```

[Senate Hearing 114-102]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 114-102

                   UNLOCKING THE CURES FOR AMERICA'S 
                          MOST DEADLY DISEASES

=======================================================================

                                HEARING

                               BEFORE THE 

                    SUBCOMMITTEE ON SPACE, SCIENCE, 
                          AND COMPETITIVENESS

                                 OF THE
                                 
                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 14, 2015

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation
                             
                             
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                            U.S. GOVERNMENT PUBLISHING OFFICE
97-384 PDF                      WASHINGTON : 2015                            

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        SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                   JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi         BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
JERRY MORAN, Kansas                  EDWARD MARKEY, Massachusetts
DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
DEAN HELLER, Nevada                  JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               GARY PETERS, Michigan
STEVE DAINES, Montana
                    David Schwietert, Staff Director
                   Nick Rossi, Deputy Staff Director
                    Rebecca Seidel, General Counsel
                 Jason Van Beek, Deputy General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
       Clint Odom, Democratic General Counsel and Policy Director
                                 ------                                

          SUBCOMMITTEE ON SPACE, SCIENCE, AND COMPETITIVENESS

TED CRUZ, Texas, Chairman            GARY PETERS, Michigan, Ranking
MARCO RUBIO, Florida                 EDWARD MARKEY, Massachusetts
JERRY MORAN, Kansas                  CORY BOOKER, New Jersey
DAN SULLIVAN, Alaska                 TOM UDALL, New Mexico
CORY GARDNER, Colorado               BRIAN SCHATZ, Hawaii
STEVE DAINES, Montana
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 14, 2015....................................     1
Statement of Senator Cruz........................................     1
Statement of Senator Peters......................................     2
Statement of Senator Wicker......................................    47
Statement of Senator Udall.......................................    50
Statement of Senator Johnson.....................................    52

                               Witnesses

Tom Coburn, former U.S. Senator from Oklahoma....................     5
    Prepared statement...........................................     8
Christopher Frangione, Vice President, Prize Development, XPRIZE.    11
    Prepared statement...........................................    13
Peter W. Huber, Senior Fellow, Manhattan Institute...............    17
    Prepared statement...........................................    20
Dr. Keith R. Yamamoto, Vice Chancellor for Research, University 
  of California, San Francisco; Executive Vice Dean, School of 
  Medicine; Professor, Cellular and Molecular Pharmacology.......    26
    Prepared statement...........................................    28

                                Appendix

Response to written questions submitted to Christopher Frangione 
  by:
    Hon. Steve Daines............................................    61
    Hon. Gary Peters.............................................    61
    Hon. Amy Klobuchar...........................................    62
Response to written question submitted to Peter W. Huber by:
    Hon. Ron Johnson.............................................    63
Response to written question submitted to Dr. Keith R. Yamamoto 
  by:
    Hon. Ron Johnson.............................................    65
    Hon. Steve Daines............................................    65

 
         UNLOCKING THE CURES FOR AMERICA'S MOST DEADLY DISEASES

                              ----------                              

                         TUESDAY, JULY 14, 2015

                               U.S. Senate,
               Subcommittee on Space, Science, and 
                                   Competitiveness,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:07 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Ted Cruz, 
Chairman of the Subcommittee, presiding.
    Present: Senators Cruz [presiding], Wicker, Fischer, 
Johnson, Peters, and Udall.

              OPENING STATEMENT OF HON. TED CRUZ, 
                    U.S. SENATOR FROM TEXAS

    Senator Cruz. Good morning. This hearing will come to 
order. We are here today to discuss an issue that is important 
to every one of us. We are here today to discuss cures--cures 
to life threatening diseases, cures to diseases that devastate 
the lives of millions.
    We are here today to discuss what we are doing well and 
what we could be doing better to open new frontiers.
    The United States has led the world in path-breaking 
medical research and yet there is far more we could be doing.
    In the year 2015, it is estimated almost 600,000 Americans 
face cancer. Another 700,000 with Alzheimer's Disease are 
expected to die this year. Nearly 500,000 people in the United 
States suffer from the effects of Parkinson's Disease. 795,000 
suffer strokes each year. 25.8 million people are afflicted 
with diabetes, and 95 percent of other rare diseases currently 
have no recognized treatments or cures, leaving most of the 30 
million patients afflicted by them with few or no options.
    The path to achieving medical breakthroughs in cures is 
long and capital intensive. Often it seems when it comes to 
medical research we are pennywise and pound foolish, that we 
pay billions or trillions on the back end, dealing with the 
consequences of horrific diseases, rather than investing and 
creating the incentives on the front end to cure these diseases 
once and for all.
    The average cost to get a single drug approved by the FDA 
is between $1 billion and $2 billion. In addition, the 
regulatory burdens and bureaucratic unpredictability slow the 
ability of innovators to create new cures. Regulatory burdens 
and uncertainty are also having an effect on private 
investment.
    In 2011, the National Venture Capital Association issued a 
report confirming that U.S. venture capitalists are reducing 
their investments in biotechnology and medical device 
companies, and are shifting their focus overseas to Europe and 
Asia, primarily due to the persistent regulatory obstacles of 
the FDA.
    Despite these daunting and persistent challenges, I 
continue to believe that incredible American ingenuity still 
has the power to fuel a revolution and open medical 
breakthroughs.
    As former FDA Commissioner Andrew von Eschenbach has 
stated, ``We stand on the cusp of a revolution in health care. 
Advances in molecular medicine will allow us to develop 
powerful new treatments that can cure or even prevent diseases 
like Alzheimer's and cancer.''
    As we begin a discussion this morning on how we can unlock 
cures for America's most deadly diseases, we will take a global 
look at examining how the American regulatory system compares 
with the rest of the world, and how incentives can change so 
that in the coming years we have more and more breakthroughs 
rather than less and less bureaucratic inertia.
    Whether it is increased Federal funding through direct 
medical research, whether it is using tools such as prize 
competitions, whether it is intellectual property reform or 
easing the burdens for approving new drugs and medical devices, 
all of those are steps that are going to need to be examined 
closely if we are going to take major steps toward new cures.
    American poet Robert Frost once stated ``Freedom lies in 
being bold.'' That is the approach all of us hope we take, that 
it is in that spirit that I welcome our panel of distinguished 
experts and friends to engage in a discussion of creating bold 
solutions that will enable medical discoveries to cure and to 
prevent deadly diseases.
    Senator Peters?

                STATEMENT OF HON. GARY PETERS, 
                   U.S. SENATOR FROM MICHIGAN

    Senator Peters. Thank you, Mr. Chairman. Thank you for 
convening this hearing, and thank you to a very distinguished 
panel to talk about a very important issue for me and I think 
for the whole country.
    Without question, scientific discovery and technological 
breakthroughs drive our understanding of the world, from the 
airplane to the MRI to the Internet, innovations in science and 
technology have transformed the United States from a rugged 
frontier nation to a global economic super power.
    Even today, U.S. researchers continue to search for the 
next big thing, that game changing innovation that will spark 
new industries, create jobs, build the economy, and further the 
United States' technological leadership.
    The Federal Government is helping lead the way. Investments 
from the National Science Foundation, the National Institute of 
Standards and Technology, the National Institutes of Health, 
NASA, and other Federal agencies work across a broad range of 
science and engineering topics to help educate a world class 
science and technology workforce and bring us continuously 
closer to breakthrough innovations.
    A few weeks ago, I had the privilege of joining some of our 
nation's brightest minds at a panel discussion by the Science 
Coalition. We looked ahead to the year 2034 and imagined some 
of the exciting discoveries that could be possible based on 
Federal investment into basic research.
    One panelist was working to develop a new class of 
regenerative drugs that would provide effect treatment for 
diseases like Parkinson's and Alzheimer's. Her work was 
supported by the NIH. Another was working to develop safer and 
quicker produced vaccines in pill form, enabling us to keep 
pace with multiplying infectious disease threats. Her work has 
been supported by both NASA and the NSF.
    These examples are just a small part of a long history of 
critical Federal Government support for research and 
development.
    Tragically, however, overall Federal R&D spending has 
fallen to below 1 percent of GDP. This is unacceptable. When we 
examine global funding trends in biomedical research, we see 
that private investment in the U.S. has begun to fall off as 
well. In fact, Mr. Chairman, I have a chart that highlights 
that that I would like to enter into the record with unanimous 
consent.
    Senator Cruz. Without objection.
    [The chart referred to follows:]

U.S. Funding for Medical Research By Source, 1994-2012

    Source: Hamilton Moses III, MD, et al., The Anatomy of Medical 
Research: U.S. and International Comparisons, Journal of the American 
Medical Association, 2015.

    Senator Peters. Studies point to a number of contributing 
factors to this fall off. For one, some private companies are 
shifting their research overseas due to the availability of 
foreign government incentives and access to well educated and 
relatively inexpensive science and technology work forces.
    If we look more closely at these global funding trends, 
particularly for the past 20 years, one conclusion is 
abundantly clear, private investment in the U.S. correlates 
very closely with government investment. When government 
investment in R&D shrinks or stagnates, the private sector 
pulls back as well. When the government grows its investment, 
the private sector follows suit.
    The trends are clear and so are the actions that we must 
take. First, we must develop our science and technology 
workforce through education, inspiration, and opportunities. 
Companies looking to perform innovative breakthrough research 
will go where the talent is. We need to make sure that our 
science and technology workforce is second to none.
    Second, Federal investment in science and technology must 
at least keep pace with the growth of our economy. If the 
stagnant trend we have seen in the last few years is allowed to 
continue, the buying power of our Federal research budget will 
slowly erode with inflation and private investment will shift 
overseas in search of greener pastures.
    Third, we need to keep our Federal research portfolio 
balanced. The challenges of our age are increasingly 
interdisciplinary in nature from biomedical science to behavior 
research to space exploration. Only a broad and balanced 
science and technology investment portfolio will preserve 
America's place at the forefront of innovation for generations 
to come.
    Finally, we need to find creative policy avenues to 
incentivize breakthroughs and reduce barriers to innovation.
    The University of Michigan's fast forward medical 
innovation program is an example of the right step to take. 
Funded by NIH, this program is nurturing commercialization in 
entrepreneurship with the ultimate goal of getting more medical 
devices, diagnostics, therapeutics, and health information 
technologies to the market sector.
    We cannot forget that we are in constant competition with 
other nations that have learned from our example and are 
rapidly growing their commitments to scientific research.
    Now is not the time to slow down. We have to step up in 
Congress on both sides of the Capitol and on both sides of the 
aisle to strengthen our commitment to basic research, to 
education, and to translating new knowledge into the next big 
thing.
    Thank you, Chairman Cruz, for holding this hearing today, 
and I would like to thank all of our panelists once again for 
appearing before us. I certainly look forward to both your 
testimony and the discussion to follow. Thank you.
    Senator Cruz. Thank you, Senator Peters. I would now like 
to welcome each of our distinguished panelists. We begin with 
Dr. Tom Coburn, who is a friend to each of us here. It is good 
to see you, Tom. Welcome back, you are looking good.
    Dr. Coburn has had an extraordinary career. He began his 
career as Manufacturing Manager at the Ophthalmic Division of 
Coburn Optical, which under his leadership grew from 13 
employees to more than 350. He captured 35 percent of the U.S. 
market.
    He then became a medical doctor and has personally 
delivered more than 4,000 babies. He was elected to the U.S. 
Congress and served from 1995 to 2001, and he served as a 
colleague of ours in the U.S. Senate from 2005 to 2014. He was 
an extraordinary leader in this body and is a good friend.
    Our next witness is Christopher Frangione, who is the Vice 
President of Prize Development at XPRIZE. He brings more than 
15 years of experience in the strategy and operations fields 
with energy companies and as a management consultant.
    He received a Bachelor of Arts from Colby College and a 
Master in Business Administration and Master of Environmental 
Management from Duke University.
    Our next witness is Mr. Peter Huber, Senior Fellow at the 
Manhattan Institute. Mr. Huber is an author of numerous books 
including ``The Cure in the Code, How 20th Century Law is 
Undermining 21st Century Medicine,'' and ``Orwell's Revenge, 
The 1984 Palimpsest,'' and I am not sure what that book is 
about, but it is apparently on Facebook CEO Mark Zuckerberg's 
2015 reading list.
    Mr. Huber has had a remarkable career as well serving as 
Associate Professor at MIT, clerking for both Ruth Bader 
Ginsburg when she was a judge on the D.C. Circuit and then 
Sandra Day O'Connor in the U.S. Supreme Court, and he is a 
partner at the Washington, D.C. law firm of Kellogg, Huber, 
Hansen and Todd.
    Finally, Dr. Keith Yamamoto, Vice Chancellor for Research, 
University of California, San Francisco. Dr. Yamamoto received 
his Ph.D. from Princeton University, my alma mater. He is also 
a Professor of Cellular and Molecular Pharmacology at the 
University of California, San Francisco.
    Throughout his career, Dr. Yamamoto's research has focused 
on signaling and transcriptional regulation by nuclear 
receptors. He uses structural, mechanistic, and systems 
approaches to pursue these problems in molecule cells and whole 
organisms.
    Dr. Yamamoto also chairs the Coalition for the Life 
Sciences, and he serves on the Advisory Committee for the 
Division of Earth and Life Studies for the National Academy of 
the Sciences.
    The Committee is honored to have such distinguished experts 
with us, and we welcome you, and we will begin, Dr. Coburn, 
with you.

                   STATEMENT OF TOM COBURN, 
               FORMER U.S. SENATOR FROM OKLAHOMA

    Dr. Coburn. Thank you, Mr. Chairman and Senator Peters for 
inviting me. I just want to give a little background. I am 
probably the only person in the room that has been subjected to 
FDA controls as a manufacturer. I remember when Gerald Ford 
signed the Medical Device Act. Two, has had manufactured 
products under FDA's guidance, and used their products as a 
physician after approval and saw the high cost and delayed 
onset of many products not just medical devices.
    Three, have been a patient, and very interested in what is 
happening in terms of modern medicine, especially in terms of 
breakthrough technologies because it becomes very personal when 
you have advanced cancer, that new breakthroughs and new 
methods of approving new drugs are very important.
    Finally, as a practicing physician, seeing the interaction 
between family and patients with Alzheimer's, and knowing that 
if we had breakthroughs in those areas, the tremendous 
difference not just in family interaction and family costs and 
family effort, but also in terms of economic costs and economic 
effort to our country.
    I just want to put in perspective, I have kind of been all 
around the FDA, and as a legislator, and I would point you to a 
couple of things. Number one, the last piece of major 
legislation was FDASIA, and I would ask you to go look at what 
FDA has done, what Congress has mandated and signed by the 
President three years ago, and what you will see is not much, 
even though you mandated that things be done.
    Whatever we do, the 21st Century Cures Act is a good start 
that came from the House. It needs to be refined and perfected. 
It is a bipartisan bill. That is what ought to come out of the 
Senate, a real look at what we can do and cover all the bases.
    I want to make four main points with you today and I will 
finish, my testimony has obviously been available to you.
    The first point I would make is technology is moving power 
back to patients and physicians, not to the FDA. No matter what 
you do, more and more decisions are going to be made outside of 
government regulation, because that is where the science and 
technology has taken us.
    We need to incentivize breakthrough innovations, not just 
incremental advances against major diseases like Alzheimer's. 
They need to be incentivized.
    I will give you a great example, and I was involved in 
this. In the AIDS epidemic, what happened at FDA? A large group 
of people who were extremely interested in seeing the process 
speed up and cures come to fruition demanded the FDA, not 
Congress, but activists demanded that the FDA respond. Guess 
what they did? Today, we have a chronic disease instead of a 
life killing disease. That did not come through Congress. That 
came through activists being persistent in pushing a regulatory 
agency.
    The barriers that Congress faces in addressing FDA reform 
are often self created, you create them. Let me give you a 
great example. The FDA did a wonderful job on the approval 
process of the drug, Vioxx. They did not make one mistake, 
according to their approvals. There is no way you can be 
perfect 100 percent of the time in what we have set up for a 
regulatory regime for new drug approvals, but what came out of 
Congress on Vioxx? Tremendous beating up of the FDA.
    If any of us had been running the FDA, running it per 
protocol as it should have been, we would have done exactly the 
same thing, except Congress beats them up.
    The other thing with Vioxx is nobody ever thought about the 
millions of people who were back at work because they did not 
have chronic pain anymore because of Vioxx. Everything is a 
balance.
    We have lost a great drug that had a rare side effect and 
the trial bar got a hold of, but you have millions of people 
now who do not have available a drug that allows them to go to 
work every day that is not a narcotic.
    We sometimes as Members of Congress are our own worse enemy 
in terms of beating up the FDA. What happens when the FDA hears 
that, it makes them less likely to take a chance on something 
that could be very, very beneficial to the country because if 
there is a consequence of something going wrong, then they want 
to protect the agency, and they do not want to hear the screams 
that come from Congress.
    The third point I would make is reimbursement and 
intellectual property reforms that reward breakthrough 
medicines that are curative and offset other types of health 
care spending are just as critical as FDA reform.
    Payment reforms and intellectual property reforms, you can 
change the FDA, but if you do not change the payment reforms, 
and if you do not change the intellectual property reforms, one 
of the reasons drugs are failing in this country today is 
people do not know that if they invest capital that they will 
still have any capital left to take advantage of intellectual 
property when they get through the process, because the process 
takes so long.
    That needs to be a thought if we really want to get new 
advances, and we really want to hurry up to cures, not just 
improvements but cures, then what we have to do is change 
intellectual property and we have to change the way we pay for 
it.
    For example, 12 years of data exclusivity, not talking 
about patents, talking about bringing exclusive data to the 
FDA, say we have a new breakthrough on a biological marker, 
here is the way this works, we have the data, protect it.
    Then what you have is capital invested. We are losing 
capital investment in this country because of the questionable 
nature of whether or not you will be able to take advantage of 
that capital investment, because the intellectual property will 
not be covered.
    Finally, transparency and peer engagement is one of the 
most effective tools we have for rapidly advancing science and 
reducing FDA's risk aversion.
    I do not blame the FDA for being risk adverse, the way 
Congress treats them. I do not blame them. It would be really 
courageous to ignore what Congress has to say to them since you 
control totally their budget outside of some of the small 
advancements.
    In the field of biomarkers, if we force the FDA to become 
collaborative and cooperative and transparent, you are going to 
see things move at a very rapid pace in this country. If you 
allow the FDA to continue to not be cooperative, continue to 
not be transparent, and continue to not be collaborative when 
it comes to biomarkers, you are going to see all this industry 
and all this intellectual property go outside of this country.
    The 21st Century Cures legislation is a great move towards 
that, but it has to be better. It has to have some teeth in it 
to force the FDA to become transparent, to be collaborative, 
because they have not been. If we do that, what you will see is 
a marked move forward in terms of advances in cures for new 
diseases, not just treatments but cures, and the identification 
of new pathways, and it will build on itself.
    It is happening now, and it is going to continue to happen 
because private capital, massive computing, and great medical 
record searching right now is causing us to find new treatments 
all the time with existing drugs, repurposing drugs, and we are 
going to see more of it. If the FDA becomes a block to that, 
then we are in trouble.
    Finally, the concern of regulators and even policy makers 
is too often about what might happen if something goes wrong. 
Something is already deeply wrong in our country. Millions of 
Americans are suffering and dying from untreatable diseases or 
the lack of better treatment options, not because it has to be 
that way but because we have a regulatory scheme that makes it 
that way.
    Too many medicines or medical devices are never developed 
because it takes too long and costs too much to bring them to 
patients.
    We need a drug development system that encourages 
innovators to pursue breakthrough cures and allows patients and 
physicians fighting serious illnesses to take informed risks 
when we have good information about the mechanistic effects of 
drugs and the relationship to known causal pathways, and allows 
everyone to learn from the real world evidence about drug 
safety and efficacy.
    That is not the system we have today but it is the one we 
need to face the health and fiscal challenges for our future.
    The double blind placebo controlled study in the future 
will have very limited value to us if we want to propel our 
country ahead in terms of leading on new innovation and new 
cures.
    Thank you. I would be happy to take your questions.
    [The prepared statement of Dr. Coburn follows:]

  Prepared Statement of Tom Coburn, former U.S. Senator from Oklahoma
    First, I'd like to thank Chairman Cruz, Ranking Member Peters, and 
the other members of the Committee for inviting me to speak today about 
an important subject that is near and dear to my heart: advancing cures 
for the tens of millions of American patients and their families 
battling life threatening or disabling disorders.
    The battle is personal for me in many ways. As a physician, I see 
elderly patients suffering from symptoms of early dementia, and 
eventually Alzheimer's, without a real treatment in sight. The burden 
of the disease falls not only on patients, but on their families and 
caregivers. Their plight is agonizing. And I can't offer them any 
effective treatments.
    As a three-time cancer survivor, I'm excited by the progress we've 
made against this deadly disease, but also mindful of how much further 
we have to go to conquer it. Cancer remains the second leading cause of 
death in the U.S.; for patients diagnosed with metastatic solid 
tumors--of the lung, colon, pancreas, or ovaries--far better diagnostic 
and treatment options are desperately needed. Diagnosing these diseases 
late--as we do all too often today--means that we can only delay the 
inevitable, at great human and financial cost.
