------------------ ------------------------------- ------- --------------- ------- ------------------ ------- -------------
  **FDA-Calculated                                                                                              
  Incremental                                                                                                   
  Testing Costs**                                                                                               

                                                                                                                

                                                             Very                                               

                                                             Small                   Small                      Large

                                                                                                                

  a                  \% Vitamin Products                     24%                     42%                        69%

  b                  \% Herbal Products                      76%                     58%                        31%

                                                                                                                

  c                  \# Vit Identity Tests                   1.97                    1.97                       1.97

  d                  \# Herb Identity Tests                  2.40                    2.40                       2.40

                                                                                                                

  e                  Cost of a Test                          \$61.67                 \$61.67                    \$61.67

                                                                                                                

  f                  \# Batches                              223                     554                        309

                                                                                                                

  g                  Finished Batches                        34.2%                   58.3%                      75.6%

                     Currently Being Tested                                                                     

                                                                                                                

  *h*                *Batches Requiring*                     *65.9%*                 *41.7%*                    *24.4%*

                     *Testing*                                                                                  

                     *(1-g)*                                                                                    

                                                                                                                

  i                  Manufacturing Fraction                  54%                     63%                        78%

                                                                                                                

  j                  *Cost Per Firm*                         *\$11,230*              *\$19,907*                 *\$7,626*

                     *((a\*c)+(b\*d))\*e\*f\*h\*i*                                                              

                                                                                                                

  k                  Firms In FDA Survey                     110                     114                        14

                                                                                                                

  l                  \% of Industry in FDA Survey            15.20%                  15.20%                     15.20%

                                                                                                                

  m                  *Industry Cost*                         *\$8,128,317*           *\$14,932,087*             *\$702,470*

                     *(j \* k) / l*                                                                             

                                                                                                                

                                                                                                                

                     **Total Industry Cost \-- All                                   **\$23,762,874**   ** **   
                     Firm Sizes**                                                                               

                     ** **                           ** **   ** **           ** **   ** **              ** **   

                                                                                                                

                                                                                                                

  **Tests Listed in                                                                                             
  FDA\'s FOIA                                                                                                   
  Spreadsheet**                                                                                                 

  **but Not Included                                                                                            
  in FDA Cost                                                                                                   
  Calculations**                                                                                                

                                                                                                                

                     In-Process Tests                        2.50                                               

                     Herb Component Tests                    2.50                                               

                     Vit Component Tests                     7.46                                               

                                                                                                                

  Source of data and                                                                                            
  calculations: FOIA                                                                                            
  response                                                                                                      
  ------------------ ------------------------------- ------- --------------- ------- ------------------ ------- -------------

  -------------------------------- -- --------- -- --------- -- ---------- -- -----------
  **Quantity of Batches**                                                     

                                                                              

                                      Very                                    CRN

                                      Small        Small        Large         Large

                                                                              

  Batches Per Firm                    223          554          **309**       **2,112**

                                                                              

  Number of Firms In Industry         724          750          92            92

                                                                              

  Number of Industry Batches          161,403      415,556      28,464        194,552

                                                                              

  Share of Batches (FDA)              26.7%        68.6%        **4.7%**      \-

  Share of Batches (CRN)              20.9%        53.9%        \-            **25.2%**

                                                                              

  Data from the FOIA response was                                             
  used except for the CRN number                                              
  of large-firm batches, which is                                             
  a average of the results for a                                              
  CRN survey and the FDA survey.                                              
  -------------------------------- -- --------- -- --------- -- ---------- -- -----------

  ------------------ --------------------------------- -- ------------- ---------- --------------------
  **FDA-Calculated                                                                 
  Incremental                                                                      
  Large-Firm Testing                                                               
  Costs**                                                                          

  Only Number of                                                                   
  Batches Adjusted                                                                 
  by CRN                                                                           

                                                                                   

                                                                                   Batch Estimate

                                                          FDA                      Adjustment

                                                                                   

  a                  \% Vitamin Products                  69%                      69%

  b                  \% Herbal Products                   31%                      31%

