```

[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]

                 FIELD HEARING ON ACCESS TO HEALTH CARE
                     IN AMERICA: UNLEASHING MEDICAL
                   INNOVATION AND ECONOMIC PROSPERITY

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 12, 2024

                               __________

                          Serial No. 118-FC30

                               __________

         Printed for the use of the Committee on Ways and Means
         
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
56-531                     WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------     

                      COMMITTEE ON WAYS AND MEANS

                    JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida               RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska               LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania             MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona            JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois               EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio                  BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas               DANNY DAVIS, Illinois
DREW FERGUSON, Georgia               LINDA SANCHEZ, California
RON ESTES, Kansas                    TERRI SEWELL, Alabama
LLOYD SMUCKER, Pennsylvania          SUZAN DelBENE, Washington
KEVIN HERN, Oklahoma                 JUDY CHU, California
CAROL MILLER, West Virginia          GWEN MOORE, Wisconsin
GREG MURPHY, North Carolina          DAN KILDEE, Michigan
DAVID KUSTOFF, Tennessee             DON BEYER, Virginia
BRIAN FITZPATRICK, Pennsylvania      DWIGHT EVANS, Pennsylvania
GREG STEUBE, Florida                 BRAD SCHNEIDER, Illinois
CLAUDIA TENNEY, New York             JIMMY PANETTA, California
MICHELLE FISCHBACH, Minnesota        JIMMY GOMEZ, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio

                       Mark Roman, Staff Director
                 Brandon Casey, Minority Chief Counsel
                         
                         
                         C  O  N  T  E  N  T  S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Hon. Jason Smith, Missouri, Chairman.............................     1
Advisory of July 12, 2024 announcing the hearing.................     V

                               WITNESSES

Kasey DeLynn Shakespear, Parent of a Rare Disease Patient, Rural 
  Health Champion................................................     4
Dr. Heloisa P. Soares, Associate Professor and Medical Director 
  of Clinical Trials Office, Huntsman Cancer Institute at the 
  University of Utah.............................................    11
Frank Watanabe, President and CEO, Arcutis Biotherapeutics.......    16
Kelvyn Cullimore, CEO, BioUtah...................................    28

                    LOCAL SUBMISSIONS FOR THE RECORD

Local Submissions................................................    81

                   PUBLIC SUBMISSIONS FOR THE RECORD

Public Submissions...............................................    97

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

 
                   ACCESS TO HEALTH CARE IN AMERICA:
                   UNLEASHING MEDICAL INNOVATION AND
                          ECONOMIC PROSPERITY

                              ----------                              

                         FRIDAY, JULY 12, 2024

                          House of Representatives,
                               Committee on Ways and Means,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:02 a.m. 
Mountain, ARUP Laboratories, 540 S. Chipeta Way, Salt Lake 
City, Utah, Hon. Jason Smith [chairman of the committee] 
presiding.
    Chairman SMITH. The committee will come to order.
    Without objection, the gentleman from Mr. Utah, Mr. Owens, 
and the gentlewoman from Utah, Ms. Maloy, are authorized to 
participate in the hearing of the best committee in Congress 
and ask questions.
    Good morning. I want to thank everyone for joining us, and 
especially thank our host, ARUP Labs, for welcoming us to your 
impressive facility. It is incredible to be able to watch the 
future of medicine happening right before us during this 
hearing.
    I also want to thank Congressman Moore for hosting us here 
today. We had a great tour this morning of a private charity 
that helps meet basic needs and uses the power of meaningful 
work to help lift families out of poverty. And I am looking 
forward to another great event here.
    Everyone here should know that back in D.C., Blake is not 
shy about sharing how Utah could be a model for the rest of 
America at everything. So he is your advocate and he never 
stops. And we are proud that he is one of our shining members 
of the Ways and Means Committee.
    The Ways and Means Committee is in Salt Lake City to listen 
and learn directly from Americans making the next generation of 
medicines and the patients who are benefiting from those 
breakthroughs to see what Congress can do to encourage medical 
innovation in America.
    American innovators are the world's best. Our researchers, 
scientists, and doctors discover and develop new tests, 
treatments, and technologies that have improved the lives of 
millions. Today, new treatments are providing levels of quality 
care and transforming lives in ways that once seemed 
unthinkable.
    Today, tens of millions of Americans can consult with their 
doctor, have their vital signs monitored, receive drug 
infusions or even dialysis all from the comfort of their home. 
Patients have more control over their care and, most 
importantly, these breakthroughs are improving their health.
    Thanks to the work of this committee, seniors are one step 
closer to having access to more cutting-edge treatments. Just 
recently, the committee voted, with support of both Republicans 
and Democrats, to allow Medicare to cover anti-obesity 
medication, multi-cancer early detection screenings, and 
breakthrough medical devices. When these bills become law, 
seniors will have access to some of the most advanced 
treatments available. Importantly, the legislation is an 
investment to help America tackle the explosive growth of 
healthcare spending in the coming decades. With 95 percent of 
adults 60 and older having at least one chronic disease, 
innovation and access is a must for the long-term health of our 
country.
    America has the infrastructure, the people, and know-how to 
stay the world's leader in medical innovation, but the next 
groundbreaking cure or treatment will only be found because of 
strong support for research and development. Policies coming 
out of Washington must encourage more R&D to happen here in 
America. We must act to ensure Americans stay at the forefront 
of developing the best, most effective medical treatments.
    One of the first steps to growing R&D is cutting the red 
tape keeping new breakthroughs, like revolutionary Alzheimer's 
medication, out of the hands of patients. Legislation also 
approved by this committee this year would provide better 
access to these innovative therapies.
    The next step is looking at the Tax Code to foster an 
economy where innovators want to take risks and invest in more 
R&D. The 2017 Trump tax cuts encouraged American companies to 
hire new workers, create new products, and invest in America. 
More than $2 trillion was invested in new facilities and R&D 
activities, but it also succeeded in another key way: jobs. The 
R&D deduction supports 2 million jobs directly and 21 million 
more indirectly. These pro-growth policies under President 
Trump led to bigger paychecks for workers, low unemployment, 
and a booming economy.
    The House of Representatives took action earlier this year 
to keep our R&D incentives strong, but a massive tax hike 
awaits American families, farmers, innovators, and job 
creators. Republicans on this committee have formed tax teams 
to find ways to protect Americans from these tax hikes and also 
find new ways the Tax Code can be utilized to better 
incentivize research and development here in the U.S. and to 
outcompete our competitors like China.
    Members are fanning out across the country to listen to 
Americans directly affected by these issues and turn their 
ideas into policies that help workers, that help families, 
farmers, and small businesses thrive. Part of that effort 
includes this hearing today and listening directly to our 
witnesses here today about their stories and ideas for keeping 
medical innovation alive and well in America.
    We also want to hear from everyone that is in the audience. 
There will be clipboards, as you see before you, passed out, 
and we ask that you take time to fill them out and let us hear 
from you. It will be entered into the official hearing record, 
and we will take those back to Washington as we consider how to 
unleash medical breakthroughs across the country.
    I am now pleased to introduce the host of this committee, 
Mr. Congressman Moore.
    Mr. MOORE of Utah. Thank you, Chairman.
    And before we hear from our witnesses--that will be next, 
correct?--I just wanted to echo that welcome to everyone.
    To my colleagues that are not on this committee, Mr. Owens 
and Ms. Maloy, thank you for also being here.
    A sincere thank you to all the committee staff--we know 
where this really all gets done--to be able to organize and 
make all this happen. So thank you all for being here.
    And to our witnesses, I look forward to hearing you in just 
a moment.
    But you sensed some levity when Chairman Smith joked that I 
am not bashful, and I am probably a little outspoken on the 
best practices that we see out of Utah. I am passionate about 
it. I mean it.
    And I want our federal government to operate a lot more 
like some of the things that I have grown up with and some of 
the things that I have seen work time and time again, from this 
morning, where we go out of our way to help those in need, to 
creating innovation that is not going to stymie our ability to 
not only lower costs but provide care for those that need it.
    So, again, thank you, Chairman, and thank you all for being 
here.
    I yield back.
    Chairman SMITH. Thank you. Thank you, Blake.
    I am pleased to recognize the gentleman from Utah, Mr. 
Owens.
    Mr. OWENS. Thank you. Are we ready to do the questions 
right now or just----
    Chairman SMITH. No.
    Mr. OWENS. Okay.
    Well, first of all, just know, back in D.C., Blake, 
Celeste, and John, we are continually talking about this 
remarkable state we live in. I have been blessed the last 10 
years to be a Utahan, and I cannot say enough. Matter of fact, 
I warn my colleagues whenever they come to visit--and they will 
all tell you this--the warning is, if you come out to Utah too 
often and stay too long, you become a Utahan.
    So let's keep that up. Let's keep up with innovation. Let's 
keep our service, our collaboration, which you do so well with.
    And I am just very, very excited to be a part of this 
panel. Thank you so much for the opportunity, and I look 
forward to the things that will come out of this for sure.
    Chairman SMITH. Thank you, sir.
    I am pleased to recognize the gentlewoman from Utah, Ms. 
Maloy.
    Ms. MALOY. Thank you, Mr. Chairman. Thank you for being in 
Utah. This is really important.
    I have been in Congress for a short time, and some of the 
best news and some of the worst news I have heard from 
constituents comes out of the healthcare industry. Some of the 
worst news is we have got constituents who struggle to afford 
medications, rural patients who don't have access, independent 
pharmacies that are going under, which harms patients. It also 
harms Main Street economies, especially in our small towns, and 
we have got families choosing between medical bills and 
mortgages.
    The best news is we have more telehealth access, more 
remote patient monitoring, more home dialysis, and Utah 
companies that are doing really innovative research that will 
make people's lives better.
    And so I am excited to be here supporting your committee 
and talking to people in Utah about the need to unleash 
American innovation both in technology, which we are sitting 
right here looking at--they are working while we are talking--
and in policy, which this committee is doing.
    So thank you for allowing me to be a part of it.
    Chairman SMITH. Thank you.
    I will now introduce our witnesses. We have, first, Kasey 
DeLynn Shakespear, who is a parent of a rare disease patient 
and a rural health champion. We have Ms. Heloisa Soares, who is 
an associate professor and medical director of Clinical Trials 
Office for the Huntsman Cancer Center at the University of 
Utah. We have Frank Watanabe, who is president and CEO of 
Arcutis Biotherapeutics. And we have Kelvyn Cullimore, who is 
the CEO of BioUtah.
    Thank you all for joining us today. Your written statements 
will be made part of the hearing record, and you each have 5 
minutes to deliver remarks.
    Mr. Shakespear, you may begin when you are ready.

