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FDA USER FEES 2012: ISSUES RELATED TO ACCELERATED APPROVAL, MEDICAL GAS, ANTIBIOTIC 

DEVELOPMENT, AND DOWNSTREAM PHARMACEUTICAL SUPPLY CHAIN 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

MARCH 8, 2012 

Serial No. 112–126 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

SUBCOMMITTEE ON HEALTH

JOSEPH R. PITTS, Pennsylvania 

Chairman 

MICHAEL C. BURGESS, Texas 

Vice Chairman 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

TIM MURPHY, Pennsylvania 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

JOHN D. DINGELL, Michigan 

EDOLPHUS TOWNS, New York 

ELIOT L. ENGEL, New York 

LOIS CAPPS, California 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Joseph R. Pitts, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 1 

Prepared statement .......................................................................................... 3 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 5 

Hon. Phil Gingrey, a Representative in Congress from the State of Georgia, 

opening statement ................................................................................................ 6 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, opening statement .............................................................................. 8 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 9 

Hon. Leonard Lance, a Representative in Congress from the State of New 

Jersey, prepared statement ................................................................................. 40 

WITNESSES

Janet Woodcock, Director, Center for Drug Evaluation and Research, Food 

and Drug Administration .................................................................................... 10 

Prepared statement .......................................................................................... 12 

Answers to submitted questions ...................................................................... 192 

John Maraganore, Chief Executive Officer, Alnylam Pharmaceuticals .............. 44 

Prepared statement .......................................................................................... 46 

Jeff Allen, Executive Director, Friends of Cancer Research ................................ 57 

Prepared statement .......................................................................................... 59 

Barry I. Eisenstein, Senior Vice President, Scientific Affairs, Cubist Pharmaceuticals ................................................................................................................ 68 

Prepared statement .......................................................................................... 70 

John H. Powers, Associate Professor of Medicine, George Washington University School of Medicine ........................................................................................ 79 

Prepared statement .......................................................................................... 81 

Michael Walsh, President, LifeGas, on Behalf of Compressed Gas Association 86 

Prepared statement .......................................................................................... 88 

Shawn M. Brown, Vice President, State Government Affairs, Generic Pharmaceutical Association .............................................................................................. 143 

Prepared statement .......................................................................................... 146 

Answers to submitted questions ...................................................................... 199 

Elizabeth A. Gallenagh, Vice President, Government Affairs, and General 

Counsel, Healthcare Distribution Management Association ............................ 158 

Prepared statement .......................................................................................... 160 

Timothy Davis, Owner, Beaver Health Mart Pharmacy, on Behalf of National 

Community Pharmacists Association ................................................................. 169 

Prepared statement .......................................................................................... 172 

Allan Coukell, Director, Medical Progams, Pew Health Group, The Pew Charitable Trusts ......................................................................................................... 177 

Prepared statement .......................................................................................... 179 

Answers to submitted questions ...................................................................... 206 

SUBMITTED MATERIAL

Statement, dated March 8, 2012, of the Infectious Diseases Society of America, submitted by Mr. Pallone ............................................................................. 97 

Letter, dated December 12, 2011, from Michael Tiller, President, Compressed 

Gas Association, to Mr. Lance, submitted by Mr. Lance .................................. 120 

Page

IV 

Letter, dated January 9, 2012, from Joseph M. Pietrantonio, Vice President, 

Global Operations, Air Products and Chemicals, Inc., to Mr. Lance, submitted by Mr. Lance ............................................................................................ 122 

Letter, dated December 29, 2011, from Thomas S. Thoman, Division President, Gas Production, Airgas, Inc., to Mr. Lance, submitted by Mr. Lance .... 123 

Letter, dated December 28, 2011, from Ted Schwarzbach, Executive Vice 

President Risk Management, Matheson Tri-Gas, Inc., to Mr. Lance, submitted by Mr. Lance ............................................................................................ 125 

Statement, dated March 6, 2012, of California Healthcare Institute, submitted 

by Mr. Gingrey ..................................................................................................... 130 

Statement, dated March 8, 2012,of the National Association of Chain Drug 

Stores, submitted by Mr. Pitts ............................................................................ 133 

Statement, dated March 8, 2012, of the Pharmaceutical Research and Manufacturers of America, submitted by Mr. Pitts .................................................... 141 

(1) 

FDA USER FEES 2012: ISSUES RELATED TO 

ACCELERATED APPROVAL, MEDICAL GAS, 

ANTIBIOTIC DEVELOPMENT, AND DOWNSTREAM PHARMACEUTICAL SUPPLY CHAIN 

THURSDAY, MARCH 8, 2012 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HEALTH, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:16 a.m., in room 

2322 of the Rayburn House Office Building, Hon. Joe Pitts (chairman of the subcommittee) presiding. 

Members present: Representatives Pitts, Burgess, Shimkus, Murphy, Gingrey, Latta, Lance, Cassidy, Pallone, Dingell, Townes, 

Schakowsky, and Waxman (ex officio). 

Staff present: Clay Alspach, Counsel, Health; Andy Duberstein, 

Deputy Press Secretary; Nancy Dunlap, Health Fellow; Paul 

Edattel, Professional Staff Member, Health; Debbee Keller, Press 

Secretary; Ryan Long, Chief Counsel, Health; Carly McWilliams, 

Legislative Clerk; Chris Sarley, Policy Coordinator, Environment 

and Economy; Brett Scott, Staff Assistant; Heidi Stirrup, Health 

Policy Coordinator; Alli Corr, Democratic Policy Analyst; Eric 

Flamm, FDA Detailee; Karen Lightfoot, Democratic Communications Director and Senior Policy Advisor; Karen Nelson, Democratic 

Deputy Committee Staff Director for Health; and Rachel Sher, 

Democratic Senior Counsel. 

Mr. PITTS. This subcommittee will come to order. 

The Chair recognizes himself for 5 minutes for an opening statement. 

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF PENNSYLVANIA 

Today we are taking a more in-depth look at several issues related to the FDA user fee programs. First, we will hear about 

FDA’s Accelerated Approval process for certain new drugs that 

treat serious or life-threatening illnesses and provide a greater 

therapeutic benefit over existing drugs and therapies. Accelerated 

Approval has been successful in speeding cancer and HIV/AIDS 

drugs to market, and I am particularly interested in how the process can be better utilized for rare diseases. 

Earlier this week, Representative Stearns, along with Representatives Bilbray and Towns, introduced the Faster Access to SpecialVerDate Aug 31 2005 10:03 Jun 20, 2013 Jkt 037690 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\112-12~2\112-12~1 WAYNE
2 

ized Treatments, the FAST Act, to help expedite new drugs 

through the approval process. 

We will also hear about FDA’s regulation of medical gas and the 

need for targeted regulations for these substances, due to their differences from most drugs. 

Representative Lance has introduced H.R. 2227, the Medical Gas 

Safety Act, which would reform the current FDA regulation of medical gases to create an appropriate process for medical gases to be 

approved. It would also remove the current regulatory uncertainty 

for medical gases by establishing targeted regulations that take 

into account the unique characteristics of medical gases. Representative Lance’s bill is bipartisan. It is cosponsored by members of the 

full committee from both sides of the aisle. 

Next, we will address the lack of new antibiotics in the pipeline 

and how Congress and FDA can act to incentivize new antibiotic 

development. 

Dr. Gingrey’s Generating Antibiotic Incentives Now Act, or the 

GAIN Act, H.R. 2182, targets this problem. This bill would extend 

the exclusivity period for new prescription antibiotics and add an 

additional 6-month period of exclusivity for a manufacturer if the 

new antibiotic identifies a companion diagnostic test. The GAIN 

Act also has bipartisan support, including eight Democrats and 15 

Republicans from the full committee. 

Finally, the subcommittee will hear about the dangers and weaknesses to the current pharmaceutical supply chain from manufacturers, to distributors, to pharmacies, and how best to ensure that 

counterfeit, adulterated or stolen drugs do not end up in the hands 

of patients. 

Representative Bilbray and Representative Matheson are currently working in this area, and Dr. Cassidy’s Online Pharmacy 

Safety Act, H.R. 4095, aims to educate the public about which 

Internet pharmacies are known to be safe and legitimate. 

We have three panels today. I would like to thank all of our witnesses for being here. I look forward to their testimony. 

[The prepared statement of Mr. Pitts follows:] 

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Mr. PITTS. So at this time I recognize the ranking member of the 

Subcommittee on Health, Mr. Pallone, for 1 minute—oh, 5 minutes. 

I am sorry. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Chairman Pitts. 

Today we are holding another hearing to examine important 

FDA-related issues that could be considered as a part of the user 

fee agreements, or the UFA legislation. These include changes to 

the current expedited approval process for new drugs, the regulation of medical gases, antibiotic drug development, and the downstream pharmaceutical supply chain. It is my hope that our witnesses that will help the subcommittee examine the ways in which 

these issues can be or should be addressed in our upcoming legislation. 

Accelerated Approval is one of the processes by which the FDA 

approves certain New Drug Applications that offer meaningful 

therapeutic benefit over existing treatments for serious or lifethreatening diseases. This process has been responsible for the 

great strides in medicine to treat HIV and cancer, and has provided patients with speedier access to important new medicines. 

According to the FDA, over 80 new products have been approved 

under Accelerated Approval since the program was established including 29 drugs to treat cancer, 32 to treat HIV, and 20 to treat 

various other conditions. There are also two other programs that 

help expedite the approval of certain promising investigational 

drugs known as Fast Track and Priority Review. 

Some have stated the accelerated approvals may be working for 

certain conditions but it had limited success in developing medicines to treat other rare diseases. As such, we will examine different proposals today that would clarify and improve some of 

FDA’s authorities. While I am open to such proposals, it is important to note that any changes we make must not lower the safety 

of effectiveness standards by which FDA approves new medicines. 

Today we will also discuss the regulation of medical gases. Medical gases are among some of the most widely prescribed drugs and 

have been in use since before the enactment of the Federal Food, 

Drug and Cosmetic Act in 1938. Many of these, for example, oxygen, are often used with other medical products such as a device. 

As I understand it, most of these core gases have been marketed 

for many years without an approved New Drug Application. According to the industry, medical gases are different than other traditional drugs and should be treated as such. Therefore, they have 

proposed a new regulatory system for dealing with medical gases 

that would cover things like good manufacturing practices, labeling, distribution, registration, listing and product tracking requirements. I believe there is a great value to this conversation so that 

members can understand the issues involved. However, I wonder 

whether an entirely new regulatory system is the answer. 

Development of antibiotic drugs is a critical public health issue. 

As chairman of this subcommittee last Congress, we held a hearing 

on the increasing of antibiotic resistance and its threat to public 

6 

health. Unfortunately, the Nation’s ability to counter this threat 

could be limited because of the lack of antibiotics being developed. 

Antibiotics were among the most impactful medical innovations of 

the 20th century. A routine treatment to combat bacterial infections, they are one of the main contributors in the decline of infectious diseases. But bacteria are living organisms, and as such, as 

they can and will mutate with time to be able to resist the drugs 

that have been developed to combat them. We now find ourselves 

in a situation where our triumph over infectious disease is in jeopardy. More and more bacteria are proving to be resistant to the 

antibiotics currently on the market. 

I am eager to hear from FDA and witnesses today about the proposed legislation that would create financial incentives for companies to develop more antibiotics drugs and spur advancement of 

these products, particularly whether that approach will help solve 

the issues our system faces but also what would be the shortfalls 

of that approach. For example, how do we limit the uses of these 

new antibiotics so that we don’t see the same type of resistance we 

are seeing now with old medicines? 

And one of the more complicated but critical issues is the downstream safety of the U.S. drug supply chain. In order to ensure 

that we do not have counterfeit stolen drugs entering the supply 

chain and harming patients, this committee has heard for a long 

time about the call for greater oversight of the drug supply chain. 

The need to set up a system that would track and trace the movement of drugs once they enter the marketplace has been the common theme. Just last month, we saw a counterfeit version of the 

cancer drug Avastin found in the United States. The counterfeit did 

not contain the medicine’s active ingredient, proving to be ineffective, and this is dangerous and in some cases life threatening. 

I think we can all agree that Congress needs to get serious about 

securing the supply chain and that a national system is necessary 

to prevent these drugs from reaching patients. Some States are beginning to pass their own laws. California, for example, has a law 

that will go into effect in 2015. 

I am interested to hear about the different approaches being proposed, specifically, the positives, negatives and feasibility of each. 

However, as we contemplate moving forward, we must not rush to 

legislation. These are really complicated and dense processes, and 

if we are looking at setting a national standard, it is critical that 

it be a strong, robust standard that is most beneficial to the consumer. 

So just let me close, Mr. Chairman, by thanking everyone. I look 

forward to our panels today. Your testimony and insight will remain useful in the months ahead. Thank you. 

Mr. PITTS. The Chair thanks the gentleman and yields 5 minutes 

to Dr. Gingrey from Georgia. 

OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA 

Mr. GINGREY. Mr. Chairman, thank you for yielding to me. I am 

going to confine my remarks to the shortages of antibiotics, and of 

course, that is the bill that the chairman referred to. 

7 

Mr. Chairman, again, I appreciate you holding this hearing and 

the three panels of witnesses. The need for new antibiotics is well 

established and beyond question. Antibiotic resistance is a threat 

to global public health as well as United States national security. 

Drug-resistant bacteria like those featured in the movie Contagion 

threaten American patients and troops in much the same way. 

Whether transmitted from person to person or contracted from biological weapons, the overall threat is the same. As a physician, I 

understand how important it is that medical providers use antibiotics judiciously, but no matter how judiciously we use the current supply of drugs we have or will have in the coming years, we 

need more. To quote the testimony of Dr. Janet Woodcock of the 

FDA, the United States is, and I quote her, ‘‘at a critical juncture 

with regards to drug development. We are in urgent need of new 

therapeutic options to treat the resistant bacteria that we currently 

face and we will need new therapeutic options in the future.’’ This 

critical juncture requires immediate action if we are to prevent a 

public health disaster from hitting our shores in the next decade. 

I want to thank Dr. Woodcock for being here today, and I personally thank Dr. Margaret Hamburg for her leadership on this important issue as the Director of the FDA. 

To Dr. Woodcock’s testimony, antibiotic resistance cannot be solely solved by the development of new drugs but it also be solved 

without them. In fact, we can answer every other problem with regard to antibiotic resistance, but if we fail to address the lack of 

incentives for drug companies and research and development experts and new antibiotic drug development, let me say this emphatically, we will lose this fight. 

As a group of bipartisan Members of Congress, my coauthors and 

I have forwarded H.R. 2182, the Generating Antibiotic Incentives 

Now, or GAIN Act, to encourage new drug development. The legislation is product of years of thoughtful consideration, and it strikes 

a balance between the need for drug companies’ incentives and the 

needs and requirements of good public health policy. That balance 

is attested to in the nearly 50 organizations that currently support 

our effort. Their testimonials, which I will be entering into the 

record shortly, underscore the potential that the GAIN Act holds 

to ensure patients will continue to have the lifesaving medications 

that they need. Among those we count public health leaders like 

the Pew Charitable Trust, patient organizations including Kids v. 

Cancer, medical providers like St. Jude’s Children’s Hospital in 

Tennessee, and organizations representing 2.5 million veterans and 

wounded warriors, among others. 

The legislation as drafted focuses incentives on a list of unmet 

needs and life-threatening pathogens from which infections arise. 

These pathogens were identified by the Infectious Disease Society 

of America as looming threats to public health because little or no 

treatment currently exists to combat the infections that they cause. 

The legislation also includes, and this is most important, Mr. 

Chairman. The legislation also includes the ability for the FDA to 

update this list to meet new and emerging threats so that we continue to encourage the therapeutic options that FDA will testify are 

needed. 

8 

To be clear, drug researchers and manufacturers in early development focus their efforts on identifying products that work 

against as an identified pathogen as an example including their 

ability to kill a specific or variety of deadly bacteria. Only after a 

compound is identified as working against a specific pathogen do 

the societies then focus on infection sites in the body in order to 

measure the efficacy of that potential drug. 

Some have questioned the need to be so specific with regards to 

the types of killer bacteria that we are focusing on in the GAIN 

Act. To that issue, let me read to you a sentence from one of the 

many support letters we have received. ‘‘The GAIN Act definition 

ensures that unmet medical needs get the attention they deserve 

in an industry where other therapeutic areas often hold greater 

commercial promise.’’ However, the incentives for development decrease dramatically if we are unable to know with a high degree 

of certainty that a product would qualify for the incentives in the 

GAIN Act in early phase development. In short, our ability to demonstrate to companies the incentives in the GAIN Act as early in 

the drug development process as possible is the foundation upon 

which our efforts rest. 

Mr. Chairman, I have gone over time. I will go ahead and submit 

the rest of my comments for the record, and I look forward to the 

testimony of the three panels of witnesses. 

Mr. PITTS. The Chair thanks the gentleman and recognizes the 

gentlelady from Illinois, Ms. Schakowsky, for 5 minutes for an 

opening statement. 

OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. I really have just about a minute to say this, 

but I wanted to put it on the record. 

I wanted to say that I strongly support the development of drugs 

to enhance therapeutic options for patients with rare diseases. 

There is no question that both patients and their families must 

cope with unusual and unique issues when they have a rare disease. I can appreciate the desire on the part of patient groups and 

their families as well as industry to create an accelerated approval 

for drugs to treat rare diseases. I both understand and support that 

goal, but I also want to ensure that in seeking to accelerate drug 

approval that we do not expose patients to unnecessary and unacceptable risks. While I am committed to efforts to accelerate the development of rare-disease drugs, I want to make sure we maximize 

drug safety efforts and that we do not encourage expedited FDA 

approval if doing so would jeopardize that goal. 

So I am looking forward to hearing you, Dr. Woodcock, on how 

best to address this issue, and I will yield back my time. 

Mr. WAXMAN. Will the gentlelady yield to me? 

Ms. SCHAKOWSKY. Of course. 

9 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much for yielding to me. We have 

all the subcommittees scheduled at the same time, and I was trying to get up here as quickly as possible. I am pleased to have this 

opportunity to make an opening statement because we are going to 

be looking at some important proposals today. We haven’t yet seen 

the legislative text, but the proposed list of user fee add-ons is long, 

and as each day passes I am increasingly concerned about whether 

we will have time to get to a bipartisan agreement on such an ambitious package of bills. 

The policies we will be discussing today involve complex public 

health issues. For us to do a responsible job on these proposals, we 

need time and we need bipartisan agreement. We should not rush 

this work. We should prioritize getting it right, not just getting it 

done, and if we are able to come to a bipartisan agreement in the 

time available, it makes sense to move them along with the other 

bills. Otherwise, I hope we can all agree it will be better to wait 

so that we do not jeopardize the passage of the underlying user fee 

bills. 

Let me turn to some specific proposals. We have learned in a series of hearings this subcommittee held in 2010 that the problem 

of antibiotic resistance is a dire public health threat and our arsenal of effective antibiotics is running dangerously low. So clearly 

we need to look at ways to incentivize the development of new antibiotics. The GAIN Act is a good first step at achieving this goal. 

However, we should ensure that the bill is narrowly tailored to 

drugs that treat dangerous infections for which we don’t have adequate treatments. Otherwise, we risk worsening the problem of resistance. We also need to ensure that the bill mandates that FDA 

and other agencies involved take steps to ensure that the efficacy 

of these newly developed antibiotics is preserved once they are on 

the market. 

We will also hear today about FDA’s Accelerated Approval system. We can all agree that we want the most effective, innovative 

medicines to be available at the earliest possible time. So if there 

are improvements that could be made in the way FDA reviews 

these medicines, we should consider them. But I am concerned that 

some of these proposals are driven by unsubstantiated claims that 

FDA has become too demanding of drug companies, requiring too 

much data, and thereby allegedly keeping drugs from patients and 

driving innovation and jobs abroad. 

