Public Forum/Town Hall Biotechnology Regulatory Reform - To Learn from Businesses and Industry Experts Which Regulations Are the Least Useful, Least Cost-Effective, And, Therefore, Should Be Eliminated

Welch Allyn 8

Mel Kurtz 56 63 9 President

Quasar Energy Group 10

Tom Fitzgerald 71 80 11 President

OyaGen 12

Dr. Larry Buckley 80 95 13 Department Head, School of Life Sciences

Rochester Institute of Technology 14 15 Dr. Edward Schwartz 97 100

Professor of Orthopaedics, 16 Director at Center for Muscular Skeletal

Research at University of Rochester 17 Also, President of LAGeT 18

Fred Bugin [ph.] 107 19 Inventor

Walk-In/Not on Speaker List 20 21 ---oOo--- 22 23 24 25 1 SENATOR ROBACH: We're going to get started 2 here so we can get to, really, your important input, 3 what we're here for. 4 I want to first thank, and introduce, my 5 colleagues who have been working on this, many who 6 have participated across the state, but I appreciate 7 them all being here, especially Senator Gallivan and 8 Senator Valesky, who have been having these forums 9 all across the state, on trying to improve, both, 10 any regulatory impediments, as well as anything we 11 can come up with to try and help the biotech 12 industries. 13 And, of course, I am very pleased, being from 14 here, and, parochially, representing Rochester, 15 I think it was very, very important that we had it 16 in our region, both, to try and help existing 17 companies and emerging-growth companies, but also 18 work on our very, very fortunate synergy that we 19 have with our colleges and universities, especially 20 the U of R and the Medical Center on the medical 21 side of biotech; and, certainly, Rochester Institute 22 of Technology, on the green- and 23 sustainable-technology side, we are perfectly 24 poised. 25 We have a lot of trained employees, a lot of 1 good people. 2 We had Comptroller DiNapoli in, even talking 3 about investment and seed capital. 4 So, we really want to hear from you, and 5 compile whatever we can together, to make some 6 recommendations as we move forward, especially in 7 Rochester, I hope, but, really, across 8 Upstate New York, as to how we can grow, not only 9 this business, but every business. 10 So we thank you all for participating and 11 doing this right here in Rochester. 12 Before I get to Senator Gallivan and 13 Senator Valesky, I just also wanted to note, we are 14 joined by my colleague Kathy Marchione from the 15 Capital Region in Albany. 16 And, also I saw Jay Grasso, who is from 17 Senator Ranzenhofer's Office, in the back, who has 18 also participated in these; 19 And, Mark Johns, who certainly worked 20 together with the Assembly. 21 I will applaud Mark, who very aggressively, 22 even though he's a member of the Assembly, asked, 23 out of importance to this, wanted to hear what you 24 had to say, and we thank you for joining us today, 25 too. 1 And with that, I will pass it over to Pat and 2 David for their opening remarks. 3 SENATOR GALLIVAN: Thanks, Joe. 4 Good afternoon, everybody, and thank you all 5 for being here. 6 We've all seen, time and time again, last 7 week, I think it was the Tax Foundation in the 8 spring, U.S. Chamber of Commerce report, and many 9 other reports, consistently rank New York State as 10 having the worst, or among the worst, business 11 environment in the country, which is a terrible 12 distinction, despite some of the progress I think 13 that we've made the past few years, as we contrast 14 that with what's going on in Washington. 15 Here, where we see Democrats and Republicans 16 working together, we have put together a bipartisan 17 committee: 18 Senator Valesky, myself, Senator Marchione, 19 and Senator Carlucci from down in Rockland County -- 20 Rockland-Orange county area, Hudson Valley area. 21 But the idea is, to try to do something about 22 New York having the worst, or among the worst, 23 business environment, and what causes it. 24 Time and time again, my colleagues and I hear 25 from some of you, and others, our constituents, 1 people across the state: taxes and regulations. 2 Very often, a lot of people talk about taxes 3 all the time. 4 It's not often, other than in complaints, 5 that we see regulations in the news. 6 New York State has over 140,000 pages of 7 regulations in the state. 8 We don't have quite an exact number of the 9 regulations, but that's over, when we multiply it 10 out, we're estimating over three-quarters of a 11 billion regulations, which is outrageous; and we 12 just see regulation on top of regulation on top of 13 regulation without much relief in the way, over the 14 years, of removing regulations along the way. 15 So our effort is to try to do something about 16 the regulations. 17 The way that we're doing that, is we're 18 conducting a series of industry-wide hearings across 19 the state, dealing with, here, of course, biotech, 20 but, health/medical, agricultural, manufacturing, 21 small business, and a number of others, but the idea 22 is to get past those big items, those big-ticket 23 items, that we hear about all the time, and try to 24 drill down into individual businesses, individual 25 industries, to identify the regulations that we can 1 look to get rid of. 2 Our initial goal is to identify at least a 3 thousand; but why a thousand? 4 We had to start somewhere, and we wanted to 5 take on something that was manageable. 6 We think that it is. 7 But more importantly, we hope that this is 8 the beginning of a continual look at regulations, 9 and a serious effort on behalf of the Legislature, 10 to try to make it part of our agenda; the 11 legislative agenda when we start next session, and, 12 hopefully, well into the future. 13 So I do appreciate the fact that you are all 14 here. 15 You can look for a final report. 16 It will be on the Senate website sometime 17 around the end of November, early December. 18 And then, of course, we will be trying to 19 push for as much relief as possible. 20 David. 21 SENATOR VALESKY: Thank you. 22 Well, Senator Gallivan covered it well, so 23 I just want to echo his comments. 24 I do also want to thank Senator Robach for 25 hosting this hearing. 1 This is the final hearing in the series. 2 We will be moving right into preparing our 3 report, which will be made available, and then 4 moving into, hopefully, many, many action items for 5 us as a Legislature, both, calling on executive 6 agencies to certainly do something about 7 regulations, but, also, take a look at what we can 8 continue to do legislatively, as a State Senate, 9 when we return in January for the commencement of 10 the 2014 legislative session. 11 The one thing that I would add, in terms of 12 the hearing this afternoon, those of you who have 13 signed up to testify, we would ask that you be as 14 specific as possible. 15 If there are specific regulations that are 16 impeding your growth, that are hindering and 17 hampering you being able to provide even greater 18 economic opportunity for folks here in Rochester, 19 and all across the state, that's what we're looking 20 for: as specific as possible. 21 And we'll certainly have some questions for 22 you as you finish your testimony. 23 Thank you very much. 24 SENATOR ROBACH: Kathy. 25 SENATOR MARCHIONE: Thank you. 1 It's an honor to be here with you today in 2 our final regulation hearing. 3 I'm Senator Kathy Marchione. 4 I represent the 43rd Senate District, which 5 comprises parts of Rensselaer, Saratoga, Washington 6 County, and all of Columbia County. 7 In addition to being the Senator from the 8 43rd District, I serve as the Chairman of the 9 Senate Administrative Regulations Review Commission, 10 known as "ARRC." 11 ARRC is a bipartisan committee with the 12 Senate and Assembly, and we keep our eye on about 13 107 state agencies, and they issue approximately 14 300 new regulations every year. 15 When we looked at that, if you listed 16 regulations on an 8 1/2-by-11 sheet of paper, end to 17 end, that's about 22 miles of regulations, which is, 18 like, from the State Capitol to my home in 19 Half Moon. 20 And, you know, they pose a massive financial 21 burden on our business community. 22 They stifle innovation, of course, and force 23 institutions to spend more time with regulatory 24 compliance, and less time finding the next biotech 25 breakthrough. 1 So, I'm happy to be here today. 2 The purpose, of course, of our forum is to 3 hear from experts in your field. 4 And our goal here is not to point fingers or 5 assign political blame to anyone for the 6 regulations. 7 Our one and only goal, of course, is to find 8 solutions; real solutions. 9 So, looking forward to hearing your testimony 10 today. 11 Thank you. 12 SENATOR ROBACH: Thank you, Kathy. 13 And before we get to Assemblyman Johns for 14 his opening comments, I just want to thank 15 Jeff Adair, the president of the Legislature in the 16 back. 17 Thank you for letting us use this great 18 facility, Jeff, and we appreciate that. 19 And before we get to our first speaker, 20 Assemblyman Johns. 21 ASSEMBLYMAN JOHNS: Good afternoon, everyone. 22 I'm Assemblyman Mark Johns. 23 This is my home region here. 24 I appreciate Senator Robach and the other 25 Senators for allowing me to come out. 1 You know, I had an opportunity a few months 2 ago to talk to Dr. Harold Smith, and I know there's 3 others out there that are going to speak today. 4 We have an opportunity in this area for 5 biotech companies to emerge and thrive. 6 I just want to make one point clear: 7 We're not only competing against other states 8 in the northeast; we're competing against every 9 state in this country, and we're competing at a 10 worldwide level. 11 Every country in the world -- China, Japan, 12 Korea, you name it -- they are out there backing up 13 their home-grown countries to try and -- companies 14 to make them better. 15 That's how you compete in a worldwide 16 economy. 17 And I'm here to do a small part to help our 18 home-grown businesses become world-class businesses 19 that are nationwide, and that also creates jobs in 20 this region. 21 So, thank you all for allowing me to come in 22 today. 23 SENATOR GALLIVAN: Our first speaker is 24 Joel Seligman, who is the president of the 25 University of Rochester. 1 We appreciate your being here. 2 Yep, front and center, if you could. 3 And if you'd rather sit, this microphone is 4 live, in the first seat. 5 JOEL SELGMAN: I got to tell you, it is such 6 a pleasure to stand. 7 I apologize if I appear to be hovering over 8 you, but this is so good for my lower back, so, 9 I thank you for restoring my health. 10 Senators Robach, Gallivan, Valesky, and 11 Marchione, and Assemblyman Johns, first, I want to 12 thank you for the opportunity to speak to you today 13 about what is truly an important topic. 14 As both the president of the University of 15 Rochester and the co-chair with Danny Wegman for the 16 Finger Lakes Regional Economic Development Council, 17 I want to thank the Senate Majority Coalition, more 18 generally, for their leadership and efforts to 19 reduce unnecessary regulation that limits economic 20 growth, and for their support for incentives and 21 initiatives that strengthen the biotechnology 22 industry and research institutions, including the 23 University of Rochester. 24 This is a big deal; the biotechnology 25 industry is a leading sector in the New York State 1 economy and the Finger Lakes region. 2 It's estimated that, in New York State, 3 bioscience currently supports 250,000 jobs, both 4 direct and indirect, generating $309 million in 5 personal state income tax and approximately 6 $6 billion in wages. 7 In the Rochester region, the biotechnology 8 industry ranges from large established firms, such 9 as CooperVision, Carestream Health, 10 Ortho-Clinical Diagnostics, to smaller companies 11 such as Vaccinex, SiMPore, OxiGen [ph.], 12 VirtualScopics, and iCardiac. 13 The creation of some of these startups was 14 driven, in fact, by the University of Rochester. 15 And for the University of Rochester, I want 16 to highlight how critical this is to our continuing 17 to be an effective institution. 18 The university currently is the region's 19 largest employer, with slightly over 22,000 jobs. 20 Indeed, it's the seventh largest private 21 employer in the state, the source of 47,000 direct 22 and indirect jobs, $2.4 billion in direct and 23 indirect wages. 24 Over the past 5 years, the university has 25 received more than $2 billion in external research 1 funding, most of which from federal agencies. 2 When normalized for faculty size in 2011, the 3 last year for which we have data, we ranked 15th 4 in the nation in federal research funding among the 5 176 leading funded research universities, with more 6 than $400 million in total sponsored research during 7 the prior two years, and $348 million last year. 8 Indeed, annually, we receive more funding 9 from the most important agency, the 10 National Institutes of Health, than institutions of 11 Buffalo, Syracuse, and Albany combined. 12 We're proud to be a national leader in 13 translating our research and discoveries into new 14 technologies and practical application. 15 Since 1996, 53 companies have been created 16 using the university-licensed technology, of which, 17 critically, 38 are still active, and 29 are located 18 in New York State. 19 For the past several years, the university 20 has been among the top institutions in terms of the 21 amount of royalty revenue received from licensed 22 technologies, according to the Association of 23 University Technology Managers. 24 Strategic investments by New York State have 25 often been pivotal in the success of our ability to 1 attract outside research funding to stimulate 2 economic development through startups or patent 3 licensing. 4 For example, the Health Science Center for 5 Computational Innovation is a partnership between 6 the university, IBM, and the State to create the 7 nation's most advanced high-performance computing 8 health-science research center. 9 To date, the center has been responsible for 10 generating over $300 million in sponsored research 11 alone, and well over 100 faculty are critically 12 involved in these activities. 13 The upstate stem cell GMP facility at the 14 university's medical center is the upstate's only 15 university-based stem cell manufacturing facility 16 that meets the strict regulatory requirements 17 necessary to conduct clinical studies. 18 Thanks to Senator Robach, and others, the 19 Robert B. Goergen Hall for Biomedical Engineering 20 and Optics allows us to build on two of our great 21 strengths at the university, biomedical engineering 22 and optics, and presents us with the unprecedented 23 opportunity to be number one in an academic area, 24 the emerging field of biomedical optics. 