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[Senate Hearing 110-828]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 110-828
 
        RESTORING FDA'S ABILITY TO KEEP AMERICA'S FAMILIES SAFE 

=======================================================================

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                                   ON

   EXAMINING THE U.S. FOOD AND DRUG ADMINISTRATION, FOCUSING ON ITS 
ABILITY TO ENSURE THE SAFETY OF FOOD AND THE DRUG SUPPLY IN THE UNITED 
                                 STATES

                               __________

                             APRIL 24, 2008

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions

  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                                 senate

                               ----------
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Washington, DC 20402-0001 

          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

               EDWARD M. KENNEDY, Massachusetts, Chairman

CHRISTOPHER J. DODD, Connecticut     MICHAEL B. ENZI, Wyoming,
TOM HARKIN, Iowa                     JUDD GREGG, New Hampshire
BARBARA A. MIKULSKI, Maryland        LAMAR ALEXANDER, Tennessee
JEFF BINGAMAN, New Mexico            RICHARD BURR, North Carolina
PATTY MURRAY, Washington             JOHNNY ISAKSON, Georgia
JACK REED, Rhode Island              LISA MURKOWSKI, Alaska
HILLARY RODHAM CLINTON, New York     ORRIN G. HATCH, Utah
BARACK OBAMA, Illinois               PAT ROBERTS, Kansas
BERNARD SANDERS (I), Vermont         WAYNE ALLARD, Colorado
SHERROD BROWN, Ohio                  TOM COBURN, M.D., Oklahoma

           J. Michael Myers, Staff Director and Chief Counsel

                 Ilyse Schuman, Minority Staff Director

                                  (ii)

  

                            C O N T E N T S

                               __________

                               STATEMENTS

                             APRIL 24, 2008

                                                                   Page
Kennedy, Hon. Edward M., Chairman, Committee on Health, 
  Education, Labor, and Pensions, opening statement..............     1
    Prepared statement...........................................     2
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming, 
  opening statement..............................................     3
Dodd, Hon. Christopher J., a U.S. Senator from the State of 
  Connecticut, statement.........................................     4
Allard, Hon. Wayne, a U.S. Senator from the State of Colorado, 
  statement......................................................     5
Brown, Hon. Sherrod, a U.S. Senator from the State of Ohio, 
  statement......................................................     5
    Prepared statement...........................................     6
Woodcock, Janet, M.D., Director, Center for Drug Evaluation and 
  Research, Food and Drug Administration, Rockville, MD; 
  accompanied by Moheb N. Nasr, Drug Quality Director and Deborah 
  M. Autor, Drug Compliance Director.............................     8
Hubbard, William K., Former Associate Commissioner for Policy and 
  Planning, Food and Drug Administration, Washington, DC.........    22
    Prepared statement...........................................    23
Morris, J. Glenn, Jr., Director, Emerging Pathogens Institute, 
  University of Florida, Gainesville, FL.........................    27
    Prepared statement...........................................    28
Brackett, Bob, Ph.D., Senior Vice President and Chief Scientific 
  and Regulatory Affairs Officer, Grocery Manufacturers 
  Association, Washington, DC....................................    29
    Prepared statement...........................................    30
Migliaccio, Gerald, Vice President of Quality, EHS and Agility, 
  Pfizer, Incorporated, Peapack, NJ..............................    32
    Prepared statement...........................................    33

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Roger Bate, Resident Fellow, American Enterprise Institute 
      and Richard Tren, Director, Africa Fighting Malaria........    40
    Response to questions of Senators Kennedy, Enzi, Burr, and 
      Brown by Gerald Migliaccio                                     46

                                 (iii)

  

        RESTORING FDA'S ABILITY TO KEEP AMERICA'S FAMILIES SAFE

                              ----------                              

                        THURSDAY, APRIL 24, 2008

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:36 a.m., in 
Room SD-106, Dirksen Senate Office Building, Hon. Edward M. 
Kennedy, chairman of the committee, presiding.
    Present: Senators Kennedy, Dodd, Brown, Enzi, Alexander, 
Hatch, and Allard.

                  Opening Statement of Senator Kennedy

    The Chairman. We'll come to order.
    This is an enormously important hearing this morning, 
because the American people have an assumption that the food 
that they eat and the prescription drugs that they take--
certainly with regard to prescription drugs are going to be 
safe and efficacious and that the food that they eat is going 
to be safe for themselves and for their children. That has been 
a general assumption over a very, very long period of time.
    We've seen the evolution of changes, and rather 
dramatically, over the period of time, particularly with regard 
to food, as we find out that more and more food is imported. 
Most of the modalities that are set up for safety and security 
are home-grown, rather than being focused in terms of the 
international scene. We've also seen some disturbing trends, 
particularly the spinach. With regard to spinach and peanut 
butter and certain cereals, and with regards to prescription 
drugs, we've seen with the Heparin, the challenges that we've 
faced out there.
    We see a FDA that is overstretched, in terms of its 
responsibilities, and under funded. We have some real, I think, 
some important responsibilities. We took note that the 
Appropriations Committee the other day--on the FDA--had a very, 
I think, interesting and important hearing in demonstrating the 
fact that the agency doesn't have the resources and funds. Many 
of us have been strong, strong advocates and supporters of an 
FDA that is going to be adequately funded, and brought into the 
21st Century in terms of technology and in terms of scientific 
capability.
    This is an important day today, and an important hearing. 
I'll put my full statement in the record, and we will ask 
Senator Enzi for any comments that he would like to make.
    [The prepared statement of Senator Kennedy follows:]

