[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.

                                 
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