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CNBC'S MEG TIRRELL INTERVIEWS FORMER FDA COMMISSIONER SCOTT GOTTLIEB FROM CNBC'S HEALTHY RETURNS CONFERENCE TODAY

WHEN: Today, Tuesday, May 21, 2019

Following is the unofficial transcript of a CNBC interview with Scott Gottlieb, M.D., Former Commissioner of Food and Drugs, U.S. FDA, live from CNBC's Healthy Returns conference in New York City on Tuesday, May 21st.

Mandatory credit: CNBC's Healthy Returns conference.

Realtime Transcription by www.RealtimeTranscription.com

MEG TIRRELL: Well, hi, everybody. And I'm so happy to be here again with Dr. Scott Gottlieb, who kicked off our first Healthy Returns last year. And, of course, in the last year, a lot has changed. Specifically, you stepped down from your post as FDA Commissioner. So, you noted in March that you were resigning, and you said you were going to be spending more time with your family. And of course, you know, as a reporter, your ears perk up and you think, that's not the real reason. What else is happening? So, you know, just between us, 300 friends, you know, is there another reason?

SCOTT GOTTLIEB: It's impossible to leave government gracefully anymore. No, that's the real reason. These are 24/7 jobs, and I was commuting from Westport, Connecticut. I have three young children. I was coming down every week, spending the whole week there, coming back on weekends. I would come back late Friday night, spend Saturday with my kids and then be back down in Washington Sunday night. It got harder after two years. I think, in retrospect, the decision I made not to move my family really was the gating factor. I think once I made that decision up front, that really time limited me, unfortunately. I didn't realize it would, but it did. And so, you know, my ability to stay the full four years, which I would have wanted to do, really was limited by that fact.

MEG TIRRELL: Was there a lot of pressure on you from the administration to stay?

SCOTT GOTTLIEB: There was. I mean, you know, I certainly had conversations with folks in the administration I think who would have liked me to stay longer. I had a good relationship with the White House. I had a good relationship with the President and his family and the people who worked immediately around the President. So, you know, I certainly felt welcomed and I certainly felt I could have stayed a good amount of time longer. It just became personally very difficult. And I wanted the summer with my family, and it just seemed the right time to step away.

MEG TIRRELL: How many job offers have you gotten since?

SCOTT GOTTLIEB: I have been having some conversations. I'm back at the American Enterprise Institute. I'm working with CNBC as a contributor. I'm probably going to be doing something on the investment side. I had worked with New Enterprise Associates, a venture capital firm, for a decade prior coming in to FDA. I think it's very likely that I'll go back to doing something like that. And I'm certainly talking to my old friends at New Enterprise Associates, as well.

MEG TIRRELL: We'll look forward to hearing more about that. Let's talk a little bit about what you did at FDA. One of your signature issues, of course, was tobacco, trying to limit the amount of nicotine that can go into combustible cigarettes. Also, a lot of work in the e-cigarette space; and recently a federal judge ruled that the FDA needs to move more quickly on regulating e-cigarettes. I think the judge even called it, quote, "an abdication of FDA statutory responsibilities" to have delayed that rule until 2022 on e-cigarettes. How do you respond to that?

