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



 
         FDA FOREIGN DRUG INSPECTION PROGRAM: A SYSTEM AT RISK

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


                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 1, 2007

                               __________

                           Serial No. 110-74


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

              Subcommittee on Oversight and Investigations

                    BART STUPAK, Michigan, Chairman
DIANA DeGETTE, Colorado              ED WHITFIELD, Kentucky
CHARLIE MELANCON, Louisiana              Ranking Member
    Vice Chairman                    GREG WALDEN, Oregon
HENRY A. WAXMAN, California          MIKE FERGUSON, New Jersey
GENE GREEN, Texas                    TIM MURPHY, Pennsylvania
MIKE DOYLE, Pennsylvania             MICHAEL C. BURGESS, Texas
JAN SCHAKOWSKY, Illinois             MARSHA BLACKBURN, Tennessee
JAY INSLEE, Washington               JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex 
    officio)

                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Bart Stupak, a Representative in Congress from the State of 
  Michigan, opening statement....................................     1
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     4
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     6
Hon. Diana DeGette, a Representative in Congress from the State 
  of Colorado, prepared statement................................     8
Hon. Tim Murphy, a Representative in Congress from the State of 
  Pennsylvania, opening statement................................    10
Hon. Mike Ferguson, a Representative in Congress from the State 
  of New Jersey, opening statement...............................    10
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................    12
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, prepared statement................................    14
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, prepared statement......................................    18

                               Witnesses

Marcia Crosse, Director, Public Health and Military Health Care 
  Issues, U.S. Government Accountability Office..................    22
    Prepared statement...........................................    25
Carl R. Nielsen, Director (retired), Division of Import 
  Operations, Office of Regulatory Affairs, Food and Drug 
  Administration.................................................    60
    Prepared statement...........................................    62
William K. Hubbard, senior advisor, Coalition for a Stronger FDA, 
  Chapel Hill, NC................................................    77
    Prepared statement...........................................    78
Benjamin L. England, special counsel, Jones, Walker, Waechter, 
  Poitevent, Carrere & Denegre, LLP, Washington, DC..............    90
    Prepared statement...........................................    93
John B. Dubeck, partner, Keller and Heckman, LLP, Washington, DC.   134
    Prepared statement...........................................   138
Bruce Downey, chairman and chief executive officer, Barr 
  Pharmaceuticals, Inc...........................................   156
    Prepared statement...........................................   159
Guido Villax, immediate past president, Pharmaceuticals Business 
  Committee, member, board of directors, European Fine Chemicals 
  Group, Brussels, Belgium.......................................   178
    Prepared statement...........................................   180
Andrew C. von Eschenbach, M.D., Commissioner, Food and Drug 
  Administration, U.S. Department of Health and Human Services...   199
    Prepared statement...........................................   207
    Answers to submitted questions...............................   240

                           Submitted Material

Drug Imports Graph presentation, submitted by Mr. Stupak.........
``Chinese Chemicals Flow Unchecked Onto World Drug Market,'' Walt 
  Bogdanich, the New York Times, October 31, 2007................   224
``Ensuring the Safety of Imported Products, Q&A with Deborah 
  Ralston''......................................................   231
Subcommittee exhibit binder......................................   255


         FDA FOREIGN DRUG INSPECTION PROGRAM: A SYSTEM AT RISK

                              ----------                              


                       THURSDAY, NOVEMBER 1, 2007

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Bart 
Stupak [chairman of the subcommittee] presiding.
    Members present: Representatives DeGette, Inslee, Dingell, 
Whitfield, Walden, Ferguson, Murphy, Burgess, and Blackburn.
    Staff present: John Sopko, Chris Knauer, Scott Schloegel, 
Paul Jung, Joanne Royce, Kyle Chapman, Peter Spencer, and Alan 
Slobodin.

  OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Stupak. This meeting will come to order. Today we have 
a hearing on the ``FDA Food and Drug Inspection Program, a 
System at Risk.'' Each member will be recognized for 5 minutes 
for an opening statement. I will begin.
    This hearing is a continuation of this subcommittee's 
investigations into the safety of imported products. Today we 
explore the question of whether the FDA is adequately 
regulating the manufacturing of pharmaceutical products and 
active pharmaceutical ingredients, or APIs, as they are called, 
for export into the United States. Most Americans do not 
realize that many of the drug products in their medicine 
cabinets come from overseas. In fact, more than 80 percent of 
the active pharmaceutical ingredients that go into drugs come 
from abroad. India and China account for almost half of these 
imports. India's pharmaceutical imports into this country have 
increased 2,400 percent from 1996 to 2006, making it the 
fastest-growing drug importer, and China has doubled its 
pharmaceutical imports to the United States over the last 5 
years.
    The Food and Drug Administration is responsible for 
regulating foreign-made medicines and ensuring the American 
public is supplied with safe medications. Despite a 2000 
oversight hearing and a critical GAO audit in 1998, which 
pointed out many of the FDA's weaknesses regarding importation 
of drugs, the FDA continues to use 20th-century tools and 
resources to address 21st-century regulatory challenges.
    Today's hearing is intended to determine the effectiveness 
of FDA in overseeing foreign drug production and explore what 
resources the agency realistically needs to do the job. Unlike 
food products, FDA cannot rely on any testing to determine if 
the drug products are safe. Instead, FDA's main tool for 
ensuring that a drug is manufactured safely is to conduct 
actual onsite inspections of drug-making facilities. The FDA is 
required to conduct a formal, pre-approval inspection before a 
form, domestic or foreign, can begin producing drugs for the 
U.S. market. After a pre-approval inspection, the agency is 
required to conduct follow-up surveillance inspections of 
domestic facilities to ensure they are continuing to meet U.S. 
manufacturing regulations. For U.S. drug manufacturers, Federal 
Law requires that follow-up inspections be done every 2 years. 
Remarkably, there is no Law dictating how often the FDA must 
inspect foreign drug manufacturers, even though foreign firms 
pose just as great, if not greater, risk to the public health 
than domestic firms.
    In a petition to the FDA, the Synthetic Organic Chemical 
Manufacturers Association, who will testify today, noted, 
``Foreign facilities in general pose a greater risk to public 
safety because when a facility is inspected infrequently, as is 
the case for foreign manufacturers, there is a natural tendency 
for management to become complacent that what was adequate at 
the last inspection is still adequate. Maintaining regulatory 
compliance requires constant effort and vigilance. Minor 
deviations may not cause any apparent lack of quality, but it 
is well-paved road from one minor deviation to serious quality 
failures.''
    Twenty years ago, the drugs Americans consumed were made in 
the United States. Because few firms were overseas, the FDA was 
reasonably positioned to closely monitor drug production 
facilities. However, as more foreign drug producers entered the 
U.S. market, FDA's ability to keep pace with inspections and 
monitoring has become severely limited. This was particularly 
true when the committee last examined this matter in 2000. 
Through the course of that investigation, the committee found 
significant shortcomings in the FDA's ability to conduct 
foreign inspections. Back then, FDA was under-funded, over-
stretched, and poorly coordinated. Among the committee's 
principal findings at our 2000 hearing were, FDA officials 
could not determine how often foreign manufacturers were being 
inspected. Drug makers in India and in China were inspected on 
an average about every 4 to 5 years, which was more than twice 
FDA's 2-year inspection requirement for domestic pharmaceutical 
manufacturers. FDA had only enough resources to inspect foreign 
pharmaceutical manufacturers on an average of once every 11 
years. Finally, the agency's IT systems were in disarray, 
relying on separate 15 data systems to identify foreign 
pharmaceutical manufacturers, plan foreign inspection travel, 
track inspection results, and monitor enforcement actions.
    Nearly 8 years have passed since our last hearing, and 
surprisingly most of the same problems plague the FDA today. 
For example, resources dedicated to foreign inspection have 
actually declined since the GAO report of 1998, while the 
number of foreign drug manufacturers and imports have 
dramatically increased. Despite more than a decade of warnings 
from FDA's own internal reviews, the Congress, and Government 
Accountability Office, FDA's IT system is still based on 
multiple databases which lack integration and contain 
unreliable information. Due to its poor IT systems, the FDA 
cannot obtain reliable data to run their risk models so they 
can effectively allocate what limited resources it does have 
for inspections. FDA's IT system has made it nearly impossible 
to provide the GAO, this committee, or even its own FDA 
managers, with key data to measure ongoing resource needs.
    Let me give you one example. For almost 3 months, our 
committee and GAO have repeatedly asked the FDA for the number 
of foreign firms the agency is supposed to be inspecting 
overseas and where they are located. For 3 months the FDA has, 
on 10 different occasions, provided numbers ranging from 2,100 
foreign firms to 13,800 foreign firms. The database that we 
believe is probably the most accurate shows that about 3,000 
firms are registered to ship drug products to the United 
States, yet the FDA's own foreign inspection risk model uses 
data from about 3,300 foreign firms. Another FDA database, 
called OASIS, which captures actual drug shipments to the U.S., 
now shows an even higher figure of 6,800 foreign firms. That 
number was revised down from 13,800 firms just last week.
    Frankly, it has been nearly impossible for the committee 
staff to calculate what resources FDA needs, because its 
internal data is simply in shambles. FDA may testify today that 
they know with some certainty the approximate number and 
location of every firm that is importing drug product in the 
United States, but I am not convinced the FDA can accurately 
calculate the number of foreign firms they should be 
inspecting. How can we have any confidence if the FDA is truly 
managing the risk that may come from foreign-made drug products 
if the FDA does not know the exact number or location of 
foreign drug manufacturers? This most basic information should 
be available within an hour, not 3 months. I don't believe an 
auto dealership could survive if it was run on the IT system 
that said there is between 2,000 and 13,000 cars on its lot. 
But apparently this passes muster at the FDA, even though it 
involves safeguarding the U.S. drug supply.
    From the limited data we have gleaned from the agency, 
FDA's foreign drug inspection program has serious shortcomings. 
For example, FDA is capable of conducting only 200 to 300 
foreign follow-up inspections each year. These are inspections 
that, by Law, FDA attempts to do every 2 years for foreign 
firms. But if one assumes that at the rough estimate of 400 
firms is likely around 3,000, a simple mathematic calculation 
would suggest the FDA can only inspect each foreign drug firm 
about every 13 years. One must also question whether FDA's 
limited resources are being properly targeted. For example, we 
know that China now represents the largest source of production 
facilities, now shipping product to the United States with more 
than 700 drug firms. Yet China represents a mere four percent 
of where FDA is spending its foreign inspection resources.
    The administration believes one of the best ways to solve 
the FDA's lack of inspection resources is to negotiate 
memorandums of agreement with foreign governments, but such 
efforts will not overcome the lack of FDA funding for on-the-
ground foreign inspections. Mutual recognition agreements of 
each other's inspection reports would save considerable money, 
but neither China nor India, two very large producers of 
pharmaceutical goods, are anywhere near being ready for such 
agreements. Perhaps the FDA should open offices in these parts 
of the world, such as India and China, where many 
pharmaceutical firms are now located or moving their 
manufacturing. Astra Zeneca, to use just one example, is one of 
the world's largest pharmaceutical companies, and it plans on 
obtaining 90 percent of its pharmaceutical ingredients from 
China in the very near future.
    The FDA does spend considerable resources in India, about 
22 percent, which is a good thing. Yet it begs the question of 
why the administration has not engaged in open discussions with 
that country, as they have been attempting to do with China. 
This is particularly strange given that the committee staff 
recently visited India and met with senior officials and 
industry officials, who strongly encouraged the FDA to open a 
permanent office in India, to reduce the backlog of needed 
inspections.
    Every year, consumers see more and more counterfeits and 
poorly-made drugs floating around the world. We dodged the 
bullet this year on tainted toothpaste, which could have made 
many people sick. But dozens of Panamanians weren't so lucky 
last year when they died from taking poisoned medicine that 
purportedly came from China. That can happen here, and it 
surely will, if we do not get a better handle on ensuring that 
foreign-made drugs are safe, and their plants are inspected 
regularly. This will require resources and significant 
restructuring of the program.
    Chairman Dingell and I have already had legislation 
designed to give the FDA more resources to do its job. 
Moreover, we have already sent you, members, bipartisan 
correspondence delineating certain changes to the program that 
could be enacted almost immediately. We truly hope it will be 
sufficient to address what are truly the root causes plaguing 
the FDA's foreign drug inspection program and not mere window 
dressing. We have been here before, in 1998, and we were told 
by the FDA that these problems would be fixed. Unfortunately, 
the problems were not fixed, and we are here again. To that 
end, I believe we have an opportunity to fix FDA's foreign drug 
program before Americans are sickened or killed by contaminated 
imported drugs.
    That concludes my opening statement, and now I would like 
to turn to ranking member of the committee, Mr. Whitfield, for 
his opening statement.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. Chairman Stupak, thank you very much. As we 
all know, this subcommittee and the Energy and Commerce 
Committee as a whole has had many hearings on this important 
issue, and today we will examine the agency's oversight of 
drugs and bulk drug ingredients imported into the United 
States.
    It is quite obvious that FDA falls short in ensuring that 
foreign firms exporting to the U.S. market meet good 
manufacturing practices. In fact, the agency devotes less than 
one quarter of its inspection resources and one tenth of actual 
inspections to these foreign operations. When you consider that 
80 percent of active pharmaceutical ingredients originate from 
abroad, and the volume of drug imports is expected only to 
grow, this is especially the case with countries such as China 
and India. According to reported estimates, as much as 20 
percent of the finished generic and over-the-counter drugs and 
more than 40 percent of bulk drugs come from China and India. 
Some predict these two countries will double their share of 
U.S.-imported drug supply within 15 years. And just consider 
that last year, among the 714 firms in China and 410 firms in 
India registered with the FDA, the agency conducted only 13 and 
65 inspections respectively.
    As we noted with food imports, FDA remains mired in an era 
when most drugs were synthesized and produced in the United 
States, and that is simply not the case today. Lack of good 
quality manufacturing is a recipe for harm. A bulk drug 
ingredient shipment of just 50 kilograms can result in millions 
of tablets or capsules produced for consumption. A bulk product 
that contains an impurity or was synthesized improperly, 
something spot testing may not detect, can cause injury or 
death to numerous people. And I might say that, while we have 
concern about the manufacturing process and the active 
pharmaceutical ingredients coming into the country, we 
certainly be concerned, and should continue to be concerned, 
greatly so, about drug re-importation issues as well.
    We have learned on this subcommittee at past hearings that 
FDA linked and unapproved and impure drug ingredients imported 
from one Chinese firm to toxic reactions that occurred in over 
150 patients across America in 1998 and 1999. One must wonder 
how often poorly made or intentional adulterated product causes 
harm, but it is undetected. Past criminal investigations have 
identified many bad actors, such as agents for foreign firms 
working to bring in cut-rate drug products, and we know without 
adequate oversight, people and firms can take shortcuts to save 
money without concern of harm to others.
    It is striking that FDA has made little progress in this 
area to reform its system, despite repeated findings by the 
committee and others over the years. Even when thoughtful and 
comprehensive plans for reform have been developed internally 
at FDA, somehow it does not seem to be implemented.
    Mr. Chairman, there are many issues to explore this 
morning. We all want to know how FDA can work to build the 
capacity for quality in countries and firms overseas so that we 
can be more confident in the manufacture of foreign drugs. We 
all want to know what improvements are needed for FDA's 
information collection and risk assessment systems so that 
public health is protected effectively. And most importantly I 
know that we all want to work with Dr. von Eschenbach to make 
overhauling FDA's foreign inspection program and FDA's import 
operations a top priority. We want to provide the money, if 
that is what we need. If we need legislation, we want to do 
that. If we can help in regulations, we want to do that. And so 
we would just say to him, I know he is going to be testifying 
later, that we want to support, we want to rally behind him and 
his leadership to fix this problem.
    Thank you, Mr. Chairman.
    Mr. Stupak. Mr. Burgess, for opening statement, please.

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

    Mr. Burgess. Thank you, Mr. Chairman. I appreciate you 
holding this series of hearings because we are finding 
ourselves yet on the brink of one more problem, dealing with 
imports to our country. This time, the focus is a little bit 
different, but the story line is exactly the same as it has 
been over and over again all summer. This committee has spent a 
great deal of time over the past months discussing the safety 
and security of imported products, and we have learned our 
Federal agencies that are tasked with keeping America safe from 
harmful food or products are often using 20th-century tools or 
possibly even 19th-century tools when dealing with a 21st-
century problem. The Food and Drug Administration does not 
shoulder all of the blame in this situation. As I continue to 
study the problem, as the committee continues to study the 
problem, it becomes more and more convincing that a lot of 
people, including people in the United States Congress, 
actually could not have anticipated the exploding number of 
imports that we have seen over the past 10 years.
    Quite frankly, our Laws and regulations were never meant to 
handle the ever increasing number of foreign products entering 
into our ports. This doesn't absolve us from guilt. It just 
means that, as the former Speaker of the House, Mr. Newt 
Gingrich, so often says, real change requires real change. Now, 
as a doctor, I think it is important that we spend some time 
today discussing medicine and medicines. Medicine is supposed 
to heal patients, not harm them. Before I took the oath of 
office to become a member of the United States Congress, I 
first swore an oath to my profession to first do no harm. Yet 
how can we do no harm if we don't know what is in the medicines 
that are coming from what is supposedly a safe and regulated 
country?
    It has been estimated that more than 80 percent of the 
active ingredients in medicines come from overseas, and about 
half of that comes from India and China. China, Mr. Chairman, 
this is the same country that manufactured over 60 percent of 
all the Consumer Product Safety recalls, including 90 percent 
of the recalled toys. Like many other Americans, I am now 
regarding the label, made in China, as warning, consume at your 
own risk. While the 20- to 40-percent number is disturbing, 
analysts predict that 80 percent of the active ingredients will 
come from China and India within the next 15 years. If this is 
true, then our action here today and in subsequent hearings is 
critical.
    We must help to move the Food and Drug Administration into 
a 21st-century agency that can handle these 21st-century 
problems. And it is not just money alone that will solve the 
problems. We do need real reform. In fact, you can argue we 
need to go beyond reform. It is not just changes at the margin. 
It is time for real transformation. Now, at the last Oversight 
and Investigations hearing on food safety, I discussed the 
quality control with the witness from Tyson's Chicken. You may 
remember. He informed the committee that, yeah, they did find 
problems with things that were coming into their plants from 
suppliers in the country where they were operating, within 
China. And when they found those problems they dealt with them 
internally, but they didn't tell anybody else. They are under 
no obligation to self-report any problems that they encounter 
with shippers, with other manufacturers, with other shippers, 
or even the Federal agency charged with protecting the health 
and safety of American citizens.
    Today I hope that the witnesses will speak to this issue. 
Mr. Chairman, before I yield back, I would be remiss if I 
didn't make a couple of observations about the witnesses before 
us today. Certainly I want to thank Mr. William Hubbard for 
appearing before us today. Dr. Hubbard has appeared before us 
in the past and has inspired at least me to introduce 
legislation based on testimony that he has given to our 
committee, so I thank you for being with us today, and I hope 
you can continue to shed some light upon the solutions that are 
needed to fulfill the organization's own mission of building a 
stronger Food and Drug Administration.
    And, of course, Dr. von Eschenbach is with us again today, 
and we are grateful that he has given his time. Honestly, Mr. 
Chairman, Dr. von Eschenbach is the head of a major Federal 
agency. His time is extremely valuable, and I know you would 
like to keep him in the audience so he can listen to your 
penetrating and probing questions, but at the same time he does 
have other duties to perform.
    We have tasked the FDA with transformation. We have tasked 
the FDA with keeping us safe, and yet as I sit here this is the 
third Food and Drug administrator that we have had since I came 
to Congress a very short time ago. He has an agency to get up 
to speed, to get up to 21st-century functioning. Yet he can 
scarcely perform that arduous task that we have set before him 
if he spends day after day after day listening to us 
pontificate from the dais. He could watch us on C-Span in 
between the activities that he needs to do at his agency. I 
hope in the future when Dr. von Eschenbach is called to testify 
we will afford the courtesy of allowing him to go early in the 
day as opposed to late in the day. I do realize that we do all 
ask very entertaining and probing questions, but I know Dr. von 
Eschenbach has a lot of other things he could be doing. I for 
one certainly appreciate the time that he has given, the 
courtesy he has shown this committee. He has never complained 
about this issue, but I find it undignified that the committee 
would behave in such a way.
    I do know that the FDA does require additional resources. 
At the same time, just this past year, when we reauthorized the 
Food and Drug Administration, it wasn't just the 
reauthorization of PDUFA and MDUFA, we made some basic changes 
as to how data is handled at the FDA. This is going to take us 
to the cusp of the 21-century type of transformation that we 
all need. I hope we are not a hindrance in that process, and I 
will yield back the balance of my time.
    Mr. Stupak. Ms. DeGette, for opening statement.
    Ms. DeGette. Chairman, I have a brilliant opening statement 
that I would like to submit for the record and in the interest 
of having extra time for questioning.
    [The prepared statement of Ms. DeGette follows:]

    [GRAPHIC] [TIFF OMITTED] 45057.001
    
    [GRAPHIC] [TIFF OMITTED] 45057.002
    

    Mr. Stupak. Very good. Mr. Murphy, I believe, is next.

