tv Government Commission Hearing on Chinas Role in Global Health - PART 2 CSPAN August 28, 2019 3:27pm-5:25pm EDT
the house will be in order. >> for 40 years c-span has been providing america unfiltered coverage of congress, the white house, the supreme court and public-policy events from washington dc and around the country.so you can make up your own mind. created by cable in 1979. c-span has brought to you by your local cable or satellite provider. c-span, your unfiltered view of government. >> the u.s. china economic review commission held a hearing recently on the role china plays on global health industries and how that impacts the u.s. congress focused on a role in the pharmaceutical marketplace and u.s. companies working in china.
>> our second panel will assess china's role in global health and activities in the united states. we will start with rosemary gibson, introduce everybody first and then we will go to ms. gibson. we will start with rosemary gibson, whose name has been mentioned already several times if you were here. who is a senior advisor pasting center perspectives at the jama internal medicine. she is author "china rx, exposing the risk ãb next we will hear from ben westhoff an award-winning investigative journalist mr. westhoff new book "retinol incorporated " how roby chemists are creating the deadliest wave of the opioid epidemic. will be published in september. the book focuses on that know with now kills more americans
annually than any drug in american history. our third panelist is jennifer buie who is a senior policy researcher and detained chair in china publicity stall is at the rain corporation. as an epidemiologist with training and clinical medicine and quantitative methods, doctor buie research centers on social determinants of health among marginalized populations. finally, we will hear from mark ãwho is a scientist with griffin scientific, he's a molecular biologist with expertise in performing risk assessments to support government decision-making on issues of bio security public health and bio defense. he is also one of the authors of china's biotechnology development, the role of u.s. and other foreign engagement report prepared for the commission published in february 2019. we welcome all of you, we ask that you would keep your remarks to seven minutes and ms. gibson we will start with you. >>.
[inaudible] >> push the button. >> good morning. thank you senator how and all the commissioners for the chance to be here today. to talk about what has been a really hidden and overlooked threat to our national health security economic prosperity and national security. that is our dependence on china for medicine. as was discussed in the earlier panel, the medicines used by members of congress, president, members of the military, veterans and all-americans, these are the medicines body retail pharmacies and pharmacies and supermarkets in big-box stores. the focus of my testimony today will be on generic drugs because they are 90% of the medicines that americans take. we can no longer make penicillin. that happened in 2004 when the last plant in the united states
closed and that happened, this is indicative of the predatory trade practices happened when a handful of chinese companies dumped the chemical material to make penicillin on the global market. it drove out u.s. european and even indian producers. then after it gained dominance, prices went back up. that's the playbook that we see the same practice with the vitamin c cartel is emblematic of how he lost the capability to make so many core core components in our medicines. this playbook will extend to finish generic drugs eventually. in 2001 after the anthrax attack when the u.s. government needed to buy 20 million doses of doxycycline, we don't make
it here.the united states turned to a european company that in turn had to get the starting cereal from a plant in china. i have four main points and that will highlight for recommendations. the first is our industrial base to make our medicines, it's collapsing. we have virtually no manufacturing capability left in the united states to make generic antibiotics. these are the medicines you give to your kids for ear infections, strep throat and we are talking about also superbug treatments and last resort antibiotics. in 5 to 10 years we will have virtually no manufacturing capacity left generic drugs. this is 90% of our medicine. second point is, china's dominance is global. in february dutch public television aired a documentary reporting the netherlands dependence on china for medicine. a former industry officials said on camera that they are
concerned that china may not supply the medicine. as mentioned earlier, even india is dependent on china for 80% of the key ingredients it needs for its generic industry. when you control the supply of medicines, you control the world. that's what we are looking at. we are losing control over the supply of our medicine. when we lose control over supply, we lose control over quality. that's why we have blood pressure medicines with carcinogens in them and we can go into this more later in the q&a but the fda cannot fix this problem it's already in the position of having to make trade off between effective medicines and shortages. we lose control over supply we also lose control over price.
china will be the price center and will be the price taker and members of congress will not be able to take in ceos of chinese companies and not asked them not to raise prices. the national security risks are pronounced. china could withhold supply. it could put lethal contaminants in medicine or have no medicine at all and i do believe it's in the realm of possibility to target certain subjects having access to medical records and distribute products to certain subjects. the most surprising thing i learned from reading china rx from working in china rx is reading it again it took three years to do it, it's no one's job in the federal government to know who controls the supply of our medicine. we wouldn't do that for oil, we wouldn't do that for food, we considered our medicine as a cheap commodity to be purchased at the cheapest possible price. that's the root cause, that's what needs to change. i have four recommendations that i will highlight. first is we need all goal of
government review of our vulnerabilities similar to the defense industrial base report that was done for the dot i looked at that report senator, i didn't see any mention of medicines outside the dod purview and understandable i think we need a whole government review that's ongoing and identifies our borno abilities and recommendations for how we can rebuild our industrial base. i believe the dod and va should have the flex ability to purchase medicines not at the cheapest place but based on value. right now american taxpayers will be shocked to learn that their hard earned money is going to help build china's generic industry as our domestic industry collapses. third, there is tremendous opportunity with advanced manufacturing technology to make active ingredients here and finish generic drugs it's been done on a pilot basis for generics we need to take that to commercial scale it could revitalize communities economies around the country
and finally, i'm sure you are aware of the africa swine flu that's devastating the pig population worse than what it was 12 years ago when we had the heparin contamination that killed hundreds of americans. one of the recommendations i have in my testimony is that the committee on foreign investment in the united states review the purchase of smithfield by a chinese company not so much for food security but for our national health security and that's because pig intestines are rare earth of our healthcare system. i have 28 seconds left i will leave that to you and i look forward to your questions and comments box you are yielding back to 28 seconds, thank you for that.and for your testimony. >> thank you senator tallon, the u.s. opioid crisis began with the over prescription of pharmaceutical opioids like oxycontin, when users prescriptions ran out many turn
to street heroin. now the crisis is entered its third wave led by fentanyl. fentanyl was already widely used medical drug but illicitly produced fat no is mainly abuse today.this fentanyl is mostly made in china and sent directly to u.s. consumers through the mail or funneled into the country by mexican cartels. u.s. political leaders have harshly criticized china for allowing large quantities of centennial, fentanyl analogues, fentanyl precursors and other new drugs called novel psychoactive substances or nps to be smuggled into america. in response, china has pledged strong action to stem the tide. however, my deep reporting and research for my new book shows
that china has not been acting in good faith. i will explain. a critical part of china's rapidly growing economy is its sprawling chemical and pharmaceutical industries. most companies produce legitimate chemicals, some make illicit ones and others are in between. reforms have been promised but inspections remain sporadic. china's clumsy understaffed bureaucracy involving at least eight different agencies as difficult time controlling these industries. thus dodging companies that keep their heads down can operate without problems. many chinese officials don't seem to fully understand the laws governing the manufacturing sales of these chemicals and companies manipulate the legal gray area to their advantage. at the same time, china encourages these industries for lucrative tax incentives and subsidies. these incentives have undoubtedly driven legitimate innovation and exports but the