As we have heard at previous hearings, there is apparently no 

reliable data to back up these claims. To the contrary, as the testimony of Friends of Cancer Research and FDA has shown, FDA actually approves novel drugs faster than its counterparts in Europe 

or anywhere else in the world. In the past, the National Organization for Rare Disorders has also testified about its study showing 

that FDA is quite flexible in its requirements for approving orphan 

drugs. 

We want drugs approved as quickly as possible but we want the 

FDA to do its job, and it is a difficult one. We want to give you 

10 

the tools and we want you to have the flexibility to do that job as 

quickly as possible while meeting the requirements of the law. 

I am open to considering whether legislation can help FDA work 

with companies to get more breakthrough medicines to patients 

more quickly. However, we need to ensure that any adjustments 

don’t alter FDA’s approval standards. 

Today’s hearing will also examine efforts to improve the integrity 

of our drug supply chain. This is an important issue. There is a 

regulatory void at the Federal level because the United States does 

not currently have laws requiring the tracking and tracing of pharmaceuticals. Consequently, some States have stepped in and enacted their own laws, and we are going to hear today about California, which currently has a law that would mandate one of the 

most robust pedigree systems in the country. Many have suggested 

that there is a need for a single Federal system that would preempt these State laws. I believe having a system at the Federal 

level could make sense if done correctly but I would have grave 

concerns about preempting a strong State law, especially in California. 

Thank you, Mr. Chairman. 

Mr. PITTS. The Chair thanks the gentleman. That concludes our 

opening statements. 

Our first panel will have just one witness, Dr. Janet Woodcock, 

Director of the Center for Drug Evaluation and Research at the 

FDA. We are happy to have you with us today, Dr. Woodcock. You 

are recognized for 5 minutes for your opening statement. 

STATEMENT OF JANET WOODCOCK, DIRECTOR, CENTER FOR 

DRUG EVALUATION AND RESEARCH, FOOD AND DRUG ADMINISTRATION 

Ms. WOODCOCK. Thank you, Mr. Chairman, and good morning. 

Mr. Chairman and members of the subcommittee, I am Janet 

Woodcock. I am Director of the Center for Drug Evaluation and Research at the FDA, and I really appreciate the opportunity to testify on these important issues that are before the panel. 

The mission of the drug program at FDA is to make sure that 

medicines are of high quality, safe, effective and available. The 

quality of the United States drug supply has long been taken for 

granted by, I think, the health care community but the drug supply 

can be threatened by poor manufacturing practices, by economically motivated substitute, as we saw in the heparin problem, and 

by counterfeit drugs, all problems that we have observed in the last 

several years and that are increasingly. The FDA must continue to 

be vigilant to maintain the quality of drugs in this country, and we 

must have the property tools to maintain a high-quality medicine 

supply. 

At the same time, health professionals and patients continue to 

rely on FDA standards for safety and efficacy so that the benefits 

and risks of medicines are studied and that they are described in 

the drug label at the time of approval and that we remain vigilant 

for unexpected side effects once the drugs are marketed. In considering new steps to enhance FDA regulations, we should not diminish the historic protective standards for safety and efficacy that 

have served our patients so well. 

11 

And finally, drugs should be available. The current drug shortage 

crisis has highlighted how important a reliable drug supply really 

is. The drug user fee proposals FDA has delivered to Congress are 

targeted to strengthen the availability of drugs for Americans. 

The prescription drug user fee program that Congress has authorized four times already has really assured that the United 

States is the leader in developing and introducing new important 

drugs to the public so that Americans have access to that cuttingedge science and to drugs that will treat life-threatening conditions. 

The new generic drug user fee proposal is intended to strengthen 

our generic drug review program that provides access to affordable, 

high-quality drugs and also addresses FDA oversight of drug quality around the world. And FDA’s biosimilars program is intended 

to provide access to more affordable biologic drugs. 

While these FDA programs are strong and successful, it is clear 

there are continuing challenges in drug regulation, many of which 

will be discussed at this hearing. I look forward to working with 

you to find solutions that will benefit our public that we serve mutually. Thank you. 

[The prepared statement of Ms. Woodcock follows:] 

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Mr. PITTS. The Chair thanks the gentlelady, and I will begin the 

questioning and recognize myself 5 minutes for that purpose. 

Dr. Woodcock, what can we do to expand Accelerated Approval 

to further help patients including those with rare diseases? 

Ms. WOODCOCK. First, let me say that the Accelerated Approval 

program has been very successful and has brought access, early access to lifesaving drugs to patients with HIV, patients with cancer, 

and to many patients with orphan and rare diseases. However, we 

believe more could be done as far as clarity of use of this proposal. 

We have found that both in the industry, in the academic community and even sometimes within the FDA itself there is confusion 

about the use of Accelerated Approval. So we believe that additional clarity in the use of this would be very beneficial. We also 

plan to issue guidance that will also clarify the use of Accelerated 

Approval and will explain our evidence standards more clear. 

Mr. PITTS. Thank you. Despite the success of Accelerated Approval for cancer drugs, I have talked with patients and innovators 

and investors, and they indicate that some in FDA intend to limit 

the use of the Accelerated Approval pathway for cancer drugs. This 

is very concerning to me. As you know, if FDA goes down this path, 

patient access to important new cancer drugs will be decreased. Investment in new cancer therapies will continue to drop. That would 

be unacceptable. Rather than limiting the use of Accelerated Approval in cancer, shouldn’t we be looking for ways to expand it? 

Would you please comment on this? 

Ms. WOODCOCK. Certainly, and I believe we are looking for ways 

to expand the use of Accelerated Approval in cancer. For example, 

we will soon issue a draft guidance on the use of a new surrogate 

called pathologic complete response, which would be used in highrisk breast cancer as a mechanism to do Accelerated Approval. So 

I believe that we have been successful in cancer, and in fact, over 

the last year we have approved cancer drugs using Accelerated Approval, sometimes using what are called historical controls, which 

means that the drug is treated in patients and their response is 

compared to what would have happened if they had had standard 

therapy. 

So we are not really backing away from that. However, we have 

had discussions about the magnitude of the response. What does 

that mean? That means that if you see in a historically controlled 

trial, maybe you see a 5 percent response rate or a 10 percent response rate, you really don’t know the amount of benefit to the patients, and so that is the level of disagreement that is going on. It 

is very technical and it is within the oncology community. But 

please be assured, we are not backing off with Accelerated Approval for cancer. In fact, we would like to find more endpoints we 

could use for Accelerated Approval. 

Mr. PITTS. OK. Thank you. We all agree that it is important to 

prevent counterfeit drugs from reaching our Nation’s patients. 

What steps is the agency taking to prevent this? 

Ms. WOODCOCK. We have for a long time had extensive effort on 

counterfeits. We are working with our foreign counterparts around 

the globe to try and identify gaps in the supply chain and inspection coverage and so forth, have early notification between all regulatory authorities when counterfeits are discovered. Our Office of 

25 

Criminal Investigations also handles a lot of investigations into 

counterfeit drugs. However, we do believe that additional authorities are necessary for us to be able to stem this tide. 

Mr. PITTS. All right. Now, you mention in your testimony that a 

system to track and trace prescription drugs through the supply 

chain would help ensure the integrity of our drug supply. Do you 

believe the most effective track-and-trace system would involve a 

uniform standard throughout the country, and what are the elements of a cost-effective system? 

Ms. WOODCOCK. Because drugs are shipped all around the country and across State lines, we believe uniform standards are important and we are developing elements of standards that we would 

publish suggested standards that could be used. The most important features of track and trace are the following. Number one, 

that you can identify the product as it moves through the supply 

chain and particularly in real time so that patients aren’t being exposed to counterfeits before you discover that they have entered the 

system, so that is one point. Another point is that modern drug 

manufacturing makes lots of drugs, in other words, batches, but it 

isn’t like you might think of, you know, what you might compound 

or whatever. A batch may be a million pills or tablets or more. And 

so instead of a batch moving through the supply chain on a pallet, 

OK, a batch would be a lot, would be broken up and go all over 

the country in different—so a lot—tracking to the lot level is not 

that helpful, would not be that helpful if we wanted real-time detection, say, drugs that have been stolen from that lot and then diverted and reentering the supply chain or a copy had made of that 

lot number and then put back into the supply chain at some point. 

We would not be able to detect that unless we are tracking that 

lot as it goes along by unit, not by whole lot. 

So we recognize that there are tradeoffs between cost of these 

systems and the benefits that they would provide, but if we want 

out patients not to get counterfeit drugs, which has happened even 

recently—they have been administered to cancer patients—we are 

going to need a system that tracks to the unit level and identifies 

the movement of the drugs in real time. 

Mr. PITTS. The Chair thanks the gentlelady. 

The Chair recognizes the ranking member, Mr. Pallone, for 5 

minutes for questions. 

Mr. PALLONE. Thank you, Mr. Chairman. 

Dr. Woodcock, I wanted to ask you a question about the GAIN 

Act and then a couple of questions about medical gases. I think we 

can all agree that we need to find ways to encourage and facilitate 

development and approval of important new antibiotics. The GAIN 

Act is one attempt to achieve that goal. However, I know FDA and 

others have had concerns about the current definition of which 

drugs would be eligible for the incentive. I believe that IDSA and 

others have suggested that GAIN should be limited to new antibiotic for treating serious infections for which there is an unmet 

medical need. I think the focus on treating serious infections has 

not been controversial but I wanted to know your views on the 

other two components, that the antibiotics should be a new chemical or molecular entity and that it should meet an unmet medical 

26 

need, if you could just tell me your views on that, and then I am 

going to get to the medical gases. Go ahead. 

Ms. WOODCOCK. A new chemical entity is simply an attempt to 

make sure that this incentive applies to new drugs that are being 

developed and not to re-studying older drugs. So I think that particular provision is really up to Congress as far as how that—but 

what we really need is new molecular entities or new chemical entities that have new mechanisms of action that will be put against 

these threats. 

Now, the second question? 

Mr. PALLONE. The other one is that it should meet an unmet 

medical need. 

Ms. WOODCOCK. By definition, we would want it to meet an 

unmet medical need. People who are facing infections where there 

is no current satisfactory treatment would meet the definition of an 

unmet medical need. 

Mr. PALLONE. OK. Let me get to the gases, and that is the H.R. 

2227. From what I understand, medical gases are regulated by the 

FDA as drugs. However, because they differ in some ways from 

most other drugs, FDA has tried to adjust its requirements to fit 

them and has taken a risk-based approach to enforcement. However, the Compressed Gas Association believes that medical gases 

are different enough from other drugs that they warrant a new set 

of regulations. So my questions relate to that. Can you explain how 

FDA regulates gases now, in particular, the commonalities and differences between your regulation of gases and your regulation of 

other drugs and the safety profile of gases? And then, you know, 

as I said, this bill provides for a streamlined process that would 

deem certain gases approved if the applicant submits a certification 

that the gas is among certain designated gases that are considered 

to be well understood and safe. So what is your view on that? And 

then last, what do you think about establishing a separate regulatory system for gases that covers things like good manufacturing 

practices, labeling, distribution? Do you think we should have a 

separate system? I am throwing these all in because we only have 

2 minutes, so try to cover it if you can. 

Ms. WOODCOCK. Number one, for designation, certain uses of 

medical gases have been used so long in medicine that they actually didn’t fall under the FDA review process that was instituted 

when the Food, Drug and Cosmetic Act was passed and so technically those uses are unapproved because no applications have 

been submitted, and so we feel for those traditional medical gases 

for traditional uses that a designation process would be useful. 

As far as a whole new regulatory regime for medical gases on 

manufacturing, we believe that might not be necessary. We believe 

we could work with the manufacturers and actually I would commit to working with the manufacturers to develop an appropriate 

and flexible interpretation of our regulations and their application 

to medical gases for traditional uses that I think would be mutually satisfactory. 

Mr. PALLONE. Obviously, one of the things that they have said 

to me is if there was some way that you could meet with the Compressed Gas Association to see if there is some way to accommodate 

27 

their needs and eliminate the need for legislative action. You seem 

to be suggesting that. Is that fine? 

Ms. WOODCOCK. I would be happy to meet with them personally. 

Mr. PALLONE. All right. Let me just ask one thing. Did you respond to the question about the streamlined approval process? 

Ms. WOODCOCK. What I said was that some designation process 

would probably be most satisfactory. These oxygen—— 

Mr. PALLONE. These are streamlined for the ones that have been 

around for a while? 

Ms. WOODCOCK. Exactly. For all medical gases, we could conceive 

of high-tech new uses that actually should be studied, but traditionally, giving someone oxygen because they have low blood oxygen, it is really not that controversial. 

Mr. PALLONE. So the streamlined would be for the one that have 

been around? 

Ms. WOODCOCK. Yes. 

Mr. PALLONE. All right. Thank you very much. 

Thank you, Mr. Chairman. 

Mr. PITTS. The Chair thanks the gentleman and recognizes the 

gentleman from Texas, vice chairman of the subcommittee, Dr. 

Burgess, for 5 minutes for questions. 

Mr. BURGESS. I thank the chairman for the recognition. 

Dr. Woodcock, always good to see you. The last time we were together, we talked a little bit about drug shortages, and in fact, in 

October, the President put out an executive order, and you were 

kind enough to receive myself and my staff out at the FDA about 

a week or so later. We talked about this. This was early November. 

Then you came to the committee a few weeks ago and we talked 

extensively about a particular shortage called Doxil, or doxorubicin. 

I think sterile methotrexate came up in the discussions as well, 

and of course, I was very glad to see then shortly thereafter we 

found a way to circumvent some of the problems with Doxil. There 

was difficulty in establishing bioequivalency because in order to do 

the studies to establish bioequivalency meant that the drug had to 

be taken away from patients who were dependent upon it for therapy, those patients suffering from ovarian cancer who really 

couldn’t afford a lapse in therapy and the FDA didn’t really provide 

a way out of that. So now you have, and I am grateful for that, 

and that involved actually I guess the use of some of the same compound or similar compound that was available overseas. I am not 

quite sure how the methotrexate got resolved but I am glad to see 

that it did. 

But you provided us with a really extensive list of drugs that 

were in shortage, and of course, some of them were sterile 

injectables, the cancer drugs which are clearly pretty important 

stuff. So I guess my question to you is—and you have also testified, 

if I remember correctly, that this is a complex problem. It is not 

the same thing causing the shortages across the board. So we look 

at it and say we are going to draft legislation, we are going to fix 

this problem, we are going to stop it, but it is difficult to do because 

the problems are so complex and yet your agency had the ability 

to reach out somewhere and solve these two very serious problems 

for patients across the country. So I guess my question to you is, 

what can you do as a regulatory agency to go down that list? Do 

28 

you have a task force that is trying to identify the most critical 

needs, the most critical shortages, get those things, whatever we 

need to do to get them through the regulatory hoops in a safe and 

efficient manner and get them delivered to patients of this country? 

Ms. WOODCOCK. Yes. We certainly have a shortage team who is 

really working overtime, and we have augmented that team with 

additional people. We have looked at every one of the drugs on the 

shortage list, and if we have had a generic applicant that is pending, we jump the queue. We expedite the review of that application 

and try to get that approved as soon as possible so that additional 

sources could be on the market. 

In addition, even when a shortage is impending, we think there 

is an impending shortage, we will start looking at alternative supply? Can other manufacturers in the United States ramp us their 

production? We contact them, we talk to them. Are there X U.S. 

manufacturers with acceptable facilities and product that could increase their production and thus cover the U.S. drug supply as 

well? So we do all this. Despite this, we are still experiencing 

shortages, primarily because a lot of facilities in the United States 

making sterile injectables have been experiencing manufacturing 

problems. 

Mr. BURGESS. Yes, let me ask you about that because some of the 

manufacturing problems actually relate to the company’s ability to 

get a return on investment or even break even in the process, and 

they say look, it is not worth it to us to revamp our manufacturing 

line for this product. Is there anything you can do at the FDA as 

far as providing the incentives so that company will stay in the 

business because then they don’t have to go through the whole reapplication and all of the approval process again? 

Ms. WOODCOCK. We have very little to do with the economic side 

of drug production and reimbursement. We focus on making sure 

that the facilities and processes are in place to make a reliable 

drug product. I don’t think that cutting corners in manufacturing 

sterile drug products is the answer because the problems that these 

facilities have experienced are significant. They include endotoxin 

contamination, bacterial contamination and particulates in 

injectables, and these types of problems do not result in useable 

sterile injectables. 

Mr. BURGESS. I need to interrupt you because time is running 

short. I have some things I am going to submit in writing about 

conflicts of interest, stuff we have covered before to some degree 

and I have got some new questions. But can you update us on— 

the New England Journal of Medicine had an article probably back 

in 2010 or maybe 2009 on the curious case of colchicine, and colchicine is a drug that has been around for 3,000 years to treat gout 

and familial Mediterranean fever, as I recall, and because of some 

things that happened at the FDA, suddenly this drug spiked in 

price and was becoming more difficult for patients to receive. 

Ms. WOODCOCK. That situation still continues. The FDA has 

something called an Unapproved Drugs Initiative, and we are trying to get drugs that are not approved by—there is no approved 

version by the FDA into the fold of proper drugs in the United 

States, and sometimes these efforts do have unintended consequences and I certainly I have heard—I am a rheumatologist. I 

29 

certainly have had from a large amount of the community and patients about this particular issue of affordability of this medicine. 

We are trying to make the balance between availability and affordability and the ability to assure a reliable supply of a drug. When 

drugs are not FDA approved and they are simply on the market, 

there are many opportunities for problems. So we try to walk this 

path, but believe me, we are very aware of the problems that have 

been created for patients. 

Mr. BURGESS. Thanks, Mr. Chairman. I will yield back. 

Mr. PITTS. The Chair thanks the gentleman and yields to the 

ranking member of the full committee, Mr. Waxman, for 5 minutes 

for questions. 

Mr. WAXMAN. Thank you very much, Mr. Chairman. 

Dr. Woodcock, I want to ask you about Accelerated Approval. 

There is a bill by Mr. Towns and Mr. Stearns, and Dr. Maraganore 

will discuss this on our second panel. The act would clarify and improve FDA’s ability to use surrogate and clinical markers for the 

Accelerated Approval pathway. Dr. Allen, also on our second panel, 

describes in his testimony another approach for breakthrough products. This approach would ensure that the FDA works closely with 

companies in helping them develop clinical trial designs that would 

expedite approval of important drugs showing promise in early 

trials. And then we also have the Infectious Disease Society of 

America, and they submitted testimony for the record that discusses yet another approach, and this one is focused on facilitating 

approval of drugs that would treat serious diseases in limited populations. 

My biggest concern in looking at these proposals is whether they 

do or have the potential to change the approval standard, which is 

something I hope we can all agree we don’t want to do. Can you 

briefly, because I have another set of questions, describe for us 

what you see as any benefits of these proposals as well as any concerns you have with any of them? 

Ms. WOODCOCK. On Accelerated Approval, as I said earlier, I 

think the main point is a clarity of our ability to approve drugs on 

an early clinical endpoint or a surrogate endpoint that is reasonably likely to predict clinical benefit. But I do not believe that 

changing the standards for safety and effectiveness would be a benefit to patients. So it is more about clarifying what approval mechanism we can use but not changing the evidentiary standard. 

As far as breakthrough therapies, I have had several people who 

are involved in the AIDS epidemic and the development of drugs 

to address that epidemic say to me if we had treated that as business as usual, we would never have solved this epidemic, we would 

have never gotten effective drugs available. And HIV is not the 

only terrible, life-threatening problem that people face. So breakthrough therapy is not about the approval standard. It is about getting all hands on deck when we find—when early in development 

a product is found to potentially have a tremendous benefit, a lifechanging benefit in a serious disease. And we all should get together at that point—this is my professional opinion—and figure 

out the most effective and efficient way to evaluate that therapy to 

see if it really has the promise that it appears to have, so if it does, 

patients will not have to wait years to have that therapy. 

30 

Mr. WAXMAN. Do we need legislation to do that? 

Ms. WOODCOCK. No. However, I believe that designating that as 

a very important process that the agency would have would provide 

benefit. 