                 Prepared Statement of Senator Kennedy

    This hearing is about prevention: how do we prevent 
tragedies such as Heparin, or the continuing reports of unsafe 
spinach, peanut butter, breakfast cereal, and other foods?
    These tragedies have common factors. All involve products 
regulated by FDA. All involve products that have killed or 
injured American consumers: more than 80 dead from Heparin, 
with hundreds more injured. Three killed by spinach last 
summer, and dozens sickened. All involve contaminated products, 
and failure by their manufacturers or growers to prevent them.
    There are some important differences, however. Heparin 
involves one of the most highly regulated types of product--a 
prescription drug. FDA approved it before it could be marketed, 
and its manufacture is highly regulated, including a 
requirement to seek approval of changes to the process. Still, 
it illustrates gross inadequacy in this regulatory scheme. Its 
manufacturer didn't carefully scrutinize how it obtained the 
active ingredient, which is derived from pig intestines, in 
this case in China. FDA regulations apparently didn't require 
it to do so, and FDA never examined these sources itself.
    The standard test for Heparin was unable to detect the 
contaminant. As a result, a tainted ingredient was brought into 
the United States and made into a deadly drug. The 
manufacturing process in high-tech plants ultimately proved 
meaningless to defeat the problem of raw materials shipped from 
grossly inadequate suppliers. Even the most up-to-date 
manufacturing processes won't ensure safety if manufacturers 
can't guarantee the ingredients aren't contaminated.
    The Heparin contaminant is not naturally occurring. It may 
have been added intentionally, perhaps because of economic 
fraud.
    It's unclear how FDA could have prevented this tragedy, 
given its current authorities and resources. An inspection of 
the Chinese supplier of the Heparin might have detected the 
intentional adulteration, if there had been open evidence of 
the crime in the plant. Because criminals tend to hide their 
activities, finding open evidence seems unlikely.
    Practical solutions are available. Drug companies should be 
required to know more about the firms from which they obtain 
their ingredients, and audit them for ongoing compliance. Many 
reputable drug companies do so already.
    Manufacturers must also use better tests of their own to 
detect impurities and contaminants. FDA obviously needs greater 
authority and significant additional resources to enforce these 
requirements, especially with respect to ingredients 
manufactured overseas. The mushrooming problem is clearly 
overwhelming the agency's current oversight.
    By most accounts, the recent contaminants in food have not 
been intentional, but the solution is similar. Companies must 
be held accountable for preventing food-borne hazards. Many of 
the best companies already analyze hazards in food and adopt 
controls to avoid them. Preventive controls should be a 
standard requirement for every firm in the food industry, and 
FDA needs greater authorities and greater resources to oversee 
these responsibilities. Better surveillance to detect food-
borne illnesses and their causes will enable both FDA and the 
industry to respond more effectively when an outbreak occurs, 
and to focus on areas that have the most public health benefit.
    It's the responsibility of manufacturers to build quality 
and safety into their products. They can use processes to 
ensure the quality and purity of ingredients, and FDA 
inspection can ensure that these processes are carefully and 
consistently implemented.
    The immediate problem is FDA's lack of resources. As GAO 
reported yesterday, FDA inspects domestic drug establishments 
at close to the required rate of once every 2 years. But there 
is no similar requirement for inspecting foreign drug 
facilities, and the agency's performance reflects this 
disparity.
    GAO estimates it will take FDA at least 13 years to inspect 
every foreign drug facility. Last year, it inspected only 30 of 
the more than 3,200 foreign drug plants, less than one out of 
every hundred. The agency's plan for the current fiscal year is 
to inspect 50 plants. GAO says it would cost 67 to 71 million 
dollars a year to inspect every foreign drug facility every 
other year, which is the rate required in the United States.
    The agency's ability to inspect foreign food facilities is 
even worse. By one estimate, at the current rate, FDA will need 
1,900 years to inspect every foreign food facility. These 
findings are very similar to the findings in the report of the 
FDA Science Board, which was a scathing indictment of the 
agency--scientifically, financially, and organizationally.
    So we all have our work cut out for us. Fortunately, we 
have a distinguished group of witnesses today, and I thank them 
for joining us. I'm particularly grateful that Janet Woodcock 
of the FDA has agreed on short notice to discuss the Heparin 
situation. Thank you all, and I look forward to your insights 
and recommendations.

                   Opening Statement of Senator Enzi

    Senator Enzi.Good morning. As implied by the title of this 
hearing--``Restoring FDA's Ability to Keep America's Families 
Safe'', we will be discussing a broad range of topics today. No 
doubt those topics will include food safety, import safety, and 
drug safety. However, this hearing is not aptly titled or 
focused. Rather than focus on all of the folks who could assist 
with the emerging world market, we are instead only focusing on 
what the Food and Drug Administration (FDA) can do. That's a 
limited view of what can and should be done. The complex nature 
of the situation requires all of the global partners--
regulators, importers, manufacturers, academia--and other 
stakeholders to come together to propose meaningful, 
collaborative solutions.
    Let's just admit the basic fact: We cannot inspect our way 
to safety. While it is unfortunate that the FDA was unable to 
inspect a particular heparin manufacturing facility in China, 
an inspection would not have resulted in a safer heparin 
product. The potential contamination happened before the items 
reached the manufacturing facility. Of course, that's the 
specifics of one situation.
    As you can see on the chart behind me, there are dozens of 
facilities around the world that supply us with drugs and 
active pharmaceutical ingredients. The true extent of foreign 
sources of our food and drug supply can sometimes be shocking. 
We need that reality check. That access is necessary to meet 
the demands of American consumers. The FDA must do all it can 
to ensure that these products are safe to consume. However, the 
reality of the global economy is that testing every food and 
drug product from outside the United States is not currently 
possible, nor will it ever be.
    Even with the increased number of inspectors, the FDA only 
inspects about 1 percent of all imported food. While that 
percentage could be higher, inspections cannot and should not 
be the only tool in the FDA toolbox to deal with import safety 
issues. That's why I am encouraged by two recent FDA actions.
    First, the FDA reported that they would be opening three 
new offices in China by October. Given the wide range of 
imported products from China, it is always good to have someone 
on the ground to assess the current situation, build 
relationships, and possibly head off an international incident.
    Second, I support the efforts made by the FDA's Food 
Protection Plan with its focus on prevention, intervention and 
response. I would like to use it as the basis for the food 
safety legislation that the HELP Committee will move in the 
coming months.
    I often remind my staff: If it is worth reacting to, it is 
worth over-reacting to. In our future discussions on import 
safety, we must remember that. Just last year, we gave FDA 
broad new authorities to deal with a whole host of drug safety 
issues. Rather than jump to quickly amend those new provisions, 
we should give FDA the time to fully utilize those new 
authorities and evaluate their effectiveness.
    However, there are some areas on which we could quickly 
reach agreement on the need for improvement. That's the 80 
percent of this issue. If we focus on that 80 percent and work 
together on the substance of these issues that we already agree 
on, we will be able to make progress and get something done 
quickly. If not, we will find ourselves stuck on the 20 percent 
that separates us and walk away from these discussions empty 
handed, with nothing to show for our efforts.
    That is why I hope we will not be distracted by extraneous 
policies and instead continue to focus on common ground. Like 
it or not, our window of opportunity for swift action will soon 
be closing. We have two options--we can focus on what we can 
get done using my 80 percent rule, or, we can over-reach and 
under achieve.
    That is why I urge all my colleagues and our staffs to stay 
focused on what is possible to get done now--so that we get 
something done--now!
    I look forward to the testimony today, and I thank the 
Chairman.
    The Chairman. Thank you very much.
    We'll call for brief comments, if there are, Senator Dodd.

