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Mark B McClellan, MD, PhD - Commonwealth Club

This text contains Dr. McClellan's prepared remarks. It should be used with the understanding that some material may have been added or deleted during actual delivery.

Speech before the

Commonwealth Club
San Francisco, California

Remarks by
Mark B McClellan, MD, PhD

Commissioner, Food and Drug Administration

June 9, 2003

Thank you for having me here today, and thank you for your kind introduction. It is great to be back in the Bay Area. I’d just like to remind you that I haven’t severed my ties – I’m still on leave from Stanford University. But it’s a very long line between the policy world in Washington and the fresh ideas that continue to be developed here, so coming back is a very important way for me to check in on the latest insights and get some useful checks on how we are doing.

And that’s why it’s a special privilege to be with a group of business and community leaders who have contributed to so many of the technological achievements that have brought unprecedented gains in the way we work and live. Men and woman from the Bay Area have made important contributions to our economy, our homeland and national defense, and our public health. As a result of the intellectual and technological leadership of the Bay Area, the way we live our lives continues to change for the better.

The impact of innovation and technology on our society is profound and unmistakable. Just look at the impacts of the information industries. The information technology sector accounts for just seven percent of all businesses in our economy, yet between 1996 and 2000 it drove 28 percent of the overall US real economic growth -- and created jobs at twice the pace of other sectors, jobs that paid twice as much on average. Many leading economists now believe that new discoveries in information technology, many of which originated here, led to investments over the last couple of decades that accounted for the historic surge in productivity growth and economic growth in the 1990s. No one can deny that the last three years have been difficult for many parts of the nation, and particularly the Bay Area, but what has been remarkable about this economic slowdown is that productivity growth has continued – in no small part due to continuing innovation in IT and related technologies. That’s a remarkable occurrence during a time of slowdown in economic growth, when the output per worker typically declines. And today, there are hopeful signs that continuing innovation along with policy actions in Washington are helping the economy to recover.

While all economists appreciate the contribution of economic growth to the well-being of the United States, I think there is less appreciation of the contribution of innovations in biomedical technology to the well-being of our population. As a result of changes in health care, millions of heart attack patients who several decades ago would have died quickly or would be given largely comfort care for heart failure can now expect to live a long and high-quality life. Diabetics who used to see a relentless progression to heart disease, kidney failure, or worse can now often throw away their needles. Even cancer patients who often faced long odds and miserable chemotherapy are experiencing longer lives, and fewer and shorter serious side effects of treatment. Some economists who have looked closely actually estimate that the value to society of the longer and better lives that have resulted from translating new biomedical knowledge into steps to prevent and slow diseases is worth literally many trillions of dollars in better health – in particular, the value of biomedical innovation to our nation equals the value of innovation in all other sectors of the American economy combined.

And despite the tremendous progress of recent decades, most medical experts believe that the most important innovations probably are still ahead of us. We achieved the improvements of the last few decades without a sophisticated science of genomics – the human genome was sequenced in just the last few years. Genomically-based drugs, and gene and tissue therapies based on genomic sciences, are making up a growing number of the new drugs entering clinical trials. We achieved them without the new science of proteomics, and an increasingly sophisticated understanding of how gene and protein expression interact to cause disease in individual patients. We did it without the capabilities of new nanotechnologies, which promise an unprecedented ability to get the right treatment to exactly the right cells and receptors, and to create artificial tissues and organs. And we did it without a new generation of increasingly powerful biomedical tools based on the latest information technology – leading to incredibly sophisticated imaging technologies and systems for supporting effective medical decision making. The potential is there in the years ahead for more effective, more targeted, even individualized medical treatments that can cure or at least slow or halt disease progression – and that need only be given to the patients who will actually benefit. It’s no wonder that many people believe that the 21st century will be the biomedical century.

But at the same time, getting a biotechnology or medical device company off the ground has grown harder, as heavy investment is needed in the early stages, and getting a product into general use is an increasingly lengthy and costly business and fraught with too much risk. Too often, the hallmark of the process is unpredictability. It depends on a long and uncertain development process, where even the most knowledgeable scientific experts don’t really know if a good concept will pan out into a safe and effective treatment – and it generally takes them many years of hard work with high costs for product testing and developing reliable production lines. It’s also depends on an often-fickle capital market, a regulatory process that can seem impenetrable and unresponsive, and a marketplace where payment is also hard to predict. It’s not for the faint of heart, but requires the unique commitment of an increasingly broad array of gutsy and dedicated professionals – scientists, clinicians, investors, and many others – who have the rare combination of genius, drive, and faith needed to surmount long odds.