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

    Mr. Murphy. Thank you, Mr. Chairman, and thank you for 
holding this hearing, which is a critically important issue we 
are dealing with. The American public's confidence in any 
products made in some foreign countries, particularly in China, 
is probably at rock bottom, and even this morning as I have 
been watching ABC Good Morning, America, they tested 100 
popular children's toys. Although they found 90 of them had no 
lead levels of problems, still, 10 of them did and got by 
Federal inspectors. Yet when it comes to children's toys and 
when it comes to drugs, I think the American people should have 
zero tolerance for any kind of weakening of inspections or 
standards.
    Although plants in the United States must be inspected 
regularly every 2 years, we are not yet there for some other 
pharmaceutical manufacturers around the world. And, as China is 
among them, we must be concerned and want to hear everything 
that our government is doing to help make sure that such plants 
are inspected and are meeting top standards, particularly 
because as we also see many factories around the world, 
unfortunately in China, India, and others in other small 
countries are involved with a great deal of counterfeiting 
drugs, where not only are drugs being marketed as having active 
ingredients when they have absolutely no active ingredients in 
them or may actually have poisons in them or lead paint, et 
cetera. This is an intolerable situation, and we, of course, 
all share our concern that would any of these ever be marketed 
or sent out through Internet sites and other marketing 
mechanisms as if they are legitimate drugs, with all of the 
stamps and other procedures on them to make them look like they 
are real. The FDA is in a critically important position here, 
and with this committee's oversight of looking at that, we are 
hoping to hear about the significant steps being taken to 
protect the American public. We want any breaches in this 
exposed. We want anybody who is involved in cutting any corners 
disciplined for that. It is something that this committee or 
Congress simply cannot tolerate when it comes to medications 
that are supposed to make things better. We cannot tolerate any 
system that is using counterfeiting or cutting corners that 
makes people sicker.
    So I applaud the actions of this committee in moving 
forward in this. I look forward to hearing the testimony about 
what is being done to make sure this area is made safe. And I 
yield back.
    Mr. Stupak. Thank you, Mr. Murphy. Mr. Ferguson, for 
opening statement.

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

    Mr. Ferguson. Thank you, Mr. Chairman. Thank you, Mr. 
Whitfield and the members of the subcommittee and our 
witnesses, for being here to discuss what many of us know is a 
very important issue, the safety and the security of our 
nation's drug supply. I am pleased that we are again addressing 
this critical issue in this subcommittee. We have had several 
hearings in recent months on all aspects of drug safety. My 
biggest concern, and I think that of others on this 
subcommittee, is ensuring that the safety of the drug supply 
for our constituents and for all Americans. It is my hope that 
our witnesses today will be able to provide us with insights 
into why there seem to be gaps in the security of imported 
drugs into America.
    Most of you have probably the New York Times article from 
yesterday, and if you have I am sure you are as alarmed as I am 
about what was contained in that. It is paramount that the 
citizens of this country have faith in the Federal Government's 
ability to monitor and ensure the safety of all of our drugs, 
and we know from recent investigations that they don't have 
good reason to have faith in that process, and perhaps not as 
much faith as they used to have. Many facilities have not been 
inspected. Other companies are using loopholes to get 
adulterated ingredients into the supply chain. However, the 
majority of ingredients used in the production of drugs are 
coming from outside of the U.S.
    This globalization of the drug manufacturing industry is 
putting a strain on the FDA and their efforts to ensure the 
safety and the security of our drug supply. There are thousands 
of facilities producing finished drugs and/or ingredients 
around the world today creating products that will end up being 
ingested by Americans across our country. The GAO has been 
tasked with finding the deficiency in the safety and security 
of the drug manufacturing pipeline. Their investigations 
revealed that the FDA isn't completely certain as to how many 
foreign manufacturing facilities are even subject to 
inspection.
    Using a risk-based assessment of the number of facilities 
subject to inspection, the FDA comes up with the number 3,249. 
However, this risk-based assessment is processed off an 
unverified database. At the agency's current rate of 
inspections it would take 13 years to inspect all of these 
facilities. This is with the stipulation that no new facilities 
be added to the list in the meantime. Even more alarming is the 
fact that the Federal Government doesn't have one interoperable 
database of manufacturing facilities, both foreign and 
domestic, which are willing to register and be inspected. We 
have three different databases for three different purposes, 
the drug registration and listing system for registration 
purposes, the field accomplishments and compliance tracking 
system for completed inspection information, and the 
operational and administrative system for import support for 
information on drugs and other regulated substances being 
imported.
    If our government doesn't have a handle on the good actors, 
the responsible actors, how can DHS and FDA and Customs work to 
prevent adulterated or counterfeit drugs from entering our 
supply chain from the bad actors? I am pleased to say that I am 
going to be an original co-sponsor of Mr. Boullier's 
legislation when he introduces it. I want to commend Mr. 
Boullier. He has done an enormous amount of work on this issue. 
He has been a leader on the counterfeit drug issue. He has 
invested a lot of time and effort in the issue, and I think he 
has come up with a very good product.
    But it really drives home the point, if we can't regulate 
the good actors that are playing by the rules in this industry, 
how are we ever going to ensure the safety of the drug supply 
of other drugs coming into America? The GAO's information is 
very alarming, and I really think it drives home the point that 
preventing the importation of drugs into our supply chain, 
which can create safety and security problems, we have some on 
this committee and in this Congress who want to kick open the 
doors, kick open the flood gates of any drugs coming into this 
country, and they say, well, it is only from Canada or a 
country that we know of. We know for a fact that Canada and 
other so-called safe countries with safe drug supplies are 
really acting as a post office for drugs coming into this 
country from any place in the world. It is irresponsible, and 
it is wrong. We know the struggles we are having with just 
ensuring the drug supply of the responsible actors of products 
coming into this country. How in the name of God can we make 
sure the drug supply is safe if we are going to kick open the 
flood gates to any and all actors? It is the wrong way to go.
    I hope we will be able to address these and other issues in 
the coming weeks. I look forward to hearing the testimony of 
our witnesses, and I thank you again, Mr. Chairman, for having 
this hearing.
    Mr. Stupak. Thank you, Mr. Ferguson. Mrs. Blackburn, 
opening statement.

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

    Mrs. Blackburn. Thank you, Mr. Chairman. I thank you for 
calling the hearing to examine this foreign drug inspection 
program. The inadequacies of our food and drug import system 
have been widely reported during the past year, and you have 
had the New York Times article referenced several times already 
today. There is a serious problem. We all recognize that. Given 
that the U.S. imports 80 percent of the active drug 
ingredients, it is critical that the Federal Government improve 
its drug monitoring safety system to ensure that the U.S. drug 
supply remains the safest in the world.
    The volume of FDA-regulated pharmaceutical imports doubles 
every 5 years and will continue to increase. How much weight 
can American consumers give to the label, FDA regulated, when 
the FDA cannot perform timely safety inspections? When the 
agency fails to enforce action against foreign manufacturers 
and lacks the tools to monitor foreign drug manufacturers, how 
can Americans feel safe? If American drug manufacturers are 
required to follow the letter of the Law regarding FDA drug 
safety inspections, Congress should expect nothing less from 
foreign manufacturers. Foreign manufacturers must play by the 
same rules that our domestic manufacturers follow.
    If consumer safety is priority number one, and it should 
be, then we have a lot of work to do to ensure that this goal 
is going to be met. It is worth noting, however, that many of 
the voices calling for an overhaul of the U.S. drug safety 
inspection system concurrently called for legislation that 
would import prescription drugs from other nations. Drug re-
importation fails to ensure the high safety standards that 
Americans have come to expect. Americans clearly do not need a 
flood of unsafe prescription drugs finding their way into the 
medicine cabinets across this country, especially since there 
is no guarantee of quality or that imported medication is 
indeed safe for us.
    When someone gets that imported drug, and it turns out to 
be unsafe, we have another public health threat on our hands. 
This subcommittee has examined drug import safety in numerous 
hearings during the 110th Congress, and the record shows that 
it is unrealistic for the FDA to inspect all imports coming 
into the United States. However, Americans demand greater 
accountability in the nation's drug supply through considerable 
and expedient improvement of the FDA's current drug safety 
review system.
    I look forward to the testimony today from our witnesses, 
and I yield back the balance of my time.
    Mr. Stupak. Thank the gentlelady. Seeing no other members, 
we will call our first panel to come forward. Dr. Marcia 
Crosse, the Director of the Public Health and Military Health 
Care Issues at the United States Accountability Office; Mr. 
William Hubbard, former senior FDA employee and current Senior 
Advisor to the Coalition for a Stronger FDA; Mr. Ben England, 
former senior FDA employee and current Special Counsel at 
Jones, Walker, et al. law firm; and Mr. Carl Nielsen, retired 
Director of the Division of Import Operations within the Office 
of Regulatory Affairs at the FDA.
    It is the policy of this subcommittee to take all testimony 
under oath. Please be advised that witnesses have a right under 
the rules of the House to be advised by counsel during their 
testimony. Do any of you wish to be represented by counsel? 
Seeing none of you wish to, then I am going to swear you in, 
but then I am going to have Mr. Dingell give an opening 
statement if he so wishes. So please raise your right hand.
    [Witnesses sworn]
    Mr. Stupak. Let the record reflect that each witness 
answered in the affirmative, and they are now all under oath. 
Mr. Chairman, would you like to make an opening statement at 
this time?
    Mr. Dingell. Mr. Chairman, you are most gracious. This is 
deja vu all over again. I have a fine opening statement. I am 
sure everybody is familiar with it. It is something very much 
identical to what has been given for years, and I don't want to 
deter you in your good work. I commend you for what you are 
doing. I thank you for your gracious kindness to me. I urge you 
to continue your vigorous effort in this matter, and we are 
going to try and make the American people safe from some of 
these imported pharmaceuticals and imported foods that are 
putting their lives at risk.
    Thank you, Mr. Chairman.
    [The prepared statements of Messrs. Dingell and Barton 
follow:]
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    Mr. Stupak. Thank you, Mr. Dingell. Dr. Crosse, if you 
would, we would start with you for an opening statement, 
please. A longer version will be submitted for the record, so 
please try to limit your testimony to five minutes. Dr. Crosse.

  TESTIMONY OF MARCIA G. CROSSE, DIRECTOR, PUBLIC HEALTH AND 
  MILITARY HEALTH CARE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY 
                             OFFICE

    Ms. Crosse. Thank you, Mr. Chairman, and members of the 
subcommittee. I am pleased to be here today as you examine 
FDA's inspections of foreign drug manufacturers. As you know, 
the United States increasingly relies on drugs manufactured in 
other countries. Slide, please.
    [Slide]
    As you can see in this figure, there are firms in more than 
50 countries that are registered to manufacture drugs for the 
U.S. market, with the heaviest concentration in China and 
India, as we have heard. The FDA is responsible for overseeing 
the safety and quality of human drugs sold in the United 
States, whether they are manufactured in foreign or domestic 
establishments. As part of its efforts to ensure the safety and 
quality of imported drugs, FDA is responsible for inspecting 
foreign establishments to ensure that they meet the same 
quality standards required of domestic establishments. For 
domestic establishments, FDA's usual approach is to conduct 
surveillance inspections of good manufacturing practices to 
ensure that marketed drugs continue to be manufactured in 
compliance with standards. FDA is required to conduct such 
inspections every 2 years for domestic establishments, but 
there is no comparable requirement for inspecting foreign 
establishments.
    We reported in 1998 that FDA needed to improve its foreign 
drug inspection programs. Today, almost a decade later, 
questions remain about FDA's ability to oversee foreign drug 
establishments and whether FDA has improved its management of 
the foreign drug inspection program. My remarks provide 
preliminary information on the review we are conducting at your 
request. Today I will discuss the extent to which FDA has 
accurate data to manage the foreign drug inspection program, 
the frequency of foreign inspections, and factors influencing 
the selection of establishments to inspect, and certain issues 
that are unique to conducting foreign inspections.
    We are finding that FDA's effectiveness in managing the 
foreign drug inspection program continues to be hindered by 
substantial weaknesses in its databases. FDA does not know how 
many foreign establishments are subject to inspection. Because 
of this, FDA does not have adequate information on the full 
scope of their responsibilities, which limits their ability to 
appropriately manage. Instead, FDA relies on databases that 
were designed for other purposes and contain inaccuracies that 
FDA cannot easily reconcile. Slide, please.
    [Slide]
    For example, one of the databases indicates there are about 
3,000 establishments registered to import drugs into the United 
States, while another indicates that about 6,800 foreign 
establishments actually imported drugs in the past year. 
However, despite the more than two-fold different in the 
estimates of foreign establishments, FDA does not verify the 
information within each database. For example, the agency does 
not confirm that a registered establishment actually 
manufactures a drug for the U.S. market. Similarly, FDA has not 
generated an accurate listing of the establishments whose drugs 
have actually been imported into the United States. Slide, 
please.
    [Slide]
    At a time when manufacturing of drugs for the U.S. market 
is increasing in foreign countries, FDA's inspections have not 
kept pace. FDA inspects relatively few foreign establishments. 
Data used by FDA to prioritize foreign establishments for 
inspection suggests that the agency may inspect about seven 
percent of foreign establishments in a given year. At this 
rate, it would take FDA more than 13 years to inspect each 
foreign establishment once, assuming that the rate of 
inspections remains constant and that no additional 
establishments require inspection. Slide, please.
    [Slide]
    The mismatch between the number of inspections performed 
and the number of establishments subject to inspection appears 
to be the largest in China. Further, FDA cannot provide an 
exact number of foreign establishments that have never been 
inspected. But, according to FDA's data, it may be more than 
2,000, and the largest number of such establishments are also 
likely to be in China. Slide, please.
    [Slide]
    FDA's foreign inspection process is driven by the current 
statutory and regulatory requirements for timely review of 
applications to market new drugs. Among the limited number of 
foreign inspections, most are pre-approval inspections 
conducted as part of the processing of a drug application to 
allow a manufacturer to begin marketing a particular drug in 
the United States. In the last 6 years, 88 percent of FDA's 
inspections of foreign inspections involved such pre-approval 
inspections. Although FDA uses a risk model to develop a 
prioritized list of foreign establishments for surveillance 
inspections, to ensure continued compliance, few such 
inspections are completed in a given year. This prioritized 
list was used to select about 30 foreign establishments for 
inspection in fiscal year 2007, and 50 are targeted for 
inspection in fiscal year 2008. Further, FDA coordinates these 
relatively few surveillance inspections with travel to 
locations for pre-approval inspections to make efficient use of 
travel funds. The need to coordinate travel is a bigger factor 
in the selection of foreign establishments than FDA's risk 
model. Slide, please.
    [Slide]
    This is in marked contrast to the pattern of domestic 
inspections. About 78 percent of FDA's inspections of domestic 
establishments were specifically for the purpose of a 
surveillance inspection, to ensure that manufacturers continue 
to comply with good manufacturing requirements. The comparable 
figure for foreign establishments is 12 percent. Further, in 
the last 6 years, FDA has conducted almost seven times as many 
inspections domestically as abroad. And this is for about an 
equal or smaller number of establishments. Slide, please.
    [Slide]
    Finally, the foreign inspection process also involves 
unique circumstances that are not encountered domestically. For 
example, FDA relies on staff that inspect domestic 
establishments to volunteer for foreign inspections. Unlike 
domestic inspections, FDA does not arrive unannounced at a 
foreign establishment. It also lacks the flexibility to easily 
extend foreign inspections if problems are encountered because 
of the need to adhere to an itinerary that typically involves 
multiple inspections in the same country. In addition, language 
barriers can make foreign inspections more difficult than 
domestic ones. FDA does not generally provide translators to 
its inspection teams. Instead, they may have to rely on an 
English-speaking representative of the foreign establishment 
being inspected rather than an independent translator. Slide, 
please.
    [Slide]
    In conclusion, our preliminary work indicates that 
fundamental flaws that we identified in the management of this 
program in 1998 continue to exist. FDA still does not have a 
reliable list of foreign establishments that are subject to 
inspection. As more imported drugs enter the United States, it 
becomes increasingly important that foreign establishments 
receive appropriate scrutiny. However, until FDA responds to 
systemic weaknesses in the management of this important 
program, it cannot provide the needed assurance that the drug 
supply reaching our citizens is appropriately scrutinized and 
safe.
    Mr. Chairman, this concludes my prepared remarks. I would 
be happy to answer any questions that you or other members of 
the subcommittee may have.
    [The prepared statement of Dr. Crosse follows:]
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    Mr. Stupak. Thank you, Dr. Crosse. And, Mr. Nielsen, for an 
opening statement, please, sir. Pull your mike up there a 
little closer and the green light should be on, hopefully. 
Thank you.

 TESTIMONY OF CARL R. NIELSEN, DIRECTOR (RETIRED), DIVISION OF 
IMPORT OPERATIONS, OFFICE OF REGULATORY AFFAIRS, FOOD AND DRUG 
                         ADMINISTRATION

    Mr. Nielsen. Mr. Chairman, members of the subcommittee. We 
are to provide information to enable you to better assess the 
adequacy of the current FDA foreign inspection program and to 
help you formulate practical, effective solutions for 
improvement. It is unavoidable for us to also discuss FDA's 
import operations, since obviously foreign-made goods gained 
entry into the U.S. market through FDA's import procedures.
    FDA manages the importation of drugs using the same entry 
reviewers, the same organizational structure, and the same 
information technology infrastructure as those used to oversee 
the importation of foods, medical devices, biologics, and all 
other regulated commodities. I recall an interview with the 
Journal of Commerce not long after that fateful 9/11 day. I was 
Director of FDA's ORA Division of Import Operations and Policy 
at the time. During the interview I was asked whether there 
were significant vulnerabilities in the current FDA import 
operation. I say to you today what I said then. Do the math. 
The import system was broken then, and it is even more so now. 
The volume of lines of entry have more than tripled since 1999, 
while resources have remained essentially static or have been 
reduced.
    So, is FDA's foreign drug inspection program adequate to 
prevent entry of unsafe drug products? Let us do a quick review 
of some relevant information. Maybe some simple arithmetic can 
help us come to a logical conclusion. First, FDA is expected to 
handle approximately 18 million lines of entry for all 
regulated commodities this year. Drugs and biologics comprise 
approximately 10 percent, or 1.8 million lines, foods and 
cosmetics comprise approximately 60 percent, and medical 
devices comprise approximately 30 percent, or 5.4 million lines 
of entry. Number two, entries of FDA-regulated goods enter 
through 250 or more U.S. Customs Ports of Entry. Nationwide, 
there is approximately 200 field investigators and inspectors 
who spend most, but not all, of their time reviewing entries, 
collecting samples, examining cargo, and conducting 
investigations and inspections for all imported commodities. 
That is less than one person per port on average, and 90,000 
entries per person on average.
    There is an estimated 300,000 plus foreign manufacturers of 
FDA-regulated commodities. FDA conducts 500 to 900 foreign 
inspections per year for all industries. That is an inspection 
cycle of 333 to 600 years on average for all commodities. The 
foreign-made products are received from 200 plus countries, not 
just a handful of concern. FDA inspects an average 200 to 300 
foreign inspectors of Rx drugs per year. Inspection of foreign 
manufacturers of OTC drugs are virtually non-existent. There is 
an estimated 3,000 to 6,800 foreign manufacturers of Rx drugs, 
on top of which there are thousands of OTC manufacturers. The 
estimated foreign inspection cycle for the Rx industry ranges 
from 10 to 30 years or more, while the cycle for OTC drugs 
could be 50 years or more, or almost never.
    Conclusion--FDA knows very little about the actual 
conditions of manufacture of most imported drugs, and that 
should be found totally unacceptable in a professed risk-based 
approach. Many potential risks are mitigated when good 
manufacturing practices are used, and many potential risks are 
increased when good manufacturing practices are not used. In 
order to ensure a safe drug supply, FDA needs to verify 
compliance by the foreign drug industry with current good 
manufacturing practice requirements. FDA needs to revamp its 
entire organizational structure and approach to managing 
products from the international market. There is no cheap fix. 
That is part of the price of a global economy. Agency oversight 
must follow the regulated industry to be effective.
    The current, domestic-oriented organization has had decades 
to get this right. It has not, and I don't think it can. We are 
sitting here talking about the very same issues from more than 
a decade ago. Unless there is significant investment in the IT 
systems and establishment of a new organization that can 
implement an effective risk-management system for all imported 
regulated products, not just for foods and drugs, then I 
suspect folks will gather here in another 10 years wondering 
why something wasn't done this time around that could have 
avoided many injuries and deaths from unsafe, imported drug 
products.
    I appreciate the opportunity to appear before you all, and 
I will do everything I can to avoid coming back in another 10 
years on the same topic. I look forward to participating in 
this hearing.
    [The prepared statement of Mr. Nielsen follows:]
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    Mr. Stupak. Thank you, Mr. Nielsen. Mr. Hubbard, please, 
for your opening.

 TESTIMONY OF WILLIAM HUBBARD, SENIOR ADVISOR, COALITION FOR A 
                          STRONGER FDA

    Mr. Hubbard. Thank you, Mr. Chairman. I have a written 
statement, which is remarkably similar to yours, so I won't 
repeat what you said, but I will say it is frustrating to be 
back here over and over again, as Mr. Nielsen said. I remember 
being here in 1986 with these issues, in the 1990s, and your 
hearings in 2004, and now we are back again. And it does seem 
to be a continuing concern. It doesn't get fixed.
    But bottom line, though, is how can we live with a process 
in which you have this pervasive regulatory system over U.S.-
produced drugs, with inspections and rigorous adherence to 
quality controls, but yet the majority of our drugs are coming 
from foreign countries and often developing countries, which 
rarely get inspected. I think that is an indefensible 
contradiction, and clearly the examples you have all given are 
real. Drug ingredients coming from countries like China and 
India that have weak process controls. Counterfeiting of drugs 
is endemic around the world. In some countries, you are more 
likely to get a counterfeit than a real drug. And, of course, 
Americans are going to the Internet and buying drugs that they 
think are coming from Canada, and in fact they are coming from 
some of the darkest corners of the world.
    So I must say this does need to be addressed. I worked at 
FDA almost 30 years, with 14 acting and permanent 
commissioners, and all of them were forced to play this public 
health version of the kids' game, whack-a-mole, in which they 
were forced to shift resources to wherever the squeakiest wheel 
was of the day and try to fix that. That was all it was, and 
nothing ever seemed to get fixed. And so you see now, 
inadequate food inspections, you know, inspections of clinical 
trials, inspections of human tissues, and of course the drug 
inspections for foreign firms lags the worst in many ways.
    So the safety of drug imports just keeps coming back over 
and again every few years, but we just don't seem to fix it. So 
I hope this time the committee will make a tenable effort to 
make this a point of concern and move to fix it. This committee 
has done tremendous things for the FDA over the years, and I 
hope that this is one that you will stay with and tackle. Thank 
you very much.
    [The prepared statement of Mr. Hubbard follows:]
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    Mr. Stupak. Thank you, Mr. Hubbard. Mr. England, please, 
your opening statement.