25 In addition, the New York State Generating 1 Employment Through New York State Science, thank 2 goodness, more popularly known as "Genesis [ph.]," 3 is an initiative that also had a significant impact 4 on our institution's growth. 5 Thanks to the $20 million in support that 6 Genesis received back in 2002, the university 7 expanded to add more than 400,000 square feet of 8 state-of-the-art research facilities, hired more 9 than 500 new faculty and support staff, and launched 10 the region's first biotech incubator, the Rochester 11 BioVenture Center, to promote and foster the growth 12 of early-stage life science companies on a regional 13 scale. 14 Nonetheless, the key theme of your hearings 15 today, the extent to which excessive regulation 16 impedes our efforts to be as effective as they might 17 be, is something very much on our mind. 18 State policymakers and regulators, I strongly 19 encourage them to review the cost and benefits of 20 state regulations, eliminating those that are 21 redundant, ineffective, inappropriately applied to 22 higher education, or for that matter, anyone else, 23 and biotechnology sectors with imposed costs that 24 outweigh the actual benefits to the state and 25 society. 1 Regulation and reporting requirements should 2 be consistent across agencies. 3 This is a huge issue. 4 It's not so much singling out a specific 5 regulation as wrong or inappropriate; it's, rather, 6 to harmonize reporting requirements so that, if 7 possible, you could have a "one size fits all," if 8 you will, to some degree. 9 We appreciate the intention, for example, to 10 significantly reduce costs and streamline reporting, 11 through both the New York State and grantees, 12 through the newly established Master Contract for 13 Grants and Grants Gateway, but there does need to be 14 more awareness, that while the concept of a single 15 standard, it should be applied in a way that 16 understands that educational institutions are 17 sometimes quite different than others who are filing 18 under the standard. 19 It can be more user-friendly, and, certainly, 20 you could help reduce redundancy with the 21 information already required on the New York State 22 Vendor Responsibility Questionnaire. 23 We urge the repeal of the annual-notification 24 provision of the Wage Theft Prevention Act. 25 This provision creates a significant 1 administrative burden, particularly for large 2 employers, and we've calculated the cost of 3 compliance with legislation is over $25,000 4 annually, and we're dubious about the benefits, if 5 any, that can be achieved there. 6 As we look for ways to fuel growth in the 7 state's biotechnology commercial sectors, 8 I encourage you to continue support for existing 9 programs that have a consequential difference in our 10 ability to attract and retain top scientists and 11 impact economic growth. 12 If you want New York State to be the world's 13 leader in biotechnology, among other things you must 14 want, is the greatest scientific talent to come 15 here. 16 You've done very well with a series of 17 programs over time, some of which have been subject 18 to budgetary cutting blocks from time to time: 19 The NYSTAR Centers for Advanced Technology 20 have been a consequence; 21 The Regional Technology Development Centers; 22 The spinal chord-injury research program is a 23 particularly critical program at a time when we were 24 on the verge of great breakthroughs there; 25 NYSTEM. 1 And then I want to say a kind word, if 2 I might, for the regional economic-development 3 process which, in Rochester, has particularly 4 focused on biotechnology. 5 Our top priority project has been, for the 6 first three years of the existence of the 7 Regional Economic Development Council, 8 Eastman Business Park. 9 We've made substantial progress, if you will, 10 offstage, in helping with processes which have led 11 to the sale of the utility RED and environmental cap 12 from the state. 13 The final prize is within reach, and that 14 will be the ultimate sale of the project by the new 15 Kodak to a private developer committed to developing 16 biotechnology and other key industrial sectors in 17 what may be the nation's largest manufacturing park 18 of its kind. 19 I would also encourage you to strengthen the 20 state's ability to harness new technologies outside 21 the park that are emerging from our region's 22 universities and research centers, and transform 23 them into commercial opportunities. 24 There remains an acute demand for seed and 25 venture-capital funding. 1 While State-sponsored efforts like 2 Innovate NY have helped universities grow their 3 research and strengthen partnerships with the 4 business communities and push early-stage 5 innovations to commercialization, we encourage you 6 to expand upon these successes to mature nascent 7 technologies that help advance science, develop 8 novel technologies, and allow us to provide further 9 economic benefits to the region and New York State. 10 As you study these and related issues, 11 I would like to continue to offer the university's 12 assistance if we can provide it in any way. 13 Again, thank you for allowing me this 14 opportunity to submit my testimony for the record, 15 and to encourage you in both of your key efforts: 16 those of helping streamline our regulatory 17 structure, and those of focusing on what strategic 18 investments can best strengthen the New York State's 19 biotechnology industries. 20 Thank you. 21 SENATOR ROBACH: Thank you, Joel. 22 SENATOR GALLIVAN: Thank you, Joel. 23 I have just a couple of quick questions. 24 The Wage Theft Prevention Act is something 25 that we have heard, the notification provision, at 1 every hearing. 2 Some people testifying, they've estimated it 3 takes about five minutes per employee, but nobody 4 has actually quantified it. 5 So I'm kind of interested how you did, 6 because, clearly, that's -- that is a needless 7 provision that's out there, that's duplicative and a 8 real pain in the rear end for employers across the 9 state. 10 But, in our trying to make recommendations, 11 it's helpful if we're able to put a cost to it. 12 So how did you calculate that out? 13 So you're a little over a dollar an employee? 14 JOEL SELIGMAN: The way to do it, I believe, 15 was focusing on the person hours of the people 16 involved in preparing the information: the number of 17 employees, the number of days. 18 But we will submit to you a memorandum which 19 specifically addresses that; we'll give you the 20 basis of the calculation. 21 SENATOR GALLIVAN: That would be helpful. 22 JOEL SELIGMAN: Yes, more than happy to. 23 SENATOR GALLIVAN: And the other thing is, 24 that I have a personal interest in this, and it's 25 just, I think, a little off topic with regulation, 1 you made mention of the spinal cord-injury research 2 program. 3 JOEL SELIGMAN: Yes. 4 SENATOR GALLIVAN: I had been -- we've been 5 approached by a number of people that had indicated 6 that that funding, there's some sort of check-off, 7 I think it's -- I don't know if it's on 8 driver's licenses, or having to do with vehicle 9 registrations, but, a separate fund where some money 10 goes to that? 11 SENATOR ROBACH: On the tax form. 12 ASSEMBLYMAN JOHNS: Speeding tickets, too. 13 SENATOR GALLIVAN: Oh, on the speeding 14 ticket? 15 But the concern was, that the money was not 16 actually freed up and sent to the particular places 17 that are doing the research. 18 Have you experienced that, or is it 19 flowing -- 20 JOEL SELIGMAN: We have not experienced that, 21 but what we did experience, however, was a dramatic 22 reduction in funding when the line that supports 23 this was reduced from, I believe the specific level, 24 and forgive me if my memory is wrong, but something, 25 like, $8 million, to less. 1 I think those numbers are correct. 2 Let me highlight why this is so critical. 3 You know, we are on the verge of discoveries 4 by which spinal cord injuries -- which, among other 5 things, hit us all quite personally at the 6 University of Rochester because of the 7 chief executive officer of the medical center -- 8 potentially, could reach a period in which people 9 confined to wheel chairs, people confined to 10 crippling restrictions, can get up and walk, will be 11 able to fully be restored to physical mobility. 12 This is not fanciful. 13 Some of this is based upon science, for 14 example, being conducted by Dr. Mark Noble at the 15 University of Rochester Medical Center and 16 colleagues around the country. 17 $8 million I know is a lot of money, and 18 I don't want to in any way minimize the 19 significance, but the payoff, potentially, in terms 20 of saved or restored lives is huge, and this is a 21 time in which there are medical results coming in 22 which make very clear a modest additional or a 23 sustained investment in the sector can have a huge 24 outcome. 25 SENATOR GALLIVAN: For the sake of everybody 1 in the room, we're moving a little off topic. 2 Maybe we can talk separately about that? 3 JOEL SELIGMAN: Sure. 4 SENATOR GALLIVAN: Because I've got some 5 people that are involved, and some -- they're 6 involved in helping out some other organizations 7 that might be a good collaboration, if you don't 8 have it already. 9 But, we'll do this separate, but, thank you. 10 JOEL SELIGMAN: We like friends. 11 SENATOR ROBACH: Joel, thank you. 12 And I guess good news on the regulation: 13 I'm happy to say that, how would I say this, 14 non-partisanly, that happened at a time when this 15 coalition was not in charge in the majority of the 16 Senate, we voted to repeal it ever since. 17 And I think we're growing in the number of 18 people in the Assembly from Upstate New York who are 19 in the majority that want to repeal that as well, 20 and I hope that will go. 21 But I wanted to ask a little bit off, too, 22 because you really highlighted, greatly, I mean, the 23 collective U of R, hospital, medical center. 24 University is now the biggest employer in 25 Rochester. 1 You highlighted some of the reasons why. 2 I keep getting back to, even off regulation, 3 which they may be connected, we create so much in 4 New York, and we have so much good capacity for 5 innovation all across the state, but the 6 commercialization, oftentimes, seems to go somewhere 7 else. 8 Is there anything we can do, or you can think 9 of, to better, besides regulation, maybe get those 10 companies to stay here, or, whether it's a vaccine, 11 whether it's an innovation that's going to reduce 12 the carbon footprint, to kind of get them to do it 13 here? 14 Do you have any thoughts on that? 15 JOEL SELIGMAN: Well, this morning I visited 16 a major manufacturer in Rochester who has thousands 17 of employees in the area, and clearly wants to stay 18 in the area. 19 But, for example, they're focusing on one 20 part of the manufacturing which involves what's 21 called a "MEMS" machine, which is a microprocessing 22 device. 23 And the CEO of the company, you know, 24 explained to me that in the nation of Singapore, 25 they will make available to him, in effect, 1 MEMS equipment that operates at 30 percent less cost 2 than what we currently have in Rochester. 3 That's an illustration of a strategic 4 investment. 5 We have, second, the kind of issues that were 6 highlighted in some of the opening statements. 7 Our tax rates are higher. 8 We don't want to lose track of the fact, 9 balancing in a different direction are enormous 10 advantages we have. 11 I know people sometimes underestimate how 12 significant these advantages are, but, the cluster 13 of great universities, with state support through a 14 number of programs, helps. 15 But what also enormously helps us, candidly, 16 is our current real-estate prices. 17 When I want to talk to people at leading 18 universities around the country, you know, you can 19 say there may be some pretty snazzy universities in 20 places like, say, Boston, Chicago, San Diego, but 21 I talk a different kind of tune. 22 I can explain to them: 23 You know the 600-square-foot apartment you're 24 living in? 25 For the rent there, you can buy a 1 three-bedroom house, you can have the backyard, you 2 can have Rex the wonder dog, you can afford the 3 Volvo, and nice vacations. 4 Now will they come here? 5 The ultimate answer, for at least 6 universities, and to some extent, for the clustering 7 with sectors like biotechnology, is colleagues. 8 In other words, we need to build a critical 9 mass of top-flight scientists. 10 And so it's, on the one hand, by reducing 11 costs, creating, particularly, incentives for 12 business; on the other hand, in terms of sponsored 13 research funding, or the kind of funding that 14 Regional Economic Development Council or other 15 programs of New York State does, you have to have 16 them work hand in hand to move and have the 17 most-effective system. 18 If you just focus on costs, it's not going to 19 go far enough. 20 It's helpful, don't get me wrong. 21 You have, obviously, limited quantities of 22 money, and you have to be very strategic where you 23 invest them, but you want never to lose track, you 24 need both to compete with international competition, 25 which is the real critical competition, to some 1 degree, where subsidies, where direct support, are 2 very, very significant in attracting both businesses 3 and top-flight scientists. 4 SENATOR ROBACH: Thank you. 5 It's interesting, I never know if those 6 numbers are right, but, you know, they say that the 7 biotech jobs, both the research and the other side 8 of it, are so much more higher than regular jobs, 9 that would really raise all boats, the more we can 10 grow that here. 11 So, I guess it's a number of things we can do 12 to be more competitive. 13 Thank you. 14 JOEL SELIGMAN: My pleasure. 15 SENATOR GALLIVAN: Thanks, Joel. 16 JOEL SELGMAN: Take care. 17 SENATOR GALLIVAN: Our next speaker, or 18 presenter, is Harold Smith, professor of 19 biochemistry and biophysics, University of Rochester 20 Medical Center. 21 HAROLD SMITH: I, too, want to thank the 22 Senators for organizing this, and putting the whole 23 show together, and the Assemblyman for attending. 24 I thank the members of the university 25 community and the ladies and gentlemen of our 1 community in Rochester for attending this. 2 My name is Harold Smith. 3 I've been in Rochester for 28 years, and live 4 in Henrietta. 5 I came up through the ranks of the 6 University of Rochester to full professorship in 7 biochemistry. 8 Started a company in 2003; my experiences 9 that I relate to you start from that point. 