STATEMENT OF KASEY DELYNN SHAKESPEAR, PARENT OF A RARE DISEASE 
                 PATIENT, RURAL HEALTH CHAMPION

    Mr. SHAKESPEAR. My name is Kasey Shakespear, and I am here 
today to discuss with you my family's medical journey with 
innovation and the limitations of living in a rural community.
    Chairman SMITH. Could you pull your mic a little bit 
closer?
    Mr. SHAKESPEAR. Sure.
    In 2021, my wife and I were expecting our third child. We 
found ourselves facing the unthinkable during an OB appointment 
at 19 weeks gestation. Our unborn son was diagnosed with 
bilateral renal agenesis, formally known as Potter Syndrome.
    BRA is a congenital condition in which the fetus does not 
develop kidneys. BRA is considered by medical text as a 
universally fatal condition with no treatment options. One in 
three BRA babies die before birth--thank you. One in three BRA 
babies die before birth with the others dying shortly after due 
to underdeveloped lungs.
    When we received the news, my mind immediately went to 
which cemetery will we bury my son in, and how will we explain 
to our other children why their brother isn't coming home?
    Unlike me, my wife did not accept defeat. She researched 
and discovered an innovative clinical trial happening at a 
handful of centers around the country called the Renal 
Anhydramnios Fetal Therapy Trial, or RAFT.
    RAFT is an innovative treatment program that involves 
serial amnioinfusions of fluid into the womb with an 
ultrasound-guided needle. The closest centers to us that 
offered RAFT were in Denver, Colorado, 630 miles away, and 
Pasadena, California, 380 miles away.
    We chose to go to Pasadena and met with Dr. Ramen Chmait 
and Dr. Martha Monson at L.A. Fetal Surgery. My wife and unborn 
son were screened and deemed eligible to be entered into the 
trial as a fetal-maternal pair. However, Dr. Chmait counseled 
us that pursuing treatment would be a long road. If we 
proceeded, it could threaten our marriage, my career, our 
financial stability, our home, and the well-being of our other 
children. And treatment was still a Hail Mary with a small 
chance of success.
    We considered the factors and decided to pursue treatment. 
Doing so required us to temporarily relocate from rural Utah to 
Pasadena, California.
    Over the next 11 weeks, my wife received 11 serial 
amnioinfusions. At 31 weeks gestation, my wife's sac began to 
leak, and we had to halt treatment. The original medical plan 
was for my son to be cared for at Children's Hospital Los 
Angeles, but he was measuring too small to receive a peritoneal 
catheter for PD dialysis. We found ourselves suddenly forced 
360 miles north to Palo Alto, California, just 1 week before my 
son's birth, at Lucile Packard Children's Hospital at Stanford.
    In late 2021, my son was born with Apgar scores of 8 and 9. 
The amnioinfusions had been successful, but over the next 5 and 
a half months, he would battle for his life daily in the NICU. 
He was placed on dialysis 2 days after birth with an Aquadex 
machine, which was developed for adults with congestive heart 
failure but adapted for neonates to receive dialysis.
    He went through blood pressure issues that were ultimately 
resolved with angiotensin II, becoming the first neonate kidney 
patient at Stanford to ever be treated with this innovative 
medication. During his NICU stay, he contracted a serious 
infection, underwent multiple high-risk surgeries, experienced 
seizures, and overcame it all.
    At 6 months old, my son was transported via air ambulance 
to Salt Lake City, Utah, where he was admitted for 2 weeks at 
Intermountain Health Primary Children's Hospital. During that 
time, my wife and I were trained on how to perform all the 
necessary functions to care for our son and administer dialysis 
on a nightly basis at home. He was discharged from the hospital 
for the first time at 6 and a half months old.
    It has been just over 2 years since my son was discharged, 
and over that time, he has been readmitted five times for stays 
varying from 3 days to a little over 3 weeks, each stay 
requiring a life flight from St. George due to the complexity 
of his condition.
    Although telehealth has helped us connect with some 
specialists, we have had to travel 9 hours round trip from St. 
George to Salt Lake City every single month to attend mandatory 
in-person dialysis appointments.
    Our little Isaac is now nearly 3 years old and active on 
kidney recipient lists in multiple regions. We hope to receive 
a call any moment to bring him in to receive his kidney.
    My wife and I have walked through hell to save our son, but 
we were only able to do so because the stars aligned for us. We 
received tremendous support from family, friends, neighbors, 
members of our religious congregation, and complete strangers.
    We found RAFT and were able to navigate the American 
healthcare system because of our education. We were able to 
overcome the cost of treatment because of insurance, and the 
ability to continue working remotely, as well as the generosity 
of so many people. And we continue to receive adequate care 
thanks to programs such as Utah Medicaid's Medically Complex 
Children's Waiver program.
    Our story stands as a testament to the innovations and 
technology that our healthcare system has to offer, but 
according to HRSA, a little over 25 million rural Americans 
live in health profession shortage areas. Innovations in 
healthcare brought about lifesaving procedures for my son, but 
our opportunity is not representative of so many others. My 
wife receives messages on social media from frantic parents 
trying to find treatment options for BRA and other similar 
conditions almost on a weekly basis. Many rural Americans 
simply cannot make it work to pursue care.
    There are so many details and barriers about the challenges 
that my family has faced that I wish I could share, but I can 
testify that the cost of accessing these innovative treatments 
coming from rural America is extremely high.
    I applaud this committee for your efforts to improve care, 
especially in rural communities, and I want you to know that 
what you are doing makes a difference to families like mine. 
But I implore you to keep working to ensure that every American 
has an equitable opportunity to receive this type of innovative 
care in their most dire moments.
    Thank you.
    [The statement of Mr. Shakespear follows:]
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    [GRAPHIC] [TIFF OMITTED] T6531A.004
    
    [GRAPHIC] [TIFF OMITTED] T6531A.005
    
    [GRAPHIC] [TIFF OMITTED] T6531A.006
    
    Chairman SMITH. Thank you, Mr. Shakespear. Powerful 
testimony.
    Dr. Soares, you are now recognized.

  STATEMENT OF DR. HELOISA P. SOARES, ASSOCIATE PROFESSOR AND 
  MEDICAL DIRECTOR OF CLINICAL TRIALS OFFICE, HUNTSMAN CANCER 
              INSTITUTE AT THE UNIVERSITY OF UTAH

    Dr. SOARES. Thank you so much for the opportunity of being 
here. Thank you.
    I am Dr. Heloisa Soares. I am a medical oncologist at the 
Huntsman Cancer Institute at the University of Utah, and I care 
for patients with neuroendocrine cancers, a cancer that is very 
rare and poorly understood.
    Improving cancer care is particularly personal to me. My 
father lives with a rare cancer for which there has not been a 
lot of medical innovation in the last several years, and he 
doesn't have any treatment options. In a twist of faith, my own 
35-year-old brother was diagnosed with neuroendocrine cancer, 
the cancer that I specialize at. It was devastating to me 
initially, but he underwent his complex surgery and is now on a 
clinical study.
    He asked me last year if he should put his affairs in order 
because of his cancer, and I look him in the eyes with 
confidence and I told him, yes, but not because of the fact 
that you have this cancer. You should always do that because 
that is what responsible people do. Live your life, enjoy life, 
and if you want to expand your family, do so. Live your dreams. 
And I can say that with confidence because of the medical 
innovations that we have been able to provide to our patients.
    And I am not saying this out of nothing. I have here behind 
me Charlene Edwards, who is a patient of mine, who has been 
living with neuroendocrine cancer for the last 18 years. When 
Charlene was diagnosed, the doctors gave her very little hope 
and told her that there was only one treatment that was 
available. At the time, she felt that she was without really 
any hope. However, there are several new treatments that have 
been developed to treat her cancer, and now I can think about 
at least five other medical treatments that we can use for this 
disease. In fact, Charlene has benefited from some of these 
treatments in clinical trials and as a standard of care.
    Which brings me to the fact that I am the medical director 
for the Huntsman Cancer Institute Clinical Trials Office. I 
oversee more than 250 active clinical trial treatments at a 
given time. I can do that because the Huntsman Cancer Institute 
and the National Cancer Institute-Designated Comprehensive 
Cancer Center serves the entire Mountain West, including Utah, 
Idaho, Montana, Wyoming, and Nevada.
    Thirty percent of our patients that are in clinical trials 
come from far away, from rural and frontier regions, more than 
150 miles away from me. These trials represent lifelines for 
these patients, offering novel treatments when there is little 
hope with conventional treatments. We are constantly developing 
new treatment strategies to care for our patients in the 
frontier and rural population. One example is the development 
of clinical trials using short course radiation for patients.
    I had patients that had declined radiation treatment for 
their cancers, because traditionally these treatments have to 
be delivered within a span of 5 to 6 weeks. However, our 
tireless radiation oncology teams and researchers have 
developed the strategies to deliver these radiation treatments 
effectively and safely in a much shorter span of time. So now 
patients can receive the care that they need and continue to 
live their lives and not have to go away from family for so 
long, which can be a barrier because of financial issues, or 
even because they have to care for their children or elderly 
patients or spouses that are also sick.
    To address distance as a disparity for our rural and 
frontier populations, we have developed additional several 
strategies. We collaborate very closely with different centers, 
including Sweetwater Regional Cancer Center in rural Wyoming, 
to enhance accessibility for patients to care and clinical 
trials.
    We also, an example that I am proud to say, we have our 
neuroendocrine cancer designation care program providing 
specialized care for patients who travel from far away, and 
they can have access to our experts and the standard of our 
treatments.
    But to do all this, we need help. Federal support is 
crucial to sustain these efforts. Innovative programs need to 
be supported and recognized. Our nationally appraised Huntsman 
at Home program delivers specialized care to patients at their 
home, but programs like that need a sustainable funding 
pathway, as they not fit the traditional reimbursement model 
for inpatient or outpatient care.
    So I am here in front of you to advocate for a few things. 
Development of innovative payment models to support these new 
care modalities, extending healthcare--telehealth services and 
refining care models so I can care for the patients receiving 
advanced therapies, such as cell therapy or theranostics, which 
is the use of radioligand therapies in these patients, and I 
can monitor them from a distance, leveraging technology and 
novel strategies. And also, asking to leveraging AI and data 
science to advance cancer care. There is a need for federal 
support to enhance the infrastructure of data management and 
sharing across healthcare systems.
    Medical innovation is the cornerstone of our progress for 
cancer care. Innovations had allowed me to conduct telehealth 
visits, coordinate local care with patients at home, 
administering treatments remotely, and significantly enhance 
symptom management and the quality of life of our patients in 
our community.
    Another day Charlene, reminded me that Huntsman Cancer 
Institute is located at Circle of Hope Drive. Thanks to medical 
innovation that we have, I can share hope to my patients and to 
my brother.
