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



 FDA'S FOREIGN DRUG INSPECTION PROGRAM: WEAKNESSES PLACE AMERICANS AT 
                                  RISK

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

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 22, 2008

                               __________

                           Serial No. 110-107


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

                                 ______

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

                                 _____

              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)

                                  (ii)







                             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. Joe Barton, a Representative in Congress from the State of 
  Texas, prepared statement......................................     4
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, prepared statement................................     6
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     7
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     9
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, prepared statement......................................    55

                               Witnesses

Andrew C. von Eschenbach, M.D., Commissioner, Food and Drug 
  Administration.................................................    11
    Prepared statement...........................................    15
Marcia G. Crosse, Director of Public Health and Military Health 
  Issues, U.S. Government Accountability Office..................    65
    Prepared statement...........................................    68
Gail H. Cassell, Ph.D., Vice President, Scientific Affairs and 
  Distinguished Lilly Research Scholar for Infectious Diseases, 
  Eli Lilly and Company..........................................    93
    Prepared statement...........................................    97
William K. Hubbard, Former FDA Associate Commissioner and Current 
  Senior Advisor to the Coalition for a Stronger FDA.............   100
    Prepared statement...........................................   102
Carl R. Nielsen, Retired Director of the Division of Import 
  Operations, Office of Regulatory Affairs, Food and Drug 
  Administration, U.S. Department of Health and Human Services...   105
    Prepared statement...........................................   107
Benjamin L. England, Esq., Benjamin L. England & Associates, LLC, 
  and FDAimports.com.............................................   117
    Prepared statement...........................................   120

                           Submitted Material

Slides accompanying Mr. Stupak's opening statement...............   146
Subcommittee exhibit binder......................................   154

 
                     FDA'S FOREIGN DRUG INSPECTION
              PROGRAM: WEAKNESSES PLACE AMERICANS AT RISK

                              ----------                              


                        TUESDAY, APRIL 22, 2008

                  House of Representatives,
      Subcommittee on Oversight and Investigations,
                          Committee on Energy and Commerce,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 11:00 a.m., in 
room 2123, Rayburn House Office Building, Hon Bart Stupak 
(chairman of the subcommittee) presiding.
    Present: Representatives Stupak, Melancon, Green, Dingell 
(ex officio), Shimkus, Burgess, and Barton (ex officio).
    Staff Present: Chris Knauer, John Sopko, Kevin Barstow, 
David Nelson, Kyle Chapman, Calvin Webb; Alan Slobodin, Peter 
Spencer, and Whitney Drew.

  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 titled ``FDA's Foreign Drug Inspection Program: 
Weaknesses Place Americans at Risk.'' Each member will be 
recognized for an opening statement of 5 minutes. I will begin.
    Today's hearing will once again explore the question of 
whether the Food and Drug Administration, FDA, is adequately 
regulating the overseas manufacture of pharmaceutical products. 
As this subcommittee has reported before, a significant and 
still growing quantity of pharmaceutical products used by 
Americans are now manufactured with ingredients obtained 
overseas from countries on almost every continent. With exact 
quantities and sources for these drugs difficult to determine, 
the general consensus is that at least 80 percent of all active 
pharmaceutical ingredients, APIs, used by U.S. manufacturers to 
produce drugs are imported. More importantly, much of this 
production occurs in regions that lack robust regulatory 
systems, such as China and India. China alone has more firms 
registered to export drugs to the U.S. than any other country, 
posing major challenges to the FDA. As was noted by former FDA 
Commissioner David Kessler in a major news production, I quote: 
``China is `as close to an unregulated environment as you can 
get.' In fact, it is a lot like the U.S. was in 1906, he says--
'That's why we developed an FDA.'''
    The U.S. Food and Drug Administration is the Agency 
responsible for overseeing the safety and effectiveness of all 
human drugs marketed in the U.S. As part of its effort to 
oversee the safety and quality of these products, FDA's policy 
is to physically inspect foreign establishments that ship drugs 
to the American market.
    Last year this subcommittee asked the Government 
Accountability Office, GAO, to undertake a comprehensive audit 
of FDA's foreign drug regulatory system. The preliminary 
findings of that audit were presented at a hearing before this 
subcommittee on November 1st of last year. The GAO reported 
that a substantial lack of human and economic resources, 
weaknesses in databases in IT systems used by the FDA to track 
inspections and drug imports, and a lack of permanent 
operational support in foreign locations were major challenges 
facing the program. GAO also found that many of the FDA 
databases used to track foreign firms that export to the United 
States contain substantial material inaccuracies that have yet 
to be reconciled by the Agency.
    More specifically, a lack of resources was determined to be 
a major factor undermining FDA's drug inspection program. For 
example, while current law requires FDA to inspect domestic 
firms once every 2 years, which FDA is managing to do roughly 
every 2.7 years, GAO reported that FDA only has enough 
resources to inspect foreign firms about once every 13 years. 
In China, one of the largest producers of active pharmaceutical 
ingredients for the U.S. market, FDA only inspects about 10 to 
20 firms each year against an inventory of more than 700 firms. 
At this rate, the FDA can only inspect each Chinese firm about 
once every 30 to 40 years. Worldwide, GAO concluded that on an 
annual basis, the Agency only has enough resources to inspect 
about 7 percent of existing foreign plants, which amounts to 
inspecting one plant every 13 years. Given that these 
inspections are the most important tool the FDA has to ensure 
firms are meeting U.S. drug safety regulations, these rates are 
unacceptable.
    FDA's IT systems for managing inspections and prioritizing 
risk was another major concern highlighted at the November 1st 
hearing. GAO testified that this system was antiquated, not 
designed for this purpose, and fraught with duplicative and 
inaccurate data. Such flaws made it difficult for the Agency to 
assess risk and prioritize inspections. Further, FDA could not 
determine how many foreign firms were subject to FDA 
inspections or where they were located. One database suggested 
that there were 3,000 foreign firms registered with FDA to 
market drugs in the U.S., and yet another database seemed to 
show 7,000 firms actually shipped products to the United 
States.
    How can there be any confidence that the FDA is adequately 
regulating foreign drug firms when the FDA has no idea who's 
making what, where they are physically located, and when they 
were last inspected? These problems highlighted 10 years ago 
still plague the Agency today.
    If the GAO and Subcommittee findings were not enough to 
demonstrate that the FDA's regulatory systems are broken, allow 
me to provide more evidence. In December of last year, a 
specially formed committee for the FDA submitted a 
comprehensive 2-year study entitled, ``FDA Science and Mission 
at Risk: Report of the Subcommittee on Science and 
Technology.'' This Science Advisory Board report assessed the 
Agency's ability to support a variety of existing and future 
regulatory operations. The special subcommittee that concluded 
this review was comprised of nearly 3 dozen external experts 
who represent industry, academia, and other governmental 
agencies.
    This subcommittee held a hearing on January 29th, 2008, to 
explore both the general concerns raised by the Science Review 
Board and their implications for food and drug import issues. 
The report advisors, including Chairperson Dr. Cassell, who 
will testify again today, provided alarming testimony regarding 
FDA deficiency in meeting its regulatory responsibilities. The 
panel is particularly troubled by the multitude of IT issues 
affecting the entire agency, including those related to foreign 
drug inspection program.
    With regard to the scarcity of resources for conducting 
foreign drug inspections at the Agency, the report states: 
``Although approximately 80 percent of the active 
pharmaceutical ingredients used in our prescription drugs are 
imported from abroad, and foreign imports of drugs and active 
pharmaceutical ingredients were valued at more than $42 billion 
in 2006, FDA conducted only 361 foreign drug and biological 
product establishments in 2006. Only 32 field inspections were 
made in India and 15 in China, the two largest sources of 
pharmaceutical exports to the United States. Millions of 
shipments of FDA-regulated products are now imported into the 
country each year from foreign facilities that have never been 
inspected by FDA, and, with current appropriations, never will 
be.''
    The FDA Commissioner was present at the January 29th 
hearing. During his testimony the Commissioner agreed to 
consult further with the Subcommittee to explore ways to 
resolve the many problems identified in the Science Advisory 
Board report and address a multitude of concerns raised by the 
GAO, the Subcommittee, and others related to food and drug 
imports. Almost immediately on the heels of the January 
hearing, the FDA was quickly overwhelmed by the very type of 
crisis these reports and audits predicted would occur: 
contaminated heparin from China.
    As we are now familiar, in late 2007 and early 2008, FDA 
began noticing hundreds of reports of adverse reactions to 
heparin, including vomiting, breathing difficulties, low blood 
pressure, and as many as 81 deaths. We would learn that tainted 
heparin was imported from China, and that the Chinese facility, 
Changzhou SPL, which made the active ingredient, had never been 
inspected by the FDA because of multiple internal failures. 
Laboratory testing revealed that a foreign ingredient called 
oversulfated chondroitin sulfate had somehow been added into 
the heparin production chain. While investigation into the 
origin of this contaminant continues, this tragic episode 
underscores the vulnerabilities in the current system used to 
regulate foreign drugs.
    We have spent almost a year investigating the nature and 
extent of failures in FDA's foreign drug inspection program. 
After several hearings, the findings of the GAO, FDA's own 
Science Board, countless press articles, and the Subcommittee's 
own work, there are enough red flags to suggest to this 
Chairman, it is time to act and fix this program. GAO said it 
perfectly in last year's testimony, and I quote: ``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.'' To date, FDA has been unable to assure 
the public these products are safe because they do not address 
the numerous systemic weaknesses many of us have identified. 
Because GAO and others will report today that many of the same 
problems we identified last year are still with us today, I can 
only conclude that American lives are unnecessarily being 
placed at risk.
    I look forward to hearing from the Commissioner today. 
However, given the current nature of his agency's foreign drug 
inspection program, I think it is incumbent upon him to lay out 
a credible plan that demonstrates what steps the FDA has or 
will take to close these gaps and what resources or regulatory 
tools he needs to do the job.
    Last year, this Nation's regulatory failure resulted in 
dead dogs and cats. This year, it has tragically led to the 
deaths of people. If we don't make rapid progress on fixing the 
foreign drug inspection program, the next melamine or heparin 
tragedy will soon be upon us.
    With that, I next recognize the Ranking Member of the 
Committee, Mr. Shimkus from Illinois, for an opening statement.
    Mr. Shimkus. Thank you, Mr. Chairman. I'd like to yield my 
time to the Ranking Member of the full committee, Mr. Barton, 
for an opening statement.
    Mr. Stupak. Mr. Barton, please, for an opening statement.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Thank you, and I apologize for going out of 
order. I have another meeting upstairs that I'm going to go to 
after the statement and then I will come back down for the 
questions.
    I want to commend Chairman Stupak and Ranking Member 
Shimkus for holding this hearing. It continues the bipartisan 
tradition of oversight work to ensure that the FDA is policing 
the safety of our drug supply. I want to commend Dr. von 
Eschenbach for attending, as he said he would when we had a 
hearing on this subject several months ago. It shows that he is 
a man who keeps his word and is willing to come before the 
Subcommittee when necessary.
    We're all very concerned about the safety of our imported 
food and drugs. And we're even more concerned that many of 
those are coming from China, which has a spotty record of 
regulating its products which are sold for export. There is a 
long history of counterfeit products from China, shoddy 
manufacturing. Sometimes those shoddy manufactured products and 
counterfeit products cause real problems in our country. The 
American people deserve better, and there is something very, 
very wrong with our system if we can't decide on a collective 
basis, cooperative basis with the administration and the 
Congress, what to do about it.
    This subcommittee has done outstanding work over the years 
in revealing the weaknesses in our current inspection program, 
both domestically and foreign. The risk from imported drugs has 
increased quite simply because the number of imported drugs 
have increased almost exponentially. And we haven't given the 
FDA the resources to handle the increased scope of activity. 
And it is quite probable--if it's not probable, it's at least 
possible that the FDA's regulatory scheme has not been up to 
the task in terms of overseas inspections.
    I was under the impression, until preparing for this 
hearing, that an active drug--a new active drug ingredient if 
it is from an overseas plant--had to have preapproval, and that 
required inspection. Apparently that's not the case because 
we've got evidence that the FDA has allowed foreign facilities 
to go uninspected or barely inspected. It would seem that that 
would be one change that we need to make and we need to make 
immediately.
    Another issue before us is, I believe that the ability of 
the FDA to refuse products to come into this country needs to 
be put into statute. I thought again in preparation, not for 
this hearing but a previous hearing, that we had the statutory 
authority to give to the FDA that if they felt like a facility 
or particular drug or base ingredient wasn't safe, they could 
refuse its admittance to the United States market. Apparently 
that's not the case. It is an authority that the Secretary of 
Health and Human Services, Secretary Leavitt, has asked for. It 
is an authority that I support giving the FDA, and hopefully 
it's an authority we can put into statutory law on a bipartisan 
basis later this year.
    It is clear that the FDA needs some new thinking in how to 
deal with the 21st century in the global commercial market that 
we have today. We don't have the luxury that we had even 50 
years ago of just staying here, snug as a bug in a rug, in our 
home country, and blocking out the rest of the world in terms 
of drug imports and things like that. We have to come up with a 
system that makes sense both from an economic standpoint, from 
a regulatory and manpower standpoint, but also from a safety 
and efficacy standpoint. And that is the bottom-line purpose of 
this hearing.
    The agency needs congressional approval to clarify its 
jurisdiction to warrant criminal conduct outside the United 
States that threatens the health and safety of the United 
States population--again, that's something I hope we can give 
the FDA in statutory authority later this year. The FDA needs a 
foreign inspection program with many, many more full-time 
inspectors overseas and with the availability to go into these 
foreign plants and conduct the inspections in overseas plants 
like they are allowed to conduct the inspections in domestic 
United States plants. Foreign inspections, unfortunately, are 
the neglected stepchild of the FDA's drug inspection program 
and that simply cannot continue.
    I am told Commissioner von Eschenbach has several good 
ideas to share with us in this hearing about how to make those 
changes. Again, I want to welcome the Commissioner and welcome 
the panelists on the other panels. This is an important hearing 
and hopefully, while it's an oversight hearing, will lead to 
some legislative action that this committee takes to help 
remedy this problem in this Congress.
    With that, Mr. Chairman, I yield back.
    Mr. Stupak. Thank you, Mr. Barton.
    Mr. Dingell for opening statement, please.

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

    Mr. Dingell. Sir, I thank you for holding this very 
important hearing. Today we are here to again explore whether 
this administration is adequately able to protect American 
citizens from unscrupulous or incompetent foreign manufacturers 
of pharmaceutical products or whether they have the will to get 
the money and the resources necessary to do so.
    Given the findings of this subcommittee of the recent 
disturbing events surrounding tainted heparin, I believe that 
FDA is clearly not up to the test, or cannot or will not 
undertake the reforms needed to protect Americans from this 
threat from abroad, or get the resources that they need to 
carry out the business that they are charged with. Indeed, they 
don't even tell us what their needs are to meet the challenges 
that are imposed upon them by their important responsibilities 
of protecting the health and safety of American people.
    Now, let's summarize some of the Committee's key findings 
from its investigation so far. and then let us ask the 
Commissioner to defend the indefensible.
    First, significant and growing amounts of pharmaceutical 
products are used by Americans that are manufactured overseas. 
At least 80 percent of all active pharmaceutical ingredients 
are now imported, much of it from countries lacking competent 
regulatory systems, such as China and India. Current U.S. law 
requires FDA to inspect domestic manufacturing firms once every 
2 years. But there is no law requiring the same for foreign 
firms. And it is to be observed that FDA cannot and does not 
investigate foreign firms sending these kinds of substances 
into the United States.
    While FDA is able to investigate and inspect domestic firms 
about once every 2.7 years, the inspection rate for foreign 
firms is once every 13 years or more. In fact at this time, FDA 
is able to only inspect about 7 percent of existing foreign 
firms shipping drug products to the United States annually.
    Now, what does this mean? More than 700 Chinese firms are 
currently ``registered'' to export drug products to the United 
States. But FDA can only inspect about 10 or 20 of them per 
year. In other words, it would take FDA more than 30 years to 
inspect each Chinese firm a single time, assuming that no new 
firms are added to the list.
    The information technology system, or IT system, that FDA 
uses to track and manage data on foreign manufacturers and the 
drugs they export to the United States is archaic and fraught 
with inaccuracies. As a matter of fact, FDA has pointed out to 
the Committee or to the public that a recent inspection of one 
of the firms involved in the heparin question was the wrong 
firm because it had a similar name.
    FDA is unable to tell us how many foreign firms are subject 
to inspection globally, or where they are located. GAO reports 
that FDA cannot determine how many firms are exporting drugs to 
the United States. And we are imposing upon American 
manufacturers duties to produce safe, effective commodities and 
to do so under proper manufacturing practices. No such 
imposition is going on with regard to foreign firms, simply 
because FDA can't inspect them or tell us that these 
requirements are being put in place.
    The last time the Commissioner of Food and Drugs was here, 
he promised to return and give us the details of how he was 
going to fix this sorry mess. I hope that his testimony today 
will not resemble what he told the Senate appropriators last 
week, which appeared to be extraordinarily short on substance 
and heavy on bureaucratic buzz words. I'm hoping that the 
Commissioner will finally tell us what additional resources he 
needs.
    The President's 2009 budget does little, if anything, to 
close the gap in foreign inspection rates. To this point, 
neither I nor the American people have any reason to believe 
that the administration is protecting us or is serious about 
protecting us from dangerous foreign-made drugs or raw 
materials from which these drugs are made. Frankly, until the 
Commissioner honestly tells the Congress what new regulatory 
tools are needed and what it will take to fix the broken IT 
systems, and how many personnel it will take to inspect foreign 
firms with meaningful frequency, I fear that we are going to 
continue to see contaminated products entering both our food 
and our drug supply, while FDA sits helplessly by watching 
calamities impend upon the safety and security of the United 
States.
    This is an intolerable situation and this committee intends 
to address this with legislation this year. We hope that the 
Food and Drug Administration and this administration will do 
something about these matters. If they will cooperate and help, 
it will make it easier; but if they won't, we will do it to 
them anyway.
    Thank you, Mr. Chairman.
    Mr. Stupak. Thank you, Mr. Dingell.
    Mr. Shimkus for an opening statement, please, sir.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you, Mr. Chairman. Today's hearing 
revisits the question of great and urgent importance to the 
American public and that is, What must the Food and Drug 
Administration do or be able to do to assure the safety of 
drugs in bulk drug ingredients imported into the United States? 
Part of the answer, of course, involves assuring a sufficiently 
robust foreign drug inspection program.
    This committee explored the foreign drug inspection program 
in some detail at a hearing this past November. As was 
established at that hearing, the present situation doesn't make 
sense. We have an agency that has focused a majority of its 
facility inspections on domestic firms, when most of the 
facilities involved in supplying drug product to the American 
public are now situated overseas. A good portion of these 
facilities are in countries like India and China. And we have 
an agency that has not implemented the IT systems and 
informational tools to identify fully and rapidly the risks 
confronting us from abroad, let alone identify all the foreign 
facilities that should be subject to inspection.
    We have already heard the numbers that show the imbalance 
in risk priorities, with most domestic firms inspected about 
every 2 years, about literally hundreds of foreign firms that 
have not seen an inspection, if at all, in a decade. Clearly 
these priorities need to be brought closer into balance.
    The Subcommittee also established that frequent 
surveillance inspections are important for assuring good 
manufacturing practices in foreign facilities. Good 
manufacturing practices and related safeguards over the supply 
chain reduce the risk that dangerous impurities in substandard 
products will turn up in U.S. medicine cabinets. Weak quality 
assurance safeguards have tragic effects. As Mr. Whitfield 
noticed in November, a bulk product that contains an impurity, 
something spot-testing may not detect, can cause injury or 
death to numerous people.
    We saw this with Chinese imports of gentamicin in the late 
1990s. We worry that the same may have occurred with heparin 
contamination in recent months.
    The main reason for today's hearing is for the FDA 
Commissioner von Eschenbach to lay out for us his strategy for 
improving the Agency's foreign inspection program. He is here 
this morning to respond to findings by this subcommittee, and 
the GAO as well as the FDA Science Advisory Board. That panel's 
subcommittee report painted a picture of the FDA struggling to 
fill its public health mission. It described resource 
shortfalls, deficient information systems and structural 
problems at the Agency that we should address.
    I very much appreciate the Commissioner's willingness to 
step once more into the Subcommittee's fire, but it is very 
important to hear its plans to address the problems we see. We 
will hear this morning some positive actions; but are these 
actions enough? Is the Agency using all the tools at its 
disposal to orient itself fully to the realities of foreign 
imports?
    For example, we know there are informational tools at the 
FDA's disposal, such as pilot Predict system, that promise 
large advances in realtime risk assessment. Predict has been 
pilot-tested, but we have yet to see this deployed widely. Why 
the hold-up? And what does this say about the Agency's 
commitment to modernize? More disturbing is the Agency's policy 
to waive inspections, even in countries such as China, for 
reasons that have nothing to do with the facility risk or 
location. This ad hoc waiver may be driven by resource 
constraints, but it raises questions about the Agency's policy 
priorities as well.
    As we move through the hearing today, I think it is 
important that first we develop good information about what the 
Agency is doing now to improve its information systems and 
foreign posture. We should learn how quickly it can bring some 
balance between its domestic and foreign inspection priorities. 
We should discuss what authorities FDA needs regarding overseas 
criminal conduct. This should help us improve our discussions 
about what Congress can do legislatively.
    And second, as we discuss what more needs to be done, I'm 
hopeful we can also discuss where we want the Agency to be 10 
years out. Do we want an agency structured as it is today, just 
with more people; or can we find some agreement that we need a 
smarter, more agile agency, using all the best and integrated 
information technology that can tackle the challenges of global 
commerce more cost effectively than the current model?
    Mr. Chairman, the Subcommittee has done great work to 
identify the Agency's weaknesses as they exist today. Let us 
gather some facts and perspective to develop a vision for this 
agency's future as well. I yield back the balance of my time.
    Mr. Stupak. I thank you.
    I want to ask Mr. Melancon for an opening statement, 
please.
    Mr. Melancon. Thank you, Mr. Chairman. I'm going to waive 
an opening statement and reserve my time for future use. Thank 
you.
    Mr. Stupak. Mr. Burgess.

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

    Mr. Burgess. Thank you, Mr. Chairman, and thank you for 
holding this hearing today. I think it's timely and, as the 
heparin story unfolds, we have no choice but to be more 
proactive in our safety measures abroad.
    Mr. Chairman, I'm a physician before I came to Congress, 
and I know that I have to trust what I'm prescribing for my 
patients. I have to trust that it is not adulterated, that it 
has not been mislabeled. I have to trust that someone with 
criminal intent has not adulterated the medication. The reason 
I trust the medicine is because the Food and Drug 
Administration approved it.
    If it is acceptable that we do not know exactly who 
manufactured the ingredients of the drug, or if those 
ingredients are safe or not, or if the factories have even been 
inspected, then that whole system comes into question.
    Pure and simply, doctors rely on the Food and Drug 
Administration to approve drugs that keep the American public 
safe, and they've done a great job over the years. That safety 
is generally stipulated when a patient comes into a doctor's 
office and a prescription or treatment is recommended.
    Today, we are very fortunate to have a physician at the 
helm of the Food and Drug Administration. Therefore, he can 
relate to my concerns about the trust that physicians place in 
this Federal agency. I certainly would like to thank Dr. von 
Eschenbach for once again appearing before us to continue this 
important dialogue on the Food and Drug Administration's 
inspection program.
    In addition to Dr. von Eschenbach's testimony, we will also 
hear from the Chair of the Science Board. When we had our 
hearing earlier this year on the report, I was very disturbed 
at some of the findings. Dr. Cassell's testimony today will 
hopefully shed more light on how the report relates to a Food 
and Drug Administration foreign drug inspection program. With 
the significant increase in imports, I think this program 
should be one of the most crucial programs we have at the Food 
and Drug Administration. So, Dr. Cassell, thank you for being 
with us today as well.
    And I would be remiss if I did not welcome Dr. William 
Hubbard. You have provided this committee with great insight, 
and I thank you for your commitment to making what I believe is 
arguably the most important Federal agency in the United States 
better and stronger.
    We heard the Chairman--I'm sorry, the Ranking Member of the 
subcommittee--Ranking Member of the full committee, rather, 
talk about the ability to stop dangerous food imports from 
entering our country. H.R. 3967, the Imported Food Safety 
Improvement Act that was introduced earlier this year, that 
bill came largely as cooperation and instruction and advice 
from Al Hubbard, Dr. Hubbard, to our office. And we need the 
same authority now for the active pharmaceutical ingredients 
that are manufactured in other countries coming into our 
country.
    Mr. Chairman, we are here today to better understand the 
Food and Drug Administration's foreign drug inspection program. 
And, unfortunately, we all realize the Food and Drug 
Administration has real problems in ensuring that our Nation's 
food, drugs, and devices are safe and effective. What is not 
clear is how the Agency has responded to these shortcomings, 
and how effective these measures have been, and how Congress 
could actually be helpful in getting the FDA to make the 
necessary changes.
    According to the GAO report that we will hear about today, 
some changes are being made as to how the FDA handles drug 
importation. But these changes will require widely invested 
resources and firm leadership in order to have the 
accomplishments that we all so much desire.
    The former Speaker of this House of Representatives, Newt 
Gingrich, says, time and time again, real change requires real 
change. New technology is desperately needed to help integrate 
the databases and modernize the recordkeeping.
    Apparently there is talk of starting FDA field offices 
overseas, a measure that I would likely support. However, the 
mission of these new offices is still not clear in establishing 
that clarity should be crucial for receiving the support of 
this subcommittee. Meanwhile, we are still consuming drugs from 
factories that have never been inspected, are possibly 
completely unknown, and we have people dying from these 
affected medicines.
    The heparin story is still evolving, Mr. Chairman. It is 
interesting that no test, no test available would have detected 
the hypersulfated chondroitin present in the contaminated 
product that came into this country, the very contaminant that 
is thought to cause the adverse heparin reactions.
    With that, the FDA is trying to improve, and I believe is 
trying to improve, under the leadership of Dr. von Eschenbach. 
Change and progress is occurring, but these improvements 
require resources that have been denied for many years.
    Now, the Chairman of the full committee asked a question, a 
rhetorical question, I assume: What additional resources the 
FDA needs to protect the American people. He questioned the 
administration's sincerity about protecting the American 
people. I think realistically anyone who has watched this full 
committee over the past several weeks would have to wonder 
about congressional intent and whether or not that's also 
suspect, with the ill-advised bill we had a few weeks ago to 
have the FDA take on an entirely new venture to regulate 
tobacco. And the lead editorial in today's Wall Street Journal 
finishes with the observation, ``congressional priorities are 
rarely so grotesque.'' And I would agree with that.
    Mr. Chairman, it is not just dollars. We've heard from the 
Science Subcommittee the personnel report, and the training of 
those personnel are important. The policy and procedures within 
the Food and Drug Administration are critical, the lack of 
information technology infrastructure prevents--truly prevents 
the development of a 21st century system that's needed to 
protect Americans. And after all, at the end of the day, that's 
what we are all after, providing Americans with the protection 
that they have grown to give, that knowledge that they have 
grown to accept from the Food and Drug Administration that that 
protection is just a given, it is just assured.
    With that, Mr. Chairman, I yield back the balance of my 
time.
    Mr. Stupak. I thank the gentleman.
    Seeing no other members, we will call our first witness.
    That concludes the opening statements by members of the 
subcommittee, and I call our first panel witness to come 
forward. Our first panel, we have the Honorable Dr. Andrew von 
Eschenbach, Commissioner of the Food and Drug Administration. 
It is the policy of this subcommittee to take testimony under 
oath. Please be advised that you have the right under the rules 
of the House to be advised by counsel during your testimony. Do 
you wish to be represented by counsel?
    Dr. von Eschenbach. No, sir.
    Mr. Stupak. OK.
    [Witness sworn.]
    Mr. Stupak. Let the record reflect the witness replied in 
the affirmative. Doctor, you are now under oath, we will hear 
your opening statement. You may submit a longer statement for 
inclusion in the record. Commissioner, your opening statement, 
please.

STATEMENT OF ANDREW C. VON ESCHENBACH, M.D., COMMISSIONER, FOOD 
           AND DRUG ADMINISTRATION, WASHINGTON, D.C.