10 And I think that my major message to bring to 11 you is that, in order for this community to really 12 realize the potential in jobs growth and economic 13 engine that biotech can bring about, it has to be a 14 collaborative effort; it has to be a collaboration 15 between the universities, the companies, and 16 venture-capital groups to come together and pull the 17 rope in the same direction. 18 This is so critical now because there has 19 been a major change on the horizon that has affected 20 the way all of us have to do business. 21 First, the federal government has, more or 22 less, pulled the rug out from underneath us. 23 Universities are suffering to support their 24 research groups and their students and businesses. 25 Biotechs are suffering as well. 1 The other issue is that a very major change 2 has happened over the past 10 to 15 years, is that, 3 big pharma, that normally trolled the waters of 4 biotech and the IP estate of universities for good 5 ideas, is now adverse to building their own 6 pipeline. 7 They will not take things early. 8 For a guy like myself looking for the next 9 cure for a disease, and particularly the cure for 10 HIV/AIDS, they are asking us to go all the way 11 through Phase II clinical trials now. 12 Fifteen years ago I would have been popped 13 out of the university technology and rewarded with 14 handsome amounts of money and lab infrastructure, 15 and stuff like that. 16 Now I carry the burden. 17 The issue here is that that is called, among 18 all of us in biotechs, as the "valley of death." 19 It is so popular now that it has its own 20 name; and that is where a university discovery, 21 which is an element that turns over rocks in the 22 right place and tells you how the natural world 23 exists, has to be complemented by biotech that 24 creates new products through innovation and 25 invention. 1 These things don't exist in nature until man 2 or woman creates them. 3 Now, between that rift, if biotech has to 4 carry the weight all the way through clinical 5 trials, this is going to be all of us in New York 6 who are requiring a sustained risk in biotech and 7 requiring support that will not necessarily come 8 from venture capital because they are risk-adverse. 9 It will not come from the federal government, 10 because now my funding in my study section for HIV 11 is at 4.5 percent. 12 When I started out as an assistant professor, 13 it was at 20. 14 So I have to compete at that level. 15 It's not that science has gotten dumber; it's 16 that we are, as a nation, choosing not to invest in 17 technology. 18 We're making a decision about the future of 19 health care. 20 So if you look at a census that I conducted 21 recently by Dunn and Brad Street, there are 22 approximately 14,000, what you could call, 23 "biotechs" across the state. 24 When I say "biotech," most people confuse 25 this with high tech. 1 Biotech is a part of high tech, but in 2 biotech, you take cells or molecules in cells and 3 manipulate them and target them with drugs in order 4 to create therapeutics. 5 It's different than a medical device, it's 6 different than putting a wind vane or a solar panel; 7 all of those are high tech. 8 But biotech has its unique problems, in that 9 the incubation period to product is longer, because 10 there's so much vetting that has to take place. 11 Technology that comes out of the university 12 is not vetted for product development. 13 It has to be vetted in the course of 14 biotechs. 15 It has to be shown to be reproducible; and 16 that is, not everything that's true is necessarily 17 is a product. 18 So this is in the hands of the biotech. 19 And I think what has to happen is that the 20 State has to help us with some kind of oversight to 21 make sure that the husbandry is there, because as 22 the universities are trying to launch companies, 23 they're finding themselves in a very unique position 24 now, and I can tell you I'm right square in the 25 middle of this; is that because I don't have a 1 pharma partner until later on, I have to have 2 fiduciary responsibility to my company for a longer 3 period of time, to navigate all the turns and 4 traverses that will happen in my company to make 5 sure it stays on track and that someone who knows 6 the technology is behind it all the way. 7 I am 100 percent committed, but because of my 8 situation of being a university faculty member, 9 I have to be careful and navigate my conflict of 10 interest. 11 I have to release my fiduciary 12 responsibilities at a time where, nowadays, 13 companies are not mature enough to launch because it 14 will take so much longer to get into clinical 15 trials. 16 So what I'm asking for is not regulation; 17 perhaps allowing people like myself and the 18 university president to adopt new language, and 19 perhaps legislation. 20 What I'm looking for is a Biotech Industry 21 Revitalization and Development Initiative. 22 I call this acronym "BIRDI"; it's because 23 it's one better. 24 It's one better than just simply throwing 25 university technology out in the field, allowing VCs 1 to be the sole gatekeeper who triage it. 2 Because I can tell you, over a cure for HIV, 3 which is nebulous, treacherous, and risky, they'll 4 choose to develop yogurt; which was, the Greek 5 yogurt happened several thousand years before the 6 birth of Christ. 7 Okay? 8 So that's the level of innovation you'll see 9 in the VC community. 10 What would help tremendously, is if the State 11 adopt this so that there was appropriate guidance, 12 mentoring, counseling, and, yes, financial support 13 in the way of grants that are milestone-driven. 14 I'm asking for a significant amount of 15 dollars to be vested, not in high tech specifically, 16 though that's a separate discussion from your other 17 meetings, but specifically in biotech itself, to 18 nurture that industry and protect fledgling 19 companies and people who need to continue to develop 20 their work during this period of time where federal 21 government is not supporting biotech, and where 22 industry, big industry, is not coming to the rescue 23 early. 24 So I think with that, I'll summarize to say 25 that, largely, I am grateful for the opportunity to 1 actually speak at such a thing. 2 It's rare that a faculty member actually gets 3 to come out like this. 4 I think that it's cooperation between 5 academics, small companies, and venture capital; 6 everyone has to pitch in and pull in the same 7 direction. 8 If we do not do that and have state money 9 supporting it, venture capital will continue to 10 restrict the amount of their total budgets of 11 available investment to 5 to 10 percent of their 12 funds, and those are the ones who are interested, 13 and we will not get the support for biotechs. 14 It is a risky proposition. 15 It is the number of opportunities on goal 16 that matter in biotech, because one of us makes it, 17 and it's a blockbuster. 18 It's tens of millions and tens of billions, 19 hundreds of millions, these things come out of the 20 door in ways you can't believe. 21 Yes, four or five will die for every one that 22 makes it, and it's not always because it's a bad 23 idea. 24 It's largely because of the economic climate 25 and the ability to find a strategic partner. 1 New York State can make sure that more of us 2 are coming out into companies, and more of us have 3 an opportunity to thrive. 4 I can guarantee, that if biotech becomes a 5 substantial rail across the state, whoever came up 6 with the idea of SUNY as a system for educating our 7 population, you merge those two concepts, the SUNY 8 creating people who are educated and looking for 9 high-paying jobs with a biotech rail that is capable 10 of providing that, you've got a New York State that 11 is going to be as competitive as California, 12 Florida, Texas, and Massachusetts. 13 So I thank everyone for allowing me to do 14 this; have this opportunity to speak, and I'll take 15 any questions. 16 SENATOR GALLIVAN: You're smarter than all of 17 us. 18 [Laughter.] 19 SENATOR GALLIVAN: But it's interesting, what 20 we have heard in most places, is get government out 21 of our way. 22 But you're articulating a need for state 23 government to be involved in this area? 24 HAROLD SMITH: In the form of grants. 25 And -- and so the hardest thing is government 1 relations and investor relations. 2 SENATOR GALLIVAN: But you mentioned 3 New York State oversight. 4 What do you mean by the "oversight"? 5 In the way of grants, or -- 6 HAROLD SMITH: In the way of a grant. 7 So we were the beneficiary of the 8 Blueprint Award; the Empire State Blueprint Award, 9 which helped us out at a critical time. 10 We then picked up a Bill and Melinda Gates 11 Foundation. 12 These were in the ilk of a hundred to 13 two hundred thousand. 14 A grant that would help start a biotech move 15 from the university where it's protected and 16 seminars are taking place, and you're really not out 17 there. 18 You're not totally committed, as long as 19 you're a university professor, to create a product. 20 Okay? 21 You do great discoveries, you publish papers, 22 but you cannot actually create a product. 23 What we need is New York State to actually 24 say, We will incentivize the university and faculty; 25 understanding that there is now a protracted period 1 of time of husbandry that's necessary in order to 2 get products to market. 3 And that will require a committee at the 4 state level that understands what the denominator 5 is: 6 How many companies we have, and what is the 7 diversity of technology? 8 And what is the potential earnings if all of 9 them were maxed to a maximum intake? 10 California has commissions. 11 Massachusetts, Texas, Pennsylvania, all the 12 states that have successful biotechs have a group of 13 senators and assemblymen who are dedicated to 14 understanding, What are the needs of that community? 15 We have nothing like that. 16 SENATOR GALLIVAN: You mentioned in your 17 written testimony, you also threw out the idea of 18 low-interest loans. 19 HAROLD SMITH: Yes. 20 SENATOR GALLIVAN: Is that workable? 21 HAROLD SMITH: Yes, that will be workable. 22 For example, the Blueprint Award is a loan, 23 and if we meet all their milestones in employment, 24 then it's given to us as a grant. 25 So there is lot of carrot, but there is a 1 stick as well on that; and I think that that works 2 pretty well for us. 3 Outright gift of money, of course, is always 4 appreciated. 5 But, I think we have to look at this as 6 something that, the state has to try to understand 7 what we have in order to know where we're going. 8 And that's what this commission, whether it's 9 dissolved afterwards, or whatever, we have to come 10 together as a state and understand what it is that 11 we can build. 12 Rather than having random things happen here 13 or there, one sector decides it's stem cells, and 14 another sector decides it's cancer, how do we know 15 that that's coordinated well? 16 Everyone's competing on their own. 17 There's no unified method. 18 And the venture-capital community, largely, 19 is going to triage things based on return for their 20 investors. 21 They will go for yogurt before they go for a 22 cure for AIDS, and that's a problem for us. 23 If that's all we have as access, and the 24 federal government has abandoned us, this is going 25 to be a massive struggle. 1 Companies are going die off left and right, 2 because they get just to the point, and then they 3 can't make payroll. 4 So the State could be enormously helpful as a 5 companion in this. 6 SENATOR GALLIVAN: Thank you. 7 SENATOR ROBACH: I don't want to digress too 8 much, but, you know, because this is all really 9 about, for me anyways, is how we can make more jobs 10 in New York, and that's good. 11 And so it's sort of changed because, what we 12 sort of heard before was that, the privates, which 13 I always thought was interesting, because, 14 California, despite what you read, and 15 Massachusetts, really, you know, we're comparable in 16 costs, I would almost make the argument, in 17 Upstate New York it's cheaper to do business than it 18 is in Massachusetts or most parts of California, 19 with more reliable energy in other places, maybe not 20 Carolina, maybe not Texas. 21 But, you think it's really much, much more 22 than that, I'm hearing you say, on even the 23 investment side, which is shocking to me, because -- 24 so, there's all this money in the pharmaceutical 25 industry, and that's the part we always seem to 1 miss, at least in Rochester. 2 So they've even created some vaccines, or 3 HP -- but, the vaccines are never made here. 4 The technology goes somewhere else to be 5 manufactured. 6 They're investing somewhere. 7 Maybe it has to be some kind of -- maybe if 8 we get more of a reputation, they'd be more willing, 9 private and public money, to go into it. 10 I don't know, do you have a comment on that? 11 HAROLD SMITH: We have to try to build it in 12 New York. 13 There was a point in time where downstate had 14 an enormous production facility. 15 It became too expensive to do it down there. 16 The Alexander Research Center has put 17 together -- it is the Taj Mahal. 18 Most people would give an arm in order to 19 work there, right? 20 It is the Alexander Research Center, and it's 21 set up with a lead faculty working inside of it, 22 with pharma fishing the edges for a good idea. 23 What's missing there, in my personal opinion, 24 is the lack of deliberateness. 25 If you have academics doing science, they 1 pursue it in an unfettered, unharnessed way to go 2 for discovery. 3 That is the nature of it. 4 Anything short of that is not academic 5 research and discovery. 6 And, so, if you have a group of people who 7 are not product-oriented getting a lot of resources 8 and a lot of money, what you're going to get is a 9 randomized discovery process, which someone else 10 above is pulling out and then taking out of state 11 with you. 12 SENATOR ROBACH: Right. 13 HAROLD SMITH: Right? 14 So what I'm asking for is a highly focused 15 effort by the State to understand, what it is that 16 we can create, what it is that we can do, how to 17 in -- potentiate it within New York, grow it in 18 New York, and make it in New York. 19 We have the people across the entire CUNY and 20 SUNY university system and private universities. 21 My company is staffed solely by 22 New York State graduates, and they are considered 23 among the elite in this area. 24 We are considered now a global leader towards 25 a cure. 1 How did that happen in Upstate New York? 2 Smart people working in a dedicated way. 3 I would love to be able to work with the 4 Senate and the Assembly to come up with appropriate 5 language and appropriate ideas, just from the 6 insider's point of view, to try to give that 7 perspective as a sounding board. 