Hearings to examine building a resilient health care future with biotechnology.

I call the finance subcommittee on healthcare to order. I'd like to thank Chairman Crapo and Ranking Member Wyden for their help in allowing us to move forward with this hearing today. I also of course wanna acknowledge Senator Hassan uh for her partnership and uh her leadership to make today's hearing possible. And uh a big shout out to members of the staff uh who worked very hard uh on both sides of the aisle to make this happen. Over the past decade, biotechnology has emerged as a pivotal technology. Uh uh it's a pivity pivot pivotal, if I can say that, technology domain of the twenty-first century. Uh this technology has the potential to cure diseases like cancer, and Alzheimer's, to protect us from pandemics, and fuel our economy. In Indiana alone, the life sciences industry employs around seventy thousand Hoosiers, providing good-paying jobs in local communities, while producing critical innovation and health treatments. Indiana also leads the United States in bio-manufacturing, serving as the nation's number one life sciences exporter in twenty twenty four. However, China's rise in biotechnology and the growing risks of antimicrobial resistance present new challenges to the United States. For more than a decade, Beijing has poured enormous resources into their biotech sector in a deliberate, a deliberate bid for global dominance. China's rise puts the United States in a perilous position because leadership in this space provides America national and economic security. Moreover, advancements in biotech help keep America healthy by preventing treating and curing diseases. So if we cede global biotech leadership to China, we risk a future where high-skilled biotech jobs migrate abroad. First-in-class therapies do not reach American patients first. And pharmaceutical supply chains are strategically weaponized. Just as we face the threat of China's rise in biotechnology, antimicrobial resistance, or AMR, has become a growing public health crisis in recent years. In the United States alone, more than two point eight million antibiotic-resistant infections occur each year, resulting in over thirty-five thousand deaths. As antimicrobial resistance has spread, market failures have resulted and a lack of needed research and development for new therapies. Many of the cutting edge biopharmaceutical companies working to develop antimicrobials have filed for bankruptcy and stopped producing these antibiotics completely. While these two threats to the United States vary in substance, the solution to address both is simple, innovation. America has a rich history of innovation, of course. It's what we are best at, and as policymakers, it's our responsibility to empower our innovators, whether through R and D incentives, partnering with allies to strengthen supply chains, or cutting red tape. Without an industrious, innovative, and self-sustaining domestic biotechnology sector, the United States will remain at risk, both of relying on China for new life-saving therapies and basic drugs, end up being unprepared for the next public health crisis. So it's my hope that this hearing will explore ways we can ensure the United States remains the global leader in biotechnology. And I now recognize ranking member Hassan for five minutes to deliver her opening statement.

Well, thank you, Chairman Young, uh, for not only your statement but for the work that you have done with me, uh, to hold today's hearing and for your staff. Um, who have worked so well along with mine uh to make sure that this hearing could come together. I also want to thank the witnesses who are here for testifying before the committee and sharing your perspectives on healthcare and biotechnology. As the chair has noted, one major threat emerging threat in this area is a surge of so-called super bugs, which are bacteria that no longer respond to the treatments that we currently have. Nearly three million Americans get sick each year with an infection cannot be treated with the routine antibiotics that we have today. Doctors who are treating patients with resistant infection often have to try multiple antibiotics and in some cases no treatment options exist. And despite this growing crisis, research and development for new antibiotics is lagging, and only a handful of new antibiotics have been discovered in the past fifty years. We need to examine this issue and find ways to invest in the development of new antibiotics, in order to give doctors and patients the tools that they need. This is a priority not just for the health of our people, but also for our national security, because as we face the challenge of combating super bugs and defending against other outbreaks, our foreign adversaries are growing increasingly sophisticated in their own biotechnology. In the development of medications and treatments, China has quickly grown its capacity and is now one of the fastest drug development pipelines in the world. If the United States does not keep up with the science and innovation coming from countries like China we risk falling behind and becoming reliant on critical new medications that are only available abroad. Furthermore, much of our supply chain for medications and medical devices made in the US depends on ingredients and materials that come from abroad as we look ahead to the future of biotechnology in the United States it's critical that we consider ways to diversify secure and onshore our supply chains. Finally, as we grow this important work at home, we also need to protect against the possibility that our adversaries will steal this research and leapfrog ahead of us. We know that foreign entities from Russia and China are already targeting American biotechnology and medical research through targeted cyber attacks This compromises our national security and sensitive patient data potentially allowing foreign governments to weaponize biological information. We need to treat biotechnology biotechnology as critical infrastructure in order to protect Americans' biological information from these outside threats. So it's clear we have a lot of work to do to strengthen our health care system and our national security by addressing these threats. And I am looking forward to today's hearing so that we can take a step forward in doing that. I'll now turn it over to the chair.