rise of fentanyl and nps has been a terrible side effect. quietly, money has gone to chinese companies exporting deadly drugs that are killing tens of thousands of americans annually. for example, china designates certain companies as new and high technology enterprises. which helps these companies, including those exploring dangerous drugs to the u.s. receive lucrative incentives. also exploited are various programs administered by china's ministry of science and technology. chinese companies showered with these type of government benefits include one called longchain. based out of the city of wuhan. he receives them even while by its own admission it sells ingredients to make fentanyl, precursors all over the globe including the u.s. it's
possible that chinese communist party officials don't realize this is happening. then again it's possibly they do considering the chinese tax code directly encourages the export of these drugs through reimbursements called the value added tax rebate or vat rebate. not every exported chemical gets yvette rebate but thousands do, including fentanyl, other fentanyl analogues not used for medical purposes anywhere synthetic cannabinoids and anabolic steroids. the u.s. says stemming the flow of illicit synthetic opioids and other nps from china is a top priority. china says it shares this commitment. indeed on may 1, 2019 china scheduled all fentanyl analogues including those not yet created. china has difficulty enforcing its drug laws but this is the most far-reaching and potentially significant type of action china has taken in its
realm. there is much more the u.s. can do can stem the flow of these drugs from china. my first suggestion is pressuring china to eliminate tax rebates, grants, and subsidies to companies making and exporting these dangerous chemicals. it makes sense for legitimate chinese pharmaceutical companies to receive that rebate for exporting fentanyl for medical use. but it's outrageous that china offers these tax rebates from any other fentanyl analogues that are illegal for chinese manufacturing export. china also needs to eliminate incentives given to these companies by the ministry of science and technology. my next suggestion is that the u.s. schedule a more fentanyl precursor and pressure china to do the same. making fentanyl from scratch is a complicated process. but making it from precursor to the fairly simple one. this is the process favored by
mexican cartels who usually employed the precursors from china. yet currently all but two of the known fentanyl precursors are unscheduled not just in china but in the u.s. and worldwide. the u.s. should also pressure china to allow the dea and the fda to do their work. china's pledge to control fentanyl analogues are meaningless without enforcement. it's not just the american agencies, however, china's own drugs and medicine regulating agencies need to be properly staffed and funded. my final suggestion is that the u.s. should do more at home. china believes u.s. demand is driving the opioid crisis. indeed predatory tactics by u.s. pharmaceutical companies and failed policies here have helped create the world's largest market for opioids. therefore, even if china rains in its rogue industries if american demand for these drugs
is not subsided production will simply shift to other countries. promoting harm reduction measures is critical. advocates of harm reduction leave drug use is inevitable and that we must work to make it as safe as possible. i suggest much increased funding for medication assisted treatment for addicted users. in addition, first responders and others to encounter overdose victims should be better supplied with no oxen which should be available and affordable to everyone. users need better access to drug checking kits. these are inexpensive tests that inform users what's actually in their drugs and can detect fentanyl. studies have shown these tests save lives. also critical is overturning the illicit drug anti-proliferation act of 2003. known as the rave act. which effectively inhibits concert organizers from
allowing drug checking at their events and festivals. information campaigns about nps are also critical. especially when it comes to children. parents in particular need to be properly educated. they need to believe that an overdose can happen to their kid because it can happen to any kid. thank you. >> thank you. doctor buie, am i pronouncing your name correctly? >> buie, thank you. >> go ahead. >> senator tallon, commissioner wetzel and distinguished members of the u.s. china economic and security review commission. thank you for inviting me to testify before you the china's activities on global health. the testimony will have three sections, first i will give a brief overview of china's global health assistance activities and their motivations. secondly i will summarize u.s. china collaborations on health and their differences in the
approach. lastly i will give some recommendations. china's current global health assistance can be grouped into five categories. china's medical team, their hospital clinic constructions, medicine and medical equipment donations, health related humanitarian aid and disaster relief programs and health professional training programs. the chinese medical team and hospital construction have the longest history. dated back to 1959 china built a tv hospital for mongolia and back in 1963 they dispatched their first medical team to algeria during the war. over the past years, china has built more than 150 hospitals dispatched more than 25,000 medical professionals to 69 countries. these activities help to fill and some of the gaps when there is a severe lacking of health
professionals and the basic health infrastructures in resource support areas. more recently china has suppressed the global health community with its timely and unprecedented response to the 2014 and 16 ebola epidemic in west africa. china's donation of the anti-malaria medicine and vaccines has also peaked during 2010 and 12. even though china's global health assistance activities often overshadowed by the western development countries activities no one can deny the significance of china's fast transformation from a major recipient of foreign aid to a critical provider of the resources. when they ask why china is scaling up its global health activities in my opinion i put into three reasons. first china felt they had something unique to offer, developing country not long ago
they were in the same positions as the recipient countries now. they believe that china's success in domestic public health can be easier translated into other developing countries. secondly, like many other countries in this area of globalization china realize the impact of pandemic on the national economy. in 2003 ãcaused china bã interrupted international trade and productivity. in 2016 the first case of yellow fever was diagnosed, this is the first case in asia was diagnosed in beijing. the patient was a chinese migrant in africa. at the time when they were over a million chinese migrants in africa and over 100,000 african in china china wants to strengthen its pandemic preparedness capacity and protect its own economic
activities and investment. lastly, china is always considered a global health assistant as a soft power and wants to be a part of the global governing. so what are the u.s. china collaboration on global health? the majority of the collaboration so far has been focused on the infectious diseases and within china. the global aids program helped set up the first cdc u.s. cdc office in beijing. in 2004 the chinese national influenza center and the u.s. cdc initiated the collaborative agreement to build capacity in influence china. in my view this is a long-term collaboration that provided sustained data sharing research exchanging benefits both countries as well as who and should be considered as a model for the future collaborations. in terms of collaborations in developing countries so far there are not so many.
in the previous administration the u.s. cdc has reached out to chinese cdc and joint sponsor five cdc centers in africa. this is as i see as the start of this type of collaboration. otherwise u.s. and china programs have mostly parallel in these countries and they are quite different in terms of philosophy and approach. on paper, china's aid to africa is pitched as on a pure level assistance. china does not impose any political or economic conditions for the recipient countries. the level the u.s. global health activity favors a vertical approach that focuses on a few infectious diseases. china's global health aide tends to be more like a horizontal approach and building infrastructures to create a systemwide expansion of access to medicine.
these activities enter good coordinations can be supplementary to each other. my recommendations for the u.s. policymakers, in general the global health community considered china's contribution so far as positive. most of the criticism on chinese activities are the lacking of transparency and the coordination. i suspect these problems were caused partly by the severe and understaffed and lack of capacity at a central government level in china. i hope u.s. can collaborate with chinese government on global health capacity building especially on personnel and project management. cultural and language integrations and program impact evaluations.it would be also helpful to encourage beijing continue collaboration with multilateral organizations and help integrate their global health activities with other global initiatives.
in terms of other risk as my fellow panelists have highlighted, china has become the largest manufacturer of health products providers of pharmaceutical ingredients and the producer of vaccine in the world. it is critical that china's government strengthened the regulatory structure to ensure the quality control of these products. i would encourage continued collaboration between the u.s. fda and china fda and hope to help accelerate the process of adopting the consistent best practice. capacity building environmental regulatory science similar to that for the global health professionals is in urgent need in china. finally, since we are talking about the defense in china's drug apology, i would like to point out to successful cases in the past.