   TESTIMONY OF BEN ENGLAND, SPECIAL COUNSEL, JONES, WALKER, 
          WAECHTER, POITEVENT, CARRERE, & DENEGRE, LLP

    Mr. England. Mr. Chairman and members of the committee, I 
am Benjamin England. I am an attorney in the Washington, DC, 
offices of the law firm of Jones, Walker, 17-year veteran of 
the U.S. Food and Drug Administration. My bio is more fully 
explained in my written statement, which I would ask to be made 
part of the record.
    Relevant to today's topic, I will only note that during my 
career Carl Nielsen and I participated in a series of imported 
counterfeit bulk drug investigations with Customs Enforcement 
in Newark, New Jersey, prior to the creation of FDA's office of 
criminal investigations. Some of those cases became of the 
topic of that hearing in June of 2000 before this committee. I 
am now an attorney in private practice. I represent domestic 
and foreign companies before and against various Federal 
agencies related to the manufacture, distribution, importation, 
and exportation of FDA and USDA-regulated commodities. I spent 
much of time assisting foreign companies and importers in 
complying with the myriad of Federal and State regulatory 
requirements prior to the process of importation to the United 
States. I do represent myself as a former FDA official 
interested in the matters before the committee.
    At the outset, I will say I am very pleased that the 
committee has taken this issue up again and to focus 
specifically on the FDA's foreign drug inspection program, but 
as the Chair will know, this is not a new discussion. It has 
obviously been mentioned a number of times about the number of 
hearings that have been had on this particular issue. And I 
would also note that during the prior hearings we also 
discussed these imported counterfeit bulk drug cases. That New 
York Times article that published yesterday reported this 
rampant counterfeit active pharmaceutical ingredient, or API, 
industry in China, manufacturing not so fine chemicals and 
passing them off in Europe, South America, and Canada, and even 
the United States as legitimate product for drug manufacturing. 
These chemicals are manufactured in an uncontrolled and 
unregulated environment, as reportedly admitted by the industry 
participants and the Chinese government. True to the pattern, 
though, that Mr. Nielsen and I discovered in the early 1990s, 
these counterfeit and unapproved APIs make their way to the 
U.S. through third countries just as the Chinese manufacturer 
of the counterfeit gentamycin sulfate sent its bulk drugs to 
the United States through Europe. The stories of the Haitian 
children that were killed by DEG-tainted over-the-counter cough 
syrup, and now the more recent Panamanian incident, is all 
being reported as news. I daresay it is not news to the 
committee. It is not news to me, and it is not news to the FDA.
    FDA's drug import program, its foreign drug inspection 
program, and its information technology systems, which are 
tasked with managing both and trying to integrate data, are 
broken. They were broken 8 years ago, and they remain broken 
today. FDA's current import program is simply not capable of 
adequately assessing risks that may be associated with imported 
drugs, particularly given the ever-increasing volume, variety, 
and complexity of those drugs. One of the effects of free trade 
is the migration of manufacturing and processing to lower-cost 
markets. For FDA, that meant the answers to FDA's safety and 
quality questions about drugs, the real questions, which relate 
to how that drug is designed and how it is manufactured, and 
the environment in which it is made, cannot be found by border 
examinations in this country. You can't use a finished-product 
testing regime in order to assess that risk. Only boots-on-the-
ground inspectors inside facilities can identify that.
    Given the numbers of foreign manufacturers, processors, 
growers, storage facilities, exporters that send products to 
the United States, it is a foregone conclusion that FDA will 
never cross those firms' thresholds in any meaningful number or 
in any significant frequency. The question is, how can FDA get 
there more often to conduct these critical GMP inspections? And 
secondly, how can FDA obtain sufficient verifiable information 
about what is happening inside the manufacturing plant in China 
or in India or in Malaysia when FDA can't get there?
    This foreign inspection problem and the import risks, the 
import program are conjoined problems. To be clear, one of the 
most important challenges I think FDA faces is lack of any 
efficient, real-time, risk-based, intelligent operational data 
screening system and its persistent siloing of agency data 
systems. Without correcting that problem, FDA could not even 
use the data that might emerge from more and more frequent 
foreign inspections. OASIS is only screening against preset 
data. It is not monitoring products that are imported. It is 
not evaluating those shipments for compliance with FDA 
requirements or for safety.
    I think we all agree FDA needs a significant influx of 
resources. I don't want to discuss many numbers. I will simply 
note that the weakness of FDA's foreign drug inspection program 
is not really limited just to this 3,000 to 6,800 number. 
First, if you include the over-the-counter products, which is 
where we actually have had these reports of the safety risks, 
that number would be far, far greater. Then if we include foods 
and devices and biologics, the numbers skyrocket, and what we 
are left with to manage that risk is the import program, and 
the numbers that are involved in that program are even worse. 
Relying on that program leaves us with a more entrenched 
finished-product regime. It is critical that FDA get into more 
foreign firms that conduct good manufacturing practice 
inspections. Without more inspections, you can't even identify 
the risk baseline for drug imports, so you can't figure out 
where the baseline, as it dynamically shifts, where FDA should 
be focusing its resources in both the foreign inspection 
program and the import program. Both of these need to be 
repaired. The agency cannot use really any of the data it 
receives if it cannot integrate it and assess it, and that IT 
problem, if not fixed, will have us back here in 5 years with 
the same problem, except much more exaggerated.
    Shortly after September 11, 2001, FDA's leadership council 
established an import strategic plan steering committee. By 
spring of 2003, that import strategic plan was virtually 
complete. FDA developed the ISP from contributions of more than 
100 agency experts and all product centers, field and 
headquarters components, laboratories, international program 
staff, general counsel's office, and the Office of Policy, 
Planning, and Legislation. I believe those ISP principles and 
many of those proposed solutions are critical to establishing a 
functional FDA program to integrate these foreign import and 
domestic operations, and then you have something to fund. Then 
you can target your resources, and you can identify and target 
new authorities. I also refer you to my proposals at the end of 
my written statement and look forward to a vigorous discussion 
on the important topic. Thank you.
    [The prepared statement of Mr. England follows:]
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    Mr. Stupak. Thank you, Mr. England. That concludes the 
opening statements of our witnesses. We will begin with 
questioning. We will go for five-minute rounds on questioning. 
Dr. Crosse, on page 13 of your testimony, you note, and I 
quote, ``The FDA's data indicate that some foreign drug 
manufacturers have not received an inspection, but the exact 
number of establishments not inspected was unclear.'' In fact, 
you note that there are more than 2,000 foreign establishments 
for which the agency could not identify previous inspections. 
Where are these firms? Who are these firms? What are they 
shipping? What risks do they pose, and what does it mean that 
there is no record they have ever been inspected?
    Ms. Crosse. Well, as to who are these firms, where are 
they, and what are they shipping, we don't know, and I am not 
certain that FDA knows.
    Mr. Stupak. Have you asked for the information?
    Ms. Crosse. We are still continuing our work for the 
committee to try to understand in greater depth the nature of 
some of these problems and what kind of enforcement actions FDA 
has been taking. The data about the number of establishments 
that may never have been inspected are coming from one of the 
many data systems that they have. This is from their risk-based 
model, where they had between 3,200 and 3,300 establishments 
that they assessed, to prioritize those for their routine 
surveillance inspections. Those records, as part of the risk 
assessment, examine whether or not there has been a recent GMP 
inspection at a facility. Over 2,000 of those establishments 
had no inspection indicated in that system.
    Mr. Stupak. Did they have a pre-approval inspection?
    Ms. Crosse. Not clear from these data, but because some of 
the establishments included in this risk-based prioritization 
system are those that have registered and may never have 
imported a product into the United States--so their risk model 
is not necessarily built on the base of firms that are sending 
product here.
    Mr. Stupak. Well, we all talked about that in a lot of the 
discussion about prescription drugs or active pharmaceutical 
ingredients, but that also includes, does it not, over-the-
counter drugs that you don't need a prescription for? You just 
go in the drug store and buy it? Like the toothpaste with the 
DEG that was found?
    Ms. Crosse. Yes. In their----
    Mr. Stupak. FDA has responsibility to inspect those 
facilities where they are manufactured?
    Ms. Crosse. That is correct. FDA is responsible for 
inspecting all of those facilities. In their risk-based model, 
they consider over-the-counter manufacturers to be of lower 
risk than those producing certain types of prescription drugs.
    Mr. Stupak. Well, let me just ask this panel or anyone who 
cares to answer it, there has been a movement, and I know it 
has nothing related to this hearing directly, but indirectly it 
does, there has been a movement to put a third class of drug. 
You have prescription drugs, you have your over-the-counter 
drugs, now there is this movement to make the BTC or behind-
the-counter drugs. If we do that, a third class, is that just 
opening up to more drugs with less inspections, or more drugs 
with, we have no idea what they are?
    Ms. Crosse. No, sir, I don't believe that is the case. My 
understanding of the third class of drugs is that some current 
drugs that are marketed, either over-the-counter or primarily 
those that are prescription drugs, would simply move to a 
behind-the-counter status, where you would have to have some 
interaction with the pharmacist in order to obtain the drug. 
Not that it would add a whole new category of drugs that don't 
currently exist into the marketplace, would just regulate some 
of them differently.
    Mr. Stupak. OK, thanks. Mr. England, I was really intrigued 
with your import strategy plan when 2003 recommendations were 
made to the FDA on what should be done, and this was, I think, 
Mr. Nielsen, were you involved in that also, the import 
strategic plan?
    Mr. Nielsen. Yes, I was.
    Mr. Stupak. That was right after 9/11. That was what you 
were referring to? How do we--What ever happened to that? 
Either one, Mr. England or Mr. Nielsen, or Mr. Hubbard, if you 
know, if you were a part of--were you a part of that group, 
too, the ISP?
    Mr. Hubbard. Yes, I was.
    Mr. Stupak. What ever happened to it? 2003 was 
recommendations made to finalize their plan. What happened to 
it?
    Mr. Hubbard. Well, the commissioner at the time was faced 
with, as I said, he was faced with tremendous priorities 
elsewhere and felt that to do that plan, while it was a 
reasonable plan, there was simply no funding for it, and he 
didn't believe that a request for funding would be welcome at 
that point.
    Mr. Stupak. Would be welcome by the administration or by 
the Congress?
    Mr. Hubbard. Well, whomever. The FDA had so many other 
priorities at the time that he basically said, look, I think 
you guys are on the right track here, but I would have no way 
to fund this, and we can't do it without funding. But I do 
understand the agency has been trying to do pieces of it----
    Mr. Stupak. Well, that is what I was just going to ask Mr. 
England, since you brought it up in your testimony. There were 
pieces of this ISP, Import Strategic Plan of 2003, that could 
be really implemented with little or no cost, right?
    Mr. England. That is true.
    Mr. Stupak. Give us an example.
    Mr. England. Well, I will give you an example. When FDA 
conducts a foreign inspection and goes in the country, you 
know, FDA receives registration data from foreign facilities. 
They may be food facilities, or they may be cosmetic facilities 
on a voluntary basis, they might be medical device or drug 
facilities. The discussion ensued during the development of the 
ISP that one of our weaknesses in the agency was that there was 
no real gatekeeper on the registration process. No one knows 
who these people are, and so during foreign visits, would it 
not be possible for a foreign inspector to perhaps stay an 
extra day, take the addresses, and at least identify the 
facilities that are listed in the addresses for the 
registrations actually exist, or that there is not an apartment 
complex there? I mean, just some basic verification of data 
while inspectors are in the country. They are already there to 
do a foreign inspection anyway. But those would be the kinds of 
examples. The other examples might be to rely upon data that 
other U.S. government agencies have from foreign inspections 
they conduct. You know, there are inspections that are 
conducted by other agencies of foreign seafood processors, of 
bottled water manufacturers, of, you know, where there are 
contracts that are let by another government agency. Another 
government agency may sub-contract an inspection process prior 
to procurement. That data is actually out there and could be 
used for integration into the FDA import process. I think the 
biggest problem we ran into, though, was, how do you integrate 
the data, because the IT systems were so broken.
    Mr. Stupak. Right. It is in shambles. Mr. Hubbard, my time 
is up, but I want to ask you this. You have been at the FDA, 
you said 30 years. You talked about the 1986 hearing. You 
talked about the 1998 GAO report, the 2000 hearing. Now we are 
here in 2007. What happens internally? I mean, we have these 
hearings. You were in one of the key positions in the FDA, 
especially 2000. I remember that one clearly because I was 
here, the 1998 report. What happens? We hear these promises. 
Things will be different. We will fix the IT system. It goes 
back to the FDA, and all this testimony and all this just goes 
in the circular file, or what?
    Mr. Hubbard. Well, I share your frustration, Mr. Chairman. 
I think it comes down to resources. The program has always been 
a poor little sister there at FDA. It has never gotten 
resources. Even now, they only devote a little over 100 FTEs a 
year to these folks' market issues, so to me it is resources. I 
think there needs to be some funding provided if it will fix 
the problem. To me that is the big missing piece, is the 
funding.
    Mr. Stupak. But, again, going back to your experience, but 
what happens on the resources? I mean, I don't ever remember 
the FDA coming up pounding on the table before the 
appropriators, saying, we need this, just from a safety point 
of view, to protect America. We need these resources. Is the 
gatekeeper of the resources request the administration? And if 
the administration doesn't make it a priority, it doesn't put 
the resource request in?
    Mr. Hubbard. If you look at the last 10 or 15 years, the 
president's budget usually gets funded, but if it doesn't get 
in the president's budget, Congress never adds more. And the 
president's budget has been very strict on FDA in recent years.
    Mr. Stupak. Mr. Whitfield, questions, please. Thank you. We 
are probably going to go more than one round here.
    Mr. Whitfield. Well, we appreciate all of you being here 
today, and certainly all of you all are experts at the FDA. 
Three of you worked there for many years, and you have attended 
enough of these hearings and expressed the frustration in your 
own testimony, and obviously lack of dollars is one of the big 
issues. And, would you all agree with that? OK. And in addition 
to that, would you elaborate on some other obstacles, just from 
your experiences. I mean, is there a culture over there that 
has something to do with it? I know that one of you mentioned 
that the most serious issue was a lack of a risk-based data 
screening system that really works. But if each one of you 
would just. You have all been involved in coming up with new 
plans. As you say, every 2 to 3 years we are back here talking 
about the same problem. So, lack of money is one big issue, and 
would each one of you maybe elaborate on a couple of other 
things? Dr. Crosse.
    Ms. Crosse. Well, I haven't been in FDA, but it is 
certainly true that resources is a major constraint here. It 
also seems to me, though, that because of the resource 
constraint the approach has been, OK, we can't do it all. Let 
us work backwards at this. Given the regulatory requirements, 
the statutory requirements for inspections, we have only got 
this many resources. How many can we do, and then do some 
figuring on where you can go within that, rather----
    Mr. Whitfield. We can't do everything, and----
    Ms. Crosse. We can't do everything, but rather than trying 
to make an assessment, it appears there has been no attempt to 
try to make an assessment of what the universe is and to try to 
integrate the information and start from that end to assess the 
risks that are the largest and to try to manage from that side.
    Mr. Whitfield. OK. What about you, Mr. Nielsen?
    Mr. Nielsen. I think the biggest obstacle is the current 
organization is the original organization, totally organized 
not for the international market. Even the location of the 
facilities, or because of the location in a judicial district, 
not because of incoming products. Then, on top of that, because 
of the existing system largely being oriented to overseeing the 
domestic industry, the work planning process is not designed to 
deal with the international difficulties, either. And so it is 
also my contention that the organization stove-piping is what 
causes our IT stove-piping, and that is why I believe part of 
the real solution is it really is an organization designed for 
all of these problems we have been talking about for over a 
decade. And then the requirements and the solutions can be 
realized and I believe can be implemented with the appropriate 
funding.
    Mr. Whitfield. OK. Mr. Hubbard.
    Mr. Hubbard. Well, someone suggested the way to solve this 
would be some forms of memorandum of agreements with other 
countries in which they step up and do a better job, and 
conceptually I think that is a good idea, but take China as an 
example. The Chinese are suffering 200,000 to 300,000 deaths a 
year from sub-standard and counterfeit drugs, among their own 
people.
    Mr. Whitfield. 200,000 to 300,000?
    Mr. Hubbard. Yes, that is an estimate that is out there, 
and my point is, if they can't protect their own people, I 
don't think we can depend on them or any other country to 
protect us. I think we need to protect ourselves.
    Mr. England. Yeah, I would, if I could, just build quickly 
on what Mr. Nielsen and what Mr. Hubbard both said. This idea 
of culture is a persistent issue in the agency, and I can 
recall when I left the lab in Baltimore and went into 
investigations, and I went into the import operations group, 
the supervisor I worked for in the lab asked me if I was nuts. 
He said he realized it is a dead-end job to go work in imports. 
And then, a couple years later, NAFTA was passed, and then we 
began to see these increases in imports became more 
significant, and the foreign market became more significant. So 
timing was good on my side. I don't propose to have any gift of 
prophecy, but it has worked out. But I think that that 
persists. I mean, imports and the foreign program largely is 
still essentially this red-headed stepchild. A very small 
percentage of the dollars that FDA expends are expended on the 
foreign source market. In 2003 the number was about $7 out of 
every $100 was based on imports or foreign, so it is a very 
small number. I don't know what it is now, but that was the 
number that I received then. I think that, in order to try to 
address it, though, organizationally, this framework problem 
does call for the need for an organization within the agency 
that does have the responsibility. They have got the line-item 
budget authority. They have got the ability to manage the field 
assets. Some things that report into the commissioner level, 
that it is the import foreign program, and from that can come 
information sharing, but they also have to have this IT system 
that is also integrated, and it can't be just about drugs. It 
has to be about drugs and foods and devices and biologics. So 
you really are talking about a rather substantial 
reorganization in the agency in order to create the line of 
authority and the budgeting in order to actually drive the 
process.
    Mr. Whitfield. Just one quick question. You mentioned this 
Haiti, the children in Haiti. How many children died in that 
incident?
    Mr. England. I don't recall. There was a couple hundred. I 
don't recall.
    Mr. Hubbard. Well, in Haiti, I believe it was 86, and 
Panama I believe it was in the 40s, but it was a lot of kids 
with clearly a substitute of antifreeze, that we put in our 
automobiles, for a legitimate drug.
    Mr. England. And in my understanding, that product was 
found here eventually and had to be recalled. And so it is 
almost as if we are waiting for these deaths to occur in other 
countries, and then we go looking for it. Whereas, as Carl 
points out, I think in his written testimony, that GMPs would 
have addressed that issue. That is a GMP--that is an incipient 
ingredient processing issue that happens to be in an OTC 
manufacturer, so whether there is oversight there is a 
different question, but----
    Mr. Stupak. Right. We used this chart before on this, and I 
know Mr. Whitfield is familiar with it, the DEG that they put 
into the toothpaste in both Panama and Haiti but also found in 
our toothpaste here in this country.
    Mr. England. That is correct, so----
    Mr. Stupak. Mr. Dingell, for questions, please.
    Mr. Dingell. Mr. Chairman, I would like to commend the 
panel. This is one of the best panels we have had in this 
committee, and I want to thank you for your quality and 
vigorous testimony and for your help to us. I have a limited 
amount of time, so we have to deal with this very quickly. Mr. 
Nielsen, you are the former director of imports in FDA, with 28 
years of experience. Isn't it true that FDA can provide a 
meaningful figure on the number of firms shipping drug products 
to the United States because of outdated databases?
    Mr. Nielsen. Yes.
    Mr. Dingell. Mr. Nielsen, FDA doesn't have a good handle on 
this inventory, do they?
    Mr. Nielsen. That is correct.
    Mr. Dingell. Mr. Nielsen, since FDA can't calculate the 
total number of foreign firms that are shipping drug products 
to the United States with any precision, how can we have 
confidence that the agency is truly managing risk?
    Mr. Nielsen. You can't.
    Mr. Dingell. Now, Mr. Nielsen, some insiders have told us 
that FDA's IT or their information technology system should be 
scrapped and rebuilt from scratch, simply because it doesn't 
work. Do you agree with that?
    Mr. Nielsen. No.
    Mr. Dingell. You don't agree?
    Mr. Nielsen. No. I think there are steps. It has to be 
replaced, but you can't just scrap it.
    Mr. Dingell. OK. We have to have a system, but we have one 
that doesn't work.
    Mr. Nielsen. That is right.
    Mr. Dingell. And it has got to have major rebuild, does it 
not?
    Mr. Nielsen. That is correct.
    Mr. Dingell. Now, Mr. England, isn't it true that domestic 
firms are inspected properly every 2 years because Law requires 
it? Isn't that so?
    Mr. England. That is true.
    Mr. Dingell. Mr. England, isn't it true that there is no 
Law defining frequency of GMP inspections for foreign firms?
    Mr. England. That is true.
    Mr. Dingell. Shouldn't foreign firms be inspected at least 
