[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
FURTHERING PUBLIC HEALTH SECURITY: PROJECT BIOSHIELD
=======================================================================
JOINT HEARING
before the
SUBCOMMITTEE ON HEALTH
of the
COMMITTEE ON ENERGY AND
COMMERCE
and the
SUBCOMMITTEE ON EMERGENCY PREPAREDNESS AND RESPONSE
of the
SELECT COMMITTEE ON HOMELAND
SECURITY
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
MARCH 27, 2003
__________
Committee on Energy and Commerce Serial No. 108-11
Select Committee on Homeland Security Serial No. 108-1
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
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WASHINGTON : 2003
87-480PS
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COMMITTEE ON ENERGY AND COMMERCE
W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
JOE BARTON, Texas Ranking Member
FRED UPTON, Michigan HENRY A. WAXMAN, California
CLIFF STEARNS, Florida EDWARD J. MARKEY, Massachusetts
PAUL E. GILLMOR, Ohio RALPH M. HALL, Texas
JAMES C. GREENWOOD, Pennsylvania RICK BOUCHER, Virginia
CHRISTOPHER COX, California EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
RICHARD BURR, North Carolina SHERROD BROWN, Ohio
Vice Chairman BART GORDON, Tennessee
ED WHITFIELD, Kentucky PETER DEUTSCH, Florida
CHARLIE NORWOOD, Georgia BOBBY L. RUSH, Illinois
BARBARA CUBIN, Wyoming ANNA G. ESHOO, California
JOHN SHIMKUS, Illinois BART STUPAK, Michigan
HEATHER WILSON, New Mexico ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
CHARLES W. ``CHIP'' PICKERING, GENE GREEN, Texas
Mississippi KAREN McCARTHY, Missouri
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California THOMAS H. ALLEN, Maine
GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois
LEE TERRY, Nebraska HILDA L. SOLIS, California
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
David V. Marventano, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Health
MICHAEL BILIRAKIS, Florida, Chairman
JOE BARTON, Texas SHERROD BROWN, Ohio
FRED UPTON, Michigan Ranking Member
JAMES C. GREENWOOD, Pennsylvania HENRY A. WAXMAN, California
NATHAN DEAL, Georgia RALPH M. HALL, Texas
RICHARD BURR, North Carolina EDOLPHUS TOWNS, New York
ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey
CHARLIE NORWOOD, Georgia ANNA G. ESHOO, California
Vice Chairman BART STUPAK, Michigan
BARBARA CUBIN, Wyoming ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico GENE GREEN, Texas
JOHN B. SHADEGG, Arizona TED STRICKLAND, Ohio
CHARLES W. ``CHIP'' PICKERING, LOIS CAPPS, California
Mississippi BART GORDON, Tennessee
STEVE BUYER, Indiana DIANA DeGETTE, Colorado
JOSEPH R. PITTS, Pennsylvania CHRISTOPHER JOHN, Louisiana
ERNIE FLETCHER, Kentucky JOHN D. DINGELL, Michigan,
MIKE FERGUSON, New Jersey (Ex Officio)
MIKE ROGERS, Michigan
W.J. ``BILLY'' TAUZIN, Louisiana
(Ex Officio)
(ii)
SELECT COMMITTEE ON HOMELAND SECURITY
CHRISTOPHER COX, California, Chairman
JENNIFER DUNN, Washington JIM TURNER, Texas
BILL YOUNG, Florida BENNIE G. THOMPSON, Mississippi
DON YOUNG, Alaska LORETTA SANCHEZ, California
JAMES SENSENBRENNER, Wisconsin EDWARD J. MARKEY, Massachusetts
W.J. ``BILLY'' TAUZIN, Louisiana NORMAN D. DICKS, Washington
DAVID DREIER, California BARNEY FRANK, Massachusetts
DUNCAN HUNTER, California JANE HARMAN, California
HAROLD ROGERS, Kentucky BENJAMIN L. CARDIN, Maryland
SHERWOOD BOEHLERT, New York LOUISE McINTOSH Slaughter, New
LAMAR S. SMITH, Texas York
CURT WELDON, Pennsylvania PETER A. DeFAZIO, Oregon
CHRISTOPHER SHAYS, Connecticut NITA M. LOWEY, New York
PORTER J. GOSS, Florida ROBERT E. ANDREWS, New Jersey
DAVE CAMP, Michigan ElEANOR HOLMES NORTON, District of
MARIO DIAZ-BALART, Florida Columbia
BOB GOODLATTE, Virginia ZOE LOFGREN, California
ERNEST J. ISTOOK, Oklahoma KAREN McCARTHY, Missouri
PETER T. KING, New York SHEILA JACKSON-LEE, Texas
JOHN LINDER, Georgia BILL PASCRELL, Jr., North Carolina
JOHN SHADEGG, Arizona DONNA M. CHRISTENSEN, U.S.V.I.
MARK E. SOUDER, Indiana BOB ETHERIDGE, North Carolina
MAC THORNBERRY, Texas CHARLES A. GONZALEZ, Texas
JIM GIBBONS, Nevada KEN LUCAS, Kentucky
KAY GRANGER, Texas JAMES R. LANGEVIN, Rhode Island
PETE SESSIONS, Texas KENDRICK B. MEEK, Florida
JOHN E. SWEENEY, New York
Subcommittee on Emergency Preparedness and Response
JOHN B. SHADEGG, Arizona, Chairman
CURT WELDON, Pennsylvania BENNIE G. THOMPSON, Mississippi
Vice Chairman JANE HARMAN, California
W.J. ``BILLY'' TAUZIN, Louisiana BENJAMIN L. CARDIN, Maryland
CHRISTOPHER SHAYS, Connecticut PETER A. DEFAZIO, Oregon
DAVE CAMP, Michigan NITA M. LOWEY, New York
MARIO DIAZ-BALART, Florida ELEANOR HOLMES NORTON, District of
PETER T. KING, New York Columbia
MARK E. SOUDER, Indiana BILL PASCRELL, Jr., North Carolina
MAC THORNBERRY, Texas DONNA M. CHRISTENSEN, Virgin
JIM GIBBONS, Nevada Islands
KAY GRANGER, Texas BOB ETHERIDGE, North Carolina
PETE SESSIONS, Texas KEN LUCAS, Kentucky
JENNIFER DUNN, Washington JIM TURNER, Texas
CHRISTOPHER COX, California
(iii)
C O N T E N T S
__________
Page
Testimony of:
Baker, James, Jr., Ruth Dow Doan Professor, Director, Center
for Biological Nanotechnology.............................. 49
Friedman, Michael A., Chief Medical Officer for Biomedical
Preparedness, PhRMA........................................ 57
Noble, Gary, Johnson & Johnson............................... 64
Read, J. Leighton, Biotechnology Industry Organization....... 51
Thompson, Hon. Tommy G., Secretary, Department of Health and
Human Services; accompanied by Anthony Fauci, National
Institutes of Health....................................... 13
Material submitted for the record by:
Baker, James, Jr., Ruth Dow Doan Professor, Director, Center
for Biological Nanotechnology:
Letter dated April 25, 2003, to Hon. Michael Bilirakis
and Hon. John B. Shadegg, enclosing response for the
record................................................. 94
Letter dated April 25, 2003, to Hon. John D. Dingell and
Hon. Sherrod Brown, enclosing response for the record.. 97
Bowdish, Katherine, President and Founder, Alexion Antiboby
Technologies, Inc., prepared statement of.................. 82
Friedman, Michael A., Chief Medical Officer for Biomedical
Preparedness, PhRMA, letter dated May 5, 2003, enclosing
response for the record.................................... 100
Noble, Gary, Johnson & Johnson, response for the record...... 88
Read, J. Leighton, Biotechnology Industry Organization,
response for the record.................................... 84
Thompson, Hon. Tommy G., Secretary, Department of Health and
Human Services, response for the record.................... 105
(v)
FURTHERING PUBLIC HEALTH SECURITY: PROJECT BIOSHIELD
----------
THURSDAY, MARCH 27, 2003
House of Representatives, Committee on Energy and
Commerce, Subcommittee on Health, joint with
the Select Committee on Homeland Security,
Subcommittee on Emergency Preparedness and
Response
Washington, DC.
The subcommittee met, pursuant to notice, at 9:30 a.m., in
room 2123, Rayburn House Office Building, Hon. Michael
Bilirakis (chairman) presiding.
Members present from the Subcommittee on Health:
Representatives Bilirakis, Greenwood, Burr, Norwood, Wilson,
Ferguson, Rogers, Tauzin (ex officio), Brown, Waxman, Eshoo,
Stupak, Green, Capps, and Dingell (ex officio).
Members present from the Subcommittee on Emergency
Preparedness and Response: Representatives Shadegg, Weldon,
Tauzin, Shays, Camp, Diaz-Balart, King, Souder, Thornberry,
Gibbons, Granger, Sessions, Cox, Thompson, Harman, Cardin,
DeFazio, Lowey, Norton, Pascrell, Christensen, Etheridge, Lucas
and Turner.
Also Present: Representative Dunn.
Staff present: Brent Del Monte, majority counsel; Steve
Tilton, health policy coordinator; Eugenia Edwards, legislative
clerk; John Ford, minority counsel; and Jessica McNiece,
minority staff assistant.
Mr. Bilirakis. Would everybody please take their seats.
Good morning. I do wish to announce to the members that
Secretary Thompson, who is the first panel, has to leave by
11:30 to 11:45 at the latest. So I would very much appreciate,
on behalf of myself, Mr. Brown, Mr. Shadegg and his ranking
member, if we could waive as many of our opening statements as
possible so we can get to the Secretary.
I now call this joint hearing of the Energy and Commerce
Health Subcommittee and Select Committee on Homeland Security
Emergency Preparedness and Response Subcommittee--what a
moniker--to order.
I would like to thank all of our witnesses for appearing
before both of our subcommittees today and, in particular, I
would like to recognize Secretary Thompson and thank him for
taking the time to be with us for the second time during this
108th Congress.
Last year, the Energy and Commerce Committee worked
together in a bipartisan fashion to produce the Public Health
Security and Bioterrorism Response Act which President Bush
signed into law in June of last year. I was proud to have been
a part of this important effort. However, while our legislation
has helped get critical resources out to the States and moved
us closer to the reality of a comprehensive strategic national
stockpile, more certainly needs to be done, and that is largely
why we are here today.
The possibility that our enemies might attack us with
biological weapons remains a very significant threat.
Unfortunately, while there has been tremendous and rapid
progress in the treatment of many serious naturally occurring
diseases, the medical treatments available for some types of
bioterrorist attacks have improved little in decades.
President Bush has proposed a strategy to deal with this
obvious weakness in our defenses, and that strategy is
encompassed in the administration's Project Bioshield proposal
which we are here to discuss further today.
I will let Secretary Thompson describe the details of this
new initiative during his testimony. I do want to commend the
President for offering this thoughtful proposal, and to
anticipate that, if implemented, it will harness the power of
our research driven pharmaceutical, biotechnology and medical
technology industries in developing effective biomedical
countermeasures.
I am also interested in hearing about some of the
challenges affected stakeholders will face in Project
Bioshield, if Project Bioshield becomes a reality. We have a
great deal of expertise in our second panel, and I hope the
members take advantage of this opportunity.
We are all here today, of course, with a very heavy heart.
As our Nation commits to securing our safety overseas, it
remains our responsibility to do what we can to ensure that the
United States is ready for whatever bioterrorist threat we
might face.
Having said that, I say thank you, and I now yield to my
friend, the gentleman from Ohio, for an opening statement.
Mr. Brown. Thank you, Mr. Chairman. Welcome, Secretary
Thompson. Welcome, Dr. Fauci.
Expanding our arsenal of vaccines, antibiotics and other
bioterrorism countermeasures is a shared goal, and I appreciate
the administration's proactive efforts in that way. While I
have questions about the funding mechanism and would like to
understand more about the drug development contracts
envisioned, I am confident we will work on a bipartisan basis
to move this initiative forward.
In that context, I hope the administration will consider
additions that would materially increase our chances of
achieving that objective. In addition to expanding and
diversifying our supply of countermeasures, we must protect the
weapons already in our arsenal. That means addressing anti-
microbial resistance.
When bacteria are exposed to antibiotics, resistant strains
survive and proliferate, posing other new threats to human
health. This phenomenon makes it more difficult and vastly more
expensive to treat a host of infectious killers and, unlike
other medical challenges, there is no way to eradicate
antimicrobial resistance. But by properly managing antibiotics,
we can render resistance less dangers, less costly.
If we don't take appropriate steps now to encourage the
development of new antimicrobial therapies and cut back on non-
therapeutic antibiotic use, defending against bioterrorism will
be far more difficult in the future. It makes sense to
incorporate strategies to combat antibiotic resistance into
Project Bioshield.
Second, access to bioterrorist countermeasures is a
function of availability and a function of price. In 2001,
faced with weaponized anthrax, the administration was forced to
haggle with Cipro makers for a price we could afford. Faced
with building a stockpile of medicines to protect Americans
from biological warfare, Mr. Secretary, you put it plainly,
saying the price is the question.
If prices are too high, we will be unable to buildup
sufficient stockpiles. Public officials may be forced to cut
corners. In the ensuing dispute the administration acknowledged
that the Federal Government did, in fact, have the right to
secure generic versions of Cipro, but was also concerned about
the uncertain royalty payments that would be required.
I introduced legislation last year aimed at addressing the
constraints the Federal Government faced in securing Cipro.
Under that bill, patent holders would be entitled to reasonable
compensation, which they deserve as the product innovator, but
the Secretary would have the authority to determine the
reasonable compensation for use of a patent in a public health
emergency under criteria which strike a balance between the
need to maintain incentives for new drug development and the
need to protect the public health.
Project Bioshield certainly aims to spur R&D, as it should.
Some would argue the safeguards I have proposed will mute this
incentive. To that, I would answer that virtually every
developed nation other than the U.S. has compulsory licensing
laws on the books that apply to prescription drugs.
Drug companies develop and market drugs, obviously, in all
of these countries.
In an ideal world, we could ignore the price component of
the access equation, because it is invariably the most
difficult to deal with. R&D is a tradeoff. If prescriptions are
too expensive to reach those who need them, their inherent
value is diminished, and the value of the R&D that went into
them is also diminished. Price is important.
Secretary Thompson, my compulsory licensing bill is one way
to address pricing concerns, but it is not the only way. I
would appreciate the opportunity to discuss price
considerations with you as we move forward with Project
Bioshield.
I want to raise one more issue. If there is one lesson we
have learned since September 11, it is that public health
threats change and evolve. That principle obviously applies in
developing as well as developed nations. Over the last several
months, attempts have been made to modify the so called DOHA
Declaration which promotes the ability of developing nations to
secure lower price medicines to combat public health crises.
The modifications would limit--that our government sought
would limit the definition of public health threats to a
handful of infectious diseases. Needless to say, bioterrorist
attack was not included in that definition. This static and
stringent definition ignores the reality that public health
threats are diverse, and they change over time.
This definition effectively locks developing nations into a
cycle of poverty and disease and death. As we fight to protect
the health and lives of Americans, I urge you, Mr. Secretary,
to also fight for the health and the lives of individuals in
impoverished.
Your chairmanship of the global fund is a major, major
commitment and step, and we are also pleased with that. I urge
you to put the weight of the U.S. behind preserving the
original intent of the DOHA agreement.
I thank the chairman.
Mr. Bilirakis. The Chair thanks the gentleman and now
yields to the co-chairman of this hearing here today, a very
valued member of the Energy and Commerce Committee and my
health committee as well as the chairman of the Subcommittee on
Emergency Preparedness and Response of the Select Committee on
Homeland Security, Mr. Shadegg.
Mr. Shadegg. Welcome, Secretary Thompson, and thank you
very much, Chairman Bilirakis, for this synergistic effort
between the Energy and Commerce Subcommittee on Health and the
new Select Committee on Homeland Security's Subcommittee on
Emergency Preparedness and Response.
It is a distinct pleasure for me to co-chair this first
ever hearing of a subcommittee of the Select Committee on
Homeland Security, and first ever hearing, of course, of the
Emergency Preparedness and Response Subcommittee.
Now last November the Congress took a monumental step in
reordering the priorities of the executive branch to put the
Federal Government in a position to better protect American
citizens and secure our borders by passing the Homeland
Security Act.
Among the functions that have been transferred to the
Department of Homeland Security dealing with emergency
preparedness and response include: the Federal Emergency
Management Agency; the Integrated Hazard Information Systems,
formerly at the National Oceanic and Atmospheric
Administration; the National Domestic Preparedness Office of
the FBI; and the Domestic Emergency Support Teams of the
Department of Justice.
There are two critical missions that have also been
transferred to DHS which are particularly pertinent to today's
hearing, those of the Office of Emergency Preparedness in the
National Disaster Medical System, and the Metropolitan Medical
Response System, as well as the strategic national stockpile.
It goes without saying that September 11, 2001, was a wake-
up call for our country. I think we all knew about the
potential threat for terrorist acts to take place in our
homeland, but for a lot of us those were big concepts outlined
by think tanks and policy experts.
Only a month later we were faced with the prospect of
anthrax mailings to New York, Washington, and your state, Mr.
Chairman, Florida. That is when we discovered that the delivery
mechanism for terror can take on a completely different look
than a crude bomb or a lone gunman.
We took our first step in addressing the new bioterrorism
threat by passing the Bioterrorism Preparedness and Response
Act overwhelmingly last year. Among the law's provisions was
$1.15 billion in new funding to expand the country's national
stockpiles of anti-bioterror drugs and vaccines, and for the
purchase of additional smallpox vaccines.
Today, we embark on a further effort in that war on terror,
Project Bioshield. In an effort to energize and unleash the
ingenuity of our Nation's best biomedical minds, Project
Bioshield will direct the national Institutes of Health to
accelerate research and development in the area of biochemical
countermeasures. It will allow the Secretary of Health and
Human Services the ability to procure biomedical
countermeasures, and last it will give the Secretary the
authority and ability to accelerate the introduction of
unapproved drugs, devices, and biologicals to help the threat
to American lives in an emergency.
I look forward to the opportunity to fully explore all of
the issues surrounding this creative proposal from the
administration to address the bioterrorism threat that our
Nation faces, including the question of mandatory or
discretionary funding, whether there should be a sunset date so
that Congress can take stock of the success or failure of this
program, whether this effort will be enough to stimulate the
interest in the private sector to produce the drugs and devices
needed to protect American lives, and how much of the money
devoted to this research will go--devoted to this task will go
into research versus acquisition and countermeasures.
Chairman Bilirakis, I welcome the Secretary here and look
forward to the testimony of all of our witnesses, and yield
back.
Mr. Bilirakis. I thank the gentleman, and on behalf of Mr.
Shadegg the Chair now yields to the ranking member of his
subcommittee, Mr. Thompson.
Mr. Thompson of Mississippi. Thank you, Mr. Chairman. In my
capacity as the new ranking member of the Select Homeland
Security Subcommittee on Emergency Preparedness and Response,
it is with great pride that I have the opportunity to sit
before you today to address and voice my concerns on an issue
that is paramount in the minds of all Americans, safeguarding
the United States against all acts of terror.
In the wake of September 11, it has become apparent that
America, unfortunately, is vulnerable to a vast array of
terrorist attacks, not only attacks carried out through
conventional means but unconventional, biological, chemical or
radiological means as well. Being cognizant of all the possible
threats lurking out there, we in the Federal Government must do
everything within our means to give Americans peace of mind by
knowing that this country has adequate countermeasures.
It is quite evident that the country currently lacks the
necessary medical countermeasures to deal with the acts of
bioterrorism. In a recent study, the Defense Science Board
found that the country has only 1 of 57 countermeasures
required to deal with the top 19 bioterror threats. This means
we need to be more than just a second generation smallpox and
anthrax vaccine to guarantee the Nation's safety.
In order to completely guarantee safety, we need a host of
not just new vaccines but new diagnostic and therapeutics as
well. I hate to imagine the pathogens out there that we have
yet to encounter.
In the past couple of weeks along, we have witnessed the
emergence of a new virus, acute respiratory syndrome, SARS, for
which we do not have treatment for spreading throughout Asia.
Then thinking long term, we have to address the possibility of
hybrid threats or genetically modified threats made to resist
antibiotics.
I say all this not to be an alarmist, but it is just to
underscore the importance of the task at hand. I am pleased
that the administration, acknowledging the grave potential for
unconventional attacks, has created a dialog within Congress in
hopes of resolving our Nation's deficient preparedness by
unveiling Project Bioshield.
Within a goal of stimulating new and accelerating existing
biomedical research, bolstering the Nation's countermeasures
stockpile, and implementing mechanisms to make such
countermeasures widely available in the event of an emergency,
Project Bioshield is an ambitious and very necessary proposal,
long overdue. However, I do have some concerns regarding the
legislation in its current form.
I am concerned that the legislation is much more focused on
the short term procurement of countermeasures than long term
research. Also, I am concerned at the way the legislation
treats companies potentially involved in or considering doing
research in developing biological countermeasures.
The legislation seems to offer narrow incentives for
companies to get involved. It doesn't seem to promote
competition among companies, and I am concerned that the
legislation doesn't seem to provide an adequate recourse for
companies to appeal decisions made by the Secretary.
Mr. Chairman, this concludes my opening statement. Mr.
Secretary, it is good to have you with us here today. I look
forward to hearing your testimony, as well as the rest of the
distinguished panel.
Mr. Bilirakis. The Chair thanks the gentleman, and now
yields to the chairman of the full Energy and Commerce
Committee, Mr. Tauzin.
Chairman Tauzin. Thank you, Chairman Bilirakis. I have two
welcomes, first of all, first to Chairman Shadegg and to the
members of the Select Committee on Homeland Security.
Chairman Shadegg is no stranger to this committee room. He
is a distinguished member of the Energy and Commerce Committee,
but I want to welcome all the members of the Homeland Security
Select Committee as this, I understand, is the first of the
joint subcommittee process by which we will continue to do our
work in conjunction with the work that Chairman Cox will do on
the important select committee that has been created for this
extraordinary and emergency problem our country faces at this
time.
I want to welcome all of you Democrats and Republicans to
this distinguished room where so much work on protecting our
country goes forward. I particularly want to thank again
Secretary Tommy Thompson for coming personally to make the
administration case on the Bioshield initiative, and thank you,
Secretary Thompson, for several things. One, of all the people
whom our committee has jurisdiction over in terms of their
agency work, you have been the most forthcoming, the most
cooperative and helpful in helping us develop policy for our
country of anyone that I am aware of, and I want to thank you
and your staff for that extraordinary level of cooperation,
your personal commitment to work with our committee as we go
forward.
Second, great thanks for the work done in the last Congress
on the bioterrorism bill which this committee produced. I
believe that is going to pay great dividends in helping to
secure our country.
What you bring to us today makes all the common sense in
the world. You basically make a case, as we should all make a
case, where the market cannot do something critically important
for our country, that we've got to step in and make sure it
happens. In this case, there is no market for a plague vaccine,
for example. No one in their right mind is going to spend
scarce resources to develop a vaccine for a plague when there
is no plague yet and there is no market for that vaccine.
If we don't in government create a market, create an
incentive for companies to develop the vaccines that are
critical to protect us against diseases we thought had been
wiped out and eradicated, but all of a sudden might pose a
threat to our country in a terrorism sort of venue, who will
produce that vaccine for us if we don't have a special program
to make sure it gets produced and that Americans are protected
because someone took the initiative to make sure that that was
available for the tens of millions of Americans who might need
it.
Likewise, while no one wants to at all threaten the gold
standard of Food and Drug Administration approval of drugs,if
we were to have a bioterrorism attack against this country and
we would be faced with the need to vaccinate and to treat
millions of Americans, and there was a vaccine or a drug
waiting approval that had all the evidence of being able to
protect this country, why would we want to let the process
stand in the way of dealing with that kind of an emergency.
So you bring to us this initiative that basically gives our
country in this extraordinary time, one, the ability to make
sure there is in fact an incentive to produce the things
critical to protect our country when the market might not
otherwise do it, second, to make sure that we stand aside the
normal processes, should the worst ever happen and we face that
dramatic emergency, and we are prepared at that point to use
whatever resources that might be available in the process,
whether yet approved or not, to protect our citizens from that
kind of harm.
That is the kind of thinking we have asked all the agencies
to do and the kind of initiatives we have asked them all to
bring to us. We don't think like evil people in America. We are
generally good people. When a plane went down when some pilot
decided to commit suicide out of New York, most of us were
thinking, you know, if he wanted to die, why didn't he just
kill himself. Why did he have to take all the passengers down
with him.
In a cave in Afghanistan, Osama bin Laden was thinking, you
know, if you just crash that plane into a building, we could
kill more Americans. Evil people think differently than we do,
and we've got to force ourselves to take these kind of
initiatives and to think through the worst case scenarios that
might happen to our country. I want to thank you for doing
that.
I want to thank you and the incredible staff you have for
thinking of our country in that extraordinarily sensitive and,
I think, productive way and for helping this committee do the
right thing.
Again, Mr. Chairman, thank you and, Chairman Shadegg, thank
you, and if you will extend my thanks to Chairman Cox for the
extraordinary way in which these two committees, I think, are
going to work today and continue to work in the future. I yield
back.
[The prepared statement of Hon. W.J. ``Billy'' Tauzin
follows:]
Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee
on Energy and Commerce
Mr. Chairman: I commend you for calling this hearing to examine the
Administration's Project BioShield proposal. Further, I would like to
extend a special welcome to the Members of the Homeland Security
Subcommittee on Emergency Preparedness and Response, who have joined us
today. Also, while I look forward to hearing from all of our witnesses
here today, I am especially grateful that Secretary Tommy Thompson has
taken the time out of his busy schedule to join us to explain Project
BioShield.
There is no doubt that in these troubled times we should become
increasingly vigilant against the threat of bioterrorism. While we are
doing so much more now, on a proactive basis, to protect the American
people from those wishing to do harm, we must still prepare for the
worst.
Project BioShield is a proposal which will help us prepare for the
contingency of bioterrorist attack. Not only would it provide the
government with better flexibility in terms of countermeasure research
and development, but it also will create a market so that private
companies will develop countermeasures for use in the event of an
attack.
Presently, it makes little sense for a drug or vaccine manufacturer
to commit their scarce resources toward developing a countermeasure
for, say, the plague. There is just no market for a plague vaccine.
Project BioShield, however, would have the government create the market
through ample funding. While I have concerns about the mandatory
spending component of this proposal, I want to work with the
Administration to ensure that whatever market we create is adequately
funded in order to spur private development of countermeasures.
Finally, the proposal would allow the use of unapproved drugs,
vaccines, or devices in times of emergency. This proposal makes perfect
sense. If there is a clearly superior vaccine on the cusp of FDA
approval, yet for whatever reason approval has not been finalized, then
it should be made available in times of emergency. This especially
makes sense if we need to have tens of millions of people vaccinated in
a matter of days. No one wants to replace the current ``gold standard''
at FDA through this proposal--rather, we need to provide the Secretary
with utmost flexibility in times of health emergency.
Again, I commend you for holding this hearing today. I look forward
to the testimony of the witnesses.
Mr. Bilirakis. Thank you, Mr. Chairman. The Chair now
yields to the ranking member of the Select Committee, Mr.
Turner.
Mr. Turner. Thank you, Mr. Chairman. It is an honor to be
able to join with you today in this joint hearing of the Health
Subcommittee of the Commerce Committee and our Emergency
Preparedness Subcommittee of the new Select Committee on
Homeland Security.
I had the opportunity to have a briefing from Secretary
Thompson and Secretary Ridge a few weeks ago at the White House
on this proposal. I think I join with all of us in the
commitment to take care of this task with dispatch. The truth
of the matter is there is no greater threat to our security
than that represented by bioterrorism. Short of nuclear attack,
there is no threat that can have the catastrophic loss of life
that could result from bioterrorism.
So this is a matter that clearly should be a priority of
this Congress, and I am confident that we will be able to move
this legislation with dispatch to ensure that we get on with
the task of preparing to address these threats.
I would like to say, and I hope Secretary Thompson will
address this, that I have heard some concern since the initial
briefing that we received about the unlimited power of the
purse that is contained in the initial draft of the
legislation, and Congress obviously will want to maintain its
traditional role and constitutional responsibility regarding
the funding of this project.
I think there are some areas of the bill that could be
strengthened to provide greater reporting and oversight by the
Congress. Having said that, I do believe very strongly that
these differences need to be settled rapidly, because this
legislation needs to move forward as quickly as it possibly
can.
With that, Mr. Chairman, thank you again for the
opportunity to join with you in this hearing.
Mr. Bilirakis. Thank you, Mr. Turner, and I see that Mr.
Dingell, the ranking member of the Energy and Commerce
Committee, has just arrived. Opening statement, Mr. Dingell?
Mr. Dingell. Mr. Chairman, thank you for your courtesy. Mr.
Secretary, Doctor, welcome this morning. Thank you for holding
the hearing, Mr. Chairman. As we continue to focus our
attention on the very important and time sensitive issue of
preparing for the possibility of a biological, chemical or
radiological attack, I look forward to hearing from our
witnesses, and I am particularly pleased to welcome our good
friend from the University of Michigan, Dr. James Baker.
We are here today to examine the administration's proposed
Bioshield Act of 2003. It has three components. It seeks to
accelerated research at NIH for the purposes of developing
biomedical countermeasures. It proposes a guaranteed market to
manufacturers of drug and medical device countermeasures, and
it authorizes new Food and Drug Administration emergency use
authorization for products and treatments still under
development.
The overall goal of the legislation has merit. Some of the
specific provisions are cause of concern, and I think you could
have heard my concern in the statement which I just made,
pointing particularly to the emergency use authorization for
products and treatments still under development.
I would say that I am anxious to learn about them, and I
want to hear what will be done to protect the American public.
I am also curious, however, what will happen with regard to the
unlimited, unfettered future appropriations without limits and
without constraints. This is a blank check of the most
extraordinary character that I have ever seen, and I will look
forward to see how this is going to work, particularly with
regard to its impact on basic procurements laws which are aimed
at preventing waste, fraud and abuse.
I could observe that this is very possibly a very bad idea
and will need to be inquired into carefully by the committee.
There are other questions of interest, I think, with regard to
Project Bioshield Act of 2003. How will the government price
products under the 5-year contract specified in the bill? Why
does the bill allow for discount prices for unlicensed and
unapproved products? Shouldn't there be more specific
definitions for certain terms contained in this bill, such as
product, significant market, and pressing research needs?
Mr. Chairman, I thank you for recognizing me, and I thank
our witnesses for their help as we begin forging the useful and
well intended administration proposal into what I hope will be
more sensible and workable legislation.
Mr. Bilirakis. The Chair thanks the gentleman. As I
announced early on when not too very many members were here,
Secretary Thompson has limited time. He can only be here until
approximately 11:30, maybe 11:45 at the latest. I would ask the
members, if they possibly can, to waive their opening
statements and to take that 3 minutes during their question
time so they might have 8 minutes after that, but obviously I
can't shut off, and will not shut off, any opening statements.
So having said that and hoping to receive your cooperation,
the Chair now yields to Mr. Shays.
Mr. Shays. I will waive my opening statement.
Mr. Bilirakis. All right, sir. Ms. Harman.
Ms. Harman. Thank you, Mr. Chairman. I am happy to be back
on this committee. I miss my service here, and I will look
forward to returning to it very soon.
I also want to welcome our guests, particularly Secretary
Thompson, and thank you for enormous effort on behalf of the
public health system of America. I want to thank you
specifically on behalf of the residents of L.A. County who are
going to keep our trauma system open because of the efforts by
you, Tom Scully and others in your department. Thank you very
much. It is a very, very big deal to southern California.
I just wanted to say a few things about this legislation
and try to put it in a context. As you know, I am the ranking
member on the House Intelligence Committee, a high honor, I
must say, and I am absolutely persuaded that the United States
faces a real bioterrorism threat now.
That makes it absolutely critical that we address market
failures, as this bill intends to do--this program intends to
do, to make certain that we have the antidotes and toxins and
other medical agents that can help us respond effectively. I
don't think this legislation is perfect.
There are deficiencies that have been addressed by others.
I think we should work together to address those deficiencies
in structure and funding quickly and pass this legislation. A
good model is the Bioterrorism Act that we passed last year. I
was proud to play a small role in that. We worked together, and
we were able to pass, I think, the first really important piece
of homeland security legislation on a basically unanimous basis
through the House of Representatives. That is a very good
thing.
Let me just tick off a few other issues that are out there
that require urgent attention. One of them is not addressed by
these committees, but it is proliferation of biological and
chemical weapons. We have to get a hold on that. If we don't,
we are going to continue to have this problem.
Another is better information for the public about what to
do in the event of a biological or chemical attack. That part
of our warning system still needs work.
The third, I would say, is a good program which we should
agree on within the next week to make certain that our first
responders want to get vaccinated with the smallpox vaccine so
that they can protect the rest of us.
Lois Capps on this committee has some extremely good ideas.
I would urge the administration to reach for those ideas,
incorporated in the administration program, so that we can get
a truly bipartisan and effective piece of legislation on the
floor.
Thank you, Mr. Chairman.
Mr. Bilirakis. Ms. Granger? Mr. King? Mr. Weldon? Thank
you. Dr. Christensen.
Ms. Christensen. I will reserve my time, Mr. Chairman.
Mr. Bilirakis. Thank you, Doctor. Ms. Lowey. Thank you. Mr.
Burr. You waive it? Good. Mr. Stupak.
Mr. Stupak. I waive my time, Mr. Chairman.
Mr. Bilirakis. Thank you. Mr. Diaz-Balart.
Mr. Diaz-Balart. Thank you, Mr. Chairman. Mr. Secretary,
since I also have conflicting responsibilities--I am sure many
of us do--and I would like to hear your testimony, I waive my
opening statement.
Mr. Bilirakis. The Chair thanks the gentleman. We are
moving right along here. Mr. Etheridge.
Mr. Etheridge. Thank you, Mr. Chairman. I will waive my
time until we get a chance for questions. Thank you.
Mr. Bilirakis. Thank you. Mr. Norwood, Dr. Norwood.
Mr. Norwood. Thank you, Mr. Chairman. Out of respect for
the Secretary, I will waive my time and will require the 8
minutes.
Mr. Bilirakis. Thank you. I am sure you will. Mr. Green.
Mr. Green. Thank you, Mr. Chairman. I will put my statement
in the record and save my time for the 8 minutes.
Mr. Bilirakis. Thank you. Of course, the written statement
of all members of both subcommittees is made a part of the
record, obviously, with unanimous consent. Mr. Souder. Thank
you. Mr. Lucas.
Mr. Lucas. I waive my time.
Mr. Bilirakis. Ms. Dunn.
Ms. Dunn. Thank you, Mr. Chairman. I will waive my time,
and only say to the Secretary, thank you for being here and
bringing to public knowledge the insights you have into Project
Bioshield. I think it is vitally important that folks at home
know how much preparation is being done to provide for their
security.
Mr. Bilirakis. Mr. Pascrell.
Mr. Pascrell. Mr. Chairman, I will submit a longer
statement, but I want to, first of all, greet the Secretary and
ask the Secretary to address the issue of oversight. While we
are trying to expedite here, while we are trying to discover
agents that need research in working with the pharmaceutical
industry in this country, this Congress cannot relinquish its
right to have oversight. We do that with an Apache helicopter.
We must do it with anything that we are going to do to respond
to bioterrorism, and I ask the Secretary to address that issue
of Congressional oversight during the process.
Thank you, Mr. Chairman.
Mr. Bilirakis. Thank you. Mr. Kemp. Mr. Rogers. These are
people who were here, but who have stepped out. Mr. Waxman. Ms.
Eshoo.
Ms. Eshoo. Thank you, Mr. Chairman. Good morning to you. I
will place my opening statement in the record and reserve my
time. Thank you.
Mr. Bilirakis. I thank the gentle lady. Mr. Sessions.
Mr. Sessions. Mr. Chairman, I seek no time. Thank you.
Mr. Bilirakis. Ms. Capps. Thank you.
Well, does that cover everybody? All right, the Chair
really appreciates your cooperation.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. Barbara Cubin, a Representative in Congress
from the State of Wyoming
Thank you, Mr. Chairman.
We must be deliberate as well as responsible in how we go about
developing any plan to combat biological and chemical agents.
The possibility of such an attack in the United States is unnerving
to all of us. We know the threat to be real so we must do whatever
necessary to protect the citizens of this country--and we are.
The Administration has presented us with Project Bioshield, and we
are here to see if it meets the expectations of today. From what I know
of it, I am encouraged.
It is designed to spur innovation in the manufacturing and
development of biological countermeasures.
It gives NIH the flexibility to concentrate more research in this
area. It provides mechanisms to get new drugs and technologies to the
public faster when no alternatives exist.
These are the kinds of things we must have in place if we are to be
truly prepared for this type of warfare. I commend Secretary Thompson,
his department, and the Administration in their efforts to do just
that.
I do however have questions today about the proposal. More
specifically as they relate to liability protections, what it means to
deal with highly dangerous pathogens, and the viability of producing
drugs and devices solely for bioterrorism prevention.
I'm simply interested in developing the best biological defense
plan that we can. That will most assuredly require the collaborative
efforts of everyone at the table today, and then some.
We are in unchartered territory these days so we must be careful
and thorough in how we go about this. It is also obvious however that
time is not on our side.
With that, Mr. Chairman, I look forward to hearing from our
witnesses today, and yield back the remainder of my time.I63
Prepared Statement of Hon. Donna M. Christensen, a Delegate in Congress
from the Virgin Islands
I want to welcome Secretary Thompson, the first official witness
that we the members of the newly constituted House Select Committee on
Homeland Security will get to hear from.
Today we are here to examine the Project Bioshield Act of 2003, the
purpose of which is to increase the development of countermeasures to
bioterrorism, and facilitate their approval for use and mass
production, so that they would be readily available when needed.
While research and development of such products is important, I
think our time would have been better spent on ``furthering the
question of Public Health Security''--a broader and more immediate
issue.
At this first meeting of the Subcommittee on Emergency Preparedness
and Response, which I am honored to serve on, I want to say that that
is my primary concern.
We have long had deficiencies in our public health system. With the
impact of rising health care costs due to our lack of focus on
prevention and ensuring everyone's equal access to quality health care,
and the systems continued deterioration, because of cuts in funding and
misdirected policies, the nations public health infrastructure is in a
worse position to provide heath security today than ever before.
Even if we had the vaccines, medications and devices today to
counteract all known or predictable bioterrorism agents, we would be
stymied by the inability of public health systems in many parts of our
country to act efficiently and effectively.
So I hope we will spend an appropriate amount of time on the issue
of public health security, particular because it takes upwards of 5,
maybe as much as 15 years to develop new vaccines or therapies.
We can't wait that long for protection.
On the particular bill before us today, I have concerns about the
broad powers of the Secretary of HHS; the open ended funding; the
expedited procedures to make the countermeasures available for use, and
what might be a lack of important safeguards.
In conclusion let me once again welcome Secretary Thompson to this
joint Subcommittee hearing today. I look forward to receiving your
testimony, and the testimony of all of the witnesses before us today. I
also look forward to working with you and your Department in developing
a meaningful solution the Public Health Security needs of country as we
continue to face the growing threat of terrorism and in our country.
Thank you.
______
Prepared Statement of Hon. Bob Etheridge, a Representative in Congress
from the State of North Carolina
Thank you to both of our Chairmen for holding this hearing. This
proposal is an extremely important element in our nation's war on
terrorism, and I appreciate the opportunity to hear Secretary Thompson
describe the legislation.
I have a number of research institutions and pharmaceutical
development companies in my district, and many of them have expressed
an interest and desire to help defend our country from terrorist
threats. Project Bioshield is an interesting proposal and a good place
to begin the discussion of our support of scientific research and
development.
However, the measure also raises a number of questions and concerns
regarding the lack of funding oversight by Congress, the potential
safety of products rushed through an expedited approval process, and
the extreme liability limits that would prevent those harmed or killed
from the use of the countermeasures from receiving reasonable
compensation.
The best defense against terrorism is to prevent attacks. However,
I know that a determined enemy can breach even the best defenses our
country can provide, so we must also be prepared to respond to all
threats. Thank you again for giving us the opportunity to begin
discussions about this important proposal.
Mr. Bilirakis. Having said that, I would now recognize
Chairman Thompson. We will set the clock at 10 minutes, sir.
Obviously, to get your message across, you will take whatever
time you please. Please proceed.
STATEMENT OF HON. TOMMY G. THOMPSON, SECRETARY, DEPARTMENT OF
HEALTH AND HUMAN SERVICES; ACCOMPANIED BY ANTHONY FAUCI,
NATIONAL INSTITUTES OF HEALTH
Secretary Thompson. Good morning, Mr. Chairman. I would
just like to thank each and every one of you for giving me this
opportunity to appear in front of this august body and to be
able to talk about a very important subject. I thank all those
individuals who have waived their opening remarks and,
hopefully, have enough time to answer each and every one of
your questions.
The truth of the matter is, Mr. Chairman, we have a serious
problem in America. When I took over as Secretary of the
Department of Health and Human Services a little over 2 years
ago, I found that we were ill prepared to deal with a
bioterrorism threat. Subsequent to that time, we have done a
lot of things.
We purchased enough smallpox for every man, woman and child
in America. We have put in place many different innovative ways
to do research. We are looking for more. We also have developed
probably one of the most modern communication--technologically
advanced communication rooms dealing with information, dealing
with tracking information on diseases and storms anyplace in
the world.
I would advise and suggest and invite each and every one of
you to come over to the department and see it. I think, if you
walk through it, you would see how well prepared we are to
respond to any kind of chemical, biological or radiological
event that may take place in our country, and I would invite
each and every one of you, and hope you would do it when I can
take you personally through it.
Second, there are six counter-agents, bioterrorist agents
that we are very concerned about. The first one, of course, is
smallpox. The second one is anthrax. The third one is botulinum
toxin. The fourth one, of course, is plague. The fifth one is
the hemorrhagic fever viruses which includes ebola, and the
sixth one is tularemia.
We are also concerned about modifying any one of these
bioterrorist agents, and we do not have the capacity, ladies
and gentlemen, to really respond quickly. That is why my
department, under the auspices of people in my secretarial
office and also with the good support and ingenuity of people
like Dr. Fauci at NIH, we have come up with Bioshield which I
will explain to you in a moment.
Before I begin, I thought it would be helpful to give you a
brief update on SARS. As we speak, scientists from a number of
countries are working around the clock to solve the mystery of
SARS. In fact, this morning before I came over here, we had a
teleconference with the WHO.
There are approximately 1500 cases now, and it is spreading
a little bit faster than we had anticipated. There are 45 cases
in the United States, and we do not know--have not been
confirmed that are SARS, but are cases that we are
investigating.
Now we are also working around the clock to solve the
mystery of SARS. Most of the laboratories around the world had
determined at the first blush that this was a paramyxovirus
which is in the family of the viruses of measles and mumps and
pneumonia. Our scientists question that, and luckily so. Our
scientists at CDC came up and decided that this was the
coronavirus or the common cold, but it is a generation removed
from the cold and is much more virulent, and approximately 4
percent of the people that get SARS currently have died.
So we are very, very concerned about it. We do not know how
to control it as of yet. We do not have a therapy for it yet,
but we are working around the clock to develop it, and I
Thought you individuals would want to know that.
Mr. Chairman, my goal at HHS is to do everything I possibly
can to ensure that Americans are strong, that they are health
and independent. Every time we take a dollar from the
taxpayers, we must be confident that we can use that dollar in
order to promote their health, security and independence better
than they can, and that is our solemn responsibility and one
that I take very seriously.
Private investment should drive the development of most
medical products. Bioterrorism, however, is different. None of
us ever expected that 16th century illnesses and diseases could
be used and be weaponized and can be used as bioterrorist
threats in the year 2003, and that is what we are facing.
There is no market out there to develop the vaccines, the
antiviruses, the antidotes and the antibiotics. That is why
Bioshield was developed, and we worked very hard to come up
with a procedure in which we could accelerate the research,
accelerate the purchase and accelerate, if need be, the
emergency usage of that particular medicine or vaccine or drug.
The attacks of September 11 made it clear that the threat
of terror is graver and more imminent than at anytime in modern
history. The anthrax attacks made it clear that the threat of
terrorism includes weapons of unprecedented power and ingenuity
and that we need to be prepared. The anthrax that was sent to
Congress had enough anthrax potential to kill 100,000
individuals, if it was used properly and, therefore, we have to
be protected. We have to protect the American citizens.
We have already done a great deal. Today the United States
is better prepared than ever to meet the threat of terrorist
attacks with a biological, chemical, radiological or nuclear
agent, and I would hope that you would once again come over and
see it. I am confident you would come away from that with a lot
of your fears allayed that we could respond very quickly in
America.
