    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

                      THE FOOD AND DRUG IMPORT SAFETY ACT

    =======================================================================

                                    HEARING

                                   BEFORE THE

                             SUBCOMMITTEE ON HEALTH

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                   H.R. 3610

                                   __________

                               SEPTEMBER 26, 2007

                                   __________

                               Serial No. 110-68

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

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                        COMMITTEE ON ENERGY AND COMMERCE

        JOHN D. DINGELL, Michigan,       JOE BARTON, Texas
                 Chairman                    Ranking Member
    HENRY A. WAXMAN, California          RALPH M. HALL, Texas
    EDWARD J. MARKEY, Massachusetts      J. DENNIS HASTERT, Illinois
    RICK BOUCHER, Virginia               FRED UPTON, Michigan
    EDOLPHUS TOWNS, New York             CLIFF STEARNS, Florida
    FRANK PALLONE, Jr., New Jersey       NATHAN DEAL, Georgia
    BART GORDON, Tennessee               ED WHITFIELD, Kentucky
    BOBBY L. RUSH, Illinois              BARBARA CUBIN, Wyoming
    ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
    BART STUPAK, Michigan                HEATHER WILSON, New Mexico
    ELIOT L. ENGEL, New York             JOHN B. SHADEGG, Arizona
    ALBERT R. WYNN, Maryland             CHARLES W. ``CHIP'' PICKERING,
    GENE GREEN, Texas                        Mississippi
    DIANA DeGETTE, Colorado              VITO FOSSELLA, New York
        Vice Chairman                    STEVE BUYER, Indiana
    LOIS CAPPS, California               GEORGE RADANOVICH, California
    MIKE DOYLE, Pennsylvania             JOSEPH R. PITTS, Pennsylvania
    JANE HARMAN, California              MARY BONO, California
    TOM ALLEN, Maine                     GREG WALDEN, Oregon
    JAN SCHAKOWSKY, Illinois             LEE TERRY, Nebraska
    HILDA L. SOLIS, California           MIKE FERGUSON, New Jersey
    CHARLES A. GONZALEZ, Texas           MIKE ROGERS, Michigan
    JAY INSLEE, Washington               SUE WILKINS MYRICK, North Carolina
    TAMMY BALDWIN, Wisconsin             JOHN SULLIVAN, Oklahoma
    MIKE ROSS, Arkansas                  TIM MURPHY, Pennsylvania
    DARLENE HOOLEY, Oregon               MICHAEL C. BURGESS, Texas
    ANTHONY D. WEINER, New York          MARSHA BLACKBURN, Tennessee
    JIM MATHESON, Utah
    G.K. BUTTERFIELD, North Carolina
    CHARLIE MELANCON, Louisiana
    JOHN BARROW, Georgia
    BARON P. HILL, Indiana

    _________________________________________________________________

                               Professional Staff

     Dennis B. Fitzgibbons, Chief of
                   Staff
    Gregg A. Rothschild, Chief Counsel
       Sharon E. Davis, Chief Clerk
     David L. Cavicke, Minority Staff
                 Director

                                      (ii)
                             Subcommittee on Health

                    FRANK PALLONE, Jr., New Jersey, Chairman
    HENRY A. WAXMAN, California          NATHAN DEAL, Georgia,
    EDOLPHUS TOWNS, New York                 Ranking Member
    BART GORDON, Tennessee               RALPH M. HALL, Texas
    ANNA G. ESHOO, California            BARBARA CUBIN, Wyoming
    GENE GREEN, Texas                    HEATHER WILSON, New Mexico
        Vice Chairman                    JOHN B. SHADEGG, Arizona
    DIANA DeGETTE, Colorado              STEVE BUYER, Indiana
    LOIS CAPPS, California               JOSEPH R. PITTS, Pennsylvania
    TOM ALLEN, Maine                     MIKE FERGUSON, New Jersey
    TAMMY BALDWIN, Wisconsin             MIKE ROGERS, Michigan
    ELIOT L. ENGEL, New York             SUE WILKINS MYRICK, North Carolina
    JAN SCHAKOWSKY, Illinois             JOHN SULLIVAN, Oklahoma
    HILDA L. SOLIS, California           TIM MURPHY, Pennsylvania
    MIKE ROSS, Arkansas                  MICHAEL C. BURGESS, Texas
    DARLENE HOOLEY, Oregon               MARSHA BLACKBURN, Tennessee
    ANTHONY D. WEINER, New York          JOE BARTON, Texas (ex officio)
    JIM MATHESON, Utah
    JOHN D. DINGELL, Michigan (ex
        officio)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    H.R. 3610, to amend the Federal Food, Drug, and Cosmetic Act with
      respect to the safety of food and drugs imported into the
      United States, and for other purposes..........................   125

    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................     1
    Hon. Nathan Deal, a Representative in Congress from the State of
      Georgia, opening statement.....................................     3
    Hon. Gene Green, a Representative in Congress from the State of
      Texas, opening statement.......................................     4
    Hon. Michael C. Burgess, a Representative in Congress from the
      State of Texas, opening statement..............................     5
    Hon. Diana DeGette, a Representative in Congress from the State
      of Colorado, opening statement.................................     6
    Hon. Mike Ferguson, a Representative in Congress from the State
      of New Jersey, opening statement...............................     7
    Hon. John D. Dingell, a Representative in Congress from the State
      of Michigan, opening statement.................................     9
    Hon. Tim Murphy, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................    10
    Hon. Anna G. Eshoo, a Representative in Congress from the State
      of California, prepared statement..............................    11
    Hon. Jan Schakowsky, a Representative in Congress from the State
      of Illinois, opening statement.................................    12
    Hon. Heather Wilson, a Representative in Congress from the State
      of New Mexico, opening statement...............................    13
    Hon. Darlene Hooley, a Representative in Congress from the State
      of Oregon, opening statement...................................    14
    Hon. Steve Buyer, a Representative in Congress from the State of
      Indiana, opening statement.....................................    15
    Hon. Jim Matheson, a Representative in Congress from the State of
      Utah, opening statement........................................    16
    Hon. Marsha Blackburn, a Representative in Congress from the
      State of Tennessee, opening statement..........................    17
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................    18
    Hon. Tom Allen, a Representative in Congress from the State of
      Maine, opening statement.......................................    20

                                   Witnesses

    Randall L. Luther, Deputy Commissioner, Policy, U.S. Food and
      Drug Administration, Rockville, MD.............................    21
      Accomapnied by: David Acheson, M.D., Assistant Commissioner,
        Food Protection, U.S. Food and Drug Administration; and
        Steven M. Solomon, D.V.M., Deputy Director, Office of
        Regional Operations, Office of Regulatory Affairs, U.S. Food
        and Drug Administration
        Prepared statement...........................................    25
        Answers to submitted questions...............................   164
    William Hubbard, senior advisor, Coalition for a Stronger FDA,
      Chapel Hill, NC................................................    58
        Prepared statement...........................................    59
    Hon. Calvin M. Dooley, president and chief executive officer,
      Grocery Manufacturers Association..............................    63
        Prepared statement...........................................    65
        Answers to submitted questions...............................   159
    Jill Hollingsworth, D.V.M., group vice president, food safety
      programs, Food Marketing Institute.............................    68
        Prepared statement...........................................    70
    Caroline Smith DeWaal, food safety director, Center for Science
      in the Public Interest.........................................    74
        Prepared statement...........................................    76
        Answers to submitted questions...............................   202
    Alan Goldhammer, deputy vice president, regulatory affairs,
      Pharmaceutical Research and Manufacturers of America...........    88
        Prepared statement...........................................    89
    Tom Kubic, executive director, Pharmaceuticals Security Institute    91
        Prepared statement...........................................    93
    Hallock Northcott, president and chief executive officer,
      American Association of Exporters and Importers................   104
        Prepared statement...........................................   105
        Answers to submitted questions...............................   196

                               Submitted Material

    American Free Trade Association, submitted statement.............   211

                 H.R. 3610, THE FOOD AND DRUG IMPORT SAFETY ACT

                                  ----------

                         WEDNESDAY, SEPTEMBER 26, 2007

                      House of Representatives,
                                Subcommittee on Health,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:08 a.m., in
    room 2123 of the Rayburn House Office Building, Hon. Frank
    Pallone, Jr. (chairman) presiding.
        Members present: Representatives Waxman, Eshoo, Green,
    DeGette, Allen, Schakowsky, Hooley, Matheson, Dingell, Deal,
    Wilson, Buyer, Pitts, Ferguson, Sullivan, Murphy, Burgess, and
    Blackburn.
        Staff present: Brin Frazier, Lauren Bloomberg, Melissa
    Sidman, John Ford, Jack Mariko, Dave Nelson, Robert Clark, Chad
    Grant, Nandan Kenkeremath, Andrew Woelfling, and Chris Knauer.

    OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Pallone. I call the hearing to order. Good morning to
    everybody. Today we are having a hearing on H.R. 3610, the Food
    and Drug Import Safety Act introduced by our chairman, Mr.
    Dingell, and I will recognize myself initially for an opening
    statement.
         Mr. Dingell's legislation seeks to strengthen our Nation's
    import safety system, and I am also a proud co-sponsor of the
    legislation. We all know that while the United States has one
    of the world's safest food and drug supplies and some of the
    most stringent standards for consumer protection, recent
    outbreaks of contaminated products and cases of food borne
    illness demonstrate that we have to do better. Contaminated pet
    food, toothpaste, and seafood products from China have
    highlighted the failings of our import safety system and
    sparked fear and distrust among consumers.
        Democrats in Congress have heard consumers' concerns, and
    we have already begun to address the issue. Last week Congress
    passed the Food and Drug Administration Revitalization Act,
    which we call PDUFA, I guess, or includes PDUFA, and that bill
    provides the FDA with the resources and the authority necessary
    to improve our Nation's drug safety system. Also included in
    this measure, however, are improvements to our Nation's food
    safety program including new public notification requirements
    of outbreaks of illness due to contaminated food. In addition,
    the PDUFA legislation will establish an adulterated food
    registry so that incidents can be reported and the FDA can
    quickly alert the public. It also calls for transparency during
    recalls of human or pet food, and will require the FDA to post
    information on recalled products in an easy to use searchable
    format.
        Now while this was a modest step which was included, as I
    said, in the PDUFA bill, a lot more can and needs to be done
    with regard to food safety. The recent contamination incidents
    raised questions about our current food and drug safety laws,
    many of them enacted in the 1900s. Have they kept pace with new
    techniques in food production and processing, are these laws
    still sufficient to keep us safe. Rather than reacting to
    outbreaks of contaminated products, we need to change our
    system to better prevent such incidents from happening in the
    first place.
        Recently, a White House working group--and I actually spoke
    to the FDA Commissioner about this yesterday--released a report
    on Government import safety protocols. This report acknowledges
    the limitations of our current import safety system and calls
    for a shift basically to review not only our imports at the
    point of entry in the United States, but also to regulate
    production abroad. The report tells us what we already know
    that the current system isn't working. The administration
    recognizes its failings, a lack of coordination amongst
    agencies, loopholes in the system that allow contaminated
    products to slip in, but merely reporting on the problem is too
    little and too late.
        Now Chairman Dingell has taken the initiative in his
    legislation that is before us today and proposed a solution for
    increasing import safety including requiring agencies to
    conduct research to develop better testing techniques and
    insuring accurate labeling on products to prevent consumer
    deception, and his bill would give the FDA the authority to
    recall adulterated products if necessary. Chairman Dingell's
    bill would also insure that products from other countries are
    only permitted to enter the United States if they meet our
    strict safety standards, and it puts in place regulations for
    ports of entry, certification, and inspection that will enable
    us to enforce this standard. These new process controls would
    be paid for by a new imported food inspection fee.
        The Dingell bill also addresses imported drugs by allowing
    the FDA to assess and collect user fees on drugs imported into
    the United States. These fees will help pay for inspectors,
    laboratory tests to detect adulterated drugs, and overseas
    inspections of drug shipments. But we know that contamination
    isn't limited to imported products alone. In the last few
    months, E. coli bacteria was discovered on lettuce and spinach
    from California. We had to recall peanut butter due to
    salmonella contamination, and botulism was found in canned
    green beans. All of these recent examples actually involve
    domestic products.
        There are incidents of serious concern. The Centers for
    Disease Control estimates that 76 million people became ill
    this year and 5,000 actually died from illnesses caused by the
    presence of microbial pathogens in their food. The spinach
    contamination alone caused 200 reported illnesses and three
    deaths last year. Now I have also introduced a bill that I have
    actually had for a number of years that would strengthen
    process controls on domestic products by establishing strict
    inspection and oversight procedures to prevent contamination at
    food processing facilities. It would require the FDA to set
    standards for sanitation and limits for the level of
    contaminations in food, and my bill would also require food
    processing facilities to register annually, and it would
    increase the number of inspections at facilities both in our
    country and in the country of origin.
        And I am looking forward to working with Mr. Dingell and my
    colleagues. I know others have introduced legislation to
    address these concerns as well. If I could just say in
    conclusion that I think that improving our Nation's import and
    domestic food and drug safety programs is of great importance.
    I wanted to thank, he is not here, but Mr. Stupak, as you know,
    has had a couple of hearings in the O&I Subcommittee on this
    issue. The bottom line is that American consumers should be
    able to trust that the products they purchased have been
    properly regulated and inspected and thereby making them safe.
    And that is why we are here today, and I thank all of you, and
    the witnesses who are here to help us in that regard. And at
    this point, I would recognize Mr. Deal, our ranking member, for
    an opening statement.

      OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF GEORGIA

        Mr. Deal. Thank you. During the month of August, I held
    town hall meetings all across my district and repeatedly heard
    from constituents who were concerned about the safety of their
    nation's food supply. They asked about country of origin
    labeling, imports from China, and wanted to know what was being
    done to make sure that the food that they feed their families
    is indeed safe. Coming from a town that calls itself the
    poultry capital of the world, I am also very familiar with the
    reciprocal impact that restrictions we place on producers in
    other countries can have on our own domestic producers.
        In my experience poultry imports are one of the first
    products another country bans if they are upset with new United
    States trade regulations. I am glad that we are holding this
    hearing today so that we can look at these issues and try to
    strike the right regulatory balance with legislation to help
    address the concerns expressed by my constituents. However, it
    is also important to recognize the complexities of these issues
    and be careful that our legislation does not hamper the reforms
    being made within the industry to provide consumer safe food
    products. I know the administration will also be making some
    recommendations shortly on import safety, and I believe it
    would be useful for us to evaluate those recommendations as we
    craft legislation on this subject.
        Also, during our work on the Food and Drug Administration
    Amendments Act of 2007 the issue of counterfeit drugs was
    highlighted, and I am glad we are continuing to work on this
    subject. While I am proud of the drug safety work that we did
    in that bill, I want to thank Mr. Buyer of our committee who
    raised a very valid point that if counterfeit medicines were
    entering the drug supply then in fact it does undermine our
    drug safety efforts. He has taken on himself to become perhaps
    the best informed on a personal basis of this issue, and I
    commend him for that.
        I want to thank our witnesses on the panels here today for
    their attendance. I look forward to your testimony on this very
    complex issue, and we look forward also to your recommendations
    as to how to solve the problems we face. Thank you, Mr.
    Chairman, and I yield back my time.
        Mr. Pallone. Thank you, Mr. Deal. And I would recognize now
    our vice chairman from Texas, Mr. Green.

       OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF TEXAS

        Mr. Green. Thank you, Mr. Chairman, for holding this
    hearing on the Food and Drug Import Safety Act. There is no
    question that glaring gaps exist in our food safety
    infrastructure. The GAO concurs, and has dubbed our Nation's
    food safety program as high risk. The news media has
    highlighted the most high profile problem stemming from imports
    from China. We have also held two hearings in the Oversight and
    Investigations Subcommittee on food safety, with the most
    recent hearing serving to investigate problems with the safety
    of food imports.
        This bill is a natural response to the problems that have
    been uncovered in the news media, and in our own subcommittee
    investigations. I support many of the provisions in the bill,
    and applaud the chairman of the full committee for his
    commitment to improving the safety of our Nation's food supply.
    I will whole heartedly support provisions granting the FDA
    recall authority over dangerous food. We learned through our
    O&I process that the voluntary recall process does not quickly
    and effectively protect Americans from tainted food, especially
    given the FDA often issues recalls after the food's shelf life
    has already expired.
        My goal is for the FDA to become a more nimble agency ready
    to respond to food safety threats in a time to make the
    difference and keep Americans from getting sick, and I hope
    these additional authorities will help them achieve that goal.
    While the bill has many provisions I support, I would be remiss
    if I didn't express my significant concerns about the language
    that would restrict the number of ports of entry for food
    imports. I am proud to represent the Port of Houston, which is
    the largest port in the country in terms of foreign tonnage.
    Granted, a good portion of that tonnage is related to our
    energy sector, but the port had made it a point to increase the
    number of food shipments it handles, more than 2.3 million tons
    of food coming through the port of Houston the first 7 months
    of this year alone.
        In fact, the port of Houston is one of only four ports in
    the country certified by the New York Board of Trade as a
    coffee exchange, and we are the only coffee port west of the
    Mississippi. Despite these commercial successes, the port would
    essentially be shut out of the food import business under this
    bill since no FDA lab is located in the Houston area. In fact,
    there is no FDA lab in the State of Texas. To make matters
    worse, no FDA lab located in the State despite the fact that
    our State shares the longest border with Mexico, one of our
    most prominent trading partners.
        There is so much produce and foodstuffs that comes across
    from Mexico through Texas land ports. I would think Laredo, TX
    may be the largest inland port in the country, if not the
    world, and yet there is no FDA lab in Laredo either. And I
    looked at the investigation from the O&I Subcommittee, and I am
    proud to serve on it, and I noticed the inspections that did
    turn up a number of problems from China but the next biggest
    country was Mexico. And so I think we need to do better on
    figuring out how we can address that. The situation brings up
    an interesting chicken or the egg scenario. Given the levels of
    trade in Texas on our southern border with Mexico, why isn't
    there an FDA lab located somewhere in Texas? It seems to be a
    glaring omission that adds more weight to our argument that the
    FDA simply doesn't have enough resources to adequately protect
    the Nation's food supply.
        On the flip side, there are only 13 FDA labs in the
    country, several of which are not located in heavy import
    areas. My neighbors in Arkansas would have to forgive me, but I
    have never considered Jefferson, Arkansas, a hub of import
    activity. I understand the chairman's desire to prevent port
    shopping. I share his concerns. But I question whether the
    presence of an FDA lab is really an appropriate reference to
    determine the ports of entry for food products in the country,
    and I fear this restriction of these imports to those extremely
    limited number of metropolitan areas could not strike the right
    balance in securing the safety of our food and supporting the
    flow of commerce, commerce that keeps my port supplying much
    needed jobs to my constituents who are the longshoremen who
    work on those docks.
        I look forward to hearing from our witnesses on this issue,
    and hope to work with the chairman of the full committee as we
    move forward in the process, and I share his goals of improving
    food safety, but I hope we can do it in a way that doesn't
    bring commercial activity in our country to a grinding halt.
    Mr. Chairman, I yield back my time.
        Mr. Pallone. Thank you. Next is the gentleman from Texas
    also, Mr. Burgess.

    OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
                  IN CONGRESS FROM THE STATE OF TEXAS

        Mr. Burgess. Thank you, Mr. Chairman. I thank you for
    having this hearing today. Just like Ranking Member Deal, I had
    my town hall meetings last month, and heard repeatedly about
    this issue, and the number of recalls of imported goods clearly
    caught people's attention across the country. And I am
    extremely concerned about the safety and security of household
    products, food supply, and our Nation's pharmaceutical supply.
    While I remain confident that America has the safest food
    supply in the world, what I am more concerned about is the
    safety of imported goods and particularly those imported from
    the People's Republic of China.
        My friend and colleague, Mr. Greg Walden, and myself sent
    numerous communications to the committee over the past few
    months asking for an investigation regarding the many food and
    consumer products safety recalls from China. I continue to urge
    the leadership of this committee to fully examine this matter.
    I am also looking forward to the Oversight and Investigations
    staff report from their recent trip to China, and I believe
    this report will further inform the legislation that we have
    under consideration today. America does have the safest, least
    expensive, most abundant food supply of any country in the
    world.
        In the past, whenever I went into a supermarket to buy food
    for myself or my family, you pick it up and you worry about,
    No. 1, does it taste good, No. 2, well, if it was in the 1980s,
    I worried about fat grams, in the 1990s, I worried about carbs.
    But now I worry about is this stuff going to make me sick? We
    just never had to stop and wonder about is the food safe to
    eat, is it going to make someone in my family ill, and the
    security of our food supply in my mind has never been in
    question, but I believe that while it is safe and secure the
    recent outbreaks of both E. coli and salmonella have caught the
    country's attention. Certainly they have caught my attention.
        The industry itself can really scarcely afford further
    erosions in consumer confidence of its products. I thank
    Chairman Dingell for his attention to this matter. Having
    reviewed the legislation, I think the intentions are good but,
    we all know when God is in the plan, the devil is in the
    details. I believe that we need to look toward how other
    Federal agencies have dealt with this issue, and whether it
    would be appropriate for the Food and Drug Administration to
    have similar authorities. I am very interested in a proposal
    developed by Dr. Bill Hubbard, former FDA associate
    commissioner. He has been here in this committee, and we have
    heard him testify in the past at numerous hearings. His
    approach would grant the FDA the authority to embargo if
    specific food from a specific country, much like the similar
    authority the USDA has in regard to meat and meat products. My
    staff and I have reached out to the FDA on a number of
    occasions, and now I am gratified that we are going to be
    getting together to review some aspects of that proposal.
        I am hopeful that moving forward we can discuss the matter
    fully with the agency. Now we just have come through the S-CHIP
    battle, Mr. Chairman, and I hope that is a lesson for us in
    this committee. This subcommittee is important. This
    subcommittee has some of the most intelligent Members of the
    people's house on both sides of the dais, and it is an affront
    to this subcommittee to push major legislation through the U.S.
    House of Representatives without the input of this
    subcommittee, and I trust we will not see a repeat of that in
    the future. I will yield back the balance of my time.
        Mr. Pallone. Thank you. I recognize the gentlewoman from
    Colorado, Ms. DeGette.

     OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF COLORADO

        Ms. DeGette. Thank you very much, Mr. Chairman, and thank
    you for holding the hearing today. I got involved in food
    safety legislation some years ago when a meat processing plant
    in my home State of Colorado sent out contaminated meat all
    around the West. And what I learned is probably the most
    important thing we can do as Members of Congress is work hard
    to protect the health and safety of our constituents. When our
    constituents to go the grocery store and buy a package of
    hamburger or when they buy spinach to give to their children
    because they think it is a healthy choice, they rely on our
    Government and our food safety agencies, all 13 of them, to
    make sure that their food is wholesome and safe for them to
    eat.
        That system has pretty much fallen apart from top to
    bottom, I think in large part because of imports from overseas
    in the last few years, and people are shocked by the continuing
    number of food safety issues we have. That is why I want to
    thank Chairman Dingell for developing comprehensive draft
    legislation that will deal with the issue of both resources and
    accountability. It seems to me there is a number of issues we
    need to discuss in the food safety issue. The first and key
    issue is resources. Our food safety agencies do not have the
    resources to do the job that we have been asking them to do and
    which increasingly they need to do. Second, the administration
    needs to think about how they are going to insure food safety.
    And, frankly, closing down FDA labs like the lab in my own back
    yard at the Federal Center in Denver is really not the way to
    go.
        I have a whole different set of concerns about the FDA labs
    that Mr. Green has, and one of them is that we are going to
    lose scientists who have years and years of experience. The
    response from industry has been somewhat more responsive, and I
    am happy to hear later today from the Grocery Manufacturers
    Association about their proposals. There are a couple of issues
    I have been working on ever since I got involved in these
    issues some years ago. The first one is giving mandatory recall
    authority to the FDA. People are shocked when they find out
    that the Consumer Product Safety Commission can recall toys
    although it is cumbersome but that we can't recall tainted baby
    food that we feed to those same babies. We need to have
    mandatory recall authority for a variety of reasons.
         Second, and there is a bill, H.R. 3484, that I have
    introduced that grants mandatory recall authority to the FDA
    and to the USDA. The second issue that I would really--I am
    glad the chairman has arrived because I would really urge him
    to look at this in the legislation. That legislation I have
    been working on, H.R. 3485, the Trace Act, which would set up a
    product tracing system that would track food from the farm to
    the grocery store which would enable to recall in the event of
    contamination. That also would help us go a long way in keeping
    our food supply that we give to consumers safe.
        Mr. Chairman, the bill before us is a great start. I am
    happy that we are having a hearing on it, and I look forward to
    working with you and the chairman of the full committee to
    making sure that we pass comprehensive food safety legislation
    in this session of Congress. Thank you.
        Mr. Pallone. Thank you. The gentleman from New Jersey, Mr.
    Ferguson.

     OPENING STATEMENT OF HON. MIKE FERGUSON, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Ferguson. Thank you, Mr. Chairman, and I want to thank
    you and Mr. Deal and members of the subcommittee and our
    witnesses for being here today to discuss this very important
    issue of the safety and the security of our country's food and
    drug supply. I am pleased that we are again addressing this
    critical issue in this most important subcommittee. It is
    paramount to the citizens of this country that they are able to
    have faith in our Government's ability to monitor and insure
    the safety of our food and our drugs. Recently, that has not
    been the case with several instances of toxic food and
    counterfeit drugs entering our supply chain.
        I hope that our witnesses today will be able to provide us
    with some insights to why there are perhaps some gaps in the
    security of our imported food and drugs. My biggest concern,
    and I believe perhaps the biggest concern of many of us, is how
    counterfeit drugs are entering our market place. How and why is
    this happening. My friend from the other side of the aisle who
    just spoke, Ms. DeGette, summarized the situation very well in
    a hearing earlier this year at a meeting of this subcommittee.
    She was speaking about the topic of a recent New York Times
    investigation that found that toxic cough syrup was being
    manufactured in China and shipped around the world.
        Even under the current construction of the law the dangers
    of counterfeit drugs are very, very real. I believe we need to
    grant the FDA the power and the authority to seize and destroy
    and investigate the origin of these counterfeit drugs. Alarming
    counterfeiting is happening not only with imported drugs but
    with our food supply, as we have heard several instances of
    that mentioned this morning, before they come here to the
    United States. Recently, the Agriculture Committee and the FDA
    provided testimony concerning imported aquaculture products
    from China containing unapproved antibiotics and contaminants.
    This is pretty disturbing as to why these products containing
    unapproved ingredients that can be harmful or even deadly to
    the consumer are making their way to American supermarket
    shelves.
        This shipment from China was found to contain nitrofurans,
    which has been shown to be a carcinogenic in animal studies. It
    is really unacceptable that food containing this harmful
    contaminant should be entering America's food supply, I hope
    that we will be able to address these and other important
    safety issues in the coming weeks. I look forward to the
    testimony of our witnesses. I particularly appreciate Chairman
    Dingell and his bill and the work that he has done on his
    legislation. I appreciate the seriousness with which he has
    taken up this issue, so much so that he has worked on
    legislation and introduced legislation to do so.
        I also hope as we move forward that the work of this
    subcommittee and this legislative product will include the
    very, very good work of our colleague, Mr. Buyer. As Mr. Deal
    mentioned earlier, he has really taken it upon himself to do
    extraordinary work and research and working on legislation that
    would address this counterfeit drug issue, and I am very
    hopeful and optimistic that in a bipartisan way that our
    committee, this subcommittee, and our full committee can come
    together to incorporate many of the good parts of the work
    product that Mr. Buyer is putting together as well. Thank you,
    Mr. Chairman. I yield back.
        Mr. Pallone. Thank you. I next recognize the chairman of
    the full committee and the sponsor of the legislation, Mr.
    Dingell.

    OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Dingell. Mr. Chairman, first of all, thank you for
    holding this hearing today. I appreciate your leadership, and I
    commend you for your vigorous efforts in this matter. Our
    Nation's consumers are experiencing a significant crisis, and
    confidence in the imported food products and other products
    they import. For months Americans have been inundated with
    reports about tainted products shipped from abroad, melamine
    tainted pet food, antibiotic tainted seafood, lead tainted
    toys, tainted counterfeit drugs, and counterfeit drugs that do
    nothing that we know of beneficial, and so on.
        As these reports have surfaced, the Subcommittee on
    Oversight and Investigations led by our able colleague, Mr.
    Stupak as chairman, intensified its investigation into how the
    Food and Drug Administration works to protect the public health
    against tainted food and drug and appliance imports. The
    preliminary results of these ongoing investigations revealed an
    under funded importation safety system equivalent in the terms
    of holes to a block of Swiss cheese. It is clear that Food and
    Drug cannot and is not doing its job for want of money, for
    want of staff, for amount of resources.
        We hear periodically about how they are going to be a
    leader organization, and how they are going to do more with
    less. I have been listening to that since I came on this
    committee long ago, and I must say that today it is as much
    phooey as it was then. Last week, Mr. Chairman, you and
    Chairman Stupak joined me in introducing H.R. 3610, the Food
    and Drug Import Safety Act. And I would urge my colleagues here
    in the committee and others of our colleagues in the Congress
    to join us in co-sponsorship with it. This legislation takes a
    vigorous proactive step towards correcting the problem of
    tainted food and drug imports. It closely resembles the
    discussion draft, which I released earlier in August.
        I would point out in response to comments I have heard from
    my colleagues on both sides it is my full intention that this
    matter will be pursued both vigorously and in a bipartisan
    fashion. And I invite my colleagues on both sides, Republicans
    and Democrats, to join in that undertaking, and I assure them
    that we are anxious to hear what they have to say about this
    because this committee will work best when we cooperate on
    matters of this importance. The legislation that we are
    discussing aims to increase Food and Drug Administration
    inspections both at the border and abroad by instituting a
    small user fee. That is something we have found is necessary
    because without this kind of financing there will be no
    adequate performance by Food and Drug, no adequate resources,
    no adequate staff or funding.
        The fee would also fund laboratory analysis to insure that
    imports are safe to enter our stream of commerce, and I would
    observe that the efforts of Food and Drug to close its
    laboratories have been met with uniform condemnation
    particularly from this committee. Next, it grants the authority
    to ferret out bad actors that seek to game the current
    regulatory system and pass off bad products as safe for
    consumption, a problem which we read about almost daily in the
    press. As our committee staff stated in their July 2007 report,
    FDA's current regulatory approach, which relies on voluntary
    guidelines for most foods, is inadequate to assure the safety
    of our modern food supply.
        I would observe that the credo down there and the mechanism
    under which this appears to be done is to trust us, and we have
    found to our regret that we simply cannot trust that kind of
    activity to an agency so poorly funded and so poorly staffed.
    Finally, the bill seeks to attempt a balance by rewarding those
    who employ best practices allowing them to participate in a
    voluntary program that gives expedited movement of food imports
    through the food inspection system.
        Mr. Chairman, I look forward to the comments of my
    colleagues today, and the testimony of our witnesses today as
    the committee seeks to protect the public health from tainted
    food and drug imports. I would urge that we be vigorous. I want
    this to be a bipartisan effort. We will build upon the things
    which we did in the earlier legislation on this matter, and the
    commitments I made to my colleagues--that we would hear all
    Members when we commence the process--remain as good today as
    they were when we made them earlier. So I urge my colleagues to
    work together. This is a serious effort to protect the public
    health, the public safety, and the public welfare from serious
    wrongdoing, which is now hurting us. I thank you for your
    recognition.
        Mr. Pallone. Thank you, Chairman Dingell. Next is Mr.
    Murphy of Pennsylvania.

       OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
             CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

        Mr. Murphy. Thank you, Mr. Chairman, for holding this
    important meeting and hearing on an issue that is so vitally
    important to America's livelihood, and actually our lives and
    our families. Several things that we are going to cover today
    are important with regard to the FDA's role in protecting our
    Nations' medicine cabinets. There is a role for the FDA, I also
    believe in regulating our food supply, and such things as
    counterfeit imported drugs, which of course mean that you may
    have people who are taking drugs with toxins in them or
    ineffective drugs which actually are contributing to their own
    health problems. We want to make sure the FDA focuses as much
    of its attention nowadays on drug safety as new drug approval.
        As appalling as it is to think that manufacturers would be
    involved in this outside of the criminal labs, we have to be
    aware that we are going to have a more vigilant role in dealing
    with this. And that is probably because of the Nation's
    increased awareness of what has been happening with China.
    China, who we have a great deal of trade with and we would like
    to be a good trading partner, but when we have raised questions
    about steel dumping or manipulation of their currency if their
    response is that they are going to sell off their treasury
    bonds to be punitive it hardly seems to be the words coming
    from a partner.
        Furthermore, they give us the toys with lead paint, bibs
    and vinyl lunch boxes with lead, diapers with fungus,
    contaminated pet food, reused chopsticks, tires that cause
    fatal accidents, juice with unsafe color additives, baby
    bottles with an ingredient that can alter a child's hormones,
    pacifiers with carcinogen, carcinogenic chemicals, teething
    rings with toxic chemicals, and also let us not forget they
    have spied on us, they have cyber techs in the Pentagon, they
    have stolen our national secrets, they have provided bullets
    and bombs and their components are used to kill our soldiers in
    Iraq, and to supply the Taliban. This is not the action of a
    friendly nation to us.
        The FDA is on the front lines of protecting American
    citizens' health, but really in the broader scheme of things
    this can be an important partnership between the FDA and the
    American people in making sure the American people are aware of
    any problems with any products, that such products are recalled
    quickly, that action is taken to inspect at our borders and put
    increased pressure on China and any other nation that tries to
    violate the laws and the protections that we consider so
    important for people's welfare and health.
        Mr. Chairman, as we continue on with this and other
    hearings, we will hear more and more horror stories of things
    that have happened, and American companies need to be vigilant.
    But let us not forget it is not the companies themselves that
    are involved with this. Companies cannot possibly babysit
    everything that happens with a nation where they consider it a
    common practice to go ahead and have lower health standards,
    lower wages, pollute the air more, and expect our citizens to
    pick up the tab on this or perhaps turn a blind eye. We will
    not do that as a nation. We will not do that as a Congress. And
    I am pleased this committee is going to take firm action on
    making sure that we draw out every possible exposure of this
    and get the FDA as a strong partner to protect the health and
    welfare of American citizens. I yield back.
        Mr. Pallone. Thank you. I recognize the gentlewoman from
    California, Ms. Eshoo.
        Ms. Eshoo. Thank you, Mr. Chairman. I am going to waive my
    opening statement time and save it for questions. Thank you for
    having this really critically important hearing.
        [The prepared statement of Ms. Eshoo follows:]

    Prepared Statement of Hon. Anna G. Eshoo, a Representative in Congress
                          from the State of California

        Mr. Chairman, I thank you for convening today's hearing on
    H.R. 3160, the Food and Drug Import Safety Act, legislation
    that would give the Food and Drug Administration enhanced
    authority and resources to inspect imported foods and drugs, as
    well as additional authority to protect public health.
        Even before reports this year about tainted foods and
    consumer products coming into our country, there have been
    substantial concerns about the safety of our food supply.
        The CDC's estimates of foodborne illness have been
    startling: 76 million illnesses, 325,000 hospitalizations, and
    5,000 deaths each year.
        The domestic inspection and monitoring system for food is
    not nearly as rigorous as it should be. The authority of the
    major food safety agencies to enforce standards and recall
    suspect food has been virtually non-existent. That's why I'm
    pleased that H.R. 3160 grants recall authority to the FDA.
        The major concern now is the ability of food safety
    agencies to keep pace with the rapid increase of food imports.
        The FDA, which is under the jurisdiction of the Energy and
    Commerce Committee, is responsible for ensuring the safety of
    approximately 80 percent of all food products--virtually every
    food item that is not meat or poultry. In the last decade the
    volume of food imports under FDA's purview has tripled. At the
    same time, the percentage of shipments inspected by FDA has
    dropped from 1.7 percent to 1 percent.
        Unlike the USDA's Food Safety and Inspection Service, which
    bars the importation of meat and poultry unless the country
    from which the product is shipped has been certified as having
    standards equivalent to U.S. standards, the FDA does not
    require equivalency certifications. Instead, FDA relies on
    inspections of imported goods to protect consumers.
        My understanding is that the FDA has stated that it does
    not have the resources to implement equivalency certifications.
    H.R. 3160 attempts to address this problem by imposing user-
    fees to expand inspections and by requiring equivalency
    standards.
        Much more needs to be done to improve food safety, and the
    legislation we're examining today will help plug some of the
    holes in the food safety system. I look forward to the
    testimony we'll hear from today from the FDA and other
    witnesses.
                                  ----------

        Mr. Pallone. Thank you. Ms. Schakowsky.