                       Statement of Senator Dodd

    Senator Dodd. Just very briefly, Mr. Chairman, and thank 
you, immensely, for holding this hearing. It is tremendously 
important subject matter and you said it well in your opening 
statement--this is an assumption we all make, all of us did 
this morning when we got up and had breakfast with our 
families--all of the assumptions we made were about how safe 
the products we consume are. We're learning, painfully, that 
that's not the case, in so many instances.
    This hearing to examine what we can do to increase and 
improve food and drug safety makes a tremendous amount of 
sense.
    The only thing I'd want to add at all to this--and we're 
going to in fact have a hearing in our own subcommittee next 
month, that will deal with food allergy issues and the truth in 
advertising here is that I am the father of a 6-year-old, with 
very profound and severe food allergies, who has been in 
anaphylactic shock four times already by the age of 6. Three 
million children are like my daughter, Grace, who runs the risk 
every single day of consuming a product, without those Epi pens 
available, that could cause her to lose her life.
    I'm hopeful that in the process here we can address food 
allergies, particularly in schools. A lot of States--12 States 
are already working on food allergy management issues at 
schools. Food labeling is a challenging issue for a parent, 
trying to read every label, as I do for everything she eats, to 
make sure there's not contamination with an allergen. She's 
subjected to airborne problems--not just consumption, 
internally. My hope would be, in the process of moving forward 
on food and drug safety issues, we can talk about how food 
allergies could also be a part of this.
    Thank you.
    The Chairman. Thank you very much.
    I see my friends Senator Hatch and Senator Allard wanted to 
say a brief word, I'll ask Senator Brown if he would say a 
word, and we'll get started.

                      Statement of Senator Allard

    Senator Allard. Well, thank you, Mr. Chairman. I don't have 
any prepared statement, but I'm looking forward to the 
testimony. I have a lot of interest in Food and Drug 
Administration for a number of reasons: because I am a 
veterinarian, and also because we have, I think, some conflicts 
of jurisdiction we have to keep in mind, between the Ag 
Department (in terms of food inspection) and FDA. Also, we must 
make sure that we don't have regulatory duplication, while 
still ensuring a safe food supply.
    This country has the safest food supply, the best and 
safest pharmaceuticals--which have also been developed here in 
this country where the inspection and the quality control 
starts right at the origination point. When we import foods, we 
don't have the same oversight over quality and so we have to 
figure out what the proper balance is between trade and 
regulation to maintain a safe and varied food supply for 
Americans.
    Thank you.

                       Statement of Senator Brown

    Senator Brown. Thank you, Mr. Chairman. Thank you for 
holding this hearing.
    When we import from overseas, we're to some extent, 
importing the health and safety standards of the countries we 
trade with. Appropriate story, a woman from Ravenna, OH told 
us, 73 years old, recently undergoing dental work, had to have 
a dental bridge removed. She'd read several stories about led 
in toys, she decided to have the bridge in her mouth tested for 
lead, and learned that the bridge contained 160 parts per 
million of lead.
    Those kinds of things are happening too often. It's all of 
these issues of food and toys and contaminants and vitamins and 
all of that, it's a trade--and prescription drugs--it's a trade 
issue. Think of the toys and the lead and American companies 
outsourcing jobs to China, and then subcontracting with Chinese 
companies and demanding that they cut the costs of their 
production. That's why we have lead paint in toys, more than 
any other reason.
    It's a deregulation issue, that we have continued in the 
last few years to weaken rules and regulations protecting 
public health and public safety. It's a food and labeling 
issue, as Senator Dodd pointed out, and it's an inspection 
issue, as this government continues to cut funding for fruits 
and vegetables coming across the Mexican border, for consumer 
product safety coming from China, from a whole host of issues 
that contaminate our vitamins and our food and our dog food, 
and a whole host of issues.
    That's why this hearing is so important.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Brown follows:]

                  Prepared Statement of Senator Brown

    A lot of you are familiar with the issues we're going to 
hear about today. They've been in the news again and again--e. 
coli in spinach and salad mixes, salmonella in pet food, the 
list goes on.
    We're also hearing about contaminated pharmaceuticals, most 
recently, Heparin.
    We're going to hear today about FDA's ability to deal with 
these threats.
    But we are really talking about much more.
    We're talking about how we respond as a nation to a 
changing world. We are more interdependent than ever before in 
this global economy. When we import from overseas, we are to 
some extent importing the health and other standards of those 
countries as well. We potentially affect--and are affected by--
every one of our trading partners.
    But we haven't recognized this new reality.
    We have kept our heads in the sand and followed a path of 
neglect for far too long. And the results are all too obvious 
and the impact can be felt all across America and in my State 
of Ohio.
    Adulterated Heparin from China is suspected in the deaths 
of 7 residents in Toledo, OH. And recently, I've heard from 
constituents in my State about dental crowns imported from 
China that contain lead. A woman from Ravenna, OH called my 
office this week to tell her story.
    She is 73-years-old and recently, after undergoing dental 
work, had to have a dental bridge removed. At that time, she 
had read several stories about lead in toys. She decided to 
have the bridge tested for lead. She learned that the bridge 
contained 160 parts per million of lead.
    As Mark Feldman, President of the American Dental 
Association points out, lead should not be in any FDA-approved 
dental materials. The American Academy of Pediatrics contends 
that there is no `safe' level of lead exposure.
    This is just one story that exemplifies the problems we are 
facing with the FDA.
    We are challenged not only with contaminated 
pharmaceuticals that have not undergone sufficient inspection, 
but insufficient regulation of imported medical and dental 
devices, too.
    How we choose to manage the challenges of globalization 
will determine our future. We can choose to continue on our 
path of neglect or we can choose to take action.
    The Food and Drug Administration has been relying on an 
import plan developed in the 1970's when imports were low. 
Today, trillions of dollars of goods are imported from hundreds 
of thousands of importers.
    FDA can not even count them.
    Thousands of overseas food and drug manufacturers are 
shipping to the United States, yet FDA has little data about 
what happens in overseas facilities and supply chains.
    FDA does not have the resources to inspect them. FDA did 
not inspect the Chinese plant that supplied the contaminant 
linked to 81 deaths among Heparin users in the United States.
    The Administration's new import plan has some ideas for 
improving the situation. But according to the GAO, the plan 
doesn't fully address the problems in the Foreign Drug 
Inspection Program. The GAO estimates that in order for FDA to 
begin full inspections of foreign plants, it needs an 
additional $56 million dollars next year.
    It also needs at least $15 million a year to bring 
inspections of Chinese drug plants up to domestic standards--
inspecting every 2 years. It needs 27 years to inspect every 
foreign medical device plant, 13 years to inspect every foreign 
drug plant, and 1,900 years to inspect every foreign food plant 
at the current rate that it's going.
    But the President's budget doesn't provide the money we 
need to hire more inspectors.
    And what are we going to do in the meantime?
    Every American is going to be worried the next time he or 
she undergoes a medical or dental procedure or is required to 
take medication for a health problem.
    We have the most advanced health system in the world. There 
is no excuse for a country with our resources to be falling 
victim to such negligence.
    It's time to get serious now.
    Our future and the health of our country depends on it.
    Thank you.
    The Chairman. Senator Hatch, is there anything you'd like 
to add? Or we'll move on.
    Thank you very much.
    Senator Hatch. Thank you very much, Mr. Chairman.
    The Chairman. Well, you've been a strong, strong advocate 
for the agency over many, many years, so we always welcome your 
involvement and participation in the hearing.
    We'll ask Dr. Woodcock, if she'd be kind enough to come 
forward--she's the head of the FDA's Center for Drugs, she's 
accompanied by Deb Autor, who is the Drug Compliance Director, 
and Moheb Nasr, who's the Drug Quality Director.
    Janet Woodcock is one of those extraordinary public 
servants that has been with the agency over 20 years--how many 
years has it been?
    Dr. Woodcock. Twenty.
    The Chairman. Twenty years, and has been a enormously 
gifted and talented scientist and researcher and public 
servant. She had incredible opportunities to go to the private 
sector or the nonprofit sector, and has had a very comfortable, 
productive and useful life. She's stayed at the FDA and been an 
enormously valuable asset to that agency and to the protection 
of the Nation's food and drug supplies, so we're enormously 
grateful for your service, and for your presence here today.
    Thank you very much, Doctor.