as frequently as U.S. firms?
    Mr. England. I believe so.
    Mr. Dingell. Isn't it true that foreign drug manufacturers' 
facilities subject to FDA inspection rarely receive a follow-up 
GMP inspection?
    Mr. England. That is true.
    Mr. Dingell. So that means that they are not being 
adequately inspected, even the small number that are, in fact, 
being inspected. Is that right?
    Mr. England. I believe that is true, that there is not----
    Mr. Dingell. Isn't it true that since the year 2000, 
imported drug volume has nearly doubled but foreign drug 
program resources have actually declined?
    Mr. England. That, I believe, is true.
    Mr. Dingell. Now, Mr. Hubbard, isn't it true that today 
about 2/3 of the drugs consumed in the United States today 
contain foreign drug components?
    Mr. Hubbard. That apparently is true, yes.
    Mr. Dingell. Of the millions of drug shipments arriving 
from foreign countries each year, isn't it true that there is 
almost no chance of an imported drug being sampled, tested at 
entry into this country?
    Mr. Hubbard. That is correct, Mr. Chairman.
    Mr. Dingell. And if they are sent back out, they can simply 
be brought in through another port?
    Mr. Hubbard. Unfortunately, that does happen.
    Mr. Dingell. And that happens also with regard to food, 
although that is not the subject of this hearing?
    Mr. Hubbard. Yes.
    Mr. Dingell. Aren't we buying even larger percentages of 
our drug ingredients from producers in developing countries 
overseas with virtually no or no FDA inspection?
    Mr. Hubbard. That is correct.
    Mr. Dingell. Mr. Hubbard, can the FDA ensure the safety of 
imported drug products at its current rate of foreign 
inspections?
    Mr. Hubbard. I am sorry, Mr. Chairman. I missed that.
    Mr. Dingell. Can the FDA, and I apologize for that. I had a 
very serious dental visit this morning. Aren't we buying even--
or, I am sorry. Can the Food and Drug assure that the safety of 
imported drug products is real at its current rate of foreign 
inspections?
    Mr. Hubbard. Oh, no.
    Mr. Dingell. Given the volume of foreign drug products 
imported in the United States, isn't the only real way to 
ensure drug safety and safe drug supply to significantly 
increase the resources to conduct on-site inspections overseas?
    Mr. Hubbard. I certainly believe that that is the biggest 
need, yes.
    Mr. Dingell. Now, gentlemen, this panel has over 80 years 
of FDA experience. Are things worse now than they have been 
before, or are they better?
    Mr. England. I think that you would have to say that they 
are worse now.
    Mr. Hubbard. I think I would have to agree, simply because 
the globalization has caused us an enormous shift of suppliers 
from here to developing countries----
    Mr. Dingell. What you are saying is that the risk is higher 
and the resources are lower? Is that a fair statement?
    Mr. Hubbard. That is correct. And then you have got the 
concomitant concerns of people buying drugs over the Internet 
and things like that, so, yes, there are great risks out there.
    Mr. Dingell. Now, why, gentlemen and ladies, are things 
worse now than they have been before? Starting with Dr. Crosse.
    Ms. Crosse. I think, as we have heard, the globalization of 
the market and the decrease in the resources that have been 
available to try to handle that.
    Mr. Dingell. Sir?
    Mr. Nielsen. Also, besides the funding, also the failure to 
redirect the resources to the global economy condition.
    Mr. Hubbard. The drugs knocking on our door are less safe, 
so therefore we need more protection, and we have been cutting 
the FDA, so that, to me, is a simple equation.
    Mr. England. Yeah, I believe the combination of all those 
is true. I think there is also a continuing culture that it is 
just easier for the FDA to think in terms of domestic 
regulation, because they are used to it, the Statute was built 
that way, and this NAFTA, the conversions that happened in 
NAFTA and the economy, just have not carried over into the FDA. 
They persist, I think, really, on a pre-NAFTA platform rather 
than a post-NAFTA platform.
    Mr. Dingell. Would this observation be correct? FDA said it 
has a risk management plan. That risk management plan, being as 
deficient as it is in personnel, money, and in the way that it 
works, is actually of no value at all. Is that right?
    Mr. England. I wouldn't say it is of no value. I would say 
it has----
    Mr. Dingell. Limited value.
    Mr. England. --limited value.
    Mr. Dingell. Now, would I be fair in saying that simply 
assures that perhaps a lesser number of people are going to be 
killed, defrauded, or hurt by imported pharmaceuticals? Is that 
a fair statement?
    Mr. England. I think that would always be true, that if you 
have less resources assessing risk you always then would have a 
lower number of people protected by those programs.
    Mr. Dingell. Does the rest of the panel agree? There is no 
nod button on the recorder's machine here.
    Mr. Nielsen. Absolutely agree.
    Mr. Dingell. Mr. Chairman, I have used more time than I am 
entitled to. Thank you for your courtesy.
    Mr. Stupak. Thank you, Mr. Dingell. We have three votes on 
the floor. I think we are going to recess until twelve o'clock. 
Let us try to get back at twelve o'clock so we can continue.
    I am looking down this row. None of you guys can do it in 
five minutes, I can tell you that right now. Go ahead, Mr. 
Burgess. I think you were next in the--I was going by your list 
of attendance, and I think Mr. Burgess--OK, Mr. Walden. I know 
he will stay at five, and I know Mr. Burgess won't, so why 
don't you go ahead?
    Mr. Walden. All right, thank you. Thank you, Mr. Chairman. 
My colleague from Pennsylvania, Mr. Murphy, suggested this 
question, and I think it is a really good one, and I would like 
a yes or no answer out of each of the panel members. If your 
child were prescribed a drug that you knew was manufactured in 
a facility in China that is not inspected, would you let your 
child take your drug? Dr. Crosse? Yes or no?
    Ms. Crosse. Yes, because if they were ill enough to require 
a prescribed drug, I would be concerned that they take 
something.
    Mr. Walden. Mr. Nielsen?
    Mr. Nielsen. Yes, because I don't feel there is an option.
    Mr. Walden. Mr. Hubbard?
    Mr. Hubbard. I think we are doing it every day, so there is 
no choice.
    Mr. England. I would agree. It is what you are left with, 
that you have nothing else to go to.
    Mr. Walden. That is a pretty sad commentary, isn't it? That 
we are putting our kids' health at risk to take drugs that a 
physician prescribes that we all now know are coming from 
factories that we don't have the resources to inspect. That is 
a scary proposition when we know our toothpaste is poisoned. We 
know our dog food got poisoned. We know--and we have no 
options? Then we had better change how FDA operates. Mr. 
England, I want to ask you a couple of questions here. Please 
refer to the document from the FDA's Web site called ``Consumer 
Update: Ensuring the Safety of Imported Products--Q&A with 
Deborah Ralston, Director, FDA's Office of Regional 
Operations''. According to the FDA questioner, the number of 
imported goods that FDA regulates has more than doubled in the 
last 5 years. Ms. Ralston states on the Web site that the FDA 
has a team of more than 2,000 scientifically-trained 
specialists who conduct inspections, analyze samples, and 
monitor the entry of regulated products at our nation's 
borders. Is this number of 2,000 FDA people working on imports 
a credible number?
    Mr. England. I have no idea who they could be. I would 
think that roughly 200, maybe between 200 and 250, in the 
inspection side, perhaps another 100 in the lab side, that 
spend more than 50 percent of their time, probably is a more 
reasonable number.
    Mr. Walden. Ms. Ralston states that the FDA analyzes about 
30,000 import product samples annually. That sounds like a big 
number, doesn't it?
    Mr. England. Sure does.
    Mr. Walden. 30,000 import samples.
    Mr. England. It does sound like a big number.
    Mr. Walden. This 30,000 samples is out of how many lines of 
entry?
    Mr. England. 18 million, probably, this year.
    Mr. Walden. So 30,000 out of 18 million. Do you think that 
is an acceptable number when our nation's health relies on 
these drugs?
    Mr. England. It is a remarkably small percentage.
    Mr. Walden. Do we know what kind of product samples she is 
talking about? Do you think a lot of these samples are drug 
products?
    Mr. England. The majority would be food, I would expect.
    Mr. Walden. So the majority of the 30,000 of the 18 million 
would be food samples.
    Mr. England. I would expect that, yes.
    Mr. Hubbard. Yes, they sample about 20,000 foods each year, 
so the majority are food.
    Mr. Walden. So we are down to 10,000? I was a journalism 
major, not a math major, but that only leaves about 10,000, 
then, that you estimate would be drug samples, out of 18 
million?
    Mr. England. It could be cosmetics, and then it could be 
some pharmaceuticals.
    Mr. Walden. Do these analyses tell the FDA how many of the 
samples analyzed were safe?
    Mr. England. Well, the FDA would have. They would make a 
determination on the given shipments that they are analyzing, 
but it doesn't tell them anything about the next shipment.
    Mr. Walden. Do these analyses of these product samples 
generate an FDA report of any kind?
    Mr. England. My understanding is that there may be some 
information inside the system, but it is probably very 
difficult, if not impossible, to retrieve it from the system, 
so I would guess probably no.
    Mr. Walden. Would you expect that the committee would be 
able to obtain from the FDA the results of these sample 
analyses, what the FDA learned, and what action the FDA took?
    Mr. England. I would expect that they should be able to do 
that through its fax system and the OASIS system, the 
combination of those two systems. Mr. Nielsen actually may know 
better.
    Mr. Walden. Mr. Nielsen?
    Mr. Nielsen. Yes, I think they should be able to provide 
that.
    Mr. Walden. So you could provide it to us, but it sounds 
like no report is generated internally at the FDA for the FDA's 
own use, do you think?
    Mr. Nielsen. It is usually case by case.
    Mr. Walden. All right. Ms. Ralston states the FDA conducted 
approximately 30 inspections of manufacturing processing sites 
in China for FDA-regulated products. How many establishments 
are there in China involved with FDA-regulated products?
    Mr. England. Wow----
    Mr. Walden. Wow?
    Mr. England. It is a very large number. I don't know the 
answer. I know that Dr. Lumpkin testified, I think a couple 
weeks ago, that there were 3,000 medical device manufacturers 
alone in China. That is just that industry, which probably is a 
fraction of the entire----
    Mr. Walden. Does 30 inspections a year sound like an 
adequate number to ensure the safety of products from China?
    Mr. England. Not overall of products from China, no.
    Mr. Walden. All right. My time has expired. I thank Mr. 
Chairman.
    Mr. Hubbard. Mr. Chairman, may I make one comment to Mr. 
Walden's earlier question?
    Mr. Stupak. Yes, sir.
    Mr. Hubbard. I don't think we should leave people with the 
impression, though, that our drug supply is unsafe.
    Mr. Walden. It is just vulnerable.
    Mr. Hubbard. It is vulnerable, exactly. I mean, I think, 
you know, the manufacturers here that receive these foreign 
components do a good job, under FDA supervision, to screen 
them. So we are not, like, taking dangerous drugs every day. 
But, as you said, we are vulnerable.
    Mr. Stupak. But 80 percent of the active pharmaceutical 
ingredients found in over-the-counter and prescription drugs 
are from offshore.
    Mr. Hubbard. Right. And so clearly there is a risk, but 
personally I don't think the drug supply in the United States--
I think it is actually the best in the world.
    Mr. Stupak. Right, and in their--I don't mean to argue or 
take any more time, but we inspect 97 percent of the plants 
here in the United States every 2 years. They do a good job 
domestically, but offshore is where the problem is occurring. 
If 80 percent of your product is coming from offshore, we have 
to devote the resources to offshore.
    Mr. Hubbard. OK. The manufacturers here are required, under 
FDA supervision, to do lots of screening before that pill 
actually goes to the drug store, so----
    Mr. Walden. My concern is it is only a matter of time if we 
don't fix the inspection process.
    Mr. Stupak. Absolutely.
    Mr. Hubbard. No, I don't disagree with you at all.
    Mr. Walden. Mr. Chairman, could we put that document in the 
record? I ask unanimous consent.
    Mr. Stupak. Yes. Without objection, the U.S. Food and Drug 
Administration interview, Question and Answer with Deborah 
Ralston, will be entered as part of the record.
    With that, we have 3\1/2\ before we have a vote time 
expires. We will be in recess. Let us still shoot for 12 
o'clock, shortly after twelve o'clock. We will continue. We 
still have many members that would like to ask questions of 
this panel. Thank you.
    [Recess.]
    Mr. Stupak. If am I may ask Mr. Nielsen, Mr. Hubbard, and 
England, Mr. Dingell and myself, Mr. Pallone has put in 
legislation which would generate about $300 million for drug 
safety, drug inspections. Have any of you had a chance to 
review that legislation, Mr. Nielsen, Mr. Hubbard, or Mr. 
England?
    Mr. Hubbard. Is that the user fee?
    Mr. Stupak. Right. The user fee with the Food and Drug bill 
we put in.
    Mr. England. I have reviewed it.
    Mr. Nielsen. Yes.
    Mr. Hubbard. Yes.
    Mr. Stupak. Any comments on it?
    Mr. Nielsen. I fundamentally have difficulty with a user 
fee for that purpose. I just don't see--I use a parallel of 
perhaps if I had to pay a user fee for IRS to process my income 
tax form, they came to audit me, and I had to pay them to 
audit, and then they put me in jail and I have to pay for that, 
too. And, on the other hand----
    Mr. Stupak. That is not the way it goes, though.
    Mr. Nielsen. What is that?
    Mr. Stupak. Nothing.
    Mr. Nielsen. Yes. But I do think it needs to be 
considered----
    Mr. Stupak. But where else would you go to look for the 
resources? I mean, you need a significant amount of resources. 
Obviously, the FDA has been reluctant to ask for it. We 
generate $300 million. That is $1000 a line. That is all it is, 
a line. A line will give you a boat-load of goods, or it can be 
one box of goods. But----
    Mr. Nielsen. Well, the problem I see with that is, FDA can 
ramp up the foreign inspections. If everything is done as it is 
done now, you are still not going to deliver that information 
into the import process. You must have the IT, and I believe a 
user fee, a nominal, like 50 cents or $1.50 per line user fee 
could be justified in providing service and the infrastructure 
to do what needs to be done.
    Mr. Stupak. So, in other words, if we did leave it at that 
$1000, let us say, we have got to dedicate at least part of 
that for IT, because without a data system we are done.
    Mr. England. That is right.
    Mr. Hubbard. If I----
    Mr. Stupak. Go ahead. Mr. Hubbard?
    Mr. Hubbard. The problem I have seen with user fees, Mr. 
Chairman, is that the budgeters of the world see new money come 
in the FDA, so they cut the budget in the non-user-fee areas, 
and that clearly happened with the PDUFA program, so the food 
program and the import programs have actually gotten weaker. 
FDA has lost about 1,000 people in the last decade from 
appropriated dollars, even though the agency's total budget has 
gone up, due to these user fees. But the user fee money is 
dedicated only to the review of new drug and device 
applications.
    Mr. Stupak. Correct.
    Mr. Hubbard. So you have actually had a shift where some 
programs are getting richer, and others are getting poorer. And 
so I think you have to find a way to make sure that the budget 
folks don't essentially take that money away from 
appropriations----
    Mr. Stupak. And then substitute it for annual----
    Mr. Hubbard. Exactly. That is what happened with user fee, 
and that is what happened with the earlier user fees, and so 
you have to build some sort of firewall.
    Mr. Stupak. OK. Mr. England?
    Mr. England. I would say that the way I read the user-fee 
legislation is that those monies would be used to essentially 
help pay for border examinations and samplings of imported 
product. I am afraid that it reinforces a finished product 
testing regime. I also----
    Mr. Stupak. Would you say it does not work, or is not the 
preferred method of protection, finished product hitting the--
--
    Mr. England. That is correct. And the end result----
    Mr. Stupak. Do you want to explain this?
    Mr. England. The end result is you are paying for a program 
that is not really useful if you don't know the GMP status of 
the manufacturer. I mean, if you were to test within the same 
batch of drug, that batch, depending upon its size, could be 
different at the front end of the process from the back end of 
the process if GMPs are not in place. So if you happen to 
sample from one portion of that, you may not even be able to 
detect a problem within the same batch. So I think finished 
product testing of drugs in particular is troublesome, but, and 
I agree with Mr. Nielsen's idea of funding the IT program 
perhaps through user fees at the border level. I think another 
aspect about it is that if you take that money and then put it 
into GMP inspections in the foreign facilities, now you have 
the U.S. importer paying for essentially inspections by the FDA 
in the foreign market and getting free quality assurance advice 
from FDA, and who knows how many times they have to go back 
before they get it right? So I think perhaps you could do it on 
the registration end of it, and that way you have some gate, 
and people wouldn't be inclined to go on and just register 
their facilities if they knew that there was money that was 
involved in it, a. And b., that that money could be used to 
fund the FDA conducting an inspection in their facility.
    Mr. Stupak. Good point. Ms. DeGette, for questions? I 
believe you have eight minutes, since you waived your opening.
    Ms. DeGette. Thank you. Thank you, Mr. Chairman. Well, all 
of you testified that the FDA needs increased resources to 
inspect these foreign facilities, and I certainly agree with 
that, but I don't think it is just an issue of resources 
because you also testified that the current computer--I think 
Dr. Crosse in particular testified that the current computer 
systems are inadequate for cross-referencing and determining 
the various facilities abroad, so I am wondering if you can 
comment, how much of the problem is more resources, and how 
much of it is an inadequate computer system, and what can we do 
to get the FDA to update their computers?
    Ms. Crosse. Well, I think it is both. I think part of the 
resource issue is resources to update their information 
technology systems and that the resources have not been devoted 
to that, and there was some testimony about plans that they had 
had that were scrapped, largely because of the lack of 
resources.
    Ms. DeGette. But do you think there is a commitment on the 
FDA's part to--a recognition that their IT systems are 
inadequate and a commitment to improving those systems?
    Ms. Crosse. I believe that there is a recognition that 
their systems are inadequate. I think that the question is 
better asked of others, whether there is a commitment.
    Ms. DeGette. All right. Let us hear from Mr. Hubbard.
    Mr. Hubbard. I would say that I saw the import folks and 
the regional affairs folks ask for funding over and over again 
through the budget process for these systems, going all the way 
back to your hearings of the 1980's, and that money was always 
denied. And even the current administration, they had this 
theory that too many IT resources were being wasted, and FDA 
was being constantly squeezed on IT, when IT actually saves you 
money in the end.
    Ms. DeGette. Right.
    Mr. Hubbard. I hope that Dr. von Eschenbach will describe 
how he is committed to fixing that system now, but money is 
clearly the reason that they don't have it now, in my view.
    Ms. DeGette. Well, another thing that we could do with 
money, aside from improving the IT systems, is improve the 
system of inspection that we have. Dr. Crosse testified, and 
she briefed us yesterday on this pathetic system that they have 
for actually inspecting the overseas facilities, where they 
take a volunteer, and the volunteer goes into this factory, and 
then the volunteer doesn't even have a translator. I can't 
imagine how you could get any adequate information inspecting a 
facility when you didn't even have someone to translate for 
you, especially if it is a foreign facility that has a vested 
interest in not providing and willfully withholding 
information. I am wondering if you can comment a little further 
on that, Dr. Crosse.
    Ms. Crosse. Well, we certainly think that is a concern. 
When they have a need for translation services, they are, in 
general, relying upon a representative of that establishment to 
do the translation for them. I have talked with some of the 
folks from FDA's Office of Regulatory Affairs, and they 
indicated that they believe there are many items they can look 
at. They can still physically inspect the plant and see if 
whether there are, you know, leaking pipes and other sorts of 
problems, that some of the data they need to review is numeric, 
but some of the data they need to review is not numeric, and 
some of what they need to obtain has to be gathered through 
interviews and discussions with officials there in the 
facility. And so----
    Ms. DeGette. And then they are relying on----
    Ms. Crosse. I have a concern.
    Ms. DeGette. And they are relying on translation by 
representatives of the officials at the facility.
    Ms. Crosse. That is right, and they are relying on that 
facility having an understanding of what is expected out of our 
regulatory system.
    Ms. DeGette. And counsel just told me he was in a factory 
in China, and they wanted to talk to some of the employees, and 
the State Department representative who was with them said, you 
know what, what the translator is saying these people are 
saying, they are not saying. And you would have no way to know 
that if you were just some FDA inspector standing there, right?
    Ms. Crosse. Correct.
    Ms. DeGette. And that is a place where resources might 
help. Does the FDA, in your opinion, acknowledge this problem 
as well?
    Ms. Crosse. They have been reluctant to acknowledge this as 
a problem to us.
    Ms. DeGette. Does anyone else have a comment on the whole 
inspection process and how it can be improved, Mr. England?
    Mr. England. I would just note, and actually a number of 
days ago I was on the phone with somebody in the FDA, and that 
happens to be one of the foreign inspection cadre participants 
who has done inspections quite a number of years for FDA as a 
foreign inspector, and recounting, you know, they have a short 
period of time to get in-country and maybe a long trip. They 
are tired when they get there. They have a couple of days to do 
an announced inspection, maybe 2 or 3 days, which, that same 
inspection, if there are problems identified, which there 
probably will be, in a foreign inspection, would probably have 
been stretched out to 10 to maybe 14 days, and then they have 
to get on the train or plane, get the next one. By the end of 
several weeks, now they are going back to their notes and 
trying to remember and rebuild the inspection and do their 
inspection reports. I mean, I think all of those kinds of 
things, those add to the complexity of just even the current 
system at FDA. Add translation, add the fact that the 
volunteers are doing it, that it is announced. Many times the 
inspector is relying on the inspected firm for transportation 
between locations.
    Ms. DeGette. Great. Now, when the FDA inspects domestic 
facilities, it can arrive unannounced, it has more enforcement 
ability over domestic than foreign countries, and it doesn't 
have to have things translated, and I am wondering if we need 
to beef up our foreign inspections, realizing that these are 
all impediments. Dr. Crosse? Or, Mr. Nielsen?
    Mr. Nielsen. I think that is very--I mean, there has to be 
a credible presence in the industry to give the incentive to 
comply, for those provisions that do result in safe products. 
There has to be a credible presence.
    Ms. DeGette. And one last question, to Dr. Crosse's point, 
the GAO findings are that the current U.S. firms are inspected 