    But I'm also deeply optimistic, because I've seen firsthand the 
inventiveness, dedication, and entrepreneurship of America's leading 
researchers and companies. I'm watching a flood of new information 
emerge that is helping researchers map out cancer's vulnerabilities at 
the genomic level and develop personalized treatment programs for 
patients tailored to their unique tumor profile. These approaches are 
being made possible by advanced computing platforms for rapidly sorting 
through this torrent of information, guiding doctors and patients to 
the best treatments. For instance, IBM's Watson is analyzing millions 
of journal articles, patient records, and data on approved and 
experimental drugs to help developed personalized cancer-care regimens 
faster than any single physician alone could ever do. Watson and other 
``big data'' and machine-learning approaches are literally getting 
smarter every day--and will, one day, expand state of the art oncology 
services to every cancer patient in America in their own communities, 
not just patients with access to leading cancer centers.
    The advent of systems biology and, more recently, quantitative 
systems pharmacology are helping us unravel the molecular networks of 
complex diseases at an unprecedented pace; simulate the effects of 
candidate compounds in computer models; weed out drugs likely to fail; 
and identify those most likely to succeed, all before a single human 
patient is dosed. Companies are also perfecting the art of developing 
targeted medicines, including genetically modified T-cells, monoclonal 
antibodies, and new gene-editing technologies. This approach heralds a 
day when researchers will use molecular scalpels to target disease-
causing cells and genes--and kill or replace them with healthy 
versions.
    Is this the Golden Age of Medicine? Not yet. How long it takes us 
to get there rests with you. It depends on the 21st Century Cures 
legislation just passed by the House, on steps that you can take to 
improve it even further, and on decisions that Congress will make over 
the next few years to enhance the climate for breakthrough innovation 
in the United States.
    The way we approve new medicines and diagnostics must change. It's 
got to be completely transformed. I know that word is overused and 
we've been talking about transformation for a long time. We don't need 
another committee to study it, or hold another conference about it. We 
need to do it.
    I'm honored today to be testifying beside Keith Yamamoto, vice 
chancellor for research at UCSF, one of America's leading medical-
research universities. He is one of the visionary leaders of the 
precision-medicine movement, and one of the architects of the pivotal 
National Academy of Sciences committee report Toward Precision 
Medicine: Building a Knowledge Network for Biomedical Research and a 
New Taxonomy of Disease. That report talked about the need to develop a 
true molecular taxonomy of disease through a knowledge network that 
patients and physicians could consult and upload information to in real 
time--moving us away from an outdated classification of disease based 
on clinical symptoms and toward one based on molecular pathways.
    We've made and continue to make rapid progress toward precision 
medicine. But the way the FDA approves new medicines is still mostly 
rooted in those clinical signs and symptoms. It is based on cutting 
edge science--cutting edge in 1962, when we couldn't identify the 
molecular mechanisms of disease, let alone design drugs to target them. 
It's how we got the double-blind, placebo-controlled trial (preferably 
two of them) as the ``gold standard'' for approving new drugs. That 
gold standard is increasingly out of date, as we gain confidence that 
we actually are targeting the pathways causing the disease or disorder 
in question. And we can also design trials that, as they proceed, help 
unravel those pathways in a learn-as-we go strategy using targeted 
medicines. We can't continue to ask one narrow question at a time, in 
one trial at a time. The current drug development and approval system 
is too expensive, too time consuming--and, frankly, likely unethical 
when there are better approaches available.
    What we should be doing instead is ensuring that all trials that we 
run attempt to match new medicines to the biology of the patients 
taking the medicine: we know that different patients with the same 
clinical symptoms can respond differently because of a variety of 
genetic factors that affect drug metabolism (or indicate that one 
patient actually has a totally different disease that needs a different 
treatment).
    We're moving in this direction--rapidly in cancer and much more 
slowly for other indications. Far too many drugs are still tested and 
developed based on 1962-era science. It's a one-size-fits-all approach 
to innovation that causes too many drugs to fail that could succeed if 
they were tested in the correct order, in the correct groups of 
patients.
    While the FDA remains concerned about approving ineffective or 
dangerous drugs, alternative approval pathways--based on molecular 
signatures called biomarkers, followed over time in patient registries 
via electronic medical records--could bring potential treatments to 
desperate patients much sooner, with appropriate requirements for post-
market trials verifying long-term safety and efficacy. That approach is 
the exception today but should be the rule. Despite its best 
intentions, and despite repeated pronouncements since 2004, it's clear 
that the FDA isn't embracing clinical-trial transformation to the 
degree that it could. The rapidly falling cost of genetic testing, the 
ability to share tens of thousands or hundreds of thousands of detailed 
patient medical records and the rise of analytic infrastructure, 
``bioinformatics,'' that can rapidly comb through massive, complex 
datasets all make it increasingly possible for individual physicians to 
develop personalized treatment profiles that leap ahead of the FDA's 
approved drug labels--which might be years or decades out of date.
    In 2013, researchers at Stanford University screened FDA-approved 
drugs with known molecular targets, with the molecular expression 
profiles of known tumor types. They found a match between a 50-year old 
class of anti-depressants and small cell lung cancer. They then tested 
the drug in cancer cell lines and animal ok models, and found that the 
match predicted by their software killed tumor cells. It turned out 
that the anti-depressants caused certain cancer cells, called 
neuroendocrine tumors, to self-destruct, through a process called 
apoptosis.
    Neuroendocrine tumors are found in subsets of other types of 
cancer, including pancreatic cancer, so the drugs may be effective 
there as well. The drug quickly went into mid-stage efficacy testing in 
small cell lung cancer, potentially shaving years off development 
timelines. Atul Butte, now a colleague of Dr. Yamamoto's at UCSF and 
one of the developers of this drug repurposing strategy, observed:

        ``We are cutting down the decade or more and the $1 billion it 
        can typically take to translate a laboratory finding into a 
        successful drug treatment to about one to two years and 
        spending about $100,000.''

    That's tremendously exciting; but imagine if we could do this at 
scale. By scanning millions of real-world patient profiles, researchers 
might discover that some patients, ``exceptional responders,'' are 
already being cured with off-label drugs, or rehabilitate medicines 
that the FDA considers ``failures'' in broader populations. Researchers 
could also discover evidence that patients who take certain types of 
commonly prescribed drugs (statins, newer classes of anti-depressants, 
etc.) have lower rates of some types of cancer or Alzheimer's, making 
them powerful off-the-shelf options for preventing or treating chronic 
illnesses. With enough data, the right analytics, and the correct 
strategy for adaptive clinical-trial designs, researchers can unravel 
the right time and sequence for using existing or experimental 
treatments to produce better outcomes and even cures.
    In short, we can harness the many petabytes of data we're already 
collecting to discover, test, and validate new treatment approaches 
without waiting for the FDA's overly cautious bureaucracy to catch up. 
Properly harnessed, data can deliver new treatments and cures at a 
fraction of the time and cost required by the FDA's 50-year-old 
paradigm for testing new drug candidates.
    To revolutionize outcomes for patients, Congress must require the 
FDA to collaborate with the broader scientific community to establish 
clear guidelines for unleashing the full potential of digital medicine 
to transform drug development and enable precision medicine prescribing 
by physicians. Congress must set overarching goals for all Federal 
agencies that touch digital medicine, especially the NIH and HHS: 
streamline bureaucracy, reduce waste, and coordinate research efforts, 
and hold agencies accountable for doing so through annual or biannual 
performance reports.
    We need reimbursement reforms that reward breakthrough innovations. 
Many curative technologies will be very expensive at first, but will 
save the health care system vast amounts of money in the long run by 
reducing hospitalizations, use of nursing homes, and the need for 
repeat physician visits and tests. A one-shot cure for leukemia or 
sickle-cell anemia may be extremely expensive by historical standards, 
but may still be extraordinarily cost effective for public and private 
payers in the long run. New approaches to funding and paying for those 
breakthrough treatments will be needed if we are to address our massive 
entitlement spending challenges for Medicare and Medicaid. A cures 
strategy is a strategy that fiscal conservatives should embrace, as 
long as we are truly paying for outcomes.
    Don't mistake my optimism for naivete. There are real challenges we 
have to overcome to embrace a cures strategy for American health care. 
Existing electronic medical records, for instance, don't capture much 
of the data we need to support rapid development of personalized 
medicine protocols. Many physicians still are not well-equipped to 
interpret results from genetic testing. While Medicare has required 
EMRs for reimbursement purposes, they haven't helped streamline the 
physician's workload or enhance patient care. If anything, they've 
detracted from it.
    But these challenges are largely engineering problems--problems 
amenable to technical solutions. The basic tools enabling precision 
medicine are available and are widely used across the Internet, as well 
as in numerous industries, from retail to the Department of Defense. 
(The Defense Advanced Research Agency is building a machine-learning 
engine to identify and predict all of the genes and signaling networks 
driving all cancers.) Several large hospital systems, such as 
Intermountain Healthcare, are developing sophisticated electronic-
records systems and diagnostics platforms that can serve as proving 
grounds for rapidly scaling up new digital medicine strategies, as well 
as for sharing such data.
    What will it take to enable a cures strategy for America? There are 
many good ideas in the 21st Century Cures legislation; but the biggest 
one is yet to be embraced. The FDA will have to pivot from being a 
gatekeeper to a collaborator, one that works with many stakeholders to 
develop evidentiary standards for enabling digital, precision medicine 
on a national scale. Power will have to shift from centralized 
bureaucrats to empowered patients and physicians. But I have no doubt 
that the country that brought us Google, Intel, Amazon, and Salesforce 
can tackle the challenge of disrupting the FDA's nearly 50 year-old 
framework for advancing innovation.
    Regulators will resist--just as they resisted the demands of AIDS 
activists in the late 1980s. Yet now, as before, when successes 
accumulate, regulators will take credit for embracing reform.
    By sending the 21st Century Cures legislation to the Senate, 
Congress has taken one powerful stride to advance precision medicine. 
Your responsibility is to put your own stamp on the legislation, to 
ensure that the transformational potential of digital and precision 
medicine is realized for patients as swiftly as possible.

    Senator Cruz. Thank you, Dr. Coburn. Mr. Frangione?

   STATEMENT OF CHRISTOPHER FRANGIONE, VICE PRESIDENT, PRIZE 
                      DEVELOPMENT, XPRIZE

    Mr. Frangione. Thank you for having me today. I would like 
to thank the Committee, Chairman Cruz and Ranking Member 
Peters, for the opportunity to testify today.
    We welcome the Committee's attention to solving cures, and 
more importantly we welcome your attention to learning about 
how and when prizes could be one of those tools in helping find 
cures.
    I am the Vice President of Prize Development at XPRIZE 
Foundation, which means my team designs the prizes and brings 
them to launch, and then we hand them off to the operations 
team.
    We are the global leader in the creation of incentivized 
prize competitions. We are a 501(c) non-profit organization. 
Our mission is to bring about radical breakthroughs for the 
benefit of humanity, and we do this by shining a global 
spotlight on the problem, and incentivizing people from around 
the world, and that is important, from around the world to 
solve that problem by offering a multimillion dollar purse. We 
do not care where you live, where you went to school, or what 
you have done before.
    Some of our cures can be figured out by somebody that has 
none of the experience that anybody in this room has, and we 
believe in that. To date, we have awarded five prizes ranging 
from highly fuel efficient vehicles to oil spill clean-up and 
health, worth over $27 million, and we have five active prizes 
right now worth over $64 million, including our recently 
launched Barbara Bush Foundation Adult Literacy XPRIZE focused 
on developing mobile applications for U.S. adult learners that 
are illiterate.
    We also have a health prize in our Life Sciences Group, and 
that is our $10 million Qualcomm Tricoder XPRIZE. This is to 
create a device that can diagnose your health without a panel 
of doctors any time, anywhere.
    We are actually in our testing stages of that right now, 
seven teams delivered 30 prototypes that were actually tested 
on consumers. The idea is that the winning team that most 
accurately diagnoses a set of disease states without a health 
professional, really allowing you to take care of your health, 
and know when it is important to go see a doctor or when you 
can just stay home.
    One of those top seven--they are from four countries--is a 
team of undergraduates from Johns Hopkins University. Some of 
them are industry players and some are from outside the 
industry.
    We are seeing a lot of successes in prizes in the health 
space but there are only a few places where prizes really work 
in health and there are places where prizes do not work in 
health. I will quickly highlight those.
    Where they do work is where new forms across disciplinary 
collaboration is needed, by bringing people together that would 
not otherwise speak to each other or work together, bringing 
the FDA and the innovators together, or where research is under 
funded or there is a small patient pool driving inefficient 
market activity, or where an engineering type solution can come 
to bear.
    I will give you an example. We are working with the 
American Society of Nephrology on a kidney disease prize. It is 
a technology prize to give better patient experience to folks 
and help solve the problem. That is an engineering type prize. 
You can imagine wastewater engineers or people from completely 
outside the industry coming together to solve that problem.
    Where we do not think prizes work, it is where early stage 
research and discovery is needed, that basic research that 
Ranking Member Peters was talking about. It is too hard because 
the teams are looking for that end market and they are going to 
spend too much money and too much time getting there, or where 
these large longitudinal studies are needed. If there is a way 
to bypass those, a prize would be able to work better.
    Even where we believe prizes work well, they can always 
complement traditional forms of funding and should never 
replace them.
    We are also currently exploring a prize in Alzheimer's. We 
are working with 10 individual donors, and Senator Wicker has a 
keen interest in this, and we thank you for that. We have been 
working with his staff on how do we partner on that.
    Prizes are powerful for many reasons. You can leverage your 
investment. If you go and put out a $5 million grant, you are 
going to get $5 million worth of work. If you put out a $5 
million prize, you can expect to get $20 million to $50 million 
worth of work because the teams are spending their own money. 
You are democratizing innovation. You are bringing in those 
outside innovators I talked about, people you would never give 
a grant or contract to because you wouldn't think they were 
going to be successful.
    We find that we do not care if you have 20 years of 
experience or 20 days of experience, as long as you solve the 
problem, you win.
    Prizes allow you to reduce your burden of risk. You are 
putting a lot of risk on the teams. The teams are spending 
their own way and you are only paying for success. In order for 
prizes to work, you have to design them well, and this is where 
we want to help the government do better.
    The teams are not competing for the prize purse. They know 
that only one, two, or three teams are going to get the prize 
purse. They are competing for that end market. What can you do 
to help them get to the end market in terms of education, 
business plans, road shows, in terms of testing, what can NIH 
do for them that would cost them lots of money or somebody 
else, or in terms of access to funders or whomever?
    We believe that prizes work really, really well when you 
have great partners. I will highlight one that we actually have 
with the FDA. We have a partnership with the FDA on our 
Qualcomm Tricoder XPRIZE where the FDA has volunteers that will 
actually answer the phone when our teams call to help them 
understand what they should expect. It is all off the record, 
but it gets the teams from outside the industry some 
understanding of what would happen next in the regulatory 
process.
    For prizes to work, you really need to offer these 
additional incentives.
    In summary, we believe that the public and private sectors 
must work together to utilize every tool available, and prizes 
are one of those tools. It is not the only tool, but it is a 
really, really powerful tool you can use.
    Thank you.
    [The prepared statement of Mr. Frangione follows:]

     Prepared Statement of Christopher Frangione, Vice President, 
                       Prize Development, XPRIZE
Introduction
    On behalf of XPRIZE, I'd like to thank the Committee, Chairman Cruz 
and Ranking Member Peters for the opportunity to testify today. XPRIZE 
welcomes the Committee's attention to incentivizing cure development 
for the world's deadliest diseases. XPRIZE welcomes the conversation 
regarding how and when prizes can be an appropriate and effective 
mechanism for the Federal Government to incent innovation, economic 
growth and solutions to some of the biggest problems facing our Nation 
today. I'm Chris Frangione, Vice President of Prize Development. I am 
responsible for overseeing the design of XPRIZEs from conception to 
launch.
Background
    XPRIZE is the global leader in the creation of incentivized prize 
competitions. As a 501c(3) not-for-profit organization, our mission is 
to bring about radical breakthroughs for the benefit of humanity, 
thereby inspiring the formation of new industries and the 
revitalization of markets. XPRIZE works to accelerate the pace of 
innovation across sectors through the implementation of prizes that are 
audacious, yet achievable. XPRIZE looks to find ``white spaces'' where 
breakthroughs can bring about exponential shifts.
    Founded in 1995, we are the recognized world leader for creating 
and managing large-scale, global, incentive prize competitions that 
stimulate investment in research and development worth far more than 
the prize itself. To date, XPRIZE has successfully awarded five prizes 
with combined purses of over $27 million. These prizes spanned multiple 
sectors, including Progressive Insurance Automotive XPRIZE for highly 
fuel-efficient vehicles, the Wendy Schmidt Oil Cleanup XCHALLENGE for 
better surface oil cleanup technologies, the Northrop Grumman Lunar 
Lander XCHALLENGE, the Nokia Sensing XCHALLENGE, and of course the 
Ansari XPRIZE for commercial space flight. In most of these 
competitions, we collaborated with the U.S. government, the private 
sector, and the research community.
    We also have five active prizes with combined purses of $64 
million. These include the $30 million Google Lunar XPRIZE that 
challenges teams from around the world to land a rover on the Moon and 
send back live video; the $2 million Wendy Schmidt Ocean Health Prize--
a competition to create breakthrough pH sensors that can help us begin 
the process of healing our oceans; the $15 million Global Learning 
XPRIZE that challenges teams to develop new learning solutions to 
empower children and communities around the world; and the $7 million 
Barbara Bush Foundation Adult Literacy XPRIZE, which challenges teams 
to develop mobile applications for adult learners that radically 
improve their literacy skills in just twelve months.
Life Sciences
    Specific to today's discussion, XPRIZE has a Life Sciences Prize 
Group aimed at stimulating innovative breakthroughs in molecular 
biology, stem cell research, bionics, organogenesis, synthetic biology, 
and artificial intelligence in order to improve health care and extend 
healthy living. XPRIZE seeks to accelerate the real-world impact of 
science, technology, and information related to the worldwide 
optimization of health and the elimination of illness and disease.
    We recently awarded $2.25 million to competition teams for the 
Nokia Sensing Challenge, a medical sensor challenge aimed at 
accelerating the availability of hardware sensors and software sensing 
technology that individuals use to access, understand, and improve 
individual health and well-being. We believe innovation in sensing is 
an important component to creating a means for appealing, usable, 
smarter digital health solutions.
    DNA Medicine Institute (DMI) of Cambridge, Massachusetts, took home 
the grand prize of $525,000 for developing a portable device capable of 
running hundreds of clinical lab tests on a very small sample of blood. 
Results are available in a matter of minutes and are highly accurate. 
Five other teams--from Switzerland and England, and Illinois, Minnesota 
and California in the U.S.--also took home $120,000 each for their 
sensing innovations.
    Our current life sciences prize is the Qualcomm Tricorder XPRIZE, a 
$10 million global competition to stimulate innovation and integration 
of precision diagnostic technologies, helping consumers make their own 
reliable health diagnoses anywhere, anytime.
    Advances in fields such as artificial intelligence, wireless 
sensing, imaging diagnostics, lab-on-a-chip, and molecular biology will 
enable better choices as to when, where, and how individuals receive 
care, thus making healthcare more convenient, affordable, and 
accessible. We will award the team whose technology most accurately 
diagnoses a set of diseases independent of a healthcare professional or 
facility, and which provides the best consumer user experience with 
their device. In fact, we just recently down-selected to the top 7 
teams from 4 countries--the United States, Taiwan, Canada, and India--
who are currently in the process of testing.
    With that said, understand that prizes don't work well across the 
entire healthcare spectrum owing to major barriers to entry, cost and 
time-intensity. So, where do we think they do work well?

   Where new forms of cross-disciplinary collaboration are 
        needed;

   Where research is underfunded or there is a small patient 
        pool driving inefficient market activity; and

   Where ``engineering'' type solutions could bring 
        breakthroughs to bear.

    Where prizes don't work well in healthcare (and where other 
programs should be continued):

   Early stage research/discovery; and

   Large, longitudinal research efforts which are too long for 
        a prize (10+ year studies).

    Even where we believe prizes work well, they can always complement 
traditional forms of funding, and should not be seen as a replacement 
for traditional forms of funding.
    Currently, we are exploring additional prizes in organogenesis, 
kidney disease and Alzheimer's.

   Organogenesis: Nationwide, the supply of viable organs 
        simply does not meet the growing demand. In 2012, 114,690 
        transplants were performed according to the World Health 
        Organization's Global Observatory on Donation and 
        Transplantation. This number of transplants represents only 
        approximately 10 percent of the roughly one million organs 
        needed worldwide. It also demonstrates stagnant growth from the 
        numbers reported in 2008, largely due to a lack of growth in 
        the number of available organs donated for transplant. XPRIZE 
        is exploring a prize that challenges innovators to demonstrate 
        the successful function of a bioengineered human tissue and/or 
        human organ (heart, lung, liver or kidney).

   Kidney Disease: Kidney disease is caused by approximately 
        100 different diseases and disorders. Kidney disease treatment 
        has seen little innovation in nearly 40 years. Investment and 
        innovation is low and the market is dominated by large, for-
        profit dialysis providers that meet Medicare reimbursement 
        standards. Significant research is needed to address those 
        causes, but we do not develop XPRIZEs for basic research. This 
        prize is designed to be a bridge between the current state of 
        treatment (which is very expensive and has terrible outcomes 
        for patients) and potential and/or the ability to grow new 
        organs for transplantation. An XPRIZE will bring public 
        awareness to the problem of kidney disease and the lack of 
        innovation in treatment by focusing a community of innovators 
        on key breakthroughs. Thus, XPRIZE is working in partnership 
        with the American Society of Nephrology to develop and 
        capitalize this prize.