 STATEMENT OF JANET WOODCOCK, M.D., DIRECTOR, CENTER FOR DRUG 
    EVALUATION AND RESEARCH, FOOD AND DRUG ADMINISTRATION, 
   ROCKVILLE, MD; ACCOMPANIED BY MOHEB N. NASR, DRUG QUALITY 
    DIRECTOR AND DEBORAH M. AUTOR, DRUG COMPLIANCE DIRECTOR

    Dr. Woodcock. Thank you.
    Mr. Chairman, and distinguished Senators, I'm Janet 
Woodcock, Director of the Center for Drugs at FDA, and I thank 
you for the opportunity to discuss the important issue of the 
safety of the drug supply in the United States, and the example 
of the Heparin contamination that we've been experiencing 
recently.
    The U.S. drug supply has long been one of the world's 
safest. This reliable quality was really the result of a 
framework that was put in place by Congress and implemented by 
the FDA, that controlled and regulated the manufacturing and 
the movement of pharmaceuticals in the United States.
    In contrast, in many parts of the world, even today, 
consumers purchasing a medicine may only have a 50 percent 
chance of getting a product that is what it says on the label. 
In some countries, that's the level of counterfeiting that 
currently exists.
    In this country, we may have forgotten that the drug supply 
here was once dangerous, and that great vigilance is required 
to maintain its safety.
    Over the past several decades, dramatic changes in the 
pharmaceutical manufacturing environment have occurred, that 
have impacted on this potential safety. First, many more 
Americans are taking many more medicines. The number of 
pharmaceutical products on the market has grown dramatically, 
and so has the number of people, and the number of medicines 
that people take. Of course, this is good news, and not-so-good 
news in some cases.
    The risks posed by quality problems, and the complexity of 
regulating pharmaceutical quality has considerably increased as 
a result of this.
    Second, the sites of production of pharmaceuticals have 
dramatically changed from what was the case in the seventies. 
FDA has traditionally been configured, as an agency, to 
regulate a domestic industry, using a field force that's 
located in District Offices around the United States to perform 
inspections.
    Over the past 15 years, the majority of active 
pharmaceutical ingredient manufacture--in other words, the 
active drug product--has moved offshore. That production is in 
other places around the world. Increasingly, the final drug 
products are also made in various countries around the world, 
and then those finished products are imported into the United 
States.
    The FDA of the last century is not configured to regulate 
this century's globalized pharmaceutical manufacturing 
industry.
    Third, the complexity of modern manufacturing arrangements 
requires more sophisticated management methods on the part of 
regulators. It used to be that we had, as I said, there was a 
single manufacturing plant--often somewhere in the United 
States--that would receive their ingredients from other parts 
of the United States, it would all be assembled there, within 
that District, and then made into a finished product.
    Currently, some generic drug applications submitted to FDA 
may cite 15 different facilities in the application, and these 
facilities may be located anywhere around the world. That's one 
application. We, right now, are approving around 400 generic 
drugs each year in the United States.
    As has been seen in the Heparin incident, intermediates and 
products can now move in the globalized world through a 
complicated web of distribution. They may originate in one 
continent, be shipped to another continent, to be made into an 
active pharmaceutical ingredient, and then be shipped to yet 
another continent to be made into a finished drug product, and 
then be imported into the United States.
    Contaminated Heparin batches ended up in a large number of 
different products all around the world. More sophisticated IT 
and informatic approaches are required on the part of 
regulators in this globalized world to monitor the supply 
chain. The supply chain is not manageable by our traditional 
methods.
    Finally, in the face of all of this growth and change, 
FDA's inspectional resources for pharmaceuticals have actually 
diminished in real terms. While the number of registered 
establishments have quadrupled, at least, over 25 years, the 
number of good manufacturing practice inspections of 
pharmaceuticals that FDA is able to conduct has dropped 
significantly, in the same time. Inspectional resources have 
actually dropped, while responsibilities have soared.
    But this situation can be addressed, and that's what I'm 
here today to say. The remedy is actually very straightforward. 
This approach is taken in other manufacturing sectors. All 
parties throughout the supply chain--from the production of the 
API and the ingredients, through brokers, through distributors, 
through importers, to finished product manufacturers--must be 
held responsible. They are the ones who must be held 
responsible for assuring the quality and integrity of the 
products they produce.
    As was just said, the FDA or any other worldwide regulator 
cannot test quality into products, and we cannot inspect 
quality into products. What we must do--the FDA must have the 
tools to hold all of these parties accountable. We need to be 
able to find them, know who they are, and have the authority 
and resources to hold them accountable for quality.
    These tools include resources for inspections, for modern 
IT systems, for laboratories and review science, because 
science is the way we will advance, and move forward, and 
actually overcome these problems in the future, and also 
education and outreach, because we are going--as we have global 
players, they need to be educated about the quality standards, 
including regulators in other parts of the world, we need to 
assist them.
    Also, we need new sets of authorities that recognize the 
global environment we are in, and give us the tools to hold all 
of these parties accountable.
    If these improvements occur, I think we can continue to be 
assured that the U.S. drug supply will be one of the safest in 
the world.
    Thank you.
    The Chairman. Thank you very much and for your suggestions 
and recommendations.
    Let me ask you just about Heparin, because that's been the 
principal concern.
    You've identified lots from 2006 of bulk Heparin active 
ingredient that included the contaminant, and Heparin made with 
those lots would have reached patients in 2007?
    Dr. Woodcock. Yes.
    The Chairman. Have you verified there were no Heparin lots 
earlier than 2006 that included the contaminant?
    Dr. Woodcock. No, in fact, we have reports of lots that may 
have been contaminated earlier, but these we have not been able 
to confirm--we wish to confirm these in our own laboratories.
    What we did was put testing methods up on the web, and we 
asked manufacturers and regulatory authorities around the world 
to do the tests, and we provided resources from Dr. Nasr's shop 
to help people with the testing and from Deb's shop--the Office 
of Compliance--to receive all of this information, and we've 
been compiling this information.
