Stifling Innovation: Examining The Impacts Of Regulatory Burdens On Small Businesses In Healthcare
Summary
A Government Publishing Office print of the hearing Stifling Innovation: Examining the Impacts of Regulatory Burdens on Small Businesses in Healthcare, May 8, 2024, before the Committee on Small Business of the United States House of Representatives, Small Business Committee Document Number 118-050. The contents list opening statements by Hon. Roger Williams and Hon. Nydia Velazquez and witnesses including Brian J. Miller of the Johns Hopkins University School of Medicine and Diana Zuckerman, President of the National Center for Health Research. Chairman Williams says in the opening statement that the hearing will focus on how overregulation in the healthcare industry limits small firms' competitiveness. The record shows the committee adjourned at 11:48 a.m.
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“Stifling Innovation: Examining The Impacts Of Regulatory Burdens On Small Businesses In Healthcare.”
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[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
STIFLING INNOVATION: EXAMINING THE IMPACTS
OF REGULATORY BURDENS ON SMALL
BUSINESSES IN HEALTHCARE
HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
MAY 8, 2024
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 118-050
Available via the GPO Website: www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
55-528 WASHINGTON : 2024
HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
BLAINE LUETKEMEYER, Missouri
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
MARIA SALAZAR, Florida
TRACEY MANN, Kansas
JAKE ELLZEY, Texas
MARC MOLINARO, New York
MARK ALFORD, Missouri
ELI CRANE, Arizona
AARON BEAN, Florida
WESLEY HUNT, Texas
NICK LALOTA, New York
CELESTE MALOY, Utah
NYDIA VELAZQUEZ, New York, Ranking Member
JARED GOLDEN, Maine
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
GREG LANDSMAN, Ohio
MARIE GLUESENKAMP PEREZ, Washington
SHRI THANEDAR, Michigan
MORGAN MCGARVEY, Kentucky
HILLARY SCHOLTEN, Michigan
JUDY CHU, California
SHARICE DAVIDS, Kansas
CHRIS PAPPAS, New Hampshire
Ben Johnson, Majority Staff Director
Melissa Jung, Minority Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Roger Williams.............................................. 1
Hon. Nydia Velazquez............................................. 2
WITNESSES
Dr. Brian J. Miller, MD, MBA, MPH, Assistant Professor of
Medicine, Johns Hopkins University School of Medicine,
Baltimore, MD.................................................. 5
Dr. David Anthony Eagle, MD, Medical Oncologist & Chair of
Legislative Affairs and Patient Advocacy, New York Cancer &
Blood Specialists, Patchogue, NY............................... 7
Mr. William J. Newell, J.D., Chief Executive Officer, Sutro
Biopharma, Inc., South San Francisco, CA....................... 8
Dr. Diana Zuckerman, President, National Center for Health
Research, Washington, DC....................................... 10
APPENDIX
Prepared Statements:
Dr. Brian J. Miller, MD, MBA, MPH, Assistant Professor of
Medicine, Johns Hopkins University School of Medicine,
Baltimore, MD.............................................. 35
Dr. David Anthony Eagle, MD, Medical Oncologist & Chair of
Legislative Affairs and Patient Advocacy, New York Cancer &
Blood Specialists, Patchogue, NY........................... 43
Mr. William J. Newell, J.D., Chief Executive Officer, Sutro
Biopharma, Inc., South San Francisco, CA................... 51
Dr. Diana Zuckerman, President, National Center for Health
Research, Washington, DC................................... 59
Questions and Answers for the Record:
Questions from Hon. Velazquez to Dr. Diana Zuckerman and
Answers from Dr. Diana Zuckerman........................... 64
Additional Material for the Record:
American Academy of Dermatology Association (AAD)............ 68
American Academy of Family Physicians (AAFP)................. 75
Associated Builders and Contractors (ABC).................... 86
STIFLING INNOVATION: EXAMINING THE
IMPACTS OF REGULATORY BURDENS ON
SMALL BUSINESSES IN HEALTHCARE
----------
WEDNESDAY, MAY 8, 2024
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 10:03 a.m. in Room
in Room 2360, Rayburn House Office Building, Hon. Roger
Williams [chairman of the Committee] presiding.
Present: Representatives Williams, Luetkemeyer, Stauber,
Meuser, Van Duyne, Ellzey, Molinaro, Alford, Crane, LaLota,
Maloy, Velazquez, McGarvey, Gluesenkamp Perez, Scholten,
Thanedar, and Davids.
Chairman WILLIAMS. I would like to welcome everybody. And
before we get started, I want to recognize Congressman Stauber
from the great State of Minnesota to lead us in the pledge and
the prayer.
Mr. STAUBER. Dear Lord, thank you for bringing us together
once again in this Small Business Committee. We thank you for
the Chairman and the Ranking Member and calling on both sides
of the aisle, and we ask that this be a productive meeting.
We thank the witnesses for traveling here. We thank them
for their safe trip here and ask that they return safely back
to their families.
In your name, we pray. Amen.
Please join me in the pledge.
I pledge allegiance to the Flag of the United States of
America, and to the Republic for which it stands, one nation,
under God, indivisible, with liberty and justice for all.
Chairman WILLIAMS. Good morning, everyone. And I now call
the Committee on Small Business to order.
Without objection, the Chair is authorized to declare a
recess of the Committee at any time.
I now recognize myself for my opening statement.
Welcome to today's hearing which will focus on how
overregulation in the healthcare industry limits small firms'
competitiveness and stifles innovation.
I would like to start off by thanking our witnesses for
joining us here today. Thank you for being here. Your
attendance is greatly appreciated, and we value your input on
these important issues.
Now, we have consistently heard how overregulation is
preventing some of our best and brightest entrepreneurs from
innovating and trying new things. We have heard this from many
different industries, and today we will examine how these
efforts can still stifle innovation in the healthcare industry.
The FDA is responsible for protecting the public's health
by ensuring the safety and efficiency of the new pharmaceutical
drugs, as well as medical devices. There is a lot of
responsibility that goes along with this authority. For obvious
reasons, we want to make sure that the medicines people are
taking are going to be fulfilling their intended purpose.
However, there is always a tradeoff in these decisions. And if
the FDA shies away from any and all risk, it will significantly
limit innovation and make it harder for small businesses to
make an impact in the healthcare industry. The balance between
risk and innovation is a fine line, and we must be able to
maintain that.
This Committee knows that small businesses are on the tip
of the spear across the economy when it comes to innovation in
any industry. The healthcare industry is not an exception.
Developing a new drug can take more than a decade and bring
with it an extremely high price tag. Unfortunately, on top of
the cost of development, small businesses have to spend
significant time navigating the FDA's bureaucratic process.
This presents a significant barrier to entry for main street.
So navigating red tape does not only hamper what drugs come to
market but also how doctors are treating patients.
In a hearing we held earlier this year, we heard from a
doctor who was serving as a witness say they only spend 12
percent of their day focusing on direct patient care. The other
88 percent is spent complying with government and private
insurance requirements. Doctors want to treat, cure, and
innovate, not spend time on bureaucratic red tape.
This issue is very personal to me. My wife is currently
undergoing treatment for glioblastoma. Throughout this process,
I have heard countless stories from Americans looking for cures
and learned about many of the challenges in bringing new
treatments to the marketplace.
As a small business owner myself, I know the potential that
lies within Main Street America today, and we just need to make
sure they can operate in an environment that allows them to
flourish.
I am looking forward to today's discussion, and I hope the
hearing shines a light on the burdensome red tape currently
restricting our small firms and providers.
I ask unanimous consent to submit three op-eds from the SBE
Council for the record. And, without objection, I will order
that.
I would like to, once again, thank our witnesses again for
being here with us today, and I am very much looking forward to
our conversation.
With that, I would like to yield to our distinguished
Ranking Member from New York, Ms. Velazquez.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
I would like to thank all of the witnesses for being here
today.
We all know that small businesses are the lifeblood of the
economy, but that is especially the case in healthcare, where
small companies are at the forefront of technological
innovation and are developing many groundbreaking new products.
And their influence is growing each year.
According to one study, the proportion of new drugs
discovered by small startups more than doubled between 2009 and
2018, and by some accounts, now makes up as much as 80 percent
of the market. Yet despite their outside role in advancing
innovation, small firms encounter significant barriers.
The process of bringing a new drug or device to market can
be costly and time-consuming because of the need to prove the
safety and efficacy of the product. The FDA is responsible for
protecting us all from potentially harmful substances or
defective devices. For most, new drugs manufacturers often must
conduct animal testing before obtaining approval to conduct
clinical trials on humans, and those clinical trials can take
years and cost millions of dollars.
Some will say this process stifles innovation, but ensuring
medical products prove their safety and clinical effectiveness
prior to going on the market is necessary for public trust,
individual safety, and advancing genuine innovation.
With that said, it is important we recognize FDA's attempts
to balance scientific scrutiny with regulatory flexibility.
Congress and the FDA have long sought to expedite this process,
particularly for rare disease treatments. Expedited programs of
the FDA help bring potentially life-saving treatments to the
market much quicker, bringing hope to many patients and their
families.
Unfortunately, that does not come without potential for
abuse. Occasionally, drug companies use expedited programs to
circumvent placebo-control studies, then drag their feet on
conducting the required follow-up studies. As a result,
companies are able to garner millions of dollars in sales
without proving clinical effectiveness. While I have full faith
in the FDA's decision-making process, there must be safeguards
in place to prevent drug companies from taking advantage of
regulatory flexibility.
Our regulatory system in healthcare is essential for
keeping patients safe and delivering genuine innovation to the
market, but that cannot be done without strict scientific
standards.
I hope today we can discuss ways to support small
businesses and their role in saving lives with new innovation,
while also recognizing the need to prove those products are
safe and effective for human use and consumption.
I would like to thank all the witnesses again for being
here, and I yield back.
Chairman WILLIAMS. The lady yields back.
And I will now introduce our witnesses.
Our first witness here with us today is Dr. Brian Miller.
Dr. Miller is an assistant professor of medicine at the Johns
Hopkins University School of Medicine located in Baltimore,
Maryland. In addition to being an assistant professor of
medicine, Dr. Miller is a nonresident fellow with the American
Enterprise Institute where he focuses on a variety of issues,
such as Medicare payments, Food and Drug Administration, and
healthcare competition.
Dr. Miller earned a medical degree from the Feinberg School
of Medicine at Northwestern University, a master's of business
administration from the Kenan-Flagler Business School at the
University of North Carolina at Chapel Hill, a master of public
health from Johns Hopkins Bloomberg School of Public Health,
and two bachelor of science degrees in biochemistry and
chemistry from the University of Washington.
I want to thank you for joining us here today, and we look
forward to the conversation ahead.
I now recognize my colleague, Representative LaLota, from
the great State of New York, to briefly introduce his
constituent who is appearing before us today.
Mr. LALOTA. Thank you, Chairman.