    Dr. von Eschenbach. Thank you very much, Chairman Stupak, 
Ranking Member Shimkus, members of the Committee, and Chairman 
Dingell. Over the past 2\1/2\ years, everytime I have appeared 
before this committee my message has been the same: The FDA is 
immersed in a rapidly and radically changing world and we must 
make radical and rapid changes if we are going to continue our 
record of excellence as the world's gold standard regulatory 
agency for food and medical products for both people and 
animals.
    I have consistently endorsed the fact that this would 
require additional resources, and over three budget cycles have 
presented requests for those additional resources to the 
Administration and to Congress. Most importantly, I've 
presented to this committee plans and proposals to use current 
and future resources wisely and strategically to achieve our 
mission to protect and promote the health of every single 
person in the country and, in fact, around the world.
    Globalization, increased product complexity, and other 
market developments, are placing tremendous strains on our 
import safety system. These trends are not new and were 
anticipated years ago in a report by the GAO. The agency's 
response has been deliberate, but nowhere adequate in 
proportion to the growth of the challenge.
    [Slide shown.]
    Dr. von Eschenbach. The first slide I share with you just 
demonstrates the volume of FDA-regulated products that are 
entering into this country. The data demonstrate that 
inspection at our borders for this volume of products could 
never be an adequate barrier that would assure protection to 
patients and consumers.
    [Slide shown.]
    Dr. von Eschenbach. The next slide shows the number of 
establishments producing drugs outside the United States for 
import and, just looking at drugs, there are over 1,300 sites. 
And you can multiply this many-fold if you consider active 
pharmaceutical ingredients, biologics, medical devices, and 
generic drugs. No matter how we arrived at this point, if we 
address the challenges of this reality, the solution is not 
simply to just do more of what we have done in the past, but we 
must do things differently.
    [Slide shown.]
    Dr. von Eschenbach. The next slide indicates that FDA must 
not just be a gatekeeper, but must be involved across the full 
life cycle of the products that we regulate, from their very 
production to consumption, by imposing strategies that 
encompass prevention, intervention, and response across the 
entire supply chain, both domestic and foreign.
    As you mentioned this morning, Mr. Chairman, at the core of 
this systems approach to this total engagement and product life 
cycle is the need to create a state-of-the-art information 
technology infrastructure with data management systems that are 
capable of acquiring the complex and diverse information from 
multiple sources with integration and analysis of that 
information that defines risks, and targets appropriately FDA's 
regulatory resources and actions.
    At the last hearing I discussed with you our vision for our 
enhanced information technology infrastructure and the progress 
we are making along a trajectory toward a total renovation of 
this infrastructure by 2010. But information management that 
provides comprehensive information about the regulated product 
is only one component of what is required. We must assure that 
quality is built into these products at the very source of 
production, and that all parties involved in the entire supply 
chain are held accountable for maintaining that quality. FDA 
must be proactive.
    In that regard, today, I describe to you a major initiative 
of quality assurance: FDA's Beyond our Borders Initiative. This 
addresses imported products with a systems-based approach to 
the systemic problem of the Agency's regulation of food, 
cosmetics, and medical products. The initiative includes a 
number of broad activities, including increased collaboration 
with foreign regulators, use of third parties to provide 
information about regulated industry compliance with FDA 
standards, and also providing additional direction to the 
regulated industry for their global activities.
    Beyond our Borders presents and builds on the very 
extensive and successful collaboration we have already 
established with foreign counterparts, including more than 70 
cooperative agreements and 30 confidentiality agreements with 
trusted foreign regulators, many of which provide the 
possibility of sharing inspection reports. These relationships 
provide a strong foundation for more extensive collaborations 
to prevent failure and quality, to intervene earlier when 
standards are not being met, and respond more rapidly and 
efficiently to signals of adverse outcome.
    The increasingly global nature of product development and 
production requires our continuous and intensive interaction 
beyond our border. This plan includes the establishment of FDA 
offices in China, India, Latin America, Europe and the Middle 
East. I have been engaged in direct discussions in each of 
those areas to obtain support and a welcome for a U.S. FDA 
presence, and that progress is well underway, especially to 
establishing our first office in China.
    FDA can rely in part on these efforts in making important 
risk-based decisions regarding imports. Permanent overseas 
offices, especially in China, will allow greater access for FDA 
inspectors and, very importantly, greater interactions on an 
ongoing basis between FDA staff and Chinese officials and 
manufacturers to help assure that products that are being 
shipped to the United States meet FDA standards for safety and 
manufacturing quality.
    Another component of Beyond our Borders leverages private 
sector resources. As recommended in the President's action plan 
for import safety, FDA is pursuing expanded use of third-party 
certification by foreign producers to verify compliance with 
U.S. safety and security standards with FDA oversight and 
verification. These third parties can include foreign 
government agencies as well as independent agencies accredited 
by the FDA. And they can provide helpful information about 
compliance with FDA's requirements. FDA certification will not 
supplant our inspectional responsibilities or our regulatory 
activities, but will simply complement them and expand our 
affect.
    To help increase information about foreign facilities, we 
will also engage external nongovernmental organizations with 
foreign offices to conduct onsite verification of registration 
data, product listing information, and the information so 
necessary in our ability to understand the source of these 
products. We would also be visiting foreign firms and verifying 
and documenting that information on a continuous ongoing basis. 
Assisting foreign regulators to be able to understand, 
implement, and embody FDA standards is another essential 
component of this initiative to build capacity beyond the FDA 
to a global effort at product safety.
    My written testimony about our prevention intervention 
response strategy provides more specific information about 
Beyond our Borders Initiative and our efforts are underway to 
enhance our oversight of imported products. Important of these 
is the request of new authorities that will help ensure that 
foreign manufacturers of drug products are in compliance with 
U.S. law.
    We have requested Congress to provide statutory authority 
for FDA to require certification by third parties, in certain 
circumstances that incoming products must meet U.S. importing 
standards; that we can refuse admission of products for which 
FDA encounters undue delay, limits, or denials of access for 
inspection of foreign manufacturing sites; that we have the 
authority to expedite destruction of certain unsafe medical 
products and authority to seek asset forfeiture remedies for 
criminal offenses regarding fraudulent or counterfeit products.
    I appreciate the opportunity to once again be with you 
today, and I look forward to answering your questions about the 
details of these proposals that will enhance and strengthen 
FDA's ability to ensure Americans of the quality of the 
products they consume, irrespective of where they are made.
    Thank you, Mr. Chairman.
    Mr. Stupak. Thank you, Mr. Commissioner.
    [The prepared statement of Dr. von Eschenbach follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Stupak. Mr. Commissioner, appreciate you being here 
today, and thank you for taking the time to come to the 
hearing. We invite you to stick around for our second panel's 
testimony. The witnesses on our second panel represent more 
than 100 years of working experience with the FDA in the 
pharmaceutical industry, as well as significant oversight 
experience at the GAO. So while we welcome your testimony, we 
think their testimony would also be valuable in assisting you 
in making changes at the FDA, and I think it would be 
worthwhile for you to listen to it.
    I'm going to yield my time for questioning at this point in 
time and turn to the Chairman on the full committee, Mr. 
Dingell, for questions, please.
    Mr. Dingell. Mr. Chairman, you are most kind and 
considerate, for which I thank you. Yes or no to these 
questions, Mr. Commissioner, because I have very little time. 
Isn't it true that in 2007 there were 3,200 foreign firms 
registered with FDA to ship drug products into the United 
States?
    Dr. von Eschenbach. I believe that number is correct, sir, 
yes.
    Mr. Dingell. Now, is it also true that according to a GAO 
audit, you inspect only about 2- to 300 of those foreign 
establishments each year?
    Dr. von Eschenbach. That's correct, sir.
    Mr. Dingell. At current inspection rates, that it will take 
FDA more than 13 years to inspect each foreign establishment 
once?
    Dr. von Eschenbach. Yes, sir. And that's why we need a 
systemic approach.
    Mr. Dingell. Now, GAO estimates that there are 714 drug 
manufacturing establishments in China registered with FDA; 
isn't that true? Yes or no.
    Dr. von Eschenbach. I believe that to be true, sir. I would 
have to check that number.
    Mr. Dingell. Now, of these 700 and more firms in China, 
isn't it also true that you'd inspect an average of 10 or 20 of 
these each year?
    Dr. von Eschenbach. Yes, sir.
    Mr. Dingell. GAO tells this committee the Agency inspects 
each domestic drug manufacturing firm once every 2.7 years. If 
FDA is inspecting each foreign firm once every 2 or 3 years, 
each domestic firm once every 2 or 3 years, how can you justify 
not inspecting foreign firms at the same rate?
    Dr. von Eschenbach. Mr. Chairman, we are completely in 
agreement that we need to extend our ability to provide 
regulatory oversight to firms.
    Mr. Dingell. So you're telling me that that situation is 
indefensible; is that correct?
    Dr. von Eschenbach. It is unacceptable for the future, yes, 
sir.
    Mr. Dingell. OK. Now let us address your budget. GAO 
reports across 41- to 44,000 for each foreign inspection; is 
that correct?
    Dr. von Eschenbach. I cannot verify that number, sir. We 
have slightly different numbers, but----
    Mr. Dingell. According to GAO, if FDA were to inspect each 
foreign establishment once every 2 years, as is required for 
domestic forms--firms, it would cost FDA approximately $70 
million. Have you seen these figures?
    Dr. von Eschenbach. Yes, sir, I have.
    Mr. Dingell. Do you agree with them?
    Dr. von Eschenbach. That figure may be somewhat higher than 
our estimates, but it is a reasonable number.
    Mr. Dingell. It is within the ballpark.
    Now, to inspect Chinese firms at the same rate FDA inspects 
U.S. firms, it would then cost FDA about $16 million if we use 
the estimates of GAO; is that correct?
    Dr. von Eschenbach. Approximately; yes, sir.
    Mr. Dingell. Do you differ with those?
    Dr. von Eschenbach. Well, Mr. Chairman, I think it is 
important for me to point out----
    Mr. Dingell. Yes or no.
    Dr. von Eschenbach [continuing]. That I believe we need to 
look not just at the cost of inspections but the entire system 
that we're using for inspections, and that may require 
different cost.
    Mr. Dingell. My time here--my time here is much limited, 
and I do apologize, but I've got--quite frankly, I'm going to 
be honest with you, I'm establishing that you don't have the 
resources and you can't do your job.
    Now, GAO reveals the most curious finding, in which the FDA 
has dedicated only $11 million for fiscal year 2008 and $13 
million for fiscal year in 2009 to conduct all foreign 
inspections, and this includes food as well. Are you aware of 
that finding?
    Dr. von Eschenbach. Yes, sir.
    Mr. Dingell. Do you agree with it or disagree with it?
    Dr. von Eschenbach. I agree with the finding.
    Mr. Dingell. Pardon?
    Dr. von Eschenbach. I agree with the finding.
    Mr. Dingell. All right. In light of these numbers, does the 
FDA need more resources to conduct inspections of foreign drug 
manufacturers? Yes or no.
    Dr. von Eschenbach. Yes, sir; I've asked for more 
resources.
    Mr. Dingell. All right. So is it fair for me to say, then, 
using FDA's estimate--rather, using GAO's estimate of $16 
million just for Chinese firms, your resources here under the 
budget request of $11 million and 13 million are not adequate; 
isn't that right?
    Dr. von Eschenbach. They are not in--they are not in 
concurrence with GAO's estimates; that's correct.
    Mr. Dingell. OK. Are you telling me that these are adequate 
or not?
    Dr. von Eschenbach. I'm telling you that we are putting 
those to appropriate use. I have requested additional resources 
to do more, but I'm trying to make the point that in addition 
to doing more, we have to do it differently.
    Mr. Dingell. You know, I've been in this business a long 
time, and I've had Food and Drug Commissioners constantly tell 
me, oh, we're going to have a new means of doing this and we're 
going to do this, we're going to be leaner and meaner. It turns 
out that they are leaner and poorer and weaker and less capable 
of doing their job. And all these promises that I get from 
commissioners of Food and Drug about how they are going to do 
better turn out to be nothing more or less than, quite frankly, 
hooey.
    Dr. von Eschenbach. Mr. Chairman, if you will allow me in 
the dialogue----
    Mr. Dingell. It is very----
    Dr. von Eschenbach. Heparin----
    Mr. Dingell. I've been talking to Food and Drug 
Commissioners for 40 years. You're not the first fella I've had 
to skin for not doing his job and coming up here and defending 
an indefensible situation. So I want to maintain any respect 
for you, but I can't maintain my respect for you if you keep 
toe-dancing around the hard facts that curse you with the 
inability to do your job because you don't have the resources.
    Dr. von Eschenbach. Mr. Chairman, I agree with you that we 
need more resources, but I think the point of the story is, the 
heparin situation indicated that, even if we had done the 
inspection, we would not have detected that contamination. 
That's why I'm trying to make the point to you that in addition 
to resources for more inspections, which I agree with----
    Mr. Dingell. Well----
    Dr. von Eschenbach [continuing]. That we also have to 
change the system.
    Mr. Dingell. How much--let's come right down to the nut-
cutting stage here and let's get a hard answer. How much money 
do you really need to carry out your responsibilities? In 
regard to foreign inspection, foreigners are not compelled by 
absence of inspections by FDA to carry out good manufacturing 
practices. American manufacturers are. How much money do you 
need to see to it that you put your treatment of foreign 
manufacturers of prescription pharmaceuticals and foods in the 
same position that you put U.S. manufacturers, because you 
inspect U.S. manufacturers on an adequate level and you do not 
inspect foreign manufacturers in the same way? How much money 
do you need to do the job that you have to have? Now, give me 
an answer to that question.
    Dr. von Eschenbach. Well, sir if you took the $45,000 for 
inspection and multiplied it by the number of facilities----
    Mr. Dingell. Mr. Commissioner, just tell me how much do you 
need? I'm rather tired of all this toe-dancing. You cannot do 
your job, you are not doing your job. How much money do you 
need to do it?
    Dr. von Eschenbach. Mr. Chairman, that would require me to 
present to you a business plan. You gave a figure of $45,000 
per inspection, if we were to inspect everything every 2 
years----
    Mr. Dingell. How much money do you need to do your job if 
you do the job on foreigners that you do on Americans? Simple 
question. I'm sure you----
    Dr. von Eschenbach. It would be the number of facilities.
    Mr. Dingell. Repeat it. How much money do you need? You are 
carrying water for an administration that is not giving you the 
resources that you need. This committee wants you to have the 
resources that you need to do the job that you have to do to 
protect the American people. Sixty-two people died because of 
bad heparin. Hundreds of others were made sick. You presided 
over this, because you do not have the resources to do the job 
that you need to do.
    How much money do you need to do the job that you are 
supposed to do to see to it that Americans are safe? You are 
the Commissioner of the Food and Drug Administration. You are 
presiding over an intolerable situation. How much resources do 
you need?
    Dr. von Eschenbach. Mr. Chairman, I would like to have the 
resources that will enable us to do a systemic overhaul of the 
entire process, not a figure that's related to the cost per 
inspection times the number of facilities.
    Mr. Dingell. I don't want--just how much money do you need, 
on the basis of what I have described is going on, to do the 
job that you have to do to see to it that good manufacturing 
practices are conducted in places like China so as to protect 
the American consumers against unsafe commodities? You have one 
fine scandal going on, you have others going on with regard to 
fish and fish products. And you simply are absolutely incapable 
of addressing your responsibilities.
    Dr. von Eschenbach. Well, Mr. Chairman, if you wanted an 
answer to that question just for drugs, given the formula----
    Mr. Dingell. Well, please answer just for drugs.
    Dr. von Eschenbach [continuing]. $45,000. It is $45,000 per 
inspection times 3,000 facilities, just for drugs. What I am 
attempting to do is respond to your question.
    Mr. Dingell. I don't want to hear about how you're----
    Dr. von Eschenbach. Bigger than that.
    Mr. Dingell. Going to have new methodologies and how you're 
going to have a new regime for dealing with the Chinese. I just 
want you to tell me how much it takes you to provide the same 
necessary inspection for Chinese manufacturers of 
pharmaceuticals that you have now going on with regard to 
American manufacturers, so that you can insist that there be 
good manufacturing practices carried forward in China like they 
are carried forward in America.
    It makes about no sense American manufacturers are getting 
raw materials in from China that put American citizens at risk. 
So how much do you need to do your responsibility of inspecting 
those foreign firms in China to see to it that they carry out 
their proper responsibilities of giving us good manufacturing 
practices to assure the safety of the American consuming 
public? Simple question. How about an answer?
    Dr. von Eschenbach. If there are 3,000 facilities in China 
at $45,000 per inspection, that would be the figure.
    Mr. Dingell. What did he say? What did you say?
    Dr. von Eschenbach. If the estimate is that it costs 
$45,000 per inspection and there are 3,000 facilities, that 
would be the figure. But I'm trying to discuss with you the 
fact that I don't believe that is the solution to the problem. 
I believe it is much more complex and the solution needs to be 
much more comprehensive than simply inspecting a facility.
    Mr. Dingell. Well, all right. How do you propose to assure, 
then, that good manufacturing practices are carried forward 
without inspecting these people?
    Dr. von Eschenbach. Well, they need to be inspected. I'm 
not precluding that----
    Mr. Dingell. All right.
    Dr. von Eschenbach [continuing]. This doesn't----
    Mr. Dingell. How are you assured that the facilities are 
safe? How are you to be assured that they are clean? How are 
you to be assured that there are not adulterants added? You 
just have a fine fuss going with the Chinese about whether they 
are adding illegal components. It is here in the newspaper. Are 
you aware of this?
    Dr. von Eschenbach. One thing, Mr. Chairman----
    Mr. Dingell. Are you aware of this article, Commissioner?
    Dr. von Eschenbach. One thing, as I pointed out in my 
opening statement, is that we cannot do this on an episodic 
basis of going and coming. We have to have offices that are 
physically present in these countries where these products are 
being produced; engaged in an ongoing continuous presence that 
involves inspections and enhancement of our inspection, at the 
same time building capacity within those countries.
    Mr. Dingell. See, if I can simplify this and get rid of the 
toe-dancing here, you've got $45,000 per investigation, you've 
got 3,000 firms, that comes to $70 million, am I right?
    Dr. von Eschenbach. Yes, I will trust your math, sir.
    Mr. Dingell. I note, with apology to you, Mr. Chairman, 
that my time has expired. I want to get back into these matters 
at a time later.
    Commissioner, I have nothing--no ill will towards you. I 
have ill will of the most gross sort towards the fact that you 
come up here and defend a situation that is indefensible, and 
that you are not soliciting the resources that you need to do 
your job to protect the American people the way the law says 
you should, and that you are tolerating an administration which 
is allowing this kind of situation to obtain, because they are 
too damn tight to see to it that the American people have the 
funds that are necessary to protect them against wrongdoing in 
foreign countries.
    I yield back the balance of my time.
    Mr. Stupak. I thank the Chairman.
    Mr. Shimkus for questions, please.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Dr. von Eschenbach, it is--we knew it would be an 
interesting morning, so it is good to have you here. Let me 
just put this out just to start with. Did you attempt through 
the budgetary process to solicit additional funds to address 
some of these funding constraints that the chairman tried to 
raise?
    Dr. von Eschenbach. Yes, sir, I did.
    Mr. Shimkus. Can you say that again?
    Dr. von Eschenbach. Yes, sir. I'm sorry. I did.
    Mr. Shimkus. Thank you. One of--the success of elected 
officials, hopefully, is to try to take the complex and make it 
simple for folks to understand. And I think that is where the 
frustration comes, because we're not trying to manage an 
unwieldy bureaucracy. If we had a dime for every outsider who 
came in to reform the Federal bureaucracy with all the great 
ideas and then left really being tamed by the bureaucracy, not 
able to really develop--and there are some people, and we're 
going to hear it from other panelists later on.
    Some of the questions that we pose is, how do we remake the 
Agency in a new world, in a new era? How do we--some people say 
dismantle it. If we were to start over from scratch, what would 
we do?
    I'm not convinced that more money is always the solution. I 
think there is an argument that--more resources in this case. 
But, based upon the whole budget and other priorities, as I 
will address to the other members of the panel, if you have a 
producer, a manufacturing facility in the United States that 
has operated 10 years straight, been investigated every 2 
years, 5 times, with zero defects, that may call for 
readjusting priorities and saying, well, you have clearly got 
this down. We are going to come once every 3 years, and then 
you can shift to areas that we know need to be inspected.
    I like charts and slides, and I can't put this up like you 
did. But the reality is, you just have a factory, And we have 
got raw materials coming in, and we produce a product, and it 
gets to the consumer. And right here in the factory is where 
everything happens. And in good manufacturing practices, under 
ISO standards or under any type of thing, they test the raw 
materials coming in. You test the product that is going out--
you should--and you watch the chain inside the factory to make 
sure there is no contamination and you have--you have a 
process.
    Constitutionally, I know the President proposes a budget. 
We always get folks to come up here and complain--it doesn't 
matter what administration--they are cutting one side to give 
money to another. And we always respond--I always respond what 
the President proposes and we dispose.
    Constitutionally, all spending begins in the House. So, you 
know, as much as we have identified a resource issue--you have 
mentioned that you have asked for more resources. It is up to 
the House of Representatives in our appropriation process, if 
there is a shortfall, for us to do that. And there may be 
proposals that come through that will end up doing that. But 
the military acronym that we used in the infantry, keep it 
simple. There is another one. There are actually 2 S's, but it 
is not politically correct to say the second S. Keep it simple.
    So based upon the opening statements of your testimony, we 
have got a resource concern, and we--that--we also know it is a 
manufacturing evaluation in these factories, and we have 
technological hurdles that many of us would have hoped we would 
have been before and seen a little bit more progress than what 
we think we are at. And so that is kind of the analysis that I 
have.
    We have this chart, the majority put up another one using 
the country of China and the United States. But it basically 
has the domestic inspections versus--the inspectors versus the 
facilities, and there we have foreign, and there is a big gap. 
The question is, how do we fix that gap? Can you just--and that 
is the whole premise of this whole hearing, is how do we fix 
that gap? Tell me how we would do this as simply as possible, 
because we are all basically simple people up here.
    Dr. von Eschenbach. The answer to your very important point 
of looking at this and arriving at a conclusion is the fact 
that if we were just simply to increase the number of 
inspections, which we need to, but that in itself would not 
solve this problem, that--no greater example of that than the 
heparin situation in which inspection would have not detected 
that contaminant.
    And so what I have been attempting to do and what I tried 
to share with Chairman Dingell is that, in addition to 
addressing the need to increase our inspections, we also need 
to overhaul the entire system, everything from the creation of 
an information technology infrastructure to working with our 
foreign components and other regulatory agencies in other 
governments, to working with the private sector in terms of 
good manufacturing processes and hold them accountable for 
building quality at the outset.
    Mr. Shimkus. Because my time is short, get through--I think 
we'll build on these.
    In the second panel, GAO will testify on the next panel 
that, although the Agency has made positive progress in its 
databases and in steps to improve foreign inspections, it is 
not enough, as I said, to close the gap.
    And you've already started talking about commenting. We 
have established in good manufacturing that good manufacturing 
practice surveillance inspections are critical to assure 
quality of the drug supply and that more surveillance of 
foreign firms is needed. And I think you would agree with that. 
How quickly do you believe it will take us to close this 
inspection gap, the gap that I just raised in the first 
question?
    Dr. von Eschenbach. I believe that trajectory is going to 
be limited by our resources and authority and capacity to 
absorb the change.
    Mr. Shimkus. So tell us the authority and follow up with 
the chairman's question on what resources. That's what we need.
    Dr. von Eschenbach. The information technology 
infrastructure could be in by 2010 to 2012 at the very latest. 
The expansion of the workforce and enhancement of our capacity 
in our overseas presence could be done again within a matter of 
2 to 3 years. So I think the timelines for modernization for 
the FDA are relatively in a 5-year frame.
    Mr. Shimkus. We will examine heparin next week more 
closely. But given the broader implications, would good 
manufacturing practices surveillance inspection of the SPL 
plant, which did not occur, have provided information that 
would have helped in the current investigation? Now, that is a 
different question than what you have stated before.
    Dr. von Eschenbach. Mr. Shimkus, I cannot answer for that 
question as authoritatively today. I don't believe it would 
have, based on our current understanding of this investigation 
and our findings. But it is ongoing. It is an ongoing 
investigation, and I think the final answer is not yet 
determined.
    Mr. Shimkus. Yesterday, FDA released a warning letter on 
the Chinese-based heparin firm that supply the contaminated 
product, which said violations cause the heparin to be 
considered adulterated. If it wasn't for the heparin recall, 
how long do you think this plant would have shipped adulterated 
product before it was inspected?
    Dr. von Eschenbach. I cannot give you a time on that, sir.
    Mr. Shimkus. Its U.S. client apparently didn't catch the 
violations. Wouldn't an earlier FDA surveillance inspection 
have kept adulterated product off the product?
    Dr. von Eschenbach. Well, again, this contaminant was not 
detectable by the routine analytical methods. So the answer is 
no.
    Mr. Shimkus. Well, that's going to be the debating point. 
It's not detected. But other aspects of a good manufacturing 
product evaluation might have highlighted flaws in the process 
where--I concur. I think that under current inspections--see, 
we're talking about two things, and I had to learn this. One is 
getting the product after it has been produced, smashing it up, 
and testing it to see if the efficacy and if it has been 
adulterated and all those other things. But the whole process 
of the manufacturing processes is watching as the production 
line is moving forward. And that is where it is just not 
testing the end product, it is testing the production of the 
product.
    Dr. von Eschenbach. Correct. There is no question that, 
based on our inspection, that particular facility would have 
come under our regulatory intervention and for other reasons, 
and that in itself, perhaps, would have shut down that 
particular source. It is my understanding that there are other 
factories, other sources whose good manufacturing practices 
were quite appropriate and acceptable, yet the contaminant was 
still occurring.
    So, again, it is the issue of that particular facility had 
problems. We would have detected those. But that doesn't mean 
we would have detected this contamination of the heparin 
supply, because that is much more ubiquitous and would not have 
been detected by our routine analysis.
    Mr. Shimkus. Yes. And I'll end on this. Mr. Chairman, thank 
you for the time.
    Our concern is that the possible deviation of the good 
manufacturing processes, and I--that's where we want to keep 
these issues and highlight that point.
    Thank you, Mr. Chairman.
    Mr. Stupak. Thank you, Mr. Shimkus.
    Mr. Commissioner, on page 4 of the GAO testimony it 
states--and I quote--``the regular inspections of manufacturing 
establishments are an essential component in ensuring drug 
safety,'' end of quote. Do you agree with that?
    Dr. von Eschenbach. Yes, sir, I do.
    Mr. Stupak. Mr. Commissioner, you keep saying that the 
inspection would not have detected the heparin contamination. 
You don't know that. You don't know that because you don't know 
what you would have found if you would have inspected that lab 
or that plant because you didn't inspect them until after we 
had these deaths.
    In fact, Mr. Commissioner, the opposite can also be true, 
can it not, that your lack of inspections, like 30 years in 
China, actually encourages manufacturers to do substitutes like 
they did in this case here. If I'm not going to be inspected 
for 30 years, instead of using the pig intestines that you're 
supposed to use, why not use a sulphate chondroitin? No one is 
going to catch it, right? So why not use it?
    The same thing with melamine. We want to get a higher 
protein for this industrial food. Why not put melamine in 
there? They're not going to inspect us. It's going to take 30 
years, so you'll never catch us.
    So one could easily argue that the lack of inspections 
actually encourages a less safe product in some of these 
plants, is that not true?
    Dr. von Eschenbach. That is certainly one possibility, sir.
    Mr. Stupak. Sure. So the only definitive answer we can give 
is, look, we didn't inspect. It is wrong. We are supposed to 
inspect. We inspect in this country every 2 to 3 years. We must 
inspect every 2 to 3 years for that deterrent effect that 
inspections cause, whether it is in the United States or in 
China or anywhere else in the world, correct?
    Dr. von Eschenbach. We need to inspect appropriately. And 
what I have been trying to express is the fact that we need----
    Mr. Stupak. OK. Before you go there, before you go there--
--
    Dr. von Eschenbach [continuing]. The number of inspections 
or the frequency but the kind of inspections that we're doing.
    Mr. Stupak. I'm willing to go there with you, but you have 
to agree with me an inspection is a deterrent.
    Dr. von Eschenbach. I'm sorry, sir. I didn't hear.
    Mr. Stupak. Sure. You would agree with me that the 
inspection is a deterrent?
    Dr. von Eschenbach. It can be, yes, sir.
    Mr. Stupak. I mean, in the short time we have been here, 
toothpaste with the antifreeze, DEG, the cough syrup with the 
DEG, the melamine, the mixed protein, and now we have the 
heparin with chondroitin. So inspections actually act as the 
deterrent.
    Now, you want to talk about other ways to do inspections. 
Our last hearing, I had mentioned in the opening, was January 
29th, and you were at that hearing. I know you sat through it, 
and we appreciated the fact that you did.
    And you're talking about setting up--in fact, Kyle, if you 
can put that pyramid up that the inspector had. He has his FDA 
on top, FDA presence; and then you have these agreements. You 
have this pyramid here. It looks at the very top you have the 
FDA, but on the bottom where the work is being done you're 
relying on third parties to do it. Is that sort of correct?
    Dr. von Eschenbach. No. It is just a little graphic.
    Mr. Stupak. Third-party certification program, foreign 
competent authority inspections----
    Dr. von Eschenbach. That is intended to show that 
everything channels up to the FDA as the final authority. But, 
actually, you could turn it the other way around and say the 
FDA is the foundation for all of that.
    Mr. Stupak. Right. And you were talking--when Mr. Dingell 
was asking questions, are there other ways to do inspections, 
you're talking about third parties and having third-party 
certifications, right?
    Dr. von Eschenbach. That's one other addition, yes, sir. It 
expands our effectiveness and our influence across a wider 
horizon.
    Mr. Stupak. In one of your earlier slides you show, besides 
drugs, we have medical devices, animal food, biologics all 
coming into this country from foreign countries, right?
    Dr. von Eschenbach. Yes, sir.
    Mr. Stupak. January 29th, when you were in a hearing, we 
had a the GAO, and they talked about your third-party 
inspection programs and--especially on medical device 
manufacturing. Your third-party inspection program has been 
around since 2004, and it is called the accredited persons 
inspection program, the pilot multipurpose audit program. And 
it shows that over a 4-year period only 5 inspections had been 
accredited by these organizations, these third-party 
organizations. And the GAO concluded that the small number of 
inspections completed to date by accredited third-party 
organizations raises questions about the practicality and 
effectiveness of establishing similar programs that rely on 
third parties to quickly help FDA fulfill its responsibilities.
    So you are saying this proposal you're talking about, even 
in your testimony, so far at least in medical devices, it is 
not going to work, it is not effective, there is too few of 
them. In 4 years, you had 5 inspections only from third 
parties. So why is this going to be different?
    Dr. von Eschenbach. That's correct. And I have spoken to 
the people in CDRH about what some of those barriers were for 
acceptance of that third party. There are opportunities, I 
think, to improve upon that substantially.
    The other thing is, of course, what we define by a third 
party. That could also, of course, be other foreign regulatory 
agencies which have their own jurisdictions. So it is a much 
broader scope.
    Mr. Stupak. Sure. But even the FDA says, even in looking at 
your Beyond the Borders program, the one you talk about in your 
testimony, we are lacking specific implementation steps. What 
are the associated time frames would this be on our borders 
that--there is a lot of talk about this, but it will have 
little impact to reduce the interval between inspections. The 
FDA will have to--how do you plan on doing it?
    Dr. von Eschenbach. Well----
    Mr. Stupak. I mean, you talk----
    Dr. von Eschenbach. First of all, it is a multi-pronged 
approach. In addition to establishing these FDA Beyond Our 
Borders initiative----
    Mr. Stupak. OK. What is the main prong? You said this is a 
multi-pronged approach. What is the main one?
    Dr. von Eschenbach. Enhancing our current inspections.
    Mr. Stupak. Enhancing your current inspections. What data 
are you going to have to enhance current inspections done by?
    Dr. von Eschenbach. We did more foreign inspections this 
year than in the history of the FDA. We can do even more next 
year in targeting----
    Mr. Stupak. Even with $13 million and each one costs 
$45,000, you're going to do more?
    Dr. von Eschenbach. We are targeting 500 foreign 
inspections next year in addition to creating a foreign 
presence.
    Mr. Stupak. Five hundred at $45,000. I wasn't a math major. 
That would be about $200 million you're going to need, and you 
ask for $11 million. How is that going to jive?
    Dr. von Eschenbach. There is already an inherent--it is up 
to 500. We are up to 350, approximately.
    Mr. Stupak. OK. So I wasn't a math major. That would be $20 
million, not $200 million. So, either way, $20 million is about 
half of what you have asked for. So how do you get there?
    Dr. von Eschenbach. Well, there is also the capability of 
leveraging what we already had in play.
    Mr. Stupak. Leveraging with who? Who is going to do the 
inspections if you're not doing them? How are you leveraging? 
Who is doing them?
    Dr. von Eschenbach. We have inspectors in the Agency----
    Mr. Stupak. Sure.
    Dr. von Eschenbach [continuing]. And we'll need to detail 
them to the foreign inspections that we are targeting.
    Mr. Stupak. I see. So----
    Dr. von Eschenbach. One of the things that is more 
efficient----
    Mr. Stupak. Your IT system is broken. You don't--how are 
you going to prioritize it? The GAO says you can't even tell us 
what is being produced and sent to the United States. 
Therefore, it is hard to prioritize what is most significant to 
prioritize your inspections. So once you start with your IT 
system so you know who is out there, what are they sending? 
What is the right of the American people?
    Dr. von Eschenbach. Yes, sir. And we started that 2 years 
ago. That's in midcourse. We anticipate----
    Mr. Stupak. When will it be done, your midcourse?
    Dr. von Eschenbach. Pardon me?
    Mr. Stupak. Your midcourse, when will it be done? Two more 
years?
    Dr. von Eschenbach. Two more years.
    Mr. Stupak. So 2 more years before we have an IT system 
that can tell us what is out there, who is producing what, and 
then be able to prioritize our inspection. So we have got to 
wait 2 more years before we can even prioritize?
    Dr. von Eschenbach. It is incremental. It is improving 
consistently and constantly, but it won't be at full maturation 
until 2 years. The data center, for example, at White Oak at 
our consolidated facility is expected to open up in early '09.
    Mr. Stupak. Early '09.
    OK, it is my understanding that you proposed but not yet 
implemented a Foreign Vendor Registration Verification Program. 
When is that program going to start? I understand it is 
supposed to help improve the accuracy of the information in 
your databases. And the way I understand the program, your 
Foreign Vendor Registration Verification Program, the FDA is 
going to contract with an external organization to physically 
conduct site verification on the registration data of the firms 
shipping drugs and other FDA-regulated products of the United 
States. When is that going to start? Have you began the Foreign 
Vendor Registration Verification Program? It sounds to me like 
you're saying we can't do it internally, so let's get someone 
externally to do it. Have you begun that process?
    Dr. von Eschenbach. No. It is a matter of leveraging where 
those verifications are occurring for multiple purposes. We can 
benefit from that. Because, as you pointed out in the data 
system, there is a lot of redundancy. There are, in fact, firms 
that registered and are no longer shipping to the United 
States, and that is what created that discrepancy in the 
database.
    Mr. Stupak. Right. So you're going to have this Foreign 
Vendor Registration Verification Program. When is that going to 
start? Have you contracted with anyone to do this? That's what 
I'm asking.
    Dr. von Eschenbach. That is in process, And I cannot tell 
you when that will be fully implemented. But it is in process.
    Mr. Stupak. '09?
    Dr. von Eschenbach. I would have to get back to you about 
that, sir.
    Mr. Stupak. Do you have any money in the budget to 
implement a Foreign Vendor Registration Verification Program?
    Dr. von Eschenbach. These are parts of the planning of the 
budget, yes.
    Mr. Stupak. But do you have in '09--is there a line in 
there for a Foreign Vendor Registration Verification Program?
    Dr. von Eschenbach. I cannot specifically speak to a line 
item for that.
    Mr. Stupak. OK. Shouldn't we really assign, in fact, some 
of the legislative proposals have indicated a unique 
identification number to every foreign establishment that makes 
a drug and that have all databases, including those used by 
FDA, Customs, track activities such as inspection, products 
alert? Shouldn't we have that?
    Dr. von Eschenbach. Yes, sir.
    Mr. Stupak. Do you have that program ready to be 
implemented where every establishment----
    Dr. von Eschenbach. That is being done in collaboration 
with the other agencies that you have talked about.
    Mr. Stupak. But you can't give them a foreign inspection 
number until you know what firms are out there, right? You have 
got to establish the firms first before you can give them a 
foreign inspection number, right?
    Dr. von Eschenbach. Correct.
    Mr. Stupak. OK. So it sounds like you're verifying what is 
out there first, correct?
    Dr. von Eschenbach. Well, it is a combination of both. It 
is through registration and our verification.
    Mr. Stupak. OK. My time has expired. Mr. Burgess for 
questions.
    Mr. Burgess. Thank you, Mr. Chairman.
    Dr. von Eschenbach, welcome again to our humble little 
subcommittee. Since most of the reason for this hearing today, 
at least in my opinion, revolves around the heparin story 
coming out of China, let's stay on that for just a minute. What 
is the culprit there that is making people sick?
    Dr. von Eschenbach. It was a compound that was added to the 
heparin that you alluded to earlier, the hypersulfated 
chondroitin sulfate.
    Mr. Burgess. When you say ``added,'' did Baxter add this?
    Dr. von Eschenbach. No, sir. This appears to be coming from 
the source in China.
    Mr. Burgess. Well, of course, the counter from--at least my 
understanding from reading the papers today, the Chinese say, 
well, it may have been added in the United States. So we have a 
fair degree of certitude that that contaminant was in the 
product before it was ever imported to this country?
    Dr. von Eschenbach. Yes, sir.
    Mr. Burgess. Well, how would someone get it in there?
    Dr. von Eschenbach. We haven't determined that at this 
point, sir.
    Mr. Burgess. We're reasonably sure that this hypersulfated 
chondroitin sulfate is the culprit?
    Dr. von Eschenbach. Yes, sir.
    Mr. Burgess. What are the tests used to detect that?
    Dr. von Eschenbach. Well, upon noticing the adverse events 
and searching for what the offending component was within the 
heparin the patients were receiving, the routine analytical 
methods did not detect any abnormality. It wasn't until we did 
very sophisticated testing with nuclear magnetic resonance and 
a variety of other very sophisticated strategies in highly 
specialized laboratories that we were able to detect the 
presence of something that shouldn't have been there. And then 
that was subsequently identified as this particular compound.
    Mr. Burgess. Now, did the Food and Drug Administration 
decide to start doing the nuclear magnetic resonance testing on 
the compound?
    Dr. von Eschenbach. Yes, sir. We launched that 
investigation. We engaged both within the FDA as well as 
outside the FDA the appropriate scientists. And then, once we 
identified the compound, we actually developed an assay that 
could be used for routine screening to be able to find that 
contaminant in heparin; and that was distributed essentially 
worldwide so that many agencies around the world are now using 
our assay and evaluating their own heparin supplies.
    Mr. Burgess. But in December of 2007, no one, including the 
FDA or any of the manufacturers--or the importers, rather, or 
any other country would have been using that test?
    Dr. von Eschenbach. No, sir. It didn't exist.
    Mr. Burgess. It didn't exist. So it would have been 
impossible, even had you--we have heard all the stories about 
perhaps the wrong manufacturing location was selected for 
inspection. But even had all of the inspections--even if we had 
had an inspector at every plant in every foreign country, 
likely as not this contaminant could have found its way 
through?
    Dr. von Eschenbach. Yes, sir.
    Mr. Burgess. In fact, it seems very likely that this 
contaminant would have found its way through.
    Mr. Stupak brings up a good point about we have got the 
melamine in the dog food and now we have got hypersulfated 
chondroitin sulfate in the heparin. And you do have to wonder, 
is this just a very unscrupulous merchant with its thumb on the 
scale or is someone actively trying to do us harm? And, 
obviously, I wouldn't ask you to speculate since I'm doing that 
for you, but it does raise those very big questions.
    So what ability do we have--now, we--I realize the dog food 
wasn't your purview. But what ability do we have to anticipate 
the next level of larceny or terrorism--if I can use that 
word--that might come our way in our food or the active 
pharmaceutical ingredients that are coming from overseas?
    Dr. von Eschenbach. Well, our ability to protect and 
promote the public health is going to be dependent upon the 
information that we have to act upon. And what I am suggesting 
in this system's approach to our ability to now deal with 
products that are coming from all over the world, have an 
extraordinarily diverse complexity, that we have to be able to 
be much more present at the source of the production of those 
products.
    Mr. Burgess. Not only that, you have got to think like a 
thug and have the same type of simulations and--you could not 
intuitively have known that this product was going to enter the 
pipeline. I mean, none of us----
    Dr. von Eschenbach. No.
    Mr. Burgess [continuing]. Fat, dumb, and happy last 
Christmas would have had any idea that this was about to happen 
to our pharmaceutical industry.
    I guess what I'm asking is, is there a room of guys over--
or men and women over at the FDA, one of whom who thinks like 
criminals, one of whom thinks like terrorists, and they try to 
run these simulations? Where is our new vulnerability----
    Dr. von Eschenbach. And, in fact--in fact, that has been a 
model that we've benefited from as we looked at our food 
protection plan. Because we had been approaching food from the 
perspective of food defense as it related to intentional 
contamination, as well as food safety as it related to the 
unintentional contamination that could come from bacteria, et 
cetera, and chemicals; and we appreciated the opportunity to 
integrate that into a cohesive system that is based on 
important intelligence as well as modern scientific analytical 
tools. And that's a concept that we have extended to all of the 
products that we regulate, and it is inherent in this 
prevention/intervention response strategy.
    Mr. Burgess. One of the things that really was striking 
when we had our food safety hearings earlier this year was the 
fact that there is no communication between the various 
commercial interests that are overseas importing food back to 
our country. There was no communication between them if they 
had a bad supplier or they got something that was contaminated 
within their shop, that they didn't communicate I guess largely 
because of competitive concerns with their counterparts.
    But really even more disturbing is that they wouldn't 
communicate with the Food and Drug Administration; and it just 
seems like now, with the melamine in the dog food and the 
hypersulfated chondroitin sulfate in heparin, that there are 
some minds out there that require that we be so vigilant that 
we are willing to give up some competitive influence or, if 
nothing else, the Food and Drug Administration may need to 
require that people be forthcoming with this information lest 
we get a bucket of chicken wings full of polonium over here 
someday, which none of us would like to see.
    Dr. von Eschenbach. And to that point, Dr. Burgess, we have 
consistently enhanced our dialogue in collaboration with other 
Federal agencies, importantly, our relationship with Homeland 
Security.
    Mr. Burgess. Now, earlier--well, actually, I guess it was 
last year--I introduced H.R. 3967. Mr. Hubbard helped us a 
great deal with that. And the whole idea there was to have the 
ability to stop something from coming into the country if we 
knew it was wrong, if we knew it was bad. Right now, it doesn't 
seem like we have the tools at our disposal, and Ranking Member 
Barton mentioned that in his opening statement, that we don't 
have a way to stop this stuff from coming in. And that is--
going forward, that just seems to me to be something that is so 
critical that we need to incorporate that into whatever plan 
you come up with or we come up with.
    The whole concept of equivalence came up when we talked 
about food safety, the equivalence standard that the United 
States Department of Agriculture has for about 20 percent of 
the jurisdiction that it has over imported food; and the Food 
and Drug Administration has an 80 percent jurisdiction over 
imported food but doesn't have that same equivalency standard 
that, even though the manufacturing is in a different country, 
it has got to be equivalent to what the manufacturing process 
would be in this country. And it is my understanding we don't 
even have that equivalence standing for the production of 
active pharmaceutical ingredients.
    Dr. von Eschenbach. One of the points of FDA Beyond Our 
Borders is to work effectively with our foreign counterparts so 
that these products meet our standards before they are able to 
come into this country. And there is a dialogue in--that I 
think we need to find for harmonization.
    I convened the first meeting of all of the international 
regulators from mature regulatory agencies around the world, 
all 27 of them--24, I believe--that came to the meeting 2 years 
ago to begin this dialogue, and we've had 3 meetings since.
    Mr. Burgess. Well--but it seems like the standards already 
set by the USDA would be--again, that equivalency standard 
would be one that would be pretty easy. We talk about 
harmonization. That is great. But we have a standard out there 
that works reasonably well for the 20 percent jurisdiction that 
is out there. And at least for the active pharmaceutical 
ingredients, it seems like that is something that we should be 
quick to pick up.
    Dr. von Eschenbach. There may be some issues with regard to 
the individual products that may or may not create unique 
concerns about equivalence, but it is an area we are 
discussing.
    Mr. Burgess. Do you have--does this discussion we are 
having about heparin right now--and I realize that heparin 
would not fall into the debate about bio-similars or bio-
identicals. But just the fact that we have got the story out 
there with an adulterated product, does this affect the debate 
on the so-called generic biologics--bio-similar products that 
this committee--Health Subcommittee of this full committee is 
investigating?
    Dr. von Eschenbach. Well, again, I think, Dr. Burgess, it 
reflects the important testimony that you heard from our 
scientific advisory board at a previous hearing and that one 
other component of this systematic modernization of the FDA is 
that we have a really robust and strong scientific 
infrastructure that will give us the modern tools of science 
and technology to make discriminating decisions about these 
complex and very difficult products to understand but to do 
that in a way that gives us greater insight from a scientific 
perspective about those products. And I think whether it is 
the--dealing with the complexities of bio-equivalence or 
understanding the components of a drug that is causing an 
adverse reaction, building the scientific infrastructure is one 
other pillar to this new FDA.
    Mr. Burgess. Let me just ask you one other question 
quickly, because it is about money, and Chairman Dingell went 
to some lengths to talk about money. We have heard about the 
administration's budget. Of course, Congress has--April 15th 
has come and gone, and we have not passed a unified budget 
resolution. Clearly, it is up to the House. It is up to House 
leadership. In fact, it is up to the Speaker of the House to 
work--initiate the work on those appropriations bills, those 
critical appropriations bills that you're going to depend upon 
to get your funding.
    The stories that I'm hearing are likely that we will not be 
able to do that work this year. The environment is just too 
toxic and too contentious. As a consequence, there will be a 
continuing resolution at the end of the fiscal year, which 
essentially will leave you at level funding.
    So although it is great to go into some sound and fury 
about budget numbers, the reality is, the reality for your 
agency, is what is being handed to you by the Speaker of the 
House is you're likely to have level funding this next year, 
this next fiscal year; and how is that going to impact your 
ability to do all of these things that we have talked about 
this morning?
    Dr. von Eschenbach. Well, I believe it has been my 
responsibility in the 2\1/2\ years I have been at the FDA to 
critically assess the status of the Agency, to bring multiple 
partners together to begin to define a strategic plan for what 
the Agency needed to accomplish and how it needed to change and 
what those initiatives would be that would require support, 
would require resources, would require new authorities, and we 
have done that across the wide spectrum. Everything from our 
food protection plan to now addressing issues----
    Mr. Burgess. But in order for you to do our job and for us 
to do our job--and, unfortunately, right now, that does not 
seem to be the case.
    I will yield back the balance of my time.
    Mr. Shimkus. You have no time to yield back.
    Mr. Stupak. Mr. Melancon for questions, please.
    Mr. Melancon. Thank you, Mr. Chairman.
    In listening to Mr. Burgess--and we're talking about the 
level funding and trying to blame the Speaker, I think we can 
go back about a couple of years and blame the previous Speaker 
and the majority. So if you want to put blame where it stands 
looking at GAO, this decline started sometime back if I recall.
    Not trying to put any blame on anybody, but the article 
today in the New York Times, one of the things that catches my 
attention is Chinese imports--you've had exported poisonous 
toothpaste, lead-painted toys, toxic pet food, tainted fish, 
and now contaminated medicine. It seems to be getting worse 
rather than better. I mean, with all this that is surrounding 
us, did you not expect that maybe we would be talking about 
heparin or some other medication that is coming from China 
today?
    Dr. von Eschenbach. I believe what has occurred is not 
necessarily things are getting worse. I think what we have done 
is systematically uncover what has been a significant set of 
issues, and we're addressing them systematically in an effort 
to resolve them. I believe even--if you'll give me a moment--
when we first encountered the problem with melamine in pet 
food, our ability to interact and work with our Chinese 
counterparts at that time was nowhere near as effective as this 
most recent episode with heparin, where we had immediate and 
rapid access into the country. We worked directly with our 
counterparts at the SFDA, sharing specimens, engaging in 
analytical processes. So I believe we're making progress, but 
the problems are substantial, and they require substantial 
effort.
    Mr. Melancon. Well--and I hear what you are saying. But 
then when you suggest that the heparin was contaminated in 
China, the Chinese are saying it got contaminated over on our 
side. Isn't there some memorandum of understanding or agreement 
that is supposed to be going on between the two countries or is 
this just pointing the fingers at each other?
    Dr. von Eschenbach. No. There was a scientific dispute, if 
you will, about an analytical methodology; and we're engaged in 
the discussion of that. We believe the analytical methodologies 
that we have applied and are being applied by others are the 
correct ones.
    Mr. Melancon. Well, it appears to me that this memorandum 
of agreement is more like a memorandum of let's disagree. And 
it is just--it is a growing tension, I think, between the two 
countries. You know, I think what I read in the article, that 
there was less pointing of fingers between the Germans and the 
Chinese than between the United States and the Chinese over 
this heparin issue.
    Given China's fundamental difference and understanding of 
science used to assess what is causing the tainted heparin 
problem, can we trust the Chinese to adequately regulate our 
drug supply, since it appears that FDA isn't willing to do it?
    Dr. von Eschenbach. Well, the FDA is working very directly 
with our counterparts in China. They are engaged, I think, in a 
very conscientious effort to improve their entire system within 
the country. I have met with their Minister of Health who 
believes this is as important to the health and welfare of the 
Chinese people as it is to the rest of the world.
    Mr. Melancon. What is it that they have done that you can 
document?
    Dr. von Eschenbach. Well, as part of the memorandum of 
understanding, we have really engaged, as I just pointed out 
with the heparin situation, in an opportunity for us to work 
directly with them, specimen sharing and the ability to get to 
the bottom of product----
    Mr. Melancon. That's why I concern myself with this 
memorandum of misunderstanding or disagreement in that they are 
immediately saying it is your fault, it isn't our fault. I 
mean, do we not work through the process of how the science is 
going to be done on these products so that we'll know?
    Dr. von Eschenbach. Yes, sir. We convened an international 
meeting at which they were present, and the scientists 
internationally have been engaged in this discussion, and we 
are continuing that.
    Mr. Melancon. Let me go back to the--when we started. GAO 
is showing that, in the beginning of '02, we started a decline 
in inspectors. Do you have any numbers that go back past '02 
that shows that--the budgetary and the number of inspections or 
inspections that were done overseas as opposed to inspections 
that are done here? I'm trying to see if there was a trend or 
if this just started at a certain period of time and is it all 
budgetary.
    Dr. von Eschenbach. I cannot give you specific numbers. My 
recollection of what I evaluated when I looked at this, coming 
to FDA, was that the number of foreign inspections had remained 
relatively flat, while the number of products and firms that 
were producing things and coming into the United States was 
growing almost exponentially. So the gap was substantially 
widening. And we obviously need to keep pace. So the--I don't 
know that the inspections went down as much as stayed flat, 
while the demand substantially increased.
    Mr. Melancon. So as we've exported all our manufacturing to 
other countries we have not kept up with the overseeing of the 
manufacturing of these products?
    Dr. von Eschenbach. That's correct. We've not kept up with 
the globalization that has occurred in the marketplace.
    Mr. Melancon. And we're outsourcing again. Maybe we can 
outsource people to go out there and do them.
    I've had some conversations with some company 
representatives. They seem to be opposed to any form of charge 
by the Department to pay for the inspections, and I understand 
that they don't want to have any cost--any additional cost 
incurred. How do we pay for this since we don't have the money, 
since we are left with a huge deficit and a huge problem?
    Dr. von Eschenbach. I'm sorry.
    Mr. Melancon. It's OK.
    Dr. von Eschenbach. Well, I have, again, consistently 
proposed that the FDA need--should and is on a broad base as 
far as its resource infrastructure. Budget appropriations are 
an important part of that. User fees have also been a part of 
our budget when applied appropriately and segregated 
appropriately so that they're not influencing our regulatory 
decisions. And I think user fees are an alternative mechanism 
of support.
    Mr. Melancon. Did someone in the Department, you or someone 
within the Department that can make decisions, surely saw this 
problem coming toward us, did they not?
    Dr. von Eschenbach. I'm sorry, sir.
    Mr. Melancon. The inspection problem or the ability to not 
inspect, to have the manpower to have the money, no one saw 
this coming? Did we just wake up last month and say----
    Dr. von Eschenbach. No, sir. When I arrived at FDA 2\1/2\ 
years ago, I set 5 strategic priorities, one of which was 
globalization. And that was an effort to recognize what was 
occurring and what had been pointed out by others and to really 
begin a very aggressive, systematic, and systemic approach to 
being able to address the complexity and the magnitude of the 
problem. And what we have been discussing are the parts and 
pieces of that.
    Mr. Melancon. Well, the difficulty I have with an 
aggressive approach is that 2\1/2\, 3\1/2\ years later we are 
here; and we are getting dumped on with chemicals and bad drugs 
and such as that. Did you come to the Congress? Did you go to 
the White House? Did you say to somebody, look, we need to have 
the money. Either give it to us in user fees, inspection fees 
or set up a mechanism where the companies can send people over 
there to inspect the products that are going to be part of 
their final products? Did we do any of that?
    Dr. von Eschenbach. Yes, sir. For the period of time I have 
been at the FDA, I have consistently and continuously requested 
increases in the budget. That trajectory is continuing. I have 
consistently attempted to bring forward plans of initiatives 
that I believed would be demonstrated to have impact and for 
which we could be held accountable for outcomes. We have talked 
on multiple occasions, just even this morning, about the 
transformation of our IT infrastructure.
    Mr. Melancon. So you requested the White House for the 
increase of the budget over the periods of years?
    Dr. von Eschenbach. Yes, sir.
    Mr. Melancon. And they have rejected that. How much more 
did you ask for for the inspectors from the White House?
    Dr. von Eschenbach. While I was going through the budget 
presentations and made my request to the Department, that 
subsequently went on to the administration and then recommended 
to the Congress.
    Mr. Melancon. How much? What was the dollar amounts that 
you asked for to make sure that we were adequately supervising 
overseas manufacturing of our products?
    Dr. von Eschenbach. Well, I asked for additional resources; 
and I cannot give you that specific number today.
    Mr. Melancon. If you could get that back to us so that we 
could have that as part of the record, I would sure appreciate 
that.
    In this changing world that everybody has been talking 
about for the last 10 years, surely people have looked to the 
future of where the jobs are going to go, or maybe they didn't 
look to where the jobs are going to go and where the 
manufacturing was going to be done. If we were friends with 
everybody in the world, I probably wouldn't be sitting here 
having this conversation. But, as Mr. Burgess contemplated, 
there are some people that don't really like us, and this may 
be an avenue for them, through terrorism, to come after us, and 
that is the last thing we need. And so, I would wish that you 
would impose upon the administration the importance of food 
safety to this country's security.
    I think my time is out. I yield back my time, if I have 
any.
    Mr. Stupak. I thank the gentleman.
    Mr. Green for questions, please.
    Mr. Green. Thank you, Mr. Chairman.
    I would like to welcome Dr. von Eschenbach back.
    Mr. Chairman, I apologize for not being here for opening 
statements. I ask unanimous consent to have my full statement 
placed into the record. I just want my full statement----
    Mr. Stupak. Without objection.
    [The prepared statement of Mr. Green follows:]

