[Senate Hearing 112-]
[From the U.S. Government Publishing Office]



 
   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2013

                              ----------                              


                        THURSDAY, APRIL 19, 2012

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 1:58 p.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Herb Kohl (chairman) presiding.
    Present: Senators Kohl, Pryor, Brown, Blunt, Collins, 
Moran, and Hoeven.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

                      Food and Drug Administration

STATEMENT OF DR. MARGARET HAMBURG, COMMISSIONER
ACCOMPANIED BY:
        PATRICK McGAREY, ASSISTANT COMMISSIONER, OFFICE OF BUDGET, FOOD 
            AND DRUG ADMINISTRATION
        NORRIS COCHRAN, DEPUTY ASSISTANT SECRETARY, OFFICE OF BUDGET, 
            DEPARTMENT OF HEALTH AND HUMAN SERVICES

                 OPENING STATEMENT OF SENATOR HERB KOHL

    Senator Kohl. Good afternoon. The subcommittee will come to 
order.
    Today's hearing will focus on the Food and Drug 
Administration's (FDA's) fiscal year 2013 budget request. We 
welcome Commissioner Hamburg, Mr. McGarey, and Mr. Cochran. We 
appreciate your being here.
    Before we begin, I'd like everyone to know that we have 
votes scheduled for 2:15 p.m. today. So right now we'll plan on 
just having opening statements by myself, Senator Blunt, as 
well as Commissioner Hamburg. Once the votes are called, we'll 
have to stand in recess until the votes are through, and we'll 
come back then and begin our questions. So we thank everybody 
for accommodating that.
    The administration's budget request for fiscal year 2013 
stands in stark contrast to the requests of recent years. Since 
2008, the Congress has provided the FDA with budget increases 
totaling nearly 30 percent and the administration's requests 
have even been higher. This year, however, the FDA budget 
proposes an increase of only $15 million, bringing total 
funding to approximately $2.51 billion.
    Two main funding increases requested in this budget are $10 
million to enhance inspections of drugs and drug ingredients 
manufactured in China, and to work with Chinese manufacturers 
on ways to meet FDA standards; and $18 million to complete the 
FDA's Life Sciences-Biodefense Laboratory complex. These 
increases are partially offset by decreases found elsewhere in 
FDA's budget.
    As we are all aware, this subcommittee has worked over the 
past several years to provide FDA with increased funding for 
food safety activities. This year the only additional funds for 
food safety are requested in the form of a new user fee. My 
understanding is that negotiations on this user fee are in 
their earliest stages, and it is not likely to be passed this 
year. This means essentially that food safety activities are 
flat-funded in this budget, when we all know that the FDA's 
workload in this area has certainly not leveled off. That 
concerns us. I look forward to discussing this further.
    I don't believe that this budget request reflects less 
support for FDA by the administration, but I do believe it 
reflects the budget realities that we continue to face. The FDA 
has been exempt from significant cuts found elsewhere 
throughout the Government. This will certainly prove to be the 
most difficult year in recent history. The importance of FDA's 
work has not diminished, and the agency's workload continues to 
increase. I have said in the past that I believe ensuring the 
safety of our food and drug supply is an important Federal 
function and should not and cannot be relegated to State and 
local governments as well as private industry.
    As these functions continue to become more and more complex 
every day, we will do our best to provide FDA with the funding 
you need to do your job well, with the understanding that we 
are all being required to do more with less.
    We look forward to your testimony, Dr. Hamburg. But first, 
Senator Blunt.

                     STATEMENT OF SENATOR ROY BLUNT

    Senator Blunt. Thank you, Mr. Chairman. Thank you for 
holding today's hearing on the FDA budget. I want to thank our 
witnesses for being here today. I look forward to working with 
the subcommittee, but particularly to working with the 
chairman, who has had such a good impact on FDA issues over his 
time on this subcommittee.
    Commissioner Hamburg, thanks for your visit the other day. 
The agency you head regulates approximately 20 cents out of 
every $1 spent in America and Americans expect the FDA-related 
products will be safe and effective. Similarly, the industry 
expects transparency and certainty from the FDA.
    The agency has authority over 185,000 domestic 
establishments that range from food processing plants to 
facilities that manufacture life-saving medications. As 
companies struggle through the recession, FDA must be mindful 
that burdensome regulations can stifle innovation and lead to 
unnecessary expenses that limit small businesses' ability to 
create jobs.
    For example, FDA's currently reviewing comments on a 
proposed rule that would require restaurants to list calorie 
content for standard menu items and of course very specifically 
defining standard menu items so you could know what that 
standard was. I believe the proposed rule that you've asked for 
comment on and haven't finalized is at this point still 
unnecessarily broad and too inflexible, but hopefully the final 
rule will benefit from the comments you're receiving.
    When implementing the rule, you should adopt the least 
burdensome alternatives that meet your responsibility, and 
doesn't unnecessarily regulate stores that don't sell food as 
their primary business or other things that wouldn't be 
necessary under the act. In addition, the rule should be 
flexible enough to allow locations that don't serve their 
patrons on site the opportunity to provide nutrition 
information in a variety of formats.
    I look forward to being able to discuss this issue a little 
further.
    I'd also like to take a moment to mention that this very 
well may be the last hearing of the subcommittee this year. 
Chairman Kohl has announced that he'll leave the Senate soon, I 
suppose maybe to focus on basketball full-time or one of his 
other many activities that he's involved in. But this may be 
his final hearing as chairman. We're going to continue to work 
closely together to produce a bill.
    I'd like to say that in leading this subcommittee he's 
really displayed keen knowledge of all the work of the 
subcommittee and--as you know, Commissioner--has shown 
particular interest and has been a real leader on FDA issues, 
particularly on food safety, and really, it's been an honor for 
me to get to work with him last year. I hope we produce a bill 
this year that we can get to the floor again, and we'll both be 
out there doing what we can to make this subcommittee work 
under the chairman's leadership.
    Thank you, Mr. Chairman.
    Senator Kohl. Thank you. Thank you, Senator Blunt.
    Now, Dr. Hamburg.

                   STATEMENT OF DR. MARGARET HAMBURG

    Dr. Hamburg. Thank you, Chairman Kohl and Ranking Member 
Blunt. I do also want to take this opportunity to thank you, 
Chairman Kohl, for the extraordinary leadership that you've 
shown over so many years and the support you've given the FDA 
in our important mission.
    I am joined, as you note, by Patrick McGarey, who is our 
Assistant Commissioner for Budget, and Norris Cochran, who's 
Deputy Assistant Secretary for Budget at the Department of 
Health and Human Services (HHS).
    Let me begin by again thanking you and the subcommittee for 
your efforts in recent years to really try to shrink the gap 
between the agency's budget and its vast and evolving 
responsibilities. Your leadership has put us on a path towards 
more appropriate funding levels to support our unique and 
crucial mission. We are using these funds responsibly to 
reinforce our core functions and to obtain the most public 
health value for the Federal dollar during these challenging 
fiscal times. We're deploying smarter and more flexible 
regulatory approaches and better targeting of our inspectional 
resources. We've consolidated our information technology (IT) 
infrastructure into modern data centers and expanded our 
efforts to leverage both financial and human capital through 
collaborations with public and private partners.

                             DRUG APPROVALS

    With your support, we have produced concrete results that 
really matter. For example, we lead the world in the number and 
speed of drug approvals, while maintaining high standards for 
safety and efficacy. Last year we approved 35 innovative new 
drugs, many of them groundbreaking, the second highest number 
of approvals in more than a decade.
    During this fiscal year, we've continued our strong 
performance and have already approved 15 innovative new drugs 
and biologics. Last year a total of 195 drug shortages were 
prevented through proactive collaboration with patients, 
healthcare providers, and manufacturers, and by exercising 
regulatory flexibility. This year we've already prevented 
another 30 drug shortages.

                     FOOD SAFETY MODERNIZATION ACT

    Just 1 year after the enactment of the Food Safety 
Modernization Act, we've issued guidances and interim final 
rules and are on the way to meeting the 5-year inspection 
mandate for high-risk domestic facilities.
    I think it is critical to note, though, that the volume and 
complexity of the products we regulate and the complexity of 
the supply chains by which they reach American consumers has 
increased dramatically. We receive thousands of medical product 
submissions each year and serve as the watchdog for the safety 
of tens of thousands of products that are already in the 
marketplace, and we oversee the safety of roughly 80 percent of 
the Nation's food supply. Imports of food products alone come 
from some 200 different countries and from more than 250,000 
foreign facilities each year.

                             GLOBALIZATION

    In addition, our core responsibilities are expanding to 
include additional product areas, such as tobacco, and evolving 
to accommodate scientific and technological advances and the 
challenges of globalization. Our budget request reflects these 
complexities and new demands, although, as you note, it is 
modest.

                        FISCAL YEAR 2013 BUDGET

    The fiscal year 2013 budget recommends $4.5 billion for FDA 
overall, a 17-percent increase from fiscal year 2012. User fees 
account for 98 percent of the increase, however. We're 
proposing cuts or savings in two areas, IT and related systems 
and building and facilities. FDA is also absorbing more than 80 
percent of inflationary rent costs.
    Our fiscal year 2013 budget authority increases will 
support import safety, medical countermeasures, White Oak 
facilities, the commissioned corps pay raise, and about 20 
percent of our rent increase.