   Alzheimer's: In partnership with 10 individual donors, we 
        are exploring an Alzheimer's prize. While we are in the very 
        early stages, we are seeking to improve diagnostics and 
        effective treatments to alleviate symptoms of the disease. 
        Senator Wicker has a keen interest in this issue and we have 
        had very productive conversations with his staff about ways to 
        encourage relevant agencies like NIH and OSTP to support a 
        prize around Alzheimer's. We applaud his leadership aimed at 
        accelerating discovery and development of cures for Alzheimer's 
        and related dementia.
The XPRIZE Prize Model
    XPRIZE believes we can make the impossible possible by creating an 
infrastructure where our world's innovators create breakthroughs that 
both catalyze industries and have a measurable benefit to humanity. We 
do this via large-scale, incentive prize competitions.
    Prizes are useful tools for solving problems for which the 
objective is clear, but the way to achieve it is not. By attracting 
diverse talent and a range of potential solutions, prizes draw out many 
possible solutions--many of them unexpected--and steer the effort in 
directions established experts may never take, but where the best 
solution may nonetheless lie.
    Prizes are powerful for many reasons, the most important of which 
include leveraging your investment, democratizing innovation, and 
reducing risk.
    Throughout the course of a competition, teams spend their own money 
to compete for the prize. We find that teams spend research and 
development dollars that, aggregated across all teams, is four to ten 
times the value of the prize purse. So, you could give a grant or 
contract worth $5 million and get $5 million worth of research and 
development, or you can put out a prize with a purse of $5 million and 
get upwards of $20 to $50 million worth. In a time of fiscal 
constraint, prizes are an extremely efficient tool to help spur 
innovation.
    At XPRIZE we say, ``Why find the needle in the haystack when that 
needle can find you?'' Hosting a prize does just that. Prizes inspire 
teams from around the world to compete to achieve your goal--and often 
those that are inspired are not the current industry incumbents. Some 
solvers are from tangential fields and have a solution that could be 
tweaked to solve the challenge at hand, while others possess little to 
no experience at all. A prize does not care if someone has 20 years of 
experience or 20 days of experience--as long as they meet the goal of 
the competition. Using a traditional grant or contract, you would be 
very unlikely to find such innovators. Your focus would fall on the 
known players who comprise your target audience. Let me give you some 
examples. In the 1714 Longitude Prize--established by the British 
government to reward the precise determination of a ship's longitude--
everyone assumed it would be a ship's captain or astronomer who would 
win. But it was a clockmaker. In the 1919 Orteig prize for the first 
person to fly between New York and Paris non-stop, everyone assumed the 
winner would be one of the aviation leaders. They all failed because 
they were too conservative in the design of their planes and how they 
flew. Instead, it was won by a relatively unknown, 25 year-old mail 
pilot, Charles Lindbergh. In our Progressive Insurance Automotive 
XPRIZE, we had a group of high school students surpass much of the 
competition. In our Wendy Schmidt Oil Cleanup XCHALLENGE, a tattoo 
artist made it into the finals. And although his team did not win, it 
still did better than the industry standard at that time. In fact, in 
that prize, four of the ten finalist teams were new to the industry. 
Most likely you would have never awarded a grant or contract to these 
innovators because (1) you would have seen it as too risky, (2) you 
never would have known they existed, and (3) they never knew they had 
an interest in solving the challenge prior to the prize. To get 
disruptive innovations, we need to democratize innovation--encouraging 
anyone, from anywhere, with any background, to help solve our grandest 
challenges.
    Third, prizes reduce risk. What separates prizes from traditional 
R&D and other funding mechanisms is that the burden of risk is wholly 
on the teams, since the prize is designed only to reward success. That 
is, you only pay when a team meets your goal. In a traditional grant or 
contract, you would award it to the known players because that is less 
risky for you. But the known players want to be successful, so they are 
not going to take those risks that are necessary to result in a truly 
transformational breakthrough. Failure is a necessity of invention, 
because innovation must build upon unsuccessful attempts. Those 
competing for the prize are willing to embrace this risk because they 
have little to lose. As we say at XPRIZE, ``The day before anything is 
a breakthrough, it's a crazy idea!''
    As you can see, prizes are extremely powerful and should be one of 
the primary tools in any innovation toolkit.
    But, for prizes to work well, you need to ensure they are designed 
well. I just spoke about passing the risk to the teams and paying only 
for success. That leads to the question of why teams compete for 
prizes. Many point to the prize purse--and that is true--but the prize 
purse is only one of the incentives for teams to compete. We have found 
the best prizes offer valuable operational incentives for teams to 
compete. A prize purse is often not enough for teams to compete because 
teams know that only one or two or three of them will win the prize 
purse.
    The teams are really competing for the end market--for the ability 
to go out into the marketplace and become a profitable company. As 
such, we have found that the best operational incentives align with 
helping teams prepare to win that market--these include incentives such 
as marketing, testing, milestone prizes, partnerships, and education.
    A well-designed prize markets the prize, the teams, and the 
solutions. This allows the teams to show their progress and results to 
the world--including potential funders and customers.
    Testing is key to incentivizing teams to compete. Often teams come 
out of our competitions with independent, third party verified data--
data they can take to the marketplace to help raise funding or data 
that they can show to potential customers. Sometimes this testing costs 
us millions of dollars, but it is necessary to prove a winning solution 
works and has the added benefit of being extremely valuable to teams. 
For example, in our Adult Literacy XPRIZE, the top five finalists will 
have their solutions tested on 1,000 adult learners each over a 12-
month period. Imagine a small startup doing this testing on its own, or 
even a large company. It would be very difficult, but the value of the 
data collected is enormous.
    Milestone prizes are mid-way prizes that we offer during many of 
our competitions. They reward teams for certain successes along the way 
or reward those teams that make it through a down select. These are 
extremely valuable to teams insofar as they provide them with a small 
amount of funding to push forward and get press around their early 
wins. That press, again, helps them to raise funds and/or bring in 
potential customers.
    Partnerships in terms of access to potential funders or investment 
funds, additional testing, advanced market commitments, and the like 
provide teams with other ways to market, test, and raise funds. We try 
to develop partnerships with organizations relevant to the prize area. 
I will focus on these partnerships more a bit later in this testimony.
    We all know that sometimes the best innovators are not the best 
business people. Because the way to truly disrupt an industry or change 
the world through the prize is to get as many of the teams out in the 
market place with successful technologies--not just the winners--we 
believe that significant effort should be placed on educating the teams 
on how to formulate business plans, perform road shows to raise money, 
understand the regulatory impacts of their business, and other valuable 
business functions. Without this education, the prize may end up with 
good solutions, but the teams may not be able to commercialize the 
solutions.
    In order to get the best results, we believe that you must provide 
additional incentives and value to the competing teams beyond the prize 
purse.
Prizes are One Way to Spark the Innovation Cycle
    We strongly believe that the private and public sectors must work 
together to utilize every tool available to facilitate meaningful 
innovation that drives economic growth. Prizes are not a replacement 
for traditional financing mechanisms, but are augments to them. They 
are one of many innovation tools that agencies and the Federal 
Government should consider utilizing in tandem with other financial 
mechanisms such as grants, contracts, investments and incentives.
    It is important to note that the resulting technology solutions are 
not replacements for behavioral change. Understanding how and where 
prizes work best will help ensure that they are used most efficiently 
and effectively. One of the hallmarks of an XPRIZE is its ability to 
create and/or catalyze industries. In this regard, the XPRIZE's impact 
does not begin at its launch, but with its award. Prizes, therefore, 
are the beginning, not the end, of the innovation cycle, maximizing the 
impact on emerging industries, scaling new ideas, and ultimately 
contributing to the economy.
    Prizes provide a mechanism to discover breakthroughs that generate, 
operate and become part of the industrial base. They can catalyze an 
industry in order to have a real set of benefits for humanity. When an 
industry undergoes a catalyzing event as the result of a breakthrough, 
everyone benefits--humanity, industry, and the public perception of 
what's possible.
Importance of Policy to Send a Signal
    The Federal Government has rightly recognized the power of prize 
competitions to draw out the latent innovative vision that simply 
hasn't found the means or the outlet to reach its potential. Following 
passage of the 2010 America COMPETES Act, which granted agencies the 
authority to operate prizes, and President Obama's ``Strategy for 
American Innovation,'' which called on agencies to use Grand Challenges 
as an innovation tool, there has been an up-tick in the utilization of 
prizes by the Federal Government. In 2015 alone, 30 agencies self-
reported a total of 97 prize competitions and challenges. The prize 
opportunities ranged in value from as low as $2,500 to greater than $1 
million, across industry sectors. These prizes have enabled government 
agencies to establish ambitious goals, pay only for success, and 
utilize novel approaches from outside partners to achieve their goals.
    Now, Congress has an opportunity to once again use policy as a 
driver for innovation by passing the Science Prize Competitions Act--
which passed the House of Representatives earlier this year. We look to 
the leadership of this subcommittee and the full Senate Commerce 
Committee to complement the bipartisan efforts of the House by 
introducing and passing policy supportive of prizes, much as it did in 
2010 with the America COMPETES Act. We believe legislation that 
provides guidance to utilize high-impact prizes as an economically 
efficient way to incent innovation sends a strong signal to Federal 
agencies, and also to the private sector and innovation community, that 
the Federal Government believes in the power of prizes as a source of 
innovation.
The Value of Public-Private Partnerships
    At the crossroads of policy-driven innovation and ``garage ideas'', 
I have witnessed remarkable breakthroughs brought about by critical 
partnerships between the public and private sector. For example, XPRIZE 
partnered with the Department of Energy to support a $10 million global 
competition to inspire a new generation of viable, safe, affordable, 
and super fuel-efficient vehicles. We brought together government and 
the private sector, including our lead sponsor Progressive Automotive 
Insurance. Our top prize-winner, Oliver Kuttner, a commercial real 
estate developer who loved to tinker with cars since taking auto shop 
in high school, maxed out his wife's credit cards to invest in chasing 
his dream--which culminated in his construction of a four-seat, 830-
pound vehicle that ran on a one-cylinder, ethanol-fueled internal 
combustion engine that achieved 102.5 miles per gallon fuel efficiency. 
Today, Kuttner's company, Edison2, is continuing to develop extremely 
light, super fuel-efficient vehicles including an electric version. 
That is the kind of citizen innovation we take pride in fostering at 
XPRIZE.
    Another ongoing example of government playing a supportive role 
even without supplying any financial support is the Qualcomm Tricorder 
XPRIZE. The U.S. Food and Drug Administration (FDA) is an integral 
partner in the effort, which XPRIZE is supporting with funding from our 
lead sponsor, the Qualcomm Foundation. In addition to assisting teams 
in preparing for future regulatory clearance post-competition, this 
prize competition is helping the FDA maximize its own readiness for new 
regulatory submissions in the direct-to-consumer diagnostics space.
    Partnerships such as these have a history of maintaining a 
commitment to scientific excellence by guiding the conception, safety, 
and deployment for various technologies that have paved the way for the 
breakthroughs of today.
Conclusion
    We strongly believe that the private and public sectors must work 
together to utilize every available tool to facilitate meaningful 
innovation that drives economic growth. As Congress explores ways to 
innovate in healthcare, prizes are one such essential tool that 
agencies, and the private sector, can, and should, consider.
    Policymakers can encourage greater and more strategic use of prizes 
by agencies by supporting prize policy such as the House-passed 
``Science Prize Competitions Act''. Passage would send a signal to 
agencies, the private sector and the innovation community that the 
Federal Government views the prize mechanism as an important solutions 
driver.
    We look forward to continuing the dialogue with Congress about the 
power of prizes to unlock innovation towards finding cures for 
diseases, in addition to some the world's greatest challenges.

    Senator Cruz. Thank you, sir. Mr. Huber?

STATEMENT OF PETER W. HUBER, SENIOR FELLOW, MANHATTAN INSTITUTE

    Mr. Huber. Thank you, Chairman Cruz, for having me here 
today, and thank you also for your list of diseases you 
mentioned specifically in your opening remarks, and also the 
thousands and thousands of rare diseases. Senator Peters, you 
mentioned ``what the next big thing is.'' The next big thing is 
already here.
    I am quite confident we actually have today in hand the 
tools that will end up, and here the phrasing gets a little 
delicate. I would still call it ``curing'' but you would 
probably call it ``preventing.''
    I think almost every disease you mentioned, Chairman Cruz, 
has a genetic origin of some kind. We are born with those 
diseases. We just don't see the symptoms until we are much 
older, but the genes that make it likely that they will develop 
are embedded in us, and we know what they are. We have gotten 
very good at tracking diseases back down to their origins.
    In the last five years or so, we have also developed, not 
me personally, but we have developed a remarkable array of 
tools that let biochemists reach down into live cells and turn 
genes on or off or chop them out or embed a new one in there. 
These have been tested quite intensively in labs. They do work. 
We can actually go in and take away bad genes. We can replace 
them with sort of neutral genes or quite often other genes that 
make people extremely good controllers of disease-causing 
factors.
    If you are born with the right genes, you will never 
develop high cholesterol because you have a feedback mechanism 
inside you that is based on a mutant of PCSK9, (I am sure that 
clarifies things), and it will keep your cholesterol levels low 
throughout your life. We know what it is. They have a drug now 
that simulates it as well.
    We can go in there. We can take problem genes out. This is 
quite controversial. Many people think immediately oh, we are 
going to have designer babies and all sorts of abuses of these 
things, but we are not talking about that at all.
    By the way, we also have, finally, the discovery of 
interfering RNAs by Philip Sharp, Nobelist at MIT, that has led 
to a whole new category of drugs, which do not involve the 
genetic engineering but they can be prescribed to turn genes on 
or off. If you have bad genes, at the very least, you can 
neutralize them.
    Why are these treatments not out there already? They are 
out there in labs. They are being tested in clinical trials. 
This is not pure speculation by any means. I will jump to the 
end. If we want to get them out there fast, we should get the 
FDA to begin not generally approving their use by doctors, that 
would be much too fast, but getting them out to doctors who 
specialize in the treatments of these various disorders and 
have a lot of experience with struggling to cure the currently 
incurable.
    We should get them out under ``treatment IND'' protocols 
which leave the doctors with broad flexibility to test out 
different options and try to understand and get early reads on 
whether these treatments are working, and we should get that 
data pooled. It should go into databases that begin to tell us 
which patient profiles are likely to respond well to these 
treatments, hopefully most of them, but it is almost never the 
case that a drug or anything else is 100 percent effective. 
There will always be some variations of patient chemistry out 
there that just do not let it work right.
    These are serious treatments. You do not want to begin 
going in reprogramming people's bodies, unless you are pretty 
confident you have a high level of success, and we are going to 
get that only by letting doctors develop this stuff, gather the 
data, and get criteria which will let us predict which patients 
will respond well.
    The FDA does not do that at all often. I think if we do 
that, if we unleash these tools to the right doctors and let 
them use them, they will be the first ones to know that this 
drug ought to be out there more generally available for doctors 
with somewhat less expertise than they bring to bear.
    What I am describing falls somewhere between ``adaptive 
trials,'' which the FDA has endorsed with lukewarm enthusiasm, 
and the ``treatment INDs,'' which were mentioned by Dr. Coburn, 
the notion that yes, we can learn a lot by treating patients 
with stuff we have and learning as we go. The standard reason 
for not allowing that and requiring placebos and so on has 
always been doctors are subject to selection bias, they really 
hope it is going to work so they see success even when it is 
really failing.
    I think that is a problem, a legitimate problem, but you 
know, there are plenty of very good high level centers where 
the doctors really are committed to getting things right and 
working on the new cures. We ought to trust them more than we 
currently do.
    It will take quite some doing to get any of this accepted 
by the FDA, but we should be moving in that direction.
    What would the doctors be learning that would not be 
learned in a standard FDA trial? Let's say I am going to go 
begin reprogramming somebody's body, which is what we are 
talking about, you begin asking yourself what do I reprogram, 
do I do this for the whole body, do I do it for stem cells, and 
then return them to the body and let them proliferate and sort 
of spread the wealth and so on.
    We are talking here about a completely new kind of 
treatment. A gene is not a drug, right. You put a real good 
gene into somebody's body, it does absolutely nothing on its 
own. It has to rely on enzymes and adjacent genes. They work 
collaboratively. It is basically one set of instructions in a 
much larger program.
    One hopes most of the time they will work just fine, you 
put in the gene, and everybody is pretty much the same 
everywhere else, but it probably won't work out that way. You 
have to begin looking systematically for the molecular criteria 
that will make such treatments work well. It is a procedural 
thing at the FDA. It is arcane. Most people's eyes glaze over 
on this, but we have to get these treatments out there.
    I might add finally we are so certain about the genetic 
correlations in a number of these diseases that to my mind, and 
I am not a doctor and it is not for me to think these through 
for doctors, but I think it is beginning to border on the 
unethical if the FDA says sure, we have this genetic 
engineering system that may be--for example, I am taking it out 
of the blue but it is only because it is a much discussed 
example--if your daughter is born carrying two BRCA genes, she 
is probably going to get breast cancer once she is older. It is 
almost that certain. Not 100 percent certain but somewhere up 
there.
    We know what the genes are. We can detect them an hour 
after she is born or we can wait 20 years later. Do we wait to 
post-puberty because there is no breast tissue to go cancerous 
before that?
    These genes are going to be there from day one, so how soon 
do we go there? Do we have to fix cells all over the body? 
These are things that doctors think through, they try out, they 
explore. It does not currently happen under any FDA protocols. 
We have to get doctors involved earlier in this business.
    I am past my time. My apologies.
    [The prepared statement of Mr. Huber follows:]

    Prepared Statement of Peter W. Huber, Senior Fellow, Manhattan 
                               Institute
    The FDA's mission as set out in statutory language written over 50 
years ago, is to see to it that drug companies generate and doctors 
receive on the FDA-approved label that accompanies ever drug, the 
information they need to prescribe the drug safely and effectively. For 
the most part, the agency continues to use drug trial protocols 
established in the 1960s, well before pharmacology developed the 
diagnostic and tools for designing precisely targeted drugs that make 
precision medicine possible.
    The clearest evidence that the FDA has not kept up with the 
advances in the science and technology of precision medicine is that it 
is losing its grip on how drugs are prescribed. In steadily growing 
numbers, doctors that specialize in the treatment of complex diseases 
are taking the initiative, using the state-of-the art technologies and 
analytical tools to develop the science themselves, and relying on 
their own analyses and databases to guide the safe and effective 
prescription of drugs to their patients.
    And that fact alone points to a serious problem. Doctors can't take 
the lead in working out how to prescribe a drug to the right patients 
until the drug has been approved. Which under the existing statutory 
language means that the drug first has to perform well in FDA-approved 
clinical trials. But to perform well in a clinical trial a drug has to 
be prescribed to the right patients.
    It has become clear in recent years that traditional symptom-based 
definitions of diseases that are used to frame most clinical trials 
ignore what matters most in modern pharmacology--the same symptoms can 
be caused by a cluster of different molecular processes, and a 
precisely targeted drug can only control one them. A drug's efficacy 
and safety can also depend on a wide range of other molecular factors 
that are hard to identify in advance. We still speak of ``developing a 
drug,'' but ``developing the patients'' would be more accurate. Both 
matter, of course--pharmacology isn't a science of one hand clapping--
but all the complex biochemical details lie on the patients' side of 
the applause.
    Oncologists have led the way in recognizing the limitations of the 
FDA's drug-approval process. In 2007, the Cancer Biomarkers 
Collaborative (CBC), a coalition of cancer experts drawn from the 
American Association for Cancer Research, the FDA, and the National 
Cancer Institute, started investigating the ``growing imperative to 
modernize the drug development process by incorporating new techniques 
that can predict the safety and effectiveness of new drugs faster, with 
more certainty, and at lower cost.'' A summary of the conclusions 
published by the CBC in 2010 noted that ``traditional population-based 
models of clinical trials used for drug approval are designed to guard 
against bias of selection, which may form the antithesis of 
personalized medicine, and accordingly, these trials expose large 
numbers of patients to drugs from which they may not benefit.''
    Other medical disciplines are following oncology's lead. Two years 
ago, for example, the National Institute of Mental Health (NIMH), the 
world's largest funder of mental health research, announced that it was 
``re-orienting its research'' away from the disease categories defined 
by psychiatrists in their Diagnostic and Statistical Manual of Mental 
Disorders. Henceforth NIMH funded researchers will be encouraged to 
search for molecular pathways that transcend the symptom-based 
categories. In the words of the NIMH's director ``patients and families 
should welcome this change as a first step towards `precision 
medicine,' the movement that has transformed cancer diagnosis and 
treatment.''
    Other diseases are being analyzed in similar ways. The National 
Institutes of Health's Accelerating Medicines Partnership, recently 
announced a $230 million, five-year plan to collaborate with 10 big 
drug companies and eight non-profit organizations focusing on specific 
diseases, to unravel the molecular pathways that lead to Alzheimer's, 
Type 2 diabetes, rheumatoid arthritis, and lupus--and to investigate 
new methods to track a disease's progress that could provide early 
reads on how a drug is affecting it. The objective is to ``ensure we 
expedite translation of scientific knowledge into next generation 
therapies.'' A Pfizer representative emphasized that the Alzheimer's 
project will focus on developing a better understanding of the 
molecular pathways and networks that propel the disease. It will also 
include searches for molecular factors that can be used to develop 
drugs that intervene much earlier, intercepting diseases before they 
become irreversible and untreatable.