                      Statement of Hon. Gene Green

    Mr. Chairman, thank you for holding this hearing today on 
the FDA's foreign drug inspection program. I think this a very 
important topic.
    As we know from previous hearings in this subcommittee and 
the FDA's self assessment report, ``Science and Mission At 
Risk,'' the Agency is underfunded and does not have enough 
employees or resources to protect the country against unsafe 
drugs, medical devices and food.
    The inadequacies of the FDA's foreign drug inspection 
program were most recently highlighted with the blood thinning 
drug heparin.
    Initially, the tainted heparin was believed to be an 
isolated incident and the active ingredient in the drug was 
traced back to a Chinese facility that had never been inspected 
due to confusion in the FDA because the name of the facility 
was confused with another plant with a similar name.
    However, further investigations found the contaminated 
heparin products have been found in at least 10 countries, not 
including the United States, and have been linked back to 12 
different Chinese companies that were somehow involved in the 
tainted heparin. A man-made chemical is believed to be 
responsible for the adverse reactions and 81 deaths associated 
with the drug.
    We should not be surprised by the lack of inspections in 
foreign drug establishments by the FDA.
    According to the GAO in FY07, there were 714 drug 
establishments in China, but only 13 inspections were conducted 
over the entire year. As another example, India had 410 drug 
establishments and only 65 inspections were conducted.
    What is alarming is the fact that eighty percent of the 
active pharmaceutical ingredients of drugs consumed in the 
United States are manufactured abroad and most of those drugs 
are manufactured in China and India. And, the FDA has publicly 
acknowledged that some foreign facilities may never be 
inspected.
    Clearly, the FDA foreign drug inspection program needs to 
be changed and has some hurdles to overcome.
    The FDA currently does not have the authority to conduct 
inspections at will overseas and must be invited to a plant in 
order to conduct inspections and the FDA often warns plant 
officials before they are inspected.
    Additionally, the FDA does not rely on end product testing 
with drugs as they do with food products, which can detect 
contamination in a final product. Also, the FDA does not have 
one system to track and monitor foreign drug inspections.
    The FDA needs resources including more employees, an IT 
system, and appropriate funding. In short, the foreign drug 
inspection program needs a complete overhaul in order to ensure 
product safety, which I know is something we all want.
    Thank you Mr. Chairman, I yield back my time.
                              ----------                              