It is my privilege to introduce our next witness, Dr. David
Eagle, M.D. Dr. Eagle is a board certified hematologist
oncologist, and has practiced medicine for over 20 years. He is
currently the Chair of legislative affairs and patient advocacy
at the New York Cancer & Blood Specialists located on Long
Island in Patchogue, New York, just outside of my district.
Dr. Eagle has published multiple oncology, health policy,
and cost-of-care articles. He has previously served as an
editorial board member for the journal Oncology. He also has
appeared on The Oncology Show on Sirius XM's Doctor Radio
channel, and provided briefings on oncology health policy for
congressional staff right here on Capitol Hill.
Dr. Eagle is a past president of the Community Oncology
Alliance and a member of the American Society of Clinical
Oncology. He graduated from the University of Virginia School
of Medicine, and then completed his internal medicine residency
and fellowship at the University of Florida.
Thank you, Doctor, for joining us today. We look forward to
the conversation ahead.
Chairman WILLIAMS. The gentleman yields back.
And now our next witness here with us today is William
Newell. Mr. Newell is the chief executive officer of Sutro
Biopharma, Inc., located in South San Francisco, California.
Mr. Newell has served as CEO of the Sutro Biopharma for over 15
years, developing cancer therapeutics for areas of unmet needs.
Previously, he served as the president of Aerovance, Inc., a
biotechnology company focused on respiratory diseases.
Mr. Newell currently serves on the boards of directors of
the Biotechnology Innovation Organization's Health Section,
Emerging Company Section, and is a member of the executive
committee. Mr. Newell received an AB in government from
Dartmouth College and a JD from the University of Michigan Law
School.
Thank you for joining us today, and we look forward to the
conversation ahead.
And I now recognize the Ranking Member from New York, Ms.
Velazquez, to briefly introduce our last witness appearing
before us today.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Our final witness is Dr. Diana Zuckerman, the President of
the National Center for Health Research, a nonprofit public
health think tank that conducts and analyzes research on health
policy issues. She is trained as a post-doctoral fellow in
epidemiology and public health at Yale Medical School.
Dr. Zuckerman worked in the House and Senate and then as a
senior White House advisor. She was also a fellow at the
University of Pennsylvania Center for Bioethics and the first
nonphysician elected to the Women in Medicine International
Hall of Fame.
Welcome, Dr. Zuckerman, and thank you for being here this
morning.
Chairman WILLIAMS. Okay. The lady yields back.
And before recognizing the witnesses, I would like to
remind them that their oral testimony is restricted to 5
minutes in length, and we stick with that. If you see the light
turn red in front of you, it means your 5 minutes have
concluded, and you should wrap up your testimony. Now, if you
keep going, you are going to hear this. Okay? And that will--we
will want to wrap it up, as I say.
I now recognize Dr. Miller for his 5-minute opening
remarks.
STATEMENTS OF DR. BRIAN J. MILLER, M.D., M.B.A., M.P.H.,
ASSISTANT PROFESSOR OF MEDICINE, JOHNS HOPKINS UNIVERSITY
SCHOOL OF MEDICINE; DR. DAVID ANTHONY EAGLE, M.D., MEDICAL
ONCOLOGIST & CHAIR OF LEGISLATIVE AFFAIRS AND PATIENT ADVOCACY,
COMMUNITY ONCOLOGY ALLIANCE; MR. WILLIAM J. NEWELL, J.D., CHIEF
EXECUTIVE OFFICER, SUTRO BIOPHARMA, INC.; AND DR. DIANA
ZUCKERMAN, PRESIDENT, NATIONAL CENTER FOR HEALTH RESEARCH
STATEMENT OF DR. BRIAN J. MILLER
Dr. MILLER. Thank you, Chairman Williams, and Ranking
Member Velazquez, and distinguished Members of the Committee.
I am a practicing physician at Hopkins, an internist, a
nonresident fellow at the American Enterprise Institute. I run
a large policy research group, and I actually worked at the
FDA. I was a reviewer in the Center for Drug Evaluation in the
Office of New Drugs. I also serve on the Medicare Payment
Advisory Commission, and I previously served 4 years on CMS'
Medicare Evidence Development & Coverage Advisory Committee.
Today I am here in my personal capacity. My views are my
own and not those of Hopkins, the American Enterprise
Institute, or MedPAC. Disclosures aside, I want to start and
talk about innovation.
So my grandmother was this tiny, little, part-Norwegian
lady who would bake for us every year at Thanksgiving. And she
loved to garden. And I remember as a kid, for a couple years
she couldn't bake pie for us--and I love food. It is a problem.
I love carbs. I remember her hands being red and swollen.
Then I remember one year she baked a pie again, and I
remember that year because that was the year the first TNF
alpha inhibitor was introduced, and her rheumatoid arthritis
was able to be treated. So she could bake again, garden, and go
about her life.
So innovation, for me, when I think about it in my head,
the first thing I remember is eating apple pie as a child. So
innovation is not really just a number; it is your life.
A bipartisan Congress has worked for 30 years on
pharmaceutical product, innovation, and promoting safe medical
products. I saw the direct impact of these tools when I worked
at the FDA, tools like accelerated approval, which is an
objective science-based mechanism for early market entry for
drugs meeting an unmet need based upon a surrogate end point.
There has been a lot of critique of these sorts of tools
recently.
We should remember where they came from. In the eighties we
had the AIDS crisis, and activists from ACT UP actually
occupied the FDA for a day in 1988 and made the news. They
didn't have access to treatments, the FDA was a barrier, and
products were available in other countries. And this started a
30-year cycle of FDA reform.
If we actually read the studies from the critics of these
pathways, it says that many of these studies get done. They
sometimes get done slowly. When I look at this and say, if
these trials are done late, yes, maybe the company should--
there are other things that the company can or should do, but
it also tells me that we need to change how we do clinical
trials.
And, for me, as I said, it is not just my grandmother, it
is personal. My father died of glioblastoma 2 weeks before I
moved to Chicago and started medical school, and he was 58. For
me, innovation is about people and their lives and their
functional status.
I think about clinical trials--we are stuck in the
seventies. The FDA has promoted concepts as real-world
evidence, patient-report outcomes, but we have to make it real.
Making it real could mean for something like COPD, you do a 6-
minute walk test at home, you assess spirometry for lung
function at home. You do for Parkinson's, say, a video
interview to assess their ability to move.
All these outcomes are patient-focused, and they are and
can be done in the setting of the patient's home. We are not
necessarily forcing the patient to drive to a study center.
They also decrease the cost of trials, which allows for small
companies to develop innovative products, and they also
increase the diversity of the patients who participate in
clinical trials.
How do we do this? Well, you need the FDA reviewer to be
the counselor to the company, because the reviewer is sitting
on top of an entire therapeutic area at the FDA. The problem is
that there is too much management, too many administrative
layers at the FDA. If you are a reviewer, you have your--you
are doing the work, then you have a team leader, you have a
deputy division director, a division director, then you might
have an office director, and then you might have a super office
director, all of whom are highly trained technical physicians
and scientists reviewing the work that you already did.
So I think that we need to collapse some of those layers of
administration, put those people back on the front line of
reviewing medical products for efficacy and safety so that they
can be a better counselor to industry, and particularly small
business and entrepreneurs.
Other things that we can and should do include returning
the staff to the office so that if you are a small company, you
are not just facing a sea of black on Zoom.
In conclusion, I think there are a lot of things that we
can do that are pragmatic and that are bipartisan to help lower
barriers to entry for small companies and entrepreneurs to
safely--to create safe and effective, innovative products to
treat disease and help everyday Americans.
And I thank you.
Chairman WILLIAMS. Thank you.
And I now recognize Dr. Eagle for his 5-minute opening
remarks.
STATEMENT OF DR. DAVID ANTHONY EAGLE
Dr. EAGLE. Chairman Williams, Ranking Member Velazquez, and
Members of the House Committee on Small Business, thank you for
the opportunity to participate as a witness in this critically
important hearing on regulatory and related burdens in small
businesses in healthcare.
I am a practicing medical oncologist with New York Cancer &
Blood Specialists, and serve as Chair of legislative affairs
and patient advocacy. I am a board member and past president of
the Community Oncology Alliance, a nonprofit group advocating
for independent nonhospital-owned community cancer care.
My career began in a small practice, three-physician
independent community oncology practice, in Mooresville, North
Carolina. I have been privileged to care for patients in an era
of immense scientific progress in overcoming a disease as it
threatens to take our closest loved ones from us.
My physician partners and I work closely with our nurses,
nurse practitioners, medical assistants, and ancillary staff,
caring for patients battling cancer and blood disorders. We
were a family.
We live with our patients on the front lines of an
increasingly broken medical system. We often acted as their
last line of defense, not only for their medical illnesses, but
also for the confusing and overwhelming medical system in which
they and we, as their providers, increasingly were fighting.
Barriers to care, both large and small, sometimes
incidental, other times intentional, popped up all over the
place and were almost always far too much to bear for patients
facing the battle for their lives.
Over time, our small practice, operating as a small
business, encountered significant pressures from large, well-
funded hospital oligopolies in the Charlotte area and beyond in
North Carolina. In 2017, one large health system in our region
gave us an ultimatum: Be acquired by us or we will hire
physicians to compete against you.
One of the prime motivators for this aggressive move by the
health systems was the federal 340B Drug Pricing Program. The
acquisition of our practice would generate substantial
immediate profits for the health system, allowing it to further
expand. Furthermore, we were faced with declining payments from
Medicare and commercial insurers.
In 2018, my two partners and I had little choice but to
join the large hospital systems of employees. Our small
independent practice that had served the community for over 19
years was gone.
Hospital clinics operate under stifling bureaucracies, and
as a result, almost immediately I was unable to see the same
number of patients that I was able to see daily in my own
independent practice. As devastating, the hospital later
switched over its billing system and was able to charge
significantly more for the same services. Patients came to the
same building, were treated by me, their same physician, and
received the same drugs but at a higher cost to them. Patients
who I treated and followed for years simply left.
Due to consolidation of hospitals into large health systems
in North Carolina, I joined my current practice in New York.
Unlike the large health systems, we are the only major cancer
provider in our region that accepts all insurance plans, while
also being the only major cancer treatment provider that does
not receive State funding or other subsidies. We have open
clinics in underserved communities, are the lowest cost cancer
providers in all of our markets, and were recently named the
number one physician practice in New York by Castle Connolly, a
rating system based on physician peer reviews.
Cancer research, drug development, and care delivery are in
a renaissance. I am privileged to practice in an era of
breakthrough scientific progress. However, patients often do
not get the treatment that they need or in the best manner
possible.
We face a fundamental choice in this country. Who is in
charge of patient medical care? Is it physicians and patients
making decisions on treatments together in the exam room? Or is
it insurance companies, massive, consolidated health systems,
and government regulators like CMS, controlling personal
healthcare decisions from afar? Over my career, the shift has
absolutely been toward the latter.
In my written testimony, I touch upon some of the other
significant forces pressuring medical practices, including
utilization management by consolidated insurers and pharmacy
benefit managers, misguided CMS regulations, and Medicare
payment cuts that are forcing independent physicians out of
business.