    The advent of tools to unravel the molecular pathways of diseases, 
and drugs precisely designed to target them have called into question 
the conventional symptom-based medical taxonomy of diseases, and thus, 
indirectly, the central role it still plays at the FDA. In 2011, a task 
force convened by the National Research Council (NRC) released Toward 
Precision Medicine, a report written at the request of the NIH to 
address the need for ``a `New Taxonomy' of human diseases based on 
molecular biology.'' We do indeed need one, the report concludes, and 
to facilitate its development, the report recommends the creation of a 
broadly accessible ``Knowledge Network'' that will aggregate data 
spanning all molecular, clinical, and environmental factors that can 
affect our health. Working out the molecular etiology of complex 
diseases will require an analysis of ``biological and other relevant 
clinical data derived from large and ethnically diverse populations'' 
in a dynamic, learn-as-you-go collaboration among biochemists, clinical 
specialists, patients, and others.
    The report also includes an illustration of how we currently rely 
on dumb luck to help drugs that target complex disorders stumble their 
way through the FDA's testing protocols. In 2003 and 2004 the FDA 
granted accelerated approval to two drugs, Iressa and Tarceva, on the 
strength of their dramatic therapeutic effects in about one in ten non-
small-cell lung cancer patients. Over the course of the next two years 
the drugs were prescribed to many patients whom they didn't help, and 
several follow-up clinical trials seemed to indicate that the drugs 
didn't work after all--probably, we now know, ``because the actual 
responders represented too small a proportion of the patients.'' 
Meanwhile, the report continues, the molecular disassembly of lung 
cancer had begun its explosive advance. In 2004, researchers identified 
the specific genetic mutation that activates the EGFR enzyme that these 
two drugs inhibit. ``This led to the design of much more effective 
clinical trials as well as reduced treatment costs and increased 
treatment effectiveness.'' Under current, blinded trial protocols, 
however, such launches often depend on luck and circular science. The 
original clinical trial happens to include just enough of the right 
patients to persuade the FDA to license the drug. The fortuitously and 
just barely successful completion of the first clinical trial then 
starts the process that may ultimately supply the information that, 
ideally, would have been used to select the patients to include in that 
first trial.
    In early 2005 Iressa became the first cancer drug to be withdrawn 
from the U.S. market after the required follow-up trials failed to 
confirm its worth to the FDA's satisfaction. After further trials 
failed to establish that Iressa extends average patient survival, and 
serious side effects surfaced in some patients, the manufacturer halted 
further testing in the United States.
    We do however, know that Iressa survival times and side effects 
vary widely among patients. And we have a pretty good idea why. As 
Bruce Johnson, a researcher at Boston's Dana-Farber Cancer Institute 
and one of the doctors involved in the original Iressa trials, remarked 
in 2005, ``For us as investigators, at this point, there are at least 
20 different mutations in the EGF receptors in human lung cancers, and 
we don't know if the same drug works as well for every mutation . . . 
which is why we want as many EGFR inhibitor drugs available as possible 
for testing.''
    When the FDA rescinded Iressa's license, it allowed U.S. patients 
already benefiting from its use to continue using it. One such patient 
who started on Iressa in 2004, when he had been given two to three 
months to live, was still alive eight years later, and walking his dogs 
several miles daily. Rare cases like his have no influence at the FDA 
but are of great interest to doctors and researchers. In 2013, the 
National Cancer Institute (NCI) announced its Exceptional Responders 
Initiative. Four major research institutions are analyzing tissue 
samples, collected during clinical trials of drugs that failed to win 
FDA approval, to identify biomarkers that distinguished the minority of 
patients who did respond well from the majority who did not. The 
analysis of roughly a decade of prior trials in the first year of the 
study identified about 100 exceptional responders. As of March 2015, 
more than 70 cases have been provisionally accepted for further 
analysis, with hundreds more anticipated. Accepted tumor tissue samples 
``will undergo whole-exome, RNA, and targeted deep sequencing to 
identify potential molecular features that may have accounted for the 
response.'' When the molecules that distinguish the exceptional 
responders align with what the drug was designed to target, these 
findings could well lead to the resurrection of drugs that might have 
helped many patients over the last decade.
    In one such trial the drug failed to help over 90 percent of the 
bladder cancer patients to whom it was prescribed. But it did wipe out 
the cancer in one 73-year old patient. A genetic analysis of her entire 
tumor revealed a rare mutation that made her cancer sensitive to the 
molecular pathway that the drug modulates. Similar mutations were found 
in about 8 percent of the patients, and the presence of the mutation 
correlated well with the cancer's sensitivity to the drug. Similar 
analyses of a decade of other trials have identified about 100 
exceptional responders and could well lead to the reexamination and 
approval of drugs that could have started saving many lives years ago.
    Which brings us back to why doctors who specialize in treating 
complex diseases are increasingly confident that they should work out 
how to practice precision medicine independently, without relying on 
FDA-approved labels. In brief, it comes down two things. Researchers 
have developed the tools needed to work out the details of how 
molecular processes that go wrong deep inside our bodies spawn and 
propel diseases. And drug designers have developed a remarkable array 
of tools to design precisely targeted drugs that can disable or control 
those pathways.
    New devices now make it quite easy to collect large amounts of 
genetic and other medically relevant data from many people. Amazon and 
Google are reportedly in a race to build the largest medically focused 
genomic databases. According to Google's genomic director of 
engineering, Google aims to provide the best ``analytic tools [that] 
can fish out genetic gold--a drug target, say, or a DNA variant that 
strongly predicts disease risk--from a sea of data.'' Academic and 
pharmaceutical research projects are currently the company's biggest 
customers, but Google expects them to be overtaken by clinical 
applications in the next decade, with doctors using the services 
regularly ``to understand how a patient's genetic profile affects his 
risk of various diseases or his likely response to medication.''
    Medicine will also benefit from the fact that the statistical tools 
needed to unravel causal pathways from complex datasets are of great 
interest in other sectors of the economy as well. The ``overarching 
goal'' of the ``Big Mechanism'' program recently launched by the 
Defense Department's Advanced Research Project Agency (DARPA) is to 
develop methods to extract ``causal models'' from large, complex 
datasets and integrate new research findings ``more or less immediately 
. . . into causal explanatory models of unprecedented completeness and 
consistency.'' To test these new technologies DARPA has chosen to focus 
initially on ``cancer biology with an emphasis on signaling pathways.'' 
It's a good call, and excellent news for oncology. Viewed from a data 
analytics perspective, the variability, complexity, and adaptability of 
cancer cells and terrorists have much in common.
    Drug companies rely on our ability to expose disease-causing 
molecular chain reactions to identify key targets that if disabled or 
controlled by drugs will cure the disease. The tools currently used to 
design precisely targeted drugs have been widely used in developing 
effective later stage treatments and clearly have the potential to 
identify and take control of the factors that launch diseases at the 
outset. Many serious disorders develop slowly however, and there is 
little doubt that successful interventions at a very early stage will 
often be the best, sometimes the only, and almost always the most cost-
effective way to beat them. The development of effective cures will 
depend on tracing their causes back to their molecular origins and 
addressing the root causes of the disease rather than attempting to 
treat the symptoms that surface much later.
    The tracing is already is already well underway. We know that the 
genetic seeds of many disorders are planted at the time of conception 
and lie dormant inside our bodies for many years before they start 
morphing into lethal diseases. An array of tumor suppression and DNA 
repair genes, for example, protect most of us from cancer for most of 
our lives. Hereditary variations in those genes affect how well they 
perform, and some are strongly linked to the development of specific 
cancers--breast, skin, or colon cancer, for example--or, in some rare 
cases, a propensity to develop cancers throughout the body.
    Now emerging are gene therapies that offer a broad range of 
radically new medical interventions. Researchers have recently mastered 
powerful and flexible methods for selectively adding, deleting, or 
replacing genes in a live cell's genome. These tools can do in weeks 
what often required months or years of work using previous gene editing 
tools. And a new family of ``RNA interference'' drugs have the 
potential to regulate gene expression and thus take direct control of 
genes involved in the earliest stages of disease development. Most gene 
therapies are still in the investigational stages of development. But 
their feasibility and great promise is no longer in doubt. And no other 
currently known process has the potential to provide complete cures for 
the many rare but often deadly disorders caused by hereditary genetic 
mutations.
    The next step could well be vaccine-like treatments that provide 
protection before cancers and other disorders start to develop. 
Researchers are investigating a number of different vectors for 
reprogramming the genetic code of cells inside a patient's mature 
tissues and organs. In early trials, for example, young adults blinded 
by a rare genetic flaw experienced significant visual improvements soon 
after a viral vector was used to insert a healthy version of the gene 
directly into their retinal cells. Similar procedures are reportedly 
being developed to treat cystic fibrosis, brain cancer, and muscular 
dystrophy.
    Genetic therapies administered early enough to replace pathological 
variations in gene repair and tumor suppression genes could offer many 
people a significant, lifelong reduction in their risk of succumbing to 
what is currently the second most common cause of death in the United 
States. Rare variations in a single gene make some people prone to 
develop very high levels of cholesterol and suffer heart attacks in 
their teens. A more common variation in the gene has the opposite 
effect, and researchers are investigating the possibility of 
reprogramming cells to replace the high cholesterol versions of the 
gene with the low-cholesterol versions. The HIV retrovirus pries its 
way into our immune system cells by latching one of two proteins on the 
cells' surfaces. A recent trial demonstrated the therapeutic potential 
of genetically engineering a patient's own immune-system stem cells to 
replace or disable the gene that codes for the HIV-entry protein. In 
the words of one of the doctors involved in the trial ``This study 
shows that we can safely and effectively engineer an HIV patient's own 
T cells to mimic a naturally occurring resistance to the virus, infuse 
those engineered cells, have them persist in the body, and potentially 
keep viral loads at bay without the use of drugs.''
    While NIH researchers, doctors, and drug companies have 
demonstrated their confidence in relying on the analysis of the 
disease-causing molecular pathways when designing drugs and prescribing 
them to patients, the FDA has made clear that it will almost never 
approve a new drug on basis of a clinical demonstration that the drug 
can take shut down or repair a pathway. The FDA asserts--correctly--
that a drug's demonstrated effect on a single, disease-specific 
molecular pathway often fails to predict its ultimate clinical effect 
on patient health.
    But much of the time we already know why, or can find out if we 
wish to. However precisely targeted it may be, a drug's overall impact 
will almost always also depend on how it interacts with other parts of 
the patient' body. How the drug is metabolized by the liver, tolerated 
by immune system, or interacts with other parts of the patient's body 
to cause side effects can affect the drug's overall performance. Cancer 
cells and HIV virion mutate rapidly, so the disease itself keeps 
changing and effective treatment will then required more than drug 
prescribe to track the changes. Factors like these however, are at 
least equally likely to undermine predictions made by the FDA-approved 
label when its contents are based on what was learned in a conventional 
clinical trial.
    The only way to work out how most of such factors affect a drug's 
performance is by prescribing it to a wide variety of patients and 
analyzing how differences in patient chemistry affect is safety and 
efficacy. In a tacit admission of the limits of its own trial 
protocols, the FDA itself helped launch a nonprofit consortium of drug 
companies, government agencies, and academic institutions to compile a 
global database of ``rare adverse events'' caused by drugs and link 
them to the genetic factors in the patients involved.
    The need to involve doctors and patients in the process of 
developing precision prescription protocols was also recognized in a 
2012 report ``on Propelling Innovation In Drug Discovery, Development, 
and Evaluation'' written by the President's Council of Advisors on 
Science and Technology (PCAST). ``Most trials. . .imperfectly represent 
and capture. . .the full diversity of patients with a disease or the 
full diversity of treatment results. Integrating clinical trial 
research into clinical care through innovative trial designs may 
provide important information about how specific drugs work in specific 
patients.''
    The British government appears to have reached similar conclusion. 
It recently announced plans to integrate clinical treatment into drug-
development efforts on a national scale. As described by life-sciences 
minister George Freeman,''our hospitals will become more important in 
the research ecosystem. From being the adopters, purchasers, and users 
of late-stage drugs, our hospital we see as being a fundamental part of 
the development process.'' Britain's National Health Service will 
become ``a partner in innovative testing, proving and adopting new 
drugs and devices in research studies with real patients.'' While the 
details have not yet been made clear, the Times of London reports that 
``Ministers want to bypass traditional clinical trials by using 
patients as a `test bed' for promising new drugs, linking [national] 
health service data to pharmaceutical company records to discover much 
more quickly how effective treatments are. Firms would be paid 
different prices depending on how well drugs work for individual 
patients. . . . Ministers argue that the system of assessing new 
treatments is no longer up to the job and that the National Institute 
for Health Care Excellence needs to catch up.''
    U.S. oncologists are already engaged in ``rapid learning health 
care,'' a term coined in 2007 by a group of health care experts 
convened by the Institute of Medicine. In brief, the workshop 
participants proposed a process for continuously improving drug science 
using data collected by doctors in the course of treating their 
patients, with a particular focus on groups of patients not usually 
included in drug-approval clinical trials. By 2008, as discussed in a 
recently published paper authored by two experts in the field, several 
major cancer centers had established networks for pooling and analyzing 
data collected by doctors in their regions. These systems are being 
used to identify new biomarkers, analyze multidrug therapies, conduct 
comparative effectiveness studies, recruit patients for clinical 
trials, and guide treatments. Several commercial vendors now offer 
precision oncology services.
    As discussed in the same paper, the powerful analytical tools and 
protocols now available, or under development, can use data networks to 
recommend treatments that would ``avoid unnecessary replication of 
either positive or negative experiments . . . [and] maximize the amount 
of information obtained from every encounter'' and thus allow every 
treatment to become ``a probe that simultaneously treats the patient 
and provides an opportunity to validate and refine the models on which 
the treatment decisions are based.'' Analytical engines like these take 
statistical analysis far beyond the one-dimensional correlations 
traditionally relied on by the FDA in the drug-approval process, and 
thus lead to far more precise prescription of the drug in question.
    The FDA does have in place a regulatory framework--``treatment 
IND''--that could be used to integrate clinical trial research with 
clinical care called the.
    It was originally developed to provide unapproved drugs to AIDS 
patients in the early years of medicine's struggle with HIV. The 
original plan was that treatment-INDs would be used for more 
comprehensive investigation. In the late 1980s the National Institute 
of Allergy and Infectious Diseases (NIAID) began funding ``community-
based AIDS research''--studies of not-yet-licensed drugs in doctors' 
offices, clinics, community hospitals, drug addiction treatment 
centers, and other primary care settings. The treatment-IND framework 
remains available to provide investigational drugs to patients for the 
treatment of serious and life-threatening illnesses for which there are 
no satisfactory alternative treatments. This is done, however, only 
when the drug is already under investigation or standard trials have 
been completed, and the FDA has concluded that enough data has been 
collected to show that the drug ``may be effective'' and does not 
present ``unreasonable risks.'' The drugs are provided for treatment 
but doctors also collect safety and side effect data.
    More recently, the FDA established a ``Group C'' treatment IND was 
established by agreement between with the National Cancer Institute 
(NCI). The program allows the NCI to distribute investigational drugs 
to oncologists for the treatment of cancer under protocols different 
from those underway in under the FDA-approved protocols. Treatment is 
the primary objective, though here again safety and efficacy data are 
collected. The FDA usually authorizes Group C treatments only when the 
drugs have reached Phase III of standard clinical trials and have 
``have shown evidence of relative and reproducible efficacy in a 
specific tumor type.''
    A third FDA-approved initiative has also tiptoed toward integrating 
clinical trial research into clinical care. Sponsored by the Biomarkers 
Consortium, a partnership led by the Foundation for the National 
Institutes of Health (FNIH), which includes representatives of the FDA 
and the NIH), are investigating up to twelve different breast cancer 
drugs simultaneously in the I-SPY 2 trial. Patients are initially 
treated with the drug that targets the pathway that is propelling their 
cancer, but the trial uses adaptive protocols that allow the doctors 
involved in the research to use data from obtained from patients early 
in the trial to guide which treatments should be used for patients who 
enter the trial later. The data are fed into an analytical engine as 
soon as they are collected, and immediately verified and shared with 
participants. Drugs may be abandoned if they perform badly and other 
new drugs may be added. And the sponsor say that this is just a 
beginning that ``holds tremendous promise for many cancers and diseases 
in addition to breast cancer'' and also may lead to adaptive treatments 
within patients as new, successful drug-patient molecular pairs are 
identified.
    These are steps in the right direction that, as the FDA asserts, 
will accelerate the drug approval process, reduce its cost, and 
substantially increase the likelihood that by improving prescription 
protocols during the trials more drugs will end up being approved. But 
all of three initiatives continue to require trials that continue long 
enough to demonstrate clinical efficacy. Even though it is becoming 
clear that we have the tools to work out disease molecular pathways 
correctly. Doctors confirm this every time they match a drug's 
mechanism of action to a pathway that is known be active a patient to 
successfully prescribe the drug off-label. By refusing to accept 
evidence that a drug can disrupt a pathway as sufficient evidence that 
the drug will have desired clinical effects the FDA is, in effect, 
requiring a demonstration that the pathway does indeed cause the 
disease. But that can be established independently, and often is, 
before the drug is designed. New drugs could be approved even faster 
and at still lower cost if the FDA would accept that body research as 
sufficient proof that proof that pathway disruption is proof of 
efficacy.
    Experience has also already established that data collected by 
unblinded doctors during the course of treating their patients can be 
used to create databases that can be successfully used to guide drug 
prescriptions going forward. The approval of a targeted drug to treat a 
specific disease is, in effect approval of the drug's ability to target 
a pathway that propels the disease and thus approval of the science 
that led to the development of the drug by linking the two.
    The FDA could and should go further, at least when dealing with new 
drugs that target serious, life threatening diseases that are currently 
untreatable.
    Following threshold screening for toxicity and an early 
demonstration in what could be a small clinical trial that the drug can 
indeed disrupt the pathway that it was designed to target, the drug 
will, at the sponsor's request, be made available to selected centers 
that specialize in treating the disorder in question. The treatment 
protocols adopted by its doctors will be monitored by independent 
outsiders, at the FDA itself or designated by the agency, or by perhaps 
by one of the NIH institutes that sponsors research addressing diseases 
of that type. The doctors involved in the integration of clinical trial 
research and clinical treatment will work unblinded and without 
placebos, and be given broad discretion to adjust treatments, collect 
data, and analyze responses, as they do. The molecular pathway that 
propels the disease is important but there are usually other pathways 
that that also interact with the drug to cause side effects or in other 
ways that affect clinical outcomes, and many of them can't be 
identified without prescribing the drug to patients and analyzing why 
patient responses differ. And if one accepts--as many doctors do--that 
the biological science has reached the point where it can be trusted to 
predict clinical benefits on the basis of a drug's pathway-disrupting 
effects, doctors will have to start considering whether it is even 
ethical to conduct blinded placebo-controlled trials of a new drug that 
has already demonstrated its ability to have those effects to the 
doctors' satisfaction. Studies have also established that patients are 
much more willing to participate in trials if they are assured of being 
treated with a drug, not a placebo. And this approach will also address 
the increasingly vocal ``right to try'' demands from patients suffering 
from serious diseases and who desperately want immediate access to any 
drug that might help.
    As is standard procedure in conventional trials the doctors will 
monitor for side effects and the overseeing authority would have the 
authority to halt use of the drug in response. The doctors will also 
use any available tools that can track the drug's effects on the 
progress of the disease, among them intermediate end points based on 
what is known about the normal rate of progression of the disease when 
left untreated. All data from all treatment centers will be pooled and 
all doctors will have access to the data and the continuously updated 
analyses of the data and use them to guide prescriptions going forward. 
If there is no good way to assess the drug's efficacy other than to 
continue the trial as long as a conventional trial would continue, and 
wait for clinical effects to surface or not surface that is what is 
what will be done. If doctors are, instead, able to demonstrate that 
steadily improving prescription protocols are steadily reducing the 
likelihood that the disease will steadily progress the doctors 
themselves will take charge of notifying the FDA when, in their view, 
more patients should be accepted for investigative treatment with the 
drug by more doctors at more treatment centers. If rate of positive 
outcomes continues to rise, at some point the FDA, again advised by the 
doctors who have been treating the patients could approve the drug for 
general distribution. But as medical records go digital, the more 
likely and better approach in the longer term will be to continue to 
track and analyze how patients respond to the drug indefinitely into 
the future, and continue refining prescription protocols for as long as 
the drug remains on the market. New side effects often surface as much 
as a decade after a drug is approved, and human bodies get reconfigured 
every time a new child is conceived.