    Mr. Green. Mr. Chairman, this is not necessarily a question 
for our FDA Commissioner, but I find it ironic, because in our 
full committee and even our Health Subcommittee over the last 
few years, particularly after the 2003 Medicare Prescription 
Act or even before, we have had a number of hearings by our 
committee concerned about my constituents going on the Internet 
and importing pharmaceuticals, whether it be from Canada or 
Europe or whatever, because they don't really know where they 
come from. And the argument we heard many times is that we 
don't know where they come from. We don't know if you're 
ordering it from a Canadian pharmacy, or you are maybe ordering 
it from a China pharmacy, or somewhere else.
    And yet now it seems like what we're hearing is our drugs 
that are approved, that 80 percent of the ingredients are 
imported. And, you know, we have learned that there is no 
oversight over that, or I guess very little, if any.
    I guess my concern, if I was in the business of producing a 
pharmaceutical, just like if I was in the business of producing 
any other product, the responsibility for that assures the 
oversight with the FDA but also with that person or that 
company who is importing that ingredient, whether it is active 
or inactive, is part of something we are putting in our body 
that is a pharmaceutical.
    Has there been any discussion on what the pharmaceutical 
companies--I know our next panel will hear that. Has the FDA 
looked and said, OK, did you all go to this plant in China to 
look for these ingredients? What--let me see your track record 
of what you did. Because you are importing that product to put 
it in something that you're putting your name on.
    Dr. von Eschenbach. You make a very, very important point, 
Mr. Green, that the corporate responsibility is an integral 
part of this whole effort and the safety; and FDA holding them 
accountable for that has been a part of this. It is required 
that they carry out their own quality assurance and are 
vigilant in the screening of their materials, and so I do 
concur with you that that is an important part of the effort, 
and FDA holds them accountable and that secures our supply of 
drugs.
    Mr. Green. Is there any information you can give the 
Oversight Committee, for example, on heparin or whatever else 
that may come along? When this developed, did the FDA go to 
that company and say, OK, let's see what you did on the quality 
of this product that you're selling to our constituents?
    Dr. von Eschenbach. Right. When a company imports an 
ingredient to--an active pharmaceutical ingredient to 
incorporate in the development of a finished product, they are 
responsible and accountable for assuring the quality of that 
product, and they have to assess it and test it. I think the 
point we were making earlier is, with regard to the contaminant 
in heparin, none of the conventional tests could detect that 
contaminant. So it was something that was beyond our ability to 
recognize using conventional testing.
    Mr. Green. And I think what you are going to hear from most 
of us is that the FDA is the traffic cop, and you need more 
resources to do that. And I appreciate you asking the 
administration.
    It is also our job as Members of Congress. Although when 
the Chairman miscalculated $200 million to $20 million--that's 
why we are not the Appropriations Committee. But if we were, we 
would probably be--what we've heard for a number of months--we 
would probably be saying, yes, we need to upgrade and provide a 
lot more funding so you can do your job as the traffic cop but 
not take away the corporate responsibility.
    Because I am speeding down the road, and I have an 
accident, sure, if there had been a policeman there to stop me, 
I wouldn't have had that accident, but it is still my 
responsibility for speeding down that road. And, Mr. Chairman, 
I think that's what we need. Maybe the next panel will explain 
the corporate responsibility along with our effort to try and 
make sure the FDA does their job as a traffic cop.
    I yield back.
    Mr. Stupak. Thank you.
    Mr. Barton for questions, please.
    Mr. Barton. Thank you, Mr. Chairman.
    Dr. von Eschenbach, my understanding is that recently the 
FDA has announced some of its preliminary results in the 
heparin investigation, and it is my understanding that your 
agency has indicated that you have traced the contaminated 
material to China. Is that right?
    Dr. von Eschenbach. Yes, sir, that's correct.
    Mr. Barton. OK. Now it is also my understanding that the 
Chinese authorities don't accept the FDA's findings. Is that 
correct?
    Dr. von Eschenbach. It is my understanding that the one 
difference is that they believed that there was product with 
which there were adverse events associated, but they could not 
find the contaminant in that product and, therefore, they were 
refuting the causal link. Our assay, our methodologies, which 
are much more sensitive, did in fact find the contaminant in 
that product. So that's where there is a very specific 
difference----
    Mr. Barton. Where do we go from here?
    Dr. von Eschenbach. Well, I think what--where we are at 
this point is we have assured that the supply of heparin in 
this country today is safe. We have prevented any further 
import of product coming from China from--through an import 
alert, from companies that are in question. And everything that 
is coming is being tested before it is allowed into the United 
States to be sure it is free of the impurities.
    Mr. Barton. So you--under current law, the FDA has the 
authority in this case to prevent any product manufactured in 
China of that name from coming into the country? So even if the 
Chinese don't agree, it really doesn't matter, because the FDA 
can say you can't bring it in?
    Dr. von Eschenbach. That's correct. We deemed it 
adulterated.
    Mr. Barton. OK. Now, do we--my understanding is that you 
and Secretary Levitt have indicated that you do think that the 
FDA needs explicit authority in terms of foreign imports and 
foreign inspections to categorically prohibit certain products 
when you have found defects in them. Is that correct?
    Dr. von Eschenbach. What we've requested, Mr. Chairman, if 
I can be explicit, is we can deny a product entry into this 
country if we deem it adulterated. What we'd like to do is 
extend that to not allowing a product to come in if we haven't 
had the opportunity or been given the opportunity to inspect 
facilities from which that is coming. So the very fact we have 
been denied access to the facility in itself would allow us----
    Mr. Barton. So you've got the authority under existing law 
to prohibit adulterated material. What you want is the 
authority to say, if they refuse to allow U.S. FDA inspectors, 
then you can also prohibit the material?
    Dr. von Eschenbach. Exactly. Yes, sir.
    Mr. Barton. Now, when Chairman Dingell--I wasn't here, but 
when Chairman Dingell was asking questions, my understanding is 
that he wanted you to give some assurances in terms of numbers 
of increased inspectors and in numbers of increased dollars and 
assets that you would need in the FDA to instigate these 
overseas inspections. Now you told me in my office that you 
want to locate FDA inspectors permanently overseas, is that 
correct?
    Dr. von Eschenbach. Yes, sir, that is correct.
    Mr. Barton. All right. Do you have an estimate yet as to 
how many inspectors and how much additional resources in terms 
of dollars that you would need to implement this kind of 
general plan that you have talked to me about?
    Dr. von Eschenbach. With specific reference to the first 
initiative in China, we would anticipate placing 13 FDA 
personnel. Eight of them would be FDA coming from the United 
States, and five would be local residents that we would employ. 
The approximate cost of that--that would also include our 
presence in Beijing, Guangzhou, where there is major food 
production, and Shanghai, where the largest exports are 
occurring, and the approximate cost of that operation is about 
$13 million.
    Mr. Barton. $13 million. Now, in that specific case, have 
the Chinese authorities been in consultation with you and your 
staff?
    Dr. von Eschenbach. I apologize, Mr. Chairman. May I 
correct that? It is 13 people, but $3.1 million. I apologize.
    Mr. Barton. That is a better number. So long as it is an 
adequate number. Have you or your staff consulted with the 
Chinese authorities about this specific case?
    Dr. von Eschenbach. Yes, sir.
    Mr. Barton. If so, are they supportive, neutral, in 
opposition to it?
    Dr. von Eschenbach. They have been very supportive across a 
number of their ministries, but we are awaiting approval from 
their foreign office. That is still outstanding. But in our 
interactions with counterparts and their regulatory agencies, 
as well as their export agency, AQSIQ, and the Ministry of 
Health, they recognize this is an important opportunity to 
enhance capacity.
    Mr. Barton. Now, if this plan materializes, will the 
inspectors in China have the same authorities as the inspectors 
in the United States? In other words, can they go into any 
facility at any time or do they have to go through some 
procedure that would make it possible to let there be a cover-
up before they were able to actually undertake the inspection?
    Dr. von Eschenbach. No, we will anticipate they would have 
the same authority as if they were coming from the United 
States.
    Mr. Barton. OK. On a slightly different topic, it has been 
suggested that inspections overseas, facilities overseas that 
the U.S. FDA does inspect, that they be inspected on the same 
timetable as domestic facilities, i.e., at least once every 2 
years. Our GAO friends are going to testify later today that if 
we implemented that system, it would cost at least $70 million 
a year just for China--no, $70 million a year in total, and of 
that cost $17 million would be in China by itself. One, do you 
agree with those numbers? And, two, if you do agree with those 
numbers, is this funding level something that the FDA can 
digest without too much of a growing pain?
    Dr. von Eschenbach. Well, to be clear, I don't disagree 
with the numbers per se. What I have tried to explain to 
Chairman Dingell was I really think the conversation has to be 
broadened beyond just the number of inspections and their 
frequency. I believe that it needs to be a tiered approach. 
There are some facilities that, quite candidly, need to be 
inspected more frequently and more intensively than that and 
others, by the very nature of their product and their history 
on a risk-based approach, may very well be able to be inspected 
less frequently than that with oversight by FDA, by having 
information and intelligence that comes from other regulatory 
agencies who are also doing inspections and by having also 
local information from our local counterparts and the producers 
and suppliers.
    So I was trying to explain to Mr. Dingell that, rather than 
simply responding to a formulaic number, that what I really 
think we need to do is create a much more strategic system of 
inspections that is tiered, that is risk-based, and that is 
focused on the particular issues of the product and its source.
    Mr. Barton. Well, that system that you just outlined, do 
you do that in the United States?
    Dr. von Eschenbach. Not to the degree that we need to and 
this is all consistent with what is really an integrated 
program.
    Mr. Barton. So this idea is something that would be 
relatively novel if implemented?
    Dr. von Eschenbach. Well, I think it is the modern FDA and 
it is based also on the importance of having an information 
technology infrastructure that supports all this.
    Mr. Barton. OK. Well, it is worth pursuing.
    My final question, Mr. Chairman. Republican staff have been 
noodling some with their pencils and come up to do the foreign 
inspections that we think need to be done, we being Republican 
staff from the Subcommittee of Oversight and Investigation. It 
is going to take about 500 FDA inspectors additionally. Do you 
agree or disagree with that number and if you agree with it, 
how long do you think it would take to find and train those 
inspectors and get them in place overseas?
    Dr. von Eschenbach. I can't----
    Mr. Barton. That is just on a--that is not an official 
estimate. That is Mr. Shimkus' and my staff's best guess. It is 
not from some think tank that tens of millions of dollars went 
into to come up with.
    Dr. von Eschenbach. I can't refute the number. But it would 
have to be a phased-in approach to bring the number of people 
of that magnitude, more importantly, those skill sets.
    Mr. Barton. The number is in the ballpark?
    Dr. von Eschenbach. I am going to accept it is in the 
ballpark, yes.
    Mr. Barton. And do you have a time frame? You were getting 
ready to answer that and I cut you off. Two years, 5 years, 3 
years?
    Dr. von Eschenbach. I believe that could be accomplished, 
as I indicated earlier, in an overall time frame of five at the 
outset. That particular process could be accomplished as early 
as perhaps three.
    Mr. Barton. My final question, are there any other 
countries that do foreign inspections like we are contemplating 
asking, directing the FDA to do? Do the Europeans have foreign 
inspections in place----
    Dr. von Eschenbach. Yes.
    Mr. Barton [continuing]. In China.
    Dr. von Eschenbach. Other--not necessarily do they have 
offices abroad, but they engage in foreign inspection.
    Mr. Barton. Thank you, Mr. Chairman.
    Mr. Stupak. Thank you, Mr. Barton.
    Mr. Commissioner, are you familiar with the program that 
was put in late 1990s with Europe, the mutual recognition 
agreement that they attempted to put in?
    Dr. von Eschenbach. I am aware of it, sir, but I am not 
familiar with all the details.
    Mr. Stupak. And what happened to that program?
    Dr. von Eschenbach. I apologize, I cannot answer that for 
you today.
    Mr. Stupak. I was on a committee for a while and it was 
under--Mr. Barton actually was the chairman and then we had a 
hearing in 1998 on it and basically it didn't work. This was 
with Europe, European Union, where we are supposed to do mutual 
inspections. In fact, it says under this arrangement the EU 
member states will be taking the place of FDA when it comes to 
inspections for good manufacturing practices.
    Dr. von Eschenbach. Yes.
    Mr. Stupak. Now if that program in the late 1990s didn't 
work with Europe, which is probably closer to us in culture and 
same standards and regulatory system, how on God's green Earth 
will it ever work in China, where we have very little in 
common? If Europe doesn't work, how is it going to work in 
China?
    Dr. von Eschenbach. Because I believe fundamentally the 
world is a lot different in 2008 than it was in 1998 and 
peoples' thinking is different. I've just recently even met a 
few days ago with growers.
    Mr. Stupak. Well, wouldn't we want to try to get back with 
Europe then?
    Dr. von Eschenbach. Pardon me.
    Mr. Stupak. Wouldn't it be easy to implement this agreement 
in Europe and in China? Why wouldn't we go back there and then 
the inspectors we are using in Europe we can use them in China 
and get to that 500 number that Mr. Barton talked about?
    Dr. von Eschenbach. One of the places that is included in 
FDA beyond our borders is Europe and working with our European 
counterparts----
    Mr. Stupak. So do you have an agreement like that in 
Europe?
    Dr. von Eschenbach [continuing]. Part of this effort. We 
haven't established the office in Europe but it is part of the 
plan.
    Mr. Stupak. Part of the plan, which hasn't worked yet and I 
don't see how it is going to work now.
    Now let me ask you this, and I don't mean to be 
argumentative, draft legislation sent to your office a draft of 
our committee--latest copy of our food and drug inspection 
legislation. Have you seen this?
    Dr. von Eschenbach. Yes, sir, I have.
    Mr. Stupak. We sent it to your office. Are you prepared to 
comment on it at all?
    Dr. von Eschenbach. We are looking forward to working with 
you and Chairman Dingell and others on the Committee.
    Mr. Stupak. Yes, you say that all the time but you never 
comment on our legislation. We are trying to help you out here 
so----
    Dr. von Eschenbach. Well, my staff has had multiple 
interactions with the staff of the Committee, and we look 
forward to those continuing with the specifics of the bill.
    Mr. Stupak. We would like to know where the FDA stands on 
the bill, OK? It is going to be moving quickly, so--in fact one 
of the parts in there--let me just ask you a quick question. 
Isn't it true that foreign drug manufacturing firms can 
register with the FDA even if the firm does not intend on 
shipping products to the United States?
    Dr. von Eschenbach. Yes, sir.
    Mr. Stupak. And in order to do that you have to do an 
inspection and everything it costs us taxpayers, right? If you 
apply for--you go and do a pre-inspection, right?
    Dr. von Eschenbach. I believe that is correct, yes.
    Mr. Stupak. OK. According to the GAO, some of these 
manufacturers will register with the FDA as a marketing tool 
because the FDA registration might be seen as an endorsement of 
that plant by the FDA in some foreign markets. Are you aware of 
that?
    Dr. von Eschenbach. I have heard that alluded to.
    Mr. Stupak. And therefore, as in our legislation, wouldn't 
the sizable registration fee ensure that foreign establishments 
who register with the FDA are serious about actually exporting 
drugs to the United States? In other words, a sizable 
registration fee, would it weed out those firms who wish just 
to register so they can market products elsewhere and not to 
the United States?
    Dr. von Eschenbach. I can't comment whether that would be 
an adequate deterrent or not, sir.
    Mr. Stupak. They are gumming up your databases, aren't 
they, these firms that applied to get the U.S. certification, 
but they never ship; they are sitting in your database or just 
gumming up the IT system that we are having so much trouble 
with, are they not?
    Dr. von Eschenbach. Well, there may be important 
intelligence information about those firms that could be 
helpful to us. I don't know that it is gumming up the system, 
but they shouldn't--
    Mr. Stupak. What important intelligence information would 
be in the database?
    Dr. von Eschenbach. Pardon me.
    Mr. Stupak. What important intelligence information would 
be beneficial by having them sitting in your database that they 
never ship drugs to the United States?
    Dr. von Eschenbach. Well, maybe we would learn something 
about them that we would never want them to ship drugs into the 
United States.
    Mr. Stupak. Well, after you pre-approve them and they are 
registered, you would never know, because you don't go back and 
check them because they are not shipping to the United States.
    Dr. von Eschenbach. But by recognizing we might be able to 
cross-reference them with other databases that exist in our 
other counterparts around the world.
    Mr. Stupak. How many man-hours and the amount of resources 
have we spent on this heparin investigation, do you know?
    Dr. von Eschenbach. How many man-hours are spent what, sir?
    Mr. Stupak. On this heparin investigation thus far by the 
FDA. You have gone over and done an inspection over there, you 
have a couple reports on the 483, we got letters. How much time 
have you spent?
    Dr. von Eschenbach. I can't give you an exact hourly 
figure.
    Mr. Stupak. Give me a guesstimation. How many inspections 
could we have done if we would have--we have 90,000, 100,000 
more?
    Dr. von Eschenbach. I couldn't give you that estimate, sir.
    Mr. Stupak. OK.
    Dr. von Eschenbach. Because I don't think they are exactly 
equivalent.
    Mr. Stupak. Well, if you had gone over and done the 
inspection which was never done in this plant before, you 
already did one inspection there, right, on heparin, that is 
approximately $45,000, you have a couple of people over there 
doing that, right?
    Dr. von Eschenbach. Well, the point--I thought the point of 
the question you asked me was what was the effort expenditure 
across FDA. The effort expenditure----
    Mr. Stupak. Correct.
    Dr. von Eschenbach [continuing]. Across FDA involved a 
whole host of people in a variety of places within the FDA. 
That wouldn't necessarily translate into those people doing 
inspections.
    Mr. Stupak. I see. But to give you more money to do things.
    Let me just change gears here for a minute. FDA's primary 
goal here is to protect the public health. And let me ask you a 
question or two and then I'll--if anyone else wants to ask a 
question they can on any issue.
    But this bisphenol A, BPA, OK, it is the chemical used in 
baby bottles and has terrible side effects. The National 
Toxicity Program at NIH has determined BPA may cause neural and 
behavioral problems as well as effects in the prostate gland, 
mammary gland at an early age for puberty in females. The 
Canadian Government has declared BPA to be toxic. The FDA 
continues to maintain that it is safe.
    While the FDA has undertaken a formal transparent 
reassessment safety of BPA, to include those in Federal 
Register public comment and expert advisory panels, when do you 
expect to have some decision on BPA?
    Dr. von Eschenbach. Well, upon learning of the new data, 
new information, we immediately convened an interagency task 
force to address that new data scientifically, and that is in 
process and that will render our opportunity to make a 
decision. The Canadians are continuing their process of 
assessment with a commentary period. So we will be working with 
them, other counterparts, and our own internal scientific 
process, which is underway.
    Mr. Stupak. When do you expect to have a decision?
    Dr. von Eschenbach. I cannot tell you exactly when that 
decision will be made, because I don't know what the complexity 
of the analysis will involve, but it is underway.
    Mr. Stupak. Well, the Canadian Government has already 
pulled BPA as being toxic, as they labeled it in their country, 
so why has it taken us so much longer to get at this?
    Dr. von Eschenbach. I think again, Mr. Stupak, it is going 
to be based on what the science dictates and what the science 
tells us, and until we have that analysis----
    Mr. Stupak. Are you saying the Canadian Government wasn't 
based on science?
    Dr. von Eschenbach. What I am saying is that FDA is going 
to assess the science and make its own independent decision 
taking into account the information that is available from 
other sources like Canada.
    Mr. Stupak. Well, we would like some decisions soon on BPA. 
Our subcommittee is working on it and----
    Dr. von Eschenbach. We are acting upon this as we speak.
    Mr. Stupak. I have heard so many of those promises and they 
never come true. So I just want to make sure we have some date 
certain that you can give us when we could expect a decision on 
BPA.
    Any questions, Mr. Shimkus, Mr. Burgess?
    Mr. Burgess. Yes, I could--just a couple of follow-ups on 
the line of questioning that you were pursuing, Mr. Chairman. 
Now, Dr. von Eschenbach, again we will cover the same ground, 
but inspectors in every location and every port in the People's 
Republic of China wouldn't have found that goop that got into 
the heparin, would it?
    Dr. von Eschenbach. No, sir.
    Mr. Burgess. Because we didn't know it was there. We didn't 
test for it. We didn't know to test for it.
    Dr. von Eschenbach. Correct.
    Mr. Burgess. Now the chairman also talks about how he is 
concerned that all of these extra applications coming into the 
IT systems are going to gum up the works. Are you at all 
concerned--when you think about gumming up the works that might 
be a little concern, but are you at all concerned about what we 
just did to the Agency with dumping tobacco in your lap? 
Because this is a huge new regulatory authority taken over by 
your agency that quite honestly we see that we are having 
trouble keeping up with what we are supposed to keep up with, 
and now we have got a product that when used as directed kills 
400,000 people a year and you are going to certify that it is 
safe and effective? I mean, it is beyond goofy to think that 
that legislation makes sense with the crisis mode that the Food 
and Drug Administration is in right now. Again, it is our 
premier Federal agency and we are treating it with extreme 
disrespect by adding that regulatory requirement to what you 
are already doing.
    And I don't expect you to answer that because I know that 
you are too smart to, but in today's Wall Street Journal you 
are quoted: The Food and Drug Administration Commissioner Andy 
von Eschenbach told Congress in October that the $5 billion in 
user fees over the next decade was not enough to kickstart a 
tobacco division, and the Food and Drug Administration may have 
to divert funds from its other programs.
    Is that--did the Wall Street Journal get it right? Is that 
essentially correct?
    Dr. von Eschenbach. Well, I think the point of that was 
that the monies were not coming to the FDA. They were going to 
the general treasury with the idea that you have pointed out--
is that our resources and authorities have to be commensurate 
with our responsibilities, so that if we don't have the 
capability of carrying out those responsibilities then we will 
fail in our mission.
    Mr. Burgess. Again, your core mission is to--things have 
got to be safe and effective. So can we ever do that with 
tobacco? Can we ever say it is safe?
    Dr. von Eschenbach. Well, as a physician I know that there 
is no way that you can define a tobacco product as being safe. 
If used as directed, it produces the result of disease and 
death.
    Mr. Burgess. Well, now there was, I thought, a very 
insightful amendment offered during the markup process that 
would have allowed the Food and Drug Administration the 
authority to either ban tobacco outright or require that 
tobacco manufacturers produce a zero milligram nicotine 
cigarette. If you are going to have this authority, would you 
not think those two tools in your toolbox would be essential 
for securing the public health?
    Dr. von Eschenbach. Well, I believe there is a need for a 
lot of discussion about what tools are in the toolbox. As you 
pointed out, the significant issue of nicotine being the most--
one of the most addictive substances that humans are exposed 
to, especially during development as teenagers are, that if you 
eliminated that completely you would eliminate the problem of 
addiction.
    Mr. Burgess. Thank you, Mr. Commissioner. I yield back the 
balance of my time.
    Mr. Stupak. Thanks. Mr. Melancon or Mr. Green? Mr. Shimkus.
    Mr. Shimkus. Just have unanimous consent that I may submit 
some questions for the record and just for the statement say 
that if--I think a lot of the basic premise here is that if 
people want to sell goods and products to our citizens they 
need to meet our standards. And if you want to sell goods and 
services to our citizens, I think you ought to be willing to 
pay for that opportunity since we are the market everybody 
wants to get to. And, you know, it shouldn't be the burden 
placed upon taxpayers.
    I also believe in trust, but verify when you have 
international agreements, and also that management by walking 
around or inspecting by walking around is still a basic 
practice that we all should observe and in this case that is 
our concern about not being involved in the factory.
    Thank you, Mr. Chairman.
    Mr. Stupak. Thank you. You will be happy to know our 
legislation does include in there registration fees so 
taxpayers aren't paying for it. Please look at it. We are 
moving that legislation quickly.
    Dr. von Eschenbach, thank you for your time. I hope you 
will stay for the next panel. As indicated earlier, they have 
100 years of experience in these areas, and hopefully we can 
all benefit from their expertise. Thank you again for your 
time, sir.
    Dr. von Eschenbach. Thank you, Mr. Chairman. Just let me 
close by expressing I know what you share and other members of 
the Committee share. And that is, although we are talking about 
the many important changes that have to occur at FDA, some of 
the things that we must always preserve is the caliber and the 
quality of the incredible people that make up that agency. 
There are--half of the Agency are involved in our field 
activities and they are doing heroic work, as you just alluded 
to with regard to our ability to immediately mitigate the 
problems associated with contaminated heparin. And so I thank 
you for our opportunities to present to you a vision for the 
future, and I appreciate your recognition of the incredible 
efforts that the people of FDA are making on behalf of the 
American people.
    Mr. Stupak. I agree with you, and the best way we can honor 
their work is to give them the resources they need so they can 
fully do their job.
    Dr. von Eschenbach. I agree with you. Thank you.
    Mr. Stupak. I would like to call up our second panel of 
witnesses and ask them to come forward here in a few moments. 
Gail Cassell, Vice President, Scientific Affairs and 
Distinguished Lilly Research Scholar for Infectious Diseases at 
Eli Lilly and Company. Dr. Marcia Cross, Director of Public 
Health and Military Health Care Issues at the U.S. Government 
Accountability Office. Mr. William Hubbard, former FDA 
Associate Commissioner and current Senior Advisor to the 
Coalition for a Stronger FDA. Mr. Ben England of Benjamin 
England & Associates and FDAImports.com. Mr. England previously 
held several senior level regulatory positions at the FDA. And 
Dr. Carl Nielsen, retired Director of the Division of Import 
Operations within the Office of Regulatory Affairs at the FDA.
    We will give everybody a minute or two here to assemble 
before we do the oath. It is the policy of the 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. Do any of you wish to be 
represented by counsel? A shaking of the heads indicate no. 
Therefore, let's take the oath.
    [Witnesses sworn.]
    Mr. Stupak. Let the record reflect that witnesses replied 
in the affirmative. You are now under oath.
    We will now hear a 5-minute opening statement from each of 
our witnesses on the second panel. You may submit a longer 
statement for inclusion in the hearing record.
    Dr. Cross, for the Government Accountability Office, shall 
we start with you, please?

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

    Dr. Crosse. Thank you, Mr. Chairman.
    Mr. Chairman, members of the subcommittee, I am pleased to 
be here today as you examine FDA's foreign drug inspection 
program. I testified before this subcommittee last November on 
this topic. At that time I discussed how FDA's programs were 
not keeping up with the globalization of drug manufacturing. I 
testified about weaknesses in FDA's data systems, difficulties 
in prioritizing foreign establishments to inspect, infrequent 
inspections and challenges unique to conducting foreign 
inspections.
    Slide, please. I have a slide. This slide shows the large 
mismatch between the number of foreign drug establishments and 
the number of inspections performed. As you can see, the 
largest mismatch is in China. Since the hearing in November, 
FDA has announced a number of initiatives to address these 
concerns, as we have heard today from the Commissioner. You 
asked that we examine these and the extent to which they will 
fill the gaps we identified.
    FDA's initiatives have the potential to strengthen FDA's 
foreign drug inspection program, but they do not fully address 
the weaknesses.
    Let me discuss in turn the four key areas of concern we 
previously raised.
    I testified in November that FDA's databases did not 
provide an accurate count of foreign establishments and provide 
widely divergent counts, with the result that FDA does not know 
how many foreign establishments are subject to inspection.
    One recent FDA initiative is to require electronic 
registration to reduce inaccuracies in its registration 
database. However, this will not prevent erroneous registration 
by firms that do not manufacture for the U.S. market. Another 
initiative aimed at reducing duplication in its import database 
is a proposal that FDA has supported to change the data it 
receives from Customs and Border Protection on products 
entering the United States. However, the implementation of this 
proposal is not certain and would require actions from multiple 
Federal agencies in addition to FDA.
    FDA has also begun efforts to integrate its various 
databases. This could provide FDA with a more accurate count of 
establishments subject to inspection, but it is too early to 
tell how much it will help and this effort has not been fully 
funded. In fact, FDA officials told us that implementation has 
been slow because the Agency has been forced to shift resources 
away from the improvements in order to maintain the current 
systems.
    Next I testified that gaps in information weaken FDA's 
processes for prioritizing the inspection of foreign 
establishments that pose the greatest risk to public health. 
FDA lacks key information on many foreign establishments. This 
limits its ability to use its risk-based approach to select 
establishments for inspection.
    To address this, FDA has discussed obtaining useful 
information such as inspection reports from foreign regulatory 
bodies. However, the Agency already has a number of such 
agreements in place and it has faced challenges in using these 
arrangements in the past. For example, FDA had difficulties in 
determining whether the scope of other countries' inspections 
met its needs and inspection reports were not always readily 
available in English. FDA also told us that complete reliance 
on another country's inspection results is risky. The result 
has been that FDA only used its existing arrangements six times 
in the past year. This raises concerns about some of the 
proposals the Commissioner has discussed to rely on inspections 
from others.
    I also testified in November that FDA inspected relatively 
few foreign establishments each year. And at the current rate 
it would take FDA more than 13 years to inspect all foreign 
establishments just once. FDA slightly increased the number of 
foreign drug inspections in fiscal year 2007, but the Agency 
still inspects foreign establishments at a substantially lower 
rate than domestic establishments.
    The foreign inspections shown in the figure are the largest 
number that FDA has ever conducted. FDA's budget calls for 
incremental increases in funding for foreign inspections. FDA 
dedicated about $10 million to foreign drug inspections in 
fiscal year 2007 and plans to dedicate about $11 million to 
such inspections in fiscal year 2008. However, it would cost 
about $70 million per year to perform biennial inspections of 
foreign establishments, as is already required for domestic 
establishments. The $11 million FDA plans to spend this year 
for all foreign drug inspections falls short of the $16 million 
that would be needed each year just to conduct biennial 
inspections in China.
    Finally, I testified that FDA faced certain logistical and 
staffing challenges unique to conducting foreign inspections, 
including reliance on volunteer inspectors and a lack of 
translators. FDA has proposed establishing a dedicated cadre of 
staff to conduct foreign inspections, but the overall time 
frame associated with this initiative is unclear.
    FDA has also announced plans to establish offices overseas 
with an initial eight FDA staff to be based in China and five 
Chinese nationals to provide translation and logistical 
support. However, the impact that these offices will have on 
the foreign drug inspection program is unknown because these 
staff would be responsible for all FDA regulated products.
    In China, in addition to the estimated 714 drug 
establishments, there are an estimated 675 medical device 
establishments and many more firms manufacturing food and other 
FDA-regulated products subject to inspection. The agreement 
with China is not finalized and plans for other countries are 
still in development.
    In conclusion, Americans depend on FDA to ensure the safety 
and effectiveness of the drugs they take. The recent incident 
involving heparin underscores the importance of FDA's 
initiatives. FDA's actions, if fully implemented, could address 
some of the concerns we identified. Given the growth in foreign 
drug manufacturing for the U.S. market and the relatively few 
foreign inspections conducted by FDA, the Agency will need to 
devote considerable resources to this area if it is to increase 
the rates of inspections. However, FDA's incremental increases 
will have little impact in the near future to reduce the 
interval between inspections for these establishments.
    In addition, many of FDA's initiatives will take several 
years to implement and require funding and certain interagency 
or intergovernmental agreements that are not yet in place. 
Taken together, FDA's plans represent a step forward in filling 
the large gaps in FDA's foreign drug inspection program, but do 
little to accomplish short-term change.
    Mr. Chairman, this concludes my prepared remarks. I will be 
happy to answer any questions that you or other members of the 
subcommittee may have.
    [The prepared statement of Dr. Crosse follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Stupak. Thank you, Doctor.
    Dr. Cassell.

STATEMENT OF GAIL H. CASSELL, PH.D., VICE PRESIDENT, SCIENTIFIC 
AFFAIRS AND DISTINGUISHED LILLY RESEARCH SCHOLAR FOR INFECTIOUS 
                DISEASES, ELI LILLY AND COMPANY