These factors, combined with the mounting pressures from
mega health systems, are resulting in cancer patients losing
access to care, not getting the best treatment, and paying more
for their healthcare.
I look forward to your questions.
Chairman WILLIAMS. I now recognize Mr. Newell for his 5-
minute opening remarks.
STATEMENT OF MR. WILLIAM J. NEWELL
Mr. NEWELL. Chairman Williams, Ranking Member Velazquez,
thank you for the opportunity to appear before this Committee
to discuss the drug development ecosystem and the challenges
small biotechnology companies face.
My name is Bill Newell, and I am the CEO of Sutro
Biopharma, Inc. I have been at Sutro since January 2009, and
working in small company biotech since 1998. I also serve on
the board of the Biotechnology Innovation Organization and
Chair BIO's capital formation work group.
Sutro Biopharma focuses on research and development and
manufacturing for next-generation cancer medicines; primarily,
antibody drug conjugates commonly referred to as ADCs. Our
company is 21 years old, and we are still a pre-commercial
company, meaning we have yet to secure FDA approval for a
medicine we have developed.
I was employee number 19, and today we have over 300
employees and a market cap of approximately $300 million. Like
many U.S.-based biotechs, Sutro has seen substantial domestic
job creation with about 40 percent of our workforce in or
supporting our U.S.-based manufacturing facility. This is the
world's only manufacturing facility utilizing cell-free protein
synthesis technology at scale.
I am pleased to say that we recently began two pivotal
phase 3 trials for our most advanced medicine. This is an ADC
for patients with late-stage ovarian cancer and for patients
with an ultra-rare pediatric leukemia, but readouts are not
expected for a few more years. We have multiple additional
potential cancer medicines and research in early clinical
development.
In many ways, Sutro's corporate journey is a microcosm of
the small biotech financing experience. We have raised
approximately $190 million in venture capital. We went public
in 2018, benefiting from the JOBS Act of 2012. So far, we have
raised approximately $535 million in public market offerings.
In addition, collaborations with larger biopharma companies
have been essential to advancing our research and development.
We have received approximately $720 million in funding and
reimbursements for R&D collaborations and our licensing product
candidates. This funding comes primarily from large and mid-
sized biopharma companies.
In addition, at various points in time we have borrowed
from venture lenders. I am proud to say that we are debt-free
as of earlier this year.
All told, Sutro has raised almost $1.6 billion in the
company's history, and we are still several years away from our
first approved medicine. That eyebrow-raising figure is,
unfortunately, very typical of the small biotech experience in
bringing a product to market.
Also, like many biotechs, we have had our share of failures
along the way. This is not unusual for our industry. Only
approximately 12 percent of products reaching clinical
development stage are ever approved, and just half of products
reaching phase 3, pivotal trial stage, ever get FDA approval.
In my remaining time, I want to emphasize the need to
reauthorize the pediatric priority review voucher program. The
current program expires September 30 of this year, and Sutro
and our industry partners strongly support the Creating Hope
Reauthorization Act of 2024. This bipartisan bill provides
critical incentives to promote research and development for
drugs to treat rare diseases impacting children across the
country.
As I mentioned, Sutro is pursuing a phase 3 trial for an
ultra-rare pediatric leukemia which affects approximately 50
infants and toddlers a year. The sad reality is that the
economics of pursuing our medicine in this indication would
clearly dictate that we should not do so. The key economic
rationale for us to pursue this ultra-rare indication is the
value to Sutro of a pediatric priority review voucher. It is
cases like this one that make it imperative that this program
be reauthorized.
Lastly, I want to thank the Members of this Committee who
either co-sponsored or voted for the American Innovation and
R&D Competitiveness Act of 2023, H.R. 2673, which was
overwhelmingly approved on a bipartisan basis by the House
earlier this year.
However, because H.R. 2673 has not yet been enacted into
law, we paid $15 million in federal taxes this year as a result
of the switch to a 5-year amortization schedule, even though we
have never sold a single vial of medicine. This tax liability
means two phase 1 clinical trials for our cancer medicines no
longer have funding.
I have included additional policies in my written testimony
that highlight other actions Congress can take to support small
biotech companies. As the innovation driver of the
biopharmaceutical ecosystem and industry that keeps America at
the cutting-edge, it is important to create a policy landscape
that supports companies like Sutro.
I am honored to be here discussing both the challenges
associated with running a small biotech company and the true
honor it is to dedicate each and every day to the service of
patients and their loved ones.
Thank you for allowing me to testify today. I look forward
to answering your questions.
Chairman WILLIAMS. Thank you very much.
And I now recognize Dr. Zuckerman for her 5-minute opening
remarks.
STATEMENT OF DR. DIANA ZUCKERMAN
Ms. ZUCKERMAN. Thank you.
Chairman Williams, Ranking Member Velazquez, and
distinguished Members of the Committee, I am Dr. Diana
Zuckerman, president of the National Center for Health
Research, a public health think tank here in Washington.
I appreciate the opportunity to be here today to share the
views of the Center, which does not accept funding from any
companies with a financial interest in our work. Our goal is to
use research information to inform and improve policies and
programs for the healthcare of everyone in this country.
As a scientist and a policy expert and a cancer survivor, I
look for common ground. I respect the important work of all the
other panel members and this important Committee. And I think
we can all agree that we want small businesses to succeed and
to provide the best possible products.
In medicine, let's agree that we want innovation that is
defined as better products and better treatments that have
meaningful benefits for patients: Living longer, spending less
time in the hospital, and having a better quality of life.
The FDA makes it very clear that it does not expect or
require absolute certainty when it approves a drug or medical
device, and I will give two examples of their flexibility.
A few weeks ago, a company named Amylyx reported that its
one and only drug, Relyvrio, did not work. FDA had granted
approval to the drug to treat ALS, also known as Lou Gehrig's
disease, even though the company ignored FDA's advice to
complete their clinical trial before they asked for approval.
FDA scientists and advisory committee members warned that
the evidence was weak and that the drug might not work at all,
but FDA approved it anyway because ALS is a terrible disease,
and the agency wanted to be flexible, and patients hoped that
the product would work.
The drug cost $158,000 per patient per year, even though it
was a combination of two much less expensive ingredients, one
of which is a dietary supplement sold on Amazon for a few
dollars.
The company promised to continue studying the drug,
comparing it to placebo, and eventually they reported that
patients taking the drug were no better off than patients on
placebo. Meanwhile, last year, the company had $380 million in
revenues, and the two young men who co-founded the company paid
themselves $7.4 million each just last year.
When Relyvrio was taken off the market, the stock dropped
80 percent, and 70 percent of the staff were left--let go.
Another example is Sarepta, a company that submitted its
only product for FDA approval based on data for only 12
patients and no placebo group. I have never seen any study like
that get approval. But despite that lack of evidence, Exondys
51 for Duchenne muscular dystrophy was approved. And they
granted accelerated approval in 2016 because, as a small
business, Sarepta did not have the capital to continue to do
their clinical trials unless they were able to sell their
product and make some money.
The company promised a larger study would be completed in
2020, but here we are, 2024, and it still hasn't happened, and
we are still waiting for any credible evidence from the company
to show that it works after 8 years.
The price of the drug has increased from about $400,000 per
patient per year to over a million dollars per year per
patient, and families have gone broke even paying the co pays,
and Medicaid has, as a result of that, footed most of the bill.
So these examples are two that show that FDA is sometimes
very helpful to small businesses, sometimes ignoring the
agency's own requirements to give companies a chance to
succeed. And there is research showing that many large
companies also benefit from this flexibility. And in my written
testimony, I have provided examples of the research evidence
and the lower user fees that FDA charges for small businesses
and how Congress has passed user fee legislation that helps to
level the playing field for small companies.
The bottom line is that we all want medical products to be
safe and effective. Small businesses will have the resources to
meet the FDA's evidence standards for many types of medical
products, but not all.
What's the alternative? If the FDA reduces the burden on
companies by not requiring them to provide clear evidence that
a new product is safe and effective, that increases the burden
on patients, families, and physicians, because we must make
life-saving and life-changing decisions without the facts that
we need to make the decisions that are best for us and our
patients.
Thank you very much.
Chairman WILLIAMS. We will now move to the Member
questions. Under the 5-minute rule, I recognize myself for 5
minutes.
Healthcare is something that is extremely personal to every
American. We need to make sure that patients can get the care
they need by the providers they want at a price they can
afford. Unfortunately, I have heard stories, as we have heard
today, from people that are not able to abide by these three
principles for many different reasons, one of which is a
complicated, expensive process to get new drugs on the market.
I understand these challenges firsthand, after my family
searched for the best treatment options for my wife, Patty,
after she was diagnosed with glioblastoma in December of 2022.
As we learned about the various possibilities and tried to
select the best path forward, we were shocked to hear that
certain options were only available abroad because they had not
been approved in the U.S. yet.
I understand the need to ensure we have safe medicines and
treatments coming to the market, but it made me think what
hurdles might be in place that are slowing this down and what
the effect on patient outcomes may be.
So, Dr. Miller, you worked at the FDA and are currently
practicing medicine at Johns Hopkins University and probably
have some great insights on the variety of challenges that
cause cases like my wife's to be a reality for so many
Americans.
So my question is, can you elaborate on some reasonable
changes that can be made to streamline the approval process so
we can bring more treatments to the marketplace without
sacrificing patient safety?
Dr. MILLER. Thank you. And I am very sorry to hear about
your wife.
Chairman WILLIAMS. She is doing good.
Dr. MILLER. That is good to hear.
I think the clinical trial reform is the thing that PDUFA
has promised for 30 years and, frankly, hasn't delivered on.
Getting the reviewer to actually guide small companies and
entrepreneurs who are scrappy and want to do things differently
is the first step that I would do. And doing that would mean
collapsing layers of management and making sure that the
primary task of the FDA is focusing on review of products to
make sure that they are safe and effective, because the FDA--
CDER, for example, has 5,800 employees. Most of them are not
focused primarily on that task.
Chairman WILLIAMS. Now, with the passage of the Democrat-
led Inflation Reduction Act, the University of Chicago
estimates that its provisions will result in 135 fewer drugs
being brought to the market. Along with these provisions,
President Biden called on to expand these price controls to
include 500 drugs, as opposed to the IRA's 50.
The American Dream is built on risk and reward. If there is
not going to be a profit incentive to bring new drugs to the
marketplace, fewer businesses will dedicate the necessary
research and development dollars to make them a reality.
So, Mr. Newell, as a small pharmaceutical company, how do
the IRA's price controls impact your business and deter
innovation?
Mr. NEWELL. Thank you, Chairman Williams.
As you would have heard from my testimony, we have raised a
substantial amount of capital through the years to bring our
medicines forward and to build our business. We work in the
biologics field, and I have other colleagues who work on small
molecule medicines. In particular, those are things that are
pills that are given to--for patients.
Particularly in the IRA, we see that there are substantial
disincentives for investors to invest in companies that make
small molecule medicines because of the different terms allowed
for the introduction of the price negotiations that are
mandated by the IRA. For biologics companies like Sutro, we
have a 13-year window, but a small molecule manufacturer
innovator has a 9-year window. That is a disincentive to
investors.