    It is worth noting, finally that there are times when relying 
entirely on a drug's molecular effects to demonstrate efficacy is 
indispensable: insisting on the use of clinical endpoints in 
conventional trials will only ensure that no treatment gets developed 
and approved. Requiring clinical endpoints means conducting trials that 
can't be completed any faster than diseases typically progress to the 
point where they cause clinical symptoms--and will take even longer 
than that when preventive drugs are designed to intervene before the 
diseases start to develop. The trials are very expensive, and the clock 
of drug patents keeps ticking while trials are conducted. . . . A 2006 
article in the New England Journal of Medicine attributed the complete 
absence of drugs that would prevent, rather than just alleviate, the 
late-stage symptoms of diseases such as Alzheimer's or osteoarthritis 
to a drug approval process that ``makes it hard, if not impossible'' to 
move the drug through Washington before its patent expires. ``[D]espite 
considerable advances in our understanding of such diseases, there is 
no validated and tested path to successful FDA approval of a drug to 
prevent these conditions. This lack of a clear plan for drug approval 
adds high regulatory risk to the already high scientific risk of 
failure.''
    Conventional clinical endpoints also present a more fundamental, if 
rarely noted, problem. Chronic diseases can cause irreversible effects, 
but when no treatment is available, there is little incentive to 
diagnose the disease early, so it usually is not diagnosed until 
clinical effects surface. At that point, a drug may be able to deliver 
so little clinical improvement to most patients that it is viewed as a 
failure.
    Very rare diseases present another problem: there are often too few 
patients to conduct a statistically robust double-blind trial, and 
focusing on molecular scale effects is the only alternative. Moreover, 
rare hereditary diseases are often strongly and unequivocally linked to 
specific genetic mutations and the flawed proteins that they code for, 
and a drug's ability to block the protein's pathological effects or a 
genetic therapy's ability to replace the mutant gene with a normal one 
should be accepted as a concomitantly strong demonstration of the 
therapy's efficacy. This will be particularly important when dealing 
with genetic therapies. Because they are genetic, the disorders can 
start developing very early in life, and to be effective the genetic 
therapies will have to start equally early. But these disorders are 
usually slow to develop--if they very quick killers, the faulty genes 
probably wouldn't have lasted in the human gene pool for long. So to 
meet standard FDA requirements of demonstrated clinical benefits, 
groups of patients who receive these treatments might have to be 
monitored for many decades. Few drug companies will be eager to invest 
in these treatments if that is how long they are likely to have to wait 
for a return.
    As Dr. Janet Woodcock, currently the head of the FDA's Center for 
Drug Evaluation and Research, noted over a decade ago, molecular 
biomarkers ``are the foundation of evidence based medicine--who should 
be treated, how and with what.. . .. Outcomes happen to people, not 
populations.'' Precision medicine is inherently personal. The treating 
doctor and the patient are the only ones who have direct access to the 
information required to prescribe drugs with molecular precision. We 
will greatly accelerate, improve, and lower the cost of the drug-
approval process by relying much more heavily on doctors who specialize 
in the treatment of complex diseases.

    Senator Cruz. Thank you very much, Mr. Huber. Dr. Yamamoto?

      STATEMENT OF DR. KEITH R. YAMAMOTO, VICE CHANCELLOR

          FOR RESEARCH, UNIVERSITY OF CALIFORNIA, SAN

      FRANCISCO; EXECUTIVE VICE DEAN, SCHOOL OF MEDICINE;

         PROFESSOR, CELLULAR AND MOLECULAR PHARMACOLOGY

    Mr. Yamamoto. Good morning, Chairman Cruz, Ranking Member 
Peters, and distinguished members of the Subcommittee. I am 
Keith Yamamoto, Vice Chancellor for Research at the University 
of California, San Francisco.
    I am honored to discuss with you today the impact of 
innovative biomedical research and precision medicine on 
preventing and curing disease and the role of Federal 
investment, policy, and regulation in enabling those advances.
    Precision medicine is a new concept that will collect and 
analyze vast amounts of basic research and patient data using 
computational tools to build a network of knowledge that allows 
effective diagnosis and treatment decisions or provides disease 
prevention advice tailored to individual patients.
    Why the need for all these data? Because we humans sense 
and respond to countless signals, internal ones like elation or 
anxiety, external signals like viral infection or a glass of 
fine wine, and each individual's responses to unique 
combinations of signals uniquely affects his or her health and 
likelihood of disease.
    Precision medicine is like Google Maps, where the full 
picture is derived from stacking together many layers of 
different types of information, but instead of topology and 
roads and gas stations, it is DNA sequence and blood glucose, 
blood levels, and exposure to secondhand smoke while growing 
up.
    Together, many layers of data gathered from many people and 
from laboratory experiments produce a knowledge network, an 
increasingly precise picture of human health and disease.
    The good news is that the network need not be complete to 
produce useful results, adding a single new data layer to those 
traditionally used to inform a therapeutic decision, for 
example, can have a tremendous impact. The progressive merging 
of small insights begins to reveal the full picture.
    At UCSF, many precision medicine project pilots are 
underway, most of them in collaboration with industry, 
startup's, national labs, or other universities. These are 
underway across our whole research endeavor, basic, clinical, 
social/behavioral research, and our emerging knowledge network 
already has begun to impact our research, our health support, 
and our treatment of disease.
    Projects around the country as well as at UCSF defining 
what it will take--what the needs are--for precision medicine 
to succeed, to unlock the cures for America's deadliest 
diseases.
    Let me mention just four such needs. First, expanded and 
sustained support for fundamental discovery, that is, basic 
research. New discoveries remain essential both to define 
biological processes and to develop powerful new research 
tools, as Dr. Huber mentioned.
    For example, after examining the genomes of bacteria that 
grow in a toxic superfund clean up site, brilliant basic 
scientists created an astonishing technology called ``CRISPR/
Cas9,'' which rapidly and economically allows any precise 
change to be introduced into the DNA of any living cell, 
potentially enabling, for example, the repair of disease 
causing mutations, increased crop growth or nutrient content, 
neutralization of disease carrying insects, and much, much 
more.
    Only government agencies such as NIH, NSF, DOE, and DARPA 
can support the research that produces fundamental discoveries. 
Those Federal investments empower private sector developments. 
Understanding a disease mechanism, for example, can direct the 
design of drug candidates, define the structure and endpoints 
of clinical trials, limit the composition and size of trial 
cohorts, and shorten the duration of trials.
    Each of these steps reduces costs and increases the 
likelihood of success. In fact, it really goes further than 
that. Drug companies approaching Phase III trials, the most 
costly and demanding of the FDA-mandated series of tests, have 
already invested hundreds of millions of dollars and need to 
make a decision on the probability that their drug candidate 
will succeed in Phase III. Knowledge of the mechanisms can 
inform their stratification of patient groups, thus reducing 
the size and length of trials, and increasing their success 
rates.
    The fact is that many trials simply do not get done, that 
drug companies made business decisions, for lack of scientific 
understanding, not to carry out the trials. The chance of 
having a drug evaporates at that point.
    Number two, transdisciplinary research. Precision medicine 
requires the concepts and tools of physics, chemistry, 
engineering, and computer science, integrated programs such as 
those envisioned by OSTP, crossing the boundaries of NSF, NIH, 
FDA, DOE, DARPA, and NIST, and partnering with industry are 
crucial. Research programs sponsored jointly by two or more 
agencies can spur the types of discovery and tool building that 
are needed.
    Number three, big data, interoperable data sharing, 
computational learning, and data security. New technologies for 
analysis massive sets of diverse data types, at scales that 
necessitate efficient and secure data sharing, will be 
developed in partnerships between Federal agencies, national 
labs, and private industry. Some of that work is well on its 
way.
    Thus, these capabilities will require that patients and 
well people agree to provide and share data, a willingness that 
in turn requires government policies that address privacy, 
security, ethical, legal, and social issues.
    Number four, regulatory science and regulatory policies. 
NIH, NSF, NIST, and especially FDA, recognize deep needs for 
science based regulatory technologies and methodologies to 
accelerate clinical trials, enhance post-market vigilance, and 
create standards for genome sequencing, novel trial design, 
cell based therapies, and risk/benefit assessments of devices 
and therapies. In fact, a lot of new programs are underway or 
planned at the FDA to address these needs, and deserve to be 
recognized.
    A national precision medicine knowledge network deserves 
Federal support with its promise to improve health and prevent 
disease, and unlock cures for America's deadliest diseases.
    If precision medicine fulfills its promise for a healthier 
and more productive workforce, better control of chronic 
disease, smaller and more successful clinical trials, and 
avoidance of unnecessary tests and ineffective therapies, the 
slope of the currently unsustainable health care cost curve 
could decline.
    Thus, precision medicine holds the potential to produce 
broad positive outcomes for science, for society, and for the 
economy.
    Thank you, Mr. Chairman. This concludes my testimony. I 
would be happy to respond to questions.
    [The prepared statement of Mr. Yamamoto follows:]

   Prepared Statement of Dr. Keith R. Yamamoto, Vice Chancellor for 
Research, University of California, San Francisco; Executive Vice Dean, 
   School of Medicine; Professor, Cellular and Molecular Pharmacology
    Good morning Chairman Cruz, Ranking Member Peters and distinguished 
members of the Subcommittee, I am Keith Yamamoto, Vice Chancellor for 
Research at the University of California, San Francisco; I serve also 
on the Advisory Committee of the Division of Earth and Life Studies for 
the National Academy of Sciences, on the Advisory Council of the 
National Academy of Medicine, on the Board of Directors of 
Research!America, and chair the Coalition for the Life Sciences. I am 
pleased to provide this testimony for the record.
    It is an honor to appear before you today to discuss public-and 
private sector efforts in biomedical research innovation and precision 
medicine, and their impact on preventing and curing disease.
    It is an especially opportune time for this discussion. A 
confluence of the physical, technological and health sciences has 
created the opportunity for a transformational leap forward--a 
revolutionary change in biomedical research, health and healthcare. 
Thoughtful and timely Federal investment, policy and regulation will be 
essential and critical drivers of these advances.
    Precision medicine\2\ is a major new concept that will collect, 
integrate and analyze comprehensive data across basic research and 
massive patient cohorts, creating an interactive network of knowledge 
that allows effective, mechanism-based diagnosis and treatment 
decisions for each individual patient, while at the same time 
empowering further research and advancing clinical care. It differs 
dramatically both from current medical practice, in which diagnosis and 
treatment decisions are based on a patients medical history and 
analysis of her/his presented symptoms, and from personalized medicine, 
which improves diagnosis and treatment decisions by collecting more 
detailed information about the individual, but does not integrate 
discoveries from basic science or information from other patients.
    Why is it important to do precision medicine? Because we humans are 
complicated--and for good reasons. Rather than being hardwired by our 
DNA, we sense and respond to internal (e.g., hunger, anxiety) and 
external (e.g., infection, environmental exposures) signals, and the 
combined output of hundreds of complex contributing factors and 
interactions influences our individual health status as well as the 
onset and course of any disease. Thus, a defining assertion of 
precision medicine is that our genomes, our individual DNA sequences, 
are powerful determinants, but in no way provide enough information to 
understand or predict human physiology and human disease. Myriad other 
components--molecular, developmental, physiological, social, and 
environmental--also must be monitored, aligned, and integrated to 
arrive at a meaningfully precise and actionable understanding of 
disease mechanisms and of an individual's state of health and disease. 
The 2011 U.S. National Academy of Sciences (NAS) report entitled Toward 
precision medicine: Building a knowledge network for biomedical 
research used the analogy of Google maps to illustrate the value and 
necessity of aligning and integrating diverse, often unstructured, data 
sets into a comprehensive knowledge network if we are to understand the 
complexities of human health and disease.
    Thus, precision medicine is not a new field of study or a 
subspecialty but rather an approach to acquiring knowledge that 
integrates across the spectrum of biomedical research and clinical 
practice; it is a platform for organizing, synthesizing, and 
rationalizing information in ways that change fundamentally how we 
conduct biomedical research and care for patients. The success of this 
approach will depend on the engagement of wide stakeholder communities, 
basic and social scientists, clinicians, patients and healthy people, 
pharma and high-tech industry, payers, and of course the Federal 
Government.
    President Obama's Precision Medicine Initiative gives voice to this 
complex task, with his call to create a million-citizen cohort to 
contribute and share their health data while maintaining privacy and 
security. Similarly, California governor Jerry Brown has created the 
California Initiative to Advance Precision Medicine, providing funding 
to motivate public-and private-sector teams to collaborate and to 
contribute resources.
    Clearly, the precision medicine effort is massive and daunting in 
scale, demanding sustained effort likely to be measured in decades. But 
here's the good news: efforts already underway demonstrate that the 
knowledge network need not be complete to produce success. Adding a 
single new data layer to those traditionally used to interrogate a 
disease mechanism or inform a therapeutic decision can have substantial 
impact. And the progressive merging of small insights will begin to 
reveal the full image. At UCSF, where precision medicine is central to 
our institutional strategy and vision, various pilot projects, most of 
them collaborations with industry, startups, national labs or other 
universities, are underway across basic, clinical, and social/
behavioral discovery research, and our knowledge network, initially 
rooted in cancer and neurological disease, is spreading to include 
other disciplines and disease areas. Our still-early efforts are 
already impacting our basic research, our understanding and support of 
human health and our treatment of disease.
    In addition, from pilot projects at many institutions across the 
country, we are gaining a sharper focus on what it will take for 
precision medicine to truly succeed. As these needs align strikingly 
with the focus of today's proceedings, I shall enumerate several of the 
most compelling, with particular emphasis on critical investment, 
policy and regulatory instruments from congress and Federal agencies.
    Expanded, sustained support for basic research. Despite remarkable 
progress, our understanding of biological principles and processes 
remains rudimentary, and it is certain that learning the fundamentals 
is essential for establishing the basis for disease, the features that 
make disease proceed differently in different individuals, and for 
development of new technologies that produce progress in leaps rather 
than steps. For example, reading the genomes of bacteria that thrive in 
the harsh environment of a SuperFund cleanup site has created, in the 
hands of brilliant basic scientists, ``CRISPR/Cas9 technology'', which 
simply, rapidly and economically allows precise changes to be 
introduced into the DNA of any living cell--potentially enabling repair 
of disease causing mutations, increased crop growth or nutrient 
content, neutralization of disease carrying insects, and much much 
more.
    Only the Federal Government, e.g., NIH, NSF, DOE, DARPA, can 
support basic research at the level and scale needed to produce a flow 
of fundamental discovery. By contrast, the private sector must maintain 
tight foci on mission-oriented goals. The Federal investment then 
empowers development and application by the private sector. In 
precision medicine, the public and private efforts can increasingly be 
productively linked. Knowledge of a disease mechanism, for example, can 
motivate the design of drug candidates, define the structure and 
endpoints of clinical trials, tightly stratify and reduce the size of 
trial cohorts, and shorten the duration of trials. Each of these steps 
reduces the cost of drug development while increasing the likelihood of 
successful outcomes.
    Transdisciplinary research. As a quantitative endeavor, precision 
medicine must power its biological inquiry with the concepts, tools and 
methodologies of physics, chemistry, engineering and computer science. 
Integrated programs, funded across agency lines (e.g., NSF, NIH, FDA, 
DOE, DARPA, NIST) such as those envisioned and effectively promoted by 
OSTP, will be increasingly essential and impactful.
    Big data, data sharing, computational deep learning, data security. 
A computational challenge to devise technologies for acquisition, 
integration and analysis of massive sets of diverse data types must be 
met by research supported by Federal agencies, national labs and 
private industry. With those capabilities must come establishment and 
embrace of a new social contract by patients and well people, a 
willingness to provide and share data underwritten by policies that 
address privacy, security, ethical, legal and social issues. 
Cooperative science and policymaking efforts across funding and 
regulatory agencies, and likely legislative action as well, are 
essential here.
    Standards and regulatory guidance, interoperability of data sensing 
and reporting devices and records. Efforts toward standardization and 
interoperability are beginning with management of genomic data and 
integration with electronic health records, but the challenges are 
broad and deep. Device builders in the private sector will be motivated 
by clear regulatory guidance. Cooperative scientific and policy efforts 
across FDA, NSF, NIST are essential.
    Regulatory science and regulatory policies responsive to precision 
medicine needs and opportunities. There are deep needs for science-
based regulatory technologies and methodologies. NIH, NSF, NIST, and 
especially FDA recognize and have begun to address a range of 
challenges, including accelerating clinical trials, enhancing post-
market vigilance, and creation of science-based standards for next 
generation sequencing, novel trial design, cell-based therapies, 
predictive toxicology, risk:benefit assessment for devices and 
therapeutics, and validation of generic drugs. Those efforts, within 
and across those agencies, merit increased support.
    Precision medicine is envisioned as a national or international 
enterprise, an audacious aspiration to be sure. However, success in 
much smaller increments is demonstrating how insights gained from 
integrating many data elements will advance us, through modeling, and 
testing of predictions, toward a detailed mechanistic understanding of 
fundamental physiological principles and processes. This knowledge--
evidence-based and predictive in nature--will, in turn, promote new 
strategies for prevention, early diagnosis, treatment, and cure of 
diseases. Moreover, if precision medicine yields a healthier, more 
productive workforce; better control of chronic disease; smaller, 
faster and more successful clinical trials; and avoidance of 
unnecessary tests and ineffective therapies, the slope of the health 
care cost curve could decline--a welcome outcome in the United States, 
where health care costs are >17 percent of GNP, and still rising 
unsustainably. So, precision medicine holds promise for improved health 
and less disease, and of broad impacts--scientific, societal and 
economic.
    Thank you, Mr. Chairman. This concludes my testimony. I shall be 
happy to respond to any questions.

    Senator Cruz. Thank you very much, gentlemen. I thank each 
of you for your learned testimony and for the time you have 
taken in preparing to come before this committee.
    I want to start by focusing on research into medical cures. 
If you look at six of the diseases that impose the highest 
costs, both in terms of human sufferings and lives lost and in 
terms of dollars and cents that are spent with treatment, we 
have heart disease where in 2010 $444 billion was spent in 
treatment. In Fiscal Year 2014, we spent $1.2 billion in 
medical research on heart disease.
    In 2010, cancer, we spent $77 billion in direct costs 
dealing with treatment as a result of cancer. On the research 
side, we put $5.4 billion in Fiscal Year 2014 into cancer 
research.
    If you look at chronic lower respiratory disease, in 2010, 
roughly $50 billion in treatment costs was spent for chronic 
obstructive pulmonary disease. We invested approximately $1.5 
billion in medical research in fiscal year 2014.
    Stroke in 2010, we spent over $71 billion in medical 
treatment, and yet in Fiscal Year 2014, invested just $291 
million in medical research.
    Dementia and Alzheimer's, in 2015, it is estimated that we 
will spend $226 billion in treatment for Alzheimer's, a truly 
terrible disease my grandmother died of. Yet, in Fiscal Year 
2014, we are investing just $666 million in medical research.
    Finally, diabetes, in 2012, we spent $245 billion in direct 
treatment costs, and invested roughly $1 billion in medical 
research.
    All total, for those six diseases, we are spending over 
$1.1 trillion a year in treatment costs, and we are investing 
collectively about $9.9 billion in medical research.
    My question to the members of the panel is, does that ratio 
seem appropriate, not only in terms of dollars and cents, but 
in terms of the human lives that are dealing with the terrible 
consequences of these diseases?
    Mr. Huber. Could I just ask a question? Are you including 
all private investment or is that just government?
    Senator Cruz. That is government investments. That is not 
focusing on private research, that is focusing on the NIH and 
other government-sponsored research.
    Mr. Huber. I know quite a few drug companies who would love 
to cure Alzheimer's. I would go even further. Drugs are cheap 
at the price, they really are, even when the sticker shock is 
enormous. It is much cheaper to churn out cures in vats and 
then ship them everywhere than to have beds with people 
hovering over them. I think that is seriously under 
appreciated.
    I might add there is a solution to the sticker shock 
problem. We get these new drugs coming out and reading stories 
all over about $30,000 a pill and stuff like this. Congress is 
responsible for this because those numbers--these are early 
adopter problems. We are loading all of the costs of developing 
a really important new drug on a very narrow window of time and 
therefore a small number of patients.
    There are ways to spread these costs--the costs of these 
drugs and databases that ought to be built and are being built 
regardless one way or another and that are going to be saving 
lives for generations to come. Human bodies change over time, 
but basically we do not evolve as fast as fruit flies. Our 
children and grandchildren are going to look pretty much like 
us, and they are going to be cured by the same drugs. Spreading 
these upfront costs of treatment much more evenly, and you will 
take away the sticker shock.
    The solution is not to say let's just tell the drug company 
we will not buy this stuff, we will take our ball and go home. 
If you do that, you are going to put the patient in the 
hospital and spend even more. It can be done. There are schemes 
for spreading costs more evenly. I have outlined some myself. 
Spread the costs some more.
    Senator Cruz. Dr. Coburn?
    Dr. Coburn. First, I would tell you that I think the NIH is 
woefully under funded. I do not think you would have any 
problem finding the money because as you guys know, I can show 
you $260 billion to $270 billion worth of duplicative things 
that are not generating anything for the American public today.
    I think we are way underfunded, but I think we need to have 
better oversight because they make some errors in funding that 
are just plain stupid and cause people not to want to support 
them.
    I think funding is important, but I think also this idea--
it is really important that every member of this committee gets 
this--the way we are going to approve new drugs in the future 
has to change. We cannot spend $2 billion and take 10 years to 
approve a new drug, especially when we have precision medicine, 
with novel new ways of actually knowing the molecular pathways 
the disease is progressing through, and then using tremendous 
massive computer analysis of looking backward, not just looking 
forward, but looking backward.
    Dr. Yamamoto's own organization on oat cell carcinoma and 
carcinoid syndrome and carcinoid cancers has already proven 
that you can do this.
