AGRICULTURE, RURAL DEVELOPMENT, FOOD 

AND DRUG ADMINISTRATION, AND RELATED 

AGENCIES APPROPRIATIONS FOR 2012 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND 

DRUG ADMINISTRATION, AND RELATED AGENCIES 

JACK KINGSTON, Georgia, Chairman 

TOM LATHAM, Iowa 

JO ANN EMERSON, Missouri 

ROBERT B. ADERHOLT, Alabama 

CYNTHIA M. LUMMIS, Wyoming 

ALAN NUNNELEE, Mississippi 

TOM GRAVES, Georgia 

SAM FARR, California 

ROSA L. DELAURO, Connecticut 

SANFORD D. BISHOP, JR., Georgia 

MARCY KAPTUR, Ohio 

NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full Committee, and Mr. Dicks, as Ranking 

Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. 

MARTIN DELGADO, TOM O’BRIEN, BETSY BINA, and ANDREW COOPER, 

Staff Assistants 

PART 3 

Page 

Food and Drug Administration ............................................ 1 

Department of Agriculture: Office of Inspector 

General Oversight ................................................................ 325 

Printed for the use of the Committee on Appropriations 


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PART 3—AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, 

AND RELATED AGENCIES APPROPRIATIONS FOR 2012 


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AGRICULTURE, RURAL DEVELOPMENT, FOOD 

AND DRUG ADMINISTRATION, AND RELATED 

AGENCIES APPROPRIATIONS FOR 2012 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND 

DRUG ADMINISTRATION, AND RELATED AGENCIES 

JACK KINGSTON, Georgia, Chairman 

TOM LATHAM, Iowa 

JO ANN EMERSON, Missouri 

ROBERT B. ADERHOLT, Alabama 

CYNTHIA M. LUMMIS, Wyoming 

ALAN NUNNELEE, Mississippi 

TOM GRAVES, Georgia 

SAM FARR, California 

ROSA L. DELAURO, Connecticut 

SANFORD D. BISHOP, JR., Georgia 

MARCY KAPTUR, Ohio 

NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full Committee, and Mr. Dicks, as Ranking 

Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. 

MARTIN DELGADO, TOM O’BRIEN, BETSY BINA, and ANDREW COOPER, 

Staff Assistants 

PART 3 

Page 

Food and Drug Administration ............................................ 1 

Department of Agriculture: Office of Inspector 

General Oversight ................................................................ 325 

Printed for the use of the Committee on Appropriations 

U.S. GOVERNMENT PRINTING OFFICE 

66–581 WASHINGTON : 2011 


emcdonald on DSK2BSOYB1PROD with HEARING
COMMITTEE ON APPROPRIATIONS 

HAROLD ROGERS, Kentucky, Chairman 

C. W. BILL YOUNG, Florida 1

JERRY LEWIS, California 1

FRANK R. WOLF, Virginia 

JACK KINGSTON, Georgia 

RODNEY P. FRELINGHUYSEN, New Jersey 

TOM LATHAM, Iowa 

ROBERT B. ADERHOLT, Alabama 

JO ANN EMERSON, Missouri 

KAY GRANGER, Texas 

MICHAEL K. SIMPSON, Idaho 

JOHN ABNEY CULBERSON, Texas 

ANDER CRENSHAW, Florida 

DENNY REHBERG, Montana 

JOHN R. CARTER, Texas 

RODNEY ALEXANDER, Louisiana 

KEN CALVERT, California 

JO BONNER, Alabama 

STEVEN C. LATOURETTE, Ohio 

TOM COLE, Oklahoma 

JEFF FLAKE, Arizona 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

STEVE AUSTRIA, Ohio 

CYNTHIA M. LUMMIS, Wyoming 

TOM GRAVES, Georgia 

KEVIN YODER, Kansas 

STEVE WOMACK, Arkansas 

ALAN NUNNELEE, Mississippi 

————— 

1 Chairman Emeritus 

NORMAN D. DICKS, Washington 

MARCY KAPTUR, Ohio 

PETER J. VISCLOSKY, Indiana 

NITA M. LOWEY, New York 

JOSE ́ E. SERRANO, New York 

ROSA L. DELAURO, Connecticut 

JAMES P. MORAN, Virginia 

JOHN W. OLVER, Massachusetts 

ED PASTOR, Arizona 

DAVID E. PRICE, North Carolina 

MAURICE D. HINCHEY, New York 

LUCILLE ROYBAL-ALLARD, California 

SAM FARR, California 

JESSE L. JACKSON, JR., Illinois 

CHAKA FATTAH, Pennsylvania 

STEVEN R. ROTHMAN, New Jersey 

SANFORD D. BISHOP, JR., Georgia 

BARBARA LEE, California 

ADAM B. SCHIFF, California 

MICHAEL M. HONDA, California 

BETTY MCCOLLUM, Minnesota 

WILLIAM B. INGLEE, Clerk and Staff Director 

(II)


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AGRICULTURE, RURAL DEVELOPMENT, FOOD 

AND DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS FOR 

2012 

FRIDAY, MARCH 11, 2011. 

FOOD AND DRUG ADMINISTRATION 

WITNESSES 

MARGARET HAMBURG, M.D., COMMISSIONER, FOOD AND DRUGS, 

FOOD AND DRUG ADMINISTRATION 

PATRICK MCGAREY, ASSISTANT COMMISSIONER FOR BUDGET, FOOD 

AND DRUG ADMINISTRATION 

Mr. KINGSTON. The subcommittee will come to order. We are 

happy today and pleased to have the FDA Commissioner, Dr. Margaret Hamburg and Patrick McGarey, the Assistant Commissioner 

for Budget for FDA. And you have a whole team behind you. I 

know that. And we are looking forward to your testimony, although 

we have read it, you have submitted it. So you are welcome to just 

summarize it. 

I wanted to make a few notes. Of paramount concern right now, 

of course, are the budget constraints, and I know that you guys 

were exempted from the President’s freeze. But you still have a 16 

percent increase and in some of the areas where you do have cuts, 

they are politically popular programs that will probably be put 

back in there by our friends in the other body, like the Natural 

Products Center, which is a $31⁄2 million cut. We certainly would 

work with you on the House, at least this member would. But I 

don’t know that the Senate is going to go along with that. And I 

am not sure that you have targeted it that way or not, but that 

was a concern of mine. 

I also wanted to comment on a couple of other things that you 

have in your budget. You have pointed out that the FDA approves 

more drugs each year than all the other countries in the world, 

combined, and that you approve them faster than Europe does, and 

I think that is great. We are glad to hear it. This committee has 

heard so many times over the years about slow FDA drug approval. 

On medical device approval, you are still up there and moving 

along, which is good and positive. So we are glad to see that. 

I am interested in the FDA track that allows the stakeholders 

and witnesses to work with you and get quarterly progress reports 

on items of interest. And I think that is something very good. 

You have also saved Americans $140 billion a year in generic 

drugs, which I think is of interest. As you know, I have some real 


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questions on food safety in terms of what you actually could accomplish in terms of the model that was rushed through in December, 

even though it was a lot of hearings—there were some hearings, 

but the last 2 years were marred by the lack of bipartisan inclusion, and I would say that piece of legislation fell in that category 

as much as anything else; for example, the health care bill. So I 

think this Congress is going to really keep a very close eye on that. 

What is your number on that? Yeah, $382 million for that. 

Dr. HAMBURG. Some of it from—— 

Mr. KINGSTON. Two hundred eighteen million in discretionary. 

And keep in mind, the money we are talking about for your entire 

budget in many respects is 100 percent borrowed. For every dollar 

we spend right now in America, 40 cents of it is borrowed. And if 

you look at the money that we spend, interest on the national debt, 

over $200 billion a year, and then put in retirement, health care, 

and national security, that is about all the budget that is paid for, 

which would be about 60 percent. 

And spending is a bipartisan problem. It is something that both 

parties have their fingerprints all over, and we need to come to 

reckon about it. I was glad the President appointed a commission 

on it. We want to work with the President throughout this process. 

So much of the context right now as we look at various programs 

and the way you or any other agency spends its money is going to 

be in that prism of what is the best bang for the buck; what is our 

want; what is our need; what is a duplication? The GAO report was 

pretty significant and it came out and underscored a lot of duplication. So those are some of the things that are on my mind. And I 

want to yield to the ranking member, Mr. Farr. 

Mr. FARR. Thank you very much, Mr. Chairman. And thank you 

very much, Dr. Hamburg, for being here. 

I also want to thank you for meeting with the Leafy Green Marketing folks from my district. They were very impressed with the 

opportunity to talk to you. You have in your testimony one phrase 

that really struck me. 

What you say is the FDA must do its job well, because there is 

simply no other agency to fall back on, no one to backstop us. Our 

role is unique and FDA must fulfill this unique role completely and 

responsibly. And I hope as we go through your budget that we can 

really help you do that role responsibly. There is too much at risk 

by doing it in a mediocre way. 

So I don’t have a lot of comments to make other than we are at 

a new turning point in American food safety history with the enactment of the bill and the implementation of the bill. A lot of agriculture out there has their eyes on you because they don’t know 

whether the people in your Department know anything about agriculture. They know you know a lot about safeguarding drugs, prescription drugs, and other kinds of programs at FDA, but I think 

FDA is more known now on the medical side than on the food safety side. So it is a new era, but it is one that is critically important. 

For example, Mr. Chairman, that I saw it firsthand. There was 

an E. Coli contamination of spinach that came from my district. 

The recall effort was voluntary, so anyone who had anything to do 

with spinach, whether driving in the trucks, planting in fields, on 

shelves, or in refrigerators at home, to get rid of it, no matter 


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where it was grown, because nobody knew where the contamination started. Today Americans don’t consume as much spinach as 

they did before that recall. The contamination episode had a devastating effect. Growers lost hundreds of millions of dollars, and 

they didn’t get covered by any kind of insurance. 

So it is extremely important that we and your agency be the good 

cop. But it also has to be a smart one so that we don’t wipe out 

industries. I appreciate you coming today and I look forward to 

talking further with you. 

Mr. KINGSTON. Thank you, Mr. Farr. We have been joined by 

Chairwoman Emerson. And I am going to recognize her after Dr. 

Hamburg summarizes her testimony, if that is okay with you, Mr. 

Farr. She has got another subcommittee she is chairing. So the 

floor is yours. 

OPENING STATEMENT

Dr. HAMBURG. Well, thank you, Chairman Kingston, Ranking 

Member Farr, and Congresswoman Emerson. I appreciate this opportunity to present the President’s fiscal year 2012 budget for the 

Food and Drug Administration and to discuss our priorities for the 

coming year. 

This hearing does come at a critical moment for our country and 

for our agency. We must be prepared to meet and capture the scientific challenges and global realities of our modern world. And the 

stakes for patients, consumers, our economy, and global economic 

competitiveness have never been higher. 

Our agency is charged with an extremely significant task, to promote and protect the health of the American people. This includes 

ensuring the safety, effectiveness, and wholesomeness of products 

that the American people rely on in fundamental, sometimes lifesaving ways—drugs, vaccines, medical devices, our Nation’s food 

supply and more. But it also includes working proactively to foster 

the scientific innovation that will lead to tomorrow’s new breakthrough products. 

Both roles are essential to delivering progress to the American 

people and both roles impact our economy by encouraging consumer confidence, growing key industries and creating jobs. And 

thanks to the support of the subcommittee, we have been able to 

see tangible evidence of that impact over the past year. 

This year, we approved dozens of new drugs, vaccines for seasonal and pandemic flu and medical devices for hearing and vision 

loss, severe asthma, and to perform 3–D mammography screening. 

We applied cutting-edge genome sequencing to trace food-borne illness outbreaks. We launched a new system that identified 100 food 

safety problems in its first 7 months of operation. We collaborated 

with the National Oceanic and Atmospheric Administration to develop and perform screening tests to assure seafood safety and to 

reopen the Gulf Coast fisheries after the Deepwater Horizon oil 

spill. And that is just a snapshot of what the agency has done in 

the past year. 

As you can see, FDA is charged with an enormous and unique 

set of tasks and, as was just mentioned, if we do not do our job 

and do it completely, there is no other agency or entity out there 


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to backstop us. That is why I am here to ask for your support of 

the fiscal year 2012 budget for the FDA. The proposed budget includes $4.4 billion and identifies four priority initiative areas: Transforming Food Safety and Nutrition; Advancing Medical Countermeasures; Protecting Patients; and fostering FDA Regulatory Science and innovations and regulatory 

science facilities. 

Compared to fiscal year 2010, the fiscal year 2012 budget rep- resents an increase of almost $1.1 billion, $382 million in budget 

authority, and $694 million in user fees. And that amount for user 

fees includes $60 million for three new user fees that FDA is proposing. 

In addition, in an effort to contribute to deficit reduction, we will 

undertake nearly $30 million in contract and administrative savings across the agency. These four initiatives are critical to our 

mission of protecting the public health and they also represent important opportunities for our food and medical product industries 

to grow and strengthen our economy. In other words, they will provide great return on investment for products, for people, and most 

importantly, for the public health. 

And let me explain how. First, Transforming Food Safety and Nutrition Initiative, contains an increase of $326 million to build 

a stronger, more reliable food safety system that will protect American consumers. We will use these resources to aggressively implement the Food Safety Modernization Act that Congress passed in 

December. This landmark legislation provides FDA with the tools 

to establish a prevention-focused food safety system, placing the 

primary responsibility for prevention on the food producers and 

processors and leveraging the valuable work of FDA’s State and 

local partners. FDA will also make sure that American families 

have the information they need to make more healthful food 

choices through menu and vending machine labeling. 

For the Advancing Medical Countermeasures Initiative, FDA proposes $70 million. Medical countermeasures include drugs, vaccines, diagnostic tests and medical equipment that are needed to 

detect and respond to deliberate, biological, chemical, radiological 

or nuclear threats, as well as emerging infectious disease threats. 

All of these threaten the lives and safety of the American people. 

This investment will help accelerate the development of countermeasures that we truly need to meet critical national security and 

public health needs. 

Third, Protecting Patients. This Initiative, for which we are proposing an increase of $123.6 million, will allow FDA to establish a 

pathway for approving life-saving biosimilar products. This could 

offer substantial savings to the Federal Government and private 

health care. This initiative also includes investments in scientific 

tools and partnerships to enhance the safety of increasingly complex drugs, medical devices, and biologics. 

Fourth, the FDA Regulatory Science and Facilities Initiative contains an increase of $48.7 million to strengthen the core regulatory 

scientific capacity that supports all elements of FDA’s mission, and 

will enable us to truly streamline and modernize our regulatory 

work by applying the best possible science, especially as we address 

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nologies. It will also allow FDA to outfit and occupy the Center for 

Biologics and the Center for Drugs Life Sciences Biodefense Laboratory complex, which will play a critical role in shaping our strategies in response to pandemics, emerging infectious diseases, and 

deliberate biological threats. Even in these difficult times, the 

FDA’s 2012 budget is essential to our ability to take meaningful 

science-based action on behalf of the American people. 

With these investments and your support, I am confident that we 

can build on our past successes and better ensure our Nation’s 

health. So thank you for the opportunity to testify, and I am happy 

to answer any questions that you may have. 

[The information follows:] 


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REGULATING PRESCRIPTION DRUGS

Mr. KINGSTON. Thank you very much, Dr. Hamburg. 

I also wanted to reiterate what Mr. Farr said about your accessibility. We on both sides of the aisle truly appreciate the time you 

have given us to answer lots of questions and we will have more 

today. But we do appreciate the ongoing dialogue. With that, I 

want to recognize the chairman of the full committee, Hal Rogers 

of Kentucky. 

Mr. ROGERS. Thank you, Mr. Chairman. And by the way, congratulations on your elevation to this chair. We think you will do 

a wonderful job. 

Mr. KINGSTON. Thank you for your role in that, sir. 

Mr. ROGERS. We think you will do a great job, and you already 

have. 

I would like to focus, Mr. Chairman, my comments and questions 

on FDA’s role in regulating prescription drugs, particularly opioid 

narcotics. Undoubtedly these drugs can make a world of difference 

for patients suffering from cancer or other terminally ill diseases 

which cause chronic pain. But the abuse and diversion of these 

drugs is now our country’s leading drug problem. In the last decade, there has been a 400 percent increase in those reporting abuse 

of pain pills. 

And in Kentucky, we are losing almost three people a day to prescription drug overdosing. My people and communities around the 

country are doing their part in recognizing that we will need a 

multifaceted approach to knock out abuse. Law enforcement, treatment programs, and education will all be crucial, but regulatory 

agencies need to do their part. 

FDA, of course, has an altogether important role in this. In 1995, 

FDA approved what you thought was the next miracle drug for 

cancer patients, a controlled-release pain reliever, Purdue 

Pharma’s OxyContin. The active ingredient in Oxy is twice as potent as morphine. Purdue immediately undertook an aggressive 

marketing campaign to sell as much of their drug as possible. They 

chased primary care doctors and doctors in rural areas who may 

not have been as adequately trained in pain management as perhaps others. They underplayed the drug’s addictive tendencies. And 

within 5 years, Oxy had become the most prescribed brand-name 

narcotic medication for treating moderate to severe pain. Purdue 

was raking in the dough, and that is about the time the people in 

my district started showing up in emergency rooms or in the 

morgue. 

In 2001, Frank Wolf and I testified—Chairman Wolf and I testified before the FDA asking that this powerful drug, twice as potent 

as morphine, only be made available for the treatment of severe 

pain where it can have the most positive impact on patient comfort 

and care. Our pleas fell on deaf ears. And the rule continued to be 

that OxyContin could be prescribed for moderate to severe pain. 

You got a sore toe? Here, have some OxyContin. Highly addictive. 

Terribly difficult to shake. 

Purdue was ultimately fined in criminal court $600 million for its 

unscrupulous marketing practices, and several executives even 

faced criminal charges. They had to reformulate OxyContin, and 


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you have recently approved the new version. They still sold $3 billion worth of the drug last year and its generic spinoffs aren’t far 

behind. I will let you decide if justice has been truly served. 

So what can be done? There is a thing called the ‘‘Flamingo 

Road’’ where there are more pill-mill crooks operating clinics in 

Broward County, Florida, than McDonald’s drive-through. People 

from other parts of the country, especially in my district, my State, 

are hired by drug pushers to get on the bus, go to Florida with 

them. They all go through the pain clinics, come back with a barrel 

full of OxyContin and other prescription medicines where they are 

sold for 10, 15, 20 times what they pay for them. And people are 

dying because they are too easily obtained. FDA has to be a partner in this fight. 

Despite some positive FDA efforts in recent years through additional labeling requirements, collaboration with partner Federal 

agencies and increased communication with physicians, prescribers, dispensers and patients still are woefully underinformed 

about the risks associated with these products. FDA has to be fully 

aware of the implications of these drugs before they go to market, 

which is why Congress instituted the REMS requirement for extended release pain drugs in 2007, and these potent drugs were 

carefully classified. 

We simply can’t keep handing these responsibilities over to profit-driven drug companies. It is reckless, it is irresponsible, and it 

is why prescription drug overdoses are killing more Americans now 

than car wrecks. Think of that. 

And that is why Mary Bono Mack, the Congresswoman from 

California, and I have filed a bill called the Stop Oxy Abuse Act 

which would moderate and change the moderate to severe qualifications to be prescribed for OxyContin to just severe, severe pain 

only. I would like your reaction to that. 

[The information follows:] 

OXYCONTIN PRESCRIPTIONS

Potent opioid analgesics have traditionally been indicated for moderate to severe 

pain. Some advocacy groups have called for the removal of moderate pain in the indications as a means to reduce the number of prescriptions for these products and 

thereby reduce the opportunities for their abuse. FDA has denied this request for 

a number of reasons. Pain is a subjective phenomenon and its intensity level is primarily determined by patient report. What one patient might consider ‘‘moderate’’ 

pain, another patient may consider ‘‘severe’’. Health care practitioners have traditionally used the terms mild, moderate and severe to categorize a patient’s pain intensity and to communicate with patients and other health care practitioners. The 

use of these terms in the indication section of the label along with the limitations 

of use statement are intended to guide prescribers to understand that OxyContin 

is not for mild, acute, or intermittent pain where other pain management products 

would be more appropriate. The label also instructs that it is not intended for use 

on an as-needed basis, nor is it indicated for pain management after the first 12– 

24 hours following surgery unless the patient had already been receiving the drug 

prior to surgery and the postoperative pain was expected to be moderate to severe 

and to persist for an extended period of time. The labeling is directed toward legitimate use of these medications. Chronic pain described by some as ‘moderate’ can 

be very disruptive and extended release opioids can be an appropriate choice for 

these patients. Removing the term moderate from the indications for these drugs 

could result in considerable confusion, and would not likely impact the availability 

of the drugs or the amount of abuse and diversion associated with them. 

I am going to leave several questions for the record, Mr. Chairman, if that would be okay. 


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Mr. KINGSTON. Without objection. 

Mr. ROGERS. Vern Buchanan from Florida, a Congressman, has 

a bill that would reclassify all hydrocodone combination drugs— 

Vicodin, Lortab and others—as Schedule 2 drugs, which are more 

difficult to prescribe and obtain. Would this cut back on abuse? I 

wanted to leave that for the record. 

[The information follows:] 

RECLASSIFICATION OF HYDROCODONE COMBINATION DRUGS

Hydrocodone, when dispensed as a single drug—not in a combination product— 

and not exceeding 15 mg per dose, is currently a Schedule II drug. Today, all marketed hydrocodone drugs that are combination products—for example, hydrocodone 

combined with another pain reliever such as acetaminophen—are Schedule III 

drugs. Schedule II drugs require a new prescription each time they are dispensed, 

whereas Schedule III drugs can be refilled without a new prescription. Rescheduling 

all hydrocodone combination products from Schedule III to Schedule II would affect 

automatic refills for a prescription. Although this change might make it more difficult to obtain these medications frequently for non-medical use, this change would 

also create an impediment to legitimate use by patients being treated for acute pain. 

While it is true that drug usage data for hydrocodone products documents extensive use, there is a legitimate medical need for these drug products. To date, data 

on abuse potential of hydrocodone combination products support their continued 

placement in Schedule III. FDA has not seen rates increasing for visits to hospital 

emergency departments related to hydrocodone product use, when compared to 

oxycodone, a Schedule II product, according to data taken from the Drug Abuse 

Warning Network of the Substance Abuse Mental Health Services Administration, 

also known as SAMHSA. Nor does FDA see increased rates of addiction, as evidenced by the need for opioid treatment, for hydrocodone compared to oxycodone, 

according to data from the SAMHSA Treatment Episode Data Set. This type of data, 

however, is not sufficient for drawing conclusions about how to impact specific criminal activity such as cutting back on pill-mill operations. 

Mr. ROGERS. Number two, Congress required REMS to ensure 

that the benefits of a drug outweigh the potential risk. I have 

heard some real concerns that FDA is allowing the drug companies 

producing extended release pain medication to develop a one-sizefits-all REMS. Considering that each medication is different and 

poses unique risks to patients and the public, how will this onesize-fits-all approach encourage innovation in risk management? 

[The information follows:] 

REMS 

Dr. Hamburg: FDA’s Center for Drug Evaluation and Research, also known as 

CDER, is in the process of developing a Risk Evaluation and Mitigation Strategies, 

commonly known as a REMS for high potency long acting and extended release 

opioid products. This REMS, which will include measures intended to increase physician and patient knowledge about the appropriate use of opioid drugs in the treatment of pain. 

