Transcripts For CSPAN Government Commission Hearing On Chinas Role In Global Health - PART 2 20240714

And activities in the United States. Well start with Rosemary Gibson. I introduce everybody first. Well start with Rosemary Gibson whose name has been mentioned already several times if you were here. Shes author of china rx exposing the risk of americas dependence on china for medicine which documents the dramatic shifts in where medicines are made in implications for National Security and american securities. Next well hear from ben westoff. Mr. Westoffs new book fentanyl inc. Which will be published in september. Fentanyl kills more americans than any drug in history. And next panelist studied at the Rand Corporation is an especial deem yol gist. Centers on Research Health among marginalized population. Well hear from mark a molecular biologist in performing Risk Assessment to sport government on bio Security Public health and bio defense. Hes one of chinas biotechnology and other foreign engagement, a report published in february 2019. We welcome all of you. We ask that you would keep your remarks to seven minutes. And ms. Gibson, well start with you. Ms. Gibson good morning. Can you hear me . Yeah, push the button there. Good thank you to 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. And that is our dependence on china for medicine. As was discussed in materialier panel these are medicines used by the members of congress, president , members of the military, veterans and all americans. These are bought in retail pharmacies in pharmacies and supermarkets an 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. And that happened in 2004 when the last plant in the United States closed. And that happened and 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. And it drove out all the u. S. European, and even indian producers. And then after it gained dominance, prices went back up. Thats the playbook that we see, the same practice with the emblematic tel is how we lost to make some so many of the core components of our medicines and this will finish generic drugs eventually. In 2001, after the anthrax attacks when the u. S. Government needed to buy 20 million doses United States the had to get it from a starting material from a plant in china. I have four main points and will highlight four recommendations. The first is our Industrial Base to make our medicines is collapsing. We have virtually no manufacturing capability left in the United States to make generic antibiotics. This is what you give your kids for ear infections, strep throat, superbug treatment and last we sort antibiotic. In five to 10 years we will have no capacity for generic drugs. This is 90 of our medicine. The second point is chinas dominance is global. In february, Dutch Public Television aired a documentary reporting the netherlands dependence on china for medicine. A former industry official said on camera that there concerned that china may not supply them with medicine. And as mentioned earlier even india is dependent on china for 80 of the key ingredients it needs for its generic industry. And when you control the supply of medicines, you control the world. Thats what were looking at. We are losing control over the supply of our medicines. And when we lose control over supply, we lose control over quality. Thats why we have Blood Pressure medicines with carcinogens in them. And we can go into in more laettner the q a, but the f. D. A. Cant fix this problem. Its in the position to make tradeoffs between detective medicines and shortages. We lose control other supply and price. China will be the pricesetter and we will be the pricetaker and members of congress will not be able to bring in the c. E. O. s and ask them not to raise prices. The National Security risks are pronounced. China can withhold supply. It could put lethal con tam innocents in medicine or have no medicine at all. I do believe its in the rem of possibility to target certain subjects having access to medical report and distribute products to certain subjects. The most surprising thing i learned from reading china rx from working on china rx and reading it again, took three years to do it, is that its no ones job in the federal government to know who controls the supply of our medicine. We wouldnt do that for oil. We wouldnt do that for food. Weve considered our medicine as a cheap commodity to be purchased at the cheapest possible price. Thats the root cause. Thats what needs to change. I have four recommendations that will highlight here. We need a whole of government review of our vulnerabilities similar to the base report what was done for the d. O. D. I looked a that report, senator, i didnt see any mention of medicines. Its outside of the d. O. D. Purview and understandable. We need a review that identifies our vulnerabilities and recommendations for how we can rebuild our Industrial Base. A second i believe the d. O. D. And v. A. Should have the flexibility to purchase medicines not at the cheapest price but on value. American taxpayers will be shocked to learn that their hard earned money is going to help build chinas generic industry as our domestic industry collapses. A third, theres a tremendous opportunity with advance Manufacturing Technology to make active ingredients here and finish generic drugs. Its been done on a pilot basis. We need to take that to commercial scale. It could revitalize communities, economies around the country. And finally, im sure youre aware of the african swine flu thats devastating the pig population worse than what it was 12 years ago when we had the heprinne heprin. The committee on Foreign Investments has to review the purchase of smithfield but a Chinese Company not so much for Food Security but for our National Health security. And thats because pig intestines are a rare earth of our Health Care Delivery system. I have 28 seconds left. Ill leave that to all of you. And i look forward to your questions. Youre yielding back the 28 seconds. Thank you for that. And for your testimony. Mr. Westoff. Mr. Westoff thank you, senator talent and the distinguished members of the commission for allowing me to testify today. The u. S. Opioid crisis began with the overprescription of farm suital ernie roids like oxycontin. When the prescription ran out, many turned to street heroin. Now the crisis has entered its third wave led by fentanyl. It was a widely use medical drug but it is mainly abused today. It is mostly made in china and sent directly to u. S. Consumers through the mail and funneled by mexican cartels. The u. S. Political leaders have harshly cite sized china for allowing fentanyl, fentanyl analogues and navo psycho active substances or n. P. S. To be smuggled into america. In response china has promised strong action to stem the tide. Ut my research for my new book fentanyl inc shows that china has not been acting in good faith. I will explain. A critical part of chinas rapidly growing economy is its sprawling chemical and farm suital industries. Most spruce legitimate ones and others are in between. Reforms have been promised but infections remains spore hradek. It involves eight different agencies has a difficult time controlling these agencies thus dodging companys that keep their heads down can operate without problems. Many chinese officials dont seem to fully understand the laws allowing the manufactureing and sales of these medicines. At the same time china encouraging these industries through lucrative tax incentives and subsidies. These incentives have undoubtedly driven legitimate exports. But the rise of fenlt nils and n. P. S. Has been a terrible side effect. Quiet le money has gone quietly money has gone to Chinese Companies that are killing tens of thousands of americans annually. For example, china designates new companies has new enterprises which helps these Companies Including those exporting dangerous drugs to the u. S. Receive lucrative incentives. Also exploited our various programs administered by Chinas Ministry of science and technology. Chinese companies showered with these types of government benefits include one called wan chang based out of the city of wu han. Make s ingredients to fentanyl including to the u. S. It is possible that Chinese Communist Party Officials dont realize its happening. Then again they do considering the tax code encouraging the export of these drugs through reimbursement of the vat rebate. Not every exported chemical gets a vat rebate but thousands do. Including fentanyl. Other analogues not used for edical purposes anywhere cannaboid and antibiotics. China says it shares this commitment. On may 1st, 2019, china scheduled all fentanyl analogues including those yet not created. China has difficult enforcing its drug laws but this was the most far reaching and significant type of action china has taken in this rem. Yet, theres much more the u. S. Can do to 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 farm suital companies to receive vat rebates for exporting fentanyl for medical use. But it is outrageous that china offers these tax rebates for many other fentanyl analogues that are illegal for chinese manufacture and 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 for fentanyl precursors and pressure china to do the same making fentanyl from scratch is a complicated process. But making it from precursors is a