    It has to change. You cannot use what has been the gold 
standard for the last 50 years, which is the double blind 
placebo controlled, and expect to get faster products more 
economic, and you are not going to get capital.
    If we change the way that we actually protect intellectual 
property, incentivize investment, you are going to get money 
pouring in, more money pouring in. If you enhance NIH to $60 
billion a year, which is what I would do, you would also get 
another $30 billion or $40 billion in the private sector going 
into it as well, but it all hinges on how does the FDA respond 
to the new technology that is out there, rather than shutting 
it down, how does it become collaborative.
    Senator Cruz. Let me ask a final question on this, if we 
were to set a moon shot goal of developing breakthrough cures 
for each of those six diseases we discussed, in the judgment of 
the experts on this panel, what specific policies or tools, 
whether Federal research dollars, FDA reforms and changes and 
incentives, prizes, what tools in the judgment of this panel 
would have the greatest efficacy incentivizing the development 
of those breakthrough cures?
    Dr. Yamamoto?
    Mr. Yamamoto. I will address that question directly, but 
let me back up and first say that the numbers that you cited I 
think are problematic at both ends. That is the amount of 
investment we make in research and the health care costs that 
are being expended.
    Let's start with health care costs and then I will get back 
to your specific question. The fact is that we are in a policy 
and economic era in which the expenditures for health care do 
not correlate in a simple way with the cost of development of 
drugs or devices.
    Drug companies have one way to make money, and that is to 
sell drugs that get approved by the FDA. That means the prices 
are reflective of not only the cost of development of the drugs 
that get approved but also includes the cost of the drugs that 
did not get approved. There is no other way for the companies 
to make money.
    Given that reality, it seems that we have in our hands the 
potential to be able to be much wiser about the ways we create 
and test drugs based on some of the things I talked about. 
Knowing the mechanism of a disease changes entirely the profile 
by which tests are carried out.
    I will give you a specific example from a drug that is well 
known. When Sue Desmond-Hellmann was vice president for product 
development at Genentech, she was charged with making a 
decision about whether to move forward with a Phase III 
clinical trial for a drug candidate that eventually became 
Herceptin, a drug that has helped so many metastatic breast 
cancer patients that overexpress a gene called HER2.
    It turns out that they knew at the company the drug 
candidate they had was attacking this HER2 protein because they 
had done the basic research that identified HER2 as a marker.
    She asked the thought question: what would have happened at 
Genentech if they did not know that mechanism, and that instead 
they simply knew they had a drug candidate that seemed to be 
working on some metastatic breast cancer patients and not on 
others. Taking us through the numbers, she shows that the 
length of the trial and the size of the patient cohort would 
have been so long and so large that the company would have 
decided not to carry out the trial, and there would never have 
been a drug.
    Other Phase III trials fail because a very small number of 
patients react badly or die, in the course of the trial. Two 
patients do not make it through Phase III and the FDA rules the 
drug candidate a failure, the drug company goes back to square 
one and starts over.
    If we knew the mechanism by which those two patients had 
failed the drug trial, then a black label indication could 
protect patients with that negative indication from 
prescriptions for that drug, and there would be a drug 
effective for others on the market.
    You can see this amplifies very strongly this idea that we 
are going to increasingly have drugs that are tailored to 
specific small population sectors. This concerns some drug 
companies because of the way our drug regulation currently 
works, but if we could change that profile so that drugs could 
be tested in a more open and transparent way, then we could, 
for example, reveal the results of negative trials, currently 
is not permitted, then we could focus on mechanistic studies 
that could advance trials.
    We would be able to move that cost expenditure curve very 
substantially, and this is true with devices and other things 
as well. I am just using drug development as one example.
    On the other side of your problematic numbers, Mr. 
Chairman, increased investment in research, you asked what 
would actually make a big difference, sustainably increasing 
Federal funded for research would make a huge difference, 
because we have in our hands, as Dr. Coburn said, the 
opportunity to be able to determine the mechanisms of disease, 
to go to the root causes, find cures and actually be able to 
prevent diseases that are now costing our society so much 
money.
    That incentive for scientists to be able to carry out the 
work that we know can be done would not only change the 
outcomes of the knowledge discovery that is needed but as you 
said at the beginning of your comments, would incentivize the 
private sector to enter the arena and go forward.
    Drug companies cannot do basic research. One of the main 
reasons that it has pulled back, as you pointed out, is that 
the success of a pharmaceutical company is measured in quarter 
over quarter and year over year performance. Basic research 
does not work that way. Companies are forced to make business 
decisions that dictate the kind of work that they can do.
    What we need is increased, more effective partnerships--
between academic researchers, researchers in national 
laboratories, and at the NIH, and pharmaceutical companies. We 
know how to do the things that would incentivize increased 
activity at the private sector end as well.
    I think that the main incentive would be to increase 
funding for research at the basic level. This is where only the 
Federal Government can effectively contribute and would 
substantially increase the flow in the rest of the pathway.
    Senator Cruz. Very briefly because we are over time, Mr. 
Huber.
    Mr. Huber. I am glad that the two doctors at this table 
both say understanding the mechanism of action of diseases and 
one might add drugs, the two have to go together, is very 
important.
    I would add the private sector has recognized this. Google 
and Amazon are in a race now to build the biggest data bases of 
DNA evidence and clinical evidence. These people are really 
good at analytics. They know more, I guarantee you this, about 
software and computers than most of this city and certainly 
more than the FDA does, and the statistical tools you need for 
this are very elaborate. They are predicting a 10 or $15 
billion industry emerging. I expect they will be right.
    There are precision oncology services that are operating 
now commercially. There is a private sector there, and some of 
you I believe are favoring private initiative. There is a lot 
of private initiative, and I am sure there are ways to 
incentivize that as well.
    Meanwhile, the NIH does have a $230 million project going 
to investigate, Alzheimer's is on their list for mechanistic 
analysis, and they have four other diseases. They have 10 drug 
companies pitching in money as well. It is being done through 
the FNTH.
    I am all for doing it in government but I will tell you, 
the FDA has not led the way on this, and the private sector 
has. The doctors are doing this and the drug companies are 
doing this insofar as they can. They need it to find targets 
for their drugs.
    I would look creatively at moving outside the city, too.
    Senator Cruz. Very good. Thank you. Senator Peters?
    Senator Peters. Thank you, Mr. Chairman, and thank you for 
your testimony, the panelists today.
    I just want to follow up a little bit. Dr. Yamamoto, you 
talked about the importance of investing in basic research and 
how important that is. As I mentioned in my opening comments, 
that has been declining.
    In fact, Mr. Chairman, I would like to introduce another 
chart that actually goes beyond the one I introduced 
previously, just to kind of track where trends in R&D funding 
have been in this country as it continues to slow downward, 
particularly after the sequestration and arbitrary caps we have 
put in place, if I could enter this into the record as well.
    Senator Cruz. Without objection.
    [The information referred to follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    Senator Peters. Thank you, Mr. Chairman. We are continuing 
on this downward slope in basic research, which is our basic 
seed corn for our country. I have one question related to that 
just to kind of follow up with you, Dr. Yamamoto. You mentioned 
the CRISPR technology, which is a very powerful technology.
    As promising as CRISPR is, as you alluded to, the 
researchers were not looking for a huge medical breakthrough 
but rather they were collaborating with an environmental 
scientist on a very obscure bacterial project, research 
project.
    What lessons should we here in Congress take away from 
that? Maybe Mr. Huber you would like to add to that if you 
would like. Dr. Yamamoto?
    Mr. Yamamoto. Sure. CRISPR is a great example of a basic 
research study that was funded to characterize the genomes of 
weird bacteria that thrive in adverse conditions, very high 
metal and acid content in a SuperFund clean-up site.
    It would be impossible to predict that such arcane work 
would eventually lead to probably the most stunning 
technological advance in the course of my career-- and I am in 
my 40th year of research support for my laboratory from NIH and 
NSF-- the greatest potential immediate application for both 
basic research and application in medicine and other fields of 
societal interest and import.
    The very unpredictability of that outcome underscores the 
values of basic research and the role of the Federal Government 
in supporting it. Vannevar Bush said it first in 1945 in his 
remarkable essay, ``Science, the Endless Frontier.'' President 
Roosevelt had asked him to project the ways government should 
remain involved with scientists following the World War II 
effort.
    He surprised perhaps everyone by asserting that the Federal 
Government should support basic research, with confidence that 
the private sector would learn from that work to develop 
applications.
    Current day examples like CRISPR demonstrate dramatically 
that we must continue to be supportive of fundamental inquiry, 
and that we can rely upon the brilliance and creativity skills 
of basic scientists to see how the fundamental discoveries can 
be brought to application in the private sector.
    Senator Peters. I would like to go beyond that, too, if we 
may, broader than looking at some of the basic biological 
research. In your testimony, you state that precision medicine 
``Will depend on the engagement of wide stakeholder 
communities,'' including social scientists as well.
    When we are talking about basic research, it does not 
necessarily mean some of the hard sciences, chemistry, physics 
and others. What role do you envision that social and 
behavioral scientists may play in making precision medicine the 
success that it promises to be?
    Mr. Yamamoto. You know, it is interesting. I am a molecular 
biologist. I think many in my field bought into the idea that 
what we do is objective, firm, and solid. I was trained this 
way at Princeton--whereas the work of the social scientists is 
relevant but perhaps not ``real science.''
    The formulation of precision medicine demonstrate that this 
is a very misguided notion--that not only can we discover how 
social forces, behavior, environment, exposures, childhood 
nurturing, come into play in real people's lives, but that we 
can correlate information about those elements to the objective 
data that I was comfortable with, resulting in a much clearer 
understanding propensity for disease and the course of disease.
    What we have learned in precision medicine is that all of 
these parameters need to be considered. Now more than ever with 
this opportunity in precision medicine we need to be collecting 
data on social and behavioral elements and their impact on 
disease, so those scientists and their work should be 
increasingly important.
    Senator Peters. Along those lines, if I may, Mr. Chairman, 
I am entering a number of things in the record here, if I could 
add another one. It is a report from McKinsey that talks about 
``Changing Patient Behavior, the Next Frontier in Health Care 
Value,'' which I think goes along the lines of what Dr. 
Yamamoto is entering, if we can enter this into the record as 
well, I would appreciate it.
    Senator Cruz. Without objection.
    [The report referred to follows:]

    Changing Patient Behavior: The Next Frontier in Healthcare Value

By Sundiatu Dixon-Fyle, PhD; Shonu Gandhi; Thomas Pellathy; and Angela 
                             Spatharou, PhD

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Senator Peters. Thank you. This report suggests that more 
than two-thirds of the health care costs are heavily influenced 
by consumer behaviors, and yet interestingly enough, the 
National Science Foundation Social Behavior and Economic 
Research Account is under constant attack here in Congress for 
the efforts they make and some of the funding that goes into 
those efforts.
    Just a final question, as we are out of time here, Dr. 
Yamamoto, there is roughly $250 million to $300 million per 
year that the NSF currently invests in social and behavioral 
science, which is a very tiny fraction of the total amount that 
is spent, and yet it is a significant portion of what we need 
to know and understand in order to have effective treatments 
and effective research.
    Do you think it is wise to redirect? Some in Congress have 
asked to redirect that $250 million to $300 million to some 
other areas of science. Are we in fact under investing in what 
is a critical area?
    Mr. Yamamoto. We are definitely under investing. As I said, 
it is increasingly important. I can actually cite a clinical 
trial, a very interesting one, that was done for diabetes, one 
of the major disease areas that Senator Cruz mentioned in his 
opening comments.
    There were four arms to the trial: Metformin, which is the 
standard drug that is given for Type 2 diabetes, a new drug 
candidate, a control, and finally a set of imposed behavioral 
changes. It turns out that trial arm for the new drug candidate 
was stopped early because of adverse effects, and that the 
recommended behavioral changes/modifications actually 
outperformed the standard drug, Metformin.
    We need to be able to continue to pursue these studies. And 
because it is not just in medicine that these social/behavioral 
elements are important, it is fully appropriate that such work 
be supported by the National Science Foundation.
    Senator Peters. Thank you.
    Senator Cruz. Thank you. Senator Wicker?

              STATEMENT OF HON. ROGER F. WICKER, 
                 U.S. SENATOR FROM MISSISSIPPI

    Senator Wicker. Thank you, Mr. Chairman. I think this is a 
pretty exciting hearing. It might seem small and not well 
attended. In terms of the future and in terms of alleviating 
human suffering and saving a ton of money for the taxpayers, 
this may be the most important hearing we will have all year.
    I appreciate the brain power in front of me, and I 
appreciate having an opportunity to have a little give and 
take.
    Senator Coburn, my friend of 21 years now, is back here and 
he is looking good, he is once again making a lot of sense. 
Senator Coburn mentioned risks, transparency, and peer 
engagement at FDA. I hope the House legislation is improved on, 
I hope it passes, I hope the FDA is listening. I would commend 
to everyone's attention a simple straightforward bill that I 
have introduced called the Patient Focused Impact Assessment 
Act.
    This bill was introduced with the help of my friends in the 
Duchenne community. It would promote transparency by simply 
requiring the FDA to share how they use patient and advocate 
input in the approval process. I would commend that bill to the 
attention of the members and suggest it would be a small step.
    Let me say how thrilled I am that Chris Frangione is here, 
and I appreciate the work that he has done with me and my staff 
in moving toward introducing legislation later on this year to 
create a prize working with the XPRIZE foundation, trying to 
work in partnership with NIH on developing a prize and 
identifying achievements with regard to curing and alleviating 
suffering from Alzheimer's.
    Chris, you mentioned that you do not care who wins the 
prize. It could be somebody that is in college. It could be 
somebody you hardly expect.
    A lot of us are reading David McCullough's book on the 
Wright Brothers. Who would have picked out two bicycle 
manufacturers from Dayton, Ohio to give a grant to create the 
machinery that would crack this problem of human flight. As a 
matter of fact, government agencies on both sides of the 
Atlantic were awarding grants to other people. It happened 
these people were working toward the formula and used a 
scientific method, tried over and over again over the course of 
years, and actually got it done. I appreciate what you said 
about that, Chris.
    Let me just say that with regard to Alzheimer's, I do think 
this may be a critical moment. Mr. Chairman, you mentioned 
700,000 people will die this year from Alzheimer's Disease. A 
breathtaking number. It is also the most expensive disease in 
America. Of course, we know it is 100 percent fatal.
    A report released earlier this year estimates that the 
caring for people with Alzheimer's will cost the United States 
$226 billion this year, including $153 billion to Medicare and 
Medicaid. In 2015, one in five Medicare dollars will be spent 
on someone with Alzheimer's, one-fifth.
    Unless we find a cure or a new drug therapy to halt the 
progression of this disease, treatment costs will continue to 
rise. By 2015, the annual costs will grow to $1.1 trillion, 
including a 500 percent increase in Medicaid and Medicare 
spending on Alzheimer's, a disease which I think we can get to.
    Thank you, Mr. Frangione, and thank you to your CEO, Dr. 
Diamandis, for working with my staff and me and with a group 
called USAgainstAlzheimer's, on finding a way to encourage the 
Government to spur innovation in Alzheimer's research through 
prize-based challenges.
    Later on this year, I will be introducing the EUREKA Act, 
Ensuring Useful Research Expenditures is Key for Alzheimer's, 
EUREKA. I will be asking you, Mr. Chairman, and Mr. Ranking 
Member, and all of my colleagues both in the Senate and the 
House, to work with us on this.
    I appreciate the positive imprimatur of the XPRIZE 
Foundation in making us believe this can work. In the five 
minutes that I have, I will just ask one question. With the 
prize, you pay only for success. How much would we pay, how 
much would society pay for a cure to Alzheimer's, but given 
these numbers, in 35 short years, we will be spending $1 
trillion a year, how much would society pay for a cure?
    I have learned in dealing with the Foundation that there 
are prize-able steps that get us concrete results and save us 
concrete amounts of money.
    If, Mr. Frangione, you could comment on that for the 
benefit of the Committee. Of course, the ultimate cure would be 
a wonderful event, we would set off fireworks around the world 
on Independence Day. We could do that.
    How can we have prizeable events that get us concretely and 
amount to success that is worth paying for?
    Mr. Frangione. Sure. Thank you so much for your leadership, 
and Sarah Lloyd on your team has been great to work with. We 
appreciate that.
    Prizes can get you along that spectrum without getting you 
all the way there. Getting all the way there is going to be a 
really, really big moon shot. There are lots of places prizes 
can play and one, especially as Dr. Yamamoto was talking about, 
is collaboration.
    We see in prizes you can bring together disparate folks to 
work together on a problem, whether it be people from the 
engineering community or people from the health community or 
people from the social sciences or wherever.
    In fact, I talked about well-designed prizes. One of the 
things that we do at XPRIZE is when teams register, we actually 
ask them are you missing any components to your team, are you 
looking for any other people? We also allow individuals to 
register that have specific expertise and knowledge that can 
then join these teams to build that collaboration.
    In terms of Alzheimer's, you can see a bunch of different 
steps along the way. Imagine starting off with finding a prize 
that can look for the biomarkers or whatever it is that can 
allow us to diagnose Alzheimer's way earlier than we currently 
do. Right now, you are pretty far along for us to be able to 
diagnose you. Or as an intermediate step, we are actually 
working on an AI prize. Could that AI prize become an AI human 
brain augmentation? You can actually help people with 
Alzheimer's artificially bring back some of their brain 
functions. Or imagine you have a prize out there in robotics, 
so you are bringing all these people from robotics, you are 
creating a human helper to take away some of the burden on 
family members and the medical community, and you can augment a 
human with Alzheimer's with a robotic helper.
    There are lots of different directions you could go 
ultimately on the way to finding that cure. You can incentivize 
different steps along the way.
    Prizes can find cures or biomarkers, prizes can help you 
solve the problem, essentially put a Band-Aid on it, but a 
really important Band-Aid that will give somebody a much better 
quality of life, or prizes can help you do things through AI or 
Big Data. There are lots of things we could do, and we are 
actually looking at all those right now at XPRIZE, as are 
people outside of XPRIZE, looking at different ways to augment 
it.
    Senator Wicker. Thank you very much. Thank you, Mr. 
Chairman, for your indulgence. Mr. Frangione, if someone within 
the sound of our voices today called you up and had an idea 
they would like to share, you would be happy to hear that, I 
take it?
    Mr. Frangione. I would be very happy to hear it.
    Senator Wicker. Thank you very much, so would I.
    Senator Cruz. Thank you very much. Senator Udall?

                 STATEMENT OF HON. TOM UDALL, 
                  U.S. SENATOR FROM NEW MEXICO

    Senator Udall. Thank you, Chairman Cruz, and Ranking Member 
Peters. Excellent hearing. I could not agree more with what 
others have said. It has been very insightful, and I think if 
we just worked with each other and took a little guidance from 
you, we could really make a difference on some of these issues.
    Dr. Coburn, you really do bring an unique perspective from 
how you talked about it, and I could not agree with you more in 
terms of NIH being woefully underfunded, and also we need the 
oversight to make sure there is the credibility there.
    I think the other thing the panel brings forward is you all 
talk about how important basic research is, and we need to be 
investing in the National Science Foundation's work to fund 
basic research at universities and that kind of activity across 
the country.
    My first question for Dr. Frangione, I would like to ask 
you about XPRIZE. XPRIZE is trying to solve some of the really 
tough questions. You mentioned several of them, Alzheimer's, 
which Senator Wicker talked about, kidney disease.
    As difficult as these challenges are, I think American 
ingenuity can solve many problems like these. We just need to 
get more innovators and researchers to focus. That is why I 
find it to be so valuable about the XPRIZE model of using 
challenge prizes to encourage innovation and new thinking, and 
as you have said, to get the interdisciplinary work going on 
between various parties.
    In fact, I plan to introduce legislation in the Senate soon 
that is a companion to the House-passed Science Prize 
Competition Act. This legislation would update the authority of 
Federal agencies to encourage the use of challenge prizes to 
solve problems.
    Agencies like DARPA, the Department of Energy, NASA already 
have a solid track record when it comes to challenge prizes, 
but I think we could be doing more to encourage other agencies 
to consider this approach to problem solving.
    Could you expand on your testimony as to why XPRIZE 
supports the Science Prize Competition Act?
    Mr. Frangione. Sure. Thank you for your leadership on this. 
What we like about the Act is it just gives clearer guidance. 
All the agencies have authority to do prizes right now, but 
this gives clearer guidance on it. Everybody is doing it 
slightly different. You named some that are doing it really 
well. A lot of general counsels are interpreting the 
legislation differently. This Act really gives clearer 
guidance, and we think that is really important.
    It would actually send a really strong signal to the 
Federal Government that the Congress supports prizes. In 
addition, one of the things that you are allowed to do in the 
government is partner with private organizations in launching 
prizes.
    Passing this legislation would also send a strong signal to 
the private sector, to folks like us, non-profits or for profit 
prize companies, that everybody is in support of this and we 
should really look toward really great ways to use it.
    I will give you an example of this collaboration which will 
help people understand how important prizes could be in playing 
a role in innovation. We recently concluded an ocean health 
prize. This is to find better sensors to measure our oceans. We 
do not know what is going on with our oceans in terms of 
acidification right now. We are going to be awarding this on 
July 20.
    There were a bunch of teams, and there is a high school 
team, a high school team that made it to the semifinals, and 
they could not afford to get to the semifinals. They went out 
and put out a GoFundMe campaign. Their largest contribution of 
$1,000 was from another team in the competition competing 
against them for $2 million. They actually funded them so they 
could go compete against them.