    It takes a village to take care of our patients, and I ask 
for federal support to continue doing so and continuing doing 
our job. I am honored to be here in front of you, and I am 
grateful for Congress' role in advancing innovations, and I 
hope to receive the support that I can continue to care for my 
community.
    Thank you very much.
    [The statement of Dr. Soares follows:]
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    Chairman SMITH. Thank you.
    I now recognize Mr. Watanabe. You are now recognized.

    STATEMENT OF FRANK WATANABE, PRESIDENT AND CEO, ARCUTIS 
                        BIOTHERAPEUTICS

    Mr. WATANABE. Thank you.
    Chairman Smith, Congressman Moore, members of the 
committee, I am honored to share my perspectives as president 
and CEO of Arcutis Biotherapeutics. In addition, I am also on 
the board of directors of Bio.
    Arcutis was founded in 2016 to develop novel treatments for 
dermatologic diseases. The FDA approved our first product in 
July of 2022, and has granted us two additional approvals 
since; in fact, the third one this week.
    We have grown from three employees in 2016 to nearly 350 
today, with operations in all 50 states and employees in 39 
states, including an office near here in Park City, Utah.
    Turning to the broader U.S. biopharmaceutical sector, our 
industry plays a vital role in improving public health in the 
U.S. and around the world. Our innovations transform patient 
care, improve outcomes, and give hope. Roughly a third of the 
increase in Americans' life expectancy over the last quarter-
century can be directly attributed to biopharmaceutical 
innovations.
    For example, the American Cancer Society estimates that 
cancer death rates in the United States have declined by one-
third since 1991, preventing 3.8 million deaths, and much of 
that is due to better cancer treatments.
    Biopharm also contributes to our economy, employing more 
than 2 million people in more than 127,000 firms across the 
country, and we constitute somewhere between 5 and 7 percent of 
U.S. GDP. We also contribute directly and indirectly to U.S. 
national security. It is my fervent belief that promoting our 
sector should be a cornerstone of our government's policy 
agenda.
    Although we are the undisputed global leader in biopharm, 
that leadership cannot be taken for granted. Today, we face 
threats from both overt policy choices and long-term neglect. 
We have seen what can happen in other critical industries like 
semiconductors when neglect or misguided policies cause the 
U.S. to lose our leadership position.
    Biotech companies are committed to championing broad access 
to transformative therapies. Policies that focus all of the 
scrutiny on biopharmaceutical innovators ignore the real 
barriers that affect American's access to innovative 
treatments.
    A significant factor in the high and ever-increasing cost 
of innovative therapies in the United States is the growing 
power of middlemen who, in most cases, pocket more than half of 
what is paid for treatments. For example, my company only 
realizes about 40 cents every dollar that is paid for our 
treatment with the remainder going to intermediaries.
    In particular, concentration in the PBM sector gives these 
firms immense power to influence prices, control access to 
treatment, and deny coverage. And the growing trend of PBMs 
merging with other intermediaries only increases their power.
    This vertical integration also gives intermediaries 
significant power over physicians' ability to select treatments 
for their patients with utilization management criteria like 
prior authorizations and step edits substantially restricting 
doctors' ability to tailor treatments for their patients.
    Congress should urgently move forward with PBM reforms, and 
the Lower Costs, More Transparency Act is an important step 
forward.
    Another major barrier to American's access to innovative 
therapies is patient out-of-pocket costs, which insurers and 
PBMs continue to increase through higher patient copays, 
expanded high deductible plans, and increased use of patient 
co-insurance. Congress should pass the bipartisan Help Ensure 
Lower Patient Copays Act to reduce patient out-of-pocket 
burdens.
    The IRA is already negatively impacting drug development. 
Fortunately, there are two bipartisan bills that could help. 
First, the ORPHAN Cures Act would fix the IRA's disincentive 
around rare disease drug development. And second, the EPIC Act 
would fix the so-called pill penalty that favors biologics. 
Both biologics and small molecules are critical to treating 
patients.
    Our R&D investment should flow to the best science that can 
have the greatest impact, and these two bipartisan bills would 
help make that possible.
    Intellectual property protections are the foundation of our 
industry but currently are under threat both at home and 
abroad. I implore Congress and this committee to fervently 
defend IP rights against those threats.
    U.S. small and mid-sized biotech companies, or SMEs for 
short, account for three-fourths of the global drug pipeline, 
and roughly a third of all new drugs approved by the FDA since 
2009 were developed by smaller biotechs. Congress should 
prioritize fostering investments in SME biotechs.
    My written comments contain details on specific policies, 
and I would be happy to answer more questions on specific ideas 
if you would like later.
    Investing in domestic biomanufacturing, strengthening our 
local workforce, and ensuring critical cutting-edge clinical 
studies are conducted in the United States should be a core 
tenet of our government's agenda.
    Finally, the interconnected bioscience ecosystem is not 
confined just to biopharmaceuticals. Promoting 
biopharmaceutical innovation can also strengthen the broader 
U.S. biotechnology ecosystem where innovators are applying 
biotechnology to food security, sustainability, and climate 
change.
    Thank you for your time.
    [The statement of Mr. Watanabe follows:]
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    Chairman SMITH. Thank you.
    Mr. Cullimore, you are now recognized.

          STATEMENT OF KELVYN CULLIMORE, CEO, BIOUTAH

    Mr. CULLIMORE. Thank you, Chairman Smith and distinguished 
members of the committee. Thank you for the opportunity to 
participate in today's hearing.
    I am also grateful to Representative Blake Moore, our Utah 
member of the committee, as well as Representatives Celeste 
Maloy and Burgess Owens, members of the Utah delegation, for 
engaging in these important discussions.
    My name is Kelvyn Cullimore. I am the president and CEO of 
BioUtah, the trade association for the state's life sciences 
industry. BioUtah is a common voice for the industry consisting 
of medical device development and manufacturing, diagnostics, 
biotechnology, and biopharmaceuticals.
    In addition to my position at BioUtah, I have personal 
experience in the industry as a medical device entrepreneur. I 
co-founded Dynatronics, a Utah-based manufacturer of physical 
therapy products. I have also served for 13 years as the first 
mayor of Cottonwood Heights, a Salt Lake City suburb. So I am 
very sincere when I say thank you for your service.
    We are immensely proud of what we are building here. We 
have organized an onsite innovation showcase with nearly 20 
Utah life sciences companies exhibiting their contributions to 
healthcare innovation. We encourage you to pay them a visit if 
you haven't already.
    Despite the 100-degree temperature today, you may know that 
Utah has the greatest snow on Earth, but you may not know that 
over the past decade, Utah has been the third fastest growing 
bio-innovation hub in the Nation.
    One of the first COVID-19 tests to receive FDA emergency 
use authorization was developed here in Utah, as was the 
saliva-based test for COVID-19.
    Utah companies are also creating lifesaving solutions for 
stroke, advances in genetic-based cancer diagnostics, drug 
discovery for MS, Alzheimer's, and other neurodegenerative 
diseases, treatment for Parkinson's disease, regenerative cell-
based therapies that alleviate pain and restore function in 
patients with degenerative diseases of the spine, improved 
heart valve replacements, cutting-edge diagnostics for chronic 
kidney disease, brain computer interface technology that would 
make Elon Musk jealous. And AI-enabled drug discovery and more 
are all part of Utah life sciences world.
    I have seen firsthand the challenges faced by our industry 
and, more specifically, how government's laws and regulations 
can promote or impede innovation.
    In Utah, we are very fortunate to have a state government 
that supports our industry. However, no matter how favorable a 
state's innovation landscape, misguided federal policies can 
erode any home team advantage.
    To that end, we offer a number of policy considerations. 
First, we urge enactment of the Ensuring Patient Access to 
Critical Breakthrough Products of 2023 to provide provisional 
Medicare coverage for FDA-authorized breakthrough medical 
technologies. Such a policy would accelerate patient access to 
innovative treatments.
    PhotoPharmics, a Utah company working on phototherapy to 
treat Parkinson's disease, received that designation from the 
FDA, opening the door for early coverage under the prior 
Medicare Coverage for Innovation Technology, or MCIT, final 
rule. But when this policy was reversed by the current 
administration, the resulting uncertainty caused investors to 
pull back, delaying efforts to bring this product breakthrough 
technology to market and depriving Medicare patients of this 
important therapy.
    We applaud the committee for marking up this legislation 
last week with strong bipartisan support. We also want to thank 
the committee for agreeing to fix the drafting error that 
inadvertently omitted diagnostics from the marked-up bill.
    We thank our Representatives, Moore, Maloy, and Owens, for 
supporting the bill. We have great hope this legislation will 
better serve patients by breathing new life into this expedited 
coverage concept.
    Secondly, robust R&D is essential to creating solutions to 
serious medical conditions. However, policies like the 
Inflation Reduction Act or changes to R&D expensing under the 
Tax Cuts and Jobs Act can put brakes on the R&D momentum.
    We urge Congress to establish a pro-innovation tax 
structure, including full and immediate expensing of R&D costs, 
bonus depreciation for equipment, and other pro-innovation 
provisions as proposed in the Tax Relief for American Families 
and Workers Act of 2024.
    BioUtah supports this House-passed bipartisan tax bill 
which favorably addresses these policies. Furthermore, tax 
policies related to capital gains and that operating losses 
should be carefully crafted to attract investment in the life 
sciences innovation.
    Finally, the Federal Trade Commission and the Department of 
Justice have overreached in restricting merger and acquisition 
activity. This is particularly problematic for life sciences 
where M&A plays a critical role in bringing new therapies to 
market. That process is like a relay race where M&A allows 
companies to pass the baton and leverage complementary 
expertise which would otherwise be too costly or duplicative.
    More details on these and other policy considerations can 
be found in my written testimony.
    To sum up, Utah has a thriving patient-centered life 
science ecosystem fueled by entrepreneurship, a passion to 
innovate, and a unique culture of collaboration. Federal 
policies can either empower or undermine these strengths.
    Creating a sound tax structure, ensuring timely Medicare 
coverage of breakthrough products, and taking a reasoned 
approach to M&A, Congress can help unleash the full potential 
of life sciences innovation in Utah and beyond and spark the 
next generation of technologies, treatments, and cures that 
will change patients' lives.
    I thank the committee for taking the time to come to Utah, 
and I welcome any questions you may have.
    [The statement of Mr. Cullimore follows:]
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    Chairman SMITH. I want to thank each and every one of you 
for your testimony, and we will now move to questions and 
answers.
    Mr. Shakespear, access to new and innovative treatments can 
be a challenge in any community, but we know it can be 
particularly difficult to those living in rural America.
    As the parent of a son who was diagnosed with a rare kidney 
disease, can you talk about the challenges you face coming from 
a rural area in finding access to necessary innovative 
therapies and how you are able to manage the logistics today?