SCOTT GOTTLIEB: Well, it seems like the judge's ruling, which I think had legal problems, with it -- and whether or not the agency does or doesn't appeal, which is obviously their decision, the reality is that we had made the decision in March to actually move up the application deadline. So, what the judge was taking issue with was at the time that we said we were going to regulate nicotine in combustible cigarettes and render them minimally nonaddictive, we implemented what was called the deeming rule, which applied all the tobacco regulations to what were called the newly deemed products. This included things like vaping products and cigars. So those announced fully regulated. I implemented that regulation. It took the prior administration about ten years to draft that regulation. The only thing we extended was the application deadlines on the e-cigarettes. And the reason we did that is because we said at the very time that we're seeking to regulate nicotine and combustible cigarettes to remove a lot of the nicotine, to render them minimally if not addictive, we wanted to make sure there's alternatives with currently addicted adult smokers who still want to get satisfying levels of nicotine, and we saw the e-cigarettes as potentially one opportunity. And this regulation was being newly implemented, so none of the rules on how you would comply with it were in place. And so, we typically don't implement regulations and requirements without outlining the rules for how to comply with those requirements. But once we saw the epidemic of use of the e-cigarettes, we said that we were going to now call in the applications earlier than what we had originally outlined. And the judge was basically saying, Well, I want you to call them in even earlier. I agree with the sentiment that these applications should now be brought in earlier, given the public health crisis of youth addiction to the vaping products. And what I was saying when I was there was that the 2019 National Youth Tobacco Survey data, which is going to be coming out sometime in the end of July or early August, if that shows another sharp uptick in the use of the pod-based e-cigarette products, I think the agency had to consider sweeping the market of those products. And so we were looking to move towards pulling those products in earlier anyway. Now, whether or not this judge's ruling provided the impetus for the agency to go ahead and do that now as opposed to waiting, I don't know what decision they're going to make. If I was there, I'd certainly be considering taking that action right now, in the view of this judge's ruling, notwithstanding the fact that I might be worried about some of the precedent that a bad ruling sets; although it's a ruling in one district, so it's not going to have a big impact on the agency's prerogatives.

MEG TIRRELL: Well, so you've said before, and as you just alluded to, there's that balance between providing a potentially safer alternative to people who already smoke cigarettes, toward moving toward e-cigarettes, but you tried to balance that against new people and especially young people becoming addicted to nicotine. In hindsight, do you think you struck the right balance, or did what you've called an epidemic in the use of these products surprise you?

SCOTT GOTTLIEB: No. We struck the wrong balance, and the epidemic of youth use caught us all by surprise. I mean, one of the worst days of my time at the Agency was when the head of my tobacco center, on August 30th, 2018, came in my office and presented the data from the 2018 National Youth Tobacco Survey showing a 78% increase in the rate of use among high school teens. I remember it vividly. I remember exactly what I did after that data was presented to me. Had we known in 2017 what would ensue, we would have made different decisions. Clearly we would have because we changed course. Once we had that data, we changed course and required the applications to come in earlier. I still think the fundamental idea of trying to regulate nicotine in combustible products, and that rule I think will get out. We got the advance notice of proposed rule-making out. I think the regulation, the draft regulation, will get out. I still think the policy of doing that, while trying to open up avenues not just for e-cigarettes to be potentially useful alternatives to currently addicted adult smokers, but also nicotine replacement therapies, which we also tried to expand the market for, is a sound policy. Now, the question is: How do you make the e-cigarettes available without them becoming vehicles by which kids become addicted? It's really just one sponsor that now has that problem and has driven a lot of youth use. And the other thing I would say is that the open-tank vaping systems, which actually have better data showing that they help currently addicted adult smokers quit, don't have the same youth use problem. The kids aren't going out and buying these big open-tank systems that are rather expensive. They're buying the cheap, disposable pod-based systems and, particularly, one brand of that system.

MEG TIRRELL: JUUL?

SCOTT GOTTLIEB: JUUL, right. So, you know, you have a narrow problem, but it's created a big public health crisis. I wouldn't want to destroy the whole category for, you know, what one company did and one segment of that market. Now, I'll close here. The data shows that adults who do switch to e-cigarettes, a lot of them will experiment with the pod-based product and then go on to buy the open-tank system. So, if you eliminate the pod-based products, you're eliminating that easy access point for the adult to try it and then decide it's something better than smoking. So, you don't want to do that from a public health standpoint. That's the balancing we were trying to engage in. But at some point, you have to say there's so much youth use of those products, any redeeming public health value that they would have is foreclosed by that youth use.

MEG TIRRELL: As you move back into industry, one of the involvements that got a lot of attention before you became Commissioner was, you were on the board of directors of this vape shop company, Kure. Would you ever work in the industry again, in e-cigarettes?