The national stockpile of medical countermeasures is large
and getting more extensive all the time. We have 12
strategically located sites, 50 tons of medical supplies and
equipment, antibiotics and so on in every one of those sites,
and we can move those within 7 hours to any city in America. It
requires 9 semi-truckloads or 1 KC-135 to do that. But the
stockpile may not be enough, unfortunately.
The medical treatments available for many pathogens have
improved little in decades. The smallpox vaccines available
today hardly differ from those of the 1960's, in fact are the
same almost. Some treatments for radiation and chemical
exposures have not changed much since the 1970's, and some
diseases such as ebola have never had any effective medical
countermeasure.
These diseases lack effective or modern treatment in part
because they are rare. By contrast, the treatment of the vast
majority of common, naturally occurring illnesses has improved
dramatically as a result of continuing innovations from
biomedical research and development. Heart attacks, for
instance, were often fatal in the 1970's, but they are much
less so today.
Better detection and therapeutic options have significantly
improved survival rates for many kinds of cancer over the last
years. We must bring that sort of progress, ladies and
gentlemen of this committee, to the rare yet deadly threats
posed by bioterrorism and by bioterrorists.
That is why President Bush announced Project Bioshield. It
would spend roughly $5.6 billion over 10 years on new
countermeasures to prepare America for a bioterror attack. This
proposal would be able to speed up the research and the
approval of vaccines. You will be able to see the concept, the
current law, and the Project Bioshield, how much more we can
accelerate it if, in fact, we are able to get Project Bioshield
through.
This proposal would speed up that research and approval of
vaccines and treatments and ensure--this is one of the most
important parts--ensure a guaranteed funding source for their
purchase. That is why it is mandatory and not discretion.
Just the latest in our forward looking efforts in order to
protect America's homeland: For example, the President's budget
foresaw and also prepared for an influenza outbreak. Pandemic
flu in 1918 caused 500,000 Americans to die. It proposes under
the President's budget to spend $100 million to ensure the
Nation has an adequate supply of influenza vaccine in the event
of pandemic. We were not prepared for that, and we still have a
long ways to go in order to get prepared for a pandemic flu.
Due to the constant changes in the circulating influenza
strains, we cannot stockpile influenza vaccine, and the current
manufacturing methods do not meet the Nation's need in the
event of pandemic. For instance, we use the old procedure of
developing flu vaccines using eggs, but an avian flu strain
would kill the eggs which would prevent us from creating the
flu vaccine. So it is important for us to come up with a new
cell kind of vaccine.
Funds will be used for activities to ensure a year-round
influenza vaccine production capacity in the development and
implementation of rapidly expandable production technologies.
We will work closely with industry to accomplish all of these
goals.
The bill before you today, Mr. Chairman and members, the
Project Bioshield Act of 2003, has three main parts. First, it
would give the department, working through NIH and the National
Institutes of Allergy and Infectious Diseases run by the famous
Dr. Tony Fauci who I believe is one of the paramount scientists
in the world and is with me today. He will have new authorities
in order to speed up his research and be able to allow him in
his development phase to promising areas of medical
countermeasures against potential bioterrorism agents.
Second, it is going to allow us to create a permanent
indefinite funding authority, because we need that in order to
be able to tell a company that we are the only ones that are
going to buy this. There is no other market out there to buy
plague or botulinum toxin vaccines. We are the one, and we will
have the money in order to purchase. We will enter into a
contract to purchase that from you. Then, of course, we can
also put it in the inclusion in our strategic national
stockpiles.
Third, and this was described very aptly by Chairman
Tauzin, in a national emergency the bill would allow me to
suspend the full lengthy FDA approval process if a product in
the approval pipeline is absolutely urgently needed and has
great potential to protect, diagnose, treat or prevent a
serious disease caused by a bioterror agent.
In other words, Mr. Chairman and members, we would use NIH
to push research through the process and our procurement
authority to pull the treatment into the stockpile.
I look forward to discussing all three parts of the bill.
The President has made improving our Nation's health and health
care one of his biggest priorities for this year. By working
together--and I was just very excited to hear the bipartisan
kinds of remarks made by members of the committee today,
wanting to work to improve the bill, and I would like to say in
conclusion, we want to work with each of you on a bipartisan
basis to come up with the best bill possible, because we are
all in this together, in order to protect America.
I thank all of you for your dedication, your leadership,
first on the bioterrorism bill and also on health issues, and
now, of course, this very important issue in front of us today.
Thank you, Mr. Chairman, for giving me this opportunity.
[The prepared statement of Hon. Tommy G. Thompson follows:]
Prepared Statement of Hon. Tommy Thompson, Secretary, Department of
Health and Human Services
Chairmen Bilirakis, Shadegg and Members of the Committees, thank
you for inviting me here today to discuss the Administration bill,
Project BioShield Act of 2003. As you know, the Department of Health
and Human Services has been heavily engaged in the Federal government
efforts to prevent, prepare for, and respond to acts of terrorism,
particularly those involving chemical, biological, radiological and
nuclear threat agents. This bill is a continuation of such efforts. It
would enable the Government to develop, procure, and make available
countermeasures to chemical, biological, radiological, and nuclear
agents for use in a public health emergency that affects national
security.
Pharmaceutical research and development historically has focused on
development of products likely to attract significant commercial
interest. Many countermeasures for potential agents of terrorism
realistically have no market other than the government and thus have
not generated a great deal of manufacturer interest. Because the market
for developing countermeasures is speculative, without government
interest, private companies have not invested and engaged in developing
the countermeasures that the current situation warrants. However, in
the vaccine development area, representatives of the pharmaceutical
industry have stressed that, to the extent that the federal government
can define its vaccine requirements and assure up front that the
requisite funds will be available to purchase the vaccines, the
industry will meet the challenge.
In these post-9/11 times of increased potential for chemical,
biological, radiological, and nuclear and other terrorist attacks, it
is important now more than ever for the United States to take all
necessary steps to protect its citizens from these agents. The current
security environment dictates the need for rapid acquisition of
countermeasures. Armed with technology that only recently was the stuff
of science fiction, the U. S. armed forces are better equipped than
ever to take military actions against threats to our national security
and defend U.S. citizens against missiles, aircraft, guns and other
traditional weaponry. But other not-so-traditional threats are lurking.
Our enemies seek, and in some cases have already obtained, the ability
to acquire and manipulate biological, chemical, and nuclear weapons
that could penetrate our military defenses and civilian surveillance
systems, and cause significant harm. We need your help to confront
these threats to our homeland.
The possibility of the intentional use of chemical, biological,
radiological, and nuclear agents presents a true threat to our society.
You have heard about many of these threats: anthrax, smallpox,
tularemia, botulinum toxin, hemorrhagic fevers and plague. We will
fight these new weapons, not with bombs and guns, but with
countermeasures such as vaccines, therapeutics, and early diagnosis. We
may be called upon to provide mass inoculation or drug treatment. The
personnel who will lead the efforts to develop, acquire, regulate, and
administer these medical tools will not necessarily wear military
uniforms or be headquartered at the Pentagon. They are civilians and
scientists of the Department of Health and Human Services located in
such places as the Centers for Disease Control and Prevention (CDC),
the Food and Drug Administration (FDA) and the National Institutes of
Health (NIH), as well as State and local health officials.
We are making rapid progress in acquiring countermeasures for the
agents of greatest concern such as smallpox, anthrax, and botulism
toxin and have made advances in development of new products. We have
sufficient Aventis smallpox vaccine to vaccinate the country in an
emergency and the new ACAM2000 cell culture vaccine is coming into the
stockpile at a rapid rate. We expect to have 155 million doses by this
summer. NIH intitiated the industrial development of a safer next
generation smallpox vaccine by signing two contracts with manufacturers
last month. We will have a stockpile of antibiotics to deal with an
attack with anthrax, plague and tularemia. In addition, we have access
to stockpile of the current anthrax vaccine and are optimistic that an
accelerated development program involving two manufacturers begun last
October will result in production of a new recombinant anthrax vaccine
sometime next year with Bioshield funding. Tularemia and plague
vaccines are in the research phase and expected to move into advanced
development in the coming year. We have acquired additional quantities
of botulinum antoxins for the treatment of botulism.
Because of a relative lack of focused research on terrorist agents,
the medical treatments available for some types of terrorist attacks
have improved little in decades while there has been tremendous and
rapid progress in the treatment of serious natural-occurring diseases.
At a time when Americans must confront the realities of terrorism
directed at the United States, it is imperative that the Federal
government be prepared to protect our citizens from potential agents of
bioterrorism.
Many of the available countermeasures have been made using
traditional, older technologies, and some have significant side effects
(e.g., smallpox and botulism vaccines). Newer products produced using
advanced technologies such as recombinant proteins against anthrax and
botulinum toxin or more attenuated viral strains to protect against
smallpox hold out hope of reducing adverse reactions while maintaining
effective protection. Extensive studies must be performed to assure
that these products are both safe and effective. Showing effectiveness
when diseases do not occur naturally can be challenging and requires
the use of appropriate animal models and careful studies of the
critical immune response to a vaccine. These studies are best planned
with close interaction between government scientists and the
countermeasure sponsors. Such early product development planning has
been going on in partnership with FDA, NIH, CDC, and others (e.g. the
development and evaluation of new smallpox and anthrax vaccines). Other
examples where older vaccines or other technologies have been employed
(often effectively) include vaccines for plague and anthrax and
immunoglobulins for treating smallpox vaccine complications and
botulism. Also, the promise of rapid productions of large amounts of
monoclonal antibodies that could be targeted for use to protect against
a variety of bioterrorist pathogens or vaccine adverse events is
becoming a reality.
This must be a public and private partnership. The pathway from
idea to final product is complex. The best scientific approach to
identifying the best drug and vaccine candidates must be based on
laboratory studies. Testing must be performed in appropriate animal
models to document safety and appropriate protective or treatment
response, and to help determine dosing. Human studies must be carefully
initiated to assure the basic safety of the product, and then
appropriate dosing and response must be determined based on
measurements of levels of drug or antibody predicted to have a
protective effect. Steps must be taken to assure that the materials
used to make the product and the final product itself can be
manufactured safely, free of contaminants, and with reproducible and
predictable purity, potency, and composition. Careful trials in humans,
or where not possible, animal models, must be performed to show that
the product is safe and effective for the types of populations who
might receive it and against the methods of infection or exposure that
could be encountered. All of these steps require careful planning,
experience, and ongoing management and scientific evaluation. Costs to
develop and manufacture high quality biological products and perform
and evaluate the needed animal and human studies are high . Grants and
contract mechanisms may not always be sufficient or attract the most
experienced manufacturers. Manufacturing capacity for biological
products, particularly for vaccines, is not substantial. For all these
reasons, the best possible support and public-private partnerships and
teamwork are essential.
The President announced BioShield in his State of the Union
Address. This is a key legislative priority for this Administration.
The BioShield bill is designed to speed the development and
availability of medical countermeasures in response to the current
threats our Nation faces. The goals of Project BioShield are: 1) to
accelerate and streamline government research on countermeasures; 2) to
create incentives for private companies to develop countermeasures for
inclusion in the stockpile; and, 3) to give the government the ability
to make these products widely available quickly in a public health
emergency in order to protect our citizens from an attack using a
select agent. This legislation is a critical component of our Nation's
homeland security strategy.
The bill has three main provisions.
expediting research and development at nih
First, the Department, working through the National Institute of
Allergy and Infectious Diseases at NIH, would be given new authorities
to speed research and development in promising areas of medical
countermeasures against potential bioterrorism agents. The increased
authority will provide additional flexibility in awarding contracts,
cooperative agreements, and grants for research and development of
medical countermeasures including vaccines, drugs, biologics, and
diagnostics, and streamlined authority to hire necessary technical
experts. Funding awards would remain subject to rigorous scientific
peer review, but expedited peer review procedures could be used when
appropriate.
NIH is leading the Federal government's campaign to improve the
Nation's public health through biomedical research. The major reason
that NIH has been entrusted with this vital leadership role is its
proven record in combating naturally occurring emerging and re-emerging
diseases, which is fortified by its rigorous system for ensuring that
only the best science is supported by Federal dollars. Underpinning
NIH's research is a rigorous peer review system, which brings together
top experts from the public and private sectors of scientific research,
as well as patient representatives and other members of the public, to
evaluate research grant applications. NIH applies stringent management
controls over contracts, personnel, leasing, and construction to ensure
careful and responsible use of taxpayer dollars. These safeguards have
served the country well. Right now NIH is leading us through the
greatest era of discovery in the history of medical research.
One of the three major objectives of the President's Project
BioShield initiative is to speed up NIH research and advanced
development in targeted areas by providing more flexible authorities
for NIH including procurement and personnel recruitment for critical
biodefense work. Our BioShield proposal would authorize the Secretary
of Health and Human Services, acting through NIH, to simplify and
expedite acquisition requirements for material and services through
such mechanisms as raising the dollar threshold for simplified
acquisitions and using noncompetitive procedures when necessary. The
Act would also allow the Secretary to expedite scientific peer review
requirements in urgent circumstances, but still require a process of
quality review.
Project BioShield is intended to strike a balance, during times of
crisis, between the Federal government's need to guarantee that the
best research is conducted effectively and efficiently and the national
need to have a quick turnaround in responding to biological, chemical,
and nuclear weapons of terror. With the authorities contained in the
Act, we can improve our ability to respond to chemical, biological,
radiological or nuclear attacks against American citizens and soldiers.
It often takes many months to issue research grants, engage
pharmaceutical companies to manufacture vaccines and other drug
therapies, hire personnel and consultants, or acquire material and
services. In times of emergency, we cannot afford the time it currently
takes to accomplish these goals and events. We need vaccines and drugs
to fight bioweapons right now. We need expertise right now. We need to
build biocontainment facilities to conduct research right now. Project
BioShield gives us the tools to cut through red tape and accomplish our
mission.
procurement of countermeasures
Second, the Administration's bill creates a new permanent,
indefinite funding authority within the Department of Homeland Security
(DHS) to procure medical countermeasures for inclusion in the DHS
Strategic National Stockpile. This Department will play a major role
along with DHS in identifying and evaluating critical biomedical
countermeasures. A great deal of work has been done to identify
vaccines and antitoxins that would be needed to protect the U.S.
population from dangerous pathogens, e.g. anthrax, smallpox, botulinum
toxin, tularemia, ebola, and plague. In the interest of national
security and public health, it is essential that the Administration
engage in the process as early as possible with sponsors and
organizations that are developing the therapeutics, vaccines, and
countermeasures. This Department will maintain a proactive role to help
ensure that the products are developed as efficiently as possible.
The Administration has already identified several products that
would likely qualify as countermeasures and is meeting with sponsors to
help foster the successful development of these products. Such products
include new generation smallpox and anthrax vaccines and
countermeasures to treat botulism, plague, ebola and other hemorrhagic
diseases.
The bill requires the HHS and DHS Secretaries to identify specific
countermeasures that would be appropriate for procurement and, in
coordination with the OMB Director, make recommendations to the
President. The following determinations must be made in order for the
DHS and HHS Secretaries to make a procurement recommendation: 1.
determination that the product is a qualified countermeasure (the bill
defines a qualified countermeasure as a drug or biologic product that
is approved or licensed by FDA or one that is likely to be FDA approved
or licensed within five years); 2. determination of quantities needed
and feasibility of production and distribution; and 3. determination of
no significant commercial market for the product other than as a
homeland security threat countermeasure. This authority will enable the
government to purchase vaccines and therapies for which no other
significant commercial market exists, as soon as experts believe that
the countermeasures can be made safe and effective.
The Administration has carefully constructed this system of
technical determinations and processes leading to a recommendation to
the President because of the extraordinary nature of the proposal for
permanent, indefinite funding authority. The Administration is
committed to ensuring that recommendations to use this new authority
are carefully considered with input from all experts within the
Executive Branch, and that the final determination to exercise this
spending authority is made by the President. Any countermeasures that
do not meet the criteria laid out in our bill, or that are otherwise
determined not to be appropriate for procurement through this
authority, may still be purchased through the existing DHS
discretionary stockpile authority.
The Administration recognizes that no other significant commercial
market exists for many of these products that will be needed to protect
our military and civilian population. This authority will enable the
government to purchase vaccines and other therapies provided experts
believe that the countermeasures can be made safe and effective. The
Secretary of Health and Human Services and the Secretary of Homeland
Security will collaborate in identifying these critical medical
countermeasures, by evaluating likely threats, new opportunities in
biomedical research and development, and other public health
considerations.
emergency use authorization
The FDA approval process for drugs, devices, and biological
products is the gold standard for the world. Sixty percent of the
world's drugs are introduced first in the United States. Research and
development pipelines hold the promise of dramatically advanced
treatments, thanks to breakthroughs in genomics, proteomics,
nanotechnologies, and other biomedical sciences. In the years ahead, we
can look forward to more sophisticated, individualized, and effective
treatments. Our policies and regulations help ensure that products that
get to market are safe and effective. In addition to animal studies,
sponsors of new drugs and vaccines typically conduct three phases of
clinical trials in humans to demonstrate the safety and efficacy of a
product. This process can take years, and is procedurally cumbersome.
Only a small percentage of all products tested are found to be safe and
effective and allowed to come to market.
In preparing for the challenges we face today, we may not always
have sufficient time when addressing the threat presented by agents of
bioterrorism. The current FDA approval process is too long to be used
during emergency situations. We have some mechanisms in place to get
products to market faster, e.g. the accelerated approval mechanism, and
expedited review. The animal efficacy rule provides a new avenue for
approval for products whose efficacy cannot be tested in human clinical
trials. The single patient IND process and the treatment IND process
permit access to unapproved products. However, these mechanisms alone
are not sufficient in an emergency.
This bill will permit the Government to make new and promising
treatments still under development available quickly if needed for use
in emergency situations where no effective approved or licensed
products are available--potentially saving many lives. This
authorization will only be used when a national emergency has been
declared. In the absence of FDA approval of a product for a specific
countermeasure use, the BioShield bill permits the HHS Secretary to
issue an emergency authorization that would provide Americans with
access to certain unlicensed countermeasures. The Secretary has
discretion to facilitate the availability of these important products.
Before issuing an emergency authorization, the HHS Secretary must make
the following conclusions:
the agent specified in the determination can cause serious or
life-threatening disease;
the product may reasonably be believed to be effective in
detecting, diagnosing, treating, or preventing the disease;
the benefits of the product may reasonably be believed to
outweigh its risks;
there is no adequate alternative to the product that is
approved and available; and
any other criteria prescribed in regulation are met.
This bill would allow use of the best technology available at the
time of a declared emergency. The emergency use authorization would
remain in effect no more than one year, unless the specific terrorist
threat justifies extension of the authorization.
FDA regulations are stringent when it comes to informed consent for
investigational products. Because urgent situations may require mass
inoculations and/or drug treatments, such informed consent requirements
may prove impossible to implement within the necessary time frame when
trying to achieve the public health goal of protecting Americans from
the imminent danger. The legislation would provide for the Secretary to
impose conditions on the authorization, either by regulation or on a
case-by-case basis, where appropriate to protect public health.
Specifically, the bill provides that such conditions shall include
labeling and other requirements to ensure that health care
professionals are informed of the special emergency nature of the
authorization; of the benefits and risks (and the extent to which such
benefits and risks are unknown); and of the alternatives to the
product, and their benefits and risks. In addition, the conditions of
authorization may include the following:
labeling and other requirements to ensure that patients are
informed of the special emergency nature of the authorization;
of the benefits and risks (and the extent to which such
benefits and risks are unknown); of any option to refuse the
product; and of the alternatives to the product, and their
benefits and risks;
limitations on who may distribute the product and how
distribution should be performed;
limitations on who may administer the product, to whom it may
be administered, and when it may be administered;
requirements to perform further studies or clinical trials;
recordkeeping and reporting requirements;
requirements, or waiver of otherwise-applicable requirements,
regarding good manufacturing practice; and
requirements for monitoring and reporting adverse events.
The language of this bill is narrowly tailored to address the
essential components for use of an emergency authorization. It provides
specific conditions and criteria for issuance of such an authorization.
It requires a declaration of emergency and provides for a limited
duration of use. It gives the Secretary authority to require
recordkeeping and access to records. Finally, it provides civil
monetary penalties for violations.
conclusion
The Department of Health and Human Services is committed to
ensuring the health and medical care of our citizens. Project BioShield
is another step towards enhancing our Nation's ability to respond to
biological or chemical threats.
In summary, our BioShield proposal would:
Ensure that sufficient resources are available to procure the
next generation of countermeasures;
Accelerate NIH research and development by providing more
flexibility in the contracting process, procurement
authorities, and grant making for critical biodefense work;
and,
Make promising treatments available more quickly for use in
emergencies by establishing new emergency use authorization
procedures at the FDA.
Mr. Chairman and members of the Committee, we applaud the Senate's
bipartisan effort to move this issue forward and we likewise hope for
your bipartisan support of this bill. We look forward to working with
you to get this needed legislation enacted into law.
Mr. Bilirakis. Thank you, Mr. Secretary.
Mr. Shadegg. I will start with a brief round of questions.
As I think you gathered from the opening statements, there
is a great deal of consensus on the need for this legislation
and its importance. However, there are measures within it that
are rather controversial. I think one of them clearly was
addressed by the ranking member of the Commerce Committee, the
question of mandatory versus discretionary spending.
Now I would like to give you an opportunity at this point
to kind of make your case for why you and the administration
believe that mandatory spending is essential for the success of
this particular proposal.
Secretary Thompson. Thank you very much, Mr. Chairman. The
reason for the mandatory is basically to create the market.
What we are going to do is we are going to use NIH to be able
to push the research. Research gets to a point, either
intramurally or extramurally, from NIH. Then once it gets to
that point, you got to establish the market. You got to be able
to manufacture it.
Unless there is mandatory funding, there is less likelihood
that a company will want to go through that unless they know
they are assured of the money, they are assured of the
possibility of having that valid contract. That is why the
mandatory versus the discretion.
Second, we had discretionary money put in this past year
for $250 million for developing new anthrax. Congress in the
budget appropriation bill this year took away that $250 million
for anthrax. That was a discretionary thing in Congress. I am
not going to complain, but I am just pointing that out. That
was a discretion. We were trying to work out a market to create
that, but that was a discretion that was taken away from us in
regards to creating that anthrax.
That is why we think the mandatory is much more important.
If we are going to go to Company A and say to you, we are--and
Company A says why do I want to put in $100 million to
manufacture plague vaccine and it may take my company 3 to 5
years to do so. Is there going to be money available? Do I want
to spend $100 million betting on Congress to authorize 5 years
out a contract that is going to require $500 million?
I don't know any company that will do that. They won't know
what is going on. So there is the up-front money that they are
going to have to put in, in order to get the manufacturing of
that vaccine or that antiviral or whatever the case may be, and
they know that the Federal Government is the only place--the
only customer they've got.
So it is important for them to be assured that they are
going to have it. That is why it has got to be mandatory, sir.
Mr. Shadegg. I've got a number of other questions, but our
time is limited, and I know there are other members that would
like to question. So I am going to yield at this point and call
on Mr. Brown.
Mr. Brown. Thank you, Mr. Chairman. Thank you again,
Secretary Thompson. You spoke articulately about the production
of plague vaccine and other both preventive and curative drugs,
if you will, and you talked about incentivizing the private
sector, finding ways to encourage them and then we would
purchase those drugs from them.
Our Nation, our military, has done it a different way or
has had some alternatives that have worked over the years, too.
As you know, Walter Reed has some amazing accomplishments under
its belt. They have conducted clinical trials in antidiarrheal,
hepatitis E vaccines as well as vaccines to protect against
multiple infectious diseases.
They have done the antimalarial both vaccines and drugs
better than any public or private organization in the world
over the last 100 years, almost certainly. Their budget,
however, is only about $20 million. The drug industry says a
new drug costs them to develop about--factoring failures into
that, about $800 million. Many of us question that number, but
it is certainly multiples of the budget of Walter Reed.
Has the administration thought of putting more resources
into Walter Reed? I mean, certainly NIH does an awful lot of
research that has been very, very productive. But is there any
thought of putting more money into Walter Reed and charging
them, as they were charged with malarial--antiparasitics and
malaria and vaccines? Is that something you are entertaining?
Secretary Thompson. We certainly would look at that,
Congressman. We have the responsibility in the Department of
Health and Human Services for bioterrorism, and Dr. Fauci's
institute has been doing just a wonderful job.
This Congress appropriated last year $788 million for new
research on bioterrorism agents, and they are doing the basic
research right now for these bioterrorism agents. Therefore, we
think it is the logical place where they have already done this
to put it there instead of trying to create another program in
Walter Reed.
We certainly would look at that. We certainly understand
Walter Reed is doing some wonderful things. We just think in
bioterrorism the experts are under the leadership of Dr. Fauci.
Mr. Brown. Dr. Fauci, would you like to respond?
Mr. Fauci. Mr. Brown, also it should be pointed out that in
the arena of biodefense countermeasures, we have years ago, and
now have intensified, our collaborative interactions,
particularly with U.S. AMBRD up at Ft. Detrick.
So there is a lot of synergy going on that wasn't formerly
appreciated, taking advantage of the very best of what they
have to offer, as well as what we have to offer is not only the
kinds of things that they have been doing but a broader scope
addressing a much larger and much more complex civilian
population.
I think that is something that the general public doesn't
really fully appreciate, that the excellent job that the
Department of Defense has done has been directed at
countermeasures that are for a population that, almost by their
very definition, are a rather restricted, by definition,
healthy population.
The kinds of problems we need to deal with go from infants
to the elderly, people who are sick, people who are on
medications. So that the problem is really much more complex in
scope.
Having said that, getting back to my first comment which is
important, that we are collaborating very nicely with them now.
Mr. Brown. That is helpful. Thank you. Second question,
last question: Talk to me, if you would, about what we are
doing on antimicrobial, the whole issue of antibiotic
resistance. I mean, certainly, we need to deal with
nontherapeutic use of antibiotics, but are we finding a way in
this Bioshield legislation to encourage the development of more
antibiotics?
Scientists will say there just aren't the number of
antibiotics in the pipeline. So we really need to do two
things. We have to figure out ways to slow down the building of
the antibiotic resistance. We also have to find ways to
encourage the pipeline to be filled and move more quickly for
new antibiotics. Give us your thoughts on that, Dr. Fauci.
Mr. Fauci. Thank you for that important question, Mr.
Brown. At the NIH we, in fact, have now as part of our broad,
as the Secretary described, the push toward the development of
countermeasures, have a program on the development of novel
antimicrobials.
I must say right from the beginning that that absolutely
needs to be joined in a collaborative way with industry,
because no one is going to be able to do that without industry,
as I am sure you are going to hear from our industrial partners
in the next panel.
The other thing is that you have antibiotics in the classic
sense, but we are also looking at innovative ways to block
microbes that are not necessarily the common pathway of a
synthetic type of an antimicrobial. A typical example is some
of the work that is going on now of using biological ways, like
monoclonal antibodies, to block some of the toxins as well as
to block some of the microbes themselves.
So we have a very robust program that is going to get even
better now that we will have, were this passed, the capability
of pushing it along a little bit more rapidly at the same time
that industry can come in with the pull of getting it to happen
in reality.
Mr. Shadegg. The time of the gentleman has expired.
Chairman Bilirakis.
Mr. Bilirakis. Thank you, Mr. Chairman. Mr. Thompson,
Secretary Thompson, let's see, flexibility is an important part
of this process. Emergency use authority is in the proposed
legislation. I would ask a question. What would happen if the
government entered into a contract with a manufacturer to
develop a vaccine for the plague, but 2 years into the contract
another manufacturer developed a clearly superior vaccine?
If the government wanted to then purchase the clearly
superior vaccine, which I trust they would want to do, would
the government still have to pay for the inferior vaccine? Now
we go into vaccine. We go into contract law here, and I
appreciate all that. But maybe you can respond to that. And if
you think that there should be some changes made to allow you
to do that without--well, go ahead, respond to it.
Secretary Thompson. The perfect is not an enemy of the
good. In regard to that, if we have entered into a contract,
the Federal Government is going to have to comply with the
specificities of those particular contracts. You also have to
realize that the perfect, the more perfect vaccine that
subsequently comes, more than likely has been built upon the
research which was in the good vaccine which we have a contract
for.
We will have to purchase that, and we will have to live up
to the contract, but that does not mean that we should not go
out and purchase the better plague vaccine. We certainly have
that opportunity to do so, but we are also going to have to
comply with our contract, because we doubt very much if that
perfect vaccine or that better vaccine that you are talking
about, Congressman Bilirakis, would have been made without the
original contract or the original research done by NIH.
Mr. Bilirakis. All right. Well, in the interest again of
flexibility, yes, what you have said is certainly contract law.
No question about that. But should there be in that definition
of flexibility the government to have the right or the
flexibility to not have to pay maybe for the full--under the
full contract terms of the first vaccine developer? Should you
have that kind of flexibility and, if you did have that kind of
flexibility, would it discourage people from reaching out and
doing this, knowing darn well that they might end up losing in
the final product?
Secretary Thompson. Congressman, we set milestones. We set
goals in our contracts, and we would pay for the work and the
goals up to a particular point. If we saw a superior package
coming, we certainly would figure out a way on how we could
terminate the contract at that particular point. We would pay
for all the expenses. We would probably have to pay for a
profit to the company, but if we had a superior product, we
certainly would look at ways in which to purchase that.
So the contract is set up so that we would ensure
ourselves, but we would ensure the company, because we've got
to make sure these companies will go along to get this far.
Mr. Bilirakis. Sure.
Secretary Thompson. So we put goals into our contracts and,
once the goals have been accomplished, we pay for it, and then
we would look at going to a subsequent contract with a superior
project.
Mr. Bilirakis. All right. Thank you, sir. I would like to
give you an opportunity to maybe expand upon your prior
comments regarding liability, the necessity for liability
protections in order to incentivize contractors to develop
countermeasures.
Do you feel that that is such a critical part of any piece
of legislation, and why do you feel that way? I think it is
important that we know that.
Secretary Thompson. It is important. I can't think of an
incident in which it wouldn't be. So I would say all companies
that deal with vaccines want to be exonerated for their
liability, and we do that, and there is a section in the
statute that gives me the authority to give exculpatory
exemptions to companies, exonerate them from their liability.
I think it is Section 8408.4. I'm not exactly sure of that,
but I think that is the one it is. We have done that when we
encourage the companies. Acambis--we had a contract for the
Acambis1000. We also had a contract with Acambis-Baxter2000 for
the production of smallpox, and we also, of course, as you
know, purchased 75 million dose--82 million what it finally
ended at--doses of smallpox from Aventis Pasteur, and we are
going to be using that, and we had to give them immunity for
liability in order to use that smallpox vaccine.
We have a general thing. We did not include it in the
Bioshield legislation, but we have it in a general portion of
the Federal code, and we would use that, if need be.
Mr. Bilirakis. Thank you, Mr. Secretary. Thank you, Mr.
Chairman.
Mr. Shadegg. The time of the gentleman has expired. It is
now my privilege to recognize the ranking member of the
Subcommittee on Emergency Preparedness and Response of the
Select Committee on Homeland Security Committee, Mr. Thompson.
Welcome.
Mr. Thompson of Mississippi. Thank you very much. Welcome
again, Mr. Secretary. Taking off from the earlier question
raised by my colleague, if a company feels that for some reason
they have not been treated fairly in the procurement process,
what options do they have under this proposed legislation?
Secretary Thompson. Usually they have appeal rights,
Congressman Thompson, but in this case there is such a dearth
of markets and such a paucity of companies that would even get
into this business, we don't think that that is a serious
problem. We have to use the ability for speed in order to get
this particular product to market, and we are the only market.
So when we go out and we enter into a contract, we are
going to have to go out and find a company, because there
aren't any companies that are producing vaccines for
hemorrhagic fever viruses, the plague, botulism or anyplace. So
we have to create the market. So there's going to be so few
companies that would even be interested in it. We have to go
out and actually negotiate with them to go into it.
The basic research is going to be done under the
supervision of NIH and under supervision of Dr. Fauci. They
will get the research to a certain point, and then we are going
to have to take that research. We are going to have to go out
and get a company. There aren't going to be many companies
standing in line that want to do this.
So I don't think there is going to be a reason for appeal,
plus we have to use our ability to get this thing done, because
if there is a bioterrorist agent that is going to hit America,
we cannot afford appeal process to go on and on and prevent us
to get to our ultimate objective, and that is to defend the
American citizens.
Mr. Thompson of Mississippi. Well, thank you. So in other
words, we will make the market. We will grow the market.
Secretary Thompson. We are going to create the market,
Congressman.
Mr. Thompson of Mississippi. Fine. Now in terms of defining
the market, have you at this point created in your mind how
definitive you will be in identifying the market or will it be
a moving target, more or less?
Secretary Thompson. It is going to have to be a moving
target, because we don't know--we will not have the
intelligence at this particular point in time to determine what
bioterrorist agent that we may get hit with or we may not have
the basic research.
We are doing research right now at NIH on ebola, and we
feel somewhat good about the basic research that is being done.
So we may take that research and get to a company to produce,
manufacture the ebola vaccine or some other vaccine. So at this
point in time, we don't know.
We don't know if smallpox is the one that we are going to
be the most concerned about--it is right now--or is it going to
be botulinum toxin or is it going to be the plague? Botulinum
toxin, we still use it the old fashioned way. You have to go
out and create the serum in a horse and bleed the horse to get
the serum to develop the antidote. So that is a very arcane
procedure.
We are looking at ways to come up with new procedures, new
manufacturing, and a new way to create a vaccine for a
botulinum toxin. Therefore, we are going to do the research,
but we are going to have to go out and find a company to do the
manufacturing, and there's no company--There is no company in
the world even considering doing anything in botulinum toxin at
this point.
Mr. Thompson of Mississippi. Thank you.
Mr. Shadegg. It is now my privilege to call on the chairman
of the full House Select Committee on Homeland Security, Mr.
Cox.
Mr. Cox. Thank you, Mr. Chairman, and thank you, Mr.
Secretary. Thank you both for being here today.
As you know, the Committee on Homeland Security and the
Energy and Commerce Committee both are anxious to move this
legislation because of the urgent national need, and we intend
to do that for you. We are having this hearing on a joint basis
to make sure that we expedite the process and that we don't
make you come up here multiple times to give the same testimony
before different House committees.
We had a chance to talk about this earlier down at the
White House, and since that time I have been very focused on
doing everything that we can on the Homeland Security Committee
to make sure that we enact this into law for you.
Let me ask a couple of questions that remain cloudy for me.
First, with respect to the taxpayer investment for the
development, for example, of a serum. I believe, having read
the draft statute, that you would have authority in letting
these contracts to negotiate an ownership piece for the
government of any commercial application for the serum or toxin
antidote, or whatever it is that you are seeking to have
developed, in your discretion, and presumably also that you
would have the opportunity to negotiate that for any research
by-products that were funded with taxpayer dollars.
Is my legal understanding correct, No. 1? No. 2, is that
likely to be your intention?
Secretary Thompson. To answer the first one, yes. The
answer to the second one, I haven't even decided. I haven't
even discussed it with our lawyers or anything. We would have
to discuss that with you and other members of the
administration, other members of this committee and Congress,
but at this point in time we haven't even given any thought to
that, Congressman. We probably should have, but we haven't.
Mr. Cox. The second: With respect to the funding mechanism
of a permanent indefinite appropriation, in response to
questions from the panel here today concerning why this should
be mandatory--in fact, I think it was Chairman Shadegg that put
the question to you--what I understand is that first we are
going to have to create this market from essential nothingness.
Second, we want to make sure that the vendors are themselves
assured of monies down the line. These contracts are up to 5
years and can be extended through a valid contract. Third, that
because the Federal Government is the only customer, there can
be no question about our reliability, and it should not be
subject to political reversals down the road.
If the legislation meets all of those criteria, will that
satisfy the objective?
Secretary Thompson. I certainly believe so.
Mr. Cox. So if we can find a way that is essentially
tantamount to a permanent indefinite appropriation but does not
technically create the first national security entitlement
program in the history of the country, but meet all of these
objectives, that is the main object. Is that correct?
Secretary Thompson. That is. We have looked at so many
different examples. We felt that this was the best way to
accomplish all of the objectives, Congressman. But we want to
work with you, and we know the importance of Congress having
the ability for oversight, and we want to work with you in
developing the best bill possible. But we think the permanent
mandatory kind of an appropriation accomplishes the best and
the most flexible and the most expedited way to do that, and
that is why we went that route.
Mr. Cox. Let me explain just a portion of my concern. I
have every confidence in you as Secretary. I have every
confidence in the Department. I have every confidence in
Secretary Ridge. I have every confidence in the President, and
I have every confidence in subsequent secretaries and
presidents to make correct decisions when it comes to
protecting our country from terrorist attacks of this type.
A permanent indefinite appropriation creates a program with
eternal life, and down the road, even if it is the discretion
of the president or the secretary or someone else to move on to
some other priorities, this program is going to gain, if it
were structured that way, a life of its own. I want to make
sure that we don't tie the hands of future secretaries and
future presidents by crowding out what may be the national
security priorities of the future.
That is one of the reasons, one of several reasons that I
am concerned about that particular structure, but I have a
complete understanding of the need to convince not you or me
but third parties in the private sector that they want to put
their money and resources into this, and that the United States
can be counted on to fulfill its side of the bargain.
So if we are going to give you this legislation, I think we
have to meet all of these objectives.
Secretary Thompson. My only rejoinder is that we definitely
have to have that appropriation mandatory, because that is what
the companies are going to look at. They are going to want to
make sure that, if they spend the money--and as Congressman
Brown says, which is the rule of thumb, it costs $800 million
to produce a new drug and get it to market. Vaccines where
there is no customer at the end except the Federal Government,
then you are going to have to have some sort of mandatory
payment, mandatory funding source, that that company will look
at it and say, yes, I am going to put the up front dollars in
here to create this vaccine, knowing full well that my only
customer is the Federal Government and knowing that the
government has got the money there to pay me when I get the
vaccine or the medicine ready to be used.
Mr. Cox. Mr. Chairman, if I might, just one last question.
It was my understanding from the presentation at the White
House that, if we go this route and if it is structured as a
permanent indefinite appropriation, that it is also unlimited
in amount in any fiscal year. That is to say, the amounts that
the administration could commit are infinite in each year.
Secretary Thompson. That is correct, since we don't know.
Mr. Cox. Thank you, Mr. Chairman.
Mr. Shadegg. The time of the gentleman has expired. let me
call now on the ranking member of the Select Committee on
Homeland Security, Mr. Turner.
Mr. Turner. Thank you, Mr. Chairman. Secretary Thompson,
first of all, I think it is important for us, as I have heard
the discussion--we are many members, and you have referred to
this as mandatory spending as compared to discretionary. I
think it is important to understand that what you have proposed
is very far from the common understanding of mandatory
spending, which is programs like Medicare where we are
basically providing a benefit to whoever shows up and is
eligible for that.
I would say that, to my knowledge, the Congress has never
granted the authority that you are requesting in any
circumstance, other than a very limited amount that is under
jurisdiction of the Intelligence Committee, which your proposal
in terms of cost would dwarf what I even understand to exist
there.
I think there is--and I would hope you would be able to
provide the committee with an analysis of how you arrived at
the approach that you are advocating today, because in my view,
there are two ways to accomplish the objective. One is what you
have suggested.
The other is to provide government funded research dollars
either to the private sector or to do the research internally,
and then once the successful vaccine is discovered to then
procure that through government purchases from the private
sector or, in fact, to do it through government labs with
private contractors in those labs, as we do in some instances
now in the military.
If we are truly concerned about getting this job done
quickly, it seems to me that a Manhattan Project type approach
to it that would utilize government funded research and
government funded production would be perhaps the superior
alternative, because if you advance contract to a given private
company to develop and then produce by guarantying them a
market, you may in fact stifle the innovation that, as some
member--I believe it was Mr. Thompson--suggested, that if you
grant a contract to one company and perhaps another comes up
with a better vaccine, then you have already committed to spend
the money on the inferior vaccine and we have wasted a lot of
money.
In truth, it may be that that second company may have
absolutely no incentive, once they learn that you have made the
contract with the one company for the long term production of
that vaccine you hope they will be able to produce.
So I think that the only advantage that I see to the
proposal you have put on the table is that it avoids the
somewhat painful problem that we all have around here, and that
is the other alternative would require us to spend some money
now. So it is perhaps attractive to say we will give somebody
an advance contract that we won't have to pay for, for 3 or 4
or 5 years, so we don't spend any money now. But I think we
may, in fact, discourage alternative research. We may in many
ways lessen the standard of care that will be used to develop
the vaccine because of the limitations of liability and the
fact that the source you contract with will know they are the
sole source.
I think it may be improper to base this proposal on what
is, in fact, a false assumption, and that is that privately
funded research and production is superior to government funded
research and production.
So I would like to see the analysis that led you to the
conclusion that the proposal you made is superior to the other
alternative I suggest, and I would hope this committee would
also conduct an independent study along those lines before we
pass this legislation.
Secretary Thompson. Congressman, I am going to respond as
Secretary. Then I am going to ask Dr. Fauci to respond as the
scientist.
I have been there now 2 years, and running the Department
of Health and Human Services, and 9/11 came and we started
working before 9/11 on bioterrorism preparation in the
department, but we were very ill prepared. We are much better
today. We can respond to just about anything.
Anthrax came a couple of months later after 9/11, and we
still have only one company, BioShield, that is making the
anthrax vaccine. We know that there are some terrorists out
there that are working on botulinum toxin, which is very
lethal, could cause tremendous problems if it got in the food
supply in America. There is no anti-toxin except an old
procedure of developing serum from bleeding horses, and it is
very time consuming. Nobody is doing it. We have no market for
it.
We have really no market for smallpox except for the market
that we created when we went out into the market and requested
proposal and got some companies to do it, and it came up with
Acambis-Baxter2000. We have no research being done, or very
little research being done on the plague, and the hemorrhagic
fever viruses--the only one that is really being done is ebola,
but there are several other--There's 3 other hemorrhagic fever
viruses that need it.
There is no market out there. So what you have to do is you
have to create it. I don't see a company spending money doing
private research on things that there will be no in customers
except the Federal Government, and that is why we decided. It
was quick. It was reliable. We could direct it. It is
necessary, and that is the reason we came up with Bioshield.
I understand the Manhattan Project. I understand the
private research, because I am a big believer in that, and we
primed the pump with private research using NIH dollars, but in
this case we haven't been able to prime the pump because there
is no in market. That is why it is important to go to a concept
like Bioshield in order to get it done.
Mr. Fauci. Congressman, just to amplify on that a little,
we have some very real life experiences over the last couple of
years in the arena that you are suggesting. There is no doubt
that, when a pharmaceutical company wants to and sets their
sight on something, the resources and capabilities from the
creative research right up to their unparalleled capability of
driving something to a product, is something that everyone
recognizes.
The difficulty that we find is that you made the comment
about squelching creativity. The creativity is there. They are
just not going to apply that creativity to the direction that
the country needs, because they have so many other competing
interests that are essentially guaranteed profit margins for
them.
We will continue to intensify the push part of the
creativity, not to say that is going to replace at all the
extraordinary creativity on the part of the companies, but we
have had situations that I think can fall into two broad
categories.
The first category would be if a company is going to go
this direction anyway, and we have examples of that, and they
say, you know, we have a great idea, we put our own money in it
and we are actually going along pretty well. We are getting
ready to go to the next step of advanced development, but we
need to convince our stockholders, we need to convince our
board that, if they are going to put another $100-some-odd
million to give us a new plant or what have you, we've got to
come to them and say we have some assurances that at the end of
that process somebody is going to buy it.
Now if they come to us now, which they have, and say this
is what we have, the only answer that we can give them is that,
if the product is going to be ready by the year 2006 or 2007,
we would like to tell you that we are going to be able to buy
it, but it is going to be totally dependent on the vicissitudes
of the discretionary appropriations process. That is what
happened with the $250 million with the anthrax now.
Mr. Shadegg. Doctor, excuse me. The time of the gentleman
has long since expired. So you can wrap up.
Mr. Fauci. I'm sorry. That's it.
Mr. Shadegg. The gentleman from Connecticut.
Mr. Shays. I will yield my time to Mr. Norwood.
Mr. Shadegg. Mr. Norwood then.
Mr. Norwood. Thank you, Mr. Shays. That is very nice of
you. Mr. Secretary, I really do appreciate you being here.