On July 22 and 23, 2010, FDA presented its proposal for a class REMS for longacting and extended-release opioid drugs at a joint meeting of the Anesthetic and 

Life Support Drugs Advisory Committee and the Drug Safety and Risk Management 

Advisory Committee. The objective of the meeting was to gather additional feedback 

and comments from the Committees and the public on its proposal to require a 

REMS for the class of long-acting and extended-release opioid products. 

FDA is currently analyzing the advice received from the Committees and from 

public comments. Once these have been thoroughly analyzed, FDA may issue a 

REMS request letter to the sponsors of these drugs. The letter would describe the 

proposed REMS and provide a timetable for the submission of the REMS and its 

implementation. Affected sponsors would be required to implement the REMS, once 

it is approved. 

The REMS proposal presented at the July 2010 meeting focused on prescriber and 

patient education. Under this proposal, sponsors would be required to provide patients with Medication Guides conveying information on the safe use of all opioid 


emcdonald on DSK2BSOYB1PROD with HEARING
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medications as well as product specific information. Sponsors would also be required 

to develop prescriber education programs covering appropriate patient selection, 

dosing, and monitoring, and training for patient counseling in the safe use, storage, 

and disposal of opioids. The proposed REMS would foster innovation in patient and 

prescriber education, which are essential for improving prescribing practices and ensuring the safe use of of long-acting and extended-release opioid drugs. 

Mr. ROGERS. And then finally, what is FDA doing to incentivize 

and speed up the development of more tamper-resistant or abuseresistant formulations of these drugs? 

[The information follows:] 

TAMPER- OR ABUSE-RESISTANT DRUGS

FDA classifies Investigational New Drug applications for purportedly tamper-resistant or abuse-resistant formulations of opioid analgesics as Fast Track drugs for 

review purposes. FDA reviews New Drug Applications for these products on a Priority Review schedule of six months. In certain circumstances, the labeling for these 

products could include data supporting the tamper-resistant or abuse-deterrent features—albeit with a disclaimer that the impact on actual abuse is unknown—which 

would allow the manufacturer or distributor to describe these features in their advertising and detailing. 

Mr. ROGERS. Dr. Hamburg, I appreciate your being here today 

and answering these questions and presenting your budget request. 

And I am very focused on—in my own way, on the drug abuse 

problem that is afflicting the country and killing young people even 

as we speak. 

Today in Kentucky, three people will die from drug overdoses 

that could have been prevented. And I think the FDA needs to join 

the fight. Thank you, Mr. Chairman. 

Mr. KINGSTON. Thank you. Dr. Hamburg. 

Dr. HAMBURG. Well, thank you very much, Congressman Rogers, 

for your very powerful statement about the serious problem our 

Nation faces with respect to the abuse of prescription drugs. And 

as you point out, it is one that takes a devastating toll on individuals, on families, on communities and our Nation, and its impact 

is very, very severe and far-reaching. And successful, meaningful, 

and enduring solutions to it, as you also point out, require true 

partnerships because there are many players that need to play a 

role. 

FDA has a critical role and we care deeply about it and I am personally very committed to helping lead the agency to engage more 

deeply on these issues with our counterparts in government and in 

other sectors and to look very carefully at where we have responsibilities and where our activities and policies can make a difference. We are, as you said, looking very carefully at how we can 

more effectively use the authorities and tools that we have in terms 

of warnings and indications for use. 

We also have mounted a major initiative around the safe use of 

prescription drugs, and it is critically important, and the area that 

you focused on in your comments is a key component of what we 

want to accomplish there. There also is an administration-wide effort focused on this. And that is very key, to engage law enforcement, to engage educators, to engage the DEA who would be involved in making decisions in terms of the reclassification. 

Mr. ROGERS. Can I help you spell Broward County, Florida? Nine 

out of ten prescriptions for oxycodone in the country are coming 

from Broward County, Florida; 9 out of 10. It is an absolute pillVerDate Mar 15 2010 04:27 Jun 14, 2011 Jkt 066581 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HR\OC\A581P2.XXX A581P2

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mill heaven. There are thousands of them there. And I have asked 

the Attorney General to send enforcement to Broward County to 

help us stamp out the problem. We have asked the Governor of the 

State for a drug prescription monitoring program, which he has refused, although some 40 States already have the system in place. 

Where do I turn? Can you change the rules by which these medicines are prescribed for just severe pain? Why not do that? 

Dr. HAMBURG. Well, I think these are important issues and as 

you pointed out, they do involve many different agencies coming together. We approve—we review and approve medical products for 

a certain indicated use, and that can certainly be a part of our considerations. There are also very important activities that have to 

do with the oversight of the providers and how they are doing their 

prescriptions, the training of providers and enforcement activities. 

So I think—— 

Mr. ROGERS. It is very simple. It is really simple. This drug 

OxyContin was built, designed, constructed for severe pain, right? 

I mean, it is a 12-hour release pill. It is a wonderful drug for those 

in severe pain in terminal cancer cases and others, for example. 

But it is so easily dispensed and it is so easily taken and it is such 

a wonderful drug to be abused, but young people especially are 

crushing the 12-hour release into an instant release, and you can 

imagine the pleasure that gives. And it is irresistible. But it is killing people. Can’t you change that formula by which they are prescribed, simply leave out ‘‘moderate’’? 

Dr. HAMBURG. In how we are approaching the warning labels, 

the indications for use, we are very mindful of those concerns. 

You also raised another very important point that I want to underscore, which is how can we bring better science to bear to make 

products that are safer and less subject to abuse and the opportunities for innovation in this area. We need to go forward today to address the current problem. We also need to be making sure that we 

are pursuing those avenues as well. I am heartened to hear about 

your work in this area and the bill that you are proposing. We are 

eager to work with you. It sounds like maybe I should make a visit 

down to Broward County and learn more about it. 

Mr. ROGERS. Absolutely. I will pay your way. 

Dr. HAMBURG. I don’t know that that would be allowed. 

Mrs. EMERSON. Mr. Chairman, can I ask you to yield just for a 

second and make a comment? I agree with you. I am just getting 

off a broken arm. And the first drugs that they threw at me were 

an OxyContin-type drug. And while I was in pain, and probably a 

lot of pain, I wasn’t in severe pain. And so I was afraid to take the 

drug because I didn’t know—I know the effects are really pretty 

dramatic. But every single time I would go for a follow-up, Do you 

need some more OxyContin, do you need some more of this drug, 

do you need some more of this drug? And I took four Advil, which 

did the trick for me. 

But I understand. I mean, they were just throwing the stuff at 

me. And I am thinking it is just ridiculous. So I just flush it down 

the toilet, which I am not sure you are supposed to do that. I can’t 

remember how you are supposed to get rid of it. 

Dr. HAMBURG. You are. 


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Mr. KINGSTON. We don’t have to remove that from the record. We 

have unanimous consent. 

Mrs. EMERSON. But anyway, it is troubling. It is very troubling 

to me who just recently, 6 weeks ago, dealt with this same problem. 

Dr. HAMBURG. It is an incredibly important issue with huge 

ramifications. We are eager to work with you. We are involved in 

activities in this domain. There is more that we can do. I think the 

partnership in terms of this administration-wide effort is going to 

make a real contribution as well. But I would be eager, you know, 

to sit down with you, to visit the Flamingo Road—did you call it— 

and also really lay out in more detail where we as the FDA can 

make a targeted difference. 

Mr. ROGERS. That is the reason I asked you today. That is why 

we are here. That is why I am here, is to have you answer the 

question. If you strike out the word ‘‘moderate’’ and they can only 

prescribe it for severe pain, we can then prosecute people who are 

unscrupulously making zillions of dollars under the guise they can 

prescribe it for moderate pain. This is done every second of the day. 

But if you only allow them to prescribe for severe pain, we could 

then prosecute and go after the unscrupulous doctors and pain clinics that are killing our people. It is pretty simple. 

Dr. HAMBURG. I think as you point out, targeting for appropriate 

use is absolutely key, and we are trying to achieve that through 

what we are doing in the REMS arena and strengthening those. I 

think it is hard to—I don’t think that you would be satisfied with 

the results by simply addressing that change in indication, because 

it is the broader abuse that is happening that is—you know, I 

think causing this serious national problem and it is—how you define ‘‘moderate’’ and ‘‘severe’’, I think we need to have a concerted 

effort that is targeted at many levels to address a problem that is 

cross-cutting, that involves both what are the kinds of drugs that 

are available, how are they prescribed, what are the oversight and 

restrictions on the use and abuse of those drugs and how that is 

enforced. 

Mr. ROGERS. Mr. Chairman, I appreciate your indulgence with 

me for the time. That is exactly what we had to do in my district. 

The State newspaper came out with a story that ran for 6 weeks, 

front-page screaming headlines that my area was the pain prescription capital of America, which prompted me to start an organization we called UNITE, Unlawful Narcotics, Investigations, Treatment, and Education. It is an amazing organization. We have got 

26 undercover agents now that do nothing but arrest people selling 

drugs. They have put in jail 3,700 pushers selling these drugs from 

the Flamingo Road source. 

We have kids in hospitals every day. We have got kids dying 

every day in the emergency rooms. We have got drug courts in 

every county. We have built treatment centers. I go to drug court 

graduations for people who finally kicked the thing and hear these 

wonderful tales. It is a pervasive, deep, widespread problem, killing 

more people than the automobile wrecks in the country, and yet 

you sit there and say we will not really talk about changing the 

prescription rules for this killer drug. And I won’t rest until we see 

an answer, ma’am. 


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Dr. HAMBURG. Well, I am happy to continue to examine these 

questions and go back with our expert team. My point, though, is 

that I think if we really want to make a meaningful and enduring 

difference, it is a different problem than simply changing the indication, because it is—whether it is an indication for severe or moderate, the prescriber ultimately is making the decision of whether 

it should be given to that patient for their pain. And I am not confident that a label with an indication only for severe pain is going 

to change the behavior of those on Flamingo Road. 

Mr. ROGERS. It will give us a chance to prosecute those people 

that are prescribing that medicine for other than severe pain, and 

we can stop—make a big point in stopping the problem at the 

source. You are in charge of the steering wheel here. And I expect 

some movement on this issue. And if you don’t do it, we will do it 

for you. I cannot be much plainer than that. 

I hate to be blunt, but this is beyond a minor issue. This is a 

killer in my district. It is killing my constituents and all around 

the country. And you could make a difference. 

Dr. HAMBURG. Well, I am eager to make a difference. I appreciate the severity of this problem and its huge ramifications on the 

lives of people and the dislocations in communities that occur and 

the terrible pain that so many have experienced. I do feel that we 

have a critical role to play and we will engage fully. I think that 

to be successful, it needs to be a broader partnership, and I am also 

committed to engaging in those partnerships so that we can make 

real measurable progress in this domain. 

Mr. ROGERS. We will be listening. Thank you, Mr. Chairman. 

Mr. KINGSTON. Thank you, Mr. Chairman. Mr. Farr. 

Mr. FARR. I share your concern, Mr. Chairman. And also I think 

you have to go upstream and also look at the manufacturers and 

the salespersons and the people that sell that to the end users. 

I know my cousin is a doctor and he says that most of the information they get about drugs comes from the drug salesperson who 

tells them you ought to use this for this and that. If there is that 

much supply out there going to doctors’ office, then there has also 

got to be something with the way the message is being given to 

doctors. And I hope we can look into that as well. 

MEDICAL COUNTERMEASURES

I think this conversation really goes to the point of how important your agency is, the Food and Drug Administration, and how 

difficult it is going to be to manage these critical issues in the 

United States if Congress indeed cuts and slashes your budget. 

So a couple of things that I would like to see is if we could get 

a better bang for the buck. One is in the area of countermeasures, 

medical countermeasures. As you know, the Medical Countermeasures Initiative was framed in the course of 2000, it was based 

on the fact that we put a lot of money into preparing for the flu 

pandemic. I think Mr. Rogers played a major role in pointing out 

that that was real serious. And what happened last year is that the 

HHS shifted 170 million dollars from their accounts to FDA accounts, to cover the new Medical Countermeasures Initiative. But 

you need some, as I understand it, you need some language to expand the other types of countermeasures you can work on besides 


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the flu. Essentially the idea is if we want to have an infrastructure 

to do that. We could look at countermeasures that would be made 

for other kinds of emergencies that might come from biological 

weapons or other things that could break out, contamination could 

break out, beyond influenza. We have kind of isolated this work to 

one countermeasure. 

I wonder if you could speak for just a second how important that 

is, how important it is to keep the money, how important it is to 

get the language you need to be able to have those other countermeasures. 

Dr. HAMBURG. Thank you, Congressman Farr. This is a very important area for the health and security of our Nation. We do face 

a set of serious biological threats from the naturally occurring, such 

as pandemic flu or something like SARS, if you remember a few 

years ago, or as yet an emerging infectious disease threat. We also 

know that we are highly vulnerable, perhaps increasingly vulnerable to deliberately caused biological threats and biological terrorism, chemical terrorism, radiological and nuclear terrorism, and 

the impact in terms of the health of individuals would be enormous; also the huge dislocations to our society, the disruptions in 

life as we know it, the impact on the economy, the public’s trust 

and confidence in government and critical institutions and our national security at its core. 

So we want to be able to provide the kinds of medical countermeasures necessary to fully prepare us both to rapidly detect and 

respond to an emerging threat and to treat and contain a threat 

should it occur. In a way, it is a form of deterrence to be better 

prepared and to limit the damage that can occur. 

Mr. FARR. As I understand it, you have the money to do the 

work. You just don’t have the authority to look at these other countermeasures? 

Dr. HAMBURG. Well, exactly right. The Secretary of Health and 

Human Services, Kathleen Sebelius, began a new initiative last 

summer in the medical countermeasures arena and FDA was given 

resources to begin important work from the monies that had originally been appropriated for pandemic response. 

Mr. FARR. And we put that language giving you that authority 

in our legislation, but it didn’t get into the latest version. 

Dr. HAMBURG. Right. In order for us to be able to expand these 

activities to address not just pandemic threat, but the continuum 

of biological threats before us, we do need additional language. It 

is a no-cost proposal. But that would allow for the use against this 

broader set of very important, potentially devastating biological 

threats. 

So we would be very appreciative if you could take a serious look 

at that. I think it would make a huge difference to our ability to 

move forward in critical ways. There are important gaps in key 

areas. We don’t have a treatment for acute radiation sickness, such 

as would occur after a terrorist attack using a radiological device. 

We don’t have antiviral drugs to treat a number of critical, potential microbial threats. We don’t have the diagnostics that we need 

to rapidly detect an emerging problem so we can treat it appropriately. 


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Mr. FARR. Yes or no? Can we assume that if these funds are not 

provided through the mechanism proposed in the budget amendment, that there is very little or no chance you can fund those activities within the appropriation in H.R. 1? 

Dr. HAMBURG. That is the case. This is a program where we are 

building a new capacity. These targeted additional dollars are essential to fulfilling the mission of assuring that we have the medical countermeasures that we need. We also in the President’s fiscal year 2012 budget are asking for monies to continue those programs that we are beginning to put in place now. 

So it is going to make a difference. And, interestingly, as this 

broader initiative around medical countermeasures was being developed, one of the things that emerged was that the role of FDA 

was absolutely crucial to success; that it involve other components 

of government, but that the FDA’s role in actually being able to review and approve for safety and effectiveness these medical countermeasures was the linchpin of success. 

So we very much appreciate your taking a serious look at this 

and helping to support efforts that will make such a difference to 

our Nation and our security. 

Mr. FARR. Thank you. 

Mr. KINGSTON. The gentleman’s time has expired. Mrs. Emerson. 

DRUG SUPPLY CHAIN

Mrs. EMERSON. Thank you, Mr. Chairman. Thank you so much 

for being here, Dr. Hamburg, and for the good job that you do. I 

know you share my concern about the possibility for counterfeit 

drugs to enter the United States supply chain, whether it is from 

within the United States or from abroad. Yet the potential for this 

corruption of the system and the potential rewards for doing so is 

growing. And it is really interesting and frightening to see how sophisticated some of the methods the counterfeiters are using. 

And I am thinking about one in Enfield, Connecticut, last year where $76 million worth of drugs were stolen; and in another year 

before, in Chesterfield, Virginia, in which about $5 million of drugs 

were stolen. But this illustrates the fact that this is a problem bigger than mere counterfeiting, and it extends to stolen drugs which 

are removed from the supply chain and simply lost before reappearing, and that can possibly be here and it can possibly appear 

as treatments for us. 

So last year, the committee included language asking FDA to examine methods and technologies by which these drugs can be 

tracked within the supply chain from the manufacturer to the patient with a minimum of cost to either party or anyone in between. 

And I wanted to follow up with you on that request for new standards just to gauge your opinion of the possible role for the FDA, 

as well as to ask you if you see a need for this kind of a national 

system to ensure the drugs that we Americans are taking are safe 

as well as affordable. 

Dr. HAMBURG. You raise a critically important issue. And increasingly in our globalized world, we need to be thinking about 

drugs coming from many parts of the world and complex supply 

chains that drugs go through with webs of producers, manufacturers, suppliers, repackagers, exporters, importers. And all along the 


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way, there are opportunities for the potential introduction of problems, sometimes unintentional, and, sadly, we know often deliberate. And we know that counterfeiting is increasingly a very significant criminal enterprise. And in fact because the penalties for 

trafficking in counterfeit drugs are much less than in illegal drugs, 

there is real concern that organized crime is increasingly entering 

this space as well. And we know that the impacts on people are 

huge. 

You mentioned drug diversion. There was a recent case where insulin was stolen, disappeared from the marketplace and then reappeared. But the only way we found out that it reappeared is that 

we started getting reports that diabetic patients were taking insulin. They were depending on this drug for a very serious medical 

problem and it was having no impact. And we determined that 

their lots of insulin in fact were from this stolen—so the ability to 

track and trace, as you pointed out, is absolutely essential. 

We would very much welcome the chance to work with Congress 

to look at the opportunities for new legislation. I know that there 

is a bill that Congressman Dingell has introduced that would give 

additional authorities to FDA to help us to secure the safety of the 

supply chain and address these global challenges. 

Mrs. EMERSON. Let me ask you. California has a standard which 

it is set to—I think it is set to be implemented in 2015. And even 

with the best possible State model, do you think a state-by-state 

approach is more effective; or is it more efficient to have one single 

national approach to the problem? 

Dr. HAMBURG. I think that this is a problem that crosses State 

borders and crosses international borders, and I think the goal of 

standards that are harmonized is very, very important. It is important to our ability to really address the problem. I think it is important to industries as they think about how they would implement it, and the cost of implementation as well. 

Mrs. EMERSON. Can you estimate the pervasiveness of the counterfeit problem? 

Dr. HAMBURG. We need better data. It is actually a worldwide 

problem that we don’t fully know the nature and scope of it. I 

think, startlingly, we do know that in some parts of the developing 

world, as much as between 30 and 50 percent of the drugs available in the marketplace for serious diseases are in fact counterfeit. 

In the United States, we have a much more closed system and 

the FDA is working every day to ensure that the drug supply is 

safe and that when you go to your pharmacy what you get is what 

it purports to be. But we know that the problem is a real one here 

as well, and that we need to be proactive and aggressive and we 

need to be very cognizant, as I said, of the fact that as the world 

becomes more globalized and more and more of our drugs are coming from being manufactured overseas—— 

Mr. KINGSTON. The gentlewoman’s time has expired. 

Mrs. EMERSON. I will look forward to working with you, Doctor. 

Dr. HAMBURG. You can tell this is a topic I care about. 

Mrs. EMERSON. I look forward to working with you, Dr. Hamburg. And thank you, Mr. Chairman, for allowing me to go early. 


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AVASTIN

Mr. KINGSTON. Mr. Nunnelee. 

Mr. NUNNELEE. Thank you, Mr. Chairman. Thank you, Dr. Hamburg, for being here. 

I would like to focus for a little bit on the drug—I believe it is 

pronounced Avastin. As I understand it, FDA granted accelerated 

approval for Avastin for the treatment of breast cancer in 2008 and 

now FDA is looking at withdrawing that approval. Is my understanding correct? 

Dr. HAMBURG. There is an expedited approval mechanism that is 

available that enables, on the basis of fairly early data on drug 

safety and effectiveness, to grant a modified form of approval, expedited approval, and then require additional studies to be done; and 

then a decision is made based on that accumulation of a broader 

set of data, whether the drug should get full formal approval. And 

in this case after additional studies were done and the advisory 

committee of experts was also brought in to review the data, a decision was made not to give Avastin full approval. 

We are, I should say, in the process of working within the legal 

framework of this approval regulatory mechanism to—we granted 

the company that makes Avastin a hearing. They are going to be 

coming to a public hearing with the FDA, making their case. And 

because we are in the middle of that process, I actually can’t comment any more deeply about this drug. 

Mr. NUNNELEE. So you can’t tell me what—you approved it then, 

and you are putting it on hold now, and you can’t tell me what is 

the problem? 

Dr. HAMBURG. Well, the additional data that was collected and 

examined, both by FDA scientists and reviewed by this panel of 

outside experts, did not support the full approval for the indication. 

However, as I said, because we are in the middle of a legal process 

and I ultimately will be reviewing all of the data under this system 

of a public hearing and a subsequent decision, that I am really not 

at liberty to have a full discussion of the matter. 

Mr. NUNNELEE. Sure. It is my understanding that this drug 

doesn’t cure breast cancer, but it does prolong a woman’s life. And 

the initial indications were it might prolong it as long as 5 to 7 

months, and now maybe it is only 3 to 5 months. And because it 

didn’t do what it was originally thought—— 

Dr. HAMBURG. If I could, because I am in a difficult legal situation here, because there is—there is a legal process with a hearing, 

and ultimately I need to be the final decision-maker, and so I need 

to be at a distance from this—if I could ask our center director, 

Center for Drug Evaluation and Research, to speak to these issues. 

Dr. WOODCOCK. Thank you. I am Janet Woodcock. I am the head 

of the drug center at FDA. Avastin’s trials in breast cancer—it is 

approved for multiple cancers, many of these are full approvals— 

showed—the original trial showed an effect on what is called progression-free survival, which does not have anything to do with living longer. It has to do with how long before your xrays show that 

the disease progresses. The subsequent trials did not show the 

same effect. It was a much smaller effect on how long it took the 

xrays to worsen, all right? 


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There is not a claim that Avastin improves survival in this setting in breast cancer life. The dispute is over the length of time 

that it takes to progress once you have metastatic disease. Does 

that make sense? 

Mr. NUNNELEE. I may have said it wrong. Initially you thought 

it would do it in 5 to 7 months, and since it is a little bit shorter, 

you are saying let us just pull it? 

Dr. WOODCOCK. The initial was a surrogate. That is why it is 

called accelerated approval. Progression-free survival is generally— 

and in this case was that your xrays don’t get worse is considered 

a surrogate for having some actual benefit to the people, say, not 

developing pain or fractures or actually maybe living longer. The 

subsequent trial showed a small effect on your xrays not getting 

worse, which our advisors and our oncologists did not feel would 

translate into a clinical benefit that somebody would feel, either reduced pain, reduced progression, or longer life. 

Mr. KINGSTON. The gentleman’s time has expired. Ms. Kaptur. 