Mr. WAXMAN. I want to ask you about the integrity of our drug 

supply chain and preventing safety crises. You have already indicated you think that we ought to require drugs to be tracked all 

the way down to the unit level, not only require that supply chain 

entities track a lot number of the product. I want to ask you about 

the question of the pharmacies because in the coalition bill, the 

pharmacies are essentially excluded from that proposal, and I am 

concerned about preempting State laws as strong as California’s. 

So I would like to know FDA’s views of the importance of the differences between the two models. You have already talked about 

the supply chain. You might just repeat it again, but what do you 

think about excluding the pharmacies? And if we have a single 

Federal system, how important do you think it is that pharmacies 

be included and that drugs are traced to the unit level instead of 

the lot level? 

Ms. WOODCOCK. If our goal is to prevent our patients from receiving counterfeit drugs before they receive them rather than 

going back and trying to reconstruct what happens after they have 

received counterfeit drugs and we have detected them, then we are 

going to have to have a system that is a real-time system that 

tracks the drugs through the system down to the pharmacy level. 

Why? Because diversion and insertion of counterfeits can occur at 

any point during the drug distribution chain and you leave a big 

gap there for the criminals, and we know there are a lot of criminals out there outside of our country who want to make profit by 

putting counterfeit drugs into our distribution chain or by stealing 

drugs, perhaps adulterating them and then reinserting them back. 

Mr. WAXMAN. You would include pharmacists and pharmacies? 

Ms. WOODCOCK. We have had some cases like that. 

Mr. WAXMAN. This is going to be expensive, and I suppose that 

the technology advances quickly and gets cheaper over time, so we 

need to work as robust a system as possible but realize that we 

have to phase it in, I suppose. 

Ms. WOODCOCK. Right. I think that there are costs, significant 

costs, associated with it. You have to balance the costs against the 

potential benefits, and I think we have to ask ourselves, are we 

going to wait until we have a mass sort of poisoning from insertion 

of counterfeit drugs or when we assume those costs, is the benefit 

worth the costs. There is no doubt that there will be costs to all 

members in the supply chain to do this. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Mr. PITTS. The Chair thanks the gentleman and recognizes the 

gentleman from Illinois, Mr. Shimkus, 5 minutes for questions. 

Mr. SHIMKUS. Thank you, Mr. Chairman. Welcome, Dr. 

Woodcock. 

My first question is kind of really a response to an answer you 

gave to Congressman Pallone on the discussion on the GAIN Act. 

I am an original sponsor on Dr. Gingrey’s bill along with Dianna 

DeGette, Anna Eshoo, Gene Green and other members, and we 

have been working a long time. The intent is to list the biggest 

31 

unmet needs, the pathogens, and then allow you all to add new 

pathogens. 

Ms. WOODCOCK. Yes. 

Mr. SHIMKUS. I think in the question-and-answer period, the concern was removal and flooding of the market with ones that aren’t 

needed. We have concerns about that, and let me address the concerns. The intent is not obviously to try to remove folks. First of 

all, there is really not a market unless there is something that 

really happens bad. So our concern is someone developing an antibiotic to meet a specific pathogen that is on the list and then all 

of a sudden they get pulled off the list. Now, what incentive would 

that be for anyone, really, anyone, to go in and try to take advantage of this process? 

Ms. WOODCOCK. Well, I would say that the FDA has various 

processes such as orphan drug designation and other designation 

processes now that we operate, and generally the simpler the rules, 

the easier these are to operate administratively. We also have a 

process that was established under the user fee—— 

Mr. SHIMKUS. Yes, and I was real involved with the orphan drug 

provisions, but really, the question still is, there will be a debate, 

it sounds like, on both sides on the ability to remove. I think our 

basic analysis is, one, there is no need to remove; two, it is really 

a disincentive. And I would ask you to look at that provision from 

the folks who want to innovate, those who may have already spent 

a lot of money and then all of a sudden it is off the list. 

Let me go to my other questions. As Dr. Frieden of the CDC testified in 2010, antibiotic resistance is a public health problem of increasing magnitude and finding effective solutions to address this 

problem is a critical focus of the CDC activities. Is it safe to say 

that you feel similarly that finding solutions to addressing this 

problem is a critical focus of your activities? 

Ms. WOODCOCK. Yes. 

Mr. SHIMKUS. And how important is new drug development in 

the fight against this public health threat? 

Ms. WOODCOCK. It is crucial. 

Mr. SHIMKUS. Thank you. It kind into this whole obviously the 

GAIN Act in which we are focused on today, part of it we are focused on today. 

One of the issues is on the ventilator-assisted pneumonia example where our rules are that it can’t be tested if the population has 

already received antibiotics so a lot of this testing occurs overseas, 

and then as I have stated numerous times, there is a concern with 

that because you are there, you are testing, you are spending 

money. You may segue into the E.U. system and then we may lose 

that population. How do we get around, or is that exclusion of testing a population that has never received antibiotics, is that really 

a hurdle that we can’t overcome in our testing aspects here in the 

United States? 

Ms. WOODCOCK. We are currently in discussions both with the 

industry and the Infectious Disease Society of America and other 

interested parties about what the drug development paradigm 

should be for multi-drug-resistant organisms, and we actually feel 

that a much abbreviated development program, a very small development program which would be an incentive for developing these 

32 

types of antibiotics would be highly feasible if in fact it were linked 

to the concept of good antibiotic stewardship post market. 

Mr. SHIMKUS. So there is hope? 

Ms. WOODCOCK. Absolutely, but I think that is something that 

we need to discuss more as far as the good antibiotic stewardship 

aspect of this. 

Mr. SHIMKUS. Great. Thank you, Mr. Chairman. I yield back my 

time. 

Mr. PITTS. The Chair thanks the gentleman and recognizes the 

Ranking Member Emeritus, Mr. Dingell, for 5 minutes for questions. 

Mr. DINGELL. Mr. Chairman, I thank you for your courtesy. 

Dr. Woodcock, welcome. 

Ms. WOODCOCK. Thank you. 

Mr. DINGELL. One way to address the threats in a supply chain 

is to know who is responsible for the pharmaceutical product at 

each point in the supply chain. I am sure you agree with that. Yes 

or no? 

Ms. WOODCOCK. Yes. 

Mr. DINGELL. As you know, the PDSA proposal would provide for 

lot-level traceability. Would lot-level traceability be helpful in identifying where in the supply chain a violation occurred? 

Ms. WOODCOCK. It might be difficult due to the size of lots. 

Mr. DINGELL. But you would be better off than you are now? 

Ms. WOODCOCK. I think the benefits of doing that would have to 

be balanced against the costs of even enacting such a system. 

Mr. DINGELL. Now, some have advocated for unit-level 

traceability over lot level so that you could track individual products and identify threats before incidents occur. Would unit-level 

traceability be helpful in the instance of contamination or entry of 

a counterfeit product? Yes or no. 

Ms. WOODCOCK. Yes. 

Mr. DINGELL. Now, one concern I continue to have is contamination or diversion of prescription drugs by persons outside the supply chain. Would lot-level traceability help the FDA to identify the 

path of a contaminated product as it traveled through domestic distribution? 

Ms. WOODCOCK. Only partially, and would have to be reconstructed I think after the fact. 

Mr. DINGELL. What would be the obstacles or the difficulties 

there? 

Ms. WOODCOCK. Because large numbers of any given lot are 

manufactured, then determining if some counterfeits of that lot 

were added at some point would be difficult unless you had realtime tracking and you kept account of the volume. 

Mr. DINGELL. Now, in the instance of contamination or diversion, 

would lot numbers be helpful if a particular lot of drugs traveled 

through multiple distributors and reached multiple pharmacies? 

Ms. WOODCOCK. It would be helpful in retrospectively determining perhaps the point of entry of the contaminated version but 

it would not be helpful, I don’t think, in real time. 

Mr. DINGELL. Thank you. Now, I happen to believe that manufacturers, distributors and dispensers should keep accurate and 

33 

thorough records detailing who is buying and selling a drug 

throughout the distribution chain. I am sure you agree with that. 

Ms. WOODCOCK. I agree. 

Mr. DINGELL. Would it be helpful to FDA to have each entity in 

the supply chain—manufacturers, wholesale distributors, dispensers—accountable for the authenticity of their product here? 

Ms. WOODCOCK. Yes. 

Mr. DINGELL. Now, again, I want to commend the industry for 

their work on the Rx proposal. Traceability is a vitally important 

tool in securing our drug supply and one I believe would complement the drug safety proposal that I have been pushing. I look 

forward to working with industries and my friends on the committee to ensure that traceability proposals move through this committee in a way that will best achieve the mutual goal of preventing counterfeit and contaminated products from entering our 

drug supply. 

Doctor, thank you for your presence. 

Ms. WOODCOCK. Thank you. 

Mr. PITTS. The Chair thanks the gentleman and yields to Dr. 

Gingrey from Georgia for 5 minutes for questioning. 

Mr. GINGREY. Mr. Chairman, thank you. 

Dr. Woodcock, thank you. The GAIN Act is squarely focused on 

serious bacterial pathogens with equally serious unmet medical 

need including Gram-negative bacteria, a specific one that was 

dubbed Iraqibacter due to the propensity of infections among our 

wounded soldiers in Iraq. It is an increasing cause of hospital-acquired infections in intensive care units leading to tens of billions 

of dollars in expenses and it is increasingly resistant to numerous 

drugs, leading to a high number of fatalities. It can show up as 

pneumonias, complicated skin infections, tissue infections, and indeed even septicemia, which is better known in common parlance 

as bloodstream infections. Most worrisome, Doctor, the pipeline for 

novel therapies against something like Iraqibacter is slim to virtually nonexistence. Now, Dr. Fauci, the Director of the CDC, testified before this committee in April of 2010 that our focus should 

be on infections derived from problematic pathogens like this 

Gram-negative bacteria Iraqibacter. Dr. Woodcock, do you agree 

with Dr. Fauci that encouraging drug development to combat infections that arise from Gram-negative pathogens like Iraqibacter is 

an appropriate role for Congress and the FDA? 

Ms. WOODCOCK. Absolutely. 

Mr. GINGREY. According to the Web site of the FDA, you have 

launched several initiatives to combat antibiotic resistance including encouragement of the development of new drugs, vaccines and 

improved tests for infectious diseases. Yet many public health organizations, patient groups and drug companies have stated that 

greater incentives are needed if we hope to increase new antibiotic 

drug development. Do you believe that current FDA actions are 

enough to encourage the numbers of new antibiotics we need to 

meet the growing public health threat that antibiotic resistance 

poses? 

Ms. WOODCOCK. No, clearly it is not enough. 

Mr. GINGREY. So the provisions in the GAIN Act, very specifically, Dr. Woodcock, like increasing the time of exclusivity from 10 

34 

to 15 years and to be very specific in regard to the pharmaceutical 

community that are developing these new drugs and biologics, do 

you agree that they need to know ahead of time that all of this cost 

and expense and innovation and research and development that literally the rug is not going to be pulled out from under them by 

some indiscriminate decision after the fact that the FDA might 

make in regard to a list of pathogens that we already know are 

causing serious medical illnesses no matter where they might 

strike, whether it is in the bloodstream or in the lungs causing 

pneumonia or in the skin causing things like necrotizing disease, 

which indeed can be deadly. So my question in regard to all of this 

is, don’t you agree, or do you disagree that being very specific about 

the pathogens and things like MRSA, methicillin-resistant staph 

aureus, and a lot of these Gram-negative bacteria, enterococcus and 

things like that, these need to be designated on the front end, and 

of course, the Director of the FDA has the opportunity or the Secretary of HHS, you know, to add additional things to the list. So 

comment on that for us. 

Ms. WOODCOCK. Certainly. It is obvious, and we know from experience that industry needs, because of the cost and the risk, a very 

clear pathway to market, and that is a big incentive if that is very 

clear and laid out, so that is extremely important. I agree with 

that. 

As far as how to do this in this specific instance I think we are 

more administratively looking at how administratively you would 

set such an incentive up, and because antibiotic resistance evolves 

rapidly and this is a dynamic field and actually many organisms 

are implicated in this, it would seem that in general for Congress 

to set up some more general criteria and then have FDA designate 

that way. We then could make agreements with companies about 

the designation at the time they come and talk to us about their 

development program and what the pathway would be. So it just 

seems that stipulating in the statute certain things rather than 

what the criteria might be, maybe setting the criteria would be a 

better way to go. 

Mr. GINGREY. Mr. Chairman, I realize I am over time, but let me 

just conclude here. 

Dr. Woodcock, I think you answered my question or my premise 

in the affirmative, and this is sort of what I think Mr. Shimkus 

was getting at in regard to the ability to add to, and you have that 

in the GAIN Act. You have that ability as things develop to be able 

to add to the list but I think the list at the outset in the law should 

be very specific. 

So with that, Mr. Chairman, I yield back, and thank you for your 

patience. 

Mr. PITTS. The Chair thanks the gentleman and recognizes the 

gentlelady from Illinois, Ms. Schakowsky, for 5 minutes for questions. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. 

As I said in my opening statement, I am interested in the balance between hurrying the drugs that we need to market and making sure that we protect safety. It seems to me that most of the 

claims about FDA’s poor performance have in fact been disproved, 

and you described quite powerfully how effective FDA has been at 

35 

using its current Accelerated Approval authorities. So it is surprising to me that we are still talking about the need for yet another accelerated approval pathway, and I hope we can all agree 

that we have to be somewhat cautious in this area. At the very 

least, we need to ensure that we don’t force FDA into a position 

where its approval standards are lowered and the agency ends up 

force to approve ineffective or unsafe drugs, which is in no one’s interest. 

So let me just ask you this. Does the FDA have concerns about 

H.R. 4132, the FAST Act, for example, having the potential to 

lower the approval standards? 

Ms. WOODCOCK. Well, we would look forward to working with 

Congress and the committee on any given language and providing 

technical assistance. I think it is important to not lower the standards for safety and efficacy and to be clear in the language while 

we do support the idea of clarifying what can be used as the basis 

for Accelerated Approval. 

Ms. SCHAKOWSKY. And do you take into account the fact that 

people who are gravely ill are in fact willing to take more risks, 

and what is the mechanism for doing that, for separating out those 

individuals who in fact willing to take some more risks? 

Ms. WOODCOCK. Well, we always balance benefit and risk. Obviously, cancer drugs aren’t as safe as headache drugs, and so we are 

taking that into account. The user fee program, the prescription 

drug user fee program that is before Congress now, will have as 

part of it a formal mechanism where we go out and solicit patient 

input into these tradeoffs, especially for diseases that aren’t well 

understood and so that we can understand how much risk people 

are willing to take for a certain amount of benefit. And then after 

marketing, typically there is patient information and we are moving toward getting uniform patient information in the United 

States so that when people get a prescription drug, they understand the benefits and the risks and they can make that tradeoff 

for themselves because individual values differ. 

Ms. SCHAKOWSKY. And do we distinguish between people who are 

pretty desperate to try things as opposed to sort of for the general 

population? I mean, is there any flexibility in that way? 

Ms. WOODCOCK. Well, what we typically do is have—the drug is 

studied and so understand the magnitude of the benefit and then 

all the risks are described, and then it is determined between the 

patient and the physician when that treatment decision is being 

considered that they would discuss both the upsides and downsides 

of the therapy so the patient can make an informed choice. 

Ms. SCHAKOWSKY. So the obligation then of the FDA is to just 

make sure that there is complete disclosure of the—let me ask you 

this. Do you need more authorities to speed new therapies to market? 

Ms. WOODCOCK. No, we don’t think that new authorities are 

needed. Perhaps some clarification might be useful but, no, we feel 

that we can get safe and effective drugs, that more risk is tolerated 

for cancer, for life-threatening diseases and so forth. We can get 

these therapies to the patients with an appropriate balance of benefit and risk. 

36 

Ms. SCHAKOWSKY. Thank you. Unless someone wants my time, I 

yield back. 

Mr. PITTS. The Chair thanks the gentlelady and recognizes the 

gentleman from Pennsylvania, Dr. Murphy, for 5 minutes for questions. 

Mr. MURPHY. Thank you for being here, Dr. Woodcock. I always 

appreciate your testimony and find you to be a very trustworthy 

source, and thank you for your leadership. 

I want to ask you about drug shortages in particular. From what 

I understand, many of these are cancer drugs. Can you explain 

why we are facing shortages in cancer drugs? 

Ms. WOODCOCK. I think the HHS Assistant Secretary for Planning and Evaluation report has the best explanation of what happened. Most of these cancer drugs are off-patent sterile injectable 

drugs and they were very few manufacturers in the United States 

making them, sometimes only one manufacturer. They were making a large list of sterile injectables also. And they developed some 

manufacturing problems. Multiple manufacturers developed problems making the drugs and had to shut down their lines or interrupt production, and this, as I said last time, is a perfect storm 

where this all sort of came together. Multiple manufacturers of the 

few that existed in the United States for sterile injectables all developed problems. As the report shows, many manufacturers had 

added newer injectable drugs that probably had increased profit 

margins as they came off patent, added them to their list and so 

they were producing a very extensive list of products, and when 

they ceased production or had to restrict their production, then 

there were other places to turn in the United States. 

Mr. MURPHY. Is the FDA taking any steps to change some of 

these things to address the shortage issue? 

Ms. WOODCOCK. Yes. The steps we take, number one, we work 

with the manufacturers. We do everything we can to keep these 

particular shortage drugs in production. We have even gone to the 

lengths of testing the drugs, see if the particles could be filtered 

out and allowing them to be shipped to the patients, to the doctors 

if they would filter them at the time of use. OK. That isn’t what 

you would want of a drug supply but it is better than not having 

those drugs available. We also expedite any applications for making additional sites or additional manufacturers who want to make 

these drugs, we expect their generic drug applications. If we have 

to, we work with foreign suppliers who may be making these drugs 

and see if they can ramp up their production and import temporarily into the United States to cover the shortage situation, and 

we have some of that happening right now. 

Mr. MURPHY. Let me ask about another area. I am a psychologist 

by training and worked in pediatrics also. I served in the Navy and 

worked with PTSD and TBI veterans. And one of my concerns is 

also the abuse of drugs. It is a sad story that we have to address, 

and of course, the abuse of drugs also is associated with some 

shortages. Some of the stimulant medications used for attention 

disorder, for example, have shortages. That hurts those who really 

need them but there is also people using that shouldn’t be having 

them and other class II and III drugs that are being used too, and 

I wonder about addressing these as other issues of taking care of 

37 

the shortages by doing such things on a Federal level, an issue I 

am working on legislation much like a couple of States have done, 

and that is, requiring a photo ID when people pick up some of 

these drugs. It is not difficult and it is not a secret that someone 

could take a Medicare patient’s prescription, take it to the drugstore, fill it for Vicodin or something else, and next you see 

Grandpa can’t find his prescription, the doctor writes another one, 

and these things go on. It is similar for abuse of some of the drugs 

used by children which they may sell or they may redistribute, and 

I get particularly concerned when we have so many veterans who 

end up self-medicating themselves out of their pain. So I wondered 

if this is something that in terms of States, I think Maine and 

North Carolina have put in some laws in effect requiring a photo 

ID or a designated person to pick up the drug when that person 

can’t do it. If you know of any research in terms of, is this addressing some of the issues with regard to reduction of abuse or at least 

helping a situation where drugstores are not put in the middle of 

basically becoming suppliers to drug abuse networks? 

Ms. WOODCOCK. Thank you. We are doing quite a bit in this 

area. The Administration last year announced an initiative to try 

to combat the epidemic of prescription drug abuse in the United 

States, and we have multiple efforts that we are working on. I am 

not familiar with the results of the research on photo ID and what 

impact that might have on decreasing diversion to people who are 

not supposed to get the prescriptions, but it is clear that we need 

to take additional measures to control this epidemic. It is ravaging 

some communities. 

Mr. MURPHY. I appreciate that. I am aware of one chain, CVS, 

requires on their own a photo ID, contacting the physician, asking 

for the diagnosis to verify a number of these steps in that process, 

and that helps, and I certainly know when I have talked to some 

pharmacists and they languish with this idea that say someone 

shows up with a prescription, we are filling it but worried that it 

is actually being abused, so I would love to be able to with you 

more in addressing this, and I do appreciate your dedication to 

this. Thank you so much. 