Although it’s a long and uncertain process, we’re fortunate that the system has worked pretty well in the past few decades, so that many new technologies have reached patients and improved their lives. But delivering on the promise of the biomedical century is by no means a sure thing. With these unprecedented technological achievements have also come unprecedented concerns about the cost of healthcare, and in particular about the rising spending on these new medical technologies. Millions of Americans are rightly worried that, even if these new technologies come along, they won’t benefit because they won’t be able to afford the high cost.

The affordability of modern medical care is an issue that rightly has the focused attention of policymakers in Washington, right up to the President. We need to take new steps to address the problem of health care affordability, but we need to do it carefully, in a way that will not put at risk the tremendous potential for benefits from continuing medical innovation at this critical time for the biomedical enterprise. Some policy proposals under consideration today might reduce health care costs in the short run, by putting significant new limits on the payments or the intellectual property protections of innovative treatments that have made it through this often long and costly process of bringing a safe and effective treatment to market.

But we’ve got considerable evidence that such policy choices ultimately impair the public health, by seeking short-term savings at the expense of higher monetary and personal costs of disease in the future, by removing the incentives needed to develop better treatments. In the past, when various medical products such as vaccines and antibiotics became unprofitable and risky because of a variety of factors, including reimbursement and litigation as well as scientific risks, product developers left the business. We don’t want to see that happen again for other vital health care needs.

In fact, right now, we are working to pass bipartisan legislation to create incentives to develop new countermeasures for the most concerning agents of biological, chemical, and radiological terrorism. This legislation, called Project BioShield, is needed because there is no clear reward for developing safer, more effective countermeasures. Our country is better prepared for a terrorist attack than ever before, including a national stockpile of vaccines and treatments that can be rapidly mobilized to protect the population in the event of an attack. But the smallpox vaccine in this stockpile is based on technology developed in the 1790s, and the antitoxins for botulinum poisoning that we have available are based on a method for isolating antiserum from horses that was among the treatments that FDA regulated when it came into existence in 1906. So-called PCR technology, important in making childhood vaccines safer and more effective than ever today, has not been applied to vaccines for agents of terrorism. And monoclonal antibody technology, which now is used in more than a dozen effective treatments from conditions ranging from cancer to heart disease, has not produced treatments that neutralize the toxins in terrorist agents. Project BioShield would correct this problem by doing what bipartisan legislators agree is most needed: allowing the government to commit years in advance to paying for counterterrorism treatments that work. Product developers are willing to take many risks in developing and producing new treatments, and they often fail. But if they have no assurance of payment when they succeed, then what’s the point of investing the money, time, and effort? BioShield is a good example of how we can find policy solutions that improve access to new technologies by providing appropriate incentives for developing new products. It could be a good model for other cases where needed markets and financial incentives do not exist now, such as to further encourage development of vaccines and other effective treatments for AIDS, tuberculosis, and malaria in many developing countries.

The need to find ways to make health care more affordable while encouraging medical innovation is coming just at the time when it appears that the process of medical innovation – of turning sound ideas from insights in the biomedical laboratory sciences into safe and effective products for treatments – is becoming more costly and less certain. According to experts at Tufts University, bringing a truly new drug to market now costs well over $800 million. I know some have disputed this estimate from economists, but there is no disputing that the process is becoming more expensive – with medical product development costs doubling over the past decade. To bring a new drug to market requires many years of coordinated research across a staggering array of disciplines. Chemists and biologists, pharmacologists and toxicologists, clinicians and regulators, all have to get their contribution exactly right, and even then this is far from a perfect science – a good deal of luck is needed. Nor has the process become any more certain as it grows more expensive. Only a small fraction of drugs that undergo the initial stages of development reach early-stage trials, and only a small fraction of those make it to the advanced phases of clinical development. And only half of the products that enter the expensive, final phase of clinical testing of safety and effectiveness – the so-called “phase 3 studies,” which typically involve large and costly clinical trials – only half actually result in applications to the FDA. The fraction of drugs that make it through this process has been largely flat over the last decade, and recently, has actually declined -- so despite all of our progress in biomedical science, the process of developing new technologies is still an art, and one that is less efficient and more uncertain than ever.