                             BUDGET REQUEST

    To strengthen the safety of foods and drugs from China, FDA 
is requesting $10 million. Exports from China are experiencing 
unprecedented growth. In the last 5 years alone, shipments of 
FDA-regulated products from China increased by 62 percent. So 
that represents a fundamental shift of our economic and 
security landscape. These additional resources will strengthen 
our capacity to inspect Chinese facilities and our ability to 
work with our colleagues in China and our ability to perform 
risk analysis on Chinese exports.

                        MEDICAL COUNTERMEASURES

    Thanks to this subcommittee, FDA received a fiscal year 
2012 appropriation of $20 million for medical countermeasures. 
The fiscal year 2013 budget recommends an additional $3.5 
million to support development and review of new diagnostics, 
medical treatments, vaccines, and other technologies against a 
range of naturally occurring or deliberate chemical, 
biological, radiological, or nuclear threats, and new funding 
will help support initiatives focused on acute radiation 
syndrome, the needs of children and pregnant women, in vitro 
diagnostic tests, and building flexible medical countermeasure 
manufacturing capacity, and allow us to continue other ongoing 
efforts.

                  LIFE SCIENCES-BIODEFENSE LABORATORY

    The President's budget also proposes an increase of $17.7 
million to outfit the new Life Sciences-Biodefense Laboratory 
and ensure that all of the biosafety systems are operational 
before we occupy and can use the laboratory.

                               USER FEES

    User fees clearly represent a substantial part of our 
fiscal year 2013 budget and I want to address that briefly. The 
current user fee programs for drugs and medical devices 
expires, as you no doubt know, on September 30 of this year. 
The reauthorization process is now well under way and new user 
fee programs for generic drugs and biosimilars have also been 
put forward.

                     FOOD SAFETY MODERNIZATION ACT

    But to implement the Food Safety Modernization Act and 
reduce the burden of food-borne illness on consumers and 
American food producers, a new food facility registration fee 
that would generate $220 million has been proposed. Additional 
proposals include new user fees to support the cosmetic and 
food contact substance programs, to compensate FDA for medical 
product reinspections, and support import operations at courier 
hubs.

                           PREPARED STATEMENT

    So, to conclude, let me emphasize that the resources in 
this budget are vital to our efforts to ensure timely access to 
innovative products, as well as our commitment to protecting 
the public from unsafe food and ensuring safe, effective 
medical products.
    I appreciate your time and attention and will be happy to 
answer any questions you may have after you come back from your 
vote.
    [The statement follows:]

               Prepared Statement of Dr. Margaret Hamburg

    Chairman Kohl, Senator Blunt and members of the subcommittee, I am 
Dr. Margaret Hamburg, Commissioner of the U.S. Food and Drug 
Administration. I am pleased to present the President's fiscal year 
2013 budget request for the Food and Drug Administration (FDA).
    I want to begin by thanking you for your efforts over the past few 
years to shrink the gap between the FDA's budget and its vast and 
evolving responsibilities. We have made every effort to spend those 
funds responsibly--to reinforce core functions and obtain the most 
public health value for the dollar.
    As a science-based regulatory agency of global scope, FDA's mission 
is both exciting and daunting. Our core responsibilities are evolving 
and expanding to include additional product areas such as tobacco, to 
accommodate scientific and technological advances, and to step up to 
the global leadership role that FDA must play if we are to promote 
innovation and protect American consumers.
    Our recent spending and new budget requests reflect this evolution. 
We are embracing these changes in several important ways--by deploying 
smarter and more flexible regulatory approaches, by identifying 
efficiencies and innovative approaches to deliver our core mission, 
improve outcomes, and better target our resources, and by using 
collaborations to leverage expertise, data, and experience. Through 
these approaches, we are already improving efficiency and achieving 
concrete results. While the challenges loom large, we are confident 
that we have identified investments and approaches that will allow us 
to continue this evolution and to protect and promote the public 
health.

                      FDA INVESTMENTS AND RESULTS

    With the funding you have provided, FDA has delivered significant 
and quantifiable benefits for the American people, and we are very 
proud of these achievements.
    In the area of drugs, FDA now has the highest first action approval 
rate for new drugs we have ever achieved, and we continue to look for 
ways to improve the predictability, consistency, and transparency of 
our drug review process. During fiscal year 2011, we approved 35 
innovative drugs, many of them ground-breaking. This was the second-
highest number of approvals in the past decade. These drugs represented 
real advances for patients, including breakthroughs in personalized 
medicine. They include two novel drugs that were developed and approved 
with diagnostic devices that will allow doctors to target the drug to 
those patients most likely to respond, as well as new drugs to treat 
important medical conditions.
    To achieve these results and to speed access to the American 
people, we demonstrated regulatory flexibility, using, for example, 
accelerated approvals and innovative clinical trial designs. Of note, 
we lead the world in the number and speed of drug approvals. Of the 57 
novel drugs approved by both FDA and the European Union between 2006 
and 2010, 75 percent were approved first in the United States. 
Furthermore, between 2003 and 2010, all 23 cancer drugs approved by FDA 
and the European Union were approved first in the United States by FDA.
    During fiscal year 2012, we continued our strong performance. Since 
October 1, FDA approved 15 innovative drugs and biologics. Of the 15, 
11 (or 73 percent) were approved in the United States first. Fourteen 
of these products had Prescription Drug User Fee Act (PDUFA) deadlines, 
and we met the PDUFA deadline for 13 of the 14 products (that is, we 
met the PDUFA deadline 93 percent of the time). Just as important, of 
the 15 innovative drugs and biologics, 12 were approved on the first 
cycle, for an 80-percent first-cycle approval rate.
    Some specific information on individual drug approvals will provide 
context for the importance of these actions. During January 2012, FDA 
approved a truly breakthrough product in the field of personalized 
medicine, a drug to treat a rare form of cystic fibrosis. Known as 
ivacaftor and sold under the trade name Kalydeco, this drug only works 
for patients with a certain genetic mutation. But, thanks to advances 
in personalized medicine, physicians can identify patients with this 
mutation. This allows doctors to use Kalydeco only for patients where 
the drug will be effective. For patients who respond to this drug, it 
can keep their lungs clear, help them breathe, and make an enormous 
difference in the quality of their lives.
    The FDA drug review process normally takes about 10 months. But in 
the case of Kalydeco, a drug of great importance for patients in need, 
this drug was approved in less than 4 months.
    FDA approved another drug in January 2012. Known as vismodegib and 
sold under the trade name Erivedge, it is the first FDA-approved drug 
for metastatic basal cell carcinoma, the most common type of skin 
cancer. This new drug interferes very little with the growth of healthy 
cells, but works by disrupting the molecular pathway in the body that 
causes cancer cells to grow. Given there were no available treatments 
at the time, FDA took measures to expedite its approval. As a result, 
Erivedge was approved in less than 5 months--or half the time of a 
typical FDA approval.
    We have also been working aggressively to address and prevent drug 
shortages and to implement important Presidential directives. On 
October 31, 2011, the President issued an Executive order that directed 
FDA to take action to help further reduce and prevent drug shortages. 
In 2011, FDA successfully prevented at least 195 drug shortages. During 
the first 3 months of 2012, FDA prevented 22 shortages. FDA has sent 
letters to pharmaceutical manufacturers, reminding them of their legal 
obligations to report certain discontinuances to FDA, and urging them 
to voluntarily notify FDA of all potential disruptions of the 
prescription drug supply, even when not required by law. This has 
resulted in a significant increase in the number of potential shortages 
reported to FDA, and thus enhanced our ability to take action. In 
February of this year, we announced a series of steps to increase the 
supply of critically needed cancer drugs that were in short supply, 
including exercising enforcement discretion for the temporary 
importation of an alternative drug and approving a new manufacturer on 
an expedited basis.
    We are also playing our part to address the rising costs of 
healthcare, by implementing a new approval pathway for biosimilar 
biological products and a user fee program to support review and 
evaluation of biosimilar products. We are also proposing a new generic 
drug user fee program that will support faster, more predictable 
reviews for generic drugs, effectively eliminate the current generic 
application backlog, and help assure quality by providing resources for 
regular surveillance inspections of manufacturers of generic drugs.
    In the area of medical devices, in 2011, FDA released the Plan of 
Action for Implementation of 510(k) and Science Recommendations, which 
contained 25 specific actions that we would take in 2011 to improve the 
predictability, consistency, and transparency of our premarket 
programs. Seventy-five percent of those actions, plus eight additional 
actions, are already completed or well underway. We issued guidance on 
FDA's regulatory expectations for personalized medicine diagnostic 
devices that are developed along with a therapeutic product, to target 
that therapeutic product to the appropriate population. We launched the 
Innovation Initiative, which proposed actions that FDA could take to 
help accelerate and reduce the cost of developing and evaluating 
innovative medical devices, using science-based principles to maintain 
or improve patient safety.
    In the area of food safety, the most sweeping reform of our food 
safety laws in more than 70 years was signed into law by President 
Obama on January 4, 2011--the FDA Food Safety Modernization Act (FSMA). 
We issued an interim final rule describing the criteria for 
administrative detention of food when there is reason to believe the 
food is adulterated or misbranded, and we have used this authority 
several times. We met the 1-year FSMA mandate for inspections of 
foreign facilities, and are well on the way to meeting the 5-year 
inspection frequency mandate for high-risk domestic food facilities. We 
also issued an updated guidance for the seafood industry on food safety 
hazards. We anticipate issuing several proposed rules called for in 
FSMA shortly. We post regular progress reports on implementation 
milestones on our Web site.
    In the area of tobacco, we have been working to achieve a number of 
significant public health goals since enactment of the Tobacco Control 
Act of 2009. These include restricting youth access to cigarettes and 
smokeless tobacco, encouraging youth and adults who use tobacco 
products to quit, providing accurate information on the contents of 
tobacco products and the consequences of tobacco use to the public, and 
using regulatory tools to protect kids from initiating tobacco use and 
to begin to reduce the public health burden of tobacco in the United 
States.
    We also have been aggressively and systematically addressing 
challenges that affect all products that FDA regulates. In June 2011, 
FDA issued our ``Pathway to Global Product Safety and Quality'' report, 
describing the challenges of regulating in the globalized world in 
which FDA now operates, calling for a paradigm shift in how we approach 
our duties in light of such challenges, and describing the concrete 
actions we will take in four areas:
  --Assembling global coalitions of regulators dedicated to building 
        and strengthening the product safety net around the world;
  --Developing a global data information system and network in which 
        regulators worldwide can regularly and proactively share real-
        time information and resources across markets;
  --Expanding FDA's capabilities in intelligence gathering and use, 
        with an increased focus on risk analytics and thoroughly 
        modernized IT capabilities; and
  --Effectively allocating FDA resources based on risk, leveraging the 
        combined efforts of Government and industry.
    The essence of this strategy marries creative international 
coalitions with cutting-edge investigative tools to continue to provide 
the consistently high level of safety and quality assurance the public 
expects--and deserves.