Chairman, I appreciate the hearing, and basically I am thankful
to you and the President for Project Bioshield. I think we are
going in the right direction. It appears to me we will give you
the legislative language you need in a bipartisan fashion. It
is just a matter of time.
Because of that, I am going to ask a little bit of a
tangent question here. I didn't get the answers I wanted to
hear when it was probed just a little bit earlier. I am very
concerned about what can be done to produce new products to
fight naturally occurring infectious diseases.
The reason I am a little concerned is I know how focused we
all are on bioterrorism, and that is precisely right. That is
what we should be, but naturally occurring infectious diseases,
as you know, are the third leading causing of death in America
and, in fact, the second leading cause of death worldwide.
New antimicrobials, vaccines, and diagnostics are urgently
needed to fight a very long list and often life threatening
microbes, including those that cause meningitis, pneumonia,
skin and bone infections, tuberculosis, malaria, hepatitis. You
know the list. It goes on and on.
Of greatest concern, research into and development of new
antibacterial drugs appear to be, from what I am hearing, at a
standstill as companies withdraw from this market due to low
return on investments. Now I understanding the primary
research, the basic science, often is applicable across several
areas. We can do both things, in other words. But I am
concerned that, as we focus on developing new products to right
bioterrorism, and we should, we may--underline may--be missing
a public health crisis that already is occurring in United
States hospitals and communities, particularly as antimicrobial
drug resistance is sort of exploding out there.
For example, the FDA didn't approve one drug last year for
antimicrobials. I would like just to get on the record and get
your feeling about what we are doing in parallel with
bioterrorism in terms of antibacterial.
Secretary Thompson. Thank you very much, Congressman
Norwood. We have a huge program at NIAID which is run by Dr.
Fauci for naturally occurring emergency infections, and I would
ask Dr. Fauci to give you the exact dollars. We are not in any
way giving up our public health initiatives at NIH. We are
spending a lot of money, more money than ever, and I want you
to know that, and we've got a great program developing.
Mr. Norwood. You are saying to me you do recognize that
this is a problem as well as bioterrorism?
Secretary Thompson. Absolutely.
Mr. Norwood. Dr. Fauci, you want to comment?
Mr. Fauci. Yes. Mr. Norwood, in fact, the way we look at
the scientific component of it is that we have a big program,
what we call emerging and reemerging diseases. From the
scientific standpoint, a deliberately released microbe is just
another form of an emerging and reemerging disease.
So a lot of the expertise that we have now been building up
for biodefense is naturally the brain power that could be
applied clearly at something like SARS, which we are dealing
with right now, the possibility of pandemic flu or a variety of
other issues. So that is very, very high on our radar screen,
naturally occurring emerging and reemerging diseases.
Mr. Norwood. Well, is there any stimulus of the private
sector to do a little better job perhaps in working in this
area and searching for new antibacterial drugs? Are you talking
to them in the sense that, hey, there is a problem brewing out
here? I don't know for sure how big it is, but I know it is
getting bigger.
Mr. Fauci. Indeed. In fact, as I mentioned just a little
while ago, earlier, that the whole question of developing
better antibiotics for emerging antibiotic resistant or
antiviral resistant microbes is something that, by definition,
has to have high industry involvement, and our program clearly
is aimed at synergizing with industry in that.
Mr. Norwood. So you feel you as an agency are doing a good
job in this area, and things should get better?
Mr. Fauci. I believe we are doing a good job, Mr. Norwood,
and I believe we can do better, and will.
Mr. Norwood. Please do. Thank you, Mr. Secretary. Mr.
Chairman, I yield back my time.
Secretary Thompson. Thank you, Congressman Norwood.
Mr. Shadegg. The Chair calls on Ms. Harman for 5 minutes.
Ms. Harman. Thank you, Mr. Chairman. In the interest of
letting others ask questions, I am only going to ask one to
Secretary Thompson.
I know you agree with me that the threat of a bioterrorism
attack is real and now. Passing this legislation, perhaps in an
improved form, will give us more tools for later, but now is
when we face a very active threat. There is another article in
today's Wall Street Journal about aid to Iraq from Russia, and
there were reports earlier in the week about al Qaeda's
capabilities of which we were not fully aware, all of which
support my view, with which I think you agree, that the threat
is now.
So my question is about your current capabilities to deal
with the threat. I specifically would like you to address three
of them.
First, how far along are you with syndromic surveillance,
this ability that you have or are developing to learn about
what is going on in any hospital, in any public health facility
in the country, and be able to coalesce that information in
real time so that you can see, for example, if a smallpox virus
has been introduced in three different locations in the
country? That is one.
Number 2, how well are you doing with WMD simulations? My
understanding is that Walter Reed has a facility for WMD
simulation that is state-of-the-art but that health responders,
first responders, have not been given access to it. I think
that simulations are a very helpful learning tool, and I am
just wondering about that.
Finally, how well are you doing with public education? I
mentioned that in my opening remarks. I just want to commend
something I just saw, which is a pamphlet prepared by AdvaMed.
I gather Johnson & Johnson will talk about it in the second
panel, but this is a pamphlet that is intended to be a guide
for local emergency response planners on how to get medical
supplies. This is the kind of thing I hope we are beginning to
see, so that in our hometowns people have better information
about what specifically they are supposed to do. Thank you.
Secretary Thompson. Thank you very much. Let me go from
third, second, first, and probably ask----
Mr. Shays. It was just one question.
Ms. Harman. It is one question with three parts, and I am
finished. Thank you very much, Mr. Shays.
Secretary Thompson. Information: We are doing a great job.
Our health alert network is hooked up right now with 85 to 88
percent of the State and local health departments in the
country. It will be at 90 percent by the end of the year. We
are up to over 200 laboratories through our laboratory network
system, and we have put out weekly notices.
I have frequent calls with all the State health directors
telling them what is going on in regards to that. Julie
Gerbadine is doing a wonderful job at CDC getting information
out. MMWRs go out every Friday with new diseases, new
information, new technology.
If a disease would show up dealing with smallpox in any
particular hospital and people don't know how to diagnose it or
what, they would send a lab specimen into the State lab and at
the same time send a corresponding specimen to the lab at CDC.
We would immediately fly some of our epidemiologists to that
hospital to work in conjunction with the emergency workers and
emergency doctors treating that particular disease.
We would have the State health department. We would make a
confirmation by CDC. We would also be able to strategically
send and deploy extra medical personnel. We got the country
divided into 10 regions. We could send up to 8,000 medical
personnel to any particular region, but they are divided up
into regions. We got the DMATs-1, -2 and -3. Our most
sophisticated teams are 28 DMAT-1 teams. We have 2800
individuals in that.
Second, in regard to exercises, we happen right now to be
having an exercise going on at the Humphrey Building as we
speak dealing with food poisonings and food pathogens. We do a
lot of exercises, and I would ask you to come down and take a
look at our command headquarters.
In regards to our GIS system, which goes to your first
question, we are the only computer base, I believe,
Congresswoman, that has every hospital, every street, every
railroad, every fire station, every police station, every first
responder in a computer base. We can call up any city in
America, determine a plume on any chemical or any bioterrorism
agent, and determine what portion of the people should be
evacuated.
We have every hospital listed. We know every single day the
occupancy in any hospital in America, what the frequency is,
and what the bed vacancy is. So that capacity is already built
into our GIS system. I would love to have you come over and
explain it to you. I think you would walk away from it saying,
wow, they really have their act together.
Ms. Harman. I appreciate that answer. Thank you, Mr.
Chairman.
Mr. Shadegg. The time of the gentle lady has expired. The
gentleman, Mr. Shays, for 1 question with as many subparts as
he wants in 8 minutes.
Mr. Shays. Let me first say I am delighted the gentle lady
asked her question. She truly is an expert on this issue, and
it is a very important series of questions. I also want to say
that I am grateful to be in a room with so many other people
who have such expertise like Curt Weldon and others who have
been on this issue well before you were ever Secretary.
First, Mr. Secretary, thank you for what you are doing.
Your information and control center is truly impressive, and I
think it will prove to be very helpful in the years to come.
I have this concern that we are straining out gnats and
swallowing camels, frankly. I think that, when I wonder how we
utilize our resources, I happen to believe that putting more
resources into WHO and to analyze how we can improve them would
be better in some cases than the fortune that we will be
spending potentially in this area.
Let me say to you I also feel like picking the right
vaccine is a huge gamble. I feel it is like a multi-billion
dollar crap shoot. It is something like Russian roulette. It
strikes me that the terrorists are just going to do what we
didn't do, and I am concerned with the altered biological
agents that we will have no antidote for.
How do you set R&D priorities when you know the terrorists
will just shift their attention to the agents you don't fund?
Secretary Thompson. First, let me thank you for coming over
and seeing the command center. I was very impressed by your
knowledge and always have been, Congressman, and thank you very
much for your dedication.
I would ask Dr. Fauci to answer that question, because Dr.
Fauci is the one that really determines the research.
Mr. Fauci. Thank you for the question, Mr. Shays.
Obviously, we will never be sure that we have covered all the
bases when it comes to the research priorities, but what we try
to do is match what intelligence we have, ranging from things
that we know have been made and have been identified such as
materials from the Soviet Union and materials that were found
in Iraq in the first Gulf War. That is how we came up with the
category A agents, but there are others involved there.
Mr. Shays. You have 57 potential.
Mr. Fauci. Yes.
Mr. Shays. You have done anthrax and smallpox, but you've
got a ways to go.
Mr. Fauci. Yes. Well, yes, we do have a ways to go, and we
are trying as best as we can to rapidly fill in the gaps of
those what we consider probability plus impact. There are a
number of agents, for example, that are on our B and C lists
that are important agents that would not necessarily have a
devastating public health impact but are things that would be
disruptive. We wouldn't be able to develop a vaccine or
necessarily a therapy, although we have many therapies against
many of them, against each and every one of them.
What we try to do as best as we can, a balance between the
threat assessment, the scientific opportunity----
Mr. Shays. I get the gist. Let me ask you this. Are we
moving in the direction that DoD seemed to be moving in, and
that was, instead of an all hazards protection--in other words,
the protective gear--they began to say let's inject an anthrax
vaccine, and let's take each one, and by the time we are done
we have a human being who has 10 or 15 or 20 or 30 different
shots in them. Are we moving in that direction or is our hope
just to have these vaccines available and to contain them and
only do those who need them?
Mr. Fauci. The latter.
Mr. Shays. Okay. Let me ask you this. Didn't the DoD try
the non-market vaccine development with the joint vaccine
acquisition program where they spent $300 million?
Mr. Fauci. I am not sure I can answer that adequately, sir.
I don't know the answer to that.
Mr. Shays. My sense is that they did. They spent $300
million, and this strikes me as somewhat of a duplication. I'm
not sure that we have gotten anything back on the $300 million
we spent. Is there anyone in your department that could respond
to that?
Secretary Thompson. It is my understanding they are working
and may have developed a tularemia vaccine, but I can get that
information.
Mr. Shays. All right. Let me just ask this last question.
Will Bioshield have any greater success in actually finishing
development of a vaccine than what is tried at the joint
vaccine acquisition? I gather this is something you have not
focused in on. I would just suggest that we do.
The DoD sometimes does things. They don't let a lot of
people know about it or they do, but nobody pays attention. But
a lot of failures over there. At the very least, we could learn
from those failures. Thank you.
Secretary Thompson. Thank you, Congressman.
Mr. Shadegg. Thank the gentleman, and the Chair calls on
Dr. Christensen.
Ms. Christensen. Thank you, Mr. Chairman. I, too, want to
welcome the Secretary and Dr. Fauci. By way of an abbreviated
opening statement, I want to say for the record that, you know,
while we are looking at Project Bioshield and while research
and development of these countermeasures is of vital
importance, I think that early in this process we really need
to focus on the broader issues of furthering public health
security, which is my primary concern.
I think we have deficiencies in our public health system
that are still unaddressed, with the impact of rising health
care costs due to our lack of focus on prevention, and ensuring
that everyone has equal access to quality health care, with the
system's continued deterioration and with closing safety net
hospitals all around the country. I think that the public
health infrastructure is really in need of a lot of attention.
Therefore, even if we had all of the wonderful vaccines,
medicines and different devices that are considered, that we
are talking about today, I am not sure that we wouldn't be
stymied by the lack of the system's ability to really get out
there and delivery these, despite what you have said about the
systems that you have.
So I hope that we will also, Mr. Chairman, spend an
appropriate amount of time on the nuts and bolts of public
health security, because it takes upwards--5 years if what we
are talking about, but some experts estimate 10 to 15 years to
develop new vaccines and therapies, and we can't wait that
long. We have to protect our population now. So I'm hoping that
we will be able to do that.
On this particular bill, though, I have some of the same
concerns about the open-ended funding, the chasing after
vaccines when our adversaries are continuing to develop new and
perhaps undetectable and other agents that we would not be
prepared to have vaccines for. But I wanted to ask the first
question relating to the territories.
You mentioned, I think you said it was a GIS system that is
in place that could look at any city and what is happening
there and begin to respond. Does that extend to the territories
as well?
Secretary Thompson. We haven't got to the territories yet.
Ms. Christensen. Okay, because we have some issues there. I
hope that in very short order----
Secretary Thompson. But I would like to say in regard to
the territories, Dr. Christensen, because when I was Governor I
worked very closely with all the territorial Governors. When I
came in, we have sent out $1.1 billion last year to the States
and to the territories for building the infrastructure, the
local State public health systems.
My only concern is that they haven't drawn down all of
their money last year, and we have an additional $1.5 billion
to send out, and we are in the process of sending that out now.
WE will be sending 20 percent of that money out very quickly,
and then we will be asking them to show what they have done
with the past installments and what they are going to do with
the other.
I would encourage you to----
Ms. Christensen. I sure will make sure that they spend
their money, not only in my territory but the other
territories. But the same is true for the Native American
reservations?
Secretary Thompson. That is correct.
Ms. Christensen. That you are able to detect what is
happening there at any given time and----
Secretary Thompson. Yes, in America. But we haven't got the
GIS system--we are working on it for the territories, and I
would encourage you to come over and see what the potential is.
Ms. Christensen. Okay. I will. Thank you for the
invitation.
Secretary Thompson. In regards to prevention, you couldn't
find a stronger advocate than me. I could speak all day on
prevention and why we have to go that way.
Ms. Christensen. Thank you. Bioshield allows--I want to ask
about the approval process. Bioshield allows the government to
take possession and pay for an unapproved product. Once the
government has done this, there is no real incentive for the
product vendor to follow through and get FDA approval, as I
understand it, especially since this is something that would be
used based on an emergency authorization under Bioshield.
In the interest of protecting the public, wouldn't it be
best for us in this bill to require a contract for the
procurement of a countermeasure to include a term that the
product vendors seek FDA approval even after that emergency
approval, and that the licensing or clearance for the product
and a timetable for development of that approval be included in
the contract?
Secretary Thompson. There is no reason why not, Doctor. The
truth of the matter is we would only use it when there has been
a declared national emergency, there is no other approved
effective countermeasure, and the threat is serious and life
threatening disease, and I determine that the benefits used in
the product outweigh the associated risks. It's got to be
immediate.
We have to--I mean, if we have a bioterrorist attack and we
have something in the pipeline that may be able to prevent
deaths, I got to make that determination. But after that,
subsequent to that, there is no reason why they can't go ahead
and go through the procedures and develop the efficacy as well
as the safety.
Ms. Christensen. Don't you have the authority to extend
that emergency, just on your own, to extend that emergency
beyond that time?
Secretary Thompson. Once the emergency is over, it goes
away.
Ms. Christensen. Well, I think that it would be best to
include those protections.
A follow-up question on FDA. I recently became aware that
FDA isn't really required to test on minorities, people of
color. Is there anything in this, since these vaccines, devices
and therapies are going to be used on people across the
country, that requires that they be tested in minorities?
Secretary Thompson. This emergency would not allow that. We
would have to move so quickly that we wouldn't allow for the
testing, Doctor.
Ms. Christensen. Okay, something else to look at. I have
heard----
Secretary Thompson. If I could just respond. I mean, the
emergency is immediate, and----
Ms. Christensen. I understand, and you have to weigh the
risks versus the benefits, but to the extent--I still feel
that, because there is a possibility of extending that
emergency period, that there still should be--Even though you
have approved it----
Secretary Thompson. That period is 1 year, and we would be
doing a lot of--If the immediate emergency is over, we would do
a lot more testing.
Ms. Christensen. Okay. Well, basically, that's what I am
getting at, that there still should be some safeguards in
place.
Is there any role for universities in terms of the
research?
Secretary Thompson. Oh, absolutely.
Ms. Christensen. Because I didn't read that.
Secretary Thompson. Well, that is going to be the push part
of it. That is what Dr. Fauci can talk more elegantly about
than I can.
Mr. Fauci. Over about 90 percent or 89 percent of all of
the research that occurs out of the funding from that initial
part of the push is actually executed in the academic setting
and some in the industrial setting. So the universities are a
major part of this.
Ms. Christensen. Thank you. Just one last question, if I
can sneak this one in. As I understand it, the Secretaries of
the Department of Homeland Security and Health and Human
Services collaborate in identifying the critical medical
countermeasures. How do you envision both Secretaries
collaborating in determining the specific threats that require
the countermeasures?
Secretary Thompson. Homeland Security's Secretary would
have to declare that there is an emergency, and he would
declare that there is a threat and determines which agents
present a material threat to the United States. I would have to
assess the consequences of that threat, determine the agents
for which a countermeasure is necessary.
Then I would have to determine the countermeasures
necessary for agent, and also I would assess the availability
and appropriateness of specific countermeasures to address it,
and then we would have to--Then I would have to determine a
specific countermeasure. Then we would take that information to
the President of the United States collectively.
Mr. Shadegg. The time of the gentle lady has expired. The
chairman now calls on the vice chairman of the Subcommittee on
Emergency Preparedness and Response, Mr. Weldon.
Mr. Weldon. I thank the chairman. Mr. Secretary, thank you
for being here and, Doctor, thank you for joining us. I
appreciate your leadership. I am here as a member of the
Homeland Security Committee, but these have been issues that
have been important to me my entire life, as it has with my
colleagues here.
My first question builds on what Jane Harman said. That is:
The bill that you proposed before us, I think, is a good
beginning and a discussion point. I think there are some
questions we have to deal with on the financing issue, but I
think it is a good foundation, but there are some areas that I
think we have to address which are not covered by the bill, and
perhaps won't be covered by the bill, but they are equal
challenges relative to security for the Nation from the threats
of weapons of mass destruction.
The first is proliferation. The reason why we have a threat
today is because of the technology that proliferated out of a
destabilized Soviet Union. In 1998, 1999 and 2000, I brought
Dr. Alexi Yabelkov to this Congress, and he testified that, in
fact, the Soviet Union developed over 50,000 metric tons of
chemical weapons, and he warned us back then we weren't taking
the threat seriously enough.
In 1999 I brought Dr. Kanalbegov who wrote the book
``Biohazard.'' He testified as the former deputy director of
the Soviet agency Biopropat that we were not taking the threat
of biological weapons seriously enough.
The bulk of the weapons and threats that we are dealing
with now came out of the Soviet Union. Iraq did not have
indigenous capability to develop chemical and biological
agents. In fact, during the 1990's I documented 19 times--18
times we had evidence of illegal technology flowing out of
Russia to Iran, Iraq, Syria, Libya and North Korea. Of those 18
times, at least 6 of them involved chemical precursors and
biological technology.
We imposed the required sanctions 6 times out of 18. That
is totally unacceptable. Just recently, we have learned that
again Russian entities are illegally assisting Iraq with their
weapons of mass destruction program. So I would say to the
administration, not to you in particular, an equal part of this
battle has got to be reinvigorate the regimes associated with
controlling proliferation.
It is good to deal with the antidotes and vaccines, but
let's eliminate the threat in the first place, the development
and transfer of those very dangerous technologies from Russia
and the former Soviet states.
A second issue involves detection. I went down to the
Centers for Disease Control in the fall of 2000, and thank
goodness you have changed the mindset there; because when I was
there and I asked the question about how we know if a chemical
or biological attack was occurring, they said it will be done
manually. Thank goodness, we now have an integrated data base
that allows us in a moment's notice to understand the kinds of
patterns that are occurring around the country relative to the
threats that may, in fact, be happening. But I am still not
satisfied that we have done all that we need to do.
One of the things that I think should happen is that we
have to focus on the first responder. I would not be in this
Congress were it not for the first responder community. I was a
fire chief in my hometown, became the mayor, and for the past
17 years I have worked with the fire and EMS providers in every
state.
I have been to all of our major disasters from the
wildlands fires in California, Oregon, Wyoming and Washington
State to the midwestern floods, to hurricane Andrew and Hugo,
the Murrow building bombing, the World Trade Center in 1993,
and the World Trade Center in 2001, interacting with first
responders and people from your agency.
Let me say, as good as we are, we are not there yet. My key
focus are the first responders in the 32,000 fire and EMS
departments, 85 percent of whom are volunteers, who are going
to be first in on the scene when an incident occurs.
We can have the best antidotes, the best detection through
our hospitals, the best systems of relaying information, but if
that first-in responding officer on a police car, a paramedic
unit or a fire truck doesn't understand the potential of the
threat they are facing, the decisions they make in the first
few minutes will determine the breadth and the scope of the
impact of casualties on innocent people.
We saw that in the subway in Japan when sarin gas was used
a few short years ago. The first responders in Japan weren't
properly prepared. They were wiped out, because they couldn't
make initial basic decisions about what it was they were
facing.
Now we have begun to address this. The Congress, not the
administration--The Congress in 2000 accepted a proposal by a
bipartisan group of Members of Congress to establish the first
assistant grant program to fire and emergency response
departments. That is now up to a $750 million funding level.
We need to continue to give them the resources to buy the
handheld detection units to make basic assessments when they
arrive on the scene of a disaster, because if they can't
determine, not to the degree of whether they have one strain of
anthrax or another but they have to be able to say we've got
something unusual here--You know we've got it for the military.
I chaired the Defense Research Committee for 6 years. So I
worked on the funding for all these technologies, both at Fort
Detrick and with our labs. We have the technology, but these
portable, handheld units are not yet in the hands of the first
responder community, and there is not an integrated
communication network for our first responder community in the
country.
So as good as our efforts are in terms of what you are
doing, and I again will commend you--I think you are doing a
fantastic job--we are not there yet.
I have another actual question for you before I end my
statement. I would like to know what, if any, involvement you
have with Dr. Alabek, or Dr. Alabekov, his real name. Now he is
at George Mason University. I have met with him many times. I
had him testify before my committee 3 years ago.
He offers a wealth of information. Now he was the vice
chairman of the agency who developed these strains. Doesn't it
make sense to bring him in? And since we give the Russians a
billion a year in external assistance, my initiative has been
for the past 3 years to establish an interdisciplinary dialog
and process with the appropriate Soviet or Russian scientists
and laboratories to assist us in reverse engineering what they
built so that we can better understand the kind of antidotes
that our pharmaceutical industry has to produce. So that is a
question I would ask you to deal with in the response to my
comments here.
Let me just--As you all know, we don't know where the next
threat is going to occur. We all saw Dark Winter, the war game
that was held in June of 2001 where the deliberate outbreak of
smallpox in 3 States within 2 weeks caused 2 million people to
be affected with that disease.
We all know that is the kind of potential. But again, I get
back to, and I am going to continue to focus on this in every
hearing where I am involved from the Office of Homeland
Security, it is the first responder. It is not the Marine Corps
CBR team. It is not the Army and Air National Guard. It is not
FEMA bureaucrats. It is not the State health care net, although
they are all important. The first responder has got to make
critical decisions in the first few minutes about the extent of
what the threat is.
They are not today prepared, and so while this
legislation--and I commend you for it--moves us in a good
direction in terms of getting the pharmaceutical industry
involved, from the standpoint of the threat of bio and chemical
challenges we have to do better.
Let me just say, in the end this is what I fear. I would
like to do a demonstration, Mr. Chairman. We saw the sarin gas
attack in a subway in Japan. This is my concern for the 1.2
million fire and EMS providers in America.
They take off a covering mechanism for the outlet, and they
hit a button, and there you have a chemical or biological agent
being dispersed. If this were placed in a subway, the suction
of the subway trains going--this is water, so don't worry. The
suction of the subway trains would carry this agent through the
entire complex, such as in DC.
The Office of Technology Assessment did a study in 1993,
and based on their calculations the amount of material inside
of a suitcase could kill between 45,000 and 135,000 people. The
first ones affected are the first responders.
So I applaud you for your work. We've got to do a lot more,
and I ask your help in making sure that we don't forget those
men and women who are out there every day responding to every
disaster. Thank you.
Secretary Thompson. Let me just thank you for your passion,
and I can't disagree with anything you have said, Congressman
Weldon. Let me just try and quickly expand on a few things you
said.
We have had Dr. Alabek in my office on different occasions.
It is quite revealing. He is very innovative. He is very
knowledgeable, especially on anthrax. I've had him in during
the anthrax thing and had him in since then, and some people in
my department meet with him. I don't know how regularly. I
could find that out for you. I haven't met with him recently,
but I know that he is available, and we have been, and Dr.
Fauci meets with him, as I understand it, on a regular basis as
well.
We have--I will never be satisfied, and I am sure you will
not be as well. We have made tremendous progress. We've got a
long ways to go, but I don't think we will ever be able to say,
you know, we are fully prepared, because every one of these
bioterrorist agents can be genetically modified.
There's going to be different ways to aerosol or disperse
these particular things. As you have indicated, a very
effective way was the suitcase model, but there's going to be
more technologically advanced ways to do that in the future. So
we are always going to have to do it.
In regards to first responders, they have got to be
included. They are an integral part. They are the first
responders. That's why their name is given to them. They are
the first on the scene, and we are putting out tremendous
amounts of dollars in order for the local State health systems
to work in concert with the first responders to develop a more
effective system.
We put out $1.1 billion from our department last year. We
are going to put out $1.5 billion this year. Most of it goes to
education and communications and also purchase of equipment,
not only for first responders but mainly for health care
workers. But we are doing a lot of things in concert with the
Department of Homeland Security.
We've got to do more, but I do want to tell you that we
have made tremendous progress in the past, and we are going to
continue to do so. I would ask, like you, to come over and see
our command center and see how far we have progressed. I think
once you go through it, you will say that I didn't expect this,
and I am very impressed.
Mr. Shadegg. The Chair thanks the gentleman for his passion
as well. I would point out that his time expired before he
finished talking. So the Chair would call on Ms. Lowey for 8
minutes.
Ms. Lowey. Thank you, Mr. Chairman. Secretary Thompson, Dr.
Fauci, I want to welcome you and tell you how fortunate I
personally feel to have two outstanding public servants head up
this project, and I want to express my gratitude.
I promised my good colleague, Lois Capps, 1 minute at the
end. So I am going to ask these two questions, and you will
respond as best you can in the time, and then I hope we can
continue the discussions.
First of all, I believe it was Secretary Thompson who said,
``We are going to ask the NIH to push the research, then
establish the market.'' There won't be many companies standing
in line to do this. I find this really upsetting, and
especially that the large pharmaceutical companies won't have
any interest, because there won't be enough profit.
It seems to me that we may want to look into other ways to
manufacture the product similar to the way the Department of
Defense does. So that is the first question, because it seems
unacceptable that the large companies that really can handle
this won't be interested in it, and we have to dig around for
some smaller companies who may not have the experience and, as
you said, don't have the experience to produce this kind of
product in the large quantities we need.
Second, I would like to present a specific case and follow
up on my colleague Jane Harman's comments, because this is in
the future. We are planning for the future. We have a problem
right now, and I appreciate several of my colleagues, my
colleague Mr. Weldon and others' comments.
I am aware of a company in Connecticut that has developed a
drug called Prussian Blue. The drug would remove radioisotopes
in a human body that has been exposed to nuclear contamination.
The drug would help protect the public from a radiologic
release from a dirty bomb or nuclear power plant.
The FDA has already determined that Prussian Blue provides
safe or effective treatment for patients with know or suspected
internal concentrations of radioactive thallium, nonradioactive
thallium or radioactive cesium, but they have not approved any
company's proposals to mass produce the drug due to interagency
bureaucratic delays.
A potential manufacturer of Prussian Blue has had direct
conversations with the Department of Energy which asked that
the company expedite production of the drug. However, now the
drug Prussian Blue sits, of no use to anyone, because the FDA
hasn't gotten the message from the Department of Energy that
this drug is critically important.
I present this to you, because it was brought to my
attention. I would be interested to know how can you guaranty
the American people that Project Bioshield won't experience
these same frustrating gaps in coordination and communication?
I happen to have Indian Point Power Plant in my district.
Many of us have nuclear power plants in our districts. All they
are offering to us is potassium iodide, which affects the
thyroid, but we all know and we won't go into--Dr. Fauci would
have to do it--a scientific explanation if, God forbid, any
kind of an incident occurs. It goes right to your bones, and
you need more than the potassium iodide protecting the thyroid.
So my question is: Right now, even though we have this
great proposal before us, how do we really deal with the
immediate threats and move the process? FDA has probably one of
the most respected processes in place. How do we make it more
efficient, expedite the process so we can get some progress
now? Thank you.
Secretary Thompson. Thank you very much, Congresswoman
Lowey. I am going to allow or have Dr. Fauci answer the second
part of the question. I just would like to say of the first
part, I didn't say the pharmaceutical companies were not
interested. I just said that there is not a market and,
therefore----
Ms. Lowey. Because there is not enough profit.
Secretary Thompson. Well, there is not a market. There is
nobody to purchase it. So there is no reason to----
Ms. Lowey. You are going to purchase it.
Secretary Thompson. Well, if we get Bioshield, we will. So
I'm not saying that they will not be interested. I hope that
they will be. I hope that a lot of companies will become very
interested if we establish Bioshield. That is one of the
reasons for us establishing Bioshield, is not only to push the
research but to create the market so we do have individuals
that want to come in and do things innovatively, pharmaceutical
companies, biological companies, whatever the case may be,
large and small.
In regard to the FDA thing, I will look into it and push it
along very quickly, but I would like to have Tony----
Ms. Lowey. Thank you.
Mr. Fauci. I can't speak to that specific issue that you
mentioned, Ms. Lowey, but you know the part of Bioshield, the
third part that is the emergency use. If in fact there was the
need to get something out rapidly on the emergency use
authorization and it was deemed something that was safe and
effective with the appropriate risk, etcetera, etcetera, and no
other alternatives, you would in fact be able to get that out
through the Bioshield emergency use mechanism.
That is part of the answer. The issue of speeding things
along with the FDA before an attack, I think, is something that
you will see the FDA--and Mark McClelland is very aware of the
need of expediting issues within the framework of making sure
we protect the American public from safety issues vis a vis not
putting something out there that would not be safe.
So it is the balance that the FDA continually deals with,
but they are very aware of the need of expediting the issues
that you brought up.
Ms. Lowey. Dr. Fauci, since I have 1 minute left, could you
address the first question. NIH in concert, you said, with
universities is doing spectacular research, and Secretary
Thompson and yourself have concerns about the manufacturer,
because people aren't interested. Couldn't we operate on a
procedure similar to DoD where we might be able to produce
this, because it is in the public interest, and we can't worry
about tremendous profits that have to be made out there.
Mr. Fauci. Yes, Ms. Lowey, not to comment in any way
negative or whatever on the DoD process, which in many respects
has worked for them, the companies, the big PhRMA as well as
the biotech companies, are so good, they are so unparalleled in
their capability that I personally feel as a scientist that we
must embrace them in the process. They will do it quicker and
better than anyone in the world.
Ms. Lowey. Well, let me conclude and turn my time over to
Lois Capps.
Secretary Thompson. Congresswoman Lowey, I would just was
told by my lawyer behind us that we are meeting this afternoon
in regards to purchasing some Prussian Blue for the stockpile.
So you asked the question. That is how fast we deliver at the
Department of Health and Human Services.
Ms. Lowey. Well, I know you are efficient, and I appreciate
your attention to this. Thank you. My colleague, my 1 minute
remainder.
Ms. Capps. Oh, I really appreciate my colleague yielding me
time, Mr. Secretary. There is one aspect of the Bioshield
effort that is being implemented by the administration, in
addition to all of our military receiving smallpox
immunizations, about a half a million of our first responders
have been asked to voluntarily become immunized as well to
create that shield. And yet, whereas on page 19 of the
administration's bill--we have discussed this--there is a
permanent indefinite funding mechanism put in place, in its
essence the first responders--many of these are nurses--are
being asked to voluntarily risk themselves, because there is a
risk associated for a small number of them, with not anywhere
near the same guarantees of protection.
In the administration's proposal and also the bill that is
right now before us in this committee and on the floor of the--
actually, not in this committee. It has been proposed for the
House, there is no guaranty of compensation that would satisfy
and give first responders the confidence to step up and take
this vaccination.
Don't you believe, and why is it--Don't you believe that
these first responders need the same kind of protection, and
why is there this disparity between the administration's bill
for the Bioshield and the actual implementation of this aspect
for our first responders?
Secretary Thompson. I don't think----
Ms. Capps. No mandatory spending has been associated at all
with the first responders.
Secretary Thompson. You are talking about the mandatory.
First, let me tell you. Mandatory is because it is going to be
long lasting. We have to be able to create the market,
Congresswoman Capps, in order to have a company go into this
business and, once the research is done, that is the pull to
get them to manufacturer it.
In regards to the smallpox vaccination compensation fund,
we know that this is a group of individuals, and we have a
discretionary amount. We know that this could be appropriated
on an annual basis, if we ran out. Congress could come back and
appropriate it.
It is right now, and it is immediate, and that is why we
thought the discretion was a much better way to go.
Mr. Shadegg. The time of the gentle lady, indeed the time
of both gentle ladies, has expired. The Chair would call on Mr.
Burr, and in doing so would remind all members of the panel
that the Secretary has a firm deadline of 11:45 by which he has
to depart the committee.
Mr. Burr. I thank the Chair. I welcome the Secretary and
Dr. Fauci. I have three questions. I will try to buzz through
them very quickly.
The first is: I would take for granted from the answers
that I have heard that, Dr. Fauci, you envision that a majority
of the research dollars would be extramural. Is that correct?
Mr. Fauci. Correct.
Mr. Burr. Given that we would enter into some type of
binding contractual agreement with companies, who would, in
your vision, hold the patent? Would it be a shared patent or
would it be, in fact, the company that we contracted with?
Mr. Fauci. It would really vary according to the situation.
For example, one example that I gave just a moment ago of a
company saying we have this, we want to proceed but we need
some guaranty you will buy it--That is a no-brainer. They have
the patent.
In a situation when we ask for applications to come in on a
product that no one is working on, that is negotiated back and
forth the way it general does in collaborative relationships.
Mr. Burr. Secretary Thompson made a very valid point
earlier. He said today there is no market for it, and I think
we all understand the need to create the market. Anthrax is a
threat here in the United States today, and next year it may be
a threat throughout Europe.
When all of a sudden there is a market for that product
that extends outside of the purchase agreement with the U.S.
Government, do you envision that contractually there is any way
for us to receive any proceeds off of the additional sales of
that product through co-ownership of the patent or some
reduction based upon markets that are created in the future for
those companies?
Secretary Thompson. Congressman Burr, it certainly is
possible. I mean there is no reason why we couldn't. We
certainly would have an exclusive license, and after the
product is developed and we put the money in for the contract,
we would have an exclusive license. I don't know if we would
hold the patent. We probably would not.
Mr. Burr. Well, certainly, today with NIH research there
are some that criticize the fact that we spend a tremendous
amount of money and a private sector company then has the
patents and makes the proceeds, and I think it is important
that we at least look at it, that----
Secretary Thompson. I think we should. I'm a big believer
in that, and I certainly want to work with you in that regard.
I think it is a good suggestion that we could take a hard look
at.
Mr. Burr. Right. As we look at the contract itself, is it
safe to say that it is impossible--Before we have even found
the company that does the research, that comes up with
potentially the vaccine, it is impossible for us to determine
what the cost would be of the vaccine for us to purchase?
Secretary Thompson. I think it would be difficult, if not
impossible, because----
Mr. Burr. Given that you went through that process and we
got to the end, how does one then determine what the correct
purchase price of that vaccine would be?
Secretary Thompson. It is negotiated between the Department
and our procurement agents and the company, just like we
negotiated the contract with Acambis-Baxter2000 on smallpox,
the same way we negotiated the contract on Cipro, the same way
we negotiated the contract with Aventis Pasteur to purchase
their stockpile of smallpox vaccines.
Mr. Burr. But this is slightly different from the fact that
we have financed their research. We probably have not paid for
the machinery to manufacture, but we have paid for a number of
the steps. In the traditional pharmaceutical market, one would
take the research and development costs and try to recover that
over the patent life of the product that was left after a very
lengthy period.
Secretary Thompson. I sincerely think that we should try
and do the same thing, as the government is to be able to get
our research and development, what we have done to go into the
product in order to keep the price down for the American
public, because we are paying for it. But that is going to be
all negotiated out.
Mr. Burr. I appreciate the fact that it is going to be part
of that negotiating process, that we do have an investment in
it.
Secretary Thompson. Well, as long as I am there, as you
probably know, the contracts that I personally have negotiated,
they have been very tough, and they will continue to be as long
as I am Secretary.
Mr. Burr. I thank you for that commitment.
Mr. Waxman. Would the gentleman yield to me on this point,
because it is an interesting point you have raised.
Mr. Burr. I would be happy to yield.
Mr. Waxman. Mr. Secretary, Congressman Burr raises an
interesting point. We see this all the time. The government
invests public funds in basic biomedical research. Drug
companies take advantage of that, then develop a product for
which they get a patent, and then have a monopoly price that
they charge the public for their product.
Now many of us have felt that the government ought to be
able to get some recoupment, if in no other way, by requiring
lower prices when the government buys that drug. I gather what
you said to Mr. Burr is that you think, if we are going to help
subsidize the development of these counterterrorist measures,
whether they be vaccines or otherwise, you think the government
ought to get a break on the price we pay for it, if we are
subsidizing the development.
Secretary Thompson. Yes, with the full extents of
disclosure of you got to get the company to do it. I mean, you
got to realize, Congressman Waxman, that there is no market out
there. We are the end customer. We are the only customer that
that company has. So that's all got to go into the
negotiations, but we got to make sure the company is willing to
manufacture it as well.
So that is all part of the negotiations that are going to
take place, Congressman.
Mr. Waxman. If the gentleman from North Carolina would
permit, I would like to ask you this question. Ordinarily, when
we go out and ask for--there is a procurement issue, we go out
and get an appropriation to back it up. That is certainly the
case when we ask development of even drugs by the Department of
Defense.
You want, however, in this bill to have a mandatory
spending, an entitlement for the companies to pay for their--
subsidizing their efforts to develop these products. I am
curious to know why the distinction here where we have
mandatory spending, first of all, and second of all, I find it
hard to understand the contrast, this issue with what Ms. Capps
asked you.
If we are going to have mandatory spending for the drug
companies to develop vaccines, why wouldn't we have mandatory
spending to make sure we compensate the first responders, the
nurses, the firemen and women, the police department, if we are
asking them to take the smallpox vaccine? Why wouldn't we want
to treat them the same?
Secretary Thompson. It's two different concepts,
Congressman Waxman. First off, you are going to have--You don't
have a market for this particular vaccine except for the
Federal Government. You are going to have the push by the NIH,
putting the dollars in to getting the research done, more than
likely extramural and some university. Then once the research
is done, you are going to have to get a company that is going
to do it.
A company, more than likely, is going to have to put in a
couple hundred million dollars in order to build a new plant or
a new procedure in order to produce the vaccine. Could I
finish?
Mr. Waxman. See, I'm not arguing with you on that point. I
understand that point. But if we are having mandatory spending
to do that, why not have mandatory spending to help a nurse who
may be permanently disabled, to assure her that she can be made
whole.
Secretary Thompson. I'm trying to explain it, Congressman
Waxman. Because it is going to probably take 5 years, 3 or 4 or
5 years to get that product to the end result in which we would
pay it. The company is not going to spend the $200-$300 million
for the plant or the modernization of the line while waiting
for us to--waiting for you and the rest of the Members of
Congress to appropriate the money. They won't do it. They want
to make sure that at the end of that 3 or 4 or 5 years there is
going to be money available. That is why it is mandatory.
In regards to the smallpox, it is right now. We know that
we have to appropriate the money, and that is discretionary
with the Congress as to how much they are going to appropriate,
but it is immediate. That is what we are asking for in the
smallpox compensation, is to appropriate the money so that we
can compensate a nurse or a first responder that has an adverse
impact.
It is not 5 years. It is immediate. That is the----
Mr. Waxman. Well, is a nurse going to take the risk that
they may not----
Mr. Burr. Recouping my time that has already expired, I
would yield back to the Chair.
Mr. Shadegg. The gentleman's time has expired, and indeed I
want to thank the Secretary and Dr. Fauci. We made a commitment
to get you out of here at quarter of, and that was per your
schedule. You have been very generous with your time.
For any members of the committee who didn't get a chance to
ask questions, I would encourage you to submit written
questions, which I am certain will be responded to. With that,
we will excuse this panel and invite the next panel to take
their seats, and I will turn the Chair back over to Mr.
Bilirakis.
Secretary Thompson. Thank you very much, all of you.
Mr. Shadegg. Thank you.
Mr. Bilirakis. Our next panel is Dr. James Baker, Jr., Ruth
Dow Doan Professor, Director of the Center for Biological
Nanotechnology from Ann Arbor, Michigan, I assume associated
with the University of Michigan; Dr. J. Leighton Read, General
Partner of Biotechnology Industry Organization; Dr. Michael
Friedman, Chief Medical Officer for Biomedical Preparedness
with PhRMA; and Dr. Gary Noble, Vice President of Medical and
Public Affairs, Johnson & Johnson, on behalf of AdvaMed.
Gentlemen, your written statement is a part of the record.
We would hope that you would supplement it and complement it
orally. We will set the clock at 5 minutes and do the best we
can. Dr. Baker, I understand that there has been a family
emergency. You are awfully courageous to hang on here. We will
start with you, sir. Please present your opening statement.
STATEMENTS OF JAMES BAKER, JR., RUTH DOW DOAN PROFESSOR,
DIRECTOR, CENTER FOR BIOLOGICAL NANOTECHNOLOGY; J. LEIGHTON
READ, BIOTECHNOLOGY INDUSTRY ORGANIZATION; MICHAEL A. FRIEDMAN,
CHIEF MEDICAL OFFICER FOR BIOMEDICAL PREPAREDNESS, PhRMA; AND
GARY NOBLE, JOHNSON & JOHNSON
Mr. Baker. Thank you. I am Dr. James Baker. I am a 14-year
veteran of military medicine, much of that spent at Walter
Reed. So I was happy to hear those kind words about it. I have
also served as a reviewer of the ChemBio Terror in the DoD and
as a reviewer at NIH of research that is conducted there. I
have chaired several panels on bioterrorism work. So I have a
broad background in this. I am also, besides being an academic,
the CSO of a company that is commercializing a new non-
antibiotic therapy for bioterrorism. So that gives you my
background.
My presence here today is to reinforce the fact that
Bioshield is going to have a number of difficulties. Many of
them are technical, and that is because the concept of a bio-
threat attack as an emerging infectious disease is not quite
correct, I don't believe.
I think that the dose that people receive and the way that
an agent is disseminated will be very different in these, and
the countermeasures would have to be very different. To give an
example, you know, in the military, if you are using the
smallpox vaccine, it is somewhat acceptable, given the unique
population. On the other hand, in the civilian population it is
not, and the dissemination would be significantly different
there.
So that the countermeasures that would have to be developed
are inherently different. In addition, I believe that the
financial issues related to return and market are much more
severe than have been presented so far. I don't believe that
even a government market would induce a manufacturer who has
high value products and high profit margins from other
applications into this field.
I believe that the work that has already been done on many
of the issues related to bioterrorism and many of the research
grants have attracted not big PhRMA but, in fact, have
attracted small startup companies. The reason for that is that
they have one focus, and their focus is developing new
products.
That can work very well in your favor, because essentially
there is a process at hand right now, how new products are
developed. There is research that is leveraged from
universities that is transferred into companies as startups
that then goes through approval process, and this can be very
effective in developing new technology, and the type of
technology that we need under Bioshield.
So that, to give you my own example, we are funded by DARPA
in my university lab, was then transferred into a commercial
entity which then, within 2 years, has entered clinical trials,
and this is a non-antibiotic countermeasure for anthrax.
To be quite honest, even after 9/11 there was no commercial
partner that was willing to support that work, because there is
no market for that and, even if they stockpiled this, was
bought for a single bioterror attack, it doesn't provide the
type of revenue that would interest a company with other types
of revenue streams.