fairly simple one. This is a process favored by mexican cartels who usually import the precursors from china yet currently all be two two of the known fenlt nil precursors are unscheduled not just in china but in the u. S. And worldwide. The u. S. Should also pressure china to allow the d. E. A. And the f. D. A. To do their work. Chinas pledged to control fentanyl analogues are meaningless without enforcement. Its not just the american agencies, however. Chinas own drug regulating agencies need to be properly staff and funded. My final suggestion is that the u. S. Should do more at home. China believes u. S. Dedemand is driving the demand is driving the crisis. It has helped create the Worlds Largest market for opioids. Therefore, even if china reigns in the industries if american demand does not subside production will shift to other countries. Advocates of arm reduction believe 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 noloxon which should be available and affordable to everyone. Users need better access to drug checking kits. These are inexpensive tests that inform users whats actually in their drugs an can detect fentanyl. Studies have shown these tests save lives. Also critical is overturning the illicit drug antiproliferation act of 2003 known as the rave act, which effectively inhib hits concert organizers from allowing drug checking at their festivals. Parents in particular need be proper little educated. They need to believe that an overdose can happen to their kid because it can happen to any kid. Thank you. Thank you. Dr. Bowie, am i pronouncing your name correctly . Yes. Go ahead. Well, senator talent, commissioner, and distinguished member of the china security review commission. Thank you for allowing me to testify before you, the chinas activities on global heath. My thrm have three sections. First i will give a brief overview of chinas Global Health assistant activities and their motivations. Secondly, i will summarize u. S. Chinas collaborations on health and their difference their differences in approach. And lastly i will give some recommendations. So chinas current Global Health assistants can be grouped into five categories. Chinese medical team, the hospital, clinic constructions medical and medical equipment donation, health and humanitarian aid and Disaster Relief programs and house professional training programs. The Chinese Medical Team and Hospital Construction have the longest history dated back to 1959, china build a tv hospital for mongolia. In 1963, they dispatched their first medical team to a jeer during the war. Over the past year, china has built more than 150 hospitals, dispatched more than 25,000 medical proifls to 69 country professionals to 69 countries. These help fill some of the gaps when there is a lack in professionals and infrastructure in poor areas. And more recently china has impressed the Global Health commine community with its timely and unprecedented response to the 2014 and 2016 ebola pandemic in west africa. Chinas donation of the antimalaria donation and vaccines has peaked during 2010 and 2012. Even though chinas Global Health assistant activities are overshadowed by the western activities, no one can deny significance of chinas fast transformation from a major recipient of foreign tied a critical provider of the resources. One may ask why china is scaling up its Global Health activities. In my opinion i put into three reasons. First china felt that they have something unique to offer. Theyre a developing country. Not long ago they were in the same positions as the recipient countries now. So they believe that chinas success in domestic Public Health can be easier translated into other developing countries. Secondly, like many other countries in this era of globalization, china realized the impact of pandemic on their national economy. In 2003, sars cost china 25 billion in interrupted International Trade and productivity. In 2016, the first case of yellow fever was diagnosed in beijing. The patient was a chinese migrant in africa. So at the time when there are over a million chinese migrants in africa and over 100,000 africans in china, china wants to strengthen its pandemic preparedness capacity and protect its own Economic Activities and investment. And lastly china is also considered a Global Health assistant as a soft power and wants to be part of the global gloverpbing. Me what are the u. S. Chinas collaboration on Global Health . The majority so far has been focused on Infectious Diseases and within china. Gap helped set up the first c. D. C. Office in beijing. And in 2004, the china the Chinese National influence center initiated the collaborative agreement to build capacity influence of surveillance in china. In my view, this is a longterm collaboration that provided a Sustainable Data sharing and Research Exchange and benefit both countries as well as w. H. L. 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. And in under the previous administration, the c. D. C. Has reached out to chinese c. D. C. And to jointly sponsor five c. D. C. Centers in africa. This is the start of this type of collaboration. Otherwise, u. S. And chinas programs has mostly paralleled in these countries. And theyre quite different in terms of philosophy and approach. On paper, for example, chinas aid to africa is on a pure level assistance. China does not impose any political or Economic Conditions for recipient countries. On a technical level, the u. S. The Global Health activity favors a vertical approach that focus on a few Infectious Diseases. Chinas Global Health aid tends to be more like a horizontal approach in building infrastructures to create a systemwide expansion of access to medicine. So these activities and under good coordinations can be complimentary to each other. So my recommendation for the u. S. Policymakers, well, in general the Global Health community considered chinas contributions 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 understaff and lack of capacity at a Central Government level in china. I hope the u. S. Can collaborate with Chinese Government on Global Health capacity and ernlnell and management. Cultural and language integration and Program Impact evaluations. It would be also helpful to encourage the collaboration with multilateral organizations and help integrate their Global Health activities with Others Global initiatives. In terms of other risk as my fellow panelists have highlighted, china has become the largest manufacture of house products, providors of pharmaceutical ingredients and the producer of vaccine in the world. It is important that they strengthen the regulatory structure to insure the Quality Control of these products. We courage continued collaboration between the u. S. , f. D. A. And china f. D. A. And hope to accelerate the process of adopting the consistent best practice. Capacity building involve medical regulatory science similar to the Global Health professionals is in urgent need in china. And finally since we talked about fentanyl, i would like to point out to two successful cases in the past. And see what we can learn from them. One is chinas Tobacco Control. For many years, china glove are reluctant to work to act on the Tobacco Control because of the worry of the lost revenues from the tobacco industry. And in w. H. O. s Framework Convention on Tobacco Control eventually changed the governments attitude. So i 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 and cadamine problem in asia and tremedol in africa. Would be easier to engage the chinese if we invite them to be a part of an alliance to fight against the synthetic drug crisis. And finally, in building a Surveillance System and data sharing system, ill go back to the successful case of the influenza collaborations between the u. S. And china. And given the time,ly stop here. Thank you. R. Kazmirczek. Thank you, senator talent, and the rest of the commission for inviting me to provide this testimony today. Chip has advanced its biotech offerings through three industries, therapeutic, contract and manufacturing and d. N. A. Sequencing. In many cases theyre catching up to the Major Players in the Global Biotech market. Theyre beginning to make inroads and they are among the leading edge of technology. Many of the biological drugs are bio similars main r meaning a highly similar drug similar to producing generic drugs. Common bio similar tarkts used to mira, evatan treat arthritis, psoriasis and cancer. Few of these drugs have made it to market. And china has yet to become a significant source of biologicalics in the u. S. Supporting them are Contract Researches ors c. R. O. s companies that provide outsourced services for clinical and clinical develop. N 2017 there are more than 11rks00 with around 400 being in china. They manage over 200 projects through its biological focus biologics. U xi and data is not available. China hosts several Company Providing d. N. A. Sequences servicing including one of the Worlds Largest. B. G. I. Is the Third Largest sequencing company between illumina and offers services for farm suit cal r. N. D. They have formed numerous partnerships with u. S. Institutions providing sequences and analysis services. The growth of chinas biotech industry has come through 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 for foreign direct investment. A significant