Thank you, Senator Hassan. Make sure the mike's working there. Um, I'd I'd now like to introduce our first two witnesses for today. Our first witness is Doctor Alan Palkowitz. He is President and CEO of the Indiana Biosciences Research Institute. He has extensive experience in the biotechnology industry, including twenty-eight years at Eli Lilly and Company. where he served as Vice President of Discovery, Chemistry Research and Technologies. Our second witness, Doctor Michelle Rozzo, uh is Vice Chair of the National Security Commission on Emerging Biotechnology and before joining the commission Doctor Rozzo served as Director of Technology and National Security at the US National Security Council. I'm now I'm gonna turn to ranking member Hassan to uh introduce third witness, ranking member Hassan.

Yeah, thank you. I'm really pleased to introduce Doctor Vera Luther, the Section Chief of Infectious Disease and International Health at Dartmouth-Hitchcock Medical Center. Doctor Luther is a nationally recognized physician and leader in infection control and the treatment of infectious diseases. Welcome, Doctor Luther. I really look forward to your testimony. Back to you, Mister Chair.

And for our final witness, uh, it's uh, Mister Kevin Outterson, Professor of Law and Executive Director of Combating Antibiotic Resistance Bacteria Bio-Pharmaceutical Accelerator or Carb-X at Boston University. Mister Outterson has published more than one hundred articles and book chapters on healthcare law with a focus on incentive problems related to pharmaceutical products including push and pull incentives for antimicrobials. Welcome all. Um, we're now going to turn to Doctor Palkowitz to deliver his opening statement. Uh, Doctor Palkowitz, you're recognized for five minutes, sir.

Thank you. Chairman Young, Ranking Member Hassan, and members of the subcommittee, thank you for the opportunity to testify today. I appreciate the chance to appear before a committee chaired by Othello Hoosier on an issue central to Indiana's growing life sciences economy. My name is Alan Palkowitz. I am President and CEO of the Indiana Biosciences Research Institute, a non-profit organization that accelerates the discovery and development of new therapeutics through partnerships among universities industry, government, health systems, and philanthropy. After more than thirty years leading drug discovery in the biopharmaceutical industry, I've reached one conclusion. America does not have an innovation deficit, it has a translation deficit. Our scientists are succeeding. However, our innovation system is not translating enough of their discoveries into medicines, new companies, manufacturing, and jobs. The gap is what many in biotechnology call the valley of death, promising discoveries that are too advanced for academic funding, too early for industry investment, and too risky for private capital. When federally funded discoveries stall there, taxpayers lose twice. Patients lose access to promising therapies, and America loses a return on billions of dollars already invested. This is not a temporary problem. For more than a decade, private investors have followed the same pattern. They wait on the sidelines until a molecule has already cleared the valley of death, and shown real evidence of commercial potential, and only then invest. That pattern shows no sign of changing on its own. If anything, today's investors' appetite for artificial intelligence and adjacent technologies is pulling capital further away from early stage biotechnology not toward it. Bridging that gap is why the Indiana Bioscience Research Institute exists. Over the past decade, Indiana has shown that translational success comes not from any single institution, but from a connected ecosystem. Universities, global life science companies, health systems, entrepreneurs, philanthropy investors, and government working together to reduce the barriers between discovery and commercialization. That is the blueprint for the national strategy I'm recommending today. For this committee, biotechnology is one of the highest return investments the federal government can make. Innovative therapies improve lives while reducing long-term Medicare and Medicaid costs. Innovation policy is fiscal policy. It is also health security policy and national security policy. As we've heard, China is pursuing an intentional and aggressive national strategy to globally dominate biotechnology. China is not competing technology against technology or drug against drug. China is competing ecosystem against ecosystem. This Congress has recently taken an important step on the security half of that challenge through the Bio-Secure Act. That is necessary, but it is defense. What America needs now is offense. A strategy that builds our own translational capacity, as deliberately as China is building its own. That is why I recommend establishing a national translational biotechnology initiative. Let me be clear about what it is not. It is not a substitute for the NIH, the NSF, or other agencies that fund America's basic science. Those investments are the foundation of everything I am describing. The initiative picks up where that research leaves off, supplementing federal funding by helping the discoveries they support survive the journey from grand supported science to an investable new therapeutic. Rather than another federal research program, the initiative is a framework that aligns existing federal investments with state initiatives regional partnerships industry, philanthropy, and private capital around six connected priorities. Building translational research infrastructure, creating a national network of regional biotechnology translation hubs, building the biotechnology workforce of the future, expanding domestic biomanufacturing capacity and supply chain resilience, expanding federal incentives to discharge technical risk, and accelerate commercialization, and finally, Measuring success through definitive outcomes, not publications or patents alone. I describe each in detail in my written testimony. Let me leave you with one final thought. Maintaining America's leadership in biotechnology is not inevitable. It is a policy choice. If we bridge America's translation gap, we achieve three outcomes. Healthier Americans, a stronger American economy, and a more resilient America. Thank you for the opportunity to testify. I look forward to your questions.