                                                                                   

  c                  \# Vit Identity Tests                1.97                     1.97

  d                  \# Herb Identity Tests               2.40                     2.40

                                                                                   

  e                  Cost of a Test                       \$61.67                  \$61.67

                                                                                   

  f                  **\# Batches**                       **309**                  **2,112**

                                                                                   

  g                  Finished Batches                     75.6%                    75.6%

                     Currently Being Tested                                        

                                                                                   

  *h*                *Finished Batches Not*               *24.4%*                  *24.4%*

                     *Currently Being Tested*                                      

                     *(1-g)*                                                       

                                                                                   

  i                  Manufacturing Fraction               78%                      78%

                                                                                   

  j                  *Cost Per Firm*                      *\$7,626*                *\$52,122*

                     *((a\*c)+(b\*d))\*e\*f\*h\*i*                                 

                                                                                   

  k                  Firms In FDA Survey                  14                       14

                                                                                   

  l                  \% of Industry in FDA Survey         15.20%                   15.20%

                                                                                   

  m                  *Industry Large-Firm Cost*           *\$702,470*              *\$4,801,349*

                     *(j \* k) / l*                                                

                                                                                   

  **Increase in                                                         **583%**   
  Large-Firm Cost                                                                  
  Estimate:**                                                                      

                                                                                   

  Source of data and                                                               
  calculations: FOIA                                                               
  response                                                                         

  The adjusted                                                                     
  number of                                                                        
  large-firm batches                                                               
  is a average of                                                                  
  the results for a                                                                
  CRN survey (3915),                                                               
  a NFA survey                                                                     
  (2750) and the FDA                                                               
  survey (309).                                                                    
  ------------------ --------------------------------- -- ------------- ---------- --------------------

  --------------- --------------------------------------- -------------------- --------------------- ---------------------
  **Percentage of                                                                                    
  Batches Already                                                                                    
  Being Tested**                                                                                     

                                                                                                     

  This box is                                                                                        
  part of a table                                                                                    
  from page D-28                                                                                     
  of RTI\'s                                                                                          
  5/17/00                                                                                            

  \"Survey of                                                                                        
  Manufacturing                                                                                      
  Practices in                                                                                       
  The Dietary                                                                                        
  Supplement                                                                                         
  Industry\"                                                                                         

                                                                                                     

                                                          [very                [small]{.underline}   [large]{.underline}
                                                          small]{.underline}                         

                                                                                                     [ ]{.underline}

  6.14            Does this plant conduct tests on any                                               
                  in-process materials and/or finished                                               
                  products?                                                                          

                  1\. Yes                                 55.81                79.94                 73.32

                  2\. No (Skip to Question 6.21)          31.69                19.30                 15.66

                  Not Applicable                          7.14                 0.00                  6.54

                  No Answer                               5.36                 0.76                  4.49

                                                                                                      

  6.15            \[If 6.14 is Yes\]                                                                  

                  What Percentage of in-process materials                                            
                  and/or finished products are sampled                                               
                  and tested?                                                                        

                  In-process materials: % of batches      48.76                58.20                 91.68

                  (mean response)                                                                     

                  Finished products: % of batches         50.19                72.32                 89.61

                  (mean response)                                                                     

                                                                                                     

                                                                                                     

  **Percentage of                                                                                    
  firms the FDA                                                                                      
  estimates to be                                                                                    
  testing**                                                                                          

  *The FDA counts                                                                                    
  as \"yes\" an                                                                                      
  answer of:                                                                                         
  \"yes\", \"not                                                                                     
  applicable\" or                                                                                    
  \"no answer\".*                                                                                    

  v.s.            55.81 + 7.14 + 5.36 =                   68.31                                      

  small           79.94 + 0.00 + 0.76 =                   80.70                                      

  large           73.32 + 6.54 + 4.49 =                   84.35                                      

  *(CRN counts as                                                                                    
  \"yes\" only an                                                                                    
  answer of                                                                                          
  \"yes\".)*                                                                                         

                                                                                                     