I yield back. 

Mr. PITTS. The Chair thanks the gentleman and recognizes the 

gentleman from Louisiana, Dr. Cassidy, for 5 minutes for questions. 

Mr. CASSIDY. Hi, Dr. Woodcock. How are you? 

Ms. WOODCOCK. I am fine. Thanks. 

Mr. CASSIDY. I have concerns about online pharmacies. As I gather, they are unregulated. It is kind of a Wild West out there and 

lots of issues associated with them. The latest article in the Wall 

Street Journal of course is on online pharmacies. Now, we have 

heard testimony recently about abuse potential drugs and the problems of prescription drug abuse. So both adulterated and abuse potential. Can you comment on the role of online pharmacies in these 

two issues? 

Ms. WOODCOCK. It is clear that online pharmacies can be—— 

Mr. CASSIDY. By the way, just to be clear, there are legitimate 

and illegitimate pharmacies, so I am sorry, continue. 

38 

Ms. WOODCOCK. No, I agree with that. There are obviously sites 

around the world that can pose as pharmacies and are distributors 

and may introduce improper drugs or provide drugs without a prescription or sometimes provide drugs that are counterfeit to people. 

The VIPPS program, which certifies certain Internet pharmacies as 

appropriate and has criteria, is one guide to consumers. We have 

educational material that we have tried to put out and tried to educate patients and consumers on what proper procedures might be 

for ordering drugs over the Internet because unguided they may 

well run into harm. 

Mr. CASSIDY. Now, is it fair to say, though, that—now, first, I am 

a physician who happens to be a Congressman who is married to 

a doctor, and I had never heard of the VIPPS program until today, 

which is not a criticism of FDA. Frankly, it is a criticism of my 

wife. Just kidding. But that said, is it fair to say that the current 

mechanism has some inadequacy if even someone who theoretically 

would be educated such as I does not know? 

Ms. WOODCOCK. I think it is a very difficult problem. The whole 

system was set up for brick-and-mortar pharmacies. Our whole 

control system was set up that way. Now we have the Internet. As 

you said, it is the Wild West, and definitely it is putting American 

patients and consumers in harm’s way. 

Mr. CASSIDY. I am struck that as we speak about unit-level 

tracking, really, that doesn’t mean anything if I am buying online 

from something which I think is legitimate but which is illegitimate and I am getting an adulterated drug from another country. 

Is that a fair statement too? 

Ms. WOODCOCK. Absolutely. 

Mr. CASSIDY. So until we can actually do something about the 

online pharmacies, we are going to continue to have a leaky bucket 

allowing things to come in which should not? 

Ms. WOODCOCK. That is correct. 

Mr. CASSIDY. Any sense of how much of the drugs that are abuse 

potential being used here would come in through online pharmacies? Do we have a sense of the scope of the issue? 

Ms. WOODCOCK. We do not. 

Mr. CASSIDY. And do we have a sense of how many of the online 

pharmacies are legitimate versus illegitimate? 

Ms. WOODCOCK. Again, the Internet is a very rapidly changing 

and evolving—— 

Mr. CASSIDY. Fair answer. Now, let me ask you again, I am 

aware of the issue of valid prescriptions versus invalid and would 

just like your comments upon that. 

Ms. WOODCOCK. Well, I think the definition of a valid prescription is an important keystone of any efforts and we have to do that 

in light of, you know, now the electronic prescribing and phone prescribing and so forth, but I think that is a very important component. 

Mr. CASSIDY. So the valid prescription, just for those who may 

not be familiar with it, currently pertains to a controlled substance 

but not to an uncontrolled substance. So I can get an 

antihypertensive, which doesn’t require a valid prescription, but 

the Vicodin, I would, but the absence of the requirement of a valid 

39 

prescription for the antihypertensive may mean I get an adulterated drug. Fair statement? 

Ms. WOODCOCK. Yes, if you happen to order from an inappropriate pharmacy on the Internet. 

Mr. CASSIDY. So ideally, we would come up with—we apply the 

definition of valid prescription—I am just saying this to see if you 

would agree—the definition of a valid prescription which would 

apply both to controlled and non-controlled substances? 

Ms. WOODCOCK. Yes. 

Mr. CASSIDY. I know we are about to vote and so I yield back to 

other members. Thank you. 

Mr. PITTS. The Chair thanks the gentleman and recognizes the 

gentleman from New Jersey, Mr. Lance, for 5 minutes for questions. 

Mr. LANCE. Thank you very much, Mr. Chairman, and I respectfully request my opening statement be placed into the record. 

Mr. PITTS. Without objection, so ordered. 

[The prepared statement of Mr. Lance follows:] 

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Mr. LANCE. Thank you, Mr. Chairman. 

I want to follow up on questioning from Congressman Pallone regarding medical gases, and I know that you are working on this 

issue. As I understand it, the six medical gases that make up 99 

percent of the prescriptions in the United States—oxygen, nitrogen, 

nitrous oxide, carbon dioxide, helium and medical air—are mostly 

derived from the air that we breathe. The FDA has a long history 

of using its enforcement discretion in exempting medical gases 

from its New Drug Application process but recent changes to Federal policy, I believe, have left both manufacturers and patients uncertain of the future of FDA-approved medical gases. 

The legislation that Congressman Pallone referenced, legislation 

I have introduced, the Medical Gas Safety Act, which is bipartisan 

in nature—I have introduced it with my colleague, Congressman 

Murphy, Chris Murphy—tries to address this situation in a bipartisan capacity. I want to work with you in this regard. Can you 

comment on where you might be going regarding this issue? 

Ms. WOODCOCK. Certainly. We feel also that there are long-recognized and medically acceptable uses of these traditional medical 

gases and that some designation would be very useful rather than 

having an application process, approve something we already 

know, all right? 

Mr. LANCE. Yes. 

Ms. WOODCOCK. But as far as some of the other issues relating 

to the manufacturing process and so forth, we believe that our regulations are sufficiently flexible that we can work out an approach 

without additional legislation that would be mutually satisfactory 

to the industry and to the FDA. 

Mr. LANCE. Thank you, Doctor. I know that your staff has some 

reservations about developing separate, current good manufacturing practice regulations for the medical gases. Codifying current 

regulatory experience with medical gases is, in my judgment, the 

best way to resolve some of the confusion, and the Compressed Gas 

Association, which is the safety-standard-setting organization for 

the industry, has offered its full resources to assist in the rulemaking process. I want to thank you for your willingness to meet 

and work with the association, with the staff here on this committee, with my staff on this issue. 

I do not necessarily think that guidance can remove the requirements from existing regulations, so I do think that some changes 

in the regulations are necessary, and I respectfully request that we 

continue to work together on this issue as PDUFA is reauthorized. 

Ms. WOODCOCK. We will be happy to work with you. 

Mr. LANCE. Thank you very much, Mr. Chairman, and I yield 

back the balance of my time. 

Mr. PITTS. The Chair thanks the gentleman and recognizes the 

gentleman from Ohio, Mr. Latta, for 5 minutes for questions. 

Mr. LATTA. Well, thank you, Mr. Chairman, and Dr. Woodcock, 

thanks for being with us today. If I could just kind of go back to 

a question that was asked by Dr. Burgess and one also that was 

asked by Dr. Murphy. One of the questions that Dr. Burgess asked, 

and I want to make sure that I wrote it down correctly when you 

said that, that he asked what can the FDA do to help incentivize 

businesses to stay in business in the manufacturing process, and 

42 

your answer was at the time that, you know, your focus is really 

on that reliability. And Dr. Murphy then had asked a question in 

the same vein because there is a lot of questions about there on 

the drug shortages, that the question as to manufacturing problems and that you had stated that in trying to address that problem you would work with the manufacturer. Is there a difference 

between trying to keep people in business and those companies out 

there that are manufacturing right now? 

Ms. WOODCOCK. Can you rephrase the question? 

Mr. LATTA. Well, the first part of the question is that you had 

said that as Dr. Burgess had asked the question, he asked what 

can the FDA do to help incentivize businesses sustain manufacturing processes of producing the product, and you had said in response to his question that your only focus is really on the reliability end and not on trying to keep them in business. So that 

would be a company out there that, you know, might be trying to 

incentivize somebody to stay in that type of a process in manufacturing but Dr. Murphy had asked the question as to if there are 

manufacturing problems and keeping pills out there or other drugs 

in the manufacturing stream to get to the patients and that you 

would say that you would work with those manufacturers. I am 

just trying to figure out what the difference between the two is on 

the reliability and working with them. 

Ms. WOODCOCK. My understanding of Dr. Burgess’s question 

was, did we help with the economic incentives, and we don’t have 

really any role in the economic aspects of drug production and marketing and so forth. We do work with manufacturers to try to keep 

them manufacturing shortage drugs or any other drugs and we try 

to work with manufacturers to keep them manufacturing a reliable 

supply of the medicines that they produce. I do believe that the generic drug proposal that is before Congress right now will help 

with this because it will help us clear out our backlog of generic 

drug applications that have decreased the predictability of a generic drug review process and hopefully we may encourage more 

entrants into that process. So we do work with them but we are 

not involved in the marketing and reimbursement or any of those 

aspects. 

Mr. LATTA. And also in answer to some of Dr. Murphy’s questions, could you define when you say you would help filter? 

Ms. WOODCOCK. Yes. Manufacturers of sterile products—that 

would be that go into your vein—we are finding they had particles 

in their products. That is bad. That is very bad but they can go into 

your lungs and get stuck and so forth, so it is not acceptable. So 

when those were in shortage, rather than say you can’t send them 

out, we tested to make sure that a filter would take out the particles and not take out the drug, and then we let the drugs be 

shipped with a filter so that at the point of delivery, they could be 

filtered and get the particles out and the patient would still get 

that drug rather than have it be in shortage. So I think that is an 

illustration that we try to work with the manufacturers to keep 

these drugs out there. 

Mr. LATTA. And also, other countries that are out there that have 

experienced drug shortages, how have they met the shortages like 

say in Europe? 

43 

Ms. WOODCOCK. They work much the same way that we do, and 

we work with the European regulatory authorities to try to make 

sure the international drug supply remains robust. So they take 

the same sorts of actions we do. 

Mr. LATTA. Again, just one last question, if I may. With the 1981 

flu pandemic that might have killed between 25 to 75 million individuals, it is being pretty much attributed now not to the flu but 

to tuberculosis, and in January of this year, a completely 100 percent drug-resistant form of TB was identified in India that would 

not be treatable with any known antibiotic. What is the FDA doing 

right now to try to prevent that from getting to these shores? 

Ms. WOODCOCK. Yes. Well, we certainly are working with the coalition that is working on developing new drugs for multi-drug-resistant tuberculosis. This is a serious threat. We recognize it and 

we are doing everything we can. Our combination investigational 

drug guidance, which is realize is very technical, that we put out 

that showed how you could develop several investigational drugs 

together to deal with a threat such as this I think is helpful in this 

effort. And as I said earlier, we believe that if provisions for good 

antibiotic stewardship were able to be instituted and we were sure 

that such a drug would only be used only for drug-resistant tuberculosis, we could have a very small development program that 

would allow that drug to get on the market. That would provide, 

I think, a tremendous incentive to manufacturers to get into this 

space and develop drugs for multi-drug-resistant TB. 

Mr. LATTA. Thank you, Dr. Woodcock. 

Mr. Chairman, I yield back. 

Mr. PITTS. The Chair thanks the gentleman. That concludes the 

questions. Go ahead, Dr. Cassidy, for one follow-up. 

Mr. CASSIDY. Mr. Lance brought up H.R. 2227, medical gas. Just 

to confirm that this would not apply to already approved substances, correct? 

Ms. WOODCOCK. Correct. 

Mr. CASSIDY. They would continue to be regulated as they currently are? 

Ms. WOODCOCK. That is my understanding. 

Mr. CASSIDY. Thank you. I yield back. 

Mr. PITTS. Thank you, Dr. Woodcock, for appearing before the 

subcommittee this morning. We really appreciate your testimony 

and answering all of our questions. That concludes panel one. 

Ms. WOODCOCK. Thank you. 

Mr. PITTS. We will now call panel two to the witness table, and 

I would like to thank all of these witnesses for agreeing to testify 

before the subcommittee today. I would like to quickly introduce 

our expert panel. First of all, Dr. John Maraganore is CEO of 

Alnylam Pharmaceuticals. Dr. Jeff Allen is the Executive Director 

of Friends of Cancer Research. Dr. Barry Eisenstein is Senior Vice 

President of Science Affairs at Cubist Pharmaceuticals. Dr. John 

Powers is the Assistant Clinical Professor of Medicine at George 

Washington School of Medicine. And Mr. Michael Walsh is the 

President of LifeGas. Mr. Walsh is appearing on behalf of the Compressed Gas Association. 

44 

Again, we thank all of you for coming this morning. We have 

your prepared statements. Dr. Maraganore, we will begin with you. 

You are recognized for 5 minutes to summarize your testimony. 

STATEMENTS OF JOHN MARAGANORE, CHIEF EXECUTIVE OFFICER, ALNYLAM PHARMACEUTICALS; JEFF ALLEN, EXECUTIVE DIRECTOR, FRIENDS OF CANCER RESEARCH; BARRY I. 

EISENSTEIN, SENIOR VICE PRESIDENT, SCIENTIFIC AFFAIRS, CUBIST PHARMACEUTICALS; JOHN H. POWERS, ASSOCIATE PROFESSOR OF MEDICINE, GEORGE WASHINGTON 

UNIVERSITY SCHOOL OF MEDICINE; AND MICHAEL WALSH, 

PRESIDENT, LIFEGAS, ON BEHALF OF COMPRESSED GAS ASSOCIATION 

STATEMENT OF JOHN MARAGANORE 

Mr. MARAGANORE. Thank you, Chairmen Upton and Pitts and 

Ranking Members Waxman and Pallone. It is my privilege to provide testimony before the subcommittee today. My name is John 

Maraganore and I am the Chief Executive Officer of Alnylam Pharmaceuticals. 

As a scientist and a businessman, I have over 25 years of experience in biopharmaceutical research and development. I serve on 

the board of several biotechnology companies and I am also an advisor to Third Rock Ventures and a member of the Biotech Industry Organization Governing Board. 

Founded in 2002, Alnylam is a small, nonprofitable biotechnology 

company located in Cambridge, Massachusetts. We are developing 

new medicines based on the science of RNA interference, or RNAi, 

which is a major breakthrough in biology that was recognized by 

the award of the 2006 Nobel Prize for Medicine or Physiology. 

Today our company has 120 employees who are working on a 

pipeline of innovative medicines that could truly be transformative 

in the lives of patients afflicted with a number of genetic diseases 

including diseases such as systemic amyloidosis, hemophilia, sickle 

cell anemia, severe hypercholesterolemia, Huntingdon’s disease, 

liver cancer and also respiratory syncytial virus. If we are successful in our efforts, we can create a whole new class of medicines and 

treat disease in a fundamentally different way. 

I am here today to discuss the importance and the benefits of 

Congressman Stearns’ and Towns’ Faster Access to Specialized 

Therapies, or the FAST bill, which would modernize the Accelerated Approval pathway at the Food and Drug Administration. The 

Accelerated Approval pathway, implemented in 1992 by the FDA 

and codified by the Congress in 1997, has indeed been a great success story but only in part. While its applicability has been largely 

limited to certain disease areas, mainly cancer and HIV/AIDS and 

certain situations, the pathway has stimulated an explosion of investment and innovation in those diseases and has brought immense benefit to patients suffering from those diseases. There are 

several reasons why the Accelerated Approval pathway should be 

expanded and in fact modernized. 

First, as I just mentioned, the Accelerated Approval pathway has 

worked but only in part. That is, it has been largely limited in 

practice to drugs that treat cancer and HIV/AIDS along with a 

45 

handful of other situations. While this is great news for patients 

afflicted with cancer and HIV/AIDS, it is not good news for patients 

suffering from other serious and life-threatening diseases. Nothing 

in the words of the current statute limits the Accelerated Approval 

pathway to just oncology and HIV/AIDS. In fact, the statute is 

worded broadly but the current FDA practice leaves many other 

treatments for rare and serious conditions effectively excluded from 

the pathway. We need certainty about how the FDA can apply Accelerated Approval in the future by ensuring that the pathway is 

available for all therapies which treat serious or life-threatening 

conditions by enacting the FAST Act. 

Second, it is important that the ability to utilize the Accelerated 

Approval pathway is both better understood by sponsors and more 

consistently applied by the FDA. This is especially true when it 

comes to FDA-accepted clinical endpoints including those that 

could be measured earlier than irreversible morbidity or mortality 

to demonstrate a reasonable likelihood of overall clinical benefit. 

While the pathway allows for approval based upon effects on clinical endpoints that are reasonably likely to predict clinical benefit, 

in practice, the lack of clarity surrounding such approval options 

has led to a very limited use of Accelerated Approval by sponsors 

and the FDA. 

Third, it is time to have an expanded and modernized Accelerated Approval pathway that incorporates the remarkable advances 

in the life sciences that have and will provide an unprecedented 

understanding of the underlying biological mechanisms and disease 

pathogenesis. These advances can enable novel drug development 

strategies that employ leading-edge methodologies and tools such 

as biomarkers and novel clinical trial designs that can overall improve how we implement Accelerated Approval. The FAST bill 

would achieve all of these objectives described above by expressing 

the sense of Congress that the FDA should utilize the Accelerated 

Approval pathway as fully and as frequently as possible while 

maintaining, very importantly, FDA’s safety and effectiveness 

standards and by codifying, modernizing and expanding FDA’s Accelerated Approval pathway with four targeted revisions. 

I thank you very much for your time and attention and I urge 

Congress to consider the FAST Act. 

[The prepared statement of Mr. Maraganore follows:] 

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Mr. PITTS. The Chair thanks the gentleman. 

We are presently voting on the floor. We are going to try to get 

through a couple more of you. Dr. Allen, you are recognized for 5 

minutes. 

STATEMENT OF JEFF ALLEN 

Mr. ALLEN. Thank you. Good morning, Chairman Pitts, Ranking 

Member Pallone and members of the subcommittee. I am Jeff 

Allen, Executive Director of Friends of Cancer Research, a think 

tank and advocacy organization based here in Washington. I would 

like to thank the staff of the committee who have worked very hard 

in putting together this important hearing. It is an honor to be 

here today. 

While compelling progress continues to be made within the field 

of oncology, there is much more to be done. This year, cancer will 

claim the lives of over 570,000 Americans. This, Mr. Chairman, is 

roughly equivalent to every citizen in your home county of Lancaster, Pennsylvania. 

With such a profound toll, improved ways to combat cancer and 

other diseases are desperately needed. While there are many factors that make development of new drugs complex, assessments of 

the process often focus on the FDA. Critics have frequently portrayed the FDA as slow and inefficient compared to other countries. However, our research reveals that FDA is approving 

anticancer drugs in a more timely fashion than the European counterpart. In fact, since 2003, FDA has approved 42 new cancer medicines versus just 32 by the EMA. Of the 28 common approvals, all 

were available to U.S. patients first. 

A cornerstone of the FDA’s standard for approvals was established in 1962 by Congress requiring that all new drugs demonstrate not only their safety but also efficacy. Without this requirement, American patients would have continued to have been 

given medicines that actually provided no improvement to their 

health. As this committee seeks to optimize and improve FDA practices and maintain its standing as the global leader, the requirement that new drugs demonstrate both safety and efficacy must be 

upheld. While the need for new treatments is immense and the 

challenge is significant, the solution is not to arbitrarily lower this 

important standard that has been in place for 50 years. 

In 1992, as science progressed, and in acknowledgement of an increased public health need, regulations were developed to establish 

the Accelerated Approval mechanism. This is shown to be an important tool used by the FDA to uphold the rigorous scientific 

standards while facilitating timely access to lifesaving treatments. 