                   MAXIMIZING THE IMPACT OF FDA FUNDS

    At this time of fiscal restraint, FDA is focusing on its core 
responsibilities and working to identify opportunities to streamline 
activities and leverage human and financial resources.
    I have instituted a series of reorganizations designed to ensure 
that FDA better reflects its evolving responsibilities, but that also 
recognizes our responsibility to make the most efficient use of our 
limited resources. Early in my tenure, I appointed a new Deputy 
Commissioner for Foods, to ensure coordination of our growing and 
rapidly evolving responsibilities for oversight of the domestic and 
global food supply chain.
    Last year I created the new position of Deputy Commissioner for 
Global Regulatory Operations and Policy, to fully address the need to 
integrate domestic and foreign inspections, streamline procedures, and 
seek greater harmonization and opportunities for collaboration with our 
counterparts in other countries. I also appointed a new Deputy 
Commissioner for Medical Products and Tobacco, reflecting our 
recognition that the review of medical products increasingly cuts 
across center boundaries and that a new framework was necessary to 
address challenges like personalized medicine and combination products. 
Together, these changes build efficiencies into our organizational 
structure from the ground up and will make it easier to identify new 
opportunities for streamlining in the years to come.
    We have made significant progress in consolidating our IT 
infrastructure into modern data centers. Simultaneously, we have 
modernized and standardized our hardware and software infrastructure, 
resulting in savings in power consumption and the ability to use FDA 
equipment and IT support resources more efficiently. You will see 
savings from this consolidation reflected in our proposed budget for 
fiscal year 2013, as well as additional proposed savings.
    Another key area for improved efficiencies is improved targeting of 
inspection resources. We have been working hard to ensure that our 
import inspection programs are risk-based, targeting imports at port-
of-entry more efficiently. We are redeploying current food inspection 
resources and pursuing efficiencies to support initial implementation 
of FSMA.

                 PREPARING FDA FOR THE CHALLENGES AHEAD

    FDA's mission is challenging, even in the best of times, with 
scientific advances occurring at breakneck speed and the pace of 
globalization accelerating. Our responsibilities are vast and growing, 
a trend that will only continue. We receive thousands of medical 
product submissions each year, and serve as the watchdog for tens of 
thousands of products on the market, ensuring that they continue to 
meet the highest standards.
    We have evolved from a country that once consumed simple, primarily 
domestically produced goods to one that consumes complex products 
manufactured in every corner of the globe. We enjoy a greater variety 
of products from a greater range of places than ever before. The 
complexity of the products we regulate and the complexity of the supply 
chains by which they reach the eventual consumer has only increased. 
All of this means that FDA's job has gotten more complex and the stakes 
have continued to increase.
    As our fiscal year 2013 budget notes, FDA regulates more than $450 
billion of domestic and imported foods. Nearly 40 percent of the drugs 
Americans take are made overseas, and about 80 percent of active 
pharmaceutical ingredients are imported. Food imports have increased 
nine-fold since 1993. These food imports come from more than 250,000 
foreign facilities in 200 countries. About 70 percent of seafood and 
about 35 percent of fresh produce consumed in the United States comes 
from foreign countries.
    We are grateful that Congress has begun to help give FDA the tools 
needed to effectively regulate in a modern, complex, globalized 
environment. We are on the right path, but the road is long and 
challenging. The proposed fiscal year 2013 budget, described in more 
detail below, will continue the forward motion that you have supported.

                  FDA FISCAL YEAR 2013 BUDGET REQUEST

Fiscal Year 2013 Summary
    The fiscal year 2013 budget recommends $4.5 billion for FDA, a 17-
percent increase from fiscal year 2012. The fiscal year 2013 increase 
for user fees, including increases for current law user fees and 
amounts for seven new user fee programs, accounts for 98 percent of the 
FDA budget increase.
    FDA user fee programs support safety and effectiveness reviews of 
human and animal drugs, biological products, medical devices, and other 
FDA-regulated products. Fees also allow FDA programs to achieve timely 
and enhanced premarket review performance. Finally, fees support the 
programs and operations of the FDA Center for Tobacco Products.
    For fiscal year 2013, FDA is proposing savings in two areas--
information technology (IT) and the FDA Buildings and Facilities (B&F) 
account. In addition to these budget authority reductions, FDA is also 
absorbing more than 80 percent of the inflationary cost of rent 
activities.
    After accounting for these savings, the net increase in budget 
authority is $11.5 million for fiscal year 2013. Our increases support 
import safety, medical countermeasures, White Oak laboratory 
facilities, a portion of the increased cost of our rent activities, and 
the military pay raise that FDA Commissioned Corps officers will 
receive.
    The Federal investment in FDA is small compared to the breadth of 
our mission and the $2 trillion in products that we regulate. The 
investment in FDA is also an investment in the economic health of two 
of the largest sectors of America's economy: The U.S. food industry and 
the medical products industry.

FDA Budget Authority
            Fiscal Year 2013 Budget Reductions
    FDA made significant progress in recent years to consolidate our IT 
infrastructure into modern data center facilities. During the 
consolidation, FDA modernized and standardized its hardware and 
software infrastructure. This effort provides an FDA computing 
environment that reduces our costs and provides agility not previously 
possible. The result is savings in power consumption and more efficient 
use of FDA equipment and resources for IT support.
    Under this fiscal year 2013 initiative, FDA will realize savings 
that flow from the consolidation effort. FDA will generate additional 
IT savings by streamlining other data management activities, reducing 
redundant IT devices, and reducing other IT costs, for a total savings 
of $19.7 million. Finally, FDA will also save $3.5 million by deferring 
repair and maintenance projects supported by our Building and 
Facilities account.
            Food and Drug Imports From China
    FDA is requesting a budget authority increase of $10 million to 
strengthen the safety of foods, drug products, and ingredients exported 
from China to the United States. From fiscal year 2007 to 2011, the 
number of shipments of FDA-regulated products from China increased by 
62 percent. This represents a fundamental change in our economic and 
security landscape, a change that requires FDA to alter its approach to 
protecting the health of the American public. To address this change, 
FDA must strengthen its capacity to inspect Chinese facilities that 
ship products to the United States and strengthen its ability to 
perform risk analysis on FDA-regulated products from China.
    The addition of $10 million will strengthen FDA's ability to 
protect American consumers and patients in important and fundamental 
ways.
  --FDA will improve its food and drug inspection and analytical 
        capabilities with 16 additional inspectors in China, and by 
        adding three United States-based analysts.
  --FDA will broaden the range of its inspections. In addition to 
        inspecting Chinese facilities that manufacture food and medical 
        products for export to the United States, FDA will inspect 
        sites of clinical trials.
  --FDA will strengthen the understanding of Chinese regulators and the 
        exporting industry about U.S. safety standards through targeted 
        workshops and seminars. This process will foster a constructive 
        dialogue on improving the safety and quality of food and 
        medical products.
    With these resources, FDA will develop more robust knowledge about 
the complexities of regulatory pathways and supply chains within an 
increasingly globalized environment. This understanding will allow FDA 
to make better evidence-based decisions and allocate FDA resources 
based upon risk.
            FDA Medical Countermeasures Initiative
    The FDA Medical Countermeasures Initiative (MCMi) is designed to 
help meet America's national security and public health requirements 
for medical countermeasure (MCM) readiness. MCMs include drugs, 
vaccines, diagnostics, and other medical products needed to respond to 
chemical, biological, radiological, nuclear (CBRN) threats and emerging 
infectious diseases.
    Thanks to the efforts of this subcommittee, FDA received an 
appropriation of $20 million in fiscal year 2012 to provide a base of 
funding for FDA's MCMi. For fiscal year 2013, the FDA budget includes 
an additional $3.5 million for FDA medical countermeasures activities.
    With the fiscal year 2012 base funding and the additional fiscal 
year 2013 resources, FDA will support partnerships with industry, 
academia, and Government partners to improve the development timelines 
and success rates for MCMs. FDA will also expand technical assistance 
to developers of the highest priority MCMs.
    The top priorities for these MCM funds include FDA action teams to 
support the development of MCMs to address the following MCM needs:
  --Warfighter care for American soldiers exposed to trauma or CBRN 
        threats;
  --Diagnosing and treating the multiple manifestations of acute 
        radiation syndrome;
  --Meeting the special needs of pediatric patients and pregnant women;
  --Developing next generation in vitro diagnostic tests for CBRN 
        threats; and
  --Working closely with HHS to establish flexible manufacturing 
        capacity in the United States.
    Since the announcement of the FDA MCMi in August 2010, FDA and its 
drug, device and biologics programs have worked aggressively to ensure 
that the United States has access to high-priority MCMs during a public 
health emergency. Although less than 2 years old, FDA's MCMi has an 
impressive list of accomplishments, made possible by the resources that 
this subcommittee approved.
            FDA Regulatory Science Facilities
    On August 18, 2010, the General Services Administration (GSA) 
awarded the construction contract for the new laboratory complex at 
White Oak, and construction is well underway.
    An fiscal year 2013 increase of $17.7 million will allow FDA to 
outfit the new Center for Biologics Evaluation and Research (CBER)-
Center for Drug Evaluation and Research (CDER) Life Sciences-Biodefense 
Laboratory complex that will support FDA's core regulatory science 
needs. FDA must make this investment now to ensure that all laboratory 
biosafety hazard systems are operational and the laboratory is ready 
for occupancy during fiscal year 2014.
            Pay and Rent
    The fiscal year 2013 budget also contains $1.5 million to support 
the military pay increase for Commissioned Corps personnel serving at 
FDA and $2.0 million to pay a portion of the inflationary rent costs 
for FDA for FDA programs. Funding these elements of the fiscal year 
2013 budget will help ensure that FDA can retain the professional staff 
to perform our mission of protecting patients and consumers and 
improving public health.