    Dr. Cassell. Mr. Chairman, members of the subcommittee, I 
am Gail Cassell, Vice President for Scientific Affairs and 
Distinguished Research Scholar for Infectious Diseases at Eli 
Lilly and Company. Of relevance to my testimony today, I have 
previously been a member of the advisory committees of the 
Directors of both Centers for Disease Control and the National 
Institutes of Health. And in 1994-95 I also cochaired the 
congressionally mandated review of the NIH Intramural Program. 
I appear before you today as a member of the FDA Science Board, 
Advisory Committee to the FDA Commissioner. I served as Chair 
of the Subcommittee on Science and Technology of the Science 
Board, which authored the report that you have heard referenced 
today by Chairman Stupak, the ``FDA Science and Mission At 
Risk.''
    By way of background I just remind you that in December of 
2006, the Commissioner charged the Science Board with 
establishing a subcommittee to assess whether or not FDA's 
current science and technology can support the Agency's 
statutory mandate to protect the Nation's food and drug supply. 
You have already also heard Mr. Stupak allude to the 
composition of the Committee. I would just emphasize that this 
committee was made up of a very distinguished group of 30 
experts, including former deputy--our former Chief Counsel to 
the FDA, as well as knowledgeable experts, some of whom had 
worked in FDA. Over 14 members of the 30--of the 33-member 
committee were members of the National Academy of Sciences, and 
we had one Nobel laureate.
    The record of the proceedings of the meeting in which we 
presented the results of this report will show that the full 
report was accepted by the full Science Board and, in fact, the 
full 33-member committee adopted the recommendations of the 
report.
    For over a year this group of experts worked intensively 
conducting their review. It became rapidly apparent that the 
FDA suffers from serious scientific deficiencies and is not in 
a position to meet current or emerging regulatory 
responsibilities. It is agency-wide and not limited to a single 
program or center. Since every regulatory decision must be 
based upon the best available scientific evidence in order to 
protect the public's health, we concluded that American lives 
are at risk and that there is an urgent need to address these 
deficiencies.
    Of relevance to the topic that we have at hand today, which 
is that of foreign inspections, especially for drugs, I might 
add that many aspects of food and drug manufacturing also 
should be based upon the latest, very latest science and 
technology, including scientific methods and technologies that 
are the latest as far as specificity and sensitivity for 
detecting not only chemical contaminants but also microbial 
contaminants, and that we should have investigators in the 
field performing those manufacturing inspections that in fact 
are qualified in terms of quality control and scientific 
expertise.
    The level of concern by all of the members of our 
subcommittee of the Science Board was and remains high, and 
thus the intensity of our commitment to the review and their 
insistence that define our findings be broadly communicated. 
Quite simply, what we found is that FDA resources have not 
increased, while the responsibilities have increased 
extraordinarily, and you have heard that from many different 
individuals today and you'll hear further from others.
    We also found that the Agency has not adapted in order to 
maximize existing resources by capitalizing upon scientific 
resources in the academic community and other government 
agencies; i.e., leveraging their resources. The specifics of 
our finding was the subject of a hearing, as you have heard Mr. 
Stupak refer to this morning, on January the 29th. So I will 
not discuss all the findings in detail, but I would rather like 
to focus upon those aspects of our review that are most 
relevant to the topic of today's hearing on foreign inspection.
    Number one is the area of growing disparity between 
responsibility and resources; two, gaps in scientific capacity 
and capability, information technology and to a lesser extent 
organizational structure.
    With regards to growing disparity between FDA 
responsibility and resources, there is no more quintessential 
governmental responsibility than the protection of basic 
commodities of American life, such as our food and drugs. The 
Science Board emphasizes that the need for an effective FDA is 
greater today than ever before since the FDA regulates 80 
percent of the Nation's food supply, plays a critical role in 
assuring the safety of therapeutics and vaccines and devices, 
and regulates a vast number of other consumer products, and 
historically has been the Agency to which governments around 
the world look to for determinants of the safety of products.
    Moreover, something that hasn't been mentioned today, I 
would like to emphasize that FDA is increasingly important to 
the Nation's economic health, as it regulates a quarter of 
consumer expenditures, and the industries that it regulates are 
innovative leaders in science and technology and among the few 
American industries with a positive trade balance with other 
nations. Further, FDA will be a critical component in combating 
bioterrorism. That has been alluded to this morning but not to 
any great extent. It is something that certainly should be of 
great concern to all of us as we talk about potential for 
intentional contamination of the food and drug supply as it 
relates to bioterrorism.
    The Science Board concluded that FDA is slowly being 
hollowed out by a progression of budget cuts and inattention to 
the Agency's needs. That deterioration in turn means that not 
only can the Agency not fulfill its public health mission, but 
that the safety of the citizens and the well-being of our 
country are undermined. Furthermore, as the Agency falls 
further and further behind, the public is increasingly losing 
confidence in the government's ability to protect them.
    The demands upon the FDA have soared. As we have already 
said, the metrics alone are daunting, 125 new statutes added to 
the FDA's workload by Congress in the past two decades, most 
without resources. And in reference to the number of 
establishments we were told during our review that there were a 
total of 375,000 establishments outside the United States 
making products coming into the United States and in effect 
that these were on all continents and over 100 countries.
    In addition, there has been a tripling in a decade of R&D 
and drugs and medical devices; an exponential increase in drug 
adverse reaction reports and the emergence of extraordinarily 
new health threats that threaten contamination of products, 
including mad cow disease, E. coli 157, et cetera.
    But perhaps most emblematic of the trend is the tenfold 
increase in the past decade of imports from other countries. 
Today, as you know, 15 percent of our food supply is imported 
from more than 100 nations, along with over half the drugs. Yet 
FDA has been given virtually no new authorities nor resources 
to address such a dramatic change in the sourcing from products 
made overseas often in developing countries with little or no 
tradition of scientific rigor.
    What about gaps in capacity and expertise? FDA's resources 
have not only not kept pace with responsibilities, many 
critical agency programs have sustained actual cuts. I won't go 
into the cuts as it relates to food, but certainly that was one 
of our areas of biggest concern.
    Although one FDA function, new drug and device review, has 
received additional funding from industry paid user fees, it is 
important for you to realize that the Agency as a whole has 
lost a thousand people over the past decade that perform 
critical function. Some of them relate to, of course, the 
foreign inspection that we are talking about today. This loss 
in scientific capacity has resulted in loss of personnel to 
perform not only the inspection associated with marketed 
products, but is equally important in that it has resulted in 
loss of individuals in critical areas of scientific expertise, 
and we will come back to that in a minute.
    Innovations and advancements in science are outstripping 
FDA's capacity to understand and regulate them, and I would 
contend that this applies both with regards to manufacturing of 
those new products as much as it does to pre-approval of those 
new products.
    We are on the cusp of another revolution in therapeutics, 
breakthroughs in human, animal, and microbial genomics, 
molecular biology, nanotechnology, computational mathematics, 
imaging, et cetera, that will revolutionize not only medicine 
and food production, but also drugs for animal health. Yet FDA 
is not and does not have the capacity to prepare for these 
breakthroughs, whether it be again in the pre-approval process 
or the post-marketing surveillance or manufacturing inspection.
    Tens of billions of dollars are being spent by both the 
public and private sector on the development of such products, 
yet FDA has been denied the relatively minor funding necessary 
to ensure their rapid and safe entry into the market. At a time 
in which U.S. competitors in science, medicine and food 
production are under increasing strain from overseas, a weak 
and underfunded FDA will be a brake on the very technologies 
that the United States is relying on for its medical and 
technological future.
    It is absolutely critical that individuals involved in 
inspection of these products coming in from overseas in terms 
of manufacturing inspections have the adequate science and 
technology to allow them to do a better job than they are 
currently able to do today. They should have the methods to 
perform increased sensitivity tests in looking for 
contaminants, both chemical and microbial, both in drugs and in 
vaccines, biologics, and also food, perhaps even including, 
something, as we heard this morning, maybe others would not 
call it quite as sophisticated, it is much more practical than 
most would admit, but perhaps information technology as well.
    I would also be remiss if I did not remind you, however, 
that again the FDA's food safety program is one that needs the 
greatest support with regards to these new technologies because 
they are simply at rock bottom, both in terms of numbers of 
scientists but also their scientific capabilities as far as 
monitoring the food supply.
    The Science Board subcommittee viewed the current 
scientific needs of FDA to be extensive and diverse in critical 
terms--in terms of critical expertise, infrastructure and 
knowledge perhaps, as I have said, across the Agency, and we do 
believe that this is a serious impediment.
    FDA, in terms of the recent heparin episode, illustrates 
just how critical science is at FDA for monitoring of drug 
quality. We heard during our review of the Center for 
Biologics, for example, that that center mandates that some of 
their scientists be present in manufacturing inspections to 
play a role in quality control; i.e., so that they can be 
assured that the right technologies are being applied to 
evaluate the quality of the drugs being manufactured, and I 
would submit to you that this should be something that 
shouldn't be an exception with regards to biological products 
or vaccines, but it also should be true for drugs.
    It is commendable that FDA was able to develop a new test 
very quickly that has picked up the contaminant in heparin, but 
also has certainly shared it around the world, but in fact 
perhaps it could have been done more quickly had more sensitive 
tests been in operation and in use all along.
    Mr. Stupak. Doctor, would you summarize?
    Dr. Cassell. Yes, thank you.
    In conclusion, FDA can no longer fulfill its mission 
without substantial and sustained additional appropriations, 
particularly in the area of information technology. Others will 
address this in detail. I will in the questioning if asked. The 
current situation has developed over years. The question is not 
why or how we got here but how we are going to go forward.
    The report actually, we would argue, would serve as a 
blueprint with regards to that and we recognize that financial 
additions to the budget are not the only answer, as we already 
heard this morning. While our report focused upon the FDA 
organizational structure related most to the scientific 
infrastructure, it might well be in light of continuing issues 
related to globalization that we should be asking what FDA 
organizational structure is needed to protect the public's 
health in the 21st century setting of globalization with 
rapidly expanding importation of foreign drugs, vaccines, and 
biologics. And again, while our subcommittee focused on 
organizational structures that related to the scientific 
infrastructure, Congress may like to consider requesting, for 
example, the Institute of Medicine to perform a more in-depth 
study to evaluate overall agency structure as it relates to 
food safety and also drug safety.
    And with that, because I am out of time I will stop, but 
thank you very much for your patience.
    [The prepared statement of Ms. Cassell follows:]

                  Statement of Gail H. Cassell, Ph.D.

    Mr. Chairman and Members of the Subcommittee, I am Gail H. 
Cassell, Vice President for Scientific Affairs and a 
Distinguished Research Scholar for Infectious Diseases of Eli 
Lilly and Company. I am also Professor and Chairman Emeritus of 
the Department of Microbiology of the University of Alabama 
Schools of Medicine and Dentistry. I am a member of the 
Institute of Medicine of the National Academy of Sciences and 
am currently serving a second term on the governing board of 
the IOM. Of relevance to my testimony today, I have previously 
been a member of the Advisory Committees of the Directors of 
both the Centers for Disease Control and the National 
Institutes of Health (NIH). In 1994-95, I also co-chaired the 
congressionally mandated review of the NIH intramural program. 
I appear before you today as a member of the FDA Science Board, 
Advisory Committee to the FDA Commissioner. I served as Chair 
of the Subcommittee on Science and Technology of the Science 
Board, which authored the report ``FDA Science and Mission at 
Risk.''

                               Background

    In December 2006, the Commissioner charged the Science 
Board with establishing a subcommittee to assess whether FDA's 
current science and technology can support the Agency's 
statutory mandate to protect the Nation's food and drug supply. 
The subcommittee was comprised of three Science Board members 
and 30 other experts. The subcommittee formally presented its 
report to the Science Board and FDA on December 3, 2007. The 
report was unanimously endorsed by each of the 33 members of 
the Subcommittee and the full Science Board. The Science Board 
accepted the report as final and dissolved the subcommittee. 
The record of the proceedings of that meeting will show that 
due to the seriousness of the deficiencies found and the 
urgency of the situation, the Science Board was adamant that 
the report be broadly disseminated among the public and policy 
makers, including posting it in the Federal Register.
    The subcommittee review was unique in many respects. First, 
it is only the second time in over a century that the Agency 
has been reviewed by an external committee reviewing the Agency 
as a whole entity. Second, the Committee was composed of 
leaders, not from a single sector, but from industry, academia, 
and other government agencies. The expertise and level of 
accomplishments of the members are almost unprecedented in a 
single committee, especially considering their breadth and 
knowledge in regulatory science and understanding of the 
mission of the Agency.
    The subcommittee included expertise ranging from a Nobel 
laureate in pharmacology, 14 members of the National Academy of 
sciences (including two engineers), a renowned economist and 
specialist in workforce issues, a leader in health care policy 
and technology assessment, a former CEO of a large 
pharmaceutical company, a former Assistant Secretary for Health 
and Human Services who also headed global regulatory affairs 
within a large company for over 20 years, a former Chief 
Counsel for the FDA, and the first under Secretary for Food 
Safety at the U.S. Department of Agriculture overseeing the 
Food Safety and Inspection Service and coordinating U.S. 
government food safety policy.
    For over a year, this group of experts worked intensively 
conducting their review. It became rapidly apparent that the 
FDA suffers from serious scientific deficiencies and is not 
positioned to meet current or emerging regulatory 
responsibilities. It is agency wide, i.e. not limited to a 
single program or Center. Since every regulatory decision must 
be based upon the best available scientific evidence in order 
to protect the public's health, we concluded that American 
lives are at risk and that there is an urgent need to address 
the deficiencies. The level of concern by all members of the 
Subcommittee and the Science Board members was, and remains, 
high, and thus the intensity of their commitment to this review 
and their insistence that the findings be broadly communicated.
    What we found is, quite simply, demands of FDA have soared 
over the past two decades. Resources have not! Furthermore, we 
found that the Agency has not adapted in order to maximize 
existing resources by capitalizing upon the scientific 
resources in the academic community and other government 
agencies.
    The specific findings of our review were the subject of a 
hearing of this Oversight Committee held on January 29, 2008 
``Science and Mission at Risk: FDA's Self-Assessment.'' Thus, I 
will not discuss all of the findings in detail today but rather 
I would like to focus upon those aspects of our review that are 
most relevant to the topic of today's hearing on foreign 
inspections: 1) Growing Disparity Between Responsibilities and 
Resources; 2) Gaps in Scientific Capacity and Capability; 3) 
Information Technology; and 4) Organizational Structure.

      Growing Disparity between FDA Responsibilities and Resources

    There is no more quintessential governmental responsibility 
than the protection of basic commodities of American life such 
as our foods and drugs. The Science Board report emphasizes 
that the need for an effective FDA is greater than ever before: 
FDA regulates 80% of the nation's food supply; plays a critical 
role in assuring the safety of therapeutics such as drugs, 
vaccines, and medical devices; regulates a vast number of other 
consumer products, ranging from televisions and cellular 
telephones to cosmetics, blood, and pet food; and has 
historically been the Agency to which governments around the 
world look to make determinations about the safety of new 
products. Moreover, the FDA is increasingly important to the 
Nation's economic health, as it regulates a quarter of consumer 
expenditures, and the industries it regulates are innovative 
leaders in science and technology and among the few American 
industries with a positive trade balance with other nations. 
Further, FDA will be a critical component in combating emerging 
threats such as intentional contamination of the food supply 
and the threat of chemical, biological and radiological attack-
as well as naturally occurring threats such as SARS, West Nile 
virus, and avian influenza.
    The Science Board concluded that FDA is being slowly 
``hollowed out'' by a progression of budget cuts and 
inattention to the Agency's needs. That deterioration, in turn, 
means that not only can the Agency not fulfill its public 
health mission, but that the safety of our citizens and the 
well being of our economy are being undermined. Further, as the 
Agency falls farther and farther behind, the public is 
increasingly losing confidence in the government's ability to 
protect them.
    The demands upon the FDA have soared due to the 
extraordinary advance of scientific discoveries, the complexity 
of the new products and claims submitted to FDA for approval, 
the emergence of heretofore unknown health threats, and the 
globalization of the industries that FDA regulates. The metrics 
alone are daunting, 125 new statutes added to FDA's workload by 
Congress in the past two decades, most without resources to 
implement them; 375,000 establishments making FDA-regulated 
products; a tripling in a decade of R & D in drugs and medical 
devices; an exponential increase in drug adverse reaction 
reports; and the emergence in recent years of extraordinary new 
health threats, such as, E. coli 0157H:7, AIDS, mad cow 
disease, and more. Perhaps most emblematic of this trend is the 
ten fold increase in the past decade of imports from other 
countries. Today, 15% of our food supply is imported from more 
than 100 nations, along with over half of our drugs, yet FDA 
has been given virtually no new authorities nor resources to 
address a dramatic change in the sourcing (and associated risk) 
from products made overseas, often in developing countries with 
little or no tradition of scientific rigor.

               Gaps in Scientific Capacity and Expertise

    FDA's resources have not only not kept pace with its 
responsibilities, many critical agency programs have sustained 
actual cuts. For example, FDA's food headquarters program has 
lost 20% of its scientists in just the past three years, 
despite an upswing in outbreaks of foodborne disease in the 
United States and a steady increase in contaminated seafood, 
produce and other foods being imported from foreign countries. 
Similarly, FDA has lost several hundred inspectors due to 
budget cuts since 2003, leaving the Agency not only incapable 
of inspecting domestic manufacturers but also ensuring that 
most of the nation's ports have no FDA inspectors. Although one 
FDA function, new drug and device review, has received 
additional funding from industry-paid user fees, the Agency as 
a whole has lost 1000 people over the past decade. This loss in 
scientific capacity has resulted in loss of personnel to 
perform inspections associated with marketed products but 
equally important, it has resulted in significant and critical 
gaps in scientific expertise.
    Innovations and advancements in science are outstripping 
FDA's capacity to understand and regulate them, threatening not 
only the safe introduction of new technologies but also 
American leadership in pharmaceuticals, vaccines, 
biotechnology, and medical devices. The United States is on the 
cusp of another ``revolution'' in therapeutics that holds great 
promise for effective treatments of cancer, Alzheimer's, 
Parkinson's, and other previously incurable conditions. 
Breakthroughs in human, animal, and microbial genomics, 
molecular biology, nanotechnology, food processing technology, 
computational mathematics, in vivo imaging and many more are 
likely to change the face of medicine and food production, yet 
FDA has not been given the capacity to prepare for these 
breakthroughs. Tens of billions of dollars are being spent by 
both the public and private sector on the development of such 
products, yet FDA has been denied the relatively minor funding 
necessary to ensure their rapid and safe entry into the market. 
At a time in which U.S. competitiveness in science, medicine, 
and food production are under increasing strain from overseas, 
a weak and underfunded FDA will be a brake on the very 
technologies that the United States is relying upon for its 
medical and technological future.
    Our Science Board Subcommittee considered the funding 
issues to be more acute for the Center for Food Safety and 
Applied Nutrition (CFSAN) than for other FDA programs. FDA's 
food safety program is characterized as one steadily dropping 
in staffing, and in funding for essential functions. Budget 
cuts for food safety have brought the Agency from doing 35,000 
domestic food inspections in 1973 to fewer than 8000 in 2007 
(meaning FDA inspects most facilities on average only every 10 
years). The foreign inspection rate is even worse, as the 
Agency may manage to inspect a dozen foreign food manufacturers 
in 2008, despite the thousands of overseas producers sending 
food to our shores. Moreover, as FDA's leadership in food 
safety erodes, other countries are presenting themselves as the 
appropriate model for food safety standard setting, even though 
such standards can be unscientific and disguised trade 
barriers, to the detriment of principles of sound science and 
to market access for American food exports. A recent GAO report 
indicates that less than 7% of foreign drug manufacturing sites 
are inspected annually be FDA.
    The Science Board Subcommittee viewed the current 
scientific needs of FDA to be extensive and diverse in terms of 
critical expertise, infrastructure, and knowledge gaps across 
FDA. Again, they were particularly critical in CFSAN. The food 
industry is rapidly changing both in terms of its global nature 
and the sophistication of the technologies used for production, 
processing, and marketing. In addition, the hazards related to 
food are changing and evolving in concert with changing food 
technologies and food production locales. The food regulatory 
program lacks sufficient high-quality applied field and 
laboratory research data to understand the mechanisms of 
contamination and how to mitigate or eradicate the many 
pathogens involved in the food production process. 
Additionally, CFSAN scientists are limited in their knowledge 
of food production, whether in the agricultural or aquacultural 
aspects of food production, especially in foreign production 
arenas. The capability and capacity of FDA to detect food-borne 
viruses and parasites have not kept pace with the emergence of 
this public health threat from international sources. It is 
essential that FDA have the capability to rapidly detect food-
borne pathogens. Currently they are limited in scope and have 
lengthy time requirements. Quick high throughput technologies 
are needed. This is a serious impediment to the US food safety 
program. Likewise, quick high throughput technologies are 
needed for detecting chemical contamination in both food and 
drugs. While the FDA was able to develop an assay for screening 
of heparin during the recent adverse reactions, the assay needs 
to be adapted to high throughput with improved sensitivity and 
adoption for field use.

                     Information Technology Systems

    FDA's information technology systems are woefully outdated 
and inadequate, posing a concrete threat to the Agency's public 
health mission. The report's authors were extremely disturbed 
by the state of FDA's IT infrastructure. We found a situation 
problematic at best, at worst dangerous. Many of FDA's systems 
are far beyond their expected life span, and systems fail 
frequently (even email systems are unstable). Emergency back-up 
systems are not in place. I heard recently that the newly 
established program related to adverse event reporting was lost 
due to failure of a back-up system. This has already resulted 
in a 6 week delay in implementation and it remains inoperable. 
Reports of product dangers are not rapidly compared and 
analyzed, inspectors' reports are still laboriously 
handwritten, and the system for managing imported products 
cannot communicate with Customs and other government systems. 
These inadequacies do not only cause inefficiencies and waste, 
but more importantly mean that dangers lurking in information 
coming to the FDA are simply missed--such as drug adverse 
reactions that are duly reported but not flagged for attention 
due to incapacities in information management. Data bases and 
data mining capabilities for appropriate tracking of 
inspections sites has proved to be a major challenge with 
existing technology and expertise. Inaccurate data bases and 
data bases not easily mined continue to hamper foreign 
inspections for drug manufacturing even though some of the 
problems were identified by GAO over a decade ago.

                               Conclusion

    FDA can no longer fulfill its mission without substantial 
and sustained additional appropriations. The current situation 
has developed over many years, the question is not why or how 
we got here but rather how do we strengthen FDA going forward? 
Our subcommittee strongly believes our report provides the 
required blueprint.
    The report is unique in yet another important way. It not 
only provides an assessment by a rigorous review of the Agency 
by a diverse team of experts from the public and private 
sectors, but it also includes a simultaneous assessment by 
leaders of the FDA (as contained in Appendices L-M). Our 
Subcommittee requested staff to not only identify science and 
technology gaps but to link each directly to their specific 
regulatory mission. This comprehensive external/internal 
analysis--done at the same point in time for an entire Agency--
is indeed rare.
    We recognize that adequate resources--human and financial--
alone will not be sufficient to repair the deteriorating state 
of science at FDA, which is why our committee also recommended 
significant restructuring. While our report focused upon the 
FDA organizational structure related most to the scientific 
infrastructure, it might well be that in light of continuing 
issues related to globalization that we should be asking ``What 
FDA organizational structure is needed to protect the public's 
health in the 21st century setting of globalization with 
rapidly expanding importation of foreign drugs, vaccines, 
biologics, and food?'' While our Subcommittee recommended that 
the Science Board conduct an extensive review of the Office of 
Regulatory Affairs and the National Center for Toxicological 
Research, Congress may want to consider requesting IOM to 
perform a more in depth study to evaluate the overall Agency 
structure given the concerns also raised regarding structure 
and drug safety. Regardless of the organizational structure, it 
is clear that without a substantial increase in resources, the 
Agency will be unable to meet either the mandates of Congress 
or the expectations of the American public, regardless of 
management or leadership changes. Our findings are supported by 
many recent GAO reports as you will hear today as well as 
recent reports form the congressional Research Service and the 
National Academy of Sciences.
    On behalf of our Subcommittee, we thank Chairmen Stupak and 
Dingell and ranking members Barton and Shimkus for holding this 
hearing and for your recognition of the seriousness of the 
deficiencies we have identified and the urgency with which they 
need to be addressed. The urgency of our advisory is simply 
predicated upon the fact that we see signs of an increasingly 
chaotic environment descending upon FDA, and the need to 
address the deficiencies we identified. Without immediate 
action, injuries and deaths from an overwhelmed regulatory 
system are certain, and the costs to our society will be far 
greater than any dollar figure upon which we all can agree.
                              ----------                              

    Mr. Stupak. Thank you, Doctor.
    Mr. Hubbard, please, for your opening statement.

     STATEMENT OF WILLIAM K. HUBBARD, FORMER FDA ASSOCIATE 
COMMISSIONER AND CURRENT SENIOR ADVISOR TO THE COALITION FOR A 
                          STRONGER FDA

    Mr. Hubbard. Thank you, Mr. Chairman. I have written 
testimony. I will just make a few opening remarks.
    It is ironic but sad that we were here on November 1st 
talking about this at the very time when the initial heparin 
deaths began to come in in reports, and so I appreciate the 
fact that you stayed with this issue because I do think it 
needs to be stayed with until we find a solution. And while FDA 
can't with absolute certainty associate the contamination from 
Chinese sources, the evidence is pretty darn strong, and the 
inadequate conditions that the FDA found when it did inspect 
the facility in Changzhou is, I think, indisputable.
    I can't overemphasize the risk we are putting our citizens 
through by continuing to allow these products to come into our 
country with no FDA screening.
    You referred, Mr. Chairman, in your opening remarks to 
Commissioner Cassell's remarks about why the FDA was created. I 
think that is a very appropriate analogy for us to consider. 
When Congress created the FDA in '06 you had a marketplace 
overrun with problems with foods and drugs, and there were 
three characteristics. You had widespread substitution of 
cheap, but unsafe food and drug ingredients, things like talcum 
for flour and sawdust for cereal, an abundant use of all kinds 
of chemicals and drugs and products driven more by profit 
motive than by quality, and lastly a weak-to-nonexistent 
regulatory system. Well, you know, that sounds familiar, 
doesn't it? So these factors are very clearly the case now with 
our import system.
    FDA has found substitutions of cheaper but dangerous 
ingredients, and that is often from less developed nations. You 
had mentioned melamine, the antibiotics in seafood, saccharine 
masking putrid fish, watered-down apple juice. The list is a 
fairly long one. And further, foreign producers, as you 
referred earlier, Mr. Chairman, can rely on the fact that FDA 
is not on the case and that a firm is unlikely to be caught and 
then if they are caught they are unlikely to be punished, and 
so that the incentives are all in the wrong place.
    And then--and then lastly, you have got equally evident 
that the governments of these nations are incapable, in my 
view, of assuring the safety of the products they send to us. 
In fact, they often deny the very existence of the problem. So 
we really only have three alternatives. We do nothing, that has 
just been the default for many years, and just hope for the 
best. We can rely on the assurances of these foreign 
governments, but as I said, I just don't think that is 
meaningful in this environment. Or we can accept the fact that 
we have not taken care of the FDA and given it the means.
    So I'll note that we have built a terrific regulatory 
authority in this country with over almost a century. We have 
built up the FDA, it has wonderful scientists and dedicated 
personnel, but we don't use it in protecting us from these 
foreign drugs, which I just think is a tremendous lapse. And we 
have not given them the tools and resources they need. You know 
as consumers we spend a penny and a half a day on the FDA. And 
I believe if we just spend 2 or 3 cents a day on the FDA that 
we could fix these problems.
    And I think if you polled American citizens, they would put 
FDA--the things that FDA does--at the top five or six things 
that they would want to see their tax funds spent for. And if 
we don't do something, Mr. Chairman, I think we are going to be 
back here over and over again having these same discussions. 
And in fact, these foreign drugs form a string of ticking time 
bombs. Heparin's gone off and I think there are going to be 
more until we fix this problem.
    And so with that, I thank you for your time.
    [The prepared statement of Mr. Hubbard follows:]

                    Statement of William K. Hubbard

                              INTRODUCTION

    Mr. Chairman and members of the Committee, I am William K. 
Hubbard. Before my retirement after 33 years of Federal 
service, I served for many years with the U.S. Food and Drug 
Administration, and for my last 14 years was an FDA Associate 
Commissioner responsible for, among other things, FDA's 
regulations and policy development. Although I remain retired 
since my departure from FDA, I serve as an advisor to The 
Alliance for a Stronger FDA, a consortium of patient, public 
interest, and industry organizations whose mission is to urge 
that FDA's appropriations be increased. The Alliance and its 
constituent members are greatly concerned that FDA's resource 
limitations have hampered the Agency's ability to ensure the 
safety of our food and drug supply. Today's hearing is a 
further exploration of your recent focus on one of those 
concerns--the massive increase in pharmaceuticals being 
imported into the United States at a time in which FDA's 
capacity to oversee those foreign producers is in serious 
doubt. Accordingly, I wish to thank the Committee for inviting 
me to testify on that subject today.

                               BACKGROUND

    As you know, Congress created the current regulatory 
structure for assuring the safety of human drugs in 1938, 
through its enactment of the Food, Drug and Cosmetic Act. That 
statute recognized that drugs could be a key component of our 
health care system, but that drugs were also powerful chemicals 
with the capability to produce great harm if not carefully 
regulated. Thus, Congress determined it necessary to create a 
relatively pervasive regulatory system, a key part of which is 
oversight of the production processes by which our drugs are 
manufactured. In carrying out its congressional mandate, FDA 
has promulgated regulations that provide specific requirements 
for drug manufacturers to meet, known as GMPs (for Good 
Manufacturing Practices). These include requirements that 
active ingredients of the drug be of a prescribed purity, 
strength and quality; that the drug be made in well controlled, 
sanitary conditions; that its labeling and packaging be equally 
well controlled; and that laboratory tests of the drug be 
performed routinely using well established scientific methods 
and properly calibrated equipment to confirm that the drug is 
always produced in the form approved by the FDA.
    GMPs and Domestic Drug Production--A Successful Safety 
Record. The result of this regime, established by Congress, and 
implemented by FDA and drug manufacturers, has been a domestic 
drug supply in which Americans can have great confidence with 
regard to quality and safety. Combined with the success of the 
user fee program that this committee created, we have access to 
new drugs as fast or faster than anywhere else in the world and 
we can be assured that our medications produced in the United 
States conform to equally high production standards. Moreover, 
countries around the world have been able to look to the FDA as 
the ``gold standard'' for determining if a new drug should be 
approved and for establishing safe manufacturing controls for 
marketed drugs. But the investigations you have been pursuing 
in recent months with regard to imported drugs point to a dark 
side of drug manufacturing that threatens to undercut the hard 
work of so many and the traditional safety assurances upon 
which we have long relied.

                FOREIGN SOURCING OF THE U.S. DRUG SUPPLY

    The reason for this concern, of course, is that 80% of the 
active ingredients in our drugs are now coming from overseas, 
and increasingly the so-called ``finished pharmaceutical''--the 
pill we take by mouth or liquid injected into our bodies--is 
being produced in other countries as well. Further, the most 
rapid growth in foreign drug suppliers has occurred in 
developing nations such as China and India, with the prospect 
of future suppliers from Vietnam, Thailand, Malaysia, and a 
host of African counties. Unfortunately, we know from 
experience that drugs produced overseas are not given the same 
``special'' treatment that we have given drugs made here in the 
United States. In most countries, pharmaceuticals products are 
subject to normal arbitrage, which means that drugs move about 
much as do electronics, apparel, auto parts and thousands of 
other goods. This has meant that drugs are often purchased from 
suppliers who have little or no oversight by regulatory bodies; 
that key elements of safe drug production are ignored--such as 
quality testing, expiration dating, and labeling; and that 
producers of substandard and counterfeit drugs have a 
relatively easy access to the marketplace. Finally, in less 
developed countries, it is abundantly clear that the regulatory 
bodies, if they exist at all, are weak and ill prepared to 
assure the safe production, distribution, and storage of drugs 
being exported to the United States.

                          DRUG COUNTERFEITING

    Further complicating and endangering this situation is the 
prevalence of counterfeiting around the world. We, of course, 
see counterfeit designer clothing, watches and videos being 
sold on street corners across the country. But a fake Gucci bag 
is likely to pose little threat to your health, while 
counterfeit drugs are reported to cause deaths in the hundreds 
of thousand worldwide each year. In some countries, it is 
estimated that a patient is more likely to get a counterfeit 
drug than a real one, meaning that more than half of that 
nation's drug supply is fake. Indeed, drug counterfeiting is 
considered to be endemic around the world, with the United 
States, until recently, a rare exception. But that may be 
changing rapidly. FDA has seen its counterfeit drug caseload 
soar in recent years, paralleling the movement of drug 
production from domestic to foreign sources.
    Perhaps this is coincidental, but certainly China has been 
alleged to be a principle world supplier of counterfeit 
products. For example, a ``sting'' operation by the The Sunday 
Times of London last year set up a phony drug wholesaler, who 
was able to buy large quantities of counterfeit drugs from a 
Chinese manufacturer, who was reported to make pharmaceutical 
ingredients for legal sale by day and fake drugs for illicit 
sale by night. The Times reported that counterfeiters are 
increasingly turning from fake handbags and currency to drugs, 
because the drugs are so easy to make and sell on world 
markets.
    And the New York Times described recently how counterfeit 
glycerin, which has been linked to hundreds of deaths in 
children when used in cough syrups and analgesics, was traced 
through a pipeline ``from the Panamanian port of Colon, back 
through trading companies in Barcelona, Spain, and Beijing, to 
its beginning near the Yangtze Delta in a place local people 
call `chemical country'.''

                         FDA AND IMPORTED DRUGS

    As this is occurring, what has been the reaction by our 
regulatory structure--the FDA? I recognize that you and others 
in Congress have been highly critical of FDA's oversight of 
drug imports in a number of areas--poor identification of 
foreign drug sourcing, little examination or testing of drugs 
when they arrive at U.S. ports, and virtually no routine 
surveillance of foreign drug manufacturers for adherence to 
GMPs. But, as you know, I have often defended the Agency as a 
cadre of highly capable, dedicated public servants who are 
struggling to keep up with the challenges of a rapidly changing 
pharmaceutical supply chain. I contend that we as a nation have 
failed to give FDA the tools it needs to carry out the mission 
we have assigned to them, such as:
      Staff to conduct regular inspections in foreign 
facilities as are now done for domestic manufacturing plants;
      Modern IT systems that would allow FDA to 
effectively track and monitor the production and movement of 
imports. The import data system is so old and communicates so 
poorly with other FDA information systems that it is difficult 
for FDA officials to use risk as a predominant driver of their 
compliance;
      Registration procedures for foreign drug 
manufacturing that would allow us to know who is making drugs 
for our market, where they are located, and what they are 
manufacturing; and
      Port inspectors to examine the almost 20 million 
annual shipments of foods, drugs, and other products that FDA 
is expected to regulation. For over 400 ports of entry, FDA has 
only 450 inspectors, meaning that most ports aren't staffed at 
all and many can be staffed only part time.
    Irrespective of particular needs, however, we must also 
face up to the fact that FDA is asked to regulate these 
products with a law whose 70th anniversary is this year--a time 
in which there were few drugs being made anywhere in the world, 
and none being imported into the United States. To use a 
transportation analogy, drug manufacturing has moved in the 
ensuing years from automobiles to airplanes to spacecraft, and 
FDA is still driving a Ford Model T, at least with respect to 
imported drugs. Current law and resource allocations for the 
FDA place most of the responsibility for assuring the safety of 
imported drugs on the Agency. So, while domestic drug 
manufacturers are held to a high standard of drug safety, with 
regular GMP inspections, foreign producers often need worry 
only about the remote possibility that an FDA inspector at a 
border crossing will find a problem and stop the drug's entry.