    It appears that the bulk of the contaminant occurred in 
2006, because some manufacturers have gone back and tested many 
lots prior to that, and have not seen it. However, we do have 
some reports of sporadic lots going back further, that's 
correct. But we have not verified that ourselves.
    The Chairman. Do you know what the risks of the contaminant 
are, both the short-term and long-term, and what should be done 
to assess those risks?
    Dr. Woodcock. We published a paper--we published online 
last night in the New England Journal of Medicine--with authors 
from the FDA, as well as people from MIT and Virginia Tech and 
others, establishing a potential link between the acute 
reactions to this product--the hypotension and other adverse, 
serious, adverse events that were observed--in a biological 
mechanism. So, we have some understanding of that.
    We know that the vast majority of people who were exposed 
to this did not suffer any acute reaction. We are proceeding 
now, looking at whether there might be any longer-term 
consequences to exposure of this.
    There was a product in Europe, that was approved and on the 
market, that was very similar to this contaminant. It was taken 
off the market in Europe a number of years ago for side 
effects, but it was a marketed product in Europe. We are going 
to follow up on this issue.
    Senator Hatch. Mr. Chairman.
    The Chairman. Yes.
    Senator Hatch. I have to leave, could I just ask one 
question? I don't mean to interrupt you, but----
    The Chairman. Go ahead.
    Senator Hatch. Have you done an analysis of how much you 
would like to have to rectify the situation at FDA? To 
strengthen FDA? How much would it cost? Just so we know up 
here?
    Dr. Woodcock. For the pharmaceutical part of this?
    Senator Hatch. For what you think has to be done to protect 
the American people in all of these areas?
    Dr. Woodcock. There are different parts of pharmaceutical 
regulation that need to be strengthened, one part is 
authorities, and one part is the inspection and testing and 
those resources, as I said. I think that would--I don't have a 
number right now, and I'm being honest--be a substantial 
increase to our inspectional resources, they are very 
inadequate right now, as has been publicized.
    We really do not inspect most of the facilities overseas, 
very much at all.
    Senator Hatch. Mr. Chairman, we treat this agency pretty 
shabbily, it seems to me, compared to what it really does for 
this country, and for the world at large. I'm just hoping that 
we can all get together and maybe find some way of giving them 
the resources that they need to do what we all know needs to be 
done.
    The Chairman. Why don't we----
    Senator Hatch. Sorry to interrupt you, I do apologize, I'm 
grateful for your graciousness.
    The Chairman [continuing]. Inquire of you, and give you 
time to respond. We'll work with Senator Hatch and other 
members of the committee and be somewhat specific and give you 
an opportunity to respond. We know it's the budget item, but 
we're also entitled as members to inquire of you for a 
professional opinion.
    Senator Hatch. We can fight for you, too. I just want you 
to know how much we appreciate you.
    Senator Allard. Mr. Chairman, if I might interject. I think 
it would be helpful--Dr. Woodcock, you indicated a number of 
areas where you thought you needed additional resources; I 
think it would be helpful for you to break out your costs in 
each one of those areas and prioritize those. I'm guessing that 
laboratory enhancement is your No. 1 priority. This would be 
helpful so that if we don't have enough money, at least we can 
focus on those areas most in need.
    Dr. Woodcock. Right, well, I testified before the 
Agriculture Appropriations Committee in the House a number of 
weeks ago, and our No. 1 priority is to develop--to have an 
inventory of every establishment in the world that is importing 
into the United States so that we can verify when these 
products come across the border that they should be allowed in 
the United States. That is our No. 1 priority. We've developed 
a business plan, and costed out how much that would be. We also 
need the inspectional resources as well as the laboratory and 
testing resources.
    The Chairman. OK. We'll follow up----
    Dr. Woodcock. We will get back to you.
    The Chairman. In final, on the issue of the Heparin, what 
would you advise a patient who needs Heparin today? What advice 
would you give him?
    Dr. Woodcock. Thanks to the efforts of Dr. Nasr and his 
colleagues and the Office of Compliance in Cedar, and numerous 
other people across the agency, and actually researchers in 
universities, we believe that the Heparin supply in the United 
States right now, is safe. It is all tested, we do not have any 
Heparin product in the United States going into patients on the 
market right now that contains this contaminant.
    People can feel assured that if they need Heparin for a 
procedure, or they're going to dialysis, the Heparin they will 
receive does not contain this contaminant. We have instituted 
testing at every manufacturer, and we're stopping products at 
the border to make sure it doesn't get in unless it has been 
tested, or will be tested. We're confident that the Heparin 
supply right now, in the United States, is safe.
    The Chairman. You suggested that we and Germany have seen 
adverse events from the contaminated Heparin, because Heparin 
is administered in what they call a ``bolus'' dose in these 
countries, and my understanding is that the bolus dosing is 
standard international medical practice for acute situations 
where there's a blood clot. Could you clarify?
    Dr. Woodcock. Sure. We do not completely understand why 
some people got a reaction, and others didn't. The paper we've 
published on the biological link is the first step in trying to 
develop a medical, scientific understanding of why some people 
got side effects, and others didn't, when many people were 
exposed.
    The contaminant is present worldwide, and yet adverse 
events, yes, only were observed in clusters, in Germany, and in 
the United States.
    Some regulatory agencies, such as France, have recommended 
that bolus dosing not occur with certain products right now, 
because of the fear that that could trigger an adverse event. 
We can't give you, today, an explanation about why some people 
got this event, and some others--the bolus dosing appears to be 
associated, or rapid intravenous dosing.
    Some countries do give a bolus, but they give it over a 
longer period of time, rather than an inner--just rapidly 
injecting it into the patient. Based on our scientific findings 
that were published yesterday, that could trigger a reaction, 
if you gave it in a very quickly, quick bolus, rather than a 
slow bolus.
    When we first had this problem in February, we advised the 
health community in the United States to move to a slower 
administration of Heparin.
    The Chairman. Just a final question--there will be a 
question about whether this contaminant slipped into the 
product. Was it accidental? Is it so pronounced that one would 
have to conclude it's purposeful? I know that's probably a 