This increase in the time and cost of product development has been associated with a decline in the number of truly new drugs and biological treatments being approved by our agency. Last year, FDA approved 21 new molecular entities – the truly new drugs – down from 44 such entities in 1996. And FDA approved 12 new biological license applications, down from 27 BLAs in 1998. The decline in products approved isn’t the result of FDA rejecting more applications; it is directly related to a decline in the number of new applications for drugs and biologics coming in to the agency, and it is a worldwide phenomenon.

From talking with many involved in the development of new medical technology, I think the slowdown in drug approvals is likely to be only temporary. Right now, the NIH is completing a five-year doubling of its budget, to more than $27 billion. Less well known is that spending on research and development by pharmaceutical companies has also doubled since 1995, to more than $30 billion. This is already starting to show up to FDA, as we are overseeing more “investigational new drugs” or experimental treatments under development than ever. And if the impact of information technology on the economy is any guide, it may require a decade or more of increased investments in order to have a real impact on productivity, on how much output we get as a result of these inputs. At this point in genomics, for example, we are still primarily gathering information, sorting out patterns, and only starting to understand what the turning on or off of hundreds of genes by a new drug means for whether it is safe and effective in patients.

Moreover, the traditional approaches to developing medical products don’t seem to be the main way for the future. While there are and no doubt will continue to be some traditional “blockbuster”-type drugs in development that may bring important relief to many millions of patients, breakthroughs in genomics, proteomics, and other new fields of molecular biology hold the potential for truly individualized drug therapy in which diagnostic tests and novel drug delivery mechanisms guide the use of medications, turning heterogeneous diseases like cancer and heart disease into distinct types of pathologies that appropriately require distinct therapeutic approaches. Other new technologies are breaking down the traditional barriers between drugs, tissues, and devices – we are increasingly seeing products in development that are combinations.

Translating all of the new biomedical sciences into these new kinds of treatments for patients is requiring major new investments, and it seems plausible that these large new investments in biomedical R&D may take many years to pay off. So maybe it’s not surprising that we haven’t yet seen the huge increase in biomedical investment of the past decade, and especially the last few years, turn into more and more valuable medical products for patients.

But the fact remains that despite all the excitement accompanying the recent waves of scientific breakthroughs, from protein identification to protein structure determination, from combinatorial chemistry to the computational design of entire molecules, the fundamental truth is that the developers of biomedical products are not producing drugs any faster than they were before all these innovations came along. Even with vastly increased research budgets, the top 20 pharmaceutical companies are turning out only around 20 new drugs per year between them. This is not only costly. From a public health standpoint, with millions of Americans suffering from diseases that may be curable or at least manageable in the not too distant future, I don’t we can afford to wait many more years for all these investments to finally become valuable products. And I’m worried that, if we don’t make the right policy choices today, many of those valuable new medical treatments may never come.

On the R&D side, it’s possible that the costs and uncertainty of developing new treatments could keep rising. It’s easy to see how this could happen: there aren’t many more obvious drug targets left to exploit, and developing genomics- and proteomics-based therapies remains very costly. So far, genomics has mainly just added steps at the front end of the development process, through so-called microarray testing of gene responses, and has not reduced the costs of clinical research much, by allowing treatments to be targeted better to patients who are likely to benefit and unlikely to have adverse reactions. And on the policy side, policymakers are under intense pressure to make health care more affordable, and so they may focus only on reducing medical costs in the short run – and also reducing the incentive to incur these high and rising development costs. This combination is not a good one for keeping the United States at the forefront of biomedical innovation, and more importantly it’s not a good combination for affordable and high-quality, innovative health care for our population.

But I don’t think the future has to be that way, and I don’t think it will be – if we take steps today to improve the development and use of medical technologies, and if we find creative policy solutions that both support innovation and make healthcare more affordable, particularly for those with limited means and great needs. There are many ways to do this, but above all, we need to increase value in the process of developing new medical technologies, and increase value in the process of using medical technologies. But this will not be easy, and that’s why this is a critical time for health care and health policy. And that’s why I spend a lot of my time working on ways to improve the efficiency of the FDA’s role in developing new drugs.