                       WHERE DO WE GO FROM HERE?

    I recognize that members of Congress on both sides of 
Capitol Hill are considering a number of legislative 
improvements to address import safety. Making major changes in 
the regulatory structure will likely be akin to turning a giant 
oil tanker--you can start the turn now, but it will take 
considerable time to fully change direction. But I believe 
there are some key principles that could be adopted right away, 
which have been suggested by the GAO and by FDA's Science 
Board:
    1) We need to initiate GMP inspections of foreign drug 
manufacturing facilities immediately, with a special focus on 
drugs made in countries without a safe drug production and 
internal regulation. Without such inspections, we essentially 
have no oversight of those manufacturers. A GMP inspection is 
far more than just a snapshot of that facility the day the 
inspector arrives. It is a detailed survey of how that plant 
has been operating for months, which allows a realistic 
conclusion about whether that facility can and does follow 
accepted drug production procedures. Relying on testing by the 
FDA or the U.S. drug company that receives the foreign 
ingredients is not a substitute for examining the source of 
production. The GAO notes that FDA today can allocate only 
about $11 million for its entire foreign drug inspection 
program. That is far too little an effort for such an important 
part of our national safety net, but, unfortunately, says a 
great deal about our current commitment to assuring the safety 
of those drugs. I urge you to support a level of appropriated 
funds that will permit FDA to assure that foreign facilities 
are complying with our standards.
    2)  Upgrading FDA's IT systems should be among our highest 
priorities.  If we don't even have a system for capturing who's 
making these products, where they are, what's coming into our 
country, and related critical information needs, we can't hope 
to begin the process of improving our coverage of imports. The 
IT systems should be configured in a way that allows the Agency 
to use a myriad of risk factors, including potential impact on 
the public health, to direct its inspectional and import 
efforts. The Science Board recommends increased appropriations 
of $800 million for FDA's overall IT needs, so there is a long 
way to go if FDA is to have state-of-the-art information 
systems, but we could at least start with funding an effective 
import information system.
    3)  Institute a vigorous mechanism for testing drugs for 
ingredients or contaminants that are not approved for that 
compound. History has shown that processors, especially in less 
developed countries, can be adept at adding substances to 
increase the value of the product or decrease costs of 
production. But the danger of doing so, whether it be the 
industrial plastic melamine in pet food, the polysaccharide 
inulin in apple juice, or the dietary supplement chondroitin in 
heparin, is well established, and poses an enormous hole in the 
safety net we are trying to maintain. Recent events have shown 
that U.S. processors and the public can be victimized alike by 
these nefarious activities, and we must find a way to end them.
    In conclusion, I believe that the scientists within the 
Food and Drug Administration have shown that they can 
effectively assure the safety of drug production when given the 
tools with which to do so. And U.S. drug manufacturers accept 
the need for high standards in drug manufacturing and generally 
adopt those standards faithfully, and many go to great lengths 
to secure their chain of supply of drug ingredients. Drugs made 
in the United States under FDA's rigorous quality control 
standards have an extraordinarily good safety record, as 
measured by the paucity of manufacturing defects and deaths and 
illnesses related to manufacturing deficiencies. But it is 
obvious that foreign sources do not share in that record of 
success. It does no good to have rules if they are not obeyed, 
no good to set high standards if they are not used, and no good 
to develop advanced scientific skills if they are not employed. 
That countries such as China have a record of serious problems 
in drug manufacturing is indisputable. And the disparity in 
drug inspections--in which FDA inspects U.S. facilities 
regularly and those in China and India almost never--is 
indefensible. I urge you to make changing that paradigm one of 
your highest priorities for this year.
    Thank you again for inviting me to give my views on this 
subject.
                              ----------                              

    Mr. Stupak. Thank you, Mr. Hubbard.
    Mr. Nielsen, please, for your opening statement, sir.

STATEMENT OF CARL R. NIELSEN, RETIRED DIRECTOR OF THE DIVISION 
 OF IMPORT OPERATIONS, OFFICE OF REGULATORY AFFAIRS, FOOD AND 
   DRUG ADMINISTRATION, U.S. DEPARTMENT OF HEALTH AND HUMAN 
                            SERVICES

    Dr. Nielsen. Mr. Chairman, members of the subcommittee, I 
thank you for another opportunity to discuss FDA's foreign drug 
inspection program, and I hope my participation will help the 
subcommittee develop effective remedies for a public health and 
safety system needing serious attention.
    The press has been very active the last couple months 
following the contaminated heparin story. FDA had a press call 
yesterday and reported there are now 81 deaths associated with 
the use of contaminated heparin from China. Truly the heparin 
story is a tragedy that seems to keep growing in magnitude. 
Because the FDA investigation has not isolated the likely node 
in the supply chain where the contamination occurred, FDA is 
encouraging all batches of heparin to be tested. Is that 
sufficient?
    FDA wants to be able to say it would not have made a 
difference whether the Changzhou plant was inspected earlier, 
that the contamination would not have been discovered. FDA is 
responding in its usual react mode to a serious injurious event 
after the damage is done, not a prevention mode. Granted, the 
mandatory identity test in each batch of API received by the 
drug manufacturer would not have identified the contamination, 
but facility inspections do help leverage safety. I say that 
the Chinese foreign manufacturer and its suppliers had adhered 
to good manufacturing practices and control of raw material and 
if FDA had inspected the plant to verify good manufacturing 
practices were in place, then perhaps 81 lives could have been 
saved.
    If compliance with the current GMP regulations could not 
have reasonably prevented or deterred the contamination of the 
heparin, then it may be time to finally update and rewrite the 
drug GMP regulations rather than trying to convince industry 
through nonbinding guidance documents to enhance scrutiny of 
active ingredients and other components.
    The vulnerability of the U.S. Drug supply to imported 
substandard or counterfeit active pharmaceutical ingredients, 
or APIs, is not a new issue before the Agency. Beginning in 
1991, my colleague Benjamin L. England, who is also appearing 
on his behalf, another FDA investigator and I initiated 
numerous international investigations with U.S. Customs related 
to APIs from several foreign countries, including China.
    In my previous testimony before this subcommittee on 
November 1st, 2007, I stated those counterfeit investigations 
found evidence that there were deaths associated with the use 
of carbamezapine, an anti-convulsant made out of imported 
counterfeit carbamezapine active ingredient. Those 
investigations also found evidence of imported counterfeit APIs 
back to the mid-1980s.
    Only one of the counterfeit cases was successfully 
prosecuted. In March 1996, in a plea agreement the defendant 
admitted the importation of several counterfeit APIs for 
several years. In May 1996, while I was a senior special agent 
in FDA's Office of Criminal Investigations, I wrote an internal 
memorandum to the upper management of the OCI describing the 
potential threats of harmful impurities being introduced into 
finished drugs by counterfeit APIs and APIs from unapproved 
sources, and I suggested several strategies to combat the 
threats of counterfeit APIs.
    This memorandum was produced to this subcommittee by FDA 
during a hearing in June 2000 on the subject of counterfeit 
drugs. Ultimately, months after I submitted my memorandum, a 
meeting was held in the Commissioner's office in February 1997 
and the imported counterfeit drug problem was verbally declared 
a top priority. Unfortunately, there was a leadership change at 
the Agency within a month and the counterfeit API issue largely 
left the Agency's radar scope.
    It seems it takes numerous deaths now to generate a call to 
evaluate and modify FDA requirements and operations. It has 
been 8 years since the 2000 hearing on imported counterfeits 
and 17 years since the first imported counterfeit API 
investigation. The same regulatory requirements for receiving 
and accepting components by finished drug manufacturers remain 
the same:identity tests and certificates of analyses provided 
by the supplier.
    Sadly, when looking at the history of the API problem, it 
should not be a surprise that it is possible for the recent 
heparin incident to occur.
    It is time for a radical change in improvement and 
adjustment of agency operations that fits the international 
trade paradigm and facilitates the trade of safe products. FDA 
must have a credible presence in foreign markets to better 
ensure compliance with good manufacturing practices and other 
requirements that it assure a supply of safe and effective 
drugs.
    The heparin incident demonstrates just how internationally 
linked we are relative to drug safety. Prescription drugs and 
over-the-counter medicines may represent less than 10 percent 
of all FDA imported regulated commodities, but the heparin 
scenario shows the serious cascading adverse health affects of 
the contamination of just one common and old drug.
    The FDA can be rebuilt, but it will be expensive. The 
public health cost is higher though if no significant 
investment is made, as demonstrated by the heparin incident. 
Effective post-market surveillance activities are essential to 
FDA's public health and safety mission.
    There are many great ideas for steering FDA effectively 
into the 21st century, but without investment in the integrated 
IT, execution of the great ideas are not very likely. If the IT 
development is functionally absent from corrective measures, 
then we should just plan a 10-year reunion to revisit what 
should have been known or done to prevent more deaths from 
contaminated drugs.
    The foreign firms may not be in immediate reach for 
inspection, but the products are. Imported drugs are not going 
into a black hole.
    I thank you for your time and look forward to answering any 
questions you may have.
    [The prepared statement of Mr. Nielsen follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Stupak. Thank you and thank you for your testimony. Mr. 
England, please, your opening statement, sir.

 STATEMENT OF BENJAMIN L. ENGLAND, ESQ., BENJAMIN L. ENGLAND & 
           ASSOCIATES, LLC, AND FDAIMPORTS.COM, INC.

    Mr. England. Thank you, Mr. Chairman and members of the 
Committee. I am Benjamin L. England, founder and owner of an 
FDA consulting practice called FDAImports.com, practicing 
attorney, and I represent foreign and domestic food, drug, 
medical device, and cosmetic companies in matters that involve 
the FDA.
    I am a 17-year veteran of the FDA. My written testimony, 
which is supplied for the record, discusses my background in 
greater detail. I am not going to belabor it here. I am pleased 
that the subcommittee has taken up the initiative to press for 
solutions for managing these safety risks associated with 
imported products again and to focus today specifically upon 
FDA's foreign drug inspection program.
    I am troubled that we are again meeting in the shadow of 
adverse events that have claimed the lives of American 
consumers, and we are still hearing about what FDA is doing 
after the fact.
    The last time I appeared before you I had made mention of 
the counterfeit bulk drug investigations of the 90s as well. 
And I might--Mr. Nielsen just recounted his efforts to improve 
the FDA's investigation of imported counterfeit drugs which was 
most likely, at least in my opinion, quashed at some point in 
the Agency. In fact, when Mr. Nielsen left OCI--I am going to 
tell a story on him and he doesn't know I am going to do it--
but when he left OCI and eventually reported to his job as the 
Director of the Division of Import Operations and Policy, he 
indicated to his supervisor, his new supervisor, that he was 
looking forward to getting back to finding ways to prevent 
counterfeit drugs from other countries into this country, to 
which his supervisor asked, what counterfeit drugs?
    This heparin incident apparently occurred because of some 
human error in deciding inspection had already been conducted 
or should be conducted. I believe that we are on the brink of a 
series of these events and that waiting for FDA's timeline will 
be a mistake. The time for developing strict strategies is long 
past.
    As I said months ago in the press and to your staff, Mr. 
Chairman, this recent case appears to be the close cousin of 
the counterfeit drug cases discovered nearly 2 years ago--2 
decades ago, excuse me.
    At that time, the illegal conduct was discovered through 
intensive smart facility inspections and by the efforts of 
forward thinking forensic scientists and investigators. This 
occurred only because of the intellectual connection between 
certain domestic inspections at U.S. facilities by a keen FDA 
investigator who had previously conducted the foreign 
inspection of the bulk supplier, coupled with follow-up 
inspections at the foreign supplier, which were themselves 
targeted with knowledge of where evidence of illegal conduct 
was likely to be found. It is no different today except that we 
now have available to us significantly improved technological 
solutions that may prove more useful to more precisely and 
efficiently identify, target, and intercept safety risks prior 
to the realization in the marketplace.
    I will provide now just a summary of six of my 
recommendations, and at this stage I believe that they are 
basically in the order of priority I would put them at. One, it 
is axiomatic that FDA's data systems, operational and 
management systems alike, have become the breeding grounds for 
potential disasters. Now let me be clear. That is not to say 
that all the products being imported or distributed into the 
U.S. are dangerous or even high risk. Rather, the relative risk 
of any of them is not known by the FDA. The agency can barely 
manage to do more on a daily basis than to check for 
registration numbers, listing numbers, and on a very good day 
some Establishment Evaluation data. When determining whether 
imported drugs should enter the country, the systems remain 
badly stovepiped or siloed and FDA's proposals will take at 
least another 5 years to correct them. FDA's solutions appear 
primarily to be to lay a common portal over the systems, which 
will not actually integrate the legacy systems.
    Number two, FDA does not conduct enough foreign GMP 
surveillance inspections to constitute a regulatory force in 
the world, even though the prized markets for such articles is 
here in the United States. The agency should be required to 
conduct foreign good measuring practice inspections at the same 
frequency as domestic inspections. Even without additional 
funding this would level the relevant risks between domestic 
and foreign sources of drugs and would force the Agency to 
balance those risks against the two sources.
    The cGMP surveillance inspection, when conducted by 
competent investigators who have at their disposal integrated 
account-based information covering the life cycle of products 
manufactured by the facility, remains the single most effective 
means for detecting the kinds of activities that have been 
prevalent in the counterfeiting of drugs, the production of 
articles using unapproved sources of materials, and product 
substitution. Without a rigorous foreign inspection program FDA 
will never prevent the next product contamination before it 
causes illness or death.
    Three, throwing more money at FDA without requiring the 
resources to be used to produce different outcomes will produce 
diminishing returns. In my opinion, I believe the most critical 
area for increasing funding is in FDA's IT systems. FDA systems 
must be far smarter and must be capable of taking data from a 
variety of sources, both internal and external, for comparison 
against legacy data. Its operational systems must utilize risk-
based algorithms, designed to predict where an exertion of 
agency effort will yield positive and measurable safety and 
security results.
    Without a major reinvention of FDA's IT systems, even the 
hundreds of proposals that were in the 2003 import strategic 
plan are of limited value. And following that, I would 
dramatically increase the resources in the field inspection 
force to include dedicated foreign inspection cadres, funding 
to increase laboratory capacity, funding for leveraging State 
inspections for FDA's domestic operations, and enhancement of 
those few headquarters components that are capable of actually 
assisting the field operations.
    Four, in order to take the most advantage of enhanced IT 
systems, the Agency should begin moving immediately to an 
account-based regulatory approach that enables the 
interconnectivity of regulatory processes along the entire life 
cycle of its products to encompass all steps from application 
and approval, where required, to the consumer impact.
    FDA could learn a lot by understanding how Customs has 
moved from a transaction-only approach to an accounts-based 
approach that evaluates the transaction in the context of the 
account.
    Customs has accomplished much of this by requiring each 
submission of the data to be connected to a unique numerical 
identifier. These identifiers can be related to one another 
enabling cross-linking of companies that demonstrate 
interrelationships.
    Under the current regime the lack of integration of data 
accounts means a human must notice slight differences in 
company names to assess whether a foreign drug facility has 
been ever inspected, and in this regard a unified registration 
system could quite easily have prevented some of the deaths as 
well.
    Five, I believe the organization of the Agency contributes 
to its inefficiencies. I recommend again establishing within 
FDA an organization that reports to the Commissioner with the 
mission of focusing on enhancing the safety of foreign made 
products, all products.
    I continue to believe fixing FDA's import and foreign 
inspection problem requires it to be broken free from the 
domestic operation, which produces much of the bureaucratic 
inertia against change in this area.
    This new organization would be responsible for all 
important international-focused work-planning activities, 
conducting facility inspections of foreign processors and 
importers, overseeing and conducting border operations, 
conducting foreign government and industry assessments and 
training, and support trade negotiations in a manner to enhance 
safety of imported products.
    And to accomplish this, the new organization should be 
directly funded rather than receiving its funding through the 
product centers. A basic persistent infrastructure to manage 
risk associated with all imported commodities must be 
maintained regardless of the year-to-year changes that may 
appropriately occur in program directions.
    And six, and finally, perhaps an unpopular solution to some 
involves the use of some third parties. In my opinion, FDA 
should begin obtaining as much information as it can from as 
many reliable sources as the Agency can find regarding the cGMP 
compliance status and supply change security programs of 
foreign drug facilities that are not inspected by FDA and are 
not ever going to be inspected by the FDA.
    Additional risk data could come in the form of third party 
inspection and certification companies, accompanied by a robust 
auditing process on both sides of the border. All such data 
should be connected to the firm's unique identifier and 
incorporated into the account data to permit its assessment in 
light of other legacy and other agency data. This 
recommendation would permit the Agency to focus its import 
inspection and examination efforts on shipments representing 
known and unknown risks.
    And I thank the subcommittee Chair and the members for the 
opportunity to discuss these important issues again.
    [The prepared statement of Mr. England follows:]

                 Statement of Benjamin L. England, J.D.

                            1. INTRODUCTION

    Mr. Chairman and Members of the Committee, I am Benjamin L. 
England, founder and owner of an FDA consulting practice, 
FDAImports.com, Inc., and a practicing attorney representing 
foreign and domestic food, drug, medical device and cosmetic 
companies in matters involving the U.S. Food and Drug 
Administration (FDA). I am a 17-year veteran of the U.S. Food 
and Drug Administration (FDA). From 1986 to 2003 I held the 
positions of Regulatory Microbiologist in FDA's Baltimore 
Microbiology Laboratory, Consumer Safety Officer and Compliance 
Officer in FDA's Baltimore District Office, Special Agent with 
FDA's Office of Criminal Investigations in the Miami Field 
Office, Compliance Officer in FDA's Miami Resident Post, and 
Regulatory Counsel to FDA's Associate Commissioner for 
Regulatory Affairs (or ACRA) in Headquarters. I resigned my 
most recent FDA position as Regulatory Counsel to the ACRA in 
July 2003--a position I held in FDA for over 3 years as a Title 
42 appointee. During my last 3 years at FDA, I was a key point 
person for Customs and Border Protection, I chaired the FDA's 
Counterfeit Drug Working Group, instituted the Joint Agency-
Industry Working Group to combat product counterfeiting and 
tampering, which laid the ground work for the preparation of 
FDA's initial Counterfeit Drug Task Force report, and co-
chaired FDA's Import Strategic Plan Steering Committee.
    Along with my colleague, Mr. Carl Nielsen, who is also 
before you today testifying on his own behalf, I established 
the Agency's first series of Import Enforcement Training 
Courses, and with a few dedicated FDA and Customs officials, 
trained nearly every FDA import inspector, investigator, import 
program manager, and compliance officer in the effective use of 
Customs enforcement tools against products imported in the U.S. 
in violation of FDA requirements.
    At the outset, I am pleased the Committee has taken the 
initiative to press for solutions for managing safety risks 
associated with imported products--and to focus today 
specifically upon FDA's foreign drug inspection program. I do 
not feel it is necessary to reiterate all of the history in 
this testimony, as it is a part of the record from previous 
hearings. Some points, however, bear repeating. Further, since 
my last appearance before you on November 1, 2007, more 
evidence has appeared in the U.S. marketplace laying bare the 
brokenness of the regulatory and information technology (IT) 
systems FDA is hobbling along with and the real safety risks 
that attend the Agency's present condition.
    I highlighted in my previous testimony the counterfeit bulk 
drug investigations of the 1990s, which were all but abandoned 
by FDA. We discussed how reminiscent those cases were to press 
accounts identified by the Chair related to counterfeit 
articles, both finished and bulk, in any number for foreign 
markets. Today we are confronted with serious adverse events 
involving a widely used drug product that appears to have been 
made using substituted active ingredients at a foreign facility 
that was never inspected by FDA--because of some human error in 
deciding whether an inspection had already been conducted or 
should be conducted. I believe that we are truly on the brink 
of a series of these events and that waiting for FDA to take 
some action that actually mitigates risk or encouraging the 
Agency to act unilaterally will be an exercise in futility. As 
I said in the press and to your staff, Mr. Chairman, this 
recent case appears to be the close cousin of the same conduct 
discovered nearly two decades ago. At that time, it was through 
intensive and smart facility inspections and by the efforts of 
forward thinking forensic scientists and investigators the 
activity was discovered. Moreover, the successfully prosecuted 
counterfeit bulk drug case was made possible only through the 
intellectual connections between certain domestic inspections 
at U.S. facilities by a keen FDA investigator who had 
previously conducted the foreign inspection of the bulk 
supplier, coupled with follow up inspections at the foreign 
supplier, which were themselves targeted with knowledge of 
where evidence of illegal conduct was likely to be found.
    It is no different today--except that we now have available 
to us significantly improved technological solutions that may 
prove useful to more precisely and efficiently identify, 
target, and intercept safety risks prior to their realization 
in the market place.

             2. INTEGRATING THE SOLUTIONS ACROSS THE AGENCY

    One of my greatest concerns as a former FDA official and a 
current consumer is that Congress would jump to solutions that 
are as ``stove-piped'' or ``siloed'' as the Agency. This is 
particularly true with regard to FDA's information technology 
systems. As the General Accountability Office (GAO) has 
articulated several times over the last 15 years, the Agency's 
legacy data systems are antiquated and not integrated. The FDA 
has been striving for decades under a budget that is anemic 
with regard to IT funding. Most Americans, I presume, would 
find it quite astonishing that FDA personnel (humans) must make 
decisions about whether a foreign facility should be (or has 
previously been) inspected by reading the name and comparing it 
to names in a number of data systems.
    Even more astonishing would be the realization that FDA's 
various registration systems--across all of its Centers and 
regulated commodities--are not relationally integrated to 
background agency data or to its operational systems. Humans 
are still entering data bases and checking to see if a 
registration, supplied during the importation process is ``in'' 
the system and whether the number ``belongs to'' the 
manufacturer declared in an entry. FDA still receives its 
manufacturer declarations via the Customs Manufacturer 
Identification (MID) process and that MID must be translated in 
FDA's systems to its own numbering system. Because of the 
variations in the MID process, FDA ends up with duplicate or 
triplicate numbers for the same facility--or far worse. Portal 
overlays can help reduce the number of data base user names and 
passwords an FDA official may have to remember--but they will 
not integrate data. These realizations, among others, account 
for at least some of the discrepancies in the Agency's data 
with respect to how many foreign facilities have been or should 
be inspected. This is an annoying result. But it is more than 
annoying when the lack of integration of data accounts for a 
regulatory regime which relies on a human to notice slight 
differences in company names to assess whether a facility has 
ever been inspected. In this regard, a unified registration 
system could quite easily have prevented the recent heparin 
scenario.

                    3. MORE THAN COUNTING COMPANIES

    Although it is critical for FDA to be able to define its 
universe, regulatory oversight requires far more than counting. 
It is critical that FDA is able to obtain reliable and 
affirmative evidence that foreign facilities manufacturing 
drugs for the U.S market are operating within the scope of 
FDA's current good manufacturing practices (cGMP) requirements. 
This information can be derived from a number of sources--but 
one primary and historical information source has been the 
physical FDA inspection of the facility making the bulk active 
pharmaceuticals and the finished dosage drugs. As discussed in 
previous testimony, the drug manufacturing industry has 
undergone significant changes over the last 15 years in how and 
where its bulk actives and finished drugs are prepared, packed, 
and labeled. Many more drugs are manufactured in foreign 
jurisdictions now than ever before. FDA's inability to count 
those facilities is indeed troubling. But the point of being 
able to count them must be based upon FDA's ability to conduct 
adequate oversight of how they manufacture the drugs we take. I 
might add that without a number we can all point to, you are 
also unable to assess how FDA is doing in evaluating the safety 
and effectiveness of those drugs. Confidence in the system 
understandably erodes.
    The post-marketing surveillance inspections of drug and 
medical device facilities are absolutely critical to assessing 
the quality, purity, safety and effectiveness of the articles 
they manufacture. I have never heard FDA or the domestic 
industry as a whole say otherwise, although I am sure there are 
different opinions as to the absolute frequency that should be 
applied. Further, the sophistication of the inspector, the 
sufficiency of agency inspection guidance, the amount of time 
the facility is available to the inspector, and the depth and 
scope of the inspection all play significant roles in the 
reliability of the inspection results. The frequency of cGMP 
surveillance inspections correlates directly to the level of 
confidence FDA and the consumers enjoy respecting the critical 
elements of the articles.
    The cGMP (or Quality System) requirements are intended to 
address the adequacy and appropriateness of the manufacturing 
process, the design of that process, the equipment used in the 
process, the control and adequacy of raw materials subjected to 
processing, the source of those ingredients, the qualifications 
of the facility's critical personnel, the packaging, labeling, 
and failure evaluation processes, and post-distribution 
monitoring, including company recall procedures. FDA's current 
inspection frequency for foreign prescription finished drug and 
active ingredient manufacturers is reportedly on a 13-year 
inspection cycle. FDA is required to inspect corresponding 
domestic drug facilities on a 2-year cycle. When you compare 
this foreign facility inspection cycle (for Rx Active 
Pharmaceutical Ingredient manufacturers alone) to the increase 
in the numbers of imported drug shipments over the last 10 
years, one can see its impact historically and can predict that 
impact prospectively.
    For instance, according to FDA data, from 1991 to 2000 the 
number of FDA-regulated import shipments increased by 272% and 
in 2001 alone there were more than 7 million imported 
commercial lines of entry. \1\ In 2002, approximately 7.8 
million lines of FDA-regulated commercial shipments were 
imported. From 1997 to 2002, the number of imports of every 
kind of FDA-regulated product at least doubled. In 2007, FDA 
had jurisdiction over more than 17 million imported commercial 
lines of entry under its jurisdiction will be imported. This 
represents two doublings in the sheer number of entry 
transactions every five years since 1997. FDA's inspection 
resources directed at assessing the safety of imported products 
and evaluating the manufacturing systems of foreign facilities 
has remained static throughout that time period. \2\
---------------------------------------------------------------------------
    \1\ A commercial line of entry is the equivalent of a line on a 
commercial invoice covering the sale of a product from a foreign 
exporter to a U.S. importer, owner, or consignee. A line may consist of 
a single laser DVD reader from Taiwan, regulated by FDA as an 
electronic product, or it may consist of 10 x 40 foot refrigerated 
containers of cantaloupes from Mexico. With regard to drugs, a line may 
be a shipment of 10 cases of retail ready over-the-counter (OTC) 
tablets of acetaminophen or a container of several metric tons of 
relatively pure bulk active pharmaceutical ingredients. A single 
invoice may have one or dozens of lines. FDA counts its import 
transactions by commercial line of entry. Each FDA-regulated line is 
subject to FDA jurisdiction based upon the legal definitions of the 
various products in the FDCA.
    \2\ More regretfully, even though roughly half of all FDA-regulated 
products consumed in the U.S. are either manufactured in whole or in 
part in a foreign country, as I recall by the summer of 2003 
approximately only 7 out of every 100 dollars spent by FDA regulating 
products under the Agency's jurisdiction was focused on FDA's import or 
foreign programs.
---------------------------------------------------------------------------
    Based upon my experience at FDA, which is further informed 
by statements from FDA in the press and in testimony before 
various congressional committees, roughly 60% of the total 
number of commercial lines of entry consists of food imports; 
25% consists of imported medical devices; and 10% consists of 
imported drugs and biologics. Using these proportions, FDA is 
responsible for ensuring the quality, safety and efficacy of 
nearly 2 million imported drug shipments per year.
    As I testified in November 1, 2007, FDA's list of 
``uninspected'' foreign API manufacturers exporting to the U.S. 
ranged from 242 to 4,600, depending upon the criteria used to 
populate the list. \3\ The reasons for such disparity include 
the FDA's multiple, ``siloed'', antiquated and non-integrated 
IT systems; the lack of a meaningful gatekeeper for the 
Agency's drug establishment registration process; and the 
Agency's insistence to mitigate the usefulness of FDA's 
historical import entry (OASIS \4\) transactional data.
---------------------------------------------------------------------------
    \3\ See Statement of Jane E. Henney, M.D., FDA Commissioner, Before 
the Subcomm. on Oversight & Investigations, Comm. on Commerce, U.S. 
House of Representatives, http://www.fda.gov/ola/2000/
counterfeitdrugs.html (Oct. 3, 2000).
    \4\ ``OASIS'' is an acronym that stands for FDA's ``Operational and 
Administrative System for Import Support.'' See FDA's discussion of 
OASIS at http://www.fda.gov/ora/import/oasis/home--page.html.
---------------------------------------------------------------------------
    Today, it is apparent that all of these factors persist at 
FDA and the Agency is still struggling to identify the scope of 
the universe of foreign drug firms under its jurisdiction--
whether we speak in terms of all foreign firms exporting drugs 
for human or animal consumption or merely foreign firms that 
FDA believes ``should be'' inspected. Lacking the ability to 
identify the larger, total universe of foreign drug firms 
exporting drugs to the U.S., the attempt to reduce that total 
to a more manageable ``high risk'' universe for targeting 
inspections has little foundation in reality. Consequently, 
FDA's current range of foreign drug firms exporting drugs to 
the U.S. that should be inspected by FDA is from 3,000 to 
6,700. \5\
---------------------------------------------------------------------------
    \5\ These numbers are derived from two separate FDA data systems 
and thus the disparity. The lower number is reportedly from FDA's Drug 
Registration and Listing System (DRLS). The higher number is a downward 
departure from data stored in ORADDS, the OASIS data warehouse. 
Therefore, the lower number is taken from the process whereby foreign 
manufacturers report data to FDA in order to meet two of the most basic 
minimum requirements to export drugs to the U.S.: drug registration and 
drug listing; and the higher number is taken from the process whereby 
Customs brokers report to Customs and to FDA through OASIS the identity 
of foreign manufacturers actually exporting drugs to the U.S. This 
discrepancy alone is troubling. It is unclear over what time frame the 
two numbers were derived and whether they correlate. Further, it 
undercuts FDA's traditional argument that OASIS data is unreliable 
simply because it represents self reporting through the importation 
process. DRLS also represents self reporting to FDA, and in the import 
declaration environment, there is another agency, Customs and Border 
Protection, that strictly governs and enforces proper data reporting.
---------------------------------------------------------------------------
    So at present, FDA is tasked with evaluating the safety and 
effectiveness of nearly 2 million imported shipments of drugs 
from as many as 6,700 foreign facilities, any number of which 
have not been visited by an FDA inspector for as long as a 
decade (or have not been visited at all, as in the case of the 
Chinese supplier of heparin potentially linked to 81 deaths in 
the U.S.). FDA is doing this with an IT system that contains 
multiple duplicate or triplicate facilities with different or 
non-unified numerical identification systems, literally dozens 
of data bases that are disconnected, and a couple hundred 
people on a part time basis. This certainly seems to be a 
resource problem--but it is far more than that.