Thank you, Doctor Palkowitz, uh, for your opening statement. Doctor Rozo, you are now recognized for five minutes.

Thank you. Chairman Young, Ranking Member Haassen, and members of the subcommittee, thank you for the opportunity to testify. It is an honor to appear before you on behalf of the National Security Commission on Emerging Biotechnology to discuss why biotech is a matter of US national security. First, let me say, Chairman Young, it has been a pleasure to serve alongside you as Vice-Chair of the Commission. Your leadership produce recommendations that will strengthen America's biotechnology future. I have two messages for the committee today. First, China is no longer merely catching up to us in biotechnology. In key domains, particularly in areas of biopharmaceutical innovation, they are now surpassing us. And second, biotechnology is about far more than medicine. Leadership in biotech will shape agriculture, defense, economic competitiveness, a national power for decades to come. China's rise in biotechnology is no accident. For two decades the Chinese government has pursued a national strategy for biotechnology leadership to dominate the sector using both legal and illegal means. And we can see the results most clearly in pharmaceutical biotech. Multinational pharmaceutical companies are increasingly going to China to acquire cutting edge innovation. Last year alone, companies entered into more than one hundred and fifty licensing deals with Chinese biotech firms worth over one hundred and thirty-five billion dollars. That was nearly triple the previous year's record, and this year is on pace to shatter that total. Let me spend a minute on why this matters from a national security perspective. I come to this issue as both a scientist and a national security professional. I am a biologist by training. and have served across the Department of War and the National Security Council, and now work with the intelligence community on emerging technologies. And people often ask me, if China develops a breakthrough ca- cancer therapy, isn't that a good thing? Wouldn't more innovation and more cures benefit patients across the world? These are fair questions. We all want lifesaving medicines to reach patients faster. But it is not just about who invents the technology, it is about who controls it, and whether we can rely on them in a crisis. Just like we saw with telecommunications, with batteries and critical minerals, America's growing dependency on Chinese biopharmaceutical supply chains is a strategic vulnerability so what we should be asking is if China has already restricted access to critical minerals why would we assume it would continue supplying lifesaving medicines during a conflict? Imagine American doctors forced to ration treatments because supply chains have been weaponized. Imagine policy makers forced to choose between national security priorities and the health of the American people. Those are choices we should never have to face, but unfortunately that is where we are heading. China's growing biotech capacity increases its strategic options, while our dependence risks constraining ours. The commission laid out a plan to change this trajectory. Forty-nine recommendations to both strengthen the US biotechnology ecosystem and also address the risks created by China's non-market system. With the help of members of this committee, Congress is acting on this plan. Legislative action has been taken on forty of the forty-nine recommendations, with twenty-six provisions signed into law. For example, one of our recommendations was to restore the full and immediate expensing of R and D costs, and I am grateful to Senator Young and Senator Hassan for their leadership on the American Innovation and Jobs Act which implements this recommendation. Ensuring biotech companies can fully deduct these R and D expenses are essential to maintaining US competitiveness. But more work remains. The country that leads in biotech will gain lasting economic, geopolitical, and national security advantages, and the Chinese Communist Party has made that bet deliberately. The question before us is whether the United States will act with the same urgency. This committee has a critical role to play, the policy levers under your