A lot of people have asked me whether when I talk about “more value” in health care and in the things we do at FDA, that’s code for FDA starting to do cost-benefit analysis on the medical products that it regulates. After all, they say, I am an economist… But I’m trying my best to be a plain spoken economist, so let me see if I can be clear in talking about issues related to economics at FDA. Cost-benefit analysis of the products we regulate is not our mandate; our mandate is to protect and promote the public health by helping to make safe and effective medical treatments as accessible as possible, as quickly as possible. And that means that we do need to undertake cost-benefit analysis in our regulatory procedures. Now more than ever, we need to make sure that all of the steps we impose in the clinical development process and in our own review of applications make sense for protecting and promoting the public health.

That’s why a key element of FDA’s new strategic action plan – a plan that I’m proud to say reflects the ideas and perspectives of all of our senior professional staff – is what we call “efficient risk management.” In all of our major policies and regulations, we’re seeking to use the best biomedical science, the best risk management science, and the best economic science to achieve our health policy goals as efficiently as possible. We’re doing this because the public needs us to. If we can fulfill our mission of determining whether products are safe and effective at a lower cost, and least burdensome manner to the agency but especially to society, then this translates into lower costs for innovating, and greater use of new products by more patients. If the cost of development were lower, than the same amounts of investment in research and development could be used to make bets on more innovative ideas, hopefully resulting in more products for more health problems being developed. And entrepreneurs might also be more inclined to go after more small therapeutic markets, for example more individualized treatments based on insights from genomics, where the lesser returns might not otherwise justify the risks if the costs of development were too high.

We’re also doing this because we have to. Thanks to the enormous growth in research investments I described, we’re dealing with more complex and innovative products in development than ever before. As discoveries made in the laboratory are flowing into the medical products consumers are using, it means that we’re challenged to upgrade our own science to keep pace with this new innovation and the growing sophistication of our sponsors. We’re in a great position to help with the innovation process – after all, we’ve got more experience and data on the factors that influence the success or failure of new treatments than anyone on the planet – but we need to find better ways to share this experience with product developers. And all this is happening at a time when FDA’s mission is becoming more complex than ever, for example with increasingly diverse food and nutritional products and new threats of terrorism. We have responsibilities over 20 percent of the consumer economy – an amount that’s growing every year. Only by becoming consistently more productive at what we do – always working to get the most public health bang for our regulatory buck -- only in this way can we have any chance of fulfilling our increasingly complex public health mission.

So at this critical time in health policy, we are trying to work harder and more creatively than ever to make sure that we fulfill the potential of 21st-century medical technology to bring more effective and safer treatments to patients as quickly as possible, and to help make them as affordable as possible. This is the best way to address the health problems of today – and cost and access are among the most critical problems – without sacrificing the medical innovation we badly need for a better tomorrow.

We need to make the process for developing new technology less costly. We need to make it less risky, with greater predictability and less time from concept to bedside. In short, we need a more efficient development process – less costly, more rapid, and more predictable ways of determining that new treatments meet FDA’s standards of safety and effectiveness – which are the gold standard for the world.

We have a good opportunity right now, thanks to bipartisan legislation that Congress passed last year, and may build on this year, to provide additional resources for FDA through manufacturer user fees for medical drugs and devices. These initiatives will help us reduce our times for reviewing product applications. But to reduce the time for approving new products, and to reduce the total time for developing new products, we need to do more.

That’s why, as part of a new FDA initiative on improving medical innovation that I announced in January, we’re taking new specific steps to help foster more and more efficient innovation, especially in emerging areas or those of great medical need. That initiative has several elements, and I’d like to tell you about some of them.

One element is the development of “quality systems” for our review procedures. The idea is to build on our professional staff expertise to identify and apply best management practices internally to our review processes. This includes using peer review programs coupled with more empirical data for drug and device reviewers to exchange ideas and use each others’ experience to learn about best practices – much as clinicians are increasingly doing today.

A key part of this effort is developing performance measures that our experts believe are related to our goal of approving safe and effective treatments as efficiently as possible. Applying such quality systems for technically complex enterprises in which every case has many unique features is a complicated task. But I have been impressed by the response to this initiative by many of our professional staff. They believe that clearer measures for evaluating the agency’s performance with respect to its mission goals can help them and therefore the agency do a better job.