                      4. WHY NOT JUST SAMPLE MORE?

    As stated in my previous testimony, when FDA is virtually 
absent in the foreign market assessing compliance with cGMPs, 
the Agency is left with attempting to assess risks associated 
with foreign sourced drugs and drug ingredients using its 
import operations. The FDA's current import program, however, 
focuses primarily on FDA approved application, facility 
registration, and drug listing database submissions, label 
reviews, and finished product testing. These approaches are 
incapable of assessing the cGMP compliance and therefore the 
quality and safety of imported drugs. Although testing can tell 
FDA something about the quality and even the safety of an 
imported product, finished product testing at the border (or 
anywhere along the supply chain) is not a statistically valid 
method for predicting the safety of later or earlier untested 
shipments--even other shipments from the same processor.
    Where product (and patient) safety is so dependent upon an 
ongoing and rigorous manufacturing quality system, finished 
product testing is not even a valid way to determine product 
safety within the same shipment. Compliance with FDA's drug 
cGMP program is the only (current) framework within which the 
Agency can justify relying upon the results obtained from 
finished product test. Finished product testing is confirmatory 
only. Without an assessment and understanding about the 
conditions of manufacture within the facility, the finished 
product test results are anecdotal at best. Such an approach 
cannot predict, measure, assess, or assure drug safety.
    Any question about this premise is laid to rest with a 
simple observation from a recent drug safety crisis. FDA now is 
maintaining that because it took some time for any number of 
laboratories to identify the contaminant in the heparin, which 
has caused such tragic loss of life recently, the FDA concludes 
that there are ``limitations as to what inspections can tell 
you.'' This is an appalling and irresponsible position. To the 
contrary, the absence of a meaningful and recurrent FDA 
inspection presence has far more to do with the events of 
recent months than almost any other factor. The evidence as to 
product safety (and security) is found only in the facilities 
and companies that make and move products into the U.S. market. 
Lacking a robust foreign drug inspection program, which takes 
into consideration all elements of prescription and non-
prescription foreign drug manufacturing in its scheduling and 
preparation, promotes a ``catch me if you can'' foreign drug 
compliance culture.
    I would only add that if FDA's IT systems were capable of 
linkage using a unique numerical identification system with 
some level of verification of registration data, then I dare 
say the system could be designed to flag any submission to the 
Agency, linked with the unique numerical identifier, with an on 
screen warning that the facility submitting the data has not be 
inspected by the Agency. This alone would have enabled FDA to 
assess whether the manufacturer of the heparin should be 
approved as a source for the finished dosage manufacturer. 
Instead, FDA personnel had to resort to recognizing slight 
variations in the names of two firms.

        5. ACCOUNT-BASED OVERSIGHT PROVIDES ADDITIONAL BENEFITS

    Other government agencies having regulatory oversight over 
hundreds of thousands of companies, transactions, and 
compliance procedures have begun to move to account-based 
regulatory processes to integrate the many steps the agencies 
must take to assess risks. For instance, Customs, with more 
than three times the number of import transactions, the 
responsibility for enforcing virtually every federal law in the 
importation arena, and the added weight of ensuring the 
security of imported products and our port infrastructure, has 
moved to account-based processing. As FDA notes in its various 
import safety proposals and (purported) risk-based food safety 
plans, Customs' development of its Automated Commercial 
Environment (ACE) and the International Trade Data Systems 
(ITDS) will assist the government in improving its 
interoperability. However, FDA's background data systems 
(managing, for instance approval submissions, registrations, 
listings, 510(k)s, Food Canning Establishment registrations, 
bioterrorism registrations, drug master file submissions, to 
name a few) will not be integrated with the final 
implementation of ACE or ITDS. Although Customs will require a 
unique numerical identifier from any company providing data 
into its systems (and for any company identified in such 
submitted data), FDA will still have to translate that unique 
identifier into its own registration system--and back into its 
duplicative, disconnected systems. So it is true that FDA will 
be able to obtain its import data from one place--as will the 
other border agencies--however, FDA's own systems will remain 
disconnected, non-integrated and stove-piped.
    If FDA moved to an account-based system to regulate 
products in the supply chain, wherever they may be found, and 
if FDA only accepted data when a Customs-comparable unique 
numerical identifier is provided with the submission, the 
Agency would be able to begin the process of internal data 
integration and meaningful data connectivity with Customs and 
other border agencies. Inspectional data, import data, adverse 
event data, and submission data could all be connected via the 
unique numerical identifier. The data systems could then be 
connected to FDA's operational data systems (FACTS and OASIS) 
to permit integration with importation data transmitted by 
Customs and to help target domestic and foreign facility 
inspections and border evaluations, inspections, and sampling. 
The account-based system would develop over time eliminating 
the now ever-present duplications in firm data and would enable 
FDA to actually identify the scope and size of the ``hay 
stack'' as it exists in the real world. \6\
---------------------------------------------------------------------------
    \6\ In my view, the unique numerical identifier should be site 
specific and should be capable of verification by government and 
private systems and processes. Because of the amount of consolidation 
that can occur in any economic market, whether developed or developing, 
the identifier must be able account for mergers, acquisitions, business 
closings etc. Consider, for instance, the ownership changes that can 
occur over the current FDA foreign inspection cycle of 13 years. Entire 
countries can disappear or newly emerge in the same geographical 
location over that amount of time.
---------------------------------------------------------------------------
    With an account based regulatory system, the assessment of 
user fees (or review fees) can be predicted with greater 
specificity, FDA can identify the size and scope of its 
regulated industry, modifications, mergers, and facility 
closings can be identified and tracked, post-market events can 
be connected to product source, objectionable conditions 
observed at manufacturing facilities can be tracked through 
supply chains more readily, supply chains are more transparent 
and interagency coordination improves dramatically. These are 
just a few of the benefits.

                             6. CONCLUSION

                   A. Missed Opportunities for Change

    In conclusion, I reiterate my previous testimony regarding 
steps going forward. The efforts of over 100 dedicated FDA 
personnel from all of FDA's product Centers, the Office of 
Regulatory Affairs (ORA), the field offices, the laboratories, 
the various information technology offices, and the office of 
international programs should be presented to Congress and 
industry in an open forum to enable the Agency to learn risk in 
the real world. FDA's foreign drug inspection program is only 
one means for FDA to assess and mitigate risks related to 
imported drugs. Foreign sourced drugs, whether finished or 
ingredients, active or inactive, must also pass through the 
bottleneck of FDA's and Customs' import assessment. Although it 
is true that FDA's import program is woefully inadequate today, 
only addressing imported drug risks in terms of increased 
foreign inspections leaves open risks that may arise in between 
foreign inspections (even if conducted every 2-3 years) or in 
the product supply chain (e.g., product counterfeiting, 
commingling, or tampering). Further, as FDA will never cross 
enough foreign thresholds to enable the Agency to apply 
inspection data on all imported drug shipments--more than just 
additional resources for foreign inspections is needed.
    Shortly after September 11, 2001, FDA's Leadership Council 
established an Import Strategic Plan Steering Committee. By 
spring 2003 the Import Strategic Plan was virtually complete. 
FDA developed the ISP from the contributions of more than one 
hundred Agency experts in all product Centers, field and 
headquarters components, laboratories, international programs 
staff, the General Counsel's Office and the Office of Policy, 
Planning and Legislation.
    The ISP's principles were simple but far reaching: Push the 
current FDA import evaluation process from the extremely 
limited border transaction to a life-cycle process, which:
     Intentionally gleans information from all points along an 
article's supply chain;
     Assesses that information based upon FDA requirements and 
risk of harm;
     Delivers the assessment to border inspectors, compliance 
officers, and electronic screening systems for reliable 
targeting decisions; and
     Results in the facilitation of safe products and 
enforcement against products that are unsafe.
    The significance of the ISP and its proposed action items 
rests in what it represents: an internal agency demand for a 
dramatic shift in thinking about the identification, assessment 
and mitigation of risks in the international supply chain. Many 
of the ISP proposals are indeed costly. However, many could 
have been implemented nearly immediately and would have begun 
the process of increasing FDA's import efficiency and 
effectiveness using existing resources. It is this shift in 
thinking that FDA's middle and upper management seems to 
continue to resist. I believe that all involved in the ISP 
process recognized the import problems--even in 2003-are 
complex and cannot be solved with FDA's traditional regulatory 
approaches and philosophy.

                 B. Some Proposed Changes Going Forward

    First, any action by this Subcommittee should include a 
significant resource investment targeted directly for 
reengineering FDA's stove-piped IT systems. IT improvements 
recommended in the ISP are a contingency for executing any 
serious risk-targeting strategies for foreign inspections and 
import interdiction of unsafe drugs. This investment, however, 
cannot be targeted solely at drugs and devices, for the same 
operational systems must manage the other 90% of imported 
shipments and the inspection of other products. The IT fix must 
either be across all Centers and ORA or it must occur at the 
Department level to leave open the option of breaking food 
regulation out of FDA and combining it with other food 
regulators into a Food Safety Administration as a sister to the 
remaining Drug & Device Agency.
    Second, I recommend the establishment within FDA of an 
organization reporting to the Commissioner with the mission of 
focusing on enhancing the safety of imported products--all 
products. I continue to believe fixing FDA's import and foreign 
inspection problem requires it be broken free from the domestic 
programs, which produce much of the bureaucratic inertia 
against change in this area. A new organization would enable 
proper staffing, allocation of human resources at ports of 
entry, management and implementation of ISP-based strategies. 
It should be responsible for all import and international 
focused work-planning activities; conducting facility 
inspections of foreign processors and importers; overseeing and 
conducting border operations; conducting foreign government and 
industry assessments and training; and support trade 
negotiations in a manner to enhance safety of imported 
products. To accomplish this, the new organization should be 
directly funded, rather than receiving its funding through the 
product Centers. A basic persistent infrastructure to manage 
risks associated with all imported commodities must be 
maintained regardless of year-to-year changes that may 
appropriately occur in program directions.
    Third, section 302(b) of the Bioterrorism Act, which 
enables FDA to implement risk-based strategies for managing 
food imports, should be expanded to cover all other FDA-
regulated products including drugs. This would clarify FDA's 
authority to facilitate the importation of drugs that are in 
compliance with FDA requirements and pave the way for 
distinguishing between and among shipments based upon 
verifiable risk data.
    Fourth, FDA should be required to inspect foreign drug 
facilities (at least those that fall into categories FDA admits 
should be inspected on a regular basis) at the same frequency 
as domestic facilities.
    Fifth, FDA should work with Customs to adopt a uniform 
numerical identification system to begin the process of 
regulating its industries using an account-based system. This 
would enable FDA to integrate its numerous and disparate 
background data systems and to interrelate the data it receives 
from Customs and other government agencies.
    Sixth, FDA should publish and begin implementing the ISP in 
accordance with the plan's guiding principles, goals, and 
themes.
    Seventh, FDA should begin developing programs for obtaining 
as much information as can be obtained from as many reliable 
sources as the Agency can find regarding the cGMP compliance 
status and supply chain security programs of foreign drug 
facilities that are not inspected by FDA. This population of 
drug manufacturers will always exist, and simply saying it 
represents too many companies for oversight or too much data to 
digest is no answer at all. Additional risk data could come in 
the form of third party inspection and certification companies, 
accompanied by a robust auditing process on both sides of the 
border, by foreign inspectorates, or by other U.S. Government 
Agency inspections and information. All such data should be 
connected to the firm's unique identifier and incorporated into 
the account data to permit its assessment in light of other 
legacy and other agency data. I continue to hold to the view 
that obtaining and assessing all available risk data better 
enables FDA to (a) target its foreign and domestic inspections; 
(b) interdict and examine high-risk imported drug shipments 
(related to product safety); (c) follow up in the domestic 
market those shipments that proceeded through the border with 
inadequate inspections; and (d) facilitate imported drug 
shipments that are likely to have been manufactured in 
accordance with FDA's cGMP requirements. This would permit the 
Agency to focus its most earnest import inspection and 
examination efforts on shipments representing known and unknown 
risks.
    Eighth, FDA requires additional resources to conduct more 
foreign inspections and import examinations and to develop and 
publish meaningful Agency guidance relating to identifying and 
managing risks in the full life cycle of imported products.
    Ninth, FDA should rely on Customs and Border Protection and 
the Department of Homeland Security (DHS) to manage security 
risks associated with FDA regulated imports. DHS' security 
programs should be expanded to incorporate product security 
risks (such as product counterfeiting and tampering) rather 
than focusing solely upon the security of in-transit cargo or 
inbound containers.

                                 * * *

    I thank the Subcommittee Chair and Members for the 
opportunity to discuss these important issues and I look 
forward to answering any questions.
                              ----------                              