8 So, I really am grateful for the opportunity 9 here. 10 SENATOR ROBACH: Thank you. 11 SENATOR GALLIVAN: Thank you. 12 ASSEMBLYMAN JOHNS: Dr. Smith, one more 13 question. 14 We talked in my office many months ago. 15 I know you came with your ideas. 16 But I just wanted you to mention, you were 17 talking about California, and how much -- what was 18 the figure that they're putting into their biotech 19 industry? 20 Didn't they vote on a referendum to fund that 21 out in California? 22 HAROLD SMITH: I don't actually have the 23 number on top of my head. 24 ASSEMBLYMAN JOHNS: It was a lot. 25 HAROLD SMITH: I'm sorry -- 1 ASSEMBLYMAN JOHNS: We're talking billions; 2 right? 3 HAROLD SMITH: Yeah, yeah, it was approaching 4 a billion. 5 And the point there is very good as well, 6 because if you look at what we have, if you have a 7 biotech community, and one biotech is needing to 8 hire, there's usually people in the immediate 9 vicinity who are well-trained to move in, and so 10 what you end up creating is this critical mass. 11 It's like what President Seligman was saying, 12 you need to create an intelligence critical mass. 13 And, we are scattered in New York. 14 Those 1400 technologies are all over the 15 place. 16 That's the advantage of having a commission 17 that basically says: 18 You know what? 19 What's happening in Syracuse is, 20 Dr. So-and-So has a related company, and that you 21 might benefit from having a JV (a joint venture). 22 And the State could actually facilitate 23 interactions in a way that's unparalleled by having 24 a 5-mile view of what's going on on the ground. 25 It has to come with a lot of money going into 1 it. 2 And as you'll see in my recommendation, I'm 3 recommending $200 million a year dedicated to 4 biotech, each of five years; so, one billion total 5 going in. 6 There is a House resolution that will be 7 dropped soon. 8 You have a copy of that. 9 OyaGen's research and products are 10 specifically earmarked in that House resolution. 11 It's for $3.2 billion, and so that money is 12 dedicated to take us through Phase III of clinical 13 trials. 14 That, with State as a matching fund, imagine 15 how we could finance out biotech. 16 It could really reach that glorious moment 17 for all of us. 18 So, again, thank you. 19 SENATOR GALLIVAN: Thank you. 20 Joanne Thompson from Welch Allyn. 21 JOANNE THOMPSON: Good afternoon. 22 Thank you so much to you all for the 23 opportunity to speak this afternoon. 24 I'm pleased to represent Welch Allyn, and we 25 welcome the opportunity to discuss some of the 1 challenges we have found with the current regulatory 2 environment here in New York State. 3 As many of you probably know, Welch Allyn is 4 a leading global health-care company that offers a 5 complete range of digital and connected diagnostic 6 solutions that help reduce risk and enhance work 7 flow in a variety of clinical settings. 8 Our company specializes in helping doctors, 9 nurses, and other frontline practitioners across the 10 globe enhance care by developing innovative 11 products, breakthrough technologies, and 12 cutting-edge solutions that improve patient 13 outcomes, safety, and satisfaction. 14 Founded in 1915, Welch Allyn is a 15 family-owned business employing nearly 16 2500 employees in 26 countries. 17 Our corporate headquarters are here in 18 New York, in Skaneateles Falls, where we have 19 approximately 1,150 employees. 20 That Skaneateles Falls location is the 21 company's largest manufacturing site producing a 22 wide variety of products, including 23 physical-assessment devices, stethoscopes, 24 cardiopulmonary devices, patient monitors, 25 blood-pressure cuffs, endoscopic devices, and 1 women's health products. 2 For nearly 100 years, we've done business 3 here in New York State, and we're committed to 4 remaining in the state. 5 That said, the current regulatory environment 6 can be complex and challenging to businesses like 7 ours. 8 To that end, we would like the discuss of 9 areas of tax reform, as well as the 10 Medicaid redesign health-technology assessment 11 process. 12 In regard to the taxation, the New York State 13 corporate income-tax system is complex and 14 burdensome, and is one of the primary reasons why, 15 as I think has already been mentioned, where the 16 state is consistently ranked as one of the most 17 challenging states for companies to do business in. 18 And this was based on the Tax Foundation's 19 annual "Business Tax Climate" rankings. 20 We urge the State to consider eliminating the 21 corporate income tax for manufacturers. 22 We also ask that the State consider revising 23 Article 9-A of that tax code to remove the multiple 24 ways to calculate the tax, as this requirement is 25 complex and burdensome. 1 The sales and use tax is also onerous and 2 overly complicated. 3 We believe that the State would have a 4 competitive advantage over other states for New York 5 to consider making the sales and use tax less so. 6 We'd also like to draw your attention to the 7 health-technology assessments that are part of the 8 Medicaid redesign. 9 Health-technology assessments are the process 10 whereby the department reviews certain medical 11 technologies and procedures in order to determine if 12 those technologies and procedures should be covered 13 under the Medicaid program. 14 To date, such reviews in New York have 15 included, among others, certain treatments for 16 lower-back pain, implantable infusion pumps for 17 non-cancer pain, and percutaneous coronary 18 intervention in certain circumstances. 19 It should be noted that medical technologies 20 like these are extensively reviewed at the federal 21 level by the FDA, the Agency for Healthcare Research 22 and Quality, the Center for Medicare and Medicaid 23 Services, and the Patient Centered Outcomes Research 24 Center. 25 We feel that similar reviews at the state 1 level are unnecessarily burdensome and duplicative. 2 While we understand the Department of 3 Health's need to systematically review such 4 technologies and procedures to ensure that the 5 covered medical benefits are both cost-effective and 6 medically effective, but, in each of the above 7 decisions, the department did not provide an 8 opportunity for public comment or participation in 9 that assessment and decision-making process. 10 We would really ask for a transparent and 11 well-informed decision-making process that is -- and 12 feel that that's essential to making fair and 13 equitable decisions regarding health-care coverage. 14 To that end, we ask that the State consider 15 the creation of a health-technology assessment 16 committee. 17 The legislation creating such a 18 health-technology assessment committee has been 19 introduced by Senator Kemp Hannon and 20 Assemblyman Joseph Morelle. 21 We applaud the efforts of these lawmakers, 22 and urge their fellow lawmakers to pass 23 Senate Bill 4509 and Assembly Bill 7528. 24 The health-technology assessment committee 25 proposed in this legislation would provide advice 1 and make recommendations regarding coverage of 2 health technology for purposes of the State Medicaid 3 program. 4 This committee would be comprised of 5 individuals appointed by the commissioner, and would 6 be a cross-section of those who are licensed to 7 practice medicine, nurses, the medical-device 8 health-technology industry, individuals with 9 expertise in health-technology assessment, 10 consumers, and a chair person who is a member of the 11 Health Department. 12 Such a group would meet regularly. 13 Notice of meetings and potential coverage 14 decisions would be made public and interested 15 parties would be allowed to provide public comment 16 as to health-technology decisions that are up for 17 review. 18 Decisions made by this health-technology 19 assessment committee would be based on patient 20 safety and clinical effectiveness, and the 21 commissioner would provide public notice of the 22 final determinations. 23 Again, we'd like to thank you all for the 24 opportunity to speak this afternoon, as well as 25 Senator Hannon and Assemblyman Morelle for their 1 responsiveness and advocacy, and urge their fellow 2 lawmakers to join them in passing these bills. 3 Thank you again for your time this afternoon. 4 SENATOR GALLIVAN: Thanks. 5 Who makes those decisions right now? 6 JOANNE THOMPSON: It's actually hard for me 7 to say because -- I mean, our understanding is, 8 because there is no transparency into that process, 9 they have been, you know, within the Department of 10 Health, but there's no notice that a certain 11 decision will be made or opportunity to participate 12 in that process. 13 SENATOR GALLIVAN: You gave examples, the 14 certain treatment for low-back pain and a few 15 others. 16 Were those treatments or technologies 17 excluded from being reimbursed? 18 JOANNE THOMPSON: I believe so. 19 I mean, I don't know if it's excluded 20 100 percent across the board, or if there are 21 opportunity for exceptions; but, yes, I believe they 22 are excluded. 23 SENATOR GALLIVAN: And the bill that you 24 mentioned, the Hannon-Morelle Bill, essentially, 25 solves the problem? 1 JOANNE THOMPSON: Well, I think those 2 decisions will still be made. 3 And I -- you know, I can absolutely 4 understand -- 5 SENATOR GALLIVAN: All right, but it solves 6 the problems of -- 7 JOANNE THOMPSON: Of the closed door. 8 SENATOR GALLIVAN: -- being well-informed -- 9 JOANNE THOMPSON: Yes. 10 SENATOR GALLIVAN: -- done in the public 11 venue -- 12 JOANNE THOMPSON: Right, absolutely. 13 SENATOR GALLIVAN: -- and an opportunity for 14 all sides to present -- 15 JOANNE THOMPSON: Right, consumer groups 16 and -- 17 SENATOR GALLIVAN: -- why treatments are 18 beneficial? 19 JOANNE THOMPSON: Yeah, absolutely. 20 SENATOR GALLIVAN: Thanks. 21 JOANNE THOMPSON: Yeah, thank you. 22 SENATOR VALESKY: Thank you, Joanne. 23 And I just wanted to point out, I think the 24 Senate has passed that bill already. 25 JOANNE THOMPSON: Okay. 1 SENATOR VALESKY: Hopefully, when we return 2 to session, the Assembly will follow that lead as 3 well. 4 JOANNE THOMPSON: Excellent. 5 That is great momentum. 6 Thank you so much. 7 SENATOR MARCHIONE: You know, I find it -- 8 thank you very much for your testimony, because 9 I would look at that bill as putting more 10 regulations on an industry -- 11 JOANNE THOMPSON: Right. 12 SENATOR MARCHIONE: -- and probably would not 13 support it. 14 I'm going to go back and see whether 15 I actually did support it or not, because I'm very 16 careful to try not to add additional regulations. 17 JOANNE THOMPSON: Sure. 18 SENATOR MARCHIONE: But you did talk about, 19 some of the regulations are duplicative. 20 Does that mean that, on the federal level, 21 are they more stringent? 22 Are New York State more stringent? 23 Are they -- do -- you know, are they more 24 than just duplicative? 25 Are they separate and distinct? 1 JOANNE THOMPSON: I don't know if I would say 2 they're more stringent. 3 I think, you know, the FDA looks at medical 4 devices and treatments from a certain perspective, 5 and the -- you know, in terms of safety and 6 efficacy. 7 And the Agency for Healthcare Research and 8 Quality looks at things from more of a 9 clinical-practice perspective. 10 But, in the Patient Centered Outcomes 11 Research Agency is really starting, you know, under 12 health-care reform, to do that comparative 13 effectiveness research in terms of, Is this, 14 you know, the right procedure and treatment for the 15 money? 16 So -- and that is very similar to what, 17 again, I believe is happening in New York under the 18 Medicaid redesign. 19 And, you know, it may be duplicative. 20 It's something that insurance companies do, 21 too. 22 So I -- you know, it's being done across the 23 board, and I understand the value in doing it, but, 24 it certainly isn't the same exact process in 25 either -- or in, pardon me, any of the agencies. 1 SENATOR MARCHIONE: And not being the same 2 process, though, perhaps we could get rid of one of 3 the processes so you're not doing two? 4 JOANNE THOMPSON: That's fair, yeah. 5 Or, you know, make sure that there -- 6 you know, each has a distinct objective. 7 SENATOR MARCHIONE: Could you give us some 8 specific examples of that? 9 Not here now, but could you provide us with 10 some specific examples of that? 11 JOANNE THOMPSON: Of what the different 12 federal agencies are doing? 13 SENATOR MARCHIONE: Of the duplicative 14 regulations that you're under. 15 JOANNE THOMPSON: Sure, absolutely. 16 Yeah, we will. 17 SENATOR GALLIVAN: That would be very helpful 18 for us in trying to review them. 19 JOANNE THOMPSON: Sure, we will follow up on 20 that. 21 SENATOR MARCHIONE: Thank you. 22 JOANNE THOMPSON: Wonderful. 23 Thank you. 24 SENATOR GALLIVAN: And we actually have an 25 e-mail address that you can send it to, out back. 1 Annie, is Keith somewhere? 2 Can you grab it? 3 Okay, thanks. 4 If you just see the beautiful lady in the 5 back, with the glasses. 6 JOANNE THOMPSON: Wonderful. 7 Thank you so much. 8 SENATOR GALLIVAN: Thank you very much. 9 Mel Kurtz, President of Quasar Energy Group. 10 MEL KURTZ: Good afternoon, and thank you for 11 allowing me to present testimony to the 12 New York Senate Majority Coalition. 13 This is one statement that everybody in here 14 is probably going to agree with: 15 Communicating with decision-makers is 16 critical because innovation always precedes 17 regulation and legislation. 18 Without this type of open dialogue, how would 19 our leaders know what innovation has come to 20 fruition and where it can improve our quality of 21 life? 22 I'm honored to be part of the state's 23 concerted effort to identify and eliminate cost and 24 regulations that strangle business and job growth in 25 the biotechnology industry. 1 My comments will specifically address 2 regulatory and legislative changes that will 3 accelerate the development of the 4 anaerobic-digestion industry. 5 Quasar Energy Group is a Cleveland-based 6 anaerobic-digestion and renewable-energy company. 7 Anaerobic digestion is a natural process in 8 which microorganisms break down organic waste in the 9 absence of oxygen. 10 The process includes receiving organic 11 residuals and reducing their volume through 12 conversion to renewable energy and nutrient-rich 13 fertilizer. 14 Quasar recently completed the construction of 15 two digesters in the Buffalo Niagara region, and we 16 have 14 other facilities operating across Ohio, and 17 one facility in Massachusetts. 18 We are in the predevelopment stage for 19 four additional projects in New York, one is 20 Rochester. 