Fumie Yokota

FDA Desk Officer

Office of Information and Regulatory Affairs

Office of Management and Budget

New Executive Office Building

725 17th St., N.W.

Room 10235

Washington, D.C. 20503

> **Re:** **Establishment and Maintenance of Records**

**Docket No. 02N-0277; RIN 0910-AC39**

Dear Ms. Yokota:

At Kraft Foods the safety of our products is of paramount importance,
since our well- known brands are found in 99.6% of US households and
sold in 150 countries around the world. Kraft is a \$30 billion global
company, the largest food manufacturer in North America, and the second
largest worldwide. Our interest in this proceeding is commensurate with
the scope of our operations. As Kraft celebrates its centennial year, we
are especially aware that the trust we have built over the last 100
years is priceless and critical to our continued success. We share the
government's goal of protecting the safety of the US food supply and
have devoted significant effort to improving the integrity of our supply
chain.

Kraft commends the dedicated FDA personnel who are diligently attempting
to implement the Bioterrorism Act in record time. We understand the
pressure under which the agency's officials have been operating and the
long hours they have invested. We appreciate their strong commitment to
public service. We, too, have been working long hours to evaluate in
detail the impact the new regulations could have on our operations.

Kraft is concerned that the proposed regulations will impose far more
significant costs than the Food and Drug Administration (FDA) has
imagined, without providing better protection for consumers. As a
practical matter, there is little time available for records examination
when the health of the public is at serious risk, yet industry can be
counted upon to take appropriate action promptly and decisively. For
example, when Tylenol was deliberately poisoned with cyanide in 1982,
Johnson & Johnson very quickly took all the product off store shelves
and used the media to warn consumers.

As the Tylenol case illustrates, removing a product from store shelves
and using mass media to warn the country prevents injuries. Examining
records occurs as part of the in-depth investigations which take place
after consumers have been warned about the potential harm associated
with a product and have stopped using it. Tracing the movement of
ingredients and products becomes relevant as investigators seek the
"root" cause of the situation and gather the evidence needed to place
blame, punish offenders, and prevent reoccurrence, but is of limited
value in directly protecting consumers during a national emergency.
Thus, we suggest that the proposed rules be evaluated with an
appreciation of the practical limitations on the usefulness of very
detailed tracking records as a tool for public health protection.

The Paperwork Reduction Act was adopted to prevent burdensome and
unnecessary information gathering requirements that have little
practical utility, like several of the detailed record keeping
requirements FDA has proposed. Consistent with the responsibilities
imposed by the Paperwork Reduction Act, Kraft urges the Office of
Management and Budget (OMB) to file comments directing FDA to reexamine
the Analysis of Economic Impact and to adopt final regulations that
reasonably align the potential benefit to the country with the overall
social cost.

**[Is the information necessary and will it have practical
utility?]{.underline}**

**The systems currently in place to protect the public reflect years of
practical experience.**

FDA quite correctly acknowledges that industry has "powerful incentives
to ensure that the ingredients they purchase are not contaminated and
that their production processes are protected from unintentional and
intentional contamination." 68 Fed. Reg. at 25200. Over the years,
industry has developed the systems needed to protect the integrity of
the supply chain and to recall products that should not be consumed.
These systems include records that identify the sources of ingredients
used in production and the locations to which finished products are
shipped. The records do not always identify particular "lot numbers;"
however, lot numbers are not needed to protect the public. Nevertheless,
FDA has proposed to require tracking of lot numbers all the way to the
retail store shelf.

Based on our long experience, we can confidently advise that complex
recall instructions tied to a list of lot numbers do not work as a
practical matter. Any attempt to respond to a situation involving a
threat of serious adverse health consequences or death based upon a list
of lot numbers is highly likely to fail. Emergency situations of this
kind impose tremendous time constraints that simply are incompatible
with time-intensive lot number tracking. Moreover, there are practical
limitations on the complexity and specificity of the recall instructions
that can be digested throughout the chain of distribution and by
consumers. Retail store personnel do not have time to sort through and
monitor the lots on the shelves to make sure only lots not covered by a
recall notice are displayed. We know from experience that, during an
emergency, products usually are returned regardless of the lot number
limitations in the recall communication.