decline in the Chinese Investment in the u. S. Overall. Similarly, chinese Venture Capital and u. S. Biotech which increased overall since 2014 and ecame the top industry for chinaled v. C. Has dropped significantly. Chinese investors have provided 40 of the u. S. Biotech in the first three quarters of 2018. But in the first half of 2019, chineseled rounds dropped 83 . The drop in Chinese Investment in u. S. Biotech has been credited to the reforms passed last year. The firms are limiting or restructuringg investments. The change of foreign transactions are causing a major sniff the investment landscape resulting in uncertainty in the near term. The effects of these changes will need to be monitored closely to insure u. S. Biotech companies dont suffer due to lack of capital. Other testifying before you today will describe the large extent to which china supplies drugs and active ingredients to the u. S. The chemical enitys that are the active ingredients can be sin thesed and generic versions of drugs can be quickly marketed. Bio pharmaceuticals are highly complex large molecules produced by engineered cells and organisms. Instead companies wishing to duplicate bio pharmaceutical products must produce a bio similar drug, one that requires more technology, is more expensive to produce an has Greater Regulatory hurdles. It pro vidse a hurdle to provide low cost pharmaceuticals. Although they focus on bio similars, it is too nay santa to roduce significant result. Only a handful are marketed in china. Chinas raise in biotech my have pro tential loss of market share and transfer of loss. Chinas companies are not yet challenging the u. S. Sustained and increased investment by the u. S. Government in biotech r. N. D. Will help to insure they do not catch up in the near future. Where china is becoming a Global Leader in getter inic sequences and other fields. Theyre raising concerns over privacy and human rights. The investments china is making into Artificial Intelligence including a 9 billion initiative. And cross sector like the Digital Life Alliance provide opportunities for Chinese Companies to make significant advances in bio logics and other medical technologies. We are still at the dawn of the michelle learning and artificial transforming age. Today, the u. S. Appears to undervalue Health Care Related data at least when compared to the major efforts underway by china and by chinese firms. Going forward, the u. S. Can take several steps to maintain its position as a Global Biotech leaders and safeguard from china and other countries. By increasing federal funding for bakes research, the u. S. Can hem drive innovation and Economic Prosperity and reduce the likelihood that u. S. Researchers turn to china and other countries for support. The u. S. Also must prepare to take advantage of advances in genomics and health care. Given the growing importance of personal data and other industries, the u. S. Must rebuild the laws to have ackess 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 sectors needs. This includes identifying dependence on foreign industry. Recognizing the players on the world stage such as china and analysis of the industrys health, stability and vulnerability to foreign competition. Thank you again for this opportunity to speak today. I look forward to answering your questions. All right. You did a good job of staying on time. The first question will be commissioner camphausen. Commissioner thank you to our panelists for your powerful testimony. Ms. Gibson, i have several questions to you with regard to pharmaceuticals. And thank you again for your written statement. As i understand the nature of the problem and im a nonspecialist, there are at least two central elements to the issue. One is that however it got there and you document quite well how china did get there, greater than 80 of a. P. I. s are chinese in origin. And secondaryly we have inadequate mechanisms for testing leading to, you know, high failure rates or poll lute tants or carcinogens or whatever. Would you agree with that kind of framing of the issues in that way . And then a have a couple of followup questions by implication. I think those two points address major factors that characterize the industry and where we are now, yes. You focused on generics because you said thats 90 of what we take. Yes. Arent those problems similar to the branding medicines as well, those two initial problems that i talked about . My understanding is that there are some brand name drugs that do use active ingredients made in china say certain chemotherapy products. When it comes to quality and testing, its also my understanding that at least from what people in the industry say that the brand Name Companies have more incentive to insure quality because their name is on the box and theyre the only supplier. Good. Well, then two very specific questions. On page four of your testimony, think its outline point b8. You talk about an Online Pharmacy that says it tests every batch of every medication it sells. Is this are we at the front edge of this . Will that be more common practice and what are the cost implications . Yes, what youre referring to is the new Startup Company called valshure. Y said their motte s their motto is they test three batches of every pickup truck. They found that more than 8 of every test and they test for active ingredients and solution. Does it stay in the body for the right period of times . Theyre getting medicine for hat duration and they test inactive ingredients, think its a game changer. But what would help everyone more that if we had a consumer type reporting having that testing done and make it public because this is way beyond the f. D. A. s capability. I think we need a marketbased approach. And i think that would help could help turnaround the market nd insure that we have quality drugs. Sometimes if theyre contaminants in them, you may not know what you are testing for. At happened with heprin that lethal con tam innocent fell under the radar. If youre not testing fort worth, then youre not going to look for it. But it would be a big step forward if the public and institutional purchasers, the d. O. D. , v. A. Demand Higher Quality medicines that we have some testing. But that, however, still doesnt address the issue of our Industrial Base and the collapsing of our Industrial Base to manufacture 95 of our medicine. That leads to my last question in your oral testimony, i think you alluded to some possibilities for reversing chinas dominant position on producing a. P. I. s. Could you elaborate on that . I think its fascinating to watch what the private sector hospitals in the United States are doing led by the mayo clinic and 900 other facilities. They formed a nonprofit called because of the shortage of antibiotics. Hospitals have put up capital in this nonprofit. Theyre doing direct contracting with trust worthy manufactures. And so far, the first two products that they have purchased or contracted to purchase are one of xan combings myocin which is a critical antibiotic. It will be a Danish Company that will be opening production here. And then theres a second antibiotic. Recently they have contracted to produce about 14 or 15 other critical medicines that are in persistent shortage. And i just read before coming up here just to confirm that they expect that their member hospitals will save between 35 to 50 on the cost. And thats because these are medicines when theyre in shortage, they cost more. So this is a way to get around that, and also to stimulate more producers for essential drugs that are trust worthy and the other secret is they have longterm contracts. So were going to put out a contract not every year and change it. Do it for five, 10 years and that manufacture knows that it will have the capital and the resources to invest not only in backup facilities to manufacture, but also to invest in quality manufacturing. Transparency on price and who is making it, i think thats a gamechanger. We should be doing that for our public procurement for the d. O. D. And v. A. And cause some needed disruption in the current system. Thank you next will be commissioner essel and then after that we commissioners fed he and bartholomew up. Thank you for being here. Im going to have another round of questioning because theres a diverse set of issues here. I was very troubled by our last panel, our d. O. D. Witness, not y 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 lifesaving purposes. Ms. Gibson, if you could help me on the question of supply chain integrity for a moment and any one else who has information. My understanding is weve had difficulty getting f. D. A. Personnel into china having difficulty getting them the visas they need to operate and then the ability to travel within country so that i was told in one instance they were concerned about a 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 for the window seeing all these vats and by the time they were able to get into the facility, all the vats were gone. So its a little difficult to to ascertain quality. Can you talk to me a bit about the difficulty in our investigators our own government has in insuring quality and what steps we should be taking . I thought we had an m. O. U. At one point with china. It appears as you were saying mr. Westoff as it relates to fentanyl that maybe the stated comments