Given the tremendous amount of money that it takes to bring
a drug forward to prove its safety and efficacy, we should be
not disincentivizing people who make small molecule medicines
for patients.
Chairman WILLIAMS. All right. Thank you.
And, Dr. Eagle, in your testimony, you emphasize that
healthcare consolidation is on the rise and small practices
like yours are struggling to keep up.
So in the brief time that we have left, can you please
describe to the Committee how consolidation harms patient care,
and beyond just patient care, what are the downsides of the
consolidation in the healthcare system?
Dr. EAGLE. I think a large consolidated system is, first,
they are more expensive. You know, they tend to be hospital
systems that charge facility fees. You know, they can provide
excellent care, but I think it oftentimes is less convenient
for patients.
I think small physician offices, you know, get to know the
community better, you know, have better processes, and provide
lower cost care for patients and more affordable and more
convenient format.
Chairman WILLIAMS. Thank you. I yield back.
And I now recognize the Ranking Member for 5 minutes of
questions.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Dr. Zuckerman, the FDA has strict standards for approving
new drugs and devices to prove their effectiveness. Is there
any evidence that you are aware of that FDA's high standards
have driven innovation and investment to other countries?
Ms. ZUCKERMAN. Thank you for that question. I haven't seen
that evidence. You have to remember that the standards are very
similar in other countries, and there aren't very many drugs or
devices that are available in other countries but not here. And
we pay a lot more for them. So there is a lot of incentive to--
to get FDA approval.
It used to be that FDA was a lot slower than other
countries. That is absolutely true. But it is not true anymore,
and it is partly because Congress passed the user fee
legislation, which really has sped up the approval to the point
that it is very, very similar in other countries.
Ms. VELAZQUEZ. Thank you.
Two years ago, Congress passed the Inflation Reduction Act,
which allowed Medicare to cap the price of insulin and
negotiate prices for certain drugs. Has this had a measurable
effect on research and development spending by pharmaceutical
companies?
Ms. ZUCKERMAN. R&D is very important, and it is related to
how much money the companies have. But R&D is really only a
small percentage compared to stock prices and things like that.
So there really isn't any evidence that, although this could
have an effect on which drugs companies invest in but not--it
shouldn't have a chilling effect on innovative drugs.
Ms. VELAZQUEZ. Thank you.
Dr. Eagle, you mentioned that utilization management
presented barriers to care for doctors and their patients. Do
you think the increased use of these practices is a function of
the market power of insurance companies?
Dr. EAGLE. Thank you for the question, Congresswoman
Velazquez.
Absolutely. You know, we have seen tremendous consolidation
among the pharmacy benefit managers, among the insurers. One of
the tools they use is utilization management that comes in
different forms. One is prior authorization, where, you know,
the--after the physician and the patient have decided what they
would like to do, we seek approval from the insurance company.
Often it is declined, and the next step is a step called
clinical peer review, where we have to get on the phone with
the insurance company physician.
You know, in cancer medicine, we do very careful
decisionmaking. You know, we look at the literature, we present
with colleagues, we discuss cases at tumor boards. It is very
frustrating when you then have to turn around and speak with an
insurance company to a physician who may not be an oncologist.
Fortunately, New York recently passed a law that requires
people at least to be in the same specialty as the case they
are reviewing. That is a fairly low standard.
My first question is always: Have you read the notes? And
then we generally start the conversation from there. It is very
common for, you know, PET scans, therapies to be denied.
Another part of utilization management is fail-first
therapy, where the insurance company will demand that we use
particular therapies before others. I just had a patient
yesterday who started treatment for breast cancer where the
nausea medicine that I wanted to use was not approved by the
insurance company. They required that we substitute an
alternative nausea medication. That can be a problem.
Ms. VELAZQUEZ. Thank you.
Dr. Zuckerman, we hear that the FDA often requires absolute
certainty when making decisions about approving new products.
Can you discuss the standard required by the FDA and the
impacts on innovation?
Ms. ZUCKERMAN. Sure. Thank you for that question.
I think the examples I gave show that it is not true that
they do require or expect absolute certainty, and, in fact, in
science you never expect absolute certainty. But you do want a
reasonable assurance that something is likely to work for at
least some patients. And that is really what FDA has been
doing, as well as making exceptions when a drug is urgently
needed for a very serious disease.
Ms. VELAZQUEZ. Thank you.
Mr. Newell, you recently signed a letter of standing with
the FDA against judicial interference in the drug approval
process. Can you expand on how a decision like this creates
uncertainty for your industry?
Mr. NEWELL. As I have explained earlier--thank you for the
question. As I have explained earlier, capital is extremely
important to allow us to do the work that we do developing new
medicines. Capital requires certainty. And if the regulatory
authority of the FDA is undermined, we do not have certainty
and, therefore, capital will not be available.
Ms. VELAZQUEZ. Thank you. I yield back, Mr. Chairman.
Chairman WILLIAMS. The lady yields back.
And before we go any further, I just want to--you are going
to see Members going in and out. It is not because they are
leaving or they are mad or anything. We have got other hearings
to go back and forth to, so you will see that happen, okay?
I now recognize Representative Luetkemeyer from the great
State of Missouri for 5 minutes.
Mr. LUETKEMEYER. Thank you, Mr. Chairman.
A few--not too long ago, a year or two ago, we passed a
bill that says the lengthy permit process across the board is
really stymieing a lot of businesses, including the approval of
drugs.
Ms. Maloy--there we go.
And so we had--the bill said you are going to set it two
years.
Have you seen this kick in yet at all? Have you seen this
process be shortened at all as a result of this bill, Mr.
Miller--Dr. Miller?
Dr. MILLER. You mean the FDA review process?
Mr. LUETKEMEYER. Yeah. Yeah.
Dr. MILLER. Not to my knowledge.
Mr. LUETKEMEYER. Because the process should have been
shortened to 2 years.
And, Mr. Newell, your process is taking years and years and
years.
Mr. NEWELL. The process has not been shortened.
Mr. LUETKEMEYER. Process has not been shortened. So our
bill hasn't taken effect yet. We need to start talking about
that, don't we?
You know, Dr. Eagle, you worked in the cancer realm, and in
my district, we have the largest nuclear reactor in the country
at our--on the university campus at the University of Missouri.
About 95 percent of all radiated drugs that are used in cancer
actually come from that--actually used around the world come
from that nuclear reactor. It is actually at the end of its
life span, so we are trying to build a new one. But have you
used those drugs? How important is it to you to be able to
continue to allow that to happen? Because they do a lot of
research there as well. I don't know if you have been utilizing
their services or not.
Dr. EAGLE. Thank you for the question. Those are vitally
important drugs. You know, we have a new prostate cancer drug,
you know, that uses a targeted antibody plus a radiation
therapy to treat--to treat prostate cancer. We use other types
of treatments called neuroendocrine tumors where that is a
vital part of the therapy. It helps people extend lives with
minimal toxicity. There will be more of those therapies in the
future. It is vital that patients have access to those
treatments.
Mr. LUETKEMEYER. They do lots of research there. It is
phenomenal. They have these little molecules that go
circulating around the bloodstream looking for cancer cells to
go to strike. It is phenomenal stuff. So thank you for that.
Dr. Eagle, you are involved in a practice. And the concern
that I have here deals with this consolidation, just as you
alluded to with your practice. So some people are going to this
concierge care, where you pay a doctor to take care of you,
whatever, for a certain price per year or whatever, and--the
insurance policy for you to take care--have you seen this
already, and what do you think about it? Is it something that
is----
Dr. EAGLE. I have seen that primarily in primary care. I
have not seen that as much in specialty medicine. In cancer
medicine, we try to make every patient a concierge care
patient. You know, we allow same-day walk-in visits, patients
don't have to have an appointment, same-day infusions.
You know, I think the only place I have really seen that
take hold myself is in the primary care sector, but not in
other fields.
Mr. LUETKEMEYER. It goes back to the premise of this
Committee from the standpoint of the regulatory burden. I mean,
it is so difficult for a small practice to continue to do this.
Do the concierge care physicians, are they burdened by the
same amount of rules and regulations? Have they found a way
around this? What----
Dr. EAGLE. In that case, I think the primary change is the
economics. You know, they just operate under a different
economic system. You know, the private physicians that faced a
decline in the fee schedule for 20 years now, and particularly
when you adjust for inflation, payments to physicians is
automatically brought down by 26 percent for private
physicians.
So I think the concierge model of care is just an effort by
certain primary care physicians to solve that problem and spend
more time with their patients and not have to be their care so
volume-driven.
Mr. LUETKEMEYER. Mr. Newell, you are in the business of
developing drugs. I saw the other day where artificial
intelligence actually developed a drug for a disease. They put
in there the parameters to do something and this, you know,
artificial intelligence came up with a drug.
I mean, is this the wave of the future? Am I correct in
that?
Mr. NEWELL. We do use artificial intelligence or machine
learning to help us identify better targets for our medicines
and, perhaps in certain cases, the structure of the medicine
that we are going to be making.
Mr. LUETKEMEYER. Will that make it cheaper or does that
make it more expensive?
Mr. NEWELL. It is to be determined. I personally do not
believe that a medicine will be fully developed using
artificial intelligence. There are too many variables in the
human body for us to take into consideration at this point in
time.
Cancer in particular is a very heterogenous disease, and so
what works in one patient may not work in another.
Mr. LUETKEMEYER. Okay.
Mr. NEWELL. And so I think at the end of the day, we need
to really be cautious about AI, but it can be helpful in
development.
Mr. LUETKEMEYER. Very good. One more question for Dr.
Miller.
You know, the administration is working on descheduling
cannabis from a schedule I down to schedule III, I believe it
is. And part of the problem is the USDA--or FDA has never done
the research to be able to say that this is justified. Can you
comment on that?
Dr. MILLER. I think that there is still a lot of work to be
done to determine what should be done with cannabis. There are
several prescription drug-approved formulations of THC. The FDA
doesn't have an adequate framework to regulate the other forms
of cannabis to ensure that is safe and effective for the
average consumer.
Mr. LUETKEMEYER. Thank you very much. My time has expired.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative McGarvey from the great
State of Kentucky for 5 minutes.
Mr. MCGARVEY. Thank you, Mr. Chairman.
[Inaudible] I think about my grandmother who passed away
with dementia, I think about my dad who lives with Parkinson's,
I think about our dear friends Katie and Ellie battling breast
cancer.
And so many of us have friends and family who are living
and fighting terrible diseases. And when you are in that spot,
you want the same thing. You want them to get better. You want
hope.
And so when I think about this hearing today, I want to
make sure that we are framing this in the right way, because
not only do you want hope, but you want that hope that they are
going to get better.
And I want to tell a little story about a woman named
Frances Oldham Kelsey. You worked at the FDA; you might have
heard of her before. This was back in the fifties and sixties.
Of course, something again that many people faced, morning
sickness.