Thank you, Doctor Rozo, and uh thank you for your uh extensive and very

Thank you. Chairman Young, Ranking Member Hassan, distinguished members of the subcommittee, thank you for holding today's hearing and inviting me to testify. My name is Vera Luther. I'm an infectious diseases or ID physician at Dartmouth Health in New Hampshire, and Fellow of the Infectious Disease Society of America. Strengthening biotechnology innovation critical to addressing threats such as antimicrobial resistance or AMR. AMR is killing Americans, driving up health care costs, and eroding our ability to perform routine surgeries, organ transplants, cancer chemotherapy, and neonatal care. To save patients' lives and protect modern medical care we need three things. We need novel antimicrobial drugs, stewardship programs to improve antimicrobial use, and infectious disease physicians. to treat patients with resistant infections, lead clinical trials, and lead health systems programs to prevent these infections. Unfortunately, our pipelines of both antimicrobial drugs and ID physicians are in crisis. AMR is a pathogen's ability to evolve to resist antimicrobial drugs making these drugs ineffective. In the US, AMR is linked to a hundred and seventy thousand deaths annually, and infections contribute to half of cancer deaths and are the second leading cause of maternal mortality. Health care costs from the six biggest AMR threats are more than four point six billion annually but new antimicrobial drugs could reduce costs by reducing hospitalizations, infections, and kidney damage. Consider a few examples that my colleagues and I regularly face. A mom in her thirties was hospitalized with severe lupus and given immunosuppressive drugs. She developed pneumonia. Despite antibiotics, the infection got worse and entered her bloodstream. We tried several different combinations of antibiotics. However, she died from her infection. A marathon runner in his fifties underwent a knee replacement surgery. He developed a surgical site infection that progressed and was resistant to multiple antibiotics. He underwent three additional surgeries, months of IV antibiotic therapy, and had to spend nearly a year away from work. A woman in her sixties was admitted with a urinary tract infection. The hospital had no ID physician and test results took three days. Initial treatments were ineffective. She progressed to sepsis and faced three weeks in the ICU and dialysis for acute kidney injury. I wanna thank Senators Bennet and Young for authoring the bipartisan Pass-Door Act, which would revitalize antimicrobial development by paying for value, rather than volume. rewarding only truly innovative drugs that benefit patients with federal contracts. We must also ensure that antimicrobial drugs are used appropriately. Antimicrobial stewardship programs improve patient outcomes, reduce inappropriate antibiotic use, and lower health care costs. However, many hospitals lack the resources, staff, and diagnostics necessary to fully implement stewardship and guide antimicrobial decisions. For example, at a rural hospital I supported through telehealth a physician described the reflex to shoot broad with antibiotics, because there's no ID consultant on-site, test results take time, and the stakes of under-treating sepsis are so high. This is understandable, but it's precisely the pattern that accelerates resistance. Nationally, nearly half of small and rural hospitals have no ID specialist on staff, though they routinely see patients with resistant infections. Pastor would provide resources to such facilities for their antimicrobial stewardship programs. We also need investments in the ID workforce. Nearly eighty percent of US counties have no ID physician. Because ID is the third lowest payish specialty and medical students accrue significant educational debt, we fill fewer than half our ID training programs annually. This means many patients can't reach us or must travel far and delay care. ID physicians don't do procedures, so we build many of the same codes as primary care, mostly in the inpatient setting. We need to work with you on legislative solutions, for example, payment incentives, an exemption for non-procedural healthcare services from cuts to practice expense reimbursement quality measures for ID so we can participate in value-based payment and a mechanism to reward ID physicians for the cost savings that our work generates. Congress has already authorized one important tool, but it remains unfunded. The bio-preparedness workforce pilot program would offer loan repayment to ID professionals in shortage areas. I urge I urge Congress to appropriate the five million dollars necessary to launch this important program. Thank you for the opportunity to testify today.

Thank you, Doctor Luther. Mister Outterson, you're recognized for five minutes.