are not followed through as it relates to policys that are being articulated. Sure. The f. D. A. To inspect a plant the u. S. , they can walk in tomorrow unannounced and say were here. Whereas when the f. D. A. Conducts inspections in other countries because it is a foreign country they do tell the government six to eight weeks in advance that we will be there. Thats not always the case according to the f. D. A. Ut that is the general rule. China with holding visas thats been a prolonged issue and as a writer of china rx tried to inquire it, the lack of transparency is quite pronounced. I do have to question whether inspections in china will ever be up to our desire to have the kinds of inspection wes have here. The kinds of inspections we have here. For the simple reason they have control over the supply of our medicines, i think we lose leverage. We lose leverage from a regulatory point of view. Its sort of a take it or leave it. One thing about the f. D. A. I think is very important to understand is and this was uncovered when i came across a document from the f. D. A. Counterpart in europe, the european medicines agency. And in 2012, they actually came out and said in writing, what they call the regularors dilemma. Theyre having to make tradeoffs between allowing substandarddicines, defective medicines into their country vs. Shortages. This was unthinkable years ago. And thats because we have a really narrow supply chain. And this is also true, i believe inner the f. D. A. , which i havent seen them put that in writing. Lets take the case with the cent cent Blood Pressure medicines that were tainted with carcinogens. Do we allow lower level of contaminants to be taken by American Consumers or patients or do we have shortages . If they took it off the market, there would be virtually nothing left. And you compare that to the risk of people have strokes and heart attacks. This is the situation were in now. And its not going to get any better. We cant inspect our way to solve this problemmle problem. We need a solution that diverse ights or diverse fights our manufactures. And the price paid to manufactures has been cheap, cheap, cheap. Weve been harpering the big companys that buy generic drugs, they hammer down on price. If you harper down on anything too much, its going to break. And the quality is broken and the supply chain is broken. We have to get to the root of the problem. Thats what many professionals do want to do. Theres another round. Our vice chair commissioner cleveland. Commissioner cleveland thank you all for your well prepared and thoughtful testimony. Mr. Westoff, when we published our paper last fall on fentanyl we made the case that the vidence of improvement after chairman xi scheduled the improvement, it would be an improvement on raids, arrests and prosecution and visa access for the d. E. A. To schedule visits unannounced visits. Have we seen any improvement in those four areas . Well, the law just took effect may 1st of this year. So i think its too soon to tell. How did the law affect what we the possible of raids or arrests or prosecutions . Well, on may 1st, all fentanyl analogues were blanket banned as it will. Previously these Chemical Companies when one fentanyl analogue was banned, they would tweak the molecular structure and make a new one. This new law outlaws that. So they will be automatically band scheduled. And so i havent seen any results of what might have changed since may 1st. Ok. Thank you. Ms. Gibson, i want to draw attention to your work on the care because it is hard work and incredibly valuable. So thank you for that service. Are shortages driven by em demics or problems or are there already short ans in terms of medicines available . Its 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 purchase medicines. If we hammer down too much on price, the good businesses go out of business. They cant make it for that price. And so were left with a handful. And also i think its really clear from the vitamin c cartel case which i didnt mention the testimony but many of the commissioners are familiar with. It was a case very clear cut of a handful of Chinese Companies forming whats called the vitamin c cartel and driving out all the u. S. And european producers of this acid so we cant make vitamin c anymore. And the Chinese Government came to bat on behalf of the domestic firms and said that we require our companies to fix prices and to control exports to the United States. So that is indicative of perhaps underlying intention of manipulation in the market for these essential commodities for our health. Do you think that it would be possible to develop a top 10 list of critical drugs that we should be monitoring to insure a safe and sufficient supply . I was wondering if there were others. I think the list would be pretty long. If you ask any hospital what they need to survive on a daily basis, think generic antibiotics i would put on that list and i would put heprin on that list. Bare in mind people in the industry say that if china shuts the door on exports within a couple of months our hospitals will cease to function. So this has tremendous urgency. Bb bowie, we r. Were talking about the role of china and humanitarian assistants operations, and in your testimony, you mentioned eir involvement in the ebola outbreak. Can you describe how they coordinated with the International Community as the International Community went . Because what we tend to see china gets involved but in their own terms and their own way somewhat detached from whatever the International Community or norms are. If you can describe specifically the ebola engagement that would be helpful. Yeah. Thank you. So i think thats not surprising for me to hear what your comments. Chinas Global Health assistant programs are traditionally been pretty much based on their own glove and sometimes delegated to the provinces. Ebola 20142016 humanitarian aid, china has coordinated within their own glove, 23 ministries. So they actually responded quite timely. They first asked their embassy so warn their citizens in the affected areas. D then they set up w. H. O. Set up the they announced this is a pandemic. Ey built a medical team of 1200. More than 1,200 personnels which is the largest Chinese Medical Team. And they have a clinician, Public Health experts and meltary medics. And they build a hospital in and ia of over 100 beds, also a level three biological lab there in sierra leon. They provide quite a lot amount of funding for these countries, not only on the medical care but also on other social and food and other related cares. China, at the same time they build their own vaccine development. So they had one of the vaccines that are approved by w. H. O. , ebola, one of the first that year. So i think in terms of the 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 countries, i dont think i havent heard a lot. About their working. But i know they contribute to the w. H. O. , to the humanitarian fund. But most of the action are on their own. Commissioner, feedler. I have a couple of comments. But id also like to establish some information for ourselves and others. The pharmaceutical production process is heavily automated. It is capitalintensive and not laborintensive, is that not correct . From my understanding about the manufacturing of pharmaceuticals, the technology to make our medicines has not changed in a very long time. Weve had more innovation in the making of potato chips than we have in our medicines. That es why one thats why one of the recommendations i have is deploying advanced Manufacturing Technology that would do that that would make it much more less labor intensive, much more secure and much more secure in checking of the quality. Youre saying its laborintensive now . I think there are others who could answer that question, but i can say that if deploying new, Available Technology on a commercial scale for our generics, it could be less labor intensive, smaller footprint and more efficient and Higher Quality. Ok. Does anyone does anyone know if any one has tracked the increase in chinas control of the market, lets say in generics, and the profits of u. S. Pharmaceutical companies who use them . Well, if were talking about generics, what i have heard from the industry is earlier this year, and i heard this second hand and thats why we needed this whole of government review of our Industrial Base is that several of the largest western generic drug makers announced they are dropping substantial number of pickup trucks. And that suggests that they simply cant compete. It also suggests that theyre not happy with the margin. Its not necessarily that they can compete its that they want to make more money. That could be the case. I think theres the price paid to manufacturers and then theres the price that consumers pay. India has a tough time competing with china on active pharmaceutical ingredients. China undercuts india. India can buy active ingredients chooper from china hint that would cost them to make it. I think theres a per assistant problem. We heard that china czyzes its domestic industry 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 would be forced labor, m. O. U. s that weve signed. I mean, im not im not cynical about it. Im just realistic about it. Ill add. Theres a chapter in china r. X. Of importing chick from china. I put that in