    That is the type of collaboration and that is why things 
like this Act are really important to spur that collaboration, 
spur the collaboration Dr. Yamamoto was talking about, to 
really drive us forward as one versus a bunch of siloed 
expertise where people are not talking to each other, because 
they do not know how to talk to each other. There is an 
invitation to talk to each other, and a prize and prizes create 
that invitation for people to talk to each other if the prize 
is designed well.
    Senator Udall. Thank you very much. Dr. Yamamoto, I would 
like to ask you about precision medicine and tackling rare 
diseases. We have an uncommon genetic blood disease in New 
Mexico called cavernous cerebral malformations that impacts 
people of Spanish descent.
    I have a piece of legislation dealing with research on 
that. Can you discuss some of the recent developments in 
precision medicine that can help tackle rare genetic diseases 
such as CCM?
    Mr. Yamamoto. I think Dr. Huber pointed out that all 
diseases have a genetic basis--that they are grounded in some 
place in genetics. That is likely true. But a mutation, a 
``disease gene'' is rarely a certain predictor of disease. We 
need to link those genetic alterations with other molecular 
parameters, as well as social, behavioral and experiential 
parameters.
    Being able to massively collect data on genome sequences 
and many other factors, and then correlate those findings with 
defects similar to those you are talking about is going to 
uncover the causes of rare diseases and will allow us to attack 
them directly.
    This is being approached in many ways. We are sequencing 
cancer patients at UCSF and tying those data to each patient's 
electronic health record, by sequencing blood spots from 
newborn babies, and looking for correlations with subsequent 
health matters through their lives.
    The precision medicine approaches offer a tremendous 
opportunity to be able to find the root causes of rare diseases 
and approach them directly.
    Drug companies, as you know, have been loath to try to 
develop pharmaceuticals, therapeutics, for rare diseases, 
because of market concerns. If we knew about mechanisms, again, 
directed work could be carried out and that would be very 
effective, and the drug companies would be incentivized to move 
forward.
    Senator Udall. Thank you very much. Thank you, Mr. 
Chairman.
    Dr. Coburn. Can I comment on that? One of the things Dr. 
Yamamoto did not mention is if you do it the way he suggested, 
it is going to cost a whole lot less and take a whole lot less 
time. $100,000 to get a cure for one of these rare diseases 
versus billions. It is a real shaking change in terms of 
outcomes.
    Senator Cruz. Thank you. Senator Johnson?

                STATEMENT OF HON. RON JOHNSON, 
                  U.S. SENATOR FROM WISCONSIN

    Senator Johnson. Thank you, Mr. Chairman. Tom, great to see 
you. I thank all the witnesses here.
    That is only going to work if people have the freedom to 
access that, and we reformed the broken model of the 
gatekeeper, the FDA, a completely risk adverse process.
    My daughter was born with transverse resistant arteries. 
Two things I learned very quickly, not being a doctor, there is 
a reason they call it ``medical practice,'' with emphasis on 
``practice.'' That is not denigrating the field, that is what 
medicine is all about, advancing it through a series of trial 
and error.
    The other thing I learned very quickly, there are centers 
of excellence. I had the freedom back in 1983 to access those 
centers of excellence and then find the most advanced surgical 
technique, which is still experimental, for my daughter's 
condition. My daughter is 32 years old, she is doing 
tremendously well. Now we do the actual aorta switch. It is 
advanced.
    Coming from a manufacturing background, I am looking for 
the root cause. I understand why the FDA is so unbelievably 
risk adverse, but when you are so risk adverse and when you do 
not give patients the freedom to choose, I think we are going 
to really hamper medical advancement in moving toward these 
cures.
    Listen, I think it is great, XPRIZE, that is great, but a 
$10 million prize is not going to incentivize breakthroughs in 
something that literally costs hundreds of millions of dollars 
to develop. The prize really is a free market system. We need 
to let that free market system operate without the impediments 
of spending $100 million, cut it off because it is not worth 
the risk.
    Dr. Coburn, you said we have to move the power back to 
patients and doctors. That is not the direction we are going in 
this country, is it?
    Dr. Coburn. No, but if you see what is really happening out 
there right now, especially in the field of cancer, which will 
be applied in so many other areas--actually, I am getting a 
treatment product based on that very idea right now--using an 
approved drug for something else because we have found through 
precision medicine and biomarkers that it actually has 
application over here, FDA cannot stop that.
    Senator Johnson. Today, they cannot.
    Dr. Coburn. They are not going to stop it because of the 
uproar. I would make two points. FDA changed when the AIDS' 
activists came and said change. They demanded change. You are 
seeing science move so far ahead of the FDA. FDA knows they 
cannot keep up with this. They know they do not have the 
capabilities. Janet Woodcock has actually said that.
    The question then comes what do you all do in legislation 
that takes the monkey off FDA's back. It is still responsible, 
but makes them the collaborative, cooperative agency that they 
need to be, you can still punish bad actors, but we are going 
to find out a whole lot more data by being freer with the 
process rather than tighter.
    Senator Johnson. The point I was trying to make with the 
centers of excellence, let them be more involved in the 
process, let the FDA cooperate with those centers of excellence 
for different diseases and let the process move forward.
    Dr. Coburn. That is right. The great example right now is 
on biomarkers. They have not--they have the ability under the 
law to go out, set up, and have this cooperative process and 
bring everybody together and be transparent with it, so we 
actually find more and more information and share more 
information, but that is not happening right now.
    Part of the hope with the 21st Century Cures is to actually 
give the FDA some relief. They need more money, I will tell you 
that, they do. We keep adding things to them to do, and yet 
their budget does not necessarily increase, so they do need 
more money to accomplish some of this, but also if we 
transition to this collaborative process where we take areas 
like the University of California in San Francisco and let them 
be one of these collaborative/cooperative areas, then what 
happens is in the long run, they will have less budgetary needs 
because they are actually in cooperation.
    They cannot go out and compete with the private sector on 
the best and the brightest. They cannot compete with the 
universities and they cannot compete with the private sector. 
They are not going to be able to do it.
    The way to move forward is in a way where we actually 
assume that people are going to do the right thing, not the 
wrong thing, and we have an agency that has everybody assuming 
they are going to do the wrong thing, and that is a very 
expensive regulatory process.
    Senator Johnson. I also want to ask your assessment of two 
other large dangers, I think, as it relates to advancement in 
innovation, and that is the medical device tax, which I think 
is a tax that literally is shipping jobs overseas, certainly 
restraining investment in medical device manufacturers, but 
also the Independent Payment Advisory Board, those two aspects 
of Obamacare.
    Can you comment and give us your assessment of how those 
two measures are hampering innovation?
    Dr. Coburn. We have already seen 40,000 to 50,000 jobs 
leave this country on medical devices. We will see more because 
the burden and the taxation both are negatives for innovation 
and capital formation.
    We do not know what the Independent Payment Advisory Board 
is going to do, but the fact is--here is the other thing that I 
think is important in terms of new drugs, and Mr. Huber made 
this point. Some of the good drugs are going to be 
fantastically expensive, but if you measure in terms of the 
cost/benefit to society, they are cheap.
    If they take an Alzheimer's patient and slow down the 
process where they have five more years of active life in terms 
of inputting in society that is not costing such, it is a 
tremendous difference to us.
    If you look at our overall budget picture where we have 
unfunded liabilities of $142 trillion, that is where we are 
today, 42 percent greater than the entire net worth of the 
country, and we can make those kinds of changes, we start 
seeing some way out. That is why Senator Cruz is calling for 
this hearing, if we break through on diabetes, if we break 
through on Alzheimer's, if we break through on all this cancer, 
we break through on Parkinson's, the cost/benefit ratio is 
unbelievable to us as taxpayers.
    Most of the dollars even with the Affordable Care Act, more 
and more of the dollars are going through the government, so it 
is to all our benefits that we have an efficient regulatory 
process that encourages rather than discourages the 
development, encourages collaboration rather than discourages 
it, encourages cooperation, and the assumption has to be we are 
all in this together, let's see if we cannot get some 
breakthroughs, and then share it.
    Let's change--the other key point--you have to change not 
only the reimbursement pattern but you have to change the 
intellectual property so the private capital comes into this.
    If you spend 10 years on a drug and your patent is running 
out, the market is X, you are going to say I am not going to 
the Phase III trial because here is another $30 million to $50 
million going into this drug, and I only have a year and a half 
left on the patent. They are just not going to do it.
    We have to have intellectual property change so we do not 
stop good stuff, even though Dr. Yamamoto can go back and look 
at the research if we are collaborative and figure out another 
way to use that same drug if it is safe.
    Senator Johnson. Those are my main points. What is going to 
drive innovation are the benefits and rewards of a free market 
system. We know that works. The other point is it is the road 
blocks that Federal Government policies create for those 
innovators for that free market capital system.
    Thank you, Mr. Chairman.
    Senator Cruz. Thank you, Senator Johnson. We are going to 
do one final round of questioning, and we will thank the 
witnesses for being here.
    In the written testimony, one of the portions I found very 
interesting, Mr. Huber, was your discussion of very rare 
diseases, and particularly when overlaid, you describe in your 
written testimony how with very rare diseases there are often 
too few patients to conduct a statistically robust double blind 
trial.
    Very rare diseases in the aggregate, according to the 
National Organization of Rare Disorders, there are roughly 30 
million Americans with very rare diseases. In the aggregate, 
they are not all that rare, even though individually they may 
be.
    Mr. Huber. It goes even further than that. To begin with, 
very rare diseases often have a more common variant. One very 
rare disease drives your cholesterol levels sky high and you 
die of a heart attack, get this, at 5 years old, it is 
hypercholesterolemia.
    You have statins today because a Japanese researcher found 
a statin by trial and error, very clever guy, because two U.S. 
researchers, Brown and Goldstein were working in this country 
on treating a hypercholoesterolemia patient, and they were able 
to test the first statin drug in their laboratory. You learn a 
ton about individual genes, so there are more payoffs than 
that.
    Yes, the very rare diseases, it is just nonsense to even 
think about prescribing a placebo when testing a drug to treat 
them, and I might add when these diseases are hereditary, you 
have incredibly powerful evidence from day one that the disease 
has a genetic cause and you can identify the molecular 
mechanism of the disease very quickly.
    There is a second factor which I think matters a lot. A lot 
of these diseases develop very slowly. Genes do not persist if 
they kill people right away. They have to live long enough to 
have children and pass on the disease.
    Take a drug aimed at one of these diseases to the FDA. By 
the way, this is very relevant to Alzheimer's, which everybody 
seems to be interested in, there is an article in the New 
England Journal of Medicine, that I mention in my written 
testimony that says you simply could not bring an Alzheimer's 
drug to Washington because by the time given the scientific 
risks and the risk of not getting through the trials and then 
the patent clock ticking, no sensible person would do that.
    The very rare diseases now, to its credit, the FDA is 
fairly flexible with very rare diseases. They are willing to 
take evidence from animals and lab tests and so on.
    Once you understand mechanisms, you should be doing that 
with all diseases. In fact, Dr. Yamamoto and a very 
distinguished group of other experts wrote the National 
Research Council report, where they said our whole definition 
of ``disease'' is basically antiquated, if you care about drugs 
and you want to beat diseases with drugs, you have to define 
diseases by their molecular mechanisms of action, because that 
is where drugs do their thing.
    The day will come and hopefully sooner rather than later we 
will begin approving drugs by their mechanism of action. You 
prove that the drug can actually reach down into a body and 
reasonably safely turn that pathway on or off or disrupt it.
    We should license it because certainly in oncology and many 
other areas, that drug is going to be used wherever that 
pathway is found. It is just amazingly weird and encouraging 
that you find the same pathways common to a lot of diseases. 
This is the cheapest possible drug development process you 
have. You just take a drug that is already on the market, you 
find an antidepressant that is suddenly curing cancer.
    Thalidomide is a licensed drug today, and actually for 10 
different uses, because it turns out it is a cytokine 
inhibitor. We knew that or we worked it out long after it had 
been banned, and by the way, it also got to market largely 
thanks to the HIV and AIDS' challenges of the 1990s. You work 
out the mechanism of action of the drug, you begin finding it 
is a cytokine inhibitor. You begin finding cytokine problems in 
all sorts of other diseases, and Thalidomide is then prescribed 
for them.
    The rare diseases are an opportunity, an important research 
opportunity, they will pay you twice.
    Senator Cruz. Also, underscoring the human cost. There has 
been multiple references to the AIDS epidemic and the pressures 
that came to develop treatments to deal with it.
    On the human cost, there was a wonderful movie a couple of 
years ago, the Dallas Buyers Club, which powerfully 
demonstrated patients that were being told they could not 
access potentially life saving medicines in America, so as a 
result they had to fly overseas to try to save their lives or 
prolong their lives.
    Address for a moment the rights of patients to acquire, to 
get access to potentially life saving medicines even if there 
are risks of side effects, if you are facing a certain or near 
certain death, people will take informed risks. I would be 
interested in the panel's views on that.
    Mr. Yamamoto. Let me say something about what is going on 
at the FDA right now. It turns out the FDA has a tough hill to 
climb because of the regulations that are imposed on them and 
the way they operate. There are a lot of smart people there 
that I think really know the direction they should be moving. 
They have developed centers of excellence, as Senator Johnson 
was talking about. There are four of them now, centers of 
excellence in regulatory science and innovation, CERSIs.
    Those groups, among the things they are pushing on, a very 
strong focus on mechanistic studies that can then be used to 
move forward in drug development or other kinds of treatments.
    There are people within the FDA that understand these 
things and know the direction they should be moving. They know 
there is a revolution coming at all of us in devices, things 
that will measure physiological parameters in the course of our 
daily lives, and I am wearing one. These things are just the 
beginning of what is coming to us.
    There is also a center for device and radiological health 
within the FDA that is pushing hard on those.
    There is a very good consciousness within that agency of 
the things that need to be done, and in part, the things that 
need to be done collaboratively. They do not have the budget or 
the personnel to be carrying out these mechanistic studies, but 
they know they have to be done. The centers of excellence are 
doing these collaborative events within academia.
    I think that is the good news. The question is can we make 
sure we can keep them on pace, look at the regulatory policies 
that are actually holding them back in being able to move 
forward, and allow these things to actually come to fruition.
    I think that is where the focus of the Federal Government 
should be. They need and deserve more funding. Commissioner 
Hamburg, before she left office, liked to point out that the 
FDA moves at two paces, too fast and too slow. Depending on who 
the observer is and what the needs are.
    Patients should own their data. It is very important. 
Simply owning their data really has to come with two tools. You 
just referred to one of them, and that is the ability to have a 
say about decisionmaking on being able to utilize drugs. Very, 
very important part of the risk/benefit assessment that the FDA 
is increasingly paying attention to, talking to patients.
    The second one, of course, is arming patients with the 
information. Simply handing someone their DNA sequence does not 
help them very much. We also need to be developing tools, and 
we are doing this with a precision medicine profile, to be able 
to inform patients what this vast amount of information means.
    Senator Cruz. Let me ask one final question. Often when it 
comes to changing the law, we think based on the existing body 
of law with years of accumulated practices, procedures, rules 
and regulations, if each of the members of this panel woke up 
tomorrow, and you were czar for a day, and you could implement 
one reform at the FDA, in your judgment, what would have the 
greatest positive impact, facilitating life saving drugs 
reaching markets and impacting people's lives?
    Dr. Coburn. I think changing their charge from safety and 
efficacy to safety. I think the medical community wants 
efficacy. I do not think there is any doubt about that. Safety 
is their number one charge.
    I will give you a great example. We now have drug tamper 
resistant narcotics, but the FDA last year approved another 
non-tamper resistant narcotic. The question is why. It 
certainly is not safe. Yet, they say their number one charge is 
safety and then efficacy.
    I think if we emphasize safety and everybody that is 
working with precision medicine is interested in safety, but 
lightening up on efficacy because the only way this thing is 
really going to fly fast in a collaborative fashion is if it is 
efficacious. That is what they found at UCSF in terms of oat 
cell carcinoma, and also carcinoid tumors. They found efficacy. 
They already knew it was safe.
    If you emphasize safety and let efficacy go on the basis of 
trusting your collaborative partners to say this works. We know 
not everybody is honest. We have seen research work that has 
been fabricated. That may happen.
    The overall benefits tremendously to patients and 
scientists in this country and physicians is going to far 
outweigh any bad character actor that you get out there. Most 
of these people, 99.9 percent of them, are dedicated to helping 
people. They are not going to falsify data.
    Senator Cruz. Thank you. Senator Peters?
    Senator Peters. Thank you, Mr. Chairman. I just want to 
follow up and clarify maybe some of the comments, Dr. Yamamoto, 
you made. I found some of your responses to the Chairman's 
questions were very interesting and certainly we have heard a 
great deal about the promise of precision medicine and a number 
of government reforms, and you talked about some of the work 
that the FDA is doing right now.
    Is the FDA now a fundamental impediment to the next 
generation of disease preventions, therapies, and cures, or are 
there other major issues that you think are up there as well, 
or yes or no, do you see the FDA as the major impediment to us 
moving forward, and if not, what are some of the other concerns 
or other things we should be considering as a committee here?
    Mr. Yamamoto. The FDA is not the major impediment. I 
suggest that we reorient this question, and instead recognize 
an opportunity in front of our entire community, whether it is 
academic researchers doing basic science that leads to CRISPR, 
or clinicians that are focusing on specific disease, some of 
them rare and very difficult to study, or investors and 
companies capitalizing on the tools of precision medicine to 
link diseases thought initially to be unrelated to each other, 
and discover there are drugs in one disease area that are very 
effective in the other.
    I think the impediment, perhaps better viewed as an 
opportunity, is to recognize that by understanding diseases at 
the level of mechanism, we can more efficiently define and 
pursue research directions, drug tests and regulatory policies 
that are much more closely aligned.
    To the extent there are FDA policies that presently may 
impede that pathway, it is a reminder that we all are entering 
a new frontier, and that we need to recognize across the 
Government that adjustments and refinements are needed.
    Senator Peters. Dr. Coburn, you talked about the dual 
mission of the FDA and how should we focus on safety as a 
primary focus. Yet, I have also heard from the panel some 
criticisms of the clinical trial process. Would you comment 
that obviously if we are concerned about safety, clinical 
trials, are they still an important element of it, and how 
would you reform that, that does add to delays. What are your 
thoughts on that?
    Dr. Coburn. Thank you. I think it is balance. I think Dr. 
Yamamoto talked about the trial on a drug that had two deaths. 
The fact is did we as a society learn something from that. What 
was the mechanism of those two genetic codes that caused them 
to succumb when the others did not.
    The point is how you look at that. I am not opposed to 
double blind placebo controlled studies. I am if when we put 
everything and say it all has to be in this box to prove 
efficacy because we are already seeing in precision medicine 
with biomarkers, with massive computer analysis, because we do 
not need to do that to advance a whole lot of benefit to the 
American society by going another way.
    What you are doing there is talking about drugs that have 
already been approved for safety, and using them in totally off 
label usages that have never been approved by the FDA, which I 
as a physician have the right to do today. If it is approved, I 
can use it, whether I am smart to do so or not.
    Here is the point I would make. If we really want to move 
forward, what we have to do is change the dynamic at the FDA. 
Part of the reason the dynamic is there is because of Congress. 
You beat the crap out of them when something goes wrong, so 
their underlying statement is never do what is best when you 
can do what is safe.
    I do not blame them. The criticism is so severe. If we 
change it to where we say we are going to allow a growing 
opportunity for change within the FDA, change within the 
medical research community, change within the oncology 
community, and the physician community, we are going to work 
some new ways, they are all going to be collaborative, they 
also are going to be transparent, so we all get to see what 
does not work, not just a small group.
    If you really want that to work, you have to have 
intellectual property protection and advancement, and you have 
to not worry about what it costs. You have to measure what it 
costs based on terms of true cost/benefit analysis, not the 
sticker shock of some new drug because of what it comes out to.
    Mr. Huber. Can I add one thing about safety? The strongest 
argument for more FDA involvement is always it takes a long 
time to expose all the possible side effects, and that is 
absolutely true. The FDA has also conceded that the long time 
is actually infinite time, because there is simply no way to 
prove a negative. It is always possible the drug just has not 
yet encountered the patient with the weird biochemical profile 
who is going to keel over dead as soon as they get the drug.
    The FDA therefore relies on doctors to do the hardest 
safety stuff. There is an international coalition, they gather 
case reports from all over the world, apparently doctors just 
observing things can teach the FDA something, too, and they 
also do the genomic analysis. The FDA set up this whole thing 
as a global program.
    It is exactly what we are advocating, and on the efficacy 
side, you asked originally, Mr. Chairman, for one sentence, and 
I do not think you got one sentence from anybody and you are 
not about to, but I think everybody agrees you want the 
threshold screening for toxicity and lab tests.
    The FDA has actually done a lot of very good work on that. 
They are increasingly willing to work with cell cultures and 
other tests of that kind. You want to continue with phase one 
tests on healthy volunteers to see if these things are 
immediately toxic. I am not about to volunteer for most of 
these, but apparently there are people who are willing to.
    You have to do that. I do not think most of us propose 
doing the efficacy by just saying look, every doctor in the 
country, possibly the world, can have this drug. I think almost 
everybody would agree we should put these through groups who 
specialize in these things, and they should be gathering a lot 
of data, pooling it, making it available.