Therefore, I believe that the most important way that
Bioshield can enhance the country's defenses is by supporting
this type of ongoing process, by leveraging the research that
they are already paying for in the universities, and by
enhancing tech transfer and startup endeavors for this type of
work.
I think there are many examples how this will work, but I
think most importantly I don't think, even with the types of
incentives that are being written into Bioshield, it will prove
enough of a lure to get large companies involved in this type
of endeavor, even if an artificial market is created. Thank
you.
[The prepared statement of James Baker, Jr. follows:]
Prepared Statement of James Baker, Jr., Ruth Dow Doan Professor, Center
for Biological Nanotechnology
I am Dr. James Baker, a physician who is the Ruth Dow Doan
Professor of Internal Medicine and Director of the Center for Biologic
Nanotechnology at the University of Michigan. I am Director of Research
at our institution's Bioterrorism Initiative, and Division Chief of
Allergy and Clinical Immunology in the Medical School. I am a 14-year
veteran of service in the U.S. Army, 12 of it on active duty, including
service during Desert Storm. I have participated in and chaired
committees in NIAID reviewing research into defense against biologic
weapons. With support from the Defense Advance Research Projects
Agency, the National Institutes of Health and NASA, my center is
applying these technologies to a number of problems in biology
including infectious disease therapy and microbial decontamination. I
am also the CSO of two startup companies, one of which, NanoBio
Corporation, is dedicated to commercializing new technologies for
antimicrobial applications and decontamination. I have extensively
studied the problems involved in preventing illness as a result of bio-
terrorism or bio-warfare, and I am pleased to have been invited to
testify before the committee this morning.
The Purpose of Project Bioshield
Project Bioshield aims to rapidly transfer technology into products
that can be used to protect individuals against biologic and chemical
agents used as weapons of terrorism or mass destruction. The emphasis
is on rapid introduction of new countermeasures into actual use, as
many technologies currently under development need to be transitioned
through regulatory approval or commercial development cycles.
Unfortunately, Project Bioshield faces many challenges in attaining
this goal. Some of these challenges are technical. The technologies
that are currently available for commercialization are not adequate to
meet the needs of our population. An excellent example is the current
smallpox vaccine which is being produced in larger quantities but has
medical issues that make it unacceptable for use by the current U.S.
population. While new smallpox vaccines are in development, the time
lag for approval of these is considerable and beyond the timeframe
desired for Project Bioshield.
Other problems for Project Bioshield involve economic issues.
Producing technologies solely for bioterrorism prevention is not
economically viable for most companies. Since most products
specifically targeted for defense against bioterrorism will hopefully
never be used, small sales of these products would have to support
massive development costs, even when aided by the government. Also, it
is unlikely that established manufacturers will bid to produce products
only for these applications since there would be no consistent, ongoing
markets available to sustain product development and marketing costs.
Finally, the cost of product liability may be an inherent issue in this
process. Unlike products developed for the military, products directed
towards civilian applications expose manufacturers to liability claims.
A product, be it a detector, vaccine or therapeutic, will not be
infallible and the risk of failure during a bioterrorism event would
create liability issues great enough to prevent any established company
from entering this market. This is apparent in many of the bioterror
initiatives the government has already launched.
The result of these many problems requires that most work supported
by Project Bioshield will involve new technology developed by start-up
companies who are willing to support the high-risk, high-reward nature
of bioterrorism applications. In addition, this approach will also
ensure that the American people get the best available technology, and
leverage the investment in government-sponsored research from NIH, NSF
and the EPA.
The Nation's Best, Largest Technology Incubator
The nation's best and largest technology incubators are its'
research universities. Most of the breakthrough technologies that have
been incorporated into medical research and therapeutics have come from
the nation's research university laboratories. These research advances
cover the gamut of Project Bioshield needs from medical counter-
measures, such as vaccines and therapeutics, through issues related to
the psychological and economical impact of bioterrorism. The nation's
universities produce new technologies very efficiently, given that they
have a pre-installed technical base. The universities are also highly
effective in technology transfer, being the source of much of the
technology used by the nation's start-up biotechnology and
pharmaceutical research companies. These start-up companies are most
likely to respond to Project Bioshield given the fact they are willing
to accept the risks involved in developing new technology for
bioterrorism. This system is remarkably efficient; yielding new
companies and new technologies rapidly and often without support from
established companies. The focus also is on technology improvement to
do a better job of protecting our citizens, rather than re-packaging
current technologies.
My Personal Experiences Emblematic Of This System
As a physician scientist I received funding from DARPA to develop
new counter-measures for bioterrorism. This research quickly resulted
in technology that was commercialized. NanoBio, a start-up company
where I am Chief Scientific Officer, began work in March of 2001 and
quickly responded to a request for decontamination materials during
October 2001. Given our technology's unique application to skin
decontamination, we have now moved towards FDA approval to use our
material to decontaminate human beings and are initiating Phase I
clinical trials this spring. This was accomplished despite the
regulatory approach for bioterrorism approval being defined only 6
months ago. Thus, the head start given to our technology by university
research and development was leveraged into a commercial product that
will enter clinical trials less then two years after the company was
created! It is this type of success that could be duplicated many times
with academic support through Project Bioshield.
Proposal for Inclusion of Research University Components in Bioshield
I would strongly urge you to include research university components
in the Bioshield bill in order to support the transition and
commercialization of university research. This will support and
leverage funding to develop new technologies these universities have
received from the NIH, NSF and EPA. It will also ensure that the newest
and most effective forms of protection are made available to our
population. Finally, given the economic and liability issues involved,
it is likely that only start-up and small companies would accept the
high-risk, high-reward endeavors entailed in Bioshield. By leveraging
the government's investment in university research, the likelihood that
these companies will be successful is increased for the betterment of
all.
Mr. Bilirakis. Thank you, Dr. Baker.
Dr. Read.
STATEMENT OF J. LEIGHTON READ
Mr. Read. Thank you, Mr. Chairman and members. I appreciate
the chance to comment here today, and I just have to say how
impressed I am with the sophistication of the comments of
yourself and the members on this very complicated important
issue.
My comments are based on my experience as a physician and
as an entrepreneur who started and built a number of successful
biotech companies, and now as a venture capitalist investing in
entrepreneurs working on astonishing technology in biotech and
information technology. I am honored to represent the
Biotechnology Industry Association today and its 1100 members,
which include companies, research institutions, State
associations in all 50 States.
Bioshield is a huge step forward, and it deserves the
urgent consideration of this committee. Some of its important
features that are extremely welcome include this essential
delineation of responsibilities between the Secretaries of
Health and Human Services and Homeland Security.
Some of the streamlining of the ability of NIAID to sponsor
both intramural and extramural research, the emergency powers
for the Secretary are to help accelerate the ability to make
good decisions under what will then be very difficult
circumstances and, of course, the serious effort to deal with
market creation and the role of the private sector.
I have adapted my remarks in light of some of these
wonderfully incisive questions today. What is the role of the
private sector? What is the case for the private sector's
engagement in creating these countermeasures?
One, our system is based on this kind of pluralism. Most
of--The second thing that I think is raised very heavily here
is the track record. It is true that most of the vaccines and
antimicrobial agents produced and introduced into actual
clinical use in the last 30 years--you can trace the roots to a
very important NIH and often NIAID contribution to the basic
science and sometimes far beyond that, but in every single case
of a product that is available to American doctors and their
patients today, there has been a gigantic investment by the
private sector.
The third reason is that there are vast resources in the
private sector. It would be wildly failing to take advantage of
these resources if we were not to recognize that there are very
specialized skills and simply large numbers of capable people
and experience in the biotechnology and pharmaceutical sector.
So the question--many of the points have already been made
today--how do we get the private sector fully, effectively,
appropriately engaged and have the appropriate safeguards? I do
think this idea of push and pull mechanisms is important as a
way to think about this. The way I would use the terms, a push
mechanism is something that lowers the cost of getting the job
done, of developing and--of discovering and developing
countermeasures, and so support for R&D is a good example of a
push mechanism, and there is a place for that.
I would describe pull mechanisms as mechanisms which
increase the reward rather than lowering the cost. So increase
the reward for success. It is really important that these pull
mechanisms not be degraded by then taking away some of that
reward for success. I will have a couple of examples.
Push deals with process. If we fund push mechanisms
generously, what we tend to get is more process. We create a
dependency, both in all of our institutions, public and private
sector, when we fund that. We create a group that exists and
will be productive in that mode. If we focus some or a large
portion of our resources on pull mechanisms, what we are
rewarding is the end result we care about.
One of the reasons that really clear examples and models
for pull mechanisms are challenging for countermeasures in this
setting is that we are still in the early days of delineating
our threat list. We have this list of agents, but we know that
the creativity of our opponents is tremendous. The tools are
available. They are already disseminated. The preparation is
already there.
So we need to have a constructive, flexible, incisive and
centralized point of setting these priorities so that we can
then design our pull mechanisms around these targets. by the
way, I think there is an important role for both vaccines and
drugs and diagnostics, some of which will be very specific to
known pathogens where we know that tons of these things were
produced somewhere and might be in the hands of our opponents.
In other cases, we really need to create the incentives,
the pull mechanisms, supplemented with push to create more
broad or general purpose medicines and approaches that don't
even exist today. We need to work on the priority list, and
having it centralized is going to be important.
I want to say a word about a couple of things that could
take away from the value of the pull mechanisms that are
embodied in the current legislation.
Mr. Bilirakis. Can you do it in a summary, in a summarized
fashion?
Mr. Read. Okay, thank you, sir. In summary, I think the 5-
year limit and the penalty for success with dual use, the fact
that this procurement is only limited to a setting where only
the government work, means that we are penalizing the
innovators for their success and, of course, it is going to be
important to provide some form of protection from crippling
lawsuits when that is appropriate. Thank you, Mr. Chairman.
[The prepared statement of J. Leighton Read follows:]
Prepared Statement of J. Leighton Read, General Partner, Alloy Ventures
on Behalf of the Biotechnology Industry Organization
Mr. Chairman and Members of the Committee, it is an honor for me to
testify before you today regarding Project BioShield and its likely
impact in bringing private sector talent and investment into our
nation's biodefense effort. I would also like to recognize Secretary
Thompson and Dr. Anthony Fauci for their testimony here today and their
continued leadership on issues relating to the health of the American
public. BIO applauds your immediate consideration of the proposed
BioShield initiative, which is designed in part to stimulate research
and development of biomedical countermeasures through collaboration
with the biotechnology industry.
These comments are based on fifteen years of experience building
and financing biotechnology companies in Silicon Valley. I am co-
founder of Affymax, a company that transformed the way the
pharmaceutical industry thinks about screening for new drugs and a co-
inventor of the technology underlying the Affymetrix GeneChip
TM, the leading technology for acquiring, analyzing, and
managing complex genetic information for use in biomedical research. I
was founder and CEO of Aviron, a vaccine discovery and development
company with extensive and successful experience partnering with the
National Institute of Allergy and Infectious Disease. When Aviron
merged with MedImmune, a fine company near here in Gaithersburg, I
joined Alloy Ventures, a venture capital fund investing in
entrepreneurs building early-stage companies in the life sciences and
in information and communication technology. Previously, I held faculty
appointments at Harvard Medical School and School of Public Health,
where I practiced internal medicine and conducted research on the
costs, risks and benefits of new medicines. For a number of years, I
served as a member of the Executive Committee of the Biotechnology
Industry Organization (BIO), who I am also representing today. BIO
represents over 1,100 companies, universities, research institutions,
state biotechnology associations and affiliates in all 50 states.
project bioshield is a major step forward
By focusing energy and resources on the creation of new biomedical
countermeasures, this legislation will certainly contribute to our
national preparedness. Its delineation of responsibilities among the
Departments of Health and Human Services (HHS) and the Department of
Homeland Security (DHS) provides essential clarification to minimize
gaps and duplication of effort. The legislation contains many
provisions that will help the National Institute of Allergy and
Infectious Diseases (NIAID) streamline work on its essential mission of
creating new knowledge about infectious disease and countermeasures.
New authorization for procurement of medical products to be used in
emergencies is highly welcome because it will facilitate good decision-
making under the very difficult circumstances that must be part of our
planning horizon.
And--very importantly--BioShield contains provisions that recognize
some of the unique challenges in producing biomedical countermeasures
and the importance of engaging the private sector in this vital effort.
The procurement provisions of BioShield begins to address the need for
``pull'' mechanisms of market creation that are essential to complement
``push'' mechanisms, such as sponsored R&D programs already enacted.
Our country will only be successful in placing needed
countermeasures on the shelf if the Government is able to engage the
enthusiastic participation of leading companies in the biotechnology
and pharmaceutical industry. The conditions are not yet in place to
accomplish that goal. BioShield is a step in the right direction,
particularly with respect to procurement of near-term products. In the
long term, in addition to BioShield, there are a range of ``push'' and
``pull'' incentive mechanisms that the Committee and the Administration
should evaluate, such as those included in the proposal by Senators
Lieberman and Hatch.
we are at the beginning of a very long road
I am concerned that several of the provisions in BioShield miss an
important chance to address our country's long-term needs. America's
role in the world positions us as a uniquely attractive and vulnerable
target for asymmetrical warfare tactics embodied in today's terrorism.
While public recognition of this threat may be a recent phenomenon, we
can plan on facing this challenge as long as our prosperity and
influence set us apart from other nations.
we must create a new biodefense industry to partner with the government
The scale of the investment required is many-fold larger than
implied by the current BioShield proposal. Only two, the anthrax and
smallpox vaccines, of 57 diagnostics, vaccines and therapeutic products
prioritized by the Defense Science Board (DSB) are available today. BIO
and our member companies had met on numerous occasions with various
agencies engaged in homeland security prior to the establishment of the
separate department. BioShield will provide much needed centralization
of these efforts, as well as a clear list of R & D priorities that can
focus private sector investment if coupled with the right market
signals. At the current investment levels, some new countermeasures
will be available within five years, however larger investments will
undoubtedly be required. Over the long-term this challenge and the
necessary investment may be compared with the nuclear threat of the
late 20th century.
Fortunately, we can ensure that government investments are well
rewarded by basing our policies on models of successful biomedical
investment. It is important to seize this opportunity because
infectious diseases represent some of our greatest triumphs in
discovering, preventing and treating disease. When the public and
private sector biomedical research assets of the United States are
focused on high priority infectious disease targets, the result has
ranged from complete conquest--as in the case of polio--to medicines
that significantly reduce mortality and improve quality of life. Young
doctors today have never seen the childhood infections that accounted
for most infant mortality 50 years ago. Even the HIV virus, which has
so far eluded attempts to find an effective vaccine, can be controlled
with a growing number of drugs discovered and launched in only 15
years.
Public-private partnerships are working to control infectious
disease. Antibiotics, anti-virals, vaccines and other ``wonder drugs''
against infectious disease come to be available to patients and their
doctors via a complex web of interactions among public and private
sector entities. In the past 30 years, almost every important
antimicrobial drug and vaccine discovery effort has benefited in some
way from the research conducted under the sponsorship of the US
National Institutes of Health (NIH). Through its intramural and
extramural programs, the NIH is responsible for an explosion in the
basic science of how infectious agents spread and cause disease and how
the human body fights back. The NIH has also made substantial progress
by moving discoveries out of the laboratory and into clinical trials
where safety and efficacy can be evaluated. For example, results from
Vaccine Trial and Evaluation Units (VTEUs) in academic institutions
supported by NIAID demonstrate how successful public-private
partnerships can be. Other Federal programs at the Centers for Disease
Control and Prevention (CDC) and elsewhere in HHS, as well as in the
Department of Defense (DOD) and the Veterans Administration (VA), have
made important contributions.
Government supported facilities for research on biothreat agents
will play a critical part in the research and development efforts of
both public and private contributors. It is not feasible for the
private sector to build or operate all of the biocontainment facilities
needed, and it is essential that countermeasure candidates developed in
the private sector can be tested for pre-clinical efficacy in the
public funded facilities, especially where physical control of
dangerous biothreat agents must be assured.
The government plays a further vital role by setting minimum
standards for product safety and efficacy via the FDA. This gate-
keeping role also extends to regulation of manufacturing processes. The
large extent to which regulation of manufacturing drives the cost and
development time of vaccines and related products is an important
consideration for biodefense procurement policy.
Finally, the government has successfully created large and enticing
markets for bio-innovations by serving directly as a purchaser, via the
Medicare, Medicaid and Veterans' healthcare programs, and via the
regulatory and tax environment that supports our large private health
insurance industry. By creating conditions for a market that is
reasonably predictable and consistent over time, the government should
set the stage for the private sector to optimize its use of resources
to develop appropriate products. The same concepts of consistency and
sustainability, while not perfect in these and other purchasing
environments, will be needed for the development of countermeasures to
biothreats. Particularly when you consider that the market for
countermeasures cannot, by any definition, be considered a traditional
market.
As important as the government's role is, it can also be said that
all of the important drugs and vaccines for infectious disease in the
US have come to be available only after substantial effort and
investment by private sector companies in the pharmaceutical and
biotechnology industries. Some of these programs began as early-stage
discovery programs in industrial laboratories. Often, these benefited
from technology licensed from our great research universities, where
discoveries were typically funded by government grants. Still others
were the result of technology transferred by the NIH or other agencies
to a committed industrial partner under licenses and Cooperative
Research and Development Agreements (CRADAs). Regardless of where
industry stepped in, every successful product has required private
investment ranging from tens to hundreds of millions of dollars.
the crada for flumist tm
My company, Aviron, held one of the first CRADAs with NIAID
beginning in 1995. This work involved a promising influenza vaccine
invented at the University of Michigan in the 1960s under US Army
sponsorship. This vaccine had been the subject of NIH-sponsored
clinical trials in VTEUs thru the 70s and 80s. Despite the lack of a
committed industrial sponsor, NIAID had built an impressive base of
scientific knowledge around this flu vaccine and its novel form of
administration via the nose. There were major contributions from the
NIAID intramural program as well as its network of vaccine trial and
evaluation units. Under our 5-year CRADA, Aviron developed a
manufacturing process and supply chain and conducted Phase II and Phase
III clinical trials for FDA registration of the candidate vaccine now
known as FluMist tm. The partnership between Aviron and
NIAID was as successful as it was collegial, with each side performing
its roles in bringing the vaccine forward. What neither party
anticipated at the outset was the staggering cost of late-stage vaccine
development and manufacturing to FDA standards. More than $300 million
has been spent over the past 8 years to bring FluMist TM to
the point of final FDA evaluation. This is for a vaccine technology
that had been the subject of over 20 years of NIH clinical trials!
The money to support this work was supplied by venture capital
firms and public market investors in our IPO and numerous follow-on
financings. The incentive for the private sector to make these huge
investments is premised on the size of the market for successful
innovations, which can reach many hundreds of millions of dollars in
annual sales. While American companies can be counted on to respond to
a crisis, efforts to attract the best people and companies to work for
many years on high-risk countermeasure projects will fail if the reward
structure is not aligned with the prevailing incentives in their
industry.
Venture capitalists do not, as a rule, invest in companies with
business models such as professional services firms or companies aiming
to build a business based on contract R&D at industry averages. We aim
for our companies to produce products based on defensible intellectual
property which have the kinds of margins seen in truly innovative
software, pharmaceuticals, and electronic devices. Year in and year
out, through the natural cycles of technology, this is a proven recipe
for creating value for consumers, patients and investors. That is why I
am so concerned that we are not giving full attention to the actual
products we need to build in the end and the market forces that will
get them finished, deployed and sustained.
extending bioshield
BioShield should be extended to cover the time frame and scale of
the problem. The Secretary needs the flexibility to choose the
appropriate mechanisms to develop countermeasures, sole-source or
through competitive means, and mechanisms for obtaining advice as to
what is likely to be most effective for different technologies. Through
the use of an appropriate advisory board, which would include industry
participation, with the necessary anti-trust waivers the Secretary will
more likely be able to obtain state of art expertise from the private
sector in addition to others.
We must signal to private sector enterprises, and the vast capital
markets that are available to support them, that there will be a
meaningful reward for successful new technology addressing our highest
priority needs. The most important enhancement for BioShield is to
create more certainty that there will be a market when the private
sector innovator succeeds in creating a product with previously defined
specifications. The current proposal only authorizes--and does not
guarantee--that the Government will purchase. This guarantee is
especially important in order to spur investment in countermeasures
that are earlier in development and thus years away from commercial
success. To be effective, this will require some creative new
approaches to overcome industry skepticism regarding government holding
to its promises. One such mechanism is a guaranteed purchase fund, as
has been proposed to stimulate R&D for new malaria, tuberculosis and
HIV vaccines.
The restriction on BioShield procurement to countermeasures
reasonably expected to be available in 5 years is highly limiting, in
light of the actual development time for new drugs and vaccines. This
will be abundantly clear as soon as HHS, DHS and DOD have harmonized
the various threat agent and countermeasure priority lists. If the hope
is that ``push'' mechanisms such as government sponsored research will
bring a whole generation of products far enough along so that they can
be commercialized within the 5-year restriction, we are setting a
policy that fails to take advantage of the private sector's abundant
willingness to take on early risk when there are clear market rewards
for success. A more reasonable calculation of development time is
between 7 and 15 years (indeed the products that are most difficult to
develop maybe the most important ones). We thus recommend that the
proposal's limitation on ``qualified countermeasures'' eligible for
procurement to those expected to be produced and delivered within 5
years be deleted.
Why should we take the beneficial procurement provisions of
BioShield off of the table for technology having borderline civilian
prospects? The surest way to shut off investment is to raise the
specter that success will be punished! The no-significant-commercial-
market provision will ensure that the private sector will under invest
in countermeasures that are a close call because of the risk that the
government will decide some future dual use is too successful. Further,
this uncertainty creates a system that may exclude products with
potential application as countermeasures, possibly be those closest to
the market for other purposes.
product-liability concerns could defeat our best efforts to engage the
private sector
In addition to the need to create a market for countermeasures, the
Government must assure private sector partners that they will be not be
exposed to a risk of litigation out of proportion to the rewards for
success. Companies make judgments about product liability risk all the
time in the normal course of business, but biomedical countermeasures
pose particular challenges. In the absence of improved market
incentives for successful innovation, many will find that potential
litigation weighs heavily against proceeding. Even with strengthened
market incentives, the unfamiliarity of the exposure magnifies
perceived risk, especially when the private sector company may have
little control over how the government deploys the countermeasure.
As this committee knows, on several occasions, Congress has
protected companies from liability when the public health and the
national defense so required. The Price-Anderson Act--of 1957
encouraged the development of a civilian--nuclear energy industry--by
limiting the liability of companies that support the nation's nuclear
weapons program as well as those who design and operate civilian
nuclear power reactors. The Swine Flu Law, enacted in 1976, brought
manufacturers of that vaccine under provisions of the Federal Tort
Claims Act in order to allow mass immunizations. The National Childhood
Vaccine Injury Act of 1986 responded to the threat that the pertussis
vaccine and other vaccines would be withdrawn from the market due to
the significant costs of defending lawsuits--by providing both a no-
fault compensation system and Federal standards applicable to lawsuits
if no-fault claims were unsuccessful or rejected by the claimant. And,
of course, last year's Homeland Security Act (P.L. 107-296) provided
protections for the manufacturers of the smallpox vaccine and--
government contractors who provide ``qualified anti-terrorism
technologies.'' In addition, the BioShield proposal drafted by the
Administration includes protection under the Federal Tort Claims Act
for contractors who participate in personal services contracts under
the new research and development program established under Section 2 of
the Administration's proposal.
Legislation implementing the BioShield initiative should extend a
liability protection program that is applicable to the proposal's three
features: research and development activities under Section 2, the
procurement program under Section 3, as well as to the products
approved under the proposed ``emergency use'' revisions to food and
drug law under Section 4.
BIO recommends extending the protections offered under Section 304
of the Homeland Security Act to biomedical countermeasures and medical
products other than those used to combat smallpox. Following this
approach, the Federal Tort Claims Act would clearly be extended to
cover manufacturers and developers of biomedical countermeasures, as
well as manufacturers of medical products granted an authorization for
use in an emergency situation. By creating a system under which
manufacturers are protected from enterprise threatening liability
mentioned, the Government will establish a true partnership with
industry that will facilitate the development and production of the
most advanced tools possible to counter possible bioterrorism attacks.
authorization for emergency use
BIO supports the concept of waiving FDA approval requirements for a
product intended solely for emergency use, such as that found in
Section 4 of the Administration's proposal. Our major concerns involve
the lack of assurance that a company is consulted on the terms and
conditions of approval. We also believe that the proposed inclusion of
civil monetary penalties to the emergency use provision is much too
broad, and we recommend deletion of this provision.
conclusion
In sum, Mr. Chairman, the proposed BioShield initiative is an
important step towards mounting an effective effort by the federal
government, to spur research and development of biothreat
countermeasures through public and private sector partnering with the
biomedical research community and the biotechnology industry.
Undoubtedly, this effort can be made much more effective through
legislative language that guarantees procurement when the research and
development has been successful, and provides rational protection
against crippling lawsuits. Finally, it is critical to recognize that,
realistically speaking, development of vaccines, therapeutics and
diagnostics typically takes more than 5 years, so it is paramount that
some form of guaranteed ``pull'' incentives are included in a final
bill because of the non-traditional market that will exist for
potential biothreat countermeasures.
Mr. Chairman, thank you for the opportunity to testify on this
tremendously important issue. The biotechnology industry is committed
to contributing to our nation's common defense and achieving the goals
articulated by the President in his Project BioShield initiative. I
will be pleased to respond to any questions from members of the
Committee.
Mr. Bilirakis. Thank you very much, Dr. Read.
Dr. Friedman.
STATEMENT OF MICHAEL A. FRIEDMAN
Mr. Friedman. Thank you, Mr. Chairman and members of the
subcommittees. On behalf of the Pharmaceutical Research and
Manufacturers of America, I am pleased to be here today to
share with you the views of the research based pharmaceutical
industry on the President's Project Bioshield initiative.
Biological weapons represent an increasingly serious danger
to people around the world. The dynamic complexity of the
problem is demonstrated by science's difficulties in dealing
with both naturally occurring infectious disease as well as
intentional bioterrorist attacks.
While PhRMA companies are the process of developing more
than 200 new medicines to treat or prevent various infectious
diseases, reports by the National Academy of Sciences, the NIH
blue ribbon panel on biodefense research, and the U.S. Defense
Science Board make it clear that an even larger number of more
diverse types of countermeasures must also be developed, and
they must be developed promptly.
Although the basic science research required for
countermeasure development is currently being supported by
Federal agencies, it is widely recognized that more sponsored
research is necessary. There also needs to be more flexible
authority and more resources for regulatory agencies. In short,
those things which will advance the development and production
of the countermeasures.
PhRMA member companies have been active in moving forward
on countermeasure research and development, as I have outlined
in my written testimony. There are numerous examples of how we
have worked with CDC, DoD, NIH, FDA and academia to support a
whole range of activities, and I won't try to repeat those now.
A cooperative and collaborative research and development effort
which engages industry, government and academia will, however,
be essential to this successful effort.
PhRMA believes that Project Bioshield is an important step
toward this, and we support the three main components of the
President's proposal. The President's proposal speaks primarily
to the early and to the later steps in the lengthy, high risk
and costly process of bringing new medicines to the market. It
does not, however, speak to the time consuming and resource
intensive middle part of that process which we see is largely
our responsibility.
Further research into bio-threat countermeasures represents
challenges beyond those ordinarily encountered in non-
biodefense R&D. These include scientific, economic, and legal
challenges, and let me enumerate just a couple of examples, if
I may.
Some products will be distributed without the typical
battery of clinical trials that are required for FDA approval.
All medicines present an inherent and unavoidable risk of
adverse events. As a result, manufacturers may be exposed to
devastating product liability suits, and it has been pointed
out here today that not only the companies but also those
patients who receive it and those people who administer these
treatments also may be affected by those suits. Private
insurance may simply be unavailable.
The need for rapid development of countermeasures may
require the sharing of scientific information and cooperation
amongst many different companies, for example, the sharing of
data by researchers working in different areas. Collaboration
and cooperation in this research might create exposure under
current anti-trust laws.
A third point is diverting resources from research and
development of other medicines will affect the future
availability of treatments and cures for patients with serious
health conditions, especially since only a tiny percent of all
the drugs that enter testing ever demonstrate sufficient human
safety and acceptable efficacy. The allocation of resources can
be particularly difficult for companies with few products in
the pipeline.
In order to meet the public health needs of our citizens,
PhRMA looks forward to working in a transparent manner with
Congress and the administration to enact measures that will
provide appropriate and equitable product liability protection
in this very special context, as well as narrowly tailored
measures to address anti-trust constraints, where appropriate,
in order to allow the needed collaboration and the consortia
with industry.
Cooperation and strong commitment from all parties will be
necessary in the years to come as our Nation seeks to protect
itself against the real threats of bio-warfare and bio-
terrorism. America's pharmaceutical companies look forward to
doing our part. I thank you for this opportunity to address
you.
[The prepared statement of Michael A. Friedman follows:]
Prepared Statement of Michael A. Friedman on Behalf of the
Pharmaceutical Research and Manufacturers of America
The Pharmaceutical Research and Manufacturers of America (PhRMA)
appreciates the opportunity to share with this Subcommittee the views
of the research-based pharmaceutical industry on the President's
Project Bioshield Initiative. PhRMA represents the country's leading
research-based pharmaceutical and biotechnology companies, which
invested an estimated $32 billion in 2002 in developing new medicines
to help and heal patients.
PhRMA member companies join others who are convinced that
biological weapons present a serious and increasing danger to people
around the world. The pharmaceutical industry is dedicated to the
development of innovative therapies and vaccines to counter unmet
medical needs. Because a substantial proportion of the unmet medical
need in the United States and worldwide is both directly and indirectly
related to infectious diseases, we understand only too well the
seriousness of the threat of biological agents if used as weapons of
war.
The complexity of the problem of biological weapons is best
demonstrated by humanity's ongoing difficulty in dealing with
infectious agents as the cause of natural disease, let alone their
potential use for intentional concentrated exposure of selected
populations. The threat represented by infectious diseases--such as
HIV, malaria, and tuberculosis--is real and all too well demonstrated
by the deaths of over 5 million people annually from these three
diseases alone. All together, infectious diseases claim more than
100,000 American lives each year, and cost more than $30 billion
annually in direct treatment expenses alone. At last count, PhRMA
member companies were developing 256 new medicines to treat or prevent
infectious diseases; medicines which include brand new classes of
antibiotics, new vaccines (including edible vaccines), antifungals,
antivirals, and immune enhancers.
Reports from the National Academy of Sciences, the NIH Blue Ribbon
Panel for Biodefense Research, and the US Defense Science Board, make
clear that a large number of countermeasures to biothreats must also be
developed. These countermeasures include vaccines, therapeutics, and
diagnostics. The basic science research required for countermeasure
development has already been stimulated by funds appropriated to
various federal agencies including the Department of Health and Human
Services and the Department of Defense. However it is widely recognized
that more is needed with respect to funding of basic research, to
increased authority for funding and regulatory agencies, and to the
advanced development and production of the countermeasures.
A cooperative and collaborative research and development effort,
which engages industry, government, and academia, will be essential to
that effort. Existing medicines are not sufficient to combat the
biological weapons already developed. Research and development into new
medicines is a lengthy, risky, and expensive endeavor. Research into
biothreat countermeasures involves several challenges above and beyond
those encountered in non-biodefense R&D. For example, biodefense R&D
requires working with dangerous pathogens in highly specialized
facilities, and developing countermeasures without a full picture of
the risk of disease (because we cannot see into the mind of the
terrorist) or the benefit of the treatment (because there are often no
patients with the disease, which prevents clinical testing for
efficacy).
PhRMA and its member companies are already working closely with
federal agencies and academia to move forward with this research. For
example, PhRMA is working with CDC, DoD, NIH, FDA, and academia to
support in vitro studies of five pathogens (B. anthracis, Y. pestis,
Brucella spp., F. tularensis, and Burkholderia spp.) for testing of
existing antibiotics. Several companies are working with the National
Institute of Allergy and Infectious Diseases (NIAID), the Department of
Defense, and the FDA to test existing antibiotics against plague, and
PhRMA will cosponsor a workshop with interested parties to determine
how best to expand labeling of other existing antibiotics that may be
effective against the top biothreat agents. PhRMA committees continue
to work with FDA to clarify and improve existing regulations that
pertain to biothreat countermeasure research, such as Part 600 (the
Spore Formers Rule, which imposes requirements on use of facilities or
equipment that have been used with spore forming organisms), and the
Animal Rule (which allows efficacy testing in animals where testing in
humans would be impossible or unethical). We have prepared educational
materials for the public on anthrax, smallpox, and vaccinia, and we are
working on materials addressing tularemia and plague. Dr. Gail Cassell,
PhRMA's Chief Scientific Officer for Emergency Preparedness and Vice
President, Scientific Affairs at Eli Lilly & Co., sits on Secretary
Thompson's Advisory Council on Public Health Preparedness. A
Biosurveillance workgroup involving PhRMA and other private sector
companies (TIGR, IBM, and Roche Diagnostics) along with federal
agencies (CDC, DoD, NIH) and the World Health Organization to establish
a global infectious disease electronic surveillance network.
PhRMA believes that Project Bioshield, announced by President Bush
in his 2003 State of the Union address, is an important step forward in
the effort to ensure the development of modern, effective medicines and
vaccines against biothreats and to ensure that these medicines are made
available in a timely and efficient manner. PhRMA generally supports
the three main components of the President's proposal: first, the
creation of a permanent indefinite funding authority to spur the
development of medicines and vaccines by the private sector; second,
new authority for NIH to speed promising R&D through streamlined hiring
and procurement mechanisms and increased flexibility to award contracts
and grants; and third, new FDA emergency use authorization for
promising treatments still under development.
At the same time, however, it is necessary to recognize scientific,
legal, and economic impediments to the research and development of
biodefense products. Manufacturers may be exposed to devastating
product-liability suits. Some of these would arise out of adverse
events that are unavoidable given the nature of the products, and some
could arise simply because the products were made available without the
usual battery of clinical trials required for FDA-approved products.
Private insurance can be unavailable or prohibitively expensive for
such products. The decision to divert resources from the research and
development of medicines for serious illnesses like heart disease can
be financially risky, especially when a countermeasure may never be
purchased or used, and especially for companies with few products in
the pipeline. (Diverting resources from research and development of
these other medicines will also affect the future availability of
treatments and cures for patients with other serious health
conditions--especially since less than ten percent of all drugs that
enter testing ever demonstrate sufficient safety and acceptable
efficacy.) The need for urgent development of medicines may require the
sharing of information and cooperation among companies, which can raise
antitrust concerns. The scientific challenges inherent in research into
bioterrorism countermeasures, for example, may require cooperation and
collaboration among scientific experts in different companies. (For
example, there have been only two new classes of antibiotics developed
in the last 40 years.) PhRMA looks forward to working closely with
Congress and the Administration to enact measures that will provide
appropriate product liability protection and address these antitrust
constraints.
Cooperation and strong commitment from all parties will be
necessary in the months and years to come, as our nation seeks to
protect itself against the terrible threats of biowarfare and
bioterrorism. America's pharmaceutical companies look forward to doing
our part.
We thank you for your time and look forward to answering your
questions.
______
March 25, 2003
the need for an antitrust exemption to enable pharmaceutical companies
to respond to government requests for help to combat bioterrorism
In the aftermath of the attacks of September 11 and the use of
anthrax as a terror weapon, the pharmaceutical industry has been asked
by various government officials, particularly the Secretary of Heath
and Human Services, to help reduce our vulnerability to the threat of
bioterrorism. The antitrust laws present a significant restraint on the
pharmaceutical industry's ability to provide assistance. Accordingly, a
limited antitrust exemption is warranted for joint efforts undertaken
under government auspices to develop bioterrorism countermeasures. Such
an exemption, for which there are several historical precedents, would
further the government's program to ensure that the country is prepared
to respond to an act of bioterrorism and would not undermine the
important protections imposed by the antitrust laws.
fighting bioterrorism will require a coordinated industry response
As the country learns more about the potential threats posed by
bioterrorism, the research and production expertise of the nation's
pharmaceutical industry could be called into service in a variety of
ways. Likely requests for assistance include:
An exchange of information by pharmaceutical companies on
individual vaccine manufacturing capacity to develop an
industry aggregate assessment of capacity.
An HHS sponsored agreement that one group of pharmaceutical
companies devote research and manufacturing capacity to one
area, such as a smallpox vaccine, and that another group of
companies focus on another area, such as anthrax treatments.
An HHS request that the companies agree that, in the event of
a bioterrorism event, they will dedicate their research and
manufacturing resources on an emergency basis in a manner
directed by HHS.
A procedure by which pharmaceutical companies share research
results and manufacturing best practices to allow for the rapid
production of needed bioterrorism countermeasures.
While each of these steps would increase the nation's ability to
respond to the bioterrorism threat, individual pharmaceutical companies
may be unable to participate in these types of joint efforts without
some assurance that its conduct will not be challenged as a violation
of the antitrust laws.
the antitrust laws bar joint action by competitors regardless of social
need
Section 1 of the Sherman Act--the provision of the antitrust laws
most pertinent to this issue--prohibits agreements between competitors
that unreasonably restrain trade. The pharmaceutical companies would be
hampered in their ability to defend joint responses to government
requests notwithstanding the existence of an overwhelming public health
benefit for several reasons:
Some agreements, including agreements among competitors to
allocate resources across a range of projects, can be per se
illegal notwithstanding compelling justifications.
Even under the rule of reason, the Supreme Court has held that
agreements must be justified under the Sherman Act as promoting
competition and may not be justified by public policy
considerations, such as safety and health.
Absent specific statutory authorization, government officials
lack authority to grant immunity from antitrust challenge.
Furthermore, antitrust claims frequently are expensive to defend
and inherently difficult to predict in their outcome. As a matter of
prudent business practice, pharmaceutical companies, pursuant to
written antitrust guidelines, routinely avoid any discussions with
competitors that could give rise to a challenge under the antitrust
laws. Thus, even some limited discussions that may not themselves
constitute antitrust violations may be hindered due to the risk that
such discussions will be taken out of context by an antitrust
plaintiff.
Each of the agreements described above could potentially be
challenged by a private plaintiff or a government entity as antitrust
violations. The fact that they were undertaken at the request of the
federal government to bolster the country's defenses to a bioterrorist
attack or as part of an emergency response to a bioterrorism event does
not remove them from the reach of the antitrust laws. Courts have
squarely rejected as being ``without merit'' a claim by an antitrust
defendant that ``in the emergency of war, the war power of the Federal
Government and military authorities takes precedence over the civil law
and nullified the Sherman Act during the emergency.'' 1
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\1\ United States v. General Inst. Corp., 87 F.Supp. 157, 163-4
(D.N.J. 1949).
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the necessary cooperation cannot occur without a specific exemption
Opponents of a limited antitrust exemption for bioterrorism
preparations typically question whether (i) the assistance requested by
the government actually places the responding companies at risk of
violating the antitrust laws or (ii) whether existing provisions for
facilitating industry cooperative efforts may provide the necessary
assurance. The answer to those questions are yes, an antitrust risk
does exist, and no, existing procedures are not sufficient to remove
that risk.
The first potential request for assistance described above relates
to a government initiated survey of productive capacity. In theory,
such information could be collected on a strictly bilateral basis by
HHS and then only shared with industry, if at all, in an aggregated
form. Trade associations routinely collect data in a similar fashion
without violating the antitrust laws. The utility of such data,
however, is limited because of the difficulty of comparing productive
assets. HHS needs more than a series of historical production data from
each company. To understand fully the industry's productive capacity,
HHS needs to be able to compare each company's assets and assess how
they might be used either alone or in conjunction with assets held by
other companies in the fight against bioterrorism. Further, HHS needs
to understand how existing assets dedicated to producing certain
products could be expanded and/or converted to new uses. HHS cannot
conduct such evaluations on its own. Rather, the companies may need to
sit down together, under the auspices of HHS, to explore how they can
each best contribute to the national defense.
Another area of potential cooperation that would raise antitrust
issues includes discussions of which research areas should take
priority for a given company. The antitrust laws expect that each
company will assess the likely profitability of a given line of
research and individually plan its research focus accordingly. In the
past, Congress has recognized that such an approach may not always
result in the socially optimal result. For example, the legislation
providing special incentives for the pharmaceutical industry to engage
in research on ``orphan drugs'' for diseases that affect small numbers
of people demonstrates that market incentives may not produce the drugs
America needs. A similar situation exists here, although the problem is
not the size of the potential market; a bioterrorism event could affect
millions. Rather the problem is the, hopefully small, likelihood that
such a market will ever develop and the possibility that companies may
not pursue research on some of the threats. The pharmaceutical industry
is willing to do the work to prepare for each threat identified by HHS,
but it makes no sense for each company to attempt to pursue every area
in which the government might request research. The antitrust laws
would at least call into question, and likely prohibit, an agreement
among the pharmaceutical manufacturers to allocate research efforts
among potential threats or to suspend non-bioterrorism research
projects if requested by HHS.
A third area of potential concern is the sharing of research
results or production techniques to enable all participating
manufacturers to take advantage of the latest technology. Such
cooperation also may allow companies to avoid duplicating, possibly at
government expense, unproductive efforts undertaken by other companies.
In the normal commercial context, such process improvements are treated
as competitively sensitive information and their sharing would raise a
question as to whether impermissible collaboration is occurring. To
obtain the most effective bioterrorism countermeasures possible,
however, exactly that type of sharing may be required.
existing antitrust procedures regarding joint ventures are inadequate
The existing procedures designed to facilitate cooperative conduct
under the antitrust laws would not provide adequate protection for the
activities described in the preceding paragraphs. The National
Cooperative Research & Production Act of 1993 (``NCRPA'') 2
provides some protection for joint research projects, but does not
provide actual immunity from the antitrust laws.3 Thus,
companies may still be dragged into litigation by competitors or
consumer groups seeking to second guess the government decision to draw
on the industry's expertise.
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\2\ 15 U.S.C. Sec. Sec. 4301-05.
\3\ A NCRPA filing limits the liability of the joint venture
participants to actual (rather than treble) damages in certain
circumstances and allows for the recovery of attorney fees by any
defendants that prevail in actions found to be ``frivolous,
unreasonable, without foundation, or bad faith.''
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Similar problems exist with a business review letter from the
Antitrust Division of the Justice Department or an advisory opinion
from the FTC. These procedures allow businesses to request a statement
of the government's current enforcement intentions with respect to a
proposed course of conduct. One notable shortcoming of this procedure
is that it has no effect on the ability of private plaintiffs to bring
suit. Furthermore, the Antitrust Division will only provide a business
review letter for proposed, not on-going, conduct. The nation's anti-
bioterrorism preparations could be held up while the Justice Department
bureaucracy ruminates over the industry request. Finally, even if a
favorable letter is issued, it constitutes no more than a statement of
present intent; no immunity is conferred. The FTC advisory opinion
process presents the same problems. The limited comfort offered by a
business review letter or an advisory letter is simply not sufficient
for companies to suspend their normal antitrust guidelines and
participate in activities that could entangle them in costly
investigations or litigation.
history offers numerous precedents for a limited antitrust exemption
The Supreme Court has repeatedly said that ``[t]he Sherman Act
reflects a legislative judgment that ultimately competition will
produce not only lower prices, but also better goods and services.''
4 In a time of national emergency, there may not be the time
to allow for the competitive process to produce the mix of goods and
services society needs. Accordingly, there is a long history of
providing legislative exemptions from the antitrust laws in specific
areas. For example, during World War II, the War Production Board, the
entity that was responsible for coordinating the mobilization of the
U.S. economy for war production, had authority to
---------------------------------------------------------------------------
\4\ National Society of Professional Engineers v. United States,
435 U.S. 679, 695 (1978) (emphasis added).
---------------------------------------------------------------------------
certify to the Attorney General in writing that the doing of
any act or thing, or the omission to do any act or thing, by
one or more persons . . . is requisite to the prosecution of
the war, [and] such act, thing or omission shall be deemed in
the public interest and no prosecution or civil action shall be
commenced with reference thereto under the antitrust laws of
the United States or the Federal Trade Commission Act.
5
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\5\ 56 Stat. 351 Sec. 12. The Attorney General was required to give
public notice when a certificate was issued and report to Congress
periodically on exemptions granted by the WPB under this provision, but
the WPB procedure for initially invoking the exemption was designed for
flexible and speedy implementation.
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During World War II, this provision was invoked in a number of areas,
including the efficient production of railroad freight cars,
conservation programs in the dairy industry, and the pooling of
information regarding the manufacture of Lucite, a newly developed
plastic important to the war effort.6
---------------------------------------------------------------------------
\6\ See Harold L. Schilz, Voluntary Industry Agreements and Their
Exemption From the Antitrust Laws, 40 Virginia L. Rev. 1, 4 (1954).