Implicit in the agency's justification of the proposed lot by lot
tracking requirement is the unstated premise that records examination by
FDA officials could replace a general public warning in an emergency
situation. We question this premise, not only because the practical
limitations on investigation time and recall communications limit the
usefulness of detailed tracking records under such circumstances, but
because in Class I recall situations public warnings typically are
required to protect consumers who may have products in their homes. The
standard for records examination under the Bioterrorism Act is
essentially synonymous with the Class I recall standard.

**The Bioterrorism Act requires identification of sources and
recipients, but not lot by lot tracking all the way to the retail store
shelf.**

The Bioterrorism Act gives FDA authority to adopt regulations requiring
industry to identify the "immediately previous sources" and "
immediately subsequent recipients" of a food. The Act does not require
lot by lot tracking throughout the entire chain of food distribution.
FDA appropriately recognized the practical impossibility of tracking by
lot number commodity ingredients stored in bulk, concluding that the
statutory requirements are satisfied if the suppliers of the bulk
ingredients (*i.e.*, "*[the]{.underline}* *[food]{.underline}* ") can be
identified. Similarly, FDA should recognize the virtual impossibility,
given current technology, of tracking foods by lot number all the way to
the retail store shelf.

Exact lot by lot tracking of finished foods to the retail level is no
more necessary than is lot by lot tracking of commodity ingredients
stored in bulk. Although it is industry practice to track food by lot
number as it moves through warehouses in the distribution chain, lot
numbers typically are not tracked once a food is removed from a
warehouse for retail store delivery. At a retail store, products often
are placed on shelves by a representative of the supplier, who delivers
the products directly to the shelf (so-called "direct store delivery" or
"DSD"). Today, lot numbers are not recorded as product is placed on the
shelf, whether by the supplier or by a store stocking clerk. This is not
a concern though, because current systems routinely identify what lots
were in the warehouse. Therefore, it is possible to identify the
specific stores that received one of several lots of the particular
food. Thus, the recipients of *[the]{.underline} [food]{.underline}* are
identified as required by the Bioterrorism Act.

> **Diverting substantial industry resources to redesigning the systems
> currently used for commercial transactions would not foster
> accomplishment of the agency's mission.**

In addition to questioning the requirement to track by lot number to
retail stores, Kraft questions the proposed requirement to add to every
commercial transaction record the name of the "responsible individual."
The term "responsible individual" is vague and undefined. Any number of
people might be regarded as the "responsible individual" for a
transaction\--the person who took the order or loaded the truck, the
plant manager, the production shift supervisor, the plant business unit
manager, the company president, or the quality manager who released the
product for sale. If FDA wanted to interview the "responsible person"
identified in a record some time after the original transaction, there
is a good chance he or she would not still be in the same job, because
people change positions frequently. Even assuming he or she still were
employed in the same position, there is a high probability that the
identified person would not be the person at the supplier, manufacturer,
or warehouse best qualified to assist FDA during an emergency.

Kraft respectfully suggests that FDA rely instead on the emergency
contact information the agency will be collecting as part of the
facility registration process. This emergency contact information should
enable FDA to reach key decision makers quickly, so proper action can be
taken immediately by people who are familiar with the company's
products, systems, and distribution practices. Requiring the addition of
another set of "responsible individual" names to company transaction
records is neither necessary nor useful.