    They should also then play a large role in saying when you 
are ready to give this larger distribution, but the safety 
argument is compelling and the FDA has already conceded it 
cannot do it all.
    Senator Peters. Dr. Yamamoto, final thoughts?
    Mr. Yamamoto. I am a little bit surprised by Dr. Coburn's 
comments about guarantees of safety because he also pointed out 
that as a physician, he can prescribe drugs for off-label use, 
completely independent of the FDA.
    My view is the FDA, perhaps due in part to expectations and 
sanctions from Congress, or perhaps on their own accord, has 
perhaps drunk the Kool-Aid that says that FDA approval, 
``Safety'' means there is no chance for anything to go wrong, 
when they know very well that the Phase II trial, as good as it 
may be in terms of scientific control, is never large enough, 
as Dr. Huber pointed out, to rule out the possibility there is 
some patient out there who may experience an adverse response.
    Post-market surveillance is one of the things FDA is 
increasingly paying attention to. Risk/benefit, I think, is a 
much clearer metric than the claim of safety. What patients and 
physicians and the community will sustain depends very much on 
the weight of risk are against the relief provided by benefits.
    Cancer patients are much more willing to take risks on 
therapies than somebody with poison ivy. Obviously, that is as 
it should be.
    We should really be talking about risk/benefit, 
acknowledging that nothing is completely safe, and moving 
toward policies with such standards. The FDA is increasingly 
doing that, and as I said, including patients, in being able to 
make that assessment.
    Senator Peters. Thank you. Thank you for your testimony, 
all of you.
    Senator Cruz. Thank you very much. The hearing record will 
remain open for two weeks. During that time, Senators are asked 
to submit any questions for the record, and upon receipt, the 
witnesses are requested to submit their written answers to the 
Committee as soon as possible.
    With that, I want to thank each of the learned members of 
this panel. I think this was a very useful, productive and 
important hearing today. I thank each of you for your time, 
wisdom and judgment that you brought.
    With that, this hearing is now adjourned.
    [Whereupon, at 12:01 p.m., the hearing was adjourned.]

                            A P P E N D I X

    Response to Written Questions Submitted by Hon. Steve Daines to 
                         Christopher Frangione
    Question 1. In your testimony, you mention 30 Federal agencies 
utilizing smaller prizes, $2,500 to $1 million, to spur innovation. You 
state that government can utilize monetary prizes as an economically 
efficient means to incentivize innovation. As you describe, such prizes 
can be cost effective, reduce risk, and focuses rewards on success. 
Given the time frame for many research and development projects, how 
can we ensure that political changes in Congress or the Executive 
Branch do not have a negative impact on the directive of prizes? Or 
should these prize structures be left to non-governmental 
organizations?
    Answer. Prizes are good for many reasons. One main benefit is the 
return on investment. When you grant 1 million dollars you will get 1 
million dollars of work. But when you put out a 1 million dollar prize 
you will get $10+ million in work. We are democratizing innovation. 
These are things that we have found leaders on both sides of the aisle 
can agree is good. We at XPRIZE believe that both the public and 
private sector must work together to see the innovation we want. This 
partnership can be a powerful tool in solving the most complex problems 
of today and enhancing the future. As such, we must support policy that 
enables Federal prizes which is why we support H.R. 1162, ``The Science 
Prize Competitions Act'' that amends the Stevenson-Wydler Technology 
Innovation Act of 1980 to encourage agencies to utilize prize 
competitions.

    Question 2. Our society is faced with many low prevalence diseases 
which have a high capacity for significant personal and societal loss 
if there were to be a pandemic, such as Ebola. In your testimony, you 
discuss how financial prizes often do not cover the full cost of 
research, rather it is the ability to get a product to market and 
become a profitable company that is the motivator. How do we create 
incentives for cures when there is currently no market for a product, 
but the need for those products could arise at any point?
    Answer. As I mentioned in my testimony, incentivized competitions 
work better in some areas than others. We believe that in the 
healthcare space, prizes work well under the below conditions:

   Where new forms of cross-disciplinary collaboration are 
        needed;

   Where research is underfunded or there is a small patient 
        pool driving inefficient market activity; and

   Where ``engineering'' type solutions could bring 
        breakthroughs to bear.

    Additionally, what we have found to be critical across all issue 
areas is the need for an end-market. We know that teams compete 
primarily for the end market--for the ability to go out into the 
marketplace and become a profitable company. If little or no market 
exists, we can try to encourage a market through advanced market 
commitments. While we know that teams secondarily compete for 
additional incentives such as marketing, testing, milestone prizes, 
partnerships and education, that end-market is critical to spur 
audacious advancements and innovations within a sector.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Gary Peters to 
                         Christopher Frangione
Topic: Prize Competitions
    Question 1. In addition to funding cash prize purses, Federal 
agencies can provide non-monetary contributions to prize competitions. 
For example, the Food and Drug Administration is supporting the teams 
competing in the Qualcomm Tricorder XPRIZE by helping them prepare for 
post-competition regulatory clearance. Are there any legal impediments 
to Federal entities offering ``in-kind'' contributions or otherwise 
participating in prize competitions?
    Answer. All Federal employees, including the FDA's assisting the 
Qualcomm Tricorder XPRIZE, must adhere to the Standards of Ethical 
Conduct for Employees of the Executive Branch. This statute ensures 
that Federal employees will give impartial treatment to any private 
organization or individual. President Obama's 2009 executive order, 
``Strategy for American Innovation'', calling for agencies to increase 
their ability to promote and harness innovation by using policy tools 
such as prizes and challenges, helps facilitate and encourage public-
private partnerships to achieve innovation. In times of question, 
governmental agencies should seek the advice of counsel, but, in 
general, Federal employees can be a resource to teams competing for a 
prize as long as they do not use their position for personal private 
gain.

    Question 2. University researchers appear less likely to 
participate in prize competitions, perhaps because the prize funding 
model is not as amenable to sustaining a research lab over a long 
period of time. What can be done to better tap into the brilliance of 
our university researchers and to encourage them to compete for 
innovation prizes?
    Answer: Prizes help facilitate collaboration that otherwise would 
not take place. While university researchers are often engaged in long 
longitudinal studies, the teams that are competing in our prize 
competitions are usually focused on an end-market for the product they 
risk their own money to develop. Grant funded university research 
provides us with essential early research and discovery in areas we 
know little about. This research allows us to define challenges and 
create prizes that incentivize teams around the world to find effective 
solutions. We can encourage university researchers to be involved in 
the prize competition process by connecting them with teams and 
facilitating cross-industry collaboration that leverages research 
already conducted in a university lab. Prizes can be structured in a 
way that fosters partnerships between researchers and teams competing 
for a prize, allowing university researchers to amplify the ultimate 
impact of the research they have completed.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Amy Klobuchar to 
                         Christopher Frangione
    Question 1. Alzheimer's presents one of the toughest medical, 
economic, and social challenges facing our country. Right now, close to 
5.2 million Americans are living with Alzheimer's including nearly 
100,000 Minnesotans. These numbers will grow dramatically in the coming 
years with the aging of the Baby Boomer generation.
    Mr. Frangione, by 2050, an estimated 13.5 million Americans will be 
living with the disease-triple the number of people affected today. In 
2015 we will spend $226 billion caring for people with Alzheimer's 
disease and other dementias. By 2050, these costs will reach $1.1 
trillion. In comparison we only invest about $586 million in 
Alzheimer's research this year. What will be the social and economic 
impacts of not investing in Alzheimer's research?
    Answer. The impacts will be catastrophic and saddening. This is a 
prevalent disease that needs the attention it deserves. The social and 
economic costs are rising and affect more people as you mentioned. Of 
that $226 billion spent to care for people with Alzheimer's, Medicare 
and Medicaid will spend an estimated $153 billion caring for patients. 
Roughly one in every five dollars spent by the government on Medicare 
is related to Alzheimer's treatment. We need to spur innovation and 
harness ideas from all over the world to find a cure to this disease. 
XPRIZE supports government efforts to develop an Alzheimer's prize to 
help address this need.

    Question 2. Mr. Frangione, in your testimony you mentioned a prize 
for Alzheimer's research. Why is it important? How is the XPRIZE model 
accelerating innovation in comparison to the way the government 
traditionally funds research?
    Answer. As you mentioned, by 2050 an estimated 13.5 million 
Americans will suffer from the effects of Alzheimer's. That is not the 
complete picture, families suffer as well, and therefore the number of 
people negatively affected is significantly higher. We need to respond 
and take proactive steps to address this ever-growing disease. That is 
why XPRIZE is exploring an Alzheimer's prize focusing on screening and 
treatment.

    Question 3. I am proud to lead the Muscular Dystrophy Community 
Assistance, Research and Education (MD CARE) Act with Senator Wicker. 
The bill supports medical research and policies to boost life 
expectancy and quality of life for muscular dystrophy patients. I have 
had the pleasure of touring the Paul and Sheila Wellstone Muscular 
Dystrophy Center at the University of Minnesota, an institution that 
benefits from this legislation and seeing first-hand the critical work 
they do, particularly to maximize the significant federal, nonprofit, 
and patient advocacy research funding.
    Mr. Frangione, why are public-private partnerships important? Are 
there other models of public-private partnerships that would have 
similar benefits and outcomes as the Wellstone Center across other 
areas of Federal research to explore treatments and cures for other 
diseases?
    Answer. Public-private partnerships are a critical aspect to 
innovation because they catalyze collaboration that can produce 
unimaginable technology to help improve lives and to solve complex 
challenges. President Obama signed an executive order in 2009 calling 
for agencies to increase innovation by using policy tools such as 
prizes and challenges. The America COMPETES Act Reauthorization of 2010 
gave agencies a clear legal path to use prize competitions in order to 
bolster their own missions and encouraged agencies to partner with the 
private sector and non-profits. Since then numerous agencies and 
departments have spearheaded prizes that incorporate private and/or 
public industry partnerships. For example, XPRIZE partnered with the 
Department of Energy to support a $10 million global competition to 
inspire a new generation of viable, safe, affordable, and super fuel-
efficient vehicles. We brought together government and the private 
sector, including our lead sponsor Progressive Automotive Insurance. 
Our top prize-winner, Oliver Kuttner, a commercial real estate 
developer who loved to tinker with cars since taking auto shop in high 
school, developed a four-seat, 830-pound vehicle that ran on one-
cylinder with an ethanol-fueled internal combustion engine that 
achieved 102.5 miles per gallon fuel efficiency. Today, Kuttner's 
company, Edison2, is continuing to develop extremely light, super fuel-
efficient vehicles including an electric version.
    Public-private partnerships like this have a history of maintaining 
a commitment to scientific excellence by guiding the conception, 
safety, and deployment for various technologies that have paved the 
road to where we are today.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Ron Johnson to 
                             Peter W. Huber
    Question. Mr. Huber, you testified that scientists already have the 
tools that will end up curing/preventing disease and emphasized that 
every disease Senator Cruz mentioned has a genetic origin. You were 
optimistic about the array of tools that lets biochemists study the 
genetic correlations of diseases that might lead to real cures.
    In your direct testimony you gave the example of a baby born and 
tested immediately for BRCA genes which show she is highly likely to 
get breast cancer in her lifetime and you posed the question of the 
appropriate place for scientists to begin to intervene. It was just 
announced that a University of Wisconsin-Carbone Cancer Center 
scientist will be leading a part of a unique national effort to match 
cancers to drugs based on their genes and not on where in the body the 
cancers begin. Dr. Kari Wisinski, a breast cancer oncologist, will lead 
one arm of the National Cancer Institute's NCI-MATCH trial.
    People who enroll in the trial will first have a biopsy of their 
cancer tissue. Four labs will analyze the cancer cells, looking for 
4,000 different variants across 143 genes to figure out which genetic 
mutation is likely driving their cancer. If the abnormality matches a 
drug or drug combination that targets that mutation, they will be 
assigned to that arm of the trial. The trial begins this month. 
Overall, researchers plan to screen 3,000 people in order to match 
1,000 into treatments that target their particular mutation.
    Do you think these trials can bring about real progress, and at 
what point, if ever, should a priority be put on them, in terms of 
Federal research investment?
    Answer. The MATCH trial raises a number of very important issues 
that have far-reaching implications for the advance precision medicine.
    It will certainly serve an important purpose of demonstrating that 
drugs can be designed to precisely target specific molecular pathways 
and clinical trials can and should be framed in ways that involve what 
the FDA currently calls ``enrichment'' by which it means stacking the 
deck to prescribe a new drug to patients selected to participate 
because they present the pathway that the drug was designed to target.
    As researchers continue to unravel the molecular pathways that 
propel diseases that approach should become the norm in the drug-
approval process, and Federal funding should be channeled accordingly. 
Many seemingly common disorders--common as conventionally defined by 
their clinical symptoms--are in fact clusters of biologically distinct 
disorders. Their molecular chemistry often varies significantly across 
patients. When multiple drugs are then developed to target the 
different pathways, both patients and drug developers will benefit from 
trials structured in the same way as the MATCH trial. The patients will 
be much more likely to receive the treatments they need, and when new 
as yet unapproved drugs are included in the trials the drug developers 
will be more likely to get their drugs approved, and approved more 
quickly and therefore at much lower cost.
    Because they are for now a departure from conventional single-drug 
FDA trials and not currently addressed by any familiar FDA trial 
protocols it is a good idea that trials of this kind should begin under 
the supervision of researchers and doctors who have experience and 
expertise in treating the disease being targeted. Having funded and led 
much of the research in cancer molecular biology the NCI is an 
excellent agency to take charge of that.
    The scope of the molecular data collection and analysis involved in 
the NCI-MATCH program is also valuable on its own. Which brings me to a 
closely related and broader issue that should be addressed as well, and 
going forward it should receive at least as much Federal funding. As 
you mention in your question molecular research that spans thousands of 
variants across 143 genes will be conducted during the course of the 
MATCH trial. It is quite likely that those analyses will uncover cancer 
mutations and pathways that aren't currently known, and that aren't 
targeted by any of the currently approved drugs that will be involved 
in the MATCH trial.
    Ideally, discoveries of that kind would launch the development of 
new drugs to target those new biomarkers. Those drugs would of course 
have to undergo clinical trials as well. But they won't perform well in 
the trials unless tested in patients who present the new targets they 
are designed to modulate. Which, under current FDA policies, can't 
happen until the FDA has evaluated and approved the science--qualified 
the biomarker in FDA jargon--used to link each biomarker to development 
of a specific clinically defined disorder.
    While the FDA recognized the important role that biomarkers should 
play in the drug-approval process over a decade ago, the Agency has, so 
far, declined to promulgate substantive evidentiary standards for 
biomarker qualification. Led by the NIH, experts in the field have been 
urging the FDA to promulgate such standards for over a decade.
    There are now promising signs that the FDA intends to move forward 
rapidly on that front. Perhaps in response to reform proposals that 
were being considered by members of Congress involved in drafting the 
Cures Act senior FDA staffers, analyzed the state of biomarker science 
at the Agency, assessed the agency's own shortcomings, and published 
their findings on April 13, 2015 in Clinical Pharmacology and 
Therapeutics. The authors forthrightly acknowledge that while the 
Agency does have ``an important role to play in qualifying potential 
biomarkers for regulatory use, it does not have all the requisite 
expertise, resources, or--in the case of inadequate scientific 
research--the mission, to address these key barriers to biomarker 
development.''
    The authors also acknowledge that ``while the ultimate decisions 
regarding qualification of proposed biomarkers currently rest with the 
FDA, the process could be accelerated if diverse experts and 
stakeholders came together to identify and prioritize needs, gather 
relevant scientific information, and develop community consensus in an 
open and transparent process.'' An ``uber-consortium'' of this kind, 
they suggest, would ``conduct substantive reviews and make 
recommendations to FDA on the sufficiency of data packages developed by 
industry and public-private partnerships to support qualification of 
new biomarkers.''
    Ideally, the NCI and other experts involved in the MATCH trial--
experts like Dr. Wisinski and her colleagues, for example--would be 
involved in framing those disease-specific standards. As noted on the 
website that describes it the MATCH trial ``employs the expertise of 
the NCI and of specialized investigators and scientists within NCI-
Designated Cancer Centers and networks who are at the cutting edge of 
precision medicine in oncology, as well as clinical oncologist and 
community practices that are experienced in clinical trials.'' If the 
FDA commits to promulgating substantive standards for biomarker 
qualification and continues to rely on MATCH-like trials overseen by 
experts from various branches of the NIH further Federal funding of 
those trials should be a very high priority.
    The 21st Century Cures Act, as passed by the House of 
Representatives on July 10, 2015, does require the Secretary of Health 
and Human Services (HHS) to consult with external consortia in the 
promulgation of a FDA guidance on biomarker qualification that includes 
evidentiary standards. But no single guidance will suffice. Standards 
will vary based on a biomarker's context of use, the state of the 
underlying science, and the risks and benefits associated with a given 
disease state, and the availability of alternative treatments or 
diagnostics.
    Now that the FDA has acknowledged that it cannot go it alone, and 
that the external scientific community must play a key role in setting 
evidentiary standards for biomarker qualification, Congress should step 
in to mandate what the agency itself says is needed. In drafting 
companion legislation to the Cures Act, the U.S. Senate should include 
a provision that requires the FDA (with adequate and sustained funding 
and staffing) to publicly consult with external scientific experts to 
develop disease-specific evidentiary standards for biomarkers that can 
be used in the drug-approval process and establish transparent 
procedures for independent external experts to participate in the 
process of deciding when the standards have been met.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Ron Johnson to 
                         Dr. Keith R. Yamamoto
    Question. Dr. Yamamoto, in your testimony you noted the substantial 
need for expanded sustained support for basic research and that Federal 
funding is a vital part of the research that produces fundamental 
discoveries. One successful example of this symbiosis could be the 
University of Wisconsin's trial called NCI-MATCH, which stands for 
Molecular Analysis for Therapy Choice.
    It was co-developed by the National Cancer Institute (NCI), part of 
the National Institutes of Health, and the ECOG-ACRIN Cancer Research 
Group. The UW-Carbone Cancer Center is part of the National Clinical 
Trials Network, a partner in the trials. The trial is for adults with a 
wide variety of cancers, including some rare cancers, solid tumors and 
lymphomas. It will soon begin enrolling patients, and will test up to 
3,000 people whose cancer has stopped responding to treatment. It is 
part of the precision-medicine initiative announced by President Barack 
Obama during his State of the Union address in January.
    Given your own experiences, and the precision medicine genomic 
mapping movement, specifically for cancer, what are your thoughts about 
the need for a long-term commitment of Federal funding for precision 
medicine programs?
    Answer. Thank you, Senator Johnson, for this thoughtful question. 
It is exciting that your outstanding research institution, the 
University of Wisconsin, home to many superb investigators (including 
many of my close friends), is playing a key role in the President's 
Precision Medicine Initiative through its leadership of the NCI-MATCH 
trial. As you know, clinical trials are essential for collecting and 
organizing observational data, and for rigorous testing of therapeutic 
drug and device candidates.
    The findings that suggest and enable these trials, including UW's 
3000 patient NCI-MATCH trial, arise from fundamental discoveries about 
biological processes--the outcomes of basic research. And as you also 
know, neither basic research nor the full three-phase clinical trial 
process, both critical steps for precision medicine, can be carried out 
on predefined schedules. Thus, it is the ``long-term commitment of 
Federal funding for precision medicine programs'', supporting and 
extending President Obama's Initiative, that will truly motivate 
researchers and clinicians to team up and carry out this important 
work.
                                 ______
                                 
    Response to Written Question Submitted by Hon. Steve Daines to 
                         Dr. Keith R. Yamamoto
    Question. In my home state of Montana, we have the Rocky Montana 
Laboratories (RML) operating under the National Institute for Allergies 
and Infectious Diseases in Hamilton. This is one of the few biosafety 
level (BSL) 4 labs in the United States. The Lab employees 450 locally, 
but it contributes globally with its research on contagious diseases 
such as Rocky Mountain spotted fever, Q fever, and Lyme disease.
    Based on your experiences at University of California, San 
Francisco (UCSF), how would adding a financial incentive change the 
dynamic of research being conducted at a public facility under the 
purview of the National Institute of Health, such as RML?
    Answer. Thank you, Senator Daines, for your insightful query. RML 
is world-renowned for the many important research projects carried out 
in its laboratories. My friend Dr. Stanley Falkow of Stanford 
University in the San Francisco Bay Area, who is described by Wikipedia 
as ``the father of molecular microbial pathogenesis, which is the study 
of how infectious microbes and host cells interact to cause disease'', 
was a Hamilton resident for many summers before his retirement, carried 
out research at RML that has had enormous impact on public health 
world-wide, and continues to consult with RML microbiologists.
    I can say with certainty, based on my 40 years as an NIH-funded 
researcher at UCSF, and as in my role as Vice Chancellor for Research 
there, that it is the potential for Federal funding, especially from 
NIH but also from other Federal agencies, that has incentivized and 
enabled remarkable research studies at UCSF, RML and 1700 other 
institutions in all 50 states. This is an investment of Federal dollars 
that has truly had, and continues to have, a spectacular impact. At 
this time, when the Federal budget is so limited that only about one in 
ten NIH grant applications to carry out microbiological research can be 
funded, there is absolutely no doubt that additional support would 
increase both the motivation and the productivity and impact of 
research being carried out at all of these institutions.

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