FDA User Fees
            Prescription Drug User Fees
    In January 2012, the Administration submitted legislation to 
Congress to reauthorize the Prescription Drug User Fee Act (PDUFA). The 
proposed legislation recommends $713 million in PDUFA fees for fiscal 
year 2013. The current law expires on September 30, 2012, and FDA is 
ready to work with Congress to ensure timely reauthorization of this 
vital program. To sustain and build on our record of accomplishments, 
reauthorization must occur seamlessly, without any gap between the 
expiration of the old law and the enactment of PDUFA V. The resources 
in PDUFA V will allow FDA to review and approve new and innovative 
therapies for patients, without compromising the FDA's high standards 
for demonstrating safety, efficacy, and quality of new drugs prior to 
approval.
            Medical Device User Fees
    For more than a year, FDA met with stakeholders and held 
discussions with the medical device industry in an effort to develop a 
package of recommendations to reauthorize the Medical Device User Fee 
Act (MDUFA). On February 17, 2012, FDA reached an agreement with 
representatives from the medical device industry, and published draft 
recommendations to reauthorize MDUFA on March 15. The agreement would 
authorize FDA to collect $595 million in user fees over 5 years, an 
amount that is subject to inflation increases. The agreement would also 
result in an fiscal year 2013 MDUFA fee amount is $97.7 million.
    The agreement strikes a careful balance between what industry 
agreed to pay and what FDA can accomplish with the proposed funding. We 
believe that it will result in greater predictability, consistency, and 
transparency through improvements to the review process.
    Key features of the agreement include:
  --Earlier, more transparent and more predictable interactions between 
        FDA and applicants, both during the early product development 
        stage as well as during the review process;
  --More detailed and objective criteria for determining when a 
        premarket submission is incomplete and should not be accepted 
        for review;
  --More streamlined FDA review goals that will provide better overall 
        performance and greater predictability. This includes a 
        commitment to provide feedback to an applicant if FDA's review 
        extends beyond the goal date, so that the parties can discuss 
        how to resolve any outstanding issues;
  --Additional resources to support guidance development, reviewer 
        training and professional development, and an independent 
        assessment of the premarket review process to identify 
        potential enhancements to efficiency and effectiveness;
  --More detailed quarterly and annual reporting of program 
        performance; and
  --A commitment between FDA and industry to reduce the total average 
        calendar time to a decision for premarket approvals (PMAs) and 
        510k applications.
            New User Fees for Generics and Biosimilars
    In addition to recommending the reauthorization of PDUFA and the 
Medical Device User Fee and Modernization Act (MDUFMA), the fiscal year 
2013 budget recommends new user fee programs to support review and 
related activities for generic drugs and biosimilars. The proposed user 
fee programs for generic drugs and biosimilars are modeled on the 
successful PDUFA program, but are tailored to reflect the unique 
challenges and needs associated with regulating generic drugs and 
biosimilars.
    Generic Drug User Fees.--As a result of the Drug Price Competition 
and Patent Term Restoration Act of 1984, commonly known as the Hatch-
Waxman Amendments, America's generic drug industry has been developing, 
manufacturing, and marketing--and FDA has been reviewing and 
approving--lower cost versions of brand-name drugs for more than 25 
years. This legislation and the industry it fostered are a true public 
health success.
    Last year, approximately 78 percent of the more than 3 billion new 
and refilled prescriptions dispensed in the United States were filled 
with generics, yet those drugs accounted for only 25 percent of 
prescription drug spending. In the last decade alone, generic drugs 
have provided more than $931 billion in savings to the Nation's 
healthcare system.
    The number of generic drug submissions sent annually to FDA has 
grown rapidly, reaching another record high during fiscal year 2011, 
including nearly 1,000 ANDAs. The current backlog of pending 
applications is estimated to be more than 2,500. The current median 
time to approval is approximately 31 months, although this includes 
time that the application is with the sponsor to address FDA questions 
about the application.
    The Generic Drug User Fee Act (GDUFA) proposal submitted to 
Congress in January 2012 will put FDA's generic drugs program on a firm 
financial footing and provide $299 million in additional resources to 
ensure timely access to safe, high-quality, affordable generic drugs.
    Biosimilars User Fees.--A successful FDA biosimilars review program 
will spark the development of a new segment of the biotechnology 
industry in the United States. To advance this opportunity, the fiscal 
year 2013 budget includes a proposal for biosimilar user fees of $20.2 
million.
    The proposed biosimilars user fee program will generate fee revenue 
in the near-term and enable sponsors to have meetings with FDA early in 
the process of developing candidates for biosimilar biological 
products. With these fees, FDA will develop the scientific, regulatory, 
and policy infrastructure necessary to review biosimilar biological 
product applications.
            Implementing FSMA--The Fiscal Year 2013 Food Establishment 
                    Registration Fee
    Food Safety remains a critical program area for FDA. FDA's fiscal 
year 2013 proposal for food safety aims to advance the vision of a 
strong, reliable food safety system that Congress enacted in the 
landmark FDA Food Safety Modernization Act of 2011 (FSMA). The fiscal 
year 2013 budget proposal builds on the food safety increases that the 
subcommittee appropriated for fiscal year 2011 and fiscal year 2012 and 
calls for user fee revenue to allow FDA to establish a prevention-
focused domestic and import food safety system, consistent with FSMA.
    FSMA set out a vision for a modern food safety system that shifts 
the focus to preventing food safety problems, rather than relying 
primarily on reacting to problems after they occur. Implementing 
Congress' vision for a strengthened food safety system represents a 
dramatic expansion of FDA's workload. However, the simple truth is that 
FDA cannot meaningfully deliver on these mandates without the funding 
contained in the fiscal year 2013 budget.
    The fee will support:
  --Establishing new, effective, and comprehensive food safety 
        standards;
  --Establishing a new program for import safety;
  --Increasing the number and efficiency of inspections;
  --Launching an integrated national food safety system with States and 
        localities;
  --Expanding research activities, which will include improved data 
        collection and risk analysis; and
  --Improving FDA's capability to conduct risk-based decisionmaking.
    These fees will allow FDA to reduce the risk of illness associated 
with food and feed and decrease the frequency and severity of food- and 
feed-borne illness outbreaks. With these fees, FDA can reduce instances 
of contamination and greatly diminish the burden on American businesses 
and the U.S. economy due to foodborne illness events. Without 
sufficient and reliable fee revenue, we can expect the unacceptably 
high human toll of foodborne illness to continue, with the resulting 
disruptions to the food system and the economic burdens to the food 
industry that result from foodborne illness outbreaks.
            Tobacco Product User Fees
    On June 22, 2009, President Obama signed the Family Smoking 
Prevention and Tobacco Control Act (Tobacco Control Act) into law. 
Since 2009, the user fees authorized in the statute have allowed FDA's 
Center for Tobacco Products (CTP) to hire Center leadership and enable 
those leaders to initiate the scientific, educational, enforcement, and 
regulatory activities needed to accomplish the public health goals of 
the Tobacco Control Act. By the end of fiscal year 2011, the CTP had a 
staffing level of over 230 FTEs, and the Center anticipates meeting 
projected staffing goals in fiscal year 2013.
    The fiscal year 2013 budget request for the Tobacco Program, 
including resources for CTP, is $505 million, an increase of $28 
million above the fiscal year 2012 enacted budget. The amount requested 
is specifically authorized in the Tobacco Control Act and comprised 
entirely of tobacco user fees. Fiscal year 2013 priorities include 
protecting youth from tobacco, encouraging current users to quit, and 
making existing tobacco products less harmful.
            Other New User Fee Proposals
    Cosmetics User Fee.--The proposed cosmetic user fee of $18.7 
million will strengthen FDA efforts to protect public health by 
preventing harm to consumers, ensuring the safety of cosmetics and 
removing unsafe cosmetics from the market. With this fee revenue, FDA 
will develop necessary guidance and standards for industry. The fee 
revenue will also allow FDA to identify research gaps, such as gaps 
related to the safety of novel ingredients used in cosmetics.
    Medical Product Reinspection User Fee.--The FDA Food Safety 
Modernization Act, which Congress enacted in December 2010, authorized 
fees for reinspections of food and feed establishments. FDA is 
proposing to expand this fee authority to medical product 
establishments. With this change, medical product establishments will 
pay the full cost of reinspections and associated follow-up work. FDA 
will impose the user fee when FDA reinspects facilities due to a 
failure to meet Good Manufacturing Practices (GMPs) or other important 
FDA requirements. The fiscal year 2013 estimate for medical product 
reinspection user fees is $14.7 million.
    Food Contact Notification User Fee.--FDA has statutory 
responsibility for the safety of all food contact substances in the 
United States. The Food Contact Notification (FCN) program supports 
applications for innovative food contact substances that help mitigate 
microbial food contamination and provide consumers with more healthful 
and safe food choices. The proposed user fees of $4.9 million will 
support FDA efforts to increase the availability of safe food contact 
substances, to prevent unsafe food contact substances from reaching the 
market and to apply the most modern regulatory science to the review of 
food contact substances.
    International Courier Use Fee.--For fiscal year 2013, FDA is 
proposing a new International Courier User Fee of $5.6 million. The 
proposed fee will support activities associated with increased 
surveillance of FDA-regulated commodities at express courier hubs. To 
address the growing volume of imports entering through international 
couriers, FDA is proposing to pay the increased cost of its 
international courier activities through user fees.