21 Anaerobic digestion is the starting point for 22 sustainable solutions with economic benefits that 23 will affect every New Yorker. 24 The technology presents an immediate 25 waste-management solution for the Greek yogurt 1 industry and all processers of dairy products. 2 From 2007 to 2013, New York's Greek yogurt 3 industry has tripled in size, and for every ounce of 4 yogurt produced, almost three ounces of acid whey is 5 produced and other byproducts that must be managed. 6 It's estimated that approximately 7 150 million gallons of acid whey are being produced 8 each year in the northeast, led by New York. 9 Anaerobic digestion is a solution for 10 managing this waste while generating clean renewable 11 energy that can be sold to adjacent businesses in 12 the form of combined heat and power added to the 13 utility grid, or sold as less-expensive, lower-cost 14 motor-vehicle fuel. 15 Since 2006, Quasar has demonstrated that 16 anaerobic digestion is an economic-development and 17 job-creation reality. 18 Most notable in the process is, every case, 19 it is less expensive than traditional 20 waste-management processes. 21 Our recommended changes, is that anaerobic 22 digestion should not be considered exclusively for 23 on farms. 24 It's a mistake to legislatively pigeonhole 25 anaerobic digestion as a farm-based technology. 1 Excessive interconnection fees and 2 restrictive virtual net metering policies stifle the 3 anaerobic-digestion industry by constraining the 4 development of farm-based applications. 5 New York State Consolidated Laws, 6 Public Service Law, Article 4, caps the 7 interconnection rate for customer generators who own 8 or operate farm-waste electric-generating equipment 9 at $5,000. 10 Under this rule, electricity generated from 11 biogas is capped at 1 megawatt, and must be derived 12 via anaerobic digestion of agricultural waste that 13 is at least 50 percent animal manure. 14 Interconnection fees for digestive projects 15 that do not fall under this rule are not capped, 16 resulting in a disparity of rates between utilities. 17 For instance, the interconnect 1-megawatt 18 digester in West Seneca, New York, NYSEG charged 19 more than $80,000, but, to interconnect a similar 20 1-megawatt facility in Wheatfield, New York, 21 National Grid charged more than $300,000. 22 Whether located on a farm processing manure 23 and milk byproducts or at a merchant site processing 24 similar waste streams and sewage sludge, all 25 same-sized generators should be charged similar 1 predictable fees to interconnect to the electric 2 utility grid. 3 All digester projects should also be afforded 4 the opportunity to benefit from New York's virtual 5 net metering policy. 6 The policy is currently restricted to 7 customer-generated operating farm waste-based 8 electric-generator equipment using biogas produced 9 from at least 50 percent manure. 10 It's important to understand that a digester 11 cannot operate on a diet of 100 percent acid whey. 12 A consistent baseload of material, such as 13 manure or sewage sludge, is required to stabilize 14 the biology. 15 Sewage sludge also improves the economics of 16 anaerobic-digestion projects because of the tipping 17 fees, while sustainably diverting waste from 18 landfills, chemical process, and incinerators. 19 The New York State Department of Economic 20 Development Environmental Investment Program offers 21 grants up to $500,000 towards a project that leads 22 to measurable recycling, pollution prevention, 23 sustainable economic-development results. 24 A program like this has the potential to 25 encourage construction of anaerobic digesters across 1 the state, except, that it specifically excludes 2 waste-to-energy projects and projects that include 3 sewage sludge. 4 To promote an industry that offers lower-cost 5 waste-management solutions while contributing to 6 regional economic-development initiatives and 7 environmental-improvements needs, the program should 8 be revised to include recycling projects that 9 convert waste to energy and sewage sludge as an 10 approved organic material. 11 In conclusion, New York's legislators and 12 regulatory agencies can encourage continued job 13 growth and economic development in the biotech 14 industry and the Greek yogurt industry 15 simultaneously, by extending the interconnection cap 16 and virtual net metering to all digester projects, 17 and by expanding the environmental-investment 18 program to include waste-to-energy projects with 19 sewage sludge. 20 If this public hearing encourages legislators 21 and regulators to consider the bigger opportunity 22 for anaerobic digestion, on or off farm, they could 23 set in motion a transformation that will be truly 24 meaningful in New York, its residents, and business 25 owners. 1 And I can tell you -- 2 Thank you for inviting us. 3 I can tell you that some of the things that 4 you're doing today, being from Ohio, you can do 5 this. 6 We had 18-month permit process, our first 7 digester. 8 Now it's two weeks. 9 Same permitting -- 10 SENATOR GALLIVAN: In Ohio? 11 MEL KURTZ: In Ohio. 12 And some of the interconnect as well. 13 We would love to build these numerous 14 digesters right along the 90 Corridor, all the way, 15 frankly, to New York City, with our partner that 16 some of you might know, Forest City Enterprises. 17 And some of these things, it's not just the 18 money; it's the time for them to do. 19 So one caveat to what I'm suggesting is, give 20 me performance criteria. 21 It took over a year and a half for them to do 22 an interconnect in our Buffalo facility. 23 It still isn't done. 24 The complete plant is built, everything's 25 sitting there, and we still have to wait for their 1 test criteria. 2 So, that's what I have to say. 3 Thank you very much. 4 Any questions? 5 SENATOR GALLIVAN: Thanks. 6 Yes. 7 I think your statement at the beginning, that 8 the innovation always precedes the legislation and 9 regulation, probably has something to do with the 10 focus on the anaerobic digesters on the farms in 11 New York State. 12 While I don't know it, I think it's probably 13 an educated guess that that's where they first 14 started, and that's where -- that's where they first 15 started, and that's where regulations and/or laws 16 were developed. 17 And there's been some change to catch up to 18 that. 19 MEL KURTZ: Yeah, I can't -- I can't answer 20 where it started. 21 I can tell you that there's a half a dozen 22 digesters in the state of New York that are merchant 23 facilities, and there's 4,000 in Germany. 24 Germany's the size of Montana. 25 SENATOR GALLIVAN: I'm aware of that. 1 But there was some recent change in the 2 requirement of 50 percent -- at least 50 percent -- 3 MEL KURTZ: Manure. 4 SENATOR GALLIVAN: -- in farm waste? 5 MEL KURTZ: Yeah. 6 SENATOR GALLIVAN: I think that was just 7 reduced from 75 percent. 8 MEL KURTZ: Could be. 9 SENATOR GALLIVAN: So there was some 10 recognition of that. 11 But that aside -- 12 MEL KURTZ: Going in the right direction, 13 then, Senator. 14 SENATOR GALLIVAN: Yeah, no, no, 15 I understand, but I get your point, overall. 16 Here's the question that I have: 17 The waste-to-energy projects and projects 18 that include sewage sludge, what do you do -- of 19 course, I understand the renewable energy, but now 20 you have that other liquid byproduct that comes out. 21 What do you do with it? 22 MEL KURTZ: That's the challenge. 23 Until we educate the populace, until we 24 convince them that it's not some of the -- it was 25 really a surprise to our company, in this area of 1 the state, the volatile nature of the responses 2 based on misinformation. 3 So we did a bad job of educating the 4 populace, collaborating with the Legislature, and 5 even endearing ourselves to Cornell and other farm 6 enterprises. 7 We're on the mend. 8 We're -- that's a very high priority for us. 9 And the reality of it is, it's, certainly, no 10 one would argue that it's better than -- that it 11 isn't much better than incineration; that it isn't 12 much better than chemical processes, quicklime and 13 other; and, I guess there's some debate about, if 14 it's better than going to a landfill. 15 But the reality is, farmers that are applying 16 chemical fertilizers instead, are doing no better 17 job than what's already gone through the food-chain 18 process and goes back to the farm fields. 19 SENATOR GALLIVAN: Well, the 20 anaerobic digesters that I'm familiar with that are 21 on farms, they're applauded in the agriculture 22 community. 23 MEL KURTZ: Of course. 24 SENATOR GALLIVAN: And I'm aware of some of 25 the challenges that you're facing. 1 Where does the difference in the byproduct -- 2 MEL KURTZ: There is none. 3 SENATOR GALLIVAN: -- the end results from 4 the process? 5 Not the energy part of it; the liquid that -- 6 MEL KURTZ: There really is none, because any 7 of the volatile is converted. 8 The volatile organic compounds are converted 9 in the process, so what's left is, the nutrients; 10 and the nutrient that come in is the nutrient that 11 leaves these digesters. 12 So what we do then is coordinate -- is 13 calibrate the nutrient to the corresponding chemical 14 fertilizer so we know what the application rates are 15 for our farm. 16 Test the soils, work with their crop analysis 17 for the rotations, and so forth. 18 So it's probably the first time in a long 19 time that there's really been science attributed to 20 the process, as opposed to, I spent $200,000, but 21 oil price went up so I'm going to spend $250,000 for 22 chemical fertilizers and apply the same amount. 23 At least with this process, and it's a big 24 deal in Ohio, where we're now looking at nutrient 25 management, not just land application and runoff and 1 some of the bad things that you all are familiar 2 with, is testing soils before, testing soils after, 3 having stream monitoring, and a bunch of associated 4 things, as well as confirming that the application 5 matches their farming structure and their crop 6 rotations. 7 So it's really -- it really makes one and one 8 equal three. 9 It's a really good thing. 10 And we just have to get rid of some of the 11 emotion, and I hope that education allows us to do 12 that, and calmer responses will prevail. 13 SENATOR GALLIVAN: I do know Quasar has met 14 with some people on our staff -- 15 MEL KURTZ: And thank you. 16 SENATOR GALLIVAN: -- to help educate our 17 office about the process, so, we appreciate it. 18 MEL KURTZ: Thank you. 19 SENATOR ROBACH: I just wanted to ask a 20 question. 21 I know we had worked, and you had mentioned 22 this, Senator Maziarz and myself and others on that 23 net metering bill, which really was an incentive to 24 have people use solar, and, really, wind, even on 25 their farm or their own home if they were in the 1 right areas -- 2 MEL KURTZ: Sure. 3 SENATOR ROBACH: -- and then made it 4 financially beneficial for them, if they produced 5 more than they used, to sell it back for almost what 6 they would buy it for from the energy company. 7 Is that what they -- how did they -- is that 8 what they did in Ohio to get this going? 9 Because you -- 10 MEL KURTZ: Well, we don't have net metering, 11 so New York is ahead of us. 12 Pennsylvania has it, New York has it, and 13 there's another state that does. 14 But, the significant difference is that the 15 cost of per kW is a fraction. 16 I mean, we get paid to make energy. 17 We don't -- our coal, it comes in the form of 18 tip fees for all these waste streams, so, nobody 19 makes energy for less than an anaerobic digester 20 does. 21 The problem is, it's so efficient, we make 22 much more than can be consumed in that typical 23 location. 24 So the virtual net metering allows us, for 25 example, to earn 8 cents a kW, or 9 cents, than what 1 we get when we put it on the grid, which is 4 cents, 2 and that reduces substantially the economic payback 3 for -- in Ohio, in most of our applications, our 4 payback could be 4 or 5 years. 5 In New York, right now, it's six or seven. 6 Change that net metering, that virtual net 7 metering, we drop six months in our payback. 8 SENATOR ROBACH: I was curious, and I don't 9 know if this is fair question, or you know it, so, 10 let's say, if we started utilizing this for every 11 aspect, from energy, or you even almost talked about 12 having a pipeline to New York City, which always 13 needs, New York City and that, for energy, which may 14 sound funny coming from me, the big promoter of 15 New York City -- 16 I'm being sarcastic. 17 MEL KURTZ: I'm just glad to be here, 18 Senator. 19 SENATOR ROBACH: -- and you're from Ohio, 20 but, seriously, how many jobs, like, to run one of 21 these? 22 Does it depend on what the size is? 23 What would be the employment and construction 24 and operation of a facility like this if it became a 25 fairly major energy source? 1 I mean, obviously, they're doing it in 2 Europe, where they don't have the space. 3 MEL KURTZ: Sure. 4 Here is the downside of an anaerobic 5 digester: 6 The jobs are primarily during construction. 7 Operations would be trucks and ag 8 opportunities. 9 That's the bad side. 10 But everybody talks jobs, and I don't -- 11 I wouldn't pretend to know what you're doing more 12 than you do, but I would offer this: 13 I think some of the jobs that have been 14 created are part of the reason for the dilemma we're 15 in, economically. 16 Productivity should be the objective, from 17 our standpoint. 18 So when we can take a wastewater treatment 19 plant and convert to it twenty-first-century 20 technology and we need three people, where they're 21 presently using 43 -- 22 And we just did that in Ohio, at a -- in the 23 city of Wooster, Ohio. 24 -- I think we win. 25 Now, what are we gonna do with those other 1 people? 2 That's where the training and the creativity, 3 and all the other things, but at least we have the 4 money, the savings, and the opportunity to decide, 5 as opposed to it being jammed down somebody's throat 6 and saying, Hey, just work there. 7 And it's kind of like the reincarnation 8 story: 9 4:30 on Friday night, the dead come back to 10 life at a lot of facilities; it's quitting time. 11 Okay, thanks. 12 That was my attempt at a joke, everybody. 13 SENATOR GALLIVAN: I got them both. 14 MEL KURTZ: Thank you. 15 So thank you very much. 16 SENATOR GALLIVAN: We're good. 17 Thank you. 18 Tom Fitzgerald, president of OyaGen. 19 You guys together? 20 TOM FITZGERALD: Yes, we are. 21 We spend a lot of time together, as a matter 22 of fact. 23 SENATOR GALLIVAN: I pronounced the company 24 correct, didn't I? 25 TOM FITZGERALD: OyaGen, yes. 1 There's a prize we give out for correct 2 pronunciation. 3 SENATOR GALLIVAN: When you're ready. 4 Thanks for being here. 5 TOM FITZGERALD: Good afternoon, Senators and 6 Assemblyman. 