Chairman Young, nice to see you again, and, and other members of the committee. Thank you for inviting me today. Uh I'm Kevin Utterson, Professor of Law at Boston University and the Executive Director of Carp-X, um which is a a a tool created by BARDA, uh to drive innovation in the antimicrobial space. Uh a recent uh Harvard study found that Carp-X supported projects actually are moving into human clinical trials are being translated, uh with great success, and I'm grateful for the opportunity to be here today in the talk with you. Americans and their health systems, all of us rely on effective antibiotics as health care infrastructure. We depend on these amazing drugs in in in astonishing ways. Uh, every uh hospital in your state, every soldier in the in in the US military, every mother who gets a C-section, uh, even people my age who uh, you know, might be looking at knee replacement or something, all of us depend on these amazing drugs as a safety net uh to prevent of the infection which could end our lives. A resistance, however, eats away at these amazing drugs. It's like rust eating away at a bridge. In the United States right now, two point eight million people uh get these infections. Thirty five thousand Americans die each year. It sickens many more people who who survive it. Treating infections caused by these six most resistant pathogens, bacterial pathogens in the US, it costs our health care system at least four point six billion dollars a year. In the past few years, the CDC reported a five-fold increase in infections, uh, caused by these nightmare bacteria across twenty-nine states. Uh, the the other states are probably just uh, we don't have enough surveillance to have seen what's happening there. Uh, these pathogens threaten the resilience of our healthcare systems. They are resistant to many of the of the newest antibiotics, as Dr. Luther just said, uh, r associated with high rates of morbidity and mortality. and can spread throughout our system. Now is the time for us to be investing in these things for the future. Antibiotics are valuable, but the economic market is is really undeniably broken. Uh, FDA approval should be a celebration for these companies. They should pop a a a quirk and and celebrate, but the payday never comes for antibiotics. Because of resistance, uh, doctors, uh, you know, like Doctor Luther and other doctors at the IDSA do the right thing. They're very careful with these drugs. That's a correct thing to do. Um but it they they s then sit on the shelf like a a fire extinguisher behind a, a glass wall and and the company doesn't get paid. Now, for the fire extinguisher company they get paid, they get paid the day that fire extinguisher goes on the wall. Um they get paid when the preparedness starts, but for antibiotics they don't get paid until we actually use them, and uh by that time many of these companies have gone bust. Uh we've had eleven uh small companies bring in a new FTA approved antibiotic to the market in the last decade, eleven, call that success. Two of them are relatively new. The other nine have been on the market for a couple of years, and all nine of them have either gone into bankruptcy or the economic equivalent their their R and D investors completely wiped out. Uh that's a hundred percent of the small companies with FTA approvals for antibiotics in the last decade. We need a better pipeline of these critical products. We need to move them onto the market and it needs to be a market success, because otherwise we lose what underpins modern medicine. Uh, there's been a more than a dozen expert reports that agree the antibiotic market is broken cancer drugs make money and, therefore, we have lots of cancer drugs in the pipeline. It's a great time to respond to this national health security crisis. We need to change the way we pay for antibiotics, building on success. Uh, BARDA has played a critical role in this ecosystem, uh, in in their programs, including launching Carbex. and all the other things that they do. Uh together with NIAID uh at the NIH uh there's been a lot of work that we've done collaboratively uh that I think is making a difference. In addition to all this work, other G seven governments are coming together to create antibiotic pull incentives such as contracts to reward innovation paying for value, instead of the volume of sales. Uh if Congress does this sort of a contracting program, such as the Pasteur Act, with Senator Young being one of the co-sponsors, uh Americans can get the new antibiotics we want from a resilient supply chain, instead of something that we we doubt whether we're gonna have it or not. We need to have that fire extinguisher for each of these bacteria ready to go. This would be a remarkably great value for the US taxpayers, a center for global development study found a twenty eight to one return. A a study that I published in nature uh reviews drug discovery says that if we only spent what we spent on branded antibiotics just less than a decade ago, That would be enough to restore the market. So, bacterial infections are bad today, they're getting worse. Uh, now is an amazingly wonderful time to invest to the in the future of antibiotics again. Thank you.

Thank you, Mr. Oderson, for your words and your work. We will now begin with member questions. Uh, I'll begin with Doctor Palkowitz, uh, Doctor Palkowitz, uh, while serving as as as Chair of the National Security Commission on Emerging Biotechnology, The commission explored ways to address, as you might expect, the valley of death, uh, that small to mid-sized biotech companies are faced with. It's a challenge that you alluded to. I know you've wrestled with it. So, given given your experience and and your form thoughts on this issue, um, tell us, how should policymakers think about addressing, um, uh, this modern valley of death?