and see what we can learn from them, one is china's tobacco control for many years chinese governments are reluctant to work to act on the tobacco control because of the worry of the lost revenues from the tobacco industry. who framework convention on tobacco control eventually change the government's attitude. what i think we can learn here is if we can frame fentanyl crisis not just as a u.s. problem or u.s. china problem but as a global issue on synthetic drugs. similar to the methamphetamine epidemic in asia and codeine and tramadol in africa. it will be easier to engage chinese government if we invite them to be a part of alliance to fight against the synthetic drug crisis. finally, on building a surveillance system and data sharing system i will go back to the successful case of the
influenza collaborations between u.s. and china. given the time, i will stop here. >> thank you. >> thank you senator tallent, commissioner wetzel and the rest of the commission for inviting me to provide this testimony today. over the past five years, china has advanced its biotech capabilities and offerings primarily through three industries. therapeutics, contract research and manufacturing and dna sequencing and related technologies. although in many cases china is still catching up to the major players in the global biotech market they are beginning to make and roads and in some cases notably genomics are among the leading edge of technology. many of the biologic drugs being developed in china are bio similars meaning a highly similar molecule to an existing approved biologic drug. similar to producing generic drugs. common bio similar targets include popular drugs like
humira, avastin and herceptin used for treating chronic conditions such as arthritis, slices and cancer. few of these drugs have made it to market, however, and china has yet to become a significant source of biologics in the u.s. supporting pharmaceutical and biologics are contract research organizations, cro's, companies that provide outsourced services for preclinical and clinical development. in 2017 there were more than 1100 cro's worldwide with around 400 of them in china. managing over 200 products in preclinical and clinical development to its biologic focus will she biologics. unfortunately data are not available on how many u.s. companies or what portion of the u.s. market using cro's in china. china also hosts several companies providing dna sequencing services. including some of the world's largest, bgi is the third-largest sequencing company behind the u.s. based
illumina and thermo fisher. and offers dna sequencing machines and services for basic research and pharmaceutical r&d. bgi has formed numerous clinical research partnerships with the u.s. institutions providing dna sequencing and analysis services. the growth of china's biotech industry has come in large part to investments in u.s. biotech. chinese firms spent $3.5 billion in direct investment and venture capital from 2013 to 2017. with very little investment activity before that. in 2018 the health and biotech sector became the top recipient of chinese foreign direct investment due both to sustained investment in the sector in a significant decline in the chinese investment in the u.s. overall. similarly, chinese venture capital and sat biotech which increased overall since 2014
and became the top industry for chinese led bc in 2018 has also dropped significantly. chinese investors provide 40% of the venture funding in u.s. biotech in the first three quarters of 2018. in the first half of 2019 chinese led rounds dropped 83 percent. the drop in chinese investment in u.s. biotech has largely been credited to the reforms passed last year to the saphenous review process. as firms are limiting or restructuring investments to avoid scrutiny. whether or not this effect was intended, the changes to review foreign transaction or causing a major shift in the investment landscape. resulting in uncertainty in the near-term. the effects of these changes will need to be monitored closely to ensure u.s. biotech companies don't suffer due to lack of capital. others testifying before you today will describe the large extent to which china supplies
generic drugs and active pharmaceutical ingredients for the u.s. in the traditional pharmaceutical market the chemical entities that are the active ingredients and drugs can be synthesized through relatively simple processes and generic versions of drugs can be inexpensively produced and quickly marketed. biopharmaceuticals, however, are hardly hardly complex molecules produced by engineered cells organism and don't have generic versions. instead companies wishing to duplicate successful biopharmaceutical products must reengineered cell systems to produce bio similar drugs. an endeavor that requires more advanced technology is more expensive to produce and has greater regulatory hurdles. these difficulties provide a significant barrier that limits china's ability to produce low-cost drug alternatives as they've done for traditional pharmaceuticals. although china's biologics industry focuses heavily on bio similars, it's too naked to yet produce significant results. currently no bio similars from china are approved in the u.s. and only a handful are marketed
in china. china's rise and biotech may potentially present economic wrists from increased competition in the marketplace. such as potential loss of market share and transfer of wealth overseas. chinese companies are not yet challenging the u.s. as a major producer of biopharmaceutical products. sustained an increased investment by the u.s. government and biotech r&d will help to ensure you not catch up in the near future. where china is becoming a global leader is in dna sequencing, genomics, and related fields. advances in this arena are already providing competition to select companies as well as raising concerns over privacy and human rights. the investments china is making into genomics and artificial intelligence including $9 billion precision medicine initiative and cross sector coalitions like the digital life alliance provide opportunities for chinese companies to make significant advances in biologics,
diagnostics and other medical biotechnologies. we are still at the dawn of the machine learning and artificial intelligence age with the most transformative discoveries likely yet to come. today however the u.s. appears to undervalue healthcare related data at least when compared to the major efforts underway in china and by chinese firms. going forward the u.s. can take several steps to maintain its position as a global biotech leader and safeguard against increased competition from china and other countries. by increasing and sustaining federal funding for basic and applied research across the sciences the u.s. can help drive innovation and economic prosperity and reduce the likelihood that u.s. researchers turned to china and other countries for support. the u.s. also must prepare to take advantage of advances in genomics and big data in healthcare.given the growing importance of personal data in biotech and other industries
the u.s. must rebuild its data protection laws to delineate acceptable use of and access to personal data while protecting individuals rights and privacy. finally, to guide these and other efforts the u.s. needs to take a close look at the economic opportunities afforded by its biotech industry as well as the sector's needs. this includes identifying dependence on foreign industries number recognition of rising players on the world stage such as china, and analysis of the industry's health, stability, and vulnerabilities to foreign competition. ...
and i'm a nonspecialist. there are at least two central elements to the issue, one is that however is not there, a new document quite well document so it did get there, clearly 80 percent of apis are chinese in origin. and secondarily, we have inadequate mechanisms for testing. leading to you know, high failure rates for pollutants or carcinogens or whatever. would you agree with that kind of framing of the issues in that way and then i have a love follow-up questions >> i think those two points address major factors. characterize the industry and where we are now, yes . >> you focus on generics as 90 percent of what we can.those
problems, those with the brand-name as well? those two initial problems that talk about. >> my understanding is that there are some brand-name drugs do use active ingredients made in china, say certain chemotherapy products area when it comes to quality and testing, it's also my understanding that at least some people what people in the industry say that the branding company and a little more incentive to assure quality because their name is on the box and they may be a supplier. >> then to very specific questions, on page 41st testimony i think it's outline point the eight, you talk about an online pharmacy that says it tests every batch of every medication it sold. are we at the front edge of this? and will not be more common practice and one other cost implications. >> what you're referring to is
a new startup company on the science campus and its, they said they are motto is that we can everything before they sell it. just three batches of every product. and i have found more than 10 percent of what they just wish them a test for active ingredients, they test for dissolution, a.k.a. medicine, it doesn't stay in the body for the right time so you're getting medicine for that duration,they test for accurate agreement and they test the solvents in the contaminated blood pressure medicine . i think it's a game changer what would help even more is it we had a consumer reports recording , having testing done and the public, this is way beyond the fda's capability, we need a market-based approach and i think that would help, could help turn around the market and ensure we have quality drugs . the challenge is that sometimes their contaminants in them.
you may not know what to test for. that's what happened with the contaminated cover, it's , that legal contaminants fell under the radar using existing testing methods at the time. so if you're not testing for it, you're not going to look for it so he could still be in their area but i think it would be a big step forward if the public and institutional purchasers, dod, ba,initially to get the market going and demand higher-quality medicine , that we had some testing but that however still doesn't address the issue of our industrial base and the collapsing of our industrial base to manufacturing 90 percent of our medicine. >> that at least my last question, and your oral testimony i think you alluded to some possibilities for reversing china's dominant session on producing apis, could you elaborate that a little bit? >> i think it's fascinating to watch what the private sector hospitals and the united states are doing , led by the mayo
clinic and 900 otherfacilities . they formed a nonprofit called civic rx and in response to persistent shortages of vital life-saving medicine. talking about last resort antibiotics here . and they hospitals have put up capital in this nonprofit and they are doing direct contracting with trustworthy manufacturers. and so far, the first two products that they have to purchase or contracted to purchase our one is vancomycin which is absolutely critical antibiotic and that would be made in bedford ohio. there will be a danish company will be opening up production here and there's a second antibiotic, and recently they have contracted to produce 14 or 15 other critical medicines that are in persistent shortage and i just read before coming up here just to confirm that we
expect their member hospitals will save between 35 to 50 percent on the cost and that's because these are medicines when they're in shortage, it cost more to this is a way to get around that and also to stimulate more producers for essential drugs that are trustworthy and the other secret is a long-termcontracts . so we're going to put out a contract every year and change it, do it for five, 10 years and that manufacturer knows it will have a cap in the resources to invest not only in backup facilities to manufacture but also to invest in quality manufacturing. transparency on price, transparency on who's making it. i think that's a game changer and we're hopeful that we're doing that for public procurement, dod and va and it will cost some neededdisruption .