every 2 years by the FDA, correct?
    Ms. Crosse. The data that they provided to us show that 
they actually get there about every 2.7 years.
    Ms. DeGette. And there is no Law defining the time between 
inspections for foreign firms and, in fact, at the foreign firm 
inspection, because of FDA's reliance on volunteers and so on, 
it is much more sporadic than domestic. Is that right?
    Ms. Crosse. That is correct.
    Ms. DeGette. So I would think it would make sense to 
require that foreign firms shipping drugs to the U.S. be 
inspected at least as frequently as U.S. firms. Would you not 
agree with that, Dr. Crosse?
    Ms. Crosse. I think there is certainly every reason to 
believe that the risks abroad are the same or greater than the 
risks in domestic establishments.
    Ms. DeGette. Would the rest of you agree that we should 
have at least the same type of inspection system we have for 
domestic firms, Mr. Hubbard?
    Mr. Hubbard. Well, I think it would be meaningless without 
the resources. They can't do the current statutory requirement 
of every 2 years. If you impose that on them for foreign, they 
would simply fail, so you would have to have some sort of 
provision to make sure that they have the resources.
    Ms. DeGette. Well, obviously, you can't do the inspections 
without the resources, but don't you think that we need to have 
some kind of a standard for the foreign inspections, especially 
in light of the recent revelations that we have had from China 
and other countries? I mean, we are not even talking here about 
drug counterfeiting. We are not talking about drug re-
importation from the Internet. We are talking about legitimate 
drug ingredients that are used for FDA-approved drugs, and we 
are not even able to inspect them because we don't have the 
resources to inspect them like we do domestically. That seems 
like a backwards system, that we should really be focusing on 
the foreign producers and obviously domestic, too, but it seems 
like we shouldn't say, well, we are not going to inspect 
foreign because we don't have the resources.
    Mr. Hubbard. Well, you are absolutely right. It is 
indefensible that we would be doing the domestic firms so 
frequently and the foreign firms so infrequently, but again, 
FDA has got to be given the wherewithal to actually do that.
    Ms. DeGette. And do you think they have the will to do it 
if we gave them the wherewithal?
    Mr. Hubbard. I would certainly hope so.
    Ms. DeGette. Mr. England?
    Mr. England. I would note that in the worst-case scenario, 
the equivalency is made between the domestic and the foreign 
industry as far as the frequency of inspection, without 
resources. What that would at least force is a shifting of 
existing resources towards risk. It really should force a risk 
assessment with regard to foreign versus domestic, because in 
these foreign manufacturers, many times these countries are 
developing countries. They don't have a regulatory regime, like 
we have in the United States. They may not have potable water, 
at least in the community. Hygiene could be deficient. So I 
think the risks, if you were to actually lay them side by side, 
the risks would be greater in the foreign market. I think it 
would at least force that shift into the foreign market.
    Ms. DeGette. Thank you. The Chairman was right. This was a 
wonderful panel, one of the best I have seen in my years in 
Congress. Thank you for your testimony.
    Mr. Stupak. Mr. Burgess, for questions.
    Mr. Burgess. Thank you, Mr. Chairman. Dr. Crosse, in your 
testimony, and forgive me for being out of the room. So if this 
has been asked, I apologize. On the use of translators, how big 
a deal is that?
    Ms. Crosse. I think in some countries it has got to be an 
enormous deal.
    Mr. Burgess. Is there a risk that, since we are depending 
upon the company, the manufacturer, to provide the translator, 
that it could be an inside job or an inside plant?
    Ms. Crosse. There certainly is that risk. That is a concern 
that we would have.
    Mr. Burgess. Are those interviews or exchanges that are 
taking place between the FDA and the manufacturer through a 
manufacturer's supplied intermediary, are those taped or 
transcribed? Is there any way to quality check the quality of 
the information that has been given back and forth? Because 
even with someone's best of intentions, just in the 
translation, as we all know, things can get lost.
    Ms. Crosse. Not to my knowledge. No, I don't believe so.
    Mr. Burgess. On the whole issue of the database, I guess, 
Mr. England, this morning downtown former FDA Commissioner Mark 
McClellan was addressing this issue, more from the standpoint 
of how it interacts with, do we get the most efficient 
technology, do we deliver the most value for the patient, and 
the previous lack of a reliable database at the FDA, in this 
country, for those types of activities, made that a real 
problem. I think it was referred to as stove-piping. I had a 
younger staffer who didn't know what a stove pipe was, so maybe 
we had better use silo. I guess they know what a silo is, maybe 
not from farm country. But Dr. McClellan was talking about the 
coverage side low, the technology side low, and how we needed 
to be able to bridge that gap, and it sounds like we are kind 
of talking about the same phenomenon here. Is that correct?
    Mr. England. I think it is true that the IT systems FDA has 
are siloed, and they are really wrapped around the agency's 
internal siloing.
    Mr. Burgess. And yet in the private sector, because we also 
heard testimony from--or, not testimony, but it was a symposium 
downtown with Health Affairs for their 25th anniversary, I 
think it was Mr. Williams from Aetna Insurance Company. It 
seems like I heard 10 years ago that they reinvested about 10 
percent of their capital into health information technology or 
information technology, and this morning he gave a figure of 15 
percent of his work force of 34,000 people across the country. 
Most of them aren't out there selling insurance and doing 
customer service. 15 percent are actually involved with 
development of software, maintaining their infrastructure, and 
I think he made the statement, I may be misquoting, but I think 
I heard him say that if Aetna's information technology 
department were a stand-alone company it would be one of the 
largest software development companies in the United States. So 
it just goes to underscore how much private industry in this 
country has recognized that they must invest in this, and it 
sounds like, even though we did make some big steps in the FDA 
reauthorization bill as far as monitoring the treatment 
database, we have got to do a lot more as far as certainly this 
aspect of it, in monitoring foreign manufacturers. Is that a 
fair assessment?
    Mr. England. I do think it is fair. I would even add that I 
think because of those kinds of investments in the private 
sector, and particularly in the areas where FDA has 
jurisdiction, and the risks maybe even perceived with some 
relevance between what FDA is trying to do and what maybe, for 
instance, Aetna might be trying to do, there are more off-the-
shelf technology that you can take and you can modify rather 
than developing systems from scratch. I mean, the OASIS system 
essentially is a from-scratch software development program. 
There are some off-the-shelf elements to it, but that ends up 
costing a fair amount of money, to try to develop it and then 
maintain it. Then you become married to a contractor as well, 
which is problematic.
    Mr. Burgess. And what would be some examples of that, in 
the private sector currently?
    Mr. England. Examples of off-the-shelf technology? Well, I 
mean----
    Mr. Burgess. What companies are, say, doing that in the 
private sector that are doing it well, that have maybe a 
similar problem that the FDA has?
    Mr. England. You would probably see most of it in the 
Customs international transactional environment, and you would 
see it in--that is why I don't want to misidentify any specific 
companies----
    Mr. Burgess. Right.
    Mr. England. But you also would see it in the defense area, 
where you have just got many, many transactions, risk that is 
built into those transactions someplace, and the ability to 
process a high volume, high, fast stream of data, in order to 
think about that data, in order to assess and mitigate risk.
    Because we will never be able to eliminate that risk, but 
we ought to be able to manage it a little bit better than we 
are doing. Now, I get the impression from talking to the panel 
that this--I think, Mr. Hubbard, you said 1986 was the earliest 
figure I heard, but 1998, the year 2000, I mean, this has been 
something that we have all been aware of, and I am a recent 
arrival, but people have been aware of for some time, so 
through several administrations, both Republican and 
Democratic, through several Congresses, both Republican and 
Democratic, so this obviously doesn't become a partisan issue 
or an issue that is isolated to one administration, but I would 
just ask, since there is so much familiarity with it over time, 
what--we have a relatively new FDA Commissioner, Dr. Crosse, 
have you spent time talking to Dr. von Eschenbach about this?
    Ms. Crosse. I have not.
    Mr. Burgess. OK. Mr. Nielsen, what sort of interplay have 
you and Dr. von Eschenbach had on this issue? Have you brought 
this to his attention and some of the previous suggestions that 
were out there, from 2000?
    Mr. Nielsen. No, I have not.
    Mr. Burgess. OK. And, Mr. Hubbard?
    Mr. Hubbard. I was trying to describe how the Commissioner 
is juggling so many priorities, and when there is not funding 
to deal with them effectively, some things fall away, and I 
think imports has been one, historically, that has not been 
able to rise to the top for funding. Perhaps, as a result of 
some of your work this year, that will change.
    Mr. Burgess. And, Mr. England, have you talked with Dr. von 
Eschenbach about this?
    Mr. England. I had the pleasure of meeting him for the 
first time today.
    Mr. Burgess. Well, he is right behind you, so I urge you to 
get his card and do talk to him about this, because it is 
clearly important, and clearly, legislation is going to be 
developed, not from this subcommittee, but out of our full 
committee, and it is important that we get it right on just so 
many levels, the safety level now and how we monitor and 
maintain the system decades into the future. So I yield back, 
Mr. Chairman.
    Mr. Stupak. Well, thanks, Mr. Burgess. Now you see why it 
is so important to have Dr. von Eschenbach for all these panels 
that they can direct----
    Mr. Burgess. But I was trying to make sure we make good use 
of his time----
    Mr. Stupak. As you were saying earlier this morning----
    Mr. Burgess. This morning, and I wanted to draw that in.
    Mr. Stupak. Mr. Whitfield, questions? I am going to ask a 
few more, and if you want to go back to the mike, we will go 
back for a couple more questions. If I may, Mr. England, you 
talked about, I think it was page 19 of your testimony, about 
the Bioterrorism Act that we passed, I think it was in about 
2002, and it came out of this committee, I know that, and you 
mentioned food, but we don't have drug imports in there? And 
that should be amended?
    Mr. England. The provision that I was speaking about is a 
provision that requires the agency to design and implement 
information technology systems related to imported food that 
will assist the agency in allocating its resources where the 
greatest risk of, in that case, intentional adulteration of 
food. But one of the elements there, also, was to facilitate 
the importation of food that is in compliance with the Act, and 
I perceive that as being really the opposite side of the risk 
coin. There is a tremendous amount of product that is out there 
that is safe. The difficulty is knowing which is which. I mean, 
to go to the issue of the fact that the domestic manufacturers 
do screening, that is true, but that is different than saying 
that therefore we are safe. And so the opposite side of the 
risk coin is that where industry can demonstrate that they are 
in compliance with GMPs in the case of the drug industry, that 
product should be facilitated. That provision, though, is 
restricted to imported foods. It doesn't cover drugs, devices, 
or any other commodities regulated by FDA.
    Mr. Stupak. In questions of Mr. Walden, based on this 
newsletter from U.S. Food and Drug Administration, FDA, on 
Ensuring the Safety of Imported Products, we were kicking 
around the numbers. It was 30,000 out of 18 million that they 
look at each other, and I think you said it was about 10 
percent related to drugs, so even if you gave the figure of 
30,000 to use, FDA analyzes about 30,000 import product samples 
annually. Even at 10 percent, or 1.8 million, that is only like 
two percent, if my math is correct, 30,000 into 1.8 million. 
That is only, like, about two percent, then, correct?
    Mr. England. Well, 20,000 of that 30,000 would be foods, so 
you are really talking about 10,000 out of 1.8 million.
    Mr. Stupak. So it is probably----
    Mr. England. We are assuming the balance are all drugs, 
which I don't think they would be. They would be biologics and 
other products.
    Mr. Nielsen. And, Mr. Chairman, I would expect the majority 
of those drug samples to be from activities at the 
international mail facilities.
    Mr. Stupak. So the figure might be closer to 20 percent of 
one percent of drugs.
    Mr. England. You are beyond me in your math.
    Mr. Stupak. I am beyond myself, too. That is why I am 
asking you.
    Mr. England. I think to Mr. Nielsen's point, though, there 
also is that, let us say for the sake of discussion that it is 
5,000 to 7,000 of the--30,000. Probably a large percentage of 
those are inspections conducted by folks at FedEx or UPS or an 
international----
    Mr. Stupak. For Customs, or whatever it may be.
    Mr. England. Looking at very, very small packages that 
Customs happens to kick out. In other words, not 30 metric tons 
of product coming in. Probably a good percentage of even the 
drug inspections would be related to that.
    Mr. Stupak. But then it gets to the point I was trying to 
make. If it is only one percent of the food that we are 
inspecting, drugs are far less than that one percent, then, of 
the drugs coming in here, so it is a problem, not just against 
drugs from foreign countries, but also food, drugs. I mean, we 
got a serious problem here. And it seems to lie with the 
databases, at least that is where we should start. Mr. Nielsen, 
there is a new program. Can you explain a little bit? I think 
it is called Predict, that is used for seafood? And that got 
funded through an earmark, correct?
    Mr. Nielsen. Yes.
    Mr. Stupak. A congressional earmark that everyone is 
against right now but this was an earmark that was actually put 
in. That is how it got funded at the FDA. Can you explain this 
a little bit more to me? How would it relate here to drugs?
    Mr. Nielsen. Yes, and it actually also falls into some of 
the low-hanging fruit of the ISP that was implemented. But the 
Predict model is being piloted or at least was being piloted, I 
believe in Los Angeles, for the seafood industry. I was program 
manager for the development while I was Director of Import Ops, 
which is why I know about it. But what it really does is it 
starts to integrate information from both external and internal 
sources. It actually learns the risk posed for imports based on 
a variety of data points and will assist the entry reviewer in 
deciding which of the riskier shipments to do the examinations.
    Mr. Stupak. Thank you. Mr. Burgess, do you have any further 
questions before we let this panel go?
    Mr. Burgess. Yes, I do, Mr. Chairman. Thank you for coming 
back to me. Just to follow up on my last thought before we got 
cut off, I mean, we have all been fairly intense in our 
criticism of the FDA, which is fair. The Commissioner of the 
FDA has been in his position since December of last year, so 
not quite a year. Mr. Hubbard has already correctly alluded to 
the fact that there is lots of things going on at the FDA, lots 
of different things to juggle, so it is fair to criticize the 
FDA, but at the same time if we have got constructive 
solutions, and it sounds like we have had those, at least been 
thinking about those for at least 20 years, so, I mean, again, 
I just concur it was a great panel, but I encourage you to 
follow up with Dr. von Eschenbach, and let us talk about these 
and explore them. Don't, you know, don't leave it to us to 
write the Law by, you know, a vacuum, because I don't think we 
will do a very good job. So we count on your input, and we 
count on that input being delivered to Dr. von Eschenbach, so 
in turn the agency can help us help the agency. Now, on the 
issue, Mr. Hubbard, you mentioned human tissue at one point, I 
think, in your discussions. Is that correct?
    Mr. Hubbard. Right. Well, that is just one of many, many 
things that have popped up in recent years that needed 
attention, got some, but then drifted away.
    Mr. Burgess. Well, it got my attention when you said it, 
because obviously there have been some fairly disturbing, even 
macabre, stories in the news in this country about some 
practices with dealing with human tissue that I found very 
disturbing. Are we importing human tissue products from 
overseas?
    Mr. Hubbard. When I was in it, there was some. We did a 
sting in which a Romanian gentleman was selling us the body of 
a Russian gentleman who had apparently died in the street, and 
he died of AIDS, and he was selling his whole body to us and 
shipping it via the airlines flight that day. So, I mean, it 
was that kind of example that caused the Commission at that 
time to put in place some rulemaking and beef up regulation. 
The problem is, the funding was never there, in my opinion, to 
really have a permanent program to inspect tissue banks to make 
sure they were following proper procedures.
    Mr. Burgess. Is that likely to still be continuing today, 
as we have seen this advance in globalization and all the other 
pressure put on the drugs, the toys, the food imports? Is it 
likely to be additional pressure put on----
    Mr. Hubbard. I don't know exactly what is going on out 
there now, but I can't imagine the FDA has sufficient resources 
to adequately inspect all of that industry.
    Mr. Burgess. Well, Mr. Chairman, I know that is beyond the 
scope of this hearing, but I would encourage this committee to 
very seriously consider--for some time I have thought that we 
ought to look at the use of human tissue that originates in 
this country. I had no idea, no idea that there was the 
possibility that there is human tissue coming from outside. And 
Mr. Hubbard correctly alluded to some of the problems there, 
and if there is lack of quality in the active ingredients in a 
Lipitor pill, goodness knows, we want that quality assurance 
for people who are going to have human tissue grafted or 
implanted. One last thing, Mr. Nielsen, on the good 
manufacturing practice, it seems like that would affect the 
whole debate of re-importation. That is, if we want good 
manufacturing process, and we are crying out for more 
inspections and more funding for the FDA to do more inspections 
and move that chart graph that we saw, so that that blue area 
becomes as a greater and greater footprint, but then we have 
people in Congress today who are arguing for, hey, we can get 
cheaper drugs if we just allow re-importation from Canada, and 
of course the supply chain then comes from who knows where, so 
it almost seems as cross purposes to argue for improvement of 
good manufacturing processes and at the same time argue for re-
importation Laws. Am I missing something?
    Mr. Nielsen. If the two are not connected, absolutely.
    Mr. Burgess.  Well, just by definition, or at least the 
legislation I have seen offered for re-importation, it doesn't 
really seem to have a lot of control. It just says, from 
Canada, and we have all seen the reports that what looks like a 
maple leaf might in fact be an insignia of some other country 
and, as someone said, from the darkest corners of the world. So 
if we embrace re-importation wholeheartedly, again, as some 
people have suggested, and that is a bipartisan issue. I am not 
putting that in anyone's theme in particular, but we know who 
has been arguing for that pretty forcefully for some time, 
basically that ends all product testing, does it not?
    Mr. Nielsen. Yes, and I have to say, on the GMP, the 
principle of the GMP is it is going to prevent the entry--it is 
really going to contribute, but it is the whole process, from 
the application process for the prescription drugs, to the 
post-surveillance process, including adherence to the GMPs. If 
you don't have the whole picture, you are just adding risk to 
it, and I have to give an example. This is not just a finished 
drug issue. The industry that is overseas are also finished 
product manufacturers. There is even less oversight of the 
ingredients going into the finished products overseas. At least 
here, when the APIs or the ingredients come in, it is not going 
to a black hole. We know where it is going. It can be checked. 
There is a warehouse. There is a facility to go to, and there 
is a process for checking potency, identity, and certificates 
of analysis, and it is not an issue of waiting for more bodies 
to show up. The med watch, the adverse events are not 
necessarily going to say everything is going to be OK unless 
there is an adverse report here. The carbamazepine scenario 
experience that I painted in my written testimony is a good 
example where the products going into the formulation have a 
potential adverse effect if it is not in compliance with both 
the application and the GMPs governing that manufacturing 
process. The good thing about the carbamazepine is if it didn't 
work, carbamazepine is an anti-convulsant drug. If it didn't 
work, the epileptics were seizing. You could see it.
    Mr. Burgess. So the bio-assay was positive.
    Mr. Nielsen. On the other hand, if a drug, like gentamycin, 
is knocking your kidneys out, you are not necessarily going to 
see it. And you are not necessarily going to know that it is 
not doing what it is supposed to do. I believe generally the 
public, all of us, have kind of been trained, if something 
doesn't work, something is wrong in my metabolism that caused 
that drug not to work. Well, maybe yes, maybe no. And what we 
are trying to do is say that there is a way to minimize the 
risk from that drug that is supposed to help you.
    Mr. Burgess. I thank you for that. It was very 
illuminating. Mr. Chairman, I do just need to mention, I think 
I mentioned a drug by brand name, and I was using that only for 
the purposes of illustration. I have no knowledge that that 
drug of that brand name even is manufactured in China. So I 
apologize for that oversight. I was simply trying to make a 
point, and I yield back.
    Mr. Stupak. You have an 80 percent chance of being correct. 
Dr. Crosse, thank you, and thank you to your staff for pulling 
everything together quickly. I know you are going to continue 
your work, and this committee and subcommittee appreciate it. 
To our panel, thank you very much. Both sides, everyone has 
been saying what a great panel. We could go round and round on 
questions, but we do have two other panels. But thank you for 
your time. Your 80 years of experience with the FDA certainly 
helped us out here today. Thank you very much. I will dismiss 
this panel, and we will move to our second panel of witnesses.
    Mr. John Dubeck, the partner in the law firm of Keller and 
Heckman, as well as counsel to the Bulk Pharmaceutical 
Taskforce at the Synthetic Organic Chemical Manufacturers 
Association; Mr. Bruce Downey, chairman and CEO of Barr 
Pharmaceuticals and chairman of the Generic Pharmaceutical 
Association; and Mr. Guido Villax, the immediate past chairman 
of the Pharmaceuticals Business Committee and member of the 
Board of Directors of the European Fine Chemicals Group. 
Gentlemen, would you all come forward? It is the policy of this 
subcommittee to take all testimony under oath. Please be 
advised that the witnesses have the right under rules of the 
House to be advised by counsel during their testimony. Do any 
of you wish to be accompanied by counsel? All witnesses 
indicate no, so I ask you, raise your right hand, take the 
oath, please.
    [Witnesses sworn.]
    Mr. Stupak. Let the record reflect the witnesses answered 
in the affirmative. They are now under oath.
    Mr. Dubeck, we will begin with you, with your 5-minute 
opening statement, please, sir.