Kraft also questions the proposal to change the existing product
descriptions in commercial transaction records. Commercial documents in
use today often incorporate code numbers and abbreviations that identify
food products very specifically. Provided these codes and abbreviations
can be deciphered readily for FDA in the event of an agency request for
records, the product description should be considered sufficient as is.
Redesigning existing records and systems to track the proposed "adequate
description," including the brand name, specific variety, and how the
food is packaged, would impose significant, unnecessary costs. In
particular, requiring changes in transaction records to include brand
names would impose an unfair burden on companies that produce and
distribute branded products. Provided all parties to a transaction can
identify the product in the record upon request, the resources needed to
change product descriptions would be better applied to other security
improvement measures.

In summary, the Bioterrorism Act does not require industry to change
commercial practices to track lot numbers and names of responsible
individuals or to record product descriptions in detail sufficient to
inform someone who is not a party to the transaction. Nor are these
proposed information collection requirements necessary for the
accomplishment of the agency's mission, which as a practical matter
would be accomplished in the event of terrorism or other public health
emergency through the same Class I recall process used today. Diverting
substantial industry resources to redesigning the systems used for
commercial transactions, when those resources could be focused on far
more meaningful security measures, would not be sound from a policy
perspective, particularly when so little evidence exists that the
capacity to protect the public would be improved by the new
requirements.

Is the agency\'s estimate of the burden of collecting the information
accurate?

The agency's Analysis of Economic Impact is premised on a number of
inaccurate assumptions about both costs and benefits, which lead FDA to
underestimate significantly the overall cost of compliance with the
proposed rule. Kraft fully supports the record-keeping requirements
contemplated in the Bioterrorism Act. Our disagreement with the current
proposal is not with the fundamental premise that tracking records are
necessary. Kraft is constantly upgrading information systems as new
technology becomes practical and cost effective. However, we question
the unnecessary and expensive information requirements added to those
Congress already adopted in the Bioterrorism Act that have no
discernible consumer safety benefit, in particular, lot by lot tracking
to the retail store level.

> **The FDA cost analysis substantially underestimates the actual cost
> of compliance.**

In estimating the cost of complying with the proposed rules, FDA
incorrectly assumes that industry would need only to modify a few forms,
implement a negligible increase in monitoring activity, and spend a
little time planning for faster record retrieval. The agency also
mistakenly assumes that the only labor costs incurred would be incurred
at a \$25.10 wage rate for an administrative worker, rather than at the
higher rates paid to information systems experts, factory and warehouse
workers, and sales personnel.[^1] Therefore, the FDA cost estimate
understates the actual cost of compliance by several orders of
magnitude. We acknowledge that FDA repeatedly asks for comments on the
various assumptions underlying the cost estimate, so we are providing
comments on the most significant costs in the following discussion.

> **The cost of tracking product by lot number to the retail level, like
> the cost of tracking bulk ingredients by lot number, in the agency's
> words, "would translate into large social costs." 68 Fed. Reg. at
> 25220.**

In analyzing the impact of requiring lot by lot tracking for bulk
ingredients, FDA accurately recognized that option 13 would involve not
only the cost increase due to more expensive, identity-preserved
ingredients, but also that "the disruption to production practices could
be substantial." 68 Fed. Reg. at 25222. The subsequent comparison with
other options lead FDA to conclude that imposing such a requirement
would not be sound policy, a decision Kraft fully supports based on
experience with our operations.

Similarly, a requirement to track lot by lot to the retail store level
would involve substantial disruption to current distribution practices.
To illustrate the changes that would be required, consider the
warehouses that supply retail stores with our Nabisco division products.
One warehouse stocks about 250 different products or "stock keeping
units" (SKUs). A typical customer's order consists of 75 to 125
different SKUs. Warehouse workers wearing headsets pull cases of product
off pallets to fill the customer's order according to instructions given
by an automated voice-directed system. The pick rate for this type of
operation usually is approximately 700 to 800 cases per hour. Once
picked, the cases are placed onto a conveyor belt, which carries them to
the truck loading area. Sometimes the products are loaded into carts for
delivery to a particular store, but usually the products are "loose
loaded" onto the truck floor, based on case weight and configuration.
Ordinarily, a truck delivers to between 12 and 16 stores each day.