>> next will be commissioner wessel and after that i have commissioners cleveland,fiedler and bartholomew lined up . >> thank you all for being here and i'm going to have another round of questioning because there is i diverse set of issues here. i was very troubled by our last panel, our dod witness , not by his integrity but by the questions about whether we know and have the ability to ascertain where the products are coming from that our troops and our families and people are ingesting on a daily basis, many of them for life-saving purposes. miss gibson, if you could help me on the question of supply chain integrity for a moment, and anyone else who has information. my information, my
understanding is we've had difficulty getting fda personnel into china, having difficulty getting them the pieces they need to operate and then the ability to travel within country so that i was told in one instance they were concerned about the facility and it took six weeks for them to get the travel permit to be able to visit, and of course by that time you can clean up virtually anything. i believe your book also referred to some investigator looking through the window seeing all these rats and by the time they were able to get into the facility, all the rats were gone so it's a little different, difficult to ascertain quality. can you talk to me a bit about the difficulty in our investigators, our own government has in ensuring quality and what steps we should be taking? i thought we had an mo you at one point withchina . it appears that as you are saying esther westhoff that as
it relates to fentanyl, that maybe the stated comments are not following through as relates to policies thatare being articulated . >> sure. that fda and its plants in the us, they can walk in tomorrow unannounced if they were here whereas when the fda conducts inspections and other countries, because it is a foreign country, they do tell the government 6 to 8 weeks and we will be there. that's not always the case according to the fda butthat is the general rule . the other point that you mentioned, commissioner wessel, about china withholding visas or fda employees to work in china, that's been a prolonged issue and myself as a writer of china inquired what's the status, their lack of transparency is really quite pronounced. i do think we have to question whether inspections in china
will ever be up to our desire to have the kinds of inspections we have here, for the simple reason china has increasing control over the supply of our medicine, i think we lose leverage. we lose leverage from a regulatory point of view, it's just sort of a take itor leave it . and one thingabout the fda i think is very important to understand is , and this was uncovered when i came across a document from the fda counterpart in europe, the european medicine agency and in 2012 actually came out and said in writing what they call the regulators dilemma. they're having to make trade-offs between allowing effective medicine, not supplements, this is our legal supply of medicine. they're making trade-offs between allowing substandard effective medicine into their countries versus shortages.
this was unthinkable years ago. and that's because we have a really narrow supply chain and this is also true i believe for the fda which i haven't seen them put that in writing. let's take the case with the recent blood pressure medicines that were contaminated with carcinogens. the fda had to make this terrible choicebetween do we allow a medicine with lower levels of contaminant to be taken by american consumers and patients, or do we have shortages ? if they took it all off the market, there would be virtually nothing left. compare that to the risk of people having high blood pressure andstrokes and heart attacks this is the situation we're in now and it's not going to get any better . what i say we can't inspect our way to solve this problem. we need a solution that again, rebuild our industrial base,
diversified our manufacturers that are out there, the supplies of medicine and frankly let's be clear,the price paid for manufacturers as benji . we've been hammering big companies to buy a generic drug, a hammer down on price. if you hammer down on anything too much, it's going to break and the quality is broken and the supply chain is broken and that's why we haveshortages so we have to get to the root cause of the problem and that will help the fda do the job i think many of the good professionals you want to do . >> thank you, there's another round. >> vice chair commissioner cleveland . >> thank you all for your well-prepared and thoughtful testimony. mister westhoff, when we published our paper last fall on fentanyl, we made the case that the evidence of improvement after chairman xi
agreed to schedule fentanyl and the problem with the increase in arrests and prosecution and access, visa access to the dea scheduled unannounced visits, have we seen any improvement in those four areas? >> well, the law just took effect may 1 of this year so i think it's too soon to tell. >> how did the law affects the possibility of arrests or prosecutions? >> on may 1 all fentanyl analog blanket ban, as you will so previously, these chemical companies when one fentanyl analog was banned, they would simply to the molecular structure to make a new one. this new law outlaws that so even fentanyl analogs that have never been created will be automatically banned, scheduled and so i haven't seen any results of what might have
changed since may 1. >> thank you. miss gibson, i want to draw attention to your work on palliative care because it is incrediblyvaluable so thank you for that service . our shortages driven by epidemics or problems or are there already shortages in terms of medicine available mark. >> is my view that shortages of essential medicines are caused by the narrowing of the supply chain to a few suppliers and that happens because of how we purchasemedicine . we hammer downtoo much on price , the businesses go out of business. they can't make it for that price so we're left with a handful and also i think it's really clear from the vitamin c cartel case which i didn't mention in testimony but which ithink many of the commissioners are familiar with
, it's case very clear-cut of a handful of chinese companies arming what's called a vitamin c cartel and driving out all the us and european producers of escort acid so we can't make vitamin c anymore and the chinese government came to bat on behalf of its domestic firm and said that as a matter of chinese law, we required our companies to fix prices and control exports to the united states.so that's is indicative of the underlying intention about manipulation in the market for these essential commodities for our health . >> you think that it would be possible to develop a top 10 list of critical drugs that we should be monitoring to ensure a safe and efficient slide? you mentioned vancomycin but i think there were others.
>> the list would be long.if you ask any hospital what they need to survive on adaily basis, i think generic antibiotics i would put on that list and i would put in on that list . >> bear in mind people in the industries, if china shut the door on exports within just a couple of months, our hospitals would cease to function so that has tremendous emergency and finally doctor bouey, we published a paper months ago talking about the role of china in international military and assistance operation and in your testimony you mentioned their involvement in the evil outbreak. can you describe how they coordinated with the international community, the international community wentin ? because what we seem to see is, it gets involved but on their
own terms and in their own way somebody crashed from whatever the international community or crimes was so if you could describe this ethically the evil that engagement, that would be helpful. >> thank you. so i think that's not surprising for me to hear with your comments. china's global health assistance traditionally would be pretty much based on their own governments and sometimes even delegated to the process. for the 2014 16 evil humanitarian aid, china has coordinated within their own government and ministries so they responded quite timely. they first asked their embassy to warn their citizens in the affected areas and then they set up as soon as who set out,
announced this is apandemic , a build a medical team of 1200, more than 1200 biologists which is the largest chinese medical team and they have a clinician, public healthexperts and military medics .they build a hospital in liberia of 100 beds and also a level iii biological lab in syria. they also provide a catalog of amounts of funding for these countries. not only from medical care but also on other social and food and other related care. the china at the same time, the deal with their own vaccine development. so they have one of the vaccines that are approved by