7 My name is Tom Fitzgerald, and I would like 8 to thank you for this opportunity to share some 9 thoughts on biotech regarding the opportunities and 10 challenges that face us in the Upstate New York 11 area. 12 I've been involved in the development and 13 regulation and marketing of pharmaceuticals for the 14 past 25 years. 15 I've worked for a number of large and small 16 U.S. and European biopharma companies, including 17 SmithKline Beecham, Pfizer, here in Rochester, and 18 ADVANTIS. 19 During the time I've worked with or led -- 20 have worked with, led, or advised a range of 21 businesses in the development of regulation, 22 commercialization of therapeutics, drug-delivery 23 systems, and medical devices. 24 Over the past few years, I've had the 25 opportunity to work with a number of early-stage 1 companies in the life science area, including 2 several located in our region. 3 I've also advised various 4 economic-development authorities in the U.S. and 5 Europe on their efforts to generate and attract 6 early-stage businesses in life science. 7 My perspective reflects those experiences. 8 I'm currently the president and 9 chief operating officer of OyaGen, a University of 10 Rochester spinout founded by Dr. Harold Smith, who 11 you heard from earlier. 12 OyaGen is engaged in the discovery and 13 development of a range of promising drug candidates 14 for the treatment and functional cure of HIV. 15 I'm also involved with several other 16 early-stage life science companies. 17 Based on my personal experience, New York has 18 the potential to and should be a leader in 19 biosciences, not only in the academic sense, but as 20 a key driver in making available the drug products, 21 devices, and diagnostics that improve our health and 22 quality of life. 23 In my opinion, Upstate New York has the real 24 potential to emerge as a biotech hub. 25 It has much that is essential to attract and 1 foster the development of biotechnology. 2 We have world-class research institutions, 3 colleges, and hospitals driven by faculty and 4 researchers with the skills and creativity to 5 generate innovative approaches to the diagnosis and 6 treatment of important diseases. 7 The region's history speaks to the 8 entrepreneurial spirit in our people, and the 9 evidence is their skill in innovation and the 10 generation of intellectual property which is the 11 lifeblood of biotech. 12 Our people are remarkably well-educated in 13 life science and the ancillary disciplines, and 14 skills necessary to develop and grow biotech 15 businesses. 16 This notably includes the graduates of our 17 many universities and colleges who have and will 18 commit to staying in the region if meaningful career 19 opportunities, such as those offered by the 20 life science companies, were available to them. 21 Beyond our local human resources, the region 22 offers quality of life and style of life that enable 23 young scientists and executives access to affordable 24 housing in a cultural environment that easily 25 outweighs our, at times, challenging winters. 1 However, biotechnology in New York, 2 particularly in Upstate New York, is not thriving, 3 and the small victories of individual localities are 4 too often the result of the individual skills and 5 luck of the local entrepreneur rather than the 6 result of the comprehensive plan to develop biotech 7 as an engine of economic growth. 8 Biotech has particular needs to flourish that 9 require understanding and nuance that is known 10 within the biotech industry, but is often difficult 11 to grasp by those not engaged in it on a day-to-day 12 basis. 13 The time to market, required capital 14 investment, the importance of intellectual property, 15 the rigors of the regulatory path to market, and the 16 international competitive environment require a 17 sophisticated understanding that cannot be fully 18 appreciated from the periphery. 19 Too often you see public monies intended to 20 support advanced biotech yield too little or no 21 result because it is spread too thin across 22 competing local companies loosely grouped as 23 high tech. 24 Often money is committed to public and 25 private institutions with interest and focus that 1 are not primarily biotech. 2 Seed-stage investment and early-stage 3 financing are too often only available outside 4 New York State, which puts immediate pressure on the 5 founders to locate closer to the funding, or to go 6 through the time and expense of fundraising away 7 from home. 8 Responsibility for many of the current 9 efforts to encourage local biotechs are entrusted to 10 entities that have investment portfolios too 11 broad-based in scope and geographically diffused to 12 significantly alter the current situation. 13 As a result, most of our biotechs are running 14 in place or becoming dormant for lack of meaningful 15 funding, inadequate equipment, and services in the 16 exodus of experienced biotech professionals from the 17 state. 18 Early-stage biotechs face a number of 19 challenges to success. 20 Some of these challenges are true to all 21 early-stage life science businesses, not just those 22 in New York. 23 We are familiar with companies that have 24 experienced clinical failure or unanticipated 25 adverse events in the development process. 1 However, these fledgling biotech businesses 2 thrive best when they have access to experienced 3 management, experienced scientific talent, 4 increasingly sophisticated equipment, and specialty 5 and expertise of services to provide them support. 6 They need access to these things without 7 unnecessarily stripping away the limited and 8 difficult-to-get cash resources that drive product 9 development. 10 There are several challenges and 11 opportunities to our biotechs which New York State 12 government is in a position to address. 13 New York's lack of a concentrated, integrated 14 biotech infrastructure limits New York's ability to 15 efficiently and effectively tie it to the global 16 biotech -- bioscience community in the way that 17 New York and San Francisco do -- does. 18 Exploited by -- upstate is financially 19 manageable and livable, and this isn't exploited by 20 the State. 21 New York State government could play a 22 pivotal role in creating a biotech hub, or several 23 hubs, which build on the existing but scattered 24 local efforts in infrastructure that now exist. 25 In the establishment of these biotech hubs, 1 New York could implement a coordinated support 2 system for biotechs to enable shared access to 3 biotech-appropriate facilities, state-of-the-art 4 equipment, subject experts and service providers, to 5 encourage and incentivize biotechs to locate their 6 operations in proximity to these centers and other 7 biotechs. 8 By encouraging collaboration, including cost 9 sharing, for some of the employees, management, and 10 technical experts, and support service in the 11 early-development stages, the drain on the biotechs' 12 vital capital will be reduced. 13 This capital could enable biotechs to 14 experience a gradual and manageable growth process 15 unburdened by institutional overhead and the whims 16 of venture capital. 17 In doing this, the state will begin to grow 18 the infrastructure and develop the critical mass 19 necessary to sustain long-term growth in the sector. 20 New York lacks a coordinated effective public 21 advocacy for the distinct needs of biotech. 22 Perhaps a commission or working group, as has 23 been suggested, of industry experts and executives 24 would be useful to give focus to this initiative. 25 States that have been successful in 1 establishing biotech hubs do not do so by accident. 2 Each recognize the potential value of biotech 3 and committed the resources that enabled them to 4 become a dynamic economic-driver for their state's 5 economy. 6 In recent years, Europe has also begun to 7 aggressively recruit existing U.S. biotechs and 8 their personnel with an attractive range of 9 incentives to relocate or establish research and 10 development activities offshore. 11 Both the states and the European countries 12 have offered examples of programs and approaches 13 which New York could select and model after. 14 I believe there is an opportunity for 15 New York to emerge as a significant force in 16 biotech, but it requires commitment and 17 follow-through. 18 The increasing number of biotechs emerging 19 across the state indicates that something is going 20 on here and needs the encouragement of state 21 government. 22 I thank you for the opportunity to share my 23 thoughts. 24 25 1 SENATOR GALLIVAN: Are there other states, 2 besides California and Massachusetts, that have 3 focused on this? 4 TOM FITZGERALD: Yes. 5 Obviously, Research Triangle Park in 6 North Carolina is a significant hub, but, we've seen 7 activity in the Philadelphia area. 8 And in, particularly, Florida, in the 9 Gainesville area, has a very active program that's 10 the early staging, and could be the basis for 11 modeling on how they've created the resources and 12 the infrastructure, physical infrastructure, that 13 has become an attracting force for these emerging 14 companies. 15 SENATOR GALLIVAN: Great, thanks. 16 TOM FITZGERALD: Thank you. 17 SENATOR GALLIVAN: Thank you. 18 Dr. Larry Buckley from the School of 19 Life Sciences, Rochester Institute of Technology. 20 DR. LARRY BUCKLEY: Thank you. 21 Good afternoon, Senators and Assemblyman. 22 Thanks very much for allowing me to speak 23 with you today concerning biotechnology in 24 Upstate New York. 25 Your initiative in calling for hearings 1 related to the health of biotechnology in the region 2 is very timely. 3 I'm happy to provide you with an update on 4 the role that RIT has played, and will continue to 5 play, with New York State, preparing a biotechnology 6 workforce, and impediments to that endeavor as well. 7 Identifying some of those I know is a key 8 component of what you all want. 9 Just a brief history of our shared work 10 together: 11 The Rochester Institute of Technology in 12 New York State have had a long and productive 13 relationship working together to promote 14 biotechnology and bioscience in Upstate New York. 15 The New York State Senate-supported 16 1999 workforce study at RIT found that levels of 17 workforce training, up to that point, were 18 insufficient to meet the demands of a growing 19 biotech and bioscience industry in the region. 20 The study also identified that the 21 upstate region lacks sufficient advanced biotech 22 training for the professional-development needs of 23 existing biotech professionals in the area. 24 So, both, we needed more workforce, and we 25 needed professional development for people who were 1 already in the workforce, and neither one of those 2 were sufficient a decade ago. 3 So, in 2003, New York State Senate and 4 Assembly partnered again with RIT to fund the 5 RIT Center for Biotechnology Education and Training, 6 which is a 38,000-square-foot state-of-the-art 7 facility dedicated to providing education and 8 training for the type of workforce that was needed 9 to support the projected growth in the biotechnology 10 and bioscience industries. 11 The facility continues today to provide 12 industry support and K-through-12 partners with the 13 essential training and consulting services for the 14 promotion of biotechnology and bioscience. 15 The RIT biotechnology program itself is 16 enjoying its 30th anniversary this year. 17 We had the very first biotechnology program 18 in the nation at RIT; we're very proud of that. 19 During its history, the program has grown 20 steadily and provides extensive hands-on laboratory 21 study. 22 We have over 1500 graduates out of that 23 program in the last 30 years, and more coming every 24 year. 25 The enrollment and support for biotech and 1 bioscience at RIT goes beyond, though, just our 2 biotechnology program. 3 It extends into 350 students in the entire 4 college of science, but, also, new bioscience 5 programs at RIT include: 6 In 2007, a biomedical sciences program that 7 now has over 250 students in it; 8 And a brand new program -- we call it brand 9 new -- in 2010, in biomedical engineering, that also 10 supports workforce-development students; another 11 250 to 300 students in that program. 12 So, right now, all the biotech and bioscience 13 programs combined at RIT are pushing 850 to 14 1,000 students currently enrolled, and that number 15 goes up every year. 16 So we're looking at somewhere in the order of 17 150 to 200 graduates a year of biotech and 18 bioscience professionals that are available for the 19 workforce. 20 So, it's getting better. 21 The CBET (The Center for Biotechnology 22 Education and Training) also provides the resources 23 in the form of professional-development 24 opportunities for local K-through-12 districts, 25 administrators, and instructors. 1 These services can be very customized, and 2 districts can set up workshops, and learn the 3 state-of-the-art biotechnology procedures with PIs 4 at RIT. 5 The workforce skill-set needs, and how bio -- 6 and how bachelor's degrees and master's degree can 7 help that, is a part that I wanted to speak with you 8 about, because it's become apparent to us at RIT 9 that the growth of bio-related disciplines on our 10 campus, and the interest in them, has quadrupled in 11 the last 10 years such that we're seeing a need for 12 graduate programs. 13 So what we have found, is that the 14 traditional biotechnology foundations, which are the 15 ones I listed -- they're, microbiology, which is 16 working with the organisms we've been hearing about 17 today, [unintelligible], bacteria; molecular 18 biology, which is DNA technologies; and tissue 19 culture, which is working with the non-bacterial 20 cells, like ours -- those are the foundational areas 21 of biotechnology, and those always will be, and they 22 have become enhanced and they've flourished as 23 technologies, and even increased to the point where 24 whole genome sequencing; that's sequencing every 25 gene in the body, has gotten to the point where 1 we've gotten, under $1,000, genomes sequenced, all 2 right, and those costs are coming down every year. 3 What we're finding now is that the needs of 4 the biotech and bioscience industry are not only in 5 students that can do those three traditional things, 6 but also in students that can do the analytical end. 7 And, that includes things like 8 bioinformatics; so, they need to be able to handle 9 big data. 10 And those types of challenges are things 11 we're now ramping up to provide. 