                               CONCLUSION

    The resources in this budget will allow FDA to perform its 
fundamental public health responsibilities in new and more efficient 
ways. Our budget also supports industry efforts to innovate and bring 
new products to market that will benefit American patients and 
consumers and strengthen our economy.
    My goal with this proposed fiscal year 2013 budget is to position 
FDA to seize these opportunities. The resources in this budget will 
allow FDA to perform its core public health responsibilities in more 
efficient ways, to address these and the many other challenges at the 
heart of our mission. This budget also supports industry efforts to 
innovate and bring new products to market that will benefit American 
patients and consumers and strengthen our economy.
    Thank you for the opportunity to testify. I am happy to answer your 
questions.

    Senator Kohl. Thank you, Dr. Hamburg. The vote has been, at 
least for a while, postponed. So we'll just----
    Dr. Hamburg. Oh, okay.
    Senator Kohl [continuing]. Start out with our questions.
    Dr. Hamburg. Excellent.

                     FOOD SAFETY MODERNIZATION ACT

    Senator Kohl. Dr. Hamburg, this budget request assumes $220 
million in additional funding that theoretically would be used 
to implement to the Food Safety Modernization Act. However, as 
you said, that funding increase would come in the form of a new 
user fee that has already been rejected by the Congress and 
that essentially has no chance of being authorized this year.
    So what that really means is that this budget doesn't 
include any funding increase to implement the Food Safety 
Modernization Act, which is of great concern to many of us. How 
have you been working with both the Congress and the industry 
in order to get these user fees authorized?
    Dr. Hamburg. It is extremely important, as you note, to 
continue to implement the Food Safety Modernization Act, which 
gives us a chance to really reorient our whole food safety 
system towards preventing problems before they occur, rather 
than addressing them after the fact, which will have huge 
benefits both in terms of human health and reducing costs to 
the healthcare system, to the workplace, and to industry.
    We are talking with industry about the importance of this 
work. They understand it. These are difficult, challenging 
economic times, however. We all recognize that. And we are, of 
course, working with other potential partners as we implement 
the Food Safety Modernization Act. We have made progress. We 
will continue to make progress, but we will have to prioritize 
in the context of reduced resources, and it will mean that we 
cannot accomplish all of the goals of the Food Safety 
Modernization Act, and I think it will mean that, 
unfortunately, we will not be able to put in place systems that 
would prevent disease and economic burdens as well.
    But we hope that, though the process may take more time 
than we would like, we will continue to make progress in terms 
of the implementation of user fees. It's not inappropriate, I 
think, when you look at the common good, the benefits to 
industry, as well as the benefits to the public, that support 
for this program be a shared responsibility. We've seen the 
benefits of user fees with our drug user fees and more recently 
the device user fees, and I do believe that when you look at 
the amount of resources available to support food safety in 
this country, we clearly need to do more.
    Senator Kohl. But your budget assumes $220 million 
necessary to discharge your responsibilities, but to be raised 
in the form of user fees which, let's be honest, isn't going to 
happen this year--$220 million. How do you propose to even come 
close to discharging your responsibilities without that $220 
million?
    Dr. Hamburg. As I said, we are going to have to make very 
difficult choices. We are not going to be able to do all the 
things the Congress has asked us to do and that the American 
people expect us to do. We will place our emphasis and our 
resources on the highest priority issues. We do need to respond 
to the challenges of globalization and start to really ensure 
that import safety system--we will be taking more risk-based 
approaches so that we're targeting resources where the greatest 
need is, where the greatest risk is. We'll be working with 
States. We'd hoped to have resources to actually give to States 
as we build those partnerships for an integrated food safety 
system. That will be less possible, but we will have to find 
ways to work with State health and agriculture departments.
    And we will have to work closely with industry and they 
will have to fully step up to the plate as partners. This is 
going to be a very, very challenging budget to implement and it 
will put very difficult choices in front of the Commissioner 
and her team.

                                GENERICS

    Senator Kohl. All right. One question on generics, then 
I'll turn to Senator Blunt. This budget request assumes the 
collection of $299 million in new user fees for approval of new 
generic drugs. Assuming these fees are authorized--and we are 
more optimistic in this case that they will be, as you know--
how long will it take to eliminate the backlog of generic drug 
applications that could immediately then be marketed?
    Dr. Hamburg. This is such an exciting and important 
opportunity to really move the generics program and its proven 
benefits to the next level. At the present time, we have 
unacceptable lags in the review of generic drugs, and we're 
also faced with the increasing challenge that so many of the 
manufacturers of generic drugs or components of generic drugs 
are overseas and we really have to level the playing field in 
terms of domestic and overseas inspections.
    This user fee will enable us to do both. We've committed to 
reducing the review lag, which currently it takes an average of 
30 months to review a generic application. We're going to bring 
that down to 10 months. We're committed to doing that in the 5-
year span of this user fee program. And we also have committed 
to having equity between domestic and foreign inspections over 
that same time period.
    Senator Kohl. Thank you very much.
    Senator Blunt.
    Senator Blunt. Thank you, chairman.
    Commissioner, on the $220 million of additional fees, in 
that fee category what's produced now in the current fees, and 
the ones that expire at the end of this fiscal year? You have 
fees that expire at the end of this year. What do they produce?
    Dr. Hamburg. The fees that would expire in September of 
this year are the drug user fees.
    Senator Blunt. The drug fees.
    Dr. Hamburg. And the medical device user fees.
    Senator Blunt. So you have no fees in the food safety 
issue, right?
    Dr. Hamburg. We don't have an establishment fee, which is 
what is being recommended in this budget at the current time, 
no.

                            REINSPECTION FEE

    Senator Blunt. What kind of fees do you----
    Dr. Hamburg. There's one very small fee, which I have to 
turn to--reinspection. There's a reinspection fee in the food 
safety program.
    Senator Blunt. And the reinspection fee----
    Dr. Hamburg. But it's a very small amount of money and it's 
for after there have been problems in a facility and we go back 
in and reinspect to see if they've been corrected.
    Senator Blunt. So with that exception, there are no fees--
--
    Dr. Hamburg. Right.
    Senator Blunt [continuing]. Now, where you're proposing the 
$220 million in fees?
    Dr. Hamburg. Yes.
    Senator Blunt. Would that be the same for the cosmetics? 
Are there fees there now?
    Dr. Hamburg. That's correct, there is not a cosmetics fee.
    Senator Blunt. And that's $18 million?
    Dr. Hamburg. $18.7 million, I think, yes.
    Senator Blunt. And what would the potential collection cost 
of that $18 million be?
    Dr. Hamburg. I think that the----
    Senator Blunt. To put the fee in place and to collect it, 
however you would collect that fee?
    Dr. Hamburg. Having built a very robust infrastructure to 
deal with user fees in other components of FDA, I think we can 
move very quickly and efficiently to establish the user fee 
collection mechanism. It is important that it is done properly 
with the right safeguards and firewalls. But we do know how to 
do that now. We have 20 years of experience on the drug user 
fee side. So I think the greater challenge is sitting at the 
table and negotiating to achieve those user fee agreements.