who, evil, one of the first that year so i think in terms of scale, this is one of the largest humanitarian aid that china has been able to put together. in terms of whether they coordinate with other countrie , i don't think, i haven't heard a lot. about their working. but i know they contribute to the who, to the humanitarian fund much of the action are on the phone. >> commissioner beeler. >> a couple of comments but i'd also like to establish some information for ourselves and others. the pharmaceutical production process is heavily automated, it is capital-intensive not labor-intensive, is that not correct -mark. >> from my understanding about
the manufacturing of pharmaceuticals, the technology to make our medicine has not changed in a very long time. we had more innovation in the making of potato chips than we have in our medicine. that's why one of the recommendations i have is about deploying really terrific technology, advanced manufacturing technology that would do that much less labor-intensive, much more secure and real-time checking of quality. >> so you're saying it's labor-intensive now? >> i think there are others who can answer that question but i can say that deploying new available technology on a commercial scale for our generic, it could be less labor-intensive, smaller footprint and more efficientand higher quality . >> does anyone, does anyone know if anyone has tracks the
increase in china's control of the market, let's say in generics. and the process of us pharmaceutical companies use them. >> if we're talking about generics, what i have heard from the industry is earlier this year, and i heard this back secondhand and that's why we need the whole government review of our industrial base, is that several of the largest western generic drug makers announced they were dropping substantial numbers of products in their manufacturing portfolio. that suggests they just simply can'tcompete . >> it also suggests that they're not happy with the margins of notnecessarily that the computer, it's that they want to make more money . >> that could be the case. i think there's the price paid for manufacturers and then
there's the price paid consumers pay. i think look at india, and you have the topline meeting with mine on active pharmaceutical ingredients. china undercuts india. you can buy, india can buy active ingredients keep her from china and cost them to make it so i think there's a persistent problem there and again, we were china subsidizes it, its domestic industry is quite significantly . >> does anyone actually think that we will ever be able to inspect anything in china? we have no history when it comes to many other subjects whether it be for mo use, i mean i'm not cynical about it. i'm just realistic about it. >> i'll add there's a chapter in china are asked about chicken, importing chicken from
china and i put that in there because i understand we haven't really imported a lot of processed chicken from china and we haven't imported and raised in china here yet. but what's interesting from a regulatory point of view is that usda inspectorswill not be in those plants .>> we had hearing years ago on fishing china and the testing of jalopy and whatever, shrimp, farm raised fish. and we were testing those fish, but the pollutants that are produced river from the farms. so we had a standard of six, i, inspection is not a solution to me. number one. >> if i may, i concur with your cynicism, commissioner and when it comes to recreational drugs, i think that we have to work on
the demand side. even if we are able to get these inspections in china, the production will likely shift to countries like india. >> i agree with you. wehave our own problems, i'm not blaming everything on china . but i will get even more cynical now. the rebate on offense, is a policy decision. a policy decision made with the knowledge that the drug is damaging america. forget the demand. i can only read that as a conscious decision to damage us. sorry. tell me i'm not right. i mean, and is a worldwide
problem isthe most damaging drugs out there . you really quickly. if you take a minor overdoseof it , and they got a vast rebate policy for its production? and i'm supposed to believe that the neighbors law is going to be enforced anymore and the chinese had enforced any other agreement they ever release with us? >> again, i share your cynicis . the only thing i would add is that fentanyl is a legitimate medical drug as we all know. and chinese companies are able to export it legally, for legitimate reasons. what's more troubling to me is that china also offers these bad rebates for a wide array of fentanyl analogs and other nbs novel psychoactive substances have never been used for a medical purpose any time in
history anywhere in the world. and so to me, i just can't understand why that is. >> is a policy decision. >> i think doctor we want to address. >> i'm out of time. >> i would quickly respond. i'm not an expert on until what i see similar problems, in china the drug medicine policy is a huge problem. it's a huge crisis. it was in china and you talk about the vaccine crisis in china, i think if the government and people there, they're worried about their own production and inspection so i think it's probably that are to engage chinese governments on these inspections because they internally, they need to boost up their capacity. but that will take time. i think even global health expertise, it will take 5 to 10 years between that expert
professionals in global health and the regulatory science, they take even longer but i think in order to engage china, chinese government, to put it on the priority, that's why i bring up the tobacco control is that if they see this as a international problem, and also engage, reengage with their interests in controlling the amphetamine canon, create this reliance on combating this synthetic drug, it might be easier to bring them to at least, bring this to the priority list. in addition to the regulatory system. and if i can say one word about the influence of collaboration, i think that's a good motto because that's elaboration shows that chinese are sharing data on surveillance, to who and with the chinese, so i
think, i hope that can be as a model. >> we will move on, we're staying pretty much on time i hope to have time for a second round . commissioner bartholomew. >> very much and 90s witnesses, this is a very interesting, i'm learning a lot. first, statement and then a couple of questions and some of my questions will also go to our final panel because they cover the topics but i just want to say that one way that china can also demonstrate its commitment to addressing global health crises is by allowing i want to participate in organizations address global health crisis like the wto and participateon , more actively in addressing lateral when they arrive. so it's the comment. doctor kessler, am i pronouncing correctly? thank you for noting particularly the nefarious nest
of dna. against the uighurs andthe ethnic profiling that goes along with . i'm interested in what kind of informed consent takes place. there is so much going on it being gathered. there's so much american data that ending up in china.what chinese citizens whose data is being gathered. is there any sort of informed consent is going on, anything like an irb? >> i think that's a good question. it's unclear exactly how much. i know there are definitely instances where there was absolutely no informed consent, so the incident i talked about in my written testimony of collecting dna samples on the weaker population in one province, that was explicitly stated to be a health physical under a program, health physical for all and people were allegedly told that this is for your health physical
when they asked to see the results, we were told you don't need to seethe results . and so there's definitely cases where there's absolutely no informed consent. i think on a broader scale, i've mentioned in my testimony, my written testimony and in my report the number of healthcare data centers that china has developed that is collecting not only genomic data but also all sorts of healthcare data. i believe i would imagine that there's, there's a lot of that operates, a lot of that is to support legitimate minute medical needs and a legitimate healthcare research. and so there is a aspect of informed consent there. but the laws differ in the us and in china as to whether informed consent is required to share data for an additional
research purpose so usually when you enter into a research panel, there's informed consent for that specific study. and the laws, and i hesitate to say definitively, because the laws differ a lot but there may or may not be a requirement for informed consent to then use that data or other research purposes. >> anything to add? >> i have done some nih sponsored, in china that on one of my only experience working with the academia in china. i think if you, if we work in china with universities, we always request, we have to conform to the nih requirements on informed consent as well as human subjects, training andall that .