To track lot numbers, Kraft would have to keep records as the cases of
product are delivered to the store. We do not know with certainty what
lot will be delivered to the store until the delivery actually is made.
It might be possible to replace the hand held electronic order tracking
equipment used by our representatives at the stores for about \$10
million, so that lot numbers could be entered at an additional annual
cost of at least \$40 million a year (for our Nabisco and Kraft Pizza
Company DSD businesses). Of course, scanning would be preferable to
manual data entry both in terms of accuracy and speed. Based on our
investigation to date, however, the cost estimate for installing radio
frequency identification (RFID) equipment is \$80 million. Additionally,
the annual cost of applying RFID tags to each case currently is
estimated to be \$20 million, although the cost is expected to decrease
as the technology becomes more widely used. The ongoing cost of the
labor to scan the RFID tags is estimated to be \$10 million a year. Our
customers that deliver to their retail stores from their own warehouses
undoubtedly would face similarly challenging financial hurdles. In
summary, the cost of tracking lot numbers to the retail store is
prohibitive at this time.

In the Analysis of Economic Impact for the proposed option 10, FDA
overlooks the costs of changing the way people work, which would be
associated invariably with a requirement to capture additional data,
just as production systems would need to be changed to maintain lot
identity of bulk commodity ingredients. Instead of addressing the time
it would take to record lot numbers, FDA suggests that "\[a\] limited
amount of new information could be accommodated by a simple redesign of
existing records...." 68 Fed. Reg. at 25204. The agency proceeds to
estimate the cost of redesigning a form based on the estimated cost of
making changes to label designs. For the purpose of evaluating
regulatory options, the agency "assumes a limited information, one-color
redesign of a paper document." 68 Fed. Reg. at 25207. Moreover, FDA
assumes that the cost of additional monitoring and record keeping could
be 30 minutes per week. 68 Fed. Reg. at 25208. Based upon these
assumptions, the average mean cost of compliance per firm in the first
year was estimated to be \$383. 68 Fed. Reg. at 25218. For our two DSD
businesses, a conservative time estimate for recording lot numbers at
retail stores is 1,000,000 minutes a week, at a cost of \$30-40 million
per year. Thus, the cost estimates associated with our DSD operations
show how significant the cost of changing current distribution work
practices would be and how substantially understated the \$383 per firm
estimate is.

The detailed tracking information FDA seeks will become more widely
available over the next 5-10 years as scanning technology improves and
becomes feasible for adoption by the food industry. The technology in
use today by companies like UPS and Federal Express is not at present
cost effective for the food industry, given the total retail price of
less than \$5 per package for most foods. We expect that our customers
will be advising FDA that tracking from the chain store warehouse to the
individual store presents many of the same issues we have identified in
the direct store delivery context. We respectfully suggest that FDA and
OMB weigh carefully the actual cost of compliance, and whether any
significant benefit will be realized in emergency situations, before
requiring such significant changes to current industry systems and
imposing the very substantial associated social costs.

> **Changes can be made to meet the four-hour time limit for producing
> manufacturing records, but shortening the time to answer FDA questions
> linking ingredient and finished product lot numbers would involve
> replacing the paper records currently in use.**

Although FDA states that "\[r\]ecords must include information
reasonably available to identify the specific source of each ingredient
that was used to make every lot of finished product," the agency also
states that "firms will choose to comply with any new requirements by
modifying shipping or purchase records, such as bills of lading,
invoices, or purchase orders." 68 Fed. Reg. at 25201. Neither purchasing
nor shipping records relate ingredients to finished products, yet no
implications for manufacturing records are considered in the FDA
Economic Impact Analysis for option 10, the one FDA proposes. Thus, the
agency's cost estimate is accurate only if FDA does not expect industry
to make changes to existing systems in order to link ingredient and
production records.