  **FDA Estimate                                                                                     
  of the                                                                                             
  percentage of                                                                                      
  finished                                                                                           
  product                                                                                            
  tested**                                                                                           

  *Multiply the                                                                                      
  percentage who                                                                                     
  test                                                                                               
  (calculated                                                                                        
  above) by the*                                                                                     

  *percentage of                                                                                     
  finished                                                                                           
  product batches                                                                                    
  that they                                                                                          
  reported to                                                                                        
  test.*                                                                                             

  v.s.            68.31% \* 50.19% =                      34.3%                                      

  small           80.70% \* 72.32% =                      58.4%                                      

  large           84.35% \* 89.61% =                      75.6%                                      

                                                                                                     

  **CRN Estimate                                                                                     
  of the                                                                                             
  percentage of                                                                                      
  finished                                                                                           
  product                                                                                            
  tested**                                                                                           

  *Multiply the                                                                                      
  percentage who                                                                                     
  test (in box                                                                                       
  above) by the*                                                                                     

  *percentage of                                                                                     
  finished                                                                                           
  product batches                                                                                    
  that they                                                                                          
  reported to                                                                                        
  test.*                                                                                             

  v.s.            55.81% \* 50.19% =                      28.0%                                      

  small           79.94% \* 72.32% =                      57.8%                                      

  large           73.32% \* 89.61% =                      **65.7%**                                  
  --------------- --------------------------------------- -------------------- --------------------- ---------------------

  ------------------ ------------------------------- -- ------------- --------- ------------------------
  **FDA-Calculated                                                              
  Incremental                                                                   
  Large-Firm Testing                                                            
  Costs**                                                                       

  Only F.B.C.B.T.                                                               
  Adjusted by CRN                                                               

                                                                                

                                                                                F.B.C.B.T.

                                                        FDA                     Adjustment by CRN

                                                                                

  a                  \% Vitamin Products                69%                     69%

  b                  \% Herbal Products                 31%                     31%

                                                                                

  c                  \# Vit Identity Tests              1.97                    1.97

  d                  \# Herb Identity Tests             2.40                    2.40

                                                                                

  e                  Cost of a Test                     \$61.67                 \$61.67

                                                                                

  f                  \# Batches                         309                     309

                                                                                

  g                  **Finished Batches**               **75.6%**               **65.7%**

                     **Currently Being Tested**                                 

                                                                                

  h                  Finished Batches Not               24.4%                   34.3%

                     Currently Being Tested                                     

                     (1-g)                                                      

                                                                                

  i                  Manufacturing Fraction             78%                     78%

                                                                                

  j                  *Cost Per Firm*                    *\$7,626*               *\$10,719*

                     *((a\*c)+(b\*d))\*e\*f\*h\*i*                              

                                                                                

  k                  Firms In FDA Survey                14                      14

                                                                                

  l                  \% of Industry in FDA Survey       15.20%                  15.20%

                                                                                

  m                  *Industry Large-Firm Cost*         *\$702,470*             *\$987,430*

                     *(j \* k) / l*                                             

                                                                                

  **Increase in                                                       **41%**   
  Large-Firm Cost                                                               
  Estimate:**                                                                   

                                                                                

  Source of data and                                                            
  calculations: FOIA                                                            
  response                                                                      
  ------------------ ------------------------------- -- ------------- --------- ------------------------

![](media/image1.wmf){width="4.404861111111111in"
height="4.2131944444444445in"}

  ------------------ ------------------------------- -- ------------- --------- ------------------------
  **FDA-Calculated                                                              
  Incremental                                                                   
  Large-Firm Testing                                                            
  Costs**                                                                       

  Only Depth of                                                                 
  Testing Adjusted                                                              
  by CRN                                                                        

                                                                                

                                                                                Depth of Testing

                                                        FDA                     Adjustment by CRN

                                                                                

  a                  \% Vitamin Products                69%                     69%

  b                  \% Herbal Products                 31%                     31%

                                                                                

  c                  \# Vit Identity Tests              1.97                    1.97

  d                  \# Herb Identity Tests             2.40                    2.40