Yeah, so, th thank you, Senator, for the question. You know, I I think it's, um, a a number of factors that have to be considered. One is we need to make sure that the science is ready to move forward uh in in translate, so that that is really where the the infrastructure of the universities, the um the the the funded program, federally funded programs have really matured science to the point where we can begin to think about that next step in connecting science to patient impact, and and and value creation. But we also need to make sure the right resources are available, the right expertise. We need to make sure that um the the translational expertise which is different from what you may find in academic environment. You know, uh groups that have the technology, that have the know-how of how to take a hypothesis and convert it into a molecule, that actually can uh be part of it a a clinical trial, and be the source of IP and value creation. That requires an infrastructure, that requires uh expertise, and that requires investment. So the we have to make sure that we can de-risk some of these um ideas to the point where we pull investors in we leverage private capital more effectively to to really be able to drive these ideas forward and really position ourselves for um uh uh an experimentation to to take the scientific hypothesis to its full confusion uh to its full conclusion so it does require

so what do you mean comes here

mmm

what's that

yeah we have to look at it

no so so so it it it does require all those factors coming together as part of of of an ecosystem in in my view to make that happen. Many resources exist, but they're fragmented, and we need to bring them together much more effectively.

Um, thank you, Doctor. Thank you, Senator. Um, so, uh, well, I'll move from innovation, uh, to, uh, the issue of national security. We'll turn right to it, Doctor Rozo. Uh, our commission highlighted US risks of of losing the biotech competition to China in a way that disturbingly uh, and I'll underscore this point, might cause us to never be able to recover, right? Uh, and and and so the commission's recent side-by-side analysis, I would commend to those who are watching these proceedings, it shows that China's already enacting the kinds of policies that the commission, that our congressionally empaneled and funded commission recommended for the US government. So, uh, Doctor Rozo, Could you uh highlight any of the recommendations from our report that China seems to have enacted that Congress should be aware of?

Yeah, thank you for that question. Um, so China is using a mix of licit and illicit means to strengthen their biotech ecosystem. As you point out, there are a number of measures that we recommend that they have gone on to implement, um, one of which is strategic investment. They have recently launched a series of guidance funds, focused on national security technologies that look a lot like the Independence Investment Fund that we recommend uh that the US government support. Another avenue that they are now doubling down on is industrial bio-manufacturing and the infrastructure associated with that. This is an area that we emphasize in our report as um a critical component of where biotech can be used to onshore critical chemicals that we now rely on foreign sources or adversaries. And the third area that I would highlight for this, uh, committee is regulatory reform. This began, of course, before we released our report, but China continues to clear the pathway to market, making it easier for products to move forward in their regulatory system, again, which is something that we recommend in our findings.

Thank you. Disturbing. Sort of flips on its head something I heard a lot around the Chips and Science Act passage, uh, which is that we don't we don't want to be like China. Well, though we didn't print this report in Chinese characters, uh, they may have some interest in in adopting our our policies. Um, Doctor Roza, what what threats to US national security and economic prosper prosperity would we face if if we, uh, cede biotech leadership to the CCP? You alluded to some earlier.

Mm-hmm.

Um, they they could shape our decision making by by not even fully implementing some of their threats in time of war, they might withhold medicines, but unpack this a little bit, um, for thirty seconds, please.

Sure. Um, so I think it really comes down to three things. First is leverage, as you point out, um, their ability to use critical sectors against us would embolden, um, their strategic independence and now expand that to every sector that biotech touches. The second is really jobs in manufacturing. I said in my opener Um, that a hundred and thirty-five billion dollars' worth of deals have been inked with Chinese firms last year. That's investment into R and D and jobs associated with it that are not going into the US ecosystem. And the third is standards. Whoever leads writes the rules of the road. Biotech thus far has been written on American values. Uh, we may not like a version of it that does not.

Great. And we haven't even gotten into, which we don't need to now, but the fact that the very biotech which is used to produce life-saving, life-improving treatments, uh, is also the the biotech that can be leveraged or parlayed into bio-industrial applications useful to war fighters. So with that, a cheerful statement, Miss, uh, Senator Haas, you're recognized.

Uh, thanks, Mister Chair. Uh, I wanna start, Doctor Luther, with a question to you. When a patient has an infection and the antibiotics that we have used for decades no longer work, doctors are left with limited treatment options. Can you walk us through some of the challenges that you face when treating a treating a patient who's infected by a superbug?

Yes. So, when we encounter patients who have an infection with a superbug, it really means that treatment for conditions that should be straightforward are extremely difficult. So, for example, a patient who develops a sore on their foot, from where their shoe was rubbing. If that wound becomes infected with a superbug, there's a good chance it'll go into the deeper tissues, into the bone, and antibiotics alone will not treat it. That person is at high risk for an amputation as the only treatment. What it could mean is that we have a child who has leukemia, and we're able to cure the leukemia, but we can't save that child's life. because they die of a serious infection. And so it sets us back decades from the progress we've made with modern medical care. So some of these incredible advances that we have in the field are all taken away when we are facing super bugs that we have no treatment options for.