loaded question, I don't know whether you want to take a crack 
at it, but it does seem to me that we're talking about a volume 
of contaminant to be very difficult to assume that it was just 
some mistake that happened along the pathway. If it was 
purposefully used in this product, that raises enormously 
serious and significant foreign policy issues.
    Dr. Woodcock. We have no proof or evidence about how this 
got into the product. However, some lots had an extremely high 
level of contamination, and we know that this was a synthetic 
product, it was not a natural product that accidentally 
contaminated. How it got in there, whether there was a mix-up, 
or whether it was deliberately added, we cannot tell you, right 
now, definitely.
    Dr. Nasr may want to comment on the production, and how 
that could have occurred.
    Dr. Nasr. Good morning, Moheb Nasr.
    Mr. Chairman, based on our scientific investigation, I can 
summarize it in the following way: that contaminant has been 
present at a smaller amount for a period of time. However, in 
all seven, we have seen an elevated amount of this contaminant 
in batches that were associated with the adverse event.
    The Chairman. Well, give that to me in----
    [Laughter.]
    Dr. Woodcock. Right. What we saw as we looked at a time 
course of this problem, and we looked back, because we require 
manufacturer, and they hold retention samples of the APIs that 
went into the finished product, so we had them go back and do 
retrospective testing, and we saw a small amount start entering 
the supply chain in 2006, and then get on the market, and then 
a larger amount.
    Some of the latest batches that were associated with 
adverse events had up to, what, 20 percent? Is that fair?
    Dr. Nasr. Up to 27 percent.
    Dr. Woodcock. Of the finished product?
    Dr. Nasr. Yes.
    Dr. Woodcock. Of the finished product, so almost a third of 
the Heparin product was this contaminant. Your point is, it 
seems--it's sort of strains credulity--how that could have 
gotten in there accidentally.
    The Chairman. You've made my point very clearly. 
Particularly, as I understand this is a product that comes from 
China, am I correct?
    Dr. Woodcock. There's different sourcing. China sources 
about 80 percent, and we had a meeting of the International 
Regulators last week, including the Chinese regulators, and all 
of the contaminated lots that have been found--which have been 
a large number--have all originated from China.
    The Chairman. My time is well over.
    Please, Senator Enzi.
    Senator Enzi. Thank you, Mr. Chairman.
    We had a great series of hearings earlier on food safety, 
after the spinach and the peanut butter incidents, and we were 
very pleased to find out about the cooperation between FDA, 
CDC, USDA and their ability to take very few cases across the 
United States and figure out a problem, and pinpoint where it 
came from.
    You mentioned that you just published the results in a 
journal, or online last night. What other indications would 
there have been earlier? What are the steps that are taken from 
suspicion, to proving, to solving?
    Dr. Woodcock. Right. This episode, this outbreak was 
detected by the CDC. Originally, there were reports to 
Departments of Public Health who reported to the CDC about 
problems after dialysis patients had received dialysis, or 
initiating dialysis.
    The CDC investigated this originally, and of course, that's 
a very complicated situation, where you have a dialysis 
machine, you have tubing, you have different drug problems--all 
of which have been associated with different adverse events in 
the past.
    We collaborated with the CDC in sorting this out, as well 
as the manufacturer, Baxter. The real epidemic was identified 
in January, and by March we had identified the contaminant, put 
up tests to test the Heparin supply, and now we've published a 
paper on the biological link. We accomplished these activities 
in a very short period of time.
    Senator Enzi. I'll ask some additional, more technical 
questions on that later, but can you tell me about the 
International Rapid Alert Notification System? It sounds like 
the FDA relied heavily on that system to share the results of 
the inspections and the testing during this incident. How does 
that work?
    Dr. Woodcock. Yeah, I'll ask Ms. Autor to answer that.
    Ms. Autor. There are actually a couple of different systems 
internationally, which helped us with this incident. One is 
that we have an international alert system where we learn about 
the most serious recalls going on in other countries. That 
helped us, for example, to learn about the German incident.
    The other thing that we did is, when we posted our test 
methodology for the contaminant on our Web site, we also 
created a hotline--both a phone number and an e-mail address. 
We received approximately 83 contacts from regulators in 
industry around the world, which helped to tell us where the 
contaminant was being found, and also helped us to answer the 
technical questions for the companies and the regulators who 
are trying to understand how to test for the contaminant and 
whether they had contaminated Heparin.
    Senator Enzi. Thank you, and again, I'll ask some more in 
writing, on the timeline for how that happens.
    I do think that it's good news that China is beginning to 
conduct export testing on Heparin. It's my understanding the 
factory that made the Heparin considered itself a chemical 
plant, not a drug plant. It wasn't registered with the Chinese 
government. How can we be sure that China's export testing is 
good enough to ensure that factories producing Heparin have 
that product tested?
    Dr. Woodcock. Let me say, and then maybe Ms. Autor may want 
to add to this--we are also requiring manufacturers to do very 
extensive testing of the Heparin APIs when they receive them. 
There is more sophisticated testing available in the United 
States that will identify this contaminant to an extremely low 
level of presence. So we can be sure that it will be removed.
    In our International Regulator's meeting, we met with the 
U.S. pharmacopoeia. They've participated in this meeting, as 
well as the European pharmacopoeia. They will rapidly be 
incorporating tests into the pharmacopoeial standards. That 
would mean that all of those countries in Europe and the United 
States, any Heparin moving around in commerce would have to 
meet those standards, and pass those tests.
    As far as the China testing----
    Ms. Autor. Let me add to that--I do think it's a very 
positive step that China is testing Heparin for export. 
However, China does not regulate, as pharmaceutical companies 
that say they are chemical manufacturers, and China also does 
not have heavy regulation of products that are intended for 
export only. At the end of the day, I do not believe we can 
rely on China as the only protection of American consumers, and 
the American drug supply. They are taking steps, they are 
improving their regulation, but again, it's incumbent upon the 
manufacturers to ensure that the products they're getting have 
the adequate quality and integrity.