HEPARIN

Ms. KAPTUR. Thank you very much, Mr. Chairman. I would like 

to take a little bit of a different tack than some of the other members have and begin with the statement, the obvious assertion that 

America will experience economic recovery when people get jobs 

and they go back to work. And thus I follow with interest the continuing outsourcing of U.S. jobs, including by pharmaceutical companies making medicines and devices everyplace else in the world 

and moving jobs outside our country. 

Every day I ask myself, how can we make goods in America 

again so people can go back to work? There are some who believe 

that we can fix what is wrong with our economy not by creating 

jobs in our country, but by simply cutting back on public health 

and safety, as is evidenced in H.R. 1, the continuing resolution offered by the majority party that cuts FDA inspectors for pharmaceutical safety. 

It is a very interesting set of arguments we are getting involved 

in: how we help our country recover. And thus I want to return to 

questions I have asked in the past regarding heparin and tracking 

what is really going on with the manufacturer of heparin, the cost 

of that to the public sector through Medicare and Medicaid, and go 

back to March 2008 when the New York Times had an article, Dr. 

Hamburg, that said the Food and Drug Administration at that 

point had linked heparin to 19 deaths and hundreds of severe allergic reactions, though the agency was continuing to investigate. And 

those deaths and allergic reactions were due to components that 

ended up in heparin that came from China; I believe through Canada, though I am not sure. 

So I wanted, first of all, to ask you whether you have completed 

your investigations and how many people may have died from 

those imported components. That is question number one. Have 

you finished your report? Is there additional data? 

[The information follows:] 


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HEPARIN

CDER’s Office of Surveillance and Epidemiology, also known as OSE, completed 

a review of adverse event reports from the Office’s Adverse Event Reporting System 

in June 2009. OSE’s analysis considered as much data as possible on the adverse 

event reports with use of heparin. However, we are not able to definitively attribute 

deaths to heparin administration due to confounding factors or lack of detail in the 

reports submitted to FDA. We continue to monitor for adverse events that are reported with the use of heparin. FDA does not have the details of the reports from 

Germany that you refer to and therefore cannot confirm the number of lives lost 

in Germany. 

Then I want to ask you this. You kindly submitted for the record 

from previous questioning I had done, questions that I had asked 

regarding heparin. And for people in the audience who don’t know, 

heparin is actually made from pig intestines. I represent a lot of 

hog farmers, so obviously they are interested in why we would go 

to China for the ingredients for heparin. And those intestines are 

ground up, proteins are extracted, and ultimately we get a liquid 

that people receive in hospitals when they go in for operations. I 

don’t know whether it is a blood thinner. 

Dr. HAMBURG. It is a blood thinner. 

Ms. KAPTUR. A substitute for the—not the red blood cells but for 

the white blood cells. 

Dr. HAMBURG. It keeps you from getting blood clots. 

Ms. KAPTUR. Now, what is interesting about what you wrote in 

answer to my questions, you said, ‘‘FDA approves applications to 

market Heparin’’—market Heparin—but it doesn’t say anything 

about manufacturing. 

So one of my questions to you is, it is unclear where or in which 

country ingredients are made. And I want to know, for the three 

or four companies that are listed that are supposedly marketing 

Heparin, how many of the ingredients actually come from the 

United States? 

I am going to push you a little bit on this, maybe not today but 

in further questions. We see where China and India may be places 

where all these ingredients are being made. 

I am also going to ask you about damages. And I know that my 

time is up here. But our government and the American people were 

not able to recover damages, is that my understanding, civil or 

criminal, from the Heparin deaths due to contaminated imports? 

And where would I get how much money is being made by these 

pharmaceutical firms in marketing these products versus what it 

actually costs them to manufacture? Can you get at that, or where 

do I have to go for those numbers? 

[The information follows:] 

DRUG MARKETING PROFITS

The information that you are requesting is not information that companies must 

report to FDA. In addition, FDA does not track this information because it is not 

meaningful for evaluating the safety and effectiveness of drugs. The financial information would likely be available from the pharmaceutical firms themselves or from 

other sources of industry financial information. 

Dr. HAMBURG. Well, you have asked a string of questions embedded in the one important issue of Heparin. And some of it we may 

need to get back to you on, in terms of your deep interest in this. 

The experience with the contaminated Heparin was a very serious one. I think it was an eye-opener, not just to the FDA, but also 


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to the pharmaceutical industry and to our Nation more broadly, 

about the fact that we really needed to be paying attention to the 

fact that the supply chain for many products in this Nation is complex and global. 

As you point out, the precursor for Heparin that is used in the 

United States and manufactured by United States manufacturers, 

but much of the precursor does come from China, which I think has 

more pigs than anyplace in the world. But—— 

Ms. KAPTUR. We have a lot in Ohio, too, and we would like to 

compete in this market. 

Dr. HAMBURG. But, you know, it caused, you know, as you pointed out, serious allergic reactions and many deaths. In response to 

that—— 

Ms. KAPTUR. Do we know yet, ma’am, how many deaths yet? 

Dr. HAMBURG. I think it was, in this country—it is impossible to 

know exactly how many. But in terms of the documented deaths, 

I think people do—— 

Ms. KAPTUR. Why is it impossible to know? 

Dr. HAMBURG. Well, because sometimes the providers don’t make 

the association between the death of a patient and the contaminated Heparin. Patients that get Heparin, you know, in the hospital often have very complex medical illnesses, and when a person 

expires, the connection wasn’t necessarily made that it was because 

of the Heparin. As we saw a couple of cases and the investigation 

was done and we began to understand the link between the Heparin and a set of symptoms and fatalities—but we know that it 

took a serious toll. 

In response, we have put into place a number of important protective measures, new screening tests, and safety systems, also 

working with the regulatory authorities in China on this and working with the private sector, so that we have safeguards that this 

kind of event with Heparin will not occur again. But it is a warning call about vulnerabilities in the system that we need to work 

on. 

I think my time is up in responding to you, but we are happy 

to follow up further with you. 

Ms. KAPTUR. Thank you. 

And I want to thank the chairman for his generosity. 

Trying to get to the bottom of this has been extraordinarily difficult. And we are going to keep digging, we are going to keep drilling down into this one. 

And I would just say to the chairman, you know, we are all 

struggling to try to find the money to balance the budget. And if 

you look at the amount of money that our government pays 

through the Medicare and Medicaid accounts for Heparin, for a 

drug that is off-patent, for material that is off-patent, unbelievable. 

So this has many legs to it. 

And I thank you very much. And we will have many follow-up 

questions on Heparin. Thank you. 

Mr. KINGSTON. Well, I thank the gentlewoman. 

And, as you can see, Dr. Hamburg, members of this committee 

have a lot of passion about our issues and do appreciate your time. 


emcdonald on DSK2BSOYB1PROD with HEARING
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FOOD SAFETY MODERNIZATION ACT

I want to visit the discussions you and I have had about food 

safety and the Food Modernization Act. Using the CDC numbers 

which you have—and I agree with you, 3,000 deaths a year is horrible. We need to do something about it—48 million illnesses. 

But where I have an issue, taking the emotion out of it—and I 

know we have talked about this, but that 3,000 people dying a year 

is down 40 percent from last year. Again, you know, it is too high; 

we need to keep working. But it is down 40 percent from the CDC 

numbers. Forty-eight million foodborne illnesses a year, that is 

down 37 percent, a decrease of 28 million from last year. Still too 

high, but in a country of 311 million people eating three meals a 

day, 365 days a year, we are consuming 340 billion meals a year. 

And if you divide that into the 48 million, you still have a food supply that is 99.99 percent safe. 

Where is my math flawed on that? 

Dr. HAMBURG. Well, I think that the key numbers are that, you 

know, we know that about one in six people get sick every year 

from foodborne illness—— 

Mr. KINGSTON. Well, let me interrupt you a minute. Key numbers come from the CDC, and those are the numbers I have used, 

so those are the numbers I want to stay with. Where is that math 

flawed? 

Dr. HAMBURG. Yeah, well, I think that is consistent with their 

numbers. I mean, I think, as you point out, we are seeing preventable deaths. We are seeing even more preventable illness. That is 

associated with a set of other preventable costs—costs to the 

health-care system, costs to economic productivity. 

Mr. KINGSTON. But you agree with my math, that it is 99.999 

percent safe? 

Dr. HAMBURG. I would have to sit down and follow your math. 

But we have one of the safest food supplies in the world, there is 

no doubt about it. And we should be proud of that, and we should 

make sure that it is maintained that way. 

Mr. KINGSTON. Well, the concern that I have is, are we targeting 

the 3,000 smartly and efficiently and effectively? Because if we 

move that number from 99.999 percent to 100 percent, which you 

and I and I think everybody on this committee certainly would 

want to do, are we going to get there? Are we going to get that last 

percentage? Are we going to get it with this bill? 

And I will tell you why I have concerns about that. Sixty percent 

of the illnesses come from Norovirus. And there is nothing in there 

that attacks it. In your testimony, you mentioned that you have 

permitted a test for it last year, but that is the only mention of 

Norovirus. 

And the CDC, on March 4th, said that, ‘‘Appropriate hand hygiene is likely the single most important method to prevent 

Norovirus infection and control transmission. Reducing any 

Norovirus presence on our hands is best accomplished through 

handwashing with water and plain antiseptic soap.’’ And yet we 

are talking eventually 17,000 to 18,000 new FDA employees, and 

that is not addressed in here. Sixty percent of the illnesses. 


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The second highest number of illness is from salmonella. Of 

course, I come from poultry country. Now, before the Food Modernization Act, FDA did finalize the salmonella egg rule, July of 

last year. And something like 79,000 illnesses or 30 deaths, but 

that it could be avoided with this new food safety requirement 

which you put into effect July of last year. 

So, you know, I don’t want to say that box is checked. I am going 

to let you respond to it. 

The third highest is Clostridium, and you don’t mention that in 

your budget. 

And it would appear to me that those are the three things that 

we need to target in order to close that percentage. And, you know, 

in this tight budgetary time, I think that would be a lot smarter 

of an approach. 

Dr. HAMBURG. You know, Mr. Chairman, I understand your concerns. And I think that we all recognize that we have a food supply 

that is generally very safe. 

I think no one can argue, though, that we are experiencing a set 

of preventable outbreaks due to a range of microbes, some which 

cause more severe disease, some which are more prevalent. But it 

is a range of concerns, and it is a changing panoply of concerns. 

SALMONELLA

Salmonella wasn’t thought to be such a major concern in products like peanuts. Today we know that it is a very different situation. So—— 

Mr. KINGSTON. But actually say today—this was only July that 

we had the new salmonella rule for eggs. And that wasn’t—— 

Dr. HAMBURG. Well, that is for eggs. 

But if I can just—you know, I think what we need and what—— 

Mr. KINGSTON. And I want to point out that the peanut problem, 

which occurred in Mr. Bishop’s district—and he and I are all on the 

same page of it—but that was a criminal act and not so much food 

safety as much as it was a criminal act. 

Dr. HAMBURG. But we are increasingly seeing salmonella in 

those kinds of products, is what I am saying, is that there is a— 

you know, we can’t only have a food safety system that addresses 

problems that have happened. We need a system, as the Food Safety Modernization Act calls for, that really puts an emphasis on preventing the introduction of contamination of any kind. 

And that is what I think is the huge opportunity here, is to move 

toward a system that is really based on prevention so that we can 

prevent those unnecessary deaths, we can prevent the unnecessary 

costs to the health-care system, we can prevent the unnecessary 

costs to industry and to our economy more broadly. 

We also, in a globalized economy, have a whole set of additional 

threats to the safety of our food supply that we need to be very 

mindful of and prepare for. 

So we are trying to create a food safety system for the 21st century and beyond, and I think that we have a responsibility to take 

that very seriously. Congress has given us the mandate to do so. 

And, you know, I am very excited about the opportunities to keep 

moving the dial so that our food supply is as safe as it possibly can 

be. 


emcdonald on DSK2BSOYB1PROD with HEARING
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Mr. KINGSTON. My time has expired. 

Mr. Farr. 

Mr. FARR. Thank you, Mr. Chairman. 

I wish we had a whole week of this panel. By the way, I don’t 

think we have ever had a head of the agency that has such a tremendous academic and medical background as you have had. I am 

just truly appreciative that you took this job. 

You are the first responder to any problem that happens in illness in America, no matter where it comes from. And your agency 

is the one that has to stop it, find cures for it. I think that we 

sometimes, in this big budget slashing that we have to do here in 

Congress—and I wish it wasn’t so much slashing as, to use a medical term, since you are a doctor, is that we could do, you know, 

just microscopic surgery, is what we really need. Just as surgery 

is done that way, it has to be very smart and very effective. But 

we don’t do it that way. 

I am thinking that we ought to have a week up here discussing 

what would be a day without the FDA. If you didn’t have the FDA, 

everything would come to a grinding halt in this country. Because, 

indeed, you are responsible for articles used in food or drink, for 

not only mankind but for animals, things that we don’t think about 

that are regulated, like chewing gum—you put a lot of that in your 

mouth—dietary supplements and dietary ingredients, infant formula, beverages, even including alcoholic beverages, fruits and 

vegetables, fish and seafood, dairy products and shell eggs, raw agriculture commodities such as what we grow in our area, you know, 

like lettuce and carrots and things like that, the canned and frozen 

foods, live food animals, bakery goods, snack food, candy, chewing 

gum, animal feeds—I mean, just a whole list of things. 

FOOD SAFETY MODERNIZATION ACT

In our new law that we passed in Congress, the Food Safety 

Modernization Act, which did pass with broad bipartisan support, 

and for that—and the chairman has already pointed out the number of deaths that occur in this country due to foodborne illness— 

the President has requested $183 million for implementation of the 

new food safety law. 

My question that goes to you is, what would happen if that 

money was not appropriated, if Congress did not give you the 

President’s request of $183 million to take these new responsibilities and tougher responsibilities that we have mandated upon you? 

Dr. HAMBURG. Well, we are very committed to moving forward 

with the implementation of the Food Safety Modernization Act. 

And we are beginning to implement some of the very many new 

mandates and requirements contained in that bill. We will be able 

to make significant progress in key areas. We will continue to be 

able to put forward the—— 

Mr. FARR. If you don’t get the money is the question, though. 

Dr. HAMBURG. Yeah. If we don’t get the money, we will not be 

able to fulfill all of the requirements of the act, without a doubt. 

We will, importantly, not be able to fulfill the very ambitious inspection mandate, domestically and internationally, which will 

mean that we won’t be able to get that hands-on look at—— 


emcdonald on DSK2BSOYB1PROD with HEARING
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Mr. FARR. Let me follow up just on the inspections. A lot of the 

products that we eat, particularly if you think about the fresh vegetables we eat in the wintertime, a lot of those do come from Mexico, 

and have to be inspected coming across the border. 

We also send and sell around the world a lot of food grown in 

the United States. California grows 80 percent of all the almonds 

eaten in the entire world. And that is more almonds than all the 

people in the United States eat, so we have to export those. Those 

require inspections in order to be purchased by foreign countries. 

If our side of the inspection falls down, we don’t live up to our 

regulations, what does that do to the movement of food supply, particularly with fresh fruits and vegetables that don’t have any resale? 

Dr. HAMBURG. Yeah, that is a very important question. About 40 

percent of the fresh fruit and produce that we do eat in this country comes from outside our borders. So FDA has a very serious responsibility to be able to assure the safety of those products. And 

it means not just inspections at the border, which are hard to do 

and very costly and time-intensive, but actually going out to where 

the products are coming from and trying to assure the safety of 

that supply chain. 

FOOD SAFETY SYSTEM

As you point out, you know, we also need to have confidence in 

a robust food safety system in order to support our exports of foods 

to other parts of the world. And when there is an outbreak, a preventable foodborne outbreak, it can have a very devastating impact 

on the health of that sector of the food industry, in terms of sales 

domestically, as you well know, and also the ability to do exports. 

And if we can’t do the inspections that we need to do, we will 

not be able to assure the American people that the food that they 

are putting on their plates and serving their families is safe and 

wholesome. 

Mr. FARR. If you don’t do the inspections, food doesn’t move. 

Dr. HAMBURG. Food doesn’t move. 

Mr. KINGSTON. Thank you, Mr. Farr. 

Mr. Farr and members of the committee, we are expecting a vote 

maybe in the next 5 to 10 minutes. And it is going to be 2 votes 

followed by a 10-minute recommit. And what I would like to do, if 

it is okay with the committee, is when the first bell goes, I would 

like to vote, come back, give the gavel to Mr. Nunnelee, then he 

can vote, and we can sort of rotate in and out. That way, we can 

maximize our time with Dr. Hamburg, if that is okay. 

Oh, okay, just one vote. And so, yeah, there will be plenty of 

time. We will be able to get this done. Aren’t you glad? 

Mr. Nunnelee. 

Mr. NUNNELEE. Thank you, Mr. Chairman. 

I want to continue the questions about the Food Safety Modernization Act. You may have already stated it, but let’s look at it 

specifically. How much is requested in your 2012 budget for implementation of the Food Safety Modernization Act? 

Dr. HAMBURG. How much is requested? 

Mr. NUNNELEE. Yes. 

Dr. HAMBURG. It is $183 million. 


emcdonald on DSK2BSOYB1PROD with HEARING
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Mr. NUNNELEE. $183 million. How will we know this time next 

year if that $183 million has achieved the results that were intended by the bill’s passage? What specific methods of monitoring 

and tracking will we have this time next year? 

Dr. HAMBURG. Well, we do intend, of course, to track very carefully our performance as we move toward implementation of the 

Food Safety Modernization Act. And I think we recognize that 

there are a number of key areas that we have to make significant 

progress on moving forward. 

We need to begin to put in place the preventive risk-based approach, working with the industry and with farmers and producers 

to make sure that we have identified and agreed on where the 

points of vulnerability are and what can be done to shore them up. 

We need to continue to expand our inspections. Of course, it 

takes a number of years before an inspector is trained and able to 

go out in the field and really perform at full capacity. So some of 

the impacts of dollars today won’t be seen for a few years down the 

road. 

We will be strengthening our import safety activities to make 

sure that we both expand our inspections overseas but also work 

more closely with sister regulatory authorities and with industry to 

assure that foods are being produced, manufactured according to 

our standards. 

We will be working closely with State and local partners, and 

that is a very important additional component of the Food Safety 

Modernization Act that we haven’t had a chance to talk about yet. 

Very much it is a partnership. We will be working with States and 

localities in terms of helping them to strengthen their capacities 

and the contribution that they make to monitoring the safety of the 

food supply and responding to outbreaks when they occur. 

So there will be very clear activities under way. We will be promulgating produce safety rules. We will be putting in place other 

guidances and taking other actions concretely in terms of what is 

required for implementation. 

But I do want to caution that much of the transformation that 

needs to happen and the building up of program will take time. It 

is not a 1-year activity. And it needs to be a sustained activity, as 

well. 

Mr. KINGSTON. Will the gentleman yield? 

Mr. NUNNELEE. Sure. I always yield to the chairman. 

NEW HIRES

Mr. KINGSTON. You are talking about 17,000 new employees and 

about $1.4 billion in a 10-year period, correct? That is what the 

findings were. That is correct? 

Dr. HAMBURG. Is it—that number of new employees seems awfully high. 

Mr. KINGSTON. In a 10-year period of time, that is what everyone 

was saying last year in Congress in the debate. 

Dr. HAMBURG. That was—I don’t know how many FTEs they 

were. Did they speak in FTEs? 

Mr. KINGSTON. All right. It was a CBO estimate. You are talking 

a massive bureaucracy in a time that, for every dollar we spend, 


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40 cents is borrowed, in the background of a 99.99 percent safety 

rate in food. 

I yield back. 

Mr. NUNNELEE. Your response was on activities. And I am new 

here, but my observation is that when government measures and 

monitors, it measures activities, not results. And so I guess the follow-up question is not how are we going to measure your activities, 

but how are we going to know in 2012 has this $183 million 

achieved any results? 

Dr. HAMBURG. Well, as we put in place this program, we are asking for this money in fiscal year 2012, and, as I said, you won’t see 

the results that same fiscal year in all cases. But in terms of impacts on people—and that, of course, is what really matters—you 

know, we will see, if we do this right, fewer outbreaks of foodborne 

disease. We will see fewer people sickened by the foods they eat. 

We will see a system that can better assure that not just food produced in this country but food produced overseas coming into this 

country will—that that imported food will be produced according to 

our same standards and will, again, be as safe and wholesome as 

we can assure. 

Mr. NUNNELEE. All right. I think my time has expired. I will get 

back and follow up on the next round. 

Mr. KINGSTON. The gentleman’s time has expired. 

Ms. Kaptur. 

Ms. KAPTUR. Thank you, Mr. Chairman. 

MENTAL HEALTH

I would just ask you to submit for the record, Dr. Hamburg, if 

you could, in the past year how many drugs have been approved 

in the arena of serious mental illness. Every year I ask for that. 

I am always interested. It is very slow in coming. I am wondering 

if you have been able to expedite the platform for these very, very 

debilitating illnesses that affect millions of people across our country. 

[The information follows:] 

MENTAL ILLNESS DRUGS

From February 28, 2008 to November 10, 2010, FDA has approved 11 new drug 

applications, or NDAs, to treat mental illness. Four of these NDAs were new molecular entities. Additionally, 41 supplements for a new indication with labeling 

changes were approved for drugs to treat mental illness. During the same period, 

FDA approved 108 generic drug applications for products to treat mental disease. 

HEPARIN

But I want to go back to the Heparin issue. First, I want to ask 

your opinion as a doctor. How complex a medical product do you 

believe Heparin is versus other products that you regulate? Is it at 

the top level of complexity? Is it medium? Is it simple? How do 

you—— 

Dr. HAMBURG. It is a very complex molecule, there is no doubt 

about it. 

Ms. KAPTUR. All right. Do you know, as FDA, at which sites all 

of the ingredients of Heparin are produced? 

Dr. HAMBURG. Heparin is produced with one of these supply 

chains I was describing that has multiple inputs. And there is preVerDate Mar 15 2010 04:27 Jun 14, 2011 Jkt 066581 PO 00000 Frm 00035 Fmt 6633 Sfmt 6602 E:\HR\OC\A581P2.XXX A581P2

emcdonald on DSK2BSOYB1PROD with HEARING
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cursor materials that come from many different sites, and then it 

is consolidated—— 

Ms. KAPTUR. And are you at those sites? Is FDA at those sites? 

Dr. HAMBURG. We don’t have the resources to be at every site 

where every component of a product that is in an FDA-approved 

drug is made. We try very hard to use our resources wisely, and 

we are at manufacturing sites to inspect them before we approve 

a new drug. But that is where the drug itself is manufactured. 

Ms. KAPTUR. Made, not where the ingredients come from. 

Dr. HAMBURG. You know, we work with companies to try to assure the safety—— 

Ms. KAPTUR. Ma’am, I will tell you, I am a little uncomfortable 

with what you are saying to me. If I bake a cake at home and I 

look at where the ingredients are from, for example, I know where 

they are from, or at least I think I do, by reading the label. But 

for these drugs and medical products like Heparin, it seems like 

there is a lot more that is being offshored and we don’t really 

know—how do under what conditions those pigs actually live? 

Dr. HAMBURG. Well, one of the reasons why we have really developed a much broader international program is so that we can get 

a better handle on these kinds of issues. We now have offices in 

China, for example, to enable us to be on the ground, working with 

manufacturers, working with regulatory authorities there. 