    Mr. SHAKESPEAR. Thank you, first of all.
    When we were diagnosed, it was unknown to the physicians in 
Utah that the RAFT trial even existed, and so the burden fell 
on my wife and I to find that treatment. So as I mentioned, if 
it wasn't for our educational backgrounds, then it would have 
been impossible to find the treatment to start with.
    But managing the back and forth, there is a lot of 
logistics that go into relocating, you know, 500, 600 miles 
away and having to stay there consistently. So that was a major 
challenge, but now that we are back home, there is still a lot 
of coordinating with physicians.
    My wife is a full-time scheduler. She is the care 
coordinator for my son, and she stays busy all week long and 
usually has multiple appointments every week. And then we have 
two older children, so it becomes quite a burden to manage all 
of the schedules and care for everybody's needs.
    But in addition to that, being on a kidney registration 
list, if you have ever had an organ donation, you know pretty 
much your entire life is tentative status, hoping to be able to 
do things but waiting to see if you get that call that disrupts 
everything.
    Chairman SMITH. Mr. Watanabe, many tax provisions have 
expired or have been phasing down over the past few years, 
including those which reward innovation right here in the U.S., 
like research and development. Looking ahead to 2025, this 
committee is exploring how the Tax Code can help better 
facilitate innovation, especially in the biotech industry, 
create new technologies, and encourage domestic manufacturing.
    With your experience and understanding of drug development, 
what would you recommend Congress look at when it comes to 
supporting healthcare innovation through the Tax Code?
    Mr. WATANABE. Thanks for that question, Chairman. Yes, I am 
glad you asked that question.
    I think there are a number of specific provisions. You 
know, first one is restoring full depreciation, deductibility 
for R&D investments. You know, the committee has already taken 
that up. The bill has passed the House. We hope to see that 
pass through.
    You know, the challenge there is that small companies are 
paying taxes even though they are not making any money because 
they are not able to fully deduct their R&D expenses, and 
particularly for smaller companies, that can be crippling.
    I think another potential opportunity is looking at 
monetization of net operating losses. Many small companies have 
large numbers of NOLs, and an ability to monetize those in the 
early stages when they can invest in R&D is something that 
could make a meaningful difference in capital access for 
smaller companies, which is becoming increasingly difficult.
    Along with that, I think corrections to section 382 would 
be an important consideration. In some cases, bringing 
investments into a new company--into your company--new 
investments in your company causes you to lose your ability to 
use your NOLs, and correcting that would be an important 
change.
    Section 1202 is a very important tool for early-stage 
investments. My company benefited from section 1202. Preserving 
that and potentially even expanding 1202 I think would be 
another important opportunity to foster investment in 
especially early-stage R&D companies.
    And then also, the passive activity loss rule in the 1986 
tax reforms has really significantly impaired the ability of 
investors to benefit from flow-through losses from their 
investments. That would be another thing that the committee 
could address that would particularly foster investment in 
early-stage companies.
    Chairman SMITH. Thank you. I was thinking you were a tax 
lawyer for a second.
    Dr. Soares, you have been at the forefront of innovative 
treatments in oncology and helping cancer patients navigate 
what is called the six scariest letters in the English 
language.
    This committee recently approved legislation introduced by 
Representatives Arrington and Sewell that expands Medicare 
coverage to multi-cancer early detection screening tests. Can 
you discuss how having Medicare cover innovative early 
detection tests can improve the care you are able to provide 
your patients and ultimately lower healthcare costs?
    Staff. We are going to pull pause for 1 second. We are just 
going to get the mike's working again.
    Mr. MOORE of Utah. Your time is still running, Chairman.
    Chairman SMITH. Okay. My mike is working.
    Mr. MOORE of Utah. Now mine is back.
    Dr. SOARES. Oh, yes. Now it is back.
    Thank you for the question.
    I think novel ways to monitor cancer when it is already 
diagnosed or detected are key. I think it is important to have 
that validation.
    I can share with you that now there are tests that are 
available that I can use. There are blood tests that I can 
monitor the tumor cells that are potentially present after 
patients receive treatment, and that has been fundamental to 
potentially helping decrease the need for patients to come to 
the cancer center. I can alternate between doing CAT scans to 
monitor recurrence versus these blood tests.
    So that has been fundamental to keep patients on 
surveillance, on monitoring, and then also decreasing the cost 
of doing these scans and visits if I can do that with blood.
    So I think there has been a lot of progress in monitoring 
and detecting minimal residual disease in cancer patients, and 
it has been substantially important to keep patients compliant 
with their care that has been designed for them.
    In terms of early detection, I think there are several 
technologies that are very promised and then they are approved 
to be safe. They will be fantastic for our patients and for 
improving their survivals.
    Chairman SMITH. Thank you very much.
    I recognize Mr. Moore.
    Mr. MOORE of Utah. Thank you, Chairman.
    Again, I would like to welcome my colleagues. Just 
appreciate you being here. I appreciate you taking the time out 
of your busy schedules to be here. I really am honored that the 
chairman would bring the committee here today so we can 
showcase what Utahans are so proud of.
    I would also like to thank ARUP for hosting us today. Utah 
has some of the most innovative and fastest growing life 
science sectors in the country. And as up here, we sacrifice a 
little bit of our ability to hear, it just showcases there is 
work to do, and this is a working lab, and, you know, there is 
a lot to be done. And so we appreciate the productivity that 
comes from this part of the First District.
    As the IRA, Inflation Reduction Act, that was signed into 
law last Congress is implemented, I remain concerned not only 
about the law's impact on medical innovation, particularly for 
rare diseases, but that it may result in increased use of prior 
authorization in step therapy, fewer covered medicines, 
narrower pharmacy networks, and fewer plan options for seniors 
covered under part D.
    A lot of times these pieces of legislation get branded as, 
you know, a way to lower costs and this and that, but the 
reality of what takes place during this is going to limit all 
of the important aspects to providing care and getting that 
care to individuals at a lower cost but at the same time 
identifying cures and promoting that type of innovation.
    There was bipartisan interest in reforming the Medicare 
Part D benefit for several years prior to the passage of IRA. 
So I would urge members of this committee particularly to work 
together towards improving the Part D program for seniors.
    So I just want to mention that, because I think it is so 
important to all the companies and the things they are working 
on in this area.
    I am not going to rehash the fact that tax is going to be 
important next year. Mr. Watanabe, you have already identified 
so much of that.
    I would ask Mr. Cullimore and--again, Frank, please share--
could you speak to net operating losses? You introduced it a 
little bit. Just the specifics of how it can be beneficial to a 
company, how they would use it, with some specific examples 
about some of these tax implications that you have already 
introduced.
    Mr. Cullimore.
    Mr. CULLIMORE. I feel inadequate to answer that sitting 
next to what looked like a tax attorney, but let me take a shot 
at it.
    The NOL monetization concept is very important for early-
stage companies because, as they built up losses, as they are 
doing research, they are building up these losses, but capital 
becomes so critical to their success. And so the ability to 
monetize those either through a device of being able to market 
those like a tax credit could be marketed or to be able to 
utilize those like an earned income tax credit on a personal 
tax return, things of that nature, that generates capital that 
further advances the work.
    Now, we recognize there is a cost associated with that, but 
there are abilities to get returns on those kinds of 
investments.
    Someone asked me, how would you pay for something like 
that? The IRA, when it was passed, it supposedly generated a 
lot of savings, they say. Most of those savings are being 
redirected in other government programs. If even a fractional 
portion of that were redirected to this, it would fully cover 
any kind of cost associated with that.
    Mr. MOORE of Utah. Thank you.
    Anything to add, Frank?
    Mr. WATANABE. I was going to say maybe just in terms of 
putting it into operational practice, you know, our company has 
been in existence since 2016. We have generated something like 
a billion dollars in losses trying to get our first product to 
market before we generated a single dollar of revenue.
    You can't use your NOLs until you are profitable. I would 
hope that maybe sometime in the next 5 years it will be 
profitable, right, but that is a long time to be sitting in 
that hole. Our ability to sell our NOLs to another company and 
bring that money in to invest into R&D immediately would make a 
huge difference for us and for earlier stage companies.
    And, you know, it is not really a cost to the government. 
It is just a shifting of when those NOLs are used because I 
have a right to use them eventually. It is just a matter of can 
I use that money today to invest in research and development 
versus waiting another 5 years or so until I start generating 
profits and can start to exploit my NOLs.
    Mr. MOORE of Utah. Excellent. Thank you for those specific 
examples.
    Dr. Soares, as I wrap up, there is so much that the 
Huntsman Cancer Institute does for this community. It doesn't 
exist without strong private sector involvement in donations 
and philanthropy. And just thank you for being here. That is 
what makes this area thrive so much.
    But just briefly, as you embrace AI and other types of 
technologies, what barriers exist for you all that you can't 
necessarily, you know, find those new next generation 
innovative technologies that will help you find those cures?
    Dr. SOARES. Yeah. Thank you so much for this question.
    And I am very proud of living in Utah and being at the 
Huntsman Cancer Center. As you said, you come here and this 
place is amazing and you just stay.
    There is a need for AI to be able to have data-sharing 
integration and management. In management, there is a lot of 
different electronic medical records that are very separate and 
spread. The AI technology can leverage that. We can integrate 
this data. We can share them in the proper ways, and that will 
lead to so much more innovation.
    So I think working on ways that we can safely integrate AI 
and share data will be imperative for us to continue to advance 
and also use that to identify the patients that will benefit 
from new treatment options.
    Mr. MOORE of Utah. Thank you.
    Thank you for your indulgence, Chairman.
    Chairman SMITH. Thank you.
    Mr. Owens.
    Mr. OWENS. Thank you again, Chairman Smith, for coming to 
this beautiful Salt Lake City and for this important field 
hearing today. I am so proud to sit next to my good friend 
Blake Moore. He has been a fierce champion for Utah's unique 
ecosystem, one that has helped our nation to thrive, our state 
to thrive.
    Today's hearing is highlighting medical innovation. Here in 
this state, it is the fastest growing state in the union since 
2010 and a national innovator in other fields of education, 
workforce, transportation, IT, and aerospace. I am so proud to 
see so many Utahans as witnesses today and eager to share our 
story as a model for the rest of the country.
    Mr. Cullimore, what has made Utah so successful in 
developing in its life sciences industry, and what lessons can 
we take from the entrepreneurial culture here?
    Mr. CULLIMORE. Thank you, Representative Owens.
    As you are aware, Utah is a great state for doing business. 
We have been recognized nationally as the number one state for 
doing business, the best state to open a business. The 
entrepreneurial spirit here goes back to the pioneer heritage 
that founded this state, and that heritage has carried on 
today.