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The War Production Board's power to grant exemptions from the
antitrust laws was designed to alleviate industry concerns that they
would incur antitrust liability from responding to government requests
for assistance. In the 1930s, the major oil companies had become
ensnared in antitrust litigation arising from their participation in
cooperative ventures established by the National Industrial Recovery
Act as a means of stabilizing the industry.7 Faced with a
recent example of how participating in government sponsored programs
could result in antitrust problems, both industry and government
leaders sought a way to ensure full and effective participation by
industry.
---------------------------------------------------------------------------
\7\ See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 170-
77 (1940); Schilz, supra, at 2-3.
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Perhaps the most pertinent example of an antitrust exemption
granted for wartime needs concerns the development of penicillin.
Penicillin had been discovered in 1928 by Alexander Fleming, but had
not been put into widespread clinical use. One major problem was
devising an appropriate manufacturing process for large-scale
production. The War Production Board invoked the antitrust immunity
provision quoted above to allow for the exchange of technical
information regarding penicillin production among the various
pharmaceutical firms participating in the program. A history of the
penicillin program written by a scientist involved in the effort notes
that ``the free exchange of information made possible by the lifting of
the U.S. antitrust law controls undoubtedly sped mass production during
1944-45'' and that it may have even ``led to increased competition
among firms that might not otherwise have undertaken to manufacture the
drug commercially.'' 8
---------------------------------------------------------------------------
\8\ Gladys Hoby, Penicillin: Meeting the Challenge (Yale Univ.
Press, 1985) at 213.
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Congress has also granted antitrust immunity in areas not involving
national security where there was a perceived need for joint industry
action. The Television Program Improvement Act of 1990 created a three-
year exemption from the antitrust laws for the purpose of ``developing
and disseminating voluntary guidelines designed to alleviate the
negative impact of violence in telecast material.'' 9
Specific legislative exemptions also exist for associations formed
solely to engage in export trade (Webb-Pomerene Act, 15 U.S.C.
Sec. Sec. 61-66), agricultural cooperatives (Capper-Volstead Act, 7
U.S.C. Sec. Sec. 291-292), and negotiations between sports leagues and
television broadcasters (Sports Broadcasting Act, 15 U.S.C.
Sec. Sec. 1291-1295).
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\9\ Pub. L. No. 101-650 Sec. 501, 104 Stat. 5127 (1990)
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One further existing statutory immunity provision merits mention.
The Defense Production Act of 1950 allows the President, or his
designee, to ``consult with representatives of industry . . . and other
interests in order to provide for the making by such persons, with the
approval of the President, of voluntary agreements and plans of action
to help provide for the defense of the United States . . .'' 50 U.S.C.
App. Sec. 2158(c)(1). Voluntary agreements formed under the aegis of
the Defense Production Act are exempt from the antitrust laws assuming
certain procedural provisions are followed. The Defense Production Act
has typically been used for the production of military equipment, such
as ammunition and armored vehicles.
While a useful example of the need for antitrust exemptions in this
general area, the Defense Production Act does not adequately address
the government's likely needs in the bioterrorism context. With respect
to manufacturing efforts, the scope of the Act appears to be limited to
``the expansion of productive capacity and supply beyond levels needed
to meet essential civilian demand.'' Many of the bioterrorism
countermeasures contemplated would be for civilian, not exclusively
military, use. The Defense Production Act includes extensive disclosure
provisions that may deter companies from sharing confidential
information and that may not adequately protect national security
interests. The Defense Production Act also contains detailed procedural
provisions, including preapproval requirements even for consultations,
that may prove too burdensome and that may cause intolerable delays in
the bioterrorism context.
the proposed exemption is narrowly focused and provides for appropriate
oversight
Under the proposed exemption, entities may engage in joint action
related to anti-bioterrorism activities ``for the purpose of, and
limited to, assuring or expediting the development, production,
distribution, or sale of [bioterrorism] countermeasures'' without
incurring any liability under the federal or state antitrust laws. The
antitrust exemption extends no further than the specific cooperation
necessary to respond to the threat of bioterrorism and specifically
excludes ``exchanging information among competitors relating to costs,
sales, profitability, prices, marketing, or distribution'' where such
information ``is not reasonably necessary to carry out the purposes of
covered bio-terrorism activities.''
The exemption requires the participating parties to file
notifications of their joint activity with the Antitrust Division of
the Department of Justice, the Federal Trade Commission, and the
Secretary of HHS. The Attorney General, after taking into consideration
the views of the FTC and HHS, can nullify the antitrust exemption in a
specific instance by determining that exempting the joint action
described in the notification would not further the public interest.
The Attorney General must also provide public notice of the identity of
the participants to an agreement exempted under this provision and the
agreement's area of planned activity. This provision provides a second
check on any possible anticompetitive activities growing out of
cooperative ventures authorized by the Act.
Mr. Bilirakis. Thank you very much, Dr. Friedman.
Dr. Noble.
STATEMENT OF GARY NOBLE
Mr. Noble. Good morning, Chairman and members of the
committee. I am Gary Noble, Vice President for Medical and
Public Health Affairs at Johnson & Johnson where I sit on the
Emergency Preparedness and Business Continuity Task Force.
Prior to that, I spent 29 years at the Centers for Disease
Control and Prevention working on infectious diseases policy
issues and legislative affairs.
I am pleased to testify today on behalf of the Advanced
Medical Technology Association or AdvaMed to express support of
the President's Bioshield initiative and urge inclusion of
medical technologies in the Bioshield legislation.
AdvaMed represents more than 1,100 innovators and
manufacturers of medical technologies. Many of the technologies
our companies manufacture or are developing are integral to
rapid and effective responses to potential terrorist threats.
As I said, AdvaMed supports Project Bioshield initiative,
because it can focus attention on the critical needs and
provide economic incentives for the public-private interaction
to protect our Nation from bioterrorist threats.
We also strongly believe that Bioshield legislation should
include all medical technologies, including devices,
diagnostics, and health information systems, as qualified
countermeasures and medical products for use in emergencies.
Legislation should not limit, in our view, support for medical
technology research and development activities alone.
The proposal submitted to the Congress by the
administration provides discretionary authority for the
Secretaries of HHS and Defense to identify specific
countermeasures that would be appropriate for inclusion in the
national stockpile. We believe the Secretaries should have the
clear authority to consider all medical technologies in these
determinations.
Technologies represented by our industry add critically
needed prevention, detection and treatment capabilities. Let me
just enumerate some of those. Diagnostic tests to determine who
has been exposed or infected decide the most effective course
of treatment and limit the number of additional cases. As the
director of CDC once said, we can't fight the enemy if we don't
know where it is; we have to have the diagnostic capabilities.
Specialized drug delivery devices that may extend vaccine
supplies; drug safety technologies to protect the blood supply,
a critical need in emergencies; health information systems
which we have heard about this morning to track vaccine
delivery and document adverse events and to help detect and
track biological outbreaks; and decontamination and
sterilization technologies to restore facilities to a
contamination free state, which we here in Washington witnessed
recently, or 2 years ago. That is why we strongly recommend
that in drafting Bioshield legislation, the committee extend to
the Secretaries the authority to consider all medical
technologies for inclusion in the national stockpile.
The proposal submitted to Congress by the administration
would also allow for the use of drugs or devices currently in
development, if the Secretaries of HHS or Defense determined
that they may be effective in detecting, diagnosing, treating
or preventing a serious or life threatening condition in
emergency situations. The Secretaries have the ability to
consider all medical devices. They should have the ability,
including, for example, 510(k) products for use in such
emergencies.
Most diagnostic tests are reviewed through 510(k) process.
A test approved to detect a specific bacterium or viral agent
may be modified, for example, to detect a related bacterium or
virus. Such a product could have a countermeasure application
and, therefore, should be covered by this legislation.
In addition, as the committee works on Project Bioshield,
we can also recommend that the committee be mindful of the
problems that can arise during a crisis in getting medical
technologies to patients. In the wake of a significant attack
or disaster, it will be necessary to ensure that local
providers have adequate medical supplies to care for their
casualties.
AdvaMed has worked closely with other industry groups to
develop a planning guide for State and local emergency planners
concerning medical supply chains and logistics. A prototype of
this has been distributed and was mentioned earlier this
morning.
AdvaMed is also concerned about business continuity and the
potential vulnerability of facilities that may be the sole
manufacturer of certain critical medical supplies. If these
sites were to be incapacitated for whatever reason, supplies
essential to quality health care may not be available when and
where they are needed. We would, therefore, recommend that in
the legislation the Secretaries of HHS and Defense be asked to
consider the need to stockpile additional inventory of these
critical supplies that may be manufactured by only one or two
manufacturers.
Mr. Chairman, thank you for holding this hearing today.
AdvaMed strongly supports the public-private partnership that
Project Bioshield creates. We believe that harnessing the
creative abilities of both the public and private sectors will
be necessary to effectively address the bio-terrorist threats
that we may face.
We believe Project Bioshield will allow the public to
benefit from the prevention, detection, and treatment
capabilities our industry can provide. AdvaMed stands ready to
work with your committee to ensure the enactment of Bioshield
legislation consistent with our testimony. I am happy to answer
any questions.
[The prepared statement of Gary Noble follows:]
Prepared Statement of Gary Noble, Vice President of Medical and Public
Health Affairs, Johnson & Johnson on Behalf of The Advanced Medical
Technology Association
On behalf of AdvaMed's (the Advanced Medical Technology
Association) Medical Technology Preparedness Council, I am pleased to
provide testimony in support of Project BioShield. My name is Dr. Gary
Noble and I am Vice President for Medical and Public Health Affairs at
Johnson & Johnson, where I serve on the company's Emergency
Preparedness and Business Continuity Task Force. I also spent 29 years
at the Centers for Disease Control and Prevention working in the areas
of infectious disease, public policy and legislative affairs.
Johnson & Johnson develops a wide range of health care products,
including devices, such as surgical supplies, diagnostic instruments
and assays, and products used to ensure the safety of the blood supply.
AdvaMed represents more than 1,100 innovators and manufacturers of
medical devices, diagnostic products and medical information systems.
Our members produce nearly 90 percent of the $75 billion in health care
technology products consumed annually in the United States and nearly
70 percent of $170 billion purchased around the world annually. Many of
these technologies--such as rapid tests to diagnose diseases caused by
bioterrorism, gels and foams that can rapidly close wounds,
bioengineered skin products for burn victims, and information systems
to communicate critical public health information--form an important
part of a timely, effective response to terrorist attacks.
advamed's medical technology preparedness council
In response to the events of September 11, 2001, AdvaMed
established the Medical Technology Preparedness Council to assist
federal agencies in ensuring that the health care delivery system is
fully prepared. The Council, established in October 2001, meets
regularly to discuss issues and concerns, and has begun to work with
key government preparedness entities including the Office of Emergency
Preparedness (OEP), the Secretary's Command Center, the Food and Drug
Administration (FDA), the Metropolitan Medical Response System (MMRS),
and with individuals at the Centers for Disease Control and Prevention
(CDC) who were administering the Strategic National Stockpile, among
others.
We strongly support the principle of a public-private partnership
in the area of preparedness. AdvaMed sponsored a sold-out conference on
February 6, entitled ``Innovation for Preparedness: the Public-Private
Partnership,'' to strengthen the partnership between the government and
the private sector on preparedness and to connect medical technology
innovators with appropriate federal preparedness entities.
Representatives from key preparedness entities within the federal
government, including OEP, CDC, FDA, the Department of Defense, the
National Institute of Allergy and Infectious Diseases (NIAID), the
Department of Defense, the U.S. Army Medical Research Institute of
Infectious Disease (USAMRIID) and the Environmental Protection Agency
participated in the conference.
medical technology: key to rapid and effective response
Many of the technologies our companies manufacture or are
developing are integral to a rapid and effective response to any
potential terrorist attack, including among others:
Diagnostic Tests: In November 2001, Roche Diagnostics and the
Mayo Clinic announced the development of a new rapid anthrax
test that can detect anthrax in humans in an hour and quickly
made the test available to public health agencies and hospital
and reference laboratories. Companies are working to develop
diagnostic tests for other bioterrorist infectious agents,
including smallpox. AdvaMed and its companies are also working
cooperatively with FDA and the CDC to speed development of a
diagnostic test for West Nile virus.
Vaccine and Drug Delivery Devices: ``Microdelivery'' devices
in development by BD will deliver vaccines more efficiently and
effectively, allowing better absorption by the body and at the
same time extending vaccine supply. For example, in
collaboration with USAMRIID, researchers have shown that use of
these skin-based microdelivery technologies can significantly
improve the performance of next-generation recombinant protein
vaccines against anthrax and the organism that causes toxic
shock.
Biochemical Decontamination Technologies: We saw the
importance of technologies to decontaminate large contained
areas and their contents, sensitive electronic equipment, mail
and other items after the anthrax attacks of 2001. STERIS
Corporation and the U.S. Army Edgewood Chemical Biological
Center have entered into a collaborative research and
development project to evaluate, optimize and modify STERIS's
Vaporized Hydrogen Peroxide (VHP ') technology and
to demonstrate its effectiveness against biological and
chemical warfare agents.
Blood Safety Technologies: Companies continue to work on
technologies to protect our blood supply through inactivation
or pathogen removal technology to inactivate or eliminate
blood-borne viruses, parasites, lymphocytes and bacteria from
blood products.
Advanced Burn and Wound Care Technologies: Companies have
developed gels and foams that can rapidly close wounds and
bioengineered skin for the treatment of second and third degree
burns. On September 11th 2001, Smith and Nephew, Inc. employees
personally drove bioengineered skin products to New York City
and Washington, D.C. to ensure patient access to these critical
technologies despite the disruption to the distribution and
supply chains because of U.S. airspace closures.
Health Information Systems: Coordination of information by
local, state and national public health authorities is key for
managing efficient immunization activities and detecting
biological outbreaks. Specialized vaccination tracking systems
being developed by BD and others can help document and manage
adverse events to vaccines while assuring rapid, safe vaccine
deployment. As a measure of the critical role health
information systems can play, last Friday, the Department of
Health and Human Services (HHS) announced that it will begin
testing a system using handheld personal digital assistants
(PDAs) for transmitting urgent information about biological
agents to clinicians. The three-month pilot test is designed to
gauge the best ways for federal officials to communicate
effectively with front-line clinicians in the event of a
bioterrorist attack.
Basic Medical Technologies: Basic medical technologies are
also essential during times of crisis including ventilators,
imaging technologies and infusion and monitoring equipment
among others as well as gowns, gloves, masks and respirators to
protect health care workers. A November 2001 JAMA article co-
authored by Anthony S. Fauci, M.D. attributes the reduction in
mortality in the inhalation anthrax cases to technological
advances in diagnostics, imaging, microbiology, antibiotics and
critical care.
advamed supports project bioshield
AdvaMed strongly supports the Project BioShield initiative. Recent
media reports confirm that some terrorist groups have the willingness
to use bioterror agents and have been trying to develop the capability
to launch infectious agents. Additionally, the rapidity of the global
spread of severe acute respiratory syndrome (SARS) highlights the
vulnerabilities we face.
Specifically, AdvaMed's Council supports provisions in Project
BioShield that will:
Speed research and development on biomedical countermeasures
by streamlining current NIH processes and providing funding for
the construction and improvement of facilities needed to safely
support research and development of countermeasures;
Provide necessary funding to purchase biomedical
countermeasures for the stockpile particularly those
countermeasures determined not to have commercial markets; and
Allow the Secretary to make promising treatments available in
an emergency, even for those products that do not yet have full
FDA approval.
project bioshield should include all medical technologies
Qualified Countermeasures. It is critical that all medical
technologies--including devices, diagnostics and health information
systems--be eligible for inclusion in all aspects of Project BioShield.
The proposal submitted to Congress by the Administration provides
significant discretionary authority for the Secretary of HHS to
identify specific countermeasures to threats that would be appropriate
for procurement and for inclusion in the national stockpile. The
Secretary must annually determine whether such countermeasures have a
significant commercial market other than as homeland security
countermeasures. The Secretary should have the clear authority to
include all medical technologies in these determinations.
While many focus on vaccines as the sole countermeasures needed to
counteract bioterror agents, as we saw with the inhalation anthrax
cases and are seeing again with SARS, the ability to diagnose
individuals to determine who has been exposed is essential to treatment
and to limiting the contagious spread of infection. Additionally, in
the case of the anthrax attacks in the Senate Hart Building, the
Brentwood Postal facility and others, as manufacturers continue to
develop rapid tests like the Roche-Mayo Clinic anthrax test, they hold
the promise that many individuals will be able to forego prophylactic
antibiotic or other treatment. And as diagnostic tests advance, we will
be able to detect those who have been exposed and are infectious yet
are not exhibiting any signs of illness--as some are speculating is the
possibility with SARS.
In the event of a bioterrorist attack, it will be critically
important to ensure that all of the elements essential to treatment--
diagnostic tests, specialized syringes and needles to deliver vaccines,
information systems to assure safe and rapid vaccine deployment, and
more--are delivered along with the vaccines. We strongly recommend that
in drafting BioShield legislation, the Committee extend to the
Secretary the authority to consider all medical technologies, including
devices, in determining what technologies are needed to protect our
nation from potential bioterrorist events.
Medical Products for Use in Emergencie. The proposal submitted to
Congress by the Administration would extend authority to the
Secretaries of HHS and Defense to declare a national, public health or
military emergency justifying the authorization of a drug or device if
they determine that it may be effective in detecting, diagnosing,
treating or preventing a serious or life-threatening condition. They
must also determine that the known and potential benefits of the
product outweigh the known and potential risks of the product and that
there is no adequate, approved and available alternative.
The Secretaries should have the ability to consider all medical
technologies for use in emergencies. For example, most diagnostic tests
are reviewed through FDA's 510(k) process. A test approved to detect a
specific bacterium or viral agent may be modified to detect another
bacterium or virus of the same family. FDA's 510(k) process recognizes
that diagnostic test development is an iterative process that builds on
the knowledge gained from the previous infectious agent to develop
tests for similar agents. Thus, it is conceivable that a previously
approved diagnostic test may also prove to be useful in screening some
bioterrorist agents. The value of this process is not limited to
diagnostic tests but is the mainstay of all 510(k) products.
We strongly recommend that the Committee draft legislation that is
broadly inclusive of all medical technologies, including 510(k)
products. In the event that a product might have a needed
countermeasure application, it should not be excluded because of a
technicality.
need for strong liability protections
AdvaMed encourages the inclusion of strong liability protections
for all aspects of Project BioShield, including medical devices.
Presumably, those products that are declared qualified countermeasures
under Project BioShield would also be declared qualified anti-terrorism
technologies under Section 861 of the Homeland Security Act and would
thus be eligible for the liability protections of that Act. However, it
is not clear that companies whose products are declared for use in
national, public health or military emergency situations would be
eligible for the Section 861 protections. Such products, by definition,
have not yet been reviewed or approved for use by FDA. Liability
concerns will be a key consideration for companies manufacturing both
qualified countermeasures and emergency-use products and the
legislation should make clear that the liability protections of Sec.
861 of the Homeland Security Act apply to such products.
importance of assuring adequate supplies in the event of a significant
attack
As the Committee works on Project BioShield and assuring the
availability of medical technologies to protect and treat patients, we
also recommend that the Committee be mindful of the problems that can
arise during a crisis in getting these technologies to patients. In the
wake of a significant attack or disaster, it will be necessary to
ensure that local providers are adequately supplied with appropriate
medical equipment to care for casualties. As part of the AdavMed's
preparedness efforts, we have invested significant time and resources
in working with the appropriate federal authorities to ensure that the
needed medical materials and supplies will be available.
There is a critical initial period of 12-24 hours during which most
supplies will come from local stocks in hospitals, other health care
facilities, and local distributors. However, after that initial period,
there will be a need to resupply these facilities. Local planners in
particular seem to take the approach that ``if it is needed, it will
appear.'' AdvaMed has worked with Office of Emergency Preparedness and
MMRS regarding the logistics of moving medical supplies to the scene of
a major attack. Our objective has been to make planners at all levels
aware of the issues around resupply and to provide advice about who to
contact for resupply.
AdvaMed has worked closely with related trade associations, the
Health Industry Distributors Association (HIDA) and the Association for
Healthcare Resources and Materials Management (AHRMM) to develop a
planning guide for state and local emergency planners that explains
medical supply chains and logistics. The guide is currently being
printed and details are being worked out for the physical distribution
to members of the National Emergency Management Association (NEMA), the
Association of State and Territorial Health Officials (ASTHO), and the
National Association of City and County Health Officials (NACCHO). A
prototype of this booklet is attached for your information.
AdvaMed has also supported the efforts of the AHRMM, HIDA and the
Health Industry Group Purchasing Association (HIGPA) in the development
of supply formularies. The formularies, which vary depending on whether
the incident is chemical, biological, radiological, explosive, etc.,
are intended to act as a benchmark for emergency supply preparedness.
They can be customized to meet the individual needs of hospitals and
the communities they serve.
AdvaMed is also concerned about ``business continuity'' and the
potential vulnerability of certain sites that monitor manufacture
critical medical supplies. These sites may be the sole source for
certain supplies. If these sites are incapacitated for whatever reason,
critical supplies essential to quality health care may not be
available. Ways to address this dilemma include establishment of
alternative site manufacturing capacity as well as stockpiling
additional inventory. We recommend that the Committees consider this
issue and that the Department of Homeland Security's Office of
Information Analysis and Infrastructure Protection be charged with
examining solutions that would provide incentives for industry to
create back-up capacity or such other solutions as may be appropriate,
including use of the Strategic National Stockpile.
conclusion
We thank the Chairman for holding this hearing today and we
appreciate the opportunity to provide testimony. During this time of
national crisis, the Medical Technology Preparedness Council stands
ready to work with the federal government to achieve our mutual goals
of defending the homeland from terrorist attacks and providing the best
medical care possible for our citizens. We also look forward to working
with the Committee to assure the enactment of BioShield legislation
consistent with our testimony. I would be happy to answer any questions
that the Committee may have.
Mr. Bilirakis. Thank you very much, Dr. Noble.
Thanks to all of you. The Chair yields to Mr. Cox, the
chairman of the full select committee, to inquire.
Mr. Cox. Thank you, Mr. Chairman, and thanks to members of
our panel for your illuminating testimony. I am going to
address just a few questions to the entire panel, and leave it
to your discretion who wants to jump in and answer.
Does anyone have a concern with the adequacy of the
liability protections in the legislation as drafted? Dr. Read?
Mr. Read. The issue of product liability is very important
for companies that are analyzing the risk and reward of getting
involved in a long term research program for countermeasures.
So both investors in those companies and their managements are
going to be looking at this issue.
In some sense, it is just a cost of doing business. There
are some sectors in our economy where we don't expect any
special help or treatment, but in the case where the market is
uncertain, and Bioshield is going to take some important steps
to improve that, and in cases where there is not--where the
products are unknown and may be used in a setting that is
really quite outside the usual posture toward balancing risk
and benefit, as we do in our civilian lives, and finally in a
setting where the sponsors of a company may actually have very
little control over how the thing they produce is actually
used, because it may be in a government stockpile and used
under emergency powers and so on as envisioned here, these are
all situations which raise the importance.
So as I understand the way this legislation is drafted
today, it could use extension to products that would be
procured under this, and in the R&D phase we have some
coverage, but I think the emergency use and actually following
procurement and then in use, I think this needs to be extended.
Mr. Cox. Dr. Noble.
Mr. Noble. I would simply add that I think that the
liability needs to be inclusive of the broad range of medical
technologies, particularly those that have been mentioned that
are not yet approved. Companies are going to be very reluctant
to enter into the marketplace or even into an emergency
situation without some knowledge that there is a ceiling, some
protection for not only the pharmaceuticals and vaccines but
for the broad range of products that may be developed just for
an emergency situation.
Mr. Cox. In the paradigm situation, assuming that this
Bioshield proposal becomes law, can you tell me whether or not
firms would be interested chiefly in having the government
finance the R&D or rather whether the firms would be interested
in being paid at the completion of the R&D successfully and the
delivery of a vaccine, serum or what have you?
Mr. Friedman. If I may respond, Congressman, I don't think
there is a single model that I am prepared today to say is the
preferred model. The factors to recognize are the ones that you
are dealing with, which is recognizing that the vast majority
of good ideas that begin testing ultimately fail, not because
people are not well intentioned, not because the scientists are
not devoted or the equipment is the best. It is because of our
imperfect understanding of biology and medicine that these
things fail. Either they are not effective enough or they are
unacceptably toxic.
We know those are the risks inherent in developing any
medicine, and they are certainly true for these bio-terrorist
or infectious disease risks as well. There are costs associated
with those research activities, how one defrays those costs. Is
it done as the research continues? Is it reserved at the end in
terms of recouping that?
There are a variety of different ways of doing it. The
sensitivity is just that--we along with others are interested
in engaging with you and the administration in thinking about
the best way to deal with these very substantial problems that
are not going to change within the foreseeable future. Our
knowledge isn't going to suddenly get better, unfortunately.
Mr. Cox. Dr. Read.
Mr. Read. I think that is a very important question, but I
would consider rephrasing it. It is really not what the
companies want. It is what we want, and what is the best way to
get what we want as a society.
Mr. Cox. If I may stick with my original question, the
reason I put it that way is that we are moving this legislation
because there are certain things that we want that the industry
isn't in a position to provide without the bill.
Let me just disclose the premise for the question, which is
my understanding of the biotech industry which is heavily
represented in my district. In fact, in southern California and
in Orange County, in particular, we have the preponderance of
this activity in the country. I did a lot of work in the
venture capital area for about a decade before I came to
government.
My understanding of this industry is that it operates on
long lead times and that it burns a lot of cash, and that there
is a lot of unrequited investment, and that once in a while you
are fortunate and you can pay back all of the other stuff. That
being the case, it doesn't seem to me that a paradigm built
into any legislation that we would write that has you paying
for all the R&D and hoping to get lucky 5 or 10 years from now
is what we should expect, really, to see, and we want to make
sure the legislation works in the other paradigm, which is pay
as you go, as it were.
That is my premise, and I need to be corrected if I am
mistaken.
Mr. Bilirakis. Well, but very brief responses to that,
please.
Mr. Cox. Dr. Read and Dr. Baker. Mr. Chairman, I am
finished asking questions. So I will just----
Mr. Bilirakis. All right. Very brief responses. Dr. Read,
Dr. Baker.
Mr. Read. Just briefly, if we focus a lot of money on the
R&D support, we will get companies gyrating toward being R&D
producing companies, and if we focus more on the end result, we
will get companies focusing on delivering products on the shelf
ready to be used.
It is true that the middle stage of these biotech companies
is the hardest part to fund. It is easy to fund the beginning,
because it is cheap. It is easy to fund the end, because the
goal is in sight. But if we make that goal clear and valuable
and the market is working, then investors will fund the middle.
We need a mix.
Mr. Bilirakis. Dr. Baker.
Mr. Baker. Very briefly, the FDA approval process is
different for bio-threat agents. You have to do human toxicity
testing in parallel with animal efficacy testing. Clearly, if
you have a dual use drug, most companies will take on the human
use applications anyway. That is part of their process.
I think where you need to move in is when you have testing
that goes specifically for an application or development that
goes for a specific application where there is no benefit to a
company. There I would agree with some of the people that
suggest that maybe the government could take that testing
internally and use the drug and provide some type of royalty
back to the company for developing it for these applications,
along with alleviating the company of liability concerns.
Mr. Bilirakis. The gentleman from Ohio, Mr. Brown, to
inquire.
Mr. Brown. Thank you, Mr. Chairman. Dr. Friedman, nice to
see you again. Thank you for joining us.
Do you have any concerns regarding BIDOL, the Act which
promotes technology transfer and returns the government--and
retains for the government the right to use technologies
developed with government funds? Do you think changes to BIDOL
should be part of this proposal?
Mr. Friedman. I am certainly not prepared to answer an
important question like that today. I think the issue that you
are raising is an extremely valid one, which is science today,
more than ever before, is a collaborative activity and, in
order for us as citizens to get the most of that, how do we
promote the best exchange between Federal agencies, academia,
and industry.
The precise dimensions, the characteristics of that, I
think, deserve careful thinking, but today I am certainly not
representing a position from PhRMA that can address that.
Mr. Brown. Okay, thank you. I have heard from both sides of
the aisle and both committees, Commerce and Homeland Security,
a real concern, as I said, bipartisan concern about the
government retaining some of those options because of the
ultimate cost of all this, and much of the research done by
NIH, much of the research done in some cases even by smaller
entities like Walter Reed, that the taxpayer's share and not
just the wondrous new drugs that can protect us from not just
bioterrorism but other infectious disease, but that the
taxpayers also get something for their dollars beyond the new
drug, gets some savings in either the cost of some royalties
going back to the government for a drug benefit or whatever it
might be.
Dr. Baker, thank you for joining us. How do we improve
Bioshield to better encourage university involvement?
Mr. Baker. Well, I think there are a number of issues. One
is to enhance the research transfer over to universities. I
think one of the issues is it is not defined whether or not
this would be in addition to the funding that is already
provided through NIAID. It is also clear from the NIAID's
current $1.7 billion budget how much of that goes to
universities and to the external program.
So having some perspective on what is going to be involved
with this and how it can be used for infrastructure to enhance
basically your research base in the universities is important.
The second thing, I think, is there are liability concerns
for universities. Universities, I think, in many ways under
BIDOL would be happy to provide the government back all the
rights for their applications in this. They don't view these as
commercial development that they can benefit from in the long
term, and they are very hard to tech transfer. But there have
been liability issues raised where universities have been sued
with technology they have provided to companies or to other
entities. So that is another issue that needs to be resolved
for the universities.
So those are two major issues I think would help encourage
universities to participate in this.
Mr. Bilirakis. Would the gentleman yield?
Mr. Cox. Certainly.
Mr. Bilirakis. Certainly, on the liability--well, let's put
it this way. I support the concept of what we are trying to do
here. People have said some improvements have to be made. I
think they have been acknowledged. Mr. Cox, others, have
acknowledge that.
You know, gentlemen, we are at war, and an awful lot of
people are sacrificing, certainly those who have men and women
in harm's way right now. But we are at war, and I would hope
that whatever we do here is--well, let's just put it this way.
I would expect pharmaceutical companies to be cooperative in
terms of what is needed in order to fight this war,
particularly on the home front.
What we can do to help toward that end, fine, but if we
don't do the job perfectly, I still would hope and expect and
have confidence in our pharmaceutical companies, biotech
people, what-not, to do the job. Do you have any comment in
that regard? Dr. Friedman, you are sort of chomping at the bit.
Mr. Friedman. I'm sorry to--That is why I don't play poker,
I guess. I think your point is exceptionally well made. I have
spoken directly with the CEOs of many of the PhRMA member
companies, their scientific directors, and many of their staff.
The passion that they feel--It's a sort of a scientific
patriotism, especially stimulated by the events of 9-11,
especially stimulated by anthrax.
The irony is that we as a Nation have been challenged in
the one area where arguably we have the greatest national
strength, our biomedical science. Because of NIH, because of
academia, because of industry, this is one of our national
treasures, and the people who are involved in day to day
working in this area feel so committed to wanting to make
contributions in this. We share that concern.
So please don't misunderstand any of the suggestions, any
of the issues that are raised, any of the constructive
criticisms that are being offered as any reluctance to support
in a general patriotic way what the Nation needs. What we are
talking about is getting the biomedical defense that we as a
Nation deserve, and we are trying to optimize that.
There are many different ways of doing that. I wouldn't
presume to say that we have all the areas understood or
covered, but there is enormous goodwill and interest.
Mr. Bilirakis. Thank you, Doctor. I'm on my own time now.
Dr. Read, please, proceed.
Mr. Read. I would just like to echo those comments from Dr.
Friedman. Many, many biotechnology executives and their
investors, I know, are asking themselves today, you know, how
can we help. Part of what motivates me is that this problem is
both very urgent and very long term.
As long as our Nation is distinguished by its wealth and
its influence from others, we are going to be a particular
target, and part of what we are doing today is confronting the
challenge of laying the ground work, the economic policy ground
work for an industry that doesn't exist today, a biodefense
industry.
We need to start thinking about some of the drivers that
will build a healthy, properly supervised, properly overseen
and productive industry, focused on the goals, not focused on
the process. So we can depend on the patriotism of America's
scientists and pharmaceutical and biotechnology researchers in
the short run, but we should also be laying the ground work for
a long term response to this important event.
Mr. Bilirakis. Yes. This is, of course, what we are trying
to do. I appreciate those comments, and I know they come from
the heart, and I trust that they reflect the views of the many
institutions that you represent.
Mr. Thompson.
Mr. Thompson of Mississippi. Thank you very much. We have
talked and heard today about the government driving the market
for some of the solutions. You gentlemen represent various
aspects of the industry. Are you comfortable that, with the
exclusive authority that Bioshield puts in the hands of the
government, that they will in fact treat the selection of the
companies to do the research fairly?
Mr. Read. If I could start on that, I think that a great
deal of thought has gone into the bill and the intention about
how to implement it, but we are in the early days of creating a
policy and economic infrastructure, and there's bound to be
some exploration as we go.
In the improvement and enhancements of Bioshield, I think
we ought to look at some other mechanisms that have also been
proposed, as in the bipartisan Lieberman-Hatch legislation that
has been introduced. I think that there are things that we must
explore, and I don't think that the Secretary or Dr. Fauci have
had a chance. It is impossible for them to have fully thought
through all the issues of how to deal with a fast follower.
Often the better product is the second product. There are
intelligent mechanisms that could be put in place, and both the
original innovator who has to pony up the money to be the
pioneer and run the risk of getting all the arrows in his or
her back, and somebody who might be motivated based on their
research and their labs--you know, they think they've got a
better way than the guy or whoever is in the lead.
These are tough issues, but they are issues that can be
addressed by people of goodwill. This will should allow for a
continued dialog between the administration and industry as we
refine and explore some of these mechanisms.
Mr. Baker. If I could also address another component of
that question and also the chairman's question, I am a veteran
of what, unfortunately, is now the first Gulf War. You know,
being exposed at that point to agents that did not go through
regular regulatory approval, and also administering them as a
physician in the military, it raises concerns.
One of the things I would hope that doesn't happen in
Project Bioshield--we see this 1 to 2-month timeframe that is
laid up on the chart. I am not sure how that would achieve a
product that I would feel comfortable putting into people in
many cases.
It is not just choosing the companies that I think is
important, but it is how you go about the process and how you
make sure that, even though we are short circuiting some of the
bureaucratic means of the regulatory process, we don't short
circuit the safety means to a point where we cause more harm
than good.
I think that is a big issue with this project, and I think
it has been an issue already with the smallpox vaccine. So I
have a concern in that regard.
Mr. Thompson of Mississippi. Any of the other people care
to comment?
Mr. Friedman. I think the tension that exists is trying to
create a system that makes sure there is at least one company
or one group of scientists pursue an important need and at the
same time fostering competition, competition for the best
ideas, for the best products, for the best price and so forth,
and the two systems don't naturally link to one another.
You can design a system that will optimize one or optimize
the other. What we are trying to do today collectively is to
think about a system which will encourage for this large number
of products, more than 50, I believe you and others have
pointed out, that we will need in the relatively short time,
how we at least have one good candidate in each of those areas
while still trying to foster the sort of scientific competition
that should exist to bring us the second and third and
subsequent generation of even better products.
Mr. Noble. I would just say that I am sure that the
government is interested in having as many suppliers as
possible. So that if there is one that comes forward and the
threat continues long term and there is a need to create a
longer term stockpile, I am sure that the government--and based
on some past experience, I know that they are not happy with a
single vendor. So they will look for the opportunity to have
competition or second suppliers.
Mr. Bilirakis. Thank you, sir. Mr. Shadegg, chairman of the
Select Subcommittee.
Mr. Shadegg. Thank you, Mr. Chairman. I want to thank all
the witnesses for their thoughtful testimony. It seems to me,
we are dealing with a very challenging problem here, and I
think we have gotten some thoughtful testimony to that point.
I think it is fair to say that everybody agrees what we
ought to try to achieve, but there are serious questions about
how we get there. I want to focus on one in particular, not the
issue of we get one good drug and then we might have a better
one later. I hope we get to the one good drug or the one good
vaccine.
What I am worried about is the need to pass this
legislation very, very quickly, contrasted with what I think is
the biggest problem in the legislation, and maybe there are
two. The biggest problem that I see is, I think, a genuine
concern on the part of the Congress with what is completely
open-ended in terms of its design, and unprecedented, and there
has been discussion of that.
This funding is, in fact, mandatory and, if you heard
Secretary Thompson in response to Chairman Cox's question who
said, not only does the structure provide for unlimited funding
over a scope of years, it was absolutely totally unlimited
funding in a single year.
While I have a huge desire to get vaccines very, very
quickly, I have a great deal of concern with that structure.
Mr. Reed, or Dr. Reed, let me start with you. At page 3 of your
testimony it says, ``The scale of investment required is
manyfold larger than implied by the current Bioshield
proposal.'' I guess my question would be: I grant you that the
scale of investment required is manyfold larger than we may be
thinking about, but it seems to me it can't be larger than the
funding contemplated by the bill, which is rather open-ended. I
guess I want to give you an opportunity to clarify that point
in your testimony.
Mr. Reed. Well, I was reacting to the $6 billion that has
been described. That does seem to be enough, to me, over the
time scale that I think is relevant. Again, we are laying the
ground work for an industry that is going to make decisions and
produce products that are going to protect our children and
grandchildren. This threat is for the foreseeable future. I see
it as, more or less, on the scale of strategic nuclear defense.
Mr. Shadegg. I certainly agree.
Mr. Reed. In terms of timing, sir. I don't want to comment
on the specific legislative appropriation language that was
used here. The key message for me as a venture capitalist, what
am I going to be attuned to, is when this list of priorities
has been set and an innovator out of a university has a great
idea that may address that priority, will the customer be
there? Can I count on the market?
The standard really: Is it, more or less, as predictable as
civilian medicines are paid for today? It is not a perfect
system. There are surprises, but the system we have is driven
by data. There is a certain amount of predictability in how we
get reimbursed. There is a certain amount of predictability
about product liability and the regulatory environment, very
important here.
If we could reproduce a semblance of that with respect--It
is not a market failure. The market is just signaling to us
that we haven't put these things in place in order for the
market to operate.
Mr. Shadegg. I would certainly agree with you that the $6
billion may be way short of the mark. We in Congress have to
look, however, at the overall structure of the legislation.
Let me ask a slightly different question. Your testimony is
rather eloquent on focusing private sector investment and
sending the right market signals to not only the companies that
Dr. Baker represents but to the investors that you represent at
least here today. One of the things--I think Congress is going
to look at a different funding structure than is currently
proposed by the administration. I applaud the administration
for trying, but I'm not certain that Congress is going to be
comfortable with what is proposed.
Let me ask you a different point. It seems to me, at a
minimum we have to fix the liability issue, because when you
couple the question of are there appropriate market incentives
with the issue of liability, that is a disincentive that we
can, in fact, take out of the law. I guess I would like any of
you to comment on that particular point.
Mr. Friedman. I think it is obvious that every intervention
has side effects, and there wills never be a perfect one that
is uniformly effective and uniformly safe. So once we recognize
that, then the question is how much information, how much
confidence will the medical providers have when they offer an
emergency innovation to a population under some bioterrorist
threat?
The answer is it will never be enough. There won't be a
large enough number of clinical trials done because of the
nature of the products. The animal models that are used are
going to be imperfect. So we are starting off with so many
questions and so many unknowns that that is going to make it
very difficult.
The second issue is it is going to be a very dynamic and
confused environment when these products are likely used, and
associating a side effect with an intervention is going to be
particularly hard. So there are a lot of reasons to understand
why that is going to be complicated, and I think the need, not
only for companies but, as I implied before, for people who are
providing the medications and the question of how to deal with
those who are receiving the medications--there has to be some
sort of umbrella structure which recognizes that we will be
operating in an environment where we have much too little
information, but the medical need is so great that we can't
wait for more information.
Mr. Shadegg. My time has expired. Anybody else who wants to
could perhaps comment on that. But I want to make--Before I
conclude, I want to make the point that, if you have thoughts
on how this committee can create the proper incentives for
industry to do what needs to be done and for investors to
invest in any model different than what we are talking about in
this legislation, an open-ended mandatory expenditure under
which the Congress has no control whatsoever and which could
open the door to what Congressman Cox talked about before, a
future Secretary saying, gosh, I'd like to change this but it
is law, I think that would help; because I think that would
help us move this legislation forward quickly, which I think,
clearly, the full panel wants to do.
Mr. Bilirakis. Yes. Dr. Read, and then we will go to Dr.
Christensen.
Mr. Read. I think that there is room for a plurality of
mechanisms, and I know it is hard for the government to work
this way sometimes, but we may simply have to explore some
different mechanisms in terms of their ability to get industry
and our best people working on the right things at the pace we
want and with the oversight and the sense of fairness that we
need to feel comfortable. We just may have to explore some
things.
One mechanism I think we ought to explore has been proposed
and is gaining some serious interest with respect to global
health in terms of producing vaccines for AIDS, malaria and
tuberculosis, a purchase fund. If you could imagine a fund
where people actually believe that the fund was there and it
would stick to its promises and that, if you could hit a
certain list of specifications of efficacy and safety and shelf
life and pragmatism in terms of delivery in the field and so
on, that was the target you're aiming for, you knew the
customer meant it and was bound by it, I am sure that we could
come up with a mechanism for those important diseases and
probably countermeasures as well that would get the private
sector probably far beyond--with the resources really beyond
the government to invest against those goals, and there are all
sorts of ways to deal with the fast follower and sharing the
market that have been proposed.
I'd love to see some of that explored as part of this.
Mr. Bilirakis. Thank you very much. Dr. Christensen.
Ms. Christensen. Thank you, Mr. Chairman. In the
procurement of the countermeasures, it is somewhat dependent on
the production and delivery of needed quantities within 5
years. Dr. Read, I thought I heard--you voiced some concern
about the 5 years? If you could just elaborate on your concern,
and I would like to know from you or from anyone what types of
research might be excluded if we use that 5-year limit?
Mr. Read. I would say the 5-year limit excludes any
vaccines where we don't have a good research lead, and many
drugs. There are some things that could be done within the 5
years. Some very important devices, for example, and
diagnostics are achievable, and there are some things in the
pipeline now that could be done in that 5 years.
If we took away the exclusion of innovations that could be
used in the private sector and have a private sector market,
that expands the number of things that could be done in 5
years, because they wouldn't exist today if they weren't moving
forward under some private sector, civilian use.
So we certainly don't want to penalize innovators who are
heading forward with that. You might have a very good candidate
for procurement under Bioshield simply because they might also
have a smaller or even not so small dual use. We want to
encourage that, not discourage it.
My experience with FluMist might be useful. In the 1960's a
wonderful scientists at the University of Michigan, Dr. John
Masab, invented a flu vaccine under Army sponsorship. It began
clinical trials in the mid-1970's under NIH sponsorship. NIH
courageously persevered. Tony Fauci was a great champion for
this vaccine, and his team that worked on intramural-
extramural, 20 years of clinical trials, and there was not a
committed commercial sponsor until we decided that there was an
opportunity for a commercial flu vaccine given by a nasal spray
instead of a short.
Perhaps you have heard about FluMist. This product is now
at the FDA. We are hoping that it will be approved sometime
soon. It is a company called MedImmune that we merged with that
is carrying it forward, but this is now 36 years after its
invention, 27 years after the first clinical trial, and 8 years
after we first began a committed commercial effort to bring it
forward. So I think it gives you a sense that these timelines
can be pretty long.
Mr. Baker. You know, one of the big issues is you are right
now making a research investment of $1.7 billion at NIAID. I am
sorry to inform you that it is highly unlikely that any of that
will reach the stage that it will be Bioshield-able within 5
years. So you have to really look beyond that to recoup that
research investment.
In fact, you need to help encourage that and transfer the
technology over to the commercial sector effectively to recoup
the research investment you are making.
Ms. Christensen. That raises the other concern that I had,
because I thought I understood from the Secretary's testimony
and from my understanding of the bill that once those
countermeasures are approved, they are exclusively to be used
for bioterrorism.
A lot of us have voiced concern about the large output of
funds that the Federal Government would have to expend in an
open-ended fashion. How do you propose that we would change
this legislation to accommodate a private sector use or other
use for these measures after the Federal Government has spent
so much money in developing them and procuring them?