     OPENING STATEMENT OF HON. JAN SCHAKOWSKY, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Ms. Schakowsky. I thank you, Chairman Pallone, for holding
    today's hearing on the Food and Drug Safety Act. I thank
    Chairman Dingell for this important legislation which makes
    crucial strides in strengthening FDA's ability to monitor the
    safety of our Nation's food and drug imports. During the past
    year, consumer confidence in our Nation's food safety framework
    has been shaken time and time again particularly by tainted
    imports. Cases of poisoned toothpaste, antibiotic laden seafood
    and toxic pet food demonstrate how we rely on the food safety
    practices of foreign countries and producers, and illustrates
    the importance of the legislation before us today.
        More than $75 billion worth of food and agricultural
    products are imported into the United States annually, which is
    nearly double the value of just over a decade ago before NAFTA
    and WTO took effect in the mid-1990s. In 2005 nearly 15 percent
    of all U.S. food consumption was imported. Despite the increase
    in imports FDA estimates that in 2007 it will conduct border
    inspections on only a paltry 0.6 percent of the food it
    regulates down from 8 percent just a decade ago. USDA, while
    not a model of perfection, has at least managed to inspect 11
    percent of the beef, poultry, and other products it regulates
    in 2007. Chairman Dingell's bill incorporates several crucial
    and common sense solutions to the present food safety crisis.
    The bill would provide FDA with the additional resources and
    authority it needs to certify and inspect food safety
    procedures of foreign countries and facilities as well as the
    products entering our ports.
        It institutes country of origin labeling, something that 92
    percent of Americans support within 6 months of the bill's
    enactment into law. I am particularly pleased that it gives the
    FDA the authority to issue mandatory product recalls and halt
    imported products until a foreign entity has resolved the
    problem. These measures will help prevent future food safety
    outbreaks and help restore the shaken consumer confidence.
    While I strongly support the intent of this bill and the vast
    majority of the solutions it proposes there are some provisions
    that I believe need more discussion. Sections 3 and 4 require
    the Health and Human Services Secretary to assess and collect
    user fees to fund inspections, lab testing, and research on
    testing techniques for food and drug imports.
        I fully support the emphasis on proactive safety
    inspections and testing. However, if we are forced to rely on
    user fees, I am concerned that we make it clear that those
    companies that pay those fees do not have undue influence on
    agency policies and practices. The subcommittee has worked to
    address this problem, and the FDA's drug approval process, and
    I hope, in fact, I am sure, that we can prevent similar
    problems here.
        I am also concerned with provisions in section 5 that would
    restrict the number of eligible ports from the current number
    of more than 300 to just 13, excluding some of our Nation's
    busiest ports such as Chicago, which I represent part of, and
    Houston and Boston. While the Secretary has the authority to
    waive this requirement, I believe we need to create a food
    safety system that enables busy ports like Chicago to continue
    receiving food imports. I am interested in hearing more about
    the consequences of the drastic reduction on areas with no
    direct port access as well as how we can insure transparent and
    accountable decision-making process with regard to this waiver
    authority.
        There is much work to be done to restore consumer
    confidence in our Nation's food supply, the kind of food safety
    framework that will make the high profile cases of this year a
    thing of the past. And I look forward to hearing from all of
    the witnesses. With that, I yield back. Thank you, Mr.
    Chairman.
        Mr. Pallone. Thank you. I recognize the gentlewoman from
    New Mexico, Mrs. Wilson.

     OPENING STATEMENT OF HON. HEATHER WILSON, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF NEW MEXICO

        Mrs. Wilson. Thank you, Mr. Chairman. The events over the
    last year really highlighted for Americans and raised awareness
    of just how vulnerable our food supply is, and it is not just
    food. It is food, medicine, consumer products, even our water
    and the things that we drink are vulnerable to contamination.
    Not only accidental contamination or what might have been
    unintentional or the result of bad sanitary practices in
    companies that are poorly regulated overseas but the potential
    for intentional contamination of our food supply. It is a
    serious issue, and we have a duty in this Congress to make sure
    that imported food and goods are safe from contamination
    whether accidental or intentional, and make sure that any
    problem with the food supply is detected so that we prevent
    public health problems before they occur.
        My colleagues on this committee have recounted the problems
    that we have had with China, but it is not a single country
    issue. Globalization creates a vulnerability here in the United
    States and starting at our border is not where we need to be. I
    believe very strongly that we need an integrated system for
    food safety and security with layers of protection. I look
    forward to the testimony here today, and looking at the
    legislation in front of us to make sure that we are providing
    that integrated system for food safety and security rather than
    setting up a system where there are single points of potential
    failure after which public health problems can occur. We have a
    food safety laboratory in the State of New Mexico at New Mexico
    State University, and I am a strong supporter of what they do,
    not only in food technology and evaluation but also in a
    counterterrorism technologies laboratory where they develop
    tools in order to make sure that our food supply is safe.
        I look forward to hearing the testimony of the witnesses
    today, and look forward to working with my colleagues on the
    committee to make sure we strengthen our ability to prevent the
    intentional or unintentional contamination of America's food
    supply. Thank you, Mr. Chairman.
        Mr. Pallone. Thank you. The gentlewoman from Oregon, Ms.
    Hooley.

     OPENING STATEMENT OF HON. DARLENE HOOLEY, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF OREGON

        Ms. Hooley. Thank you, Mr. Chairman. I first of all want to
    thank you and Chairman Dingell for your leadership on food
    safety issues. I know this is an issue that the chairman cares
    about very deeply, and I am glad we are taking up this
    legislation. I too want to make sure that we can assure the
    American public that our foods and other products are safe.
    Recent incidents involving adulterated products from China have
    again brought to the forefront the critical importance of food
    safety. Although the vast majority of food entering the United
    States is safe, now is the time to act to strengthen our system
    to limit harmful food products from entering the country.
        Monitoring the safety of imported foods is a tremendous
    challenge for FDA. Over 825,000 different importers brought
    shipments into the United States last year. Those importers
    bring products to approximately 326 ports. The value of U.S.
    imports has nearly doubled since fiscal year 2000. The FDA's
    resources are stretched too thin to meet the growing demand of
    its inspectors. Fortunately, I think almost universal agreement
    exists on that point, that the FDA needs more resources to its
    job properly. I also believe it is vital to insure that our
    food is not only safe but that we work to permit the free flow
    of goods into the United States. The safe and secure food
    importation program is an important step to help expedite the
    importation of food from those parties willing to abide by
    rigorous food safety guidelines established by the FDA.
        This program provides the appropriate incentives to
    importers by rewarding those who take extra steps to ensure
    safety. I also look forward to hearing from our witnesses today
    regarding the provisions restricting port of entry to only 13
    ports. I believe that steps can be taken to help ensure we are
    able to better inspect imported foods, but I believe we can do
    so in a less burdensome manner. I have a significant food
    processing industry in the district I represent. I am concerned
    about the impact restrictions on port of entry may have on
    consumers and the food processing industry by making them wait
    longer to get fresh products.
        I also fear that having only 13 ports of entry will raise
    production costs and put food processors in the fifth district
    at a competitive disadvantage to those cities with an FDA lab,
    without materially improving safety. I believe we can find
    other alternatives that ensure safety and still meet the needs
    of our consumers and producers. As the author of the country of
    origin food labeling, COOL provisions for produce passed in the
    2002 farm bill, I believe COOL can be an important resource for
    consumers. It is also critical to ensure such requirements can
    be practically administered.
        COOL with processed foods present challenges that are not
    present with fresh produce or meat. I hope our witnesses will
    share their thoughts on the impact of COOL as it relates to
    processed foods in particular, and practical approaches to
    implementing such requirements. I look forward to working with
    Chairman Pallone and Chairman Dingell as we move forward with
    this very important legislative process on H.R. 3610. Thank
    you, Mr. Chairman, and I yield back the remainder of my time.
        Mr. Pallone. Thank you. Mr. Buyer from Indiana.

      OPENING STATEMENT OF HON. STEVE BUYER, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF INDIANA

        Mr. Buyer. Thank you very much. And to Chairman Dingell, I
    want to thank you for giving me the opportunity to work with
    you and your staff. As I traveled the country and went to our
    mail facilities and to our private carriers, I learned that
    your staff, and, Mr. Pallone, your staff had also been there.
    In 3 minutes I can't even cover the vast--my summer, what I did
    on my summer vacation. But what I would like to do is say I
    believe that our ideal is to insure the highest standards of
    health care for Americans. We do that with regard to health
    care. The demands for high standards are placed upon our health
    providers, our pharmaceuticals, our medical devices, our
    medical technologies, our medical research.
        But with regard to drugs and medical devices, how do we
    protect our system? We look to the FDA as the gold standard but
    then when you think about this, we just passed PDUFA, and
    PDUFA, and all the dollars, the hard work that we put into the
    reauthorization I believe is useless if we cannot protect the
    system and close it off from the harmful products and bad
    actors who are these counterfeit criminal syndicates that are
    preying upon Americans. We must safeguard citizens from unknown
    dangers using the information we have on the threats to
    America's health. We know that there are multi-million dollar
    worldwide criminal enterprises doing business growing at
    unfathomable rates to manufacture counterfeit drugs. 20,000 to
    30,000 packages enter each of our 12 international mail
    facilities every day, and that is not counting the private
    facilities.
        Less than 1 percent of these packages are screened by FDA.
    That means 99 percent of them are sent to individuals across
    the Nation without ever being inspected, much of which, in
    excess of 70 percent perhaps, are unapproved drugs. Now when
    you look about how many times we have touched this law, we
    touched it back in 1938. Chairman Dingell and his initiatives
    in 1988 touched this issue. So if you will indulge us, Mr.
    Chairman, I hopefully will have a discussion draft, it has been
    at the leg counsel here for the last 2 weeks, by mid next week.
    What we propose to do is give FDA the authority to destroy
    counterfeit drugs coming into our postal system and the private
    carrier system, give FDA the authority to seek the disgorgement
    of counterfeiters profits.
        We want to increase minimal Federal standards to States to
    use in licensing prescription drug wholesalers. We want to
    implement a Federal pedigree standard so we can effectively
    trace prescription drug products throughout their chain of
    custody. This further secures our domestic supply chain from
    bad actors. We want to establish the electronic pedigree
    standards to modernize our system and prevent fraud of paper
    pedigrees. We want to work toward a goal of serialization of
    all products, prescription drugs, so we can further protect
    them from the counterfeiters.
        We will also enlist State's help in tracking counterfeiters
    down by providing them with some financial incentives to help
    the Federal Government. We also will insure that any repackaged
    drug products are held to the same high standard as the
    original drug products, insure also that drug wholesalers
    engaged in criminal counterfeiting activities are debarred and
    prohibited from future work with the FDA. We want to create a
    study to investigate the international domestic threats to the
    Nation's drug supply. So, Mr. Chairman, I want to continue to
    work with you. We will get this discussion draft hopefully back
    from leg counsel, get it to your staff, and we all will get
    this and work together. And I appreciate, Chairman Pallone,
    working with you and Chairman Dingell, along with Mr. Deal. I
    appreciate your leadership along with Mr. Barton and his staff.
    Thank you.
        Mr. Pallone. Thank you. The gentleman from Utah.

      OPENING STATEMENT OF HON. JIM MATHESON, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF UTAH

        Mr. Matheson. Thank you, Mr. Chairman. Clearly, this is an
    issue of great concern. We want to ensure the integrity of our
    food supply. And I think it is a complicated issue, and to
    resolve it, I think that a good bipartisan effort is the best
    way to go about it. I think this committee can really step up
    to the plate in that regard. I think we need to take a look at
    this in the context of the global market place, and we need to
    look at the whole chain, supply chain, if you will. I would
    suggest that you could connect this issue with the toy safety
    discussion that is also going on in another subcommittee. In
    that case, we are looking more at the manufacturing end. In
    this case, I am hearing a lot about the domestic end of the
    equation where we inspect food when it gets to our country. I
    would suggest we need more of a blended approach, and we ought
    to be looking at the supply chain in general about where we can
    make the most rational and efficient efforts to ensure the
    integrity of the food supply.
        And this discussion seems to be a lot about imported food
    but we also of course should not forget our domestic production
    as well and make sure that food produced domestically can be
    assumed to be safe when it reaches a family dinner table. There
    are two issues I just wanted to raise briefly in this opening
    statement of concern to me that I think we need to keep in mind
    as we look at this broad issue of food safety. The first has to
    do with the impact on our relationships with our trading
    partners. I am concerned that this effort at addressing food
    safety concerns could invite a more protectionist agenda than I
    think would be appropriate or good for this country, and I
    think as we look at this issue we ought to make sure that does
    not happen. I think we should recognize that there--and we
    should ask questions about how the existing WTO agreement that
    talks about the application of sanitary and by sanitary
    measures how that does work and if there are issues that we
    ought to think about to make it work better then I think we
    should recognize we are in that global market place, and we
    should try to maintain the integrity of that global market
    place.
        The second issue I want to raise that we ought to be
    looking at has to do with comments that FDA provided during the
    Agriculture Appropriations Subcommittee hearing on food safety.
    FDA issued some concerns about imported aquaculture products,
    seafood products, and the issue of antibiotic resistance, based
    on antibiotics being used with the seafood product. I think
    that is a very important issue when it comes to the issue of
    the development of antibiotic resistant diseases. I plan on
    introducing legislation this week with my colleague,
    Representative Ferguson, which seeks to address this issue
    about how this country can better position itself for trying to
    develop new antibiotics that can take on these organisms that
    are currently resistant to current antibiotics, and I think
    that is an emerging public health concern and it turns out even
    in this food safety discussion that public health concern is
    now merged as well, so those are just two quick issues that I
    think we also ought to keep in mind as we look at this broad
    food safety issue. With that, I will yield back, Mr. Chairman.
        Mr. Green [presiding]. Mrs. Blackburn.

    OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF TENNESSEE

        Mrs. Blackburn. Thank you, Mr. Chairman. I would like to
    thank the chairman for calling the hearing to discuss all of
    our issues with FDA oversight and the food and drug imports
    into the country. This is indeed a critical public safety issue
    as well as a national security concern, and when we hear the
    reports as we have heard in recent days about the episodes
    around the country, we do become keenly aware of the potential
    for terrorists to exploit these weaknesses. The combined
    efforts of the food industry and the regulatory agencies are
    often credited with making the U.S. food supply the safest in
    the world. And we know that we have at least 15 different
    agencies administering over 30 different rules related to food
    safety.
        And in spite of this widespread approach, we have a
    tremendous track record of success and those involved in that
    process are to be commended. We know that the FDA is
    responsible for insuring that all domestic and imported food
    products except most meats and poultry are safe, nutritious,
    wholesome, and accurately labeled. Although all imported food
    products must meet the same safety standards as domestically
    produced foods, international trade rules permit a foreign
    country to apply its own differing regulatory authorities and
    institutional systems in meeting such standards under an
    internationally recognized concept known as equivalence.
        As Americans consume increasing amounts of imported food
    and drink and as U.S. producers are demanding more overseas
    ingredients, we see an increase in this volume. Globalization
    is playing a part. It has tripled our imports in the past
    decade. I was impressed by the staff that the FDA received more
    than 10 million imported food entries in 2006 and compared that
    with less than 2.8 million entries in 1996. That is an
    indication of the volume that is before the agency. Just over 1
    percent of these shipments were physically examined in fiscal
    year 2006 compared with 1.7 percent in fiscal year 1996.
    According to the USDA, the United States is expected to import
    a record 70 billion in agricultural products this year.
        The legislation before us today causes some concerns to me
    with the user fees, the trade implications, new labeling, the
    negative impact on small business with these user fees and
    those being passed on to the consumer, and of course the
    bureaucracy that is there. I am also concerned about the
    restriction of ports of entry and what that would do to food
    plants that are not in close proximity to a metropolitan area.
    But, Mr. Chairman, I look forward to the discussion, and I
    thank the committee for the efforts spent on the issue. I yield
    back.
        Mr. Green. Mr. Waxman.

    OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Waxman. Thank you very much, Mr. Chairman. There
    doesn't seem to be a day that doesn't go by when we pick up the
    morning newspaper and we hear about the dangers of some
    imported product that turns out to be unsafe. We have been
    hearing a lot about toys. We have been hearing about lead. And
    we have been hearing particularly alarming information about
    food that comes into our country from foreign lands that are
    not safe. So we need to do something about this issue, and I
    want to point out that I think this Food and Drug Import Safety
    Act of 2007 makes some critical steps forward getting FDA what
    it needs to protect the American public.
        And I want to applaud Chairman Dingell for the good work he
    has done on this legislation. The bill, as we look at this bill
    at this hearing today, makes important improvements to food and
    drug import safety, but its most dramatic and in some ways most
    critical changes would affect food imports because the bill
    deals not just with food imports but other imports within the
    jurisdiction of the FDA. If we look at FDA, FDA's experience
    with food importation, we want them to focus on securing the
    entire supply chain, not just stopping unsafe foods at the
    border. The bill would give the FDA clear authority to require
    a recall of unsafe foods. The bill provides for strong civil
    monetary penalties to hold bad actors accountable, and it has a
    strong food regulatory system. All of this represents an
    important step forward.
        I was pleased to listen to the very thoughtful statement of
    our colleague, Congressman Matheson of Utah, where he pointed
    out we need to look at the whole chain of the food supply from
    the original source. And so this legislation doesn't just deal
    with the problem at the border, it requires that within 5 years
    FDA would have to certify that all food importers, either
    individual facilities or countries, have a system in place to
    insure the safety of the foods that they export to the United
    States.
        I think this makes a lot of sense. If they don't have a
    system in place then FDA would be required to go and examine
    the facility itself. It may be impossible for FDA to review and
    certify the overwhelming volume of facilities in countries
    seeking to enter the U.S. market. If that is so, we are all
    going to lose so I hope the FDA will provide some guidance on
    what exactly it needs to do this important job. I want to raise
    an issue of concern about the user fee. I think we rely too
    much on user fee, and I also want to point out as Mr. Matheson
    did, we have a domestic food supply question as well, and I
    know that Chairman Pallone has introduced a bill that I think
    is highly commendable on this subject.
        But let us go into this issue with the expectations that we
    are going to get the job done, but let us don't fool ourselves.
    We don't provide the authorities, and if we don't provide the
    resources FDA will do the best it can but it will fall short of
    what needs to be done. And I hope we don't have another hearing
    in another year that the problems have not got resolved.
        Mr. Green [presiding]. Mr. Pitts.
        Mr. Pitts. I would like to thank the chairman for holding
    this vital hearing, this hearing on a very vital issue, food
    and drug safety for the American people. And I would like to
    thank the gentleman from Indiana, Mr. Buyer, for his leadership
    on this issue, and would like to yield the balance of my time
    to him.
        Mr. Buyer. I thank the gentleman. I would like to say to
    Chairman Dingell, back in 1988 when you touched this issue, we
    didn't have the Internet, and the Internet is presenting great
    challenges to the protection of our system today, so when
    people believe they can get on the Internet and they pull up a
    Canadian Web site, and these Web sites can go up one day and
    down the next. For example, I don't want to give great
    compliments to FDA, American people could go to a Canadian
    Internet pharmacy, which was www.rxnorth.com, and they were led
    to believe the products were coming directly from London and
    that they were safe and it is all legal and it is approved. And
    what is happening today is that our Government by way of our
    policy are being the enablers of these very complex criminal
    enterprises. So why I say enablers is the FDA believes through
    their interpretation of the law that they do not have the
    authority to destroy these drugs when they see them.
        Now if it's a schedule 1 or 2, they do a seizure and they
    can destroy, but they can send it to a lab and they can destroy
    it. Many of them were never sent to a lab. And I felt that the
    absolute frustration by many of the pharmacists at our
    international mail facilities working for the FDA that they
    will place their stamps, FDA stamps, and things on these drugs,
    and they have a return to sender policy. Now you think about
    that. You got a flim-flam operation here, a snake oil salesman
    selling bad goods to people, and they are taking their money,
    and the Government is giving the product back to the flim-flam
    man to go somewhere else to scam people. That is what is
    happening here.
        And the FDA, they want the ability to destroy these drugs,
    and we need to give it to them. And what I am referring to here
    is with regard to these criminal enterprises the FDA last
    summer, they did an FDA bust in cooperation with British
    officials at Heathrow Airport. Now these drugs were
    manufactured in China. They were shipped transient through Hong
    Kong to the United Arab Emirates. They went to Heathrow. From
    Heathrow they then go to the Bahamas to a fulfillment center
    where that Canadian pharmacy, rxnorth.com, would then contact
    the Bahamas, and say, okay, I have an order that has been
    placed from somewhere in the United States. They contact the
    Bahamas. The Bahamas then fills that order, send it to
    Heathrow. From Heathrow then it comes into the United States.
        Now the challenge is to actually take down these syndicates
    because they are moving transit through so many different
    countries. And to give you an example, this is a drug, Fosamax.
    This is to improve bone density for those diagnosed with
    osteoporosis. Now when you look at these packages, you look at
    them here, which one is the counterfeit and which one is real?
    Now the only way that you can tell is you got to go to the
    manufacturer themselves. And you look here and the yellow is
    just a little bit lighter if you look really close. That one is
    real. When you turn to the inside on both of them, they both
    have the blister packs. All the way to instructions it looks
    real. It is not. It is fake.
        When you look at the packages and you go to the bar coding,
    you can bar code the counterfeit and bar code the real, and
    they both bar code correctly. You go to the lot numbers. The
    lot numbers are both correct. You go to the expiration dates.
    They are both correct. The sophistication of these criminal
    syndicates is absolutely extraordinary, and we have to get on
    our heels and on our toes and give FDA the authority to destroy
    these and protect our country. And that is why I want to work
    with everyone and anyone who wants to help protect our system
    from these bad actors who prey on the most vulnerable in our
    society. I yield back.
        Mr. Green. Thank you. And we have about 6 minutes until our
    vote. Representative Allen for opening statement.

       OPENING STATEMENT OF HON. TOM ALLEN, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF MAINE

        Mr. Allen. Thank you very much, Mr. Chairman. Thank you for
    convening this hearing to address the important issue of food
    and drug import safety. Like many Americans, I have become
    increasingly concerned about the safety of our food supply.
    Food imports have more than doubled over the past decade, and
    the Food and Drug Administration currently lacks the resources
    and the authority to protect Americans from tainted products.
    For example, the FDA first issued an alert on unsafe seafood
    from China as early as 2001, but we all know from watching the
    news in June 2007 contaminant levels were still unacceptably
    high for many imports, including catfish and shrimp.
        The Food and Drug Import Safety Act of 2007 takes several
    important steps toward increasing the safety of our food
    supply. I want to highlight a few of the provisions I think are
    particularly important. First, the legislation would require
    that all imported food intended for consumption be subject to
    the same safety standards already applied to domestically
    produced food. Most Americans would be appalled to realize that
    today this is not the case for many food products. Under the
    bill, the FDA must certify that foreign countries or facilities
    that import food into the United States are enforcing food
    safety standards as good or better than the standards in place
    here already. I applaud this proactive approach, which has the
    potential to identify and address problems in the food supply
    before the food ever reaches our borders.
        Second, this legislation would institute mandatory country
    of original labeling for all foods, drugs, and medical devices
    regulated under the FDA. All consumers have a right to know
    where their food comes from. I am particularly pleased that for
    the first time the rule will apply to processed seafood. These
    foods might be at greater risk of contamination because of
    extended processing but until now have been exempt from the
    country of origin labeling requirement. Finally, the
    legislation would help level the playing field for American
    producers. For example, fishermen in my home State of Maine are
    renowned for safe, sustainable, and high quality seafood
    products, yet these hard-working Americans often encounter the
    economic hardship because the seafood market is flooded with
    cheap, lower quality imports that have not had to meet the same
    rigorous safety standards applied to home grown or caught
    products.
        One possible problem I just wanted to highlight, the bill
    would reduce the number of ports open to food imports
    dramatically, and this is legislation that I think really needs
    some revision. I do thank the chairman again for holding this
    hearing on such an important topic and look forward to working
    with my colleagues to advance this important legislation. Mr.
    Chairman, I yield back.
        Mr. Green. Thank you. Since we have votes on the floor the
    subcommittee will stand in recess. We finished the opening
    statements so we will get to your testimony as soon as we
    return hopefully in about 20 minutes.
        [Recess]
        Mr. Green. The subcommittee is going to come back in order,
    and again I appreciate everyone's patience this morning for our
    vote schedule. We may have another one in about an hour on the
    continuing resolution, so we will try and get through our
    statements. Again, I know your time is valuable like everyone
    else.
        I would like to recognize our first panel. Dr. Lutter is
    Deputy Commissioner for Policy, Food and Drug Administration,
    and he is accompanied by Dr. Acheson, and also Dr. Solomon. So,
    again, proceed with your testimony, and thank you for being
    here.

     STATEMENT OF RANDALL L. LUTTER, DEPUTY COMMISSIONER, POLICY,
     FOOD AND DRUG ADMINISTRATION, ROCKVILLE, MD; ACCOMPANIED BY:
     DAVID ACHESON, M.D., ASSISTANT COMMISSIONER, FOOD PROTECTION,
       U.S. FOOD AND DRUG ADMINISTRATION, AND STEVEN M. SOLOMON,
    D.V.M., DEPUTY DIRECTOR, OFFICE OF REGIONAL OPERATIONS, OFFICE
        OF REGULATORY AFFAIRS, U.S. FOOD AND DRUG ADMINISTRATION

        Mr. Lutter. Good morning. Thank you, Mr. Chairman, and
    members of the subcommittee. I am Dr. Randall Lutter, Deputy
    Commissioner for Policy at the Food and Drug Administration in
    the U.S. Department of Health and Human Services. I am very
    pleased to be here today with my colleagues, Dr. David Acheson,
    Assistant Commissioner for Food Protection, and Dr. Steven
    Solomon, Deputy Director of the Office of Regional Operations
    in FDA's Office of Regulatory Affairs.
         Thank you for the opportunity to discuss the important
    issues relating to the safety of imported FDA regulated
    products. I would also like to take this occasion to thank the
    committee for all its recent hard work in passing the Food and
    Drug Administration Amendments Act of 2007. The programs that
    this legislation reauthorizes are vitally important to the
    agency and its continued ability to protect and promote the
    public health. We look forward to working to implement this
    legislation.
        I assure you that FDA is committed to ensuring that
    America's supply of food, drugs and other products that we
    regulate continues to be as safe as possible. In recent years,
    the agency has done a great deal to detect unintentional and
    deliberate contamination in imported products. However,
    increasing globalization and trends towards production of these
    products abroad pose significant challenges. Recent incidents
    involving unsafe imported products underscore the need to renew
    our focus on integrated product safety strategies.
         Food has recently been in the news. Dr. David Acheson,
    Assistant Commissioner for Food Protection, provides leadership
    on strategic and substantive food safety on food defense
    matters for both imported and domestic foods. He is developing
    a strategy to enhance our food safety and food defense systems
    that will address changes in the global food distribution
    system, identify the most critical needs, and serve as a
    framework to help us address the challenges we face.
        Our goal is to ensure a comprehensive and robust food
    safety and food defense program that focuses first on
    prevention, second on risk-based interventions to ensure and
    verify our preventive controls are effective, third, rapid
    responses when contaminated food or feed is detected or when
    there is harm to humans or animals. The strategy will provide a
    risk-based farm to table approach that coordinates food safety
    and food defense efforts on both imported and domestic products
    and focuses on prevention, intervention, and response.
        The President is engaged directly in the effort to make
    sure we are doing everything we can to protect Americans from
    unsafe imports. On July 18 he issued an Executive order
    creating a Cabinet level working group on import safety to
    promote the safety of imported products. It includes
    representatives from 12 Federal departments and agencies
    including FDA and the U.S. Department of Agriculture, and is
    reviewing the procedures, regulations, and practices for
    ensuring that imported foods, drugs, and other consumer
    products are safe.
        Secretary of Health and Human Services Michael O. Leavitt
    chairs this working group, and FDA plays a key role in the
    group's activities. Secretary Leavitt and FDA Commissioner von
    Eschenbach have traveled extensively throughout the United
    States during the past few months visiting ports of entry and
    reviewing import operations in the field. The insights that
    they gained during their review of field operations helped
    shape the strategic framework that was released by the working
    group on September 10. That report ``Protecting American
    Consumers Every Step of the Way: A Strategic Framework for
    Continual Improvement in Import Safety,'' outlines an approach
    that, like the food protection strategy, is based on the
    organizing principles of prevention, intervention, and
    response.
        The Strategic Framework recognizes that we must find new
    ways to protect American consumers and continually improve the
    safety of imports. It identifies the need to shift from the
    current model that relies on snapshots at the border to
    interdict unsafe products. The new prevention focused approach
    would identify and target those steps in the import life cycle
    where the risks of unsafe products are greatest and verifying
    the safety of products at those important phases. Such a risk-
    based prevention focus model will help ensure that much more
    information about safety and risk is available to border
    inspectors and that safety is built into products before they
    reach our borders.
        Supporting the working group model are six building blocks,
    one is to advance a common vision, two, increase accountability
    and enforcement, three, focus on risks over the life cycle of
    an imported product, four, build interoperable systems among
    Federal agencies, five, foster a culture of collaboration, and,
    six, promote technological innovation and new science. The
    interagency working group on import safety has an aggressive
    schedule for public comment and follow up. Next Monday, the
    working group will hold a public meeting to identify actions
    the public and private sectors can take to promote the safety
    of imported products.
        By mid-November the working group will present an action
    plan to the President. The plan will reflect the public
    comments and recommend specific actions that the Federal
    Government and stakeholders can take to enhance import safety
    at all levels. The action plan will be based on the Strategic
    Framework that is already public and will lay out a road map
    for short and long-term recommendations.
         In addition to these efforts, FDA has recently initiated a
    series of meetings with officials in China to negotiate draft
    memorandums of agreement aimed at creating a framework to help
    assure the safety, quality, and effectiveness of products
    exported from China to the United States. The agreements also
    aim to increase cooperation and information sharing between the
    regulatory bodies of the two nations with the goal of
    strengthening China's regulatory process.
        Furthermore, FDA is also looking into ways that it can
    increase information sharing with other governments that will
    assist FDA in better allocating its inspection resources.
    Recently, FDA has completed a pilot project with Swissmedic to
    facilitate such information sharing.
         I would like to comment briefly on H.R. 3610, the Food and
    Drug Import Safety Act of 2007, which was introduced by
    Chairman Dingell on September 20. It contains a variety of
    provisions that relate to the safety of imported food and drugs
    in addition to other matters.
        The administration has not yet taken a position; however,
    we would be pleased to provide technical assistance to
    committee and subcommittee staff. We share Chairman Dingell's
    interest in enhancing the safety of imported product, and look
    forward to continuing to work with him and his staff and others
    on the subcommittee and on the committee. We also look forward
    to working with you on the action plan that we discussed above.
         Ensuring the safety of imported products is a significant
    task, and I want to assure you that FDA is diligently working
    to efficiently and effectively use the resources and
    authorities we have been provided by Congress to help protect
    American consumers.
        Thank you for the opportunity to discuss FDA's activities
    to enhance the safety of imported products. We would be happy
    to answer any questions.
        [The prepared statement of Mr. Lutter follows:]