    We have many large companies that operate in the state of 
Utah, but many of them are here because they acquired 
technology that was developed here in Utah. We have a 
phenomenal academic system here with our universities who 
generate great technology. We also have a great workforce here, 
and we have the ability to generate great ideas because of the 
existing critical mass of companies that are here that spin off 
from other companies. You can trace many of the companies back 
to other companies that were here, people who have spun off 
from them.
    And so we are very fortunate to have a very high-growth 
industry in the life sciences here. Most people are unaware of 
that. We are the number three state in the nation in density of 
employment in life sciences behind only Massachusetts and New 
Jersey.
    So we are recognized as the life science hub, and that kind 
of success begets additional success.
    Mr. OWENS. Thank you.
    You talked a bit earlier, you might want to elaborate, any 
more on Utah's ability to track funding since the passage of 
the Inflation Reduction Act in terms of shutting off 
opportunities for future generic competition?
    Mr. CULLIMORE. Well, the Inflation Reduction Act, I don't 
think we have seen the full impact of that yet. I think as the 
specifics come forward and we see the impact that can have, it 
is going to have an even greater chilling effect on research 
and development in the therapeutics field.
    I think we are already seeing--and Frank can testify to 
this better than me--how investors are very concerned and 
withholding funding until they see how some of this pans out. 
And I am afraid what they see will discourage them even 
further. So that is a challenge.
    That is going to be a challenge in the pharmaceutical area 
for that, and Utah has a lot of early-stage pharmaceutical 
companies. And so we have some concerns. Some of the things 
that Frank talked about that could improve it are important 
steps, but overall, the bill is still of great concern.
    Mr. OWENS. Thank you.
    Mr. Shakespear, you made some comments earlier. Any 
additional comments or insight on how to support the rural 
community for issues that you are having right now in the 
health arena?
    Mr. SHAKESPEAR. Absolutely. Thank you for the question.
    I would urge you to put it in the hands of the parents in 
rural America to decide whether they are willing to pay the 
price to pursue these innovative treatments. It is difficult to 
bring them to close proximity to everybody in rural America, 
and I recognize that. And you have to understand as well that 
not every urban center is even created equally, because the 
treatments that saved my son are still not available in Utah.
    But in many instances throughout our journey, medical 
providers at times tried to make the decision for us on whether 
we would be willing to pay the price to continue with 
treatment, and I would just urge that in every situation the 
parent gets the choice in that right. Let the patient choose 
whether they are willing to pursue that or not, and don't make 
assumptions about whether the patient is willing to go that 
distance when making decisions about legislation and things 
regarding continuing to research and develop these innovative 
treatments.
    Mr. OWENS. Thank you so much.
    And I yield back.
    Chairman SMITH. Ms. Maloy.
    Ms. MALOY. Thank you, Mr. Chairman.
    Mr. Shakespear, before I ask a question, I just have to say 
I am really impressed. We asked you to come here and talk about 
something really deeply personal and really emotional, and you 
have been very poised about it, so thank you for that.
    You know, I have spent most of my life in really rural 
areas too. You and I were talking before the start about some 
of the places that we both know. And we all know, we talk about 
it all the time in Utah, how we are losing our rural kids to 
urban areas. They have to leave to get jobs.
    And the Governor of Utah has made a big push to bring more 
jobs to rural areas, and that is wonderful. But your story is a 
reminder that even when us rural kids grow up and can get jobs 
in our small hometowns, if anything goes wrong, we still have 
to move to urban areas where we can get medical treatment or 
whatever else the problem is.
    So thank you for being here and talking about the 
challenges you are facing and what we can do to better support 
rural areas because they are important to the economy. I don't 
even have a question for you. I just want to say thank you.
    Mr. Cullimore, you talked about how the state does a good 
job of supporting the bio-life industries and how we need more 
federal cooperation. Could you talk about what the state is 
doing well and how we could support that from a federal level?
    Mr. CULLIMORE. Well, the state of Utah has identified the 
life sciences industry as one of its five target industries for 
development. To that point, they have taken the approach of 
providing funding in critical areas that encourage development 
of these companies.
    So, for instance, last legislative session, the legislature 
passed a life science initiative bill to provide money to 
develop a workforce specifically for life science needs, which 
can be very unique. They have also established a fund called 
the Utah Innovation Fund, which is intended to help bring 
technologies that are early, early stage at our universities 
and institutions out to an investable stage. It is really hard 
to get these early technologies to a point where an investment 
community will take a look at them. And so that is a key bridge 
that they have helped to provide.
    And they have provided research and development credits and 
other kinds of incentives for companies.
    So from a federal perspective, I think continuing to 
provide the kinds of tax things that Frank articulated earlier 
are critical to making sure that we have that, trying to limit 
the kind of barriers that we face.
    The life science industry is probably the most regulated 
industry in the country, and finding ways to reduce those 
barriers will help bring products to market a lot faster. 
Medicare itself could be a great toolbox or a great sandbox for 
doing some of that.
    Ms. MALOY. Thank you.
    Mr. Watanabe, you talked about PBMs, and it is something 
that I hear about a lot. I have independent pharmacists and 
even, you know, larger chain pharmacies that we have all heard 
of. They come talk to me about how there is a middleman that is 
making all the money. You talked about the same thing. I know 
it is something all of us up here are hearing about. What would 
your ideal PBM solution look like?
    Mr. WATANABE. How much time do I have?
    I do think that the intermediaries in the healthcare system 
have become a real problem and are probably one of the major 
drivers of growth. The concentration in the PBM sector and now 
increasingly with the insurance sector is also a problem.
    They have immense power vis-`-vis physicians, pharmacies, 
and the innovators. They now control access to care in many 
cases, right. They are dictating to doctors what drug their 
patients can receive rather than the doctor making the decision 
for themselves what is the best choice. And at the same time, 
they are extracting large amounts of money from the companies 
who are innovating, and they are not passing that money on, 
those savings on to the patients, as it was originally 
intended.
    I think, you know, increased transparency is a very good 
first step, but I think there are a number of other things that 
Congress can look at to reduce the power of these 
intermediaries and ideally to ensure that any savings that are 
realized in the system are passed on ultimately to the patients 
who need access and, you know, who are spending an immense 
amount of their own money caring for themselves or for their 
loved ones.
    Ms. MALOY. Yeah. And we just heard Mr. Shakespear testify 
he would like to have parents make more of those decisions, not 
have them be made by somebody who crunches numbers in an office 
somewhere. And I agree with him.
    Dr. Soares, I am almost out of time, but quickly, what 
federal policies do you think are acting as barriers to 
Americans getting their cancer screenings and being responsible 
upstream for their own health? Is there anything we can do to 
support you there?
    Dr. SOARES. I thank you for the question.
    I think there are many things that can be done. Some of 
them we touched about, step therapy and step therapy in 
preauthorizations. This hugely affects how I can care for my 
patients. Patients might elect not to continue treatment, 
because if I have to start with a medication that I don't think 
is ideal but step therapy requires me to do, they might have a 
lot of side effects from that treatment. And they might decide 
that they don't want to have the treatment anymore because they 
got traumatized by the side effects.
    But I have tools to help the patient. It is just that these 
issues are limiting my ability of providing the best care that 
I want.
    And it goes also for testing, novel testing and 
innovations. There are these preauthorizations that are put in 
place that I cannot give the treatment or do the test that I 
need for my patients. So that is an issue.
    Also, we need to continue telehealth coverage. That is the 
only way that I will be able to continue to provide the care 
for my rural population. As you heard, at least 30 percent of 
the patients that we have in clinical trials at Huntsman are 
rural. So that is my people. I need to be able to provide care 
for them. So we need federal support for that.
    Ms. MALOY. Thank you.
    My time is up, Mr. Chairman. I yield back.
    Chairman SMITH. Thank you.
    Dr. Wenstrup.
    Mr. WENSTRUP. Thank you, Mr. Chairman.
    And thank you all for being here today. I really 
appreciated hearing from each and every one of you.
    I want to say to Mr. Shakespear, it was several years ago, 
probably about 6 or 7 years ago, it was actually a Member of 
Congress whose daughter was one of the first to receive the 
treatment that your son treated. And, you know, you mentioned 
something about the stars aligning, and she was one of the 
lucky ones where the stars aligned as well.
    And, you know, this requires early diagnosis and treatment, 
which is what we talk about all the time, and improving 
medicine requires early diagnosis and treatment.
    You know, a close acquaintance of my family who happens to 
be on Medicaid had the same similar situation, but when she was 
pregnant, she was only offered termination. And that is a sad 
day in America.
    Dr. Soares, you talked about home health and things like 
that. We are working on that--home health, hospital at home. 
And I do want to talk--and I will ask you something later--
about the delays that you brought up, the delays in care that 
are offered.
    And, Mr. Cullimore, you hit on a few things. You talked 
about MCIT being repealed by the Biden administration, which 
held up then new innovations getting to market. The Biden 
administration promised they would come out with a new form of 
it; they did not. And so we have our bill, which you mentioned, 
and I appreciate that.
    So you guys are hitting on all cylinders today, as far as I 
think this committee is concerned.
    You know, I am co-chair of our Doctors Caucus. And, you 
know, really, one of the themes that we are trying to promote--
in Washington, too often, when you bring up healthcare, 
everyone starts talking about Medicare, Medicaid, Affordable 
Care Act, Blue Cross Blue Shield; they are not talking about 
the health of patients. And that is a problem.
    And our goal should be to make America the healthiest 
nation on the planet and work towards that. Besides, that is 
where the real return on investment is--prevention, cures, all 
of these things that we are talking about today.
    You know, I practice predominantly in an urban area, but I 
represent urban and rural. So these issues are common 
throughout, especially in underserved areas.
    But one of the things that is a real concern to me in 
medicine today--and we really need your voice out there so that 
Congress does act on some of the things. Similar to what we do 
with semiconductors, we need to do for pharmaceuticals, 
especially generics. You know, we are reliant on China for our 
generic medications. We have to turn that around. It is a 
national security risk. It is a national health security risk. 
When my daughter can't get amoxicillin for her ear infection, 
that is a problem.
    And so this is something that I would like to address. We 
talked about, you know, pro-growth tax incentives. We are on 
board. I have a bill to address the generic issue. Just, can we 
at least look at our battlefield medicines? If you would have 
told me when I was a surgeon in Iraq that I relied on China for 
my protective equipment and my pharmaceuticals, how did we get 
here? We have to turn this ship around. And we need everybody 
talking about that and the dangers involved with that. So maybe 
we can do like we did with semiconductors and address some of 
those tax issues that would allow us to bring that back.
    And I do have a bill up for draft discussion. If we can at 
least start with our battlefield medicines, will that not tug 
at some people's heartstrings to say, yes, we have make that 
domestic? So we need your help in that area too.