TESTIMONY OF JOHN DUBECK, PARTNER, KELLER AND HECKMAN, LLP, AND 
   COUNSEL, BULK PHARMACEUTICAL TASKFORCE, SYNTHETIC ORGANIC 
               CHEMICAL MANUFACTURERS ASSOCIATION

    Mr. Dubeck. Mr. Chairman, and members of the subcommittee, 
on behalf of the Bulk Pharmaceutical Taskforce and the 
Synthetic Organic Chemical Manufacturers Association, SOCMA, I 
thank you for this opportunity to testify on two key points. 
First, the current system for regulating imported drugs is 
putting American consumers' health and safety at risk. Second, 
there is a solution; more frequent and in-depth inspection of 
the foreign facilities making these drugs.
    The Bulk Pharmaceutical Taskforce submitted a citizens' 
petition to FDA in January of last year, outlining the risks 
associated with imported drugs and providing suggested 
solutions. These risks have been well highlighted already, and 
I will not repeat them. We are disappointed that we have 
received no substantive response from the agency.
    The drug manufacturing industry today is structured vastly 
different than it was 30, 20, or even 10 years ago. No longer 
are drugs primarily manufactured in-house by the major 
pharmaceutical companies. Rather, these companies have 
increasingly turned to outsourcing their ingredients and 
sometimes even the finished product. The suppliers of these 
outsourced products are overwhelmingly foreign manufacturers. 
FDA is required to inspect domestic drug establishments every 2 
years. These inspections are unannounced, and a single 
inspection can extend over many weeks and may involve many 
separate visits. And I might add that on subsequent visits at a 
given inspection an inspector may call in other experts in 
specialties to assist in observing something that is seen 
during the first part of an inspection.
    This is no comparable obligation on FDA to inspect foreign 
facilities. Since FDA must be invited to perform its official 
duties on foreign soil, a foreign facility always receives 
several weeks' notice of an impending inspection, and the 
length of the inspection is typically driven by travel 
schedules, rather than the compliance status of the facility, 
and it is impossible to bring additional expert investigations 
to review specific issues. As a practical matter, a foreign 
manufacturer is unlikely to be inspected for cGMP compliance, 
except in the context of a pre-approval inspection. If you 
wish, I can explain later the difference between pre-approval 
inspections and cGMP inspections and why the former is of 
little value in assuring the ongoing quality and purity of 
imported drugs.
    If routine cGMP inspections are unlikely to occur, it is 
very tempting for management to put a low priority on 
maintaining cGMP compliance. Statistics presented at a cGMP 
conference in 2005 indicate that cGMP inspections of foreign 
firms result in significantly more violations than seen in 
domestic firms. When comparing data solely from pre-approval 
inspections, the same discrepancy is seen. Deviations from cGMP 
were more serious in foreign facilities than in U.S. 
facilities. These numbers cry out for FDA to conduct more 
frequent inspections of foreign facilities. They also 
underscore that the frequency of foreign cGMP inspections is so 
low that managers of foreign facilities have apparently made 
the business decision to spend less time, attention, and money 
on ensuring that their drug manufacturing operations comply 
with cGMP than is necessary to assure compliance.
    A dramatic and drastic overhaul of FDA's approach to the 
risk posed by foreign manufactured drugs is long overdue. The 
manufacturing side of the pharmaceutical industry has changed 
substantially, and yet FDA's allocation of inspection resources 
remains unchanged from an earlier era. In order for FDA to give 
cGMP inspections of foreign facilities the priority it 
deserves, the Bulk Pharmaceutical Taskforce proposed that FDA 
do three things. FDA should abandon its policy of prioritizing 
domestic and foreign facilities separately for inspection. FDA 
should rank domestic and foreign facilities together, based on 
the risks that the products from each facility pose to the 
American consumer. If there are 100 foreign facilities with 
higher risk profiles than the highest-ranked domestic firm, the 
American consumer is ill-served unless those 100 foreign 
facilities are inspected before the domestic firm.
    Foreign sites, particularly those owned by U.S. companies, 
would welcome more inspections of all foreign sites. This will 
only happen if FDA is required to have comparable inspection 
frequency for domestic and foreign facilities.
    The U.S. market for pharmaceuticals is large and lucrative. 
FDA's recent action to restrict imported vegetable protein 
unless and until it could be shown to be free of melamine is 
evidence of its broad authority to prohibit the importation of 
products that appear to be adulterated. Furthermore, this is 
where FDA has an enforcement advantage with regard to foreign 
facilities versus domestic. It has no need to prove in an 
enforcement action that a product is adulterated. Imported 
products can be refused admission if they merely appear to be 
adulterated.
    A second proposal is that FDA should consider a facility's 
foreign status per se as a risk factor in its risk-based 
inspection program. As I noted earlier and explain in greater 
detail in attachments to my written presentation, all 
statistics indicate that drugs sourced from foreign facilities 
pose greater risks to America's public safety. When a facility 
is inspected infrequently there is a natural tendency for 
management to become complacent. Maintaining cGMP compliance 
requires constant effort and vigilance, and it is a well-
traveled road from minor deviations to serious quality 
failures.
    Importantly, even if FDA conducts more frequent inspections 
of foreign facilities, we believe an additional risk factor 
should still be assigned for foreign facilities. As a practical 
matter, any inspection that provides prior notice, is 
constrained by travel arrangements, and suffers from the 
communications problems inherent when dealing with 
documentation that is in a foreign language while using a 
translator provided by the facility, is bound to be less 
effective than an unannounced inspection of indeterminate 
duration, conducted in the investigator's native tongue.
    The Bulk Pharmaceutical Taskforce's third request is a 
stopgap measure that FDA could implement before it has the 
resources to conduct adequate foreign inspections. It could 
actively test and monitor the impurity profiles of active 
pharmaceutical ingredients produced in facilities that FDA has 
never inspected.
    Allow me to elaborate here. New drugs require prior 
approval. Pre-approval inspections are part of that prior 
approval process, but not all drugs are new drugs. Drugs that 
are not new drugs do not require prior approval and do not 
require a pre-approval inspection. These are the facilities 
that are likely to never have any inspection, not a GMP 
inspection, not a pre-approval inspection. Further, there have 
been many prescription-to-over-the-counter switches in the past 
few years. One of the earliest of those switches was ibuprofen. 
In August 2002, FDA proposed to move ibuprofen from new-drug to 
not-new-drug status. In response to the Chairman's question 
about behind-the-counter drugs, and are we just moving more 
drugs into a non-approved status, the issue is really not 
whether it is Rx, OTC, or behind-the-counter, the issue is 
whether it is a new drug that at least has a prior approval 
inspection, or a not-new drug. And FDA's proposal would move 
more drugs into this uninspected, not-new-drug category.
    To be sure, testing and monitoring would be a poor 
substitute for onsite inspections, but given budget and 
staffing considerations it would be a great improvement 
compared to doing nothing. Just as a stopped clock is correct 
twice a day, a non-GMP-compliant facility will periodically 
produce drugs that meet specifications. It is reasonable to 
assume that foreign manufacturers with sub-standard cGMPs will 
cherry pick production lots and ship to the U.S. only 
ingredients that meet specifications. When different batches of 
products coming from the same facility have significantly 
different impurity profiles, it is reasonable to conclude that 
they did not come from a process that is in control.
    Mr. Stupak. Mr. Dubeck, I am going to have to ask you to 
wrap it up here, please.
    Mr. Dubeck. Just that if FDA observes through monitoring of 
variable impurity profile, it could refuse admission on the 
basis that the products appear to be adulterated. We sympathize 
with FDA's resource limitations, but it is imperative that 
foreign manufacturing facilities be inspected at the same rate.
    In closing, I note that although there are many economic 
factors that have resulted in nearly half of all drugs marketed 
in the U.S. being produced in foreign facilities, the fact that 
such production attracts less aggressive FDA oversight surely 
contributes to the trend. On behalf of SOCMA and the Bulk 
Pharmaceutical Taskforce, I thank you for your time and 
attention to this serious matter. I will be happy to answer 
questions.
    [The prepared statement of Mr. Dubeck follows:]
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    Mr. Stupak. Thank you, Mr. Dubeck. Mr. Downey, please, for 
opening statement. Your full statement is in the record, so if 
you could summarize and keep it to five minutes, we would 
appreciate it.

       TESTIMONY OF BRUCE DOWNEY, CHAIRMAN AND CEO, BARR 
  PHARMACEUTICALS, INC., AND CHAIRMAN, GENERIC PHARMACEUTICAL 
                          ASSOCIATION

    Mr. Downey. Yes, thank you, Mr. Chairman. I am Bruce 
Downey. I am Chairman and CEO of Barr Pharmaceuticals. Barr 
produces hundreds of prescription drugs here in the United 
States and Europe, both brand and generic, both finished goods 
and APIs, so I think we have a broad range of experience that 
is relevant to the committee's consideration today. In fact, in 
the U.S., we market nearly 5 to 6 billion tablets a year, so we 
have quite a bit of experience. I am also chairman of the GPhA, 
which is a generic trade association which represents companies 
that produce over 95 percent of the generic pharmaceuticals 
sold in the United States.
    And I would like to comment on one part of the testimony 
earlier this morning. I think it is not correct to say that you 
can't buy products that aren't made in China. I mean, if you 
look at the largest members of our association, Barr, Watson, 
Teva, Mylan, Sandoz, none of those companies make finished 
goods in China, and the overwhelming majority are made either 
in the United States or Europe or Israel. So I think that part 
of the testimony wasn't correct.
    But it is important to testify today on the committee's 
issue of FDA foreign inspections, and I think one thing is 
clear to me, and I think it was clear to the panels before me, 
that there is no justification for having fewer inspections of 
foreign facilities than we have of domestic facilities. And I 
say that as someone who is responsible for both. They pose 
equal risks. There just simply is no justification for that.
    The question I think is most important is what is the 
appropriate level of oversight, and what are the different 
kinds of risks we are trying to manage? And I think there was 
some confusion this morning in testimony about two very 
different kinds of risks that require two very different kinds 
of responses. One risk is, in terms of number of incidents, is 
quite small. That is the risk of counterfeit. Compared to 
lawfully produced drugs, it is a quite small amount, but it is 
also the group that proposes the greatest risk. And inspection 
is not the answer to counterfeit drugs. People who make 
counterfeit products don't register their facilities in the 
database at FDA, the 6,000 or 3,000-firm database. They try to 
avoid detection, so the response for counterfeiting is to 
discover the counterfeiter and put them out of business. I 
mean, inspection is really not the issue. And the second issue 
is how do you review the compliance of lawful manufacturers, 
who have registered with the FDA, who have gone through the FDA 
approval process, and what is the appropriate role of 
inspection in monitoring their compliance with their overall 
commitments?
    I think that, first and foremost, we have to allocate the 
amount of resources necessary to ferret out and put 
counterfeiters out of business. They pose the greatest risk, 
and that isn't necessarily foreign inspectors so much as 
investigators, the criminal investigation group at FDA, 
international law enforcement authorities, and I think there we 
need to provide whatever resources are necessary to make sure 
that risk is completely covered.
    If you look at the second risk, the risk posed by FDA-
regulated companies, I think today Mr. Hubbard mentioned, and I 
think he is right, we have an incredibly safe system. We have a 
system because testing and inspection is only one very small 
component of the overall FDA-regulated process. Now I would 
just like to go through it for you so you get a sense of how 
comprehensive it is.
    In the development area, for example, we inspect all of our 
raw material suppliers' active ingredients before we even take 
in samples. Once we receive the samples, we work with the raw 
material manufacturers developing appropriate specifications 
for that compound, which are incorporated into our section of 
either the NDA or the ANDA file at FDA, and our raw material 
supplier incorporates that in the DMF, which is filed with the 
FDA. Those specifications and all the other components of the 
application are reviewed and approved by the FDA, and our 
commitment is to manufacture our products in conformity with 
those specifications and the processes that are part of our 
application.
    Once the application is approved, and we continue to market 
the product, we routinely inspect our raw material suppliers, 
on average about every 3 years. We have a staff of 12 
inspectors, covering the globe, inspecting our raw material 
suppliers, and they are supported by support staff and the 
like. So we do that self-policing, and FDA expects us to do 
that self-policing. I think it is different in the toy industry 
or other kinds of industries. That is the requirement of part 
of our obligation to be in FDA compliance, and we take that 
very seriously.
    And once we are in production, as we receive lots of raw 
material, we receive a certificate of analysis from our 
producer, and we retest that lot so that we confirm the test 
results obtained by the raw material supplier, and then as that 
raw material is incorporated into finished goods, it is tested 
in process, and it is tested as finished good release and 
ultimately tested on stability to ensure that it remains potent 
through its shelf life. So there is an enormous amount of 
testing in the Rx system that ensures that products that we 
sell and present to consumers meet the requirements that we 
have in our applications.
    And then once we get into post-marketing, we have to 
monitor adverse events, we have to investigate complaints we 
receive from pharmacists, physicians, patients. We conduct 
annual reviews on all of our products which analyze the test 
results of all the batches from the previous year, compare them 
with batches from years before that. We look at any complaints 
we have received and the adverse events. So we have a 
comprehensive review on each, individual product to satisfy 
ourselves that the product is being made safely and 
appropriately.
    So I think in terms of inspections in the United States, we 
have five production facilities, and we have had seven 
inspections, GMP inspections, in the last 18 months. If you 
look abroad, I think you heard the testimony today, it is far 
less frequent, and I think the key element that I would like to 
leave you with is there is just simply no justification for 
that. I think that we have a very safe system because of all 
the safeguards built in. Inspections are one component, but not 
even the most important component of that system. It is 
important, but it should be spread evenly across the globe.
    I would say that, if I were in charge of the overall 
inspection program and I heard the testimony today, I would 
tomorrow morning reallocate resources that were being used to 
inspect domestically to foreign inspections, because there is 
no justification for that disparity, and I would then try and 
work to get the additional resources to have all the facilities 
inspected at the frequency that we thought would be 
appropriate. And I think there are different ways to raise 
those resources. One is the direct appropriations. Second is 
through a user fee program that could be expanded to generic 
products and to raw material suppliers. And then third is your 
legislation, Mr. Stupak. I would think that is a way to raise 
the funds. I don't think it is probably the preferred way, and 
I would suggest that the focus not be on further testing of the 
material but in developing the infrastructure that was 
described this morning, the computer systems to monitor 
products as they move through the system, and ultimately to 
have enough inspectors to conduct the frequency of inspections 
you would like to have both here and abroad.
    Just one last point, I think there is no justification 
either for having a different standard for OTC products and Rx 
products. We are generally in the Rx business, but people take 
products either way, and I think they pose similar risks and 
should be similarly treated.
    [The prepared statement of Mr. Downey follows:]
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    Mr. Stupak. Thank you, Mr. Downey.
    Mr. Villax, I understand you came from Europe to be with 
us, and we appreciate that. Thanks for being here, and we look 
forward to your testimony. If you would begin, please. Make 
sure your mike is on.

      TESTIMONY OF GUIDO VILLAX, IMMEDIATE PAST CHAIRMAN, 
  PHARMACEUTICALS BUSINESS COMMITTEE, MEMBER OF THE BOARD OF 
  DIRECTORS, EUROPEAN FINE CHEMICALS GROUP, BRUSSELS, BELGIUM