12 The biomedical engineering program, which is 13 our newest program, provides students with that -- 14 those foundational STEM discipline principles; they 15 learn all of the basic principles, but then they 16 learn, through undergraduate research, how to turn 17 those principles into innovative discovery and the 18 translational science that institutions, like the 19 U of R, provide for us. 20 What we've seen in the sense of additional 21 analytical necessity, is that so much data is coming 22 out now from tissue-engineering studies and the 23 genomics projects today that -- and, just to give 24 you a scale: 25 When I did my dissertation many years ago, 1 the amount of data that came out would probably take 2 one of my students about a week to produce now. 3 So my students can work a summer and produce 4 10 times more data, in terms of DNA sequencing, just 5 because of the costs and productivity increases in 6 those fields. 7 And that's only gonna get bigger; at least 8 the people that I go to meetings and talk to now say 9 that that the cost per data is going down every 10 year. 11 What this has led us to do is to perform a 12 study of all of our programs, to discover, with 13 external advisory boards, whether or not we need to 14 ramp up and go to additional programs besides just 15 our BS programs. 16 Perhaps MS programs, and maybe even in the 17 future, Ph.D. programs, and the reason for that is 18 twofold: 19 First, the traditional disciplines of 20 biotechnology, which are molecular biology tissue 21 culture, those have advanced tremendously. 22 We now have tissue engineering going on in 23 labs at RIT in which there are real answers for 24 therapeutic needs in tissue engineering, such as 25 burn repair, and many, many others, such that the 1 traditional skills of a biotechnologist that were 2 wet-bench skills are now so far advanced, that it 3 may be the case that students, in addition to 4 undergraduate research, actually need a graduate 5 degree, just to have the wet-lab bench experience to 6 do those things. 7 Secondly, they need to be kind of nerdy, like 8 our kids are at RIT. 9 [Laughter.] 10 DR. LARRY BUCKLEY: They need to be computer 11 geeks; they really do. 12 These kids -- and most of them coming in know 13 that ahead of time. 14 They need to be comfortable with big data, so 15 that when we say to a student, We're going to do 16 some DNA sequencing and 3 billion base pairs are 17 going to come at you on a DVD, they need to say, 18 "What?" 19 They don't need to say, Gosh, I can't do 20 that. 21 They need to say, Oh, yeah, we do that all 22 the time. I downloaded that last night. 23 Which is what they say about other things; 24 right? 25 So new -- students training for biotech now 1 are different than they were a decade ago, and we're 2 recognizing that and we're attempting to respond to 3 that. 4 Okay, so, now, to get to your specific 5 questions about things that we can do, because RIT 6 is a little bit different than the other presenters 7 here today, in that we're on the end of the pipeline 8 that's producing the workforce. We're not really on 9 the regulatory end of the pipeline. 10 However, that doesn't mean that we're okay 11 with all the regulations that are out there. 12 It just means that, you know, we're at the 13 beginning of the pipeline; we're attempting to 14 provide the workforce. 15 The folks who, in the past decade, have built 16 up the strong biotech and bioscience curricula at 17 RIT, and the buildings as well, have told me, and 18 companies in the area that I've spoken with, have 19 let us know that available workforce, high-quality, 20 high-trained professionals, is one of the most 21 attractive components of a decision to bring a 22 biotech company to a region. 23 And so that's why RIT is so passionate about 24 producing those individuals. 25 And right now, yes, a lot of them go away 1 from Rochester, but some stay. 2 When they go away, it is not because of the 3 region; it's because the jobs are either here or not 4 here. 5 That's the only reason. 6 The region has lots of high-quality-of-life 7 reasons to stay in the Western New York region. 8 So the first thing that we would recommend, 9 is that we reassess and update the 1999 Workforce 10 Study to find out three things: 11 What progress have we made since 1999? 12 I think that's the easiest one to do, because 13 we can just do the numbers. 14 The second one is, what areas need 15 improvement? 16 We know, for instance, the next-generation 17 sequencing is producing, orders of magnitude, more 18 data than it was, and 10 years ago, we weren't 19 training students to deal with that much data. 20 We need to do that now or they're not going 21 to be that high-trained workforce that companies are 22 gonna want when they come to the region. 23 The third is, we need students to also be 24 updated in their wet-bench skills. 25 Those wet-bench skills that were cutting-edge 1 10 years ago aren't as cutting-edge now. 2 The basics are still there, but they've been 3 built upon, such as tissue engineering. 4 We also need studies compiled from our 5 graduates to assess their success; right? 6 And we're reaching out to our graduates all 7 the time to ask them the question: 8 Were you successful? 9 How were you successful? 10 How could we improve our program so that it's 11 more successful? 12 And then an assessment, an examination of 13 biotech and bioscience programs, with advisory 14 boards, are things that we're doing internally. 15 The next thing that I'd like to address is 16 this controlling of costs to both students of 17 biotech and bioscience education. 18 RIT has one of the lowest tuitions of private 19 schools, and we've gone to great pains, and we're 20 very proud of that. 21 I looked at colleges with my daughter last 22 year, and RIT looks real good. 23 Of course, she wouldn't go to RIT because her 24 father lives in this city, right, and our Rochester 25 schools are off the list. 1 But, nonetheless, RIT looked really good, and 2 we're very proud of that, as a faculty at RIT, that 3 we can say we are giving a top-quality education 4 and, for a private school, it's one of the lowest. 5 Right? 6 Keep the student-loan rates low; right? 7 That's another way, it's kind of an obvious 8 one. 9 We need to control costs to both educators 10 and to industry, and one of those ways might be to 11 leverage buying power between university, state, and 12 federal labs. 13 What I hear from presidents of companies and 14 biotech companies that want our graduates, is the 15 key impediments to them, in addition to the 16 regulatory impediments, are of the costs that those 17 regulatory impediments impose on them, and the cost, 18 for instance, of just hiring a co-op. 19 So, our students do a lot of undergraduate 20 research projects that they get credit for, but what 21 employers would really like is to offer them a 22 co-op. 23 And when employers get enough money, they do 24 that, and that's what they prefer, because they get 25 more buy-in from the student when they do that. 1 So making those things more possible and 2 controlling costs, so that more of that money is 3 avail available for co-ops, is a good thing. 4 We need to also streamline the process and 5 set up a maintenance of animal-care facilities. 6 These right now are so costly to do, that we 7 don't -- we have the floor space for animal 8 facilities, but we don't set it up, because, 9 primarily, I have to say, these are federal 10 problems, federal regulations, for doing so, and 11 they're prohibitively expensive. 12 To give you an example: 13 It used to be the case that, to set up an 14 animal facility, you simply had to have it 15 NIH-assured through a process working with OLAW. 16 Right? 17 Now, you can't just go to OLAW and get your 18 animal facility NIH-assured. 19 You, at the same time, have to have an 20 R01 NIH grant funded simultaneously in order to get 21 that animal facility assured. Both have to happen 22 at the same time. 23 Consequently, I think we only have 24 three areas in the entire Rochester region -- the 25 entire neighboring region that even have NIH-assured 1 labs. 2 And guess what all of our PIs that we want to 3 bring in as interviewees say to us? 4 "Do you have an animal facility?" 5 "Can we use mice models here?" 6 Right? 7 These are just white mice. We're not talking 8 about anything fancy. 9 Right? 10 And so that's a huge area where I think maybe 11 we can help one another to understand how to lower 12 those impediments. 13 A big one here is keeping principle 14 investigators and their students in their labs. 15 The only way RIT can continue to produce a 16 competitive workforce, students that are valuable to 17 employers, is if they get that hands-on wet-lab 18 experience, and now dry-lab experience with big 19 data, while they're as -- while they are an 20 undergraduate. 21 They primarily, most valuably, do that 22 through an undergraduate research experience, so we 23 need to keep state and federal funding levels 24 consistent. 25 We also need to fund the types of activities 1 that universities -- that allow universities to get 2 students into labs. 3 These are undergraduate research co-op 4 programs in summertime, and then stipends for 5 graduate students. 6 Lastly there, I'd like to make a play -- make 7 a play for really pushing on STEM education. 8 We really need to get the message out there 9 to K through 12 that "STEM" is cool; science, tech, 10 engineering, and math are cool, they should go into 11 it, students should go into it. 12 We can do that by summer camps, which CBET 13 already does. 14 We can do it by supporting teacher-led school 15 initiatives; what the Rochester City School District 16 is trying to do right now. 17 We can do it through charter schools; which 18 RIT is partnering with the Rochester City School 19 District right now to do. 20 The reason for that -- 21 And I'll tell you this as a side note. I was 22 writing some notes while I was listening to 23 everyone. 24 -- we've seen thru interviews with students 25 in our enrollment numbers, a shift in our biotech 1 and bioscience enrollments at RIT away from the word 2 "biotechnology" into biomedical engineering and 3 biomedicine. 4 Now, these programs and these students share 5 many of the same classes. 6 Our students take many of the same core 7 courses, but the perception to 18-year-olds, when 8 they're looking at programs at RIT, are that, 9 there's something not quite as attractive about 10 biotechnology than there was 10 years ago. 11 But bioengineering, or biomedical science, 12 even when the curricula might only differ in six or 13 eight courses, to them, that word is so important. 14 So I want to make the play today, and no one 15 has mentioned it, there isn't the same perception in 16 young adults today about biotechnology, and it's 17 potential as a fruitful career, that there was 18 10 and 15 years ago, when I got there to RIT. 19 So that's most of my presentation. 20 Take any questions? 21 SENATOR GALLIVAN: Just one. 22 If you go back to that 1999 workforce study, 23 was that funded by the State? 24 DR. LARRY BUCKLEY: Yes, I believe it was 25 Senator Alesi, that -- yes, with Doug Merrill [ph.] 1 and then-president Al Simone at RIT, and they got 2 together. 3 SENATOR GALLIVAN: Do you know what the level 4 of funding was? 5 DR. LARRY BUCKLEY: I want to think -- I want 6 to say Doug once told me it was maybe in the 7 hundreds of -- low hundreds -- maybe two or 8 three hundred thousand. 9 I can get the figure. 10 Doug -- 11 SENATOR GALLIVAN: No, we can look it up. 12 DR. LARRY BUCKLEY: Okay. 13 SENATOR GALLIVAN: I was just curious -- 14 DR. LARRY BUCKLEY: I'm guessing. 15 Yeah, I'm guessing it was in that region. 16 And what they did was, they sent letters out. 17 I think Doug told me there were several 18 hundred biotech companies in the region, and just 19 said: What do you need? How can we provide it? 20 What levels of training do you need your workforce 21 to have? And here's how our curriculum can provide 22 it. 23 You know, just basic information-gathering. 24 And from what we're hearing from local 25 companies, and regional companies, is we may need to 1 redo that, because I'm not certain that, uhm -- I'm 2 not certain that we're getting the message out to, 3 both, students, 18-years-olds, who are looking at 4 programs, judging from the shift in their move to 5 more what they consider, probably more profitable 6 careers, and, what companies are saying about what's 7 coming out. 8 They like our graduates. 9 They wish they could hire more of them, they 10 with they could put more of them in co-ops, if they 11 had the money to do so. 12 SENATOR GALLIVAN: Thank you very much. 13 SENATOR ROBACH: Thank you. 14 DR. LARRY BUCKLEY: Thank you very much. 15 SENATOR GALLIVAN: Appreciate your time. 16 Have we missed anybody? 17 Is that a yes or no? 18 Come on right up. 19 We apologize, first of all. 20 DR. DOUG SCHWARZ: No problem. 21 Dr. Edward Schwarz. 22 I'm a professor of orthopaedics, the director 23 at the Center for Muscular Skeletal Research at the 24 University of Rochester. 25 I'm also the president of LAGeT, which was 1 founded here in Rochester as a spin-off in 2001. 2 I'm the chief scientific officer of 3 Telefis [ph.] that started this year to develop the 4 MRCR vaccine. 5 SENATOR ROBACH: What do you do in your free 6 time? 7 DR. DOUG SCHWARZ: I come here. 8 [Laughter.] 9 DR. DOUG SCHWARZ: Rather than give 10 testimony, really, I'd rather ask you questions, 11 because, really, you know, the specific question 12 about the legislation and the regulations, whether 13 it's state or it's federal, it's really our problem 14 to fix. 15 And the two that I would want to specifically 16 focus on, is the first is the Sunshine Law, and the 17 perspective of this question is, really, not 18 changing the law, but, where is the safe harbor? 19 So, in order to develop the biotechnology and 20 the biomedical engineering that we have in campus, 21 we have a very, very rare -- I know this, because 22 I go all over nationally -- interactions between 23 clinicians and scientists. 24 That's really what makes the medical centers 25 special versus other places. 1 And large pharma manufacturers, the critical 2 question they want to know, particularly now with 3 health-care reform is, Will a doctor use it? 4 So there has to be a meeting between the 5 pharmaceutical company, the manufacturer, the 6 science, and the physician. 7 And the Sunshine Law has changed things 8 dramatically, in that, nobody knows what's allowed. 9 Can we go and sit down together and figure 10 this out? 11 This is a disruptive technology that's going 12 to replace total joint replacements with artificial 13 cartilage. 14 The companies, like, Wow, the science is 15 amazing. 