there because i understand we havent really imported a whole lot of processed chicken from china and we havent imported chicken raised from china here yet. But from a regulatory point of view is that u. S. D. A. Inspectors will not be in those plants. We had a meeting about the testing of talapia and shrimp and catfish. And we werent testing those fish for the poll lieu tants that are produced pollutants that are produced up river from the farm. So we had a standard of i mean, 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. We have our own problems. Im not blaming everything on china, ok . Now, but i will get even more cynical now. Hat that rebate on fentanyl is a policy decision. A policy decision made with the knowledge that the drug is damaging america. Forget the demand. Ok. I can only read that as a conscious decision to damage us. Sorry. Ell me im not right i mean, fentanyl is a worldwide problem. It is the most damaging drug out there. Kills you really quickly. If you take a minor overdose of it. And they got a vat tax rebate tax policy for its production . And im supposed to believe that the may 1st law is going to be enforced any more than the chinese have enforced any other agreement theyve ever reached with us . Yes, again, i share your cynicism. [laughter] 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. Whats more troubling to me is that china also offers these vat rebates for a wide array of fentanyl analogues and other p. S. , navo psycho active substances that have never been used for anything in history anywhere in the world. So to me, i cant understand why that is. Thats a policy decision. I think dr. Bowie wanted to address the inspection well well, i would just quickly respond. Im not an expert on fentanyl, but i see similar problems. In china the drug medicine quality is a huge problem. Its a huge crisis within china. Talk about several vaccine crisis in china. I think the government and the people there should be very worried about their own production and the inspection. So i i think its probably to engage Chinese Government in these inspections because they need to boost up their capacity. But that will take time. I think even for a Global Health expeer tease, it will take five to 10 years to train the expert professionals in Global Health. And the regulatory signs may take even longer. Think in order to engage china, and thats why i bring up the Tobacco Control. If they see that this is an International Problem and also engame themselves, engage with their interest in controlling the methamphetamine. And so create the alliance on combating the synthetic drugs. It might be easier to bring us to the priority list in addition to strengthen the regulatory system. And if i can say one word about the influence of collaboration, i think thats a good model because that collaboration shows that the chinese are using the data to w. H. O. And with the u. S. C. D. C. So i hope that can be another model. Ok. We will move on. Were staying pretty much on time. I hope we have time for second round. Commissioner bartholomew. Thank you very much. And thank you to our witnesses. Its a very interesting very interesting im learning a lot. First a statement and then a couple of questions. And some of my questions will actually go to my final panel because they cover some of these topics. I just want to say that china can demonstrate its commitment to addressing Global Health crises is by allowing taiwan to participate in organizations that address Global Health crisis like the World Trade Organization and participate more actively in addressing bye lateral trade issues. Just a comment. Dr. Thank you for noting the nefarious use of dna against the ethnic profiling that goes along with it. I mentioned what kind of informed consent takes place theres so much data being gathered, ending up in china. Citizens whosee data is being gathered, is there any sort of informed consent that is going on . Thats a good question. Its unclear i know there are definitely instances where there was absolutely no informed consent. The incident i talked about in my written testimony of collecting dna samples on the , that wasulation explicitly stated to be a health physical. Thate were allegedly told this is for your health physical, but when they asked to see the results were told you dont need to see the results. Wheres definitely cases theres absolutely no informed consent. I mentioned scale, in my written testimony and in my report, the number of Health Care Data centers that china has developed that are collecting not only genomic data but also all sorts of Health Care Data. That a lot ofe to support legitimate medical needs. Legitimate health care research. An aspect of informed differ in theaws u. S. And china as to whether informed consent is required to share data for an Additional Research purpose. Usually when you enter into a Research Trial you do it for that specific study. The laws and i hesitate to say definitively, because the laws differ a lot there may or may not be a requirement for informed consent, to then use that data for other research purposes. Anything to add . Some of the nih sponsored studies in china, that is my only experience working with academia in china. If you work with universities, conform toys have to the nih requirements on the informed consent as well as human subject training. Not by initiated collaboration with the u. S. Government, then those are the areas those will be the gray areas. The final question to any and all of you, we talk a lot about production, obviously a production of pharmaceuticals, which is critically important, but also r d is really important for the next generation, particularly chemotherapy. A lot of it is keep yourself alive until the next drug comes online. Is the u. S. Losing our leading Research Scientists to Companies Either operating here or companies that are in china . I can address that somewhat. I dont think i would go so far as to say we are losing our leading scientists. States isn the united heavily dependent on an International Researcher community and china certainly does have programs to entice top to relocatesonnel to china, giving them large startup packages and whatnot. Targets both u. S. Born and chinese born scientists. Setver, using data from the if you look at the rate at which phds in science and engineering in the u. S. Foreign phds getting their degrees in the u. S. The rate at which they return to their home country in five or 10 years china has the lowest return rate out of all countries, which is to say that despite their andrts of trying to entice certainly bringing some top talent to china, they are really trying to catch up to other countries and they have much higher stay rates than scientists in europe do. Anybody else . Ok, thank you. Commissioner lewis is next. Thank you very much for your information, you have vast knowledge of something of which we are totally unaware. In, is the situation we are a collapsing Industrial Base. It is a very sobering situation. Id like to ask each of you, if you would please tell us the recommendations you are making, how long would it take to affect those recommendations, how much would it cost, and who opposes them . I will start. Think to begin sooner rather than later in the short term, the dod and v. A. Make purchases based on value, not just price, cheapest price. Security,des quality, uninterrupted supply, that would be a very important consideration for force protection and combat readiness, and it would also direct our taxpayer money not over to china to build its industry, to build it here. My understanding is theres no law that requires the dod and v. A. To purchase the cheapest drugs. It is i think a well intended effort to save taxpayer money, but we wouldnt have our aircraft carriers and Nuclear Submarines built in china, and for very important medicines we should take a close look at what it will take to purchase based on value and not just on price. Theres also the opportunity to look at what the private sector market is doing to purchase ,hose drugs that are expensive so its possible depending on how much they paid now, the dod and v. A. Might be able to pay less. That would be a first step. Insofar as will this cost more that what we know is the large purchasers of generic drugs, big ones, they purchase the vast majority and they buy very cheap, but thats not the price you and i pay when we go to the drugstore. So without knowing how much of a market there is among these groups in between, it is hard to say if the dod and v. A. Went directly to the manufacturers, whether that could save taxpayers money and federal agencies money. Mediumterm, the dod through darpa has invested in whats called pharmacy on demand. This is the use of that remarkable manufacturing chemists canere produce forgive my lay language, and a box in a lab the api for essential antibiotic and make a small dose volumes within 24 hours. Can we get some Public Investment to support demonstrating that small volume production to commercial Scale Production that hasnt been done before, certainly on the api level, and have a stockpile of api. Once you have the active pharmaceutical ingredients, it is much easier to make the finished drugs. Im not a fan of stockpiles because that will not get us out of the mess we are in, but stockpiles of api and using the advanced manufacturing can go a long way. There are good people who are chomping at the bit to do that, thats a shortterm endeavor, and then something for the mediumterm. My first suggestion was to pressure china to eliminate these rebates, grants, and other subsidies to companies that are ,xporting illicit fentanyl precursors and nps. This information that china offers is being revealed for the first time right now. These are revelations from my book which comes out in september. The first step i think is simply making this information known. I think this wouldnt cost anything to the u. S. , it would obviously cost china a lot in chinaof its industry, and would likely oppose it on that at the same time it is so outrageous to be fueling a drug crisis in this way. China also doesnt want to be known as the worlds drug pusher. Effective, if the u. S. Puts this type of pressure on china. Also recommend scheduling more fentanyl precursors in pressuring china to do the same. Traditionally how this works is that u. S. 