There was a cancer drug out there, thalidomide, that was
being used in other countries that was helping women with
morning sickness. Forty-six other countries approved it. There
was all sorts of pressure to approve it here in the United
States. One woman at the FDA said no. Imagine the pressure on
that one person saying no to get rid of morning sickness.
And then it comes out that thalidomide caused incredible
birth defects. Tens of thousands of babies around the world
were born without limbs, were born with brain defects. The drug
was taken off. It was never used. And we did not have--the term
was--it was so common, they called them thalidomide babies. It
wasn't--it didn't happen here because we had one person who was
willing to say, is it safe?
So while we want all of our friends, neighbors, and loved
ones to get better, we want them to have that hope, we have to
have it be safe. And I will admit, there are obviously
regulations that are burdensome and can get in the way. But
regulation itself is not a four-letter word.
Regulations have been used to save the lives of everything
from the minors in my State of Kentucky to save the lives of
people who actually need these treatments and when they come to
market.
And so when we are talking about this today, I want to talk
about some of the other things that are actually keeping these
drugs from getting them in the hands of the people who want and
need them, because that is what we all want. We want people to
get and be healthy, and we want it to happen safely.
So, Dr. Zuckerman, I want to ask you a question. What is a
bigger barrier to getting new drugs and cheaper drugs to
market? Is it FDA regulations or is it Big Pharma practices
like pay for delay, patent manipulation, and side deals with
generic manufacturers that are keeping most people from getting
the drugs they want and need?
Ms. ZUCKERMAN. Thank you for that question. And I just want
to say, I met Dr. Kelsey, and she was just a wonderful woman.
She lived nearby in Bethesda.
There are a lot of--some products are very complicated, and
they do take a long time to develop and they take a long time
to study. But patent manipulation is a huge problem, because
you have--you have products like Humira, which have a couple of
hundred patents--a couple of hundred patents, and they keep
adding patents to keep it on the market and to prevent any kind
of competition. So it costs enormous amounts of money to
patients, and it makes drugs very, very expensive that
otherwise would have generic alternatives that would be much
less expensive. So I think that is a great example.
Mr. MCGARVEY. Thank you very much. I appreciate that.
And, again, this is something--we want to encourage
innovation, we want to continue developing life-saving drugs to
get people better. And so, you know, hopefully, that is what we
can continue to happen and look at all the reasons why it might
not be happening.
Mr. Chairman, I yield back.
Chairman WILLIAMS. The gentleman yields back.
And I now recognize Representative Stauber from the great
State of Minnesota for 5 minutes.
Mr. STAUBER. Thank you, Mr. Chair. Thanks to all the
witnesses here.
Mr. Miller, in your comments, you said there is too many
administrators in the FDA. You have been part of the FDA. How
do we--from our standpoint, how do we legislatively reduce the
bureaucracy? Like, give me--like, is it a congressional action,
or is it you, as experts, placing your own to remove the
burdensome redundant administrators?
Dr. MILLER. I would say it is oversight and then also the
user fee acts.
Mr. STAUBER. And what?
Mr. MILLER. The user fee act. So when PDUFA comes up for
reauthorization, that is a great opportunity to write language
to encourage the FDA to have reviewers as opposed to managers.
Mr. STAUBER. Mr. Eagle, you had--you talked about your
experience as a small provider, you and two other doctors, and
then you were almost forced to be bought up by the large--a
larger company. In one of your statements you said, who is in
charge of patient care? That is a huge problem, we know, in
Medicare.
I think the vast majority of Americans would say that the
patient and doctor are in charge. And when the patient and the
doctor agree that a 5-night stay in the hospital is needed,
rather than Medicare saying, no, you should only spent two
nights there, that is--there is a huge problem going on in our
country where our physicians are undercut by, in this instance,
Medicare, telling you that your patient didn't need 5 days and
we are only paying for two. And we know you are going to make
the best decision for your patient, not a bureaucrat at a
three-letter agency checking off the boxes.
That--I am hearing that universally around the country. We
must fix that. The patient and the doctor must make those
decisions. Thanks for bringing that up. And that is a big lift.
Mr. Newell, you have--you have an interesting story on the
research and development of the product. I can tell you right
now, I know a physician within this country that is in the
final stages of his new drug, and I know he used it on a COVID
patient the last--that was the last stretch, this is it, and it
saved the patient's life.
I can't imagine--and he has talked to me about the FDA and
all the process and the bureaucracy. I can't imagine how many
COVID patients it would have saved had it been allowed--FDA
allowed it earlier. We won't know. But in talking to this
physician and others, it is very concerning.
We talk about safety. I mean, we want it to be safe. But I
think we have to meet a sweet spot here where the research and
development, there is timing on this, there is certainty. We
have to have, not administrators at the FDA, but people that
will look at these drugs and use their professionalism and
experience and yea or nay.
One of the things that frustrates me is, you know, as a
small business owner--you as a small business owner, just the
rules and regulations that they force upon you. It is
unnecessary. I want you and the nurses to have patient care,
not pushing paperwork. Thirty-five percent, probably, of your
time is pushing paperwork. Would you agree, Doctor?
Dr. EAGLE. Absolutely. And to give you an example of some
of the things that we--that affects how patients are cared for,
there is a rule in Medicare that they consider it unreasonable
for us to see a patient and give them an injection or an
infusion and then see them for that same related problem the
same day. The rule is--it is termed modifier 25 because that is
an exception that insurers and CMS use to except.
So, for instance, I might have a patient who is getting a
shot for anemia and they need to also have the anemia managed.
They need to follow the doses, they need to make sure it is
safe. I can no longer see that patient on the same day they get
their shot. So the patients--you know, oftentimes their
children have to take off work, their caregivers have to take
off extra time from work to bring them for the visit with me
and then bring them on a separate day to receive the injection,
when both could easily be done and it would be much better for
them both to be done at the same day.
That was not a big issue 3 to 4 years ago. But over the
last 2 years, we have had to reeducate our entire staff,
reorganize our entire office around that rule, and it is
absolutely no benefit to the patient.
Mr. STAUBER. My time is up. I want to thank you all for
your expert testimony, and thanks for what you are doing to
your patients. You are making their lives better.
And I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Scholten from the great
State of Michigan for 5 minutes.
Ms. SCHOLTEN. Thank you so much, Mr. Chair.
Thank you to our witnesses today.
This is such an incredibly important hearing. And I think,
if we have learned anything from the questions today and the
testimony, it is that this is about balance. We need federal
regulations to keep individuals safe. But I can tell you
firsthand from a place like west Michigan where I come from,
there are overly burdensome surprise regulations that are
hampering innovation. And I am grateful that we are having the
hearing today to talk about it. Let's not throw the baby out
with the bath water. But let's make sure that we have effective
regulations that are doing what they need to do but are not
getting in the way of critical lifesaving drugs and medical
devices.
Healthcare is growing the economy and saving lives every
single day in west Michigan, from the production of the COVID
vaccine to innovative cancer research to medical devices that
are being created right in my home, my backyard.
From 2018 to 2021, our State saw a 41.8-percent increase in
the establishment of research, testing, and medical
laboratories. That is about 6 points higher than the national
average. Go blue. I am committed to ensuring that that we ease
the burden for our small businesses in this critical market
while also keeping consumers safe.
This question is for Dr. Zuckerman. As you have discussed
in your testimony, the FDA has made concerted efforts to assist
small businesses navigating the regulatory process. Can you
speak to the FDA's ability to ensure new establishments are
aware of the services that they offer, such as the Center for
Drug Evaluation and Research and SBIA programs. And are there
ways that this outreach can be improved?
Ms. ZUCKERMAN. I am sure there are ways to improve it. I do
think that most companies would be aware that, because of the
User Fee Act, the FDA is under an obligation to have their
scientists meet regularly with companies when the companies
request it. The companies do have to request it. But that
really helps level the playing field because, otherwise, you
know, companies that don't have access to expensive consultants
would not have that kind of advice that they need of, what do I
need to do to get this across the finish line so to speak?
But I also just want to mention that device regulations are
much, much different than drugs.
Ms. SCHOLTEN. Of course.
Ms. ZUCKERMAN. And something like 98 percent of devices get
on the market without even having clinical trials. And you'd be
surprised what that includes. And I will just say a loved one
is trying to decide how to get treatment for a brain tumor. And
there are several products on the market that provide radiation
that have never been tested in clinical trials except after
they went on the market, and those clinical trials are tiny and
not very well conducted because they weren't required by the
FDA. So that is the balance.
Ms. SCHOLTEN. Yeah, absolutely.
The regulatory process can be lengthy and expensive for
small businesses, we recognize this, who are willing to bring
their product to market. This question is for you, Dr. Miller,
in your testimony, you discussed different ways to improve
clinical trial outcomes with greater efficiency. You mentioned
the FDA's draft guidance regarding decentralized clinical
trials. Are there important mechanisms or other tools that can
be strengthened within the FDA to assist in the adoption of
these practices to support innovative small businesses in
communities like mine, keeping in mind some of the comments
that Dr. Zuckerman just made as well.
Dr. MILLER. I think it is operationalizing those guidances,
that has always been the trouble with the FDA. When you are a
reviewer, you have NDAs. You have INDs. You have all these
meetings and everything comes to you. And then you have six
layers of bureaucracy above you telling you to work harder. And
the six layers of bureaucracy also can do your job because they
had the exact same training. So I think it is deburdening the
reviewers and making more of them by transforming that
bureaucracy into more frontline staff who can interface with
companies to help them operationalize those guidances and
principles in their development programs. So the tools are
there. It is primarily a human capital management challenge.
Ms. SCHOLTEN. Thank you. I yield back.
Chairman WILLIAMS. The lady yields back.
I now recognize Representative Meuser from the great State
of Pennsylvania for 5 minutes.
Mr. MEUSER. Thank you, Mr. Chairman.
Thank you very much to our witnesses. We very much
appreciate you being here. A very interesting subject, very
important subject. I am very glad we are discussing it and has
definitely been informative already.
Dr. Eagle, I would like to ask you, the H.R. 2474, the
Strengthening Medicare for Patients and Providers Act. I hear
all the time from physicians that the reimbursements levels are
a challenge, prior authorization requirements and everything
else that takes place. Do you think this act will improve
things and make it a little bit more consistent as far as your
reimbursement levels?
Dr. EAGLE. Thank you for the question, Congressman. I
believe that is the act that provides the inflation adjustment,
so for physician fee scheduling, and so we fully support that.
Mr. MEUSER. Okay.
Dr. EAGLE. If you look at private physician reimbursements,
it has really been flat or declining over the past 20 years and
while inflation has increased by 26 percent. So there has been
an effective decline for physician payment over the last 20
years. And that explains much of why private physicians are
going away. The hospitals and nursing homes have those
inflation adjustments. And I think we would fully support that
legislation to level the playing field and give the physicians
the resources that they need.
Mr. MEUSER. Great.