Ms. KAPTUR. I really wish I could get you on the ground in Ohio 

so we could provide them with real competition. As I look at some 

of the answers that were provided to past questioning, it looks like 

Illinois has really got this thing wrapped up, and maybe there is 

not as much competition as we think. Because we are looking at 

three companies here, all in Illinois—Schaumburg, Illinois; Deerfield, Illinois; Lake Forest, Illinois—three companies. I wonder if 

they have connecting doors. I don’t know. I will have to take a ride 

over to Illinois and take a look. 

But according to information that you provide—you know, I am 

really asking—I am going to become an expert in Heparin. If Americans died, we ought to know why. And we ought to really go back 

and understand that production chain intimately, because it will 

instruct us on what is happening with other medical products as 

well. 

According to your answers to us in the record, one of my questions was, what percent of Heparin’s ingredients are domestically 

produced versus foreign-produced? FDA could not give an exact answer on that. Here is what they said: ‘‘The percent of Heparin components produced domestically versus abroad is determined by each 

manufacturer according to their specifications.’’ And then it says, 

‘‘Manufacturers of the finished product, Heparin, to be marketed in 

the United States do disclose the source of the active pharmaceutical ingredient,’’ but you are not necessarily on the ground 

where that source is being produced. And you say, ‘‘FDA would 

need to review each application to determine the percentage of foreign-made components in each finished Heparin product available 

on the U.S. market.’’ So, basically, FDA doesn’t know. 

And it also says, there is a note, ‘‘Please note that the drug applications contain information that is a trade secret.’’ Now, as I understand it, Heparin is off-patent. Am I correct? This has been 


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around for a long time. It is a trade secret, commercially confidential or otherwise protected from disclosure to the public under the 

Freedom of Information Act, the Trade Secrets Act, the Privacy 

Act. 

If something is off-patent, I mean, tell me here, why don’t the 

American people have a right to know where the ingredients of 

Heparin come from specifically? What is missing in the law? 

Dr. HAMBURG. I think, you know, the problem is that Heparin 

and many other products are made in complex ways that have ingredients that come from many places. The companies take responsibility for making sure, to the degree that they can, that the supply chain is safe and intact. And we have a responsibility to oversee that process. 

But in terms of our resources to be in every place where a precursor material is made, it is not—— 

Ms. KAPTUR. Is it within your purview to impose user fees on 

those companies to ensure that that product that comes back here 

is safe? Or do you need more legislative authority to do that? 

Dr. HAMBURG. You know, with respect to Heparin, after the problem arose, there were some fundamental things that needed to be 

done to shore up the safety of that product and, also, that could 

be applied more broadly, things that involve more intensive screening of the precursor products, more intensive screening of the manufacturing procedures, more intensive screening of the final product—— 

Ms. KAPTUR. And who is paying for that, ma’am? 

Dr. HAMBURG. It is a—you know, we are working with industry. 

They do provide user fees for components of the work that we do. 

Budget authority pays for many aspects of this program. And industry directly, through their work, takes responsibility for components of it, as well. 

Ms. KAPTUR. Thank you. There will be more questions. 

Mr. KINGSTON. Thank you. 

Mr. Latham. 

Mr. LATHAM. Thank you, Mr. Chairman. 

And welcome. I apologize for not being here earlier. As you may 

be aware, there are a few other things going on this morning also. 

And I want to thank you for coming by and visiting. I appreciate 

that very, very much. 

LIVESTOCK ANTIBIOTICS

Last summer, the FDA released its final draft guidance 209 on 

antibiotics used in livestock production to keep animals healthy 

and products safe. In the guidance, you laid out plans to phase out 

the use of growth promotion or production antibiotics, as the FDA 

refers to them, and increase veterinary oversight on the farms. 

The production antibiotics FDA proposes to eliminate serve two 

roles: to improve the overall health of growing the animal, and, 

thus, leads to improvement in feed efficiency and growth as a result of improved health and gut integrity. 

Given this final draft guidance will directly impact the health of 

animals and livelihood of a lot of pork producers—and you may be 

aware, in Iowa, we have, like, six pigs for every human in the State 


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of Iowa—I am really curious as to what sort of outreach has the 

FDA done with the producers themselves to get their input. 

These are farmers who, you know, care for these animals. They 

produce a bountiful and safe food supply. And I really think that 

that type of outreach is extremely important to really understand 

modern production agriculture. 

And if you could just talk about that, what kind of outreach, or 

is there communications going on at all. 

Dr. HAMBURG. Well, very much so. And our Center for Veterinary 

Medicine has been deeply engaged in this issue and in those conversations. 

It is a very important concern. As you know, antibiotics are vital 

for treating illness and disease in humans and animals. It is a vital 

resource, but it is a limited resource in terms of the number of 

antibiotics available. And there are not many new antibiotics in the 

pipeline. We don’t want to be in a position where antibiotic resistance develops and we no longer have tools to treat serious disease 

in people or animals. 

And that is why we are moving to try to define a framework for 

their use that is really as judicious and thoughtful as possible, 

never denying antibiotics for appropriate treatment when there is 

an indicated medical need, but reducing use that can contribute to 

antibiotic resistance and is not medically indicated, not for therapeutic purposes. 

We have been working closely with producers and with the industry, have had, you know, a lot of ongoing conversations and a 

lot of, you know, back and forth. We are trying to move in a voluntary way to accommodate many of these concerns, and working 

with the veterinary community so that we can make sure that antibiotics are administered as appropriate and with appropriate oversight. 

Mr. LATHAM. Just to clarify, are you saying it is better to wait 

until the animals get sick or to have healthy animals all the way 

along? 

Dr. HAMBURG. Well, we want to have healthy animals, but we 

don’t want to use our antibiotics in ways that can cause additional 

serious problems. And antibiotic resistance is a very real problem. 

When there is a therapeutic indication, antibiotics should be 

used. When it is for growth-promotion purposes, that can contribute to antibiotic resistance; it doesn’t serve a therapeutic purpose. And in terms of the overall health and wellbeing of animal 

and human populations and our ability to have this vital resource 

of working, effective antibiotics, we need to move in some new directions. 

Mr. LATHAM. I still question whether you are saying, you are 

not—in my mind, it is better to have a healthy animal to begin 

with, just like healthy human beings, rather than to wait until you 

have—I would think it was more of a food risk with diseased animals, if you wait until after the fact. 

And the idea of growth promotion or whatever it is, is just because they are healthy; it is not because they have hormones or 

something being fed to them. 

Dr. HAMBURG. But we know that you can reduce the use of antibiotics in those settings without compromising health of animals. 


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And we need to be judicious in how we use these very vital resources. 

ANIMAL ANTIBIOTICS

Mr. LATHAM. But I think you should give some credit, and, certainly, I would hope that there is input from producers. I mean, 

they are facing record-high input costs. They are not going to be 

overusing anything, because their bottom line is very much affected. And also, it is to their economic advantage to have the 

healthiest animals possible out there to go into the food system. 

So, in my mind, it is a concern that you don’t give the appreciation maybe of the producers and their position that should be, I 

think, well-deserved. 

So, anyway, thank you. 

Mr. NUNNELEE [presiding]. The chair will recognize Ms. 

DeLauro. 

Ms. DELAURO. Thank you very much, Mr. Chairman. 

Good morning, Commissioner. 

Dr. HAMBURG. Morning. 

H.R. 1

Ms. DELAURO. To all, my apologies. Secretary Sebelius was testifying in HHS, but I wanted to make it to the hearing this morning. 

And thank you for the good work that you all do at the FDA. 

Three years ago, Commissioner, the Science Board reported that 

the FDA was so underfunded that it could not perform its public 

health mission. Congress responded by increasing funding in 2009 

and 2010. That progress stalled with this year’s continuing resolution. And the House passed H.R. 1, which would cut FDA funding 

by $241 million. 

I have a series of questions that I would like answers to, and 

specific. My view, as somebody who runs for office every 2 years, 

that if you can’t quantify what you have, if somebody can’t tell you 

where it is all coming from and where your votes are coming from, 

you don’t have any idea whether or not you are going to win. So 

it is about the numbers. 

How would FDA accommodate that kind of a cut? And what 

would it do to efforts to address problems identified by the Science 

Board in 2008? 

Specifically, if the cuts in H.R. 1 were implemented, would it 

lead to fewer food safety and medical product inspections? How 

many? 

Would the cuts impact the amount of imported foods and medical 

products that get inspected? How many? 

Given that cuts would have to be enacted in a short amount of 

time, would furloughs or reductions in the FDA inspection force be 

necessary? 

The President’s budget closes some of the gap on needs identified 

by the Science Board. Where does it leave us if we lose ground in 

2011 and then fail to fund adequately in fiscal year 2012? 

What would that do to the agency’s ability to perform its mission? What are the risks to public health if FDA isn’t able to perform its mission? 


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Dr. HAMBURG. Well, we do face, you know, a very worrisome situation in terms of the facts that, as you recognize, FDA’s mandates 

and responsibilities far outstrip our resources. For many, many 

years, many decades, truly, we have been underfunded, underresourced, as that Science Board report pointed out. And they 

called for very significant increases to our budget over a 5–year period. 

We have been very grateful for the resources that we have gotten 

over the last 3 years to help build our budget. And it has enabled 

us, I think, to put in place important programs in key areas to protect the health of the public. 

If we had to face cuts of the magnitude you are describing, you 

know, it would be devastating. The size of the cut is equal to the 

budget of, you know, one of our centers. Of course, we would absorb 

it across the agency—— 

Ms. DELAURO. I am looking for some specific numbers, Madam 

Commissioner, because I think that the impact is lost if we do not 

have the numbers. 

And, again, you know, I was concerned about funding last year 

at this time when we spoke about what the Senate was going to 

do with the bill on food safety, et cetera, and in order to move on 

a piece of legislation which is so good and which is so much needed. 

But without the resources to do it, what are the consequences? 

Now, it is not a question of even the—it is a question of the resources for 2012. But we have looming here H.R. 1. I want to know 

very specifically, as I said, how many food and medical product inspections? What impact on imported food and imported medical 

products? 

[The information follows:] 

H.R. 1 FOOD AND MEDICAL PRODUCT INSPECTIONS

FDA estimates that the reductions to the FDA budget in the House-passed 

version of H.R. 1 will result in approximately 1,250 fewer FDA inspections of firms 

that provide or manufacture food and medical products. In addition, House-passed 

version of H.R. 1 will result in a significant decline in funding that we could provide 

to our state counterparts to support development of an integrated national food safety system as well as a decline in funding to provide employee training that would 

negatively affect the level of expertise within our workforce. 

And, you know, if you can’t answer them today, I really want it 

laid out very specifically so that it is well-known what we are playing with here at our risk. And we need you to talk about the agency’s ability to perform its mission and what the risks are to public 

health—above all, what the risks are to public health. 

[The information follows:] 

H.R. 1 PUBLIC HEALTH RISKS

FDA estimates that the reductions to the FDA budget in the House-passed 

version of H.R. 1 will diminish the ability of FDA to perform its mission and protect 

the public health. FDA’s ability to assure the safety of America’s food supply and 

medical products will be substantially reduced. For example, the magnitude of the 

cuts may result in approximately 1,250 fewer FDA inspections of firms that provide 

or manufacture food and medical products. The reduced number of inspections can 

result in an increase in the number of manufacturing and safety incidents that 

threaten the health of patients and consumers. 

In addition, FDA also estimates that the reductions for FDA in the House-passed 

version of H.R. 1 would result in 7,500 fewer FDA import inspections to assure that 

imported foods and medical products meet safety standards. A lower inspection rate 


emcdonald on DSK2BSOYB1PROD with HEARING
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makes it difficult for FDA to monitor the safety of a growing volume of food and 

medical product imports. The result is that Americans could suffer increased 

foodborne illness and experience greater medical product safety problems resulting 

in more sickness and deaths. 

In addition, FDA also estimates that it must conduct analysis of 3,300 fewer food 

and medical product samples to identify safety problems. This reduction in laboratory sample analysis may result in increased incidents where foodborne contamination and drug, device, and biologic safety problems would go undetected. 

Furthermore, FDA’s ability to implement the new food safety legislation will be 

severely limited. The H.R. 1 reduction will likely increase the risk of recurring outbreaks of foodborne illness and lead to greater industry losses of revenue and market share. 

Overall, cuts of this magnitude may limit FDA’s ability to stimulate and support 

industry innovation that offers promising new opportunities to diagnose, treat, cure, 

and prevent disease. These lost opportunities would diminish industry innovation 

and compromise the development of new products that would improve the lives of 

patients. 

I don’t know if you have any of those numbers today—— 

Dr. HAMBURG. I can’t give you exact numbers in terms of how 

many fewer inspections. I can tell you that it will be significant. 

We will be unable to do inspections, domestically and internationally, at the level that we need to be doing. We are already not at 

the level that we want to be and that we know really matters. 

We will be delayed in our ability to review and approve new 

medical products that come before us. That will have impacts on 

people who need and are counting on those products. It will have 

broader impacts on the economy and the health of the companies 

making those products, the jobs associated with that, our ability to 

maintain exports in key areas and our global economic competitiveness. 

Ms. DELAURO. Uh-huh. 

Dr. HAMBURG. We will not be able to do the work that needs to 

be done to assure the safety of the blood supply—fundamental 

things that matter to people every day. 

So we need to be, obviously, very thoughtful. We all recognize 

that we have to tighten budgets. And, you know, we will work with 

Congress going forward to examine how we can achieve important 

cost savings. And the President’s proposed budget does contain 

some significant administrative and contract savings across the 

agency. But we have critical programs, unique programs that are 

vital to the health and safety of people. 

Ms. DELAURO. It is going to be important to this committee. And 

I just outlined some in the food safety area that I think we need 

to have a catalog of—and you mentioned the blood supply—of what 

that would that mean. I think it is critically important for this 

committee to know that, in terms of what its actions are going to 

be. And I also believe it is critically important for the public to 

know what is about to befall them if this piece of legislation sees 

the light of day. 

Thank you. 

Dr. HAMBURG. Thank you. 

FOOD SAFETY MODERNIZATION ACT

Mr. NUNNELEE. I will recognize myself for a follow-up on where 

I was at the last line of questioning, back on the Food Safety Modernization Act. 


emcdonald on DSK2BSOYB1PROD with HEARING
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We talked about how the budget request for this year is $183 

million. I will acknowledge that I am new here and I am still learning. The approach that I have to take is the exact same approach 

that I took in my business before I got here, probably the same approach that American consumers have. It is, What are we asked to 

spend, and what are we going to get for what we spend? 

So, $183 million for this year. Do you have a 10-year estimate 

as to what the enforcement of the Food Safety Modernization Act 

would cost? 

Dr. HAMBURG. We believe that, in order to fully implement the 

Food Safety Modernization Act and all of its many important mandates and requirements, that we would need the money that is outlined in the President’s fiscal year 2012 budget and we would need 

likely comparable increases over the next couple of years to get us 

to the overall working budget for this program. 

As a businessman, though, I think you can appreciate that there 

are some investments that have a greater return on investment. 

And I think it is really important to underscore that this opportunity that we have to really transform the food safety system in 

our Nation is going to have much more profound impact than what 

you are paying up front in terms of those dollars. 

It is going to reduce costs to the health care system, preventable 

costs. It is going to reduce unnecessary lost work productivity, 

which is going to be important to our economy. It is going to support the health and growth of critical sectors of our economy, the 

food industry, enabling them to have broader markets here at 

home, more trust and confidence of consumers, as well as stronger 

export markets. 

So there is huge return on investment. And the costs of these 

outbreaks of foodborne disease that we know can be prevented are 

enormous, in the billions, you know, well over $100 billion. 

Mr. NUNNELEE. All right. I want to continue to pursue it, but I 

think the chairman is back. 

TRANSFORMING FOOD SAFETY AND NUTRITION

Mr. KINGSTON [presiding]. I am only worried about your voting 

right now. 

See, Dr. Hamburg, we are trying to run this in a manner that 

is fastest on everybody. 

I want to talk to you about the dietary guidelines. And I know 

that you have been involved in this in New York City and so forth. 

And I know that salt is always on everybody’s drop list. But there 

are so many articles that take the other side of salt. And I will submit these for the record, but there are five or six of them right here 

that kind of, on a fact-based discussion level, talk about the sodium 

intake and, you know, give a counter side to it. 

And I think, as somebody with FDA, while it is okay for an advocacy group to take a position, I don’t think that FDA should take 

a position on that until they have looked at all the facts. And I am 

going to submit these to you. And I would like you to get back to 

me and let me know what your comments on that are for the 

record. 


emcdonald on DSK2BSOYB1PROD with HEARING
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ENFORCEMENT OF TITLE XXI

Mr. KINGSTON. I also want to switch gears right now and talk 

to you about a GAO report that came out about a year ago, and 

it was on the Office of Criminal Investigations. And the gist of it 

was that the FDA Office of Criminal Investigations operates almost 

autonomously, with the director deciding which cases he or she 

would report to FDA’s senior management. 

Are you familiar with that report? 

Dr. HAMBURG. I am. 

Mr. KINGSTON. Have you taken steps to rein that in? Because 

what the GAO said is that investigations really should come 

through you and be part of the FDA core mission and consistent 

with it and prioritize, rather than have an autonomous group over 

there doing it their own way. 

And the GAO report also pointed out that their budget had risen 

by 73 percent since 1999 and the number of employees has gone 

up 40 percent. 

So would you care to comment on that? 

Dr. HAMBURG. Well, that component of FDA does serve a very 

important role, but—— 

Mr. KINGSTON. Well, no, that is not my question. My question is, 

have you implemented the GAO recommendations? Or do you disagree with them? 

Dr. HAMBURG. Well, we reviewed it very carefully, took it extremely seriously, and a group of individuals followed up in terms 

of developing a set of actions that should be taken based on that 

GAO report. We are moving forward with that. In addition, we 

have—— 

Mr. KINGSTON. Well, where are you right now? I mean, can you 

give me a list of what they are investigating and why they are investigating it? 

Dr. HAMBURG. You know, I am not sure that I would be allowed 

to give you a list of what they are investigating and why, since 

they are ongoing investigations. I would have to, you know—I 

would be happy to, if I could. But in terms of the kinds of work 

that they do, it relates to some of the important questions that 

Congresswoman Emerson was asking about, the control of counterfeit drugs—— 

Mr. KINGSTON. So you feel like what they are doing is consistent 

with the core mission, even though FDA’s senior management did 

not know what they were doing? 

Dr. HAMBURG. You know, I think that the GAO raised a number 

of very important concerns that we are taking seriously. And, as 

I said, you know, we looked at it and have developed a set of action 

steps. We are also working closely with the department’s IG because it is all part of a coordinated effort to address a set of enforcement and investigation activities. 

So we are currently in a period both of trying to examine systems 

and how it works; we have new leadership that is overseeing that 

component of FDA broadly. And we are recruiting for a new head 

of that office. 

Mr. KINGSTON. What is their budget? 

Dr. HAMBURG. I don’t know off the top of my head. 


emcdonald on DSK2BSOYB1PROD with HEARING
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Do you know? 

We would have to get that for you. 

[The information follows:] 

OCI BUDGET

For FY 2010, the Office of Criminal Investigation’s budget was $47,095,762, which 

includes payroll and operating expenses. The Office of Criminal Investigations has 

244 FTE. 

Mr. KINGSTON. Okay. 

Mr. McGarey, you are aware they have increased 73 percent? 

That was the GAO number. 

Mr. MCGAREY. Yes. 

OFFICE OF CRIMINAL INVESTIGATIONS

Mr. KINGSTON. All right. Here is one of my questions. And I am 

going to confess, it may be partly personal. There are two Members 

of Congress who ride bikes to work, and I am one of them. If I 

Google ‘‘Novitzky’’—do you know Jeff Novitzky? You do know him? 

Dr. HAMBURG. I don’t know him personally, but—— 

Mr. KINGSTON. Does he answer to you? Who does he answer to? 

Dr. HAMBURG. Well, he is an employee of that office. 

Mr. KINGSTON. And so, who would be his boss? 

Dr. HAMBURG. Well, his boss would be the head of that office, reporting through our—— 

Mr. KINGSTON. And that is the vacancy right now, the head of 

that? 

Dr. HAMBURG. There is a vacancy, and we have an acting head, 

of course, in that office. And then—— 

Mr. KINGSTON. So he would answer to the acting head? 

Dr. HAMBURG. And to the ACRA, the Assistant Commissioner 

that oversees our inspectorate. 

Mr. KINGSTON. So he is four away from you, so to speak? Is 

that—— 

Dr. HAMBURG. I suppose that—— 

Mr. KINGSTON. Here is my question. And, you know, all the very 

important issues in food safety and drug safety and everything. If 

I Google ‘‘Novitzky’’—and I invite you to do it, because I did it this 

morning; I just wanted to confirm. ‘‘Novitsky and Lance Armstrong,’’ do you know how many hits come up? 

Dr. HAMBURG. No, I don’t. 

LANCE ARMSTRONG

Mr. KINGSTON. 116,000. And including going to France to investigate Lance Armstrong. Now, if he has broken the law, then that 

is a very serious matter. But it almost appears to me that there 

is a little adventurism going on here, that Mr. Novitzky is operating on his own. 

I would like to know how much has been spent on this investigation and why so much money has been spent. And is there anybody 

here who could give me the answers to that? 

Dr. HAMBURG. I don’t think we could give it to you now, but we 

would be happy to follow up with you. And this is also, you know, 

in conjunction with the Department of Justice. 

[The information follows:] 


emcdonald on DSK2BSOYB1PROD with HEARING
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LANCE ARMSTRONG INVESTIGATION COST

The FDA Office of Criminal Investigations, known as OCI, estimates that it has 

expended $17,450 to cover investigative travel costs covering a timeframe from mid2009 through February 2011. These are the only expenditures allocated to this case 

from OCI’s operating budget thus far. This does not include estimates of agent salaries. OCI has one primary case agent assigned to this investigation. 

Mr. KINGSTON. But you are aware of this investigation? 

Dr. HAMBURG. I am. 

Mr. KINGSTON. And you are aware that, I believe, millions have 

been spent, lots of time? 

Dr. HAMBURG. I don’t know—— 

Mr. KINGSTON. And I would like to know what priority that is 

in the food chain, because what I am very concerned about—and 

I hope that I am proven wrong—but that, because it is a celebrity, 

and one great way to make a name for yourself in this town and 

in politics is to bring down a celebrity—and, certainly, all people, 

whatever their status is, need to follow the law. But it appears that 

millions of dollars are being spent, lots of employees are involved 

in this. And I am not sure why so many resources would be put 

in front of the issues with Heparin that Ms. Kaptur raised or the 

issue with OxyContin that Mr. Rogers raised or the issues that 

Mrs. Emerson raised. 

So what I want to see from you on this priority list—and I understand you have to keep some of this quiet—but I would like to 

know where this is in the priority list and see how many dollars 

have been spent. Because I really believe this is one man’s tear, 

maybe a personal issue, after somebody else. And I am not sure 

where the balance is. 

But, again, I want to know where it is on the priority list, why 

it is where it is on the priority list, how many people are in this 

investigation, and how much it has cost the taxpayers. 

Dr. HAMBURG. Okay. I appreciate your concern and have raised 

some similar questions, myself, within the agency. And we will get 

back to you. 

[The information follows:] 

LANCE ARMSTRONG INVESTIGATION PRIORITY

Under a long-standing policy established by the Department of Justice, FDA does 

not comment on open investigations. 

Mr. KINGSTON. And do you know the irony of it? 

And, Mr. Farr, I am going to shut up in a minute. 