    Senator Enzi. So, once it's found, then testing moves, in 
effect, to the ultimate company, the final company. Only after 
there's some kind of a difficulty like this, I assume. Nobody 
was testing the Heparin beforehand?
    Dr. Woodcock. Right. There were what are called 
pharmacopoeial standards, and other standards for Heparin that 
were in place, and this is what was very interesting about this 
incident. This contaminant was chemically modified to enable it 
to--it mimicked Heparin in the existing tests that we had. It 
was not detected by the manufacturers when they got the 
contaminated batches of raw Heparin, of API Heparin. Because 
when they did the normal tests, that passed--even when it had 
30 percent of something that wasn't Heparin in it.
    It took more sophisticated modern tests to determine this. 
Actually, our analysts had this in their laboratory, some of 
them, for several weeks. It took them that long, with all their 
analytical instruments, to actually figure out what this was. 
Because it's very similar to Heparin.
    Senator Enzi. Thank you. I have a whole bunch more 
questions, but I'll submit those in writing, since my time is 
expired.
    The Chairman. Senator Brown.
    Senator Brown. Thank you, Mr. Chairman.
    I'm, of course, troubled, Dr. Woodcock, by the uncertainty 
of accuracy of labels, depending in part on where the 
ingredients come from.
    I want to talk about the whole issue of how we do 
inspections of ingredients coming from China. I understand FDA 
plans to open three offices in China, and will assign 13 
employees to staff these offices--does that get us very far?
    Dr. Woodcock. What that does is provide a--as someone said 
already--a presence on the ground in China. It doesn't get us 
out there doing all of the inspections, potentially, that we 
need to do, but we'll have people in China who know what is 
going on in China, and that is a very important step.
    I'll have Deb talk about the inspectional issues.
    Ms. Autor. Having the offices in China is a good start. It 
allows us to do a lot of capacity-building, it allows us to do 
some inspections, and as Dr. Woodcock said, it allows us to 
have a presence on the ground to observe conditions.
    Ultimately, our resources and our ability to inspect drug 
manufacturers in China are very limited. The GAO, I think, has 
said that internationally, at the rate we're going, we'll get 
to every facility every 13 years, or in China, every facility 
every 40 yeas. While it's a start, it won't create----
    Senator Brown. Well, what does that mean? Based on having 3 
offices and 13 employees? Or based on what we could be doing if 
you had the right kind of appropriation and the right 
direction?
    Ms. Autor. Based on our current inspectional rate 
internationally, and specifically in China--that's our ability 
to cover the Chinese inventory. Having the offices there will 
allow us to do somewhat more inspections, but we currently have 
over 800 Chinese drug manufacturing facilities. Having 13 
people on the ground in China, responsible for covering all 
FDA-regulated products, will not allow us to cover a 
significant proportion of those.
    Senator Brown. How long does it take to inspect a typical 
foreign drug manufacturing plant?
    Ms. Autor. Our typical foreign inspections are about a 
week.
    Senator Brown. With how many inspectors?
    Ms. Autor. Usually two.
    Senator Brown. Two? These inspectors are trained--what is 
their training?
    Ms. Autor. It varies somewhat, but we have special training 
on how to conduct pharmaceutical inspections--either, they 
usually are trained FDA inspectors and then they would have 
some extra training on pharmaceutical inspections, and at time 
we will bring review chemists, or others who have particular 
expertise in the product, along on inspections so they can 
help. They range from people with a Bachelor's Degree in 
Science, to Ph.D.s.
    Senator Brown. Why, with all of the stories there's a bit 
of an exaggeration, but a monthly, maybe weekly, report of some 
contaminated or unsafe or toxic toy, food substance, vitamin, 
pharmaceutical, coming from China to this country--why such a 
modest approach? Is it all about budget to send 13 employees 
and 3 offices to a country of 1.2 billion people?
    Dr. Woodcock. As I pointed out in my introductory remarks, 
FDA was staffed and configured to regulate a domestic industry. 
Times have changed--we haven't changed--we've shrunk. Our 
inspectional capacity has shrunk.
    There's several issues, though. One is it's--without some 
special foreign inspector, I think it's difficult to get our 
people to go there, and we can't force people to go and do 
foreign inspections. We need to recognize and probably 
establish an inspectorate, that will do foreign inspections, so 
that that's the expectation.
    Maybe people would like to rotate through that, and not do 
that for the rest of their lives, however, that's one thing 
that we don't have. That's an example of--we need to change our 
approach to match the current reality of where products are 
produced.
    Senator Brown. Does a domestic inspection take any longer 
time or shorter time than an inspection in China?
    Ms. Autor. They tend to average a slightly longer time for 
a variety of reasons.
    Senator Brown. Could you give me one or two of the most 
prominent reasons?
    Ms. Autor. I think in part there is less pressure to get 
them done, they're not under such a tight itinerary, and so 
they're able to go at a slower pace. The foreign inspectors, 
I'm told, are working pretty much around the clock when they're 
there, because they have a short time to get all of their work 
done. That's less of an issue domestically.
    Senator Brown. Let me ask a theoretical question that's 
troubled me since--well frankly, since the passage of the North 
American Free Trade Agreement and what's happened with the 
amount of--and I know this is partly agriculture, partly FDA--
the amount of food that has come across the border. The good 
news is that we eat more fruits and vegetables, in part because 
we--of all times of the year, because we import a lot of 
fruits, fresh fruits and vegetables.
    My recollection is that in pre-NAFTA days, we inspected 
about 8 percent of fruits and vegetables coming into the United 
States. Today, at least, from South of the Border, today that 
percentage is one--about one-eighth, one-tenth, one-fifth, 
that's something significantly less.
    The theoretical question is--understanding we'll never 
inspect 100 percent, as Senator Enzi pointed out--is there sort 
of a mathematical, statistical analysis, that if you inspect X 
percent, that it really does guarantee--not guarantee, but 
suggest or promise with some amount of certainty, that 
something is safe. Is it 3 percent or 8 percent or 20 percent? 
What gets you--part of the disincentives for those who might 
adulterate food, or be less careful, but partly sort of a 
statistical issue--can you speak to that?
    Dr. Woodcock. Not very well, because I'm not an expert in 
the food area.
    I will tell you that--especially, I would think, for food--
you can't inspect quality in, because you can't see microbes 