I come from the home medical equipment industry, formally
DME, powered chairs and mobility equipment and such as that. I
honestly have never been a fan of CMS or the FDA, more so as I
have gotten into Congress I guess. It seems that even prior
authorizations are intended for slowing down payments,
controlling costs rather than actually just dealing with it and
talking. And I don't mean any particular administration. I mean
all the way back to W. Bush and even H. Bush and on through. I
just didn't feel that there was the right level of
understanding of what the results were, of what their work was,
as well as their understanding of what was the most cost-
effective ways of handling things. And they would tend to beat
up on the industries that pushed back the least, if you will.
So do you feel--Dr. Miller, this is actually for you, do
you feel that CMS is listening these days to pharmaceutical
concerns and physicians' concerns?
Dr. MILLER. No. And I think that is a longstanding
historical problem. One of the things that I think has
happened, though, is we have had increasing centralization of
payment and decision-making. The IRA created centralized
administrative pricing for a small group of drugs. There is a
push to expand that over time. When we look at physician
services, 8,000 physician services are written and priced by
CMS on an annual basis. And that over the past 60 years has
destroyed clinical innovation and service delivery. In fact,
the industry has had flat or negative labor productivity
growth, and so I am really concerned that the IRA is going to
drive that for drugs.
Mr. MEUSER. I can't help but--why don't we have people like
you in CMS, you know? I am serious. Or even you, Dr. Eagle?
I would like to ask Dr. Newell, Mr. Newell, on your R&D tax
credit situation where we are phasing--not us, the R&D tax
credit of course is being phased out this year. It is about 80
percent less of the deduction than it was last year, very
significant. How does that--and we passed a bill by the way to
prohibit, to not allow it to sunset. So it is languishing in
Senate right now. So hopefully that gets resolved. But this of
course was part of the Tax Cuts and Jobs Act of 2016. Can you
tell us how that is affecting your business?
Mr. NEWELL. As I explained in my testimony, thank you,
Congressman, for your question. It is very expensive to develop
new medicines, particularly cancer medicines. And I take every
dollar that we are able to receive from investors or from our
partners and reinvest them in the people, the technology and
the research and development effort that we do. And here we are
21 years, and we are still not yet at a first approval of a
medicine. So that tells you how much investment we have been
putting into this effort since 2003.
This year, for the first time, because of a collaboration
arrangement or arrangements that we made with other companies,
we paid $15 million in taxes to the federal government for the
first time ever. That was a remarkable amount of money that did
not go to cancer research and development. That would have been
the equivalent of two trials, two phase 1 clinical trials to
study new medicines in patients. And that is really remarkable
to me that, after 80 years, where there was certainty about R&D
deductibility now it has gone away, as you have indicated. So
it is a problem not only for me but for a lot of other
companies as well.
Mr. MEUSER. I yield back, Mr. Chairman.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Glusenkamp from the great
State of Washington for 5 minutes.
Ms. GLUESENKAMP PEREZ. Thank you.
Dr. Eagle, I wanted to focus on some of the structural
factors that you mentioned in your testimony that impact cost
in patient care. You note that vertical and horizontal
consolidation among insurers and PBMs in particular is a
particular challenge to providing quality care for your
patients. I represent a rural district in southwest Washington
State, and I hear from my independent pharmacists all the time
that this is literally causing them to close their doors. Can
you explain more about how it is also negatively impacting
independent medical practitioners?
Dr. EAGLE. Absolutely. Thank you for your question. So, as
you mentioned, there has been tremendous vertical integration,
particularly among the PBMs. The PBMs are typically part of the
insurance company, and they also have their own specialty
pharmacies and independent pharmacies. So they have a
motivation to use those pharmacies. So they use different tools
like restrictive networks and contracting terms that are less
favorable to either independent pharmacies or pharmacies like
ours that provide medications for patients. So we provide oral
cancer medications for patients, but the way we do it is
through medically integrated dispensing. So our pharmacy team
is located in or clinics. We are connected to the EMR. We know
what is happening to the patients. We never supply 90 days of
drugs because we know that those expensive medications need to
be held or the doses changed. But the PDMs frankly try to do
everything they can to get those prescriptions routed to their
own specialty pharmacies.
Ms. GLUESENKAMP PEREZ. So how has that impacted, like, an
independent physician? Is this kind of going to cause them to
close or, I mean, have to join a bigger practice?
Dr. EAGLE. When I was part of a smaller practice in North
Carolina, we simply couldn't have a pharmacy, it was just too
complicated to do that. As part of my practice in New York, we
have six free-standing pharmacy sites that provide tremendous
value to patients.
Ms. GLUESENKAMP PEREZ. So what do you advise Congress to do
about this?
Dr. EAGLE. Well, I think absolutely with the PBMs there has
to be transparency. I think that is the first step. That it is
going to take far more than transparency. I think that the fact
that they can refer to their own--give referrals to their own
in-house pharmacies needs to be looked at. We are also seeing
problems now with below water drug reimbursement. So pharmacies
are now reimbursing less than the amount of the drug, and
nobody can continue to operate that way. I--there are rules
already that preclude that, but we need CMS to enforce those
rules.
Ms. GLUESENKAMP PEREZ. Okay. Hospital systems too have
grown significantly consolidated, as you mentioned in
testimony. Can you explain the impact that that level of
consolidation has on patients and healthcare costs for the
country as a whole? Often we hear that the hospital
consolidation is justified because it is more cost-effective or
efficient. But do patients end up bearing the cost of that?
Dr. EAGLE. No. Thank you for that question also. They
absolutely do. Hospitals charge more through the facility fees
so they have a different set of charges. They cost more than
Medicare because they are paid under a different fee schedule
than private offices. They are able to negotiate much higher
commercial contract rates with private insurers, and so patient
copayments can be very high. And just the entire insurance plan
costs can be higher because those costs have to be borne by the
plans as well also.
Ms. GLUESENKAMP PEREZ. How do we work to help encourage
more competition in the system and help independent practices
thrive again?
Dr. EAGLE. Yeah. I thank you for that question also. I
think payment parity is a nice little--is an excellent place to
start. I mean, there is no reason that we should be paying one
system more for providing the exact same service as another. I
think 340b is another driver as well also. Some hospitals do
need 340b, but a lot of hospitals are making tremendous profits
off of that program that don't necessarily provide the energy
and care that that program, you know, would imply. That is
another factor that is driving consolidation in healthcare. In
fact, that was one of the motivators, you know, for hospitals
to want to acquire oncology practices because the profits from
that program are very desirable.
Ms. GLUESENKAMP PEREZ. Thank you very much.
We know that we just saw the last Medicare trustee report a
few days ago, which warns that Medicare will face shortfalls in
12 years that will require higher premiums and limits on
services or both.
Dr. Zuckerman, how can innovation reduce such shortfalls,
or other policy changes we can help ensure Medicare coverage is
sustainable for those who count on it?
Ms. ZUCKERMAN. Thank you for that question.
In the ideal world, of course innovation would save money
in terms of healthcare, but that is not what has been
happening. So many--well, we did a study of cancer drugs and
found that many cancer drugs that had been approved actually
were never proven to save people's lives, to help people live
longer, or to improve the quality of life. So, in fact, the
opposite seems to be true that, when Medicare is a little bit
more careful or when the FDA is a little bit more careful about
what products are approved, that saves money, and that can save
a lot of money.
Ms. GLUESENKAMP PEREZ. Thank you very much for your
response.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Representative Van Duyne from the great
State of Texas for 5 minutes.
Ms. VAN DUYNE. Thank you very much, Mr. Chairman.
And, Dr. Miller, it is great to see you again.
Last July, the Oversight Subcommittee, which I Chair, held
a hearing on the overregulation in healthcare and the impact
that it has on small businesses. And I am glad to see that we
are holding this hearing with the full committee today, given
the level of bipartisan concern regarding how this
overregulation is hurting our healthcare system.
In Texas' 24th District, I have hosted a number of
roundtables with doctors. And I have always made it a point to
ask them how much of their time is spent in front of a computer
on a screen as opposed to talking to their patients, as opposed
to actually doing the job that they signed up for, that they
studied for. And their answers are always astonishing to me;
anywhere between 65 and 90 percent of their time is spent
checking boxes that CMS has put in front of them. It is not
helping their patients. It is not decreasing costs. It is not
increasing quality. It is spent on regulatory issues. And it is
just shocking to hear that. And this is time that they would
obviously rather prefer to spend with their patients, and
guarantee you it is time that patients would rather, you know,
spend talking to their doctors.
And I will never forget a meeting with a doctor who was
forced to sell her own practice because she said she just
couldn't afford to do it anymore. And she said now that she is
basically not practicing medicine, but she is just filling in
boxes, that she just feels like a monkey could do her job
because she is only following regulations, not practicing
medicine.
And, where regulatory costs reached the point that it is no
longer feasible for small private healthcare practices to keep
the doors open, it only leads to one thing, which is
consolidation. And this is decreasing the quality of care. It
eliminates competition, which increases costs. And it limits
the possibility of physicians owning their own businesses. And
that restricts access to care, and it hurts patients. We can't
continue to allow overregulation to shut the doors of small
care providers. And I am glad our committee is focused on
finding solutions to better provide better and more affordable
quality care, patient care.
But, not only are this administration's policies hurting
solo and small physician practices, but they are also hampering
our ability to be able to provide much-needed new
pharmaceuticals and drugs into the market that are produced by
our highly regulated U.S. manufacturers. And, at the same time,
though, these policies seem to be actually--policies like the
Inflation Reduction Act, which Dr. Miller, you were speaking of
earlier, but they are actually enriching and empowering some of
our most adverse foreign agents.
So, Dr. Miller, I am going to ask you, can you tell us how
China is using the Inflation Reduction Act against us when it
comes to new drugs?
Dr. MILLER. Thank you for the question.
China views the biopharmaceutical industry as a place where
it wants to completely dominate. The IRA sent a massive
negative signal to all entrepreneurs, small companies and large
companies basically saying that you are going to undergo
centralized administrative price regulation. That, plus the
inability for the FDA to modernize clinical trials means that
the cost of developing drugs and doing trials in the U.S. and
manufacturing is very high.
I know people who are building companies, developing new
therapies, and they are looking at lower cost sites. And they
always ask me about China. They want to manufacture products in
China. They want to do clinical trials in China. So that
scientific knowledge, that technical knowledge that
manufacturing knowledge, the clinical knowledge, in addition to
all of the jobs which are highly paid and created a great
innovative economic and scientific ecosystem, those ecosystems
are leaving for China. And we just passed a law that sent--and
told the pharmaceutical industry to do more development in
China where it is lower cost. So we essentially functionally
supported our greatest adversary.
Ms. VAN DUYNE. Wow. Look, it has been almost a year or two
since you testified in this committee about overregulation in
healthcare. Do you think things have gotten better, or do you
think things have gotten worse?
Dr. MILLER. Worse. I would say that I spend most of my time
typing. And I remember one of my professors in medical school
said I would be an excellent physician because I was a very
fast typist.
Ms. VAN DUYNE. Dr. Eagle, I am going to ask you the same
question.