    But, Dr. Soares, you mentioned step therapy. I have had 
that bill for years. I don't know why we can't get that 
through. The Safe Step Act, as it is called, we are going to 
continue to push that. Same with prior-authorization bills. It 
is: Speed up care.
    You know, you have decisions being made by people that 
don't see patients, and some have never seen patients. And this 
is a real problem in patient care. Because it all comes down to 
that.
    So one of the questions I have for you, Dr. Soares, it 
comes to--you do clinical trials. Thank you for doing that. 
That is how we get things to market. And you know the problem 
with getting through FDA approval. But it is even tougher for 
you, treating patients, when you get something approved by FDA 
with the indication of something you are treating and Medicare 
won't cover it.
    Can you address that relationship with your patient and how 
that is affected when someone else is deciding that they can't 
get something that can make them healthy?
    Dr. SOARES. Yeah. Thank you for question.
    And this is very upsetting. I had several patients that I 
would like to have provided a treatment--in this case, we are 
talking radioligands, radioisotopes. And even though has been 
approved by the FDA for one niche of what the therapy benefits, 
it is not really paid by Medicare to all the indications. So my 
patients die, because I cannot give them the treatment that 
they deserve.
    And, you know, thankfully we have done a lot of innovations 
and I have many more treatment options for my patients, but 
that particular treatment is the cornerstone of longer 
progression for survivors and survival for these patients.
    I had personally lost patients because I had not been able 
to provide the treatments because I have been told they were 
not covered by Medicare. And that is unacceptable to me.
    Mr. WENSTRUP. That seems immoral and sinful to me, and 
people that aren't standing over patients trying to help them 
making those decisions.
    Thank you. I yield back.
    Chairman SMITH. Mr. Estes.
    Mr. ESTES. Well, thank you, Mr. Chairman.
    And, you know, once again, I want to thank you for holding 
a hearing outside the bubble in Washington, D.C. I know many 
Members like myself go home every week and listen to our 
constituents, but having these hearings around the country is 
really important for us to be able to talk with people in, I 
will use the term, the ``real world,'' as opposed to what is 
going on in Washington. And it is great that we are able to 
take this information to make sound policy decisions.
    I am just going to dive right into questions today. I have 
a lot of things to go over.
    And, Dr. Soares, thank you for your testimony. And I want 
to thank you for what you do to help advance medical 
breakthroughs in the country.
    And cancer has impacted most of us, if not personally, then 
a family member or a close friend. And there have been so many 
innovations in the field of cancer treatment.
    Can you talk a little bit about why it is important for the 
United States to remain the leader in medical innovation?
    Dr. SOARES. Thank you for the question.
    We are extremely successful in medical innovation. There 
are so many pathways that are so important for us to continue 
to lead. It is important for our patients, for our communities, 
for our economy. The amount of economic revenue that is 
generated from research, in many aspects, is also huge.
    So, from the aspect of healthcare, delivering healthcare to 
our patients is key. It is also economically important. And, 
also, if we keep our drugs here, we don't have to depend on 
other countries to supply. Because, as was mentioned, drug 
searches, this is a huge issue. And I also have not been able 
to provide chemotherapy drugs and symptom control management 
drugs to my patients because they are not here.
    So it is such a multilevel importance that we continue to 
lead all these efforts.
    Mr. ESTES. Yeah. Well, thank you.
    And, Mr. Watanabe, you have heard--and I know you talked 
about it, our chairman talked about it--how important research 
and development is, and the issues there, and just how 
important that is for medical R&D to help save lives.
    I have been a fierce advocate of making sure that the Tax 
Code encourages U.S.-based research and development. And you 
talked about it a little bit, but do you want to talk some more 
about how the Tax Code helps or does impact the R&D that gets 
developed? And what other points do we need to do in Congress 
to help make sure that--and encourage innovation in the U.S.?
    Mr. WATANABE. I think I mentioned in my comments, I think, 
first of all, it is important to recognize that most of the 
innovation that is happening now is happening in small 
companies, companies like mine, and, you know, not companies 
who are generating billions of dollars in profits from existing 
drugs.
    And, as a result, capital is probably the most important 
thing for small companies like mine. It is very expensive to 
develop drugs. I mentioned my company spent almost a billion 
dollars getting our first product to market, with no revenue.
    So this committee in particular and Congress more 
generally--you know, policies that foster our ability to 
acquire capital, like the Tax Code changes that I mentioned but 
other measures that foster an environment that is friendly to 
capital formation for small companies, is vital, because that 
is what gives us the resources to run the clinical studies, to 
do the basic research that leads to the medical innovation.
    And then I think, you know, the other aspect that Mr. 
Cullimore touched on is M&A. Most drugs are developed--new 
drugs are developed by small companies, but they aren't 
marketed by small companies. Typically, the company is bought 
or the drug is bought by a large company. And that M&A activity 
is critical to then getting the medication to patients. And 
some of the steps by the FTC, in particular, against mergers 
and acquisitions are really actually going to inhibit R&D and 
the ability for us to deliver new drugs to patients.
    Mr. ESTES. Thank you for those comments.
    I mean, a lot of times, in my conversations, a lot of folks 
have said, ``Well, research and development only helps big 
companies,'' but it is really the small ones that are so much 
more greatly affected through that.
    It is critical that we keep innovation here in the U.S., 
but it is also critical that we make sure healthcare is 
affordable. You know, in my home state of Kansas, there are a 
lot of rural Kansans, as we have talked about today, and we 
need telehealth to help make sure we have better outcomes.
    And, unfortunately, some of the higher costs, driven by the 
incorrectly named Affordable Care Act a decade ago, have 
prevented Kansans from getting some of that medical care. And, 
as we mentioned before, or has been mentioned earlier, the so-
called Inflation Reduction Act is only making it worse.
    And so we need to make sure that--you know, as we look 
ahead, CBO, the Congressional Budget Office, is already 
projecting that premiums are going to go up and that seniors 
will have fewer drug choices in their drug insurance because of 
these disastrous pieces of legislation. So I want to make sure, 
as we look forward, that we can actually implement policy that 
helps make sure that we have drug treatments and other 
treatments available to patients.
    So thank you all for your time in being here.
    And I will yield back.
    Chairman SMITH. Mr. Hern.
    Mr. HERN. Thank you, Mr. Chairman.
    Congressman Moore, thanks for hosting us here in your 
beautiful city.
    I would like to thank the witnesses for being here.
    It has been great to work on healthcare in Ways and Means 
in my 4 years on the committee. And when we talk about 
healthcare, things usually turn very partisan, with the 
exception of innovation.
    And you probably saw, last week we had a great markup. A 
lot of bipartisan bills came out of there, a lot of, you know, 
``kumbaya,'' ``let's go get 'em.'' And then we had CMS come out 
and support the mental illness treatment using PDTs, so that is 
great.
    And while I wish everything could be as positive as last 
week, it is sad that what we are dealing with is stifled 
innovation and a decrease in patient access due to the 
Inflation Reduction Act, a bill that had zero Republicans on 
it.
    And one consequence of the IRA that I am extremely 
concerned with is the harm it is going to do to research of 
rare diseases treatments, as we have been talking about. I know 
on a personal level how having a rare disease can affect an 
individual and their family. I will always advocate for those 
who are suffering from a rare disease and support efforts to 
bring treatments for these diseases to market.
    Over 90 percent of rare diseases have no FDA-approved 
treatment. And that is millions of patients across America with 
no options.
    According to the 2021 National Organization for Rare 
Diseases report, about 25 percent of drugs on the market with 
an orphan designation are approved for more than one orphan 
indication. Under the IRA, there is no incentive for companies 
to investigate these additional uses, because as soon as they 
receive additional orphan designation, they are eligible for 
government-mandated price controls.
    That is why I am proud to co-sponsor the ORPHAN Cures Act. 
This bill fixes one of the many IRA consequences that would 
only hurt individuals who are already suffering enough. The 
ORPHAN Cures Act would ensure that orphan drugs treating one or 
more rare diseases are excluded from Medicare price 
negotiations.
    You know, this hearing we are having today, this markup, is 
exactly what the Chairman wanted to do when he became the 
Chairman of Ways and Means just almost 2 years ago, was to get 
out and listen to the experts, listen to the people that are 
receiving the brunt of, or the lack of, work from Washington, 
D.C.
    And you all have expressed, you know, intimately the issues 
you are having in order to get to this--not some, you know, 
politician, not some person on the Hill that has read something 
in a book. You are telling us from your heart what is really 
mattering. And we really need to listen to this.
    And it is really sad, quite frankly, that we don't have any 
of our colleagues from across the aisle that could be hearing 
exactly what you are saying. This isn't political. This is 
real. This is people's lives, as Dr. Soares said. This is 
people's lives that we are not being able to help.
    And, you know, Dr. Watanabe--Watanabe--I will get that 
right in a minute--you know, it is sort of interesting, some of 
the concepts that you came up with. Monetizing net operating 
loss, that is interesting. The passive versus non-passive 
investing. You are not asking for the federal government to 
give you money; you are asking to have an opportunity for just 
the timing of the tax.
    That is something that, you know, everybody on this 
committee needs to hear. Everybody--not just us on this side of 
the aisle, but everybody--needs to hear that. So I really 
appreciate that.
    And can you tell us what is going to happen if there are no 
fixes to the ORPHAN Cures Act? What is that going to look like 
for, you know, the support to incentivize research and 
development for rare disease treatments?
    Mr. WATANABE. Yeah. Congressman, thank you for your 
question.
    You know, my own company doesn't work in the orphan disease 
space, but a number of my colleagues at BIO, on the BIO Board 
of Directors, do, and I can tell you that it is already having 
an impact. Exactly as you described, the IRA has set up a 
disincentive for pursuing any follow-on indications for an 
orphan drug.
    You know, historically, that has been the model, that you 
get your orphan drug approved for its first indication and then 
you look to see what other possible rare diseases that drug may 
treat. And, you know, some of the best cures out there for 
these rare diseases are repurposed from a different initial 
indication. Companies are not pursuing those follow-on 
indications anymore precisely, as you said, because the IRA 
creates this disincentive for them to do that.
    I think your ORPHAN Cures Act is an incredibly important 
fix to the IRA. And we are really hope that we see passage of 
that bill very soon, because, you know, every day that this 
disincentive is in place is days that new innovations aren't 
being developed for people who are suffering from rare 
diseases.
    Mr. HERN. Thank you for your comments.
    We are already seeing, you know, what is happening to Part 
D. You know, we have lost--you know, prices have gone up 21 
percent. We are losing options in the marketplace. People are 
leaving the market because of what is happening with the price 
controls. It is something that we on this committee have got to 
get fixed. It is disastrous for our seniors. And just because, 
you know, somebody says it is great, the results of the actions 
are showing something completely different.
    So, again, we thank you all so much for your, you know, 
expert testimony. And, again, we need to have all of our 
colleagues out here.