We’re also working to develop new guidance documents that I believe can bring more predictability to our regulatory process. These are in a tradition of FDA documents that serve as roadmaps for drug and device developers, offering guidance on how to structure studies to prove that new treatments work. FDA has lots of guidances, but these new documents represent an enhanced effort to combine our internal expertise with input from outside experts to make sure that are regulatory methods are up to date in important areas of technology development. Some of the guidances will focus specifically on diabetes, obesity, and cancer. Despite all the innovation that’s already occurred, these are therapeutic areas that remain underserved by effective treatments and that have promising technologies under development today. We’re also developing guidances in new areas of technology development – including pharmacogenomics, novel drug delivery systems, and cell and gene therapy. In all these cases, we expect to learn something from outside experts in the open process of developing them. For example, we are setting up a “research exemption” program for product developers as well as academic experts to share data on pharmacogenomic results, such as microarray studies, that may be useful for predicting clinical benefits and risks and thus reducing the costs of demonstrating safety and effectiveness. The goal is to use the new regulatory standards can reduce the time and cost of product development, and to make sure our regulatory procedures are up to date at the same time - hopefully leading to earlier and broader access to new treatments.

Supporting the development of safe and effective new treatments is one of the most important ways that FDA can promote the public health. And as I’ve said, to encourage the development of these potentially lifesaving treatments, meaningful patent protection is essential. But when appropriate patents have expired, we need to facilitate broader access through lower-cost generic drug alternatives. Generic drug manufacturers produce medications that are just as safe and effective as their brand counterparts. In fact, part of the FDA's mission is to make sure that's the case. Yet the prices of generics are generally much lower: a generic version of a $72 average brand-name prescription costs about $17. And thanks to more brand-name medications coming off patent -- over 200 of them in the next few years -- as well as to the ever-improving scientific knowledge and public awareness about the benefits of generic drugs, the health and economic benefits of using generic drugs are constantly growing.

Encouraging rapid and fair access to generic medications following the appropriate period of patent protection is one of the FDA’s major priorities. We’re proposing new resources to enable us to implement major reforms in our generic drug programs to reduce the time it takes to get a generic drug approved. Right now, it takes well over a year and a half on average to approve a new generic medication – and we think we can do a lot better. In addition, we are working to overcome some technical hurdles in demonstrating product equivalence that have made it difficult to develop generic alternatives for medications that are not taken as pills, such as topical creams for dermatologic conditions and inhaled drugs for asthma and other respiratory conditions. And we are finalizing a new regulation that will improve the way that the so-called Hatch-Waxman law functions, so that litigation over patents does not lead to inappropriate delays in access to new medications. Together, these changes are expected to reduce drug costs by billions of dollars each year.

Another application of our principle of efficient risk management to reduce medical costs is overhaul of the way that medical products are manufactured. We call these guidelines good manufacturing practices, and our GMP regulations for drugs haven’t been updated in 25 years. Meanwhile, best practices in manufacturing technologies and methods have undergone significant progress over that time, particularly in other high-tech industries. For example, the semiconductor industry also has a very low tolerance for impurities and inaccuracies in production. And when its production processes were lagging because of high costs and too many errors that industry helped invent the “six sigma” production methods. Through continuous quality improvement, those methods achieved enormous improvements in production cost and quality, and they have since been widely adopted in manufacturing industries.

But continuous quality improvement in manufacturing hasn’t been the subject of as much attention in the pharmaceutical industry, even though many experts on manufacturing processes believe that large savings in production costs could be realized while maintaining very high standards for purity and accuracy. We want to make sure that our regulations are encouraging such progress, not standing in the way. So our broad-based program is developing new GMPs based on the latest science of risk management and quality assurance. The new standards are being designed to encourage cost-reducing and precision-enhancing innovation in manufacturing and technology, and to ensure that all three FDA medical centers use consistent and up-to-date methods, including inspectors specializing in particular types of production methods.

In addition to substantial savings in the development and manufacturing of safe and effective medical products, there are many more opportunities to increase the value of the medical products we regulate after they are approved. These approved products, while safe and effective to the best of our knowledge when used as intended, are involved too often in costly and potentially preventable adverse events.