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 is not any pressure on china to do this because the u. S. Has even scheduled these precursors, and that is step one. I think the case would be easier to make. Senator john kerry led the leave the first two fentanyl precursors in 2016i believe, and he was successful after the u. S. Did it to getting it done internationally and china followed not that long afterward. So my short answer to your question i think is we have to think about the globalization and the market mechanism. Being thef china supply chain for most of the api, i think thats a fact. If market regulations or any companies that buy chinas products were to raise the Quality Control and raise these issues i think china itself in terms of government, it seems that they are trying very hard to regulate their own pharmaceutical sectors, and 50007000they are companies registered. Plan theyt fiveyear tried to consolidate and encouraged consolidation of some of these companies to create bigger and more solid companies. That would pave the way for the regulation to go in but right now they are just too many, too smart, too hard to regulate. Continue would be to to help Chinese Governments on this effort. The looking at this from perspective of biotechnology, biopharmaceuticals, dna sequencing, 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 ,oncern is economic competition as they become more advanced in developing bio similars or other products, and my top recommendation is to increase u. S. Funding support for basic and applied research. Has a fare u. S. Superior ability to innovate, but it needs to make the proper investment. Obviously that would cost money but its an investment that could bring about a lot of new advancements, both basic research, which has led to from the discoveries Gene Editing Technology crispr, and everyone is aware that the internet was obviously not by a but governmentfunded know whatso you never basic research is going to produce major Breakthrough Technology but i think supporting that is very important. On top of that, helping companies through Small Business ,nnovation, Research Programs to help those products come out of basic research into products is also very important. The other main challenge that we have talked about his with Health Care Data and genomic sequencing and the privacy and Security Issues around that. The u. S. Has some of the weakest laws as far as protecting 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 dont think we need to go that far, but i think with the gdp are that was passed recently or couple years ago, i think it is obviously a global concern, and i think its an appropriate model to use. I think if we were to advance our laws to allow sharing of data to advanced 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 important, iry think thats a leading step we need to do soon. Thank you all very much. To know thatbering we are having the collapse of a major industry in the United States. I want to ask each of you to please send one or two pages how much it would take to affect your recommendation, how much it would cost, and how long it would take. Ok. Thank you for that. Im going to go now and then a have commissioners goodwin and will in the first round and that i think we will have time with the others. Thought your history of chinas Global Health direct 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. A couple quick questions for you three, hey on page said the chinese built 150 hospitals, 25,000 health care professionals, and they treated 280 million patients, and that last number jumped out of me, thats 5. 5 million per year since 1963, and many of those years i dont think they were that active locally. Where does that information come from . Reports coming from a from the Chinese Ministry of commerce. Until last year that ministry was in charge of coordinating the medical peace in china. Thathappened in china is once you have a request from a they will send that to the province. They will have a designated providence to partner with that country, and then the province will organize that. Report from a book i think they are still the final stage is there any other independent documentation that comes from the Chinese Government . It is not like they have a history of transparency regarding the Global Health activity. That figure at least is it documented anyplace else . That is from that chapter. That theyo mentioned do a lot of contrasting their activities globally with usaid and other countries. You mentioned they do a lot of infrastructure. Thats hospitals and Health Care Infrastructure health related. This is talking about ,ransparency and coordination the Commerce Department in the report howy usually theybuildings they do, dont specifically bring out this is a hospital, this is a clinic they dont report that way. Teams, and iearch work with a few, who are looking at these infrastructure buildings in the medical support, and we are trying to bring out ok, this is a hospital, this is a malaria clinic, to be considered as a health assistant. And build infrastructure, whose companies do they use . Do they use local companies or chinese . Thats a good question. I think theres a changing trend. In the past, like any other infrastructure building in africa or asia, they bring in their own workers. But i think the Chinese Government is very sensitive to the criticisms of International Society that they are not helping local industry. Buildings theynt are trying to get a report from what i see in africa, some of the construction site has 80 of the locals and still have 10 15 in they finance most of those through loans, right . They loaned money to the local government. We see another reason why theyve been doing this. They are loaning money to local governments and going into debt to hire their firms. Right, you are correct. Agency, theyhe new aid,rying to create global the humanitarian aid from a commercial interests. That is one step they are trying to do. It just started last april, and i think over this year they are trying to figure out within their own government but so far it is difficult because they have concessional loans and grants all lumped together. Ok. Since im the chairman, im going to be disciplined and hope i have a second round i want why the chinese have developed cro industry, which so maybe we will get a chance to do that. Commissioner goodwin . Thank you. A point of clarification in your written testimony discussing these vast rebates, you mentioned that they are offered for at least eight others that are illegal for chinese exports are they legal for chinese manufacturing data . No, they are not. What are they legal for . Nothing. Do they provide a tax rebate for an illegal narcotic . Thats correct. Chris gibson, returning to this discussion of cost and the pressure on agencies on governments and the like to negotiate based on cost and it obviously dominates the negotiations with those companies. Who iscussions on included or excluded presumably with the benefits to those agencies and state governments, to taxpayers and ultimately to beneficiaries. And we can measure it, it is quantifiable intangible we can determine that there were savings and occasions where a particular drug was used. How do we measure value . How do we measure quality . There aree reasons why we sourced certain products or services from certain places, and even beyond National Security, if you are building a dam or a bridge, potential vendors would have to meet certain minimum eligibility requirements, a threshold of expertise in addition to competing on cost. So how do we do it in this context, and how is that consortium possible . Thank you for the question. The consortium of hospitals are buying directly from manufacturers, bypassing a lot of folks in between that add to margins so that they have one i thinkpproach it, but we have to look at the mediumterm and longterm when we lose control over the supply we do not lose supply. We will be the price better in they will be the price taker, and we saw that with vitamin c when the Chinese Cartel was formed and all the other prices went out. They have not been calculated. There was an estimate of the cost of drug shortages in this country because of the narrowing supply chain and they only measured the time that pharmacist spend, which is enormous. If you had 400 billion at hospitals spent just to manage drug shortages and recalls, that doesnt include many other costs, and the cost of human life. Remember, we had hundreds of people die in this country 12 years ago from a contaminated purchase from china, and if you look at the email exchanges, it was the cheap stuff. Some things you just dont want cheap. There is a very high price to cheap and one of the interesting things i wrote about is how is it that the products are so cheap when it is not just subsidies from the government, its also companies will say we assume no liabilities for our product. 