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        Mr. Green. Thank you, Doctor, and I know you heard in my
    opening statement about my concerns with the bill's requirement
    that food imports are only allowed to arrive through ports of
    entry that have an FDA lab located in the metropolitan areas.
    Given the list of the current FDA labs it seems fair to say
    that there is no FDA lab presence in not only the No. 1 port
    that I represent but also in, in fact, the 10 largest seaports.
    There is no FDA lab presence in Houston, Charleston, Hampton
    Roads, Savannah or Miami, and also coming from Texas we have
    the largest land port in the Port of Laredo. There seems to be
    a disconnect that suggests that the locations for FDA labs
    determine the basis for the need for their presence in heavy
    import areas. Can you explain the decision making for
    determining the location of the FDA labs? Was there an intent
    to put them near a port of entry?
        Mr. Lutter. I am unaware of the history of how the labs
    actually ended up where they are currently. As you may know, we
    have developed a plan to consolidate labs. That is temporarily
    suspended, and we will examine that when the time comes in the
    future. Maybe I can ask Dr. Solomon from the Office of
    Regulatory Affairs if he knows about the history of how labs
    got located where they are.
        Dr. Solomon. I don't think there is any relationship
    necessary to ports of entry. I think there were locations
    throughout the United States to make sure that the domestic
    industry was primarily covered, and that was the genesis of
    initial thinking on the establishment of labs. Of course, that
    has been over many years.
        Mr. Green. Do you think it would be reasonable that in that
    provision in the bill that if the labs were more geographically
    available that that requirement that it only be in a port that
    has an FDA lab, you could have inspectors there without
    necessarily having the lab. I know you could send samples to
    anywhere literally very quickly. I assume that is what happens
    now with FDA even though the lab may not be there.
        Dr. Solomon. That is correct. With today's ability to ship
    products, samples are collected at many different ports of
    entry and they are sent to laboratories. There is a lot of
    benefit of having large volume laboratories because that
    creates good throughput and quality assurances in those
    laboratories. That is currently what we do.
        Mr. Green. And you could even have mobile laboratories, I
    assume, if you had a heavy port. For example, if you didn't
    have a lab in Laredo, TX, and if you stand there and watch
    those trucks come across from Mexico that are bringing all
    sorts of food products then you could easily have a mobile lab
    there.
        Dr. Solomon. We actually do have two mobile labs. One is a
    microbiology mobile lab, one is a chemistry lab, and we do take
    those and rotate those around to different ports of entry.
        Mr. Green. OK. FDA actually has inspectors at 90 ports of
    entry and you do inspections there but you really only have the
    13 labs, and so it would be almost unworkable to have it only
    at a location where there is a lab.
        Dr. Solomon. The numbers you said are correct.
        Mr. Green. Dr. Lutter, and other FDA panel, the other
    question I had was the bill allows the Secretary to waive the
    restriction of food imports and ports of entry located near an
    FDA lab. To do so, however, the Secretary must certify that the
    import would not increase the probability of adverse health
    effects. I can only imagine there would be an influx of waiver
    requests to the FDA based on the provision and the fact that
    the current FDA lab structure does not cover those ports with
    heavy traffic. From the FDA's perspective, are there any
    concerns about the workability of the provisions? Does the FDA
    currently have the resources to meet the potential high demand
    for these waivers much less the inspections?
        Mr. Lutter. We haven't yet had an opportunity to examine
    that particular provision so I think at this point what we can
    say is workability of new requirements and legislation is
    always a concern to us, and we will have to get back to you on
    the specifics regarding that one point. I would like to
    reiterate what Dr. Solomon pointed out a moment ago with
    respect to labs. What we are really concerned with is the
    capacity overall of facilities within FDA to do laboratory
    analysis, and the location is something that is relatively
    secondary from our perspective. What we would really like is
    the opportunity to do throughput of laboratory analysis
    everywhere, and that is the overarching concern that we have
    rather than the particular location of the facilities.
        Mr. Green. Well, if we are going to expand your
    responsibility, we would hope you would both have the staff and
    the resources to be able to do that.
        Mr. Lutter. Absolutely.
        Mr. Green. Thank you. Our ranking member, Congressman Deal.
        Mr. Deal. Thank you. Dr. Lutter, your written testimony
    does not appear to actually cover the legislation which is the
    subject of this hearing. When will the administration be in a
    position to send us a written review of the actual legislation?
        Mr. Lutter. We are working on it now. We look forward to
    offering technical assistance absolutely as soon as possible.
    It is probably a matter of some weeks. As I mentioned earlier
    in the oral, we are also developing a food protection strategy,
    and the President will receive a report in mid November on
    import safety, and I think all of that will provide information
    that may be of some value to the committee and to the
    subcommittee.
        Mr. Deal. Could you tell us what agencies might be involved
    in legislation such as this, and I understand there is an
    interagency task force on imports, and would everyone in that
    interagency work group potentially be involved in this kind of
    legislation?
        Mr. Lutter. Well, the interagency working group on import
    safety involves actually a very large number of agencies. Maybe
    I could speak--I will let David talk to the actual list. It
    does include USDA and USTR, and also the Department of Commerce
    and maybe you can add more to that list.
        Dr. Acheson. Yes, there are at least a dozen departments
    and agencies that are a part of that that cover a whole gamut
    of imports so it is related to the trade issues, the customs
    and border protection issues, as well as the product safety
    issues.
        Mr. Lutter. And so, for example, it also includes a
    consumer product safety commission which has regulatory
    authority over toys which have been mentioned earlier in this
    session.
        Mr. Deal. The bill before us I think has user fees that
    seem to apply by line item, and can you explain to us what a
    line item is and how would that impact facilities such as
    restaurants that import various items of food, maybe an ethnic
    restaurant, for example?
        Dr. Solomon. A line item is an entry, a shipment that comes
    in of one commodity that is all covered under one customs
    tariff code, so if there are products of different commodities
    that come in the shipment, they would all come as a different
    line entry as they are submitted to the FDA.
        Mr. Deal. Would that mean then that an ethnic restaurant
    who uses a lot of different line item products would be paying
    fees on each of those line item products?
        Dr. Solomon. Each different product that would be entered
    would come under a different line entry.
        Mr. Deal. Does that have the potential of being adversely
    punitive to small restaurants as opposed to maybe larger
    restaurants who are buying in greater bulks?
        Dr. Solomon. Well, certainly as currently structured each
    line item that has a separate charge would have different fees
    associated with it.
        Mr. Deal. Dr. Lutter, in your talk, you talk about risk-
    based prevention focus model that would seem very different
    from a simple border inspection. Would you describe the model
    in greater detail for us?
        Mr. Lutter. Yes. Thank you. The vision that many people
    have about inspections at the border is essentially an FDA
    inspector who is being asked to physically examine a product to
    ensure whether or not it meets certain standards for safety;
    and of course, this is fundamentally an approach that is
    potentially very inefficient and lacks promise of full safety
    and effectiveness in ensuring that the products actually meet
    appropriate standards. Ideally a risk-based model that we had
    envisioned would take into account a full set of information
    over the life cycle of the product from when it was first
    produced overseas including information about its storage, how
    it was produced, what other regulatory agencies may have
    thought about that product, including the ones in other
    countries such as China or ones in third-party countries such
    as the United Kingdom or Canada; and in that sense, the risk-
    based approach that we envision would look at a wide variety of
    physical characteristics of a product, who produced it, whether
    it is vulnerable to certain types of contamination, what we
    know about it over the life cycle, and what we know about what
    other parties may have thought about what risk may have been
    associated with that in determining how we should view it at
    the border.
        Mr. Deal. Is there indication that other countries who are
    trading partners would cooperate in that kind of model?
        Mr. Lutter. I mentioned that we have completed a pilot
    project with Swissmedic which is a medical products agency in
    Switzerland where we've done joint inspections with them to
    develop confidence and trust about the results of their
    inspections in their facilities and how they might compare with
    the result of our inspections. Yes, we're making progress in
    that regard.
        Mr. Deal. Thank you.
        Mr. Green. Congresswoman Eshoo?
        Ms. Eshoo. Thank you, Mr. Chairman, and thank you to each
    of the witnesses that are here today. I want to address my
    questions to Dr. Lutter.
        In your testimony you note that each imported food and drug
    shipment is ``screened'' meaning that importer has provided
    prior notice of the shipment and the notice has been reviewed
    to determine the shipment's potential risk. Now, you reported
    that FDA reviews more than 33,000 of these notices each day,
    but the estimates are that only about 1 percent of the
    shipments are physically examined; and I think there's a big
    gap here between screened and physically examined. It is also
    estimated that fewer than 500 FDA inspectors are covering 300
    to 400 points of entry. So with only 1 percent of food shipment
    being inspected, how is it that the FDA can demonstrate that
    the current ``screening'' and inspection regime is adequate? I
    mean, do you really believe that this is adequate?
        Mr. Lutter. We think there is a lot of room for
    improvement. We are working on a food protection strategy that
    will outline steps for that. With respect to the current
    process, we acknowledge that the physical inspection is
    conducted for a very small percent of the food products coming
    in.
        Ms. Eshoo. Has the FDA in the last year or 2 years come to
    the Congress to say that we see that there are problems and we
    need resources, a plan, here is the plan and these are the
    resources that we need to address this? I mean, from a consumer
    standpoint, it seems to be kind of one scandal after another.
        Mr. Lutter. We are developing very actively and very
    vigorously a food protection strategy. We expect to be able to
    issue that before mid-November.
        Ms. Eshoo. When was it begun? Before, during, or after
    these major reportings?
        Mr. Lutter. Dr. Acheson has had the lead developing it, and
    maybe I should let him answer that question.
        Ms. Eshoo. I have more questions. I didn't do my opening
    statement so that I could ask as many questions as possible.
    Maybe we can get to Dr. Acheson to finish this.
        Do you believe that there should be more physical
    examinations of imports?
        Mr. Lutter. I think there should be more physical
    examinations of imports, but more importantly than that, I
    think that the vision of how to ensure safety of imported
    products is not simply a question of increasing physical
    examinations at the border.
        Ms. Eshoo. Then what else would you do?
        Mr. Lutter. It is important to build safety in over the
    lifecycle, it is important to ensure that there are processes
    and procedures abroad by pushing our borders out to ensure that
    the production and the processing of foods overseas is
    conducted in a manner to ensure that the products are safe and
    comply with FDA standards.
        Ms. Eshoo. Do you think that equivalency standards provide
    a more cost-effective way to accomplish this to increase food
    safety?
        Mr. Lutter. I am not sure exactly what you mean by
    equivalent to.
        Ms. Eshoo. Well, we have equivalency in the legislation
    that has been introduced, and it is at the heart I think one of
    the drivers of today's hearing. Has the FDA reviewed the bill?
        Mr. Lutter. We have looked at the bill. We are not prepared
    today as I mentioned to offer any specific comments----
        Ms. Eshoo. OK. Fair enough. I would like to get to the
    OASIS database. How old is it?
        Mr. Lutter. Dr. Solomon, do you want to take that?
        Dr. Solomon. It is a database developed in the 1990s. It
    has been around for some period of time.
        Ms. Eshoo. So maybe about 20 years, do you think? It is the
    collection point for shipment notices and other related
    information, and it is the tool that the FDA uses I am told to
    assess risk, is it not?
        Dr. Solomon. It is the point for entry and admissibility
    that the data reviews. It is one of the places where we put
    risk factors into it. That is correct.
        Ms. Eshoo. So it is an important tool for the FDA?
        Dr. Solomon. Yes, it is.
        Ms. Eshoo. Now, one of our other witnesses today, Mr.
    Hubbard, who is a former FDA Associate Commissioner notes in
    his testimony that the FDA's information systems are ``old and
    out of date.'' In a July 2007 report on food imports from
    China, CRS that we pay a lot of attention to, we rely on CRS
    for very clear information and facts, they reported and found
    it difficult to get certain information from FDA in part
    because of technical problems with OASIS. CRS could actually
    not even determine the total number of food shipments, nor
    could it find a volume of products that were rejected at the
    border.
        So these are my questions. Do you think today that the
    OASIS database is really a robust tool for examining the risk?
        Dr. Solomon. We have been looking in replacing that system
    with a new system called MARKS. This system integrates various
    different databases as you are aware of.
        Ms. Eshoo. When is that scheduled to be accomplished and
    how much of your budget has been allocated to this change?
        Dr. Solomon. We can get back to you with that information.
    I don't have that.
        Ms. Eshoo. All right. Now, it is because it has technical
    problems that you just described what you did?
        Dr. Solomon. As we described, it is a system developed many
    years ago that has exceeded the capacity of entries, has
    exceeded----
        Ms. Eshoo. When do you expect the system to be brought up
    to date?
        Dr. Solomon. I don't have a date for that.
        Ms. Eshoo. I think that the committee needs to know that
    because you are reliant on this system, and as you have said,
    the system is about 20 years old.
        Dr. Solomon. We will be sure to supply those answers to
    you.
        Ms. Eshoo. Good. Thank you very much. Either now or later
    in writing, can you tell the subcommittee the volume of
    shipments that have been refused entry into our country in the
    last 12 months?
        Mr. Lutter. We will have to provide that later to you.
        Ms. Eshoo. And can you tell the subcommittee the overall
    number of food shipments that are coming into the country?
        Dr. Acheson. That is on the order of, for 2007, around
    about 9 million lines.
        Ms. Eshoo. I think we need really accurate numbers on this,
    and I am asking the last set of questions because they are
    questions that CRS reported that were difficult to find. So I
    think it is important for the subcommittee to get it and
    information----
        Mr. Lutter. We would be happy to provide and answer that.
    Just one word of caution about this. Historically, these
    numbers have been growing very, very rapidly, more than 10
    percent per annum. So one question is simply what period, so we
    will give you an estimate of that for the most recent period.
        Ms. Eshoo. Well, let me just ask the chairman, the
    subcommittee chairman. What time frame? We want to be specific
    with the FDA so that we get information that is going to really
    help us fill out our case.
        Mr. Green. Well, again, The chairman of the full committee
    and the sponsor of the bill is here, and I would hope we would
    have it as quickly as possible. I would hope we would have it
    as quickly as possible because this bill----
        Ms. Eshoo. He is saying the period of time, though.
        Mr. Lutter. The last 12 months.
        Ms. Eshoo. Well, we will let you know.
        Mr. Green. Whatever is reasonable, 30, 60 days at the
    maximum, probably.
        Mr. Lutter. Thank you.
        Ms. Eshoo. No, not the period of time in which they have to
    respond but the period of time relative to the shipments. How
    broad of a lens do we want, a snapshot do we want of this, an
    accurate accounting for shipments? The committee staff will get
    back to you on that, but we don't want to spend 6 months trying
    to get the right numbers. CRS doesn't have it. We need it.
        Mr. Green. Yes.
        Ms. Eshoo. Thank you very much.
        Mr. Green. Thank you. Mr. Murphy.
        Mr. Murphy. Thank you, Mr. Chairman. I just want to ask a
    couple questions. In my opening statement I raised a number of
    issues about the medications, the drugs that come in from other
    countries such as China, and I wanted to see what things we can
    expect from the FDA on this with regard to medications and
    dealing with counterfeit drugs. I know there was some reference
    to that. For example, do we see any hope in stemming the tide
    for this, are there any increase, decreases, do you see that
    some of the other inspections will work on this, do we need to
    take other steps? Any of you.
        Mr. Lutter. The problem of unapproved foreign drugs coming
    into the United States and being available to U.S. consumers
    concerns us deeply. These products include not only
    counterfeits which are made by people who have concern for
    profit but not the health of the people who are consuming the
    drugs but also substandard products which contain active
    ingredient in levels that are too low or too high or
    occasionally not at all, as well as contaminants and bad
    labeling. Currently we face a very large volume, even a flood
    of such unapproved products at international mail facilities
    and courier facilities. This is a problem that we have wrestled
    with. Currently our strategy and overall stance has been one of
    public communications. We communicate to the public the risks
    associated with these products and to dissuade them from using
    them by being sure that they understand the risks.
        Mr. Murphy. Are you saying here that in this there are some
    who are unscrupulous, involved with criminal activity; but are
    other ones a matter of companies that do not properly inspect
    the materials that are being manufactured over there when it
    comes to dealing with medications or are these counterfeits
    coming from them?
        Mr. Lutter. I think the products come from all different
    types of sources as we have reported in the past. We noted, for
    example, in intercepts of products coming in from four foreign
    countries, India, Costa Rica, Israel, and Vanuatu in the
    Pacific. Nearly half of the products coming in from those
    countries had documentation indicating that they were in
    response to orders placed by Americans on Web sites that
    purported to be Canadian in some form. And this is an
    inherently misleading practice. Who knows where the products
    actually originated from? Almost half, again, of those products
    had some documentation indicating that they came from a set of
    countries all over the world. I think that set listed 26
    countries including Eastern Europe. This is an international
    market filled by people who are looking for a quick buck in
    trading finished pharmaceutical products that have unknown
    origins, unknown handling, and they are intrinsically unsafe--
    and consumers shouldn't be buying them. It is somewhat akin to
    an unregulated market that in many other respects Americans and
    the U.S. Government have rejected as unsafe at least a century
    ago.
        Mr. Murphy. What do you see is the main way that consumers
    are getting these drugs? Are they trying to order them from
    what they consider legitimate sources?
        Mr. Lutter. They sit at their home computers I believe and
    log onto the Web site that might be selling these and then
    place orders over the web, and in that sense this is relatively
    easy for consumers; and because of that, it is one that we lack
    the resources at the borders to stop, so our effort over all
    has been to try and persuade people through public health
    announcements and advisories that this is an unsafe practice
    that they should be very wary of.
        Mr. Murphy. All right. I just want to shift gears here and
    ask one quick question on food issues about some of the risks
    you see for food and what are our greatest concerns for health
    and how do you overall see that some of the issues that have
    come by lately with regard to food and manufacturing and
    contamination, et cetera, that you would be able to deal with
    those?
        Mr. Lutter. If I may, I would like to ask our food expert,
    Dr. Acheson, to answer that.
        Dr. Acheson. I would be happy to. I think the risks
    associated with food are going to be dependent whether we are
    talking about domestic food supply or imported food supply.
    Essentially what we consider to be high risk are those foods
    where we see repeated problems, where we have seen repeated
    outbreaks leading to serious adverse health consequences,
    hospitalizations. So obviously a recent example would be leafy
    greens where we have seen repeated problems over the last
    decade with leafy greens becoming contaminated. When you get to
    imported products, similar fresh produce from various parts of
    the world as we have seen recently with imports from China or
    there can be other foods, too.
        Mr. Murphy. Well, I know I am out of time here, but I just
    think it is so important for American consumers, who I think
    over the last year have developed grave concerns about the
    safety of imported foods and even some domestic ones, too. It
    is so essential that we take an aggressive role in trying to
    address this because it is one that we cannot afford basically
    what is more death, more sicknesses, and more problems with our
    healthcare system. I know that one of the greatest things that
    has contributed to life expectancy in people in this country
    has been such things as clean water and clean sewer systems,
    better sewer systems. Now, we are dealing with some other
    levels here that have to do with the medicines and food that we
    have taken for granted for so long that were healthy we
    recognize are tainted too; and we cannot take that for granted,
    so we look towards all of you being extremely aggressive in
    helping hunt down anybody who is bypassing any laws, domestic
    or international. Thank you.
        Mr. Green. Thank you, Mr. Murphy. The committee will stand
    in recess. We have another series of votes, and it will be
    hopefully about 20 minutes and we will be back.
        [Recess.]
        Mr. Pallone [presiding].We will reconvene, and I believe
    the last person who asked a question was Mr. Murphy; so I will
    move to the chairman, Mr. Dingell.
        Mr. Dingell. I again commend you for this excellent
    hearing. It is very important to the business of this committee
    and, I think, the business of the country.
        First I ask unanimous consent that I be permitted to
    include a letter or other letters which we are going to be
    sending to the Food and Drug Administration with regard to the
    subject matter of this hearing today .
        Mr. Pallone. So ordered.
        Mr. Dingell. And I ask that the record be kept open for
    that purpose.
        Mr. Pallone. So ordered.
        Mr. Dingell. To Mr. Lutter, staff from FDA has informed our
    staff that between 2,000 and 3,000 pharmaceutical companies in
    foreign countries are registered with the U.S. and are likely
    to ship drug products to the United States that should be
    subject to surveillance inspections. Is that correct?
        Mr. Lutter. It is our understanding that is right, sir.
        Mr. Dingell. All right. Now, the next question is, I
    understand that FDA has personnel and funds to undertake only
    25 inspections due to resource restraints. Is that true?
        Mr. Lutter. I would like to refer that to my colleague, Dr.
    Solomon.
        Mr. Dingell. We were informed by your staff. Is that
    correct or not?
        Dr. Solomon. FDA conducts several hundred foreign
    inspections of drug manufacturers.
        Mr. Dingell. We will give you a specific question on this,
    but I want to know how many foreign inspections you make a
    year. We were told that the number is 25. Please submit that
    for the record, and I would like to have it for the last 10
    years.
        Now, the committee staff has accompanied inspectors to
    India. The investigators have come back and told us that
    durations of greater than 2 or 3 years make it difficult for
    there to be an accurate picture of what is taking place inside
    a typical overseas firm. Isn't 3 years a difficult situation to
    enable you to know what is taking place in a foreign firm? Yes
    or no. My time is limited. Please respond.
        Mr. Lutter. It is very difficult to answer yes or no, sir.
    I think longer periods are more problematic than shorter
    periods, yes.
        Mr. Dingell. Under the law you are supposed to investigate
    American firms every 2 years, isn't that correct?
        Mr. Lutter. Yes.
        Mr. Dingell. All right. But can you investigate these
    foreign firms every 2 years?
        Mr. Lutter. We are not able to do so now, sir.
        Mr. Dingell. Now, I come down that 2,000 or 3,000 firms
    being able to investigate 20 a year gives you 100 years to get
    the firms all investigated, is that correct, just using the
    arithmetic?
        Mr. Lutter. The arithmetic is correct, sir.
        Mr. Dingell. The arithmetic is correct? I would like to
    know how often you can get around to investigate these foreign
    firms which are exporting drug products into the United States.
    Now, isn't it true that we have firms importing drug products
    to the United States that have not been investigated in 8, 10,
    or more years or never? Is that true?
        Mr. Lutter. That is correct.
        Mr. Dingell. So we are attempting to investigate and
    inspect domestic firms every 2 years in a well-regulated
    environment but we are having terrible times providing the
    necessary investigation and inspections of firms which do not
    have either a good regulatory law or which do not have proper
    investigation of their products as they are entering into the
    United States, is that a true statement?
        Mr. Lutter. That is correct, sir.
        Mr. Dingell. All right. You have mentioned in your
    testimony that FDA currently reviews approximately 33,400 prior
    notice submissions per business date. How many FDA staff review
    these prior notice submissions? Can you tell us now or do you
    wish to submit that for the record?
        Mr. Lutter. Put it in the record, please.
        Mr. Dingell. All right. How many prior notice submissions
    are received on weekends? Would you submit that for the record?
    How many staff would review these submissions? You say that FDA
    performs routine surveillance inspections. Can you tell us the
    frequency of these routine surveillance inspections?
        Mr. Lutter. We will have to put that in the record, sir.
        Mr. Dingell. All right, if you please. Now, you stated in
    your testimony that the FDA has the authority to commission
    other Federal officers and employees to conduct examinations
    and investigations. You note that FDA has commissioned over
    9,900 customs and border patrol officers. When CBP officers are
    commissioned, do they work solely on FDA examinations and
    investigations or do they work on other matters?
        Mr. Lutter. It is our understanding they work on other
    matters as well.
        Mr. Dingell. All right. How easy is it for CBP officers to
    be pulled off their FDA duties?
        Mr. Lutter. We would have to get back to you on that, sir.
        Mr. Dingell. All right. Now, I am interested, how many
    ports are approved for admission of foreign manufactured
    pharmaceuticals? Please submit that for the record.
        Mr. Lutter. We do not approve ports, sir, so any port of
    entry would be permissible.
        Mr. Dingell. What percentages of your imports of
    pharmaceuticals are examined by FDA inspectors? Do you have any
    idea?
        Mr. Lutter. We would have to get back to you on that, sir.
        Mr. Dingell. All right, if you will submit that for the
    record. How many food shipments or what percentage of your food
    shipments are investigated by FDA investigators?
        Mr. Lutter. Physically inspected?
        Mr. Dingell. Physically inspected, yes. Please submit that
    for the record. We will have a letter on this particular point.
    Now, inform me how many inspections you make of devices and
    appliances that are regulated under your jurisdiction, that are
    imported from abroad?
        Mr. Lutter. Inspections of the shipments coming in or of
    the----
        Mr. Dingell. Yes, coming in.
        Mr. Lutter. We will get that to you on the record.
        Mr. Dingell. All right. First of all, American
    manufacturers are required to comply with the law by observing
    best manufacturing practices. Do you apply the requirements for
    best manufacturing practices to be performed by foreign
    companies which export pharmaceuticals to the United States?
        Mr. Lutter. The requirements----
        Mr. Dingell. Yes or no.
        Mr. Lutter. The requirements for good manufacturing
    practices apply independent of location, so yes, facilities
    abroad that we inspect and that are approved for the----
        Mr. Dingell. So the answer is you really don't do that, is
    it? And you really don't have any inspectors to do that, do
    you?
        Mr. Lutter. That is correct.
        Mr. Dingell. For example, how many inspections have you
    done in China to make sure that good manufacturing practices
    are carried forward by Chinese manufacturers that export to the
    United States?
        Mr. Lutter. We do not now have inspectors permanently
    located in China.
        Mr. Dingell. How many inspectors do you have over there
    looking at this question?
        Mr. Lutter. We don't have any right now that are
    permanently located in China, sir.
        Mr. Dingell. Now, please inform me, how many will you have
    under your next budgetary request?
        Mr. Lutter. We will have to get back to you on that, sir.
        Mr. Dingell. You will submit that for the record?
        Mr. Lutter. Yes, sir.
        Mr. Dingell. Now, please inform me, what happens to
    prescription pharmaceuticals that you find that are unsafe at
    the point of entry and what happens to foods that you find to
    be unsafe at the point of entry? What happens to them? They are
    rejected, they go back out of the country, is that right? Yes
    or no.
        Mr. Lutter. Foods are refused, yes, sir, and the drugs are
    also refused.
        Mr. Dingell. They go back out of the country?
        Mr. Lutter. Yes.
        Mr. Dingell. Is that true in all cases or sometimes you let
    them go through?
        Dr. Solomon. If the product can be made in compliance, then
    that can be considered.
        Mr. Dingell. If it can be made in compliance? I wanted to
    ask you some questions on it because my time is expiring. Now,
    I want you to please tell me what percentages of those
    commodities that are rejected at the point of entry can you
    assure us are not coming in at another point of entry?
        Mr. Lutter. we will have to submit that to the record, sir.
        Mr. Dingell. All right. I want you to give me that. Now, I
    want you to tell me, and I will ask you to submit this to the
    record, how you are going to substitute for the laboratories
    which you had proposed to close under the earlier rulings and
    orders of your agency and the Office of Management and Budget?
    I want you to submit that for the record if you would please.
    We will have you a letter on this.
        Mr. Chairman, I ask unanimous consent that the record
    remain open so that we can get this because this will tend to
    show us that the Food and Drug which says it is being leaner
    and meaner is just being leaner and weaker and is not capable
    of carrying out its important duty of protecting the American
    public, and I intend to try and get you folks, whether you like
    it or not, the resources and the authorities to do the things
    that you have to do to protect the American people.
        Mr. Chairman, I thank you for your courtesy.
        Mr. Pallone. Thank you, Mr. Chairman. Mrs. Wilson.
        Mrs. Wilson. Thank you, Mr. Chairman. The chairman of the
    full committee asked a number of questions that were very
    interesting and some of the answers I know you will have to get
    for the record, but did you want to elaborate on any response
    that you were not allowed or not able to make in the last round
    of questions?
        Mr. Lutter. No, thank you.
        Mrs. Wilson. Fair enough. I just wanted to give you that
    opportunity. You mentioned in your testimony risk-based
    methods, and particularly the Bioterrorism Act that includes
    provisions that push the FDA in this direction. Could you talk
    a little bit more about risk-based methods for ensuring
    security, how that works and how it is working, how this is
    being implemented?
        Mr. Lutter. Let me turn to my colleague, Dr. Acheson, to
    address that.
        Dr. Acheson. Sure, would be happy to. In relation to
    imports, is that what you are asking about?
        Mrs. Wilson. Yes.
        Dr. Acheson. OK. Essentially that has got multiple
    components. The machinery that makes it work is the prior
    notice center, but the prior notice center is primed with
    information derived from vulnerability assessments that have
    been done internally within FDA, and essentially what those
    vulnerability assessments are doing is asking the question,
    which foods are most likely to be contaminated with an agent
    that could cause maximum harm. So it has essentially been
    ranked based on the type of food and the type of agent that you
    might have concern. That information is fed into the prior
    notice center, and it is then combined with other intelligence
    information and law enforcement information and customs and
    border protection information to screen entries. So every time
    a line of food arrives in the United States, prior notice has
    to be submitted. The time up front varies with whether it is an
    air or truck or ship. That is reviewed electronically, and if
    it is a food that is of higher concern or origin is of higher
    concern or something to do with the importer or the person
    receiving the goods kicks a message out through studying the
    classified law enforcement systems, that will flag that product
    for specific action which is usually in the form of an
    inspection and/or sampling.
        Mrs. Wilson. Are you developing new tools in this prior
    notice center or new things to enhance the ability to screen
    based on risk?
        Dr. Acheson. Prior notice center as I have described is
    entirely focused on deliberate attacks on the food supply. It
    is a food defense, bioterrorism tool. We work internally within
    the agency to change those parameters as necessary based on
    identification of new risks. As we move toward integrating food
    safety and food defense into an overall food protection
    strategy, those concepts of how do you define risk based on a
    variety of parameters need to be built into that. We are not
    completely there yet, but the food protection strategy that we
    are developing currently will address those broader issues.
        Mrs. Wilson. Let me ask if you would elaborate a little bit
    about the food safety strategy you have under development, both
    the timing of it and who is involved, what are the issues you
    are addressing, what are the major thrusts of this new
    strategy?
        Dr. Acheson. The strategy was started in the beginning of
    May when the Commissioner created the position that I fill. It
    is a strategy that is focused on food and feed, domestic and
    imported products, and it is focusing on the full product life
    cycle. In the context of domestic, that takes you right back to
    the process of where the food is coming from and likewise for
    imports. It will be a risk-focused, a risk-based strategy
    because what we need to do is to look at those risks to find
    where the resources need to go. The other very important part
    of this is a major shift toward prevention. The agency has
    heavily focused on interventions through inspections and
    reacting to situations. What we need to do is get ahead of that
    curve and focus on preventative strategies, and that is a huge
    part of what the plan is going to look like.
        Mrs. Wilson. In this effort to develop a food safety
    strategy to shift toward prevention and look systemically at
    this whole problem, have you involved private industry in these
    efforts, particularly for their input whether it be grocers or
    restaurants or food processors in thinking about these
    strategies and what they bring to the table?
        Dr. Acheson. That is part of the strategy, to involve them.
    What we want to do is to basically--
        Mrs. Wilson. But are they being involved in the development
    of the strategy or just in its implementation?
        Dr. Acheson. They will be involved in implementing it and
    helping us figure out how to implement it. The strategy
    essentially is laying out the broad directions of prevention,
    intervention, and response. One of the very first deliverables
    in the strategy is going to be to have dialogs with various
    stakeholders, consumers, industry, State partners, on how to
    implement it and how to adjust it so that it is going to fit.
    But we want to roll out with something for people to respond
    to.
        Mrs. Wilson. In your working group, and this is my final
    question, Mr. Chairman, and I appreciate the latitude, to
    develop this food safety strategy, are you involving experts in
    other elements of government who have worked on other safety
    and security kinds of strategies or is this mostly FDA?
        Dr. Acheson. At this stage it is an internal FDA strategy,
    and it is more than food safety. It is food safety and defense,
    so it is a food protection strategy that integrates, too. We
    are starting internally, but we anticipate that we are going to
    work with other stakeholders as it rolls out.
        Mrs. Wilson. I would encourage you to do so, particularly
    we have National Laboratories whose expertise is systemic
    approach is to security and defense whose experience in other
    realms may be helpful to you.
        Dr. Acheson. I appreciate that. There is no question, we
    will.
        Mrs. Wilson. Thank you, Mr. Chairman.
        Mr. Pallone. Thank you. I am going to recognize myself for
    questions. I wanted to ask Dr. Acheson if I could. I am just
    reading from a publication that said that you testified
    yesterday I guess before the House Agriculture Appropriations
    Subcommittee that the agency needs more powers to police the
    Nation's food supply, and I guess there wasn't a time for the
    chairman of the subcommittee to ask what new authorities the
    agency might seek. So I would simply ask that. What kind of
    authorities, Mr. Acheson, would you seek? Are these in the
    Dingell bill by reference or would they be something beyond the
    Dingell bill, if you would?
        Dr. Acheson. There is currently a very active dialog going
    on within FDA and HHS to address exactly what new authorities
    we would seek as part of this plan. So at this point, it is not
    fully defined, but there are a number of areas that are under
    consideration.
        Mr. Pallone. You want to comment on some of them at all or
    just give us some idea?
        Dr. Acheson. At this stage, I am not able to really say
    much beyond what I just articulated.
        Mr. Pallone. All right. Well, I would ask you if you could
    get back to us in writing and give us some indication.
        Dr. Acheson. Absolutely, and I would hope in the future as
    the plan starts to take shape, that we could work jointly
    between what we are developing and what the subcommittee is
    developing so that we have a holistic view of this that is
    fully integrated, building the best of all these ideas.
        Mr. Pallone. Absolutely. Then I want to go back to Dr.
    Lutter. Everyone knows that part of the problem with the food
    safety system is the lack of resource that the FDA has
    available to perform its responsibility. It is a recurring
    theme. I have heard it for years. Can you talk about the
    financial resources that the FDA has to perform its safety
    responsibility and has that budget increased or how has that
    budget increased if any? I will ask you some more specific
    things, but just in general?
        Mr. Lutter. I would prefer to pass that question onto my
    colleague.
        Mr. Pallone. Sure.
        Dr. Acheson. Yes, in recent history while there have been
    increases in the budget on the food side, they have largely
    been used to keep pace with inflation and pay increases, and
    there have not been substantive increases in programmatic
    support.
        Mr. Pallone. And do you have a specific percentage each
    year over the past 5 years, or you just say just to keep up
    with inflation essentially?
        Dr. Acheson. I would have to get back to you with specific
    numbers. I don't have it with me.
        Mr. Pallone. All right. I would appreciate it if you would,
    but basically you said what keeps up with inflation and that is
    it. Well, do you think that an importation fee like what Mr.
    Dingell was proposing is a good way to fill in the gaps and the
    lack of resources?
        Dr. Acheson. User fees are a double-edged sword. I think
    that there can be potential advantages to them. Clearly as you
    have articulated as have many of your colleagues in order to
    make a new system work that is going to be radically different,
    you have go to adequately resource it. So those resources have
    to come from somewhere. User fees are a potential source of
    revenue to do that, but one has to be very circumspect about
    whether you can implement them in a meaningful way that is fair
    that is actually going to get you where you want to go. It is
    an option.
        Mr. Pallone. But clearly you do think that your resources
    are inadequate? You agree, we need more resources, right? I
    didn't ask that question because I thought it was obvious.
        Dr. Acheson. It is obvious.
        Mr. Pallone. OK. Then I wanted to go back to Dr. Lutter
    unless you want to pass it over to him again. Let me say this.
    Mr. Dingell's bill directs funds specifically to strengthen
    imports, the system to regulate and inspect imports. But some
    of the recent contaminations, and I mentioned in my opening
    statement, have involved domestic products, not imports.
    Considering the current funding levels and the fact that very
    little money is targeted for imports regulation, how do you
    perceive strengthening inspection of national products while
    simultaneously managing the new import regulations? In other
    words, if we were to spend more money on imports, how are we
    going to strengthen inspection of domestic products given the
    fact that we don't have a lot more money available so far?
        Mr. Lutter. The food protection strategy that we are
    developing would be holistic and integrated in the sense it
    addresses both imported foods and domestic foods, as well as
    risk from deliberate contamination and accidental contamination
    and over the life cycle. So in that sense the approach would be
    intended to encompass both domestic foods, and we have
    acknowledged that there are risks that are worthy of concern
    and additional action particularly with respect to leafy greens
    which the recent outbreaks have been domestic. So yes, we share
    concerns about that.
        Mr. Pallone. OK. All right. Thank you. I recognize Mr.
    Buyer from Indiana.
        Mr. Buyer. Sure. I have no problem if you have further
    questions. You are on a roll. OK. Dr. Solomon, as Deputy
    Director for the Office of Regulatory Affairs, is it fair to
    say that you would have a good understanding of FDA's work at
    the international mail facilities?
        Dr. Solomon. It is not my area of expertise, but I am
    heavily involved in import operations and familiar with
    processes and procedures at many of our import facilities.
        Mr. Buyer. At these mail facilities and the private ports
    of entry, Customs will identify a particular package. Both of
    you, as I understand, have target search systems, am I correct?
        Dr. Solomon. That is correct.
        Mr. Buyer. So it is easier when you have a manifest as it
    is going through the private systems, FedEx, UPS, et cetera.
    When they have a manifest, you can examine it by your target
    systems, and so you kind of know what you are looking for,
    right?
        Dr. Solomon. We have more information going through those
    systems, correct.
        Mr. Buyer. Right. So as the packages are coming down the
    conveyor belt, it has been identified. So now you have a
    targeting system, there is an overlap, Customs has a targeting
    system, and the handler also has their own targeting system. So
    into the FDA bin get kicked a lot of packages, isn't that
    correct?
        Dr. Solomon. That is correct.
        Mr. Buyer. Is it fair to say that around 5 percent of those
    packages are inspected?
        Dr. Solomon. Yes, sir.
        Mr. Buyer. And these packages that go into the FDA bin at
    FedEx and UPS, the FDA, you don't work at night while others
    work, i.e. other Federal agencies and obviously the shippers.
    You work during the day to put the input with the data to
    identify from the manifest what packages you want sent to your
    bin, is that correct?
        Dr. Solomon. Yes, products can be placed on hold and then
    examined the next day.
        Mr. Buyer. Right. So then you come in the next day to
    examine. So 95 percent of these shipments, though, just gets
    kicked right back into the system?
        Dr. Solomon. A large percentage of the products are not
    examined.
        Mr. Buyer. OK. Now, of the packages that the FDA examines
    so a pharmacist can actually look at them, not all of these
    packages are forwarded to a laboratory, is that correct?
        Dr. Solomon. That is correct. Only a percentage of them
    need further laboratory exam.
        Mr. Buyer. OK. So when Customs will look at a package and
    prima facie, on its face, they can identify this is
    counterfeit, I know it is counterfeit, they destroy it. If they
    are not particularly sure, they also kick it over to the FDA.
    So now FDA, your investigators or inspectors look at this and
    you have got the pharmacist on site; and he looks at this and
    goes, no, we are not going to let this come into the country.
    Do you put some type of a sticker on it, don't you?
        Dr. Solomon. The product is marked and set aside and then
    it is going to be detained.
        Mr. Buyer. How is the product marked?
        Dr. Solomon. I am not familiar with the exact mark on that.
        Mr. Buyer. At two of the ports of entry that I went to in
    Chicago and at JFK, the pharmacist on site said that they keep
    seeing their own marks on counterfeits coming back to the
    system. Would that be accurate?
        Dr. Solomon. That is possible.
        Mr. Buyer. So earlier from my statement that the Federal
    Government, we are becoming an enabler to a criminal enterprise
    because people get the Internet, they think that, from that
    Canadian Web site, that it is OK because it says it is OK.
    These are legal, lawful drugs. It is OK. And when the criminal
    enterprise, the counterfeiters then send that product into the
    United States, they take the person's money from the credit
    card, then we, the Federal Government, by virtue of your policy
    or an interpretation of the law then, return to sender. That is
    what we do, is that correct? We take that product and return it
    to sender?
        Dr. Solomon. That is for the most common products. Some
    products that are clearly of concern are not sent back to the
    sender.
        Mr. Buyer. Excluding your schedules 1 and 2, right? Those
    would be destroyed. If in fact the package does not have a
    formal entry, a commercial formal entry in the amount of 2,500
    or more, you can give your notice, and if they don't, within 30
    days, respond it can be destroyed?
        Dr. Solomon. That is correct.
        Mr. Buyer. So I understand there are exceptions to that,
    but in general, most of these small packages either get through
    the system or if your inspectors are able to identify them,
    then they are returned to sender, correct?
        Dr. Solomon. That is the most common procedure.
        Mr. Buyer. Most common procedure? Now, as a policy
    standpoint from the FDA, do you think that is good policy to
    give back to the criminal enterprises their products so they
    can continue to send them back and prey upon people, whether it
    is our own country, hemisphere, or other countries and
    hemispheres around the world?
        Dr. Solomon. I will let Dr. Lutter from the policy
    perspective----
        Mr. Lutter. We are concerned about the continued
    circulation of counterfeit and substandard products that might
    be sent overseas to the sender and then might be reintroduced
    again into the United States. These products, if they were
    unsafe the first time, they are surely unsafe the second time.
        Mr. Buyer. So if this committee puts into the law giving
    the authority to the FDA to destroy, stop this return-to-
    sender-policy, you would support that?
        Mr. Lutter. It is something we would look at very seriously
    to the extent that it mitigates this public health concern of
    ours. I think there are a couple of questions pertaining to
    destruction methods and the destruction costs and also whether
    or not the adequacy of due process before destroying goods. To
    the extent that it protects public health, we would look at it
    very seriously.
        Mr. Buyer. Well, with regard to costs on destruction, Mr.
    Chairman, I think the FDA should be able to tell us, if we are
    going to protect the American system and America's health and
    ensure high standards, cost shouldn't be the problem here; and
    if in fact, you think that is a barrier to this, please let us
    know what you estimate the cost to be able to destroy is and
    how to handle that because Customs is doing that right now. And
    in your testimony, Mr. Chairman, they say that they anticipate
    these imports to triple by 2015. If in fact that is true, we
    have got to get off our heels and on our toes. So I want to
    work with you. When I mentioned in the opening that as soon as
    this gets from Legislative Counsel, we will get it to the
    chairman and Chairman Dingell and to the ranking members. I
    will also ship this down to you, and we want your comment. I
    know you agree with some of these areas, whether it is
    serialization or the pedigree issues, let us work through
    these. As I said earlier, this is an issue that Congress
    doesn't touch very often. 1938, 1988, and now. So I appreciate
    the chairman's indulgence, and I look forward to working with
    everyone.
        Mr. Lutter. Thank you. Likewise.
        Mr. Pallone. Thank you. Ms. DeGette.
        Ms. DeGette. Thank you, Mr. Chairman. Dr. Solomon, I was
    curious to hear your answer in response to Mr. Green's concerns
    about FDA lapses at ports. We don't have very many ports in my
    district, but what we do have is an FDA lab; and I thought I
    heard you say that there is a great benefit in having many
    labs. Is that correct?
        Dr. Solomon. No, I think what I was alluding to is the
    benefit of laboratories, as Dr. Lutter explained before is the
    lab capacity to get a lot of throughput through those labs to
    ensure the quality of those products and labs. Lab capacity is
    the most critical issue versus the----
        Ms. DeGette. OK. So you didn't intend, if you did say there
    is a great benefit in having many labs, because you are aware,
    aren't you, that the FDA has a proposal out to reduce the
    number of labs from 13 to seven.
        Dr. Solomon. We are aware of that and as discussed earlier,
    that is in abeyance.
        Ms. DeGette. Dr. Lutter, I also heard you say that, and I
    know it is in abeyance, that what you are really looking at
    with these labs is the ability to do analysis and the location
    is really secondary, correct?
        Mr. Lutter. One of our concerns is to be able to do the
    most possible analysis of suspect products given the resources
    we have.
        Ms. DeGette. And for example, in the Denver lab, you have
    people who have been doing some of these very specialized food
    analyses for 23, 25 years, is that correct?
        Mr. Lutter. I am told that is the case.
        Ms. DeGette. And these are also people, and I will just
    tell you in case no one has, I have talked to them personally
    and I don't blame them. Anybody who lives in Denver, CO, and
    has for 25 or 30 years doesn't want to move to a centralized
    lab. So those people will all quit. So my question is I know
    that you have temporarily suspended the reorganization. Mr.
    Dingell's bill would do it permanently, and I am wondering if
    the administration would be ready to drop the plans to close
    these laboratories and just go along with our committee
    proposal at this time?
        Mr. Lutter. We are committed to ensuring that the products
    that we have----
        Ms. DeGette. OK. I don't need that kind of answer because I
    have only got 5 minutes. Yes or no, are you willing to drop
    this proposal at this time?
        Mr. Lutter. No.
        Ms. DeGette. You are not? OK. In that case, previously I
    asked the FDA witness at other hearings to provide with an
    analysis justifying the closure of the food safety labs. Is the
    FDA prepared to do that, either a cost benefit analysis or a
    quality control analysis or any other kind of analysis? Can we
    get that from you?
        Mr. Lutter. I think we are working on one and will have to
    get back to you on----
        Ms. DeGette. When will I be able to receive that analysis?
        Mr. Lutter. I will have to look into it and get back to
    you.
        Ms. DeGette. OK. When will you get back to me about when
    you can get back to me about the analysis?
        Mr. Lutter. Later this week.
        Ms. DeGette. Thank you. I will look forward by October 1 to
    having that timeline from you. The reason I am a little
    frustrated, I have been having difficulty getting requests from
    the FDA and other agencies, so I appreciate your comity in this
    area. One of our witnesses today is going to testify that the
    FDA only inspects 1 percent of imported food. Is this accurate?
        Mr. Lutter. With respect to physical inspections, yes.
        Ms. DeGette. OK. Do you think that is adequate?
        Mr. Lutter. I think the key message is not the physical
    inspections but the information available to us to identify
    which products are really risky.
        Ms. DeGette. OK. So given the available information to you,
    do you think that 1 percent of actual, physical inspection is
    sufficient----
        Mr. Lutter. No.
        Ms. DeGette. OK. So if we gave you more resources you would
    like to be able to actually, physically inspect more food?
        Mr. Lutter. We would endeavor to inspect more food, but
    that is only part of the solution.
        Ms. DeGette. Absolutely.
        Mr. Lutter. The real part is to put together a system that
    ensures the products are safe when they arrive at our borders.
        Ms. DeGette. I agree that physical inspection can't be the
    only thing, and I think that is right. Does the administration
    have any idea what percentage of actual, physical inspection
    would be beneficial or is that part of the whole plan that Dr.
    Acheson and others were talking about the quality control?
        Mr. Lutter. It is really the latter. What we are really
    looking at is a transformational strategy that will use much
    more information to ensure that the inspections at the border
    are well-targeted, are efficient in figuring out which products
    are safe, but also to ensure that the products themselves are
    safe when they arrive at the border.
        Ms. DeGette. Absolutely.
        Mr. Lutter. And so it is not only the physical inspections
    that we should be focusing on.
        Ms. DeGette. Right. I agree with that. And so my question,
    I was very pleased to hear your response to one of the other
    members when they said would it be fair to say you don't have
    adequate resources and you said yes. Does the administration
    have any idea how many additional resources it would take so
    that you could adequately perform these duties, and does the
    FDA support the user fees that are included in the bill?
        Mr. Lutter. With respect to the user fees in particular,
    the question that we would have in examining the proposal more
    closely is the extent to which they are adequate to perform the
    services they were expected to do as part of the bill, and we
    will have to get back to you on that. We look forward to
    offering technical assistance to the committee on that key
    question.
        Ms. DeGette. And do you have any idea how many additional
    resources you are going to need to perform your job in the way
    you would like to?
        Mr. Lutter. I think that information also will have to come
    later as part of the food protection----
        Ms. DeGette. OK. So for those two things, does the FDA have
    some idea when it will have the answers to those questions?
        Mr. Lutter. We expect to go public with this by mid-
    November.
        Ms. DeGette. Mid-November? OK. Thank you very much, Dr.
    Lutter.
        Mr. Pallone. Mr. Waxman.
        Mr. Waxman. Thank you very much, Mr. Chairman. I know that
    Secretary Leavitt is working on a proposal, and I am pleased
    that he is because I understand he is taking personal charge of
    the matter; and we should be working closely with the
    administration because we all want the same goals. I think we
    can all agree that the concept behind the provisions of this
    bill make good sense. We want to have every confidence that the
    foods we import are from countries and from facilities that
    have systems in place to ensure those foods are safe, and who
    better to give us that confidence than FDA. So before imported
    foods would be permitted to enter the U.S., the bill would
    require FDA to certify that those foods come from a country
    that has in effect food safety standards at least as protective
    as ours. FDA would have also to certify that the country is
    monitoring for compliance with those standards in taking
    appropriate enforcement actions when that compliance is
    lacking. If FDA is unable to make that certification as to the
    entire country, the bill would give FDA the option to certify
    each company on a facility-by-facility basis and I agree with
    this concept. But I want to be sure we are giving the FDA the
    appropriate authorities and resources so that this is a job
    they can handle. If you don't think the agency will be able to
    do this job, I would hope you would give us specific
    suggestions about how to make it work. That responsibility lies
    with the agency. So I think we need to get an understanding
    here on the size and scope of the job we're asking the agency
    to do.
        Let us just look at China for an example. Obviously given
    the many recent incidents of unsafe imported Chinese foods, it
    seems unlikely that FDA would be prepared to certify the
    country as a whole anytime soon. Would you agree with that, Dr.
    Lutter?
        Mr. Lutter. Dr. Acheson recently returned from China, and I
    would like to have him----
        Mr. Waxman. Are we ready to certify that China has in place
    a system as reliable as the one we have here in the United
    States?
        Dr. Acheson. Not yet.
        Mr. Waxman. If FDA could not certify the country as a
    whole, FDA would be faced with the prospect of certifying each
    of the Chinese facilities seeking to export their foods to the
    U.S. before those foods would be permitted to enter the
    country. Could you give us the sense of the scope of
    accomplishing that task. For example, can you give me any
    estimate of how many Chinese facilities there are currently
    exporting foods or food ingredients to the United States, and
    what kind of resources would FDA need to be able to inspect
    each and every one of these firms? Dr. Acheson, do you have an
    idea of that?
        Dr. Acheson. Yes, based on the information provided on
    recent visits to China, there are about 400,000 food or feed
    manufacturers in China of various sizes. Currently about 12,000
    to 15,000 of those are registered with AQSIQ who is the import/
    export authority in China. According to their law, they have to
    be registered in order to be a certified export. One of the
    problems is that foods are being exported from China that are
    not certified, and according to Chinese law they are
    essentially illegal exports. And at least a third of the
    exported food apparently is falling into that category.
        Mr. Waxman. One would think if foods are being exported
    inconsistently with the law of China that even if we look to
    China to have in place a system like an FDA to inspect and
    review all the safety issues, there would probably be a lot of
    products that would go under that law, too, wouldn't it?
        Dr. Acheson. Well, to get to your point, if this is going
    to work, we have to ensure that it is meeting our standards.
    And you asked about resources. I think we would have to examine
    that, how many firms we are talking about, but it would be
    significant to ensure that number of firms were in compliance.
        Mr. Waxman. Well, we are going to look forward to your
    recommendations, and I assume this is going to be part of the
    administration proposal because this is a huge undertaking if
    we work along this theory of making sure the country has in
    place a system, that they are enforcing it, and if they don't,
    we go facility by facility. Of course, China is only one of the
    countries that we are dealing with.
        Dr. Acheson. Right.
        Mr. Waxman. FDA currently inspects only 1 percent of all
    imported food. This is quite a grim figure, but it is also true
    of the domestic food supply. Dr. Acheson, there has been a
    serious problem with leafy greens in the United States. There
    have been 20 outbreaks related to fresh produce alone in the
    past 12 years, and the number of food safety staff has fallen
    significantly in recent years; and funding for domestic food
    safety investigations has been dramatically reduced over the
    past 5 years. While we obviously have got serious problems on
    our hands because Americans are looking to FDA to restore their
    confidence in the safety of their food, has FDA formulated some
    ideas about how and what it needs to do to remedy this
    situation? We need to know how many more inspectors the FDA
    would need, whether your information technology infrastructure
    is adequate to effectively and efficiently monitor the life
    cycle of products as you indicated is necessary, what new
    authorities you need to deal with other countries as well as
    domestic firms to know that adequate safety procedures are in
    place. So I guess what I want to ask your personal assurances
    that you are going to work with Secretary Leavitt to give FDA's
    full and candid assessment of the needs of the agency in this
    area, and we need this assessment now. We can't wait for the
    next outbreak.
        Dr. Acheson. We are already working with the Secretary and
    others in HHS and FDA, and this essentially is what the food
    protection plan strategy that we are currently working on is
    all about, is to examine the changes that we are facing in 2007
    that evolved over the last 10 years or so and put a plan in
    place that is going to begin to move forward. But I want to
    emphasize, this is not an overnight fix. We need to build a
    solid foundation of a plan adequately resourced and be looking
    for in the medium term to put this back on track. It is not
    something you can just throw money at, flick a switch, and the
    problem is solved.
        Mr. Waxman. Thank you very much. Thank you, Mr. Chairman.
        Mr. Pallone. Thank you, Mr. Waxman. It is not my intent to
    have a second round of questions because I want to move to the
    second panel, but Mr. Buyer said that he wanted to ask a
    question; so I will recognize him.
        Mr. Buyer. I appreciate the gentleman's indulgence. This is
    a very complex and serious issue, so I appreciate the
    gentleman. On page 6 of your testimony, sir, you go into great
    detail how FDA, in order to comply with regard to imported
    drugs, your biologics, certain devices for pre-market approval
    with regard to authenticity to ensure that they comply with
    U.S. labeling requirements, et cetera. So earlier when I held
    up these two drugs, the Fosamax, and when you look at it, my
    gosh, it complies with everything. So what I look here is you
    are working very hard with regard to the authenticity, and
    these counterfeiters are getting better and better and better
    with regard to packaging and labeling. And obviously we have a
    great challenge ahead of us. So with regard to the proposed
    legislation that I am going to send to you, one of the things
    that I hate doing is studies. I don't want to create a
    commission, but I think there is one thing that we are going to
    have to really look at and that is whether to have FDA, in
    cooperation with our manufacturers, create a database that
    interfaces with your targeting system. And what I mean by that
    is if I am a manufacturer, I now disclose to you--you already
    know where their manufacturing facilities are but not only
    these are our manufacturing all around the world, but here are
    our approved wholesalers. Pick a company. This is who we work
    with. So if you are getting a particular product, so here is
    the legitimate product; and this runs through a legitimate
    wholesaler in Germany, and someone in Germany has purchased
    that product, they are sending it to a relative who is only
    visiting on a legal visa to the United States, you let that
    come through. But if your targeting system knows that this is
    coming from Singapore and I have no wholesalers licensed in
    Singapore, there ought to be some kind of alert system out
    there. So the more we get sophisticated and these computer
    systems are enablers for us, I think we have an opportunity
    here to zero in on the authenticity because right now, I just
    wanted to let you know, you can work very hard to comply with
    the law and do everything, but the counterfeiters seem and
    appear to be one step ahead of us. Do you have a comment with
    regard to any of these ideas?
        Mr. Lutter. We share very much your concerns about the
    threats to public health posed by counterfeit products, and the
    point that you are making about the inability to distinguish
    the counterfeit from the genuine product is one that I have
    actually made in this room on past occasions, and we agree very
    much with that. We have trained pharmacists and physicians who,
    confronted with the counterfeit, can't distinguish one from the
    genuine product. With respect to the opportunity to develop an
    electronic database that might facilitate the identification
    and the authentication of genuine products and permit the
    distinction of those from counterfeits, that is something we
    have explored repeatedly in the past in the context of a
    counterfeit task force. It was organized at FDA and has issued
    a series of reports. It is unclear who should own such a
    database or who should manage it. There are a variety of views
    on that, but the idea that electronic pedigrees and electronic
    track and trace technology would allow for a low-cost way of
    authentication so as to reduce the risk of counterfeits is
    something that we pointed toward, advocated in the past, and we
    think that is an appropriate way to implement mandates of past
    legislation and also the regulation on pedigrees that we have
    adopted. We think there are a lot of opportunities there, and
    we look forward to offering technical assistance to you.
        Mr. Buyer. That is excellent, Mr. Chairman. That is going
    to put us here on the Hill on common ground with the
    administration with regard to this legislation. The last thing
    I would say is please recognize your front-line personnel for
    FDA. Your inspectors and your pharmacists, they are very
    challenged and frustrated; and they want the ability to destroy
    when they find these counterfeit drugs, rather than a return-
    to-sender policy. With that I yield back, and I thank the
    gentleman.
        Mr. Pallone. Thank you. I want to thank all of the panel
    and obviously we have got a lot of work ahead of us; and please
    get back to us with a lot of these questions that have been
    asked as quickly as possible.
        Mr. Lutter. Thank you very much for the opportunity to
    present our views, Mr. Chairman. Thank you.
        Mr. Pallone. Thank you. And I will ask the second panel to
    come forward if you can. Thank you all for being here, and let
    me introduce everybody from my left to right.
        First we have Mr. William Hubbard who is senior advisor,
    Coalition for a Stronger FDA, and then we have my former
    colleague, Congressman Cal Dooley. I am really pleased to see
    you here today, and he is president and CEO of the Grocery
    Manufacturers Association. Then we have Jill Hollingsworth who
    is group vice president for food safety programs at the Food
    Marketing Institute. And then is Caroline Smith DeWaal who is
    food safety director for the Center for Science in the Public
    Interest; Dr. Alan Goldhammer who is deputy vice president for
    regulatory affairs with PhRMA, the Pharmaceutical Research and
    Manufacturers of America; and then we have Tom Kubic who is
    executive director of Pharmaceuticals Security Institute; and
    Mr. Hallock Northcott who is president and CEO of the American
    Association of Exporters and Importers.
         You have 5 minutes for your opening statement. They will
    be made part of the record, and at the discretion of the
    committee, we may submit questions, ask you to get back to us,
    in which case we would ask you to answer those in writing for
    inclusion in the record at a later time. So I will start with
    Mr. Hubbard. You are recognized for an opening statement. Thank
    you.