    Mr. Villax. Thank you. Good afternoon, Chairman Stupak, 
Ranking Member Whitfield, and members of the House Subcommittee 
on Oversight and Investigations. Thank you for inviting the 
European API industry to testify on the FDA's foreign 
inspection program. I am here in representation of the European 
Fine Chemicals Group. I am Guido Villax, chief executive of 
Hovione, a producer of APIs based in Portugal, present in China 
and in the U.S.A. Hovione was founded by my father 50 years 
ago, so it has been about 40 years that I have had a front seat 
watching changes in the pharmaceutical industry.
    The European Union, like the U.S.A., has rules in place to 
assure that the active pharmaceutical ingredients used to make 
medicines meet cGMPs to assure that each medicine is identical 
to the product approved by the health authorities. Last 
century, medicines were either patented or branded and were 
manufactured mostly in the West, in-house, and in compliance 
with GMPs.
    The world has changed. Today, driven by the demand globally 
for lower healthcare costs, off-patent medicines make up the 
majority of pharmaceuticals we consume. 80 percent of the API 
volume used to make EU medicines comes from abroad, and not 
everyone is playing by the rules. This is putting the safety of 
our citizens at risk. Globalization has resulted in the 
emergence of off-patent API production in the low-cost 
economies where regulations and GMP requirements are very 
limited compared to those in the EU. More complex and 
fragmented supply chains increase the potential for 
contamination, mislabeling, or substitution of one substance 
for another, all of which increases the risk to patients.
    Unprecedented pressure on prices and profit margins drive 
generic and OTC companies to buy formulations and APIs at the 
lowest cost, sometimes from API plants that have never been 
inspected by any health authority from the EU or the U.S. This 
pits quality and ethics against profits, in an uneven fight. 
Without enforcement, the least scrupulous operator wins. In 
this new world, the West no longer produces the antibiotics 
that fight anthrax. The compliant industry has to meet ever 
growing, tougher regulations that add 25 percent to the cost. 
This makes cGMP-compliant plants uncompetitive versus non-
compliant ones.
    The EU regulatory framework has not kept pace with these 
dramatic changes. The lack of effective oversight, inspection, 
and no enforcement by the authorities has encouraged non-
compliant, illegal trade, including the importation of APIs 
into the EU, mainly from Asia, via certain brokers and traders. 
This allows them to offer lower prices from a non-compliant 
cost base and to import substandard, often counterfeit APIs 
with a low chance of being caught. Oddly, the EU inspects API 
plants based on proximity, not risk. In a year, European 
authorities may inspect 30 to 50 API plants in Asia, when Italy 
or France inspect a greater number in their own country alone. 
The few foreign inspections by the European Directorate of 
Quality of Medicines, EDQM, tell us something is broken. All 
the suspended approvals resulting from inspections were related 
to production in Asia. None were in the EU. All approvals that 
were withdrawn by EDQM related to filings in the name of 
middlemen. Some of the suspended approvals are of APIs for old 
OTC drugs that could well be exported to the U.S.A. and those 
facilities FDA would not have inspected. Some of the suspended 
approvals and FDA warning letters seem to be related to API 
producers that receive support from middlemen.
    Last month, EFCG asked the European Commission to improve 
the oversight and enforcement of the regulations for APIs by 
increasing inspection resources and enforcement sanctions by 
adopting some of the systems that the U.S. FDA has in place and 
that here have been quite strongly criticized, but I would like 
to emphasize that we don't even have those in Europe. And the 
last thing we recommended to the European Commission is that 
they should take the leadership to regular middlemen and to 
seek international cooperation between agencies around the 
world.
    Several supranational bodies, the European Parliament, the 
USP, and the WHO have recently recognized that more inspections 
are key to stop non-compliant APIs from reaching the market. 
Unscrupulous players cannot be allowed to take advantage of 
uncoordinated jurisdictions that allow them to escape by 
crossing the State line. The generics and the OTC medicines 
that the world needs cannot continue to be regulated by 20th-
century structures and resources. The answer lies in more, but 
especially smarter, enforcement and the global cooperation of 
national medicines agencies. Thank you.
    [The prepared statement of Mr. Villax follows:]
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    Mr. Stupak. Thank you, Mr. Villax, for your testimony. I am 
going to start with questions. We will start with the chairman 
of the full committee, Mr. Dingell, for questions, please.
    Mr. Dingell. Mr. Chairman, I thank you for your courtesy. 
Mr. Villax, yes or no, isn't it true that in some places like 
China and India basic clean water and sanitation are major 
problems?
    Mr. Villax. I think that, absolutely, yes. However----
    Mr. Dingell. Doesn't this then mandate that a higher level 
of care with regard to products of those countries, especially 
with regard to inspection of plants there, should be one of the 
guidelines of the United States' policy with regard to imported 
foods and drugs?
    Mr. Villax. China has made tremendous progress.
    Mr. Dingell. But the progress isn't enough. They have still 
got lots of dirty water, polluted air, major problems with 
sanitation and health over there. And doesn't require us to 
engage in much more careful inspection of products that are 
manufactured there? Yes or no.
    Mr. Villax. Yes.
    Mr. Dingell. OK. And thank you for that. I don't mean to be 
discourteous, but I have got 5 minutes, 1 minute of which is 
now gone. Now, gentlemen, these questions. Dr. Dubeck, isn't it 
true that nearly half of all drugs marketed in the United 
States are produced or manufactured in foreign facilities and 
that that number is increasing?
    Mr. Dubeck. Those are statistics from FDA and GAO, correct?
    Mr. Dingell. Isn't it a fact that cGMP inspections of 
foreign firms result in significantly higher violation levels 
than are seen in domestic firms?
    Mr. Dubeck. That is what was reported at the Georgia GMP 
conference, correct?
    Mr. Dingell. Isn't it fair to say that foreign firms 
generally pose a greater risk with regard to quality and safety 
to consumers than do domestic firms?
    Mr. Dubeck. I think that necessarily follows from the 
above.
    Mr. Dingell. Now, Mr. Downey, do you agree that the current 
imbalance between foreign and domestic inspections places U.S. 
domestic firms at a competitive disadvantage?
    Mr. Downey. In some ways, yes. Other ways, no.
    Mr. Dingell. In other words, we have got to meet high 
standards, and they don't.
    Mr. Downey. That is true, but it is also more difficult to 
get a pre-approval inspection for a product as a foreign 
manufacturer, so you are at a competitive disadvantage because 
you are inspected less frequently.
    Mr. Dingell. And they can slip bad stuff in here, and get 
away with it and American firms can't?
    Mr. Downey. I don't believe bad stuff is being slipped into 
the country. I don't think that is so.
    Mr. Dingell. Well, let us see about what the findings of 
this committee might be on that particular point. Now, do you 
think that it would be beneficial to have FDA open offices in 
those parts of the world that are significant exporters of 
production to the United States of prescription 
pharmaceuticals?
    Mr. Downey. I think there should be parity in inspections, 
and that is one way to increase the inspections in Asia. Yes, 
sir.
    Mr. Dingell. Now, Mr. Downey, isn't it true that if a 
facility is not inspected frequently, the safety of drugs 
coming from that plant could be affected?
    Mr. Downey. Could be, but not necessarily would be.
    Mr. Dingell. But there is a better chance if they are not 
inspected than if they are.
    Mr. Downey. The inspection of the facility is one component 
of a very comprehensive regulatory system, and----
    Mr. Dingell. And it encourages good behavior and a right 
conscience, does it not?
    Mr. Downey. I think responsibility of what we are doing 
encourages behavior, and that is the basis----
    Mr. Dingell. Now, isn't it fair to say that as long as 
FDA's foreign drug inspection program is so poorly funded and 
its IT systems in disarray that our medicine supply is at risk?
    Mr. Downey. I believe we need better foreign inspections, 
more resources in that area, yes.
    Mr. Dingell. Good. Mr. Villax, you had a comment.
    Mr. Villax. Yes, I think that there has been a lot of 
emphasis that we need more inspections, and I agree, but the 
fundamental impact of inspections is deterrence, and this is 
what is needed. You ought not to have areas of the industry 
that get zero inspections. You ought to have them spread out 
and probable. That is what causes the drive for compliance, and 
this is where Europe is catastrophically weak.
    Mr. Dingell. Gentlemen, you can have inspections at the 
point of entry, you can inspect for efficacy and safety here, 
but you also have to inspect or you have to have knowledge of 
whether good manufacturing practices are carried forward in the 
country of origin, and also whether or not the different 
components that are exported here or the components that are 
included in that country are in fact safe. Is that not true?
    Mr. Villax. In fact, you must absolutely check the process.
    Mr. Dingell. And not only the process but the components.
    Mr. Villax. Well, I was talking from an API perspective. 
When you make the active ingredient, you obviously have some 
accepted sources or approved sources of raw materials, but you 
need to make sure that it is GMP compliant, and you need to 
make sure it is regulatory compliant. What I mean by this is 
that you have to check two things. One, that you follow good 
manufacturing practices.
    Mr. Dingell. Yes.
    Mr. Villax. The other thing is that you need to do what you 
have put in your filing. In other words, the inspectors need to 
make sure that what is in the filing in Washington is the same 
thing that actually is taking place in the plant. Because that 
is the only way you can actually guarantee traceability and 
that what you did in your bioequivalence test remains the same 
thing year after year.
    Mr. Dingell. Gentlemen, I want to express my thanks to you. 
I apologize for being so brusque, but that clock is a harsh 
master. Thank you.
    Mr. Stupak. Now Mr. Whitfield, for questions.
    Mr. Whitfield. Thank you, Mr. Chairman. Mr. Villax?
    Mr. Villax. Villax.
    Mr. Whitfield. Villax, OK. Now, my understanding, you are 
actually the chief executive officer of a company that makes 
medicine, correct?
    Mr. Villax. We manufacture APIs, both for the generic 
industry and the innovator industry.
    Mr. Whitfield. OK. And so you import into Portugal--is the 
plant in Portugal?
    Mr. Villax. We manufacture in Portugal, and we had our 
first inspection by FDA in 1982 and export to the U.S. market. 
We also manufacture in Macao. It is in south China, and that, 
we had our first inspection there in 1987 and export into the 
U.S.A.
    Mr. Whitfield. Now, tell me again. You alluded to this a 
little bit. How would you compare the European system with our 
U.S. system as far as maximizing the safety for the consumer?
    Mr. Villax. Well, Europe has been late in bringing in 
systems that you have had for three, four, or five decades. 
Europe does not yet have a foreign inspection system, although 
the industry has been pushing them.
    Mr. Whitfield. So Europe does not have any foreign 
inspection system?
    Mr. Villax. Well, we don't have a foreign inspection 
system, but we have certain authorities around Europe that make 
a special effort to go abroad and check. We have especially 
something called the EDQM, the European Directorate for Quality 
of Medicines, that is associated to the European Pharmacopoeia, 
and they have been the agency that have tried hardest to go 
abroad. But I think the numbers that I have is that in 7 years 
they have done 80 inspections internationally, which is very 
small.
    Mr. Whitfield. In 7 years. Wow. So I know it is difficult 
to summarize this, but as bad as our system is in the U.S., I 
mean with our shortcomings, I am going to say----
    Mr. Villax. You are way ahead.
    Mr. Whitfield. We are way ahead.
    Mr. Villax. And you are the gold standard.
    Mr. Whitfield. All right.
    Mr. Villax. In other words, if GMPs were developed, with 
thanks to FDA, and Europe has been free riding on what FDA has 
been doing.
    Mr. Whitfield. Really?
    Mr. Villax. Absolutely.
    Mr. Whitfield. So despite our shortcomings, we are the gold 
standard, and Europe has been free riding with us, then. That 
is good. Now, let me ask you, you discussed in your testimony 
some of the--no, actually it wasn't you. I guess it was Mr. 
Dubeck. You discussed in your testimony some of the risks 
presented by the fact that over-the-counter drugs are not 
subject to any pre-approval barriers, especially with regard, 
and I think you mentioned ibuprofen, and how would you propose 
that FDA remedy that problem?
    Mr. Dubeck. Well, ibuprofen is currently a new drug and is 
under all of the inspection and reporting that Mr. Downey 
summarized. The FDA proposal is to make it a not-new drug. Once 
it does that, all of the additional precautions that Mr. Downey 
mentioned disappear, and all you really have left is cGMP 
monitoring. So there needs to be the same level of inspection 
of OTC facilities because even though they may not have some of 
the same inherent risk as some very new prescription drugs, 
they are consumed by the public in much larger quantities.
    Mr. Whitfield. Right.
    Mr. Dubeck. And so impurities in those products wind up 
causing much greater exposure to the American public, and there 
is no inspection.
    Mr. Whitfield. Which is hard to believe, really.
    Mr. Dubeck. Our members that make these APIs and try to 
compete also find that hard to believe.
    Mr. Whitfield. Now, the foreign establishments that produce 
these active pharmaceutical ingredients are not required by 
Federal Law to register with the FDA if their products are not 
directly imported into the U.S. Now, considering that more of 
these manufacturers are being outsourced, you would recommend 
that all the establishments be registered with the FDA?
    Mr. Dubeck. If they are--I mean, under the Law, a drug 
includes finished-dosage form and components of drugs. The 
registration requirement includes APIs, so right now 
registration is required for all the API manufacturers.
    Mr. Whitfield. Even if they are not directly imported into 
the U.S.?
    Mr. Dubeck. No, only if they are imported into the United 
States.
    Mr. Whitfield. OK. All right. Now, Mr. Villax, would you 
please describe the European Union Law that requires a 
qualified person employed by a drug company to assure the 
quality of APIs used in medicines?
    Mr. Villax. Yes, this is a very recent legislation.
    Mr. Whitfield. All right.
    Mr. Villax. It came into force in October 2005, and what 
that legislation says is, first, it is based on the fact that 
we do have now as Law something that in the industry we refer 
to as in other words, there is well-defined law that defines 
what are GMPs, and the Law that came in, in 2005, states that 
the QP, the qualified person, that is, the person that releases 
batches of finished product in the marketplace, this person has 
to make sure that they only use APIs that meet GMP. So this is 
a bit of self-regulation. In other words, Europe doesn't really 
believe in inspections, I think wrongly, and what they are 
expecting is that the QP takes personal responsibility for 
checking that the APIs meet GMP, and how this QP is expected to 
meet these obligations is by developing a close relationship 
with the producer of API. Like Mr. Downey said, he has a team 
of six auditors that go round the world producing audits so 
that the QP is expected to have audit reports that satisfy him 
that the producer of the API meets the GMP.
    Mr. Whitfield. And are there significant sanctions if a 
company improperly assures the quality of the API?
    Mr. Villax. I have written a couple of articles that 
compare or that say that the liability of the QP is 
substantially lower than that of a CPA that signs off a balance 
sheet. In other words, shareholders are better protected than 
patients, and one of the requests that we have made to the EU 
Commission is that they have to somehow come up with personal 
liability for the QPs, because otherwise we have the purchasing 
department fighting with the quality unit.
    Mr. Whitfield. Right.
    Mr. Villax. And we all know who is going to win.
    Mr. Whitfield. Thank you very much.
    Mr. Stupak. Mr. Inslee, for questions.
    Mr. Inslee. Thank you. To put it in the vernacular of the 
peasantry, this is a fine kettle of fish that we have got. 80 
percent of our active ingredients coming in from imports. It is 
doubling the amount every 5 years, and we find out we just 
don't have a meaningful inspection protocol. It is most 
troublesome, and I just want to ask if my understanding is 
correct that we are proposing that that actual situation is 
going to get worse. As I understand it, I am told that the 
full-time equivalents, the FTEs of the FDA's foreign inspection 
program, was 149 in 2002. By fiscal year 2008, the FDA 
estimates that number will actually drop to 102. Now, we have 
tried to remedy that in our budget by increasing some of these 
appropriations. The president has threatened to veto our 
budgets, didn't have a veto pen for the first 6 years of his 
presidency, and all of a sudden he wants to veto these budgets. 
My understanding is that essentially, even though we already 
have a pathetically indifferent system to these imports, they 
are wildly less protective of the American public than our 
domestic production. I am told we can't even find out who these 
manufacturers are to have a really good compilation of them. 
Even though we are already bad, we are going to get worse 
unless we can override this president's veto on these 
appropriations bills. Could you gentlemen help us in 
understanding if that is correct or not?
    Mr. Downey. I wouldn't agree with a good deal of your 
comments. I will say this, that we have 12 full-time auditors 
that audit our raw material suppliers, and we are a very small 
part of our drug supply system, so I think having 100 or 150 is 
definitely inadequate. But I don't agree----
    Mr. Inslee. I am sorry. Did you say inadequate?
    Mr. Downey. Absolutely, inadequate. I don't think you can 
properly fulfill the role that inspection plays in the overall 
regulatory process with that number of inspectors. I just don't 
think it can be done. But, on the other hand, I think we have 
in place a very large number of safeguards that I explained in 
my testimony that I think protect and ensure that we have high-
quality, safe pharmaceuticals. I think the biggest risk are 
counterfeiters who don't register, don't subject themselves to 
inspection, and we really need to make sure that the first 
priority is allocating the resources to discover the people who 
are blatantly and in criminal violation of our statutes 
bringing products into the United States and supplement that 
with appropriate levels of inspection for those who are 
regulated.
    Mr. Inslee. Well, foreign field inspectors would help on 
the counterfeit problem, would they not, as well?
    Mr. Downey. I don't think they have a very large role in 
that at all.
    Mr. Inslee. OK. Well, let us talk about the first problem. 
I thought I heard Mr. Downey say that there is no legitimate 
reason to have a lesser standard of inspection for foreign 
manufacturers than for domestic manufacturers?
    Mr. Downey. I absolutely think that is true.
    Mr. Inslee. You totally agree with that? Well, if you look 
at the chart up here that I am holding, showing the FDA foreign 
field funding, you see a constant decline that we are trying to 
remedy in our appropriation that the president has threatened 
to veto. Now, I want to make sure that I understand your 
testimony. I thought you were telling us that you want, you 
thought we should have the same level of inspections----
    Mr. Downey. Absolutely.
    Mr. Inslee. For foreign productions as domestic. We are not 
doing that right now, and we have a decreasing number of people 
that are going to do that, so I would assume you agree with me 
that that is a bad state of affairs, and we should increase the 
number of inspections and we should override the president's 
veto if we have to, to get that done.
    Mr. Downey. I think we should increase the number of 
inspections. As I said, I think my recommendation would be 
that, starting tomorrow, you reallocate inspectors to the 
foreign inspections because relative to domestic inspections 
they are too infrequent, and simultaneously work to increase 
the resources to have enough inspectors to conduct the 
appropriate number of inspections of both.
    Mr. Inslee. Well, I think this hearing is instructive, 
because I think it is important for the American public to know 
that we have got a president who is threatening to veto a bill 
that will increase protections of Americans against foreign 
imports that do not meet accepted standards, and I am hoping 
this hearing can help remedy that situation. Thank you.
    Mr. Downey. I have very little power over the veto.
    Mr. Inslee. We have some. We might need a few more votes. 
If you have any friends, you might talk to them. Mr. Villax, 
did you want to say something?
    Mr. Villax. Yes. The plants located abroad that make APIs 
find these inspections very important because it is tough to 
meet the requirements of an inspection, and we need these 
inspections to make sure we have a level playing field. And the 
members of our association, we have gone on record to say we 
are happy user fees for these inspections. These are important 
inspections to have.
    Mr. Inslee. Thank you. And when the EU gets a role in 
Congress we know you are going to help us override this veto.
    Mr. Villax. Well, I think you should approach the EU and 
say that you want to set up some kind of, or FDA needs to agree 
with them, to recognize each other's inspection reports. This 
is what I meant by more smarter enforcement, because they do 
between 20 and 50 inspections in Asia.
    Mr. Inslee. I think that is an interesting proposal. Thank 
you.
    Mr. Stupak. Thank you, Mr. Inslee. Actually, that has been 
a proposal the committee has made to the FDA, that why don't we 
recognize the inspections that the EU may be making, provided 
your regulatory scheme, which is same or similar to the FDA? It 
doesn't make any sense for the EU to do one, and 6 months later 
the FDA comes in. We could do that--Do you share information? 
Does the EU share information with the FDA? Let us say you go 
to a place, and you inspect, and you find a problem here. In 
this country we call them 483s, a violation on inspection. Do 
you share that information?
    Mr. Villax. As I understand it, the Europeans approached 
FDA many years ago to do these memorandums, or these mutual 
recognitions, but since we didn't have a Law about what were 
the standards of GMPs, it never moved forward. And I think 
until such time as we have a foreign inspection program in 
Europe it won't work, because you can't talk to 27 agencies. 
You have to talk to a single one. Now, I understand that 
informally there is quite a bit of information that goes 
backwards and forwards.
    Mr. Stupak. Well, good, but do you agree you don't know 
what it would be on inspections of foreign plants?
    Mr. Villax. This is very complicated, and it is very 
political.
    Mr. Stupak. I understand. The QP you talked about, this 
quality person within the plant, the company that is 
manufacturing the API, they are responsible for that 
individual?
    Mr. Villax. No, no. No, the pharmaceutical company that 
makes the pills that go into the market----
    Mr. Stupak. But not the API?
    Mr. Villax. The API company----
    Mr. Stupak. You don't have any QPs in your plant in 
Portugal.
    Mr. Villax. Not for the role that you are describing.
    Mr. Stupak OK. So it is just the pharmaceutical that makes 
the finished product?
    Mr. Villax. Yes.
    Mr. Stupak. And then that individual is responsible to make 
sure the ingredients, the API ingredients, going into the final 
product is----
    Mr. Villax. Were made according to GMP, yes.
    Mr. Stupak. OK.
    Mr. Villax. So that is why they audit.
    Mr. Stupak. And then that standard would be based upon the 
country in which they are shipping it to?
    Mr. Villax. The GMP standards that have to be met and that 
the QP has to certify are the GMP standards of the market where 
the pills are going to be sold, and----
    Mr. Stupak. Correct.
    Mr. Villax. In Europe we now have the same standards.
    Mr. Stupak. OK.
    Mr. Dubeck. Chairman Stupak?
    Mr. Stupak. Yes, Mr. Dubeck.
    Mr. Dubeck. I would like to comment that all the 
inspections that the U.S. pharmaceutical companies do of 
imported APIs do provide a high degree of quality assurance, 
and so the mere fact that APIs made overseas don't get 
inspected very much, that would include Mr. Villax's products, 
does not mean we don't have high confidence in them. You will 
see, however, that many more approval applications are now 
being filed by foreign companies, which means that what is 
coming in are finished-dosage forms, and you don't have the 
U.S. manufacturer analyzing, reanalyzing the API and all the 
quality steps that have been described when it comes in as a 
finished-dosage form.
    Mr. Stupak. Well, my question is going to be, and I don't 
know if Mr. Downey or to you, Mr. Dubeck, if you have a quality 
person, you have the same thing at Barr Pharmaceuticals, I take 
it? Or not----
    Mr. Downey. In our European facilities, for products made 
for sale in Europe, they are released by the QP.
    Mr. Stupak. What about here in the United States then?
    Mr. Downey. Well, they are released by our quality 
control----
    Mr. Stupak. OK. Do you have any plants overseas and not in 
Europe, not in the United States?
    Mr. Downey. No, all of our plants are in--well, we have a 
plant in Croatia, which is not part of the EU, but it is 
European.
    Mr. Stupak. Do you have a quality person there?
    Mr. Downey. Yes, we have QPs. Actually, the QP for release 
into the EU is in our polish facility, because not only does 
the QP have to be there, but the actual release testing for the 
European Union must be done in a European Union country, and so 
our release testing for product made in Croatia is Poland.
    Mr. Stupak. OK. Well, let me ask you this question. Our 
committee staff was both in India and China during the August 
break to check on the manufacturing practices at some of the 
facilities over there. Our staff met with senior government and 
industry officials in India, and both expressed strong support 
to have the FDA locate a permanent office in India. China, we 
got just the opposite. We got a push-back about having 
permanent offices in China. Do you think it would be beneficial 
for the FDA to open offices in those parts of the world where 
significant drug production or APIs for the U.S. market is 
taking place?
    Mr. Downey. That is one way to address the need to have 
parity in inspection, is to have people on the ground. That 
would certainly reduce travel time, would probably be less 
expensive, and I would say that that reaction, I am not 
surprised, and I think the Indian pharmaceutical industry is 
more advanced in terms of its quality systems, its exposure to 
Western regulation, more modern regulation than our Chinese 
suppliers. So I am not at all surprised by that. In fact, I 
mentioned earlier, our Indian members of the GPhA complain that 
they can't get inspected fast enough for their new product 
approvals. As we mentioned earlier, there has to be an 
inspection prior to a new approval, and they can't get people 
on the ground there, and it is very frustrating to them.
    Mr. Stupak. Right, and the Indian government officials felt 
that if we had a permanent office there that those inspections 
would take place much quicker.
    Mr. Downey. It is certainly an idea that is worth 
exploring. I can't comment as to whether it is the right way or 
not.
    Mr. Stupak. Mr. Dubeck, would you care to comment?
    Mr. Dubeck. I think it would make a whole lot of sense. If 
we have overseas U.S. personnel for Customs and Immigration and 
for USDA, it makes sense it should be there for FDA.
    Mr. Stupak. Well, let me ask you this, Mr. Dubeck. In your 
testimony, it says that cooperative arrangements with foreign 
governments to determine the safety of drugs for the U.S. 
market are, and I quote now, ``a poor substitute for a visit by 
the FDA''. The FDA is currently negotiating a memorandum of 
agreement with China with regards to product safety. Are you 
saying that this type of arrangement won't protect the safety 
of the drugs as much as a FDA inspection of a plant in that 
country?
    Mr. Dubeck. Correct. I mean, these memorandum provide for 
sharing of information, so that FDA would at least have access 
to whatever inspection reports the Chinese may conduct, but, as 
it has been commented, FDA is the gold standard. The FDA 
inspectors, when they get there, they do the best inspections, 
and so, I mean, that is part of the problem of relying upon 
inspections by other government agencies. They are not the 
same.
    Mr. Stupak.  GAO indicated and also our staff has reported 
back that when you go to a foreign country, let us say like 
India or China, you are under a time limit of how much time you 
actually have, which is really counter-productive to-- in the 
United States, if it takes a month, it takes a month. In 
foreign countries, if you only have 3 days, you get in what you 
can in 3 days.
    Mr. Dubeck.  Yes, and when it takes a month in the U.S., it 
is usually not a month, every single day of the month.
    Mr. Stupak. Right.
    Mr. Dubeck. They come for a few days, they go back, they 
get caught up on their paperwork, then they come back, they may 
bring other people with them when they come back. And so it is 
much more conducive to doing a thorough, competent job than 
when you are on the road, going from hotel to hotel.
    Mr. Stupak. I agree. Mr. Villax, in discussions with 
committee staff, you expressed concern that the U.S. does not 
sufficiently inspect foreign production of over-the-counter 
medications or the ingredients that go into them. Why is this 
important? What dangers come from the failure to inspect this 
class of medicines?
    Mr. Villax. I was referring very much to the issue that 
John Dubeck raised, and this is related to the older drugs 
that, as I understand it, are not in the realm of probability 
to be inspected, and I think that the deterrence factor of FDA 
inspections is the critical aspect and therefore every single 
drug establishment ought to have a probability of being 
inspected.
    Mr. Stupak. OK.
    Mr. Villax. And if I could add something on the 
inspections.
    Mr. Stupak. Sure.
    Mr. Villax. Inspections abroad and inspections in the U.S. 
are really very different. When FDA inspectors come to Hovione, 
we invite them, and they are pre-announced, and they do not 
last as long--it probably lasts 3 days or 5 days--but we have 
had inspectors that have changed plans because they wanted to 
stay longer. But they also start at 8 o'clock in the morning 
and probably stay until 7 o'clock in the evening, and one of 
the reasons why these inspections can go much faster is that in 
the U.S. inspection, they have to collect data and have proof 
in case they are taken to Court. In Europe, they have no need 
to collect proof because if they don't like it they pick up the 
telephone, they call Washington and say, tell Customs to hold 
everything from Hovione. And we can't take them to Court, so it 
is probably more effective and faster.
    Mr. Stupak. The unadulterated drug angle of it. OK.
    Mr. Downey. I would agree on that point that the problem is 
the frequency of inspection, not the quality of the inspection, 
at least as we experience it. I don't know about the language 
barrier so much in Asia, but in European inspections, I would 
say that they are quite comparable between the U.S. FDA 
inspections conducted there and those conducted here in our 
facilities.
    Mr. Villax. One of the----
    Mr. Stupak. Well, that is one of the things that we are 
asking the GAO to follow up on, and then what happens to a 483 
when it hits the FDA? What I understand, they are basically 
deep sixed. Nothing ever happens to them on a foreign one, so--
well, those are things we are asking GAO to continue, and that 
is why Dr. Crosse and her group did a great job given what they 
had, but we are following up. Go ahead, Mr. Villax.
    Mr. Villax. One of the benefits of having offices in India 
or China is to bridge the culture. The culture distance between 
the U.S. and Europe exists. But there is a much greater 
distance, and I think having inspectors that gain an 
understanding of these cultural differences is probably very 
helpful in an inspection.
    Mr. Stupak. Well, thank you, and thank you to this panel 
for your insight and your assistance on this problem that has 
been going on for some time. We are trying to address it. We 
appreciate you coming. Mr. Villax, thank you for coming over 
from Europe and sharing your insight on what you are doing in 
Europe. Mr. Downey, Mr. Dubeck, thank you. We will excuse this 
panel, and we will call up our third and final panel.
    Our witness to come forward is the Honorable Dr. Andrew von 
Eschenbach, Commissioner of the Food and Drug Administration. 
Accompanying the Commissioner is Ms. Margaret Glavin, Associate 
Commissioner for Regulatory Affairs at the FDA. It is the 
policy of this subcommittee to take all testimony under oath. 
Please be advised that witnesses have the right under the rules 
of the House to be advised by counsel during their testimony. 
Dr. von Eschenbach or Ms. Glavin, do you wish to be represented 
by counsel today? Both witnesses indicate they did not. 
Therefore we will take the oath, and we will begin.
    Dr. von Eschenbach. Mr. Chairman, may I? Also at the table, 
joining me is Deborah Autor, our Director of the Office of 
Compliance, and would you swear her in as well, sir?
    Mr. Stupak. OK.
    Dr. von Eschenbach. Thank you.
    Mr. Stupak. Would you spell that for the record, please, 
just, Dr.----
    Dr. von Eschenbach. A-u-t-o-r.
    Mr. Stupak. A-u-t-o-r? OK. OK. Raise your hand, then.
    [Witnesses sworn.]
    Mr. Stupak. Let the record reflect that all three witnesses 
have indicated the affirmative. That means they are under oath. 
Dr. von Eschenbach, you are the only one going to be giving an 
opening statement?
    Dr. von Eschenbach. Yes, sir, I will give the sole opening 
statement for this panel.
    Mr. Stupak. Welcome, and please, whenever you are ready.