But I just want say to you as a bike rider, it is one of the healthiest things Americans can do right now. And I know of your personal interest in health. But this is an icon who revolutionized bike 

riding and brought it home to so many Americans. And, again, if 

he is guilty, you know, that is a different matter. But I just sense 

that, you know, this is blown out of proportion, in terms of resources put into it. But in terms of public health, this is a huge 

icon that your agency is trying to take down. And maybe it should; 

I am not saying you are wrong on this. But what I am saying is 

you are really going after somebody whose name is synonymous 

with ‘‘health.’’ 

Dr. HAMBURG. I understand what you are saying. You know, it 

is an ongoing investigation in coordination with the Department of 


emcdonald on DSK2BSOYB1PROD with HEARING
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Justice. You know, I can’t speak to the details, but we would be 

happy to provide you with some of the information that you asked 

for. 

I also hope you wear a helmet when you ride your bicycle. 

Mr. KINGSTON. I do. And I occasionally stop at red lights, as well. 

Mr. Farr. 

Mr. FARR. Well, Mr. Chairman, with this disclosure of how much 

you ride a bike, I want to invite to you the greatest bike-riding 

event in the entire world. It is called the Sea Otter Classic, out in 

Monterey. It features bike events of every single type, international. So I hope someday—— 

Mr. KINGSTON. As long as they have a slow lane, I might be able 

to make it. 

Dr. HAMBURG. Well, and I have to confess, I tried to do a bike 

ride of the 17 Mile Drive but turned around before we completed 

the whole circuit. I can sort of blame my kids for not wanting to 

go further, but—— 

Mr. FARR. Well, we are a bike-friendly community. Thank you. 

A lot of this discussion has been around cuts and essentially new 

appropriations. 

FSMA USER FEES

Mr. FARR. I would like to focus for a minute on user fees. When 

we passed the Food Safety Act, we had some user fees in there in 

the House version. It got knocked out in the Senate version. There 

was a user fee and an annual registration fee, the Food Safety Enhancement Act annual registration fee of $500 a year for food facilities. And I understand that the food facility or the industry supported it and consumer groups supported it and it was to provide 

FDA with needed additional funding. Where is that user fee proposal now? 

Dr. HAMBURG. I think that at the present time, there is an interest in continuing discussions around fees that could help to support 

the Food Safety Modernization Act. As you know, industry had 

been supportive, or components of industry at least, of some kind 

of a registration fee. Clearly, when you think about food safety, it 

is an issue where both the public and industry have huge investments and concerns in terms of the outcomes, the benefits. So it 

makes sense for it to be a shared responsibility in terms of supporting the programs. 

We hope that there will be continuing discussions with industry 

and with Congress about user fees, and I think as the President 

indicated in his budget, we are hoping that in 2013 there will be 

proposals that deal with that. But action before then would be most 

welcome as well. 

Mr. FARR. We need the authority to do that. Perhaps we ought 

to revisit that, Mr. Chairman. My district, when I was on the county board of supervisors—and I think in every county in California, 

the county environmental health offices have a restaurant inspection fee. Every kitchen is required to be inspected. Of course, nobody likes that. You know what? It has an incredible effect on making sure that the food preparation in all our restaurants and food 

for-profit institutions are done according to health standards, and 

I think there doesn’t seem to be anybody wanting us to repeal that 


emcdonald on DSK2BSOYB1PROD with HEARING
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fee. I think you get—if people find a benefit for the fee, they will 

use. 

There is another fee that the President’s budget anticipates is 

going to raise $61 million. It is a volunteer fee. It is called the Voluntary Qualified Importer Program. I wondered if you could just 

tell me how that is working. As we talked about earlier, I am very 

concerned about safe imports, because a lot of fresh product grown 

in Mexico comes into the United States and fresh product grown 

in the United States goes to Mexico and because Mexico is the 

number one trade partner with the State of California, and California is the largest ag State in the union, a lot of that trade with 

Mexico is agriculture. 

IMPORTED FOODS

If that agriculture trade is delayed because of inspection issues, 

either on the Mexican side or the U.S. side, it is just lost. Everyone 

is concerned about this. You want to do thorough—but quick—inspections. So you created this sort of fast-track program, to move 

food product expeditiously. 

I wondered if you think this qualified importer program is going 

to work and work so that those who are paying to be in the program will get fast tracked. 

Dr. HAMBURG. I think as we have talked about already, the challenge of dealing with all of the imported foods is a huge one, and 

we need to find ways to extend our reach and we need to find ways 

to have a risk-based approach. And this is one way to help in that 

regard where we can reward people with good track records in 

terms of being able to recognize that they have demonstrated adherence to standards and quality. They don’t need the level of inspection, et cetera that other purveyors may require. We need a 

risk-based strategy overall so that we can really target limited resources. But we are developing a set of new tools and strategies, 

some that came with the Food Safety Modernization Act, in order 

to extend our reach internationally and to utilize third parties. 

Mr. FARR. Do you expect to meet that goal of $61 million in fee 

revenues this year? 

Dr. HAMBURG. I think we don’t yet have the foundation of a program in place and it will take a while to build up a program. But 

I think that we would anticipate that it will be a program that will 

be subscribed and successful. And I would hope we would be able 

to recover that amount of money. But again, this is a request for 

2012. So we won’t be seeing it immediately. 

LEAFY GREENS

Mr. FARR. Well, would you pass on my sincere thank you and appreciation for the work that Mike Taylor is doing in meeting with 

growers. I know. I know where you are. You are hiding back there; 

but, Mike, sincerely, the effort you have made to sit down and listen and show the concern and understanding for a very complex 

process of trying to ensure leafy green food safety. Mr. Chairman, 

almost everything we produce in the United States has some kind 

of process where you can sterilize it and sanitize it, except leafy 

greens like lettuce. You can’t cook it. There is no heat process. So 


emcdonald on DSK2BSOYB1PROD with HEARING
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you really have to develop all of that food safety into the growing 

practices and to be able to have traceability in that. 

And the industry is—the California industry is way ahead of the 

world, and we are excited about it. And remember, they were the 

ones that came before this committee when Rosa was chair, and I 

think shocked us all by saying we need to be regulated. Well, they 

went out and set up a bunch of tough regulations and now they are 

asking the Nation to be regulated like they are. And I think it is 

a good program. 

Mr. KINGSTON. I agree with the gentleman, and I had an opportunity to be briefed on what the California program was, which is 

voluntary, and I thought it was a very positive step. Incidentally, 

for what it is worth, one of my first jobs was a cook, and the way 

we sanitized the lettuce was—I hate to say this in front of Dr. 

Hamburg—but we soaked it in salt in order to kill the bugs. And 

I am not sure if that would meet her standards or not. But it was 

so much better. Dr. Hamburg, I might have to give you some some 

time. 

Ms. DELAURO. Sounds good to me, Jack. 

Mr. KINGSTON. I knew I could count on you. The Italians would 

appreciate. 

Ms. DELAURO. Lots of salt, pepper, oil and garlic and parsley. 

That is all you need to make it happen. That is right. 

Mr. KINGSTON. The Southerners and the Italians merge on that. 

Ms. DELAURO. Thank you. 

GENERIC DRUG FUNDING

Commissioner, H.R. 1 dropped the language specifying the level 

of generic drug funding in the 2010 bill. There is no report accompanying that bill. So there is no idea of what level the bill would 

provide. Since H.R. 1 also cut funding for the drug-centered FDA 

by 10 percent below 2010, 14 percent below the 2011 request for 

the drug center, we can assume that a cut in generic drug would 

use at least these amounts and probably much more, given the 

lateness in the fiscal year. 

Let me ask you about your concern about the impact of the cuts 

to CDER on generic drug review work. And do you, of course, see 

a slowing of application reviews and a loss of savings to patients 

in the health care system as a result? And again, what I am trying 

to get some idea of so that we know what the consequences are, 

is a sense of how many fewer generic drugs would be approved 

under H.R. 1. What can you tell us? 

Dr. HAMBURG. Well, we have been making progress in the generic drug area in terms of addressing the backlog and moving 

product review forward, and it is really quite impressive. We review about—we approve about two drugs per business day at the 

present time. And we know that generic drugs are making a huge 

difference in terms of access to critical medicines. And this cut 

would set us back. It would mean that our backlogs would increase, 

and we would have fewer drugs being reviewed and approved in a 

timely way. 

Ms. DELAURO. Do you have any idea how many? 

Dr. HAMBURG. Again, I would prefer to get back to you with 

exact numbers. Again, it is one of those issues where we have to 


emcdonald on DSK2BSOYB1PROD with HEARING
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not be penny-wise and pound-foolish. A small cut to that program 

is going to have repercussions in terms of costs to the health care 

system. I think about 75 percent of prescriptions in this country 

today are generic drugs, and they are resulting in huge savings. 

Ms. DELAURO. Savings. That is the point I want to try to make, 

because we are taking a look at how we are trying to save money 

and cut back the cost in health care. Now, there is also something 

that—you don’t have to comment on this—something that I wanted 

to go after, and that is this opportunity that the pharmaceutical 

companies have where they pay to delay, pay to delay a generic 

drug from coming to the market, so that they are in essence paying 

their competitors to do that. They have agreements in order to do 

it. If that were not allowed and if we could move generic drugs to 

the market sooner, on that one specific item I mentioned on the 

pay to delay, if the Federal Government is purchasing drugs for 

TriCare, for Medicare, for Medicaid, it is about a $3 billion savings. 

And when you think about the savings that can be made if we have 

generic drugs going to the market, that in fact we can begin to look 

at how health care costs get reduced, which is what we are trying 

to do. 

The other piece is what I mentioned in terms of the pay to delay, 

immediately—and that follows on the generic drug piece, because 

$3 billion we could apply to some other effort, including reducing 

the deficit rather than taking the money from food safety modernization or from inspectors or for dealing with some of the other 

areas that we do. And those are the places that we ought to start, 

rather than putting at risk the health and safety of people in this 

country. 

If I can quickly do a food modernization piece, because it is hard 

for me to stay away from this area, the legislation calls for the inspection of high-risk food facilities once every 5 years initially, and 

dropping to a frequency of once every 3 years. Low-risk plants 

would initially be inspected every 7 years and then dropped to one, 

once every 5 years. 

Based on the information you currently have, how many food facilities would fall into the high-risk category and how many would 

fall into the low-risk category? And in order to meet the mandate, 

how much more funding would FDA need to reach those inspection 

frequencies and how many more inspectors would you need to hire? 

Dr. HAMBURG. Well, first I should have thanked you for your 

leadership on food safety over the years. It has been most appreciated. In terms of your question, let us see if Michael Taylor—he 

says 8,000 in the high-risk category in 2012. 

HIGH- AND LOW-RISK ASSESSMENTS

Mr. TAYLOR. Yes, the ongoing assessment of the bill. That is the 

current—— 

Ms. DELAURO. Eight thousand in the high—— 

Mr. TAYLOR. In 2012 we are shooting for about 8,800 high-risk 

assessments. And that will play out as the bill is implemented. 

Ms. DELAURO. Low-risk category? 

Mr. TAYLOR. We do a total of 15,000 inspections, if you include 

the State inspections. And we mostly divide up—we do most of the 


emcdonald on DSK2BSOYB1PROD with HEARING
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high-risk, and States share in that, but also do some low-risk inspections. 

Ms. DELAURO. Which is why my prior comments about knowing 

what we are able to do or not able to do when you are looking at 

high risk, 8,000; not a small number for us to have—not the tools 

that you need in order to be able to get the job done. 

STATE AND LOCAL PARTNERS

Dr. HAMBURG. And the mention of the inspections done by States 

gives me the chance to underscore a point that I did make earlier, 

but I think you were out of the room. But another casualty of cuts 

in H.R. 1 would potentially be our opportunity to help support the 

State and local partners and the ability to help strengthen those 

on-the-ground programs that are so important to an integrated food 

safety program. 

Ms. DELAURO. Thank you, Mr. Chairman. 

Mr. KINGSTON. Thank you, Ms. DeLauro. 

FOOD MARKETED TO CHILDREN

Dr. Hamburg, I wanted to talk to you about the Interagency 

Working Group on Food Marketed to Children, the tentative proposals that came out in December 2009; and we are having a comment period, and I know it is the Federal Trade Commission and 

the Center for Disease Control, USDA and you, and it really is 

something that concerns me, the potential overreach based on 

these guidelines that are sitting on the table right now, and I know 

we are having a comment period. But under these guidelines that 

are out there, the food that would not be allowed to be advertised 

on television shows in which 50 percent of the audience is children, 

could include peanut butter sandwiches, eggs, granola bars, noodles, chocolate milk, pretzels, Cheerios, bread, Graham crackers 

and cheese. 

Mr. Taylor, I can see you squirming. I will go on. Raisin bread, 

vegetable soup, yogurt, some salad dressing and, again, natural 

cheese. And what bothers me is that—oh, and the television shows 

that teenagers watch, basically college football, Fresh Prince of BelAir, Full House, Jane Goodall’s Heroes, NASCAR—it is the only 

thing I can keep up with—Nick News, Comedy Central, Sports 

Center, USA soccer. So these items would not be allowed to advertise on there. Doesn’t that strike you as an overreach, particularly 

since these items are allowed on WIC to be sold? 

Dr. HAMBURG. I think that the effort is really geared at trying 

to make sure that there is an opportunity for information about 

health products to be as accurate and informative as possible, and 

that certain products that are targeted to youth audiences in particular often are targeted in ways that are misleading in terms of 

their nutritional value, and it is the appeal of the sugary—sweetened sugar, sugary cereal. 

Mr. KINGSTON. Let me ask you this. It seems the nanny state 

has a solution for everything. Good old Momma Government is 

here to tell you how to raise your kids. I might want to serve my 

kids baloney sandwiches. In fact, these peanuts, which this committee routinely enjoys eating, two packages would exceed your 


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guidelines and they would not be allowed to advertise because of 

the salt. 

Mr. Taylor, I am going to invite you to come speak next time because—he is kind of like a referee in the background. You can’t see 

him from here. But what does the nanny state want? 

HEALTHY KIDS

Mr. FARR. Healthy kids. 

Mr. KINGSTON. Let us talk about healthy kids. Are you familiar 

with the family-friendly MTV show called Skins? 

Dr. HAMBURG. I am not. 

Mr. KINGSTON. Well, it is not exactly something you want your 

14-year-old necessarily watching. And yet you could watch Skins, 

which is basically kind of a titillating-type show. I haven’t watched 

it. I have channel-surfed through it. But you could watch that 

show, but you could not buy Cheerios—Cheerios would not be allowed to advertise on it. Doesn’t that strike you as—even for 

momma government—a little bit inconsistent? 

Dr. HAMBURG. Well, from the FDA perspective, our role is to try 

and provide accurate information to consumers so that they can 

make informed choices, hopefully informed choices that—— 

Mr. KINGSTON. But isn’t the labeling law going to do that? 

Dr. HAMBURG. I think it is very, very important to provide that 

kind of information so that people can begin to see what is in their 

foods. 

Mr. KINGSTON. I know you want it so that when I take my wife 

out for a romantic Valentine’s dinner, we have to read through the 

content of the food before we can order our fish and steak. And I 

am not going to let you steal my romantic evening from it, but I 

have got to say I don’t know where the nanny state is planning to 

stop. It is just one thing after the other that you want to control. 

But think about it. I want to invite you to look at a review of 

the show Skins and think, We are saying, fine, you can watch it, 

freedom of speech, parental control, I am not here knocking Skins, 

but I am saying it is ironic that you can watch Skins but Cheerios 

can’t be advertised on it because that might really hurt our teenagers, not the fact that they are all running around in skimpy little 

clothes. 

Ms. DELAURO. I have got to watch the show, Jack. 

Mr. KINGSTON. If I haven’t drummed up a little advertising and 

interest in the show. Mr. Farr. 

Mr. FARR. Thank you, Mr. Chairman. I have to run because we 

got called for votes. But I think if we are going to go into what is 

advertised on television, let us go after all these prescription drugs 

that are just drowning the airwaves. By the time they give you the 

disclaimers, they tell you you are going to die. I don’t know why 

anybody wants to buy it. But they seem to be very effective and 

I think it is abusive. 

BORDER PRODUCTS

Getting back to border issues, I wondered if you could get me 

some information to give to this committee on the number of tests 

conducted on microbials and pesticides for fresh produce at the border. You don’t have to give me that right now, but if you could get 


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it to the committee, and the time it has taken the agency to return 

the results of those tests. I am really looking for the number and 

the time. 

[The information follows:] 

MICROBIAL AND PESTICIDE INSPECTION TESTS

In FY 2010, ORA performed more than 2,200 microbiological analyses and more 

than 1,700 pesticide analyses on imported fresh produce samples. These numbers 

reflect multiple microbiological analyses performed on samples. For example, an imported produce commodity may be analyzed for the presence of Salmonella, E. Coli 

and Shigella. This would constitute a single product sample with three distinct analyses. 

MICROBIAL AND PESTICIDE TEST RESULTS

The time for reporting microbiological findings of products sampled during import 

exams will vary based on the product being analyzed, the type of analysis, such as 

foodborne pathogen, and the analytical finding. The minimum timeframe in which 

a negative analytical finding may be obtained from a rapid screening method for microbe testing typically ranges between three to five days. However, when analyzing 

more complex products and foodborne pathogens, this timeframe will range between 

10 to14 days. In addition, when the initial screening results are not negative, an 

additional four to eight days is required to perform confirmatory testing. FDA continues to do research and collaborate with others to develop both more rapid and 

sensitive screening and confirmatory tests. 

MICROBIAL AND PESTICIDE INSPECTION RESOURCES

ORA continues to prioritize its available resources to maximize our public health 

protection impact. We continue to identify and implement new rapid screening 

methods in our field laboratories, providing FDA with the ability to rapidly screen 

imported commodities for the presence of microbiological contaminants. In addition, 

we continue to use our mobile laboratories at the borders to provide on-site microbiological screening of imported products. These laboratories allow ORA to screen 

a high volume of imported product in an expedited manner, providing FDA with 

greater assurance products do not contain microbiological contaminants. 

Mr. FARR. And then I want to know whether you have—and you 

can do that in writing to the committee—enough resources to carry 

out and analyze and quickly report the results for those tests. This 

is where speed is essential, and if there are any gaps in being able 

to provide that speed, I would like to know about it. 

COCOA BEANS

And lastly, I just want to read something and get that also on 

the record in writing, because I am not looking for the answer 

today. But I would like for you to be aware of an issue regarding 

import procedures for issuing release notices for cocoa beans. It has 

come to my attention that several of the cocoa processing industry 

are facing time delays and additional financial burden at U.S. ports 

because of the need to clean the product at the port, not at the 

processing facility. I don’t even know all the facts, but I will submit 

it to you and you can get back to us. 

[The information follows:] 

COCOA BEAN IMPORTS

Imported cocoa beans from Brazil, Indonesia, and Malaysia are subject to, detention without physical examination—or DWPE—due to a historical presence of live 

insect infestation. The product can be released into U.S. commerce if the importer 

shows the product complies with import standards or if the importer reconditions 

the product to successfully address the insect infestation problem. The surest way 


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to accomplish the latter is to have the cocoa beans fumigated and then cleaned of 

any insect detritus. 

FDA does not require cocoa beans to be fumigated or cleaned at the Port of Entry. 

According to Chapter 9 of FDA’s Regulatory Procedures Manual, the importer 

should provide to FDA details of the process the importer will follow for fumigating 

and cleaning the cocoa beans. Chapter 9 describes two acceptable methods of reconditioning shipments of cocoa beans. Either one of the options, if correctly implemented, will result in a release of the shipment into U.S. commerce. There is no 

requirement stating these activities be carried out in any particular location or at 

the Port of Entry, though certain activities should occur before the cocoa beans are 

delivered to the roasting plant. 

In 2010, FDA met with the National Confectioners Association—or NCA—regarding concerns over the fumigation and cleaning process. Some FDA Districts were requiring processors to hold ‘tailings’, such as sticks, rocks, and dead insects, for FDA 

to examine after the fumigation and cleaning process. NCA explained it was not feasible for industry to comply with this requirement because of current industry practice. After reviewing the information provided, FDA determined that it generally 

would not need processors to hold tailings to obtain release. FDA provided this information to the affected District offices and is in the process of reviewing the entire 

guidance regarding reconditioning of imported cocoa beans subject to DWPE. 

Dr. HAMBURG. Thank you. I have to confess I am not up to speed 

on cocoa bean imports, but we will get back to you with information on that. And on the other, it is very, very important. 

ONSITE DIAGNOSTICS

I would just add to what you said about time being essential 

with the testing of fresh produce coming into the country, it is an 

area where we have huge opportunities to apply better science so 

that we can have onsite diagnostics to give us answers quickly and 

to be able to move products more swiftly, which matters to companies, and it matters to the quality of the produce, and it matters 

to people who want those foods on their plates. 

Mr. FARR. When you think about it, as we move from a fast-food 

society to this so-called slow food, fresh food, we are going to have 

to be extra fast at making sure the slow food is what we claim it 

to be. Thank you. 

Dr. HAMBURG. Thank you. 

Mr. KINGSTON. Mr. Farr, I was just complaining to the very distinguished Democrat clerk that I think you guys took out our timekeeper back here on the television. So you might have another 2 

minutes if you want. 

Mr. FARR. I am finished, Mr. Chairman. We have got to go. 

Mr. KINGSTON. Dr. Hamburg, we appreciate it. We are going to 

have to run on you. We will have a lot of questions for the record. 

But I do want to say you are an extremely important agency to 

every single household in America, And we all take a lot of pride 

in your work and we all have opinions of what you are doing right 

and what you are doing wrong. But we want to work through this 

process with you, and we appreciate what you are doing. And while 

the hearing is ending, our discussions won’t. 

So thank you, and this committee stands adjourned. 


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(325) 

WEDNESDAY, MARCH 2, 2011. 

DEPARTMENT OF AGRICULTURE 

WITNESSES 

PHYLLIS K. FONG, INSPECTOR GENERAL, U.S. DEPARTMENT OF AGRICULTURE 

ROBERT W. YOUNG, SPECIAL ASSISTANT TO THE INSPECTOR GENERAL ON RECOVERY ACT 

GIL H. HARDEN, ASSISTANT INSPECTOR GENERAL FOR AUDIT 

KAREN L. ELLIS, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS 

JOHN LEBO, DEPUTY ASSISTANT INSPECTOR GENERAL FOR MANAGEMENT 

Mr. KINGSTON. The committee will come to order. We certainly 

appreciate you being here, and wanted to welcome not just the inspector general, Phyllis Fong, but the deputy inspectors, Bob Young 

and Karen Ellis, and Suzanne Murinn. 

Okay. We appreciate your being here today and appreciate your 

testimony, because I think it is one of the most interesting hearings that we ever have on the hill, and particularly in this committee. It is always well received. We have found that the op tempo 

right now on Capitol Hill is pretty fast, and everybody has not just 

one hearing at a time, but often three. 

With that, let me yield to Mr. Farr, if you have any opening 

statement. 

Mr. FARR. I am interested in hearing the testimony, and then I 

have a couple questions. Thank you, Mr. Chairman. 

Mr. KINGSTON. So the floor is yours. 

Ms. FONG. Okay. Well, good morning, Mr. Chairman, and ranking member Farr. Thank you for the opportunity to come up today 

and talk about our work at USDA. And I want to start out by acknowledging the appreciation that we in the OIG have for your interest in our work and your longstanding support for us, and we 

want to congratulate you on your new role in the leadership of this 

committee, and we look forward to working with you as we move 

forward in the next few years. So let me go ahead and introduce 

some of my colleagues today. 