Due to limited storage space at production facilities, after the first
year many of our production records are stored off-site and currently
are subject to contracts which allow the vendors until the next business
day to make the records available. Today, the storage facilities are
sometimes located hours from the plant. Thus, changes would be needed to
comply with the proposed four-hour record production time. Although the
cost of renegotiating the contracts alone would run into thousands of
dollars, more than the \$151 per firm cost FDA estimated, 68 Fed. Reg.
at 25211, Kraft does not object to the shorter record production time or
the cost involved, given the public health protection goal.

In an emergency situation, Kraft probably could satisfy the proposed
four-hour record production time, but within that time we would only be
able to make boxes of records available for FDA to examine with our
employees. Our records connecting ingredients with production lots
generally are kept on paper at this time, so shortening the time for
production of records will not concurrently shorten the time it takes to
analyze the records and answer specific questions about matching
ingredient and finished product lot numbers.

Even with the document production time shortened, whether examined by
our personnel or agency officials, so long as the links between
ingredients and finished products are made on paper records, answering
questions during an investigation still probably will take the one to
three days FDA has experienced in the past. We spot-checked the number
of different lot numbers of ingredients used recently in a vegetable
pizza and found 34 different lots were used. We estimated that at least
six of those ingredients could go into as many as 40 or more finished
production lots of pizza. As this one example illustrates, the number of
records that must be examined to answer tracking questions increases
rapidly. So long as the records are kept on paper, instantaneous answers
to tracking questions will not be available.

> **The major systems changes associated with faster ingredient to
> finished product lot tracking would cost industry hundreds of millions
> of dollars, if mandated now, before the technology becomes cost
> effective.**

Shortening the time within which lots of ingredients could be linked to
lots of finished products would involve major systems changes, require
an investment of hundreds of millions of dollars for Kraft alone, and
take years of work. Scanning technologies would need to be adapted and
incorporated into existing production processes, a substantial capital
investment. The supporting data collection systems would need to be
developed. People would need to be trained to work differently. Many
facilities make dozens of recipes a day, each containing dozens of
ingredient lot numbers. Even if tracking of bulk commodity ingredients
were not required, replacing the current paper records with records that
could be queried more quickly would be a huge undertaking.

Kraft agrees with FDA that tracking often is useful during a company's
investigation of the "root" cause of a situation, but from our
perspective the company is in the best position to decide what records
are needed based upon a thorough knowledge of applicable business
practices and cost structures. To us, it seems that a company can judge
better than the government how to balance the cost of keeping specific
records with the cost of conducting a broader recall, in the event that
products must be recovered.

> **The evidence does not support the conclusion that the proposed rules
> will provide the anticipated benefits.**

The most troubling assumption FDA makes about the benefits of the
proposed rules is that effective action to protect the public cannot be
taken without new records. FDA asserts that "\[t\]he suspect food must
be traced backward and forward through the distribution chain, both to
protect consumers and to find the source and cause of the event." 68
Fed. Reg. at 25200. Yet the responsible manufacturer or distributor is
identified on the label of every food package. Once the responsible
company learns of the risk associated with the product, existing Class I
recall procedures can be used immediately to protect the public. It is
unclear to us why FDA assumes that the current state of the world has
zero costs and benefits. *Id.* History shows that Americans have been
very well protected over the years by both FDA and industry.

Another questionable benefit assumption is that the new rules will
provide significantly improved public protection. FDA cites five
outbreaks of food borne illness and details the costs of the illnesses
as if the proposed record keeping requirements would have prevented
those costs.[^2] FDA does not give an example of records missing in any
of the five situations that would be required under the new rules. Nor
does the agency explain the role the records would play in reducing the
amount or severity of illness in any of the situations.