As especially if you've got somebody who, because of the advanced treatment, has a a suppressed immune system, and therefore more likely to get uh get the infection. What are the most pressing areas for innovation, Doctor Luther, in biotechnology that you need in order to improve clinical care?

So the most pressing areas really center around three main topics. One, novel and microbial drugs, so right now we really don't have the arsenal that we need to be able to treat these superbugs. Um, so that is critically important. We also need developments with regard to diagnostics. So, rapid diagnostics for surveillance to look at the environment, to give us a head start about where there may be an outbreak, but also diagnostics at the bedside, and making sure that people have access to those diagnostics, including in uh rural and critical access hospitals. And then the third area is around manufacturing. So, unfortunately in medicine, face shortages on a regular basis, um shortages in terms of antibiotics, shortages in terms of the diagnostics, and so we really need to leverage biotechnology um to uh m- ensure that our manufacturing of these a- antimicrobials and critical materials um remains secure.

Thank you. Um, Doctor Palkowitz, small biotechnology companies face significant obstacles when developing new antibiotics. Antibiotic research involves costly early stage scientific research, as well as clinical trials that are more complex than other types of trials because of the urgent and life-threatening nature of infections. I've been working on draft legislation that would give biotechnology companies bigger tax incentives to develop new antibiotics and help patients who get super bug infections. How could targeted tax incentives help the small biotechnology companies that you work with in pursuing research on new antibiotics.

Thank you, Senator, for the question. I I think one of the the toughest challenges that any starting biotech faces is is raising critical capital for very risky and very uh challenging research, uh and uh and development. And so any kind of incentive that would actually um offset some of that financial risk, but also more importantly create a a more favorable environment for investors to jump in and participate, i think would be very very valuable and and i think um you know this could be a great catalyst for uh getting more companies off the ground recognizing that the science is there um the right environment has to be available then for all the resources that converge on these important problems and it has to be done at scale because you know it one drug is not gonna solve the the challenge we need to have a a pipe a young pipeline a a emerging pipeline that is not only um strong but also diverse in

right

approaches, and so this could be an very important catalyst to achieve that.

I appreciate that, thank you. Uh, quick uh question for Doctor Rozo. Uh, the National Security Commission on emerging biotechnology found that much of our biotechnology infrastructure such as manufacturing facilities and labs, is not adequately protected. In the commission's report you recommended that Congress take action to ensure that biotechnology infrastructure and data are covered under the definition critical infrastructure. How would it strengthen homeland security for the US government to designate biotechnology infrastructure and data as critical infrastructure?

So right now, um, DHSCSA recognizes sectors that biotech cuts across health, uh, agriculture and energy. But biotech is not explicitly called out or protected, um, comprehensively. So the designation of biotech as a critical sector by DHSCSA, would enable threat information sharing, a federal response in a crisis, and really mobilize the resources needed to protect biotech facilities and critical data.

Thank you very much. Thanks, Mister Chair.

Doctor Cassidy, you're now recognized.

Doctor. Thank you, sir. Doctor. You uh speak about the I think I I may get the quote almost right. For small biotech right now, their biggest challenge is raising critical capital. Now the IRA, which is going to begin to include small biotech in twenty twenty eight, they tell me is a real hindrance to raising capital. Because they see that their drugs that are currently raising the money may be subject to the IRA. Um what do you think, and and again small biotech has been the fertile field where all this innovation has occurred. Not so much big pharma, it's small biotech. So we should have a vested interest in how we can preserve the innovation of small biotech. Uh, so do you agree with their concerns that the, um, that the small biotech exemption, uh, expiring in twenty twenty eight is going to make it even more difficult for them to raise the critical capital?

S um, thank you, uh, Senator, for for the question. I If I understand, um, you know, the the the context here, I I'm I'm not fully versed in in all the detail of the IRA as it relates to this. Um, but when I think about, you know, some of the provisions of the, uh, uh, IRA, it's been around, um, you know, some of the, uh, challenges on, on, uh, patent terms for small molecule biologics. I don't know if that's exactly what you're referring to, but

Well, let me, let me go on to another question if you,

Yeah.

uh, you just,

Yeah, yeah, I'm sorry.

there's, yeah, something. Secondly, as regards, uh, I had somebody who had a superior product for detect detecting colon cancer. They got through FDA, they couldn't get a CPT code. And there was like an eighteen month delay. And in your testimony you speak about how we could better bring products to market. But if you can't get paid for your innovation, it's gonna be a damper on innovating. And so that eighteen month delay, in their case it may have been longer, I forget, between getting FDA approval and getting a CPT code, could really be life or death for a company trying to make it. Any comments on that and the importance of getting a tighter coordination and a shorter time frame between FDA approval and getting the CPT code?