For example, in oncology, Accelerated Approval has been used for 

over a third of new cancer drug approvals since 1999. However, 

since 2007, the number of oncology drugs approved through this 

mechanism has decreased. 

In order to optimize the use of this tool, Congress should take action to enhance Accelerated Approval to ensure that it is applied 

consistently, efficiently and effectively. This is not to suggest in any 

way that the standards of safety of efficacy should be altered but 

rather to examine additional opportunities in which Accelerated 

Approval is the optimal approach. 

58 

Today, much like at important times throughout recent history, 

the FDA needs an updated mechanism to respond to the rapid advancement of science. With the expansion of knowledge about the 

biological basis of complex disease, new targeted therapies are 

being developed. For these new treatments that show remarkable 

benefit early in development, the traditional approach may not be 

appropriate. Currently, there are no clear guidelines to expedite 

subsequent studies that would generate the needed evidence and 

minimize the number of patients who would need to be assigned 

to the current standard of care. 

In order to address this, Congress should establish a mechanism 

that would allow the FDA to designate a new compound that shows 

substantial clinical activity in early-phase trials as a breakthrough 

product. Upon designation, the sponsor, working closely with FDA, 

would develop trial designs to abbreviate or combine traditional 

phases of development. This would avoid giving larger numbers of 

patients a potentially harmful or ineffective drug as part of a control arm while maintaining current safety and efficacy standards. 

This establishment of this new designation would help FDA respond to highly innovative new medicines quickly and consistently 

across the agency as well as to communicate and encourage drug 

developers to pursue trial designs that are able to show potential 

benefit earlier in development. 

I conclude my remarks today by reiterating that rigorous FDA 

standards cannot be compromised. The FDA should be given the 

ability to respond to cutting-edge science and the most promising 

therapies through an enhanced Accelerated Approval mechanism 

and a breakthrough product designation. 

I thank you for your time and I am happy to answer any questions you may have. 

[The prepared statement of Mr. Allen follows:] 

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Mr. PITTS. The Chair thanks the gentleman. 

The ranking member and I have consulted. The last time we did 

this, we missed a vote, so we had better break at this point. We 

will recess and come back to the panel as soon as the last vote of 

the series is over. The subcommittee stands in recess. 

[Recess.] 

Mr. PITTS. Time of recess having expired, we will reconvene, and 

the Chair recognizes Dr. Eisenstein for 5 minutes for an opening 

statement. 

STATEMENT OF BARRY I. EISENSTEIN 

Mr. EISENSTEIN. Chairman Pitts, Ranking Member Pallone and 

members of the subcommittee, thank you for the opportunity to testify today on the urgent need to spur greater innovation and accelerate the development of new antibiotics to combat the threat of 

drug-resistant pathogens. I am Dr. Barry Eisenstein, Senior Vice 

President of Scientific Affairs, Cubist Pharmaceuticals, a company 

focused on the research and commercialization of antibiotics. 

Headquartered in Lexington, Massachusetts, we currently market 

Cubicin, a first-line intravenous antibiotic for the treatment of 

methicillin-resistant staphylococcus aureus, better known as 

MRSA. 

Mr. Chairman, on behalf of patients and health care experts 

alike, I wish to commend the subcommittee for holding this hearing 

and for the leadership of Congressmen Gingrey and Green and others for the introduction of the Generating Antibiotic Incentives 

Now, or GAIN Act of 2011. The bipartisan GAIN Act would directly 

promote the research and commercialization of new drugs and 

diagnostics against resistant pathogens. It offers our best hope to 

stimulate American innovation, particularly within small and midmarket companies, and strengthen the hand of clinicians and scientists in the fight against drug-resistant pathogens both here and 

abroad. 

Annually, at least 1.7 million Americans acquire a bacterial infection in the hospital and nearly 100,000 of them die, and we have 

heard the heartbreaking stories. A young high school football player loses his life to a bathe with MRSA, the woman who just had 

mastectomy surgery acquires a resistant post-op infection and goes 

into kidney failure. ICU patients in American hospitals and our 

troops in the Middle East alike are suffering untreatable 

Acinetobacter infections at alarming rates, referred to earlier as 

Iraqibacter. Two years ago, the U.S. Air Force testified on the challenging epidemic of multi-drug-resistant infections that has resulted in a shortage of safe and effective antibiotics. 

Just as antimicrobial resistance is rising, we are faced with a 

disturbing and dangerous lack of new antibiotic drugs, particularly 

against Gram-negative bacteria. The Pew Charitable Trust warns 

us that the antibiotic pipeline is dwindling and a global crisis 

looms. This threatens much of modern medicine because antibiotics 

are crucial from surgical recovery to cancer treatment. As Dr. William Evans, the CEO of St. Jude’s Children’s Research Hospital 

noted, ‘‘We don’t want to find ourselves in a situation in which we 

have been able to save a child’s life after cancer diagnosis only to 

lose them to an untreatable multi-drug-resistant infection. 

69 

The antibiotic pipeline is running dry because antibiotics uniquely are wasting assets. Bacteria evolve so quickly that the development of resistance is inevitable. Thus, each new antibiotic has only 

a finite lifespan. Appropriate stewardship is an important component of antibiotic use. That said by itself doesn’t increase the supply of new compounds. Because antibiotics are used for acute conditions and for a short period, much of the biopharmaceutical industry does not invest in antimicrobial development and has instead 

turned its efforts to products aimed at more chronic diseases. 

The GAIN Act is targeted at precisely this problem. By building 

on current law and extending the new drug exclusivities created by 

the 1984 Hatch-Waxman Amendments only for urgently needed 

antibiotics, it would dramatically improve the prospects for tracking new investments for the development and approval of new antibiotics so needed by our patients. The act would send a powerful 

signal to scientists and investors exploring new molecules and 

forming new companies as well as to large established biopharmaceutical companies that Congress recognizes the unique challenge 

in this area and is opening the door to new innovation, new investigations and greater investor interest. The enhanced exclusivity 

for antibiotics as well as the straightforward designation of qualified infectious disease products is based on what Dr. Janet 

Woodcock of the FDA recently described as the wildly successful 

Orphan Drug Act. 

Mr. Chairman, this committee has a unique opportunity to take 

timely action against a serious public health threat. The market 

failure that has strained our pipeline of important new antibiotics 

remains. I urge the members of the subcommittee to move the 

GAIN Act through committee and enact it into law during this 

112th Congress. 

Thank you for the opportunity to testify today. I look forward to 

your questions. 

[The prepared statement of Mr. Eisenstein follows:] 

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Mr. PITTS. Thank you, Dr. Eisenstein. 

Dr. Powers, you are recognized for 5 minutes for an opening 

statement. 

STATEMENT OF JOHN H. POWERS 

Mr. POWERS. Good afternoon. Thank you for inviting me to testify today. My name is John Powers, and I am a practicing infectious disease and internal medicine physician and a medical researcher who actively cares for patients. I was a scientist at FDA 

for almost a decade, and while there, I was one of the co-chairs of 

the Interagency Task Force on Antimicrobial Resistance. 

I would like to share with you today my perspectives as a clinician, researcher, and having been a patient myself on appropriately 

developing incentives for antibiotics where there is the greatest 

need. My remarks are my own views, and I am not representing 

any agency or organization, but I am here speaking on behalf of 

the patients for whom I care. Several patients and consumer and 

public health groups have expressed the same views as I will 

present here today. 

Government intervention is needed to spur antibiotic development because antibiotics are less profitable for drug companies 

than other therapeutic areas resulting in decreased investment. 

The Generating Antibiotic Incentives Now, or GAIN bill, provides 

those incentives to develop new antibiotics. 

In any policymaking, as in science, one must first outline the 

problem, then come up with potential solutions while minimizing 

unintended consequences, implement that policy, and then measure 

whether it has its intended effects. The problem of serious diseases 

for which there are no effective therapies has been well outlined. 

The question now is, how best can GAIN address these problems. 

If the public to make an investment on new antibiotics, the public 

should get something of measurable value in return while not 

worsening the problem of antibiotic resistance. Several changes to 

GAIN might help it focus to best address public health needs while 

limiting potential adverse consequences. 

First, GAIN should focus on patients and their diseases rather 

than organisms. I have never had a patient tell me their E. coli 

hurts or that their Klebsiella is killing them. Patients present with 

disease syndromes like pneumonia, and I have certainly heard 

enough people in this room coughing today to show that symptoms 

are a problem. 

The human body contains more bacterial than human DNA, and 

organisms do not cause problems for patients until they cause disease. In fact, the word ‘‘pathogen’’ implies pathology and disease. 

Any list of organisms in the bill would be quickly outdated and 

hard for FDA to implement. In addition, FDA regulations appropriately point out that drugs are approved for recognized diseases 

or conditions, and organisms are neither. Use of antibiotics to 

eliminate organisms in the absence of disease would paradoxically 

increase antibiotic resistance. 

Second, GAIN should focus on the treatment of serious and lifethreatening diseases where lack of safe and effective therapies results in death or serious disability. Antibiotic resistance in the test 

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biotics but it is inappropriate use in these settings that has worsened antibiotic resistance. Despite efforts by CDC, FDA, and others, a substantial portion of antibiotic prescriptions are still not 

warranted, provide no benefits to patients, and cause the problem 

of antibiotic resistance we are trying to control. 

Third, there should be valid scientific evidence based on FDA’s 

standard of substantial evidence from adequate and well-controlled 

trials that these drugs actually unmet medical needs. In a 1979 

landmark Supreme Court case, Thurgood Marshall pointed out that 

people with terminal diseases should not receive less protection 

under the law from unsafe and ineffective drugs than persons with 

curable diseases. Test tube and animal studies are helpful in choosing drugs to study in people, but people are not rodents. The complexity of the human body is totally humbling. Three-fourths of 

antibiotics submitted to FDA for review with promising test tube 

and animal studies ultimately fail to show safety and efficacy in 

human disease. Approving antibiotics today hoping for some future 

promise makes no sense as resistance is inevitable with all antibiotics, sometimes occurring before the drug is even marketed. 

There is no guarantee that a drug approved today will address resistance tomorrow. In a study from Boston, almost half of antibiotics approved since 1980 have disappeared from the market, either because of safety and efficacy issues or because of poor sales 

because they did not address public health needs. Therefore, numbers of drugs approved is not a measure of public health benefits. 

Fourth, we need new tools to evaluate antibiotics that will make 

trials more efficient and less expensive for companies to perform. 

Determining who needs and who does not need antibiotics and developing better outcome measures to evaluate directly how patients 

feel and function are urgently needed so we can get the valid evidence we need to know if the drugs actually meet unmet medical 

needs. 

Fifth and finally, any incentives should go hand and hand with 

programs for appropriate stewardship of antibiotics. For any scarce 

resource, conservation should accompany increased production. Unfortunately, we as physicians have been only moderately successful 

at policing ourselves to appropriately use antibiotics but greater efforts are underway. FDA should be given the authority to develop 

strategies to evaluate and ensure appropriate antibiotics where 

they are most needed and to minimize antibiotic resistance. An 

HHS-level internal group to address issues related to antibiotic resistance would help strengthen ongoing efforts of the interagency 

task force. 

Focusing the GAIN bill on the five ways I have just outlined will 

result in addressing the goals it sets out to achieve: developing new 

and safe antibiotics with an appropriate evidence base to positively 

affect patients’ lives while simultaneously limiting antibiotic resistance. 

Thank you very much. 

[The prepared statement of Mr. Powers follows:] 

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Mr. PITTS. Thank you, Dr. Powers. 

Mr. Walsh, you are recognized for 5 minutes. 

STATEMENT OF MICHAEL WALSH 

Mr. WALSH. Thank you. Mr. Chairman, Mr. Ranking Member, 

thank you for inviting me to testify today. My name is Mike Walsh. 

I am President of LifeGas. This is part of Linde North America. We 

are headquartered in New Jersey. We have about 4,500 employees 

in the United States. 

I am here today to testify on behalf of the Compressed Gas Association, of which we are a member. CGA represents companies engaged in the manufacture and distribution of compressed gases including medical gases. 

The Compressed Gas Association was founded in 1913 and currently has more than 120 member companies. CGA serves as a 

safety standard-setting organization for the medical gas industry. 

The medical gas companies in our coalition employ about 21,000 

employees and have around 4,500 locations, half of which are small 

businesses. I personally entered into this industry, the medical gas 

industry, as a small business owner. 

Linde and other members of the Compressed Gas Association 

provide medical gases that are used by doctors, primarily for respiratory care. You can find our products in hospitals, clinics, doctors’ offices and in homes across the country. 

On behalf of the CGA, I want to offer my thanks to Congressman 

Leonard Lance and Chris Murphy for introducing the Medical Gas 

Safety Act. Your leadership role in this issue has been pivotal. I 

also want to thank Chairman Pitts and Ranking Member Pallone 

for your willingness to address these issues in the very important 

bill you are working on now. Naturally, I also want to thank Chairman Upton and Ranking Member Waxman of the full committee as 

well. 

Medical gases, like oxygen, are used by medical practitioners as 

prescription drugs every day. We have over a million patients using 

it in a variety of conditions. Medical oxygen has been used for more 

than a century. Medical gases were in use for decades before the 

FDA was created and a New Drug Application process was initiated. And here is the really key point. Medical gases have a long, 

long history of safe and effective use. The most common ones are 

derived today, things we are breathing today. These common medical gases are a unique class of drug products that are different 

from traditional pharmaceuticals in a lot of ways. We have different properties than pharmaceutical drugs: we have a different 

delivery method, we have a different manufacturing process, we 

have a different type of container that holds the product. Medical 

gas manufacturers make no medical claims for medical gases, 

which is very different for traditional prescription drugs. 

However, the FDA currently regulates medical gases with the 

same regulatory system as traditional pharmaceuticals. This has 

created significant and growing regulatory issues. These practical 

issues create uncertainty and drive up compliance costs for our industry. Medical gases need a separate regulatory system that takes 

into account these unique characteristics. 

87 

The Medical Gas Safety Act addresses a number of critical regulatory issues facing the medical gas industry. It establishes an appropriate approval process for medical gases. It requires the creation of separate regulations for medical gases. It ensures that 

FDA fees do not disproportionately impact medical gas manufacturers, many of whom are small businesses. This legislation will create regulatory certainty for our industry. It will ensure that patients in the medical community have access to these lifesaving 

products. It will remove current uncertainty regarding the Federal 

regulations of medical gases for Federal and State inspectors. 

The FDA has recognized the unique nature of medical gases for 

a very long time. Until now, the FDA has generally used its enforcement discretion not to require medical gases to go through the 

New Drug Application process. Recently, the FDA began the Unapproved Drugs Initiative, which is intended to eliminate all unapproved drugs from the marketplace including medical gases. If the 

Unapproved Drugs Initiative is applied to medical gases, this 

would remove access for patients to gases as simple as oxygen. 

Recent changes in enforcement policies related to the export of 

unapproved drugs have also created serious challenges for our industry. Also, the regulatory system in place for medical gases does 

not take into account the unique characteristics of medical gases. 

In response to concerns raised by the Compressed Gas Association, 

the FDA stated in 1976 in the preamble to the original Current 

Good Manufacturing Practices rulemaking that they intend to develop separate regulations for medical gases. No such regulations 

have been developed. 

This legislation will provide a clear, targeted regulatory structure 

for medical gases, creating a process for medical gases to become 

approved drugs and establishing specific regulations for medical 

gases which will reduce uncertainty, improve compliance and improve safety in what is already a very safe industry. 

I applaud all of you again for your willingness to address these 

important and longstanding regulatory issues. Thanks again on behalf of the CGA for the opportunity to testify. 

[The prepared statement of Mr. Walsh follows:] 

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Mr. PITTS. Thank you. Thank you for your testimony. The Chair 

thanks the panel for being patient waiting while the members 

voted. We will now begin questioning, and I will recognize myself 

for 5 minutes for that purpose. 

Dr. Maraganore, in your testimony, you cite the success of FDA’s 

Accelerated Approval pathway for HIV and AIDS and cancer treatments but indicate the Accelerated Approval framework has done 

little to help expedite treatments for rare diseases. Can you elaborate on why the accelerated pathway has not led to gains in the 

rare-disease space that you would all like to see? 

Mr. MARAGANORE. Yes. I think it really speaks back to the comments that Dr. Woodcock in terms of the clarity around the utility 

and the usefulness of the Accelerated Approval process for diseases 

outside of cancer and HIV/AIDS, and clearly what I think is being 

proposed in Congressmen Stearns’ and Towns’ proposal is a way of 

significantly enhancing and modernizing our understanding of Accelerated Approval to the point where it will be used more frequently, I would expect, for the purposes of rare or orphan diseases 

where there significant unmet medical need and certainly an important desire I think for patients and physicians to have access to 

medicines faster. 

Mr. PITTS. Now, some experts believe that FDA is seeking to 

limit the use of Accelerated Approval for cancer drugs. Is this the 

case? Rather than narrowing the use of Accelerated Approval in 

cancer, shouldn’t we be looking for ways to expand it, and what 

should Congress to prevent FDA from limiting its use? 

Mr. MARAGANORE. I think there has been some concern around 

potential changes within the FDA’s views on how Accelerated Approval would be used in cancer based on some hearings that were 

held about this time last year. You know, clearly, the FDA has 

used this approach for cancer-based medicines. We believe that the 

FDA will continue to do so. I think our desire is really to see it expanded and clarified as a system while very importantly maintaining the safety and efficacy standards that exist today for the approval of medicines. 

Mr. PITTS. And how would the FAST Act incentivize research 

and development of innovative therapies and treatments for serious 

diseases? 

Mr. MARAGANORE. Well, clearly, the ability of having a clear and 

established framework whereby medicines in the context of very serious unmet medical needs can be approved through an Accelerated 

Approval pathway would certainly encourage the investment that 

is needed to ultimately bring these types of products to the marketplace. Clearly, innovative medicines are increasingly being discovered by, you know, young companies like ours, of which there are 

many in this country, in a very vibrant industry, but this industry 

as been challenged by the increasing time it takes to get drugs to 

the marketplace and the increasing costs, and Accelerated Approval in the context of very serious unmet medical needs would 

provide a framework for getting drugs to patients faster in a way 

that would be more acceptable to the investors that have to put 

capital at risk to ultimately bring these products to market. 

Mr. PITTS. Thank you. 

94 

Dr. Eisenstein, while the threat of antibiotic drug resistance is 

a looming public health crisis, the drug development pipeline has 

not kept pace with this threat. What can we do to turn this 

around? 

Mr. EISENSTEIN. Thank you for your question, Mr. Chairman. I 

believe that the GAIN Act as presently formulated provides us with 

precisely the right tools to provide the incentives needed. To cite 

Dr. Woodcock’s earlier testimony: ‘‘We need economic incentives beyond the regulatory ones for these bad bugs.’’ Industry needs a 

clear pathway to the market. I could not have said that better myself, and when one looks at the enormous success of the Orphan 

Drug Act that was enacted in 1983, the Office of the Inspector General in reviewing that in 2001 declared, A, that it was extraordinarily successful in enabling at the time over 200 new drugs. We 

are now over 350 new drugs through the Orphan Drug Act. But I 

would say equally importantly, they pointed out that the increased 

market exclusivity was the most important determinant of the success of that program. So I believe we have everything we need in 

the GAIN Act as it presently written. 

Mr. PITTS. Thank you. 

Mr. Walsh, I understand that FDA regulation has caused problems for many in the medical gas business. Many of these are 

small businesses. Can you explain how and why FDA regulation 

has caused these problems? 

Mr. WALSH. Yes. Thank you. I was one of those small business 

owners, and when I had started this business, we were under the 

guidelines of a grandfathered product, and if I would have known 

today what I had known back then, I would not have started this 

business. We went on and created through our employees a great 

organization with nearly 1,000 employees but we are marketing, 

distributing and selling an unapproved drug, and so you are asking 

to invest in that and then the regulations if we were forced to go 

under a strict pharmaceutical standard would be too expensive for 

the small companies to follow. 