This includes medical errors. As many as 20 percent of Americans have experienced some kind of significant medical error. Preventable errors and complications involving prescription drugs alone are responsible for thousands of deaths, millions of emergency room visits and hospitalizations, and billions of dollars in additional health care costs each year, in addition to all of the unnecessary suffering. There’s too much wasted money that would be better spent on care that actually made people healthier.

FDA has a role in helping to avoid these costly errors by supporting the development and use of safer health care systems, systems that help health professionals avoid errors and deliver higher quality care. For example, earlier this year we proposed a universal barcoding system for prescription medications and blood products. Coupled with barcode readers and electronic medical records, bar codes on drugs are expected to reduce the rate of medication errors that occur at the stage of dispensing and administering medications by half or more. Bar codes can help make sure that the right patient gets the right medication in the right dose at the right time, and soon a standardized system of codes will be built in to all drug packaging. Our work on standards has another benefit too. According to the hospital industry and many health care purchasers, this step will speed the adoption of electronic health information systems by hospitals and other healthcare organizations, because the standardized codes increase the payoff to having electronic systems. Now, purchasers can be sure that all approved medications can be handled in their system.

But adverse events that I consider preventable aren’t just caused by human error. Even with the best available data, drugs are sometimes found to have adverse effects that couldn’t have been predicted or uncovered in any feasible clinical trial. Most of these subtle or rare problems such as liver toxicities that occur in a small number of people and most become apparent only after drugs have been used in real-world patient populations for some period of time. It’s during the time soon after a new product is approved that we need to be especially vigilant; if we don’t have effective systems in place to detect such problems, then preventable adverse events are occurring that shouldn’t, and finding better ways to prevent these events can improve health outcomes and lower medical costs.

As part of this effort to identify and prevent adverse events, we’re working on developing information technology tools that will allow us to link into the electronic medical records of large healthcare institutions and organizations, and automatically scan medical records for combinations of new drugs and clinical endpoints such as blood test results that might contain harbingers of trouble. The idea is to use modern information technology to acquire information on associations between adverse events and use of a medical product that might warrant focused further investigation. We want to have systems in place that allow us to be proactive in collecting this clinical information, rather than continuing to rely primarily on vigilant doctors and our so-called “spontaneous” adverse event reporting systems. For this, we’re also going to need outside help, by working with health care organizations and caregivers who have adopted high-quality information systems. And to make it worthwhile, we intend for these activities to be a two-way street. We are pairing these pilot programs, which now extend to hundreds of hospitals and health care organizations, with efforts to develop better information for participants – such as regular feedback to participating organizations about what we find, so that the institutions and companies working with us will be able to use the information we develop on preventing risks to improve quality of care.

Finally, we need more studies of the safety and effectiveness of medical products after they are approved. This can be very helpful for learning more about the risks and benefits of medications in special populations. As part of our efforts to improve our understanding of drugs in pediatric populations, where 6 of the top 10 drugs are being prescribed for off-label uses that have not been evaluated in formal scientific studies, we are expanding our pediatric expertise to collaborate more effectively with the NIH in funding needed studies. And for a new cancer drug that recently gained accelerated approval, the National Cancer Institute is funding so-called “Phase 4” studies to confirm clinical benefits and help assess longer-term risks. These efforts to use modern information systems and post-approval studies can add substantially to the body of knowledge about which patients are most and least likely to benefit from an approved treatment, in turn leading to higher-value treatment decisions.

FDA is also working to encourage more effective, high-value use of medical treatments by helping patients and health professionals get access to the latest and best information on risks and benefits. For all that improving medical technology can do – and it can do a lot – it is much less than people can do through their own choices to improve their health. From encouraging better guidance to patients in pharmacy labels, to clearer guidance on communicating risk and benefit information in direct to consumer advertising, to new enforcement initiatives against dietary supplement manufacturers who make health claims without scientific foundation, FDA is undertaking new efforts to help consumers make better-informed decisions about how to use their health care dollars. We’re working on a DailyMed program for physicians, so that a redesigned electronic product label that can be updated daily to include the most current information about a drug after they are already on the market. Only by facilitating access to complete, timely, and easily used information available to consumers and health professionals can we make sure that people are making the best decisions about their health based on the best available information.