    And I want to thank the chairman once again for having 
these field hearings on all the different topics we have had 
this year related to the American people.
    Thank you. I yield back.
    Chairman SMITH. Mrs. Miller.
    Mrs. MILLER. Thank you, Chairman Smith.
    And I would like to thank all of you for being here today 
so that we can have very good conversations back and forth.
    I am from West Virginia. This is my third trip to Utah, and 
it is incredible. But we have an expression in West Virginia. 
Our mountains are a lot closer, they are a lot lumpier. And 
there are areas that--the expression is this--and people will 
look at me and go, what does that mean? And I will say, it 
means the sun only shines between 10:00 a.m. and 2:00 p.m., 
because our mountains are so close. It is just so different.
    But, you know, because I represent rural West Virginia, 
where the access to care and innovation can really be a 
challenge for all of our patients--and an issue that I am 
particularly passionate about, of course, is care for patients 
with end-stage renal disease. Kidney care doesn't often see 
innovation--which I think you are a living example of--which is 
an extremely pressing issue for us.
    But we also have to consider the very basic challenges 
rural patients face when they are trying to access lifesaving 
dialysis services, which, again, we have already mentioned. 
Many ESRD patients in my district have to travel for hours to a 
dialysis center to receive the care they need, dialyze for two 
or three hours, then drive back home those hours. And they must 
do this three times a week just to survive.
    This burden on some of our most vulnerable patients really 
is unbearable. And, thankfully, the new technology exists for 
patients to receive home dialysis. Home dialysis can be a 
godsend for rural patients, people who have jobs or families, 
or are without access to transportation. And I have worked very 
hard in Congress to increase that access of home dialysis just 
for our ESRD patients.
    So, Mr. Shakespear, I am a mother, I am a grandmother, and 
I was so touched by your testimony about your son. You know, 
everyone here, your heart just aches, understanding, or trying 
to understand, what all you have been through, and how any 
parent would go to the ends of the Earth to save their baby.
    Unfortunately, for parents like us in rural areas, as you 
have pointed out, there are some patients that don't get care. 
And it is just, care is so far away, it makes it difficult.
    Can you sort of walk us through--I know you have talked 
about it, but--what was it like finding the care for Isaac? 
And, you know, can you explain, was it a pediatric nephrologist 
or a dialysis clinic, or was it a social worker? How did you 
work all that to navigate for healthcare?
    Mr. SHAKESPEAR. One of the challenges has been that Isaac 
has received care across many different organizations, and, 
unfortunately, care coordination across different organizations 
is very challenging.
    So, when we initially found out about his diagnosis, he 
received care from a high-risk fetal obstetrician, fetal 
surgeon, with Dr. Chmait. And then we had to coordinate with 
another high-risk OB at Stanford in order to transfer Isaac 
from Los Angeles to Stanford for birth.
    And then, throughout the process, in the NICU, he was cared 
for by a wide variety of specialists--nephrologists, 
neonatologists, and then lots of -ologists. But each condition 
that he came across usually required a different specialist. 
And then it was 24/7 care, and so we were dealing multiple 
nephrologists, multiple neonatologists throughout the process, 
and sometimes changing over in the middle of crisis situations.
    And so most of the burden for coordinating that care has 
fallen on my wife and I. But my wife has a bachelor's degree in 
early childhood education. I have a bachelor's degree in 
biology and a master's degree in healthcare administration and 
public health. So, when I say it's because of our education, I 
understand the system, I understand the biology, she 
understands the development component. And so you could not 
have picked a better set of parents to be thrown into that 
situation. But I know that we are very unique in understanding 
what is happening and being able to communicate those things 
across different teams.
    And so, throughout the process and every hospitalization, 
we have had to be advocates for our own child and understand 
the treatments that he was going through and ask questions and 
be able to explain in clinical terms to the next provider.
    Mrs. MILLER. I need to ask one more----
    Mr. SHAKESPEAR. Uh-huh.
    Mrs. MILLER [continuing]. Question, so thank you.
    Mr. Watanabe, Chairman Smith recently created 10 tax teams, 
because you all know about the Tax Cuts and Jobs Act, and we 
are just focused on what we can do for 2025 and how we can put 
these things in order. I am heading one of the tax teams, and 
what I am hearing about the most is the corporate tax rate.
    And because of President Trump's work and all of that that 
happened, we tried to create a favorable environment for 
companies engaged in R&D. And it is disturbing to me that our 
medical supply chain is heavily reliant on foreign 
manufacturers.
    Could you explain to me the benefits of a 21-percent 
cooperate tax rate and how that helps you?
    Mr. WATANABE. Well, you know, as I mentioned earlier, the 
smaller companies, most of us are not actually profitable, so 
we don't pay taxes, at least at the moment, although we all 
hope to at, you know, sometime in the very near future.
    But I think, you know, it is also important to understand 
that small biotechs exist inside of a much larger ecosystem. 
And I mentioned earlier, for example, the importance of M&A to 
finish development and to bring the therapies to patients. So I 
think that any change that fosters the health of the overall 
biotechnology sector in America, like the corporate tax code, 
will have a very positive effect on R&D.
    And I certainly don't want to suggest that large 
pharmaceutical companies--I was employed at Eli Lilly and at 
Amgen in the past. They invest immense amounts of money in 
research and development. And to the extent that they have to 
pay higher tax bills, all of those dollars are dollars that 
they will not then spend on R&D and develop additional 
therapies.
    Mrs. MILLER. Thank you so much. I apologize.
    I yield back my time.
    Chairman SMITH. Mrs. Steel.
    Mrs. STEEL. Thank you, Mr. Chairman, for having this 
hearing here in Utah.
    When Congressman Blake Moore said that it is over 100 
degrees, I couldn't believe it, because I came here only to 
ski, so I always thought that you have much cooler weather.
    But thank you, witnesses, coming out here. Because when we 
hear from you, then, you know, we know which direction that we 
have to move. A lot of times, we try to introduce the bills, 
and you know what? Sometimes those bills actually create more 
loopholes, and then it is not really helping. So thank you very 
much for coming out today.
    And telehealth--I am so into telehealth. Especially 
California, during COVID, we were totally shut down for a few 
years. So telehealth has been a vital lifeline for patients 
living in urban, suburban, and rural areas across the country.
    And, last June, Ways and Means took a proactive step in 
passing the Telehealth Expansion Act, which would allow 32-plus 
million Americans with health savings accounts to have a 
permanent access to telehealth and remote care services without 
first having to meet their deductible.
    This legislation must pass before--it is going to be 
expired by end of this year.
    And thank you, Mr. Shakespear, for, you know, you sharing 
your personal story. And it is really sad, you know, what you 
have to go through. Of course, you have happy times too, but, 
you know, when baby comes, usually you have to be really happy.
    Actually, my grandson was just born 2 months ago. Nine-
pounds premature, so he was in NICU for 8 days. And I remember 
that, you know what, those 8 days, that, you know, I hoped that 
he's going to come out healthy. Fortunately, he is healthy. 
But, you know, what you are going through I cannot really 
imagine.
    But, you know, could you explain just a little more about--
since I know that you are chair of the Utah telehealth advisory 
board at the same time that, actually, telehealth helped to 
connect with the specialty care providers for your son. So 
could you tell us how important it is that, you know, we have 
to move forward with this?
    Mr. SHAKESPEAR. Absolutely.
    So understand that when we have to travel to Salt Lake City 
for an appointment, it is not only 9 hours of our time but it 
is the cost of gas to travel up here, it is the cost of 
lodging--typically we have to stay oversight somewhere--it is 
the cost of food.
    And I do want to acknowledge, our insurance programs and 
Medicaid do assist with us this. But when you look at raising 
gas prices, inflation for the cost of food and for lodging, 
those rates that we are reimbursed don't change when those 
price goes up. And so those exacerbated prices make the problem 
worse for us personally.
    But being able to access telehealth from home just gives us 
a component of being able to keep a consistent schedule, reduce 
cost, and really protect our son, because taking him out into 
public is dangerous until he has a higher immune system.
    It has been huge to be able to get in quicker as well. 
Oftentimes, if we are scheduling an appointment, sometimes it 
is a month out, but telehealth, we can get in that week.
    So it makes a significant difference in a number of ways 
for us to be able to access that.
    Mrs. STEEL. Thank you.
    And another concern here is, I am concerned that, under 
current Biden policies, seniors are seeing fewer Part D plans, 
increased premiums, and fewer drug options.
    I also think this hearing must address the CCP manipulation 
on American companies. Economic diversification is an important 
tool to halt our current dependency on the CCP on our 
healthcare supply chain.
    I introduced the Medical Supply Chain Resilience Act, which 
would allow USTR to establish trusted trade partners, diversify 
medical devices and pharmaceuticals. This framework can help 
eliminate barriers to trade, expand supplier networks, and 
allow for the investment in domestic manufacturing.
    So I want to ask Mr. Watanabe and Mr. Cullimore: As the 
CEOs, can you share your perspectives on the greater issues of 
sole-sourcing products in China instead of in the United States 
or with trusted allies? And what does the future hold if we 
don't change that course?
    Mr. WATANABE. So I guess I will start.
    Yeah, this is a major issue, I think, that we need to 
address as a country. And I think it is even more acute than 
some of the issues that Dr. Wenstrup mentioned.
    You know, for example, it is not just generic drugs that we 
rely on. In fact, most of the drugs that we take in this 
country are being manufactured with chemicals, starting 
chemicals, that are coming from China. China manufactures the 
majority of the starting chemicals. China has our entire 
biopharmaceutical industry by a stranglehold.
    You know, I think one of the challenges has been that, as 
margins have been squeezed by pharma companies through IRA and 
through PBMs and through a whole variety of things, we are 
always looking for ways to reduce costs, and, unfortunately, 
China typically is the cheapest place to buy supplies, it is 
the cheapest place to run clinical studies, it is the cheapest 
place to manufacture your product. And so companies looking at 
their bottom lines are shifting overseas.
    We, as a company, have chosen not rely on China for any 
purpose, one, because, as a former CIA and former Naval 
intelligence officer, I think we are in the middle of a cold 
war with China. But, secondly, you know, we saw in the 
pandemic, if we rely on overseas sources, particularly overseas 
sources from a country that is not terribly friendly to us, and 
something like the pandemic happens, we can't rely on those 
sources anymore. And it would be far worse if our two countries 
were to actually come into conflict.
    So I fully support the BIOSECURE Act and the broader push 
by Congress to build resiliency in the U.S. biopharmaceutical 
sector.
    Mrs. STEEL. You know what, my time is up, Mr. Chairman, so 
I--is it okay?
    So, Mr. Cullimore.