Mr. PITTS. My time is expired. The Chair recognizes the ranking 

member for 5 minutes for questions. 

Mr. PALLONE. Thank you, Mr. Chairman. 

I wanted to ask Dr. Allen a question and then I wanted to ask 

Dr. Powers a question. Let me start with Dr. Allen. I think we all 

agree that FDA needs to be able to be flexible in determining approval requirements and we have heard from Dr. Woodcock and 

your testimony, there is ample evidence that FDA does in fact use 

its authority in a flexible manner, and that has enabled FDA to get 

important drugs through the regulatory process in a timely manner 

and some circumstances based on quite limited data. That being 

said, I recognize there can be advantages to clarifying and improving some of FDA’s authorities to facilitate its use of Accelerated Approval pathways, and I think the pathway you propose for breakthrough therapies deserves serious consideration as does the pathway put forward in the FAST Act by Representatives Stearns and 

Towns and the Special Population Limited Use pathway proposed 

by IDSA in its submitted testimony. 

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tiveness standards by which FDA approves new medicines. Now, I 

know you mentioned that you don’t want to—I think you actually 

said in your testimony ‘‘I don’t want to lower the safety or effectiveness standards.’’ But I just wanted you to basically expand on that 

a little. Do you agree that whatever improvements we make—well, 

you said that you don’t think they should lower the safety and effectiveness standards but if you would spend a little time just giving me some more information on that. 

Mr. ALLEN. Well, thank you for the question. First of all, I absolutely agree that the current standards of safety and efficacy that 

have been in place for decades need to continue to be upheld, first 

and foremost. I think the difference in what we are proposing here 

through the idea of a breakthrough designation, it is important to 

distinguish that Accelerated Approval is an approval mechanism 

where the breakthrough is a designation or a process-oriented 

question, and what we are seeing, and I am most familiar with oncology, of course, is that there are new drugs being developed that 

are highly targeted and being used in select populations where 

they achieve the greatest benefit and the lowest amount of toxicity, 

and in those cases, the traditional development plan of a phase I 

followed by a phase II followed by a phase III trial may not always 

be appropriate, and there may be ways to expedite that, and we 

have worked with several expert groups including the National 

Cancer Institute, the FDA, the Brookings Institute and others to 

look at those strategies, and while it was mentioned that there may 

not need to be new law, I think that the 1.5 million Americans that 

will hear the words ‘‘you have cancer’’ this year would appreciate 

looking at all policies that will help expedite promising new therapies to them quickly. 

Mr. PALLONE. Well, thank you. 

Now, Dr. Powers, one of the things you alluded to is the issue 

of making sure the use of antibiotics is targeted to infections for 

which they are actually useful and making sure that the patients 

actually have those infections. One feature currently included in 

the GAIN Act is the availability of 6 months of additional exclusivity for an antibiotic if its manufacturer develops a companion diagnostic test to use with a new antibiotic. I understand that in 

order to really accomplish the goal of directing new antibiotics to 

the right patients, a test would have to help identify where in the 

body an infection is, what kind of bacteria is causing it, and should 

suggest or ensure that the antibiotic in question is an appropriate 

treatment for the infection. Did I get that right? Can you tell me 

more about whether you think it is possible to develop tests that 

accomplish this and how to make sure that we are not giving additional incentives for tests that may not help us conserve precious 

antibiotics? 

Mr. POWERS. That is correct, and I think it gets back to the issue 

of disease versus just harboring an organism in your body. So if we 

were to develop diagnostics that merely tell you that you have an 

organism on your nose, that wouldn’t help us if we then treat all 

those people when that treatment wouldn’t help. On the other 

hand, if we specifically develop diagnostics to show that people 

have a disease, that would be more helpful, and through the current 510(k) process that FDA utilizes for medical devices, you don’t 

96 

necessarily need to show anything other than you can detect an organism. So we would need to go beyond that and actually have 

helpful information, not only for clinical trials so we can enroll the 

right people but also those could be useful in practice as to who to 

direct antibiotics to and who not to treat. 

Mr. PALLONE. But you think it is possible to develop tests that 

accomplish this, right? 

Mr. POWERS. I think the technology is there, and I think that is 

why it is helpful to develop incentives that would help people to do 

this. 

Mr. PALLONE. Thank you. 

Mr. Chairman, if I could ask—I know we gave this to you a little 

while ago, ask unanimous consent to include in the record the 

statement of the Infectious Diseases Society of America? 

Mr. PITTS. Without objection, so ordered. 

Mr. PALLONE. Thank you. 

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Mr. PITTS. I thank the gentleman and recognize the gentleman 

from Georgia, Dr. Gingrey, for 5 minutes for questions. 

Mr. GINGREY. Mr. Chairman, thank you. I am going to start out 

with Dr. Eisenstein. I almost said Dr. Einstein after reading his 

re ́sume ́, and I am most impressed with that. 

Dr. Powers testified that almost half of antibiotics approved since 

1980 have disappeared from the market, either because of safety 

and efficacy issues or because of poor sales because the drug did 

not address public health needs. This is a question. Do you agree 

with Dr. Powers that current FDA oversight of antibiotics and the 

reality that market forces such as poor sales will help ensure generally that only those drugs that provide an unmet need will ultimately find their way to the market, or most importantly, be financial wins for the drug companies? Is that enough? 

Mr. EISENSTEIN. Well, I agree that for a drug to be successful 

needs to demonstrate utility with patients. What the FDA process 

does is provide evidence of efficacy and safety. It doesn’t translate 

necessarily to effectiveness, which is what happens in the broad 

population. That said, with the enormity of medical need that we 

presently have with the enumerated organisms plus others that I 

can talk about if you like, there is clearly a medical need and there 

is clearly a market failure in terms of being able to provide the appropriate incentives for companies to be able to make the investments in antimicrobials, and it appears that all of my colleagues 

on this committee are in complete agreement with that notion. 

That is again why I feel the GAIN Act as presently designated does 

provide exactly that sort of assistance. 

Mr. GINGREY. Well, I thank you for that, and there was one part 

of Dr. Powers’ testimony, and maybe he will have time, Mr. Chairman, to respond to this as well, but I want to stay with Dr. 

Eisenstein for just a second. In regard to your comments in your 

testimony about the GAIN Act, the fact that we have been working 

on it for a number of years, it has wide bipartisan support, especially here on the Health Subcommittee of Energy and Commerce 

and listing these pathogens, these known pathogens, and I reference that in my opening remarks, whether it is MRSA or whether it is some Gram-negative—we talked about the Iraqibacter problem with the troops returning from Operation Iraqi Freedom and 

other conflicts. It is important, I think, and I think you pointed it 

out, that these are known pathogens. 

Now, Dr. Powers is suggesting that nobody comes in and says oh, 

this Klebsiella is killing me or I can’t stand this Iraqibacter—you 

know, they say well, I am coughing and I think I may have pneumonia or I have got this horrible skin infection and my skin is 

sloughing off—to make a case for I guess some change to this carefully worked on piece of legislation, the GAIN Act, and to me, if I 

could make an analogy in the criminal justice system to say that 

if you have got a known thief out there that you don’t make every 

effort to apprehend him or her, but rather you take all your law 

enforcement and your security measure and you pick two or three 

banks in the local neighborhood to protect because those are the 

areas where he might strike next. I don’t know if that is a great 

analogy but I hope everybody understands the point I am trying to 

117 

make. What say you about that? And then I will go to Dr. Powers 

and let him comment on that. 

Mr. EISENSTEIN. It is absolutely true what Dr. Powers says, that 

bugs by themselves don’t mean that one has disease. If I were to 

look around the room here, that may be, what, 50 or 80 folks in 

the room, probably 20 of us have staph aureus and maybe 30 of us 

have staph aureus in our noses right now, and that about a third 

of the people that walk in this room have staph in their noses all 

the time, and the two-thirds left, about half of those have staph 

that come and go at various times, and we are seeing increasing 

numbers of those staph being MRSA staph. So perhaps 10 of us are 

walking around with MRSA staph in our noses right now, and yet, 

as an infectious disease physician, I wouldn’t think about treating 

any of us for any of that. One has to have a condition, a disease, 

that says I am an infection causing a problem for this patient that 

goes along with certain manifestations. If it is pneumonia, the patient will have cough, will have shortness of breath, will have chest 

pain, will have fever. There are a constellation of methods that one 

can detect that. You are a physician as well. You understand that 

one makes the diagnosis based on what the patient shows, what 

the patient is saying, what your own examination of the patient 

shows. 

That said, if the patient appears to have a pneumonia and you 

are able to recover a pure culture of staph aureus from the expectorated sputum, you know that the patient is suffering from staphylococcal pneumonia, and every hour that goes by that you don’t 

treat that patient, the likelihood of the patient dying goes up significantly, and if we don’t get drugs on board fast enough, we may 

lose 25 to 30 percent of even relatively healthy individuals. 

Mr. GINGREY. To put it in really simple terms, and I know I am 

beyond my time, Mr. Chairman, I appreciate it, I will yield back, 

but it is like closing the barn door after the horse is long gone, so 

I thank you very much for that response. 

Dr. Powers, I apologize. I didn’t have time to go you. 

Mr. PITTS. Dr. Powers, if you would like to respond? 

Mr. POWERS. Sure, I would. I mean, I understand what you are 

saying. To use your thief analogy would be sort of like saying—and 

first I want to say, I think everyone is very appreciative about 

GAIN because we absolutely need to do something about this, and 

I think the question that I tried to bring up in my testimony is, 

can we focus the bill so we make sure that we do what we think 

we want to do without causing more harm. So I guess the concern 

is that, you know, if you see a bank robber and he is wearing a 

blue coat and the police say we are going to go out and arrest everybody who is wearing a blue coat, and so the thing that Dr. 

Eisenstein brought up is, these same organisms can cause less-serious disease and they can also cause more-serious disease. 

And Dr. Gingrey, all the diseases listed when you spoke earlier 

to Dr. Woodcock, they are all serious ones, but FDA actually has 

approved 64 new drug applications for these same kinds of organisms for non-serious, non-life-threatening diseases since 1980. So 

that is why I think the history shows, and also those are the more 

profitable areas to go because those less-severe infections are more 

common in patients. So I think that is the issue of trying to focus 

118 

it to—we are all talking about serious and life-threatening diseases 

here. The question is if that is what we are talking about, could 

we actually focus the bill to that. 

Mr. PITTS. The Chair thanks the gentleman and recognizes the 

ranking member of the full committee, Mr. Waxman for 5 minutes 

for questions. 

Mr. WAXMAN. Thank you very much, Mr. Chairman. 

Dr. Powers, let me pursue that issue with you. The GAIN Act 

seeks to create incentives that would prompt drug companies to develop and market new antibiotics. Specifically, it would give 5 

years additional exclusivity if a company gets a new antibiotic approved. If we are talking about giving such a generous reward to 

companies, I think we need to ensure that two things are in place 

at a minimum. First, we need to make sure that we are only providing exclusivity for the kinds of drugs that will truly benefit the 

public health. Only antibiotics to treat dangerous infections for 

which we do not already have effective treatment should be covered 

in my opinion. 

As currently written, the bill would provide exclusivity for drugs 

if they are targeted to treat specified bacteria. Some including you 

have expressed concern that this kind of model is both inappropriate and unusual for the FDA, and have instead suggested that 

we look at targeting drugs that treat specific infections instead of 

just bacterial species. More significantly, some believe that GAIN 

should be limited to new antibiotics for treating serious infections 

for which there is an unmet medical need. Can you explain a bit 

more about why focusing on specific infections is appropriate and 

why we should reserve incentives for drugs that treat serious infections with unmet medical need? 

Mr. POWERS. Again, I think the issue is that antibiotics can be 

used to treat a wide array of infections caused by the same exact 

organism, and I can give an example of when I worked at FDA, 

several companies came in asking for indications for pneumonia 

that was caused by multi-drug-resistant organisms. Now, that was 

completely appropriate. At the same time, they asked for approval 

for multi-drug-resistant organisms for sinus infections and ear infections in kids and other things that predominantly get better on 

their own, sometimes even without antibiotics. So the history of 

what has happened before shows that—and in a sense, you can’t 

blame a company for asking. FDA didn’t grant those, though, because they applied the same exact standard that we are talking 

about today. It is not clear whether resistance in the test tube has 

much of an impact on patient outcomes in a disease where people 

will get better anyway. So it seems to make sense to focus on the 

areas of where, when you have a resistant disease, that is what is 

going to kill you. 

The other thing is that this sort of comports with everything that 

FDA has ever done in the past related to providing incentives. Priority Review, Accelerated Approval that we are talking about 

today, and Fast Track designation as well as subpart E approvals 

all are based on serious and life-threatening diseases, unmet medical needs and added benefit above available therapies. So it fits in 

with the regulatory paradigm already, which of course would make 

it easier to implement as well. 

119 

Mr. WAXMAN. Well, the second thing I think needs to be in place 

is a robust stewardship program. We need to make sure that any 

antibiotics that are approved under this kind of new system are 

protected once they are on the market. We have seen far too many 

antibiotics lose their effectiveness because the bugs they seek to 

treat become resistant, and that is a problem caused in large part 

by overuse of these drugs. So we need to make sure that doesn’t 

happen with these new antibiotics that we have all invested so 

much in, after all. When extended exclusivity is granted, we all pay 

higher drugs for a longer period of time. Do you agree with that 

concept? 

Mr. POWERS. I think that is absolutely key, and they have to go 

hand in hand. To pass something about giving incentives to develop 

new drugs now hoping that we will approve something about stewardship later probably doesn’t make a whole lot of sense. These 

really need to be linked to each other because developing new 

drugs without the ability to use them in the appropriate places 

they need to be used is really a dangerous thing. That is kind of 

how we got to where we are today. 

Mr. WAXMAN. Can you elaborate more on what ideas you have 

about stewardship? 

Mr. POWERS. I think that there is—I put a couple in my testimony in terms of how I think that allowing FDA to have the authority to designate where drugs should be used appropriately is a 

big step. In the past, FDA has had the authority to restrict drugs 

where they weren’t safe and effective. Here we would be saying 

well, maybe these drugs could be used in less life-threatening diseases but we really think they ought to be reserved for these specific serious diseases. That would be novel. So I think giving FDA 

the authority to do that would be really important. 

The other thing is, having been on the Interagency Task Force 

myself, I know somebody said to me once, you know, it is different 

when it is your 25th job at the bottom of your list of things to do 

versus you come into work and every day that is exactly what you 

have to focus on. So I think developing an HHS-level internal 

group that consists of agencies that address this problem might 

highlight the issues associated with antibiotic resistance and allow 

people to spend their time focusing on it. 

Mr. WAXMAN. Thank you very much. 

Mr. PITTS. The Chair thanks the gentleman and recognize the 

gentleman from New Jersey, Mr. Lance, for 5 minutes for questions. 

Mr. LANCE. Thank you, Mr. Chairman. 

Mr. Chairman, I ask unanimous consent to place in the record 

letters of support for the Medical Gas Safety Act from the Compressed Gas Association and three manufacturers: Air Products, 

AirGas and Tri-Gas. 

Mr. PITTS. Without objection, so ordered. 

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Mr. LANCE. Thank you, Mr. Chairman. 

To Mr. Walsh, can you give the committee a couple examples of 

why FDA’s current regulations are not a good fit for medical gases? 

Mr. WALSH. Sure. I think first of all, I would like to—because I 

don’t think I testified for it, we do feel very fortunate that we have 

the FDA. 

Mr. LANCE. Absolutely, and we are working well with the FDA 

and it is an excellent agency. 

Mr. WALSH. We have existed before the FDA came along and 

then the two of us have been working down this precarious path 

of discretionary enforcement and we are fortunate that we share 

the same principles that we want to send our employees home safe 

at night and we want our patients to be safe, so I think that is critical to say to say that we have been keeping it together because 

we are fortunate that the CGA and the FDA work so closely together. 

Having said that, the medical gases fall under a pharmaceutical 

standard yet our manufacturing processes are different, our containers that hold the drugs are different, and the characteristics of 

our drugs are different. From a manufacturing standpoint, a typical pharmaceutical company may have one plant that distributes 

their product nationally or perhaps even globally. We have 4,500 

plants in the United States producing and selling oxygen, which occurs in a very tight radius of about 100 miles. And in terms of our 

containers, many of you probably have loved ones that you have 

seen on oxygen. They pull around a cylinder, which is about 2,000 

psig under pressure. After it is empty, we pick it up, bring it back 

to our location and refill it. If the label, if you can still see the label 

and it is still in good working condition, it stays on there, or in 

large cases, you might see it at a hospital, a large cryogenic container where as it gets low, we come to fill it. You compare that 

to a typical disposal pill box that gets thrown away. And then the 

characteristics, most of our medical gases are on the periodic table. 

They never expire, which is very different from pharmaceuticals. 

Mr. LANCE. Thank you, and what would the effect, in your opinion, be on patients if the FDA were to require an NDA, a New 

Drug Application, for medical gases? 

Mr. WALSH. I think Dr. Woodcock said it very well today in her 

goals. It is having a safe, effective and available product, and what 

gets me particularly concerned is the available if we have to go 

through an NDA process. An NDA is a long process to go through. 

We have 2 million patients alone on oxygen in the homes, not to 

mention in hospitals and doctor offices. So it could really have an 

impact on supply to these existing patients that we are supplying. 

And to what safety benefit? Our products have been used—oxygen 

we used as an example has been used for over 100 years. You could 

Google it and find physicians talking about oxygen therapy in the 

1850s. 

Mr. LANCE. Thank you. Google it now, not 100 years ago. 

Mr. WALSH. Google it now. Do not Google 100 years. 

Mr. LANCE. Do you see some problems in particular of the current system for small business medical gas manufacturers? 

Mr. WALSH. I do, and I said before, I started from a small business, and if would have known—I was very young when I started 

128 

the business, but if I would have known then what I know now, 

I would not have started that business because you are investing 

in something that is not approved. It is not under the approved 

drug status. Plus, if the FDA chose to enforce us to a strict pharmaceutical standard, many of the small companies would get out 

of the medical gas business. 

Mr. LANCE. Thank you. I look forward to working with Dr. 

Woodcock on this issue and with those on the panel, and with that, 

Mr. Chairman, I yield back the balance of my time. 

Mr. PITTS. Do you have a follow-up? 

Mr. GINGREY. Mr. Chairman, I do, and thank you for yielding. 

First I would like to ask unanimous consent to submit a letter, a 

statement from the California HealthCare Institute in support of 

H.R. 2182, the GAIN Act. Do I have unanimous consent to submit 

that for the record, Mr. Chairman? Mr. Chairman, I thank you for 

that, and I know the ranking member would like to look at it, and 

that is appropriate. I did want to ask one follow-up question if you 

will allow. 

This issue of stewardship, and again, I will go back to Dr. 

Eisenstein. This issue of stewardship, the judicious use of antibiotics, and this has come up a few times in testimony, and for 

members of the panel today and from the committee members, in 

fact, the ranking member of the committee. So I want to ask you 

this: Dr. Eisenstein, can we solve global resistance through a Congressionally mandated stewardship program? And I think Dr. Powers referred to this as well. Are other forms like maybe the World 

Health Organization better suited to tackle this issue of antibiotic 

resistance from overuse, over-prescribing, etc.? 

Mr. EISENSTEIN. That is an excellent point. The problem with 

drug-resistant organisms, Dr. Gingrey, as you know, is they know 

no boundary. So when the New Delhi beta beta-metallo proteinase 

was discovered in strains of Klebsiella and other Gram-negatives 

in India, within 6 to 12 months we saw patients infected in the 

United States, in Canada, in the United Kingdom, etc. I was at a 

meeting recently where an individual went to an unnamed southeastern country in Asia and showed five different pharmacies, one 

after another, where any individual could go into any one of those 

stores and choose any antibiotic essentially that they wanted. This 

is a much broader problem, and clearly, stewardship must be part 

of the solution. I would submit, though, that that is not the place 

for the GAIN Act. 

Mr. GINGREY. Well, I thank you for that, and very quickly, Mr. 