Dr. EAGLE. Things have clearly gotten worse. And thank you
for the question. Your point about EMR could not be more on
target. That is kind of where the rubber meets the road between
a lot of the regulatory requirements and how physicians spend
their time, and it is a huge burden for physicians to kind of
spend all day checking boxes in the electronic medical record.
A lot of EMRs are really--involve the billing systems, so,
you know, the priorities of the EMRs are check-the-box
documentation requirements and billing and not true medical
decisionmaking that actually benefits patients, you know. I
will get 5-page documents from other physicians with a list of
diagnosis codes, a list of medications, a list of previous
diagnosis, but very little about what they are actually
thinking about what the patient needs and what the plan of care
should be. And that is a lot of how a lot of these regulatory
issues get transferred to physicians is through the EMR. It is
a major source of burnout for physicians, and I thank you for
making those points.
Ms. VAN DUYNE. Thank you very much.
I yield back.
Chairman WILLIAMS. The lady yields back.
I now recognize Representative Alford from the great State
of Missouri for 5 minutes.
Mr. ALFORD. Thank you, Mr. Chair and Ranking Member, for
holding this. And thank you of course to our witnesses today.
I represent 772,047 people in a very rural district of
Missouri. The Fourth Congressional District. And rural
healthcare is kind of at a crisis point I think in America.
Facing the continuing healthcare crisis, providers are being
forced to shut down or withhold the vital services that they
provided to communities they serve.
Rural Americans are uniquely vulnerable to the downstream
effects of regulatory burden being forced upon the healthcare
industry. That is why I am glad we are having this hearing
today, Mr. Chairman.
We have visited numerous hospitals in our district. We have
heard firsthand the impact regulations have had on small
businesses in our district. When rural providers are forced to
shut down, it can leave their patients stranded hours away from
the healthcare that they need and that they deserve. While
telehealth is helping meet some of those needs, only 22 percent
of our constituents in our district have high-speed internet
that is capable of taking part in this technology.
So, Dr. Eagle, I want to start with you. You talked about
how difficult it was to maintain your independent practice,
that you eventually was forced to join a large hospital system.
It is something I hear from my constituents well. They are
worried they won't be able to continue their small practices
that serve rural Americans. Why is it so difficult to maintain
a small practice, especially in rural America?
Dr. EAGLE. I think the two primary drivers--thank you for
the question--are economics and regulations, you know. I think
that the practice I had in North Carolina was more suburban
than rural, but I think the problems are largely similar. I
think rural practices suffer from all the same problems that
the other practices do, but regulation is harder to manage in
those situations. And reimbursement has been declining for the
private offices, the same as for everybody else.
I can't speak as an expert on rural medicine in that regard
because I never have practiced in a true rural setting. But I
think the problems are the same; it is just harder to solve.
Mr. ALFORD. Thank you.
Dr. Miller, another concern I have heard about from my
constituents is about CMS' efforts on this great idea of
decarbonization. We have got to decarbonize healthcare at a
time when rural hospitals are struggling to keep their doors
open. CMS--I was being flippant there, if you don't know that--
is releasing guidance asking hospitals and healthcare providers
to monitor and address their emissions. This is a slap in the
face to rural hospitals in my district. In fact, the Golden
Valley Memorial Hospital in Clinton, Henry County, told me that
to replace a single boiler with a clean alternate that the CMS
wants is going to be $3 million bucks, $3 million. Do you think
that CMS is fulfilling their statutory duties in attempting to
browbeat hospitals into decarbonizing?
Dr. MILLER. Absolutely not. That is completely out of scope
for CMS.
Mr. ALFORD. It is kind of crazy, isn't?
Dr. MILLER. Yeah, there is a long history of using the
conditions of participation in Medicare to attach a favored
regulation. And CMS' primary goal is--should be to assist in
running the State Medicaid programs and to run Medicare.
Mr. ALFORD. Should be.
Dr. MILLER. It is not an environmental regulator and should
not be.
Mr. ALFORD. Thank you.
Dr. Eagle, back to you. I have often heard from small rural
hospitals that are really struggling this year. I visited the
Bates County Memorial Hospital, a great crew there, a small
facility in Butler, Missouri. And they told me that, in 2022,
they lost nearly $2 million providing for Medicare patients. I
know we have some bills out there that is going to help with
their reimbursements. But what do we do in the meantime? How
can these small hospitals and doctors who want to serve--truly
it is almost a ministry to them out in the rural communities--
how do they stay alive?
Dr. EAGLE. I know. Thank you for that question. I cannot
speak as an expert on hospital administration. But I think that
programs like 340b are designed to support, you know, programs,
hospitals like those. And I think that, you know, redesigning
that program to actually truly meet the hospitals that need the
funds would be a step in the right direction.
Mr. ALFORD. Well, thank you. I truly think this is a very
important hearing that we are having today. And I thank you for
being here.
And, with that, Mr. Chair, I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Thanedar from the great
State of Michigan for 5 minutes.
Mr. THANEDAR. Thank you, Chairman Williams and Ranking
Member, for hosting this important discussion.
And I thank all the witnesses here.
Look now, I came here as an immigrant, got a Ph.D. in
chemistry, did my post doc at the University of Michigan, and
shortly thereafter started a small innovation research company.
So this feels like something that I have done for 25 years. A
lot of what we did was develop pharmaceutical formulations,
made clinical trial materials for small startup businesses.
Many startup businesses, very innovative, you know. A lot of
innovation, as you know, happens in small Pharma companies. But
often they don't have the resources to do all of the drug
development process, do all of the regulatory QAQC testing, all
of that. So I had a facility that had 65 scientists at one
time, Ph.D. scientists, equipment, formulation, a CGMP
facility. So I could provide these kind of services and do
innovation. And that helped, because often, you know, some
small segments of population that has a rare disease doesn't
get noticed by large Pharma because there is just not enough
profits in there. And so a lot of small innovative companies
are working on that. And what I have noticed is the burden from
FDA, the delays getting responses, and overall not having the
resources, financial resources to be able to develop these
drugs. And my question to you all is that, what can Congress do
to facilitate such innovation? What can Congress do to keep our
scientific community at the top of innovation, discoveries, and
keep our leadership in this area? As a pharmaceutical
scientist, I am very interested in your answers here. Anybody.
Dr. MILLER. So I think, moving more towards
decentralization of pricing, as opposed to centralization,
which is what we did with the IRA. I think another thing, as I
said, is clinical trial reform, because the small companies
need guidance. If a small the company gets one meeting on Zoom
6 months into their development program and they have lots of
questions that they need answered in those first 3 or 6 months
as they are setting up trials and making decisions, they need
to be able access the brain. They can't pay someone $2,000 an
hour who has been doing this in the space for 30 years. They
need the FDA reviewer brain who has been in the space for 15,
20 years and sits in that entire area and has seen 15 to 20
years of development programs through INDs, NDAs, sNDAs, et
cetera. So, we need to make sure that the FDA is a partner to
the small companies and entrepreneurs. Those SBIA programs are
great, but they are not a substitute for having that
scientific, clinical, and technical guidance available at the
fingertips for those entrepreneurs.
Mr. THANEDAR. Anybody else?
Mr. NEWELL. Thank you, Congressman.
As a CEO of a company that is developing new medicines
starting at the 19th employee and now 300 employees, with our
CGMP manufacturing facility, I know a lot of what you talk
about. The hurdles that we have from a regulatory standpoint
are enormous. And that requires a tremendous amount of capital
and expertise.
In the development process for our lead program, we started
clinical development in 2019. Here we are in 2024, and we are
still 2 to 3 years away from having the data set that will be
satisfactory for FDA.
One of things that we have had to do is to satisfy a new
initiative within FDA called Project Optimus where they are
trying to get companies to not identify the most effective dose
for the patient, but the lowest, most effective dose for the
patient. And so, while we were prepared to start our pivotal
trial about a year ago, we had to first study two doses of our
drugs in 50 patients, and that will delay our trial about a
year. So there are actions that Congress can take to allow and
incentivize FDA I think to accelerate development rather than
hinder development.
Mr. THANEDAR. Thank you so much. I am out of time, but I
would love to work with you, all of you. Thank you.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative Maloy from the great State
of Utah for 5 minutes.
Ms. MALOY. Thank you, Mr. Chairman. I have been sitting
here listening to your testimony. I had a whole list of
questions I wanted to ask, and most of them have already been
asked. That is one of advantages of being junior on a
committee; you get to learn to think on your feet. But it seems
clear that we need to do a better job at trials and approvals.
It seems like we are hearing a lot of that.
And, as a Member of Congress, I am nervous about this
conversation because having Congress get involved isn't always
helpful when we are trying to get things to be more efficient
and quicker, but we do have oversight responsibilities with
FDA. And I just want to ask, what can we do that would help
with the efficiency of approvals and trials without adding more
bureaucracy and making it more cumbersome? I want to start with
Dr. Miller. I know you have covered this, but I just want to be
really clear, how can we help without getting in the way?
Dr. MILLER. So the specific things to ask is, how many
staff are in each center, and what are the tasks that they are
doing? Another thing is, how long does a company have to wait
to get a meeting? How long do they have to wait to get an in-
person meeting? How frequently are the staff in the office? I
realize some work can be done remotely, but when you are doing
intellectual collaborative, frankly, highly creative and
interdisciplinary work, you need to be able to walk down the
hall. We had a guy in our group whom we called the grand
mentor. He had been there 30 years. We bought him a seersucker
jacket. He had basically seen everything. You would just walk
down the hall and ask him questions because he had been there
forever. That doesn't happen if you are all working remotely at
home 30 minutes to hours away from the agency. So I would say
making sure also people get back to the office.
Ms. MALOY. Dr. Eagle?
Dr. EAGLE. I can't speak as an authority on clinical trials
the way Dr. Miller can. But I will just tell you, in 40 percent
of the FDA-approved therapies in oncology--or 40 percent of the
FDA-approved therapies are oncology drugs and is how we make
progress. It is critical to be able to do these trials in the
community, and we do those in our practice. It is a lot of
work, though. But the trials are better when they are, you
know, in communities because the results are more accurate. You
get better diversity of trial participants, and the trial
results translate into the real world better than if they are
all done at academic centers.
Ms. MALOY. Mr. Newell?
Mr. NEWELL. Thank you for your question.
I would like to build on what Dr. Miller said. When we go
through the regulatory process with the FDA, we have a number
of meetings. Some of them are on what are called CMC, chemistry
manufacturing and control subjects, basically how we make our
medicine. Some of them are on the design of the trial. Some of
them are on the statistical plans that underpin the design of
the trials. Even though we are in California, we would welcome
the opportunity for in-person meetings. I don't think we have
had an in-person meeting in the 6 years that we have been in
clinical development at Sutro Biopharma. We do get Zoom
meetings. They usually occur at the very end of the time period
at which they have to grant the meeting. And not everyone is on
camera during the Zoom meetings themselves. So there is a huge
barrier I think to the proper exchange of information and
getting to the right answers for the company and for the
regulatory system and being in-person and or being on camera
would be a great step forward for us in terms of that
communication efficiency.