Mr. Read. A couple of suggestions. One is I think we ought
to delete the exclusion related to commercial use. In essence,
what we are doing is we are punishing the innovator for being
successful in finding a dual use. The government benefits when
the technology finds a civilian use, because it means that
production and all of these costs can be spread over both the
civilian use and the bioterrorism defense use.
Some of our most important opportunities are broad spectrum
antibiotics that could be used for serious hospital acquired
infections for agents that produce--that are resistant, that
may be very good agents against bio-threat agents. So I think
that it would be important to leave that out.
I also think the 5-year restriction is also worrisome and
that we should find a way to also make sure that these
incentives are there for longer term projects.
Ms. Christensen. Just a brief question that relates to the
question I asked the Secretary. There are some possible
amendments that might include requiring the product vendor to
follow through to get FDA approval, which is one question I
asked, or imposing requirements that specifically state who can
distribute, who can administer the product, etcetera. Would
that adversely affect--what is it called?--the push mechanism
for these drugs? Anyone can answer.
Mr. Read. Well, maybe some others, but the more you
decorate these requirements and the procurement with extra
provisions, it just figures into the cost of doing business. I
think the idea of having products get full FDA vetting is a
very good idea. We just need to find the right way to build
that in and still have the flexibility for the emergencies.
If we are looking for private sector investment, they will
look at the whole picture, and they will look at the things
that make it easier and more attractive and the things that
make it harder and less attractive, and balance that. We are
going to have to have some flexibility here. We are not going
to solve it all at this first bill.
Ms. Christensen. I agree.
Mr. Shadegg. [presiding.] The time of the gentle lady has
expired. First, I need to encourage the witnesses to be short
in their answers to further questions, because we are going to
have to go to a vote. I call on the gentleman from Connecticut,
Mr. Shays.
Mr. Shays. Thank you very much, Mr. Chairman. I would like
to ask the witnesses first: Given that there can be altered--
First, do you believe there can be altered biological agents?
Mr. Read. Absolutely. I think it is important to understand
that all infectious agents are naturally altering all the time.
So we have human manipulation, and naturally they are going to
be modified.
Mr. Shays. Thank you.
Mr. Baker. I would like to add, though, that the natural
evolution can be remarkably short circuited by simple
biotechnology techniques. There are in the literature
techniques where over a week you can increase resistance to
antibiotics by 64,000-fold, whereas it would take you billions
of years to do that naturally. So this is a different event.
Mr. Shays. All right. Thank you. Do you believe that the
concern of one of the witnesses before my National Security
Subcommittee is a valid concern, and his concern was expressed
by the fact that he said--He is a noted doctor of a major
medical magazine. He said his biggest concern is that a small
group of dedicated scientists could alter a biological agent
that would have no antidote and could wipe out humanity as we
know it.
Mr. Baker. I do believe--and I serve on a DoD committee
that reviews this--that altered organisms can present a
remarkable threat, and not just physically altering or
biotechnology altering a single organism, but releasing more
than one organism at a time in a synergistic manner could have
effects that are totally unpredicted by single or natural
infections.
Mr. Shays. Do you think that this legislation addresses
this issue?
Mr. Baker. Well, this was the one point I tried to make. I
think that, when you look at bio-threats as emerging infectious
diseases, you miss the nuances that could be engineered into
them or result from alterations in the amount of organism
release or how it is propagated to individuals.
So, yes, I think they need to think of it more in the text
of bio-threats agents and not as an emerging infectious
disease.
Mr. Shays. Let me ask you this. Thank you. What is the
private sector putting on the table for Project Bioshield? You
all want R&D money, a guaranteed purchase price, and liability
protection. What do you bring to the table?
Mr. Friedman. I can only represent the considerable
activity that----
Mr. Shays. I wish you wouldn't sound so sincere. Sound a
little more sinister or something. I can only--You have
appeared before me too many times, Dr. Friedman. I'm sorry.
Mr. Friedman. You leave me speechless.
Mr. Baker. While Dr. Friedman collects himself, it is the
opportunity cost. I hear willingness among my colleagues in the
biotech industry to seriously sit down and put a thumb on the
scale in favor of working on a serious countermeasure when they
still have opportunities, important opportunities for----
Mr. Shays. That's a fair response.
Mr. Friedman. And let me just add that people are doing it
now. You know, talk is cheap. I know of companies that are
committing resources, scientists, laboratories, their best
thinking now on some of these problems, without any of these
guarantees. But the question is can we optimize that system?
The fact that we've got a few things moving forward, I
think, is terrific, but we as citizens really want more.
Mr. Shays. Yes. I guess one of my concerns is that we are
not throwing money at something where money might have already
been spent, and that would be, you know, obviously, a concern.
Thank you, Mr. Chairman. I'll yield back. Thank you,
gentlemen. Appreciate the answers.
Mr. Shadegg. The time of the gentleman has expired. For the
last set of questions, Mr. Green.
Mr. Green. I will be very quick.
Mr. Shadegg. Just to give you a caution, we have exactly 9
minutes left.
Mr. Green. Okay. I have a number of questions, but I will
submit them and appreciate the opportunity to do that. I would
like to touch on one. Dr. Read or Dr. Baker, I know that I work
with Baylor College of Medicine in Houston, and a lot of the
research is being done by a lot of our great institutions, and
I am aware of what is being done locally, and I am glad for
this hearing to know what is being done elsewhere.
Let me ask one question, Mr. Chairman, and I will submit
the rest. PhRMA's website states that the 2002 survey of
medicines in development for infectious diseases found that the
pharmaceutical and biological companies were working on 256
medicines for these diseases, including medicines for smallpox,
anthrax, and the plague.
To follow up my colleague from Connecticut, if the industry
is already taking steps to develop countermeasures for these
products, is there really a need for this type of legislation?
Mr. Friedman. If I may respond, sir.
Mr. Green. Sure.
Mr. Friedman. If you look at the characteristics of those
large number of medicines, many of them are for diseases that
aren't seen as bio-terrorist threats. They are important
diseases, hepatitis, childhood illnesses, and so forth.
The number of needs is vastly greater than 250, and the
goal here is not to try and have protection in hand for every
conceivable risk, because that won't be possible, but to try in
a thoughtful, effective way to identify the highest risks and
then to marshall the right science to address that.
Some of the things are being--Some of the threat agents are
being addressed, but as was pointed out by committee members
earlier, there is really an urgent need for new antibiotic
classes and new immunologic modifications and new techniques
for diagnosis and so forth. These are not being adequately
addressed in the current environment.
Mr. Green. Thank you, Mr. Chairman. And I know we probably
have only 7 minutes to vote now.
Mr. Shadegg. We have about 7 minutes left, and we probably
have to leave here at 5. So, okay.
Mr. Noble. I just wanted to add that there are many
potential products in the diagnostic arena or other
technologies, for example, agents that we haven't yet
recognized. We now have SARS, and it probably occurs in a
virus.
There are lots of things that are known, but there are a
lot of things that aren't yet known, and we have to protect,
diagnose and be able to take care of those threats as well,
protect our blood supply if they are blood borne, for example.
Mr. Green. And I agree, and I understand the concern. In
fact, I'm glad the Secretary mentioned about SARS because of
the concern, because that is something that we need to address,
particularly since the People's Republic of China--seems like
they have drawn a wall there not to allow some information to
be shared. Thank you, Mr. Chairman.
Mr. Shadegg. I thank the gentleman for yielding back. I
want to especially thank this panel for their superb testimony,
but also for what you do on behalf of both my subcommittee of
the Homeland Security Committee and also on behalf of Mr.
Bilirakis's subcommittee. Mr. Bilirakis?
Mr. Bilirakis. Well, Mr. Chairman, thank you. Gentlemen, I
know Dr. Friedman has been here before at least. We will have
written questions to you. We would appreciate your responding
to those when you receive them. Thank you so very much.
Appreciate your patience.
Mr. Shadegg. With that, we will conclude the hearing.
[Whereupon, at 12:50 p.m., the subcommittee adjourned.]
[Additional material submitted for the record follows:]
Prepared Statement of Katherine Bowdish, President and Founder, Alexion
Antibody Technologies, Inc.
Chairman Bilirakis, ranking member Brown, Chairman Shadegg,
distinguished members of the Subcommittees, I am honored to present
this testimony on the application of the very latest biotech solutions
for defense against the very real threat of bioterrorism facing our
nation today.
As we saw in the attacks against our nation in 2001, Inhalation
anthrax is a highly fatal disease if not identified early enough for
antibiotics to be of use. Death usually occurs within a few days of the
onset of acute symptoms. The causative agent is Bacillus anthracis, and
the lethality and short time course leading to death are due primarily
to the effects of the toxin produced by the bacteria. Blocking the
activity of anthrax toxin could provide time for appropriate
antibacterial agents or the immune system to clear the infection.
Anthrax toxins could be blocked at several stages in the process of
toxin entry into the infected host cells. Such anthrax toxin antidotes
might inhibit binding to the cellular receptor, processing of the
toxin, or assembly of the toxin components on the cell surface prior to
translocation of these molecules into the cell.
Antibodies are among the most logical and natural anti-toxins that
could be developed for treatment of anthrax. There are two types of
antibodies, monoclonal antibodies and polyclonal antibodies. Monoclonal
antibodies are extremely effective, there is no risk of transmission of
infectious agents, and the supply of antibody is unlimited as the cells
can be continuously grown in culture. Polyclonal antibodies, on the
other hand, are collected from a large pool of donors increasing the
risk of transmission of infectious agents, and furthermore, the supply
is limited by the number of donors available at any given time. Human
or humanized antibodies have been proven to be safe and well tolerated
for therapeutic purposes. Mouse monoclonal antibodies have been shown
to neutralize (block) the anthrax toxin in rats, and guinea pigs have
been passively protected against anthrax infection using polyclonal
guinea pig antibodies. Potently neutralizing human monoclonal
antibodies to anthrax should therefore have therapeutic value in human
anthrax infections.
Alexion Antibody Technologies, a wholly-owned subsidiary of Alexion
Pharmaceuticals, has successfully isolated fully human monoclonal
antibodies with therapeutic potential for biodefense. Using our
proprietary technology, we have isolated fully human high affinity
anti-anthrax toxin antibodies that show complete protection in animals
against anthrax toxin challenge, as well as antibodies to other
biodefense agents that we hope to test soon. We would be delighted to
coordinate with government officials to see that our antibodies and our
expertise are utilized for emergency stockpile generation to protect
both civilian and military populations.
Specifically, we have used our proprietary technology to isolate
fully human high affinity, potently neutralizing antibodies against
anthrax toxin proteins. To do this, we cloned the genes encoding human
antibodies from blood and bone marrow of vaccinated military personnel
to create human antibody display libraries. Human antibody fragments
that specifically bind to anthrax toxins were isolated from the library
through a process termed ``panning''. A panel of human antibodies that
bind anthrax proteins was generated. Antibody fragments were assayed
for their ability to neutralize anthrax toxin activity in cell based
assays.
Over 140 individual antibody fragments with strong binding activity
were further characterized. Laboratory neutralization assays using the
purified antibody fragments were performed, demonstrating that 17 of
the first 21 anti-toxin antibody fragments in the first screens were
able to block the effects of the anthrax toxin with greater than 80%
protection from cell death. Five antibody fragments protect fully
(100%) at this concentration.
Because two of the antibody fragments protect to 100% in cell based
assays, they were chosen for testing in animals against recombinant
anthrax toxin challenge. In these studies, the two antibody fragments
protected fully allowing complete survival of the animals following
anthrax toxin exposure.
To our knowledge, this work demonstrates for the first time that
human anti-anthrax toxin antibodies that are potently neutralizing can
be isolated from immunized donors. These antibodies, either alone or in
combination, may be useful as immunotherapeutics at the onset or during
the course of an infection and for the passive protection of
unvaccinated personnel that might need to enter an area of suspected
anthrax release.
The work described above has been discussed with and presented to a
large number of scientific experts in anthrax, on other agents of
bioterror, as well as experts in antibody therapeutics, and passive
immunotherapy. In order to carry out the work initially, we described
our approach to some of the worlds leading experts in anthrax at the
United States Army Research Institute of Infectious Disease (USAMRIID).
The willingness of the USAMRIID researchers to work with us by
transferring needed materials, as well as having further discussions in
person and by phone throughout the work lends support to our approach.
On completion of the work, we drafted a manuscript describing our
success in anti-toxin therapy and sent it to two of the worlds leading
experts in antibodies and passive immunotherapy at The Scripps Research
Institute, a world renowned institute for immunology research. These
experts approved of the research and suggested submission of our work
to a world class journal read by scientific leaders throughout the
world.
In addition, in discussions of our approach to a leading botulinum
expert at UCSF, the comments we received were how important the work
was, how important it was that the researchers carrying out the work
have the necessary capability and expertise, and how comforted he was
that our company with it's significant expertise was willing and able
to take on the work. Furthermore, in discussions with the CDC, where we
already have a program ongoing in biodefense against a different threat
of bioterror, the lead CDC participant in that program reviewed the
anthrax research and commented that is was clear Alexion knows what it
is doing. Experts at each of the above agencies have either offered
their assistance to further the work, or have agreed to participate
with us whereby each offers their expertise toward a different agent of
bioterror in the form of an NIH program project grant, or both.
Finally, when this work was presented at a large, open peer
reviewed scientific meeting, the members of the audience of experts
were excited by the developments, and encouraged that we would obtain
appropriate federal government support to complete development through
the next phases leading to emergency stockpile generation.
Alexion's biodefense program has been entirely internally-supported
to date. We saw a need and recognized that we had the ability to offer
our technology and expertise. And most importantly, we have
demonstrated success of our approach. It is our hope that Congress can
help us ensure that the appropriate decision-makers in our federal
government are aware of our critical and highly relevant work for
consideration for civilian and military defense.
Building the necessary emergency stockpiles for civilian and
military defense is certainly something that no one company can or
should accomplish solely with private funding. Therefore, we are
looking for assistance from the Federal Government through NIH for the
final phase for development of these therapies. Our next goals are to
test the current panel of anthrax antidote antibodies against live
anthrax spore challenge in relevant animal models, manufacture the
antibodies according to FDA guidelines, and do a Phase I safety study
in humans. Importantly, Alexion has significant monoclonal antibody
clinical development and manufacturing expertise. Alexion can build and
run a government-supported manufacturing facility, or Alexion and a
contract manufacturer can provide the needed material.
Our very successful and highly relevant work on anti-toxin therapy
for anthrax exposure could quickly lead to the emergency stockpile
needed for biodefense against anthrax. Further, we are currently
applying the same technology to additional agents of bioterror in our
research laboratories. Preliminary results suggest we will have similar
successes with other bioterrorism agents, such as smallpox and plague,
allowing us to proceed with desperately needed emergency stockpiles of
antidotes to a wide range of bioterror agents. At the minimum, we hope
our research will deter any would be terrorist, and alleviate public
anxiety.
I thank the committee for this opportunity to present this
testimony and welcome any written questions.
______
Responses for the Record of Dr. Leighton Read, Representing the
Biotechnology Industry Organization
Question: Can you explain for the Committee the primary concern of
the biotechnology industry regarding liability? And, what are your
recommendations for providing liability protections that ensure the
biotech industry will maintain a long-term commitment to this effort?
Response: BIO sees liability as a profound concern for private
companies who may want to contribute to biodefense via R&D and
production of countermeasures such as drugs and vaccines. There are
striking differences between bioterrorism countermeasures and civilian
biotechnology products that stem from:
A. the nature of the target biology and medical need,
B. the nature of the information that can be collected prior to use of
a promising countermeasure,
C. the likely role of government in recommending, distributing and
administering countermeasures, and
D. the unusual circumstances in which countermeasures may be
administered.
A. While drugs and vaccines against infectious agents represent
many of the enduring successes in pharmaceutical and
biotechnology product development, biodefense is different.
Agents that must be countered in biodefense range from
natural pathogens delivered intentionally by surprising
means (as in the case of mail delivery of anthrax) to
microorganisms genetically engineered by our opponents to
accomplish specific, but yet unknown pathology. The
challenge is a man-made contest of offense and defense that
does not have a clear parallel in drug and vaccine
development for natural pathogens. For example, it is
possible for agents to be designed with harmful features
that are activated by the obvious countermeasures.
Furthermore, for some potentially important countermeasures
it may be difficult to distinguish the severe end of the
drug side effect profile from the mild end of the biothreat
pathology. These examples illustrate the kind of surprises
that greatly raises the risk that an innovator might be
held unfairly accountable for unexpected consequences to
recipients.
B. Preclinical and clinical testing data obtainable for candidate
countermeasures will typically be less complete than for
drugs and vaccines targeting most human diseases. As
acknowledged by the FDA's recently formalized animal
testing rule, human efficacy data cannot ordinarily be
obtained in advance of an attack with a dangerous
bioweapon. This means that the key data supporting use is
from animal studies of safety and efficacy and human safety
studies. However, animal efficacy and safety work will
often be constrained by the daunting logistics of
conducting animal experiments under very high levels of
biosafety containment. For some very serious threats, we
must be prepared to stockpile countermeasures with
significant known side effects until a better
countermeasure is developed. Because of the risk we will be
asking experimental subjects to take, the number enrolled
in such trials will certainly be smaller than in civilian
drug or vaccine development. The inherent limitations of
the data package supporting use of many countermeasures,
particularly when the Secretary of HHS determines that an
``investigational'' agent should be deployed, raises the
risk that an innovator might be held unfairly accountable
for unexpected consequences to recipients.
C. Under many of the scenarios in which a biodefense countermeasure
is actually used in people, the government is taking a
larger role than is typically the case for drugs and
vaccines. Normally, a private company can initiate
important decisions regarding changes in labeling and
product recalls if it believes this is in the best
interests of patients or the company. In the event of a
biodefense emergency, it is reasonable to assume that
private companies will have ceded control over the physical
product and the distribution pipeline to government
entities.
D. Companies will have much less ability to correct or adjust the
messages to caregivers in the midst of an emergency. In
case of a serious crisis, details of indications and
contra-indications will almost surely be missed and the
government may have to make last-minute changes in usage
recommendations, possibly including mandatory
administration to account for rapidly changing
circumstances. This greatly increases the risk that an
innovator might be held unfairly accountable for unexpected
consequences to recipients.
At the same time that the risk of potentially enterprise-
threatening litigation is increasing, the availability of adequate
insurance to cover these risks is decreasing.
In enacting the Homeland Security Act, Congress recognized that the
fear of facing extraordinary liabilities from third party suits could
jeopardize the development of smallpox vaccines and therefore included
provisions to protect companies involved in that effort. Similar
protections are necessary for development of other countermeasures.
Therefore, we have provided to the Committee staff proposed amendments
to the Administration's draft legislation which would extend to
manufacturers of other types of biomedical countermeasures protections
provided by the Homeland Security Act to manufacturers of smallpox
countermeasures.
Question In your testimony Dr. Read, you call for greater attention
on market incentives or ``pull'' mechanisms. Since this is,
undoubtedly, an atypical market, can you provide recommendations on how
a guaranteed market can be created through BioShield and explain what
is necessary for us to reach our objective of being successful in this
arena?
Response: BIO has recommended that the Administration's proposal be
amended to include provisions that require the Department of Health and
Human Services to enter into an ``Agreement to Purchase'' biomedical
countermeasures. The agreement would be contingent on a determination
that the countermeasure is appropriate for procurement and would
address, among other terms, the price, quantity and available market.
BIO's proposed amendments would provide more certainty that there
will be a market when the private sector innovator succeeds in creating
a product that meets public health needs. In the absence of an assured
market as provided for in BIO's proposal, biotechnology companies will
be extremely reluctant to undertake the expensive, lengthy and
challenging process to develop new countermeasures.
Other ``pull'' mechanisms should also be explored under the
BioShield authorizations. These policies are the first steps in
creating a biodefense industry for the United States and some
experimentation with procurement and incentives will be necessary. The
Secretary of HHS should be given authority to use multiple contracting
mechanisms appropriate to countermeasures having differing R&D
challenges and product life cycles, as illustrated by vaccines, drugs,
and diagnostics. BioShield clearly provides for contracting with
specific companies to provide specific countermeasures. ``Innovation
prizes'' are another ``pull'' mechanism that have been proven to
stimulate vigorous private sector innovation in the past and should be
available under BioShield.
The legislation should provide for a dialogue among government and
private companies to develop contractual terms dealing with product
specifications and market sharing in the event a fast-follower provides
a better solution than the first to succeed. Internet reverse auctions
where the customer names his or her ``own price'' for travel purchases
suggest a mechanism by which the government can ensure that it is not
paying more than necessary to attract willing innovators to the
challenge, and--even more important--not paying enough to get a
critical problem on the table.
The Secretary should be accountable to Congress for reporting on
the success of different ``pull'' mechanisms so that these can be
refined over time.
Question: As a physician and former biotech CEO experienced with
vaccine development, can you outline for the Committee just how
vaccines are made and what difficulties, if any, you envision regarding
the development and production of countermeasure vaccines?
Response: Of the many pharmaceutical and biotechnology approaches
that can be expected to yield bioterrorism countermeasures, vaccines
have a spectacular track record of controlling infectious diseases, but
vaccines often take more time to develop. Drugs for infectious agents
typically exploit a specific biochemical weakness in the microorganism
that is not found in humans. Vaccines intervene in the complex
interplay between the pathogen and the human immune system where most
of the detailed biology has yet to be worked out. While there are often
good clues about how to begin and many potential vaccine technologies
that may be exploited, the process still involves a great deal of trial
and error. In many vaccine development efforts, researchers must deal
with poor correlation among laboratory assays, animal testing, and
actual protection in humans.
Vaccines are typically biological products, composed of complex
protein mixtures or killed or weakened forms of the pathogenic
microorganism. Manufacturing of these types of products are much more
complex and expensive. The FDA regulates these products based largely
on every little detail in the manufacturing process, because it is
impossible to quantify every ingredient in the final product.
Development of biodefense countermeasure vaccines will share all of
these challenges complicated, in many cases, by a lack of experience
with the target agent and by the difficulty in performing experiments
with such a potentially dangerous pathogen. Manufacturing of vaccines
based on some successful technologies will also be uniquely expensive
and complicated. Today's vaccines for tetanus and diphtheria are
carefully extracted from large stocks of pathogenic bacteria and the
flu shot is made by growing large stocks of virulent influenza, which
is then inactivated in a rigorous manufacturing process.
Questions from Hon. John Shadegg
Question: The Defense Science Board in its May 2002 Study on
Defense Science and Technology has issued a challenge to DoD that by
2005, the pathogen to drug hit process should be reduced from years to
months, by 2010 from months to weeks, and by 2020, it should have the
ability to go from bug to drug within 24 hours. It has recommended
spending $200 million per year over the next twenty years to achieve
this.
What is your opinion of the Defense Science Board's challenge on
going from bug to drug within 24 hours by 2020?
Response: I haven't reviewed the DSB challenge in detail, but am
impressed with the importance of its vision. Great scientific progress
has often followed such a clear and quantitative statement of what
needs to be done, as in the case of the prizes announced for early
aviation pioneers and physicist Richard Feynman's challenge regarding
ultraminiaturization that has spurred the imagination of many
nanotechnology innovators.
These are extremely aggressive objectives that depend very much on
how ``drug hits'' are defined. It is NOT out of the question that for
certain types of pathogens and certain types of ``drugs hits'' that
this might be achieved. For example, DNA sequencing and synthesis
technology now on the horizon could conceivably permit the design and
production of antibody-like molecules that could be turned around in
these time frames.
Part of the value of this challenge is not just technical, but
implies that we must be innovators in the way we regulate the balance
of risk and benefit in the application of our technology. Posting a
reward, in the form of a suitably specified commitment to purchase such
a countermeasure technology would be the most effective spur to such
innovation. The magnitude of the need for such a system would justify
very attractive rewards.
Questions from Hon. Dave Camp
Question: Two major issues in countermeasure technology development
are economic incentives and liability concerns. In Secretary Thompson's
testimony, he mentioned that grants and contracts might not be
sufficient for developing the public/private partnership. How will
Project BioShield address these issues in order to expedite the
development of the next generation of countermeasures?
Response: Grants, contracts and other ``push'' mechanisms have a
vitally important role to play in ensuring that effort gets underway in
key technology areas for our biodefense. These are not the mechanisms
that will ensure that products are produced for stockpile or use. An
adequate market opportunity (``pull'') will be required to draw in the
large amounts of private capital and expertise necessary to complete
the later stages of drug and vaccine production. There is not a
convincing track record that the government or any other entity has
been able to deliver finished products such as these. The inclusion of
``pull'' mechanisms in the Administration's BioShield proposal signal
the importance of creating workable incentives for the industries
capable of developing and producing countermeasures.
Questions from Hon. Edolphus Towns
Question 1) Given that devices, biologics and drugs usually have
different standards on what makes a product commercially viable to make
a commitment to R&D, does the BioShield proposal offer enough incentive
for your individual industries? If I could get comments from each of
the panelists on this issue.
Response: To the extent that the Administration's BioShield
proposal includes liability protections and guaranteed market
provisions, BIO believes that the environment to develop commercially
viable biotechnology products will be significantly improved. BIO sees
liability as a profound concern for private companies who may want to
contribute to biodefense via R&D and production of countermeasures such
as drugs and vaccines. In enacting the Homeland Security Act, Congress
recognized that the fear of facing extraordinary liabilities from third
party suits could jeopardize the development of smallpox vaccines and
therefore included provisions to protect companies involved in that
effort. Similar protections are necessary for development of other
countermeasures.
BIO recommends that the Administration's proposal be amended to
include provisions that require the Department of Health and Human
Services to enter into an ``Agreement to Purchase'' biomedical
countermeasures. The agreement would be contingent on a determination
that the countermeasure is appropriate for procurement and would
address, among other terms, the price, quantity and available market.
In the absence of an assured market biotechnology companies will be
extremely reluctant to undertake the expensive, lengthy and challenging
process to develop new countermeasures.
Question 2) Do we need to add anything to this proposal to make it
easier for academic research institutions and commercial companies to
work together on developing these countermeasure products?
Response: It is important that the intellectual property
environment provided by the Bayh-Dole Act be preserved in order to keep
the door open for academic-industry collaboration. The Bayh-Dole
provisions haven enabled countless technologies to move from the
research stage into development, and commercialization.
Question 3) If each of you had a product already approved to treat
a given, what incentives exist in this proposal or what would you like
to see to encourage research for a new countermeasure?
Response: With respect to existing products that have already been
approved for use, BIO's primary concern is the exposure to liability
associated with the inherently risky nature of extending product use to
conditions for which FDA approval was not granted. Again, such uses
apparently would be conditionally approved by FDA based on less than
the generally required amount of data. And, again, presumably consumers
would either be required or strongly urged to use the medication for
such purposes. Concerns about liability do not, therefore, differ
substantially for new uses of products approved for other conditions
than for countermeasures still under development. BIO recommends the
inclusion of appropriate liability protections for companies engaged in
this hazardous arena. Specifically, BIO has provided to the Committee
staff proposed amendments to the Administration's draft legislation
which would extend the protection already provided by the Homeland
Security Act to manufacturers of smallpox countermeasure to the
manufacturers of other types of biomedical countermeasures. BIO
believes that such protection is essential to encourage
commercialization of existing technologies and research in new
countermeasures.
Question 4) If a better product is developed after you have signed
a contract with the government, should the government be forced to
stockpile your product--because you already have a contract--or does
the government need the flexibility to go with the better product,
which many mean canceling your contract?
Response: One of the most important features of BioShield is the
attempt to create a credible and reasonably predictable market for
countermeasures so that innovators will take risks in this area. No
market is perfectly predicable and successful innovators are accustomed
to taking competitive pricing risks, based on their experience in
established markets. In the market for biodefense countermeasures,
there is very little history and much of it is not encouraging. The
government must be prepared to introduce some predictability in the
reward structure. For example, it is not necessary (or even a good
idea) to stockpile a countermeasure found to be obsolete, but a
successful innovator who took great risks in good faith and was the
first to meet the government's a priori specifications should be able
to count on a specific financial reward sufficient to justify the risk
and opportunity cost of diverting effort to this problem.
Question 5) This bill appropriates unlimited sums of money.
However, our Orphan Drug Program also gives incentives to work on R&D
for diseases that are not that prevalent. And, many illnesses still
have not cure. Is BioShield a research problem that money alone can
solve?
Response: NO: LEADERSHIP is absolutely essential.
Money alone does not solve the potential problem of no supply, or
short supply of biological countermeasures. However, these policies are
the first steps in creating a biodefense industry for the United States
and some experimentation with procurement and incentives will be
necessary. The Secretary of HHS should be given authority to use
multiple contracting mechanisms appropriate to countermeasures having
differing R&D challenges and product life cycles, as illustrated by
vaccines, drugs, and diagnostics. BioShield clearly provides for
contracting with specific companies to provide specific
countermeasures. ``Innovation prizes'' are another ``pull'' mechanism
that have been proven to stimulate vigorous private sector innovation
in the past and should be available under BioShield.
The challenge of discovering a cure for a number of orphan
illnesses does not call for us to retreat solely because the cure has
not yet been found. On the contrary, we must press forward even more to
find the breakthrough. The biotechnology industry is at the forefront
of pursuing therapeutics and vaccines to combat a number of illnesses
that affect a smaller group of patients. Similarly, the threat of a
biological attack that relies on a seldom used, but extremely
dangerous, pathogen requires that we must be vigilant in our biodefense
appropriations. That challenge implies that we must be innovators in
the way we regulate the balance of risk and benefit in the application
of our technology. Posting a reward, in the form of a suitably
specified commitment to purchase such a countermeasure technology would
be the most effective spur to such innovation. The magnitude of the
need for such a system would justify very attractive rewards.
______
Responses for the Record from Dr. Gary Noble, Johnson & Johnson
Question 1. Dr. Noble, you mention in your written testimony that
people tend to overlook the contributions of medical devices when
considering the countermeasures needed to combat bioterrorism. Why?
Response: While many focus on vaccines as the sole countermeasures
needed to counteract bioterror agents, as we saw with the inhalation
anthrax cases and are seeing again with SARS, the ability to diagnose
individuals to determine who has been exposed is essential to treatment
and to limiting the contagious spread of infection. There are numerous
technologies that assist in or play a significant role in combating
bioterrorism, including diagnostic tests. The ability to quickly
diagnose individuals to determine who has been exposed is essential to
treatment and to limiting the contagious spread of infection.
Additionally, in the case of the anthrax attacks in the Senate Hart
Building, the Brentwood Postal facility and others, as manufacturers
continue to develop rapid tests like the Roche-Mayo Clinic anthrax
test, they hold the promise that many individuals will be able to
forego prophylactic antibiotic or other treatment. And, as diagnostic
tests advance, we will be able to detect those who have been exposed
and are infectious yet are not exhibiting any signs of illness.
Question 2. In your opinion, would medical devices qualify for
funding under Project BioShield? If not, should they?
Response: The Administration proposal includes devices in portions
of its BioShield proposal but excludes devices from key aspects of the
proposal. Devices are clearly included in the Biomedical Countermeasure
Research and Development section of the legislation. Devices are
explicitly listed in the definition of that section. However, devices
are excluded from the qualified countermeasures procurement section.
The definition for that section lists only drugs and biologics.
The proposal, at least as initially drafted, creates the
paradoxical situation in which a device company that cooperatively
engages in research with the National Institute of Allergy and
Infectious Diseases (NIAID) in the development of a product with no
commercial market would be prevented from recouping its full investment
because the Administration proposal prevents it from being purchased as
a qualified countermeasure. Companies that did not develop a technology
without the R&D assistance of NIAID would similarly be prevented from
recouping their investment because such products could not be purchased
as qualified countermeasures.
The Administration proposal also prohibits devices that are
reviewed through FDA's 510(k) review process from being considered for
use in emergencies. Most diagnostic tests are reviewed through FDA's
510(k) process. It is not unusual for diagnostic tests that have
already been approved to detect a specific bacterium or viral agent to
be modified to detect another bacterium or virus of the same family.
Thus, it is conceivable that a previously approved diagnostic test may
also prove to be useful in screening some bioterrorist agents. FDA's
510(k) process recognizes that diagnostic test development is an
iterative process that builds on the knowledge gained from the previous
infectious agent to develop tests for similar agents.
AdvaMed strongly recommends that the legislation be drafted broadly
to include medical devices, including 510(k) products, in all aspects
of the BioShield program. The Secretaries of Health and Human Services
(HHS) and of Homeland Security should have the discretionary authority
to consider all medical technologies, including devices, in determining
what may be needed or most useful in protecting our nation from
potential bioterrorist events. Devices (including devices approved
through the 510(k) process) that have needed countermeasure
applications, should not be excluded from consideration due to a
technicality.
Question 3. What types of devices are needed by the government to
respond to a bioterrorist attack?
Response: There are numerous medical technologies that are integral
to a rapid and effective response to any potential terrorist attack,
including among others:
Diagnostic Tests: In November 2001, Roche Diagnostics and the
Mayo Clinic announced the development of a new rapid anthrax
test that can detect anthrax in humans in an hour and quickly
made the test available to public health agencies and hospital
and reference laboratories. Companies are working to develop
diagnostic tests for other bioterrorist infectious agents,
including smallpox. In a related development, AdvaMed and its
companies are also working cooperatively with FDA and the CDC
to speed development of a diagnostic test for West Nile virus.
Vaccine and Drug Delivery Devices: ``Microdelivery'' devices
in development by BD will deliver vaccines more efficiently and
effectively, allowing better absorption by the body and at the
same time extending vaccine supply. For example, in
collaboration with USAMRIID, researchers have shown that use of
these skin-based microdelivery technologies can significantly
improve the performance of next-generation recombinant protein
vaccines against anthrax and the organism that causes toxic
shock.
Biochemical Decontamination Technologies: We saw the
importance of technologies to decontaminate large contained
areas and their contents, sensitive electronic equipment, mail
and other items after the anthrax attacks of 2001. STERIS
Corporation and the U.S. Army Edgewood Chemical Biological
Center have entered into a collaborative research and
development project to evaluate, optimize and modify STERIS's
Vaporized Hydrogen Peroxide (VHP ') technology and
to demonstrate its effectiveness against biological and
chemical warfare agents.
Blood Safety Technologies: Companies continue to work on
technologies to protect our blood supply through inactivation
or pathogen removal technology to inactivate or eliminate
blood-borne viruses, parasites, lymphocytes and bacteria from
blood products.
Advanced Burn and Wound Care Technologies: Companies have
developed gels and foams that can rapidly close wounds and
bioengineered skin for the treatment of second and third degree
burns. On September 11th 2001, Smith and Nephew, Inc. employees
personally drove bioengineered skin products to New York City
and Washington, D.C. to ensure patient access to these critical
technologies despite the disruption to the distribution and
supply chains because of U.S. airspace closures.
Health Information Systems: Coordination of information by
local, state and national public health authorities is key for
managing efficient immunization activities and detecting
biological outbreaks. Specialized vaccination tracking systems
being developed by BD and others can help document and manage
adverse events to vaccines while assuring rapid, safe vaccine
deployment. As a measure of the critical role health
information systems can play, HHS announced that it will begin
testing a system using handheld personal digital assistants
(PDAs) for transmitting urgent information about biological
agents to clinicians. The three-month pilot test is designed to
gauge the best ways for federal officials to communicate
effectively with front-line clinicians in the event of a
bioterrorist attack.
Basic Medical Technologies: Basic medical technologies are
also essential during times of crisis including ventilators,
imaging technologies and infusion and monitoring equipment
among others as well as gowns, gloves, masks and respirators to
protect health care workers. A November 2001 JAMA article co-
authored by Anthony S. Fauci, M.D. attributes the reduction in
mortality in the inhalation anthrax cases to technological
advances in diagnostics, imaging, microbiology, antibiotics and
critical care.
Question 4. In the ``emergency use'' portion of BioShield,
unapproved devices subject to premarket approval could be used to
respond to bioterrorist attack, when the benefits of the device
outweigh its risks. Should this new ``emergency use'' authority also
apply to devices subject to premarket clearance?
Response: As mentioned above, the Administration proposal prohibits
devices that are reviewed through FDA's 510(k) review process from
being considered for use in emergencies. Most diagnostic tests are
reviewed through FDA's 510(k) process. It is not unusual for diagnostic
tests that have already been approved to detect a specific bacterium or
viral agent to be modified to detect another bacterium or virus of the
same family. Thus, it is conceivable that a previously approved
diagnostic test may also prove to be useful in screening some
bioterrorist agents. FDA's 510(k) process recognizes that diagnostic
test development is an iterative process that builds on the knowledge
gained from the previous infectious agent to develop tests for similar
agents.
AdvaMed strongly recommends that the legislation be drafted broadly
to include medical devices, including 510(k) products, in all aspects
of the BioShield program. The Secretaries of HHS and of Homeland
Security should have the discretionary authority to consider all
medical technologies, including devices, in determining what may be
needed or most useful in protecting our nation from potential
bioterrorist events. Devices (including devices approved through the
510(k) process) that have needed countermeasure applications, should
not be excluded from consideration due to a technicality.
Question 5. Do you believe that liability protection for
manufacturers is necessary in order for Project BioShield to work?
Response: It is important to understand that the countermeasure to
a severe bioterrorist threat may have some severe side effects. As a
result, companies that provide countermeasures to the government could
be exceedingly vulnerable to liability claims. Device companies are
extremely interested in partnering with the federal government but not
if the potential for liability threatens the financial viability of the
company itself.
Presumably, those products that are declared qualified
countermeasures under Project BioShield would also be declared
qualified anti-terrorism technologies under Section 861 of the Homeland
Security Act and would thus be eligible for the liability protections
of that Act. However, it is not clear that companies whose products are
declared for use in national, public health or military emergency
situations would be eligible for the Section 861 protections. Such
products, by definition, have not yet been reviewed or approved for use
by FDA.
Liability concerns will be a key consideration for companies
manufacturing both qualified countermeasures and emergency-use products
and the legislation should make clear that the liability protections of
Sec. 861 of the Homeland Security Act apply to such products. For these
reasons, AdvaMed urges the inclusion of strong liability protections
for all aspects of Project BioShield, including medical devices.
Questions from Congressman Camp
Question 1. Two major issues in countermeasure technology
development are economic incentives and liability concerns. In
Secretary Thompson's testimony, he mentioned that grants and contracts
might not be sufficient for developing the public/private partnership.
How will Project BioShield address these issues in order to expedite
the development of the next generation of countermeasures?
Response: The Administration's BioShield proposal does not appear
to provide any liability protection at all to companies who are willing
to partner with the federal government in developing countermeasures.
As mentioned previously, a countermeasure to a severe bioterrorist
threat may have some sever side effects. As a result, companies that
provide countermeasures to the government could be exceedingly
vulnerable to liability claims. Device companies are extremely
interested in partnering with the federal government but not if the
potential for liability threatens the financial viability of the
company itself.
AdvaMed believes that liability concerns will be a key
consideration for companies manufacturing both qualified
countermeasures and emergency-use products. For these reasons, the
legislation should make clear that the liability protections of Sec.
861 of the Homeland Security Act apply to all medical technologies,
including medical devices.
With respect to incentives designed to encourage companies to
research, develop and manufacture potential countermeasures, the
greatest challenges will occur for those countermeasure technologies
that have no commercial market. It can take substantial sums of money
to research and develop a technology, develop supporting clinical data,
conduct any needed clinical trials, construct manufacturing facilities,
apply for FDA review and approval and have all the necessary
infrastructure in place to comply with regulatory requirements. Before
making such investments, companies do careful analysis to ensure that
they will not suffer significant financial losses.
Because of the suspected nature of bioterrorism events--rare, one-
time events that will likely affect only a small portion of the
population at any one time--it is hard to imagine that a company would
be able to fully recoup its investment, unless the product also has a
commercial market. The BioShield proposal is designed to meet this
challenge by allowing the Secretaries of HHS and Homeland Security,
with approval from the President, to negotiate contracts with companies
that will presumably enable companies to appropriately recoup their
research, development and manufacturing investments.
Unfortunately, the Administration proposal explicitly excludes
devices from being considered as qualified countermeasures for
procurement. The proposal, as initially drafted, creates the
paradoxical situation in which a device company is eligible to procure
research and development funding from the NIAID to develop
countermeasures with no potential commercial market. However, these
same companies would be prevented from recouping their full research
and development investment because the Administration proposal prevents
medical devices from being purchased as a qualified countermeasure.
AdvaMed strongly recommends that the legislation be drafted broadly
to include medical devices, including 510(k) products, in all aspects
of the BioShield program. The Secretaries of HHS and of Homeland
Security should have the discretionary authority to consider all
medical technologies, including devices, in determining what may be
needed or most useful in protecting our nation from potential
bioterrorist events. Devices (including devices approved through the
510(k) process) that have needed countermeasure applications, should
not be excluded from consideration due to a technicality.
Questions from Congressman Bob Etheridge
Question 1. Will private sector companies still need to raise
capital to fund their initial research and development efforts?
Response: Yes. While some technologies exist that can be used or
adapted for use as potential countermeasures, new technologies will
also need to be developed to address situations and threats that did
not appear as urgent and eminent before September 11th.
Unfortunately, it can take substantial sums of money to research
and develop a technology, develop supporting clinical data, conduct any
needed clinical trials, construct manufacturing facilities, apply for
FDA review and approval and have all the necessary infrastructure in
place to comply with regulatory requirements.
Developing a technology to prepare our nation against terrorist
threats, however, has added complications because there is frequently
no viable commercial market for the technology. Bioterrorist threats
are expected to be one-time event that will affect only a small portion
of the population at any one time. Without a viable market, it would be
difficult to find investors to support the research, development,
trials and production of the technology.
Question 2. If small companies have difficulty in raising capital
to fund new research, how do we deal with this challenge?
Response: Due to the significant costs mentioned above in regards
to researching, developing, and getting the technology approved for
patient care, all companies do careful analysis to ensure that they
will not suffer significant financial losses before investing in any
product development. The difficulty in securing investors to support
the research, development, trials and production of the technology is
even more acute for small companies that cannot support the new
development efforts through revenues raised from other products.
The BioShield proposal is designed to meet this challenge by
allowing the Secretaries of HHS and Homeland Security, with approval
from the President, to negotiate contracts with companies--essentially
securing a market for the product that will allow the company to recoup
their research, development and manufacturing investments.
The Administration proposal explicitly excludes devices from being
considered as qualified countermeasures for procurement. Unfortunately,
this exclusion would create the paradoxical situation in which a device
company is eligible to procure research and development funding from
the NIAID to develop countermeasures with no potential commercial
market. However, these same companies would be prevented from recouping
their full research and development investment because the
Administration proposal prevents medical devices from being purchased
as a qualified countermeasure.
AdvaMed strongly recommends that the legislation be drafted broadly
to include medical devices, including 510(k) products, in all aspects
of the BioShield program. The Secretaries of HHS and of Homeland
Security should have the discretionary authority to consider all
medical technologies, including devices, in determining what may be
needed or most useful in protecting our nation from potential
bioterrorist events. Devices (including devices approved through the
510(k) process) that have needed countermeasure applications, should
not be excluded from consideration due to a technicality.
Question 3. Does the private sector believe that Project BioShield
will work? Specifically, does the private sector think that the
Administration's proposal addresses its needs to develop a mature
market for the production of biomedical defenses? If not, why not?
Response: AdvaMed strongly supports the Project BioShield
initiative. Specifically, AdvaMed's Council supports provisions in
Project BioShield that will:
Speed research and development on biomedical countermeasures
by streamlining current NIH processes and providing funding for
the construction and improvement of facilities needed to safely
support research and development of countermeasures;
Provide necessary funding to purchase biomedical
countermeasures for the stockpile, particularly those
countermeasures determined not to have commercial markets; and
Allow the Secretary to make promising treatments available in
an emergency, even for those products that do not yet have full
FDA approval.
AdvaMed has concerns, however, that the Administration proposal
explicitly excludes devices from being considered as qualified
countermeasures for procurement and excludes devices approved through
the 510(k) review process from being considered for emergency uses.
Unfortunately, this exclusion would create the paradoxical situation in
which a device company is eligible for research and development funding
from the NIAID to develop countermeasures with no potential commercial
market. However, these same companies would be prevented from recouping
their full research and development investment because the
Administration proposal prevents medical devices from being purchased
as a qualified countermeasure.
AdvaMed strongly recommends that the legislation be drafted broadly
to include medical devices, including 510(k) products, in all aspects
of the BioShield program. The Secretaries of HHS and of Homeland
Security should have the discretionary authority to consider all
medical technologies, including devices, in determining what may be
needed or most useful in protecting our nation from potential
bioterrorist events. Devices (including devices approved through the
510(k) process) that have needed countermeasure applications, should
not be excluded from consideration due to a technicality.