Chairman, I will go to Dr. Powers now. 

Dr. Powers, you had sort of suggested just a few minutes ago 

that maybe there ought to be some Federal mandate in regard to 

best practices and how infectious disease specialists such as yourself should prescribe antibiotics in the most judicious and efficacious manner. It would seem to me that maybe that should come 

from the American Academy of Infectious Disease Subspecialists 

and their best practices paradigm, but you seem to think, if I understand your testimony correctly, that maybe the Federal Government should do that. Would you suggest that that would be within 

the auspices of the FDA or maybe from some other government bureaucracy such as IPAB? 

129 

Mr. POWERS. I don’t think they are mutually exclusive. To answer the question you asked to Dr. Eisenstein, resistance is both 

global and local, and that is that there have been countries where 

their antibiotic usage has decreased, where they have been able to 

decrease local resistance. That doesn’t mean that we shouldn’t have 

a global approach. I think what I was trying to suggest was that 

FDA should have the authority to be able to designate drugs for 

special uses. That doesn’t mean they are regulating the practice of 

medicine or telling doctors how to use it, but having worked at 

FDA, I certainly understand the importance of giving doctors the 

information they need to be able to practice appropriately. That is 

more of what I was suggesting, not that FDA should designate who 

can use what. And I think that means working with those other 

outside organizations and developing stewardship programs at hospitals. 

Mr. GINGREY. Thank you, Dr. Powers. 

And Dr. Eisenstein wanted to make another comment. Is that 

OK, Mr. Chairman? 

Mr. PITTS. Yes. 

Mr. EISENSTEIN. Yes, just to continue on two points that I would 

like to make, or actually three points. One of them, in terms of the 

FDA being able to approve a drug because it happens to get a very 

bad organism, you still have to—the manufacturer still has to go 

through normal procedures to demonstrate efficacy, which means 

that the drug is better than placebo and that the agency has got 

to designate it, therefore approved on that basis. That is point 

number one. 

Point number two, the practice of medicine, as you know as a 

former practicing physician, has changed dramatically over 40 

years. I graduated from medical school 40 years ago, and antibiotics were used essentially willy-nilly at that time. In the last 10, 

15 years, the stewardship that we see already in place in hospitals 

is so exact, we could not get our own antibiotic on formularies anywhere in this country without it being severely restricted so that 

only infectious disease experts were able to give the approval for 

the use of that drug, and in part, because of that, we believe 

Cubicin, the drug that we now have had approved for 8 1⁄2 years, 

still has a 99.9 percent susceptibility rate against MRSA despite 

8 1⁄2 years on the market. So we can use drugs appropriately and 

they have been used appropriately. 

And lastly, I would just like to wholeheartedly agree with the Society of Infectious Disease Pharmacists who noted that inclusion of 

stewardship language in the GAIN Act may broaden the scope of 

the act and take the focus away from the appropriate incentives 

that we are talking about. If you try to put too much in the way 

of disincentives back in this bill, you are actually creating the same 

problem that we are trying to solve. 

Mr. PITTS. The Chair thanks the gentleman. 

The unanimous consent request of Dr. Gingrey with the letters 

is approved. 

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Mr. PITTS. The Chair recognizes the ranking member for 5 minutes for questions. 

Mr. PALLONE. Thank you, Mr. Chairman. I just wanted to ask 

Mr. Walsh, you heard Dr. Woodcock, who is still here, on the first 

panel say that FDA is concerned with the concept of creating an 

entirely new regulatory structure for medical gases, and she said 

she would be willing to meet with you personally to discuss whether there are other ways to addressed the Compressed Gas Association’s concern short of legislation. So I am trying to get you together here, you see? Would you be willing to meet with Dr. 

Woodcock to see if there is a different solution here? 

Mr. WALSH. We definitely have an interest in working directly 

with Dr. Woodcock and her staff to come up with the actual legislation that can give us the guidelines and regulations specific for 

medical gases. 

Mr. PALLONE. OK. Because I think it sounds like you have some 

valid concerns but I just hope the FDA can be responsive and find 

a way to resolve these issues without actually having to pass legislation. That is my hope, so we will see if you can get together. It 

would be helpful. 

Mr. WALSH. I do think legislation is important. We have been operating under the guidelines for many, many years, and so I think 

it is important that we have something very strict and by law that 

we can operate off of. 

Mr. PALLONE. All right. Well, let us see what develops out of the 

meeting in any case. Thank you. 

Mr. PITTS. The Chair thanks the gentleman, and I would like 

unanimous consent to enter into the record statements from the 

National Association of Chain Drugstores, and Pharmaceutical Research and Manufacturers of America. I think you have seen this. 

Without objection, so ordered. 

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Mr. PITTS. That concludes panel two. Thank you very much for 

your testimony, and we appreciate your patience. 

We will now go to panel three, and I would like to call them to 

the witness table, and I would like to thank all of you for agreeing 

to testifying before the subcommittee today, and I will quickly introduce our final panel. 

First of all, Mr. Shawn Brown is the Vice President of State Government Affairs at the Generic Pharmaceutical Association. Then 

we have Ms. Elizabeth Gallenagh, who is the Vice President of 

Government Affairs and General Counsel for the Healthcare Distribution Management Association. And Mr. Tim Davis, who is the 

Owner of the Beaver Health Mart Pharmacy and representing the 

National Community Pharmacists Association. And Mr. Allan 

Coukell, the Director of Medical Programs at the Pew Health 

Group. 

Again, we thank all of you for coming. We have your prepared 

statements. Mr. Brown, we will begin with you. You are recognized 

for 5 minutes to summarize your testimony. 

STATEMENTS OF SHAWN M. BROWN, VICE PRESIDENT, STATE 

GOVERNMENT AFFAIRS, GENERIC PHARMACEUTICAL ASSOCIATION; ELIZABETH A. GALLENAGH, VICE PRESIDENT, GOVERNMENT AFFAIRS, AND GENERAL COUNSEL, HEALTHCARE 

DISTRIBUTION MANAGEMENT ASSOCIATION; TIMOTHY 

DAVIS, OWNER, BEAVER HEALTH MART PHARMACY, ON BEHALF OF NATIONAL COMMUNITY PHARMACISTS ASSOCIATION; AND ALLAN COUKELL, DIRECTOR, MEDICAL PROGRAMS, PEW HEALTH GROUP, THE PEW CHARITABLE 

TRUSTS 

STATEMENT OF SHAWN M. BROWN 

Mr. BROWN. Good morning, Chairman Pitts, Ranking Member 

Pallone and members of the House Energy and Commerce Subcommittee on Health. Thank you for inviting me to testify before 

the subcommittee on the important topic of securing our Nation’s 

pharmaceutical supply chain. 

I am Shawn Brown, Vice President of State Affairs at the Generic Pharmaceutical Association. GPhA represents the manufacturers and distributors of finished does generic pharmaceuticals 

and suppliers of other goods and services to the generic industry. 

We appreciate the efforts of members of this committee particularly 

Congressmen Matheson and Bilbray, to address this important 

issue and we share their goal of ensuring the security of our supply 

chain. 

For many years, GPhA had worked closely with multiple stakeholders across the supply chain to ensure U.S. consumers benefit 

from the safest and most secure prescription drug supply in the 

world. Both industry and FDA are exceptionally vigilant against 

the distribution and sale of counterfeit and adulterated medicines. 

GPhA believes the problem of counterfeit medicines raises a significant public health concern that must be addressed on a range 

of levels from local to global and throughout the drug supply chain. 

Our commitment to this issue is further evidence by the Generic 

Drug User Fee Act, which recognizes that while providing earlier 

144 

access to effective medicines is critical, FDA’s central mission is ensuring drug safety. It is worth noting that generic drugs are rarely, 

if ever, targeted by counterfeiters. The primary focus of counterfeiters is on more profitable and expensive brand name products. 

GPhA is not aware of a single instance of a counterfeit generic 

product occurring within the normal chain of distribution in the 

United States. 

Nevertheless, the generic industry has been a leader in supporting numerous anti-counterfeiting efforts and developing methods to further protect the integrity of the pharmaceutical supply 

chain. As these efforts move forward, however, it is vital to ensure 

that any system is practical, focused and uniform across the country. The uniform system, founded on reliable technology and business practices, would avoid creating cost barriers to the distribution of safe and effective medicines. 

For example, some anti-counterfeiting efforts such as the California model taking effect in 2015 would require implementation of 

full unit-level track and trace capabilities where theoretically the 

entire distribution history and location of every unit in the supply 

chain can be determined at any time. GPhA believes that adoption 

of the California model or a similar one would raise the cost of 

medicine by billions of dollars over time, would be prone to error, 

and would have at best similar results to the less expensive, more 

efficient model that we support. 

With billions of units moving quickly and efficiently through the 

supply chain to fill more than 4 billion prescriptions per year, the 

magnitude and complexity of such a system is not technically feasible. The California law does include language providing for preemption of its requirements in the event that Federal legislation is 

enacted. With California’s initial effectiveness date fast approaching, GPhA has helped lead an effort to develop a more efficient 

model. 

In partnership with stakeholders from every area of the pharmaceutical supply chain, the Pharmaceutical Distribution Security Alliance, or PDSA, has developed a consensus technological model 

that we believe will deliver greater patient safety and help to 

achieve FDA’s stated goals for a supply chain security system. 

The PDSA is a multi-stakeholder initiative whose membership 

spans the U.S. pharmaceutical distribution system including manufacturers, wholesale distributors, third-party logistics providers, 

and pharmacies. As a member of the PDSA, GPhA strongly supports the alliance’s proposed electronic traceability system, known 

as the Pharmaceutical Traceability Enhancement code, or RxTEC. 

This system would increase patient access to safe medicines while 

improving the security of our country’s drug distribution system. In 

addition, the RxTEC system would aid State and Federal agencies 

in tracing the distribution history of suspect products, replace the 

inconsistent and inefficient patchwork of State laws, increased efficiency throughout the drug distribution system, and establish 

foundational technology for future enhancements. 

The PDSA model is based on technological solutions that are 

achievable and scaleable, and unlike a full track and trace system, 

which is not technically feasible in the near term, the RxTEC system would provide immediate measures to increase supply chain 

145 

security. The legislation would provide regulators with new authorities to establish new penalties to address counterfeit products, 

cargo theft and illegal online drug sellers and create new rules regarding e-labeling that will increase patient safety. It would also 

improve the efficiency and effectiveness of drug recalls and returns, 

and enable health care providers to leverage technology for recordkeeping purposes. We urge the inclusion of the proposal in the user 

fee package to accomplish these goals. 

In conclusion, Mr. Chairman, GPhA and the industry share the 

concerns of the committee with regard to maintaining the security 

of our drug supply and preventing the entry of counterfeit, diverted, stolen or other substandard medicines. The development of 

a uniform national system is needed to give regulatory authorities 

another tool for enforcement, make it more difficult for criminals 

to breach the supply chain, and enhance the ability of the supply 

chain to respond quickly when a breach has occurred. We believe 

the RxTEC model proposed by the PDSA achieves all of these goals 

Thank you, and I would be happy to answer any questions. 

[The prepared statement of Mr. Brown follows:] 

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Mr. PITTS. The Chair thanks the gentleman. 

Ms. Gallenagh, you are recognized for 5 minutes. 

STATEMENT OF ELIZABETH A. GALLENAGH 

Ms. GALLENAGH. Good afternoon, Chairman Pitts, Ranking Member Pallone and members of the Subcommittee on Health, I am Liz 

Gallenagh, Vice President of Government Affairs and General 

Counsel at HDMA. Thank you for the opportunity to inform the 

subcommittee today regarding this critically important issue of prescription drug pedigree, traceability and pharmaceutical supply 

chain safety. I would also like to thank Congressmen Bilbray and 

Matheson for their bipartisan leadership in this area. 

The pharmaceutical distribution industry’s primary mission is to 

operate the safest, most secure and efficient supply chain in the 

world. As part of this mission, HDMA’s members work to eliminate 

counterfeit and diverted medicines by capitalizing on the technological innovation and constant improvements in efficiency that are 

the foundation of our industry. 

Today, I am here to express HDMA’s strong support for a national uniform approach to pedigree and the traceability of medicines throughout the supply chain. HDMA believes that reform 

should have tighter wholesaler licensing standards and a new Federal ceiling for pedigree requirements to improve safety and uniformity across the country while establishing targets and parameters for longer-term electronic traceability solutions. 

In addition to fundamentally addressing counterfeit and diverted 

medicines, we also believe that Federal pedigree may have some 

potential as a useful tool in discouraging gray-market activity associated with drug products in short supply. After many years of debate, 2012 is the best window of opportunity to enact national pedigree legislation. This is in large part due to broad consensus among 

supply chain partners as well as the possibility of attaching national pedigree and traceability provisions to PDUFA reauthorization. 

Basic guidelines for pedigree were set forth nearly 25 years ago 

with the enactment of the Federal PDMA. Since that time, activity 

at the State level has varied with some enacting complex electronic 

pedigree laws and other never going further than the original 1988 

guidelines. Based on our experience, the complexities of dealing 

with multiple approaches in the States will only get worse if we fail 

to solve this problem now at the national level. 

Since Florida’s first foray in raising pedigree and licensure requirements in 2003, we have seen dramatic variation across the 

country in both legislation activity and regulatory interpretation. 

This has occurred despite our attempts to work in every State 

along with our fellow stakeholders and interested legislators to 

achieve more uniformity. Today, for example, 29 States have acted 

beyond the Federal PDMA standards. For instance, the States of 

California and Florida are thought to be the most stringent and 

leaders in this area. However, they take completely different viewpoints with Florida considered to the most stringent today and 

California thought to be the most complex in the future in 2015 

when their law is implemented. 

159 

This patchwork not only creates operational challenges but also 

creates openings for bad actors to shop for more lenient States 

rules, openings that could mean the difference between a fake or 

diverted medicine being dispensed or administered to an innocent 

patient in need of treatment. Because of this State-by-State variation, we believe that pedigree and traceability should be under the 

purview of Congress and the FDA. 

HDMA is currently a part of an industry alliance, a consortium 

of other industry partners called the PDSA. PDSA’s consensus 

model calls for the following: national requirements for wholesaler 

licensing standards and for direct purchase and standard pedigree 

upon the effective date of the legislation; manufacturer serialization at the unit and case levels, enabling unique identification of 

prescription drug products for the first time; the development of 

electronic systems to facilitate traceability and transaction data exchange to provide additional efficiency and safety benefits within 

the supply chain; appropriate transition time and development 

phases for the migration to traceability for each segment of the 

supply chain. Further, Federal legislation must also preserve the 

critically important role of the States, for instance, in the area of 

wholesaler licensure and enforcement. There is no single element 

that will protect the supply chain from every threat but rather a 

comprehensive solution should incorporate each of these elements. 

We urge the subcommittee to consider this important issue for 

inclusion in PDUFA legislation. Now is the time for Congress to act 

to bring cohesion and consistency to our national drug supply 

chain. Thank you. 

[The prepared statement of Ms. Gallenagh follows:] 

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Mr. PITTS. The Chair thanks the gentlelady. 

Dr. Davis, you are recognized for 5 minutes. 

STATEMENT OF TIMOTHY DAVIS 

Mr. DAVIS. Chairman Pitts, Ranking Member Pallone and members of the subcommittee, thank you for conducting this hearing 

and providing me an opportunity to share my views and my perspective as an independent pharmacist on the issue of securing the 

pharmaceutical supply chain. 

My name is Tim Davis of Beaver County, Pennsylvania, and I 

own the Beaver Health Mart Pharmacy in that town and county. 

I have been a practicing pharmacist for 12 years, and I am here 

today representing the National Community Pharmacists Association. It is an association of over 23,000 independent pharmacists, 

and we are the pharmacists that represent over 40 percent of the 

prescriptions dispensed in this country. 

It is my belief that the pharmaceutical supply chain in the 

United States is largely safe and secure. I believe that today most 

practicing pharmacists have a heightened awareness of the possibility of counterfeit or diverted drugs and therefore recognize the 

critical importance of purchasing medications only from trusted 

wholesalers or trading partners. In addition, most pharmacists 

today make a concerted effort to carefully examine and make note 

of drug packaging and the appearance of the drug itself to make 

sure that there are no suspicious anomalies. 

It has been my observation that certain types of prescription 

medications tend to be the target of counterfeiters. High-dollar 

medications that can be easily produced and readily sold generally 

enable counterfeiters to create an attractive profit margin. Presently, generics are not typically a target for this type of activity. 

Some drugs that I have seen are particularly susceptible and are 

lifestyle drugs such as Viagra, as well as a number of very expensive injectable medications, and most recently, Avastin. These are 

typically not carried in community pharmacies but rather dispensed through consolidated specialty pharmacies or directly 

through physicians. 

In my career, I have seen an example of counterfeiting at the 

local level. We received manufacturer information that a particular 

drug had entered the drug supply chain in counterfeit form, and 

the manufacturer instructed us on how to recognize the genuine 

product versus the fake. Upon receipt of a daily shipment in the 

morning from our wholesale distributor, we checked and found that 

the item we received was indeed one of the counterfeit products. 

We immediately contacted and discussed the situation with the 

wholesaler. Our answer was to stop doing business with them due 

to lack of believable responses. 

That being said, NCPA does believe that there are a number of 

different approaches or tactics that could be employed to provide 

further confirmation of integrity. These strategies could include national uniform Federal licensure standards for wholesale distributors, increased oversight or security measures to deter pharmaceutical cargo theft and illegitimate online drug sellers, and lotlevel form of tracking for prescription drugs to assist the FDA or 

170 

State authorities in the event of recall or to investigate suspect 

product. 

Raising the standards for wholesaler licensure in a uniform fashion would provide the community pharmacist at any location in the 

United States with an additional layer of confidence in the integrity of the medications purchased from such companies. Therefore, 

NCPA recommends that the U.S. government set national uniform 

and Federal licensure standards for wholesale distributors. At the 

present time, these distributors are licensed at the individual State 

level, which has resulted in a patchwork of requirements of varying 

rigor. 

There are a number of other approaches that could also further 

secure the pharmaceutical supply chain. S. 1002, the SAFE DOSES 

Act, would expand the penalties for pharmaceutical cargo theft, 

and in addition, H.R. 4095, the Online Pharmacy Safety Act, would 

create a publicly available white list of legitimate Internet pharmacies. This list would help to eliminate rogue Internet pharmacies that exist and often prey on consumers looking for bargainpriced medications. 

NCPA is a member of the Pharmaceutical Distribution Security 

Alliance, a working group comprised of representatives from all 

sectors of the pharmaceutical supply chain. It has been collaborating on a comprehensive proposal to address supply chain security issues. The RxTEC Act is currently in draft form. However, it 

includes language that would create the registry of legitimate online pharmacy Web sites, increase the penalties for counterfeiters 

as well as provide for tracking of prescription medications at the 

lot level. 

The actual tracking of prescription drugs through the supply 

chain is a topic that has been discussed for a number of years, and 

independent community pharmacists have had significant concerns 

in the past about the cost of the hardware, software and employment burdens placed upon the association. This is a complex issue 

both in terms of the technologies necessary to implement it as well 

as the fact that each of the sectors involved in the supply chain operate under very different business models and very greatly in 

terms of financial resources and technological sophistication. Community pharmacies are largely small businesses. Any system that 

would require a pharmacist to electronically scan each item would 

create a burdensome and time-consuming exercise that would further limit the amount of time that we have to provide patient care 

and counseling or any other activities necessary to keep that small 

business running. 

The tracking system proposed under RxTEC Act is one that is 

lot-based tracking, would require that the encoded information on 

each unit be both machine and human readable, and would allow 

for collaboration between all members of the supply chain. The proposed system is one that could be built upon in the future if it was 

determined that this course of action was advisable but is one that 

would not impose an undue burden either financially or as it relates to work flow upon independent community pharmacists. 