SCOTT GOTTLIEB: I don't think I would. You know, I think that the dynamic has changed in terms of the kinds of roles that I would play now and where I would want to try to effect change and do my advocacy. I mean, that company was committed -- and I believe still is; I haven't followed them -- to the idea of using these tools to try to address adult smoking. And I believe very strongly in the idea of harm reduction and that nicotine delivery exists in a continuum of risk, and we need to migrate smokers to less harmful products. And that was the genesis of my involvement with that company.
I think that I would -- I plan to forcefully advocate for the idea of trying to put e-cigarettes through an OTC pathway, to put them on the market as an over-the-counter drug where you can do proper analysis around their ability to be used as a smoking cessation tool and also get the tox studies. If you look at the statement that we put out in my last week on the job when we talked about the seizure risk that we saw with the nicotine use, on the bottom half of that statement was a discussion around toxicology data that we had seen and some changes in animal studies consistent with precancerous changes in tissue from exposure to the vaping products. So there are -- while these are less harmful than smoking, they're not safe. And I think the proper way to evaluate the toxicology is to do it through the OTC pathway. So I plan to very forcefully talk about that. And I would certainly try to help any company that was looking to go through the OTC pathway, because I think from a public health standpoint, that's the optimal positioning if you believe that these can be a smoking cessation tool.

MEG TIRRELL: Well, in some ways, when you think about nicotine products and the FDA, it feels a little odd, you know, the FDA would be approving, quote-unquote, something that you know is harmful. Segueing into another recent legal decision, the Justice Department recently ruled that the FDA doesn't have jurisdiction over death penalty drugs. And the Washington Post reported, interestingly, that you got into a shouting match with Jeff Sessions in the White House situation room about that issue about a year ago. What can you tell us about that?

SCOTT GOTTLIEB: Well, I don't want to comment on the interactions with the Attorney General. At one point he called me hyper-principled, which I don't think was a compliment. But -- I don't think he meant it as a compliment. But, you know, the issue -- the issue is whether or not you can carve jurisdiction out from FDA for one category of drugs without impinging the FDA's ability to exert authority in other contexts, and whether or not by doing so in this OLC opinion -- OLC has just given a blueprint for other people who want to claim that they're not regulated by FDA. With respect to the death penalty, in particular and the drugs used in that three-drug cocktail, and that's what this decision turned on, particularly sodium thiopental, the challenge here is that in the context of the administration of the death penalty, sodium thiopental is being used as an anesthetic. It's not being used as a lethal agent in most three-drug cocktails. So this is a drug with a drug monograph being actually used for its indication, which is to provide anesthesia. And so it's hard to say that FDA doesn't have jurisdiction over a drug being used for a drug-like purpose. And I was very concerned and continue to be concerned that trying to neatly carve out jurisdiction for the death penalty drugs is going to somehow degrade the agency's institutional prerogatives in other contexts. I continue to have those concerns, and that's the position that I maintained while I was at the Agency.

MEG TIRRELL: Briefly, just to kind of close the book on that issue, do you think the Justice Department's ruling here will open up a flow of drugs into the lethal injection system? You know, that's been such a problem, the supply of those drugs, because drug companies don't want to be associated with –

SCOTT GOTTLIEB: Right. So, I think the intent -- so the challenge here for the states that want to administer death penalties and using drugs as a lethal agent is that they can't source them anymore from responsible manufacturers, because they don't want to sell to the states, so they're getting them through sort of circuitous routes that are being foreclosed as well. So, they want to be able to source them from manufacturers overseas that haven't gone through any regulatory process. In the case of Texas, they were sourcing it from a manufacturer that, you know, has a long track record of challenges associated with it. And FDA was doing its job and stopping that shipment at the border. This was a test case. I mean, they flagged this for us. They told us it was coming through the border. They told us when, and they told us what it would look like. So, they were testing us. This was impact litigation to try to test this theory and try to argue to the courts that FDA shouldn't have jurisdiction here. Remember, we're under a court -- we're under an injunction by a court, Judge Leon, the FDA is, from a prior ruling where the courts ruled, the federal court ruled, that people who are facing death, are going to be put to death by the state, are no less deserving of the protections of the FDA than anyone else in terms of making sure that the drugs that are going to be used in that context are safe and effective for the purpose, particularly when they're being used as an anesthetic. So this OLC ruling doesn't just all of a sudden create the opportunity for these drugs to now be imported. The Justice Department is going to have to go before that prior court, get the injunction lifted. That's not going to happen. They're going to have to litigate it through the District Court. Then it's going to end up going through the Supreme Court. So you're looking at a four- or five-year process of litigation now, the outcome of which, you know, depending on how this gets ruled, could potentially degrade other components of FDA's authorities, depending on whether courts rule broadly in favor of the OLC opinion or not. So institutionally, I had concerns -- and I continue to have concerns -- around trying to create these very neat buckets where you just carve out narrow slivers of FDA's existing jurisdiction to suit some political goal.