Questions from Congressman Towns
Question 1. Given that devices, biologics and drugs usually have
different standards on what makes a product commercially viable to make
a commitment to R&D, does the BioShield proposal offer enough incentive
for your individual industries?
Response: AdvaMed is committed to the public-private partnership
for preparedness as are our member companies. AdvaMed sponsored a
February 6 preparedness conference entitled ``Innovation for
Preparedness: the Public-Private Partnership,'' to strengthen the
partnership between the government and the private sector on
preparedness and to connect medical technology innovators with
appropriate federal preparedness entities. The conference was sold out
which we believe speaks volumes about the interest of the device
industry in working with the government to achieve our mutual goal of
defending the homeland and providing the best medical care possible.
The greatest challenges will occur for those countermeasure
technologies that have no commercial market. It can take substantial
sums of money to research and develop a technology, develop supporting
clinical data, conduct any needed clinical trials, construct
manufacturing facilities, apply for FDA review and approval and have
all the necessary infrastructure in place to comply with regulatory
requirements. Before making such investments, companies do careful
analysis to ensure that they will not suffer significant financial
losses.
Because of the suspected nature of bioterrorism events--rare, one-
time events that will likely affect only a small portion of the
population at any one time--it is hard to imagine that a company would
be able to fully recoup its investment, unless the product also has a
commercial market. The BioShield proposal is designed to meet this
challenge by allowing the Secretaries of HHS and Homeland Security,
with approval from the President, to negotiate contracts with companies
that will presumably enable companies to appropriately recoup their
research, development and manufacturing investments.
Unfortunately, the Administration proposal explicitly excludes
devices from being considered as qualified countermeasures for
procurement and excludes devices approved through the 510(k) review
process from being considered for emergency uses. AdvaMed strongly
recommends that the legislation be drafted broadly to include medical
devices, including 510(k) products, in all aspects of the BioShield
program. The Secretaries of HHS and of Homeland Security should have
the discretionary authority to consider all medical technologies,
including devices, in determining what may be needed or most useful in
protecting our nation from potential bioterrorist events. Devices
(including devices approved through the 510(k) process) that have
needed countermeasure applications, should not be excluded from
consideration due to a technicality.
Question 2. Do we need to add anything to this proposal to make it
easier for academic research institutions and companies to work
together on developing these countermeasure products?
Response: AdvaMed and its member companies have a rich history of
working with academic research institutions and medical colleges in the
research, development and clinical trials for many medical
technologies. In November 2001, Roche Diagnostics and the Mayo Clinic
announced the development of a new rapid anthrax test that can detect
anthrax in humans in an hour and quickly made the test available to
public health agencies and hospital and reference laboratories. AdvaMed
and its companies are also working cooperatively with FDA and the CDC
to speed development of a diagnostic test for West Nile virus.
The major concern for companies, whether they collaborate with
academic research institutions or the government or not, is whether the
resulting technology will be allowed for consideration as a qualified
countermeasure for procurement. The Administration proposal explicitly
excludes devices from this consideration, creating the paradoxical
situation in which a device company is eligible to procure research and
development funding from the NIAID to develop countermeasures with no
potential commercial market. Without being considered for inclusion,
the companies and institutions would be prevented from recouping their
full research and development investment because the Administration the
device could not be purchased as a qualified countermeasure.
AdvaMed strongly recommends that the legislation be drafted broadly
to include medical devices, including 510(k) products, in all aspects
of the BioShield program. The Secretaries of HHS and of Homeland
Security should have the discretionary authority to consider all
medical technologies, including devices, in determining what may be
needed or most useful in protecting our nation from potential
bioterrorist events. Devices (including devices approved through the
510(k) process) that have needed countermeasure applications, should
not be excluded from consideration due to a technicality.
Question 3. If each of you had a product already approved to treat
a given condition, what incentives exist in this proposal or what would
you like to see to encourage research for a new countermeasure?
Response: AdvaMed strongly supports the Project BioShield
initiative. Specifically, AdvaMed's Council supports provisions in
Project BioShield that will:
Speed research and development on biomedical countermeasures
by streamlining current NIH processes and providing funding for
the construction and improvement of facilities needed to safely
support research and development of countermeasures;
Provide necessary funding to purchase biomedical
countermeasures for the stockpile particularly those
countermeasures determined not to have commercial markets; and
Allow the Secretary to make promising treatments available in
an emergency, even for those products that do not yet have full
FDA approval.
AdvaMed has concerns, however, that the Administration proposal
explicitly excludes devices from being considered as qualified
countermeasures for procurement and excludes devices approved through
the 510(k) review process from being considered for emergency uses.
Unfortunately, this exclusion would create the paradoxical situation in
which a device company is eligible to procure research and development
funding from the NIAID to develop countermeasures with no potential
commercial market. However, these same companies would be prevented
from recouping their full research and development investment because
the Administration proposal prevents medical devices from being
purchased as a qualified countermeasure.
AdvaMed strongly recommends that the legislation be drafted broadly
to include medical devices, including 510(k) products, in all aspects
of the BioShield program. The Secretaries of HHS and of Homeland
Security should have the discretionary authority to consider all
medical technologies, including devices, in determining what may be
needed or most useful in protecting our nation from potential
bioterrorist events. Devices (including devices approved through the
510(k) process) that have needed countermeasure applications, should
not be excluded from consideration due to a technicality.
Question 4. If a better product is developed after you have signed
a contract with the government, should the government be forced to
stockpile your product--because you already have a contract--or does
the government need the flexibility to go with the better product,
which may mean canceling your contract?
Response: While some technologies exist that can be used or adapted
for use as potential countermeasures, brand new technologies will also
need to be developed to address situations and threats that did not
appear as urgent and eminent before September 11th.
Unfortunately, it can take substantial sums of money to research
and develop a technology, develop supporting clinical data, conduct any
needed clinical trials, construct manufacturing facilities, apply for
FDA review and approval and have all the necessary infrastructure in
place to comply with regulatory requirements.
Developing a technology to prepare our nation against terrorist
threats has added complications because there is no viable commercial
market for the technology. Bioterrorist threats are expected to be one-
time events that will affect only a small portion of the population at
any one time. Without a viable market, it would be difficult to find
investors and raise capital to support the research, development,
trials and production of the technology.
The BioShield proposal is designed to meet this challenge by
allowing the Secretaries of HHS and Homeland Security, with approval
from the President, to negotiate contracts with companies--essentially
securing a market for the product that will allow the company to recoup
their research, development and manufacturing investments.
If the Government, however, is not required to honor the contract
it negotiates for the development of a product or technology needed to
prepare our nation against bioterrorist threats, the intent of the
proposal is completely undermined. Companies will continue to face
significant problems in funding research, development, approval and
manufacturing for the technology if there is not a guaranteed market
for sale.
______
University of Michigan Health System
Center for Biologic Nanotechnology
April 25, 2003
The Honorable Michael Bilirakis, Chairman
Subcommittee on Health
Committee on Energy and Commerce
Rayburn House Office Building
Washington, D.C. 20515
The Honorable John B. Shadegg, Chairman
Subcommittee on Emergency Preparedness & Response
Select Committee on Homeland Security
c/o Rayburn House Office Building
Washington, D.C. 20515
RE: March 27, 2003 Congressional Testimony--Project Bioshield Dear
Chairman Bilirakis and Shadegg: Attached are my answers to the
questions submitted by members of your respective subcommittees related
to testimonies given at the March 27 hearing ``Furthering Public Health
Security: Project Bioshield.''
Thank you for the opportunity to address these timely and important
questions. If I may be of further service, please do not hesitate to
contact me at 734-647-2777 or by email at [email protected].
Sincerely,
James R. Baker, Jr., MD
Ruth Dow Doan Professor
Chief, Division of Allergy & Clinical Immunology
Director, Center for Biologic Nanotechnology
cc: Marvin Pames, Executive Director, DRDA, U-M
Mark Burnham, Director of Fed. Relations for Research, U-M
The Committee on Energy and Commerce's Subcommittee on Health and the
Select Committee on Homeland Security's Subcommittee on Emergency
Preparedness and Response.
Question 1. What things should we do to assure Technology Transfer
our from NIH research, so that countermeasures can be rapidly produced?
Answer: It is important to begin with the premise that the
Bioshield proposal should augment existing NIH programs. It is critical
that these efforts do not undermine the existing NIH structure, which
would slow research and ``clog'' the pipeline for Bioshield. With this
in mind, it is appropriate to then target resources and efforts at
specific needs for technology transfer rather than research,
particularly related to biological weapons. To the extent that
treatment options are present within research laboratories, then the
market incentive, as created by the Bioshield proposal, could make it
financially possible for companies to develop this research into viable
treatments. However, as I mentioned in my written testimony, it is not
clear that the specific proposals included in Bioshield will actually
encourage companies to develop these treatments. This is especially
true if the economic and liability issues are not resolved, and there
remain unresolved impediments to dual use, commercial applications of a
technology or therapeutic.
Regardless of the industry incentives to develop technologies or
drugs, the creation of new bioterrorism deterrents will require
substantial basic research at universities. While universities are
supportive of this type of research, the present proposal does not
clarify that fundamental, university-based research is an integral part
of the program. Much of the proposal is focused on near-term solutions,
which although vital, will likely not be the optimal outcome to protect
our population. To achieve the degree of protection envisioned in
Bioshield, substantial and on-going basic research will be necessary.
Universities are nimble and can devote significant resources to this
effort. However, while these efforts can be accelerated with additional
funding, it is not clear that the 2 to 4 month grants proposed by the
Administration could generate relevant and significant science.
Instead, I would suggest that significant efforts are made to
accelerate the pace of current research, through additional funding and
by teaming academic, intramural governmental and industry researchers
similar to successful endeavors in CREDA and SBIR mechanisms.
In short, Bioshield must specifically enhance university-based
research programs regardless of industry incentives. The university-
based research must focus on both short-term technology solutions and
accelerated basic research. Finally, NIH should survey its existing
intramural and extramural research programs to identify research
proposals that offer rapid avenues for commercialization.
Question 2. What is your view of the Administration's research
proposal?
Answer: The Bioshield proposal is an innovative attempt to remedy
the reasons industry does not develop countermeasures for biological
weapons. However, it is not clear that the timeframe and focus of the
research component of the legislation will achieve its stated goal. As
mentioned in my prior answer, the current legislation envisions
research grants having short time frames that appear incompatible with
the type of fundamental changes necessary to facility protection
against bio-threats, particularly engineered agents. These short time
frames will not even be technically viable for a range of needed
treatments against current threats, such as a new smallpox vaccine.
While Bioshield can and should support short-term goals where needs are
critical, there also must be a commitment to accelerating fundamental
research for longer time intervals. At the present time, much of the
academic community does not understand how our institutions fit into
this proposal or whether there is a commitment to a basic understanding
of the problems involved in responding to bio-threat agents.
Question 3. [Camp Question] Two major issues in countermeasure
technology development are economic incentives and liability concerns.
In Sec. Thompson's testimony, he mentioned that grants and contracts
might not be sufficient for developing the public/private partnership.
How will Project Bioshield address these issues in order to expedite
the development of the next generation of countermeasures?
Answer: From an academic perspective, Bioshield could help foster
partnerships between academic and commercial entities by providing the
business sector a reason to engage in research that would otherwise
have little commercial value. This would be enhanced if all entities
had defined liability limitations, especially if non-approved or
emergency use of a technology is envisioned. However, without an
explicit role for fundamental research and a specific means for
industry partnering to support this work, it is unlikely that new
interest and ideas will be generated and transitioned to solve current
and future needs. The key point is that while a few treatments may be
possible in an extremely short time frames, most countermeasures will
require substantially longer time frames for testing. In particular, it
is likely that the short intervals for testing currently envisioned by
the Bioshield proposal would raise substantial liability concerns since
they are simply not compatible with human testing. Bioshield therefore
needs to include a long-term research component to accelerate research
in those areas of greatest need.
Question 4. [Townes 1] Given that devices, biologics and drugs
usually have different standards on what makes a product commercially
viable to make a commitment to R&D, does the Bioshield proposal offer
enough incentive for your individual industries?
Answer: This is a complex issue. Devices, biologics and drugs all
have difficult and somewhat unique approval processes. However, the
problems tend to be individualized to a particular countermeasure as
much as they are common to a particular group. For example, a killed
virus vaccine for a particular infection might have substantial, dual
use commercial value while a live virus vaccine for the same infection
might never be acceptable for routine use in civilian populations
regardless of its utility in military applications or for emergent
care. Thus, the Bioshield legislation needs to provide specific
incentives for those applications that are necessary but have little
commercial value. However, the legislation needs to carefully address
several problems related to the dual use of a technology or treatment.
First of all, it should not limit Bioshield research to work that does
not have any commercial use, nor should it prohibit the
commercialization for another use of a countermeasure developed under
Bioshield. This would lead to greater economic opportunity costs for
industry than any incentive they could possibly obtain from Bioshield.
It would also risk the potential public health benefits by forgoing the
widest possible use of new medical options. If the government decides
it needs a return on its investment for dual use applications, it can
most readily accomplish this through contract or licensing
negotiations.
Question 5. [Townes 2] Do we need to add anything to this proposal
to make it easier for academic research institutions and commercial
companies to work together on developing these countermeasure products?
Answer: The academic research community is not convinced that this
version of the legislation really includes them. The focus is on
treatments and devices extraordinarily close to commercialization--a
type of work that is not usually performed in universities. While much
of basic university research has potential to be commercialized, there
are no incentives to assure that this happens. It is imperative that
the legislation includes accelerated fundamental research, as well as
specific financial incentives for companies to partner and
commercialize university research. Otherwise, the government's
tremendous investment in basic research will not be leveraged and may
exclude the university programs, which have been the most active
research component in the development of bioweapon countermeasures.
Question 6 [Townes 3] If each of you had a product already approved
to treat a given condition. What incentives exist in this proposal or
what would you like to see to encourage research for a new
countermeasure?
Answer: Academic institutions continuously look for additional
applications of our research results, and we do not generally have
``products'' as envisioned in this question. I would suggest that it be
clear in the legislation both that we can look at existing products for
potential use as a countermeasure, and that the countermeasures we
develop can be developed for commercial use. From a public health
standpoint, this ensures we are obtaining the greatest utility of our
medical capabilities. In order to facilitate this public good, industry
should be allowed to retain its intellectual property to both the
existing commercial products and the commercial uses of developed
countermeasures. The impact of such a commercial use on the cost of the
program can and should be dealt with in the terms of the individual
contract since the commercialization potential will vary widely across
the possible countermeasures.
Question 7 [Townes 4] If a better product is developed after you
have signed a contract with the government, should the government be
forced to stockpile your product--because you have a contract--or does
the government need the flexibility to go with the better product,
which may mean canceling your contract?
Answer: The committee might consider structuring these contracts in
a manner similar to NASA performance-based contracts for the
development of spacecraft. There, industry is generally paid for the
actual costs of research and construction, often these payments are
made at specific milestones. Upon completion, the contractor is then
paid a performance fee which includes incentive payments and profit. If
such a contract were structured, there would be no reason that the
parties could not agree in the contract to allow the government to
cancel the contract, paying through the next milestone (thus covering
the contractor's actual costs) and then the performance payment (thus
guaranteeing the company a profit without completing the production of
the drug).
Question 8 [Townes 5] This bill appropriates unlimited sums of
money. However, our orphan drug program also gives incentives to work
on R&D for diseases that are not that prevalent, and many illnesses
still have no cure. Is Bioshield a research problem that money alone
can solve?
Answer: Bioshield cannot solve the problem of bioterrorism by money
alone. However, a comparison to the orphan drug program is not entirely
appropriate, because the urgency and scale of these issues are
completely different. Money is one necessary ingredient, although no
more important than collaboration among researchers of various
disciplines, cooperation between academic, government and industry
partners, and having adequate time to perform the work. This last
requirement may be the most vexing. In order to achieve the goals of
the proposal, we will need time to develop new medical responses to
biological weapons. The current legislation may induce industry to
develop a few treatments that may have languished in regulatory limbo,
but the vast majority of treatments are simply not waiting for
commercialization. Fundamental research remains to be conducted to
answer many of the primary questions of how these countermeasures might
function, and to provide proof of concept that a countermeasure is
effective. In fact, even for those situations where there appears to be
a viable treatment alternative, there are often adverse effects that
provide a need for continuing research to develop better treatments.
Examples of this abound, be it approaches with fewer complications
(e.g. the smallpox vaccine) or to new countermeasures necessary should
the potential pathogen be able to defeat our defense, (e.g. antibiotic
resistant anthrax). That is why most diseases, whether covered by the
orphan drug act or the Bioshield proposal, require substantial money
and time for basic research to find an effective cure.
______
University of Michigan Health System
Center for Biologic Nanotechnology
April 25, 2003
The Honorable John D. Dingell
Subcommittee on Health
Committee on Energy and Commerce
Rayburn House Office Building
Washington, D.C. 20515
The Honorable Sherrod Brown
Subcommittee on Health
Committee on Energy and Commerce
Rayburn House Office Building
Washington, D.C. 20515
RE: March 27, 2003 Congressional Testimony--Project Bioshield
Dear Congressman Dingell and Brown: Attached are my answers to the
questions submitted by members of the subcommittees related to the
March 27 hearing ``Furthering Public Health Security: Project
Bioshield.''
Thank you for the opportunity to address these timely and important
questions. If I may be of further service, please do not hesitate to
contact me at 734-647-2777 or by email at [email protected].
Sincerely,
James R. Baker, Jr., MD
Ruth Dow Doan Professor
Chief, Division of Allergy & Clinical Immunology
Director, Center for Biologic Nanotechnology
cc: Marvin Pames, Executive Director, DRDA, U-M
Mark Burnham, Director of Fed. Relations for Research, U-M
Eugenia Edwards, Committee on Energy and Commerce
Candace Butler, Committee on Energy and Commerce
The Committee on Energy and Commerce's Subcommittee on Health and the
Select Committee on Homeland Security's Subcommittee on Emergency
Preparedness and Response.
Question 1. There were some questions raised during the hearing
regarding the Bayh-Dole Act and its effectiveness. Please explain how
Bayh-Dole is working on your campus and throughout academia. Is it
successful? How should success be measured? Is it encouraging or
impeding partnership with private industry? Does it make a difference
in getting research discoveries and technologies into the market?
Response. The Economist, in its December 12, 2002 article entitled,
``Innovation's Golden Goose,'' said that The Bayh-Dole Act of 1980 is,
``perhaps the most inspired piece of legislation to be enacted in
America over the past half-century.''
Giving American universities both the right and the responsibility
to commercialize technologies developed with taxpayers' money, Bayh-
Dole ushered in an era in which universities began to have an
unprecedented impact, both technologically and economically. In the
eyes of many, this landmark legislation is responsible for today's
knowledge economy.
According the article in The Economist, the original Bayh-Dole
legislation, together with its 1984 amendments and its augmentation in
1986, ``unlocked'' the inventions and discoveries that had been made in
university laboratories and, ``helped to reverse America's precipitous
slide into industrial irrelevance.''
Our experience at the University of Michigan would tend to
corroborate these findings. In just the past five years, as a
consequence of the intellectual property rights granted by Bayh-Dole,
the University of Michigan has spawned 34 start-up companies and
granted 267 technology licenses to existing companies. At the
University of Michigan, we have filed 590 patent applications over that
same period.
Nationwide, there has been an increase in patents originating from
universities. According to the Association of University Technology
Managers (AUTM), ``Prior to Bayh-Dole, fewer than 250 U.S. patents were
issued to universities each year. Since 1993, U.S. universities
participating in the Survey have averaged more than 1,600 U.S. patents
annually. In recent years, patents issued to U.S. universities have
exceeded 2,000.''
The effect of this increase in patenting on public health should
not be underestimated. These patents have lead to the development and
commercialization of innumerable advances in medical diagnostics,
devices and care. Why is patenting important? It provides researchers
economic incentives to continue working with industry to develop
laboratory research into a useable product. This is important because
researchers typically would move on to the next research project
without this incentive, and researcher involvement is often critical in
developing a technology beyond the lab. Similarly, the intellectual
property rights ensure industry that their investment in this research
will inure a benefit back to the company.
Without the incentives and obligations inherent in Bayh-Dole,
universities might not have stepped up to develop the technology
transfer programs which made these great achievements possible, and
they might not have invested in the development of a professional cadre
skilled in moving ideas from academia to the marketplace. This growth
is reflected in the growth of AUTM which now counts over 200
universities actively engaged in technology transfer activities, an
eightfold increase in less than twenty years.
A variety of relationships with industry have continued to be an
important element of university-based research and technology transfer.
At the University of Michigan, our large research centers generate
patents which are licensed non-exclusively to all industry affiliates
within the consortium; we license some patents exclusively to large and
small companies; in joint research endeavors we recognize joint
inventorship and joint ownership of intellectual property. Thus, as do
nearly all research universities, we have found that all kinds of
arrangements can be forged with industry, whether in biotechnology,
engineering, or information technology. In 2000, industry sponsored
$317 million in research at U.S. universities, hospitals and research
institutes, the overwhelming portion of which was for biomedical
research.
In addition to being the Ruth Dow Doan Professor at the School of
Medicine; Chief, Division of Allergy; and Director, Center for Biologic
Nanotechnology at the University of Michigan, I am also the Chief
Science Officer of a university spinout company by the name of NanoBio
Corporation. It is doubtful that NanoBio, a biopharmaceutical company
that has licensed biologic nanotechnology delivery systems from the
University would be in existence if not for the Bayh-Dole Act.
Furthermore, it is doubtful that we could be considered for venture
capital backing if not for the provision in Bayh-Dole that allows for
the exclusive licensing of federally funded research.
Question 2. It was suggested during the hearing that Bayh-Dole is
enabling the drug companies, and others, to make an inordinate amount
of profit based on federally-funded research without providing the
government an adequate return on that investment. Is this an accurate
depiction of the effect of Bayh-Dole? Should Bayh-Dole be amended to
change this situation?
Response. Given the strong concern with the cost of pharmaceuticals
it is entirely understandable that attention would be directed at how
research universities contribute to the products manufactured and
marketed by large corporations. However, these questions are premised
on the false assumptions that the federally sponsored research provides
the pharmaceutical industry a free ride on the costs of research, and
that we could lower the costs of drugs if only the federal government
didn't allow universities to retain intellectual property rights under
Bayh-Dole. In truth, many drugs would not be developed at all if not
for the technology transfer incentives established by Bayh-Dole, and
the pharmaceutical industry is not getting a free ride. It costs $600
million and takes on average 11.2 years from the time a new drug is
discovered until it is approved by the Food and Drug Administration.
Licenses to the pharmaceutical industry are but a small part of the
drug discovery and approval process, and the vast majority of licenses
yield little income to universities.
To properly understand this issue, it is imperative that we
understand why Bayh-Dole even exists. In the late 1970s and 1980s,
approximately 80% of basic research was funded by the federal
government, which then retained title to the intellectual property
generated by that research. During this time, there were few, if any
new drugs commercialized based upon federally funded basic research.
Recognizing that universities were not in a position to work with
industry to commercialize the results of their research, absent some
ownership of the intellectual property, and realizing that the vast
majority of federally owned intellectual property was sitting on the
shelf unused, Congress decided to create an incentive for federally
funded researchers to take the portion of their research which lends
itself to commercialization--and commercialize it. By enabling the
university to retain title to the intellectual property, and then
mandating that the university disclose the invention and attempt to
commercialize it, Congress unleashed one of the most significant
technology development and economic engines in our economy.
I must also note that universities do not generally make a profit
on this activity. Technology transfer is time consuming and costly;
most universities are doing well if the revenue from their intellectual
property pays for the technology transfer operations. Also, to the
extent that a university does make any money from its licenses, Bayh-
Dole mandates that those funds be spent on education and scientific
research. Technology transfer is therefore consistent with our mission
of gathering knowledge and diffusing it for the benefit of society. It
is not about making money; if we generate returns, we use those funds
to further our missions of education and research.
So is it worth it, does it work? Absolutely, the economic and
social impact of Bayh-Dole has been very significant. Industry and
academia are teaming up more than ever before, and the results are new
companies, new products, improved public health and a higher quality of
health care and life. Universities play a key role in the discovery of
some new medical treatments, devices and other countermeasures critical
to homeland security.
Is the government getting a return on its investment? Absolutely.
Thousands of jobs are created, generating salaries and corporate income
that are then taxed by federal and state government. Technology
developed through federal assistance is being transferred, to the
benefit of society. Returning to government ownership, or some sort of
public domain ownership of university intellectual property would not
only hinder our nation's capabilities to bring the results of research
into the marketplace, it could result in fewer new products, less
industry research and poorer public health.
Although I appreciate that the high cost of drugs is a significant
concern, dismantling the Bayh-Dole system will not only fail to
accomplish the goal of lower drug prices, but will effectively
undermine much of our economy. As both the NIH and PCAST have said in
recent studies of Bayh-Dole, Bayh-Dole is working well, and should be
left alone.
To try and ``tax'' Bayh-Dole would seriously limit its
effectiveness. Less than 1 in 100 licensees ever make a substantial
profit from their work. An up-front fee or obligation would provide a
serious disincentive to commercialization that would likely limit the
academic commercial incentives that the current legislation is
attempting to foster. If there are concerns about profits on the few
drugs that make commercial success, it would make much more sense to
tax the profits of these companies. This would provide the most
significant recoup on the research investment of Bayh-Dole and would
not directly hamper commercial development.
As it relates to Bioshield, the ultimate cost of the research,
development and production of new countermeasures will necessarily be a
critical issue for how the contracts will be structured. Since Bayh-
Dole already provides the federal government with both no cost, non-
exclusive licenses and ``march in'' rights for every patent generated
under Bayh-Dole, repealing or modifying Bayh-Dole will not improve the
government's negotiating position on these contracts and will have no
bearing on the ultimate cost of these countermeasures. Considering the
important role Bayh-Dole plays in the development of new technologies,
any attempt to repeal or amend it should be opposed.
______
May 5, 2003
The Honorable Michael Bilirakis, Chairman
Subcommittee on Health
U.S. House of Representatives
Committee on Energy and Commerce
Rayburn House Office Building
Room 2125
Washington, DC 20515-6115
The Honorable John B. Shadegg, Chairman
Subcommittee on Emergency Preparedness and Response
Select Committee on Homeland Security
2402 Rayburn House Office Building
Washington, DC 20515
Re: Response to Questions for the Record of the Hearing on ``Furthering
Public Health Security: Project Bioshield'' (March 27, 2003)
Dear Chairman Bilirakis and Chairman Shadegg: I have enclosed my
responses to the follow-up questions enclosed in your letter to me
dated April 9, 2003.
Best regards.
Sincerely,
Michael A. Friedman
responses to the honorable michael bilirakis
Question 1. What are the main scientific challenges facing
companies involved in bioterrorism countermeasure research?
Response: Bringing a drug from concept to market takes 10 to 15
years, which reflects the greater complexity of target diseases, the
longer and larger clinical trials now required by FDA, and the medical
system's demand for more complex data about new drugs. As a result, the
average cost to develop a new drug has grown from $138 million in 1975
to $802 million in 2000. The risks involved in the new drug development
and approval processes are also substantial. For every 5000 compounds
screened, 250 drugs enter preclinical testing, and of every 250 drugs
that enter preclinical testing, only 1 is approved by FDA. Research and
development of bioterrorism countermeasures presents significant
additional scientific challenges. First, handling highly dangerous
pathogens is expensive and time-intensive. Second, a limited number of
experts and facilities are available for research and development
involving biothreat agents. To work on most biothreat agents, a
laboratory must be constructed at the highest bio-safety level (bio-
level 4 or ``BL4''). There are only four BL4 labs in the United States,
and three are owned by the U.S. Government. Third, because so few
scientists have worked with biothreat agents, the development and
production of a countermeasure could require tapping into scientific
expertise from a broad spectrum of the individuals in the
pharmaceutical and biotechnology industry, government, and the
academia. Fourth, traditional clinical effectiveness trials using human
subjects are neither ethical nor lawful. For each countermeasure agent,
a relevant animal model must be developed, a process which can be time-
consuming and expensive.
Question 2. In discussing the need for more bioterrorism
countermeasures, much of the focus has been on vaccines. What types of
countermeasures can be pursued by traditional ``large molecule'' drug
companies?
Response: The companies with experience researching, developing,
securing approval for, and marketing drug products and biological
products--whether vaccines or therapeutics, whether small-molecule or
large-molecule--are essential to the effort to build an effective U.S.
armamentarium against biological weapons. Some important
countermeasures--including antibacterials (antibiotics), antifungals,
antivirals, and immune enhancers--will be large molecule products.
Also, as the Director of NIH pointed out at the hearing on March 27,
research into emerging and re-emerging infectious diseases will inform
and benefit biodefense research.
Question 3. What type of countermeasure work is being done by PhRMA
companies in conjunction with NIH and other Federal agencies?
Response: As indicated in my written statement, PhRMA and its
member companies are working closely with the NIH and other federal
agencies to move forward with countermeasure research. For example,
PhRMA is working with NIH, CDC, DoD, FDA, and academia to support in
vitro studies of five pathogens (B. anthracis, Y. pestis, Brucella
spp., F. tularensis, and Burkholderia spp.) for testing of existing
antibiotics. Several companies are working with NIAID, DoD, and FDA to
test existing antibiotics against plague. Several have offered to have
existing drugs tested against additional biothreats.
Question 4. Should liability protections be included in any
BioShield proposal considered by Congress?
Response: Any Bioshield legislation should include liability
protection for companies that enter into contracts for the research and
development or the procurement of countermeasures and for all parties
involved in the manufacture, distribution, and administration of
products under the special emergency authorization provisions. PhRMA
hopes to work with the Administration and Congress to ensure the
legislation includes appropriate product liability protection along the
lines of the swine flu model or Section 304 of the Homeland Security
Act. Neither indemnification under Public Law 85-804 (which would cover
only products subject to procurement contracts) nor the narrow
``government contractor defense'' available in some situations under
Subchapter G of the Homeland Security Act would be adequate to assure
pharmaceutical companies that the risks inherent in the research,
development, and manufacture of countermeasures can be adequately
managed.
Question 5. Under Project BioShield, before the Secretary can
decide to purchase a countermeasure, he must first determine that there
is otherwise ``no significant commercial market.'' What types of
factors should guide the Secretary in making this determination?
Question 6. Should the BioShield procurement authorities apply only
to new drugs? That is, isn't the fact that a drug is currently on the
market evidence that a ``significant commercial market'' for the drug
exists?
Response: PhRMA opposes the inclusion of a ``no significant
commercial market'' requirement. This would apparently preclude
procurement of antibiotics and broad-spectrum antivirals. It might also
discourage companies from further testing of antibiotics and antivirals
currently on the market. Further, it might discourage companies from
including countermeasure research in existing anti-infective research
and development programs. Research into emerging and re-emerging
diseases could provide vital information for biodefense research. For
example, at a recent medical conference in Prague, it was reported that
very preliminary research has shown that a derivative of the HIV anti-
viral drug cidofovir might help combat smallpox. Any legislation passed
should ensure that BioShield funds may be used to purchase antibiotics
and anti-virals with dual-use potential.
Question 7. Project BioShield also allows the Secretary to use
unapproved drugs during emergencies, but only if the benefits of the
drug outweigh the risks, and there is no available alternative. In an
emergency, should the Secretary be able to authorize the use of an
unapproved drug, when there might be an alternative, but the
alternative is more dangerous?
Response: The Senate Bill provides that the Secretary may issue an
authorization if he concludes: (1) the agent specified in the
determination can cause a serious or life-threatening disease or
condition; (2) based on the totality of scientific evidence available
to the Secretary (including data from adequate and well-controlled
clinical trials, if available), it is reasonable to believe that the
product may be effective in detecting, diagnosing, treating, or
preventing the disease or condition (or a serious or life-threatening
condition caused by a product authorized under section 564 or approved
for detecting, diagnosing, treating, or preventing that disease or
condition); (3) the known and potential benefits of the product, when
used for this purpose, outweigh its known and potential risks; (4)
there is no adequate alternative to the product that is approved and
available; and (5) any other criteria prescribed in regulation are met.
Patient safety remains the research-based industry's highest priority.
We believe the hypothetical presented in the question can be addressed
with the current language, provided the Secretary has the discretion to
determine whether an approved alternative is ``adequate.''
Question 8. Do you believe that the Secretary should have the
ability to limit off-label uses of drugs authorized for emergency use?
Response: A legislative prohibition of off-label use would be
unprecedented. It would effectively require FDA to regulate the
practice of medicine, something that it has stated for decades it does
not do.
responses to the honorable bob etheridge
Question 9. Will private sector companies still need to raise
capital to fund their initial research and development efforts?
Question 10. If small companies have difficulty in raising capital
to fund new research, how do we deal with this challenge?
Response: In order to undertake research and development into
countermeasures, a company will need to reallocate resources and
personnel from research relating to other diseases and conditions,
raise new funds to be earmarked specifically for countermeasure
research and development, or both. The decision to divert resources and
personnel from the research and development of medicines for serious
illnesses like heart disease can be financially risky, especially for a
company with few products on the market or in the pipeline. (This
diversion of resources and personnel will also affect the future
availability of treatments and cures for patients with other serious
health conditions--especially since fewer than ten percent of all drugs
that enter testing ever demonstrate sufficient safety and acceptable
efficacy.) Raising new capital is likewise a difficult and potentially
risky undertaking. In light of the legal, economic, and scientific
challenges inherent in this undertaking, any legislation implementing
Project BioShield should include appropriate liability protection and a
contracting and procurement process tailored to this special context.
Question 11. What patent rights will companies enjoy under Project
Bioshield? If companies are concerned that their patents might be
challenged, how do we deal with this fear?
Response: We do not understand Project Bioshield to make any
changes to intellectual property protection currently available under
U.S. law. Granting patents is one of the primary ways in which
governments create incentives for making the investment in new
innovations. A patent gives an inventor the right to prevent others
from making, using, and selling an invention for a limited period of
time. Patents provide the opportunity to recoup the time and money
invested in innovation. They are critical to research-intensive
industries such as the pharmaceutical industry, for which R&D
represents the major cost of bringing a product to market.
Question 12. Does the private sector believe that Project Bioshield
will work? Specifically, does the private sector think that the
Administration's proposal addresses its needs to develop a mature
market for the production of biomedical defenses? If not, why not?
Response: Project Bioshield is an important first step towards
development of a complete armamentarium of vaccines, diagnostics, and
therapeutics to counter biological and chemical weapons. There are,
however, many scientific, legal, and economic challenges inherent in
the research and development of these countermeasures. These challenges
can be addressed, in part, with the inclusion of adequate liability
protection and with provisions that tailor the contracting and
procurement process to better fit the R&D model of the pharmaceutical
and biotechnology industry. We look forward to working with the
Administration and Congress to ensure that legislation adequately
addresses these issues.
response to the honorable dave camp
Question 13. Two major issues in countermeasure technology
development are economic incentives and liability concerns. In
Secretary Thompson's testimony, he mentioned that grants and contracts
might not be sufficient for developing the public/private partnership.
How will Project Bioshield address these issues in order to expedite
development of the next generations of countermeasures?
Response: Any Bioshield legislation should include liability
protection for companies that enter into contracts for the research and
development or procurement of countermeasures and for all parties
involved in the manufacture, distribution, and administration of
products under the special emergency authorization provisions. PhRMA
hopes to work with the Administration and Congress to ensure the
legislation includes appropriate product liability protection along the
lines of the swine flu model or Section 304 of the Homeland Security
Act. Neither indemnification under Public Law 85-804 (which would cover
only products subject to procurement contracts) nor the narrow
``government contractor defense'' available in some situations under
Subchapter G of the Homeland Security Act would be adequate to assure
pharmaceutical companies that the risks inherent in the research,
development, and manufacture of countermeasures can be adequately
managed.
The Department of Defense (DoD) and the Defense Advanced Research
Projects Agency (DARPA) have the power to enter into research and
development or prototyping arrangements under what is known as ``Other
Transactions Authority.'' This authority can provide much more
flexibility than is typically the case under federal acquisition
regulations and can be used to develop agreements that more closely
resemble commercial transactions. It also has been used to encourage
and provide for the establishment of industry teams in federal
contracting. In any legislation implementing Project Bioshield, the
Secretary of Health and Human Services should be granted OTA for the
purpose of securing both R&D and actual countermeasures.
responses to the honorable gene green
Question 14. Dr. Baker alleges that the incentives in the Bioshield
initiative are not large enough to attract the bigger companies, and we
will have to rely more on smaller start up companies who are more
willing to take risks. Do you agree with his assessment on this issue?
What work is currently being done at some of your member companies to
combat bioterrorism?
Response: PhRMA does not have a complete list of the relevant
research currently underway at its member companies. As indicated on
PhRMA's website, however, a 2002 survey of medicines in development for
infectious diseases found that pharmaceutical and biotechnology
companies were working on 256 medicines for infectious diseases,
including medicines for smallpox, anthrax and plague. A cooperative and
collaborative research and development effort, which engages both the
smaller and larger biotechnology and pharmaceutical companies, as well
as government and academia, will be essential to ensuring the timely
research, development, and production of bioterrorism countermeasures.
In order to foster this effort, any legislation implementing Project
BioShield should include effective liability protection; modifications
to the ordinary government contracting and procurement process in order
to better fit the research and development model of the pharmaceutical
and biotechnology industry; and narrow provisions granting relief from
antitrust constraints in order to permit certain types of meetings
under certain circumstances.
Question 15. Some of us have been grilling PhRMA witnesses for some
time to try to get a better sense of exactly how much it costs to
develop a drug, and while we've never gotten a straight answer, but it
is safe to assume that it costs millions of dollars and takes many
years. Is the timeframe in this legislation realistic? I just wonder
whether throwing a lot of money at the industry will yield results any
faster?
Response: The average cost to develop a new drug has grown from
$138 million in 1975 to $802 million in 2000. Bringing a drug from
concept to market takes 10 to 15 years. Under the President's Project
Bioshield legislation, in order to enter into a procurement contract
for a countermeasure, the Secretary of HHS must determine that
production and delivery of the product within five years is reasonably
expected to be feasible. The five-year condition may operate to
preclude the Secretary from entering into contracts for promising
research, in light of the length of the new drug research and
development process. We recommend deletion of this requirement.
Question 16. The PhRMA website states that ``a 2002 survey of
medicines in development for infectious diseases found that
pharmaceutical and biotechnology companies were working on 256
medicines for these diseases, including medicines for smallpox, anthrax
and plague.'' If the industry is already taking steps to develop
countermeasures for these products, is there a need for this type of
legislation?
Response: PhRMA companies are engaged in research and development
relating to a large number of infectious diseases. Some research is
being done on medicines for smallpox, anthrax, and plague. It is
generally recognized, however, that the U.S. needs a full arsenal of
vaccines, diagnostics, and therapeutic products for a much wider range
of biothreat agents. For many companies, however, there are significant
disincentives to the research and development of bioterrorism
countermeasures. These disincentives include the expense and time
involved in developing a new product that, even if successfully
developed by the company and then approved by FDA, may never be sold,
or--if sold--may be sold only to one purchaser (e.g., DoD) that makes
no commitment to long-term purchase. Liability exposure can be
significant and unavoidable, and private insurance can be prohibitively
expensive or unavailable. Opportunity costs, when resources are
diverted from the research and development of other medicines, can be
prohibitive, particularly for companies with pipeline products only in
very early stages of development. The need for rapid development of
countermeasures also may require a level of collaboration among
companies and with the government that raises antitrust concerns.
Project Bioshield is an important first step towards creating an
infrastructure that fosters the research needed. For the reasons
outlined in this paragraph, however, any legislation implementing
Project BioShield should include liability protection, modifications to
the ordinary government contracting and procurement process in order to
better fit the research and development model of the pharmaceutical and
biotechnology industry, and narrow provisions granting relief from
antitrust constraints in order to permit certain types of meetings
under certain circumstances.
responses to the honorable edolphus towns
Question 17. Given that devices, biologics, and drugs usually have
different standards on what makes a product commercially viable to make
a commitment to R&D, does the Bioshield proposal offer enough incentive
for your individual industries?
Response: Project Bioshield is an important first step towards
creation of complete armamentarium of vaccines, diagnostics, and
therapeutics to counter biological and chemical weapons. There are,
however, many scientific, legal, and economic challenges inherent in
the research and development of these countermeasures, all of which
function as disincentives. These challenges can be addressed, in part,
with the inclusion of adequate liability protection and provisions that
tailor the contracting and procurement process to better fit the
research and development model of the pharmaceutical and biotechnology
industry. We look forward to working with the Administration and
Congress to ensure that the legislation adequately addresses these
issues.
Question 18. Do we need to add anything to this proposal to make it
easier for academic research institutions and commercial companies to
work together on developing these countermeasure products?
Response: A cooperative and collaborative research and development
effort, which engages both the smaller and larger biotechnology and
pharmaceutical companies, as well as government and academia, is
essential to ensuring the timely research, development, and production
of bioterrorism countermeasures. The President's Bioshield legislation
is an important step in this process. My written testimony described
ways in which PhRMA member companies are already collaborating with
academia and government to begin this research. There are, however,
many scientific, legal, and economic challenges inherent in the
research and development of these countermeasures. These challenges can
be addressed, in part, with the inclusion of adequate liability
protection, provisions that tailor the contracting and procurement
process to better fit the R&D model of the pharmaceutical and
biotechnology industry, and narrow relief from antitrust constraints
for certain meetings provided safeguards are in place.
Question 19. If each of you had a product already approved to treat
a given condition, what incentives exist in this proposal or what would
you like to see to encourage research for a new countermeasure?
Response: While Project Bioshield is an important first step
towards development of a comprehensive arsenal of vaccines,
diagnostics, and therapeutics to combat bioterrorism, there are many
scientific, legal, and economic challenges inherent in the research and
development of these countermeasures. These challenges can be
addressed, in part, with the inclusion of adequate liability
protection, provisions that tailor the contracting and procurement
process to better fit the R&D model of the pharmaceutical and
biotechnology industry, and narrow relief from antitrust constraints
for certain meetings provided safeguards are in place. These can be
more accurately characterized as removing disincentives to research,
rather than incentives. Of course, PhRMA itself does not conduct
product research or development. While Project Bioshield does not
contemplate incentives, any individual company contemplating
countermeasure research and development may find a particular incentive
or other provision especially important in view of its own research
capabilities, portfolio, and pipeline.
Question 20. If a better product is developed after you have signed
a contract with the government, should the government be forced to
stockpile your product--because you already have a contract--or does
the government need the flexibility to go with the better product,
which may mean canceling your contract?
Response: The pharmaceutical research and development model is not
like the research and development model of ordinary government
contractors. It is uniquely time consuming, costly, and risky. Other
factors in this special context--including high liability exposure and
the challenge of reallocating resources (i.e., diverting funds and
scientists from research into other diseases and conditions)--will
amplify the risks and serve as significant disincentives to
countermeasure R&D by private industry. Legislation intended to
encourage research and development into countermeasures should not
allow the government to terminate its contracts when additional
products are developed. The uncertainty associated with this
termination authority would operate as a significant disincentive to
research and development of countermeasures. At the same time,
competition is essential to innovation, and any legislation passed
should encourage pharmaceutical and biotechnology companies to compete
by developing and manufacturing newer and better versions of already-
procured products. The pharmaceutical industry looks forward to working
with the Administration and the Congress to develop a contracting and
procurement model that would mimic the ``real market'' and encourage
private sector competition.
Question 21. This bill appropriates unlimited sums of money.
However, our Orphan Drug program also gives incentives to work on R&D
for diseases that are not that prevalent, and many illnesses still have
no cure. Is BioShield a research problem that money alone can solve?
Response: Project Bioshield is an important first step. As I
indicated in my testimony on March 27, the President's proposal speaks
primarily to the early and the late steps in the lengthy, high-risk,
and costly process of bringing new medicines to the market. It does not
speak to the time consuming and resource intensive middle part of that
process, which is largely our responsibility. There are many
scientific, legal, and economic challenges inherent in this part of the
process. These challenges can be addressed, in part, with the inclusion
of adequate liability protection, provisions that tailor the
contracting and procurement process to better fit the R&D model of the
pharmaceutical and biotechnology industries, and narrow relief from
antitrust constraints to permit certain types of meetings, with
government officials present and appropriate safeguards in place.
______
Responses for the Record Submitted by Hon. Tommy Thompson
Questions are numbered sequentially 1-38. Questions were submitted
as follows: Chairman Tauzin, questions 1-6; Chairman Shadegg; #7; Mr.