I have a greater degree of confidence in the United States drug 

supply than I did just a few years ago, largely due to heightened 

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171 

terfeit or diverted medications being discovered. That being said, 

community pharmacies take very seriously our role in ensuring the 

safety of medications that we personally dispense to our patients 

and we remain committed to working with our colleagues in the 

supply chain, other pharmacy organizations, wholesalers and manufacturers as well as with State and Federal authorities to make 

any needed improvements. Moving forward, it is essential that all 

stakeholders make a concerted effort to keep the lines of communication open so that consumers can continue to implicitly trust the 

integrity of the medications that they depend on. 

I thank you, and welcome any questions. 

[The prepared statement of Mr. Davis follows:] 

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Mr. PITTS. The Chair thanks the gentleman and recognizes Mr. 

Coukell for 5 minutes for a statement. 

STATEMENT OF ALLAN COUKELL 

Mr. COUKELL. Chairman Pitts, Ranking Member Pallone, subcommittee members, thank you for the opportunity to present testimony. Thank you for your work on this issue and especially to Representatives Bilbray and Matheson for introducing a bipartisan bill 

that would help protect Americans from counterfeit and diverted 

drugs. 

My name is Allan Coukell. I am a pharmacist and Director of 

Medical Programs for the Pew Health Group of the Pew Charitable 

Trusts. 

The safety of the drug supply has been a long-term focus for 

Pew. Last year we issued a major report, and one of the key findings was that we currently have no national system to detect or 

prevent counterfeits, and with close to 2,000 individual wholesalers 

and many more individual pharmacies and actors, it provides multiple points of entry to our system. 

Let me illustrate the risks with just a few examples of diversion, 

theft and counterfeiting. First, the black market for diversion and 

resale of drugs that have already been dispensed to patients and 

paid for, often by Medicaid. Two years ago, Federal officials in Florida brought down a ring that illegally purchased $13 million worth 

of prescription drugs, buying them from patients and then selling 

them to pharmacies through a licensed wholesaler in Texas. Similar schemes have been documented in other States. 

Drug theft is another threat. In 2009, thieves stole a tractortrailer containing 129,000 vials of insulin. After disappearing for 

several months, some of this temperature-sensitive drug was later 

found on the shelves of chain pharmacies in Texas, Georgia and 

Kentucky. In another case, thieves cut through the roof of an Eli 

Lilly warehouse in Connecticut using forklifts to load a truck with 

$75 million worth of prescription drugs. The fate of those drugs 

isn’t known, but some experts believe that the thieves may be letting the alarm die down before selling them back into the system. 

And then finally, we have incidents of outright counterfeits. In 

recent weeks, a counterfeit cancer drug, Avastin, made its way reportedly from Egypt through multiple European countries to a licensed U.S. pharmaceutical wholesaler that had been supplying 

numerous clinics. In 2001, counterfeit Serostim, a high-cost 

injectable for AIDS patients, was found in at least seven States and 

passed through multiple wholesalers. The manufacturer of that 

drug has since put in place a secure distribution program with a 

unique serial number assigned to each vial that must be verified 

by the dispensing pharmacy. 

Unlike for that drug, for most drugs there is no currently no way 

to check whether they are authentic or counterfeit. Some State 

laws exist. California is implementing a comprehensive system 

under which manufacturers will put a unique serial number on 

each unit, and wholesalers and pharmacies will check to ensure 

that the drugs they buy and sell are authentic. 

A strong national standard would be preferable to a patchwork 

of State laws, but a national system has been under discussion for 

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years and won’t happen without legislation. Congress is now considering a compromise proposal developed between various industry sectors, and Pew supports a number of the elements of this proposal including strengthened standards for wholesaler licensure, 

but the proposal falls short in a couple of crucial aspects. 

First, the key to improved security of drug distribution is knowing who handles the drugs as they move from manufacturer 

through a succession of wholesalers to the pharmacy or the hospital and ultimately to the patient. The industry proposal calls for 

tracking drugs at the lot level, but a lot, as we heard already this 

morning, can contain numerous cases and many thousands of individual bottles and each case or individual unit can be sold separately, and tracking by lot doesn’t allow industry or regulators to 

ever know who bought and sold a given drug. 

Maintaining data about lots may provide an incremental benefit 

over the status quo, but it would fail to catch unsafe drugs in many 

scenarios. If part of a lot was stolen and illicitly reintroduced into 

commerce, a pharmacist or a patient would have no way to tell if 

the product on their shelf was compromised. That same lot will be 

sitting on the shelves of dozens or hundreds of pharmacies, but if 

individual units are tracked, specific stolen bottles could be identified. 

While the PDSA proposal would result in a unique serial number 

being placed on each unit of sale, keeping track of the drugs would 

be impossible unless the serial numbers can be associated with the 

case in which they are shipped. Even if we decide that we don’t 

need unit-level tracing now, the PDSA system proposed would 

make it difficult or impossible to track drugs at the unit level in 

the future. 

Next, under the proposed system, neither the pharmacy nor any 

other party in the system would ever be required to verify the authenticity of drugs. A criminal could sell a vial of counterfeit drug 

with a fake serial number, and no one would detect it because no 

one would be required to check it. Pew supports required authentication of drug products by the companies involved in distribution 

as outlined in H.R. 3026, the Bilbray-Matheson bill. 

Let me conclude by noting again that the impending California 

law creates momentum for a single national standard. Such a 

standard should product Americans today and provide the flexibility of future refinements. 

Thank you, and I welcome your questions. 

[The prepared statement of Mr. Coukell follows:] 

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Mr. PITTS. The Chair thanks the gentleman and thanks all the 

witnesses, and we will begin questioning. I will recognize myself for 

5 minutes for that purpose. 

Let me ask a question to all of you first. You can each respond. 

We are all concerned about the safety of our drug supply, and we 

want to ensure that diverted drugs and counterfeit drugs do not 

reach our Nation’s patients. However, as we look at policies to help, 

we also have to think about the cost to our Nation’s small businesses. They are struggling right now. We need to take them into 

account as we analyze every policy idea. 

The first question, how do we ensure the safety of our prescription drugs in the most cost-effective way? And then two, why is a 

national standard necessary? Mr. Brown? 

Mr. BROWN. I think I would say the PDSA model, we have got 

a consensus throughout industry from chain drugstores, independent pharmacies, secondary wholesalers, third-party logistics 

providers, brand and generic manufacturers. We believe this is a 

scaleable system and a feasible system that we are proposing, and 

I think that this will help to achieve all of FDA’s stated goals, one 

of which being to prevent introduction and to help identification of 

counterfeit medicines. We are concerned about the cost as well, but 

the system that we are proposing is exponentially less than the 

system would be if we had to implement the California model, 

which we don’t think is technically feasible. 

Mr. PITTS. Ms. Gallenagh? 

Ms. GALLENAGH. I would agree with Mr. Brown. We believe that 

the best approach is something that is done at the national level, 

and our members have told us that it would be more cost-effective 

to operate the RxTEC proposal that PDSA has put forth and that 

we have worked on rather than work toward California and then 

deal with potentially New York or Illinois or whatever State is next 

in this arena. We are already—as wholesalers, we see firsthand the 

50–State patchwork that you hear so much about, and that really 

is a reality for our members in terms of dealing with 50 different 

laws, and so automatically we think that we get greater efficiencies 

and cost benefits from going with the PDSA proposal. 

Mr. PITTS. Dr. Davis? 

Mr. DAVIS. The PDSA proposal also looks at the problem in a 

multifaceted approach. The only place that rogue pharmacies can 

get counterfeit or diverted medications is from rogue wholesalers, 

so we need to look upstream. I think the PDSA looks at creating 

national standards to help us feel that the drug supply above us 

is intact. I also feel that it takes a look at the rules and regulations 

set against counterfeiters to prevent that sort of activity long before it gets to a pharmacy level, and I think that the infrastructure 

built on the serialization and lot numbers included in the RxTEC 

Act prepare this for adaptation in the future. We need a system 

that is going to adapt to the health care needs of the near future, 

not necessarily the legislative needs that we foresee coming, and 

this market is going to continue to change and the products that 

we are going to experience are going to continue to change, positioning us very well to scale effectively. 

Mr. PITTS. Mr. Coukell? 

187 

Mr. COUKELL. Mr. Chairman, along with the compliance, or the 

costs of compliance that my colleagues raise, I think the other argument for a national system is that the companies involved in 

drug distribution work across State lines, so in the case of Avastin, 

it was a Tennessee-licensed wholesaler that sold the drugs but they 

ended up in Illinois, Texas and California, or at least those are the 

practices that have been mentioned. So that argues for a national 

standard, and clearly we have to do it in a way that has the least 

necessary cost impacts. So it is important to say what are the goals 

of the system, do we want to be able to identify counterfeit drugs 

when they come in, and if so, what is the most effective way to do 

that, and secondly, do we want to be able to track product as it 

moves through the system and what is the most cost-effective way 

to track the product at the level we want to be tracking it at. 

One of our concerns with the proposal is that companies are 

going to make a capital investment to be able to serialize their 

product, and we certainly recognize they are stepping forward to do 

that, and I think the question we have to ask is, if we think that 

eventually we want to get to a system where we are tracking individual units and we are putting into place an infrastructure now 

that is lot-level tracking, are we going to be back here in 5 or 8 

years when we have a crisis because have counterfeit drugs on the 

shelves asking them to invest again in a new system to track at 

the unit level or should we get it right now. 

Mr. PITTS. Mr. Brown, can you speak what would the costs be 

to manufacturers if the California approach were adopted? 

Mr. BROWN. Yes, I can give you an approximate estimate. If we 

think about the number of packaging lines that serve the consumers in the United States, it is about 3,000. I have heard some 

estimates higher, some lower, and per packaging line, my manufacturers tell me that it ranges between $500,000 and $1 million per 

packaging line. So at the highest, I would say it is near $3 billion 

just to implement the camera infrastructure. We are not talking 

about the data management costs or the costs of the barcodes, the 

ongoing costs. We are just talking about getting the infrastructure 

set up into the packaging lines. 

Mr. PITTS. My time is expired. The Chair recognizes the ranking 

member for 5 minutes for questions. 

Mr. PALLONE. Thank you, Mr. Chairman. 

I was going to ask actually each of the panelists this question. 

In addition to the various provisions related to development of the 

RxTEC system, the proposal from the Pharmaceutical Distribution 

Security Alliance contains a number of provisions related to Federal licensing of parties involved in the manufacture and distribution of pharmaceuticals. I understand these provisions are intended 

to create Federal uniform for the regulation of these parties and 

could help prevent bad actors from engaging in the drug supply 

chain. But I would like to ask each of you if you support the provisions requiring Federal licensure for manufacturers, distributors, 

repackagers and third-party logistics providers, and if not, what 

concerns they have. And I am just looking for a yes or no at this 

point. 

Mr. BROWN. Yes. 

Mr. PALLONE. Ms. Gallenagh? 

188 

Ms. GALLENAGH. We support the provisions that are contained in 

the proposal, but if I could clarify, on the wholesaler licensure 

piece, we support Federal standards and still retain the issuances 

of licenses with the State. 

Mr. PALLONE. OK. 

Mr. PALLONE. Dr. Davis, do you agree with that? 

Mr. DAVIS. We agree as well. 

Mr. PALLONE. Mr. Coukell? 

Mr. COUKELL. As do we. 

Mr. PALLONE. Now, let me ask Mr. Coukell, I understand that 

from the patient safety perspective, the best system would be one 

in which the pedigree system goes to the unit level—you talk about 

this—in which the pharmacist verifies the pedigree of all the units 

he receives for dispensing. I also understand that the current industry proposal does not have serialization information down at the 

unit level but it enables tracing back only to the lot level. You stated that, or one of you did. Meanwhile, that proposal does not require a pharmacist to verify any pedigree information whatsoever 

before dispensing, although it would facilitate traceback once the 

problem has been identified. So it appears that the industry proposal does not go as far as some would like and certainly not as 

far as the California law appears to go. However, what many of us 

have heard is that the California law is proving much more difficult to implement than anticipated and that the industry plan can 

serve as a building block towards reaching the goal that California 

law sets out. 

So my question, I will ask you first, Mr. Coukell, is, do you agree 

with that, what I just said, or do you see the industry proposal as 

a step that while containing many useful items ultimately puts a 

roadblock in front of ever reaching unit-level tracing and 

verification, and I will ask Ms. Gallenagh if you would respond as 

well? 

Mr. COUKELL. Thank you for that question. If I could begin with 

one point of clarification, under the industry proposal, there would 

be a unique serial number on each vial. It just wouldn’t be tracked 

as it moved through the system. So potentially, on a case-by-case 

basis, somebody could look that up and check it. But what you 

don’t have is at the point where there is no suspicion that vial 

being checked and, you know, these counterfeits are pretty good. 

You can’t by the naked eye in a lot of cases detect them and so 

there is no system here where a flag is automatically thrown up. 

So I think the key question in looking at how to move forward 

is, what are the basic elements that we want now and what are 

the basic elements that we are going to want within a reasonable 

time frame, and does this system give us enough to build on, and 

as I said already, we are a little concerned that if we go with this 

system, then we may not be able to get where we need to go in the 

future. 

Mr. PALLONE. OK. Ms. Gallenagh? 

Ms. GALLENAGH. Sure. Thank you, Congressman. I think a couple of things in this area. One, I am to agree with Mr. Coukell’s 

explanation. There is an SNI or serial number included in the 

RxTEC data, so the 2D barcode would include the SNI information 

as well as lot and expiration. What we think is that that would 

189 

alone for the first time provide unique identification of medicines 

and would be a very big step for the industry. Today we don’t have 

that at all, and we are dealing with paper and electronics sometimes, always lot level and no real standard in terms of what different States are doing across the country. I think we also would 

think that going with the PDSA proposal is not a roadblock but 

sticking with the 50–State patchwork may be a roadblock to actually ever getting to a true electronic system across the country. I 

think that, you know, we need to take a broader perspective of this 

issue and that patient safety really does belong in the purview of 

Congress right now. Right now is probably the best opportunity we 

have, and we do have industry consensus and that is something 

that we have never achieved before, and so I think that goes a long 

way, and I believe that my members, other industry partners, once 

those things are in place that are put forth in the PDSA proposal 

like unit-level serialization, I think that building on the innovation 

that we have built on in the past and the efficiencies that can be 

achieved as we learn more about the technology, we may eventually find other uses for the technology and it may go further than 

what we have initially set out to do. 

Mr. PALLONE. Thank you. 

Thank you, Mr. Chairman. 

Mr. PITTS. The Chair thanks the gentleman and recognizes the 

vice chairman of the subcommittee, Dr. Burgess, for 5 minutes for 

questions. 

Mr. BURGESS. Thank you, Mr. Chairman. 

Dr. Davis, you were probably in the room earlier when Dr. 

Woodcock was here and you heard our exchange about the drug 

shortages. She had been here 3 or 4 weeks ago, and this was a lot 

of follow-up to that. Can you tell me from a community pharmacist’s perspective what you are encountering in the drug shortage arena? 

Mr. DAVIS. A single day doesn’t go by where drug shortages don’t 

affect patients in one manner or another. So of the hundreds of 

prescriptions that we fill daily in my pharmacies, we know we have 

to have a conversation every single day with a patient to alter therapy, to choose a different therapy or to come to a consensus with 

the prescribers and other caregivers as to how to change therapy 

to still get the best result for that patient without the agent available that we need. 

Mr. BURGESS. Can you give us some examples of how that might 

come up in the course of your day? What are the ones you are seeing very frequently? You heard my exchange with Dr. Woodcock. 

We had the executive order in October, and as far as I can tell, not 

a darn thing happened. But then when we had a very intense discussion about Doxil 3 or 4 weeks ago, suddenly you got some movement on that and people were able to find oh, yes, there is some 

supply that we could free up. So help me here. Tell me what you 

are having the most trouble with. I will write a letter to Dr. 

Woodcock. We will see what we can do. 

Mr. DAVIS. The most trouble that is arising is mostly solid dosage 

forms. At the community pharmacy level, we dispense very few 

injectable medications or infusible medications so the cancer drugs 

that you are referencing are not necessarily a problem in the comVerDate Aug 31 2005 10:03 Jun 20, 2013 Jkt 037690 PO 00000 Frm 00193 Fmt 6633 Sfmt 6633 F:\112-12~2\112-12~1 WAYNE
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munity, but what we do see are the ADHD medications, solid dosage forms of those, medications in some neurological disorders as 

well. Methotrexate has been recently a problem for us in the treatment of RA and a couple of other disease states. And in those 

cases, they are patients that were managed and well managed on 

these medications and now we have disruption of therapy. So we 

have to make a decision, can we still achieve the clinical outcomes 

with another agent, and it is proving to be burdensome. It is proving to burn time that we shouldn’t necessarily have to burn because this patient has already been managed effectively and efficiently within the system. 

Mr. BURGESS. How involved do you get with cost of prescriptions? 

I get to do a number of telephone town halls with other Members 

of Congress because they like for me to be there, and invariably a 

caller calls and they are on whatever and it is frightfully expensive, 

and then you kind of know in the back of your mind, there is a generic available for that that probably is much less. How do you 

handle that at the community pharmacy level when somebody is 

having difficulty paying for their medication and there might be a 

generic or there might be something that is just a little bit different but perhaps suitable? Do you communicate with the physician, the prescribing physician, in those instances? 

Mr. DAVIS. Absolutely. Something to keep in mind is, we are 

probably the only health care professional that actually gets to see 

the cost of care as it is rendered, so as someone is standing in front 

of us approaching the instance of therapy, we know what that is 

going to cost and how that is going to impact that patient. We are 

also the only professional that still has one-on-one time to render 

to those patients to help them understand and navigate the waters 

associated with the cost of those medications. So we do reach out 

to our prescribers in the community and offer recommendations 

based on what we understand to be the outcomes and efficacy of 

that drug while still maintaining the integrity of the intent of that 

prescriber but being able to do it at a lower cost. 

Pharmacists are doing it each and every day over and over again 

throughout their day. It is not necessarily a recognized function but 

we have transitioned from being the makers of salves and potions 

into clinically based social workers and helping people to navigate 

Medicare, helping people to navigate Medicaid, helping people to 

understand what is going on with the PBMs and the cost of their 

medications. 

Mr. BURGESS. Let me ask you this because the issue of Avastin 

came up, and I have to admit, a couple weeks ago I was pretty 

taken by surprise. Now, I get why Viagra might be a counterfeit 

and why there might be a market, you know, the incredible markup that occurs on that, but Avastin is hardly something you would 

just buy on the Internet and use. What is going on there? 

Mr. DAVIS. So the concern that I have is, it is a high-dollar medication so clearly to be able to counterfeit and move that into the 

supply chain puts a lot of value not only on the people that are actually counterfeiting and entering it in the supply chain but the 

hands that may touch it during the supply chain itself. And that 

is why I said, the integrity of our trading partners is of utmost importance, especially being the end dispenser of that. So to underVerDate Aug 31 2005 10:03 Jun 20, 2013 Jkt 037690 PO 00000 Frm 00194 Fmt 6633 Sfmt 6633 F:\112-12~2\112-12~1 WAYNE
191 

stand the components of the supply chain that come before us, to 

understand who your wholesaler is, to understand the integrity associated with that wholesaler and how they conduct business is 

vital to what we do at the community and ground level. 

With the case of Avastin, I understand that that particular medication changed hands through multiple sources multiple times 

after entering this country and did not necessarily enter through 

the channels that we would normally consider as part of the trusted lines. 

Mr. BURGESS. It wasn’t in the legitimate stream of pharmaceutical commerce? 

Mr. DAVIS. Correct. 

Mr. BURGESS. Thank you, Mr. Chairman. I will yield back. 

Mr. PITTS. The Chair thanks the gentleman. 

That concludes our third and final panel. It has been very informative. We thank all of you for your testimony. 

I will remind the members that they have 10 business days to 

submit questions for the record, and I would like to ask the Director and witnesses to respond to the questions promptly. Members 

should submit their questions by the close of business on Thursday, 

March 22nd. 

Without objection, the subcommittee is adjourned. 

[Whereupon, at 2:35 p.m., the subcommittee was adjourned.] 

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