Ms. MALOY. Thank you.
Dr. Eagle, I want to come back to you. Sorry, I am going to
skip Dr. Zuckerman for a minute. My colleague from Washington
covered a lot of this, but I also hear a lot of frustration
from independent pharmacists and independent healthcare
providers about, you know, the vertical integration that is
making their lives harder and making it harder for them to
compete. And, when you were answering questions about that
earlier, you said we need more transparency in PBMs. Do you
want to just quickly tell us what that would look like?
Dr. EAGLE. Well, I think, if you look at the economics of
PBMs, there is--it is a little misunderstood about how--where
the money goes. They are truly the only entity in the entire
process, and when they contract, it really sees all contracts
and really knows how the money flows. So I think that would be
a first step.
So, if you look at where drugs rebates go, whether those
savings really get passed on to the patients in the plans, that
is just not entirely clear. It is stated that that happens, but
we just don't know that. So I think transparency would be a
first start, but I think the legislation after that would need
to follow as well.
Ms. MALOY. Okay. Mr. Newell, last question for you, and I
am almost out of time so really quick answer. But how
important--it is troubling to me that you are 21 years old and
still not commercial. How important is the timing of
reimbursements for small businesses that develop breakthrough
technologies from Medicare?
Mr. NEWELL. It is vital. You know, when we do this work, we
want to get a medicine to a patient, and we need to ensure that
the patient has no barrier to getting that. So reimbursement is
vital to the whole ecosystem.
Ms. MALOY. Thank you.
I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Representative Molinaro from the great
State of New York for 5 minutes.
Mr. MOLINARO. Thank you, Mr. Chairman. Although, every time
you say ``the great State of New York,'' I always have chuckled
that not only, obviously, are small businesses overburdened by
federal regulations--I talked a great deal about that, and we
are going to get into that in a little bit--but it is even
worse in the State of New York. Sadly the federal/state
regulatory regime has not only used overregulation as an
enforcement mechanism, but sadly, absent both Congress and even
the State legislature's involvement, enforcement and regulation
is used as policymaking. And that is a frightening recipe and,
quite frankly, has led to so much consolidation and smaller
businesses, smaller practices, and smaller providers leaving
the community.
For rural communities like the ones I represent in upstate
New York, without question, small independent providers serve
as a critical lifeline for patients in connecting them with
high-quality and affordable medical services. We acknowledge
this. From skyrocketing regulatory compliance cost to labor
shortages, it is clear our small providers, especially those in
rural communities, are struggling to stay afloat. It is one of
the reasons I sponsored the Healthcare Workforce Innovation Act
to ensure qualified medical, behavioral, and oral health
professionals can practice in medically underserved and rural
communities. We, in upstate New York, sadly live in medical
deserts.
As healthcare consolidation has accelerated over the past
two decades, the number of independent practices continues to
shrink. You have all acknowledged this. And, according to the
American Independent Medical Practice Association, from 2019 to
2022, the share of physicians working hospital health systems
or other large corporations grew from 62 to 74 percent. And I
worry that that has accelerated even more so in communities
throughout New York.
Dr. Eagle, I want to return to some of your testimony where
you elaborate a bit on how CMS regulation enacted during COVID-
19--which, by the way, I lived on the front line of public
health as a county executive during COVID-19. When we didn't
know what we didn't know, we made decisions that made sense.
And then we knew a lot and started to make even more decisions
that made no sense. One such regulation barred the independent
medical practices from delivering to patients medications via
mail or similar delivery means, which of course made no sense
during COVID. It makes even less sense now. I joined 53 of my
colleagues in issuing a letter urging HHS and CMS to reconsider
this regulation to help ensure patients' and their medical
providers' needs are accounted for in the regulator process.
Dr. Eagle, if you could, just share a little bit more about
your experience as a small provider--modest provider, not so
small but small provider, navigating the burdens of the
regulatory environment and the impact this particular order had
on patient care.
Dr. EAGLE. Thank you so much for the question.
As I mentioned previously, what we do in our practice is
medically integrated dispensing so it is different when
patients get their oral drugs from us than when they do from a
PBM, because the PBMs, they don't do the same patient support,
financial support. There is a loss of--they don't know the
critical record.
The new CMS regulation is a massive burden, and it was
issued through an FAQ, which is not the typical rulemaking
process. So that in itself was problematic. But we can no
longer mail these drugs to patients. Only the PBMs can mail
drugs to patients. So sick cancer patients now have to
physically come into the office to pick up their medications.
It is not even allowed that the patient's family members can
come to the office and pick up the medications. The patients
themselves who are battling cancer have to make these trips. In
rural areas, in New York, that can be a huge burden, but just
getting around the Long Island area and New York City can be a
challenge as well also. So that is prime issue that really
needs scrutiny. And it would be very easy for CMS to reverse
this requirement, but we are very disappointed that they seem
to be dug in on this.
Mr. MOLINARO. As are many of us. And if we think the
healthcare system--and, again, I try to localize it a bit, the
healthcare system in New York is a bit on life support as it
is; The mental healthcare system is relatively nonexistent. And
access to medications in a more fluid and accessible way for
those dealing with mental illnesses is critically important.
I just want to very quickly reference, in my district,
there are several small domestic pharmaceutical companies and
manufacturers, including Alvogen, that experience extreme
challenges working with federal bureaucracy. Lacking certainty
in matters involving the government is a challenge for any
business of any size. It is one of the reasons this committee
exists, but it is especially challenging for small companies
that lack financial resources to stay afloat during periods of
time while they wait on government to act.
For any of you, if you would, in my 20 seconds, how does
that uncertainty in the bureaucratic red tape impact the
ability in particular to small biotech companies to meet
providers' needs?
Mr. NEWELL. Congressman, maybe I will answer that quickly.
Mr. MOLINARO. Please.
Mr. NEWELL. In order to raise capital, we need to chart a
path for the medicines that we are developing. And we need to
persuade investors that we know that that path is achievable.
When there is uncertainty from a regulatory standpoint,
investors sense that uncertainty, and they are less likely to
invest. And, without capital, we are not able to bring new
medicines to the market.
Mr. MOLINARO. Thank you. Thank you, Mr. Chairman.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Representative LaLota from the great State
of New York for 5 minutes.
Mr. LALOTA. The great State of New York, Mr. Chairman.
Chairman WILLIAMS. That is what I said.
Mr. LALOTA. Yes, sir. It is easy to agree with you, Mr.
Chairman.
Dr. Eagle, it is always nice to welcome a fellow New
Yorker, a fellow Long Islander, to Washington. You have more
than 20 years' experience in healthcare, with specialized
training in diagnosing and treating cancer. Additionally, you
are the past president of the Community Oncology Alliance and
are acutely aware of how overregulation affects small
practices.
The matter of cancer, we have heard it from several of our
Members today, is a personal one to us and our constituents. Me
in particular, in March 2006, I lost my father after a yearlong
battle to lymphoma. He died in Mather Hospital in Port
Jefferson. He was a big, strapping, strong Italian man. And the
disease ate him away in many different ways. My three daughters
born after never got to meet him.
And, before I ask you a few questions, I want to commend
you for your lifetime of dedication to work in this field to
try to bring comfort to many families, to try to treat and end
this disease. It is commendable that you have spent your
professional life on this endeavor.
Specifically and switching gears a little bit, one thing
that stood out to me in your written testimony is that your
practice treats all patients, including Medicaid. Are you
telling me or are you saying that other hospital systems in the
New York area do not treat patients who use Medicaid?
Dr. EAGLE. Thank you for the question.
To the best of my knowledge, that is true, you know. We
participate in all insurance plans in New York. That is a
rarity in New York, frankly. We participate in all the Medicaid
plans. I don't believe the nonprofit hospitals do participate
in all the Medicaid plans. So, you know, we really try to take
care of the community. I think, when a lot of people look how
to build healthcare and who provide subsidies to, they look to
nonprofit hospitals. But I think, in New York, it is notable
that our practice, which is 80-plus million oncologists, we
accept all the insurance plans and work very hard to stay in
all networks.
Mr. LALOTA. What do you think is the impact of others not
accepting Medicaid?
Dr. EAGLE. Well, you can't help a patient unless you see
them. The only way you can help a cancer patient is being in
their community and give them access to your clinic and their
care.
Mr. LALOTA. Great, thanks. And can you describe how
oncology care has changed for patients, doctors, and staff
after your practice transitioned from your small private
practice to your large regional health system?
Dr. EAGLE. When we were a three-physician practice, we
started every Monday at 8 o'clock in the morning with a 30-
minute meeting with the entire staff, talking about clinic
operations, how to do little things right. When you are in
small private practice, the only thing you can do is win on
quality and service. We had no other structural advantages. So
it was just critically important to make sure that all the
staff was involved with every part of the clinic and making it
operate as efficient as it possibly could and welcoming to the
patients as it possibly could. Unfortunately, with the
transition to the hospital, we lost a quarter of our employees
before the changes even happened. They just did not want to
work for a hospital system. I think today maybe even less than
one-third are left. So much of the efficiencies, so much of the
personalized care, so much of the things that we personally
enjoyed about taking care of cancer patients just became harder
to do.
Mr. LALOTA. Yeah. We want to take care of patients. We want
to take care of constituents. Can you describe to the committee
the difference between how a hospital does this or how a
private physician office like yours approaches this? And,
specifically, is there an unlevel playing field between the
two?
Dr. EAGLE. Structurally there is a tremendously unlevel
playing field. Particularly in oncology, there is the 340b
program. So hospital oncology programs and nonprofit hospitals
can drop substantial profits from that program. They derive
higher commercial contract reimbursement. But they also get
paid facility fees under the Medicare program and just higher
payments generally across the board for Medicare for the same
services.
Mr. LALOTA. And the dynamic that seems to favor the large
hospitals, is that hurting patient care, or are the patients
disadvantaged with the unlevel playing field?
Dr. EAGLE. You know, when I transitioned into the hospital,
I was able to see about one-third fewer patients. So I think
patients begin to wait longer for appointments. They are paying
higher costs both commercially and through facility fees on
Medicare. So I think it has tremendous patient impacts.
Mr. LALOTA. Great. Thank you so much. Appreciate all of
your feedback today. This is one of the more functional
committees in Congress. The Republicans and Democrats seem to
agree on a decent amount of things. We have produced a fair
amount of legislation subsequent to testimony from folks like
you. So I want to say thanks so much for being here.
Mr. Chairman, I yield back.
Chairman WILLIAMS. The gentleman yields back.
And I would like to thank our witnesses today for their
testimony, for you appearing. It has been a good hearing, and
one--I think we love to have people come up and go before our
committee because, most of the time, we are pretty bipartisan.
We see things as they should be and try to get something done.
Without objection, Members have 5 legislative days to
submit additional materials and written questions for the
witnesses to the Chair, which will be forwarded to the
witnesses. I ask the witnesses to please respond promptly if
that happens. And I have no further business.
Without objection, the committee is adjourned.
[Whereupon, at 11:48 a.m., the committee was adjourned.]
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