We note that the proposed record keeping requirements either would not
apply to or would not prevent the types of out-breaks FDA cites in
support of the Economic Impact Analysis. The tofu salad was served at an
outdoor music festival; the *Salmonella typhimirium* situations were
associated with salad bars; the ice cream was delivered directly to
consumers; the muffins and doughnuts were intentionally contaminated in
a workplace; and, the raspberries probably did not have labels or lot
numbers. The new record keeping requirements would not apply in the two
restaurant situations or in the case of the ice cream delivered directly
to consumers. Records sufficient to identify the tank car as the source
of the ice cream contamination apparently were available. The new rules
certainly would not have prevented the intentional contamination of the
muffins and doughnuts in the workplace or reduced the illness
experienced by the culprit's coworkers.

How the record keeping requirements would have helped in the case of the
unlabeled raspberries is at best unknown, as the proposed standard for
keeping lot number information at any point in the chain of distribution
is "if reasonably available." Moreover, the proposed requirement to keep
lot number information only if the information is "reasonably available"
would burden disproportionately those who distribute the packaged foods
that already are labeled with the identity of the responsible firm,
because those are the foods that typically bear lot numbers.
Historically, the situations that have been most difficult for FDA to
address have involved unlabeled produce or foods served in the
restaurants, which would not be covered by the proposed lot number
tracking requirements. Therefore, we suggest OMB question whether the
asserted benefits can be expected reasonably to result from the rules as
proposed.

**[What could be done to minimize the burden of the collection of
information on those who are to respond?]{.underline}**

The most effective way to limit the burden of collecting information
would be to focus data gathering requirements on the identity of sources
and recipients, as required by the Bioterrorism Act, without regard to
lot number detail. Another constructive step would be to accept records
that contain sufficient substantive information for tracking, even if
the use of abbreviations or code numbers requires explanation, instead
of requiring descriptions that would be clear to someone not a party to
the transaction. Avoiding requirements that duplicate information the
agency is gathering under other regulations, like the registration
regulation, also would help minimize the burden associated with
collecting information to satisfy FDA regulations.

As a practical matter, the systems in place when the final rules are
adopted still will be in place six months later, regardless of company
size. Six months is an unrealistically short period within which to make
systems changes. Indeed, it is expected to take several years before the
import monitoring systems on which Customs and FDA are working are fully
implemented. Our experience is that straightforward systems redesign
takes at least two years and more complex systems take longer. Giving
those companies that must comply with new record keeping requirements
more time would lower the burden of collecting the information.
Depending upon the types of new requirements imposed, a number of years
could be needed for implementation.

**[Conclusion]{.underline}**

Americans depend upon both industry and government to assure the safety
of the food supply. Deploying government and industry resources as
effectively and efficiently as possible is critical. Focusing the new
information collection requirements as we have suggested will enable
industry and FDA to comply with Congressional directives without wasting
or misdirecting resources that could be better used for more urgently
needed security measures.

Kraft always stands ready to work with the government to protect the
safety of the food supply. Please do not hesitate to contact me at (847)
646-6125, if we can provide additional information that might be
helpful.

Sincerely,

![](media/image1.png){width="1.7513888888888889in"
height="0.5784722222222223in"}

Jean E. Spence

Senior Vice President

Worldwide Quality, Scientific Affairs and Compliance

cc: FDA Docket 02N-0277

[^1]: . Although FDA states that this wage rate is doubled to include
    overhead costs, we have not been able to determine how this
    assumption is reflected in the cost calculations. 68 Fed. Reg. at
    25204, 25210.

[^2]: . In addition to the five outbreaks for which costs were
    calculated, FDA mentions a *Cyclospora* outbreak in which the agency
    found "the majority" of five trace-back failures were due to lack of
    available records, but the agency does not describe what records
    were missing or how having the records would have reduced the amount
    or severity of illness. Moreover, 33 out of 38 trace-back efforts
    reportedly were successful. 68 Fed. Reg. at 25227.