Mr. KINGSTON. I was hoping you would, because I sure dropped 

the ball on it. 

Ms. FONG. Yes. We had some last minute changes, so let me 

help. 

Sitting here at my far right is Jack Lebo, who is the Deputy Assistant IG for Management. Next to me is Karen Ellis, who is the 

Assistant IG for Investigations. On my left here is Gil Harden, who 

is the Assistant IG for Audit. And at the end of the table is Bob 

Young, who is the Special Assistant for Recovery Act, and the reaVerDate Mar 15 2010 05:36 Jun 14, 2011 Jkt 066581 PO 00000 Frm 00325 Fmt 6601 Sfmt 6601 E:\HR\OC\A581P2.XXX A581P2

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son they’re all here today is because they’re going to answer all the 

tough questions. So just feel free to direct them to them. 

Well, you have my full written statement, so I just want to offer 

a few brief comments on three areas of Department activity where 

we have really been focusing our attention, and those three areas 

are, as you can imagine, oversight of the Recovery Act money; secondly, strengthening food safety; and, third, looking at improper 

payments within the Department, which is an issue of great interest to all of us. So let me start out with our work on the Recovery 

Act. 

As you know, the Department received $28 billion across a broad range of program areas, and with your support we received $22 

million to provide oversight. So we are looking at virtually every 

‘‘Recovery Act’’ program to ascertain whether the recovery moneys 

have been spent efficiently and in accordance with the law. Currently, we are looking at program delivery. We are looking at 

whether the people who got the money should have gotten it, and 

we are looking at whether the funds went for the correct purpose. 

Next year we are going to be looking at performance results to 

see how the performance measures were met. So this year I just 

want to highlight a few audits that were significant. We issued an 

audit on single family housing guaranteed loans, where we found 

that 28 out of our sample of 100 loans were made to ineligible borrowers. 

We also issued a report on the single family housing direct loan 

program where we found that the agency did not ensure that calculations of borrower eligibility were current when they closed the 

loans. And then we did some work in the SNAP program where we 

found that the agency did not review state fraud detection units, 

which are a critical part of the management of that program. 

Let me just turn to food safety next, which remains a top priority 

for us. We focus in this area on making sure that USDA programs 

safeguard the food supply. We have issued two audits. Let me talk 

about two audits. We have issued one on beef trim and E. coli 

where we found that the agency could do a better job of taking 

samples of E. coli in ground beef to ensure that the product is free 

of contamination. 

We have also started work in the multi-state egg recall area. We 

are looking to see how effective USDA’s system is for detecting salmonella; and, as you can imagine, this work is going to take us a 

little bit of time. We are in the middle of it, but we were very troubled to learn that of the 288,000 eggs that were recalled last fall, 

over 270,000 of them had the official USDA grade mark on them. 

And we are trying to understand how that could have happened 

and how the coordination between AMS, FDA, and others worked 

in that situation, so we are right in the middle of that work. 

In the area of improper payments we are spending a lot of time, 

because we believe it is important that USDA programs deliver the 

correct benefits in the right amounts to the right people; and so, 

we have done a number of audits in this area over the past year. 

We looked at USDA’s suspension and debarment program, and we 

found that that program is not working as well as it should. The 

Department could better protect its programs by debarring individuals and entities that have been convicted of committing crimes 


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against the government, and we found that the Department actually rarely suspends program violators in that sense. 

We also are in the middle of looking at the BCAP program, the 

Biomass Crop Assistance Program. Some of our initial assessments 

in this area are that the program suffered from hasty implementation, and so the management controls in that program are not as 

good as they should be; and, as a result, it appears that USDA may 

have inappropriately made matching payments to some landowners, so we are in the middle of looking at that as well. 

In the SNAP program, which is of course one of the Department’s 

largest programs, we devote a lot of effort to looking at fraud committed by retailers. We have done a lot of investigations in the past 

year on benefits trafficking, which are situations where a recipient 

exchanges his or her SNAP benefits for less than face value with 

a retailer, and then the retailer redeems and claims full reimbursement from FNS. And we found that the amount of money involved 

in that kind of fraud can be very significant. It can be in the millions of dollars. 

For example, we had a case in Florida where two retailers were involved in about $6 Million in trafficking. They were successfully 

prosecuted as a result of our investigation. We are also doing audit 

work on improper payments in FNS. As you know, the SNAP and 

the school lunch programs are high risk programs, and so we are 

looking at how the Department is addressing, how it plans to address these rates of improper payments, how it plans to bring down 

those rates, and we anticipate issuing some audit reports this year 

with some recommendations on that. 

And so in conclusion, we look forward to answering your questions; but, before I end, I want to respectfully request your support 

for the President’s request for us for Fiscal Year 2012. I understand that we are in a very difficult budget situation, and I understand that government-wide, we are all trying to deal with this 

issue of the deficit. 

We do believe that our work provides value, and so we ask that 

you consider the request for our office as favorably as you can. So 

we look forward to answering your questions, and thank you. 

[The statement of Ms. Fong follows:] 


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Mr. KINGSTON. Well, thank you very much, and in response to 

your last request, often those numbers are actually set by another 

committee, and so we don’t have as much control on it as we want 

to ourselves. But we certainly plan to work with you, and we do 

recognize the importance of your good work. 

One of the questions that I wanted to ask you about in terms of 

the error rate and improper payments, though, you have not mentioned farm payments, and I think that we should look very carefully at SNAP error rates and at farm payment error rates. And 

one of the reports that I have read, and it may have been last 

year’s testimony, but it was one of your reports, it was just incredible to me the number of people who had broken the law fraudulently, and yet still were involved in the program. 

And your number of 3981 that says FNS did not debar 3,981 

SNAP retailers, I am just amazed. Why? Why is that so hard? Why 

is that even a thought process that if you break the law, you know, 

maybe we are not going to take you to jail? Maybe we are not the 

ones to prosecute you, but we are the ones who say you are not 

going to participate in the program anymore, and so that’s it. 

SUSPENSION AND DEBARMENT

Ms. FONG. Well, I think we agree with you that the suspension 

and debarment process needs a lot of work within USDA, and we 

feel very strongly that if a person has been convicted of a crime, 

especially involving a federal program, it makes perfect sense to 

debar them from participating in USDA programs as well as all 

government programs, and we are working with the Department to 

implement that. 

I know that on our investigation side, whenever we have convictions and indictments, we provide a monthly report to the agencies 

within USDA and we make it known to them that here it is. Here 

is the list. Some agencies are more responsive than others; and, I 

think one of the issues that we are dealing with right now is working with the Department on its regulations, on suspension and debarment, to make sure that the exclusions that they have for certain program areas really make sense. 

We do not have a basis for evaluating whether their exclusions 

make sense, but we do question them. So we are working on that. 

Mr. KINGSTON. Who is responsive, and who is not? 

Ms. FONG. I believe RMA has been responsive. 

Mr. HARDEN. RMA is actually one of the agencies that is most 

responsive and uses suspension and debarment quite actively. FNS’ 

explanation to us, which we are still working with them on, is that 

they put the retailers on it. 

Mr. KINGSTON. RMA is who? 

Mr. HARDEN. The Risk Management Agency. 

Mr. KINGSTON. Yeah. I was thinking Risk Management. 

Ms. FONG. Crop insurance? 

Mr. KINGSTON. No, Risk Management is involved in SNAP. 

Mr. HARDEN. No. You asked where in the department. 

Mr. KINGSTON. Oh, okay. All right. Yeah. Okay. So you are talking farm. 

Mr. HARDEN. It is outside of FNS. 


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Mr. KINGSTON. Yeah. I got it. We were blending farm payments. 

Okay. Who is not responsive? 

Mr. HARDEN. One of the examples that you gave with FNS is 

they put their retailers on a list that takes them out of the program, but they don’t share them with the actual list that debars 

them from all government programs. And that’s where we are 

working at the department now on each one of the recommendations to work with the agencies as to their justification for excluding programs for suspension and debarment. 

Mr. KINGSTON. Why is that so hard, though? Because here we 

are working with it and I understand your role is working with 

them; but, it still seems to me that under the management of 

USDA it shouldn’t be that much of a mystery. Either you are doing 

this or you are not doing it, so I am asking your opinion of it. I 

am not holding you responsible. 

Mr. HARDEN. I am kind of in the same boat you are. We don’t 

understand why it is so hard. But when we start talking to the different agencies and counsel’s office, and trying to see and provide 

us with evidence as to why something should be excluded, they 

have yet to provide that information, so we still have those recommendations open. 

Mr. KINGSTON. Well, you know, it is interesting. In this town, 

both parties always talk about waste, fraud and abuse as a way to 

cut spending, and we are all in agreement with that. You are the 

folks who always have these unbelievable stories of waste, fraud 

and abuse, and yet in my years on this committee in Democrat and 

Republican Administrations, it always seems to be that we are 

working to get this under control. 

I think right now we need to go ahead and get this under control, 

and any advice you can give us on, okay, here is how to do it, because these folks aren’t going to do it on their own. You’ve got to 

go ahead and put a hammer on them and make sure it is done. So 

my time is up, but I want to continue that discussion. 

Mr. Farr. 

Mr. FARR. Well, thank you, Mr. Chairman. I will just follow up. 

I mean is the authority there for all the agencies to do it? Is the 

training, because it is sort of a legal role. You can appeal these, I 

imagine, so is it a lack of training among personnel? I mean what 

is it it takes to crack down? And it is universal in the department. 

I mean you didn’t go into any of the farm payment programs, 

and you know, we just hear abuses of that all the time, usually, 

reading about it in the press; but, you audit those payments as 

well? And nothing in your report here about it. 

Ms. FONG. Let me address suspension-debarment at a more philosophical level. 

Mr. FARR. Okay. Yeah. 

Ms. FONG. This is an issue that it is very difficult, and we see 

it among many departments and agencies in the executive branch, 

because frequently IGs come in and say, ‘‘you need to really pay 

attention to this, you need to act against the bad actors.’’ What you 

will hear from the program side is ‘‘Well, we understand that, we 

see where they made a mistake, but we depend on these entities 

to deliver the programs.’’ And so if we were to debar them or suspend them, there would not be an adequate delivery. 


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Mr. FARR. But a lot of those you are talking about programs that 

go to private sectaries, and aren’t they bidding on those programs 

competitively? Isn’t there some competition out there who could 

pick up that bid if they were disbarred? And aren’t you in charge 

of the counsel of all the AGs to be looking at this? 

Ms. FONG. Exactly. Exactly. And the reason I am bringing this 

up is because a number of us as IGs have testified on this issue 

in the last year. There’ve been hearings in some of the other committees on the hill. We are all dealing with these issues. And so 

what we are trying to do as a group of IGs is to make sure that 

our internal processes work, that we are identifying parties that 

are appropriate for suspension or debarment, that we are providing 

notifications and lists of those parties to the departments, and that 

we are issuing reports that point out where the department really 

needs to do further work. 

Mr. FARR. Is the procedure for this different with each department? 

Ms. FONG. Well, each department has its own regulations. 

Mr. FARR. Okay. 

Ms. FONG. And I think USDA’s are unusual. 

Mr. FARR. Do they have enough authority? I mean there is nothing missing in congressional enactment that you need. It is just 

trying to get a standardized process, somewhat standardized process here, if they each have their own regulations; but, it seems to 

me that this sort of—all the reporting of contract frauds I mean— 

you know. Bill Gates is next door and I will bet there is a lot of 

discussion going on right now about defense contractors. 

But, you know what? Your testimony is essentially the same as 

the testimony was made 20 years ago to this committee, and what 

is changing in this field? And I think the chairman is right about 

suspension and debarring of people. 

Mr. KINGSTON. Will the gentleman yield? 

Mr. FARR. Sure. 

Mr. KINGSTON. And I am going to emphasize that there is a high 

degree of frustration here, because I think Mr. Farr is absolutely 

right. Ten years ago, different administration, different people at 

the table, different people on this panel but same testimony, and 

I think we really would love to see, you know, the end of all this, 

whatever. 

Our constituents are crying for it, and I feel very strongly that 

whether it’s ‘‘Red’’ state or ‘‘Blue’’ state politics, it should still be 

the same measurement. We have got to crack down on this. So we 

have a lot of unanimity, I guess, on that. 

Mr. FARR. Do you need more authority? 

Ms. FONG. I don’t believe it is an issue of authority. And to add 

a little more nuance to this, we are engaged with the Department, 

the CFO’s office, the chief financial officer’s office is engaged with 

all of the agencies to move them forward on this and we are in consultation with them on their regulations. 

We believe that progress is being made, although it is slow, and 

so we are continuing to engage with them. We are not going to let 

this issue drop, because it’s a government-wide issue and we need 

to prioritize. 


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Mr. FARR. Do you prioritize? I mean there are some issues here 

about SNAP, and I am glad you are going after, sort of, the vendors, rather than just the individual, who may be poor and illiterate and may be misqualified; or, essentially, children who are in 

the wrong line in school, I mean, you are looking at the bigger cost 

issues. 

I have some follow-up questions, but my time is running out. But 

I really get a sense of, I mean, what I think is what we are surprised to see; that there is nothing in here about the farm payments that are being made, and that whole list of categories that 

I think we yesterday pointed out that there were—what—32 different programs of dealing with where individuals could qualify for 

federal assistance. 

Ms. FONG. Well, our testimony was developed, focused on sort of 

the highlights of what we have done in the last year. That’s not 

to say that we are not looking at the farm programs. We have a 

lot of ongoing work in that area; and, in terms of improper payments, we have, as you know, responsibilities under the new improper payments law in the executive order to look at the Department’s efforts across the board to make sure that each agency is 

identifying in where their improper payments lie and that they 

have good plans to remediate their improper payments. And so we 

are in the middle of doing all of that, and FSA, you know, is among 

our list of entities to look at. 

We also have work going on in BCAP, which I think you might 

have noticed we highlighted in our testimony. We are very concerned about how that’s all developing. 

Gil, would you like to add? 

Mr. HARDEN. Another area that we will be looking at improper 

payments for farm programs is the SURE program, which is a new 

program. 

Mr. KINGSTON. Did you say SURE or sugar? 

Mr. HARDEN. SURE, supplemental revenue. I am trying to remember what the acronym stands for. 

Mr. KINGSTON. Well, is it a disaster program? 

Mr. Latham. 

Mr. LATHAM. Thank you, Mr. Chairman. 

I guess somewhat to follow up on the topic here in your semiannual report, the second half of 2010, your investigation disclosed 

two brothers who were able to defraud SNAP of about $800,000 

over three years by exchanging SNAP benefits for cash. And a 

similar problem was found in the WIC program. What we have 

been told for years, that this wasn’t going to be happening, to the 

extent that apparently it is, what is happening? Is there something 

new going on, or what? 

Ms. ELLIS. Is this on? 

Mr. LATHAM. There is no button there or switch. 

Ms. ELLIS. Okay. Good. It makes it easy for me. What we have 

found, I mean I think the idea being that going to the electronic 

benefit transfer would eliminate or reduce fraud. I think what we 

have found out in our work is that it has made it easier for us to 

build our investigations, because everything is done electronically, 

and there is a record now. 


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We get to a point now when we do our investigations where we 

can literally sit in our office, and on a computer watch transactions 

occurring. So it may have had a deterrent effect, maybe, at first. 

But what we have found is that for us the crime has just become 

more sophisticated, more technologically advanced, making it much 

easier for us to build our cases more so on paper; whereas, before, 

our EBT cases, or at the time our food stamp cases, were more field 

work intensive. So it has just raised the level of technology. 

Mr. LATHAM. So it is easier for you to track, but we still have 

very innovative people out there trying to do. 

Ms. ELLIS. Yes, and they do try to find different ways to circumvent the system. 

Mr. LATHAM. In your opinion, are there things that we could do 

legislatively or whatever to help you or to really crack down further? 

Ms. ELLIS. I think for our purposes the tools are there for us 

with regard to legislation and laws. I think it is a matter of working closely with the agency and the agency working with the states, 

and where my audit counterpart can help out with finding where 

there are weaknesses or loopholes and make suggestions to the 

agency. 

I do have to say though that in my years of working at USDA 

and working with FNS, they are always very open to our side of 

the house to investigations. When we find problems, they will work 

with us to try to remedy them. 

FRAUD IN RECOVERY ACT PROGRAMS

Mr. LATHAM. In the same report, rural development and the ‘‘Recovery Act’’ had $1.56 billion in loans that were meant for buyers 

of very low incomes for the single family housing direct loan program, if you look over here, where the answer is over here. Okay. 

And, apparently, there were some people getting loans that their 

incomes were not being verified or too high to qualify, or something, what is the reason for that or what needs to be done? 

Mr. YOUNG. Well, in that particular case, the rural development 

or rural housing service wasn’t getting the documentation they 

needed to review. They hadn’t set up a second party review, so 

loans were being approved, but they didn’t have that second party 

review to ensure that they had all the information ensuring that 

the people getting those loans were eligible for the loans. Their control process broke down and allowed some ineligible loans to be 

made. 

Mr. LATHAM. Were there guidelines in place to verify? 

Mr. YOUNG. Yes. There were guidelines. I think the reason some 

of this happened, you had a lot of money that needed to get out 

very quickly. And some of the people were somewhat overwhelmed 

because of the number of loans they were making. And, as a result, 

some of the controls fell by the wayside, such as second party review. 

Mr. LATHAM. Who was rushing? 

Mr. YOUNG. There seemed to be within the agency staff, a feeling 

that since this money was made available, they wanted to get that 

funding out or those loans out as quickly as possible to address the 


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recession, to address the farmers that needed help in the housing 

area. 

Mr. LATHAM. Okay. So I mean was there a dictate from above, 

or something, that said no matter what, don’t follow the rules. Get 

the money on a shovel and move it out the door? 

Mr. YOUNG. No. I am fairly sure there was no one saying don’t 

follow the rules. But I think just the sheer volume of the work they 

had to do, when you have so many people and so much work to do, 

sometimes some of those controls fall by the wayside because of the 

sheer volume of program participants. 

Mr. LATHAM. Okay. My time is expired. Thank you. 

Mr. KINGSTON. Ms. DeLauro. 

Ms. DELAURO. There are a couple on your side over here before 

I was, so let them. 

Mr. KINGSTON. Mr. Nunnelee. 

Mr. NUNNELEE. No questions. 

Mr. KINGSTON. Mr. Grace. 

Mr. GRACE. I am listening in awe. 

Mr. KINGSTON. Ms. DeLauro. 

Ms. DELAURO. Thank you, Mr. Chairman. Just a couple of random observations. 

SNAP PROGRAM ERROR RATE

First of all, I don’t know, and if we could get this information, 

how the SNAP error rate of approximately 4.4 ranks in comparison 

to other government programs, and that is such as direct payment 

to farmers, oil subsidies, or mineral subsidies. I also understand 

there were serious mistakes that were greater than anything that 

we are talking about here, and the guaranteed housing program, 

that in fact were the errors. And the people who were responsible 

were bankers, and that is in your testimony. 

So it would be interesting to note that 27,000 loans were ineligible for the program—33 percent of the portfolio with a projected 

total value of about $4 billion. So I think it would be useful to lay 

out, because there is always an abiding interest in what happens 

in the SNAP program. It is always interesting to me that that is 

the place where we direct our attention. But we have got some 

other serious offenders here, and quite frankly the error rate, I believe, since 2004 has gone from around 10 percent down to about 

now 4 percent. 

We have had a tremendous rise in the number of people participating in SNAP, and as I congratulated Secretary Vilsack, yesterday, I think that managing that increase with an error rate that 

is a low one by some standards, but I think for the benefit of the 

committee, it might be useful to look at this information so that we 

can have an accurate picture and not just kind of cherry pick, either from the side of a farm payment issue, or from the side of the 

SNAP issue. So let me ask you to provide me with that information, if you can. 

Ms. FONG. Okay. 

Ms. DELAURO. And SNAP is USDA’s largest program in dollars 

spent, number of participants, so we are looking at what is ostensibly a low error rate. That doesn’t say we shouldn’t correct what 


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we need to, but we ought to be equitable in our correcting and emphasize where the most egregious offenders might be. 

And I don’t know if you know something about what the percentage of error rate with regard to the guaranteed loan program, with 

the mineral subsidies. I don’t know if you have that off the top of 

your head, now. 

Ms. FONG. We can provide a chart, too, that the Department 

compiled in its Fiscal Year 2010 PAR—— 

Ms. DELAURO. That would be great. 

Ms. FONG [continuing]. Which lists the improper payment rates 

for all of the agencies within USDA. 

[The information follows:] 


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Ms. DELAURO. One of the things I wanted to follow-up, something that Mr. Farr said. Well, we are going to get another round, 

I am sure. What would you need? In other words, you make recommendations to the agencies, and this is every inspector general. 

And it is nice to see you all again, anyway. Thank you very much 

for being here. 

You make the recommendations and then you rely on the agencies to carry out the recommendations. Correct? 

Ms. FONG. Correct. 

Ms. DELAURO. Is that right? Now I am also taken with, so then 

with your portfolio of the various audits, investigations, and what 

you have to do, and agency recommendations, and following up 

year in and year out, you need to have staff that deals with all of 

that for you to have accurate information and data to know what 

they have done and what they haven’t done. Correct? 

So I have got a two-part piece here. One is what else could we 

do for you that would allow you to have a greater opportunity for 

follow-up with the agencies to see where they are going and to be 

able to monitor that more closely. And then I would like to ask you 

is given that the OIG’s office is cut by $8.7 million under the budget that was passed last week, it is a reduction of about 10 percent. 

The USDA OIG’s budget was cut more than any other IG office 

in other departments again, as I understand it. Treasury, Interior, 

a cut of one percent. The less, Defense IG, received an increase of 

17 percent, because ACR would be enacted. So late in the fiscal 

year what would be the impact of the cut to your office? Would you 

have to furlough employees? If so, how many? 

How would this impact the work of the OIG? Would audits, investigations have to be delayed or suspended? Would the office 

miss statutory deadlines for audits? How would your office have to 

reassess its priorities? Would your office have to shift away from 

investigating improper payments in order to focus on public health 

and safety priorities? 

My time is up. I’ll repeat them in a second go-round so that you 

can answer this for us, both from the point of view of what you 

need to continue to follow-up on these investigations and audits, 

and what would the majority’s cuts to the OIG budget at USDA 

mean in terms of your workload and your personnel? 

You can answer it in the next round. Mr. Chairman. Thank you. 

Thank you for your indulgence. 

FRAUD IN FEDERAL PROGRAMS

Mr. KINGSTON. Thank you. 

Ms. Fong, what I don’t understand is it appears that the fraud 

is common. Would you say that that’s true or false? 

Ms. FONG. Fraud is common in any particular program? 

Mr. KINGSTON. In all of them. I mean from the housing to farm 

programs to SNAP. Those are the three we have talked about. It 

seems to be common. 

Ms. FONG. I think what I would say is that in general, if you 

have a federal program that has a lot of dollars and, in particular, 

in situations where dollars are going out quickly and people see an 

opportunity, it is human nature that there will be some element of 

the population who will look for a way to take advantage of a fedVerDate Mar 15 2010 12:14 Jun 14, 2011 Jkt 066581 PO 00000 Frm 00351 Fmt 6601 Sfmt 6602 E:\HR\OC\A581P2.XXX A581P2

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eral program. And so, I think, if you look government-wide, virtually every program will have some level of fraud. Now, that’s not 

to say that while that’s not surprising, that’s why we are here. 

