[fdadockets@oc.fda.gov](mailto:http://www.fdadockets@oc.fda.gov)

Dockets Management Branch (HFA-305)

Food and Drug Administration

5630 Fishers Lane, Room 1061

Rockville, MD 20852

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

**Docket No. 02N-0277**

Dear Sir or Madam:

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 this country's food and
have been striving to improve the integrity of our supply chain.

Kraft compliments the dedicated Food and Drug Administration (FDA)
personnel who are working so hard to implement the Bioterrorism Act. We
recognize 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
diligently to implement the Act by analyzing carefully the impact the
proposed new regulations would have on industry operations and
attempting to provide thoughtful comments in response to the agency's
proposals.

Initially, Kraft is compelled to express concern that the proposed
record keeping regulations would impose far more significant costs than
the 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 cases illustrates, removing a product from store shelves
and using mass media to warn the country prevents injuries. Records
examination typically occurs as part of the in-depth investigation that
takes 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 FDA reevaluate the proposed rules with
greater recognition of the practical limitations on the usefulness of
very detailed tracking records as a tool for public health protection.

**I. 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 every step of 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 would be highly likely to fail. Such emergency situations
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.

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

The Bioterrorism Act gives FDA authority to adopt regulations requiring
industry to identify the "immediate previous sources" and " immediate
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 each step of
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.

FDA also has proposed to require transporters to track the movement of
foods by lot number, a record keeping practice that is not common in the
food industry at this time, would require substantial investment to
accomplish, and would be unlikely to provide incremental benefit during
an emergency situation. The paperwork that accompanies truck shipments
today ordinarily consists of a bill of lading, a driver's log, and a
shipping manifest, documents which do not contain the detailed product
descriptions proposed by FDA, product lot numbers in particular.

[]{.mark}

Moreover, the vast majority of trucking carriers in this country are
relatively small businesses, which simply are not set up to create and
store the types of records FDA has proposed to require. As of 2000, the
US Department of Transportation (DOT) reported 540,000 registered motor
carriers. According to the 2002 version of American Trucking Trends,
published by the American Trucking Association\'s Economics and
Statistics group, 74% of carriers have 6 or fewer units, 8% of carriers
operate 7-20 units, and only 18% of carriers operate more than 20 units.
A number of our carriers have advised us current systems would not
comply with the proposed record keeping requirements and that compliance
would be very difficult and costly.

[]{.mark}

Kraft does have a fleet of company owned trucks, which transport only a
fraction of the total shipments we receive and make, but even with the
comparatively up to date tracking systems we use to monitor the flow of
materials through our facilities, our records as a "transporter" would
not comply with the agency's proposals. The detailed tracking
information is available at the shipping and receiving locations, but is
not available on the truck or stored by the parts of our organization
responsible for transportation. The product information and carrier
information, however, are both available at the various production
facilities and warehouses.

[]{.mark}

As long as non-transporters\--processors and warehouses\--can trace
product and the carriers on which product is transported, at least to
the warehouse supplying retail stores, FDA will be able to access
sufficient information for the investigations that may be required.
Kraft urges FDA not to strain the efficiency of the food distribution
system by imposing upon transporters the significant costs that would be
associated with the duplicative and exceptionally detailed proposed
record keeping requirements.

> **III. 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 truck driver, 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, transporter, 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. Although transporters are not
required to register, the company hiring the transporter would have
every incentive during an emergency to help FDA contact appropriate
personnel, should the cooperation of the transporter become necessary.

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.

**IV. Several of the assumptions upon which the Analysis of Economic
Impact is based need revision.**

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 and to overestimate substantially the potentially
associated benefits. 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 adopted in the Bioterrorism Act that have no discernible
off-setting benefits, lot by lot tracking by transporters and to the
retail store level in particular.

> **A. 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.

> **1. 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 head sets 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
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.

> **2. 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, many of our
production records are stored off-site and currently are subject to
contracts which allow the vendors to deliver records on the next
business day. For example, records for a pizza plant located in northern
Wisconsin are stored in Milwaukee, at a location from which it would be
faster to provide records at one of the agency's offices or at one of
our headquarters offices, than to ship the records back to the
production facility. Thus, we recommend that FDA consider the
possibility of allowing records stored off-site to be produced at
locations more convenient than the manufacturing facility, such as FDA
offices, headquarters locations, or other locations mutually agreed upon
to expedite record examination. Regardless of document production
location, changes to current practices 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.

> **3. 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.

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

A basic 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 industry record management 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 question whether the asserted
benefits can be expected reasonably to result from the rules as
proposed.

> **V. By focusing information gathering requirements on the data
> Congress directed FDA to collect, and establishing reasonable
> effective dates for requirements that necessitate significant
> revisions to current industry practice, FDA could significantly reduce
> the burden on industry without compromising public health
> protection.**

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 redesigns
take 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

[^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.