     STATEMENT OF WILLIAM HUBBARD, SENIOR ADVISOR, COALITION FOR A
                     STRONGER FDA, CHAPEL HILL, NC

        Mr. Hubbard. Thank you, Mr. Chairman. Given the size of the
    panel, I will be very brief. I have a written statement. I will
    just point out that we like to think that our food supply is
    the safest in the world, but to some extent, the world's food
    supply is becoming ours. This country now imports $2 trillion
    worth of goods, and that will triple in the next few years. So
    we are being inundated by these foreign products, and you have
    pointed out the inadequacies in the current system, so I won't
    repeat all of that information. But I will say two main points,
    first, FDA is incapable of protecting the food supply vis-a-vis
    imports with its current resource staffing. They only have 450
    inspectors to look at what is approaching 20 million imports.
    So they are simply inundated by that. Second, I believe a
    paradigm is broken or the process is broken. It is 100 years
    old. It once worked in the 1920s or 1930s, but it puts all of
    the burden on this one small agency to identify a problem. And
    so the producer, the exporter, and the importer essentially
    don't have that responsibility. We need to move toward a system
    where everyone is accountable.
        Let me give one example. Let us say you have got a fish
    farm in China or Vietnam or Indonesia, and now he has got
    incentives to be as efficient as possible. He is crowding the
    fish into a pond, he is feeding them perhaps chicken livers,
    chicken droppings which are fairly high protein, and the water
    is becoming very polluted. The fish are getting fungal and
    bacterial infections. So he is adding drugs to keep the fish
    alive until they can be harvested. Well, that farmer is
    producing an unsafe food, and we see that all the time. The
    problem is no one is checking him. He has the incentive to
    produce this unsafe fish. His distributor in China has no
    responsibility to do anything about that. The exporter, the
    importer in the United States, it all comes down to whether FDA
    will actually look at that fish and test it. And with an
    inspection rate of less than 1 percent, that is not going to
    happen. So we have the problem there that you can't depend on
    an inspection process at the very end of the food chain. You
    need it sooner.
        So I am recommending that we consider much as your bill
    does and as section 7 of Mr. Dingell's bill does moving toward
    a system of prevention. Imagine that fish farmer now knows that
    the importer is taking some responsibility and saying, well,
    who am I getting that fish from? Is he producing safe fish? And
    then the exporter in China is doing that, and then the
    wholesaler in China is doing that. All the message down to that
    farmer is, if I don't produce safe fish, I am going to be
    checked by the people in the supply chain, and I am going to be
    out of business. We need to give FDA the authority to set up a
    process like that I believe and then fund it so that it can
    verify the system is working. And I believe with that we can
    have a safe food supply. In fact, many of the major food and
    drug companies do this now. Cargill, or someone like that, is
    already securing their supply chain. So we need to bring all
    the other guys who aren't doing that up to that standard, and
    then I believe we will have a safe food supply that everyone
    can agree is managed in an effective way.
        With that I will pass onto the next witness.
        [The prepared statement of Mr. Hubbard follows:]

                        Statement of William K. Hubbard

        Mr. Chairman and members of the committee, I am William K.
    Hubbard. Before my retirement after 33 years of Federal
    service, I served for many years with the U.S. Food and Drug
    Administration, and for my last 14 years was an FDA Associate
    Commissioner responsible for, among other things, FDA's
    regulations and policy development. Although I have remained
    retired since my departure from FDA in 2005, I provide advice
    to The Coalition for a Stronger FDA, an organization comprised
    of patient, industry, and public interest groups whose mission
    is to urge that FDA's appropriations be increased. I will be
    providing comments on FDA's resource constraints on behalf of
    the Coalition, but my comments on specific legislative changes
    do not necessarily reflect the Coalition's views and are solely
    my own (as the Coalition does not take positions on non-
    appropriations issues). During my career at FDA, I was deeply
    involved in seeking improvements in FDA's ability to assure the
    safety of foods, drugs, medical devices and other products that
    are imported into the United States from around the world.
    Accordingly, I wish to thank the Committee for moving quickly
    this year to consider legislation that would strengthen FDA's
    ability to oversee imports of food and other products from
    other countries.

                                   Background

        This committee has often raised concerns about our Nation's
    vulnerability to unsafe foods and drugs imported from abroad,
    and illustrated those concerns with examples of illegal
    pesticides on fruit from Latin America, deaths associated with
    raw drug ingredients from China, and other instances of unsafe
    goods produced in developing countries. FDA's scientists have
    agreed with you that imports were a growing concern, as they
    noted with increasing alarm the volume of imports moving from a
    trickle to a stream to a flood, with no new resources or
    authorities to deal with the problem. Perhaps the events of
    this year--the deadly pet food ingredients, toothpaste tainted
    with antifreeze, seafood laced with illegal drugs, and other
    examples of dangerous imports--will serve as the national wake-
    up call that is sometimes needed to get our institutions moving
    toward effective solutions. And solutions are indeed needed,
    for, Mr. Chairman, there can be no doubt that our current
    system for overseeing food and drug imports is broken, and
    therefore cannot protect us as it is currently structured.

                      The Current FDA Import Safety System

        As was noted in July's Oversight and Investigations
    Subcommittee hearing on imports, the current FDA system
    predates the creation of the Food and Drug Administration.
    First established in 1896, the system was designed to authorize
    Federal inspectors to open and examine (and sample, if
    necessary) foods and drug imported into the United States. It
    was folded into the original Food and Drug Act that established
    the FDA in 1906. And when the current statute authorizing FDA
    to protect our foods and drugs was enacted by Congress in 1938,
    the import provision was the only one of the original 1906
    authorities that were believed to have worked well (and were
    thus continued in the Food, Drug and Cosmetic Act that remains
    FDA's principal legal authority). Congress' judgment at the
    time was correct, as most imports were foods and FDA inspectors
    could generally oversee imports via technology of the early and
    mid-20th century--tools such as visual inspection, a well
    trained sense of smell, microscopic examination, and laboratory
    analysis. But as we neared the end of the century, it became
    increasingly apparent that changes in the nature of imports
    were overwhelming the ability of the FDA to assure their
    safety, namely:

         A huge increase in volume, for instance, from 2
    million shipments of imported products regulated by FDA in 1993
    to a level approaching ten times that today.
         A tremendous surge in foods, drugs, medical
    devices, cosmetics, animal foods, and dietary supplements from
    developing nations that have little or no established
    regulatory authorities overseeing production of those
    commodities.
         A shift in the types of commodities from
    ``finished'' products ready for consumption toward components
    that are used to make finished products in the United States,
    such as the active ingredients for our drugs from India and
    many of our basic food ingredients from China.
         A greater range of risks, such as new pathogens in
    food unknown to science in past years, and the intentional but
    dangerous addition of industrial chemicals and cancer-causing
    drugs in products produced overseas.

                             An Agency Overwhelmed

        Several times in recent years, examinations by
    Congressional committees, the Government Accountability Office,
    the National Academy of Sciences, and other expert panels have
    concluded that FDA's ability to protect us from unsafe foods
    and drugs has been steadily deteriorating. No better example of
    that erosion exists than in the import area. Let me give you
    just a few measures of how FDA's capacity lines up with its
    responsibilities for imports:

         The volume of imports, as I noted earlier, has grown to
    the point that it is nearing 20 million annual shipments of
    foods, drugs, medical devices and other FDA-regulated products.
    Yet the number of import inspectors has not been increased, and
    today the agency has only 450 inspectors to cover this massive
    inflow of products, which means that less than 1 percent of
    imports receive Federal inspection.
         Imports of FDA-regulated products enter the United
    States at many ports of entry. [Depending on how one counts a
    ``port,'' between 300 and 400.] But inspector staffing is so
    low that they can man only about 40 ports, and many of those
    only part time.
         Despite the fact that there are thousands of
    facilities oversees making products for our medicine cabinets
    and dinner tables, the number of FDA inspections of those
    facilities is tiny. For example, only 125 inspections of
    foreign food manufacturers were conducted last year, and that
    was down from only 209 in 2001. This year, the agency will do
    even less, about 100. And for other products the numbers are
    even more dismal--two dietary supplement foreign inspections
    last year, zero animal food inspections, and zero cosmetics
    inspections.
         FDA's information systems, particularly those
    focused on imports, are old and out of date. They cannot
    interact directly with other agencies' systems, such as those
    at Customs, and cannot even distinguish imports of road salt
    from table salt.
         FDA inspectors lack modern scientific tools to
    make rapid assessments of imported goods for contaminants such
    as bacteria, viruses, heavy metals and industrial chemicals.
    They must undertake an expensive and time consuming process of
    collecting a sample and sending it to laboratory for analysis,
    often having to wait days for results.
         With so few inspectors, FDA's laboratories cannot
    be adequately used, and the agency has attempted to close some
    for that reason. The result is that only a small number of
    products even receive laboratory analysis. For example, only
    20,000 samples of imported foods were sent for laboratory
    analysis last year, out of about 10 million shipments. There
    were about 200,000 shipments of food from China last year, for
    example, so if ALL of the laboratory analyses were directed
    toward China alone, FDA would have been able to analyze just 10
    percent of those imports.
         All in all, the parts of FDA that do not receive
    user fees (for new drug and medical device review) have been
    growing steadily weaker over the past decade, as the agency has
    lost a thousand scientists and inspectors who would have been
    protecting us from products on the market and those being
    imported from overseas.

                               A Broken Paradigm

        If the signs of FDA's failure to adequately oversee imports
    are so clearly evident, then what can we say about how we got
    to this point? There are, in my opinion, two principal reasons
    for our current dilemma, both revolving around the paradigm
    that current exists for imports--namely, FDA inspection, at the
    border, to ``catch'' problems before they make it into our
    homes.
        First, FDA's budget has not kept pace with its growing
    responsibilities. The agency has sustained either a flat
    appropriation or actual cuts in their budgets for more than a
    decade, at a time in which new problems and new regulatory
    challenges have been thrown steadily at the agency. The food
    safety program is a good example. It was almost half of FDA's
    budget in the 1970's, but today is only about one quarter.
        Let me give you a more recent example. FDA's food safety
    budget was $407 million in 2003. If the agency had received
    sufficient funding since then just to stay even with inflation,
    the food safety appropriation for this year would be $626
    million. But it was actually $450 million, which means that the
    agency lost $176 million in buying power for food safety in
    recent years. The result has been a loss of 20 percent of its
    food scientists, and over 600 inspectors, during that time.
        One would think that with a growing domestic food industry,
    soaring imports of food from other countries, numerous new
    technologies (such as biotechnology) being used to produce
    food, an increase in food borne disease outbreaks associated
    with foods regulated by FDA, and declining public confidence in
    FDA, our leaders would be anxious to assure that the regulatory
    structure would be strengthened.
        Similar analyses can be done for other FDA programs, such
    as drug and medical device safety, dietary supplements, and
    animal foods and drugs. These trends are alarming, and
    underscore the reasons for the creation of The Coalition for a
    Stronger FDA. While the Coalition's members often disagree on
    policy outcomes with respect to regulation, they are all
    concerned that a weak FDA is detrimental to domestic business,
    international trade, and, most importantly, public safety.
        The second reason for our current vulnerability with
    respect to imports is that the regulatory paradigm for those
    products simply does not work in the 21st century. It is a
    system fraught with flaws in today's world:

         It is reactive system that looks for problems in
    foods and drugs after they're arrived in the United States,
    rather than preventing the export of contaminated products at
    their source
         It would need massive new resources to be
    significantly improved, requiring hiring thousands of new
    inspectors at a cost of billions of dollars, and even then may
    not be able to meet our expectations
         It continues to place all of the burden of
    assuring safety on this one small agency--the FDA--rather than
    requiring accountability by those who produce and import these
    commodities,
         It provides little incentive for foreign
    governments and foreign producers to be vigilant in producing
    safe goods for sale to the United States, and
         It does not take into account modern principles of
    product quality assurance that have recently been developed and
    proven to work effectively in the production of food and other
    products.In sum, Mr. Chairman, I believe we must re-engineer
    our system of import oversight in ways that will not only
    strengthen the FDA but also bring our trading partners and
    their producers into a comprehensive safety assurance system.