but if it's initiated not by a collaboration with us government, then you know, those are the areas, those will be the grayareas . just a final question to any and all of you. we talk a lot about reduction which is obviously a production of pharmaceuticals and we haven't talked about devices and devices also which is critically important but also r&d is really important for the next generation of drugs, i'm thinking particularly chemotherapy. a lot of times it yourself a lot until the next one comes online and is usable. it is the us losing our leading research interests to chinese companies either operating here or chinese companies that are in china? anything you know about that? >> i can address that someone. i don't think i would go sofar as to say we are losing our leading scientists . research in the united states is heavily dependent on an international researcher
community. and china certainly does have programs to entice top research personnel to move to, to relocate to china giving them large starter packages and whatnot. and this is, this targets both us-born and chinese born scientists. however, using data from nsf if you look at the rate at which the agencies in science and engineering in the us, foreign phd's getting their degrees in the us, the rate at which they return, they return to their home country and five or 10 years, china has the lowest return rate of all countries. and it's so, that is to say that despite their efforts trying to entice and definitely
certainly bringing some top talent to china, they are really trying to catch up with other countries and gave much higher stalemates than say scientists in europe do. >> anybody else? thank you. >> commissioner lewis next. >> thank you very much for your vast knowledge of something that most people are totally unaware of. you mentioned today this is the situation we are in. with our collapsingindustrial base drugs . a very sobering situation. i'd like to ask each of you if you would please tell us the recommendations that you're making, how long would it take to protect those recommendations, how much will it cost and who opposesthem -mark . >> i'll start. i think to begin sooner rather
than later in the short-term, the dod and va, if they could purchase based on value and not just price, cheapest price , that includes quality, security, uninterrupted supply, that would be a very important consideration for force protection and combat readines . it would also direct our taxpayer money not over to china to build its industry to build here. there's no law that requires the dod and the a or just the cheapest drug. is a well intended effort to save taxpayer money but we wouldn't have our aircraft carriers, nuclear summaries in china and for very important medicines, we should take a close lookat what it will take . to purchase based on value and
not just on price. i think there's opportunity also for the dod and va to look at what the private sector market is doing in hospitals to purchase thosedrugs that are in perpetual shortage , so they are possible to see how much they pay now, the dod and va might be able to pay less. that would be a first step. insofar as will this cost more money, what we know is that large purchasers of generic drugs, big ones , they purchase the vast majority of all of them. they buy very cheap but that's not the price you and i pay when we go to the drugstore so without knowing how much a markup there is among these purchases in between, it's hard to say whether in fact if the dod and va went to the manufacturers whether in fact that could save taxpayers money and save federal agencies money. in the medium-term, the dod through darpa has invested in
what's called pharmacy on demand. this is the use of that remarkable manufacturing technology where chemists can produce, produce, forgive my lay language, in a box on apa or essential antibiotics and make small those volumes within 24 hours. how can we, can we get some public investment to support demonstrating that small volume production, the commercial scale production that hasn't been done before, certainly on the api level and have a stockpile of api. once you have the active pharmaceutical ingredients, it's much easier than to make drugs so i'm not a fan of stockpiles, but that's not going to get us out of the mess we're in now. the stockpiles of apa using this advanced manufacturing technology could go a long way
. i would put that in the medium-term and there are people out there chomping at the bit to want to do that so that's a short-term endeavor and then something or the medium-term. >> my first suggestion was to pressure china to eliminate these bad rebates, grants and other subsidies to companies that are exporting illicit fentanyl precursors and nps. this is, this information that china offers these types of subsidies is being revealed for the first time right now. this was, these are revelations from my book which comes out in september. so the first step i think is simply making this information known. i think that this wouldn't cost anything to the us but it would obviously cost china a lot in terms of its industry and china
would likely oppose it on backgrounds, on those grounds but at the same time it's so outrageous to be fueling a drug crisis in this way. china also doesn't wantto be known as the world drug pusher . and so i think this could be effective. if you guys put best type of pressure on china. i also recommend scheduling more fentanyl precursors and pressuring china to do the same. traditionally, how this works is that the us will schedule one of these types of drugs and then it will be scheduled internationally, which forces china to do it within a certain amount of time, say a year. right now there's not any
pressure on china to do this because the us hasn't even scheduled these precursors. and that's step one. and i think that the case would be to make senator john kerry have the effort to schedule the first two fentanyl precursors in 2016 i believe and he was successful after the us and getting it done internationally and china followed not that long afterwards. >> my short answer to your question i think is we have to think about globalization and a market mechanism. in terms of china being the supply chain for most of the api, i thinkthat's a fact . i think it's upon the markets regulation for any companies that by china's product to raise the quality control and
raise these issues. i think china itself in terms of government, it seems they're trying their hardest to regulate their own pharmaceutical sector. it's very fragmented. right now there are 5000, evan thousand companies registered in china. there'smany others are not even registered . so in their last five national five-year plans, they tried to consolidate and encourage consolidation of some of these companies to create a bigger and more solid company. that was, that would pave the way for the the regulations to go in. and help, right now there have just been, they're too small and too harsh to regulate. so that would be, my answer would be just continue to help china's government on this effort.
>> i'm looking at this from the perspective ofbiotechnology , biopharmaceuticals and dna sequencing as opposed, which as i mentioned earlier is a very different situation from the traditional pharmaceutical market. but there are still issues there. i think with respect to biologics, from china, our major concern right now is economic competition. as they become more advanced in developing bio similars or other products, and my top recommendation is to increase us funding support for basic and applied research. i think the us has a far superior ability to innovate, but just needs to make the proper investments in it, so obviously that would cost money but it's an investmentthat
could bring up , could bring about a lot of new advances, both basic research which has led to countless discoveries from jean editing technology, crisper and everybody's aware that the internet was obviously not by a related but government-funded research but you never know what basic research is going to produce major breakthrough technology so i think supporting that is very important. on top of that, helping companies through programs like sbir, small business but innovation, research programs, to help those products, out of basic research and into products is also very importan . the other main challenge that we talked about is with healthcare data, genomic sequencing and the privacy and
security issues around that. the us has some of the weakest laws as far asprotecting personal data . china is very strict and does not allow personal data on its citizens to be shared or stored outside of the country. i don't think we need to go that far but i think with the gdp armed with recently for a couple years ago, i think that it's obviously a global concern. i think that is appropriate sort of model to use. and i think if we were to advance our laws to allow sharing of data to advance biomedical research, with trusted partners while simultaneously preventing access from those that are not deemed to be able to handle it
securely or maintain patient privacy, it's very important and i think that's a leading step that we need to do soon. >> all very much, it's very sobering to know that we don't make this fall and were having a class of major industry of theunited states . i would ask each of you if you please keep this one or two pages, how long would it take effect your reputations, how much it would cost and how long it would take. >> okay. >> thank you for that. i'm going to go now and then i have to mister goodwin and wortzel and then will go to a second round. with mister wessel, kamphauser and cleveland. i thought your history of china's global healthcare activities was very helpful for
us and i imagine a lot of what you said is going to end up in the background of our report . couple of quick questions for you really for clarity. so when i was reading on page 3, i think you said that chinese built hundred 50 hospitals and 25,000 care professionals in their and if they treated 280million patients , that last a number that out at me, five and half billion a year. since 1963 and many of those years, i don't think they were that active globally like in the 70s and 80s, i don't believe they were where is the information come from class is from a report from the chinese ministry of commerce.though that ministry is until last year, has been part of the coordinating the medical teams in china. so what happened in china is that once they get requests from a country, they will send
that to the province, they will have designated products to partner with that country.and then the province will send out a team and organize that area so that's a report. from the va book publishing. i think they are still in the final stage of. >> is there any other independent documentation that comes from the chinese government . >> that does not come from the chinese government. >> it's not like they have a history of transparency regarding global health activity so isn't it documented anyplace else? >> not in others so that from that chapter. >> also mentioned a lot of contrasting their activities globally with us and other countries and you mentioned they do a lot of infrastructure so that hospitals, healthcare infrastructure. >> related. so again, this is talking about
transparency and coordination, that's a problem area as always. the chinese commerce department in the past, they usually report how many buildings they do, infrastructure buildings. they don't specifically bring out this is a hospital, this is the clinic and they don't report that way. so there are research teams and i personally work with the two value interviews university looking at some of the structure buildings and medical support and then we were trained to bring out okay, this is a hospital. this is a clinic so we considered them as a health assistance. >> when they build infrastructure, whose terms, whose companies, do theyuse the local company for the bring in chinese ?