    Mr. Stupak. Thank you, and thank you to everyone for your 
testimony today.
    Mr. Hubbard, Mr. Nielsen, Mr. England, I believe you were 
here when the Commissioner testified. What would each of you--
if you would just give me quick--what would you each do if you 
were the Commissioner? How would you come to address this 
issue? Give me the top 3 things you would do, starting with 
you, Mr. Hubbard.
    Mr. Hubbard. First you have got to know who is making our 
drugs and sending them to us. So you need registration. And I 
think you've mentioned that.
    Mr. Stupak. OK. A foreign vendor registration we were 
talking about.
    Mr. Hubbard. Everyone that is in the supply chain, all the 
way back to the pig--the pig farmer and his heparin. So at 
least we know who they are and where they are. That is, I 
think, number one. Second, you need to get over there and look 
at all the facilities and see what you find. Because we don't 
know now because we don't go there. And, thirdly, as I think 
these gentlemen have mentioned, you have got to have some sort 
of IT system to track it.
    And there are many more things you need to do, but I would 
put those 3 things as sort of the sequential first things to do 
to begin to get a grip on this problem.
    Mr. Stupak. Mr. Nielsen.
    Dr. Nielsen. I do believe--I do believe IT has to be the 
first item, and there has to be funding. It is for the center. 
It is for the ORA. Coupled with that, I would say number two is 
functional organizational structure to deal with the issues at 
hand; and I do concur with what Ben said, that there does need 
to be a separate entity.
    I also recommended that, in my written statement, that the 
foreign inspection oversight, the border operations, and 
oversight of the importers are all extremely related as far as 
risk; and I do believe a formation of an organization with the 
responsibility and funded and empowered will provide solutions 
that will work. And certainly funding is still a big issue, but 
the funding needs to be attached to very specific events with 
articulated outcomes or expected outcomes.
    Mr. Stupak. Mr. England.
    Mr. England. I think there are two levels. One is, what do 
you do in the instant event; and I think that the FDA is doing 
probably the best they can in trying to figure out where this 
product came from.
    Mr. Stupak [continuing]. Heparin you mean?
    Mr. England. Yes, right. The specific heparin situation. I 
disagree entirely with the theory that the inspection couldn't 
have had a significant impact in preventing this. I mean, I 
think if we keep in mind that the inspection that we have now 
seen the 483 for occurred after the adverse events, and we 
still saw the conditions we saw. If FDA had been there prior to 
the adverse events during a pre-approval inspection, I'm 
inclined to believe that they would have seen a facility in 
even worse condition, in which case they would not have been in 
a position to be a source for this product.
    Mr. Stupak. Hang on. OK.
    Mr. England. So I think--I think that the foreign 
inspection component is absolutely critical, and it has been 
for years. I also think that because of the mandate that FDA 
has to inspect the domestic industry every 2 years, you end 
up--I think FDA ends up trying to reach that mandate to the 
exclusion of the foreign market where it doesn't have the 
mandate and that it tries to do the best it can.
    Most of the foreign inspections, in reaction to the idea 
that, well, even some foreign inspections were conducted and 
yet there was still contaminated product that came from perhaps 
those facilities, those inspections were probably 2-day pre-
approval inspections. The inspection we just saw at this 
facility regarding heparin was probably a 5-day, I believe, 
inspection, far more deep. In the United States, that would 
have been a 10- to 12- to 16-day inspection.
    Maybe that is not necessary to find the appearance of a 
violation and prevent that product to come in, but I would 
agree that a 2-day inspection may not be able to produce this 
or to be able to find these kinds of problems. So I think 
inspections.
    But if you don't have the IT, it really doesn't matter what 
you do. You can't put together a risk-based program. I mean, 
even Customs work, the integration with international trade 
data systems, the FDA still has to have data to bounce that 
data against. And without integration on the FDA side, you can 
go one place to get the data, but you can't really do much with 
it anyway.
    Mr. Stupak. We are going to have a hearing next week, 
actually, next Tuesday, on heparin.
    I don't mean to belabor the heparin point, but, Mr. 
England, you brought up--and I think Mr. Melancon brought up, 
too--it is our understanding that this plant was never 
inspected, but Baxter did inspect it. Where is the corporate 
responsibility here or why would Baxter inspect it and we still 
have all these problems that were highlighted in the document 
that you indicated with the FDA inspection?
    I mean, if we had had--if the FDA did inspections, would 
that also pressure Baxter then in this case to make sure that 
what they are doing as inspections are robust and complete and 
safe for the American people?
    Mr. England. First, I don't want to get into a liability 
question, because I just don't. I have not seen any of the 
documents on those inspections. I have no idea what the scope 
of the Baxter review was.
    Mr. Stupak. It is called response----
    Mr. England. I mean, the importer of a product has 
responsibility to ensure that the product they are importing is 
in compliance with U.S. law. In the case of an API, that means 
that they should have some--they should be able to make some 
assertions as far as the product having been manufactured in 
compliance with GMPs. That is from the Federal perspective.
    Mr. Stupak. If the government system broke down here 
because it was never in fact inspected and if the private 
company that is making the profit here broke down, the American 
people are truly just at risk then. I mean, there is nothing we 
can do other than a re-overhaul of the FDA.
    Mr. England. I believe--I believe that that is not an 
overstatement.
    Mr. Stupak. Mr. Nielsen, you're trying to jump in there.
    Dr. Nielsen. And coupled with that, as far as 
responsibility is, I do think there has to be a reevaluation of 
the good manufacturing and practice regulations. It is not a 
new topic for the Agency, for a rewrite of the drug GMPs.
    Mr. Stupak. Any idea last time that was rewritten, Mr. 
Hubbard?
    Mr. Hubbard. 2003. They are relatively new, but they're 
very general. They don't really deal with some of the problems 
that arise here.
    Mr. Stupak. OK. Dr. Crosse, we're focusing quite a bit on 
IT here with these questions I was asking. But yet on page 12 
of your testimony you talk about the Foreign Vendor 
Registration Verification Program, and I was pressing the 
Commissioner to try to give us some kind of idea on when it is 
going to happen. And, in your testimony, FDA currently plans to 
award this contract of May '08, but yet you cite for an example 
the Agency has not yet established the criteria it would use to 
determine which establishments would be visited for 
verification purposes to determine how many establishments it 
would verify annually. Does it look like one of these things 
where the FDA is going to award a contract but yet not have the 
criteria before we even have the contract? 
    Dr. Crosse. It is not clear to us. This is something that 
is very new, and it was difficult for us to get very much 
information about it. Our understanding yesterday, after we 
submitted this statement, is now that it has been pushed off to 
June but that they do still intend to move forward in trying to 
establish some program.
    It is not clear to us what exactly is going to be done 
under this contract, whether they are going to perform onsite 
inspections of a certain proportion of facilities, how they are 
going to select those facilities, what is going to be involved 
in the verification, what information they're going to get 
beyond just is there a building there and do they manufacture 
drugs. It is really unclear at this point, and we were not able 
to get very many specifics from FDA about it.
    Mr. Stupak. And I think Mr. Nielsen or Mr. England 
mentioned the Shared Establishment Data Service. That all would 
have to be dovetailed into this, also, would it not? FDA needs 
to know about it, but Customs needs to know what is coming in 
and--what's coming in. Could you probably get the information 
quicker by going to Customs? Because at least they know what is 
coming into this country.
    Dr. Crosse. It is not clear how this backtracks to a 
particular facility that is manufacturing a drug. The 
information that is coming in from Customs is again--sometimes 
they have difficulty linking back in that way. And as I said in 
my statement, there is not yet agreement that this SEDs system, 
the unique identifier that would be used with Customs, is going 
to move forward, because it requires the agreement of a large 
number of Federal agencies, and they all have to fund the 
changes to their systems to make this work.
    Mr. Stupak. My time is running out, and I think we'll 
probably go a second round, because I enjoy this panel, and you 
have good suggestions.
    But, Dr. Cassell, if I may, on page 56 of the Science Board 
report there is a recommendation--and I pressed the FDA last 
time and never got a commitment. So let me ask it this way. 
There is a recommendation that the FDA develop a comprehensive 
plan that includes how and when the Agency would respond to the 
recommendation.
    Has anyone from the FDA, after you submitted a report, got 
back with the Science Board and said, here is what we're trying 
to do. Help us implement. Here are our recommendations to 
implement--I mean, you gave them a blueprint on how to fix 
things. Have they worked with you to try to get it implemented 
or say here is our priorities? What happened after you 
submitted your report?
    Dr. Cassell. To my knowledge, they have not gotten back to 
the Science Board. I'm only one member of the Science Board. 
They could have talked to others to share with us specifically 
how they would propose to implement their recommendations.
    I'm aware, however, they have begun the review of ORA and 
NCTR that we have recommended, and I am aware that a chief 
scientist has been appointed, although that was not in 
relationship to our recommendation but, rather, it seems the 
PADUFA legislation that also recommended the chief scientific 
officer.
    Outside of those three things, I'm not aware of other 
activities that are ongoing.
    Mr. Stupak. And as the chair of the Science Board, your 
Science Board members are available to help the FDA implement 
these recommendations, are they not?
    Dr. Cassell. Well, I'm not a chair of the Science Board, 
but, rather, I was chair of the subcommittee that conducted the 
review. But just, still, a member of the Science Board. But the 
Science Board clearly is eager to help in any way.
    Mr. Stupak. Mr. Shimkus for questions.
    Mr. Shimkus. Thank you, Mr. Chairman.
    I, too, want to commend the chairman for the hearing and 
this panel in particular.
    This has been held up maybe before. This is the hearing 
record from the 105th Congress, which is my first Congress, 
Volume III, 11 years ago. Far be it from us 11 years from now 
when someone goes through and holds this up that we haven't 
done this.
    I liken this to--one of my other responsibilities was 
telecommunications and interoperability for first-line 
responders. We have had Katrina. We've had September 11th. 
We're still--yes, we are still struggling, and we're trying to 
move. But, you know, people's lives are at risk, and so I--you 
all have been a great panel.
    If everybody was living by the golden rule or the second 
table of the law and loving their neighbor and not wanting to 
steal, we wouldn't have this problem. But we live in a sinful 
world, so--but the folks that are producing illicit drugs to 
enter our consumer market, we ought to identify them. They 
ought to be punished to the full extent. Why can't we just say, 
you don't comply with our inspection regime, you don't sell in 
our country?
    Mr. Hubbard. Well, that is one of the things that I think 
is mentioned in Chairman Dingell's bill. The concept is, for 
both food and drugs, is if someone can't show that they are 
meeting our standards, they ought not to be sending us food, 
and the FDA ought to have the ability to say, did this company 
demonstrate that it met the standards? And if the answer is no, 
it doesn't come in. And then you've shifted the burden from FDA 
to find the problem back to the producer to show he is doing a 
good show.
    Mr. Shimkus. Yes, I'm not a big--I'm not well received by 
the trial lawyers, but I'm thinking if they had some good ones 
in China, we may not have this problem sometimes because they 
would be going after these firms that are illicitly putting 
other elements in these drugs and taking advantage.
    There are a couple parts of the testimony that we found 
compelling and--talk about. One of the questions this deals 
with, if we don't have institutional reform in the FDA and we 
just give them more money, what would be the result, do you 
think, Mr. Nielsen?
    Dr. Nielsen. Probably a little more of the same. Until 
there is a real change in direction in how resources are 
allocated, how priorities are selected--for example, I don't 
think it is just an issue of getting more resources, but there 
has to be a hard look as to how existing resources are also 
used. Even if the entire domestic industry is being inspected 
at the total expense of lack of oversight of the foreign supply 
just does not make sense.
    Mr. Shimkus. Mr. England, do you want to chime in?
    Mr. England. Yes. I think that to a certain extent--I can 
give you just a couple of examples. I wish I brought slides 
with me.
    Because if you look at the organizational structure of the 
FDA--you know, when the act was established in 1906, nobody 
imported anything in here. So the imports regime was set up 
under a curtain context which doesn't exist anymore.
    And similarly, as time went on to the 1900s, there was some 
functionality in FDA for managing import issues. But most of 
what was coming in was bulk ingredients that was for further 
manufacturing. In those circumstances, FDA would ensure that 
there was inspection and quarantining that was happening on the 
domestic side and that they were properly qualifying--properly 
qualifying the vendors. So they'd use the domestic inspection.
    Now we have a whole lot less of that. Now, in the drug 
industry, it is actually still very much like that, which is an 
example, for instance, with heparin, which is why you still 
have to do inspections of those bulk facilities.
    But--so now you've got--you've got a situation where FDA 
has a division of import operations and policy that Carl was 
the director over, and he is responsible for managing OASIS, 
the IT system. He has absolutely no authority over anybody in 
the field. He cannot tell them to do anything. So he can have 
all the great ideas in the world to fix a situation, but he 
lacks the power to make FDA move.
    And those are the kinds of organizational structures that 
exist. It is an appendage. It is an appendage.
    Mr. Shimkus. Let me follow up, because you all sat in to 
hear the Commissioner and his testimony, and my opening 
statements talked about how well-intentioned individuals go 
into the bureaucracy trying to slay the dragon and really walk 
away not being able to do so. I think there are more examples 
of that occurring than really transforming. Because some of the 
terminology--we talked about stovepipe and silos. I mean--and 
in my opening statement, a comment was if you were to just 
rebuild, I mean, stop and restart the process, how would we go 
about getting to that area of where we need to be?
    So the question is, based upon listening to the 
Commissioner, did you get a feeling that there was an 
understanding of the transformational nature, that the FDA has 
to change, or did you get a feeling--I think the frustration is 
that it is not a 100 percent commitment.
    Mr. England?
    Mr. England. Yes. I don't want to characterize the 
commitment level. I think, though, however, that part of it is 
that we are at a stage I think now where the Agency is saying 
what a number of us have been saying for literally a decade as 
far as this risk and these kinds of things that are out there. 
And they are starting to say it. But I also think that FDA has 
lost a fair number of people who actually would have known how 
to do it. So they are in some ways a little bit perplexed as to 
what the steps ought to be.
    Also--I also feel that they feel pressure from Congress and 
from this committee and other committees perhaps that they 
should be doing certain things because it was mandated, even if 
maybe those aren't the best things to be doing. So I think they 
are a little bit between a rock and a hard place.
    But I also would add that it does take more--we are way 
beyond strategy, way beyond planning, that the Agency should be 
assessing, OK, what can we not do right now in order to do 
these things that are priority and start this shift.
    Mr. Shimkus. Part of stovepipe--and this may be just a 
couple of panelists. It is not directed to anybody. Whoever 
wants to chime in. Address the frequency debate both--
obviously, we can't talk about frequency if we're not 
inspecting overseas. If we were, what would be the frequency 
there versus the frequency here?
    You're talking about--Mr. England just mentioned mandated 
things that we have to do and may be--and my previous with the 
Commissioner talking about, you know, if a manufacturing 
facility has a 10-year record of being inspected every year 
with zero defects, shouldn't we consider frequency evaluation 
in that venue?
    Anyone want to chime in real quick? Mr. Hubbard.
    Mr. Hubbard. Well, I think as a start you do need the same 
frequency. But I think Commissioner von Eschenbach was correct 
in that, over time, you do want to move towards a risk-based 
system. If you've got a facility, as you say, that has been 
doing very well and makes a relatively low-risk drug, then 
maybe that gets a pass every 2 years; and someone who is not 
doing a good job or makes a high-risk drug gets inspected every 
year.
    But they can't even begin that shift without resources, in 
my view. They would have to strip inspectors out of domestic 
inspections to fund anything foreign at this point, And then we 
could see the deterioration of our domestic drugs. So it is 
kind of----
    Mr. Shimkus. I want to tie into the flexibility of domestic 
inspectors. I understand that. We get that there needs to be 
more resources but also the flexibility of being able to move 
an inspection regime and the frequency debate with 
international concerns.
    Mr. Hubbard. Well, that raises a whole other issue. Because 
they are having difficulty finding enough people willing to go 
to these countries. I think the Agency would like to create a 
foreign inspectorate of people that are hired for that purpose, 
posted in these countries and in sufficient numbers to do the 
coverage. And I think that is a good idea personally.
    Mr. Shimkus. Go ahead, Mr. Nielsen.
    Dr. Nielsen. I would also say that that is another scenario 
where the integrated IT function is critical. You can gather 
all of this information, but you just as well not have it if 
you can't get access to it.
    Mr. Shimkus. That's right. And I wanted to move--Mr. 
England, I just want clarification, and I think it ties in with 
IT. You propose what is called the accounting system approach. 
Can you just again for the--elaborate just for someone who is 
simple-minded, how is that a change?
    Mr. England. Yes. An account-based system, an account-based 
approach, as opposed to a transactional approach. Right now, if 
you look at the way FDA manages its import program, for 
instance, everything is on a line-by-line basis. Now, sometimes 
they will make some decisions based upon history of a 
processor. For instance, I would presume, based upon the 
warning letter, that this manufacturer of heparin is now on an 
import alert. Now, whether that works or not is a completely 
different question, because I think the import alerts don't 
work anyway in far too many cases. But, ordinarily, the Agency 
is doing transaction by transaction; and the inspector or the 
evaluator is trying to figure out whether to let this one in 
rather than--for instance, on a registration basis, someone 
registers, they--if there is a user fee, there is a user fee.
    Mr. Shimkus. Do you think the FDA can do that now? Does it 
need legislative authority? Can they--can that be part of the 
change in dynamics?
    Mr. England. I think they could do it now. I would be 
surprised if they didn't have the authority to move to that 
system. They probably don't have the resources to do the IT 
piece of it, but I don't see an authority problem with it.
    Mr. Shimkus. Thank you, Mr. Chairman. My time has expired. 
I appreciate your----
    Mr. Stupak. Mr. Melancon for questions.
    Mr. Melancon. Thank you, Mr. Chairman.
    Mr. Hubbard, has there been--and I have only been here in 
the Congress for 3 years now. Has there been a period in time 
somewhere where, appropriation-wise, the Department was given 
some monies because of the concern with inspectors, that money 
was taken and then used other places? I have heard rumors of 
that, and I don't know if----
    Mr. Hubbard. Well, the best example is, after 9/11, HSS 
Secretary Thompson was very concerned about foreign products in 
general from a bioterrorism point of view, and with a lot of 
pushback from the White House, he demanded the hiring of new 
inspectors for the ports. And FDA very rapidly hired 650 new 
inspectors in 2003, hired them in a matter of weeks and trained 
them and had them going very quickly. The subsequent budget 
cuts, though, took away all those inspectors; and now they are 
actually back with fewer than they had before 9/11. So all 
those 650 folks are gone.
    Mr. Melancon. And they were just--instead of maybe trying 
to keep them on and then retraining them for foreign----
    Mr. Hubbard. There was no money to pay them. So they--it 
really wasn't that people were fired. It was an attrition. As 
inspectors retired or left, they couldn't--so they just 
disappeared over about 4 or 5 years.
    Mr. Melancon. Now, that was--I wasn't sure what the 
scenario was. I just heard that there were fewer people than 
there were at certain periods as of 9/11.
    You mentioned in your testimony that China had been 
associated with a number of problems related to counterfeiting 
and tainted exports. Should the FDA consider treating the 
country's products, particularly in areas we have seen problems 
such as drug exports, different than other countries who have 
not advanced--who have more advanced regulatory systems, i.e., 
should we be focusing on China specifically?
    Mr. Hubbard. I certainly think that less-developed 
countries need inspection, at least an initial inspection.
    One concept that we looked at a few years ago was to say 
that if a country or given product from a country was 
repeatedly problematic then that would trigger a greater degree 
of regulation so that that country would then have to come to 
the FDA and say we fixed whatever problem you found; future 
shipments to the United States will meet your standards and 
demonstrate that. And that would mean that countries that don't 
have a problem, that don't send bad products wouldn't have to 
do anything different. But countries with a problem, they would 
have to step up.
    Personally, I think that concept is one that could be 
valid. But I think it is partly met by Chairman Dingell's bill 
through the certification concept.
    Mr. Melancon. So the tainted food, the toothpaste, the 
fish, what have we done? Have we just slapped their wrist and 
moved on?
    Mr. Hubbard. The way the law works now is FDA has to catch 
each shipment, find the problem and say you can't come in. 
Since they only inspect 6/10ths of 1 percent, very little gets 
caught. So you need to shift it the other way and say they 
need--the ones that are caught, they need to do something more. 
Because you know it is just going to keep on happening until 
they fix the problem.
    Mr. Melancon. In other words, if you start embargoing those 
products that have problems, then either the people that are 
importing or the people that exporting would start having a 
concern?
    Mr. Hubbard. That is exactly right. You need to put that 
burden back on them so it costs them money to keep sending bad 
food or bad drugs to us. Right now, it is just a cost of doing 
business because FDA catches so little.
    Mr. Melancon. Yes. Go ahead, Mr. England.
    Mr. England. If I could, just briefly. And I agree with 
those ideas in concept. The problem with it if we only go that 
direction is that you're right back to a transactional mode 
because you've got to figure out as those goods come to the 
United States which ones are the ones that are subject to the 
ban. You're still in that--which is still an IT issue, A.
    And, B, it seems to me that if the FDA were to be able to 
do more foreign inspections, they would be able to better 
distinguish segments of industries and segments of--or kinds of 
industries in contrast to others and actually incentivize, for 
instance, in China, industries that are doing it right in order 
to create examples even in China.
    And I think that is a kind of a policy that encourages a 
holding up of those that are meeting our standards rather than 
just trying to catch--I think we're still trying to catch them 
at the border, and I don't think it is going to be as 
effective.
    Mr. Hubbard. I agree with that. I don't think what I said--
I think you need both, you know.
    Dr. Nielsen. And just a little clarity. The way the law is 
written right now for the admissibility--Bill had said it is up 
to the Agency to find the problem. It is not like USDA where 
there is an existing permit requirement that affirms 
compliance. And one of the possibilities with an account base 
is to be able to link. In order to establish an account is to 
have an affirmative process for that compliance.
    Mr. Melancon. Is it your opinion in having similar problems 
or countries within the union like we're having with imports 
coming in that are tainted?
    Mr. Hubbard. Well, certainly they have had a problem with 
heparin. Germany has already had several deaths. And just today 
I understand Spain has announced heparin adverse reactions. So 
it can go anywhere. And, as the FDA said yesterday, there are 
about a dozen countries that have gotten contaminated heparin.
    Dr. Crosse. I would just add also that the EU doesn't do as 
many inspections of the active pharmaceutical ingredients, the 
API manufacturers like the facility in China. So they are less 
likely to be doing those inspections.
    I would also point out it is not a simple matter to just 
say this country's products that are coming to the U.S. could 
be problematic, because those products go other places and then 
come to the U.S. For example, China ships many products to the 
EU to be incorporated in finished products that are 
manufactured there and then come to the U.S. So the chain can 
go many directions.
    Mr. Melancon. And, of course, I deal with shrimp because 
I'm from south Louisiana. I understand that most of the shrimp 
that are aquaculture-type shrimp or--that might be sent to the 
EU, get discovered to be bad and where do they end up? They end 
up here, I believe, if I'm not mistaken. So our own FDA isn't 
protecting us on that foodstuff.
    Mr. England, Mr. Hubbard and Mr. Nielsen, shouldn't we 
require a hefty registration fee for those foreign 
establishments to ensure that if a firm is going to register at 
the FDA they are serious about exporting to the U.S. market? 
Would that help clean up the foreign drug inspection database?
    Dr. Nielsen. I think it can help, but I believe what is 
more important is the link with the registration process, a 
requirement to provide affirmative information that they can 
make the product in conformance with FDA requirements. Even if 
they didn't ship but they provided information that if they did 
ship, it could be significant information. Even if they are 
distributing somewhere else on the globe but they ultimately 
intend to be here, there could be some utility. But the bottom 
line is we need much more information than just who they are. 
We need to know what the conditions are, can they make a safe 
product.
    Mr. Melancon. And that is kind of one--the point is, what 
do we do to make them know up front that we are going to be 
checking or that we want--we are going to be on top of it? I 
mean, is there any specific recommendation?
    Dr. Nielsen. I would modify the registration process. The 
current registration process--and, as Bennett said, establish a 
universal process for all of the commodities. But that process 
was just totally inadequate. It is not just an IT issue. You 
and I can register right now. OK? No problem.
    Mr. Melancon. What does it cost me?
    Dr. Nielsen. Nothing. You can go online and do it.
    Mr. Melancon. Fill out the form?
    Dr. Nielsen. That's right. But the bottom line--that is 
just very cursory information. To make real risk-management 
decisions, you need to know something about the operation. Are 
they capable, even if it is the basics. And I think the 
registration process should be more of a submission of more 
information or develop some kind of process that will be 
recognized by the Agency as verifying that this place does 
exist, that it does have potable water, et cetera, whatever the 
infrastructure is required for safety.
    Mr. Melancon. Is there anywhere in this process bond that 
are required of any of these folks that register or do 
importing into this country? I.e., if I'm an insurance company 
and I'm going to write a bond for you, I want to know damn well 
that what you are shipping in that country I'm not going to 
have to pay off on that. Do we require anything such as that?
    Mr. England. Not for registration. There is a bond for 
every importation. It is a basic importer's bond, and it is 
usually for FDA purposes, FDA products, three times the invoice 
value. So----
    Mr. Melancon. So how--OK. It is three times the invoice 
value of that one shipment.
    Mr. England. Right.
    Mr. Melancon. But if we don't have the authority to go 
embargo every other pile that is coming in----
    Mr. England. Well, I mean, at this point, they have the 
authority to detain without physical examination any shipment. 
And that's where you get to the--for instance, the countrywide 
import alerts that we have for the wheat gluten and the soy 
proteins and aquaculture coming out of China. Those are 
countrywide import alerts. And the Agency does them now.
    I think part of the question--I mean, the question about 
whether the Agency has the authority to refuse has to do with 
whether or not if someone delayed or denied an inspection in a 
foreign facility, then FDA could automatically put them up into 
an automatic detention and stop their products. But FDA has the 
authority to do that now.
    I think the reason it is not doing them is that--Carl hired 
the guy who is running policy at DIOP now. They have 5 people, 
I think. I mean, the people who are responsible for OASIS and 
responsible for reviewing import alerts, there are 5 people 
doing it, and we are talking about 17 million lines of entry 
that these folks are responsible for.
    That goes to resources. It goes to IT. It also goes to 
theory and policy and where you put the resources. And I don't 
think many people are really thinking about it inside the 
Agency, because they're just trying to do what they have always 
been doing and that is what--that's why I believe the series of 
events are really just beginning, that we are going to see a 
series of these from a number of different sources.
    Mr. Melancon. Thank you. My time is up and this--Mr. 
Chairman. Go ahead.
    Mr. Stupak. Go ahead, Doctor. Do you want to answer this 
question?
    Dr. Cassell. Yes. I would just like to say that, to me, it 
all goes back not only to the resources and priority setting 
but people and the quality of individuals now, that we don't 
have good people there.
    We mentioned in our report the importance of constant 
external peer review that would identify these problems, make 
an argument for correcting them, stay on top of them before we 
have an emergency. ORA, for example, we identified had never 
had an external peer review. So this review that is ongoing 
right now, it is the first time to our knowledge that has ever 
occurred. I think a lot of these problems would not have 
occurred had those processes been in place.
    I just wanted to bring to the attention of everybody that I 
think that the issue of personnel is critical--getting the 
right people, recruiting them, retaining them, whether it be 
the scientists or information technology specialists, which 
they seem to have a hard time recruiting, are absolutely 
critical to everything we are talking about today.
    Mr. England. I would like to follow up, if I could, please.
    I agree absolutely, entirely. When I say resources, I mean 
humans as well, human resources. And I'm going to give you just 
an example.
    When the Office of Criminal Investigations came online in 
1992, I went into OCI. I was one of the early agents that came 
out of FDA and into OCI. And OCI was responsible from really 
that point forward in conducting criminal investigations and 
conducting investigations that where there is some suspicion of 
fraud--CSOs, the Consumer Safety Office, or the inspectors, 
they only started losing those skills.
    I mean, many folks that used to do the investigations were 
conducted by the regular inspectors. And now, once you had a 
criminal enforcement arm, they began to--the inspectors began 
to just have to check boxes off. And they--and I think that 
there was a training--some training that was lost. I think 
there was some intelligence that was lost. Not that they are 
not intelligent, but as far as institutional knowledge about 
how to think through these situations like the drug 
investigations where just a keen investigator knew how to do 
investigations and he was an inspector and he put 2 and 3 
together, came up with the number 5, pulled in people, got 
resources. And at one point we had 10, 12 grand juries running. 
And so it can be done.
    But I think that that part goes to the organizational 
aspect of it. These inspectors can do it with the tools. If 
they have the tools and they have the training and they have 
the time to be in the facilities, they can do it.
    Mr. Stupak. We would have a second round of questions, but 
go back to OCI. On Ketek, the OCIs were doing their job, and 
they were asked to do their investigation, and they were denied 
the opportunity. And they got frustrated and basically are 
leaving the Agency because they're not allowed to do their work 
in some cases. It is more of a structural thing.
    And we were talking of issues of mandates that the FDA--
we--this committee or our Energy and Commerce Committee, we 
don't mean to micromanage the FDA on--mandate lots of programs. 
But without quality of leadership at the top of the FDA, we 
must resort to mandates as a trigger or a triage or emergency 
patch to correct some of these most pressing issues.
    And that's why I was pressing the Commissioner today on BPA 
or on discussion draft of the legislation we have floating. 
Because we want to move that quickly to try to give them the 
resources they need to do their job and to help reconfigure the 
FDA so we can get at this issue, which is getting to be a 
growing problem.
    Along those lines, on our legislation, Mr. Hubbard has 
mentioned--and a couple of the others have mentioned it--if you 
have some suggestions on things we should improve upon in that 
draft, we are moving on that bill fairly quickly. So if you 
have anything further, please get with us.
    Dr. Cassell, you indicated new drugs, new biologics, the 
genome, that active pharmaceutical ingredients, other things we 
were going to be relying upon, given the multitude of 
additional foreign firms--and you're going to see places like 
Thailand, Vietnam and Malaysia are expected to start making 
drugs and will likely export to the U.S. If we're grappling 
with a problem right now and all these other countries come on 
line and new medical discoveries come online, how are we ever 
going to be able to keep ahead of the curve?
    Dr. Cassell. Oh, I agree. I think in some respects it is 
almost mind-boggling when you think about the degree of the 
complexity of the products increasing and especially in terms 
of safety issues as it relates to biologics. They are not as 
easily manufactured as you--we all know and appreciate as small 
molecules. So I think, again, it goes back to assuring that we 
have the latest scientific evidence for the decisions that 
would be made, the best people making those decisions, the 
technologies in place to improve upon our inspections.
    We mentioned in our testimony, I think, in some of the 
discussion on the 29th of January that the Department of 
Defense, Department of Homeland Security has invested millions 
of dollars in their information technology for doing datamining 
in a lot of different topics, particularly as it relates to 
biological weapons, and they have also developed very 
sophisticated methodologies for detection in the field of both 
chemicals and biologicals. These same methodologies could be 
applied, I believe, to inspection in terms of quality control 
as far as potential chemical and biological contamination of 
our products.
    I don't know to what extent the FDA has tried to leverage 
those technologies and apply them or bring them on line, but I 
think we have to begin to apply newer, better technology as 
well as just be sure that the individuals that are performing 
these functions are up to date in terms of what new science is 
available to help resolve the problems.
    Mr. Stupak. In the last panel, we talked a little bit about 
this heparin and the altered drug, and I think Mr. Burgess 
brought up the fact that it could have been for a criminal or a 
deviant mind. But whether it is melamine or heparin, I don't 
think we see that.
    Is it really economic pressures putting pressure on to find 
a cheaper substitute? As in melamine, you know, it was supposed 
to be high protein, but it ended up--why would you alter a 
drug? Does anyone care to speculate on that? I'm sure it is 
just not criminal. I mean----
    Mr. Hubbard. You have very good chemists over there. And 
the best example is pharmaceutical grade glycerin is fairly 
pricey, and antifreeze you can get down at the dollar store. 
So, you know, it tastes the same; it looks the same. It is just 
one will kill you, and one is perfectly safe. And, you know, 
people just don't care about where it ends up going. And, of 
course, a lot of children in Haiti and Panama and other 
countries die because someone didn't care.
    Mr. England. I think also, if I could quickly, that my 
understanding was that there was a problem with some of the----
    Mr. Stupak. The pig intestines. The pig stock, right.
    Mr. England. So they were running into a capacity problem. 
So it wouldn't surprise me that, under that pressure, that 
there was some intent to find something to put it in there.
    I'll point out, just quickly, the APIs that FDA approved--
and everything goes into a source inspection and finds an API 
facility to be fined, the value of their product on the world 
market doubles overnight. So, right now, you've got the 
incentive, you've got cushion between guys who are--people who 
are not approved and people who are. And it is a lot cheaper 
sometimes to buy the product than it is to make it.
    Mr. Stupak. So instead of using the pig intestines and 
heparin and I use something else, do I have to get FDA approval 
to make heparin in this manner and method or can I just say, 
oh, no, this is OK because the end result is still heparin?
    Mr. Hubbard. You're supposed to get approval. But, believe 
me, you can get it for that.
    Mr. Stupak. Is that common? I mean, we make substitutions 
to a formula that we use?
    Mr. Hubbard. You can't do that. You have to at least--it 
depends on the severity of the change. If it is a very great 
change, you have to get FDA approval. If it is a minor change, 
you have to at least tell FDA so they can object.
    Dr. Nielsen. I mean, one of the things to keep in mind, 
even on the counterfeit APIs, like the carbamazepine, it has to 
pass the test. Even if it is nominal, it has to pass the 
identity test at least. And so it has--it is going to have to 
look like that or else at least the safeguard at the end user 
or the finished dose manufacturer will detect it.
    Mr. Stupak. Mr. England, you mentioned the import alerts. 
In fact, as this panel was seated, we've had three import 
alerts just come out from the FDA on some foods and other 
issues here. You're not a big fan of it. They don't work, you 
said. Explain that a little bit further. And what should we do?
    Mr. England. Right. I mean, what solutions perhaps there 
might be as far as them not working, I think that is an IT 
issue. There is evidence last year where products that were--
that should have been subject to a number of different seafood 
a reporter rather quickly found 200-some-odd shipments that had 
gotten through the system and had never been tested by the FDA 
and had never been stopped, even though they were subject to 
the criteria.
    So when Carl was asked in the press as to whether or not 
that surprised him, of course the answer is no. I mean, there 
has been holes in that system forever. So putting up an import 
alert is not an answer. It certainly is a piece, and it 
certainly does put information out there.
    I think another aspect of it is that I'm not so sure that 
the FDA has the authority that it exercises sometimes in these 
countrywide alerts. So if Congress wants FDA to have that, that 
is something they may want to consider clarifying. But, in many 
respects, the import alert is supposed to be just guidance to 
the field, and it really ends up acting as a regulation.
    And I think that is where the Agency begins to run into 
some potential liability. They've been challenged a number of 
times, and I don't think they have--I don't think FDA has won 
yet when they've been challenged on an import alert as to 
whether it was legitimate. To fix that--those sort of problems, 
I think FDA----
    In fact, Bill Hubbard, when he was in the Agency and along 
with us, we went through a process of trying to establish what 
we called a detention without physical examination rule that 
basically described these are the kinds of evidence the FDA 
might rely on to issue an import alert. Here is the kinds of 
evidence we might seek in order to overcome it. And at least 
you created a regulatory regime to manage it, and then your 
guidance could be your alerts that are just applying the reg.
    But there is a number of those kinds of situations, both 
IT--and I think also the way that the authority is structured, 
that the Agency is vulnerable, and it is not as effective.
    Mr. Stupak. Let me just--and anyone can jump in on this 
one. But, Mr. Hubbard, it is more directed at you.
    I'm not a big fan of PADUFA, where you have a user fee that 
gets your drugs approved with the new drug applications. But, 
from a practical point of view, PADUFA has worked. I mean, 
you've given them money. The drugs are approved by such and 
such a time line. I'm not talking about the safety or efficacy 
of it, but we've met those timelines, given the resources.
    And I know Mr. Burgess kept bringing up the tobacco issue. 
Again, they will be given the resources. If given the 
resources, with a clearly defined mission, can the FDA--and the 
Dingell bill, Dingell-Pallone-Stupak bill--we have a 
registration fee that is probably going to be sizeable to fund 
this program. Can the FDA do the job if given the resources in 
a focused area as in PADUFA or tobacco regulation? Wherever 
there might be--as long as resources are there and they--can 
they attract the science people that we need to do the job in 
this country?
    Mr. Hubbard. I think absolutely. I think the programs in a 
more funded FDA work well. You don't hear the criticisms about 
them. And the programs that are not funded well are the ones 
that everyone is screaming about.
    The one problem with PADUFA is that it is sent to the OMB 
and the appropriators. There is a lot of new money flowing into 
FDA. So we can cut back on appropriations. And those cutbacks 
have occurred in places like imports and food safety, not in 
the drug-review programs. So it has had a negative consequence, 
I'm afraid, in that sense.
    Mr. Stupak. Sure. And in that sense, like the new money 
coming into the FDA in the last budget, that is really from 
MADUFA and PADUFA fees. There is really not that much new money 
to take care of these shortfalls, and that's what we've got to 
guard against.
    But it seems like the $71 million we've been talking about 
to do the proper inspections is probably a small amount; and we 
can attract the science and the inspectors we need, provided we 
have a dedicated funding source. Because I don't want to see an 
example like this panel has pointed out where Homeland Security 
had the 650 inspectors, got them right away right after 9/11, 
got them trained and within 2 or 3 years they were all gone 
because there was not a dedicated funding source. That seems--
--
    Dr. Cassell, do you want to jump in on that?
    Dr. Cassell. I think you're right to be concerned about 
that. I, like Mr. Hubbard, though, believe given the resources 
with emphasis upon the right people, not just warm bodies, I 
think they can absolutely do the job.
    The other thing that I would just encourage us all to think 
about again, though, is to encourage putting in place this 
external peer review, if you will, process. Because, to me, 
that would also help ensure accountability. And in the long run 
I know it is just one more committee for FDA to deal with. But 
if you look at the NIH, if you look at CDC now, they have these 
external review committees in place. The peer pressure does 
play an important role in keeping things on track.
    Mr. Stupak. My time is up.
    Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Again, I appreciate the panel. I, too, am adverse--Federal 
Government, we always overpromise; we underdeliver. If we set 
up a trust fund, we all dip into it. So we--I think this 
legislation would have a much better success if it was a 
Dingell-Pallone-Stupak-Barton deal and Shimkus. Maybe we will 
get there.
    Because there are a lot of things that we agree upon and, 
hopefully--I know the legislation is out for comment. 
Hopefully, our folks--I'm going to check with Barton and Diaz 
and see what they think of it.
    I also thought about the current--well, it's an old series 
of books and movies: Series of Unfortunate Events. And we don't 
want this to continue to be a series of unfortunate events. 
Everything does go back to leadership, though. I mean, I'm from 
the military school of training, and someone at the top has to 
drive transformational change. And that we are all skeptical--
--
    And it goes back--it is not one--Commissioner von 
Eschenbach has only been there 2\1/2\ years. Now that 2\1/2\ 
years really makes substantial changes, but there was guys 
before him. There will be folks after him. There is other 
administrations. And we have fallen to a dilemma that a lot of 
us don't want to see. We want to see it fixed.
    And I think you've got some great comments. You talked 
about--Chairman Stupak talked about if other countries start 
coming into the system. I wish legislatively we could stop--if 
you're in a hole, the best way to get out of it is to stop 
digging. We have got new entries into this. Maybe that is where 
we start a regime. But then you have not being favorably 
inclined to----
    Mr. England, do you want to chime in on that?
    Mr. England. Yes, just quickly, because this actually came 
up early; and I don't know if I forgot to answer it or left it 
for somebody else.
    But the question is to whether or not--what is the point 
about why are we going to China in order to try to do MRAs? Why 
are we trying--probably 50 percent--Carl probably knows the 
number better than I do--of what is imported either comes from 
Canada or Mexico or comes through Canada and Mexico. And they 
are right here. They are our NAFTA neighbors. We have access to 
them. We have ways to put together risk-based programs, and we 
can actually verify it.
    I mean, my feeling is that if we were to focus where we 
could apply risk-based principles and be able to have some 
verification, trust but verify, and then you take the resources 
and you put them where you really don't have any basis to trust 
or verify, then I think you start creating incentives for 
countries to want to be those countries and they want to be 
like those countries. And you throw in the registration pieces 
and expenses of that and where that money goes I think is 
important.
    I think, you know, your IT money and how that is applied is 
a management decision. But when it comes to this, how you 
address China versus other places, I think we have got--we 
actually have the ability to show some leadership in markets 
where we have access to show it, prove it and then begin to 
create the incentives for other countries to come into it.
    Mr. Shimkus. I want to go back to the account-based with a 
question. Have you--or anyone might--I think everybody 
understands the premise. Is there anything that the FDA is 
doing right now that gives you hope that they are understanding 
that or moving in that direction?
    Mr. England. I would have to see what the current IT 
proposals are. My recollection of the IT proposals as I left 
and the ones I saw from November were--mostly was a portal 
overlaying existing systems. Which means you still have your 
silos. You just have them in one basket now.
    Mr. Shimkus. What--let me jump--predict that we have all 
been waiting--is that--would that--if that was taken hold of 
and moved, would that be moving in that direction?
    Mr. England. PREDICT would require integration to be most 
effective. But PREDICT itself is not an integration system. 
What it does do, though, is take data from multiple sources; 
and it does think about that data using evolutionary 
algorithms. But it also uses it with rules based looking at the 
Agency's historical data. So it is hard to go from seafood into 
other products without already having--being able to do some of 
that risk analysis to think about how you're going to weight, 
you know, these different characteristics. So it will not do 
the integration, but I think it should be at the front end of 
their inspection program as well. I mean, I think it just makes 
the most sense.
    Mr. Stupak. If I can jump in for just a minute. You know, I 
sat through the '98 hearing when J.L. testified again about the 
IT system, and it has been 10 years. Why is IT here such a 
problem to get our hands around? It is not just FDA. It seems 
like IT just seems to be a problem that the government can't 
get its hands around, especially this one. We have got I think 
seven different databases we are dealing with the FDA on food 
and drug safety. Why has this been an insurmountable task that 
we can't seem to get to?
    Dr. Nielsen. From my observation, a good portion of the 
existing legacy system is based on the need of a particular 
product center. And ORA is not directly funded, and IT is not 
directly funded. And that is why one of my proposals is--why I 
believe a new entity, funded entity needs to be established, is 
you have to start line item the IT. And ORA set it in the 
position, doing a good portion of the post-market surveillance 
work, what need for information from each of those silo legacy 
systems. It has to be integrated.
    The investigators and ORA either at the border or doing 
facility inspections need information. They are going to go 
from one industry to another. They may do a drug inspection, a 
device inspection, a biologic inspection. So that is why the 
integration. But it is not funded. It is just--it is not a 
direct line. And ORA considerations, in my opinion, just have 
not been at the fore.
    Mr. Hubbard. If I may, Mr. Chairman, the IT is expensive. 
The Science Board suggested it needed about $800 million. And I 
think the folks at--above FDA have just not felt that it is 
worthy. And, in fact, many years we would ask for money--around 
the time of your '98 hearing, we were asking for money for 
import IT. In fact, we would get cuts that said you don't 
really--IT, that is not important. You can always use 
efficiencies and do better. And it squeezed--it cut 10, 20 
million. And so you have never had that commitment to fixing 
the IT systems. So you have these 1970s and '80s systems 
limping along, totally ineffective.
    Mr. Stupak. Dr. Cassell.
    Dr. Cassell. Yes. I would agree and just remind you in our 
report we pointed out that FDA's IT budget is less than half of 
that that CDC currently has, yet the information that needs to 
be managed is far greater.
    The other thing I have heard this week that is very 
disturbing is that, while we were well on our way to developing 
a new IT system for adverse event reporting, apparently the 
backup system that we pointed out that didn't exist actually 
doesn't exit. It was lost. They are 6 weeks behind in terms of 
implementation, and the problem still hasn't been resolved. So 
I think again this is one area that is urgent. It is critical 
that it be fixed and fixed quickly.
    Mr. Hubbard. Can you imagine the frustration at FDA last 
year when the FBI decided its $800 million system didn't work 
and threw it away and said we'll start over. Now, if they had 
gotten that kind of money, I personally think FDA would have 
spent that.
    Mr. Stupak. Mr. England, go ahead.
    Mr. England. Just real quick examples. One--because I think 
some of this responsibility actually happens because Congress 
sometimes tries to fix problems one piece at a time. Prior 
notice, for example. FDA got mandated--you were mandated to do 
due prior where they were given no money to put the IT system 
together. So all the money they were going to use for OASIS 
enhancements all went into prior notice, which, quite frankly, 
I think didn't really accomplish very much.
    Now, as we think about the idea of proposing a registration 
system where people pay money for registration, some of that 
money will go into what? An IT system. And it will be a 
stovepipe system just like the rest of them. So as these 
solutions come up, if they're not for across the entire agency, 
it actually aggravates the problem. They start using that money 
to create stovepipe solutions to manage the new mandate.
    Mr. Shimkus. Yes, and that's one of the issues of the whole 
institution; and, indeed, if you would rebuild it from the 
ground up--and we've got to break down these barriers.
    I'm going to throw out 3 phrases for the sake of time and 
just have comments.
    The appearance standard for kicking off an import alert and 
then also the debate on extraterritorial jurisdiction on our 
ability to hold overseas importers somehow more accountable 
under the law. Any comments on that? Does that make sense? I 
mean, I can go into the whole question, but you know the 
phrases, right?
    Mr. England. The appearance standard, I mean, right now the 
Agency already has the authority under the appearance standard. 
Nobody knows what it is. No judge has ever said so, nor will 
the FDA ever want a judge to say so, because they would all of 
a sudden have a standard that they would have to meet. But 
there is no--the appearance standard--as long as it appears to 
be in violation of the act, they can stop that product now.
    And then the courts tend to defer to the Agency as to what 
the appearance is. And is that right? Well, I represent other 
people who don't like that, but you can see why judges do it.
    As far as extraterritorial power, you're not really 
reaching into those foreign governments with that standard. All 
you're doing is--you're just saying, not in my backyard, not 
here.
    Mr. Shimkus. I know that the question is should that be 
something that we legislatively consider?
    Mr. Hubbard. The appearance standard is a relic of 1906. It 
says the FDA has to define either that problem clearly or the 
appearance of that problem and then stop the product. If you're 
going to change the paradigm, you need to move the burden to 
the producer to show they are making safe food or drugs, not on 
FDA to find every single problem with every single shipment 
when you have 20 million shipments.
    Mr. Shimkus. Mr. Nielsen.
    Dr. Nielsen. I think the task is to make certain it is 
equal burden for the domestic and foreign industry or else it 
is unfair competition.
    Mr. England. I mean, just on the extraterritorial question, 
I would think--it would seem to me where it would be difficult 
is how you enforce it. I mean, if--and part of it--if you're 
talking about some how penalizing----
    Mr. Shimkus. I understand--I mean, we were talking about 
heparin a lot, but if there is criminality----
    Mr. England. The United States government already has power 
to prosecute foreign nationals that commit those kinds of 
crimes. They've done it before. They did it in the drug 
investigations. Gerd--what is his name? Gerd Weithase was a 
German national. He was involved in the manufacture--somehow 
involved in the scheme----
    Mr. Shimkus. You know, I'm getting help here, but I hear 
that DOJ wants some explicit language to help us more fully 
prosecute.
    Mr. England. DOJ has often gone along with FDA and said we 
agree. That would certainly help. It isn't clear that the Food 
and Drug Cosmetic Act--and I think that clarification was not 
going to hurt anything.
    Mr. Shimkus. But if we are moving legislation, if we wanted 
it clear, we could at least look at the language.
    Mr. Hubbard. FDA would clearly like you to deal with the 
extraterritoriality.
    Mr. Shimkus. Thank you. I'm done, Mr. Chairman. Thank you.
    Mr. Stupak. Mr. Melancon? No.
    Well, thank you to this panel. It is always a very, very 
good panel. We enjoy it. That's why I like the members to just 
go on and ask the questions.
    I mentioned the three recalls just while this panel was 
empaneled. We had from China snow fungus, which is mushrooms; 
from Vietnam, ginger; and from China, dried lily bulbs. Those 
are three recalls--or alerts that just came in.
    Mr. England. Not my clients----
    Mr. Stupak. I thought I'd give you a heads-up.
    Mr. Nielsen [continuing]. Yet.
    Mr. Stupak. I am still trying to figure out what do we do 
with dried lily bulbs.
    Anyway, that concludes our questioning. I want to thank our 
witnesses for coming today and your testimony and thank you 
again. And, Dr. Cassell, be sure you tell your committee thank 
you very much for their work and expertise.
    I ask unanimous consent that the hearing record will remain 
open for 30 days for additional questions for the record.
    Without objection, the record will remain open.
    I ask unanimous consent that the contents of our document 
binder be entered in the record.
    Without objection, documents will be entered into the 
record.
    That concludes our hearing. Without objection, this meeting 
of the subcommittee is adjourned.
    [Whereupon, at 3:00 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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