                               COSMETICS

    Senator Blunt. Do you know what the average fee might be 
for the various categories of cosmetics producers, medium, 
small, or large? Do you have a sense of how this impacts the 
industry?
    Dr. Hamburg. I think we would have to sit down and really 
talk about the different strategies for approaching it and what 
would be the most appropriate way to structure the fee system 
so that there would be the greatest benefit to the industry and 
it would align with the kinds of demands on our time and 
resources.
    Senator Blunt. So would that mean you haven't decided yet 
whether it would just apply to a finished product or have a fee 
during the entire production chain of cosmetics? I assume they 
get things----
    Dr. Hamburg. Yes, I think it would very likely be modeled 
on some of the other fees in terms of registration of 
establishments. But it is a different regulatory framework than 
for drugs. For example, where there's a pre-approval process 
with cosmetics, our legal regulatory responsibilities have to 
do with monitoring for safety issues and is really not focused 
on the pre-approval, so it wouldn't follow the exact kind of 
model of other user fees in existence today.

                                 CHINA

    Senator Blunt. And the China inspection issue, would that 
be fee-based also, or would you propose some inspections in 
China?
    Dr. Hamburg. Yes, the China proposal is really to enable us 
to enhance our inspectional capacity and our presence on the 
ground in China, as well as to enhance our risk-based analytics 
and our strategies for our operations in China. But it would be 
building on existing activities. We'd be expanding our 
inspectional cadre in China by 16 people and correspondingly 
increasing the numbers of inspections in both food and drug. 
But it would not be part of our user fee program.
    Senator Blunt. So it's paid for out of regular taxpayer 
dollars?
    Dr. Hamburg. Yes.
    Senator Blunt. So these Chinese companies wouldn't pay for 
their inspection?
    Dr. Hamburg. No.
    Senator Blunt. Obviously, you'd have to agree that their 
products are going to have to go through this regimen for them 
to be allowed to come into the country?
    Dr. Hamburg. Right. If we are approving a new drug in this 
country, we need to inspect to make sure that, if it's being 
manufactured in another country, that the manufacturing meets 
our standards and requirements. If we are bringing a food 
product into this country, we need to inspect the facility to 
make sure that it's being made according to good manufacturing 
practice and meets our safety quality standards.
    So it would be to enable us to expand work that is under 
way in China. But you can imagine, based on the huge increase 
in imports of the FDA-regulated products that I noted, that we 
are extremely hard-pressed to be able to even begin to do the 
range of inspections that really are important to assuring 
safety and quality to the American people.
    Senator Blunt. But under your proposal for food or 
cosmetics, as an example, either one, that would still be paid 
out of your taxpayer-funded budget. That's not in the fee 
proposal, the China inspection?
    Dr. Hamburg. The China inspections are going to be focused 
on food and drug inspections in China, building on a framework 
that already exists. We do have offices now in Shanghai, 
Beijing, and Guangzhou and are doing inspections out of those 
offices, and also working with our counterpart regulatory 
authorities in China and industry that's based in China, either 
Chinese industries or United States companies, but that are 
manufacturing in China.
    So that $10 million will enable us to expand our capacity 
in ways that are very, very crucial.
    Senator Blunt. I guess the point that I'm trying to get 
established for myself is that we would still fund that effort 
on food, for instance, like we always have, but we would under 
your proposal have a fee for food inspection for U.S. companies 
in the United States, which I'd be reluctant to do. But we can 
visit about that later.
    Dr. Hamburg. What we're trying to do is really create an 
integrated program that is supported by both budget authority 
and user fees. In negotiating the user fees, we would be very 
explicit about how those user fee dollars would be used as part 
of this broader program. But they would not be siloed programs 
in terms of impact----
    Senator Blunt. But the user fees wouldn't be paid by the 
foreign companies. They'd be paid by U.S. companies, unless the 
foreign companies were producing in the United States?
    Dr. Hamburg. The user fees would be paid by the 
establishment that was manufacturing a product----
    Senator Blunt. In the United States?
    Dr. Hamburg. No. They could also be if you were 
manufacturing anything that would be FDA-regulated, foreign or 
domestic.
    Senator Blunt. So the Chinese company might pay the user 
fee if it was in China?
    Dr. Hamburg. Yes, yes.
    Senator Blunt. Okay, okay. That's the one point.
    Dr. Hamburg. No, I'm sorry I wasn't clear. But the $10 
million we're asking for now is to enhance our ability to 
inspect the facilities that are manufacturing goods that are 
FDA-regulated for export into the United States from China.

                             MENU LABELING

    Senator Blunt. Let me ask a couple of questions about 
probably the issue that we've gotten the most questions about 
of anything you're doing this year, which didn't maybe sound 
all that hard going in, but probably has turned out to be 
pretty complicated. And that's menu labeling. So if I 
understand the rule you've got out, on places where restaurant-
type food is not the predominant part of the business, this 
would be certainly grocery stores that might have a food area, 
one of your options is that they wouldn't be subject to the 
rule. I think that's option two under your proposed rule. 
That's how I understand that, that that is one option you 
believe you have available.
    Dr. Hamburg. Yes. We put forward some draft proposed rule 
format for comments that included some of the different 
strategies that could be undertaken. As you note, it has proved 
very complicated, how you define a restaurant-like 
establishment and a standard menu. And we have gone out to get 
comment on the different approaches that could be used for 
defining the universe of restaurant-like establishments and 
what should be labeled and how. And we are now in the process 
of responding to the comments that we've gotten. We got a lot 
of comments and they covered the waterfront in terms of 
perspectives on these issues, and we will be coming forward 
with a final rule in the near future.
    Senator Blunt. As I said in my opening comment, I would 
certainly be as flexible as you think the law allows you to be 
here, because there's lots of difficulty, it seems to me, in 
implementing this, particularly if it's not the principal thing 
you do, if it truly is arguably incidental to what you do. And 
the food options vary so much from one of the grocery stores 
you own to another grocery store you may own because of what's 
available that day or how the food counters are operated. I 
would encourage that.

                              MENU BOARDS

    The other two questions that I had that I'd like you to 
comment on at least, one is the drive-through menu board; what 
do you think that might entail? And what about places where--I 
read somewhere in some information I had that Domino's Pizza, 
that 90 percent of the customers never, never come into a 
location. So for 90 percent of the customers, they're not going 
to see what's on the menu board anyway. Is there some 
understanding that that's a different environment? Do you want 
them to comply in a different way or do you want them to doubly 
comply, something on the Web site and something else on a wall 
that nobody sees? Or what are you thinking there?
    Dr. Hamburg. As I mentioned, we are finalizing the rule 
that will go forward, so I can't speak to specific details 
because it's still being discussed and worked through. But in 
terms of what was sort of put forward in the legislation was 
the recognition that there were different types of 
establishments, but how consumers access menus would be the 
place for communicating the information.
    So if you have a storefront, but that isn't where consumers 
come in to order their pizza, it wouldn't make sense to require 
a menu board that no one would ever see. But if there's a menu 
that's on the Internet, that would certainly be an appropriate 
place, or a flyer that would be distributed, whatever, and the 
same with drive-through food establishments. Where there is a 
menu board that you look at to make your decisions, that would 
probably be the most appropriate place to have the 
communication as to calorie content of what's on the menu.
    But with respect to all of the specifics, it is still in 
discussion, and we got across the range of different types of 
establishments a lot of suggestions about different ways to 
make information available so that it would be most consumer-
friendly and-or least burdensome to the industries involved.
    Senator Blunt. My last question is, where I read 
``nutritional content'' does that mean calories or does that 
mean a lot more than calories, as you comply with this?
    Dr. Hamburg. As I remember, calories was what was clearly 
indicated for posting with a requirement to indicate that 
additional nutritional information----
    Senator Blunt. Is available?
    Dr. Hamburg [continuing]. Would be made available on 
request from the consumer.
    Senator Blunt. Thank you.
    Thank you, Mr. Chairman.
    Senator Kohl. Senator Brown.
    Senator Brown. Thank you, Mr. Chairman.

                           KV PHARMACEUTICAL

    Thank you, first of all, for your decisive action a year 
ago on the Makena drug, the progesterone made by KV 
Pharmaceutical, when they took what was a compound, priced it 
$10 to $20 per injection, and a woman, a pregnant woman, needed 
about 20 injections, as you know, in the course of the 
treatment, and after getting FDA approval jacked the price up 
to $1,500. Some would say they overreached. Others would say 
they were greedy.
    Your action was important. However, some things have 
happened that I think demand more attention. As you instructed 
compounding pharmacies to keep compounding and not to respond 
to the cease and desist order, it was a real public health 
victory that you caused. So thank you for that.
    Recently, KV Pharmaceutical--and it's pretty incredible 
behavior, a company that astounds me in its behavior and 
interaction with its patients--claimed that it collected 
contaminated samples of the compounded versions of the drug and 
asked the FDA to investigate. I am pretty amazed how they did 
it, what they did, but they did. This investigation and the 
length of it has caused some doctors to be reluctant in 
prescribing the compound, causing, I would be pretty certain, 
some women not to get the medication, which means a higher 
rate, I don't have evidence of that, but I assume--a higher 
rate of low-birth-weight babies or, second, great expense to 
insurance companies and taxpayers.
    So my question is, what are you doing in this? Are you 
aware of this slowdown in prescriptions that we're told about, 
and what are you doing to speed up this investigation so we can 
put this behind us, so that women who are at high-risk of low-
birth-weight babies get access to this drug for $300 or $400 
instead, or this progesterone for $300 or $400, instead of--
well, they dropped the price from $1,500 to $690. That was 
really kind of them, so it's only $20,000 instead of $30,000.
    What are you doing to fix this public health hazard?
    Dr. Hamburg. When we do get a report, wherever it comes 
from, of a potential public health concern regarding an 
activity that we regulate, we take it very seriously and we do 
follow up. So we are in the process of an inspection, an 
investigation of the concerns that were raised. Obviously, we 
need to do this based on more than just reports, especially if 
the reports come from----
    Senator Brown. The manufacturer.
    Dr. Hamburg [continuing]. The manufacturer.
    However, it is an ongoing investigation and I can't really 
report on details of findings or timing. I have not been made 
aware of concerns that during this process that there has been 
a decline in access to the therapeutic intervention overall. 
And I will go back and look at that.
    Senator Brown. We'll compile what information we can.
    Dr. Hamburg. Okay.
    Senator Brown. Some in the medical community have told us 
that the number of prescriptions has slowed as a result of the 
fear that doctors have because this company has made 
accusations that certainly serve its financial interest. Maybe 
they're true. I understand you have that responsibility. But 
you have a responsibility to move as quickly as you can in this 
case because it's clearly a huge public health threat. Okay, 
thank you.