                              Building Quality In

        Let me give a brief history that I believe will illustrate
    the concept of building safety into our food and drug supply.
    Many Americans do not know the name F. Edward Deming, but he is
    revered in Japan as one of the leaders in their post-World War
    II effort to rebuild their economy. Deming convinced the
    Japanese that traditional production methods, which relied on
    post-production inspection, would not assure product quality,
    and advocated instead a process whereby defects in a product's
    manufacturing are prevented from ever occurring. The Japanese
    embraced the concept and began a transformation in their
    production of automobiles, electronics and other consumer
    products that enabled Japan to shift from an image of a
    producer of cheap, shoddy products--some would say analogous to
    China today--to an economic superpower with a reputation for
    product quality. American manufacturers eventually adopted
    Deming's quality assurance philosophy, which has been credited
    with improving quality in recent years of a host of U.S.-
    produced consumer products.
        This quality assurance concept was implemented for food by
    the Pillsbury Corporation in 1960, when they were tasked by
    NASA to develop food for the U.S. manned space program. A food
    borne illness resulting in vomiting or diarrhea could be
    catastrophic in the weightless space environment, so Pillsbury
    developed a food production process to ensure that no
    contamination could occur as the food was being produced,
    thereby ``building safety in'' to the food as it was produced.
    This concept, known by the acronym ``HACCP'' (for Hazard
    Analysis Critical Control Points) was quickly used by FDA to
    solve a series of contaminations in the 1960's in canned foods,
    then used more recently to improve the safety of seafood and
    juice. Meanwhile, the Agriculture Department adopted the
    concept for improving meat safety in the United States, and the
    European Union has legislated HACCP into its food safety laws.
    FDA also developed regulations, utilizing the same quality
    control concept, for drugs and medical devices, to minimize
    production defects in those products.

              An Emerging Consensus on a Solution--Build Safety In

        As dismaying as the recent contaminations of seafood, pet
    food, toothpaste and other commodities have been, they have
    focused the various stakeholders in ways that would not have
    been likely a few months ago. I believe, Mr. Chairman, that we
    are seeing the development of the elements for needed change in
    the regulation of imports that could be a wonderful, even
    historic, opportunity to ``fix'' imports for the foreseeable
    future.
        Two weeks ago, the Interagency Working Group on Import
    Safety created by the President this summer released a
    ``strategic framework'' that emphasizes a ``life cycle''
    approach to the management of imports that builds prevention in
    upstream from the FDA. Last week, the Grocery Manufacturers
    Association/Food Products Association issued its ``Four
    Pillars'' for import safety, which emphasizes the need for all
    parties in the production and sale of imports to be accountable
    for the safety of foods. Consumer groups have long urged that a
    system of continuous quality controls over food production be
    adopted to reduce food borne disease. And your committee's
    draft import bill includes provisions that emphasize the need
    for safety assurance across the supply chain.
        My point is that I believe you are all saying fundamentally
    the same thing--that the answer for import safety is a system
    based on prevention that requires producers, exporters,
    importers, U.S. purchasers ``everyone in the chain of supply--
    to take greater responsibility for the safety of imports, and
    give FDA the authority and resources to implement and oversee
    such a system.

                          A System Based on Prevention

        I urge you to accept this emerging consensus among the
    various stakeholders as a sign of a tremendous opportunity to
    re-engineer our import safety system in ways that will save
    lives, reduce illnesses, enhance our citizens' confidence in
    their government, and perhaps even improve some of our trade
    relationships. The elements of legislation that would focus on
    a system of prevention could include:

         An express requirement for a foreign supplier
    quality assurance program that importers would implement to
    provide greater assurance of the safety and quality of imported
    food products and ingredients;
         Enhanced international standard setting, for
    better consistency in safety standards across the globe;
         Agreements with exporting countries that would
    improve their capacity and willingness to better oversee
    producers within their borders;
         Procedures to assure that verification is made
    that safety standards are being followed, and
         A strengthened FDA, with resources to strengthen
    the agency's scientific base; to gather and utilize new
    technologies for screening imports; to create modern IT systems
    to track the movement of imports; and to recruit and train
    inspectors to oversee the new system--both by better, risk-
    based inspections at the border and by more frequent
    inspections of foreign facilities.

        I believe it is entirely possible for the Congress to bring
    together the disparate interests involved in import safety and,
    keying off of the very basic concept of prevention throughout
    the supply chain, craft legislation that could be accepted by
    consumers, the industry, and the current administration.
    Obviously, there would be many details to consider, but, in the
    end, the goal of a better, more effective import screening
    system is achievable. And, of course, there are other
    authorities that members of Congress have considered in the
    past, such as country of origin labeling, new recall authority
    and more. But those additional authorities would not, in my
    view, address the fundamental problem of why FDA cannot assure
    the safety of imports. Thus, I urge the committee to consider
    making a system of prevention your primary objective, and I
    thank you for allowing me to express my views on this subject.
                                  ----------

        Mr. Pallone. Thank you. Congressman Dooley.

    STATEMENT OF HON. CALVIN M. DOOLEY, PRESIDENT AND CEO, GROCERY
                       MANUFACTURERS ASSOCIATION

        Mr. Dooley. Well, thank you, Congressman Pallone,
    Congressman Buyer. It is a delight to be here. I have the honor
    and privilege of representing over 300 companies in the U.S.
    that manufacture food and beverage products. So every time you
    go into the grocery store and you see those brands on the
    aisles there, quite likely they were produced by my member
    companies; and they are absolutely committed in working in
    partnership with all of you and this committee to ensure that
    we can build upon what we consider the safest food supply in
    the world to make it even safer.
        What we have proposed, the Grocery Manufacturers just
    recently, is what we call the four pillars for safer food; and
    we are trying to build upon that foundation of an incredibly
    safe food supply. But the underlying premise of this is much
    like Mr. Hubbard talked about is we can be most effective by
    focusing on prevention because while we know there is work to
    be done and there are improvements, when you look at all the
    food products that are in a grocery store today, we are
    fortunate that it is a small, a very, very small number of
    those that pose any health or food risk to a consumer. And so
    what we need to be focused on is that we understand we have a
    small problem, but it is not a large problem. It is almost like
    how do you find that needle in the haystack with that needle
    being that food safety concern? So our objective needs to be
    how do we limit the number of needles and also how do we reduce
    the size of that haystack so that it makes it easier for FDA to
    allocate their resources in order to make a difference.
        Our pillar one is really to develop a mandatory foreign
    supplier quality assurance program, and under this pillar, all
    importers of record, which is a company that is importing a
    food product, would be required to develop mandatory protocols
    that would ensure that they have a greater confidence in the
    safety of those products that they are importing. We would ask
    FDA to develop guidance in terms of what would be the
    components for this mandatory foreign supplier quality
    assurance program. And the reason why we are going down this
    path is that every one of our member companies, the greatest
    equity that they have in their company is the brand of their
    product; and that brand of their product is what makes a
    difference in whether or not that consumer will take it off the
    shelf. And if that consumer has any concerns in terms of the
    safety of that product, they in fact, will not purchase it. And
    so we are totally committed, and we think we are in the best
    position to really make a difference in preventing contaminated
    food products.
        The pillar two really works on the voluntary qualified
    importer food safety program, and this is really focused on how
    do we reduce the size of the haystack understanding that there
    are some food products that we are importing or ingredients
    that are in fact of lesser risk, and there are also
    opportunities for food producers and processors to work in
    cooperation with FDA to provide them with additional
    information which in fact can lower the risk of concern of a
    food safety problem.
        And pillar three is something we think is absolutely
    critical is that this Government and FDA needs to be working to
    build the capacity of foreign governments to develop equivalent
    food safety programs within their countries.
        And also pillar four is something that we have been working
    very closely with many of the organizations that are
    represented at this table, is that we have to expand the
    capacity of FDA. We are a part of the coalition for a stronger
    FDA which is asking for a doubling of the budget of the Food
    and Drug Administration over the next 5 years because we are
    not going to be successful in giving the FDA the resources to
    enhance their participation and partnership in this effort to
    achieve greater food safety if they do not have additional
    resources.
        The one thing that I would like to spend just a moment in
    talking about some of our concerns with the legislation that
    was in fact implemented. The industry and my member companies
    have great concern about a user fee approach as we think that
    food safety is a public good, it is a responsibility of the
    Federal Government, and it should be paid for out of general
    fund dollars. We are concerned about whether or not you can
    actually in fact implement an equitable user fee approach that
    doesn't have unintended consequences. And I just brought two
    products, two little props here, which can kind of demonstrate
    that. If you have a line item, a user fee of $50 per line item,
    I have a product here that is Madras Lentis that is a product
    of India. This product would come in under one line item and
    thus would pay that one $50. We could have a very similar
    product coming in, a vegetarian chili product, that was
    manufactured in the U.S. that has a number of different
    ingredients in it. Those ingredients, many of which would be
    imported into this country, would be paying a separate line
    item or that user fee on each of those ingredients. You are
    creating a perverse incentive for many food processors and
    manufacturers to locate their processing facilities across the
    border in order that they could minimize the cost of a user fee
    that would be coming into this county.
        There are also concerns similar to this on part of the
    country of origin labeling. All processed foods that are coming
    into the country today has to be labeled as to the country of
    origin where it had substantial or significant transformation.
    We are concerned, and there is a lack of detail on the country
    of origin labeling requirements, that again this product from
    India could be a product of India, but this product
    manufactured in the United States might be required to have
    separate line items in terms of where each of the ingredients
    was sourced, further complicating the marketing and the
    packaging of this product.
        We also have concerns that have been articulated in terms
    of the port of entries. We do not think that you can restrict
    it to the 13 or so that have FDA lab facilities. We think that
    is of great concern to us. We also have concerns, too, with the
    certification process being prescribed. We think that just the
    testimony that Dr. Acheson gave, there are 400,000 food
    suppliers in China alone. There are almost that many in India.
    We are looking at millions of food suppliers throughout the
    world that we would have to be in the position to try to
    certify, and we think that would become such an onerous and
    costly burden and wouldn't be the best allocation of FDA funds.
    We think that our proposal will ensure the private sector can
    provide better information, that we can share that information
    with FDA in a manner that we can achieve the shared objective
    of enhanced level of food safety.
        [The prepared statement of Mr. Dooley follows:]

                       Statement of Hon. Calvin M. Dooley

        I am Cal Dooley, president and CEO of the Grocery
    Manufacturers /Food Products Association. I am here today to
    discuss an issue of paramount importance to our members--
    ensuring the safety of imported foods.
        Food producers have an abiding interest in safe food.
    Maintaining consumer confidence in our products, our brands,
    and our companies is the single most important goal of the
    food, beverage, and consumer packaged goods industry, and
    product safety is the foundation of consumer trust. My industry
    devotes enormous resources toward this goal, and effective
    regulation and oversight by Federal regulatory agencies such as
    the FDA are critical and complementary elements of the fabric
    of consumer protection.
        This month, GMA/FPA issued ``Commitment to Consumers: The
    Four Pillars of Food Safety,'' a comprehensive proposal
    designed to protect consumers by strengthening, modernizing,
    and improving the system governing food imports. Our proposal
    envisions new mandatory requirements for the food industry to
    assure the adequacy of foreign supplier food safety programs
    and new responsibilities for FDA. Other elements include a new
    program to help identify and prioritize imports of potential
    concern, new efforts by FDA to help enhance the capacity of
    foreign governments to prevent and detect food safety issues,
    improvements to FDA's scientific capabilities and its use of
    information technology, and a significant increase in FDA
    resources.
        Underlying this comprehensive set of proposals is a
    fundamental emphasis on prevention.
        Let me put the challenge before us in plain terms. As the
    volume of imported food steadily increases, the FDA's job at
    the border can be compared to trying to find a needle in a
    haystack. We need to approach this task from different angles:
    (1) by reducing the number of needles to find; and (2) by
    reducing the size of the haystack in which to find them.
        A complete copy of the ``Four Pillars'' proposal has been
    submitted with this written testimony. Before I provide
    comments on the Food and Drug Import Safety Act introduced last
    week, I will take just a few minutes to briefly outline each of
    the four pillars for you now.
        Pillar One: Mandatory Foreign Supplier Quality Assurance
    Program--Under this pillar, all importers of record would be
    obligated to adopt a foreign supplier quality assurance program
    that assures that all imported ingredients and products meet
    FDA food safety and quality requirements. Food companies would
    utilize FDA guidance to adopt food safety programs and
    practices needed to ensure food safety, such as audits,
    testing, good manufacturing practices, good agricultural
    practices, HACCP plans, food defense programs, product
    management systems, and recall programs. Requiring importers of
    record to ensure the safety and quality of their supply chain--
    and giving FDA the authority to review the effectiveness of
    these programs--would reduce the number of needles in the
    haystack.
        Pillar Two: Voluntary Qualified Importer Food Safety
    Program--To help prioritize FDA resources and to relieve
    congestion at ports, we further propose that importers of
    record who are able and willing to meet additional standards
    and conditions than those required under Pillar One could
    voluntarily participate in a program entitling them to
    expedited entry at U.S. borders. This is similar to the Safe
    and Secure Food Importation Program Chairman Dingell has
    proposed in the Food and Drug Import Safety Act introduced last
    week and builds upon the C-TPAT program currently in place. In
    addition to demonstrating the presence of well-designed and
    implemented food safety systems, importers could demonstrate a
    secure supply chain and conduct and share additional testing
    and program data with FDA to be eligible for expedited entry.
    By permitting expedited entry for imported foods that pose no
    meaningful risk, Congress can reduce the size of the haystack
    needing closer scrutiny by the FDA.
        Pillar Three: Build the Capacity of Foreign Governments--
    FDA would work with foreign governments to improve their
    capacity to prevent and detect threats to food safety. FDA
    would work with foreign governments to expand training,
    accelerate the development of laboratories, ensure the
    compliance of exports with U.S. regulations, permit appropriate
    FDA inspections of foreign facilities, and ensure adequate
    access to data and test results conducted abroad. In addition,
    FDA would be encouraged to use Codex to harmonize requirements
    among countries. The food industry has long supported
    international harmonization through Codex, and we believe that
    FDA must once again provide international leadership towards
    the adoption of strong, science-based international food safety
    standards. All of these foreign capacity building steps would
    further reduce the likelihood of contamination and thereby
    further reduce the number of needles for FDA to find at the
    border.
        Pillar Four: Expand the Capacity of FDA--Expanding FDA
    resources--including personnel, equipment, laboratory capacity,
    and scientific expertise--is an essential component of an
    effective food safety system. FDA resources have not kept pace
    with the demands posed by rising imports and current food
    safety challenges. To meet these needs, Congress must provide
    significant new funds to dramatically improve FDA's analytical
    testing capabilities, to increase and target inspections
    conducted by FDA, to obtain real-time test results, and to
    enhance communications during crisis events. With additional
    resources that are well-deployed, FDA should be much better
    positioned to find any remaining needles before they cross the
    border and enter U.S. commerce.
        We believe that the adoption of these four pillars of food
    safety will result in significant improvements in our food
    safety net. By focusing our efforts on prevention--and by
    expanding and improving our ability to detect threats to public
    health--we believe that our proposal will do far more to ensure
    the safety and quality of imported food products and
    ingredients than would the adoption of many of the provisions
    of the Food and Drug Import Safety Act and will build upon the
    partnership between FDA and the food industry.
        Food companies recognize that growing food imports pose new
    challenges and we share the same goal as the committee: to
    continually improve the safety and quality of food products and
    ingredients. We are grateful for the opportunity to work with
    you to develop comprehensive imported food safety legislation
    which makes the prevention of contamination the cornerstone of
    our food safety net.
        While inspecting products at the border is an important
    element of a comprehensive approach to food safety, we believe
    that inspections alone will not provide enough improvement to
    the safety of our food supply. We strongly agree with your
    desire to find more resources for FDA, which needs to restore
    its scientific base as well as its capacity to conduct an
    appropriate level of inspection and examination. However, we
    strongly oppose the user fee provision in the Food and Drug
    Import Safety Act. We have five significant concerns with the
    user fee.
        One, we believe that the benefits of a safer food supply
    accrue to the public generally, much like the benefits of a
    strong national defense, and believe that the costs of
    providing FDA with sufficient resources to perform the various
    responsibilities to protect the public health that have been
    given to it by the Congress should come through taxes, not user
    fees. As you know, a user fee is appropriate when the benefits
    of the government service flow to an individual (such as
    postage stamps, recreation fees, or public transportation) or
    to a particular business (such as harbor maintenance fees,
    accelerated review of prescription drugs, or bankruptcy filing
    fees). The benefits of inspection and research clearly flow to
    all Americans, not simply to food companies.
        Second, the proposed user fees would impose significant
    financial burdens on U.S. companies, not just on importers.
    This is especially true for companies with facilities in both
    the U.S. and Canada, for example, where there is a steady flow
    of ingredients and finished products, all of which would be
    subject to import user fees. We are in the process of
    collecting data to estimate the added costs to U.S. businesses,
    but we have reason to believe they would be substantial.
        Third, the imposition of the user fee on imported products
    and ingredients could create an incentive for companies to
    locate production facilities outside the United States. Let me
    provide an example of why this is so. Suppose a company makes a
    product in the United States that consists of 20 ingredients,
    half of which are imported. Under the user fee proposal, a fee
    would be imposed on ten of those ingredients each time they are
    imported. If, on the other hand, the production facility was
    located in Mexico or Canada, for example, the fee would only be
    imposed once: when the finished product was brought into the
    United States.
        Fourth, we are concerned that a user fee on imports would
    violate our trade commitments by creating a preference for
    domestic sources of food products and ingredients. We're also
    concerned that such a fee could invite other countries to place
    similar fees on our food exports. Finally, we are concerned by
    the mechanics of the user fee. By charging $50 per line of
    food, the user fee in the Food and Drug Import Safety Act
    places an unfair burden on importers of many distinct products.
        We strongly agree that FDA needs more resources to increase
    inspectors, improve its scientific capabilities, and meet other
    critical needs. For the past year, GMA/FPA has worked with the
    Coalition for a Stronger FDA to substantially increase FDA
    funding. In our view, FDA does not simply need ``more''
    resources, but needs the ``right'' resources. In particular, we
    believe that the agency needs additional resources for both its
    ``science'' and its ``compliance'' activities. The agency
    cannot operate effectively without both. Our goal is to double
    FDA's food-related spending over five years, and we applaud
    Chairman Dingell for his efforts to seek additional FDA
    spending.
        We have other major concerns with the Food and Drug Import
    Safety Act and we look forward to working with the committee to
    address these and other challenges.
        One, we are concerned that proposals to limit imports to
    certain ports and to require the development and implementation
    of certain tests could create havoc at the border and create
    costly and unachievable new burdens on FDA and the food
    industry. In particular, we are concerned that the proposal to
    limit food imports to ports of entry located in the same
    metropolitan area where FDA has a laboratory could
    unintentionally block food imports to many ports. While there
    are more than 300 ports of entry, there are only 13 FDA labs.
    As a result, many ports--including all ports in Texas and
    Florida--would no longer be able to import food products and
    ingredients. We believe a better course would be to expand and
    better target FDA inspectors, as we have proposed in our second
    ``pillar'' and Chairman Dingell has proposed in section 7 of
    the Food and Drug Import Safety Act, and to expand FDA's
    capacity to quickly analyze food products and ingredients.
        We are also concerned about requirements to develop rapid
    tests within three years and to test all processed food
    products. While we share your desire to make rapid-tests and
    other sampling methods widely available, we are concerned that
    requiring the development of such tests within three years may
    be unrealistic. We are also concerned that a requirement,
    included in Section 12 of the Food and Drug Import Safety Act,
    that all processed food be tested to detect substances that
    make the food adulterated creates an impossible burden: there
    is simply no way to test for all potential causes of product
    adulteration. In our view, requiring every importer of record
    to implement a foreign supplier quality assurance program--and
    placing the focus of imported food safety efforts on
    prevention, rather than detection--would significantly improve
    the safety of imported food to a far greater degree and build
    upon the strong partnership between food companies, our
    suppliers, and FDA.
        Two, we are also concerned about two new labeling
    requirements included in the Food and Drug Import Safety Act.
    First, packaged food products are already required to bear
    country of origin labeling. Second, we are concerned that the
    proposal to require country of origin labeling for all food
    could create huge new burdens on food companies while providing
    little or no benefit. Many of our food companies combine
    ingredients from dozens of countries to create a single
    product. Would the proposed country of origin labeling
    requirement mean that each ingredient has to be labeled with
    its country of origin? We are also concerned that a ``safety
    notice'' on meat, poultry or seafood that contains carbon
    monoxide to affect coloring would needlessly mislead the
    public. As you know, this practice has been subject to
    exhaustive testing and has been declared safe by FDA.
        Three, we are also concerned that Food and Drug Import
    Safety Act violates our trade agreements and would invite
    retaliatory actions by our trading partners. As I mentioned,
    the adoption of user fees would create a clear preference for
    domestic food products and ingredients and would invite the
    adoption of similar fees on our exports. In addition, we are
    concerned that a requirement that all foreign facilities
    importing food into the U.S. obtain FDA certification would
    place enormous new burdens on FDA, would violate our trade
    agreements, and would invite reciprocal demands by our trading
    partners. Further, we do not believe that there are likely to
    be resources available--even with user fees--for FDA to certify
    tens of thousands of foreign facilities located in about 150
    different countries.
        Four, there is ample evidence that the current recall
    system works well. We are concerned that the due process
    protections that necessarily accompany the recall proposal in
    the Food and Drug Import Safety Act could actually delay, not
    accelerate, efforts to address public health threats. As you
    know, food companies have powerful incentives to remove
    adulterated products from commerce as quickly as possible and
    have worked closely with FDA to implement recalls quickly and
    effectively. We strongly support efforts to expand FDA's
    ability to communicate the risks posed by adulterated foods.
        In conclusion, we share your commitment to the improving
    the safety of imported food. We also share your commitment to
    increase FDA's resources, including resources to increase our
    ability to detect adulterated food at the border. However, we
    believe that far more emphasis must be placed on the prevention
    of threats to food safety throughout the supply chain and look
    forward to working with you to make a safe and secure supply
    chain the responsibility of every importer of record and to
    expand the capacity of foreign governments to detect and deter
    threats to public health.
        Our ``Four Pillars'' proposal builds on the long history of
    public-private responsibilities and cooperation in ensuring
    food safety, while providing new and innovative approaches to
    the latest challenges to our Nation's food safety net. Its
    focus on prevention would be complemented by an enhanced
    ability to quickly detect and address public health threats.
    Meeting the challenges of the modern supply chain requires
    additional public resources for FDA and related agencies and
    demands an integrated approach that leverages the significant
    investment of the private sector in product safety. We look
    forward to working with the committee to fashion comprehensive
    legislation that will address the new challenges posed by
    rising food imports and will continually improve the safety of
    our food products and ingredients.
                                  ----------

        Mr. Pallone. Thank you. I just realized, Calvin, you went
    over 5 minutes. I didn't pay attention. So I will ask the
    others to stick to the 5 minutes, even though he used twice the
    time; but that is all right, you are a Congressman, so we will
    allow it.
        I do have to tell everyone, though, that we will have two
    votes; so I am going to try to get in one or two of you before
    we go vote, and you will have to wait until we come back.
        So next is Dr. Hollingsworth.

    STATEMENT OF JILL HOLLINGSWORTH, D.V.M., GROUP VICE PRESIDENT,
             FOOD SAFETY PROGRAMS, FOOD MARKETING INSTITUTE

        Dr. Hollingsworth. Chairman Pallone and members of the
    committee, thank you for the opportunity to appear before you
    today to present our views and suggestions on H.R. 3610. I am
    Dr. Jill Hollingsworth, the group vice president at the Food
    Marketing Institute, FMI, where I have been head of the Food
    Safety Program for over 10 years. FMI is a national trade
    association with 1,500 member companies representing food
    retailers and wholesalers in the United States and abroad. Our
    members represent over 75 percent of all retail food store
    sales in the U.S., accounting for $340 billion in annual sales.
        In my capacity at FMI I often have to draw upon my past
    experiences at USDA where I worked for 15 years. While I was
    there, I not only implemented the investigation of the E. coli
    outbreak at Jack-in-the-Box, but I was responsible for
    developing and implementing the public health and recall
    programs that exist today in the Food Safety and Inspection
    Service.
        At FMI I worked closely with the supermarkets and their
    wholesalers to ensure that we are doing all that we can to
    achieve a safe food supply, but we are very concerned about the
    recent decline that we have seen in consumer confidence in the
    food safety system. In January 2007, FMI's own survey of
    consumers called U.S. Grocery Shopper Trends found that
    consumers' confidence in the safety of the food purchased at
    supermarkets dropped from 82 percent down to 66 percent, and
    for restaurants that drop in confidence declined to 43 percent.
    Numerous recalls and the lack of confidence in both the food
    system and the Government have actually caused consumers to
    actually change their purchasing habits with over 38 percent of
    consumers saying they no longer buy certain items such as
    spinach because they are afraid of the safety of the food.
    Enhancing the safety of our food supply would require active
    effort and aggressive support of the business community such as
    food wholesalers and retailers working with the Government.
    This is a farm-to-table challenge, and it will take a farm-to-
    table solution; and it is both a domestic and an international
    problem that we must address together.
        As the retailers and wholesalers of this country, we are
    working to improve safety through four focused programs. First,
    we want to ensure that our suppliers, whether they are domestic
    or international, are actively managing a science-based food
    safety program. We do that through our own Safe Quality Food
    Program, a global food safety training, audit, and
    certification system. Second, we train and certify our own
    supermarket employees in safe handling practices through
    education programs called SuperSafeMark, and we have trained
    this year alone over 15,000 food store managers.
        Third, we provide consumers with practical science-based
    advice on food handling in the home through the cooperation for
    the Partnership for Food Safety Education. This is a public/
    private sector program that brings together consumer groups,
    FDA, USDA, CDC, and the industry sector. Our president, Tim
    Hammonds, is the founding chair and immediate past chair of
    this educational partnership.
        Fourth, FMI's Board has appointed a food safety task force
    made up of chief executives from retail and wholesale
    companies. The task force is currently looking at ways that we
    can improve our Nation's food recall communication system to
    make it more effective and efficient. As I mentioned, there is
    a need to restore consumer confidence and to reduce food borne
    illnesses. To that end we would want to work with this
    committee, but we also want to be sure that we can do so
    without hindering the ability to serve our customers. To that
    end, any changes that we consider must be able to answer some
    questions: Can they be supported by science, do they in fact
    provide measurable benefits, are they affordable, realistic and
    practical, and can they be implemented without unintended
    consequences.
        For example, in H.R. 3610, we support the concept of an
    expedited review process for those companies that comply with
    FDA guidelines. Here is an example of where the private sector
    can be of assistance. Through our safe quality food program, we
    are able to audit all of our suppliers as often as we need to,
    and we can grant them accredited certification when they meet
    the standards at or above FDA's. We also support the operation
    of the FDA field labs. Rapid tests should be developed based on
    the seriousness of the threat posed by the pathogen or
    chemical, and we also feel that these tests should be used to
    monitor the food safety system, not to inspect food. Another
    provision that we may be able to support is mandatory recall.
    Under our current recall system, food companies have an
    outstanding history of compliance, and we do not want to change
    anything that would possibly slow down the recall system.
    However, if the Secretary had the option to mandate a recall,
    in the event that a company were to refuse, then we could
    consider supporting such a provision. This is slightly
    different from the bill language. We would be more inclined to
    supporting the Secretary with the authority to option, if a
    mandatory recall is necessary, rather than telling the
    Secretary he must issue a mandatory recall.
        FMI cannot support the proposal for user fees on imported
    foods and drugs. Not only will this raise the cost of food for
    the American consumer but we also feel it presents a conflict
    of interest. FMI and its members are very concerned about the
    provision to restrict U.S. ports of entry. I think we have
    heard many examples of why the system will just be damaging to
    our country. Ultimately the consumer will be the loser with
    higher costs for food and less availability of quality, fresh
    foods. We also do not support the proposed provision for carbon
    monoxide labeling of meat, poultry, and seafood. Both FDA and
    USDA have recognized this technology as being safe, and it is
    not the only packaging system that is currently used to extend
    color of foods. We are not aware of any scientific basis for
    singling out one technology for a warning label.
        The bill also contains a provision requiring country of
    origin labeling. FMI strongly objected to the mandatory Country
    of Origin Labeling Law created in the 2002 farm bill because it
    placed the entire burden for labeling on retailers. Retailers
    are the last link in the supply chain, and we should not, in
    fact we cannot, be accountable for ensuring the location of
    where food originated. The concept of certifying foreign
    governments and countries by FDA sounds very promising as we
    move toward a risk-based system and one that we can support.
         That system is one that we would support, but there does
    need to be a more pragmatic approach as to how this could be
    accomplished. We look forward to working with you on these and
    other concerns. Thank you.
        [The prepared statement of Dr. Hollingsworth follows:]

                    Testimony of Jill Hollingsworth, D.V.M.

        Chairman Pallone and members of the committee, I am honored
    to appear before you today to present our views and suggestions
    on House bill 3610, the Food and Drug Import Safety Act. I am
    Dr. Jill Hollingsworth, group vice president of the Food
    Marketing Institute (FMI). I have been in charge of food safety
    programs at FMI for the past 10 years
        FMI is a national trade association that has 1,500 member
    companies made up of food retailers and wholesalers in the
    United States and around the world. FMI members operate
    approximately 26,000 retail food stores with combined annual
    sales of $340 billion, representing three quarters of all
    retail food store sales in the United States. FMI's retail
    membership is composed of national and regional chains as well
    as independent grocery stores. Our international membership
    includes some 200 companies from more than 50 countries.
        In my capacity at FMI, I often draw upon my past work
    experience at the U.S. Department of Agriculture (USDA). I
    spent 15 years there and led the investigation of the Jack-in-
    the-Box E. coli outbreak in 1992. I subsequently set up food
    safety and recall programs and a liaison program with the
    Center for Disease Control in Atlanta and the U.S. Public
    Health Service. While there I also served as a Veterinary
    Inspector, Special Assistant to the Administrator of Food
    Safety and Inspection Service (FSIS) and Assistant Deputy
    Administrator of FSIS.
        Presently, I work closely with supermarkets and their
    wholesalers to ensure we are doing all we can to guarantee a
    safe food supply--operating clean and safe stores; adhering to
    science-based best practices; responding to emergency
    situations; educating the public about safe food handling
    practices; and, working with our Federal, state and
    international partners to improve food safety programs.
        In 2007, consumer confidence in the food supply reached its
    lowest point since 1989. FMI's own survey of consumers, U.S.
    Grocery Shopper Trends, found that consumer confidence in the
    safety of foods purchased at supermarkets dropped from 82
    percent in 2006 to 66 percent in 2007. And for restaurants, the
    drop in confidence was down to 43 percent. Recalls and the lack
    of confidence in both the food system and government have
    caused consumers to actually change their purchasing habits,
    with 38 percent of consumers saying they have stopped buying
    certain food items because of food safety concerns. For
    example, in January of this year, 71 percent of consumers
    reported they no longer buy spinach.
        We realize that restoring consumer confidence and
    strengthening our food safety system is of paramount
    importance. We understand and support your goals. Enhancing the
    safety of the food supply requires the active effort and
    aggressive support of the business community--such as food
    wholesalers and retailers--as well as government. This includes
    our work with suppliers, especially beyond our borders, our
    commitment to train our own people and our outreach to
    consumers. It is a farm-to-table challenge that needs a farm-
    to-table solution. It is both a domestic and an international
    problem we must address together.
        Accordingly, the retail food industry is actively involved
    in improving food safety in the U.S. We are doing this through
    four focused programs: SQF (Safe Quality Food program);
    SuperSafeMark; the Partnership for Food Safety; and, our Board
    Level Food Safety Task Force.
        I would like to highlight a few of the retailer/wholesaler
    food safety initiatives in place. First, we work with our
    suppliers to ensure that they are following best practices. We
    have been aggressively implementing a new standard in food
    safety--one based on science, for all suppliers, from the
    smallest farm to the largest manufacturing plant. This program
    is called Safe Quality Food, or SQF. The SQF standard is one of
    only five programs in the world that has received recognition
    from the Global Food Safety Initiative, a group of
    international food safety experts. What makes SQF unique is
    that we require suppliers to carry out risk assessments, and
    after they have put their food safety program in place, we
    monitor their performance through third-party audits. Only
    those companies in compliance with this international standard
    can receive SQF certification.
        Second, on the domestic front, we train and certify our
    supermarket employees in safe food handling through a program
    especially designed for retail called SuperSafeMark. Currently,
    we train and certify about 15,000 store managers a year and we
    train thousands of store employees so that they comply with the
    FDA Food Code.
        Third, we provide consumers with practical, science-based
    advice on food-handling in the home. We do this through The
    Partnership for Food Safety Education. This is a joint private-
    public sector project that brings together consumer groups, the
    FDA, USDA, CDC and a wide variety of other industry
    associations. Our president, Tim Hammonds, is the founding
    chair and immediate past chair of the partnership. The
    Partnership is responsible for the FightBAC campaign to teach
    food safety to children and others; the Chill Out program to
    remind consumers about keeping their home refrigerators cold;
    and, most recently, the Be Food Safe promotion providing
    retailers with the tools they need to educate their customers
    about safe food practices.
        Fourth, FMI's Board has appointed a food safety task force
    made up of the chief executives from retail and wholesale
    companies around the world. The task force is looking at how we
    can make our nation's food recall communications system more
    effective and efficient. We are working in concert with our
    trading partners and will be glad to communicate with this
    committee on our progress as we work toward improvements in the
    recall system.
        As I mentioned earlier, there is a need to restore consumer
    confidence and to reduce the burden of foodborne illness; to
    that end we want to work with the committee to accomplish our
    shared goals but in a way that does not hinder our ability to
    serve our customers and ensure an affordable and abundant food
    supply. Many of the proposals in H.R. 3610 are well founded,
    but we must be sure that any changes to our current food safety
    system meet certain criteria. They must:

         Be supported by science,
         Have measurable benefits,
         Be affordable,
         Be realistic and practical,
         And, be implemented without unintended
    consequences.

                           Mandatory Recall Authority

        Regarding mandatory recall authority, we realize that under
    our current voluntary system of recalls, a company has never
    refused to withdraw adulterated product at FDA's request or
    they have taken action on their own. However, if the Secretary
    is given the option to mandate a recall in the event a company
    did refuse, we can see where this would build confidence in the
    recall system. We note that this approach differs somewhat from
    the current bill language, which would require FDA to issue a
    cease distribution order upon a finding of food adulteration.
        Rapid Testing Techniques for Use in Inspection of Imported
    FoodsAnother area of potential agreement is the development of
    rapid testing techniques for use in inspections of imported
    foods. We urge the committee to pursue this avenue as long as
    scientists and researchers prioritize this work. Developing
    rapid or screening tests should take into account: the
    seriousness of the threat posed by the pathogen or chemical;
    how frequently it occurs as a food contaminant; and, the
    likelihood that a rapid test methodology would be successful.
    We would also encourage FDA to work with USDA, CDC, and other
    public and private entities to share expertise, resources and
    laboratories in pursuing this.