>> that's the question. there's, in the past they've mostly like any other infrastructure building in africa or in asia, they bring in their own workers but i think the chinese government are very sensitive to the criticism of international society that they are not relying on, now helping the local industry. i think in the recent infrastructure buildings, they are trying to build at least a report fromwhat i've seen in africa , some of the construction site, they have 80 percent of the locals and still have 10, 15 percent out there. >> and they finance most of those through loans, right -mark they loaned money to a localgovernment . so we see another reason why they've been doing this. they're loaning money to the government, it's going into
debt the higher their firms. >> right. you're correct and i think the new agency, this is called pacifica, they're trying to integrate the global aid, the humanitarian aid from the commercial interest. that's one step. it was just started last april and i think over this year they're trying to figure out within their own government to figure out, separate the two but so far it's difficult because they have loans, confessional loans and grants. they're all lumped together. >> since i'm german i'm going to be disciplined and hope i have a second round because i'm going to be thinking about this, i want to ask why the chinese have such a developed cro industry which you mentioned. it's maybe, rotted gasket so we'll get it just to do that. commissioner goodwin. >> mister wessel, point of
clarification in your written testimony, you've been discussing these bad rebates. you mentioned that they are offered for at least eight other pencils or illegal for chinese exports. illegal forchinese manufacturer in this region i would assume that the mark . >> no, they are not. >> what are they legal for? nothing. >> providing a tax rebate for production of an illegal product? >> at correct. >> i think mister field has justified. ms. gibson, returning to this discussion of calls and the pressure on agencies, hhs, state government and the light to negotiate based on policy and business, it obviously dominates the negotiations with other companies and the
discussions on who is included or excluded from schedules and the like. similarly with a benefit to these agencies, to the state governments, the taxpayers and ultimately to the beneficiaries and we can measure it, it's quantifiable, it's tangible. we can determinewhether there were settingsthat were occasioned by a particular drug being used . how do we measure value ? how do we measure quality? it can be done and in the uk worship there are reasons why we source certain products or services from certain places. and even beyond national security, if you're building a dam or a bridge, vendors, potential vendors would have to meet certain minimum eligibility requirements. that threshold of expertise so how do we do it in this context
as you describe and how is that texting with hospitals. >> iq for the question, the consortium half of hospitals are buying directly from manufacturers so they are bypassing all the bolts in between that add to margins. so that certainly one way to approach it. as for cost, i think we have to look at the medium-term and long-term as mentioned earlier. when we lose control oversupply, we lose control of price. china will be the price setter and we will be theprice taker. and we saw that with vitamin c when chinese cartels were formed , prices went up and all the other producerswent out so these are hidden costs and they've not been calculated . it was an estimate of the cost of drug shortages in this country because of the narrowing supply chain and the only mention the timethat pharmacists spend which is enormous .
it's $400 million hospitals then just to manage drug shortages and recalls area that doesn't include only other costs frankly the costof human life . remember, we had hundreds of people die in this country 12 years ago from a contaminated blood thinnerpurchase from china and if you look at the email exchanges of companies that purchased it, was that she stop . something you just don't want cheap. there's avery high price and one of the things i wrote about in china , is how is it that the products are so key. it's not just subsidy fromthe government . it's also companies will say we assume no liability for our products. so we are buying medicines that are a matter of life and death and we assume no liability and what recourse do we have when there is a bad product -mark back to an earlier question, if you look what happened with the
vaccines were not in china,any people were arrested . the people in china. so when are written we got from china killed hundreds of americans, there was nobody arrested. the blood pressure medicine contaminants and carcinogens, knowingly worshiping product in the united states, the worst offender was a chinese company where the amount of carcinogen was 200 times the acceptable limits for bill. and what prompted them to do that? because the, valspar was going generic and there were companies competing directly or global market share so they wanted to come up with a more efficient means of making that pressure medicine and they did. the problem was they came up with this new chemical process and this has beenreported in the media , but no one with great chemistry solve the problem to more efficient but nobody considered this is a product that would be consumed by humans. and it was dangerous, was lega .
when the fda went into effect this plan, a saw that the company knowingly sent substandard effectiveness in which he no toxic impurities to the united states so we went cheap, we can beinecke. what's missing from the holy question on generic competition and price, let's have lower prices is quality and if we have 10 percent of our generic drugs that don't meet standards, and it's a public knew about that, so it's a very high price everything pretty. >> but from my perspective i think the challenges, the choice isn't that start. as you say and i think we have to take a broader and longer term view. a downward sure the cost low, the choice is not let's pay a little bit more versus was from china with a dangers that come with that. let keep costs low and once at the manufacturingbase , was in 20 years and we've seen done, this concentration of climate change in china.
>> we can reinvigorate our communities and our local economies by bringing this manufacturing back home. the same time that we can have higher-quality jobs at the fda can go in and inspects, i think it's a win-win. his uncle happily in the us, at least we're not buyingour manufacturing base to trustworthy countries . >>. >> commissioner work isnext . >> thank you all for being here to comment your willingness to print statement so i have what i think are a set of questions. back i'm going to attempt to address and ask ms. gibson and doctor kazmierczak to respond with ways that we can shift the
production to the us as the industrial base, we each have really not told us how you have and what bothers me doctor kazmierczak is yours long required government and solutions. i mean, that's your big business. >> and i don't think that should happen. so i guess i'd ask both of you it there are other ways to help develop this us industrial base and strengthen it. to punish the countries that are providing these bad things and providing subsidies, i'm not a lawyer, then you take a minute to some world court and assume , create a reasonable fair marketplace through legislation? what would you recommend there?
how would we instead incentivize private research by us companies, by lowering the taxes for a time while they put new drugs on the market so off, i'll throw those things out there, i'm searching for ways that don't have thefederal government . >> i'll start, thank you for the question. i guess i have a couple of responses to that. i think incentives is very much be part of the solution as well. by saying increased government funding, i guess i'm saying increased government support so whether that's true taxes and it's, i think the bottom line is that we have the capability to produce at least in the case of biopharmaceuticals, we have the capability to continue to be the leader for a long time
and so it's just encouraging those activities. as far as, i will say there's another aspect to this. a lot and that's that goes into access to other markets. access to the chinese market and particular area china has been reforming its laws. regulations on biologics and bio sellers. to become more in line with global standards and actually, provides the greatest amount of post-market data for protectio , the exclusivity than any other country. however, that is dependent on the drugs having been developed in china using clinical trials that were conducted in china andhaving chinese partner so if
you're using data from outside china , you get less exclusivity which meant that market less attractive. so there are diplomatic avenues to try to bring china into more into a more friendly market so that our companies can compete there. as well as being able to compete domestically. >> theresa marsenburg. >>. >>. >> .. >> .. which i believe they will in our health care system and quality problems persist. one would hope that model would
expand to other health care facilities in the private sector to spur a diversified manufacturing base and trustworthy suppliers. i think when it comes to national security for the dod do we want to tell the men and women in uniform that we are going to buy cheap because it will save the taxpayers money. in that case who want to buy based on value and look closely at what manufactures will charge versus what adding everything else in between the middleman if you took that out of the system could that be more economical and more prudent for the use of taxpayer money? i think the same is true for veterans. i think we have an opportunity to use their procurement dollars to move the market. when it comes to advanced manufacturing toality it's just demonstrating the proof of concept that we can do this on commercial scale protest and been done before.
the fda's support of this technology but doing it and saying here's how can be done and yes your facility can be fda approved, show that can have buyers with a consortium of hospitals that we will buy products that we can make here in real-time quality control. that could take some modest amount of incentive to stimulate that private market and that development of that technology on a higher scale. >> commissioner bartholomew has a quick clarifying question. so make your talking about 3-d printing aren't you essentially? that there would be machines that could. up using that word manufacture on-demand. is the technology already there are not yet? >> i'm thinking the advanced manufacturing technology which is called pharmacy and demand making the ati which is the most
costly part of generic drugs and that's why generic companies don't have the incentive to invest in this because their margins are so small that's the technology i'm thinking of. >> thank you. >> i be happy to provide the commission with more information on that. it's fascinating and i think in the future should we choose to support it. >> we have finished around one and because of commissioner wessel's and my foresight we have the time for round two. we have time for the second panel and i think we should be very proud of that and we go to commissioner wessel for the first question and then i'll have commissioner kamphausen in cleveland lined up. >> thank you all. this has been very helpful. i've been sitting here getting angrier and angrier because i love my dog and my wife.
after the melamine square just scare refuses to buy dog food made in china and i realize there is more disclosure on our dog food than there is on the drugs that we use every day for our families. to me that is a crime. going to talk to her wortzel's question my understanding is several years ago there was legislation that would require on the labels the source of the active ingredients and that is not part of the present law, is that right ms. gibson? >> that's my understanding. there was country of origin legislation proposed in 2,072,008 by share it rounded that was killed on the first pass. >> i'm of the few that in the
dog food bags should be in whatever products and whatever dietary supplements or pharmaceuticals. so i think we need to look at the question of what the impediments are to country of origin labeling for the active and inactive ingredients so we can address that but as a market based solution i would welcome anyone's comments. i think someone made the statement that there is limited liability. without having to have massive government expenditures or no government expenditures if we were to create an insurance risk-based system where importers of the api, importers of the finished products or pharmaceuticals have to bond or insurer against risk.