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 . Back to an earlier question, if you look at what was bad in china, many people were arrested, that affected the people in china. With the heparin we got from china, and it killed hundreds of americans, there was no one arrested. The Blood Pressure contaminants with carcinogens, they were knowingly shipping product to the United States, the worst offender was the Chinese Company were percentages were 200 times the acceptable limit per pill. At what prompted them to do it . Generic anding there were Companies Competing vigorously for Global Market share stop they wanted to come up with a more efficient means of making that Blood Pressure medicine, and they did. The problem was they came up with this new chemical process this hasnt been reported in the media it was great consideredbut no one that this is a product that would be consumed by humans. It was dangerous, it was lethal. When the fda went in to this plan, they saw that the company knowingly sent substandard, defective medicine with toxic impurities to the United States. If we want cheap, we can buy cheap. Whats missing from the holy equation on generic competition is quality. If we have 10 of our generic drugs that dont meet standards, if the public knew about that there is a very high, hidden price we are paying for cheap. , thet from my perspective challenge is that the choice isnt that stark. We have to take a broader, more longerterm view. The pressure to keep costs low it is not saving more versus sourcing from china, its lets keep costs low, and what is that due to our Manufacturing Base . We have seen what it has done. Its a concentration of supplies in china. And we can reinvigorate our communities and local economies by bringing this manufacturing home, at the same time we can have Higher Quality tested drugs that the fda can inspect. I think its a winwin on all counts. At least we are diversifying our Manufacturing Base to trustworthy countries. Thank you. Commissioner wurtzel was next. Here,nk you all for being and your willingness to take part. I have what i think are a set of mixed question that i am going to attempt to address and ask to tryson and the doctor that weond with ways the productions of the u. S. And strengthen the Industrial Base. How,avent really told us ms. Gibson, but you have. Doctor, iss me, that yours requires governmentfunded solution. Thats your big deal. I dont think thats going to happen. Youess i would ask both of if there are other ways to help develop this u. S. Industrial countriesnish the that are providing these bad as and providing subsidies im not a lawyer can you take them to some world court and sue them, create a reasonable fair marketplace through legislation . What would you recommend . Incentivize private research by u. S. Companies, while lowering taxes for a period of time while they put new drugs on the market . Im searching for ways that dont have federal governmentfunded. I will start, thank you for the question. I guess i have a couple responses to that. I think incentives could very much be part of the solution as well, by saying increase government funding, i guess im saying increase government support, whether that is through tax incentives i think the bottom line is that we have to produce, aty to least in the case of biopharmaceuticals, we have the capability to continue to be the leader for a long time. It is encouraging those activities. Say theres another that goesthis, and into access to other markets, the Chinese Market in particular. China has been reforming its laws and regulations on biologics and bio similars to become more in line with global standards. Amountides the greatest ,f postmarket Data Protection data exclusivity, than any other country. Dependent on the drugs having been developed in china using Clinical Trials that were conducted in china and having chinese partners. If you are using data from outside china, you get exclusivity, which makes the market less attractive. Avenues toiplomatic into a more china Friendly Market so that companies can compete there as well as being able to compete domestically. This figure ive seen about how much we spend on generic drugs in the United States, 70 billion per year how can we use that money we currently spend and by smarter and wiser and high quality . How do we take the procurement dollars in the private sector, which is why im so intrigued about the consortium of private hospitals, and as shortages continue, which i believe that they will in our Health Care System, and as quality problems persist, one would hope that the model would expand to other Health Care Facilities in the to spur actor diversified manufacturing basis with trustworthy suppliers. When it comes to national securities, do we really want to tell the men and women in uniform that we will buy cheap if it saves taxpayer money . In that case we want to buy based on value and look closely at what manufacturers will charge versus what adding Everything Else in between the middleman if we 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. We have the opportunity to use our procurement dollars to move the market when it comes to advanced Manufacturing Technology, demonstrating the proof of concept that we can do this on a commercial scale that hasnt been done before, and the fda is supportive of this technology, but doing it and saying the facility can be fda approved, and it has buyers at this consortium, that we will buy products we can make here and realtime Quality Control, that could take a modest amount of incentive to stimulate the private market in the development of that technology at a higher scale. Commissioner bartholomew has a quick clarifying question. You are talking about 3d printing, essentially, that there would be machines that thed print up im using term manufacturing on demand. Is the Technology Already there or not yet . Im thinking of the pharmacy on demand, making the api, which is the most costly part of the generic drug, and thats why Generic Companies dont have the incentive to invest, because their margins are so small. Thats the Technology Im thinking of. Thank you. I would be happy to provide the commission with more information on that, its fascinating and i think its the future, should we choose to support it. Alright, we have finished thed one, and because of tremendous foresight we have time for round two. I think we should be very proud of that. Commissioner the for first questions in round two and then i have commissioner camp house and lined up. Thank you all, this has been very helpful. Ive been sitting here getting because id angrier, love my dog, my wife after the melamine scare refuses to buy and iod made in china, realize there is more disclosure on our dog food then there is on the drugs that we use every day for our families, and to me that is a crime. Question a couple my understanding is several years ago there was legislation that would require on the labels the source of the active ingredients is not part of present law is that right . That is my understanding. Originas country of legislation proposed around 2007 in 2008, and that was killed on the first pass. Right. If it ishe view that in dog food bags, maybe we should know whether they are Dietary Supplements or pharmaceuticals. I think we need to look at the question of what the impediments are to country of origin labeling for active and inactive ingredients, so that we can address that. Solution, ibased would welcome anyones 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 and then it a risk based systems, where importers of the apis, importers of the finished products or bond oruticals had to toure against risk, it seems me that would have a pretty Significant Impact on the sourcing patterns, and the Insurance Company doesnt want to be left holding the bag for liability, and therefore presumably is going to demand go upstream tor its suppliers and have some kind of confidence in the supply chain. Elsees gibson or anyone who may want to respond, can you just give me your opinion on whether that kind of systemic actually help us in this dilemma . I think its a really interesting idea, it will certainly raise the cost of exporters for china and other countries but it will also create a more level Playing Field for manufacturers and in other countries where the standards maybe better. Any other thoughts . We, we have to deal with constantly the issue on the one hand weve talked about all the threats that exist here today, our earlier panel in terms of sourcing health care is one of those fields where there really is a global consensus, or there should be. You talked about pandemic threats, et cetera all that isgrating chinese, which tends to be the political motive 