                    Safe and Secure Importation Food Program

        The provision for a safe and secure importation of food
    program that recognizes those companies that comply with new
    FDA guidelines in exchange for expedited review of their
    product is a good idea. Here is an area where the private
    sector can be of assistance if companies demonstrate their
    compliance to a food safety standard through an accredited
    certification program such as SQF. SQF requires that a company
    be in compliance with the regulatory requirements of both the
    exporting and importing country, in addition to the standards
    set by the retail buyers. Although not intended to be a
    substitute for government oversight, the private sector can add
    an additional layer of ``policing'' for products entering into
    the U.S. food supply. We would need to see the details of FDA's
    plan as many factors such as tracking compliance, the security
    of the company's supply chain, etc., would need to be taken
    into consideration. It would also be important to coordinate
    these efforts with USDA, Customs and other Agencies.

                 Continued Operation of FDA Field Laboratories

        We fully support the continued operation of FDA Field
    Laboratories. These labs provide needed scientific support and
    credibility. One consideration for reform would be to determine
    the capabilities at each of the labs and designate certain ones
    as a ``center of excellence'' for a selected type of test or
    procedure.

                     User Fees on Imported Foods and Drugs

        Although we strongly agree that FDA and its food safety
    programs are under-funded, FMI cannot support the proposal to
    impose user fees on imported foods and drugs. Not only will
    this raise the cost of food, but we also consider such fees to
    be a conflict of interest by the Agency in charge of inspecting
    and raising money for its own budget. We are unsure what direct
    impact user fees on food will have on our retailers and have
    asked them to review this.

               Restricting the Ports of Entry for Imported Foods

        FMI and its members are very concerned about the provision
    to restrict U.S. ports of entry for imported foods. We
    understand that the provision is modeled on the USDA system,
    but when applied to the broad spectrum of products under FDA
    supervision, it becomes unworkable and prohibitively expensive.
         Mr. Chairman, U.S. ports are already busy to the point of
    congestion. And there is increasing concern in the retail
    community that the growth in port capacity is simply not
    keeping pace with the growth in demand. Limiting the number of
    ports food can enter into through legislation will not only
    aggravate congestion and delays, it could also increase the
    cost of food for the American consumer.
         As you know, quite a bit of food that enters the country
    is perishable and needs to be shipped, sold and consumed in a
    limited period of time. A shipment of apples or pears cannot be
    left sitting on a dock for an extended period of time. As
    delays increase, so does shrinkage, waste and--unfortunately--
    costs.
         FMI is particularly concerned about the ability of these
    ports to handle the spike in imports of perishable commodities
    during the winter months, when the U.S. growing season for a
    number of products is over. The only way to meet demand for
    certain fruits and vegetables during this period is through
    imports. But again, delays at the port-level threaten our
    ability to bring these products to market in a timely manner
    and increase costs. And unfortunately, it is the American
    consumer who bears the brunt of this increase, particularly
    poorer Americans. As prices rise, consumers do not just pay
    more, they often consume less. When talking about fruits and
    vegetables, this is clearly not the desired outcome.
         I would also note that there are significant costs
    involved with closing ports of entry and shifting freight
    elsewhere. Food importers that have distribution centers at or
    around the ports that will no longer accept food will have to
    move their operations and face the expense of building and
    setting up new centers. Long-established supply lines will have
    to be reworked, which can be both expensive and costly. And the
    impacted districts are likely to see a decline in employment
    and tax revenues as the importers shift employees to their new
    operations.
         As an example of the disruption of trade, ninety percent
    of seafood shipments enter through 14 ports (Los Angeles; New
    York; Miami; Portland ME; Seattle; Boston; Norfolk; Tampa;
    Savannah; San Francisco; Houston; Philadelphia; New Orleans;
    and, Nogales, AZ), according the National Fisheries Institute.
    Of the 14 ports, only four are co-located with FDA
    laboratories: New York, Seattle, Savannah (Atlanta laboratory)
    and San Francisco. This would render states such as Florida
    unable to accept seafood products.

                           Country of Origin Labeling

        Section 6of the bill would require labeling to identify the
    country of origin of food, drugs, and medical devices and would
    require FDA to promulgate final regulations within 180 days of
    the law's enactment that would likewise take effect within 180
    days of enactment. We have several concerns with this provision
    in terms of timing, necessity and efficacy.
         In terms of timing, based on our experience with the
    regulations for country of origin labeling for seafood alone,
    we can report that the development of regulations for the 80
    percent of the food supply that falls within FDA's jurisdiction
    within 180 days would be virtually impossible. Moreover, the
    Tariff Act already requires imported food products to bear
    country of origin labeling, leaving open the question of what
    additional service this provision would apply and what standard
    the bill intends for the industry to use. That is, given the
    breadth of countries that may be involved in sourcing
    ingredients (and ingredients of ingredients) for processed
    foods, what country should be listed as THE country of origin
    for any given food product if a different standard is to apply?
    More importantly, however, identifying one--or twenty--
    countries from which food or its ingredients derives does not
    enhance the safety of the underlying food product. The
    resources that would be required to develop and implement the
    complex system that such labeling would entail would be far
    better spent on measures that would actually have the potential
    to improve the safety of the product.

                  Certifying Foreign Governments and Companies

        The concept of certifying foreign governments and companies
    by FDA sounds promising as a nod toward a risk-based system,
    but it gives rise to many questions. For example, how would FDA
    implement a mandate of this magnitude? FDA does not have the
    financial or personnel resources to take on this endeavor even
    with the $300 to $500 million projection from the user fee
    provision of the bill. Before moving forward with this, FDA,
    USDA and others should map out a plan for how such a system
    might work.
         We would also encourage the committee to remember that a
    number of developing countries may face severe difficulties in
    meeting the requirements of any certification programs. At the
    very least, both FDA and USDA need to be prepared to provide
    both technical and monetary aid to support capacity building in
    those areas.
         We agree that foreign governments should be held
    accountable for demonstrating that they have regulatory systems
    in place equivalent to those in the U.S.; evaluating other
    government programs might be a more realistic starting place.
    We would also suggest using some of the existing resources of
    USDA, APHIS and others who are already in those countries and
    ask them to take part in inspections and possible
    certifications.
        Adequate Testing of Processed Food Products
        Providing adequate testing of processed food products post-
    production presents challenges because there is no objective
    way to ensure testing is truly ``adequate.'' It is more
    effective to implement and monitor prevention programs, and use
    testing as a measure of how well those food safety programs are
    performing. This approach supports risk-based systems where
    resources are directed toward making sure products are safe
    through process control, such as HACCP (Hazard Analysis
    Critical Control Points) and certified third party audit
    programs.

             Carbon Monoxide Labeling for Meat, Poultry and Seafood

        We do not support the proposed provision for carbon
    monoxide labeling of meat, poultry and seafood. Both FDA and
    USDA have recognized that carbon monoxide is generally
    recognized as safe for its intended purpose. We are not aware
    of any scientific basis for singling out this one technology
    for labeling.
        Thank you for the opportunity to testify. We appreciate the
    efforts set forth in H.R. 3610 to help restore confidence in
    the food safety system and reduce foodborne illness. We remain
    available to the committee for further discussion and
    information should you need it.
                                  ----------

        Mr. Pallone. I think we only have about 6 minutes left, so
    I am going to recess. We only have two votes, so it should be
    about maybe 15, 20 minutes. Thank you. The subcommittee is in
    recess.
        [Recess.]
        Mr. Pallone. The subcommittee will reconvene, and we left
    off with Ms. DeWaal.

       STATEMENT OF CAROLINE SMITH DEWAAL, FOOD SAFETY DIRECTOR,
               CENTER FOR SCIENCE IN THE PUBLIC INTEREST

        Ms. DeWaal. Thank you, Mr. Chairman. I am Caroline Smith
    DeWaal, and I direct the Food Safety Project for the Center for
    Science in the Public Interest. We represent over 900,000
    consumers, both in the U.S. and Canada; and I need to tell you
    that last year consumer confidence in the safety of the food
    supply declined dramatically by 16 percent in just 1 year.
    Concerns about imported food was also very pronounced; and in
    July, 83 percent of shoppers expressed concern about food from
    China, and 61 percent were concerned also about food from
    Mexico. This concern is really, totally understandable given
    the fact that we have so many outbreaks and recalls last year
    from contaminated food.
        For years CSPI has advocated for new, legal structure to
    modernize FDA's Food Safety Program, and we really congratulate
    the chairman on his leadership in introducing the Consumer Food
    Safety Act. Recently, the Bush administration and the food
    industry both agreed that the systems in place today are not
    sufficient to ensure the safety of imported foods. In fact, the
    food industry's Four Pillars Reform Proposal recognizes several
    essential areas for modernization. Such broad agreement clearly
    signals that the time is right for Congress to act on reforming
    the country's food safety laws.
        Congress also appears poised to address this problem and to
    fund it adequately as just last week in the PDUFA legislation,
    you passed a sense of Congress that talked about the need to do
    this and Congress' commitment to it. And the emergence of
    coalitions like the Coalition for a Stronger FDA including
    groups which are traditionally estranged or on opposite sides
    of the table, consumer and industry organizations, this gives
    Congress a unique opportunity to appeal to many constituencies
    as it creates a modern food safety system.
        Change is hard, but it has been done before and in many
    other countries. The United Kingdom reformed its food safety
    program and established the Food Standards Agency in 1999; and
    this agency has proven effective in reducing the incidents of
    food borne illness and in rebuilding public confidence. In
    fact, food borne illnesses declined 18 percent within the first
    3 years of the new agency, and public confidence in the safety
    of the food supply rose from 44 percent to 60 percent. This
    change came after food scares, most notably from mad cow
    disease in the 1990s which led all sides to recognize both the
    need for change and built the momentum to reach workable
    compromises.
        I believe that we are at the same nexus of crisis and
    consensus in this country that Britain faced in the 1990s and
    that the momentum for building a stronger food safety system is
    growing.
        I have a number of specific comments with respect to
    Chairman Dingell's legislation, and they are mostly included in
    my written testimony. I do want to mention that the
    certification procedure in the bill has greatly improved from
    what was originally announced in August, but it does need to
    probably be fine tuned with some regular audits of foreign
    national programs, including inspections of facilities.
        In addition I am concerned that the user fee proposal may
    distract from many important questions about legal authority,
    so I would hope that the user fees, if they are going to move
    forward, doesn't bog down the process.
        The bottom line though is while this bill contains many
    excellent components, we believe that really to restore
    consumer confidence, Congress must go further and enact
    comprehensive legislation to address today's food safety
    hazards, both foreign and domestic. Preventive control systems
    implemented by the food industry and performance standards
    monitored and enforced by the Government must form the heart of
    needed reforms to FDA's legal structure. Only such
    comprehensive reforms will protect the food supply and restore
    consumer confidence.
        U.S. food safety laws are more than 100 years old and were
    never designed to deal with the modern issues such as
    escalating imports, bioterrorism, or tainted produce.
    Legislation is needed that creates a program that puts public
    health at the forefront of food safety. We urge Congress to
    take action before the next congressional election to modernize
    food safety laws and to fully fund our National Food Safety
    Program. Thank you.
        [The prepared statement of Ms. Smith DeWaal follows:]

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        Mr. Pallone. Thank you. Dr. Goldhammer.

    STATEMENT OF ALAN GOLDHAMMER, DEPUTY VICE PRESIDENT, REGULATORY
     AFFAIRS, PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMERICA

        Mr. Goldhammer. Thank you very much, Chairman Pallone. It
    is a pleasure to return to the subcommittee and talk about this
    important issue. PhRMA looks forward to continueing to work
    with the full committee to ensure patient safety because
    patients and their healthcare providers quite reasonably expect
    that our medicines will safely and effectively treat the
    diseases that they are diagnosed with. American patients trust
    that the drugs dispensed for their conditions are not
    counterfeit, and our companies obviously don't want patients
    getting counterfeit medicines because such medicines could
    result in effectual or even dangerous medical outcomes.
        The Prescription Drug Marketing Act which originated with
    this committee was a critical piece of consumer legislation
    passed as a result of Congressional concerns regarding the
    integrity of the drug distribution system that existed at that
    time. The passage of this legislation established the closed
    distribution system that we have today. The PDMA, coupled with
    the exacting regulatory requirements of the FDA helps to
    minimize the possibility of a consumer receiving a counterfeit
    drug. The pharmaceutical industry is already intensively
    regulated. Our companies manufacture products following
    exacting standards that have been reviewed and approved by the
    FDA. They employ extensive quality systems to assure that
    innovative medicines provide consistent, positive health
    outcomes. However, even the most effective medicines cannot
    help patients if those medicines were compromised by loopholes
    or breakdowns in the pharmaceutical distribution system which
    could provide opportunities for diversion or counterfeiting.
        The remainder of this testimony will focus on the FDA
    regulatory system that assures quality, steps that
    manufacturers take to implement quality systems, and finally
    some thoughts about what policymakers might consider to further
    secure the pharmaceutical supply chain.
        Throughout the drug development process, our companies
    focus on the quality of the product and put into place
    manufacturing controls that result in a medicine that is
    consistent from lot to lot with respect to purity and potency.
    Information is collected on the product's stability so the
    patient may be assured, the expiration date is based on sound
    science, and that the medicine, if used within this period of
    time, will provide the therapeutic dose the doctor has
    prescribed. All of this information is submitted to the FDA for
    review in the license application. FDA not only reviews all
    this data but conducts the preapproved inspection in the
    manufacturing facility to ensure that it is in compliance with
    good manufacturing practice regulations.
        These GMPs cover the quality control unit, buildings and
    facilities, equipment, control of components and drug product
    containers, enclosures, production and process controls,
    packaging and labeling control, clothing and distribution,
    laboratory controls, record and reports, and finally, returned
    and salvaged drug products. When companies use outside vendors
    or contract manufacturers for any components or parts of the
    finished medicine, extensive qualification and standards
    testing regimes are put in place to ensure the materials
    received meet the standards established by the pharmaceutical
    company. Companies regularly audit these suppliers to make sure
    that source materials are produced in a manner consistent with
    the specifications outlined in the manufacturing agreements.
    Quality assurance is also an ongoing part of the business. It
    does not stop when the NDA is approved and production
    commences. Companies have a regulatory responsibility to
    continuously monitor so that each lot released in the
    commercial distribution system meets the FDA approved
    specifications.
        While PhRMA believes the United States drug distribution
    system is the safest in the world, there are some steps we have
    advocated that will further secure the pharmaceutical supply
    chain. First, we need increased requirements for repackagers.
    PhRMA believes that FDA should reassess its policies and
    procedures regarding repackaging operations. Repackaging has
    been identified as a weak spot in the drug distribution system
    that can be used as an entry point and distribution center for
    diverted and counterfeited drug products. Repackagers remove
    drug products from their original packaging and labeling
    thereby destroying any counterfeit-resistant technologies
    employed by the original manufacturer. Consequently, additional
    oversight is necessary to ensure that repackaged drug products
    are authentic and not compromised by such repackaging
    operations.
        Second, we believe the Federal requirements for wholesalers
    and distributors should be strengthened. We support efforts to
    strengthen licensure requirements for wholesalers and
    distributors. Recent investigations in Florida have identified
    systemic weaknesses in the oversight of the wholesale drug
    industry, and there have been many newspaper articles detailing
    this as well. These weaknesses permit individuals, even those
    with prior felony convictions, to obtain wholesale licenses for
    operations that deal in diverted and counterfeit drug products.
        Third, we believe that there should be increased criminal
    penalties for counterfeiting activities. We believe that the
    criminal penalties for counterfeiting prescription drug
    products must be significantly increased. The current penalty
    under the Federal Food, Drug, and Cosmetic Act, a maximum of 3
    years' imprisonment, does not reflect the serious public health
    risks associated with counterfeit drugs or serve as an adequate
    deterrent to prospective counterfeiters. We thus support
    increasing the maximum criminal penalty for counterfeiting drug
    products from 3 to 20 years imprisonment.
        We look forward to working with the committee as you move
    forward with this important legislation. Thank you very much.
        [The prepared statement of Mr. Goldhammer follows:]

                          Statement of Alan Goldhammer

        Thank you Mr. Chairman and members of the Energy and
    Commerce Committee. My name is Alan Goldhammer, Ph.D., and I am
    the deputy vice president for regulatory affairs at the
    Pharmaceutical Research and Manufacturers of America (PhRMA), a
    trade association representing the leading research-based
    pharmaceutical and biotechnology companies. We are pleased to
    have been invited as part of this discussion, and look forward
    to continued work with the committee to ensure patient safety.
        PhRMA members alone invested an estimated $43 billion in
    2006 in discovering and developing new medicines, and patients
    and their health care providers quite reasonably expect these
    medicines to safely and effectively treat the diagnosed medical
    condition. America's patients trust that the drugs dispensed
    for their conditions are not counterfeit. Pharmaceutical
    companies obviously don't want patients getting counterfeited
    medicines, because such medicines could result in ineffectual
    or even dangerous medical outcomes.
        The Prescription Drug Marketing Act of 1987 (PDMA), was a
    critical piece of consumer legislation passed as a result of
    Congressional concerns regarding the integrity of the drug
    distribution system that existed at the time. The passage of
    this legislation established the closed distribution system
    that we have today. The PDMA coupled with the exacting
    regulatory requirements of the Food and Drug Administration
    (FDA) helps minimize the possibility of a consumer receiving a
    counterfeit drug.
        Pharmaceutical companies manufacture products following
    exacting standards that have been reviewed and approved by the
    FDA. They employ extensive quality systems to assure that
    innovative medicines provide consistent positive health
    outcomes. However, even the most effective medicines cannot
    help patients if those medicines are compromised by loopholes
    or breakdowns in the pharmaceutical distribution system, which
    could provide opportunities for diversion and counterfeiting.
    The remainder of this testimony will focus on the FDA
    regulatory system that assures quality, the steps manufacturers
    take to implement quality systems, and finally some thoughts
    about what policy makers might consider to further secure the
    pharmaceutical supply chain.
        Throughout the drug development process, pharmaceutical
    companies focus on the quality of the product and put in place
    manufacturing controls that result in a medicine that is
    consistent from lot to lot with respect to its purity and
    potency. Information is collected on the product's stability so
    that the patient can be assured that the expiration date is
    based on sound science and that the medicine if used within
    this period of time will provide the therapeutic dose the
    doctor has prescribed. All of this information is submitted to
    the FDA for review in the New Drug Application (NDA) (or
    Biologics License Application (BLA) for biologics and
    biotechnology products). FDA not only reviews all of this data
    but also conducts a pre-approval inspection of the
    manufacturing facility to insure that it is in compliance with
    Good Manufacturing Practice (GMPs) requirements as outlined in
    21 C.F.R. Parts 210 and 211.
        The GMPs cover the quality control unit; buildings and
    facilities; equipment; control of components and drug product
    containers and closures; production and process controls;
    packaging and labeling control; holding and distribution;
    laboratory controls; records and reports; and finally returned
    and salvaged drug products. When companies use outside vendors
    or contract manufacturers for any components of the finished
    medicine, extensive qualification and standards testing regimes
    are put into place to assure that the materials received meet
    the standards established by the pharmaceutical company.
    Companies regularly audit their suppliers to make sure source
    materials are produced in a manner consistent with the
    specifications outlined in the manufacturing agreement(s).
        Quality assurance is an ongoing part of the business; it
    does not stop when the NDA is approved and production
    commences. Companies have a regulatory responsibility to
    continuously monitor so that each lot released to the
    commercial distribution system meets the FDA approved
    specifications.
        While PhRMA believes that the Unites States drug
    distribution system is the safest in the world, there are some
    steps that we have advocated that we believe will further
    secure the pharmaceutical supply chain.
        1. Increase Requirements for Repackagers. PhRMA believes
    that FDA should re-assess its policies and procedures regarding
    repackaging operations. Repackaging has been identified as a
    weak spot in the drug distribution system that can be used as
    an entry point and distribution center for diverted and
    counterfeit drug products. Repackagers remove drug products
    from their original packaging and labeling, thereby destroying
    any counterfeit resistant technologies employed by the original
    manufacturer. Consequently, additional oversight is necessary
    to ensure that repackaged drug products are authentic and are
    not compromised by repackaging operations. PhRMA believes that
    FDA could better regulate the authenticity and quality of
    repackaged drug products if it had authority to require prior
    approval of repackaging operations. At a minimum, FDA should
    increase its inspections of repackagers and, where appropriate,
    initiate enforcement action. In addition, repackagers should be
    subject to the same requirements regarding overt and covert
    counterfeit resistant technologies as original manufacturers.
        2. Strengthen Federal Requirements for Wholesalers/
    Distributors. PhRMA supports efforts to strengthen the
    licensure requirements for wholesalers and distributors. Recent
    investigations, particularly by the Florida Grand Jury and the
    Washington Post, have identified systemic weaknesses in the
    oversight of the wholesale drug industry in many states. These
    weaknesses permit individuals, even those with prior felony
    convictions, to obtain wholesaler licenses for operations that
    deal in diverted and counterfeit drug products. PhRMA supports
    efforts by Florida and Nevada to strengthen requirements for
    the licensure of wholesalers by, for example, requiring the
    posting of a substantial performance bond (e.g., $100,000) and
    conducting detailed pre-licensure background checks and
    facility inspections. PhRMA believes, however, that licensure
    requirements should be strengthened consistently across all
    states to prevent diverters and counterfeiters from re-locating
    to states without strong licensure requirements. This can best
    be accomplished through revisions to 21 U.S.C.0 Sec.  503(e)(2)
    specifying higher minimum standards for state licensing of drug
    wholesalers and distributors similar to those currently in
    place in Florida and Nevada. FDA also should review state
    requirements for the licensure of wholesalers to ensure that
    they meet any enhanced minimum Federal regulatory requirements.
        3. Increase Criminal Penalties for Counterfeiting
    Activities. PhRMA believes that the criminal penalties for
    counterfeiting prescription drug products must be significantly
    increased. The current penalty under the Federal Food, Drug,
    and Cosmetic Act (FFDCA)--a maximum of three years
    imprisonment--does not reflect the serious public health risks
    associated with counterfeit drugs or serve as an adequate
    deterrent to prospective counterfeiters. PhRMA thus supports
    increasing the maximum criminal penalty for counterfeiting drug
    products from three to twenty years imprisonment. PhRMA also
    believes that criminal penalties should be imposed against
    entities that create a market for diverted and counterfeit drug
    products by purchasing drug products without adequate due
    diligence into the source and authenticity of such drugs. PhRMA
    thus supports making it a prohibited act under the FFDCA to
    purchase prescription drugs from a wholesale distributor
    without first obtaining and verifying the information provided
    on a drug pedigree.
                                  ----------

        Mr. Pallone. Thank you, Doctor. Mr. Kubic.

      STATEMENT OF TOM KUBIC, EXECUTIVE DIRECTOR, PHARMACEUTICALS
                           SECURITY INSTITUTE

        Mr. Kubic. Thank you for this opportunity to provide
    comments concerning an issue of growing importance to all
    Americans, the safety and security of their medicines as well
    as their food.
        Today there are trans-national criminal organizations who
    ignore regulations formulated by drug regulatory authorities
    and who regularly violate laws designed to ensure the integrity
    of medicines that are widely available here in the United
    States. They manufacture, they distribute counterfeit medicines
    indiscriminately without any regard to the current good
    manufacturing processes.
        I hope that these discussions today will help lead to a
    better understanding that the risks facing the public today are
    indeed real. My name is Tom Kubic, and I am the executive
    director of the Pharmaceutical Security Institute. PSI is
    comprised of 24 security directors of the major manufacturers
    of pharmaceuticals. They have operations in more than 160
    countries.
        The goal of PSI is to support our members in their efforts
    to ensure the distribution of pharmaceuticals that are safe and
    effective. PSI's mission is to collect, to analyze, and to
    disseminate information about counterfeiting, theft, and the
    illegal diversion of medicines. This information is then shared
    with the authorities so that they can initiate appropriate
    investigations and activities. In my opening remarks, I just
    want to make a few statements about the nature and extent of
    counterfeiting, the counterfeiting facts, if you will.
        PSI conducts an annual assessment of the worldwide
    situation regarding counterfeit medicines. In the Fifth Annual
    PSI Situation Report, we found that many individual criminals
    and criminal organizations continue to be actively engaged in
    pharmaceutical crimes. The support of this statement is the
    fact that last year PSI reported 1,371 new incidents, roughly
    22 percent as an increase over calendar year 2005. Throughout
    the year we added another 150 incidents that actually occurred
    in 2005, and the 2-year total exceeded 2,494, roughly 100
    incidents around the world each and every month.
        The increases in 2005 and 2006 were not an isolated trend.
    In fact, the 5-year trend line includes generally speaking
    double-digit increases in counterfeiting incidents around the
    world. Some would say this number of incidents is small. In
    fact, what we see is an increase in quantity of medicine and an
    even wider variety of medicines that being counterfeited. For
    example, in November 2006, in Mexico City itself at 14
    locations, 11 tons of counterfeit medicines were seized. In
    July 2007, in Jakarta, Indonesia, 4\1/2\ tons of illegal
    medicines were seized. In contrast to 2006, when each incident
    had either one to 45 different drugs found that were
    counterfeit, in 2007 the Jakarta seizures, for example, 88
    different types of medicines were counterfeited.
        The numbers of countries experiencing counterfeiters remain
    about the same in 2006. There were 100, the preceding year it
    was 101. However, we have seen a concentration on fewer numbers
    of drugs with the exception of 2007. In 2006, 560 different
    types of medicines were counterfeited, and then in 2005, it was
    687 different products.
        Counterfeiting is no longer limited to the so-called
    lifestyle drugs. In fact, virtually every type of medicine has
    been determined to be counterfeited.
        So what has been the law enforcement response? In calendar
    year 2006, worldwide there was an actual 10 percent reduction
    in counterfeit arrests. There were a total of 755 documented
    individuals arrested for this activity in over 56 different
    countries. While it was encouraging to see that the majority of
    these arrests occurred in the Asian region, fully 33 percent of
    the worldwide arrests, it was also important to note that those
    arrests, the largest category, was for manufacturing of
    counterfeit medicines versus the sale or distribution of
    counterfeit medicines.
        In summary, the challenge of counterfeits, stolen, and
    diverted pharmaceuticals is fairly clear from the Situation
    Report. More incidents have occurred, fewer arrests have been
    made. Americans need to know that the U.S. markets have been,
    is now, and will continue to be an area that is of keen
    interest to these organizations. Their safety today is
    endangered whenever they venture outside of the closed system
    of acquiring their pharmaceuticals and they move into such
    bizarre places such as the Internet. Thank you.
        [The prepared statement of Mr. Kubic follows:]

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        Mr. Pallone. Thank you. Mr. Northcott.

      STATEMENT OF HALLOCK NORTHCOTT, PRESIDENT AND CEO, AMERICAN
                 ASSOCIATION OF EXPORTERS AND IMPORTERS

        Mr. Northcott. Good afternoon, Chairman Pallone, members of
    the committee. My name is Hal Northcott, and I am here
    representing the American Association of Exporters and
    Importers, and we very much appreciate this opportunity to
    speak on H.R. 3610.
        AAEI is a cross-section of the Nation's supply chain in
    that we are made up of manufacturers, distributors, retailers,
    freight forwarders, insurers, brokers, foreign trade zones, and
    ports all across the country, both large and small business.
    Each of these businesses is engaged in actively getting stuff
    in and out of the United States. That is what they do, that is
    who we represent.
        With this background, let me say that we are here today to
    address by section only those portions of the bill on which our
    trade, security, and logistics knowledge may be of some benefit
    to the community.
        So if I might, let me begin with section 2 on port
    inspection, which for brevity, we will comment on in linkage
    with section 7 covering restricted ports of entry. Here I would
    like to make three points. First, the use of a tried and true
    inspection system like that of the USDA is very initially
    appealing. However, taking that model which has been applied to
    a comparatively small scope and volume of meat, poultry, and
    eggs and then trying to apply it across the enormous volume of
    imports, food in particular, nationwide creates a whole new
    logistical ballgame. Frankly, it is highly problematic.
        Second, the application of the restricted port inspection
    system will have predictable but significant impact nationwide
    in that there will be clearly perceived winners and losers.
    That would make 313 ports losers and 13 winners. However, let
    me assure you that even the perceived winners will face some
    serious new problems and we believe unintended consequences.
        Third, we would urge the committee to take a serious look
    at the enormous volume of data that has been referenced over
    and over again during this testimony. In this we commend to you
    CBP's developing ITDS, or International Trade Data System,
    which for rough purposes is roughly comparable to the air scoop
    on the hood feeding crucial data to the engine block which in
    this case is the automated commercial environment. This is a
    good thing, and frankly it enables the very important drive
    toward one face at the border which our friends at CBP are also
    spearheading. And may I note here that CBP, like FDA, is badly
    lacking necessary resources, and we encourage your action in
    that regard.
        So separately, we ask that you appreciate that while a
    successful import safety program with its data must have
    transparency, data is private property and it is highly
    valuable. It must not be given away to the bad guys in a world
    filled with foreign government-owned and subsidized industries
    and extensive industrial espionage. In the name of American
    competitiveness, data protection is crucial.
        Now let us turn briefly to section 6, the rules or origin,
    and here frankly we have two requests, both very short. We ask
    that you please do not permit this Congress to confuse rules of
    origin labeling with an effective safety program. It is
    certainly a useful consumer element, but it doesn't do much if
    anything to solve the real world's import food safety problems.
    And second, in looking at rules of origin, we suggest that the
    Congress please do not impose yet another country-of-origin
    standard upon your import/export industries. Believe me, with
    the further proliferation of new and differing rules of origin
    found in existing and forthcoming FTAs, it is sufficiently
    confusing for industry already. Please look to existing
    standards.
        I am going to go briefly to section 7 and say that we
    endorse the concepts here and have been actively engaged with
    the FDA in trying to create this type of program for the last
    four years. The personnel with whom we have worked do a fine
    job. The low-risk model will go a long way in promoting
    America's huge food export markets. But all of the above, I
    would say as a final point, one fundamental springs to the top
    of any supply chain list, and here we would ask that you
    recognize, despite important similarities, that trade,
    security, and product safety are not the same. They are
    fundamentally different. They may look and feel the same on the
    surface, but they are truly worlds apart. At its most basic,
    trade security is concerned with the integrity of the supply
    chain, ensuring that the box or container and its contents have
    not been tampered with in packaging or transport. Thus, it is
    secure. In direct contrast, what you are addressing today, food
    product safety, is focused on the individual item inside those
    boxes. Product safety targets the composition, functionality,
    quality, and overall integrity of the food product. It is
    inside versus outside, the two must not be confused.
        And with that, thank you very much. We would like to
    conclude our testimony and offer again our appreciation.
        [The prepared statement of Mr. Northcott follows:]

                         Statement of Hallock Northcott

                          A. Introduction and Overview

        Chairman Dingell, Ranking Member Barton, Ranking Member
    Deal, and members of the committee, my name is Hall Northcott
    and I am president and CEO of the American Association of
    Exporters and Importers (AAEI). AAEI appreciates the
    opportunity to offer its comments on your effort to address
    import product safety in the Food and Drug Import Safety Act of
    2007 (H.R. 3610)
        AAEI is a trade association comprised of U.S. and
    multinational manufacturers, distributors, retailers, freight
    forwarders, insurers, brokers, foreign trade zones and ports
    across the country, each engaged in the import and export of
    merchandise to and from the United States. In one fashion or
    another we truly represent the scale and scope of America's
    supply chain. We have helped educate and then externally
    represented the trade community in domestic regulatory,
    legislative, and public policy arenas since 1921 and in recent
    years have moved to assertively represent American import and
    export interests in multiple international forums.
         AAEI's primary focus has long been ``getting things in and
    out of the United State in the most efficient, practical and
    responsible manner seen worldwide.'' In this we have long been
    a strong supporter of supply chain integrity and security as
    well as facilitation throughout the full-range of trade
    community issues affecting customs and international commerce.
    In short, AAEI believes that it is vital for the government and
    the trade community to work closely together and coordinate
    supply chain security, facilitation and import product safety
    for the United States to maintain a critical balance between
    the free flow of legitimate trade and safe and secure goods.
    However, we are not expert in food product safety matters and
    thus are to here to support the committee in its efforts
    impacting supply chains, trade processes and those multiple
    aspects of today's global trade reality with which we are very
    familiar. It would be our pleasure to support, assist and
    encourage the committee in these efforts.
         It is indeed a privilege to appear before you on behalf of
    Chairman Charlene Stocker, our Board of Governors, and our
    members, found in every industry nationwide. Our testimony
    reflects the trade community's eagerness to work with the
    committee to ensure that the Nation's product safety measures
    work--for consumers, the government, manufacturers, importers
    and exporters. In particular, we hope that we can assist you in
    your efforts to advance product safety by both fully exploring
    and thus utilizing all the current trade related statutory and
    regulatory tools available.
        Since 9/11, AAEI and the U.S. business community have
    worked diligently with the Department of Homeland Security,
    U.S. Customs and Border Protection and multiple government
    agencies at the Federal, state and local levels to develop
    programs designed to maximizing homeland security protection
    primarily through reducing the likelihood that the global
    supply chain could be used by terrorists as a delivery system
    for weapons of mass destruction. Frankly, we have long been and
    remain concerned that many important trade facilitation
    functions can be relegated to secondary status in the press of
    today's critical security environment. Thus, it has been our
    intent to assist in ensuring that robust security practices
    enhance the flow of legitimate trade such that the twin goals
    of trade security and trade facilitation are mutually
    complementary. In this, while we often have significant
    disagreements as to details and applications, we would strongly
    commend the efforts and personnel of the CBP and related DHS
    leadership for their commitment to vital national goals.
        In relation to the above trade and supply chain concerns,
    we have recently begun to explore, in depth, related product
    safety issues and believe that ensuring product safety and
    integrity should be viewed as an important ``third leg of a
    stool'' which strengthens the other two legs--security and
    facilitation. Although balancing these interests is
    unquestionably a difficult task, we believe that H.R. 3610 has
    provisions of great value in further structuring the overall
    framework. We look forward to working with you to safeguard
    achieving this productive balance between these roles is a
    vital national interest and those U.S. policies and programs
    critically important for the United States to remain
    competitive in the global marketplace. In this we will support
    your efforts to further encourage the growth of our nations
    reliable, efficient and successful international trade system.
    This system must remain healthy if our Nation is to retain and
    enhance its position at the head table of global commerce.