I’ve talked about many ways in which we can and will increase value while encouraging needed innovations in the quality of health care in the United States. But I also want to mention one area of concern with respect to health care quality, and that is our medical liability system. As the New York Times reported in a front-page story recently, according to many health care experts, the unpredictable risk of extreme liability costs is affecting decisions about developing and marketing new treatments. This is impeding access to new, valuable technologies, especially in important areas like women’s’ health and pediatric care – the same kind of crisis areas as are occurring in physician care in many states that have not implemented physician liability reform.

Now, I think that tort law can potentially be a very important force for improving the development and use of safe and effective medicines. In cases when product manufacturers have a significant harm on the quality of health care, by providing fraudulent information to FDA, or deliberately withholding important information about safety problems associated with their products, they should be held accountable. The dedicated members of our legal profession have always provided, and continue to provide, vital protection against those who would prey on consumers or intentionally try to pass off harmful products. The threat of litigation can be an important disincentive to many predatory behaviors that could take advantage of vulnerable patients, and it can help our efforts to enforce the law against such activities.

But as the New York Times described it, the lawyers are doing what we want patients and doctors to do: they’re reading the warnings that we put on products, and they’re taking action when we add a warning or withdraw a product from the market based on our analysis of new information. Using the information they get from us, they file a few suits with very sick plaintiffs in states and counties considered favorable to plaintiffs, while building big “inventories” of less seriously ill patients, or even people who have used the drug but are not sick. The point of our warnings and the other science-based information on a medical product labeling is to provide doctors and patients with the up to date scientific information about risks and benefits, so that they can maximize benefits and minimize risks. And we need to learn more about products on the market – even, as with hormone therapies, products that have been on the market for decades.

So instead of pursuing real wrongdoing, our legal system is piling on to our legitimate warnings about the risks of medical products. This is a problem, because all medical products carry risks as well as benefits. This is especially true of the most risky products, like medications for pregnant women or women of childbearing age, or medicines that are given to prevent illness in healthy people, such as vaccines. Because of legal risks, product developers are getting out of these businesses, yet these are precisely the kinds of areas where there is often the greatest medical need. Because of legal risks, providers and manufacturers may be reluctant to develop data on existing patient risks and how they may be prevented. This is a serious public health problem. High quality medical care involves managing risks – including balancing the risks of treatments with the often more serious risks of illnesses. To the extent that our legal system encourages managing litigation risks instead of patient risks, reforms may be needed.

I’ve tried to cover a lot of ground in my remarks, because I really do believe that finding ways to encourage value and innovation is the best way to make health care more affordable and to promote the public health by greater access to high-value treatments. Clearly, much more should be done outside of FDA in terms of health policy reforms to support greater value. We need innovative approaches to making up-to-date health insurance more affordable to all Americans, especially those with limited means and high needs. I have to say I’m very encouraged by recent Congressional action, such as last year’s passage of a small but potentially important program to provide health insurance credits for the purchase of insurance -- and new subsidies for states to set up and run health insurance risk pools. And I’m also encouraged by progress making modern health insurance coverage options available to Medicare beneficiaries, including prescription drug coverage. To help make these coverage improvements work, though, we need to make more progress on improving value in the health care system.

Some breakthrough treatments emerge from eureka moments, but that’s not the way it usually works in science. More often, new treatments result from years of meticulous plodding work to solve a countless array of complex problems in order to translate a proof of concept into a treatment that actually and reliably makes people better. This takes relentless efforts by dedicated professionals, men and women who are infused with an increasingly bright collection of ideas who are willing to work hard. While I miss Stanford very much, I’ve found my experience in health care policymaking in Washington to have many similar characteristics. We are dealing with problems of affordability of high-quality care that have never been harder, but the stakes in terms of the current and future health of the American public have never been greater. I really enjoy going to work every day with people who take this challenge extremely seriously, and who are doing something about it. From where I sit, the present time is absolutely the best time to be involved in healthcare. Now, more than ever, so much of what we do really matters.

And so I look forward to working with all of you to achieve our shared goal of a vibrant, innovative health care system, one that not only delivers high-value care to the right patients at the right time, but one that is always getting better. That’s our public health mission at FDA, and that’s our goal as participants in the healthcare enterprise. Thank you for listening to me today.