TESTIMONY OF ANDREW C. VON ESCHENBACH, M.D., COMMISSIONER, FOOD 
 AND DRUG ADMINISTRATION, U.S. DEPARTMENT OF HEALTH AND HUMAN 
   SERVICES; ACCOMPANIED BY MARGARET O'K. GLAVIN, ASSOCIATE 
      COMMISSIONER FOR REGULATORY AFFAIRS, FOOD AND DRUG 
 ADMINISTRATION, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES.

    Dr. von Eschenbach. Thank you, Mr. Chairman and members of 
the subcommittee, Mr. Whitfield. I very much appreciate the 
endurance and the attention that the panel and the committee 
has given to this very important issue. I very much appreciate 
the opportunity to engage in a dialog about FDA inspections of 
foreign pharmaceutical managers. But I think it is also 
apparent from everything we have heard this morning and this 
afternoon that we realize what the FDA has known for some time, 
and that is, this problem is much bigger than the number of FDA 
inspections that occur abroad. This is a problem that really 
addresses a much more global issue, and I want to begin by 
applauding the work of the committee and the committee's staff, 
particularly the counsel, who is present with us today. I want 
to appreciate the time that they have taken to update the FDA 
on the observations that they made during their recent foreign 
inspections, on which they accompanied FDA inspectors in China 
and in India. I find this dialogue to be very helpful to me and 
to the FDA staff.
    We are well aware that, whether it is China or India, the 
fact of the matter, Mr. Chairman, is the world is and has 
radically and rapidly changed around us. We have heard about 
the enormous challenges but also the great opportunities that 
are now confronting us with regard to the issue of 
globalization. Mr. Whitfield was very kind this morning in 
commenting on his support of leadership at FDA to effect the 
kind of changes that we must effect if we are going to be 
responsive to these new challenges and these new opportunities. 
And it is not only with regard to leadership as it relates to 
identifying the need for and the application of resources 
through a budget process, but even more importantly our 
responsibility to present to you, to the administration, and 
most important to the American people a strategy and a plan as 
to how we would, in fact, begin to utilize these precious 
resources in the most effective way. And so I would like this 
afternoon to highlight just a few of the things that we are 
doing at the FDA to not simply build our capacity to better 
assure the safety of medical products or components that are 
produced abroad or that Americans use at home but also what we 
are doing to modernize the entire function and structure that 
is needed at the FDA if we are going to continue to be what we 
have just heard from our witness from Europe. We have been and 
are the world's gold standard, and we intend to continue to 
maintain that standard of excellence, but it will require 
change.
    Mr. Chairman, we all know that, given the scale and scope 
of the problems that have been defined by you and other members 
of the committee, the solution to assuring the quality of 
imports does not reside only in increasing the number of 
inspections we perform abroad or even at our border. In fact, 
we agree, we must revamp our entire strategy, our entire game 
plan, and we are doing this as it relates to the importation of 
drugs and components of drugs from other countries in exactly 
the same way that we are adapting our strategy and our approach 
to all other FDA-regulated products. We are adopting an entire 
life-cycle management and engagement process, from the very 
production, all the way through to consumption. And so much of 
our production now comes from outside our borders, we must be 
global in our regulatory approach.
    This total life-cycle engagement is consistent with the 
first report of the President's Import Safety Working Group, on 
which FDA, along with other members of the Cabinet, is an 
integral part of the process. This import safety working group 
report emphasizes the key components of FDA's new strategy. We 
will be engaged in the total life cycle of these products 
through implementation of initiatives that address prevention, 
intervention, and our ability to respond. And we will do this 
in a way that first and foremost assures quality is built in to 
the products before they ever reach our borders, and we will 
use greater resources and more modern sources of science and 
technology to further enhance our efforts at both inspection 
and verification, as well as leverage those resources through 
collaboration and partnership with other government agencies, 
other governments abroad, other regulatory agencies, and, most 
importantly, the industry.
    Let me give you one example of one of the tactics or 
implementations that we have incorporated in this approach, and 
that is our ability to use information technology, which is 
critical across the entire spectrum of prevention, 
intervention, and response. We recognize as the GAO pointed out 
that information technology infrastructure was a problem at FDA 
10 years ago, and it is a problem today. But unlike 10 years 
ago, today we have technologies and capabilities that didn't 
exist in 1997. None of us is using the same model of computer 
or cell phone today that we did 10 years ago. We also have 
recognized the development in other spheres of data mining 
techniques and the ability to crosswalk through different data 
systems, and our opportunity to adapt these new technologies 
and these new strategies in IT is exactly how we will approach 
and are approaching the modernization of IT.
    I would like to point out on the panel's charts that will 
be presented to you, if we could please put them up. The graphs 
are on your screen, and if we could put the charts up, that 
would be helpful.
    [Slide]
    Mr. Chairman, I would point out that this particular 
schematic is a very complex display of the various components 
of the information technology processes and components that are 
operative in our ability to oversee the diverse portfolio that 
FDA is responsible for regulating. As you can see on your left-
hand side, the current state is, and as has been pointed out, 
there are multiple systems addressing multiple needs, but they 
have been developed independently for specific missions, and 
what has been absent is the ability to further integrate and 
coordinate those systems. We have been engaged in a very 
aggressive effort to migrate those systems into a unified, 
coherent, single FDA approach to IT technology.
    Once we have accomplished that, on the right-hand side, all 
of those various applications will be able to have a degree of 
interoperability of information sharing and information 
analysis and outcome assessment that literally has not been 
capable or able before, both because of technological 
limitations as well as, as we indicated, structural changes 
that needed to occur within FDA. In 2007, we brought in a Chief 
Operating Officer and a Chief Information Officer, both of whom 
had extraordinary experience in modernizing complex information 
technology infrastructures. We created the Bioinformatics Board 
at FDA to bring the operating components together to find 
opportunities for synergy and interoperability, and we are 
working with our external partners, particularly, for example, 
as it relates to inspections, our colleagues in the Department 
of Homeland Security-Customs and Border Protection, to further 
enhance our opportunities for interoperability and 
modernization of IT.
    And we are allocating resources to this important issue. 
Our 2008 budget request, currently before Congress, includes 
$247 million for such efforts, and that actually accounts for 
11 percent of the agency's budget, devoted and committed to 
modernizing and implementing the kind of information technology 
infrastructure that you and other members of the committee have 
been calling for.
    In addition to just simply looking at the infrastructure, 
it is mostly and critically important to look at how we 
interact with, collaborate, and cooperate with our partners. 
This is a global problem, and it will require a global 
solution. Inspections will verify quality, but they don't 
create quality. Technology can exist, but it will never be able 
to replace the ability of people interacting with other people 
to create the kind of quality that Americans expect and will 
continue to depend upon.
    And so FDA is taking a very aggressive approach in our 
effort to further enhance our own resources as it relates to 
our ability to expand our workforce with the great, qualified, 
talented people, as well as to collaborate more effectively 
with our partners abroad so that we can collectively address a 
problem that truly, as you heard from our colleague from 
Europe, is something that everyone in the world is concerned 
about.
    Some of those opportunities are to expand FDA's 
international presence beyond its borders. We are committed to 
finding the kinds of options that you have discussed, namely, 
placing FDA staff on long-term assignments in key locations 
around the world, on a permanent basis. Our staff onsite in 
those locations would have a number of important advantages 
that weren't necessary in the past but are critical to the 
future. They will be able to, number one, work very closely, 
hand in hand, on an ongoing basis with our counterpart 
agencies, who must be important partners in this global effort. 
They will help build capacity in developing areas in which they 
have not had the fruits and the benefits of the kind of support 
that we have achieved or experienced here in the United States 
with regard to your support of the FDA. We will be able to 
provide technical assistance to foreign manufacturers to build 
quality in and improve products long before they come to us, 
and we will be able, as has also been indicated, on an ongoing 
basis to create opportunities for partnership that transcend 
cultural barriers, language barriers, and those things that 
separate us rather than unite us. And we will have the 
opportunity to leverage the impact of a global industry 
expecting to produce and deliver global products around the 
world.
    We will be able to continue to expand our government-to-
government and agency-to-agency activities. Both Secretary 
Leavitt, myself, and many, many FDA staff have been engaged in 
substantial interactions with our counterparts, especially in 
China. I personally visited China and interacted with my 
counterparts, the Minister of Health, the head of the State 
Food and Drug Administration in China, and leadership of its 
export agency. We will continue these relationships to build 
and assure the kind of quality that is necessary and to be able 
to create the infrastructure that will assure that quality.
    No one wants to live in the past, and neither you nor I, 
nor any member of the committee, is satisfied with the status 
quo of today. Together, I believe we can build for tomorrow the 
FDA that will continue to be the gold standard of protecting 
and promoting the health of not just Americans but everyone 
else in the world as well. I look forward to the opportunity to 
respond to any questions that you have.
    [The prepared statement of Dr. von Eschenbach follows:]
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    Mr. Stupak. Thank you, doctor, and thank you for being here 
today and for listening to the first two panels, their 
statements and their questions. The last time you were here at 
the end of the meeting, it was on food safety. You indicated at 
the meeting that it was important for you to hear the witnesses 
and what they have to say on issues affecting the FDA, and I 
appreciate that, and I appreciate your taking time to be here.
    Dr. von Eschenbach. Thank you, sir.
    Mr. Stupak. If I may, put up chart No. 3, the GAO chart. 
This was GAO's chart earlier today--right there----
    [Slide]
    Mr. Stupak [continuing]. That they testified to and is part 
of their testimony. If you would take a look, the first country 
there listed is China, 714 plants with 13 inspections. How do 
we close that gap? And you can go right up the line to any 
country you want, but China and India are the biggest two 
exporters to the United States. How are we going to close this 
gap? I guess that is the whole question before this committee.
    Dr. von Eschenbach. Mr. Chairman, I think we have a number 
of strategies that must be and are being employed to close that 
gap. Number one, as I indicated in my oral testimony, we are 
engaged in government-to-government, minister-to-minister, 
regulatory-agency-to-regulatory-agency interactions to build 
capacity.
    Mr. Stupak. Right. We are glad to hear you say that, 
because when we met, committee staff met with Bill Steiger, he 
is your Director of Office of Global Health Affairs and Special 
Assistant to the Secretary of HHS, they told us basically they 
weren't interested. They just pushed back on every suggestion 
we have, like putting people in there, using other countries' 
inspectors to help us, so we are very glad to hear that. In 
fact, our staff on this committee, we are pleased to hear that. 
We think that is a good start. We think India is a country in 
particular that really wants the United States in there. The 
only question I would have, then, as you do these agreements, 
whether it is China, India, the UK, wherever, that country must 
have some kind of regulatory scheme, then, for drug safety and 
standards, much as ours, like----
    Dr. von Eschenbach. Yes.
    Mr. Stupak. Correct me if I am wrong, but China doesn't 
have any standards like that.
    Dr. von Eschenbach. Well, one of the important parts that 
you are pointing out, and I think it is an important part of 
this entire hearing's testimony, is that our presence in these 
foreign countries gives us the opportunity to build capacity. 
Build capacity, not just as it relates to our ability to 
inspect more effectively this growing portfolio of producers, 
but, even more importantly, to build capacity within those 
regulatory agencies.
    Mr. Stupak. Does that include putting people on the ground 
there permanently?
    Dr. von Eschenbach. Yes, sir. Yes, sir. As a matter of 
fact, we look forward to that as being a very key element----
    Mr. Stupak. We are glad to hear that, because we just think 
that is one of the ways to go. We are going to do five votes, 
and I don't want to keep you here with 45 minutes or waiting 
for us for an hour to vote, so let us try to buzz through some 
of these, if I may. Earmarks chart that you had up there, in 
fact, the one that was up there before----
    Dr. von Eschenbach. Yes, sir.
    [Slide]
    Mr. Stupak. The only caution I have on that is, we heard 
all that before in 1998 and the 2000 hearing. Because everybody 
was always worried about Y2K, and the FDA and all of them came 
in with these same things. They said, we will guarantee all 
these databases will talk to us. We are going to fix the Y2K 
problem, and these will all talk to each other. They will be 
integrated, and we won't have the problems. We still have the 
same problems today, so excuse me if I am a little skeptical, 
but why--my question, though, is, we heard from the previous 
panel that this PREDICT which is a program going on right now, 
you are using it for seafood, is doing all this, sort of 
getting interoperable, grabbing the key words from different 
databases, bringing it together. From what Mr. Nielsen said, 
who used to be in your Office of Regulatory Affairs, it is 
working, and it is working well. Why wouldn't you just expand 
that instead of create a whole new computer regimen that I am a 
little skeptical will work? If you have got one that is working 
now, why would you disregard that and go to a different system?
    Dr. von Eschenbach. We are not disregarding that, Mr. 
Chairman. As a matter of fact, PREDICT is one of the important 
models that we are beta testing, which I think has great 
promise because of the kind of data that it acquires and puts 
into our risk management system. In the interest of time, Mr. 
Chairman, I would like to submit for the record a much more 
detailed assessment of the specific steps that we are taking 
that I think will demonstrate to you that this isn't just same-
old, same-old, or more planning, more ideas, but rather actual 
implementation of many of the things that you have been 
expecting and looking for. We heard this morning that there was 
a plan that was developed by some of the members of the first 
panel----
    Mr. Stupak. ISP, correct.
    Dr. von Eschenbach. And they seemed to indicate that 
nothing had been done. I had not had the opportunity to hear 
that before and respond to that, but I will be able to respond 
to you with regard to the fact of the matter is, many things 
have been done since that particular plan was put in place.
    Mr. Stupak. Is the ISP plan being implemented?
    Dr. von Eschenbach. Many parts and pieces of it are being 
implemented, and in fact many parts and pieces of that have 
been a core element of what is our more global import strategy 
that is a part of the presidential import quality initiative.
    Mr. Stupak. OK. You mentioned you are to spend----
    Dr. von Eschenbach. I will submit that for the record.
    Mr. Stupak. $247 million on this MARCS system to go to----
    Dr. von Eschenbach. IT, and I want----
    Mr. Stupak. Just in IT. Go to No. 4, if you would, chart 
No. 4, from GAO.
    [Slide]
    Mr. Stupak. And here is what I want to know is, what 
resources is it going to take to implement your full plan, your 
IT plan, your increased inspections? If you look at this chart 
right there, on the right-hand side of that chart as I am 
looking at it, that is 2007, that is the lowest line. The next 
one is 2008, where you predict a 40 percent increase in 
inspections. Where are you going to get the resources? Have you 
asked for additional resources for 2008? If so, how much is it 
going to take to get back to where we are actually doing 
inspections, which technically should be about 1,200 a year, 
not 300?
    Dr. von Eschenbach. We have asked and allocated in both the 
2007 and have asked, and it is under consideration by Congress, 
in the 2008 budget, increases in our resources to be able to 
respond to this need, and we are continuing to build that 
business plan as we are in the process of preparing our 2009--
--
    Mr. Stupak. Will this be part of this presidential group 
you have looking at food safety and drug safety?
    Dr. von Eschenbach. Yes.
    Mr. Stupak. And they will put in a specific request for 
resources, then?
    Dr. von Eschenbach. We are building and have presented, and 
are in the process of building and presenting our 2009 budget 
request, and as I indicated we already had increases in the 
2008 which hopefully when we move beyond the continuing 
resolution will have those resources to be able to be applied. 
What I also want to continuously emphasize, Mr. Chairman, is 
not only the absolute amount of resources, but, more 
importantly, how we are allocating them strategically, because 
I think we can leverage these resources to get more outcomes 
and just measures.
    Mr. Stupak. I agree. And I have to compliment the FDA today 
that while we are talking about foreign drugs and import into 
this country, you had a press release today saying the FDA 
raided a place today because the place they were producing the 
drug lacked FDA approval and remained under grossly unsanitary 
conditions by General Therapeutics Corporation of St. Louis, 
Missouri. So the problem isn't just other countries. It is even 
right here in our own country. And with that, let me turn it to 
Mr. Whitfield.
    Mr. Whitfield. Thank you, and Dr. von Eschenbach, we are 
delighted you are here with us today. The first panel today, we 
had some distinguished panel with a lot of experience at FDA, 
and they talked about this internal import strategic plan that 
was developed at FDA, and that was about 3 years ago. From your 
understanding, why has this plan not been implemented as of 
today?
    Dr. von Eschenbach. Mr. Whitfield, I am going to ask Ms. 
Glavin to specifically comment on the number of initiatives 
that we have underway, as we speak, and have been underway at 
the FDA to do exactly that, to implement that plan. I regret 
that the people on the earlier panel commented that we are not 
aware of this, but I am pleased to present this to you.
    Ms. Glavin. Well, we have already instituted a program to 
evaluate the accuracy of import filer information so that we 
can make sure that those filers are giving us accurate 
information. We have just posted on our contracting site a 
request for bids for verification of the registration data 
worldwide. This is to have an independent organization go out 
and actually see every one of these places so we have an 
accurate registration database. We are testing the automated 
system that has already been talked about, the PREDICT system. 
We have developed a new----
    Mr. Whitfield. Ma'am, what did you say about the PREDICT 
system?
    Ms. Glavin. We are testing that. That is a system to 
automatically identify high-risk seafood imports for closer 
examination.
    Mr. Whitfield. And you all have been operating that as a 
pilot program for, like, 3 years.
    Ms. Glavin. No, no, no, sir. Just for a couple of months. 
We started this back in the summer. We have been developing it 
for about 3 years, but we have actually gotten it to the test 
phase at this point.
    Mr. Whitfield. You have been developing it for 3 years.
    Dr. von Eschenbach. The software programs, and now they are 
being beta tested in----
    Mr. Whitfield. But the information I had is that it had 
been operating as a pilot for 3 years, but you are saying it 
is--OK.
    Ms. Glavin. That is right. It has just recently been put 
into a pilot phase. We have also developed a new screening test 
for use at ports of entries. It is a very important part of 
looking at imports. This gives more like rapid screening tests. 
We have a very interesting one that has just gone online. We 
are----
    Mr. Whitfield. Well, let me just say that--I am sorry to 
interrupt you, but we have votes on the floor, and we have a 
very limited time, and--on this import strategic plan that was 
developed internally, and you were kind enough to go through it 
pretty precisely, are you saying that the majority of that plan 
will be implemented? Is that what you are saying?
    Ms. Glavin. We are working on almost all of the 
recommendations in that plan and some of them have already come 
to fruition, but there is still many more that are in earlier 
stages. The ones I have mentioned are ones that are online.
    Mr. Whitfield. And can you tell us as a part of the 
forthcoming President's Working Group on import safety whether 
you will be proposing a separate foreign inspection program?
    Dr. von Eschenbach. It will not be part of the import 
safety strategy per se----
    Mr. Whitfield. Will not.
    Dr. von Eschenbach. But it is a part of FDA's strategy.
    Mr. Whitfield. All right. Of the FDA's. OK. Now, you had 
also provided us with a graph of the IT program that you all 
are working on right now, which appeared to be pretty 
complicated----
    Dr. von Eschenbach. Yes, sir.
    Mr. Whitfield. Which I am sure it is. Do you have any time 
table on that of when we----
    Dr. von Eschenbach. Yes, sir.
    Mr. Whitfield. Could you----
    Dr. von Eschenbach. That is a 3- to 5-year implementation 
plan. It is mapped with milestones and outcomes. It has got a 
business plan underneath of it in terms of building our 
resources to support it, and it does require a cultural change, 
as was brought up earlier today, in terms of interoperability 
of cross-functional units, whether we call them stove pipes or 
silos, but that is all part of and integrated into the plan.
    Mr. Whitfield. OK. But do you feel like when it is complete 
it should at least have the information necessary to assess the 
risk of foreign drug suppliers?
    Dr. von Eschenbach. We will have a plan that, number one, 
will get us better data in the first place, and that is 
critical. We must have quality data to start with and 
verification of the data. Two, better ability to acquire, 
integrate, and assemble that data, better opportunities to 
analyze and mine that data for information that we can then 
take regulatory action on.
    Mr. Whitfield. Thank you, Mr. Chairman.
    Mr. Stupak. Well, thank you. I wish we had more time for 
questions, but I am afraid if we went and voted, we have five 
votes, that we would be there for an hour. So in lieu of 
keeping you for another hour, we will go vote. We will submit 
questions for the record and ask for your assurance that they 
will be answered in a timely manner.
    Dr. von Eschenbach. Yes, sir.
    Mr. Stupak. We would appreciate it. And thank you again for 
being , and thank you for sitting through this hearing.
    Dr. von Eschenbach. Thank you, sir.
    Mr. Stupak. That concludes all questioning. I want to thank 
all of our witnesses for coming today and for your testimony. I 
ask unanimous consent that the hearing record will remain open 
for 30 days for additional questions for the record. With no 
objection, the record will remain open.
    I ask unanimous consent that the contents of our document 
binder be entered in the record, except for No. 9 and No. 11. 
We will scratch those two. So, without objection, those 
documents will be entered in the record.
    That concludes our hearing. Without objection, this meeting 
of the subcommittee is adjourned. Thank you all.
    [Whereupon, at 2:05 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
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