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 populations, while also addressing as mr. Westhoff pointed out, fentanyl is not legal in china but they are giving export taxes to it. How do we deal with that dilemma in the u. S. China debate right now . Theresonal opinion can be three actions. We have the shortterm, mediumterm, longterm. Would be more collaborations, helping china to onat capacity for regulation both medical products and vaccine. Has been trying what i heard in china is that they are only producing the api, which is low profit margin. The government hopes that there pharmaceuticals can build more it cans or drugs, that be on the International Market, but right now only a handful of who. Is looked at by china is far away from providing for medicine on the International Market and they are focusing on api. Them with the longterm solutions. The mediumterm solution will be more collaboration similar to the influence of surveillance. If the u. S. Cdc, china cdc, china fda, u. S. Fda, can help the collaborations influence of surveillance that that they brings, signing an agreement for capacity, then chinese putting in more than 400 million into building these labs all over the country, more than 500 at capacity, providing data and sharing the data for both countries. See, what isen we the target . That is some of the data used for international organizations. Term, if we want to address the fentanyl issues, i theirengage china leaders are very sensitive to international opinions, and they want to be part of the global governance. Framed as at as synthetic drug problem. Yesterday i saw a report saying opiates, thehe illegal opiate production, is actually in africa. Tramadol. Certainly we are all focusing on fentanyl but there are larger epidemics out there. Bringing china in as an active player, that coalition i think will be the fastest way to get their attention and bring their priorities so it can change their policy. And i appreciate all of that. Collaboration is great. I think china is putting that collaboration in real jeopardy as a result of many of its policies. You talked about World Opinion i think World Opinion, demanding that china change certain practices, is as high as it has ever been. I dont see a lot of change. Hink it is at this point chinas leaders are beginning to take certain steps that will reengage collaboration and give greater confidence. Thank you. Thousand,ioner kim two quick questions and a point of fact you talk about the coalition of hospitals do you have any idea where they are sourcing their api . Ok. On page 15 of your testimony, you talk about the importance of encouraging beijing, multilateral organizations, and what china has done as a participant in global governance. Following up on that statement earlier, what insights or perspectives do you have on beijings decline to allow 2017n to participate since on a political basis, based on their opposition to the administration and taiwan. Bloomberg has rated taiwans Health Care System as ninth most efficient and effective in the world. This,ense can we make of and how does it contribute to this assertion that youve made, that china wants to be a stronger participate in global government . Thats a difficult question not a, because im chinataiwan expert. Government has the political will to especially on Global Health assistance. Think there is limited knowledge about taiwans Health System as a model i think even now china itself has lots of problems, one of them is their Health System. They have a social insurance upgram and they cannot keep with the cost of health care, and they have very limited mobility to work with longterm care. They are looking into taiwan as it asl, they also look at the u. S. But they think taiwan has the better model in terms of the health care provider. Personally i hope as a researcher and a Public Health professional that there will be more collaboration. Ok commissioner cleveland has been very patient. We have the same question. I have previewed it. If you could explain why both commissioner and cleveland and i were interested your written testimony was really good and you make the point that in this area, biotech biologics, the chinese have not yet advanced very far, although they are certainly investing and ambitious, but there are a couple areas where they really are competitive and have significant market share and one of them is Contract Research organizations. So why . Why are they doing so well now . That, whyanalysis of have they been effective . Thank you for the question. Industry uses Research Organization for the same reasons that anybody outsources any services its because of cost. It is cost and expertise. True for large pharmaceuticals, where it could be more of a cost issue but especially important for startups, where that expertise is a lot easier to go outside and build within. Developing essentially taking advantage of that. They are able to provide these services, and they do have a large, technically advanced workforce that can do this work. They can do it at a lower cost. This is why theyve been able to build of the industry. It can also be used as a stepping stone to more advanced development. Be a way of training the workforce to then move on from the Contract Research into other companies or arms of the same company that are developing new biologics. Orare these cros subsidized given any help by the government to compete, or do you know . I have not seen any specific instances of cros being funded by the Chinese Government, although i did not 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. Mostly for firms that are trying to get business or approval in china . It sounds like they help to navigate a lot of the regulatory terrain, right . Do the chinese firms deal mostly for firms wanting to work in china, or are they working for example, companies trying to navigate. Are they going higher than cros . I think its a very large portion of their clientele, although i havent done a systematic analysis of it. One of the major activities for cros is to help navigate to the approval process for a drug. It is more likely that the company will want to use a chinese cro if they are trying to access the Chinese Market. Followup, have any commissioner . One. You will note that data are not available on how many u. S. Companies or what portion of the market are using cros in china, yet they are involved in preClinical Trials. Would there be any way of collecting that data, or is it something there hasnt been interest in . What with the impediments or barriers be to understanding which u. S. Companies we are relying on cros in china . Well, it is definitely difficult to get specific quantitative data, because unlike investment data, these are customerclient transactions that are not reported. There is no database for that kind of information. Interested in looking at exactly that issue, and there are ways around it largely it would be through talking to the u. S. , the Major Players and the smaller players in the u. S. Biotech industry, to get a sense. Crould say that the u. S. Industry is still the largest in the world. Both american and Foreign Companies are using american cros to a great extent. While we have one commissioner remaining commissioner lewis, and we should have time for his questions, and then we will be done. Commissioner. The information that youve given to us today is obviously a matter of National Security, and earlier this year we had another hearing where at any Aerospace Manufacturer was doing things that were not in the national interest, and it was a story by the u. S. Times. That Aerospace Company stopped doing what they were doing but it seems to me that if the reports that you give us how long would it take to affect your recommendation, and who opposes it . Itcluded in our report might cause them to change their conduct, so i would appreciate any information on the subject, thank you very much. Ok. All right, well yes, commissioner. Howre any of you aware of the chinese are using bri to promote their industries . We are hoping to start some of the Research Projects looking into it. It is the environmental and social impact of bri. I only know from the reports i read from the Chinese Government while their goals they had a house so that years that along are aware with bri they want to develop and help assistant programs, partly to protect their investment. Natural,hat is pretty but it also will coordinate away with infrastructure and to enhance the investment in health care. I know that the Chinese Government is hoping that their companies will be more africa, to build the factories, because they already have apis and they can use that as an incentive for if they have a local production and they dont have to put in thinkg for api, and i they definitely have in mind to coordinate the Health Systems. We want to thank the witnesses again for your outstanding testimony, for your answers to our questions, and sometimes we have a followup or two, and if we do, we will let you know thank you and we will now break for lunch until what is it, 1 30 . 1 30. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] [captions Copyright National cable satellite corp. 2015] announcer cspan is washington journal, live every day with news and policy issues that impact you. 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