Mr. KINGSTON. But would you say the government is easier to 

steal from than other places? 

Ms. FONG. Well, I don’t know if it is easier to steal from the government or other places. 

Mr. KINGSTON. That is why I voted against a bailout. [Laughter.] 

Ms. FONG. But I will say that I think the government has in 

place a structure to try and deal with those situations, and that 

structure is comprised of program managers on the very first level 

of defense who need to pay attention to make sure that their programs are run effectively and have the minimum potential for 

fraud. And then the next level of defense is the IG system, which, 

you know, is here to help the program managers get a third party 

objective look and advise on how they can tighten up. And, if in 

fact people get through and commit fraud, we are here to go after 

them so that there is a deterrent effect against future fraud. 

LOAN GUARANTEE PROGRAMS

Mr. KINGSTON. Well, let’s talk about the $4 billion in the loan 

programs, the loan guarantee programs. It said that a lot of people 

got loans that weren’t eligible. Did any employees of the USDA lose 

their job because of that incompetency? Ms. Fong. 

Ms. FONG. I would suggest—my sense is that the answer is no, 

but you might want to ask the undersecretary for RD that question. 

Mr. KINGSTON. Okay. You know that is an interesting response, 

because last year I had a similar question to you, and you had said, 

‘‘No. You need to ask them, because we only make the recommendations.’’ Maybe there needs to be something that bridges 

your action with their action a little bit stronger, because it appears that if your recommendations are merely academic, and then 

from then on out somebody is not going to do anything about it, 

then we are going to continue to have these repetitive hearings. 

I had a friend of mine, many, many years ago, right out of college, real smart guy, was the treasurer of his church. I mean he 

was like 23 years old, just out of college, a really bright kid, and 

figured it out that the preacher was stealing money out of the collection plate. And he went to the adults on the vestry and he told 

them. This was a preacher. Everybody loved the guy. He was great. 

How could he be stealing? It can’t be possible. 

So what they ended up doing is they planted $20 bills in the congregation and wrote down the serial numbers, and they did this 

several times. And the last person to get the collection plate was 

the preacher and those $20 were gone. So they went to the church, 

and the church said—their reaction, and this is my 23–year-old, 

idealistic friend who believes in everything good and great and the 

church says to him—the upper church says, ‘‘Well, don’t do anything rash. You have to be careful about these things.’’ This is a 

preacher stealing! And the message to the 23-year-old was, you 

know, you don’t always have to play by the rules. They’re optional. 

And I wonder if we haven’t sent that signal in the USDA that, 

you know, some fraud is going to happen, and maybe we are not 


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going to be that tough about it. I mean $4 billion in the loan guarantees and nobody gets—— 

Ms. FONG. Let me just clarify, a little bit. In that audit we found 

that it appeared that a number of borrowers who should not have 

gotten housing loans got them. Now, as it was pointed out, it was 

a guaranteed program, so the banks are the ones who bear the 

brunt of it. 

Mr. KINGSTON. Did they get eliminated from the program, from 

eligibility? 

Ms. FONG. I don’t believe RD has taken action on that, and here 

we get into the whole issue of how the program agencies want to 

deliver their programs. 

Mr. KINGSTON. But, the banks, just like the grocery stores, 

should be responsible for their own employees and they should not 

be eligible anymore. And if we are sending a signal, that is the option. 

Ms. FONG. Well, I do not believe our office is sending that signal. 

We have gone up against the program. 

Mr. KINGSTON. Does it drive you crazy? 

Ms. FONG. Yes. We have continuing debates about this audit. We 

have briefed the Secretary and the Deputy Secretary, and they are 

committed to taking action. 

Mr. KINGSTON. Well, my time has expired, but I think what 

would be really good is you guys turning up the volume to us and 

saying, ‘‘Okay, you people in Congress need to know we are giving 

the same testimony over and over again. And you are the bridge, 

and it is not getting through to the people who should be taking 

role and kicking tail. And it’s not happening. We can’t do it, but 

you all can.’’ And I don’t think we are hearing that from you, because what I’d like to get, we will have another round, is some recommendations where do we go from here. 

[The information follows:] 

(Recommendations for what needs to be done to strengthen ‘‘the bridge’’ between 

OIG recommendations and implementation.) 

Agency leadership and staff have been very positive in responding to OIG’s recommendations. OIG works closely with agency officials and staff to timely reach 

agreement (i.e., achieve management decision) and, in coordination with the Office 

of the Chief Financial Officer (OCFO), implement agreed to actions. However, issues 

do arise in reaching agreement and final action on some recommendations. When 

that happens, we follow established procedures to elevate our concerns. 

In USDA’s Departmental Regulation on Audit Followup and Management Decision, DR 1720–1, Appendix A (which is currently being updated), there are specific 

steps in place that agencies are to follow in reaching agreement on OIG recommendations. Included are elevation milestones if agreement is not reached within 

a 6-month timeframe. The timetable and actions described below do not preclude 

elevation to the next level at any time. The timeline follows. 

• Within 60 days of the audit release date, the agency must propose a preliminary management decision to OIG for each recommendation in the audit report for 

which there was no management decision made at the time of report issuance. 

• If an agreement with the preliminary management decision has not been 

reached within 90 days, both OIG and the agency will alert their respective senior 

officials of the differences and potential problems in reaching agreement. 

• If agreement has not been reached within 120 days, OIG will prepare an Audit 

Decision Paper summarizing disagreement with the preliminary management decision, and will discuss the Audit Decision Paper with the management officials. 

• If agreement with the agency head has not been reached within 135 days, the 

Audit Decision Paper will be elevated by OIG to the applicable Under or Assistant 

Secretary. 


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• If, after 150 days, an agreement has not been reached, the Audit Decision Paper 

will be elevated by OIG to the Department’s Audit Follow-up Official, the Deputy 

Secretary, who will render a management decision. 

If an agreement still has not been reached within 6 months (180 days) after 

issuance of the final report, the audit is reported in OIG’s Semiannual Report to 

Congress. 

In April 2010, the Secretary established an initiative to close out late OIG recommendations. The agencies have taken the Secretary’s initiative very seriously. All 

agencies are working diligently with the Office of the Chief Financial Officer, who 

has been instrumental in this initiative, to reach final action in order to get old recommendations off the books. Agency staff have also been responding more timely 

to new recommendations reported by OIG. 

Mr. Farr. 

IG AUTHORITIES

Mr. FARR. To follow up on that, you don’t take the legal action, 

you just point out the error or the misconduct, and then it’s up to 

the agency’s lawyer to prosecute? Or what is it, AG? 

Ms. FONG. Or take whatever action. In this case, I don’t believe 

we found fraud in any of those situations. It was not fraud. It was 

more oversight or not following the regulations, so it’s not criminally prosecutable. And so, then the question is what is the agency 

going to do about it. Is it going to comply with its regulations or 

is it going to change its regulations? 

I think that is a policy issue that they are struggling with right 

now. Let me just address, philosophically, the whole structure of 

what IGs do, and I think all of you are bringing this issue on the 

table out of a sense of frustration; and, certainly, we have that 

sense as well. As IGs under the law we report to you and we report 

to the Secretary, and we issue our reports directly to you and we 

testify before you. 

We bring to you issues that we think are significant, and I am 

very pleased that at these hearings you are so interested in what 

we are hearing and you want to see further action—I think you are 

going about it the exact right way—that you are having these oversight hearings, that you are talking to the Department officials, the 

policymakers, and you are putting it on the table with them: What 

are you all going to do about this; because that is exactly the right 

role for you and for us. 

Mr. FARR. But that goes to my question of the authorities. I 

mean you have authority to blow the whistle, but you don’t have 

the authority to stop the game. 

Ms. FONG. Precisely. The Inspector General Act very clearly says 

we cannot run a program. We do not make decisions on funding. 

We cannot fire employees unless they are within our own office. 

And it’s there for a reason. 

Mr. FARR. But you pointed out in your testimony what you are 

going to do with your additional money is you are going to increase 

the instruction on suspension and debarring. Is that the right 

word? To give the agency staffs the knowing how to do that properly, right, is that what it takes? 

Ms. FONG. We can. Part of our role is to inform, to educate, to 

persuade, and convince. A part of our role is to provide information 

so that the agencies can act on that information. 


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Mr. FARR. But your responsibility then is to train people on how 

to use the authorities they have to take some legal action to stop 

the game, so to speak. 

Ms. FONG. I would hesitate to use the word ‘‘responsibility,’’ but 

I will say a role that we can play is to educate and train. 

Mr. FARR. Well, I mean I think everybody on this committee is 

frustrated. And I am sure every committee and subcommittee of 

appropriations is frustrated in hearing this testimony, because 

yeah, we do like to hear the whistleblowers, but we are frustrated 

that once you hear it that the agencies aren’t playing the role 

they’re supposed to play to effectively remedy the situation. 

STATE ENFORCEMENT OF SNAP

I mean throughout your testimony, that’s what I kept understanding, and some of your audit responsibilities are, because some 

of the cops in this are not federal cops. We deal with states. What 

are the states that have the worst reputation of not being able to 

do enforcement? 

Ms. FONG. You are talking about the nutrition programs? 

Mr. FARR. SNAP is the biggest program in the whole USDA. 

Ms. FONG. We may have to provide that information to you, because we don’t know that. 

Mr. FARR. I think you said you had that. 

Ms. FONG. Well, we have the improper payment rates. We can 

provide you a chart on improper payment rates within programs. 

Mr. HARDEN. That’s not the state. 

Ms. FONG. Right. Right. 

Mr. FARR. Pardon me? 

Mr. HARDEN. The listing of programs that have improper payment rates is not the same as the states that are the bad actors. 

That would be two different lists. 

Mr. FARR. What is the one—we have some information about 

Texas and Indiana. 

Ms. DELAURO. That is erroneous. The highest error rates, as I 

understand it, is Texas and Indiana. 

Ms. FONG. That may be. They are on the watch list, yes. 

Mr. FARR. So that is for error rates, but what we are talking 

about is weak enforcement. Right? 

Ms. FONG. Well, they may be related. The fact that there are 

high error rates may, if a state has a very high error rate, then 

the agency needs to be focused on that and to employ whatever 

tools they have to penalize, as it may. 

Mr. FARR. So walk us through the process. You have a SNAP 

program. It is the biggest program USDA has, the most money 

going out. You work for the states, because we don’t administer it. 

It is state administered. 

Mr. HARDEN. Right. 

Mr. FARR. So what we do is monitor. So if you find an error rate, 

then what? Who slaps the hands of the state and how do you do 

it? 

Mr. HARDEN. Well, where it starts, initially, is the Food Nutrition Service provides the oversight through their regional offices to 

the states, and states have high error rates. They have ways, for 

like the SNAP program, of administering sanctions to the different 


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states to encourage them to lower their error rates. And then they 

also have—— 

Mr. FARR. Encourage them to lower their error rate. 

Mr. HARDEN [continuing]. Bonuses. 

Mr. FARR. They just defrauded the Federal Government a lot of 

money and you are going to get encouraged. ‘‘Don’t do this anymore.’’ Is that all that happens? 

Mr. HARDEN. I am not going to be able to speak all of FNS’s process, but they are the first line of oversight in terms of—— 

Mr. FARR. But you are overseeing them. 

Mr. HARDEN. And we would go in and look at how they are running the program and are they following up and carrying out the 

roles and responsibilities that they have. And if we find that they 

aren’t, then we would be making recommendations as to how to 

strengthen those weaknesses. 

Mr. FARR. My time has expired. Thank you. 

Mr. KINGSTON. I think we’re seeing a theme here. 

Mr. Latham. 

Mr. LATHAM. Thank you, Mr. Chairman. 

In your testimony, there was a case in Massachusetts, a corporation that collected millions of dollars in government money for services they never provided. Apparently it was an IT training, or 

something like that. And it’s just amazing to me that this is a prepaid voucher system, where they got the money ahead of time but 

never provided the service. 

How widespread is this system? Is there no control over this? Or 

how did this happen? 

Ms. ELLIS. This is to kind of explain, when you buy a computer, 

sometimes you prepay on your personal computer training. And 

sometimes we take advantage of it, and we actually go to the store 

where you bought the computer, and we get that training, and 

sometimes we don’t. 

And in this case, it was very similar. It was a large company that 

gave IT-type training, that the government had contracts with. And 

certain training aspects were not followed through. 

The people did not go to the training. But still the company 

charged. 

In answer to your question, we did work this case jointly with 

several other federal agencies. And within USDA, there were a 

number—I’m looking at my list, I’m going to say maybe about ten 

different USDA agencies, that also had contracts with this company. 

So it was pretty widespread. 

Mr. LATHAM. Ten different USDA? 

Ms. ELLIS. USDA agencies that had contracts with this company 

for this training purpose. In addition to other federal agencies. 

Mr. LATHAM. With similar results with all of them? 

Ms. ELLIS. Yes. What had happened was our agency worked with 

other federal law enforcement agencies as a team, and we investigated this company and the various contracts. 

So we were able to pull all of our information together. 

GSA was one of them, Department of Commerce, and DOJ 

worked jointly with us. 


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Mr. LATHAM. Can you give me a list of the other agencies that 

were involved with this also? 

Ms. ELLIS. Yes. 

Mr. LATHAM. Please, if you would. 

Ms. ELLIS. I’ll supply that for the record. 

[The information follows:] 

(Listing of other agencies involved in investigation of the contractors and the prepaid voucher false billings.) 

Working with other Federal investigators, OIG determined that a corporation 

doing business in Massachusetts collected millions of dollars from the Government 

for services it never provided. The corporation offered training on computer software 

and other information technology. Using a pre-paid voucher system, agencies paid 

up front for training that the company never delivered. We found that several 

USDA agencies were victimized by this scheme. In April 2010, the corporation 

agreed in a civil settlement to return a total of $4.5 million to the Government. 

This was a joint investigation by USDA-OIG, General Services Administration 

(GSA)-OIG, the Department of Commerce-OIG, and the Department of Justice. The 

investigation involved USDA agencies affected by the corporation’s scheme, including: Agricultural Marketing Service, Natural Resources Conservation Service, Animal and Plant Health Inspection Service, Food and Nutrition Service, and Economic 

Research Service. 

OIG was recently notified that GSA’s Office of Acquisition Policy, Washington, 

D.C., determined it was not necessary to exclude the corporation or the president 

of the corporation from Federal contracting. The corporation is still providing services to GSA. 

Mr. LATHAM. And you’ve made recommendations, I assume, to 

the Department as far as how to correct or keep the integrity of 

this—I have real concerns about a voucher program where, it’s 

after the fact, the money’s out the door. 

Ms. ELLIS. Yeah. We work closely with the Department. What we 

did is we issued our reportive investigation, which then showed the 

results through DOJ of the sanctions that were taken in the sentencing. 

We then send it to the Department, to ask them to take some 

sort of admin action. This one that I am not sure that they’re in 

the process of debarring; because there are so many other agencies 

involved, especially GSA, who probably has the main contract. 

My guess is—— 

Mr. LATHAM. Why would they have to wait for other agencies, 

other departments? 

Ms. ELLIS. Well, we would work with them to make sure they are 

debarred. There is like a list that this company would go onto. 

And that’s why—I personally don’t know right now who is actually taking the action, whether it’s us or—— 

Mr. LATHAM. No. But I mean, you said that you were waiting for 

other agencies to act. If you knew the facts in this, why wouldn’t 

you go ahead and respond? 

Ms. ELLIS. Oh, because we can’t enforce the actual suspension 

and debarment. We would have to wait for the USDA to take that 

action. And we would follow up with them. And my assumption is 

that they—— 

Mr. LATHAM. Are they acting? 

Ms. ELLIS. I don’t know the answer to that, offhand. 

Mr. LATHAM. Okay. 

In Puerto Rico in the Nutrition Assistance Program, apparently 

they’re allowed to cash in 25 percent. And this is U.S. taxpayer dollars going down to support the program. 


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But you are able with your nutrition program to get 25 percent 

of your benefit in cash. So potentially there’s about 250-some million dollars that could be used for other purposes, rather than nutrition. 

Is there any way of knowing where the money’s going? And now 

they’re talking about being able to use it in restaurants and fast 

food places, and—anybody? 

Ms. FONG. We did some work on that, the Puerto Rico program, 

a number of years ago. But I don’t recall the results. And I hesitate 

to speculate. 

But my guess is that Puerto Rico’s delivery system is unique. I 

think it’s the only jurisdiction that allows a cash takeout. 

Mr. LATHAM. Right. 

Ms. FONG. And I’m not sure if that’s a federal—— 

Mr. LATHAM. I just hope this isn’t a pilot program for the rest 

of the system. I mean. 

Ms. FONG. It doesn’t appear to be. 

Mr. LATHAM. Okay. 

Ms. FONG. I don’t know if that’s because of local law or a federal 

law. I just don’t know that. 

Mr. LATHAM. I think they have their own program that we pay 

for, yeah. 

Ms. FONG. Yes. 

Mr. LATHAM. Right. Thank you. 

Mr. KINGSTON. Ms. DeLauro. 

Ms. DELAURO. If I can, because I want to get in a question eventually about N60 testing, that you were engaged in. But let me just 

go back quickly to what I was asking about and answering the 

questions that I laid out. 

BUDGET CUTS

I think it’s clear that everyone wants to provide you with what 

you need in order to deal in terms of the followup. And it would 

be useful if we can have conversations about that, that would allow 

you to do your job better, given the nature of the law with regard 

to IGs. 

But given the nature of the cut that is intended, particular to the 

OIG at USDA—and which is not the case for other IGs, the impact 

on your office. 

And as I said, if you could tell me now. If you can’t, I would like 

to know this. But I want an answer to this. Would you have to furlough people? 

Ms. FONG. Okay. 

Ms. DELAURO. Yes? Or—— 

Ms. FONG. Short answer, yes. 

Ms. DELAURO. Okay. How many? Do you know that now? 

Ms. FONG. We would be looking at our whole staff. 

Ms. DELAURO. Whole staff? 

Ms. FONG. Our whole staff for a period of time. 

Ms. DELAURO. Your entire staff for a period of time, given the 

cut that was passed last week in the House of Representatives. 

How long would you have to furlough for? 

Ms. FONG. Our preliminary numbers would show, I think we’re 

looking at about six weeks. 


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Ms. DELAURO. Okay. 

Ms. FONG. And I should say that, you know, we would do it on 

a rolling basis. 

Ms. DELAURO. Fine. I understand. I’m just trying to get a sense 

of what we’re dealing with here. 

Obviously now maybe the next two questions are moot. How 

would it impact your work? Every audit, every investigation would, 

even if you rotated, it would have to scale back? 

Ms. FONG. Yes. There would be a tremendous impact. As you 

know, because of the nature of our work, we don’t have a lot of 

money in our budget. It’s all pretty much tied up in staff salary 

and benefits. 

Ms. DELAURO. Mm-hmm. 

Ms. FONG. And so any significant reduction would impact our 

staffing levels, which means that our priorities would have to 

greatly change. We would only be able to address the very highest 

priority work. 

Ms. DELAURO. Okay. And I really want this in writing. I want 

to hear from you about what this means. If we can’t quantify this, 

then we’re just dealing in speculation as to what this means. 

And I think it’s important for the members of this committee, 

and I think it’s important for the rest of the members of the House 

to understand what the nature of this cut, as a ten percent cut to 

the OIG, and particularly in your case what that means. 

And all of our discussion about improper payments, all the authorities, all that we would care about is really, it’s gone. It’s gone. 

We would not be able to follow up on any improper payment. 

Thank you. Let me move to N60 testing. 

Ms. FONG. I’ll provide that, for the record. 

Ms. DELAURO. Please, I would like that, for the record. 

N60 TESTING PROTOCOL

I want to say a ‘‘Thank you’’ to you for completing that audit on 

the N60 testing protocol. Which is, for my colleagues, FSIS’ samples beef trim for E. coli, taking 60 samples from large lots of beef 

trim to test. 

This was an audit that I requested in November. The OIG finding that this procedure does ‘‘not yield a statistical precision that 

is reasonable for food safety’’ is astounding to me. 

It confirms the concerns that have been expressed in that the 

sampling system is flawed. By recommending that FSIS redesign 

its sampling methodology to account for varying levels of contamination, it makes you wonder if it undercuts everything that they 

are working on now, since it seems like they have to start over. 

Questions: Is there an estimate of how much the E. coli 0157 H7 

levels in the FSIS regulatory sampling program have been understated by using the N60 sampling technique? 

What would be a better sample to capture a more accurate picture of the levels of E. coli, 0157 H7, in a bin of trim? 

FSIS adopted an industry-sampling technique, when it started to 

use N60. Industry has made claims that the levels of E. coli have 

been declining in beef. What would you advise the industry, based 

on your audit findings, for the FSIS sampling program? 


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Was OIG able to provide more specific recommendations to FSIS, 

beyond placing its testing process on sounder statistical ground, by 

redesigning its sampling technology? 

Given that FSIS generally agreed with the recommendation, do 

you have a sense of how much time this process would take? 

Mr. HARDEN. In response to the first questions, in terms of the 

prevalence rate? 

Ms. DELAURO. Yes. 

Mr. HARDEN. I mean, that’s part of the whole problem. They do 

not know what the prevalence rate is, and they had not completed 

the underlying study to know how prevalent E. coli is in beef. So 

that’s where they have to go back and really finish that study that 

was started, or start over with that. 

And then they would have to decide for themselves what type of 

confidence level they would be willing to take, so that that would 

then drive the types of samples or the size of the samples they 

would need to take. 

We did talk to them about that; it would be very resource-intensive, and we offered some alternatives that they could consider as 

they’re going forward, such as maybe dedicating a specialized team 

to go in to do the sampling that is needed; and also to make themselves aware of what the industry is doing in terms of testing; because a lot of big beef plants and companies do their own testing. 

Ms. DELAURO. Mm-hmm. 

Mr. HARDEN. And we’ve encouraged FSIS through several—— 

Ms. DELAURO. My time has expired. 

Mr. KINGSTON. Thank you. 

Ms. DELAURO. And the Chairman has been generous. So we’ll 

come back on it, so I can get the answers to the other questions. 

Mr. KINGSTON. We will. 

Ms. Lummis. 

Ms. LUMMIS. Mr. Chairman, the committee can enjoy a rare reprieve from the sound of my voice today. Thank you. [Laughter.] 

Mr. KINGSTON. You can always submit questions for the record. 

Mr. Bishop. 

Mr. BISHOP. Thank you very much. 

I was just looking at an analysis of the effects of the CR that was 

passed last week on your office, the potential effects. And I heard 

the discussion with Ms. DeLauro just now. 

CIVIL RIGHTS CASES

But last year, we also added some additional requirements for 

the Inspector General in connection with the Pigford case. And of 

course, there were several provisions that were put in there: Approval of neutrals, additional documentation, attorney certification, 

transparency of claims determinations, and distribution of funds 

and reports. 

And I don’t think there is a member of this subcommittee, or 

even in the Congress, who has any interest in seeing the Federal 

Government make one single payment to anybody who doesn’t have 

a legitimate and proven claim under the settlement. 

But I do have a couple of questions for you: 

There has been a significant amount of attention to the fraud 

issue. And I’d like for you, if you could, to briefly share with the 


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subcommittee your office’s experiences or your activities with respect to any fraud that was associated with the Pigford I claims. 