it seems to me that would have a pretty significant impact on the sourcing patterns and an insurance companies don't want to be left holding the bag for liability. therefore presumably it's going to demand that an importer go upstream and have suppliers and have confidence in the supply chain. for anyone ms. gibson or anyone else who may want to respond. can you just give me your opinions to whether that system may ask for help us in this dilemma? >> i will start to think it's a really interesting idea and it was -- would certainly raise the cost of exporters from china and the country but that would also have to create a more level playing field for manufactures here and in other countries where the standards may be better. >> any other thoughts?
dr. contigo wortzel separate question for you and an issue - on the one hand we have talked about all the threats that exist here today. their earlier panel in terms of sourcing. health care is one of those fields where there really is a common source should be pretty talked about pandemic threats etc.. without denigrating all that is chinese which tends to be at times the political mode of the day how do you think we are able to address that challenge so that we can talk about u.s. interest, the health and safety of our population while also addressing again is mr. west pointed out fentanyl is not legal in china but they are
adding export taxes to it. how do we deal with that dilemma in the u.s. china debate right now? >> in my personal opinion they can use three-level actions. we have the short-term, medium-term and long-term. for the long-term more collaboration and helping china with capacities for regulation in and medicines, medical products and vaccines predicting china has been trying and actually what i heard in china is that they are only producing the api at the low profit margin they hope that their pharmaceuticals can build more formulas or drugs that can be on the international market for right now only a handful of
drugs and only one vaccine is with w.h.o.. it's kind of far away from providing for medicine on the international drug market so they are focusing on api now. to help harmonize regulation would be a long-term solution. medium term the solutions would be more collaboration and the influence of surveillance. if cdc, u.s. fda china fta can have a real collaboration with the influence of surveillance to find an agreement for capacity building and the chinese government put in more than $4 million for fielding these labs all over the country. they have built more than 500 labs they would praise the
capacity and they are providing data to sharing that data with most countries as well as to w.h.o.. every year when we say what is the target for vaccines that some of the data that is used for international organizations. in the short-term i think if we want to address the issue short-term i think again we would engage china. the government and their leaders are very sensitive to international opinions and they want to be part of the global government. something that is framed again as drug problems all over the world, yesterday i saw a report saying that 80% of the opiates he illegal opioid production is
actually in africa. it's tramadol. here certainly we have fentanyl but there are larger epidemics out there. bringing china in as an active player is a coalition. i think it would be the fastest way to get their attention so they can change their policies. so back i appreciate all of that and i'd don't -- collaboration is great predicting china is putting that collaboration in jeopardy as a result of many of its policies. you talk about world opinion. i think world opinion demanding china use certain practices is as high as it's ever been and i don't see a lot of change. at this point the next step is china's leaders beginning to take certain steps that will
reengage collaboration. thank you. >> commissioner kamphausen. >> to put questions for ms. gibson. he talked about the coalition of hospitals. you have any idea where they are sourcing their api's dr. haena kealia worthing and on page two of your testimony talks about the importance of encouraging greater collaboration and organizations and you talk about progress that china has made in local governance. what perspectives and insights to have on beijing's declined to participate in the world health assembly every year since 2017 on a political basis, based on
their opposition to the administration in taiwan. what sense can we make of this and how does it contribute to this assertion that you have made a china wants to be a stronger participant in global governance and health care issues? thank you. >> i think that's a difficult question for me because i'm not a china taiwan experts. i think china's government has the political will in global governing and especially for my knowledge health assistance. my limited knowledge about taiwan's health system is a model.
even now china itself has lots of problems and a lot of them is our health system. if a single-payer social insurance program that cannot keep up with the cost of health care. they have very limited ability to work with long-term care and disability care. they are actually looking into taiwan as a model. they also look at u.s. but they think taiwan is a better model in terms of a health care provider. i hope as a researcher and its public health professional there will be more collaboration. >> okay commissioner cleveland has been very patient. we have the same question, didn't we? i have previewed the dr. kazmierczak if you could
explain why your test -- written testimony was really good and you made the point that in this area biotech and biologics the chinese have not advanced very far although they are certainly investing in certainly ambitious but there are couple of various where they really are competitive and have a significant amount of market sharing and one of these is the contract sharing resources. why are they doing so well there and what is your analysis of that? >> thank you for the question. industry uses research organization for the same reasons anybody else versus. it's cost and expertise. this is true for a large pharmaceuticals or it may be more of a cost issue but
especially important where that expertise is eager to go outside to build within. china has been developing essentially taking advantage of that. they are able to provide these services than they do have a large stick we advanced workforce that can do this work. and they can do it at a lower cost. this is why they've been able to build up an industry. it can also be used as a stepping stone to more advanced development so it may be a way of training the workforce to then move on from the contract research activities into other companies for the same companies
that are developing new biologic or bio similars. >> are they given any help by the government to compete or do you know? >> i have not seen any specific instances that they are being funded by the chinese government although we do look explicitly for that. given the amount of support that they have given for biotech in general it would not surprise me if some of them are. >> do they work mostly for firms that are trying to get business or approval in china? it sounds like a help navigate a lot of the regulatory terrain. do the chinese firms worked mostly for firms wanting to work in china or are they working for example of companies trying to navigate here in the united states? today higher chinese seer owes?
>> i think that's a large portion of their clientele although i haven't done an analysis of it. one of the major committees for c. r. o.'s is to develop a navigate the approval progress for a drug. you will see will be more likely that a company would want to use a chinese cro if they are trying to access the chinese market so yes. >> did you have any follow-up? >> one. what portion of the u.s. market are using sierra o's from china? would there be any way of collecting the data person something there has been and just enter what is the impediment or the barrier to understanding which u.s. companies are relying on sierra
o's in china. >> it's definitely difficult to get specific quantitative data because unlike investment data these are customer client transactions that are not reported. there's no database for that kind of information. i have not had the opportunity but i'm extremely interested in looking at exactly that issue. there are ways around it whether it be through talking to the major players and the smaller players actually in the u.s. biotech industries. i will say the u.s. sierra oindustry is the largest in the world. both american and foreign companies are using american cro 's.
>> we have one commissioner remaining and we should have enough time for his questions. commissioner. >> the testimony have given us today is obviously a matter of security. and aerospace manufacture was the story in "the news york times" in "the wall street journal". nasa's report appeared in "the wall street journal". it seems to me the report reviewed give us on the earlier question how long would it take to effect your recommendations on how much would it cost and who opposes those? if we include our report or who opposes your recommendations if my custom to change their conduct so i really would appreciate information you can give us on the subject. thank you very much.
>> all right, commissioner cleveland. >> are any of you aware of healthy chinese are using bri's for the industry? >> we are hoping to stir some of the research projects looking into bri. it has to fire environmental and social impact of bri payday only know from the same reports i read from the chinese government one of their goals while they had bri house summit a couple of years ago they are aware that along with bri they want to develop the house assistant
program and partly to protect their investments. i think that's pretty natural but also the two coordinates was infrastructure and to enhance the investment in health care. i know that china, the chinese government is hoping that their companies would be more adjusted invest in africa to build the factories. they can use that as an incentive so if they have a local production they don't have to put in funding for api so that's the incentive. they definitely have in mind to coordinate health assistance with bri.
>> we want to thank the witnesses for your outstanding testimony and your answers to our questions and sometimes we have a follow-up or two that we solicit in writing. if we do we will let you know and if you could help us more that would be great. thank you and we will now break for lunch until 1:35 i think. 1:30. [inaudible conversations] are. >> good afternoon. we will get started. our third