Copyright 2000 Federal News Service, Inc.
Federal News Service
February 24, 2000, Thursday
SECTION: PREPARED TESTIMONY
LENGTH: 2243 words
HEADLINE:
PREPARED TESTIMONY OF SENATOR JOHN F. KERRY
BEFORE THE
SENATE COMMITTEE ON FOREIGN RELATIONS SUBCOMMITTEE ON AFRICA
BODY:
Mr. Chairman, thank you for allowing me
to testify today about a catastrophic problem that needs our immediate
attention. I commend your leadership on this issue.
Later today, we will
hear later today from the Surgeon General, from Sandy Thurman and from my friend
Jeff Sachs from Massachusetts who will describe the scope of the this epidemic
in public health, economic and social terms.
I do not want to pre-empt
their comments, but I do want to mention some statistics which are by any
measure sobering and compelling. More than 33 million people are infected with
HIV, and this disease will kill more than 2.5 million this year. It has already
orphaned 11 million children. These numbers are incomprehensible. To put in
perspective, nearly 60 people will become infected with HIV in the time it takes
me to testify today. This epidemic is out of control. To change this death
spiral, we need to institute bold new measure. We must provide new global health
infrastructures which look at long-term solutions of disease eradication. And,
until they are established, we must provide much- needed short-term financing
for disease prevention and treatment.
I applaud the work of my friend,
Senator Durbin with whom I have joined on a number of bills this year. I also
recognize and support the efforts of Senator Boxer and Senator Smith. Senator
Moynihan and Senator Feingold have an important plan to prevent vertical
transmission of HIV from mother to child. I would like to associate myself with
all these efforts.
Mr. Chairman, the scope of this epidemic requires a
bold response which looks beyond just preventing and treating this disease. The
epidemiology of this disease dictates lifetime adherence to preventive measures.
I am fully supportive of prevention programs -- I have seen their very positive
effect in the AIDS Action Committee in Boston and in
AIDS Project Worcester. The Outer Cape also has a tremendous
program which I support every year in Provincetown and these are echoed in small
towns across Massachusetts which have accessed CDC grants and instituted the
absolute best of community-based programs. I have also been an early and
consistent support of the Ryan White program which comes up for reauthorization
this year.
But, Mr. Chairman, we need a vaccine -- for the United States
and for the developing world.
Vaccines are the most cost-effective
weapon in the arsenal of modern medicine to stop the spread of contagious
diseases, and they offer a relatively inexpensive means of lowering a society's
overall cost of medical care. Prime examples of the success are the three
million children whose lives are saved each year as a result of early childhood
immunizations against diptheria, polio, pertussis (whooping cough), tetanus,
measles, and tuberculosis.
Mr. Chairman, consider the alternatives
we-have now. Pharmaceutical products, like the highly touted antiviral
"cocktail" for treating AIDS patients can cost, on average, as
much as $15,000 a year. That is a princely sum for the wealth
countries but clearly, for nations with per capita incomes of
$700 or $800 like Malawi, such treatments and
drugs are nowhere in the realm of affordability. They also require enormous
infrastructure investments and medical compliance which is difficult to adhere
to in this country let alone developing societies.
For these nations,
finding an affordable vaccine for AIDS is the only option that
offers them an opportunity for gaming control over the AIDS
epidemic.
Unfortunately, of the $2.4 billion or so
spent on overall AIDS research last year, only a fraction was
spent on AIDS vaccine research.
The World Bank
estimates that perhaps between $280 million and
$350 million was spent worldwide on finding a vaccine for
AIDS in 1999, or somewhere between 10 and 15 percent of the
total amount spent on AIDS research.
Furthermore, of
the $300 million or so spent on HIV vaccine research, less than
$50 million came from private sector research and development
budgets. Simply put, our biotechnology and pharmaceutical industries do not
believe that investing in AIDS vaccine research is a good
investment.
Mr. Chairman, we have a responsibility, an obligation, to
change this perception. Investing in an AIDS vaccine is one of
the best investments we as a nation can make. And for Africa, it is the only
hope for survival.
And while continued and expanded investments in our
research engines are vitally important -- I am referring to
AIDS research at the National Institutes of Health -- the time
has come for us to explore additional strategies for stimulating private sector
AIDS vaccine research and development.
We must look for
innovative financing mechanisms--we must strive for new and improved
public-private partnerships. We must instill the financial incentives for our
pharmaceutical and biotechnology sectors to engage in areas they have previously
ignored.
Mr. Chairman, I was amazed to learn that of the
$56 billion a year spent globally on health research, well over
90 percent is spent on research into health problems that concern only 10
percent of the world's population.Amazingly, of the 1,200 new drugs
commercialized between 1975 and 1997, only 13 were for tropical diseases --
diseases such as malaria and tuberculosis which combined kill close to 3 million
people a year.
Why don't pharmaceutical companies invest in these
diseases? Is it because there is no hope for finding a vaccine for malaria? Is
there no hope for finding an affordable vaccine for tuberculosis or HIV? Is the
science just insurmountable?
Absolutely not.
Companies don't
invest in these diseases because they don't foresee a profit. A malaria vaccine,
while offering the potential to save millions of lives, does not offer the same
return to shareholders as the return from Viagra, Lipitor, Prozac, or other
blockbusters here in United States. I don't blame the pharmaceutical industry
for concern about their shareholders, but I believe it is morally imperative to
jumpstart research into vaccines as quickly as possible.
What then, is
the answer? Should we mm our back on these diseases as a casualty of the way
free markets function? Should we dump billions into new government bureaucracies
to tackle these problems? The answer on both counts is no. We as a nation, and
as a responsible member of the international community, should create the market
incentives to encourage our pharmaceutical and biotechnology companies, the best
and brightest companies in the world, to invest in those diseases which are a
scourge to the world.