Then I’d like to know whether or not your office has been a part 

of any ongoing discussions with the USDA or the Department of 

Justice with respect to executing the legislation, particularly the 

fraud provisions, and what were those discussions; 

Whether or not it’s your office’s intention to focus potentially on 

Pigford, or we focus on fraud in the other classes of cases that were 

included in that legislation, and the bill requires that your office 

conduct a performance report audit of the claims processing. And 

I’d like for you to tell me how that is going to be accomplished. 

And what methodology you’re going to use in determining the 

processing in evaluating the validity of the allegations of fraud or 

fraudulent claims. How do you anticipate getting at that information? 

And overall, if you developed a plan of action to pursue examining fraud? 

And the final question: Do you have adequate staff and resources 

to carry out the responsibilities that were put on you by that legislation? 

Ms. FONG. Okay. Let me offer a few comments about how we’re 

going to approach the Pigford situation, and I’ll invite Gil and 

Karen to chime in. 

With respect to Pigford I claims and fraud, I believe our policy 

on that was to refer all potential fraud claims to the Department 

of Justice. And that mechanism has worked well. So we have not 

been involved in that. 

Now with respect—— 

Mr. BISHOP. Did you make any referrals? 

Ms. FONG. Yes, we did. 

Ms. ELLIS. Yes, we received a number of hotline referrals 

throughout the years. And we just packaged them up and sent 

them over to the FBI. 

Mr. BISHOP. Do you know how many of those were found to be 

meritorious, or valid? 

Ms. ELLIS. We have that information, but I don’t have that offhand. I could provide that for the record. 

Mr. BISHOP. Thank you. Would you? 

Ms. ELLIS. Yes. 

[The information follows:] 

(Provide information on the investigative results of the referrals you made to the 

FBI in Pigford I.) 

Since January 2000, OIG has referred a total of 2,083 complaints to the Federal 

Bureau of Investigation (FBI) involving allegations of fraud related to the class action suit filed against USDA known as Pigford I. The complaints were received via 

telephone, mail, fax, and e-mail. While we do not generally receive updates from the 

FBI, we have learned that of the 2,083 complaints referred, 3 individuals have been 

convicted and sentenced to date. 

Mr. BISHOP. Thank you. 

Ms. FONG. With respect to Pigford II, as you point out, the claims 

Resolution Act of 2010 included a requirement that our office do a 

performance audit of all claims before the claims are paid out, in 

an effort to prevent improper payments. 

And we have been working very closely with the Department and 

with Justice to get the timing on all of that correct, because we 


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can’t actually start auditing until the settlement agreement has 

been approved by the judge. And I think that’s still pending. 

But assuming that all happens at some point, and we get the access to information issues all ironed out, we will be keeping a close 

eye on how those claims are processed. 

And we are developing our audit plan to do a statistical and performance audit, which will be quite resource-intensive. And we believe this will hit our office some time by the end of this fiscal year 

into next fiscal year. So we will be quite busy in Fiscal Year 2012 

doing this work. 

In terms of the other classes who have claims against the Department—— 

Mr. BISHOP. That was the Native Americans and—— 

Ms. FONG. And the women? 

Mr. BISHOP. The women. 

Ms. FONG. Exactly. 

Ms. ELLIS. The Hispanic farmers. 

Ms. FONG. And the Hispanic farmers, yes. I think Secretary 

Vilsack announced recently that the Department has entered into 

an agreement with those classes. As part of that agreement, there 

is a provision, I believe, that says that the Secretary can make a 

request to our office to do a similar kind of audit, similar to the 

one that we are going to do for Pigford II, involving performance 

auditing, statistical sampling, to ensure that claims that are paid 

out are appropriate. 

And we anticipate that we could very well get that request. And 

if so, we would give that request very serious consideration. And 

that would involve quite a bit of our audit resources as well. 

Mr. BISHOP. Do you have the resources? 

Ms. FONG. Well, you know, we haven’t really answered that 

question for ourselves. We are committed to carrying out the requirements of the law. And we will do the audit. And what that 

will mean is that we will have to prioritize everything else. 

Mr. KINGSTON. The gentleman’s time has expired. 

SNAP ERROR RATES

Ms. Fong, I want to make sure the committee has this for the 

record, in terms of error rates on the SNAP program, Texas and 

Indiana are high. Maryland is actually in the second slot. That 

would be for 2009. We don’t know what it is for 2010. 

Now 2008 you had up there Connecticut had a very high rate. 

Ms. FONG. Five percent. 

Mr. KINGSTON. 8.16 for 2008. However, it improved remarkably. 

And also I want to say there were all kinds of other ones. I see a 

lot of fluctuation in these. 

Yeah, Iowa had a high one. Georgia’s okay, though. I’m proud to 

say. 

But the one I was real interested about, though, was Delaware 

had a very high rate in ’07 of nine percent, and now it’s 0.7. 

Do you have any idea how they improved that much? I’ll share 

this with—did you get involved in that? 

Ms. FONG. We have not done any audit work in Delaware on 

their improper payment rates. But—— 


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Mr. KINGSTON. Well, they certainly would win the most improved. 

Ms. FONG. You know, I think you have a good point there. 

Maybe—— 

Mr. KINGSTON. And maybe we should get some Delaware folks to 

Texas. I don’t know—— 

[Laughter.] 

Mr. KINGSTON. We might put them on the road. 

IMPLEMENTATION OF OIG RECOMMENDATIONS

Mr. Young, I want to ask you some questions, because I’m just 

picking on you. You’re a reemployed annuitant? Right? 

Mr. YOUNG. That’s correct. 

Mr. KINGSTON. And so you’re probably the freest person in this 

room. You can say whatever you want to say. And you’ve seen a 

lot of things. 

So whether it is guaranteed loans, whether it is fee cap, whether 

it’s foreign payments, whether it’s in SNAP, you’ve got to have 

thoughts on what needs to be done, from a recommendation standpoint. And they might be different in each program, we understand 

that. 

Mr. YOUNG. As far as—I guess it’s sort of a mixed bag amongst 

the agencies. 

We make a lot of recommendations in the audits we do. I think 

some agencies are very receptive and move forth to try to address 

what we’ve asked them to do, and do a pretty good job. 

I think there are others—and there’s a whole variety of reasons—it could be anything from staffing to they don’t necessarily, 

they’ve said they agree, but they don’t truly agree—in other words, 

‘‘I’m going to tell the IG that yes, we’ll go forth and do it,’’ but 

they’re not really committed to doing that, for a variety of reasons. 

It could be staffing, it could be they simply don’t agree with the 

concepts that we’ve come up with. 

But it’s a very difficult thing, as far as getting action completed 

and getting it completed timely. 

As I said, some agencies are great, they move very quickly. Others drag there feet. And then that’s where we work with the Department and try to push them, work with the Secretary, work the 

office of the chief financial officer, in trying to push those agencies 

to implement what we’ve recommended and to do it within a timely 

fashion. 

Mr. KINGSTON. Well, now Mr. Farr brought up, in terms of these 

programs, it’s more the institution that is at fault. And it might 

just be incompetency. Maybe it’s laziness. Maybe they’re not doing 

their due diligence on applications. 

But that’s where we’re concerned, because I’m assuming that’s 

where the big money is. 

You know, if a farmer participates, who isn’t ineligible, shame on 

him. And he should be penalized for it. But there’s also the other, 

you know, if there’s a government employee who wasn’t doing the 

paperwork right, and they’re repeat offenders, we would be concerned about that. 


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If there’s a grocery store chain, who has the employees, who are 

bilking the SNAP system, then it should be the chain that’s out of 

it. 

There should be a very high standard for that. 

And what I would like—as my time is almost over—is if you 

could submit to us, for the record, what would be your recommendations? Not broad at recommendations, but very specific 

recommendations, perhaps per agency, or whatever. 

Because we really, I think the tolerance level is very low at the 

moment. And there’s a great opportunity for all of us to do something for the American taxpayers, and say, ‘‘Look, we just are not 

going to put up with this anymore.’’ 

Year in, year out, it’s either fraud, or it’s incompetence. But money’s going out the door that should not be going out the door. And 

that money could be spent elsewhere. 

And my time is up. And Mr. Farr? 

Mr. FARR. Thank you, Mr. Chairman. 

APHIS

Let’s go to one of the agencies. 

First of all, I want to thank you very much for doing the audit 

on APHIS, on the dog dealers. I’ve been interested in trying to 

eliminate these puppy mills, and I’m interested in APHIS doing a 

much better job. 

And you pointed out that the APHIS had major deficiency in 

their enforcement of the Animal Welfare Act. Why is that? 

Mr. HARDEN. It was basically the agency’s approach or a lack of 

an effective approach for the inspectors’ carrying out the program. 

They tended to want to try and educate the problem dealers into 

getting better, as opposed to issuing fines and penalties. 

Mr. FARR. Well, that’s laudable. But I mean, we all try to do 

that. 

But that’s not the way other agencies work. I mean, there’s always some education in there. But some of these breeders are just 

awful. I mean, if they’re going to try to make awful people get better, it’s still awful. 

Mr. HARDEN. Which is the point that we were trying to make 

with the audit report. And you know, in response to the recommendation, they agreed to take stronger enforcement actions. It 

will take us going back to see how well they do it, to know if they 

really changed how—— 

Mr. FARR. Well, you pointed out they didn’t even accept all of 

your recommendations. 

Mr. HARDEN. They have, at this point. 

Mr. FARR. They have? 

Mr. HARDEN. They have. 

Mr. FARR. Including the ones that would confiscate animals that 

are dying, or seriously suffering? 

Mr. HARDEN. We have gotten agreement on those recommendations. I can’t tell you exactly what they’ve done. 

Mr. FARR. And to count each animal as a separate violation in 

a case involving animal deaths and unlicensed wholesalers? Those 

were two that in the report that I got that they hadn’t reached 

agreement on. 


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Mr. HARDEN. We didn’t reach them at the time of report 

issuance. But we continued to work with the agencies after we 

issue it, if there is not agreement, to get that agreement. And I 

know that we have reached that agreement now. 

Where they are in terms of implementing the corrective action, 

is what I don’t have in front of me. 

Mr. FARR. I’m curious. When you go out and do these audits, do 

you actually visit sites? Or do you just look over their paperwork? 

Mr. HARDEN. No, we actually visited a number of sites, which is 

the pictures that were in that report, which were quite difficult, 

were from our people going on site, and what they saw. 

Mr. FARR. This is something that I think goes to the Chair’s 

question also, about implement. You do your work and you make 

these recommendations. And then some of them take them seriously, and others don’t. 

You know, an animal welfare committee I think is pretty interested in making sure that the laws that we’ve enacted get enforced. 

How can we make it better? Is it to take an audit? Does it take 

Congress asking to do an audit to get people’s attention? 

I mean, we can’t do that with everything—— 

Ms. FONG. I understand. 

Mr. FARR. Where’s your oversight rule? 

Ms. FONG. You know, I will say that in the enforcement in the 

Animal Welfare arena, we have done a number of audits over a 

number of years. And we’ve found major problems three or four 

years ago, which is why we went back in and did this audit. 

We wanted to make sure that APHIS actually corrected the problems we saw the last time, with respect to enforcing penalties and 

other issues. 

And you know, the sad story is that with this audit, it’s clear 

that there were still problems. They have said that they are going 

to take very specific actions in terms of developing training and 

hiring specialists, and developing new information systems. 

We will probably need to go and look at this again. Maybe in a 

year or two, once we give APHIS a chance to actually take a look 

at this. 

And I will remark that we understand that you have introduced 

legislation to address some of the loopholes that exist in the current AWA that deal with internet dealers. And we think that that’s 

actually a very useful piece of legislation to address an issue that 

we did find. 

Mr. FARR. Could I get a letter of endorsement from you? That 

would be terrific. 

Ms. FONG. You have my public statement. [Laughter.] 

Mr. FARR. Well, I appreciate that. 

I mean, I think it would help this committee a lot if we would 

know, you know. Also I think what you’ve also, Mr. Chairman, 

raises, there is some as we go through the rest of the agency and 

through their departments, some questions that we ought to be 

drilling down on in the subsequent hearings. 

Ms. FONG. Okay. 

Mr. FARR. The last one—oh, I’m running out of time. I wanted 

to go the California Organic investigation—— 

Mr. KINGSTON. Can I ask unanimous consent that—go ahead. 


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Mr. FARR. It will be my last question, Mr. Chairman. 

ORGANICS

If you could respond to the California Organic investigation 

of—— 

Ms. FONG. The fertilizer? 

Mr. FARR. It was to deal with fertilizer dealer that was certified 

as organic, and then switched ingredients and didn’t tell anybody. 

And so you ended up using improper protocols. 

Or I mean, they did. 

And you cracked down on the California—I mean, what happens 

is these people get certified by independent certifiers. And has this 

gotten cleaned up? Is it California’s, CDF—what is it, Department 

of Food and? And Agriculture. 

Ms. ELLIS. Yeah. 

I could tell you, that was our first investigation. We do have a 

few more involving that. But in working with California, they are 

very proactive in getting out front on top of this issue. 

And so I can’t speak so much for state level as to what they are 

doing there with regard to legislation. But I do know that they are 

trying to make sure that they keep this from happening in the future. 

Mr. FARR. And your role was what? 

Ms. ELLIS. We conducted the criminal investigation into this 

matter, and ended up getting an indictment of the individual, 

which I believe was sealed up until very recently, because he had 

left the country, and several months ago actually came back into 

the country. And we were able to catch him and serve him with 

the indictment. 

So it’s still in the judicial process. We have not finished the investigation. 

Mr. FARR. Thank you. 

Ms. FONG. I would just like to mention that we do have a number of other audits planned in the organic program. We’ve got a 

couple ongoing, involving the dairy industry, and the list, the process for making the list—— 

Mr. HARDEN. The substances that go on and off the National List 

of Prohibited Substances, we’ll be looking at that later this year. 

And we also have work in the crop insurance area, because they 

have a pilot program, or a new program, for organic operators in 

insurance. 

Mr. FARR. I appreciate those audits. And it’s a program where 

they’re labeled as very highly respected in the community, in the 

consumer community. And I think that we have to make sure 

that—there’s a lot of people trying to take advantage of it, because 

they get a better price. And so they’ll try to sneak stuff in and label 

it organic. And it does injustice to every legitimate grower out 

there, who’s struggling to make sure that they can get their product to market and be legitimate. 

So do those audits. Thank you. 

Ms. FONG. Okay. 

Mr. KINGSTON. Ms. DeLauro. 

Ms. DELAURO. Thank you, Mr. Chairman. 


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FOOD SAFETY

Mr. Harden, let me come back to you. 

I think we were talking about what would be a better sample, 

for a more accurate picture on this. What would you advise industry on the audit findings here, because industry has made claims 

that where E. coli 0157 H7 is declining? 

And the specific recommendations to FSIS beyond, if you’ve made 

any beyond putting this on a sounder technical ground? And have 

they agreed? And if they have agreed, what’s the timing this process is going to take, given that do not know what the level of contamination might be? 

Mr. HARDEN. I’d have to get back to you on the specific time 

frame. 

Ms. DELAURO. Okay. 

Mr. HARDEN. But in terms of FSIS working with the industry 

and a better way to know the number, we’ve recommended to them 

to have the inspectors that are in the plant to look at the results 

and know how well a plant is checking for itself; 

And if the test the plants are running to test for E. coli meet 

FSIS’ standards, to maybe use those results as well in building how 

they know how prevalent E. coli is. 

Also, we’ve talked to them about, and recommended, that they 

look in evaluating their plants and knowing which ones are at 

greater risk for having E. coli contamination, so they know that 

they’re putting their resources at testing those plants may be more 

frequently than the ones that have a better system. 

Ms. DELAURO. Mm-hmm. I just would make a quick comment on 

that. I think once again, we may be relying on an industry to share 

their data with inspectors, who are also talking about the potential 

for furloughing inspectors. That was done last week, as well, in the 

budget resolution. 

And your last point was? I’m sorry, because I had—the industry? 

Mr. HARDEN. Oh, having FSIS evaluate the—— 

Ms. DELAURO. Risk-based—— 

Mr. HARDEN. Risk-based—— 

Ms. DELAURO. Risk-based. I must tell you, if they don’t know 

what the level is on terms of estimates, it makes it very, very difficult. Except if you have repeat offenders. 

But it makes it very difficult if you don’t have a way in which 

you’re determining what the level of contamination is. Then it’s to 

base your inspection on risk, because you don’t know what the risk 

is. 

So we’ve got more to talk about in this area, and how we do get 

to safe and uncontaminated beef. 

Ms. FONG. I believe we have an audit going on, a second-phase 

to the FSIS audit of the N60 testing. 

Ms. DELAURO. Okay. 

Ms. FONG. And we’re going to be going out into the field this 

spring to look at plants and how they actually do the testing. 

And I think we’ll have some more specific—— 

Ms. DELAURO. Beautiful—— 

Ms. FONG. Observations—— 

Ms. DELAURO. Thank you—— 


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Ms. FONG. And we’ll be happy to work with you. 

Ms. DELAURO. Yes, this is an area of very high interest to me, 

as you know. And I thank you for the study. I really appreciate it. 

Ms. FONG. Right. 

Ms. DELAURO. Let me ask again—I know you addressed Salmonella in eggs, and that you’re auditing AMS in terms of what 

happened with the Wright County egg outbreak? Is that right? 

You’re auditing AMS? 

Mr. HARDEN. Actually, we’re looking at multiple agencies in the 

Department, AMS being one of them. 

Ms. DELAURO. Okay. 

Mr. HARDEN. The audit of eggs was generated out of one of the 

recalls, one of the big recalls. But we’re looking at APHIS’ role, 

FSIS’ role, and AMS’ role. 

Ms. DELAURO. Okay. 

Mr. HARDEN. The issue that we’ve recently brought to the table, 

that we talked about in the testimony, is one where AMS needed 

better coordination with other agencies. But we’re working on that 

particular issue right now, but it will be broader—— 

Ms. DELAURO. Mm-hmm. Well, but as you know, inspection of inshell eggs is the responsibility of FDA. This is why we need a single food safety agency, in order to be able to deal with it. Otherwise, we’ve got varying people looking at what is involved in food 

safety. 

Just a word about the audit, how extensive is it? What are you 

doing? 

And then my final question would be: Are you going to examine 

the memorandum of understanding between FDA and AMS that 

sets out each agency’s responsibility, that make the recommendations for improving the coordination between the two agencies on 

in-shell egg safety? 

Tell me about the scope of the—— 

Mr. HARDEN. The answer to that is yes. The basic objective of 

this particular audit is to look at USDA’s control over shell eggs, 

to detect and report the presence of Salmonella and other contaminants, and also to look at how they coordinate with FDA on this. 

Ms. DELAURO. Mm-hmm. And in each instance—in other words, 

we are going to get some idea of the level of overlap, or duplication, 

or lack of either, given that we have multiple agencies that are trying to deal with one function here, and what falls between the 

cracks? 

Quite frankly, what falls between the cracks is the public health 

of the people of this country. 

So thank you very much. Thank you, Mr. Chairman. 

Mr. KINGSTON. Thank you. 

Mr. Bishop. 

Mr. BISHOP. Thank you very much, Mr. Chairman. 

PEANUT PRICE REPORTING

Madame IG, in March of 2009, I think you completed an audit 

of in-shell peanut prices that are paid to farmers and reported to 

the National Agricultural Statistics Service, which data the FSA 

uses to calculate program payments. 


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Your office indicated that you believe that the price data supplied 

by the peanut buyers is unreliable, and that FSA should seek authority for mandatory price reporting for all in-shell peanuts. 

And I look forward to the Department resolving this issue; but 

it would seem that any proposal to provide new FSA statutory authority on price reporting should be done in the context of the 2012 

Farm Bill, as opposed to a stand-alone issue. 

And of course, we expect that there will be substantial changes 

and modifications in the programs, which should really be a part 

of that discussion, whenever it happens. 

But I did have some other questions I wanted to ask you: Is 

there any further activity on the part of the OIG’s office on mandatory peanut pricing reporting? Or is it now just in the hands of the 

Secretary and FSA? 

And well, the ’02 Farm Bill and the ’08 Farm Bill both encouraged USDA to use the world market price in determining peanut 

prices. 

And I find it curious—and I don’t know whether it came to your 

attention or you found it curious also—that the Department never 

followed through in exploring a world price option. 

Many people in the industry, both producers and sellers, believe 

that a mandatory pricing requirement is really just an effort on the 

Department’s part to lower the price of peanuts. 

Last year, I asked you if you had any evidence that indicated 

that the information that the peanut shellers and others were providing to NESS was fraudulent. And you indicated that no, you answered no to that, that there wasn’t any evidence of fraud. 

Is the Department, from your determination and your audit, really certain that a mandatory pricing reporting requirement would 

elicit factual information, as opposed to just creating the possibility 

of options payments to large farmers, which are not included in the 

data? And do you think that the mandatory price reporting would 

ultimately result in the creation of a real futures market for peanuts, which would have the potential of destabilizing the prices for 

peanuts? 

And the final part of that is whether or not you have information 

of any other industries or any other commodities, where that reporting is required? 

Ms. FONG. That’s a long question (laughing). 

Let me just offer a few comments. You’re right, we did do that 

audit a few years ago on the pricing for shelled peanuts. 

And at that time, we felt very strongly—and we still do feel very 

strongly—that because of the way that reporting is structured, it’s 

voluntary, there’s no way to really verify that the prices that are 

reported are accurate; that it’s not a good basis for the Department 

to set its prices. 

And so we made our recommendation. 

I think you’re right that the Farm Bill is the right vehicle in 

which to address that issue from a policy basis. I don’t believe that 

we have done any follow-up work since our audit was issued. 

And I think you also indicated that there may be an issue with 

respect to other commodities, whether other commodities have a 

mandatory requirement for reporting. And as far as I know, others 

do not. 


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This is an issue actually that we took on for the first time with 

peanuts. And we understand that there may be implications for 

other commodities. 

And my sense is that if we were to look at it, that we would, in 

the interest of having hard, good, verifiable data, upon which to 

make a decision, that our philosophy would be ‘‘Why wouldn’t the 

Department want good, certifiable data?’’ from a philosophical 

standpoint. 

Now I understand there may be some economic issues and some 

other policy issues that we have not addressed. 

Mr. BISHOP. So you basically have not gone any further than the 

report that was issued in 2009? And I guess you’re waiting for us 

to deal with it, for Congress to deal with in the Farm Bill. 

Ms. FONG. That’s correct. We believe it’s basically a policy issue 

at this point. 

Mr. BISHOP. Okay. Thank you very much. 

Mr. KINGSTON. Thank you, Mr. Bishop. And if there aren’t any 

other questions, then I’m going to move to adjournment. 

And let me just say this, Ms. Fong. You have a lot of interests 

on this committee. We’ve always been very appreciative of your 

work. And I think we would like to get these follow-up questions 

answered. And there might be a few more that are submitted to 

you. 

But we truly appreciate everything that you do. And with that, 

the committee stands adjourned. 


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(i) 

W I T N E S S E S 

Page 

Ellis, K. L ................................................................................................................. 325 

Fong, P. K ................................................................................................................. 325

Hamburg, Margaret ................................................................................................. 1 

Harden, G. H ............................................................................................................ 325 

Lebo, John ................................................................................................................ 325 

McGarey, Patrick ..................................................................................................... 1 

Young, R. W ............................................................................................................. 325 


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