Yes, I I I think, you know, that that's a very good uh point, and I think everything that we're talking about of compressing timelines, you know, from a scientific concept all the way way to reaching patients and actually uh delivering the value of the science has to be um more effectively, uh shortened and coordinated. Oth otherwise um a lot of effort will be wasted and patients will not benefit. So I think reform on on all dimensions to really bring a a tighter um uh integrated process that that goes from concept to uh patient impact is really critically needed uh across the board.

And that is CMS,

Um.

so that's under our jurisdiction, also perhaps help committee. Doctors Rozo and Luther um uh or any uh or you also, sir. Um the antibiotic resistant, addressing antibiotic resistant strains requires you to come up with a new antibiotic that you never use. Unless it is for somebody who's got an antibiotic resistance strain. Now, when I was in residency, they would come around and push to have the new greatest drug used often, because that's how you pay for the development. So clearly we've got to have a different business model. Now, one thing I thought about, both for that and for attempting to reshore drugs, what if Medicare, if our committee directed, that Medicare would pay an extra bit of money, to those companies investing in producing drugs within the United States, if currently they are not. Or, if you have a subscription model that Medicare would subsidize, that you've got an antibiotic that you never wanna use unless you have to use it, um, but that every hospital would be required to pay a little bit to access it, and whenever they need it, boom, it's like going to the library and putting out the book, but you never have to return it. You with me? So I guess I have two things there. first about the epipayment for drugs that we wish to reshore and secondly having a subscription model for the antibiotics for antibiotic resistant organisms whomever

thank you for that that question i think the subscription model is an excellent point and that is uh something that is so exciting about the pester act is uh being able to have these drugs available and for companies to be paid by the value they provide, rather than the volume of that drug that is consumed. Um, so I think that's a very, very important consideration. And the other piece, um, that I believe your question spoke to is about how do we ensure that these new drugs are used appropriately, and that is, uh, so important. And so, thinking about antimicrobial stewardship programs, to have the oversight on a local level to see how are these drugs used, how ought they uh be used, and make sure that we're providing that support to the front-line physicians and providers so that they're really using these novel drugs, um as best they can.

Yes, sir.

Doctor Cassidy, great questions. On the subscription, uh you know that I support Bess' turn of changing the way we pay for antibiotics on the supply chain. Um, you know, the companies are responding to the to the fact that we always look for the cheapest generic antibiotics or any of the other drugs that are in shortage across our systems and so the companies have responded by offshoring you know, that production um you know, right now for antibiotics I know that many of the of the API the pharmaceutical ingredients the key components behind them uh there's only a couple of places in the world and mostly in China in which these place these drugs are are the key ingredients behind the drugs are made. Uh so so you know if we want that, we're going to have to pay some sort of a small premium, so that these the API manufacturing, the chemistry and the manufacturing are done uh in an e- either onshore in the United States or nearshored in an allied country. Uh they're responding to the incentives at the lowest possible generic prices by pushing it offshore. I mean it's a serious issue.

Senator Cortez Mesto.

Thank you, thank you all for being here, and I I have to uh thank uh the Chairman and Ranking Member. What a sobering conversation. And thank you for um putting this at the forefront of area that we need to focus on. I also appreciate coming from Nevada and watching the critical mineral uh fight in this country with China and how China cornered their market in the eighties, and we weren't really paying attention, and now we understand why they were doing it. They're doing it with biotechnology now. And if we are not careful, we are going to cede that to them, and that that is a national security issue, it's a health issue, it is so many things that we are talking about right now. So I appreciate this conversation. Um, Doctor Luther, let me ask you, cuz um I I I I always love to listen to Doctor Cassidy, cuz he just brings a a wealth of knowledge w- based on his background. Um, a as we're talking about the the novel antimicro microbial drugs, and how we can ensure that they continue to innovate and do the research here. It, was it your co- was it your testimony that the past year act, you think that satisfies that concern by actually shifting federal payments, um, for the drugs from the volume of drugs used to the value these drugs provide to the patient care, you think that's part of the the answer here?