Let's give pharmaceutical companies the financial
incentives to achieve what we know is possible and let them work their
magic--these are the same engines of growth and technological progress which
have helped extend life expectancy beyond what was imaginable at the mm of the
century. Now, let's help them turn their attention to those diseases which kill
millions upon millions in developing countries.
This type of
public-private partnership, I would argue, is the most efficient means of
addressing the world's growing health care pandemics. Here, Mr. Chairman, is how
we can achieve it.
The legislation I am introducing today, the "Vaccines
for the New Millennium Act" provides a number of market incentives to encourage
private sector investment in lifesaving vaccines. These incentives can be
classified in one of two ways. Some of them provide a "push" mechanism--lowering
the cost of R&D at the front end. Others provide a "pull" mechanism,
demonstrating that a market will exist if the pharmaceutical companies provide
the product.
On the push side, first, the bill expands on the research
and development tax credit by increasing the credit rate from 20 percent to 50
percent for research related to developing vaccines for AIDS,
malaria, tuberculosis, or any infectious disease which kills over 1 million
people a year. The tax credit is incremental such that the credit applies to
research spending which exceeds a base amount. In effect, the credit rewards
incremental increases in lifesaving vaccine research--thus giving our drug
companies an incentive for more focus on lifesaving vaccines.
Second,
the bill allows small biotechnology companies which do not have tax liability to
pass a smaller tax credit through to investors. Firms with assets under
$50 million may choose to pass through a 25 percent tax credit
to investors who provide financing for research and development on one of the
priority vaccines. The credit would apply to stock issued after the date of
enactment and used within 18 months to pay for qualified vaccine research
expenses.
Both of these proposals have been endorsed by a combination of
public health advocacy groups and industry -- including AIDS
Action Council, the Global Health Council, the American Public Health
Association, the AIDS Vaccine Advocacy Coalition, Chiron,
Vaxgen, and others.
Third, the ball authorizes voluntary contributions
to the Global Alliance for Vaccines and Immunizations and the International
AIDS Vaccine Initiative. The Global Alliance for Vaccines and
Immunizations is an international partnership recently established to expand and
improve access to existing safe and cost-effective vaccines. It is being
supported by a number of nations and international donors, including the Gates
Foundation. A similar provision was included in the President's budget. By
working to improve the delivery of existing vaccines, the Global Alliance not
only offers the opportunity to save lives, it will improve health delivery
systems for the distribution of future vaccines.
Fourth, the bill
authorizes voluntary contributions to the International AIDS
Vaccine Initiative. The International AIDS Vaccine Initiative
is a global, non-profit organization working to speed the development and
distribution of preventive AIDS vaccines by providing venture
capital for industry R&D efforts. In effect, the initiative provides
financing to industry in return for international access to the vaccine. For
example, under a typical IAVI/industry agreement, IAVI will provide financing in
exchange for an agreement with the manufacturer to sell the vaccine to
developing countries at very reasonable prices.
To further accelerate
the invention and production of lifesaving vaccines, the bill
includes a tax credit proposed in the President's budget. Under
the proposal, every dollar paid by a qualifying organization to buy a lifesaving
vaccine would be matched by a dollar of tax
credits--thereby doubling the purchasing power of nonprofit
organizations and others that purchase vaccines for developing
countries. The credit only applies to vaccines not yet developed, thus
demonstrating the existence of a market if drug companies fill the void. The
credit would apply to vaccines for AIDS, malaria, tuberculosis,
or any other disease which kills over 1 million people annually.
The
bill also establishes a Lifesaving Vaccine Purchase Fund. This approach has been
advocated most prominently by Harvard economist Jeffrey Sachs, a witness on the
second panel.
Under my proposal, Congress would authorize and advance
appropriate $100 million a year, over ten years, to a fund for
the purchase and distribution of newly-developed vaccines for
AIDS, malaria, and tuberculosis. The first appropriation would
not occur until a vaccine has been licensed and approved, in effect, by
establishing a guaranteed market, the proposal would provide a real incentive
for additional private sector research. However, the money would not be spent
until the vaccine was developed, thus postponing any cost to the government.
The bill directs the President to initiate negotiations with officials
of foreign governments for the establishment of an international vaccine
purchase fund that would purchase and distribute in developing countries
vaccines for malaria, tuberculosis, HIV, or any infectious disease which kills
over 1 million people. It is assumed that if such an agreement is reached, the
domestic fund described above would be integrated into the multilateral
agreement.
Finally, Mr. Chairman, my proposal establishes a Lifesaving
Vaccine Advisory Commission to oversee public-private vaccine partnerships. The
commission would consist of six members from the pharmaceutical industry and six
from the medical, public health, or academic community. Membership would be
designed to balance the concerns of the public health community with the
concerns of industry. The commission would be tasked with reviewing the progress
of national and international efforts to develop vaccines for malaria,
tuberculosis, HIV, and other infectious diseases, examining the merits of
innovative financing mechanisms such as tax incentives, purchase funds, patent
exchanges, and cooperative R&D agreements, and developing consensus on
policy recommendations for ways the government can further advance the discovery
and distribution of lifesaving vaccines.
This is a comprehensive plan,
Mr. Chairman, which I have worked on for two years. This past weekend, it was
endorsed as a positive step by academics, pharmaceutical executives and
governmental leaders at a high-level conference convened by the University of
California at San Francisco, World Bank and the Global Forum for Health
Research. It is my hope that our colleagues will give it equally seriously
attention.
END
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2000 