                             IMPORTED DRUGS

    Second group of questions. Tainted heparin from China--and 
I want to follow up on some things that Senator Blunt asked 
about--in 2008 it killed 100 people in this country, including, 
I believe--around the world; I'm not sure--including 3 people 
from Toledo, Ohio. In 2007-2008, melamine was found in pet food 
and in infant formula in China. I've heard recently, in the 
last year, from a number of dog owners who lost their animals 
as a result, their beloved animals, as a result of tainted 
chicken treats from China.
    More recently, the identity and safety of imported fish has 
become a growing concern, a recurring concern also. You know 
the importance of this. You've asked for $10 million in your 
budget, as you pointed out to Senator Blunt and he pointed out, 
16 new full-time employees, 7 food safety inspectors, including 
7 new safety inspectors and 9 drug safety--7 food, 9 drug 
safety.
    This is a huge problem. There is no way, when you look at--
my understanding is it would take the FDA 9 years to perform 
one inspection at the high-priority pharmaceutical facilities 
in China and 13 years to inspect all of the foreign-based 
pharmaceutical manufacturing plants.
    Understand $10 million is important. The inspectors are 
important. But isn't the goal to make the companies that import 
these drugs--I don't care if they're American companies or if 
they're French companies or Chinese companies that are selling 
into the American market. Shouldn't your goal be to make them 
personally responsible?
    I mean, if a chief executive officer (CEO) is not certain 
where all the ingredients come from, and those ingredients 
coming from wherever end up killing a patient in Toledo, 
shouldn't that CEO go to jail? Shouldn't that CEO, that 
company, be fined huge amounts of money?
    We'll never be able to inspect every place in China. What 
do we do about this? Come up with something more creative than 
begging the Congress for $10 million so we can sprinkle a few 
food inspectors and safety and pharmaceutical inspectors in a 
country of 1.3 billion. Come up with something----
    Dr. Hamburg. I want to reassure you that, number one, this 
is a huge priority for us and we have a multifaceted program. 
The $10 million is a small drop in the bucket of what our 
overall needs are. We do believe that we have to have a 
strategy that rally increases standards and accountability in 
the countries of manufacture, that increases the ability for us 
to work with other regulatory authorities to share information, 
because many countries are facing the same challenge. We need 
to really carve up the landscape.
    We need to also target our inspectional resources more 
efficiently so that they can be extended further. And of 
course, we have to continue our border import safety activities 
as well, but do it in a more risk-based way.
    Senator Brown. I'm going to interrupt. I'm sorry, 
Commissioner. Is there any way to do these inspections, short 
of threatening legal action--and I don't care about, I really 
don't care about a CEO going to jail or I don't care about a 
huge fine against the companies. I want these companies to be 
responsible for their ingredients. Is there any way to do that 
short of some legal process?

                            FOREIGN IMPORTER

    Dr. Hamburg. Yes. And in fact, the Congress has helped us 
in that domain. The Food Safety Modernization Act included a 
component for foreign importer verification and really puts a 
requirement on people that are bringing products into this 
country to verify that they were manufactured in compliance 
with our standards.
    Senator Brown. And if the ingredients have shown to be 
contaminated and cost lives, what is the legal resource for a 
consumer or a family or a country?

                              ENFORCEMENT

    Dr. Hamburg. I think on the drugs side there's legislation 
that's currently being considered to give us additional 
authorities to be able to act and enforce. On the food side, we 
have been able to achieve more of the tools and authorities 
that we need. It still is a real problem to take enforcement 
action proactively in another country, and I think it does 
speak to the fact that we need to continue to work, as we are, 
making this a very important area of focus within the FDA, to 
really----
    Senator Brown. I understand that. But for 100 years in this 
country, from the creation of the FDA after Upton Sinclair's 
book, we have worked hard to protect public health and protect 
food safety and pharmaceutical and drug safety. And just 
because the company--you don't have jurisdiction in another 
country doesn't mean that they should have access to our 
markets unless those companies, the importer or the company, 
whoever it is that's bringing it in, that they should have 
ultimate liability for that.
    Mr. Chairman, if I could go one other short set of 
questions. Thank you.
    Dr. Hamburg. I just want to tell you that this is a huge 
priority, and it's one that we talk about every day in terms of 
we as a Nation have to really address this. FDA is at the 
cutting edge of much of this in terms of responding to the 
challenges of globalization. At the present time, we don't have 
the tools and authorities that we fully need to achieve that, 
nor do we have the resources.
    Senator Brown. I respect you. I've watched your career. I'm 
not convinced yet that you are aggressive enough.
    On the question of drug shortages, thank you for your work 
on that. Thank you for the comments from the chairman.

                              REPACKAGING

    On the issues of repackaging, we sent you a letter about 
repackaging within a specific hospital. They get 15 vials of 
drug X, they break it into 5 packages of 3 each to treat a 
patient, that they're able to repackage and use those, helping 
to perhaps preclude a drug shortage. I sent you a letter 
suggesting we do that. We will follow up with some legislative 
language.
    The letter that you sent back to us yesterday was to us 
inconclusive. I mean, Erin in my office, it wasn't clear to her 
in reading it that that was a very specific answer. I'd just 
like to ask you to work with us on the whole repackaging issue, 
because that can preclude some of these drug shortages.
    Dr. Hamburg. I'd be happy to work with you. I think that 
actually some of the restrictions have to do with other 
components of HHS activity, and we need to work----
    Senator Brown. We'll work with you.
    Thank you.
    Senator Kohl. Thank you, Senator Brown.
    Senator Moran.
    Senator Moran. Mr. Chairman, thank you. Thank you to you 
and to the ranking member.

                         ANTIBIOTICS--LIVESTOCK

    Commissioner, I'm pleased by your presence here today. 
Recently the FDA-issued guidance concerning antibiotic use by 
farmers and ranchers in regard to their livestock. Was that 
guidance based upon peer-reviewed science? The second question 
is: Would you provide this subcommittee with the science on 
which that guidance was based?
    Dr. Hamburg. Certainly. We did review an enormous amount of 
literature over quite a long period of looking at these 
questions. We also worked very closely with all of the critical 
stakeholders as we move toward putting forward that guidance, 
which is to restrict the use of antibiotics for growth 
promotion and feed enhancement purposes. We actually got a lot 
of support in both the analytic work for that and in the 
determination to go forward from our colleagues in animal and 
veterinary health, and the pharmaceutical manufacturers 
involved also, I think, believe that the world has changed 
considerably and we now know a great deal about the impact of 
injudicious use of antibiotics and the development of 
antibiotic resistance, that we as a Nation and as a global 
community are facing a very, very serious public health 
challenge with respect to antibiotic resistance and that this 
can make a real difference in order to really reduce this 
public health threat to both humans and animals with respect to 
ensuring that we have antibiotics that work.
    Senator Moran. I think you were suggesting that there is 
broad consensus to back up, in the industry, both the users and 
the scientific community, to support the guidance that you have 
issued.
    Dr. Hamburg. Nothing we do ever has consensus, but we did 
work hard to listen to the concerns of all of the stakeholders 
and address them.
    Senator Moran. Is it related to the use? When you talk 
about use for growth, I assume that's as compared to treating 
disease and infection?
    Dr. Hamburg. Correct.
    Senator Moran. Did the guidance have any implications on 
that use of antibiotics?
    Dr. Hamburg. Not for treating disease. We do believe that 
these antibiotics, just as in human populations, antibiotics 
are used under prescription and guidance of medical 
professionals, that veterinary professionals should be 
overseeing the appropriate use for treatment of disease.
    Senator Moran. Commissioner, would you work with my staff 
to give us----
    Dr. Hamburg. Certainly.
    Senator Moran [continuing]. A summary of the scientific 
basis for that guidance?
    Dr. Hamburg. Certainly.
    [The information follows:]