MEG TIRRELL: Well, accusations of being hyper-principled aside, I want to ask you about your relationship with the Trump administration and with the President. When you announced your resignation or when the news broke of your resignation, the President tweeted: Scott Gottlieb, who has done an absolutely terrific job as Commissioner of the FDA, plans to leave government service next month. Scott has helped us to lower drug prices, get record number of generic drugs approved and onto the market, and so many other things. He and his talents will be greatly missed. So it sounds like the President liked you.

SCOTT GOTTLIEB: It was two Tweets, actually.

MEG TIRRELL: It was two Tweets. Did you like the President? And, you know, what was your understanding of his understanding of the issues that you were dealing with? He talks so much about drugs.

SCOTT GOTTLIEB: Yeah. So, I had a good relationship with the President. I probably was -- you know, would interact with him once a month. I wasn't in the Oval Office all the time, but I was probably in there once a month, mostly on drug pricing issues; although, I did have the opportunity to brief him on technology. I got to brief him before we approved the first gene therapy product. He had a lot of interest in what we were doing. He understood it well. He gave the Agency credit for the work we did with generic drugs and the impact it had on drug competition and lowering prices. And, you know, I felt that he supported what we were doing. And I will tell you that the intangible sort of consequence of the perception that the President supports -- supported me, supported what we were doing, really helped drive a lot of the other policy that I was engaging on. And I think you'd be surprised how much of that policy, you know, the President really either directly knew about or supported, and also how much his support of the agency and of me, just generally, in a broader sense, gave me the ability to, you know, push things forward. You know, there were a couple of moments where I said, Well, maybe we should take this to the Oval Office. And I usually won those arguments. Because I think the Agency -- I think the President and the people around him were deeply public health minded. I think they had a sense of what the Agency did. It wasn't just the President. It was the head of Domestic Policy Council at the time, Andrew Bremberg, who is deeply public health minded and previously worked in Health and Human Services. So, there were people in key positions during the time that I was at the FDA that I think supported what the FDA did and supported regulation in the context of advancing the public health. You know -- and I will end here. You know, there are people who are deregulatory instinctually, libertarians, conservatives. I was one of them; I am still one of them. But they also understand that regulation in the context of advancing the public health is different, and they carve that out. And the folks in some of the key positions did have that mindset, including me, obviously.

MEG TIRRELL: Do you expect the President to follow through on real drug pricing legislation that actually changes the way drugs get priced in the United States?

SCOTT GOTTLIEB: Well, the legislation is a broader question, because it's going to depend on what Capitol Hill does and whether or not they can get legislation through before the election. I think that there's a narrow window of opportunity to do it. If I was betting, I would say it's a small window, but there's still a window of opportunity to do it. And I think there's likely to be legislation that puts together some of the bills that are currently before Congress, which I think, you know, provide incremental improvements in terms of creating more competition in the marketplace. And then there's a question now that you see in the media: What happens to that rule that would create the safe harbor around the rebates, the PBMs, which was a rule that had a big price tag associated with it, and whether or not they would delay implementation of that rule and use the savings to pay for closing some of the out-of-pocket costs in Medicare Part D going into an election year. So that's more of a political decision that's going to get made by Capitol Hill and maybe some folks in the administration. That's been in the press, so, you know, I'm reading the same stuff you are. I think you could see the outlines of a potential piece of legislation. But my guess is the window of opportunity to do that is getting pretty slim right now.