                                                                                

  e                  Cost of a Test                     \$61.67                 \$61.67

                                                                                

  f                  \# Batches                         309                     309

                                                                                

  g                  Finished Batches                   75.6%                   75.6%

                     Currently Being Tested                                     

                                                                                

                     **Depth of Testing**               **100%**                **71%**

                                                                                

  *h*                *Finished Batches Not*             *24.4%*                 *46.0%*

                     *Currently Being Tested*                                   

                     *(1-(g \* Depth of Testing))*                              

                                                                                

  i                  Manufacturing Fraction             78%                     78%

                                                                                

  j                  *Cost Per Firm*                    *\$7,626*               *\$14,376*

                     *((a\*c)+(b\*d))\*e\*f\*h\*i*                              

                                                                                

  k                  Firms In FDA Survey                14                      14

                                                                                

  l                  \% of Industry in FDA Survey       15.20%                  15.20%

                                                                                

  m                  *Industry Large-Firm Cost*         *\$702,470*             *\$1,324,329*

                     *(j \* k) / l*                                             

                                                                                

  **Increase in                                                       **89%**   
  Large-Firm Cost                                                               
  Estimate:**                                                                   

                                                                                

  Source of data and                                                            
  calculations: FOIA                                                            
  response                                                                      
  ------------------ ------------------------------- -- ------------- --------- ------------------------

![](media/image2.wmf){width="5.553472222222222in"
height="8.393055555555556in"}

  ------------------------- -- --------------------- -- ------------------- -- ---------------
  **Capital Renovation                                                         
  Cost**                                                                       

                                                                               

                               Very                                            

                               Small                    Small                  Large

                                                                               

  Square Footage Per Firm      24,674                   71,354                 596,000

                                                                               

  Average Increase             10%                      10%                    10%
  Necessary                                                                    

                                                                               

  Cost Per Square Foot         \$50                     \$50                   \$50

                                                                               

  CRN Cost Per Firm            \$123,370                \$356,770              \$2,831,000

                                                                               

  Number of Firms In FDA       110                      114                    14
  Survey                                                                       

                                                                               

  \% of Industry in FDA        15.2%                    15.2%                  15.2%
  Survey                                                                       

                                                                               

  CRN Industry Cost            \$89,292,925             \$267,613,477          \$260,785,059

                                                                               

                               **CRN Total Industry     **\$617,691,461**      
                               Cost**                                          

                                                                               

  FDA Reduction Factor         18.4%                    9.8%                   1.0%

                                                                               

  FDA Cost Per Firm            \$22,700                 \$34,963               \$26,895

  *(CRN Cost \* Reduction                                                      
  Factor)*                                                                     

                                                                               

  FDA Industry Cost            \$16,429,898             \$26,226,121           \$2,477,458

  *(CRN Cost \* Reduction                                                      
  Factor)*                                                                     

                                                                               

                               **FDA Total Industry     **\$45,133,477**       
                               Cost**                                          

                                                                               

  Data from the FOIA                                                           
  response was used                                                            

  CRN\'s numbers differ                                                        
  from FDA\'s numbers                                                          
  because CRN did not use                                                      
  the reduction factor.                                                        
  ------------------------- -- --------------------- -- ------------------- -- ---------------

  ------------------------------------- -- --------- -- ---------------- -- ---------
  **Frequency of Recalls**                                                  

                                                                            

                                           Food         Supplements         Drugs

                                                                            

  Class I & II Recalls 1990-1999           1,493        52                  997

                                                                            

  Average Annual Recalls                   149.3        5.2                 99.7

                                                                            

  Annual Sales (Billions)                  \$500        \$18                \$145

                                                                            

  **Recalls per \$ Billion Sales**         **0.3**      **0.3**             **0.7**

                                                                            

  Sources:                                                                  

  Number of recalls from FDA weekly                                         
  enforcement reports                                                       

  Annual food sales from National Food                                      
  Processors Association                                                    

  Annual supplement sales from                                              
  Nutrition Business Journal for 2002.                                      