Turner #8; Mr. Weldon #9; Ms. Wilson #10; #11 [unspecified]; Ms. Lowey
#12-17; Mr. Green #18-22; Mr. Lincoln Diaz-Balart #23-24; Mr. DeFazio
#25-28; Mr. Camp #29; Chairman Bilirakis #30-31; Mr. Etheridge #32; Mr.
Bennie Thompson #33-38.
questions and answers:
Question 1: To qualify for procurement under Project BioShield, the
government must first determine that there is ``no significant
commercial market'' for the countermeasure. Who would make this
decision? What criteria would guide the decision maker?
Response: The bill states that the HHS Secretary shall make this
determination. See sec. 121(c)(3)(B)(iii), as added by section 3 of the
bill.
The Secretary would likely be guided in making this determination
by the Federal Acquisition Regulations (FAR). The FAR sets forth
guidance for determining whether a particular product or service is a
``commercial'' product or service. Specifically, FAR 2.101 supplies an
in-depth definition of the term ``Commercial item.'' Factors which
would result in classifying a product as commercial include: (1) if the
item is customarily used by the general public or by non-governmental
entities for purposes other than governmental purposes, (2) if the item
is sold or leased to the general public, and (3) if the item has been
offered for sale, lease, or license to the general public. Contracting
officers are accustomed to using market research and market surveys to
determine whether these factors exist, and the Department would be able
to use these methods to make the ``no significant commercial market''
determination under the bill.
Question 2: Is the fact that a product has already been approved
conclusive evidence that there is a ``significant commercial market''
for the product? In other words, will Project BioShield only apply to
new drugs and vaccines?
Response: No, approval for a product is not conclusive evidence
that there is such a commercial market. In fact, the definition of
``qualified countermeasure'' in the Countermeasures Procurement section
of the bill is drafted to explicitly preserve the possibility of using
this authority to procure products that have been approved or licensed.
Question 3: Are medical devices eligible for purchase by the
government under Project BioShield? If not, why not?
Response: Under the Administration's bill, the Countermeasures
Procurement section would provide authority for procuring drugs and
biological products, but not devices. This section would provide
extraordinary spending authority to spur the private sector to invest
in next-generation countermeasures against biological, chemical,
radiological, and nuclear weapons. The Administration plans to continue
to develop and acquire new devices to diagnose and respond to threats
under current funding authorities. The Government could purchase
devices for the Strategic National Stockpile, but it would do so using
existing authority and annual appropriations rather than the special
fund to be created by the Project BioShield bill.
Question 4: Regarding the ``emergency use'' authority in Project
BioShield, could the government authorize the use of a clearly
superior, yet unapproved countermeasure if another inferior (in terms
of risk profile or efficiency, for example) countermeasure was approved
and available?
Response: Yes. Under the bill, one of the conditions for granting
emergency use authorization is that ``there is no adequate, approved,
and available alternative'' to the product. If another product was
approved and available, an unapproved product could still be given
emergency use authorization if it was determined that the approved
product was not adequate for that indication.
Question 5: Can you outline what the Administration has done, and
will continue to do, regarding securing private sector advice in the
creation of a countermeasure's development effort, and what has private
industry told the Administration regarding its requirements
particularly related to guaranteed procurement?
Response: Dr. Fauci and other HHS officials consulted with the
private sector as the Project BioShield proposal was being developed
and continue this dialogue. The industry has indicated that the absence
of a secure and predictable funding source discourages them from
investing in the technology and infrastructure needed to develop
cutting edge biomedical products where the Government is the only
market. When the private sector considers developing a new product, the
first thing it does is assess the potential market for the product.
Biomedical countermeasures, like vaccines against Anthrax or Ebola,
have only one market: the Government. If there is not a secure funding
source behind this market, there is little reason for a biotech or
pharmaceutical firm to invest in products responsive to this market.
From their point of view, it makes more sense to invest in a next
generation cholesterol lowering therapy or some other blockbuster drug.
The current state of the country's countermeasure armamentarium
confirms this assessment. Very little in the way of innovation has
occurred over the last few decades for countermeasures against the
Category A. agents (smallpox, anthrax, tularemia, plague, botulinum
toxin and the viral hemorrhagic fevers). While Dr. Fauci and his
colleagues at NIH have made substantial progress on a vaccine against
Ebola, the smallpox vaccine has changed only modestly over the last 100
years and the current generation anthrax vaccine was developed in the
1960s. Luckily, anthrax, plague, and tularemia respond to antibiotics
that were developed for other conditions. It seems clear the
uncertainty inherent in the annual appropriations process has played a
large role in discouraging innovation in countermeasures against
Category A agents and for other countermeasures where the Government is
the only likely purchaser.
Question 6: The Administration's BioShield proposal includes the
concept of ``emergency use'' authorization that would allow for
``contingent FDA approval'' of countermeasures. Can you explain how
this would be done, how long would the ``contingent approval'' last,
and under what circumstances would this ``contingent approval'' be
revoked? How would a revocation impact the liability of a private
company product given an ``emergency use'' authorization?
Response: Emergency use authorization would not be a contingent FDA
approval. It would be an emergency authorization to use an unapproved
product or to use an approved product for an unauthorized use in an
emergency to respond to a serious public health threat. To invoke this
authority:
The Secretary of Homeland Security, the Secretary of Defense,
or the Secretary of HHS, as appropriate, would have to
determine that there is an emergency involving a particular
biological, chemical, radiological, or nuclear agent, or a
specific disease.
In response to such a determination, the Secretary of HHS may
authorize the use of a drug, biological product, or device in
an actual or potential emergency.
The Secretary may impose conditions on the use of products
authorized in this manner. These conditions may relate to
product labeling, distribution, who may administer the product
and under what circumstances it may be administered, the
performance of studies, trials or research related to the
product, recordkeeping, good manufacturing practices, and the
monitoring and reporting of adverse events.
The authorization would last until the termination of the emergency
declared by the Secretary (at most one year, unless renewed), or until
the Secretary revoked the authorization.
The Secretary may revoke an authorization if, in the Secretary's
judgment, the conditions for the authorization are no longer met or
other circumstances make revocation appropriate.
A manufacturer's liability (e.g., for alleged product defects)
should not be directly affected either by the granting of an
authorization or by the revoking of one.
Question 7: Mr. Secretary, the Defense Science Board in its May
2002 Study on Defense Science and Technology has issued a challenge to
DoD that by 2005, the pathogen to drug hit process should be reduced
from years to months, by 2010 from months to weeks, and by 2020, it
should have the ability to go from bug to drug within 24 hours. It has
recommended spending $200 million per year over the next twenty years
to achieve this. What do you think of the likelihood of their success?
Are they on target in terms of the financial commitments? What sort of
communication/collaboration do you have with the Department of Defense
in terms of R&D of countermeasures? What is your opinion of the Defense
Science Board's challenge on going from bug to drug within 24 hours by
2020?
Response: The Defense Science Board's (DSB's) challenge and
recommendations are at once inspiring and formidable. There is cause
for optimism, however. For example, HHS is seeing a steady stream of
scientific and medical progress flowing from the revolution in genomics
and proteomics. In this regard, an ongoing, concerted, multi-agency
federal program to sequence the genomes of Categories A, B, and C
pathogens is crucial. It has been possible to greatly accelerate this
effort with recent increases in biodefense funding at the NIH.
Furthermore, evidence of the realism of the Board's time frame is
suggested by the incredibly rapid identification and molecular
dissection of the causative agent of SARS, and the program, almost
completed, to screen currently available antiviral drugs for anti-SARS
activity. However, one should not underestimate the challenge posed by
the DSB, and it remains to be seen whether it can be met within the
specified timeframe. It is clear, however, that HHS efforts in
biodefense research are compatible and in alignment with the DSB's
aspirations, and HHS certainly shares the goal of reducing the time
from pathogen identification to therapeutic ``hit.''
NIH has developed numerous collaborations involving various
components of DOD. Illustrative examples include the following:
Development and testing of therapeutics for smallpox, with the
U.S. Army Medical Research Institute of Infectious Diseases
(USAMRIID) and the Centers for Disease Control and Prevention
(CDC)
Development and testing of a candidate Ebola vaccine, with
USAMRIID
Development of antivirals for Ebola, with USAMRIID
Development of a candidate West Nile virus vaccine, using a
dengue virus ``backbone,'' with Walter Reed Army Institute of
Research
Testing of next-generation anthrax vaccine, with the
Department of Defense
Support of the Orthopoxvirus Genomics and Bioinformatics
Resource Center, with CDC, USAMRIID, and the DoD Defense
Advanced Research Projects Agency (DARPA)
Genomic sequencing of Categories A, B, and C pathogens, with
DARPA, DoD, USDA, DoE, NSF, CDC, CIA, and others
Evaluation of antibiotics, licensed as therapies for other
diseases, to treat anthrax and plague, with USAMRIID and the
FDA
Question 8: A key feature of the Administration's proposal involves
a grant of permanent, indefinite funding authority to spur development
of medical countermeasures by private sector firms.
How do you envision such permanent indefinite funding authority to
function?
Who will administer such authority?
Was an analysis done to determine what funding mechanism would best
meet the need of developing medical countermeasures to a terrorist
threat?
Would such a procedure bypass the annual authorization and
appropriations process? If so, why should Operation BioShield be
exempted from the usual Congressional oversight function?
To what extent is the Department going to leverage the resources of
government funded labs and academia in meeting the goals of Project
BioShield?
Response: The goal of BioShield is to ensure that needed
countermeasures are developed and procured as quickly as possible, with
procurements being driven by threat assessments and scientific/
manufacturing feasibility. This legislation is designed to provide
industry the assurance that, if it makes the investments necessary to
manufacture and bring specifically identified countermeasures to
market, the finances will be in place for the Government to procure
them quickly. It also enables the Government to respond quickly to
unanticipated changes in threats that cannot be addressed with
commercially available products. Those that are available
commercially--such as ciprofloxacin--or existing vaccines would be
purchased through discretionary appropriations. Similarly, if a
significant commercial, non-homeland security, market subsequently
developed for a BioShield countermeasure, any additional contractual
undertakings would have to be funded with discretionary appropriations.
The proposal includes a deliberate governmental process that must
be followed for funds to be used. Funds would be available to DHS for
obligation only after the President approved a procurement
recommendation made jointly by DHS and HHS, in coordination with the
Director of OMB. The Congress would be notified of such Presidential
approval. Prior to making such a joint recommendation, DHS must, in
consultation with other agencies, determine which agents pose a
material risk of use against the United States. HHS must assess the
public health consequences of such potential use, and determine that a
countermeasure is needed but is not commercially available. HHS must
also determine there is sufficient scientific basis to conclude the
product will ultimately be determined safe and effective, and that
production of adequate quantities within five years is feasible. For a
procurement contract to be finalized and funds obligated, HHS and the
manufacturer must also be confident that the manufacturer can provide
those quantities of safe and effective product--no Federal funds could
be drawn down against the contracts until a substantial quantity of the
product had been delivered. Further discussion of Congressional
oversight is in the response to Question 12.
We expect a substantial leveraging of NIH research efforts. Proof
of scientific concept must be established before funds would be
available for procurement. This proof of concept would often
accomplished through NIH-funded research. BioShield includes added
research authorities for NIH to accelerate this type of work.
Question 9: What future efforts (if any) are planned for the
Department of Health and Human Services and the Department of Homeland
Security to utilize the knowledge within the Russian scientific
community to identify existing and potential biological threats, learn
how such technical expertise was used in the creation of these agents
and cooperate with these persons to aid countermeasure policy making?
The former Russian chief scientist in the bioengineering labs--Dr.
Ken Alibek--tells the story of how biological and chemical weapons were
created and leaked out of the country. This book titled ``Biohazard''
and Dr. Alibek may provide crucial insight into how these weapons were
made and how America can best guard against them. I would be more than
happy to facilitate this effort and provide any assistance you desire.
Response: NIH is an active participant in several important
interagency initiatives already underway that address the points you
raise.
The U.S. Civilian Research and Development Foundation (CRDF) small
grants program is designed to provide catalytic funds to stimulate
collaborative research of high scientific merit between U.S. and Former
Soviet Union (FSU) scientists. The CRDF is a nonprofit charitable
organization created by the United States Government in 1995. This
unique public-private partnership promotes scientific and technical
collaboration between the United States and the countries of the former
Soviet Union (FSU). The CRDF's goals are to:
Support exceptional peer reviewed research projects that offer
scientists and engineers alternatives to emigration and help
prevent the dissolution of the scientific and technological
infrastructure of the countries of the FSU;
Advance the transition of weapons scientists to civilian work
by funding collaborative non-weapons research and development
projects; and
Help move applied research to the marketplace and bring
economic benefits both to the countries of the FSU and to the
United States.
In FY 2003, NIAID will fund at least seven CRDF collaborative
research projects in various areas of civilian biodefense.
NIH also participates in the DHHS-State Department Biotechnology
Engagement Program (BTEP), which provides larger grant support to FSU
bioweapons scientists now engaged in civilian research. For example,
NIAID currently participates in seven BTEP projects: in HIV/AIDS (3),
Tuberculosis (2), Amebiasis (1), and Antimicrobial Drug Resistance (1).
These projects are in Russia (5) and Georgia (2).
Since the collapse of the FSU, Russian scientists are the most
rapidly growing national group seeking research training in the NIH
Visiting Scientists Program. Russian scientists are also eligible to
partner with US scientists applying for regular NIH research awards
and, under special circumstances, to receive NIH foreign awards. One
example is the NIAID Comprehensive International Program for Research
on AIDS (CIPRA) award to the University of St. Petersburg. HHS expects
that scientifically peer reviewed collaborative research and directly
funded research will continue and increase in the future, particularly
as NIH-trained biomedical researchers return to Russia and begin
competing for research support.
Question 10: Mr. Secretary, there was a project underway jointly
with the Armed forces Radiobiology Research Institute (AFRRI) and the
Uniformed Services University of the Health Sciences (USUHS) to develop
a radioprotectant. There was a hitch due to appropriations, but their
product, HE2100 has already shown remarkable results in animal models.
During questions at the hearing, you mentioned negotiations for
Prussian Blue. Have you also considered a product such as this, which
actually protects against more complications of radiological exposure
than potassium iodide or Prussian Blue?
Response: The Department is currently exploring the possibility of
adding Prussian Blue, along with additional quantities of other
countermeasures for radiation sickness, to the stockpile.
Question 11: What steps have you taken since October 2001 anthrax
attacks to have sufficient doses of licensed anthrax vaccine to
vaccinate civilian responders?
Do you feel you have a significant CDC stockpile of FDA-licensed
vaccine available in the event of a wide-spread attack in the U.S.?
Do you have a short term anthrax preparedness policy that includes
expansion of production capacity and a short term stockpile of the
current FDA licensed vaccine?
In a letter sent to Bioport on March 6, 2003, you indicated you
wanted to focus efforts on developing a new vaccine Why?
Response: An initial amount of $11,000,000 carried over from the FY
02 budget plus an additional $22,110,000 in the FY03 budget are
allocated to purchase anthrax vaccine. The Strategic National Stockpile
(SNS) Program is working with the Department of Defense (DoD) to
develop a Memorandum of Understanding (MOU) that will enable the SNS
Program to purchase up to 3.0 million doses of this vaccine. Between
now and March 2004, approximately 420,000-500,000 doses will be
available for purchase. The remainder of the 3.0 million doses may be
requested for purchase after March 2004.
The current on-hand availability of FDA-licensed vaccine is 381
vials with 10 doses per vial. This is enough capability to vaccinate
1270 people (3 doses/person). The SNS also contains 20,878 vials of IND
product, enough to vaccinate 69,593 people.
The SNS Program is currently finalizing an MOU with DoD for
purchase of the licensed product only. DoD holds the contract for
production with the company. The SNS Program cannot request increased
production capacity; this would have to be done through DoD.
With respect to the question concerning the letter to Bioport, what
is needed is a new vaccine that, by comparison with the current
licensed vaccine manufactured by Bioport, (1) is less reactogenic, (2)
is easier to manufacture, (3) is more uniform, (4) has higher
immunogenicity, (5) requires fewer doses before an acceptable immunity
is established, and (6) has a reliable supply.
Question 12: This proposal provides permanent and indefinite
funding authority under the guise that it is necessary to spur the
development of medical countermeasures in the private sector. Will this
authority bypass the annual authorization and appropriations process?
If so, why shouldn't BioShield be subject to regular Congressional
oversight?
Congress wants to develop needed vaccines and drugs to fight
bioterrorism. If the Administration requests funds for this, I am
confident that Congress will meet these requests. Wouldn't it be a
feasible option to use the regular order for crafting the spending
authority under this measure? Or, is the Administration merely
requesting this funding outside of the normal appropriations process
because it did not want to reduce funding for domestic programs already
shortchanged in the fiscal 2004 request?
Response: We have carefully developed this legislation to ensure
fiscal responsibility while providing the flexibility needed to respond
to changing threat scenarios and the financial assurances industry
needs to develop/manufacture essential countermeasures that do not have
a commercial market. The requirements for the use of these funds are
stringent, and limited to products for which there is not a significant
commercial market. The Administration anticipates on-going
Congressional oversight. Each procurement must be approved by the
President, with the Congress notified of each such approval. HHS would
expect activities--and results--under BioShield to be a regular topic
of discussion in hearings in a wide range of hearings for both DHS and
HHS, including authorizing, oversight, and appropriations committees.
Question 13: As you know, the normal peer review procedure in the
case of grants, contracts, and cooperative agreements for biomedical
countermeasure research and development (R&D) is an initial study
section review and an advisory council review. The two-stage peer
review process is the most well-regarded in the world. Yet, this bill
would waive these procedures.
Can you please tell the Committee what safeguards will be put in
place to ensure the new, expedited process is as sound and safe as the
current process provides for?
Can you also address concerns that because this process will be
done behind closed doors and that competitive procedures can be waived
that the process will not either be fair or produce the best results?
What safeguards will be put in place to ensure the companies with the
best proposals, not those in good standing with the Administration,
will be awarded contracts?
Response: The NIH system of peer review is, indeed, admired and
emulated around the world. The expedited peer review provision in the
BioShield bill is aimed at shortening the peer review process (which
often can take 9 months or more), but not diminishing its quality.
Expedited peer review, carried out in consultation with appropriate
scientific experts, would determine scientific and technical merit of
proposals and assess the likely contribution to the field of research.
Furthermore, under the proposed provision, the authority to expedite
peer review may be exercised only in the case of pressing research and
development of countermeasures urgently needed to combat a biological
agent that may cause a public health emergency and affect national
security.
As provided elsewhere in the Administration's bill, some contracts
may be awarded through a noncompetitive process when it is known that
only a limited number of companies are available to submit proposals.
(See response to Question 24). However, peer review procedures (either
regular or expedited) would be employed to review proposals submitted
through the noncompetitive process, as well as all contract proposals
that are submitted through any normal competitive processes.
Question 14: The proposal allows for the use of unapproved drugs or
devices in an actual or potential national public health emergency.
What compensation protections will be provided the general public if
the government distributes a drug that causes severe or disabling side
effects?
Response: Section 4 of the bill authorizes use of medical products
in emergencies if the Secretary concludes that it is reasonable to
believe, based on the totality of available scientific evidence,
including available data from adequate and well-controlled clinical
trials, that the product may be effective against a serious or life-
threatening disease or condition; that the benefits of the product
outweigh the risks; and that there is no adequate, approved, and
available alternative to the product for such purpose. Thus, the risk
that a distributed drug will cause severe or disabling effects should
be reduced as much as possible prior to any distribution.
If, nevertheless, there is an injury, there are several potential
sources for compensation, depending on the circumstances. Compensation
may be available from an individual's insurer. If the individual
received the product in connection with his/her employment,
compensation may be available under a workmen's compensation program
(including, for Federal employees, the Federal Employee Compensation
Act). If the injury results from negligence or wrongdoing in the
manufacture or administration of the product, compensation may be
available through the tort law system (including, for negligence or
wrongdoing by Government employees, the Federal Tort Claims Act, where
the requirements of that statute are met). If the countermeasure is
part of the Strategic National Stockpile, the manufacturer may have
been indemnified by HHS pursuant to Public Law 85-804. If the
countermeasure is related to smallpox, special provisions may apply--
Section 304 of the Homeland Security Act creates a Federal Tort Claims
Act remedy in certain circumstances, and Public Law 108-20, the
Smallpox Emergency Personnel Act of 2003, provides compensation to
individuals receiving smallpox vaccine under HHS recommendations.
Question 15: Can you more clearly define under what circumstances
you have the authority to declare an emergency and distribute
unapproved, unlicensed drugs?
Response: In order for the Secretary of HHS to issue an emergency
use authorization for a product, there must be a determination--
(A) by the Secretary of Homeland Security, that there is a domestic
emergency (or a significant potential of a domestic emergency)
involving a heightened risk of attack with a specified
biological, chemical, radiological, or nuclear agent;
(B) by the Secretary of Defense, that there is a military emergency (or
a significant potential of a military emergency) involving a
heightened risk to United States military forces of attack with
a biological, chemical, radiological, or nuclear agent; or
(C) by the Secretary of a public health emergency under section 319 of
the Public Health Service Act, affecting national security and
involving a specified biological, chemical, radiological, or
nuclear agent or a specified disease or condition that may be
attributable to such agent.
With respect to distribution of unapproved, unlicensed drugs,
pursuant to the BioShield legislation, such products could be
introduced into interstate commerce if the Secretary issues an
authorization for emergency use of the product. Prior to issuing such
an authorization, certain criteria have to be met under the proposed
legislation including a conclusion by the Secretary--
(1) that an agent specified in a declaration under subsection (b) can
cause a serious or life threatening disease or condition;
(2) that, based on the totality of scientific evidence available to the
Secretary, including data from adequate and well-controlled
clinical trials, if available, it is reasonable to believe that--
(A) the product may be effective in detecting, diagnosing, treating,
or preventing--
(i) such disease or condition; or
(ii) a serious or life-threatening disease or condition caused by a
product authorized under this section or approved under
this Act or the Public Health Service Act, for detecting,
diagnosing, treating, or preventing such a disease or
condition caused by such an agent; and
(B) the known and potential benefits of the product, when used to
detect, diagnose, prevent, or treat such disease or condition,
outweigh the known and potential risks of the product;
(3) that there is no adequate, approved, and available alternative to
the product for detecting, diagnosing, preventing, or treating
such disease or condition; and
(4) that such other criteria as the Secretary may by regulation
prescribe are satisfied.
Question 16: The measure states that the Administration has the
authority to procure medical countermeasures for the inclusion in the
DHS strategic national stockpile. Is there any instance where the
Administration will be procuring a countermeasure for outside the
stockpile or ``emergency use''?
Response: The Government may purchase limited quantities of a
countermeasure for research, either under the research and development
section of the Project BioShield bill or for other research. It may
procure countermeasures for use in Government health care facilities
(IHS hospitals, DoD and VA hospitals). (These situations would entail
using regular annual appropriations rather than the special fund
created by the countermeasure procurement section of the bill.) The
Government may also procure countermeasures for the Strategic National
Stockpile other than through the mechanism supplied by the Project
BioShield bill--for example, if there is a commercial market for a
particular countermeasure, the Government may procure it for the
Stockpile using ordinary annual appropriations. Countermeasures
purchased for the Strategic National Stockpile, either under Project
BioShield or the annual stockpile discretionary appropriation, can be
transferred to DoD or other federal agencies on a reimbursable basis.
Question 17: Can drugs already on the market for other uses be
entered into BioShield if it's shown that the drug can be developed
into a countermeasure?
Response: It is unclear what is intended by the phrase ``entered
into BioShield'' in this question. If that phrase is intended to refer
to whether a product can receive an emergency use authorization in
response to a declared emergency relating to chemical, biological,
radiological or nuclear attack, the proposed legislation would
authorize the Secretary to provide an emergency authorization for such
a product, even it it is currently licensed for another use.
Question 18: Mr. Secretary, in his written testimony, Dr. Baker
underscores the importance of including academic research institutions,
as well as private innovator companies, in our efforts to develop
countermeasures to bioterrorism.
In my opening statement, I referenced the work being done at Baylor
College of Medicine and other universities. Can you tell us how Project
BioShield would further the work being done at our nation's
universities?
Response: The Department is in complete agreement about the
importance of including academic research institutions in its efforts
to develop countermeasures for bioterrorism. To that end, NIAID has
markedly intensified, expanded, and accelerated its ongoing basic and
applied research programs relating to biodefense, and has developed a
total of 52 biodefense initiatives to stimulate basic research and
development of countermeasures in 2002 and 2003. Most of these
initiatives are specifically addressed to, or entail collaborations
involving academic research centers. (Additional detailed information
is contained in the response to question 22 below.)
BioShield will build on these investments and help ensure that HHS
scientists, working with industry, can actually develop the tools of
diagnosis, treatment and prevention that will allow HHS to respond
effectively to and deter future bioterrorist attacks on American
citizens. Project BioShield will provide an additional and extremely
important stimulus to the basic research engine of academia by greatly
facilitating translation of advances in fundamental research into
countermeasures to defend civilians. It will also create many
opportunities for industry-funded applied research in academic research
centers as industry carries out the studies required for advanced
development, production, and licensure of new interventions so that
they can be added to the Strategic National Stockpile.
Question 19: The emergency use component of this bill would allow
the Secretary to make certain unapproved products available to the
public in an expedited fashion in the event of a bioterrorist attack.
Because these products would likely not be fully tested at this point,
there is a possibility that harmful side effects might be discovered
after widespread use by the public.
We already are trying to address such a situation with legislation
to compensate persons who are harmed as the result of a smallpox
vaccination. Many Members of this Committee have been locked in these
difficult negotiations.
Has the Administration given any thought to how it would compensate
individuals who could be harmed as a result of taking an untested
product? Some of our witnesses on the next panel will testify that this
liability issue could discourage larger manufacturers from really
engaging in new product development. Does this legislation address the
liability concerns?
Response: As noted in the response to Question 14, the emergency
use authorization section includes several provisions that should
reduce the risk of harm, and, in the event of harm, there are several
possible sources for compensation, including insurance, workmen's
compensation programs, the tort law system, and certain special
statutory provisions concerning smallpox countermeasures and the
Strategic National Stockpile.
There are existing legal provisions that address manufacturers'
concerns about potential liability resulting from product liability
tort actions. (1) If the product in question is designated by the
Secretary of Homeland Security as a ``qualified anti-terrorism
technology,'' as defined in the SAFETY Act (sections 861-865 of the
Homeland Security Act of 2002), the seller of the product receives
certain protections from liability in cases based on acts of terrorism.
The statute gives federal courts exclusive jurisdiction over such
claims, and it limits damages in such cases (precluding punitive
damages, limiting non-economic damages, and limiting total damages to
the amount of liability insurance coverage that the seller can obtain
without unreasonably distorting the sales price of the technology). The
statute also allows the seller to assert the ``government contractor''
defense (which applies the Government's sovereign immunity to
Government contractors), absent a showing that the seller committed
fraud or willful misconduct in giving the Government the information
used to approve the product as a ``qualified anti-terrorism
technology.''
(2) The government contractor defense also protects a manufacturer
of a product that is not designated as a ``qualified anti-terrorism
technology,'' if the product is produced pursuant to a Government
contract; the Government has prepared or approved reasonably precise
specifications; the product conforms to such specifications; and the
manufacturer warned the Government of any dangers known to the
contractor, but not known to the Government.
(3) Finally, the Department may, under certain circumstances,
indemnify countermeasure manufacturers or sellers under P.L. 85-804.
Question 20: Mr. Secretary, many on this panel have already
expressed their concern, and general surprise at the Administration's
decision to provide unspecified, permanent funding for this program.
This provision certainly flies in the face of the Administration's
previous positions on many issues. Many of us are uncomfortable with
writing a blank check of this nature, especially since the Congress
controls the purse strings. How do you justify this change of policy?
Response: Pharmaceutical manufacturers have expressed concerns
about investing substantial resources to develop a countermeasure, only
to find out down the line that the Government cannot make available
sufficient funds to purchase the product. Permanent funding will help
to provide assurance to the industry that, in the event an effective
countermeasure is available, there will be a market for such a
countermeasure and the Government will have sufficient funding
available for purchase.
Question 21: Similarly, based on my read of this legislation, it
looks like the Secretary would have the blanket authority to expedite
scientific peer review requirements under ``urgent circumstances.''
Would the Secretary act unilaterally to determine what products could
bypass FDA approval? Does the legislation require consultation with the
NIH, the Congress or consumer groups? I appreciate the need to cut the
red tape in some of these situations but I have concerns that this
provision could be broadened to include products that might not be
directly related to bioterrorism.
Response: The legislation would authorize the Secretary to issue an
emergency use authorization if specific criteria are met for the
duration of the declared emergency. It is not HHS's intention to permit
emergency use authorizations except for products that could be used in
response to a domestic emergency involving biological, chemical,
radiological or nuclear agents, a military emergency involving those
agents, or a public health emergency. The legislation does not preclude
the Secretary from consulting with relevant government and non-
governmental public health experts.
Question 22: Mr. Secretary, can you paint a picture of some of the
work that is currently being done within NIH to help develop
countermeasures? We have heard a lot about how the proposal would
incentivize research at private companies, but is there a desire to
expand the work being done at our public institutes?
Response: The National Institute of Allergy and Infectious Diseases
(NIAID) is the principal institute within the National Institutes of
Health that supports biodefense research. The explicit goal of NIAID's
biodefense research is to develop the tools and countermeasures that
are necessary to protect civilians from potential agents of
bioterrorism. The NIAID's biodefense strategic plan includes
significant investments in internal and extramural basic research,
including studies of microbial biology and host responses to those
microbes. This basic research provides the substrate of new knowledge
from which new vaccines, therapies, and diagnostic tools will emerge.
One goal of Project BioShield is to encourage industry to invest in the
process of translating these basic scientific discoveries into
deliverable products. NIAID is also making substantial investments in
national research resources such as laboratory facilities, centers of
excellence, and a national reagent repository. To implement these
plans, NIAID has launched a total of 52 biodefense initiatives in 2002
and 2003. The majority of these are either directed toward academic
research centers or will entail collaborations that involve academic
centers. Examples include the following:
Biodefense and Emerging Infectious Disease Research Opportunities:
Intended to encourage the submission of investigator-initiated research
grant applications in biodefense and select emerging infectious
diseases. The goal is to expedite research leading to the diagnosis,
prevention and treatment of diseases caused by potential bioterrorism
agents.
Rapid Response Grant Program on Bioterrorism-related Research:
Funded more than sixty projects in FY02 to support innovative research
targeted at the design and development of specific diagnostics,
therapies, and prevention strategies for Category A biological
diseases.
Partnerships for Novel Therapeutic, Diagnostic, and Vector Control
Strategies in Infectious Diseases: Awarded six Partnership Grants in
FY02 to support collaborative partnerships between government,
academia, and the private sector to develop novel biodefense products.
Biodefense Partnerships: Vaccines, Adjuvants, Therapeutics,
Diagnostics, and Resources: Facilitates collaborative partnerships
between government, academia, and the private sector to develop novel
biodefense products.
Cooperative Research for the Development of Vaccines, Adjuvants,
Therapeutics, Immunotherapeutics, and Diagnostics for Biodefense
Program: Facilitates the design and development of vaccines,
therapeutics, adjuvants, and diagnostics for NIAID Category A-C
priority pathogens and their toxins to help translate basic research
knowledge into new biodefense products.
Regional Centers of Excellence for Biodefense and Emerging
Infectious Diseases Research: Establishes 7 to 8 academic research
centers of excellence that will not only provide state-of-the-science
research capacity, but will also link to the Centers for Disease
Control and Prevention and to state and local health departments to
provide permanent, regional expertise on agents of bioterror and other
emerging and re-emerging diseases.
Construction and Renovation of Biosafety Laboratory Facilities:
Funding, mainly to academic research centers, to design, build,
renovate, and certify biocontainment laboratories, addressing a
critical national shortage of facilities in which to safely carry out
some essential biodefense research and development.
Division of Intramural Research: Intramural program has expanded
research efforts for many Categories A, B, and C agents and initiated
plans to construct Biosafety level 3 and 4 facilities to enable safe
research on medical countermeasures against bioterrorism.
Question 23: What procedures will HHS employ to study the
effectiveness of a countermeasure after it's been employed in an
emergency, and will it have to then go through a more elaborate FDA
approval process in a non-crisis situation?
Response: The legislation provides the Secretary with authority to
establish conditions for use relating to an emergency authorization,
including limitations on distribution, on who may administer the
product, and on the performance of studies and clinical trials. In
addition, the legislation authorizes the Secretary to impose
requirements for adverse event reporting, to impose additional
recordkeeping and records access requirements and to impose good
manufacturing practices. In a non-crisis situation, a countermeasure
would have to go through FDA's statutorily required pre-market approval
process.
Question 24: Would you expound on the use of the noncompetitive
process mechanism you propose in the bill?
Response: Current Federal procurement regulations permit
noncompetitive contracting when it is known with certainty that only
one source is available. The provision for a noncompetitive process
proposed in the Administration's BioShield bill would permit HHS to
award contracts without competition when the number of available
sources is greater than one, but highly limited. This authority would
be used to bypass a number of time-consuming steps, but the Department
would continue to undertake necessary steps, including effective
acquisition planning, to ensure contracts are awarded at fair and
reasonable prices and include terms and conditions that are in the best
interest of the government. In biomedical research and development,
especially for vaccines and other complex biological materials, it is
frequently the case that only a few companies possess a viable
candidate product or technology. Without these authorities, HHS would
be obligated to follow the complete process of solicitation and
competitive contracting, even when it knows that only a very limited
number of companies could submit proposals.
Question 25: With single source procurement contracts for
countermeasures, are the profit margin and rate of return pre-
established in the contract?
Response: Under the Federal Acquisition Regulation, single source
procurement contracts do not contain a profit margin or rate of return.
If the contract is a firm-fixed price contract, the Government is
always charged the negotiated unit price in the contract. If the
contract is a cost reimbursement, the contract is priced on the basis
of negotiated allowable costs plus a fixed fee, or such costs plus cost
containment or performance incentives.
Question 26: As is customary in conventional government
procurement, couldn't HHS simply expedite the RAP and awarding process
for developing countermeasures? Wouldn't a competitive bidding process
serve the public interest and public goals better?
Response: The Department's intent is not to forego competition, but
rather to use highly streamlined forms of competition (including
application of simplified acquisition techniques) whenever possible and
to use noncompetitive processes, only if necessary and justified. While
current laws and regulations provide agencies with considerable
flexibility, including the ability to conduct efficient source
selections when there are many potential contractors, the current
framework does not fully address the environment which the Department
routinely anticipates for the types of needs, addressed by its
BioShield legislation--namely, very limited numbers of companies (but
perhaps more than one) that possess a viable candidate product or
technology to meet pressing demands for effective countermeasures. HHS
fully appreciates the benefits that competition provides and intends to
engage in good planning and market research in all acquisitions so that
it can take advantage of competition whenever possible and ensure well
structured contracts with appropriate incentives for successful results
in all contracts in furtherance of Project BioShield.
Question 27: Better still, why shouldn't DHS start contracting
immediately to develop countermeasures for a National Institute of
Allergy and Infectious Disease High Threat List (``A List'') Toxins?
Response: HHS, through the NIAID/NIH, has the mandate from both the
Congress and the Administration to develop countermeasures for
biodefense because HHS, NIH, and NIAID have extensive resources of
scientific talent and expertise, and a long and proven track record of
success in developing drugs and vaccines for infectious diseases. DHS
cannot, in any reasonable timeframe, replicate this experience and
expertise. Providing HHS with the special (and targeted) authorities of
Project BioShield for the scientific experts at the NIH who are already
in place and know how to use them would enable NIH to immediately
accelerate research and development of countermeasures for agents that
may cause a public health emergency affecting national security. HHS
will continue to work collaboratively with DHS to coordinate research
and development priorities and activities between the departments.
Question 28: Much of the debate on preparedness revolves around
biological toxins. Is there anything specifically that's being done to
develop countermeasures for chemical agents?
Response: The NIH is actively assessing its opportunities to assist
the national effort in this regard. Several steps have already been
taken. For example, NIAID initiated a meeting with the leadership of
the National Academy of Sciences to explore potential areas of
collaboration and cooperation, following the NAS Report ``Making the
Nation Safer: The Role of Science and Technology in Countering
Terrorism.'' NIAID also convened an expert panel to help frame the
``landscape'' of biomedical research and development needs in this
area. Within this framework, several NIH Institutes and Centers are
exploring opportunities to address needs in this area. Across the NIH,
these efforts will be coordinated through the NIH Biodefense Research
Coordinating Committee with the NAS and other relevant organizations
and federal agencies.
Question 29: Two major issues in countermeasure technology
development are economic incentives and liability concerns. In your
testimony, you mentioned that grants and contracts might not be
sufficient for developing the public/private partnership. How will
Project BioShield address these issues in order to expedite the
development of the next generation of countermeasures?
Response: Section 3 of the bill, the biomedical countermeasures
procurement section, facilitates the creation of markets for certain
biodefense products that, absent new incentives, would likely be
inadequate to attract sufficient investment by the private sector to
meet emerging needs for development of countermeasures. This proposal
complements existing statutes that support technology transfer and
public/private partnerships, including the Bayh-Dole Act and the
Federal Technology Transfer Act. Moreover, the bill would enable the
Department to award grants, contracts, and cooperative agreements for
research and development of medical countermeasures through expedited
and more flexible procedures to enhance the Department's ability to
accelerate research on and development of innovations applicable to
biodefense.
In general, grantees and contractors are expected to carry
insurance to cover research and development activities. There is some
concern that insurance coverage will not be sufficient, or available
for countermeasure research and development, but existing mechanisms,
as discussed in the Department's responses to questions 14 and 19,
would address such concerns.
Question 30: Mr. Secretary, it is my understanding that the U.S.
Armed Forces Radiobiology Research Institute (AFRRI) is currently in
partnership with a private drug company to conduct Phase III trials of
a compound, HE-2100, that has shown early promise in counteracting the
immuno-depleting effects of nuclear radiation. Considering the
promising nature of this and possibly other radioprotectant drug
candidates, can you elaborate on how Project BioShield or other
initiatives would specifically enhance the ability to aid in the
development and procurement of these drugs?
Response: The U.S. Armed Forces Radiobiology Research Institute has
published several articles on the drug HE-2100. The compound appears to
be well-tolerated in high doses in mice and is reported to have modest
radioprotectant activity when administered prior to radiation exposure.
HE-2100 is the subject of a Cooperative Research and Development
Agreement between the Armed Forces Radiobiology Research Institute, the
Uniformed Services University of the Health Sciences, and Hollis Eden
Pharmaceuticals Inc. At this point in its development, further
preclinical and animal model work is necessary to determine if the
compound provides radioprotectant activity when it is administered
FOLLOWING radiation exposure. The absence of such post-exposure
radioprotectant activity would significantly limit the role for HE-2100
in civilian biodefense. In addition, research is also needed to
establish that the compound is safe and efficacious for civilian
biodefense use. Thus, it is not a candidate for Project BioShield at
this time.
Question 31: Mr. Secretary, it is also my understanding that the
current fiscal year budget for AFRRI is in some degree of doubt, and
that the agency currently does not and may not in the future have the
resources to aggressively develop promising radioprotectant drug
candidates like HE-2100. Do you see a role for HHS in directly aiding
in the development of this compound, considering it is AFRRI's leading
radioprotectant candidate?
Response: HHS, through NIH, has recently initiated discussions with
AFRRI and a number of other organizations, including the National
Academy of Sciences, to explore how it might contribute to research and
development on countermeasures for nuclear/radiological and chemical
terrorism. While HE-2100 appears to have some promise as a
radioprotectant from a DoD perspective, its interest to and priority
for civilian indications remain to be determined, but are dependent on
the development of evidence of radioprotectant activity when
administered AFTER radiation exposure. This would be a minimal
requirement for a radioprotectant destined for civilian biodefense use.
It is also important to note that there are other possible
opportunities to research and develop potential radioprotectant
countermeasures for civilian biodefense, too. As with HE-2100, HHS is
also in the process of assessing their merit, interest, and possible
priority for support.
Question 32: How much do you estimate Project BioShield will cost?
What costs are likely to be incurred for fiscal years 2003 and 2004?
Over the next ten year period? What is the basis for the
Administration's cost estimates?
Response: We estimate costs of $5.6 billion over 10 years,
including $890 million in FY 2004. No FY 2003 spending is assumed.
These estimates are based on a combination of assessments of threats, a
determination of which threats cannot be addressed by commercially
available products, and current scientific judgements of what
countermeasures can be produced during this time frame. FY 2004
estimates reflect research NIH believes is nearing proof of scientific
concept, with funds expected to be used for a new anthrax vaccine, a
smallpox vaccine that is safe for those with medical conditions that
contraindicate use of current vaccines, and protection against
botulism.
Question 33: To what extent has the Administration worked closely
with the industry in developing its program to develop these
countermeasures?
Response: See the answer to question #5
Question 34: In what ways does BioShield focus on procuring
countermeasures that become available?
Response: The countermeasure procurement section of the Project
BioShield bill requires the Secretaries of Homeland Security and of HHS
to make ongoing assessments of which chemical, biological,
radiological, and nuclear agents pose material risks of use against the
United States population and of the effect on public health of possible
use of such agents. It also requires ongoing determinations of agents
for which countermeasures are necessary to protect public health, and
ongoing assessments by the two Secretaries of the availability and
appropriateness of specific countermeasures to address particular
threats. It requires the Secretary of HHS to identify countermeasures
that are appropriate for procurement with the special fund.
Question 35: In what ways does it serve as an incentive for long-
term research projects?
Response: Project BioShield provides a critically important
incentive for long-term research and development of drugs and vaccines
(countermeasures) for bioterrorism preparedness. Many such
countermeasures have essentially no market other than the U.S.
government. In the absence of a market, there is no incentive for
private sector interest or involvement in development of these
countermeasures because fiduciary responsibilities to shareholders
channel priorities toward other, more lucrative opportunities. This is
particularly the case with vaccines, where production is complex and
costs can be extremely high. BioShield creates the missing ``market''
for these countermeasures in two ways. The Government may contract to
purchase a specified quantity of the product if there are data
supporting a reasonable conclusion that the product can be approved or
licensed within five years. For products that are further away from
approval or licensure, the availability of the permanent indefinite
appropriation will assure companies that, if their research and
development do yield an appropriate product, the Government will be
able to purchase it even if there is no commercial market. Under these
circumstances, it is more likely that companies will be willing to
assume the risks inherent in research and development.
Question 36: Will BioShield define a market for a countermeasure in
advance so that a company can evaluate it BEFORE it begins a major
long-term research project to develop it? How specific will this
definition be? Does the government, in effect, guarantee that this is
the market that will exist if the company successfully develops the
countermeasures?
Response: Project BioShield is designed to achieve results, and the
countermeasure procurement section of the bill envisions the Government
entering into firm purchase obligations. If the product does not yet
have approval or licensure, the Government may enter into a procurement
contract under the bill as long as there is clinical experience or
research data supporting a reasonable conclusion that the product can
be approved or licensed within five years. For products that are
further away from approval or licensure, the procurement section will
still enhance the incentives for a company to enter into the research
project--the availability of the permanent indefinite appropriation
will assure companies that, if their research yields an appropriate
product, the Government will have the ability to purchase it even if
there is no commercial market.
Finally, it should be kept in mind that the research and
development section of the bill provides flexible mechanisms for
procurement of research on countermeasures.
Question 37: If a company believes it has successfully developed a
countermeasure and it is not, in fact, awarded the procurement, what
recourse does it have?
Response: The first recourse for a disappointed bidder would be to
protest to the agency and cite section 33.103 of the Federal
Acquisition Regulation. Beyond this there are two other avenues for
disappointed bidders to challenge Government contract award decisions.
First, under the Tucker Act (28 U.S.C. 1491(a)(1)), contractors may
file bid protests challenging award decisions in the U.S. Court of
Federal Claims. Second, pursuant to provisions within the Competition
in Contracting Act (31 U.S.C. Sec. Sec. 3551-3556), contractors may
also file bid protests at the General Accounting Office (GAO).
Question 38: The legislation only applies to procurement where
``production and delivery within five years of sufficient quantities of
the product . . . is reasonably expected to be feasible''. Why did you
limit the focus to this time period? What types of research is likely
to be covered by this time frame and what types is likely to be
excluded? What types of research is likely to be covered by this time
frame and what types is likely to be excluded?
Response: Drug and vaccine development is fraught with
unpredictability. A very high percentage of candidate drugs and
vaccines fail development. The five year window was chosen because it
is virtually impossible to make reasonable predictions of the
feasibility of ``production and delivery . . . of sufficient quantities
of the product'' in longer time horizons.