MEG TIRRELL: Well, on the campaign trail, the President talked about bidding them out, which sounded like Medicare negotiation, direct negotiation by the government on the price of drugs. Was it your impression in conversations with the President that he supports that?

SCOTT GOTTLIEB: Well, I'm not going to relate my direct conversations with the President about this. What I will say is that there was a lot of discussion also around creating competition in Medicare Part B. I mean, there was a recognition that there is competition in Medicare Part D and prices are competitively bid in Medicare Part D. The idea of having the government negotiate Medicare Part D, you have vigorous negotiation going on by PBMs that in some cases are negotiating on behalf of, you know, constituencies that are the size of small European countries where you have no competitive bidding and negotiation as Part B. So, there was always discussion of trying to create a competitively-bid scheme in Medicare Part B, and folks were very open about that, that that discussion had gone on.

MEG TIRRELL: Well, I want to ask you about something we're going to talk about on a panel later today, and that's CRISPR gene editing, just to take a hard left turn.

DR. SCOTT GOTTLIEB: Okay.

MEG TIRRELL: Of course, it rocked the world last year when some babies were born who had been genetically edited in China. And a lot of people have said there aren't safeguards in place, there aren't the right kinds of regulations in place. And a lot of people say it's not clear how this should be regulated internationally. How would you do it?

SCOTT GOTTLIEB: Well, look, I think it was a horrible experiment and established a horrible precedent. And I think that the scientific community and the companies engaged in this -- but more, the scientific community is making a very bad mistake by not coming out more forcefully and just saying that we ought to have a moratorium and this just should not be allowed. And anyone who engages in germ-line editing using CRISPR and Cas9, other forms of gene editing, should be cast out from the scientific community. I mean, I think we need to draw a bright line here, that you shouldn't be editing germ-line cells, human germ-line cells. And I will tell you, I put the question to many people who are sort of on the fence about this to give me examples. I did this when I was at FDA. Give me examples where, from a clinical standpoint, a public health standpoint, this is essential. And I have heard nothing compelling; nothing that couldn't be accomplished, for example, with embryo selection. If you were willing to create and destroy embryos, do it through embryo selection, because you're doing the same thing with germ-line editing. And the features that people proposed to edit into embryos aren't compelling, either, in my view. So, you know, we're creating an awful risk. And the risk is that we do this and people rightly turn away from the science; that they look at this and say this is horrible, we do not want scientists engaging in trying to create designer babies, and they turn against the whole establishment of CRISPR, Cas9, and gene editing, because we weren't willing to draw a bright line and put a marker down.

MEG TIRRELL: All right. We're out of time. I have to ask you one more question: Unfinished business, if you could go back and do one thing as Commissioner.

SCOTT GOTTLIEB: Yeah, the pieces of legislation that we didn't get over the finish line. We were advancing legislation to try to modernize our approach to OTC drugs. We did it in regulation. We didn't get that bill done. And also, the comprehensive bill that we were moving to try to create a more modern framework for the regulation of laboratory-developed tests and laboratory tests more generally, IVDs, diagnostic tests. There is a long-time horizon of legislation. I thought we would be able to get the OTC bill done while I was there, and I was hoping we'd get the other bills further advanced. Those bills will eventually get passed, just not on my watch.

MEG TIRRELL: All right. Scott Gottlieb, thank you for being here.

DR. SCOTT GOTTLIEB: Thanks a lot.

TYLER MATHISEN: Scott, great to see you. Meg, thank you very much. And Meg will be back later as we progress throughout the day. Well, that was fascinating and really helpful and exciting, good insights about how the administration works and what it's like to be an FDA commissioner in this particular era.

For more information contact:

Jennifer Dauble
CNBC
t: 201.735.4721
m: 201.615.2787
e: jennifer.dauble@nbcuni.com

Emma Martin
CNBC
t: 201.735.4713
m: 551.275.6221
e: emma.martin@nbcuni.com