  Annual drug sales from Association of                                     
  Drug Stores and Drug Store News for                                       
  1999.                                                                     
  ------------------------------------- -- --------- -- ---------------- -- ---------

  --------------------------------------------- -- ----------- -- ------------
  **Class I & Class II Recalls of Dietary                         
  Supplements**                                                   

  1990-1999                                                       

                                                                  

                                                   Class I        Class II

  Reason for Recall                                Recalls        Recalls

                                                                  

  Undeclared Ingredient/Color                      1              5

  Unapproved Ingredient/Color                      \--            1

  Contaminant -- Microorg.                         3              2

  Contaminant -- Digitalis                         13             \--

  Contaminant -- Lead                              \--            11

  Contaminant -- Mercury                           \--            \--

  Contaminant -- Pesticide                         \--            \--

  Contaminant -- Misc.                             1              \--

  Super-Potent                                     2              3

  Sub-Potent                                       \--            1

  L-Tryptophan                                     5              \--

  Mispackaged/Mislabeled                           \--            4

  Processing/GMP Violation                         \--            \--

  Physical Characteristics                         \--            \--

  Regulatory Issue                                 \--            \--

  Defective Packaging                              \--            \--

  Toxins/Poisons                                   \--            \--

  Illness Related                                  \--            \--

  Histamine                                        \--            \--

  Unapproved Drug/Claim                            \--            \--

  Non-Sterile                                      \--            \--

  Other/Misc.                                      \--            \--

                                                                  

  **Total Recalls**                                **25**         **27**

                                                                  

  Source: FDA weekly enforcement reports                          
  --------------------------------------------- -- ----------- -- ------------

![](media/image3.wmf){width="4.184722222222222in" height="8.99375in"}

  ---------------------------------- -- ------------------ -- ----------------- -- -----------------
  **Cost of Illness From Recall                                                    
  Data**                                                                           

                                                                                   

                                        FDA                   CRN                  10% Reporting

                                        Calculation           Calculation          Rate for Death

                                                                                   

  Reported Class I Recalls in 10        60                    22                   22
  years                                                                            

  Reported Class II Recalls in 10       70                    25                   25
  years                                                                            

                                                                                   

  Reported Class I Recalls per year     6.0                   2.2                  2.2

  Reported Class II Recalls per year    7.0                   2.5                  2.5

                                                                                   

  Percent Reported                      1%                    1%                   \*

                                                                                   

  Health Cost Per Class I Recall        \$59,207              \$59,207             \$21,861

  Health Cost Per Class II Recall       \$4,769               \$4,785              \$4,785

                                                                                   

  Class I Health Cost Per Year          \$35,524,129          \$13,025,514         \$4,809,448

  Class II Health Cost Per Year         \$3,338,204           \$1,196,345          \$1,196,345

                                                                                   

  Total Health Cost Per Year            \$38,862,333          \$14,221,859         \$6,005,793

                                                                                   

  Percentage of Cost Averted            100%                  50%                  50%

                                                                                   

  **Annual Benefit**                    **\$38,862,333**      **\$7,110,930**      **\$3,002,897**

                                                                                   

                                                                                   

  \* Death is reported 10%, all                                                    
  other severities are reported 1%                                                 
  of the time.                                                                     
  ---------------------------------- -- ------------------ -- ----------------- -- -----------------

  ------------------------------------ -- ------------------ -- ------------------
  **Cost of a Rare Catastrophic                                 
  Event**                                                       

                                                                

                                                                

                                          FDA                   CRN

                                                                

  Cost Per Event                          \$1,983,901,074       \$1,983,901,074

                                                                

  Frequency (Likely to Occur              30                    70

  Approximately Once Every \_\_ Years)                          

                                                                

  Annual Probability of Occurrence        3.33%                 1.43%

                                                                

  **Annual Cost**                         **\$66,130,036**      **\$28,341,444**

                                                                

  Source: FOIA response EMS                                     
  Spreadsheet                                                   
  ------------------------------------ -- ------------------ -- ------------------

![](media/image4.wmf){width="5.6305555555555555in"
height="8.991666666666667in"}