16 The business people have the models all 17 created on how many jobs, what the profits are going 18 to be, but they want to know from the surgeon, 19 "Would you use this product?" 20 And we don't know where we stand with all of 21 that; Where is the safe harbor? 22 The second one is, we talked about crowned 23 jewels in this environment that we have here; one of 24 them is the cGMP facility. 25 I'll go a step beyond what President Seligman 1 said; that's not only the Auling [ph.] stem cell 2 facility; it's actually the Auling cGMP facility in 3 all of Western New York. It's on a non-for-profit 4 campus. 5 Where is the safe harbor to allow 6 pharmaceutical biotech spin-offs for profits to 7 interact with some of these key resources? 8 It could be the cGMP facility, it could be 9 the animal facilities we have, it could be some of 10 the super-computers we have. 11 Right now, we have to tell them you can't 12 touch these. 13 You're a for-profit, we're a not-for-profit; 14 we have no way to figure this out. 15 Where is the safe harbor for this interaction 16 between for-profit and the non-for-profit? 17 That's really the critical feedback in the 18 guidance that we need really to leverage the unique 19 resources we have in the medical center in 20 Western New York. 21 So, thank you. 22 SENATOR GALLIVAN: What prevents the 23 interaction? 24 DR. DOUG SCHWARZ: Right now? 25 So, going to the safe harbor, for the first 1 part, is the doctor -- the physicians and the 2 surgeons that I speak to say, "If I go to this 3 meeting with Zimmer, are they going to put my name 4 on the website?" 5 Because what happened with the Department of 6 Justice, and I know this, because I ended up on the 7 front page of the D&C; my wife got very upset. 8 [Laughter.] 9 DR. DOUG SCHWARZ: But in order to -- 10 JOANNE THOMPSON: You get used to it. 11 DR. DOUG SCHWARZ: I know, exactly. It wears 12 off. 13 [Laughter.] 14 DR. DOUG SCHWARZ: They say, "Am I going to 15 go on that national website?" 16 Because the website doesn't distinguish 17 between a doctor who, basically, is just answering 18 the question, "Would you consider using this in your 19 practice?" and the doctor who's getting $10 million 20 a year in payola just to use a specific implant. 21 There's no distinction in that website. 22 So the first question they want to know is, 23 "If I go to this meeting, do I go on the website?" 24 And I have to say, "I don't know." 25 Just what you said, there's 10 miles of 1 words, of language in there. 2 There's no way for me to say "no." 3 If we have some kind of document that we 4 sign, that we are only discussing this one thing, or 5 some objective criteria, to establish a safe harbor. 6 For example, the safe harbor exists, very 7 important legislation for drug development with 8 respect to patents. 9 So, if you're developing a new drug and 10 you -- and the FDA says, "You need to show us this 11 data," you are allowed to infringe on another 12 company's patents in order to provide that data. 13 You don't necessarily have to have that 14 technology in your portfolio if you're going to -- 15 that is what they call the "safe harbor." 16 So, if you're in the pre-commercialization 17 stage and you're doing an experiment for regulatory 18 reasons, you can't be sued, period; you're in the 19 safe harbor. 20 That's kind of what we're looking for. 21 SENATOR ROBACH: These are hard, and I don't 22 claim to be an expert, but, you know, going back to 23 everything we said and asked, you know, clearly, the 24 purpose for that was based more on informing the 25 public if there was bad performance, and, really, 1 almost secondarily, if there was a financial vested 2 interest, whether it was public or private money 3 going to that for the decision-makers, in both the 4 medical field and otherwise, on the Sunshine Law. 5 But, you know this kind of, I won't say scary 6 part, the interesting part is, off that website now, 7 you cannot control what's on the Internet or what 8 somebody puts out there. 9 DR. DOUG SCHWARZ: Exactly, once you're on, 10 you're on. 11 Doctors don't want to be on there. 12 SENATOR ROBACH: So I always thought, you 13 know, these are the conversations we certainly had 14 with Joel and the other people, or 15 Dr. Dessler [ph.], can't there be another entity? 16 DR. DOUG SCHWARZ: Right. 17 SENATOR ROBACH: Because I wanted to focus 18 that. 19 I want the commercialization. 20 I want them to take your expertise and your 21 knowledge and say, Yes, if you make that, I know 22 that will work for patients. 23 We will all make money. 24 And if we can do it in Rochester, we'll have 25 those jobs, and those students can stay here, and 1 your students can stay here, and they'll buy cars, 2 and all those good things, right here in Rochester. 3 So, if there's something you have, maybe this 4 is the opposite of regulation, where you think we 5 can fine-tune it, or create something that would be 6 still protective -- 7 DR. DOUG SCHWARZ: Create the safe harbor. 8 SENATOR ROBACH: Yes. 9 DR. DOUG SCHWARZ: That's what we want: 10 create the safe harbor. 11 These behaviors are in -- 12 SENATOR ROBACH: But, clearly, encourage and 13 protect good activity for that purpose -- 14 DR. DOUG SCHWARZ: Correct. 15 SENATOR ROBACH: -- I'd certainly be willing 16 to look at that, and at least put something in 17 a print so we could have some dialogue. 18 DR. DOUG SCHWARZ: Right. 19 In terms of the -- using a core technology, 20 or a core facility, in a non-for-profit, again, 21 let's just use the cGMP facility, the specific 22 challenge we have there with a company wanting to 23 use our facility, is that it comes down -- it's even 24 too complicated for me -- but, the bonds, basically. 25 So, when we are allowed to use only 3 percent 1 of all of the University of Rochester property for 2 for-profit activities, how is that regulated? 3 How do we give assurances to the university 4 that we're not going over the 3 percent? -- and so 5 forth. 6 And, so, I think, again, there should be a 7 way to say, Okay, the cGMP facility was 8 State-funded. This is an Empire Zone, and you don't 9 need to -- it will be -- it will obviously be run in 10 a manner that you can see the finances, and so 11 forth, and that for-profit entities would be able to 12 use that in a more easier fee-for-service manner. 13 And, again -- again, it speaks directly with 14 what Dr. Smith said, because the burden on us in 15 biotech is not just to find the answer, but actually 16 complete the Phase II trial. 17 And that crown jewel in our environment is 18 the most important thing we have in order to gain 19 access to the Phase I and Phase II trials, where we 20 will manufacture the drugs here in Rochester, but it 21 has to involve for-profit entities, at some level, 22 using a non-for-profit facility. 23 And we don't have a safe harbor for that. 24 SENATOR ROBACH: I don't want to put you on 25 the spot -- 1 DR. DOUG SCHWARZ: Go ahead. 2 SENATOR ROBACH: -- this is fascinating to 3 me. 4 Do other states have something more 5 protective? 6 DR. DOUG SCHWARZ: So, basically, they 7 don't -- they built them not on the school campus, 8 so they built them, actually, in the incubator 9 space. 10 SENATOR ROBACH: Right, and we do that, too, 11 here, so that's why I don't understand why -- I 12 mean -- 13 DR. DOUG SCHWARZ: But it comes down to 14 the -- what makes these facilities so special and 15 expensive, is the people that run them. 16 So, you can't turn the lights off in the 17 cGMP facility. It has to -- it has to be run all 18 the time, and it's run by U of R personnel. 19 So, I don't know how that works. 20 SENATOR ROBACH: Thank you. 21 DR. DOUG SCHWARZ: I appreciate the 22 opportunity. 23 Thank you. 24 SENATOR GALLIVAN: Well, we appreciate 25 everybody's time, and the fact that you -- I mean 1 you took the time, not just today, but to prepare 2 your testimony. 3 Yes, sir, did we miss you? 4 FRED BUGIN: Accept a walk-on? 5 SENATOR GALLIVAN: Pardon me? 6 FRED BUGIN: Do you accept a walk-on? 7 SENATOR GALLIVAN: Come on right up. 8 FRED BUGIN: Thank you very much. 9 Pass that right on up front. 10 My name is Fred Bugin [ph.]. 11 Senator Robach, we had a chance to talk 12 before. 13 SENATOR ROBACH: Yeah. 14 FRED BUGIN: What I have here is a picture of 15 taking blood pressure with a cuff. 16 On this side, you have a blood pressure taken 17 without a cuff. 18 There is a $300,000 study going on at 19 Western University of Medicine Dentistry up in 20 London, Ontario, of which the key that we're looking 21 for is the wireless, like you got with this little 22 CVS device, so that when you put this device on your 23 palm, it transmits temperature, which is a 24 non-dimensional parameter, and we have to accept it 25 wherever we're at, and a change in barometic 1 pressure. 2 Now, I'm going to ask you a question. 3 When do you want to take your blood pressure 4 the conventional way: on a rainy day or a sunny day? 5 SENATOR ROBACH: You pick. 6 SENATOR GALLIVAN: Why don't you tell us. 7 DR. DOUG SCHWARZ: Now, every doctor should 8 know this, because you want to take it on a rainy 9 day when the atmospheric pressure is low. It's 10 below 14.7, one bar. 11 And if you take the blood pressure and you go 12 up to Colorado, where my cousin went, had a heart 13 problem, and died of a heart attack up there, 14 because you only have one-half the pressure, so you 15 go lower oxygen. 16 So what I'm saying is, with this tiny little 17 bead -- 18 [Inaudible.] 19 -- there's the capability of putting a band 20 on you, and what they're looking at, for radio 21 frequency, is to be able to walk into the hospital, 22 put the band on you, give you an RF by 23 identification, and you will now be identified with 24 your blood pressure, pulse, and temperature taken 25 without anybody having to monitor you 24/7. 1 That means, when you walk in, they know how 2 you're doing. 3 You're transmitted to the front desk, and 4 we're looking at a range of 300 feet for each cell 5 up at the hospital up at Western University. 6 And from the standpoint of here in Rochester, 7 I've sat down with RIT, presented the technology; 8 haven't had a right time of day. 9 I was, matter of fact, walked off of campus. 10 I've also introduced it to 11 Dr. Deworski [ph.], from the standpoint of, when he 12 came back and was proposing master's programs, in 13 which they take 100 ideas, filter them down to 6, 14 and then launch somebody on a master's program, with 15 the hopes that that master's program is going to 16 lead this individual into a company where he will be 17 acknowledged as one of the experts. 18 But, unfortunately, when you start talking 19 about generating an idea, and that same little bead 20 can also measure impact. 21 We just got through the program, where we had 22 two in the side temple and one on the chin of a 23 helmet. 24 The ball was fired at at 52 miles an hour, 25 and the registration of the impact was hit, 1 compression on this side, spike up, decompression on 2 this side, and I little blip right where the chin 3 is. 4 Major need for athletics. 5 Looking at it for Rochester, and I just got 6 through with a gentleman who [unintelligible] who 7 says, I'd like to be involved with this for the 8 boxing industry. 9 So from the standpoint of that simple little 10 sensor, which cost cents, I need to be able to, and 11 how we work our business, is I have the sensors that 12 I have the patents on, delivered from a sole source, 13 which is Martech Controls in Syracuse. 14 If you want to generate a product of which 15 you want to use the sensor, you buy our sensors; you 16 now own our technology from the standpoint, you can 17 only get them from us. 18 You put a 1 or 2 percent license on top of 19 the product that you're selling. 20 We get the licensing back. We don't have to 21 worry about confidential agreements, non-disclosure, 22 and all the rest of the business. 23 And the same type of thing can be done 24 because, when it comes time for RIT, I wrote to the 25 provost, Institute of Health, Science, and 1 Technology. 2 I have never had a reply. 3 And that's where I offered to put the sensor 4 in with the students that are Institute of Health, 5 Science, and Technology to say, "Knock yourself 6 out." 7 Find a place for that product, launch the 8 product, put it in. 9 I'm selling sensors, fat, dumb, and happy, 10 and you're gonna be out there in your own 11 independent business. 12 Different concept: 13 Now, when we talk about people generating 14 ideas, it's like me walking up to you and saying, 15 Invent me something. 16 Everybody has their forte, everybody has 17 their areas of interest, and I'm still looking for 18 support out of Rochester, out of Strong, or out of 19 RIT, or out of a place to where we can talk about 20 manufacturing these things to be able to put on the 21 band, because, commercially, they can be sold in a 22 drug store. 23 So what you put on it is, number one, a radio 24 frequency identification. It will transmit over a 25 range, wireless, and you put your birthdate. 1 So now when you have a disaster, and in 2 Spencerport, they already have an emergency 3 department to where, within 10 minutes, they have to 4 decide your state, to find out whether they can send 5 you into Rochester, or whether you just lay there 6 and they go after the ones who you'd be looking at a 7 green, orange, red. 8 So it says, I know how much time I got left 9 to be able to deal with the people that are green or 10 orange, and just forget the rest, because you can't 11 get them back to Rochester or any major city at any 12 time. 13 That's my product; that's my problem; and 14 that's my solutions to some other problems. 15 So I thank you for your day, and your time. 16 Oh, and by the way, I had a 2:00 appointment 17 for my extension for my income tax; my wife had been 18 in some serious problems. 19 I went to H&R Block. They said it was gonna 20 be the one at where your office was. 21 So I said, fat, dumb and happy, I'll get 22 there at 1:00, and then I'll be able to get it 23 extended. 24 I canceled it, just said, "Forget about it." 25 I'm coming here and I'll get a chance to talk to 1 you. 2 So not only, I'm tax-delinquent, and I'm 3 sitting here to make a proposal. 4 [Laughter.] 5 SENATOR ROBACH: Who's having more fun than 6 you? Nobody. 7 FRED BUGIN: Thank you. 8 SENATOR GALLIVAN: Thank you. 9 We do appreciate everybody's time. 10 And you can look for a report on the Senate 11 website, late November, early December. 12 Thank you all. 13 (Whereupon, at approximately 2:57 p.m., 14 the public forum on Biotechnology Regulatory 15 Reform held before the New York State Senate 16 Majority Coalition concluded, and adjourned.) 17 18 19 20 21 22 23 24 25