    Mr. CULLIMORE. Oh. Just briefly, the pandemic shined a 
bright light on this problem, and many companies have 
recognized that and are trying to disentangle as much as they 
can from those kinds of sources in their supply chain.
    That said, it is very important, I think, that we be 
judicious in how we approach it. Because sometimes major 
tariffs or things of that nature can have an immediate effect 
on U.S. companies that is very negative.
    And so I think, while the concept of bringing and reshoring 
is important, it needs to be done in a way that doesn't create 
short-term harm that is very significant.
    Mrs. STEEL. Thank you, Mr. Chairman. I yield back.
    Chairman SMITH. Thank you.
    Mr. Feenstra.
    Mr. FEENSTRA. Thank you, Chairman Smith, for having this 
today.
    And I also want to give a special shout-out to my good 
friend, Representative Moore. Thank you for having this in your 
district. It is truly impressive, what you are doing here. It 
really is remarkable.
    And I thank each one of you for your witness and testimony.
    You think about where the U.S. stands. I mean, in the last 
couple years, last decade, we have for the most part been 
number one in the world in innovation when it comes to 
healthcare. And we are losing that. We are losing that grip on 
what we can do.
    And it just seems like, through IRA, that we want to go 
back to that European-style government price control, the quick 
solution to try to bend this curve, which is a false narrative. 
And it really concerns me.
    And, then, when we talk about supply chains, when we talk 
about the tax ramifications, our tariffs, our regulatory 
environment, there are so many things that are really pinch 
points to us just being innovative.
    So my question is, we are all sitting here trying to figure 
out, what are the solutions?
    And, Mr. Watanabe, I mean, if you look at the supply 
chain--and you talked about, obviously, China and things that 
are going on there--what would be the number-one thing that you 
could say to us, hey, this is the first thing you need to 
tackle? I mean, is it the amortization of R&D expensing, or 
what would you look at and say, this is the key?
    Mr. WATANABE. I think probably the single most important 
thing that Congress can do to maintain our leadership in 
biopharmaceutical innovation is to address access and 
reimbursement issues in this country. Because if we don't fix 
the currently broken reimbursement system in this country, 
there isn't going to be any money for future innovations.
    Mr. FEENSTRA. Boom. Thank you. Exactly. Reimbursement. I am 
glad you said that. And that hasn't been really talked about 
today.
    Dr. Soares, you have also mentioned in your testimony that, 
because of the IRA, that a lot of cures are going to be gone. I 
mean, you talk about biologics, you talk about orphan drugs, 
all these other things that are going to be on the sunset or go 
away because of what is happening.
    Can you address that? And what is any type of solution? You 
know, do we have to roll back this? Or how do we fight against 
this?
    Dr. SOARES. Yeah, there are treatments that will go away, 
and there are treatments that have already gone away and I have 
not been able to offer to my patients.
    I think continuing federal funds and reforms to allow them 
to keep--that we can be able to incentivize the companies to 
still have them, that will be key.
    It is very disheartening when we have treatments that are 
effective and, for reasons that are not in the physicians', in 
the healthcare control, we cannot offer to them.
    I cannot speak necessarily of a given policy. That is not 
what I am expert on. But I can tell you for a fact that some of 
the treatments have been going away and I have not been able to 
offer to my patients with rare cancers.
    Mr. FEENSTRA. Yeah.
    I want to pivot, Dr. Soares. You and I are sort of kindred 
spirits on talking about rural healthcare----
    Dr. SOARES. Yes.
    Mr. FEENSTRA [continuing]. And the rural access points. I 
have done my research in maternal care. You have done it, 
obviously, in cancer areas.
    Can you talk and give this group here solutions to the 
deserts that are out there in healthcare? I mean, what do you 
see--I mean, I have done my research and said, all right, this 
is X, Y, and Z. But for you, what do you see as the opportunity 
for us?
    Dr. SOARES. Yes. Thank you for that question. That is 
actually one of my tasks, is to provide care and clinical 
trials to our patients. And then there are several steps.
    A, obviously, access to telehealth is key. And then 
providers that have multi-license so they can even go outside 
of their states and provide the care.
    Access to being able to get the labs done locally so I can 
monitor that for the patients, and I can also be coordinating.
    Continued support of patient navigations that can be 
reimbursed and help with all of this navigation of rural care. 
Really, integration of the EMR systems, that it can talk, and 
AI can help with that.
    And regulations that allow us to send the drugs to the 
rural patients. Because right now there is a lot of regulation 
that shipping outside even state lines or farther can be very 
complex and expensive.
    Mr. FEENSTRA. Yes.
    Dr. SOARES. We have multiple meetings at the Huntsman 
Cancer Institute to brainstorm how we are going to give and 
take and deliver cutting-edge therapies to other patients at 
their homes. I can monitor them, but there are regulations that 
are needed to be in place for me to be able to actually get, in 
an affordable way, the drugs to the patients in their homes.
    Mr. FEENSTRA. Yep. Yep.
    Dr. SOARES. And I will be forever thankful for help with 
that.
    Mr. FEENSTRA. Yep. Thank you, Dr. Soares. Thank you for 
those comments. And I will be working on those issues and try 
to help in those areas.
    Thank you very much. I yield back.
    Chairman SMITH. Ms. Malliotakis.
    Ms. MALLIOTAKIS. Thank you, Mr. Chairman.
    I am pleased to be here in Salt Lake City for the first 
time. And I want to thank our witnesses for sharing their 
expertise and their personal experiences on the topic of 
healthcare innovation and access.
    Under the Biden administration, we have seen significant 
barriers for Medicare beneficiaries' access to innovative 
technologies and bringing new drugs to the market. It can take 
up to 5 years after FDA approval for medical devices to get 
Medicare coverage. Innovative treatments see that same lag 
time.
    Furthermore, the Democrats have made their intentions clear 
to oppose the pro-growth tax policies from the 2017 Trump tax 
cuts that have created a more competitive tax code, they have 
created millions of jobs, they have helped encourage and 
sustain innovation in the United States by giving businesses 
the tools to grow, conduct research and development, and 
reinvest back into their companies and employees and their 
communities.
    But even more concerning is the implementation of the so-
called Inflation Reduction Act and the harmful impacts the 
Medicare drug price negotiations program will have on premiums 
and the development of critical lifesaving drugs.
    Mr. Chairman, I would like to submit for the record a study 
by Milliman titled, ``Expected Impact of Inflation Reduction 
Act Medicare Drug Price Negotiation Program on Medicare Part D 
Beneficiary Out-of-Pocket Costs.''
    Chairman SMITH. Without objection.
    [The information follows:]
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    Ms. MALLIOTAKIS. According to the study, the IRA's 
government price-setting scheme will cause Medicare 
beneficiaries' annual out-of-pocket costs to jump by $70, or 12 
percent, for those who utilize these negotiated drugs under 
part D in 2026. Low-income beneficiaries' out-of-pocket costs 
will increase by a staggering 27 percent.
    And on top of the rise in premiums, the Congressional 
Budget Office's conservative estimates say that 13 fewer drugs 
will come to the market over the next 30 years, with outside 
experts projecting the number will be around 135 new cures.
    I will start with Mr. Watanabe.
    Thank you for your mention of the impact that this will 
have on especially the orphan drugs. And I am also proud to be 
a co-sponsor of the ORPHAN Cures Act.
    The President said recently that the Democrats, quote, 
``finally beat Medicare,'' unquote, and I am afraid that the 
data in Medicare Part D would agree.
    My question is, do higher out-of-pocket costs lead to 
patients stopping treatment, perhaps, or maybe trying to ration 
their medication? What impact would this have as a whole?
    Mr. WATANABE. Yeah, there is no question that increased 
patient co-pays has an impact on patients adhering to therapy 
or even fulfilling therapy.
    I think it is well-known in the biopharmaceutical industry 
that anytime the patient is paying more than about $35 out of 
pocket, the rate at which the patient refuses to accept the 
medication at the pharmacy counter goes up.
    And that is leaving aside, you know, conversations between 
a doctor and a patient when the doctor says, ``Hey, I am going 
to prescribe this medication for you, but the co-pay is going 
to be X'' and the patient walks away.
    And this unfortunately is occurring both across commercial 
and Medicare plans, where there is constant increase in cost-
shifting to the patients, which is unfortunately impacting the 
standard of care.
    Ms. MALLIOTAKIS. And I see all your fellow witnesses 
nodding their heads that they are in agreement that this is a 
concern.
    I want to also talk about manufacturing and R&D. I recently 
introduced the bipartisan Supply Chain Security and Growth Act, 
which will onshore critical supply chains in pharmaceuticals, 
in medical devices, and other manufacturing back to the United 
States by providing credits to companies who choose onshoring 
their manufacturing.
    Mr. Cullimore, can you speak to the importance of these 
types of incentives as we work to onshore these particular drug 
productions and, in particular, reduce our reliance on foreign 
nations, Communist China, which we unfortunately rely on far 
too much for APIs and other pharmaceuticals?
    Mr. CULLIMORE. Thank you for the question.
    It is really important to understand that the reason people 
have gone to China and other places is because it is cheaper. 
Now, to bring them back, to reshore those kinds of processes, 
the investment of dollars to make that happen is significant.
    We just met with a company that was looking at doing the 
chemicals, the APIs, as they call them, that they are doing 
overseas, bringing them here, acknowledging that it was going 
to be a significant investment.
    A bill like you are proposing would provide incentives and 
a pathway for those kinds of reshoring activities to occur. 
Because the biggest problem is not just the lower costs; it is 
the investment that it requires to reshore and do all of those 
kinds of things. So you are right on track with that.
    Ms. MALLIOTAKIS. Well, thank you very much. I appreciate 
that.
    And, you know, we see shortages, about 250 different drug 
shortages, things like antibiotics and chemotherapies. We need 
to onshore this stuff. If COVID taught us anything, it is that 
we cannot rely on countries, particularly a communist country 
like China, for this.
    And so we, as a committee, are working very closely to try 
to address this issue, and hopefully we will be able to do it 
in the near future.
    Chairman SMITH. I would like to thank each and every one of 
our witnesses for your testimony, for answering our questions, 
for being here, and for your ideas.
    I also want to thank each member of the committee. The 
members of this committee are spread in thousands of different 
directions, and for them to make it a priority to come up here 
to hear from real Americans of the issues that you are facing--
I admire your hard work, and I appreciate the sacrifice that 
you have all made.
    Please be advised that members have 2 weeks to submit 
written questions to be answered later in writing. Those 
questions and your answers will be made part of the formal 
hearing record.

      

                    LOCAL SUBMISSIONS FOR THE RECORD

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                   PUBLIC SUBMISSIONS FOR THE RECORD

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    Chairman SMITH. And, with that, the committee stands 
adjourned.

    [Whereupon, at 11:45 a.m., the committee was adjourned.]

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