          B. Setting a Framework for Import Product Safety Difference

        AAEI's testimony on Setting a Framework for Import Product
    Safety touches upon four topics which we understand to be of
    particular interest to this committee 1. Low risk and account-
    based management works and can be used to enhance import
    product safety; 2. trade security and product safety are
    different and are based on divergent principles including
    different risk tolerances; 3. Interagency cooperation,
    particularly data exchange through the International Trade Data
    System (ITDS), is essential; and 4. Enhancement of manpower and
    resources for multiple agencies both directly and through third
    parties should be approached with an eye to significantly
    enhanced capabilities.
        Frankly, at some point in the future, we would welcome the
    opportunity to discuss with the committee a number of subjects
    including 1) the multiple impacts, since 9/11 upon commerce
    and, in particular, small and medium business of the
    substantial number of security programs launched, as stand
    alone efforts, 2) the cumulative affect of proliferating
    Federal agency actions outside of CBP jurisdiction which
    increases the complexity and cost of the import process, 3)
    Federal agencies movement towards harmonizing U.S. regulations
    with international standards, 4) additional compliance
    requirements, 5) ongoing pressure on agencies to impose new
    user fees on importers that are, at best, ``toll booth taxes''
    rather than fees for additional government services, and 7) new
    proposals each year seeking market data demands as well as more
    transparency and resilience from the global supply chain than
    can be digested and implemented by the trade community in the
    short period of time required by statutory deadlines.

            Low Risk and Account-Based Management is Highly Efficient

         Account-Based Management. For many years, the trade
    community has partnered with CBP and DHS to develop low risk
    importer programs for both trade security and trade compliance
    purposes. In regulating over 825,000 importers, CBP had to make
    strategic choices in deploying its already scarce, and
    increasingly depleted, resources while the volume of trade
    continued to increase. CBP's strategy, going back to the
    1980's, incentivizes companies with good security procedures
    and internal controls to join voluntary programs for mutual
    advantage and, dependent upon the program, a menu of trade
    facilitation advantages through reduction of processes or
    complexity of steps required. A critical part of this strategy,
    as directed earlier by the Congress, is treating importers as
    an ``account'' by reviewing the companies'' record of
    compliance for all their importations, rather than individual
    transactions. By treating importers as an account, CBP is able
    to quickly determine a company's compliance profile and work
    with the company to remedy any deficiencies. CBP can then
    concentrate its resources on companies which do not demonstrate
    a high level of compliance and present the great risk for
    violations. In these efforts, CBP serves as an excellent model.
        One example of a flourishing public private partnership at
    work today is found in the risk management operations of a
    widely accepted account based program now in its 6th year. This
    is the Customs Trade Partnership Against Terrorism (CTPAT)
    program which today, while truly voluntary, has, in many
    industries become the acknowledged standard upon which business
    is done. C-TPAT is a government-business initiative to
    strengthen and improve overall international supply chain and
    U.S. border security. Those businesses that choose to apply are
    making a commitment to work toward the goal of creating a more
    secure and efficient supply chain in partnership with CBP.
        One key feature, that we would specifically note for the
    committees consideration is that, after multiple discussions
    with industries and congressional committees committed to this
    program's success, CBP did not fall prey to the easy answer of
    imposing a ``one size fits all'' approach in this wholly new
    effort. Instead of the ``one size fits all'' approach, CBP and
    DHS succeeded in developing a successful program by recognizing
    that different products, sourcing regions, and supply chains
    have different operations and levels of risks. We would
    strongly urge the committee to explore the many reasons for
    adopting this approach. In this effort, one vital aspect is the
    ongoing verification and recertification program. Here, for
    instance, they issued and used extensively in the ongoing
    verification process, a Supply Chain Security Best Practices
    Catalog to provide importers with a compendium of the optimum
    and most effective efforts developed by other companies. This
    catalog has helped promote CTPAT's wide acceptance in the trade
    community as evidenced by the fact that there are over 7,500
    certified participants in C-TPAT. As of today, approximately,
    5,000 validations have been completed and we expect the
    remainder will be validated by the end of the year. However, we
    would hope that any efforts that the committee might wish to
    initiate would from date of implementation be adequately
    staffed for efficiency in implementation.
        In a significant precedent, Congress has already accepted
    and enhanced C-TPAT's risk management approach to security by
    providing statutory recognition of this program in the Security
    and Accountability for Every (SAFE) Port Act. In this
    legislation, they sanctioned its voluntary nature, and tiered
    levels of participation linked to specific benefits. For most
    U.S. companies with global supply chains, C-TPAT membership is
    a requirement in today's business environment. C-TPAT has also
    serves as a model for the European Union's Authorized Economic
    Operator certification for security and the World Customs
    Organization's (WCO) adoption of the ``Framework of Standards
    to Secure and Facilitate Global Trade'' (the Framework of
    Standards). Here we see an international strategy, based upon
    clearly established U.S. principles to secure the movement of
    global trade in a manner that does not impede it, but instead,
    facilitates the movement of global trade. In this, AAEI has
    been privileged to support various initiatives in multiple
    international forums.

                 Trade Security and Product Safety Are Different

        AAEI recognizes that though there are important
    similarities, trade security and product safety are
    fundamentally different. We have noted and attempted to
    incorporate those differences in our now four year effort to
    assist FDA in the development of low risk importer programs
    which, in our opinion, would have substantially benefited all
    parties. We remain hopeful that important progress towards this
    goal can be made through both the regulatory and legislative
    processes.
         It is fair to say that, at its most basic, trade security
    is primarily concerned with the integrity of the supply chain
    and ensuring that the ``box'' (i.e., the cargo container) has
    not been tampered with during transport so that no weapons of
    mass destruction or other harmful substances are
    surreptitiously placed in the box after sealing at the point of
    stuffing. On the other hand, product safety is focused on the
    integrity of commodity in the box. Specifically in FDA
    jurisdiction, we understand there needs to be focus on
    microorganisms, toxins, pathogens, pesticides and problematic
    chemicals. In this effort, there is clear recognition that
    regulated food testing requires examination outside of the
    containers. In other words it is our understanding your product
    safety effort is specifically directed to ensure for the Nation
    the quality, functionality, safety and overall integrity of the
    product. This is not even comparable. Frankly, with apologies,
    in the contrast of ``inside the box'' and ``outside the box,''
    we must point out that these are, as my niece has said, simply
    apples and zebras. One element which this committee could
    appropriately explore is an import safety is current company or
    independent testing policies at FDA. Currently, AAEI is unaware
    of any variety or method of internal testing which a company
    can do to reduce processing and inspection time for food, drugs
    and medical devices. However, it is important to note that
    would be a fundamental change in culture and resource
    requirements for FDA to fully implement a programs which take
    advantage of ongoing extensive domestic industry efforts. Thus,
    any efforts which the company makes do not help without agency
    facilitating product delivery. Perhaps the nearest match to
    product safety requirements in today's business environment is
    in the quality assurance process (QA)--which so many American
    companies excel in and can help by providing valuable lessons
    for the committee's use in crafting language.

           Interagency Cooperation Is Essential--ITDS is a Vital Tool

        In fostering necessary interagency cooperation, and thus
    effective and efficient import and export programs, the
    Congress made an important first step in strongly encouraging
    what has become known as ``One Face at the Border.'' The effort
    has been designed to eliminate lack of coordination and even
    agency cross purposes, at our land, air and sea ports.
    Achievement of this goal was initiated in the creation of the
    Department of Homeland Security. Over the past several years,
    AAEI has testified to the importance of both preventing
    restoration of and further eliminating the extraordinarily
    burdensome and inefficient processes which have been suggested
    by a variety of special interests.
        Increasing the government-wide focus on product safety,
    including CPSC leadership and multiple agency participation in
    the enforcement of Intellectual Property Rights protection,
    along with tracking financial transactions that may be
    financing terrorism are extremely worthy goals. Unprecedented
    cooperation and formal coordination of efforts, whether
    legislative or administration driven, would make all the
    difference.
        In this, AAEI and the trade community have long supported
    the government's multi-agency automation efforts and the use of
    data to provide more transparency to the supply chain and
    import clearance process. One of our top priorities in the
    passage of the SAFE Port Act was the inclusion of a provision
    mandating Federal agency participation in the International
    Trade Data System (ITDS). ITDS is intended to be a ``single
    window'' of trade data for government agencies to advance
    electronic access trade data provided by the importer in order
    make the import clearance process a seamless process for
    importers, CBP, and other Federal agencies that license
    imported products or have ``release and hold'' authority for
    regulated imports. In a rough analogy, ITDS is the air scoop on
    the hood feeding vital data to the engine of the Automated
    Commercial Environment System (ACE).
        We continue to believe that interagency cooperation and, at
    minimum, data exchange through the ITDS is essential. While
    full data sharing may not always be possible, alignment of
    agency goals with our nation's regulatory framework is crucial.
    In sum, use of the ITDS tool, if fully supported by vital
    agencies and bureaus, is highly beneficial for all involved and
    its maturation should be a much higher priority. We are
    gratified that the President's Interagency Working Group on
    Import Safety highlighted the importance of ITDS by
    recommending the acceleration in the development of ITDS in its
    initial report to the President, ``Protecting American
    Consumers Every Step of the Way: A Strategic Framework for
    Continual Improvement in Import Safety,'' issued on September
    10, 2007. We hope the committee can take advantage of this
    important tool in development of its overall legislative
    strategy to improve product safety.

                      a. U.S. Business Data Confidentiality

        Among the emotionally charged issues that the U.S. trade
    community and AAEI's member companies have confronted in
    today's evolving environment are the extensive and substantial
    concerns regarding the confidentiality of proprietary business
    data submitted to government agencies. In crafting this
    testimony, we wish to recognize the committee's dedication to
    preserving and even expanding individual data privacy and we
    hope that the committee will recognize that for business this
    is an effort which should be preserved with equal vigor.
    Frankly, commercial data is property and inadequate protection
    is a ``give away'' to the bad guys. We need not look far to see
    a repugnant record of foreign firms and interests engaging in
    grand scale industrial espionage. In trade policy terms, these
    concerns are driven both by private sector competitiveness
    issues and international business ownership and management. In
    addition, we are deeply concerned about some Federal agencies''
    dismal record of compliance with the Federal Information
    Security Management Act (FISMA). We would ask that the
    committee carefully examine the breadth of concerns we convey
    today and support further study in this area.
        The immediate issues which we ask you to consider exploring
    and incorporating into your efforts are driven by several
    ``real world'' competitiveness concerns. Among business
    community concerns are: 1) the increasing range, depth and
    amount of total data that is being requested by multiple
    Federal, state and local agencies often without cooperation and
    certainly without integration; 2) the Federal sharing of
    ``sensitive'' data with an ever widening range of domestic and
    international trade bodies where neither a devotion to crafting
    future program requirements nor a tradition of confidentiality
    (or record of advanced training programs) or have even been
    apparent to the private sector; and 3) the Federal Government's
    increasing reliance on unproven electronic systems to manage
    confidential commercial data including product entry and risk
    assessments about products based on such data.
        In today's environment, we are quite concerned with the
    development of policies within international bodies where
    multiple U.S. data streams are provided to merge and commingle
    with other Nation's data. In this we applaud recent Department
    of Commerce's initiatives toward data security for the
    Automated Export System (AES). In any instance, sharing of data
    regarding ``risk analysis'' must be done in such a fashion so
    as to avoid commercial implications as much as is humanly
    possible.
        Notably, it is the practice of a number of foreign
    governments, which are traditional and significant U.S. trade
    partners, to subsidize certain industries which compete
    directly with their U.S. counterparts. In many of these
    governments, both in developed and developing nations, it has
    been AAEI's experience that the US tradition of data
    confidentially and specific agency retention of data, is both
    absent, and frankly, unwelcome. This is particularly true of a
    significant number of competitive nations which have neither
    sufficient customs nor enforcement capacity. Thus,
    internationally, we particularly encourage the committee to
    explore development of policies to address the sharing of
    sensitive information with other governments, in particular
    foreign customs and business promotion agencies.
        In noting that a variety foreign governments have
    substantially invested finances, national pride and whole
    industrial development strategies in industries and specific
    business enterprises that compete directly with the U.S.
    private sector, we must also note that, as the committee is
    well aware, significant commodity supports are found globally.
    Clearly our concern here is in the impact of government
    subsidies and credits among other financial commitments may
    have upon the absence of appropriate prohibitions, or
    regrettably the apparent ``blind eye'' to data misuse or abuse.
        In addition, a significant concern here is, the apparent
    lack of controls or restrictions to be imposed upon these
    foreign governments by any international body on a commerce
    driven mandate, particularly, as noted, those which may have a
    financial interest in such a competitor to a U.S. company or
    which lack important legal safeguards restricting the use and
    dissemination of trade data belonging to U.S. companies
    necessitate AAEI's concern. To be candid, those FDA regulated
    U.S. businesses which are of interest to you today must have
    firm assurances that information potentially to be supplied to
    foreign governments for safety, and related, purposes would not
    be used against them in a competitive business context. At
    present, AAEI member companies are not sufficiently convinced
    that their proprietary trade data in multiple industrial
    sectors will be secure.

      Allocation of Manpower and Resources--Both Direct and Through Third
                                    Parties

        Among vital areas the significant enhancement of manpower
    and resources for multiple Federal, and perhaps state and
    local, agencies through third parties should be carefully
    considered by the committee. As noted earlier, this may be the
    time to review existing FDA lack of recognition or benefit from
    internal testing and controls.
        We look to you, in those areas of your concern, for
    potentially significant changes in the way government provides
    for and otherwise supports import safety, risk management and
    control and thus imports writ large. We would be happy to
    discuss CBP's significant under funding and lack of sufficient
    manpower in the face of expanding responsibilities, but this is
    not the proper forum. In specific program terms, our experience
    has demonstrated that the CBP model for gaugers and, more
    recently third-party validations for C-TPAT certified
    partners'' shipments from China, may prove useful to the
    committee along with the Environmental Protection Agency's
    long-standing program of licensed importers and Coast Guard's
    periodic regulatory inspections. AAEI believes that a
    fundamental element in the design of such systems must be the
    economic impact upon small and medium size enterprises.
    However, the overall impact upon small businesses nationwide;
    of implementing multiple trade-related approaches to enhanced
    product safety is subject to the unforgiving rule of unintended
    consequences. ``To do no harm'' is a difficult mission when,
    even for a vital purpose, modifying long-established
    importation and distribution patterns and requirements will be
    part of the mission. It is indeed necessary, but the committee
    may wish to explore the use of an incremental approach.

                             Concerns with H.R. 3610

        AAEI's testimony on specific provisions of H.R. 3610
    touches upon the following seven topics: 1. Inspection at Port
    of Entry; 2. User Fee on Imported Food and Drugs; 3. Restricted
    Ports of Entry; 4. Country of Origin Labeling; 5. Safe and
    Secure Food Importation Programs; 6. Penalties; and 7. Recall
    Authority; and 8. Inspections.

                    1. Section 2--Inspection at Port of Entry

         We believe that emphasis on inspection at the border goes
    against the current administrations ``push out the border''
    policy that has been embraced by Congress with respect to trade
    security and must be considered in development of this approach
    to food safety. However, those amendments which have already
    been suggested to simply adopt the pattern of current homeland
    security policy, i.e. to push the borders back- to foreign soil
    is problematic in foods. It is our belief that to prevent any
    or all FDA regulated product from ever being loaded into U.S.
    bound containers- to certify the safety of products- has huge
    supply chain implications for customer access and pricing.
        In addition, though we are not experienced in USDA matters,
    we certainly appreciate the value of their current system of
    labs and import safety. However despite this appreciation,, we
    suggest that trying to take a limited volume and scope
    ``system'' which works well for certain kinds of goods and
    apply it across the board, sends U.S. policy in altogether new
    directions. As we will discuss shortly, we find a number of
    these possible directions problematic.

                1. Sections 3 and 4--User Fee on Food and Drugs

         AAEI is concerned about this proposed user fee on imported
    food for the following four reasons:
         AAEI is opposed to user fees levied against the retail
    community and other importers when we know that global trade
    has a positive effect on the United States as a whole. We
    believe that both existing user fees imposed upon certain
    commodities (such as medical devices) and future fees under
    consideration are problematic. We consider that their impact
    frequently appears to be the kind of unequal burden created
    when the government agency in procurement or resource
    allocation among others chooses to treat products differently.
    The assessment of fees (or tariffs) upon retailers and
    importers of only specified commodities is said to limit the
    opportunities to cost effectively bringi9ng in goods of all
    genres. Frankly though this witness is certainly not an expert
    on fees versus tax policy it has been our analysis that such
    fees can unfairly burden certain industries, commodities and
    communities. Here we note disparate treatment of food and
    drugs, which are already highly regulated commodities.
         It is our observation that the disparate treatment of
    imported product safety and domestic product safety is highly
    problematic in terms of U.S. industry's ability to trade
    internationally. To prevent serious, unnecessary damage to our
    huge export economy, U.S. interests must be understood in
    today's complex WTO environment and our growing framework of
    trade agreements. With the enormous degree of international
    competition in food commodity production already facing our
    companies and industries, we are extremely concerned, as noted
    earlier, that reciprocal actions, particularly in countries
    with our U.S. traditions of fair trade, could prove very
    difficult trade barriers to overcome.
         From conversations with our retailer members, it is our
    impression that fees assessed per line item will
    disproportionately impact small and medium enterprises (SME's),
    particularly those that import a wide variety of products
    currently regulated under the Food Drug and Cosmetics Act. We
    are informed that these would, as one example, specifically
    impact, specialty food retailers who may cater to traditional
    ``geographically'' based consumers. However, we believe that
    such data is not yet available and anecdotal evidence is all
    that we can rely upon at this point.
         The possibility exists that the fee amount per line item
    may actually exceed the value of the good. In this case,
    importation of the product is likely to dry up regardless of
    the lack of any domestic production. This diminishes the value
    of our global economic power in directly benefiting the
    American consumer and penalizes importers who currently provide
    low cost food to the average American household.
         One fine example of this has been provided by an allied
    trade association in which they pointed out that( MR I think
    that here we can just Insert NCBFFA Mexico example

                    2. Section 4--User Fee on Imported Drug

        a. AAEI is concerned about this proposed user fee on
    imported drugs for the following four reasons:
         AAEI is opposed to user fees levied against importers when
    we know that global trade has a positive effect on the United
    States as a whole. Again, this witness is not expert in the
    arena of fees assessed.
        However, to prevent serious, unnecessary damage to our huge
    export economy, U.S. interests must be understood in today's
    complex WTO environment and our growing framework of trade
    agreements. Prominent among these have been both the nature of
    the assessment (tax on value) and constitutional limitations
    (tax on exports). Frankly, from our preliminary review, it
    appears that each of the methods commonly discussed does appear
    to require extensive review so as to avoid unanticipated
    economic and trade repercussions. To assist in this effort, we
    suggest that the committee consider an annual report of all
    such revenue collected from the spectrum of Federal customs-
    related fees and their allocation in the budget would be of
    value to the committee.
         The possibility exists that the fee amount per line item
    may actually exceed the value of the good. This diminishes the
    value that our global economy has the power to bring to the
    American consumer and appears to penalize importers who provide
    low cost food and drugs to the working class families and
    senior citizens who live on a fixed income. As referenced
    earlier in this testimony, the impact upon specific niche but
    very important marketplaces could be profound.
         It is our understanding that utilization of user fees to
    pay for government programs and projects reportedly undertaken
    in the public good, rather than applying primarily or
    exclusively for the benefit of a specific and defined set of
    users, would be a significant departure from widely accepted
    policies. It appears to us that it is simply a tax imposed upon
    this segment of American industry. Yes, we as a Nation need to
    gather the resources required, but this is not the way to do
    it. From our perspective, it is highly prejudicial against
    imports, falls disproportionately on a variety of industries
    and impacts most heavily on the ultimate U.S. consumer.

                     3. Section 5--Restrict Ports of Entry

         AAEI believes that restricting ports for entry of food is
    an unwise choice because our industries trade and logistics
    providers must always be prepared to adjust to the dynamic
    economic environment. In fact, any major corporation's supply
    chain team can provide you with--virtually on demand--multiple
    alternate methods and location of delivery with minimal product
    cost or availability implications. In fact, we all need to keep
    in the front of our minds the all too real possibility that any
    number of occurrences (i.e., natural disasters, labor strikes
    or terrorist attacks) could cripple any one of our major ports
    for weeks or months. Under this proposal, if that port or
    ports, since many are located in relative proximity, in the
    case of natural disasters among other factors were to be closed
    the options available are markedly reduced and the impacts,
    while negative, are highly unpredictable.
        In a global environment, it is unwise to place
    insurmountable restrictions on either specific imported
    products or individual ports due to the need to maximize the
    limited remaining flexibility that still exists in the US
    trades overcrowded and aging infrastructure.
         For Example, as noted above, if an incident of any kind
    occurs, it will be extremely difficult to adjust the import
    clearance and distribution of food product in a timely manner.
    The lack of pathways, in our current and emerging multimodal
    environment will restrict the flow of necessary food items to
    localities that need such products and will inevitably create a
    backlog in processing shipments through food specific imports.
        Today, such adjustments for multiple perishable and time
    sensitive products are routine and often occur overnight.
         With respect to the food industry, both a necessity and
    highly perishable commodity, this is a very dangerous shackle
    to burden our country with at a time when the need might be at
    a crescendo. Industry's ability to adjust current import and
    distribution methodologies in the event of an incident is an
    essential and highly supported element of today's Homeland
    Security Strategic planning at the Federal, state and local
    levels. We would urge members of the committee to consult with
    those local and state officials most familiar with these
    concerns to fully evaluate the repercussions.
        It is our understanding that application of the USDA
    restricted port model for individual product imports, food and
    otherwise, would mean, in very simple terms, that specified
    kinds of products can only be imported and distributed through
    certain ports--both land and sea. The impact upon the 50 states
    and literally hundreds of ports, out of roughly 300, can only
    be calculated with full understanding of the consequences of
    economic dislocation in Congressional districts nationwide as
    well as the anticipatable impact upon land ports along either
    border. It is important to note that the Congress has, since
    the Second World War, repeatedly resisted such plans for
    multiple products and industries. It is our experience that, to
    date, proposals of such policy for multiple product and
    industry imports have often been offered by those whose primary
    concern would appear to ease and simplicity of government
    processing without equal regard for economic impact.
         Under such a proposal the added logistical costs for an
    importer, even assuming that nothing catastrophic occurs, can
    be prohibitive particularly when--as is very common in this
    country--a product enters a given port, is transported to a
    second relatively convenient location for packaging or
    modification and then delivered to a third perhaps distant
    market for final distribution and consumption. The implications
    for the small and medium business owner unable to compete with
    the large retailers for inexpensive product would be
    substantial. In terms of industry, as we know there are
    multiple highly competitive pharmaceutical and food products
    where profits, under normal circumstances may range for one to
    four percent. The impact upon these, often generic or house
    brand products could be highly problematic, if not prohibitive,
    based upon location of established facilities and long term
    distribution patterns.
        As noted earlier, the reported over-crowding, current
    massive infrastructure requirements and highly limited
    expansion or even rebuilding of a number of the ports specified
    has another side to it. Here, we must be concerned about the
    impact upon those areas where labs currently exist or where one
    of a limited number may be added. As noted, we are looking at
    the immediate need for substantial infrastructure costs--
    official structures, roads, tracks, additional docks and many
    other elements. We are facing immediate and significant
    congestion and citizen disruption in that virtually all of
    these ports are contained with major metropolitan areas. We are
    also looking at potentially substantial overall environmental
    impact and quality of life concerns. To understand this, we ask
    that you simply note the enormous volume of product where, at
    the largest ports, of which these are, roughly 20,000
    containers arrive a day. With total current national meat,
    poultry and egg importation of 2.6 million containers a year
    being absolutely dwarfed by projected totals coming through
    each of these ports.
        Among many, one particular example of definite concern to
    the import community would be the Port of Los Angeles. Here the
    infrastructure requirements, increased congestion and
    projected, environmental disruption would obviously be of
    lifestyle concern to those citizen groups and policy leaders
    already actively engaged in operations and planning.
         I would like to note, finally, one additional item which
    may be of interest to the committee. In conversations with some
    of our historically minded members I am reminded that, when it
    was first discussed here in the late 1700s, this concept,
    apparently known as ``Port Goods Selection'', might have been a
    viable option when there were fewer ports around the country, a
    dearth of well established industries at highly diverse
    locations and far less global trade flowing through interior
    ports,. However they suggest that it is certainly not feasible
    for 2007.

                    4. Section 6--Country of Origin Labeling

        AAEI is concerned with the burden being placed on the trade
    with respect to the further development of multiple agency
    Country of Origin rules. This is, for instance, evident with
    respect to CBP and FDA. Today's situation can be roughly
    described as CBP being harmonized internationally though the
    WTO and multiple FTA's and FDA having an independently
    developed and implemented system that lacks even a nexus of
    compatibility or overlap with CBP's regulatory regime.

             5. Section 7--Safe and Secure Food Importation Program

         AAEI wholeheartedly supports voluntary programs for
    security and safety, and was an enthusiastic participant in the
    development of C-TPAT. As a result, AAEI would, in terms of
    trade facilitation and security concerns, be pleased to both
    support and assist in the development of voluntary programs for
    product safety. However, such a program should be based on risk
    management principles that are compatible with and enhance both
    the current and future food security programs.
         Foreign exporters of product to the U.S. utilizing non-
    performance of voluntary standards as a competitive tool
    against U.S. manufacturers who do adhere to these essential
    standards--pose a growing problem which must be firmly and
    quickly addressed. While complex legal issues will arise, the
    idea that ``voluntary'' means that any one player, by virtue of
    geography, doesn't have to pay attention to them is just plain
    wrong. Equally, the merits of our current system permitting
    export of U.S. made products failing to meet domestic agency
    safety standards will need to be fully explored and addressed.
         The committee should be aware of the enormous
    complexities, as well as range of other the difficulties, that
    AAEI members have encountered in dealing with the multiple
    Federal agencies whose regulatory jurisdiction and oversight
    for certain imported goods overlap with other Federal agencies.
    As mentioned, our member companies have been at the forefront
    of cooperating with CBP by joining its trade security and trade
    facilitation partnership initiatives, such as C-TPAT and the
    Importer Self-Assessment (ISA) Program. We believe that these
    programs have a valuable role in achieving AAEI's often stated
    goal of a productive balance between trade security and trade
    facilitation, which AAEI believes will be achieved on
    regulatory issues only when Federal agencies work in close
    partnership with one another and the U.S. trade community.
        Regretably, today, many AAEI member companies tell us that
    they do not receive the full benefit of these partnership
    programs because they are indeed regulated by multiple Federal
    agencies that neither recognize nor accept the risk-based
    methodologies of existing partnership programs. They continue
    to face the kind of d hurdles which should be a thing of the
    past in today's security environment. Such reluctance affects
    nearly 36 percent of the entries for imported goods that are
    subject to the ``release and hold'' authority of the U.S. Food
    and Drug Administration (FDA), the U.S. Department of
    Agriculture (USDA), and the U.S. Fish and Wildlife Service
    (FWS), which are the primary Federal agencies that impact most
    of our members potentially impacted by the current proposals.
        As you can see the Congress' design for ``One Face at the
    Border'' was well founded and based upon concerns to serve
    land, air and sea port traders with full and equal rights. If
    successfully implemented it should, and hopefully will,
    eliminate much of the perceived inequities which have been
    reported in the past.
         In this pursuit, AAEI has worked closely with the Congress
    and has spearheaded private sector efforts to initiate and
    develop a dialogue and working relationship with these other
    Federal agencies. AAEI is particularly pleased that the earlier
    referenced industry dialogue with FDA has resulted in some
    recent initial successes. Most notably, AAEI has provided
    comments to FDA on its Secure Supply Chain Pilot Program which
    builds upon the investment U.S. companies have made in C-TPAT
    since FDA's program requires applicants to be C-TPAT certified
    at Tier 2 or higher.
         In the same vein, we are also working with FDA concerning
    possible adoption of proven and practical risk-based
    methodologies. One which we believe is worthy of consideration,
    as a purely voluntary element, is the Importer Self-Assessment
    program where the foundation of the ISA program is CBP's
    finding that U.S. companies which have good internal controls
    are highly compliant with U.S. customs laws. It is AAEI's
    experience that ISA member companies are pro-active in meeting
    their compliance responsibilities for all Federal regulatory
    agencies, not just customs. However, as with other items
    mentioned, making this program mandatory would have difficult
    impacts upon the competitiveness of small and medium sized
    enterprises. Overall, AAEI believes that the committee's
    interest in FDA and CBP coordination is an important step
    toward encouraging coordination and integration of other
    Federal regulatory agencies in maintaining and demonstrably
    enhancing our efficient and reliable import process.

                              Section 8--Penalties

         Again this is not an area where AAEI has specific
    expertise but we comment based upon the strong belief of our
    members that significantly increased and burdensome monetary
    penalties levied against manufacturers and importers will do
    little in today's international marketplace to effect change
    and enhance product safety without implementation of a firm
    correlation to the level of culpability found during an
    investigation. We would urge that the apparent lack of
    delineation in the varieties and levels of company involvement
    in the introduction of a product for introduction should be
    carefully evaluated by the committee. We do not understand the
    reasoning behind the apparent intent to make no differentiation
    between those supply chain participants who had no reason to
    know and those willing and knowingly participating companies.
    We believe that the bad actors should be punished. Examples of
    perhaps more useful deterrents which the committee may choose
    to explore include tying the fines to certain thresholds of
    negligence and/or intentional violations.

                          Section 10--Recall Authority

         AAEI supports providing FDA with necessary recall
    authority. However, as before, we cannot comment upon the
    specifics of such a provision in light of our focus on import,
    export and supply chain matters. Nonetheless, we are obviously
    familiar with domestic distribution networks and would urge the
    committee to examine the full implications of such a proposal.
    It is, frankly, the velocity with which those products under
    discussion move through the global supply chain from
    manufacturer to often independent distribution to multiple
    retail facilities and ultimately to the consumer that causes
    our concern. It seems to us that today's rapid and efficient
    distribution system could well place the importer in the
    untenable position of chasing down every shipment transported
    long after delivery to retailers and probable consumption. We
    suggest that the committee may wish to recognize that FDA
    regulated products often move in very different patterns than
    consumer electronics or automobiles or apparel but are often
    facilitated by the same players. In this regard, we ask that
    you examine recall policy, a necessarily reactive remedy for
    the government, with an eye toward economy wide impact.