    Questions regarding the use of antimicrobial drugs in food-
producing animals have been raised and debated for many years. A 
variety of recognized international, governmental, and professional 
organizations have studied the issue. Within the FDA Guidance for 
Industry No. 209, ``The Judicious Use of Medically Important 
Antimicrobial Drugs in Food-Producing Animals,'' we have briefly 
summarized the findings and recommendations from some of the notable 
reports that have addressed this issue over the past 40 years. These 
reports provide context to FDA's current thinking on this issue and 
highlight the longstanding concerns that have been the subject of 
discussion in the scientific community as a whole.
    We acknowledge that a significant body of scientific information 
exists, including some information that may present equivocal findings 
or contrary views. However, below is a list of some of the scientific 
literature that FDA considered in developing this guidance, including 
some key reports and peer-reviewed literature. This list is not 
intended to represent an exhaustive summary of the scientific 
literature but rather to highlight some of the more recent scientific 
research related to the use of antimicrobial drugs in animal 
agriculture and the impact of such use on antimicrobial resistance.
  --1. 1969 Report of the Joint Committee on the Use of Antibiotics in 
        Animal Husbandry and Veterinary Medicine.
  --2. 1970 FDA Task Force Report, ``The Use of Antibiotics in Animal 
        Feed.''
  --3. 1980 National Academy of Sciences Report, ``The Effects on Human 
        Health of Subtherapeutic Use of Antimicrobial Drugs in Animal 
        Feeds.''
  --4. 1984 Seattle-King County Study: ``Surveillance of the Flow of 
        Salmonella and Campylobacter in a Community.''
  --5. 1988 Institute of Medicine (IOM) Report: ``Human Health Risks 
        with the Subtherapeutic Use of Penicillin or Tetracyclines in 
        Animal Feed.''
  --6. 1997 World Health Organization (WHO) Report, ``The Medical 
        Impact of Antimicrobial Use in Food Animals.'' http://
        whqlibdoc.who.int/hq/1997/WHO_EMC_ZOO_97.4.pdf
  --7. 1999 National Research Council (NRC) Report: ``The Use of Drugs 
        in Food Animals--Benefits and Risks.''
  --8. 1999 United States Government Accountability Office (GAO) 
        Report--``Food Safety: The Agricultural Use of Antibiotics and 
        Its Implications for Human Health.'' http://www.gao.gov/
        archive/1999/rc99074.pdf
  --9. 1999 European Commission Report, ``Opinion of the Scientific 
        Steering Committee on Antimicrobial Resistance.'' http://
        ec.europa.eu/food/fs/sc/ssc/out50_en.pdf
  --10. 2000 World Health Organization (WHO) Expert Consultation: ``WHO 
        Global Principles for the Containment of Antimicrobial 
        Resistance in Animals Intended for Food.'' http://
        whqlibdoc.who.int/hq/2000/WHO_CDS_CSR_APH_
        2000.4.pdf
  --11. 2003 Report, ``Joint FAO/OIE/WHO Expert Workshop on Non-Human 
        Antimicrobial Usage and Antimicrobial Resistance: Scientific 
        assessment.'' http://www.who.int/foodsafety/publications/micro/
        en/amr.pdf
  --12. 2003 Institute of Medicine (IOM) Report, ``Microbial Threats to 
        Health: Emergence, Detection and Response.''
  --13. 2004 Report, ``Second Joint FAO/OIE/WHO Expert Workshop on Non-
        Human Antimicrobial Usage and Antimicrobial Resistance: 
        Management options.'' http://www.oie.int/fileadmin/Home/eng/
        Conferences_Events/docs/pdf/WHO-CDS-CPE-ZFK-2004.8.pdf
  --14. 2004 United States Government Accountability Office (GAO) 
        Report--``Antibiotic Resistance: Federal Agencies Need to 
        Better Focus Efforts to Address Risks to Humans from Antibiotic 
        Use in Animals.'' http://www.gao.gov/new.items/d04490.pdf
  --15. 2005 Codex Alimentarius Commission (Codex), ``Code of Practice 
        to Minimize and Contain Antimicrobial Resistance.'' http://
        www.codexalimentarius.net/download/standards/10213/CXP_061e.pdf
  --16. 2006 Antimicrobial Resistance: Implications for the Food 
        System, Comprehensive Reviews in Food Science and Food Safety, 
        Vol. 5, 2006.
  --17. 2009. American Academy of Microbiology. Antibiotic Resistance: 
        An Ecological Perspective on an Old Problem. 1752 N Street, NW, 
        Washington, DC 20036, (http://www.asm.org).
  --18. 2011. Tackling antibiotic resistance from a food safety 
        perspective in Europe. World Health Organization (WHO), 
        Regional Office for Europe Scherfigsvej 8, DK-2100 Copenhagen 
        ;, Denmark. http://www.euro.who.int/data/assets/pdf_file/0005/
        136454/e94889.pdf
  --19. 2008. Longitudinal study of antimicrobial resistance among 
        Escherichia coli isolates from integrated multisite cohorts of 
        humans and swine. Alali WQ, Scott HM, Harvey RB, Norby B, 
        Lawhorn DB, Pillai SD. Appl Environ Microbiol. 74(12):3672-81.
  --20. 2008. Diversity and distribution of commensal fecal Escherichia 
        coli bacteria in beef cattle administered selected 
        subtherapeutic antimicrobials in a feedlot setting. Sharma R, 
        Munns K, Alexander T, Entz T, Mirzaagha P, Yanke LJ, Mulvey M, 
        Topp E, McAllister T. Appl Environ Microbiol. 74(20):6178-86.
  --21. 2008. Effect of subtherapeutic administration of antibiotics on 
        the prevalence of antibiotic-resistant Escherichia coli 
        bacteria in feedlot cattle. Alexander, T.W., L.J. Yanke, E. 
        Topp, M.E. Olson, R.R. Read, D.W. Morck, and T.A. McAllister. 
        Applied and Environmental Microbiology. 74:4405-4416.
  --22. 2009. A metagenomic approach for determining prevalence of 
        tetracycline resistance genes in the fecal flora of 
        conventionally raised feedlot steers and feedlot steers raised 
        without antimicrobials. Harvey, R., J. Funk, T.E. Wittum, and 
        A.E. Hoet. American Journal of Veterinary Research. 70:198-202.
  --23. 2009. Association between tetracycline consumption and 
        tetracycline resistance in Escherichia coli from healthy Danish 
        slaughter pigs. Vieira, A.R., H. Houe, H.C. Wegener, D.M. Lo Fo 
        Wong, and H.D. Emborg. Foodborne Pathogens and Disease. 6:99-
        109.
  --24. 2009. Associations between reported on-farm antimicrobial use 
        practices and observed antimicrobial resistance in generic 
        fecal Escherichia coli isolated from Alberta finishing swine 
        farms. Varga C., A. Rajic, M.E. McFall, R.J. Reid-Smith, A.E. 
        Deckert, S.L. Checkley, and S.A. McEwen. Preventive Veterinary 
        Medicine. 88:185-192.
  --25. 2010. Farm-to-fork characterization of Escherichia coli 
        associated with feedlot cattle with a known history of 
        antimicrobial use. Alexander, T.W., G.D. Inglis, L.J. Yanke, E. 
        Topp, R.R. Read, T. Reuter, and T.A. McAllister. International 
        Journal of Food Microbiology. 137:40-48.
  --26. 2011. Lower prevalence of antibiotic-resistant Enterococci on 
        U.S. conventional poultry farms that transitioned to organic 
        practices. Sapkota AR, Hulet RM, Zhang G, McDermott P, Kinney 
        EL, Schwab KJ, Joseph SW. Environ Health Perspect. 
        119(11):1622-8.
  --27. 2011. Association between antimicrobial resistance in 
        Escherichia coli isolates from food animals and blood stream 
        isolates from humans in Europe: an ecological study. Foodborne 
        Pathogens and Disease. Vieira, A.R., P. Collignon, F.M. 
        Aarestrup, S.A. McEwen, R.S. Hendriksen, T. Hald, and H.C. 
        Wegener. 8:1295-1301.
  --28. 2011. Distribution and characterization of ampicillin- and 
        tetracycline-resistant Escherichia coli from feedlot cattle fed 
        subtherapeutic antimicrobials. Mirzaagha P, Louie M, Sharma R, 
        Yanke LJ, Topp E, McAllister TA. BMC Microbiol. 19;11:78.
  --29. 2012. In-feed antibiotic effects on the swine intestinal 
        microbiome. Looft, T., T.A. Johnson, H.K. Allen, D.O. Bayles, 
        D.P. Alt, R.D. Stedtfeld, W.J. Sul, T.M. Stedtfeld, B. Chai, 
        J.R. Cole, S.A. Hashsham, J.M. Tiedje, and T.B. Stanton. 
        Proceedings of the National Academy of Sciences USA. 109:1691-
        1696.
    In addition, FDA also considered a number of other studies that 
were referenced by the Department of Health and Human Services in 
response to the 2004 United States Government Accountability Office 
(GAO) report entitled, ``Antibiotic Resistance: Federal Agencies Need 
to Better Focus Efforts to Address Risks to Humans from Antibiotic Use 
in Animals'':
  --1. Phillips I, Casewell M, Cox T, et al. Does the use of 
        antibiotics in food animals pose a risk to human health? A 
        critical review of published data. J Antimicrob Chemother, 
        2004;53:28-52.
  --2. Holmberg SD, Wells JG, Cohen ML. Animal-to-man transmission of 
        antimicrobial-resistant Salmonella: investigations of U.S. 
        outbreaks, 1971-1983. Science, 1984; 225:833-5.
  --3. Holmberg SD, Solomon SL, Blake PA. Health and economic impacts 
        of antimicrobial resistance. Rev Infect Dis, 1987; 9:1065-78.
  --4. Lee LA, Puhr ND, Maloney K, et al. Increase in antimicrobial-
        resistant Salmonella infections in the United States, 1989-
        1990. J Infect Dis, 1994; 170:128-34.
  --5. Varma J, M