                           . Section 11--Inspections

         AAEI remains concerned that merely increasing random
    inspections, sampling and testing of food imports will not
    sufficiently enhance food safety because such actions will be
    done at our borders. We suggest that there are other ways which
    the committee could consider in devising solutions. In this
    effort, one vital step to the ultimate goal of protecting the
    American consumer from harm will likely lie in the prevention
    of tainted food and drugs entering the supply chain. However,
    we believe that the committee will wish to indicate that the
    importer's failure to find and obtain products once released,
    and not ``caught by regulators'' at entry, will not lead to
    penalties upon the importer--in particular if there is no
    finding of intentional distribution . Thus, something that must
    be done outside the supply chain to ensure that the supply
    chain does not end up as the dumping ground for any and all
    catch-all provisions aimed at regulating this complex and
    sensitive area of trade.
         Though the committee may wish to fully explore providing
    additional U.S. certification of foreign facilities, it could
    choose to both augment and take advantage of the strength of
    ongoing U.S. efforts to concentrate on development of
    international harmonization standards. Such efforts, pursued by
    both the public and private, sectors could provide a model that
    the committee could use to assist the promotion of U.S. foods
    and FDA regulated products.
         In addition to our export interests we suggest judging the
    real world impact, upon U.S. consumers. It is vital to note
    that there are today tens of thousands of foreign shippers to
    the U.S. which provide critical products and substantial price
    competition in marketplaces nationwide. We believe that, with
    the tremendous growth in multiple overseas marketplaces which
    may not yet or ever choose to impose similar certification
    regimes upon these very same exporters, American retailers and
    the consumer could suffer a significant diminution in quality
    and variety. Despite our attraction as a marketplace the
    growing sophistication of worldwide consumers could have a
    major impact.
        During our 85 year history, AAEI has a long record of
    working together with those Federal departments and agencies,
    which have had jurisdiction over customs, trade policy, ports,
    transportation, tariffs, security, and immigration regarding
    the variety of other issues that impact the import and export
    of goods and services to and from the United States. We
    actively participate in multiple international forums and in
    support of excellence in this arena. In this light, it is our
    view that effective models for FDA and trade cooperation should
    include a wide variety of private sector perspectives--
    particularly those trade related organizations which have not
    always been part of the current food and drug related
    equations. Though independent organizations provide vital
    information and perspective, one highly instructive model can
    be based on the foundations of the well regarded Commercial
    Operations Advisory Committee (COAC). COAC authorized under the
    Federal Advisory Committee Act (FACA) is a key mechanism to
    foster and encourage public and private sector interaction.
    While significant aspects have evolved over time, COAC remains
    extremely useful and its mission is vital to assisting CBP and
    DHS craft appropriate trade security and compliance programs
    that not only do not interrupt the flow of legitimate trade but
    serve to facilitate trade in many ways. It is worth noting that
    the operations and reach of COAC itself were significantly
    enhanced in last session's passage of the SAFE Port Act and
    this effort may prove helpful to the committee.
        From our perspective, dedicated private sector
    organizations and individuals, where appropriate, assisting FDA
    and related agency consultative efforts could highly productive
    and organizations can be encouraged which are specifically
    devised to incorporate the breadth of private sector consumer
    and trade related voices in their consideration of policy
    development and implementation. In addition to these groups and
    other beneficial multiple channels of communications between
    the public and private sector regarding vital import safety,
    trade security and trade facilitation issues for both U.S.
    importer and exporters, a body comprised of private citizens
    authorized under FACA to confer with FDA modeled on COAC would
    be a constructive initiative. Such a COAC like body could
    provide vital support and assist in making these programs both
    robust and effective. We would ask the committee to examine
    options and consider its options in imitating utilization of a
    Federal advisory committee in the development of vital
    Executive and Legislative branch coordination and direction for
    these vital trade related issues.
        In conclusion, we wish to thank the House Subcommittee on
    Health of the Committee on Energy and Commerce for its
    invitation to provide our observations, comments, and
    suggestions about ``H.R. 3610, the Food and Drug Safety Import
    Act.'' We greatly appreciate the committee's efforts and hope
    that we can assist it to ensure that consumer confidence in our
    product safety regime serves as the third leg of a stool
    balanced partnership with trade facilitation and security. We
    strongly believe that the committee's continued oversight and
    active promotion of import safety with recognition of existing
    trade security and trade facilitation programs and initiatives
    can make an enormous difference.
        We hope that our testimony will prove useful as the
    committee considers measures to enhance FDA's capabilities in
    handling imported food and drugs. AAEI looks forward to both
    supporting this committee's active involvement and to
    continuing our partnership with FDA in pursuit of these goals.
                                  ----------

        Mr. Pallone. Thank you very much. Let me start the
    questions with the panel. I wanted to start with Congressman
    Dooley. I had a couple of questions I wanted to ask you, Cal.
    In your testimony, you speak about GMAFPA's four pillars, one,
    mandatory foreign supplier quality assurance program; two,
    quality import food safety program; three, build the capacity
    of foreign governments; and four, expand the capacity of FDA.
    Now, when I look at Mr. Dingell's bill, some of his provisions
    include, one, a new requirement that imported food meets the
    same standards as domestic foods; two, a voluntary program for
    companies that import food to agree to abide by specific safety
    guidelines; three, significant new resources for food drug
    safety via an importation fee, I mean the question I have, Cal,
    is that you state that your proposal will do more to ensure the
    safety and quality of imported food products and ingredients
    than with the adoption of many of the provisions of the Dingell
    bill, but I don't see the difference on how your plan is
    superior. You want to just tell us why you think it is better
    or why you think it would do more to ensure safety and quality?
        Mr. Dooley. Sure. The way I would respond to that is that
    the proposal that we have tabled really relies much more on
    prevention than from inspection. Our assessment of Chairman
    Dingell's bill is that it really is looking at how do you
    enhance the level of inspection capacity and resources of the
    FDA to try to enhance a level of food safety. We think that we
    need to approach this by defining what the private sector can
    do most effectively and complementing that with the defined
    role where FDA can best utilize its resources. And so where the
    Dingell proposal would rely on perhaps a certification of what
    is, by FDA's testimony today, would literally be hundreds of
    thousands of foreign suppliers of ingredients which we don't
    think they have the capacity to do, that our approach would be
    to have a partnership with the private sector where the private
    sector would have to develop these mandatory supplier import
    programs that would embody almost without question audits of
    those facilities and those suppliers, and that would be a
    private sector approach that would mitigate the need for FDA to
    have to go out and certify again these literally hundreds of
    thousands of facilities. And we think that would be a role that
    would be more effective and certainly more pragmatic with our
    approach.
        Mr. Pallone. Well, you mentioned about the different models
    the FDA could adopt to strengthen their efforts to regulate
    food safety, but are there things your members are doing to
    mirror those FDA efforts at this point?
        Mr. Dooley. Well, what you find is that the reason that we
    really have a limited number of food safety incidents even as
    it relates to imported food products is that most importers of
    products today do in fact have best practices in place that are
    including the supplier audits, they do have the chain of
    custody that they can account for throughout the supply chain,
    do have testing protocols to ensure that there's not an
    adulteration of a product. They have those practices in place,
    but unfortunately there are limited number of people in the
    industry that aren't deploying that same level of best
    practices. What our proposal would suggest is that we need to
    mandate that those best practices apply to any company that is
    importing a food ingredient or food product, and they would
    have to be in compliance with those guidelines and guidance
    that would be developed by FDA.
        Mr. Pallone. I wanted to ask you about the import user fee
    because you are pretty critical of that, and you have a number
    of reasons for your opposition. For example, you said user fees
    are generally appropriated when the benefits accrue to
    individuals or individual companies and that the benefits of
    import inspections and research go to all Americans. Of course,
    I don't agree with you on this because we just went through the
    PDUFA process and the MDUFMA process, and it is very similar
    where you have the industry paying for a user fee that
    essentially helps all Americans or all consumers; and I don't
    really see how a user fee on imports would be any different
    than a user fee on drugs or device applications. So I guess my
    question is what is your answer to that? I mean, it is no
    different in my opinion. Do you think it is?
        Mr. Dooley. Yes, I think it is dramatically different
    because when a pharmaceutical company is working with FDA to
    gain approval of a product that they are going to provide into
    the marketplace, they have a proprietary interest. They get a
    protection of a product that is going to have a patent
    protection for a period of time which derives financial
    benefits to that company who is paying that user fee. In this
    case, we have no proprietary interest on what we could be
    paying for, is that we are paying for basically a public good
    in terms of an inspection of a food ingredient that we have no
    proprietary interest in it. Even if we go in and we have a food
    additive that a member company in the food industry might be
    requesting that FDA approve, that food additive immediately
    goes into public domain and we have no financial benefit from
    that. So we think it is a dramatically different approach.
        Mr. Pallone. Of course, a lot of what we just passed in
    PDUFA was post-market, too. In other words, that was the big
    issue, that it is not just for the approvals, a lot of what we
    are doing in the new bill is post-market. I don't want to argue
    with you. I mean, I do but you know where I stand.
        Ms. DeWaal or Mr. Hubbard, did you want to comment on that,
    and I am already over the time. I wanted to give the loyal
    opposition or whatever they are the opportunity.
        Mr. Hubbard. Ms. DeWaal may differ with me, Mr. Chairman,
    but I was very much involved in the creation of the original
    user fees for drugs in 1992. The downside has been as the drug
    program has gotten wealthier, the appropriators and the
    budgeteers and the OMB have seen an opportunity to cut back on
    appropriations, and the problem is because the drug money had
    to be kept up, based on provisions in the law, they cut it out
    of foods in the field and inspectors. So the FDA has lost 1,000
    people in the food safety and inspection area since PDUFA was
    created.
        So my fear here is that if you do this user fee, they will
    find a way to use that to supplant appropriations, and we won't
    be any better off for it. So, if you could find a way to
    prevent that, great, but I am pessimistic about user fees.
        Mr. Pallone. I understand. Ms. DeWaal?
        Ms. DeWaal. Thank you. We don't have a fundamental problem
    with the concept of user fees, but in this context we are very
    concerned that the user fee proposal in this narrow construct
    where it is only applying to one segment, the imported food,
    and also there may be some restrictions in how that money is
    used, it could actually distract from the important work the
    committee needs to do in terms of looking at the authority. So
    while we are happy to work with the committee on what the
    overall structure might look like, I think it is just vitally
    important that you really focus on what authorities are needed
    today that will improve the safety of the products, both
    domestic and imported, going to consumers tomorrow.
        Mr. Pallone. Sounds like the same arguments that we heard
    in PDUFA and MDUFMA, and of course, we ended up doing it anyway
    because we didn't know where the money was going to otherwise
    come from. Mr. Buyer?
        Mr. Buyer. Thank you very much. I am focusing on the drug
    side, so I apologize to the witnesses here with regard to food.
    Mr. Dooley, it is good to see you again, and I appreciate your
    testimony.
        I will go back to our ideal, the ideal being safety and
    efficacy of drugs that come into the United States through
    legal means. Our challenges are these that come through illegal
    means, and so I have some questions here for Messrs. Hubbard,
    Kubic, and Dr. Goldhammer. There are some givens. One of the
    givens is that the mail facilities are overwhelmed, that there
    appears to be an inadequacy of FDA personnel and of resources
    that due process is becoming extraordinarily burdensome with
    regard to the 30 days; and this 30-day process or giving notice
    of due process I highlighted because what I am learning here is
    that the, quote, by exception of FDA policy is becoming the
    rule of the day and being exploited by these counterfeiters. So
    I would ask the three of you to comment on my assessment.
        Mr. Hubbard. That is right, Mr. Buyer. The FDA created an
    exception for compassion in cases of people who had a serious
    disease and could not get the drug in the United States, a very
    small number of people. These Web sites use that and say to
    people, you can buy prescription drugs like Viagra or something
    over the Internet using this exception from the FDA. So first
    of all, that is a lie to begin with. Then the drugs arrive in
    these mail facilities, thousands of packages a day. The FDA has
    no place to store them. They might have the size of a high-
    school locker to store things. Customs is saying, we got to
    move this stuff out of here, there is more coming tomorrow; and
    the FDA has the choice of either taking each package, sending a
    letter to the addressee and waiting 30 days for them to explain
    that the drug should come in usually unsuccessfully or just
    letting it in. And unfortunately, that means they are just
    letting it in, and that is a bad outcome for everybody because
    people are getting all kinds of drugs from all kinds of
    countries all over the world that can be counterfeit, expired,
    or otherwise unsafe; and FDA really has no choice in my view
    than to let it in under current law.
        Mr. Buyer. So you would endorse my initiatives to have
    FDA----
        Mr. Hubbard. We actually proposed that when I was there.
    Just give Customs the authority. If it's a pill, burn it which
    is what they do for controlled substances.
        Mr. Buyer. Thank you. You are right. Dr. Goldhammer?
        Mr. Goldhammer. Our position on it is very simple. A
    patient should only buy drugs through the normal supply chain,
    and if they go on the Internet they should only buy through
    verified Internet pharmacies that have been certified by
    National Association and Boards of Pharmacy. We believe any
    other Internet Web site is not an Internet pharmacy site, it is
    simply an Internet drug seller that is trafficking in illegal
    drugs.
        Mr. Kubic. Your observations are entirely correct, and I
    share the views expressed by my colleagues on the panel. I
    would say, however, that there is another thing that needs to
    be done here, and rather than try to stop the flood of these
    drugs that are arriving at the mail centers on a daily basis,
    which is frankly overwhelming, I think there needs to be a
    refined investigative effort on a national basis to go after
    the people who are really behind the Web sites. Earlier, sir,
    in your statement you mentioned a specific site that the FDA
    had identified. That particular investigation is ongoing, and I
    won't go into a lot of details; but suffice it to say that they
    are into their third Assistant U.S. Attorney who has had that
    case in the particular Federal District Court, the prosecution
    has not even begun. So there seems to be some rhetoric about
    the importance of these things, but when it gets down to it and
    cases are made and cases are presented by the FDA, their Office
    of Criminal Investigations, they seem to somewhat fall by the
    wayside.
        Mr. Buyer. On page 6 of your testimony, you spoke about the
    counterfeiting, legal diversion, products, that arrests have
    decreased by 10 percent, even though we have double-digit
    increases of activity. So what is your explanation of this
    dissonance?
        Mr. Kubic. Well, what we saw law year, for instance, is
    that there was a shift of law enforcement effort. Early on in
    our initial reporting, we saw a lot of arrests that were being
    made at the point of sale. This is kind of a low-hanging fruit.
    I mean, it doesn't take a very extensive investigation to go to
    an open-air market anywhere in the world and conduct an
    enforcement action. In contrast, if you are going to identify a
    manufacturer of counterfeit medicines in China, you are going
    to have to spend some time and effort. The private sector does
    some of this with their security staffs in concert with ICE,
    CBP, and the FDA. So as you look at the higher-level targets,
    it will certainly take more time; and I think that is one of
    the reasons why there has been a dimunization of the number of
    arrests. It is in fact a reduction, but we see a different
    person being arrested over the last year at least.
        Mr. Buyer. Thank you, Mr. Chairman.
        Mr. Pallone. Ms. DeGette.
        Ms. DeGette. I guess I will try to cover food and drugs
    somehow because I think we should be concerned about both of
    them. So I would start by asking Mr. Kubic and if any of the
    other drug representatives have anything to add. I agree with
    you, I think that the counterfeit drugs are a huge problem. We
    have been having a number of hearings over the years in
    Oversight and Investigations Subcommittee about this issue, and
    I think greater enforcement is needed but when you look at the
    pictures of the vast quantities of these drugs that are coming
    in through our points of entry, it almost seems like it is a
    barrage that is just coming in. I am wondering if there are
    independent efforts by any of your organizations to educate
    consumers about what you just said which is that you should
    only buy drugs from approved sites, and my other question is
    how are consumers going to know what the, and maybe that is a
    question for Dr. Goldhammer, what are the sites that would be
    safe for them to buy drugs on the Internet from?
        Mr. Goldhammer. The National Association Boards of Pharmacy
    actually has a seal. I believe the acronym is ``VIPPS'' that
    goes on those Internet sites that they certify.
        Ms. DeGette. And how do consumers know that that is the way
    they can tell that those----
        Mr. Goldhammer. Well, we have been doing a number of
    education campaigns over the last several years in this area.
    There is a Web site BuySafeMedicines.org which we are part of.
    There are a number of consumer groups that are a part of this
    as well that has a lot of information. Also the Food and Drug
    Administration, on their Web site has their own independent
    page on safe purchasing of pharmaceuticals over the Internet.
        Ms. DeGette. Well, Mr. Kubic, do you have any ideas what
    else we could do?
        Mr. Kubic. Sure. I could add, just to expand a little bit
    on Dr. Goldhammer's comments, there is a Partnership for Safe
    Medicines where anyone, any person who has got a prescription
    drug medicine that they are taking can sign up for free and
    they get an e-mail alert if there is in fact then an official
    announcement made by the FDA about a counterfeit medicine here
    in the United States.
        Ms. DeGette. About how many alerts are going out every
    year, do you know?
        Mr. Kubic. By the FDA? I would have to defer to the FDA. I
    am not quite sure of the specific number, but that would direct
    a person who is taking a specific medication that has been
    found to be counterfeit to that site. So, the FDA does a fine
    job of alerting professionals, the doctors, pharmacists and so
    forth. But the partnership is designed for the target audience
    to be the person who takes the medication.
        Ms. DeGette. I am wondering if any of you think it would be
    a good idea for us to do an idea that Mr. Dingell and I
    disagree with, but a lot of our other colleagues on this side
    of the aisle agree with, which is drug reimportation. Seems to
    me that it would make the problem worse. Mr. Hubbard, why don't
    we hear from you?
        Mr. Hubbard. Well, when I was with the FDA, we certainly
    opposed reimportation because drugs that have been made here
    and gone elsewhere could have been contaminated, but more
    likely, they didn't really start here to begin with.
        Ms. DeGette. Right.
        Mr. Hubbard. So the FDA is very much opposed on safety
    grounds.
        Mr. Goldhammer. I think you know that is the PhRMA
    physicians----
        Ms. DeGette. Right. Yes, yes. I just want to turn quickly
    to Ms. DeWaal and ask her a couple of questions about food
    safety because as you know, I have two pieces of legislation,
    one for mandatory recall and one for traceability. And you
    mentioned very briefly in your testimony that the language in
    the Dingell bill could be improved significantly on mandatory
    recall. I am wondering if you can briefly talk about how you
    think that could be improved?
        Ms. DeWaal. First of all, all recalls done, both the USDA
    and FDA, are voluntary; and one of the problems we are finding
    in that system is actually getting information into the hands
    of consumers who need it. So we would have specific proposals
    to actually extend that portion of the bill down to the
    consumer level to ensure they get effective recall notice. But
    also Congresswoman DeGette, I think your issue of traceability
    is also vital here. To have an effective recall, we need to
    know where that food went, and in a recent recall actually that
    the FDA handled, it wasn't effective down at the retail store
    level, and they had to actually send out otherwise fully
    employed food, drug, and medical device inspectors to retail
    stores to pull back cans of foods that may have contained
    botulism.
        Ms. DeGette. And as I understand it, it is not from a food
    distribution standpoint, it wouldn't be difficult to do,
    traceability. You could actually do that in both the foods
    under the FDA purview and the USDA purview, correct?
        Ms. DeWaal. That is right. And part of a comprehensive bill
    which we are urging this committee to consider, I think
    traceability would be a critical element.
        Ms. DeGette. Thank you. We will keep working with you on
    those issues. Thank you, Mr. Chairman.
        Mr. Pallone. Thank you. Before I recognize Mr. Matheson, I
    know Mr. Buyer had a unanimous consent request.
        Mr. Buyer. Yes, Mr. Chairman. I would move that all Members
    may have 10 legislative days to ask questions for witnesses to
    answer for the record and insert additional material.
        Mr. Pallone. Yes, so ordered. Didn't you have a request to
    include this document from the American Free Trade Association?
    Mr. Matheson?
        Mr. Matheson. Well, thanks, Mr. Chairman, and thanks to the
    panel. I want to address first a question to my former
    colleague, Mr. Dooley. It is good to see you again. As you
    know, the Ways and Means Committee already had a mock markup
    but the House will begin consideration of this trade agreement
    with Peru, and one of the issues that has been raised in
    relation to this agreement has been food safety. And I am
    hoping you might be able to clarify to folks on the committee
    how the standards included in the Peru free trade agreement
    affect existing U.S. safety standards as well as whether this
    agreement would limit the ability of the U.S. to raise food
    safety standards.
        Mr. Dooley. Congressman Matheson, there is nothing in the
    Peru FTA agreement that would in any way pose any jeopardy to
    the existing food safety regulations that we have in the United
    States. And in fact, there is nothing in the Peru FTA agreement
    that would preclude the United States from even developing more
    stringent science-based food safety standards as long as they
    applied to domestic and imported products in a similar manner.
        Mr. Matheson. And beyond Peru, is it also not true that
    under the WTO standards that exist today, even without a
    bilateral free trade agreement, those capabilities exist for
    the U.S. in dealing with any other country that is a member of
    the WTO?
        Mr. Dooley. That is absolutely correct.
        Mr. Matheson. The next question I wanted to ask you is you
    have testified that the focus of our efforts to improve food
    safety ought to be placed on prevention in your words to reduce
    the number of needles in the haystack. How much of this burden
    should be placed on the food industry and how much should be
    placed on the public sector?
        Mr. Dooley. Well, I think, clearly we are going to be most
    effective at one that is a partnership, but it is clearly the
    private sector that can make the biggest difference. And what
    we are suggesting that if we really are objective and we look
    at the scope of this problem, the vast majority of our food
    products are safe, those that are imported as well as domestic.
    And the reason for that is that most manufacturers are
    currently today deploying best practices that provide that
    level of food safety. So what we are suggesting is that, there
    might be some folks out there that need to change some of their
    operation protocols, and why don't we work again in partnership
    with FDA and the consumer groups to help develop some mandatory
    guidance that would ensure that those best practices are being
    deployed by anybody that is importing a food product into this
    country. And then in fact we think, well, further enhance and
    build upon the already safe food supply that we have today.
    Where we are somewhat concerned in terms of the difference
    between Congressman Dingell's approach is on relying more on an
    inspection approach. People were talking today we are
    inspecting 1 percent of the food that is coming into this
    country. OK. So if we inspect 10 percent, is that going to give
    us that much greater margin of safety? We would argue it might
    help on the margins, but your greatest difference is going to
    be by finding that effective partnership with the private
    sector to ensure that these best practices are being put in
    place.
        Mr. Matheson. As I said in my opening statement, while the
    issues are not completely the same, when we are talking about
    the toy safety issue in another subcommittee on this committee,
    we are talking about doing preventive measures back at the
    source along the manufacturing chain, whereas on the food
    safety, the proposed legislation seems to be focusing more on
    the back end, and I think it might be healthy for us to
    consider the benefits of looking at the overall supply chain. I
    suspect you probably agree with that. Dr. Hollingsworth, quick
    question for you. The proposed legislation seeks to give FDA
    the authority to recall products. Since this would be a new
    authority as I understand it for FDA, I am interested to hear
    ideas on what would make recalls more effective from the
    retailers' perspective.
        Dr. Hollingsworth. I think from a retailers' perspective,
    the biggest issue that we are challenged with is the
    communication system of recalls, getting the information from
    the manufacturer who is initiating the recall, whether it was
    mandatory or voluntary. It is getting that information down to
    the retailers so they know what products need to be recalled
    and also allowing retailers to be involved in the initial
    discussions. Retailers are excluded from any discussions about
    possible recalls until that information is given to the media.
    And so we are always trying to play catch-up on a recall. We
    would like to be engaged earlier, and we are working to find
    better ways to help those communications and also ways that we
    can be sure that the word gets out to the customer, if in fact
    they have bought that product.
        Mr. Matheson. I was going to ask you, also you talked about
    communication to the retailer, and I was also going to say how
    does it work for communication directly to the consumer? Do you
    think there are better ways in the public and private sector to
    partner in this communication?
        Dr. Hollingsworth. I think there are ways we can do better,
    and that is one of the things that our board task force is
    looking at now, having more uniformity in the announcements and
    the messages so that people will understand what is being
    recalled and what to do with that product.
        Mr. Matheson. Mr. Chairman, I know my time expired but I
    just would emphasize I think this issue of communication is one
    that would merit our review of it on the committee. I think
    that is a really relevant issue both communication with the
    retailer and on down to the consumer level. I think that is a
    healthy issue for us to discuss. I will yield back.
        Mr. Pallone. Thank you. I am going to ask a couple more
    questions, too, so if you want to you can. I just had two
    questions of Mr. Hubbard. In your testimony you talk about
    building safety into products, and you specifically cite Hazard
    Analysis Critical Control Points as a model adopted by the FDA
    and the Department of Agriculture in the 1960s. But given all
    the recent contaminations we have had with spinach, peanut
    butter, and other products, I am wondering why this model no
    longer appears to be effective? What has changed exactly?
        Mr. Hubbard. Well, it is not in place for those products.
    It is only in place for meat and poultry at USDA and for
    seafood and juice at FDA. In fact, I understand there have been
    press reports that the FDA leadership requested that the
    Secretary allow him to move to adopt that for produce, meaning
    in February, but was denied. So, I think it has been proven
    first by the industry and later by FDA regulation that the
    concept of HACCP does work because it builds in safety and it
    is much as Mr. Dooley was describing, you have got the people
    in the supply chain now taking some responsibility rather than
    putting it all on the FDA to inspect a product at the end which
    has proven not to work. You don't want to rely on that
    inspection at the end because it will fail. You need to have
    everyone producing safe food and then letting FDA be the
    regulator that comes in and verifies that folks are in fact
    building safety and keeping records so that you know that they
    are doing that and keeping them honest. And then you have in my
    opinion a safe process.
        Mr. Pallone. OK. And then the second question, in your
    testimony you state that you think that reengineering our
    import safety system could actually improve some of our trade
    relationships, but there are Members who are looking at this
    legislation, especially the import user fee, and see it as a
    possible trade barrier. Can you elaborate on why you think this
    may be good for trade?
        Mr. Hubbard. Well, let us take the case of China. They have
    been hit pretty hard by this. They produce a tremendous amount
    of goods for our country. Most of it is very safe. We have got
    a small problem here. One would hope that if processes are in
    place that say to the producers in China, produce safer food,
    then the overall Chinese export economy will improve. I am told
    by experts on China and a number of them that the Chinese
    Government does not have the wherewithal to assure the safety
    of exports to us, that they don't have the reach into the
    hinterlands of China, they don't have the regulatory structure.
    It could take years to develop such a thing. So if by putting
    into place the preventative system we are talking about to have
    the Chinese producers producing safer food, the sense I get is
    the Chinese Government would say we win in that because then
    products coming out of China are safer products. And then they
    have a better reputation in the world market. I would defer to
    a trade expert on that, but I would argue that in the end they
    win, too.
        Mr. Pallone. OK. Thank you. Did you want to ask anything
    else? All right. Let me just remind everybody that Members may
    submit additional questions for the record to be answered by
    all of you, and those questions should be submitted to the
    clerk within the next 10 days, and then the clerk will notify
    you if we have any. And again, I just want to thank you all. I
    know it has been a long day here with the interruptions from
    the floor, but that is the way things go. Mr. Dooley is
    certainly familiar with it. And without objection, this meeting
    of the subcommittee is adjourned.
        [Whereupon, at 3:40 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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                  Statement of American Free Trade Association

         The American Free Trade Association (AFTA) is a trade
    association of importers, distributors and wholesalers
    providing American consumers throughout the country with
    alternative sources of brand name, genuine and unadulterated
    food products. AFTA appreciates the opportunity to provide the
    Health Subcommittee with its comments and testimony in response
    to Congressman Dingell's introduction of H.R. 3610, the Food
    and Drug Import Safety Act of 2007.
         Members of the American Free Trade Association applaud all
    efforts to ensure the safety and integrity of the domestic
    supply of foods and drugs. AFTA believes (i) that American
    consumers must know that the products entering this country are
    safe for their children, safe for their pets and safe to enter
    the commercial marketplace; (ii) that American consumers must
    be able to continue enjoying the benefits of a competitive
    global marketplace--one that thrives because of the successful
    relationship forged between product safety, trade facilitation
    and supply chain integrity; and (iii) that any legislative
    initiative intended to ensure the health and safety of American
    consumers do so in a manner encouraging continued viability of
    lawful small and medium sized importers and distributors. H.R.
    3610 is an important step forward in our country's efforts to
    protect its citizens from harmful food and drug imports. AFTA
    looks forward to working with the bill's sponsors to ensure
    that the legislation is made even stronger and is even better
    able to reflect the symbiotic needs of consumers, the industry
    and the government.
         In light of the foregoing, AFTA is pleased to offer the
    following specific comments to the proposed legislation
    included within the Food and Drug Import Safety Act of 2007.

                    Section 2: Research on Testing Techniques

         Testing food imports at ports of entry to determine
    product safety and ensure no adulteration of food products
    within 60 minutes of arrival is a laudable goal. However, this
    idealistic objective must be tempered with the practical
    realization that not all food shipments will be able to undergo
    such testing without risking loss of product integrity and
    without the creation of substantial, additional and very
    expensive infrastructure capabilities that do not presently
    exist. As Congress is already aware, earlier this year, the FDA
    had announced its intention to close at least half of its
    existing laboratories due to lack of use and deterioration.
    Although that decision has since been suspended, the reasons
    for the initial announcement cannot be forgotten. FDA lacks the
    resources, human and financial, to carry out the functions and
    operations even of its existing laboratory facilities. To
    undertake research hoping to develop additional and more
    stringent testing protocols than currently exist before
    ``fixing'' the Agency's current problems may be, respectively,
    premature and not the best utilization of current and
    anticipated agency resources.
         Even in today's commercial environment in which sampling
    of less than 1 percent of food shipments occurs, more and more
    importers--large and small--complain loudly of unnecessary
    entry delays and port congestion. Even if user fees were to be
    assessed (which we do not believe should occur), even if the
    FDA was required to maintain its current roster of
    laboratories, even if Congress appropriated substantial
    additional resources to facilitate such port level testing, the
    port congestion and entry delays resulting from required port
    of entry testing of all food shipments would measurably and
    painfully disrupt the distribution of critical food supplies
    into the American marketplace.
         In light of the foregoing, AFTA urges the Secretary to
    consult comprehensively and often with affected industry and
    trade associations such as the American Free Trade Association
    as it researches and develops appropriate testing methods to
    prevent entry of intentionally adulterated imported food
    product. This type of industry-based consultation and
    collaborative effort is the only means for the Agency to ensure
    that its research consider both the needs and mandates of the
    government agencies, as well as the practical business
    realities of the importing trade community.

                 Sections 3 and 4: User Fees for Food and Drugs

         The FDA is charged with protecting the American consumers
    from unsafe products. The funding required for the agency to
    carry out its mission should be legislatively appropriated and
    not passed onto American importing companies and traders, the
    majority of whom are small and medium sized businesses already
    suffering from the decreased value of the American dollar and
    increased global competition. Food safety efforts are intended
    to benefit all residents and visitors in the United States, and
    the costs to assure food safety is most appropriately born by
    that broad class and not the import community. Moreover, it is
    not reasonable to pass along the costs of increased product
    testing and border enforcement responsibilities solely to
    importers of commodities required and needed by American
    consumers, especially when the problems leading to the proposed
    assessment were primarily caused by parties other than domestic
    importers!
         Summarily and admittedly painting a picture with broad
    strokes, the tainted food products giving rise to legislation
    such as H.R. 3610 became adulterated at the place of
    manufacture, not because of any action or inaction taken by the
    importer or lawful product distributor. While it may be
    reasonable to hold product manufacturers responsible for
    ensuring product safety and mandating that manufacturers commit
    the investment necessary to so protect American consumers from
    any threats to health or safety, there is no justification to
    switch this burden onto the backs of small and medium sized
    importers and global traders.
         H.R. 3610 proposes a $50 per line item user fee on all
    shipments of food products and $1000 per line item on all
    shipments of drug products. Oftentimes, this exceeds the
    domestic value of that line item and collectively may easily
    surpass any revenue hoped to be realized by the importer.
    Importers into the United States provide American consumers
    with the benefits of being a participant in the global
    marketplace. It is not appropriate to tax these traders for the
    privilege of doing business in their own country. To do so
    would be to discourage an entire industry; to do so would be to
    limit domestic supply of critical food and drug products; to do
    so would be to say to the American consuming marketplace that
    the only way our government can afford to protect you is to
    charge you more money for your basic and critical consumer
    commodities.
         It is, respectfully, inappropriate and inaccurate to
    represent that the only source of funding sufficient to enable
    the FDA to carry out its mission of ensuring the safety of
    imported food products is to assess user fees against lawful
    small and medium sized importers such as those represented by
    the American Free Trade Association. These traders do not
    dictate product specifications nor do they contract with
    overseas suppliers for processing of manufactured product.
    Third party importers supply branded merchandise to American
    consumers believing in the reputation and quality control
    mechanisms instituted by the product manufacturer itself--- the
    same beliefs held by American consumers, who have come to
    depend upon AFTA's members' businesses to provide cost
    effective and alternative sources of these brand name and
    allegedly reputable foodstuffs.
         Food and drug manufacturers and not importers should be
    held responsible for any funds not legislatively allocated to
    the FDA to ensure product safety. AFTA's members provide
    American consumers with food products at competitive prices and
    at more outlets throughout the country than those products
    would otherwise be made available. If these importers and
    distributors are required to add user fees to the costs of
    entering these products into the country, the United States
    would certainly have less and more expensive food for its
    consumers. This cannot be the goal of any legislation intending
    to make our country's marketplace safer or of any legislation
    intended to meet the consumers' needs for safe and accessible
    food products.

          Section 5: Restricting the number of ports for food shipments

         Imported food products serve critical needs of American
    consumers throughout the country. It is impractical to limit
    these imports to selective ports in metropolitan areas
    surrounding existing FDA laboratories that the FDA itself
    concedes are underutilized and in poor physical condition.
    Moreover, the increased costs of in land transit from those
    ports to ultimate customers are costs that are bound to be
    passed on to consumers.
         The myriad and volume of food shipments into the United
    States demands that importers be provided with more than merely
    a few ports in which to enter their products. The port
    congestion and delays that will inevitably occur if over 10
    million annual food shipments were entered through only several
    U.S. ports of entry is too vast to even estimate or reasonably
    contemplate.
         Importantly, there are currently no FDA laboratories at
    either the northern or southern border crossings. Does this
    mean that all food shipments will necessarily and only be able
    to enter on the east or west coasts? The United States has
    major food distributors and wholesalers located on both the
    Northern and Southern borders, all of whom could very well be
    forced to close their doors if required to bear the increased
    costs of transporting perishable foodstuffs over land from
    ports hundreds of miles away. The resulting economic
    catastrophe will be astronomical and will quickly surpass the
    product safety crisis currently facing our country.

              Section 805: Safe and Secure Food Importation Program

         AFTA supports any program facilitating the identification
    of low risk importers. To this end, it is critical that FDA
    consult closely with industry and trade associations to make
    sure that the programs instituted are practical and reflect
    industry realities, bearing in mind the variety of distribution
    systems supplying the domestic marketplace with safe food
    products and the need to protect proprietary business
    information. AFTA looks forward to being a part of this
    constructive and collaborative effort.

                           Section 8. Civil penalties

         Intentionally introducing unsafe and adulterated food
    product into U.S. commerce should be severely punished in any
    legislative solution intended to ensure entry of only safe
    foodstuffs into the U.S. Accordingly, AFTA believes that H.R.
    3610 must be appropriately amended to so reflect such a
    knowledge and intent standard, as a predicate to penalties
    sufficient to immediately close the doors of any small or
    medium sized innocent importer or manufacturer.
         The existing language in H.R. 3610 assesses penalties of
    up to $1,000,000 against importers and/or manufacturers
    introducing adulterated food product into interstate commerce.
    Without a doubt, intentionally introducing adulterated food
    into interstate commerce must be prohibited and severely
    punished. However, global market realities include the
    possibility that certain perishable products may become
    adulterated without the importer or manufacturer's knowledge
    during transit; products may contain pesticides or other
    contaminants not known by the processor or the importer at the
    time of product purchase. It is imperative that any provision
    for civil penalties be based on the knowledge of the importer
    or manufacturer that the product at issue was knowingly
    adulterated with the intention to cause harm to the health or
    safety of the American consumer.
         As currently drafted, the contemplated civil penalties may
    be assessed against ``any person who introduced into interstate
    commerce'' an adulterated food article. HR. 3610 must clarify
    who is actually potentially liable for these contemplated civil
    penalties or the legislation will merely serve as a means for
    increased litigation. For example, is it possible that a
    customs broker or freight forwarder could be personally liable
    for ``introducing'' adulterated food into interstate commerce
    about which he or she had no direct knowledge? Does this mean
    that a third party importer who purchases product from a food
    wholesaler, which lawfully transacts business perhaps even in a
    country ``certified'' as contemplated by this legislation, is
    nevertheless personally liable if without his knowledge that
    product enters U.S. commerce with a contaminant or ingredient
    not known to the importer or identified to the importer at the
    time of purchase? Without clarification as to financial
    liability, it is reasonable to assume that no party within the
    supply or distribution chain will knowingly assume any such
    risk and distribution of food products within the U.S.
    marketplace will literally come to a standstill. AFTA does not
    believe that this is the intent of H.R. 3610 and looks forward
    to working with the bill's sponsors to clarify this provision.

              Section 9. Continued Operation of Field Laboratories

         While certainly the FDA should be required to maintain its
    current laboratory facilities and operations, even with its
    existing laboratory infrastructure the Agency has not met its
    burden of ensuring entry of only safe products. Accordingly,
    while without a doubt the FDA should not be permitted to lessen
    its current capabilities, Congress should require the Agency to
    create additional laboratory facilities to expedite sampling
    and laboratory analysis in order to improve the Agency's
    capacity to ensure the safety of imported foods and drugs.

          Section 419. Inspection and Other Standards; Applicability;
                          Enforcement; Certifications

         The Bioterrorism Act of 2002 purported to create a system
    for foreign food facility registration sufficient to ensure the
    safety of the domestic food supply. To now require
    certification of these same foreign food facilities because the
    existing system did not, in hindsight, provide enough
    assurances of product safety to the U.S. government will
    certainly infuriate many U.S. trading partners and put U.S.
    importers in the unenviable position of having to convince
    their suppliers once again to comply with yet another new,
    unique and burdensome U.S. law as a condition of market access.
         Moreover, to require certification of foreign food
    facilities or, in lieu thereof, to require certification of
    foreign governments, while not requiring the same certification
    of domestic factories or distributors is to invite unnecessary
    and undesirable, WTO scrutiny into what may certainly be
    perceived as a discriminatory and clearly discriminatory trade
    practice. If Congress and/or the FDA encourages importer
    verification of supply chain security and product safety, as it
    should, and works with the industry to develop the appropriate
    program guidelines and protocols, there is no basis to also
    require certification of foreign shippers, which, as already
    stated, will necessarily create havoc for the United States as
    it seeks to act within the parameters of the global
    marketplace.
         The American Free Trade Association appreciates the need
    to expeditiously pass Federal legislation or implement similar
    regulatory initiatives satisfactorily ensuring the safety of
    imported foods and drugs. AFTA also appreciates, however, the
    importance of crafting legislation that not only protects
    consumers' health and safety, but also guarantees consumers'
    continued access to safe, unadulterated and competitively
    priced food products.
         AFTA looks forward to working with Congress to craft
    legislation ensuring entry of unadulterated food products into
    the United States and appreciates the opportunity to submit
    this testimony to the esteemed subcommittee members.