and you can't see pesticide contamination by inspecting.
    In may be--and that's where research is needed--with better 
probes that you could use instantly----
    Senator Brown. We have some detection equipment now that 
can do that pretty quickly, in come cases, is my understanding.
    Dr. Woodcock. They're limited.
    Senator Brown. OK, limited, okay.
    Dr. Woodcock. Very limited.
    Inspection as a deterrent, at the border, has to be seen as 
one part of a whole--one component of a quality system, and the 
real goad, I think, for foods, as well as pharmaceuticals, has 
to be to hold the producers accountable, to have very good 
mechanisms, to hold them accountable, say, for good 
agricultural practices, or in the case of drugs, for good 
manufacturing practices. We make sure that they do the right 
things, because we can not be the quality control unit for the 
world. We are never going to have enough resources to do that.
    Senator Brown. My time is expired, thank you, Mr. Chairman.
    The Chairman. OK.
    Senator Allard.
    Senator Allard. Thank you, Mr. Chairman.
    It seems to me that the surveillance procedures that were 
put in place were working. Through the reporting to the CDC 
lab, we noticed an aberration in the occurrences of reactions, 
which raised an alert. That aspect did work; would you agree 
with that?
    Dr. Woodcock. Yes, that did work, and we were able to 
rapidly respond, once it was identified there was an outbreak, 
and it was then linked to Heparin.
    Senator Allard. Yes. I'd like to have a clarification of 
your testimony earlier--you said that Germany and the United 
States used a bolus treatment for Heparin; is that correct?
    Dr. Woodcock. Yes.
    Senator Allard. And that you think that negative reactions 
occurred in this country and Germany, as opposed to other 
countries, because the contaminant through the bolus treatment 
was causing the reaction. It is not that previous reactions 
weren't reported, right?
    Dr. Woodcock. Well, the problem with Heparin and all of 
these incenses, is that there is a background rate of people 
getting hypotensive--low blood pressure--who are on dialysis or 
who are undergoing cardiac procedures.
    First of all, you may not recognize that, it's unusual, 
because it happens anyway. Then you may have trouble linking it 
to Heparin, because there are multiple other things going on.
    Senator Allard. I understand that.
    Dr. Woodcock. However, here we saw clusters, where multiple 
patients in a dialysis center got the same reaction. That was 
seen in Germany, as well as the United States.
    We can't guarantee, I'm sorry, we can't guarantee that this 
contaminant caused it. We have published a biological link. We 
know, as Dr. Nasr said, that lots with high concentrations were 
associated with some of these reactions.
    Senator Allard. But other countries have taken it off the 
market because of side effects of some type?
    Dr. Woodcock. They have not seen side effects, but Heparin 
should not be contaminated with other compounds.
    Senator Allard. No.
    Heparin is a relatively small protein, I would suspect, 
compared to Chondroitin?
    Dr. Woodcock. It's a large carbohydrate similar to----
    Senator Allard. So it's not a protein, it's a carbohydrate?
    Dr. Woodcock. Yes.
    Senator Allard. Does Chondroitin have any protein in it?
    Dr. Woodcock. Chondroitin is--I'll have Dr. Nasr discuss 
the chemistry.
    Dr. Nasr. Both Chondroitin Sulphate and Dermatan Sulphate 
and Heparin have similar complex carbohydrate structure.
    Senator Allard. They don't----
    Dr. Nasr. No protein.
    Senator Allard [continuing]. No proteins in Chondroitin. 
But it's a cartilage; that surprises me.
    Dr. Nasr. It's extracted from a----
    Senator Allard. Is it the same Chondroitin that you see in 
cartilage?
    Dr. Nasr. Yes it is. Chondroitin is extracted.
    Senator Allard. And that's not a protein in cartilage?
    Dr. Nasr. There is a protein in cartilage, but there is no 
protein in Chondroitin.
    Senator Allard. In the----
    Dr. Nasr. The manufacturing process makes sure to eliminate 
the protein from the carbohydrates.
    Senator Allard. Interesting. OK. But you have no qualms 
about the purity of protein on today's market. Do you see a 
risk at all, currently?
    Dr. Woodcock. With Heparin?
    Senator Allard. Yes, Heparin. Today, you would not hesitate 
to license Heparin and make it available by giving your 
approval; is that correct?
    Dr. Woodcock. Heparin is an essential drug.
    Senator Allard. Yes.
    Dr. Woodcock. So we must have it available on the U.S. 
market. The testing that we've put in place, any contaminated 
lots of Heparin have been removed from the U.S. market and 
testing will assure that new contamination with Chondroitin 
Sulphate will not occur.
    Senator Allard. OK. The Chinese government has disagreed 
with our scientific findings. Are there some legal reasons why 
they would deny our science, or is it pretty much a bona fide 
scientific disagreement or are there some trade reasons? Can 
you elaborate on why you think they would be so quick to deny 
the results of our scientific studies?
    Dr. Woodcock. They had analytical results that led them to 
question the association between the contaminant and adverse 
events. They agree that there is a contaminant, in the Heparin, 
but they tested one batch that was associated with adverse 
events and they didn't find any contaminant in it.
    Senator Allard. I see.
    Dr. Woodcock. That led them to question the link. Now we 
have tested that lot in three laboratories, and they confirmed 
that it's contaminated. Basically, they're questioning it 
because they have different test results than we do, but we 
stand on our test results.
    Senator Allard. I was just kind of curious if you felt that 
maybe there are some legal or trade reasons why they would be 
so persistent in denying that. Your response helped clarify 
that.
    My time has expired.
    Senator Brown [presiding]. Thank you, Senator Allard.
    Senator Alexander.
    Senator Alexander. No questions.
    Senator Brown. One other question of the witnesses before 
we bring the next panel up. Is this explosion of imports of 
food and pharmaceutical ingredients, chemicals mostly, is this 
a function--is this all about cost to American companies? Or is 
this about an ability to get access to the chemical components 
that we need?
    Dr. Woodcock. To a great extent it's about various cost 
factors, there are different environmental regulations in 
different parts of the world, there are other different 
requirements, the labor costs are lower, developing countries--
--
    Senator Brown. What do you mean by environmental rules in 
other parts of the world? You mean, we're more stringent here 
so we go abroad to get components for prescription drugs----
    Dr. Woodcock. That's my----
    Senator Brown [continuing]. Somewhere else----
    Dr. Woodcock [continuing]. Understanding.
    Senator Brown [continuing]. Because of weak environmental 
laws?
    Dr. Woodcock. Well, you asked why companies are outsourcing 
and how it might be related to costs, and that one of the cost 
factors, we understand, is that very lower, less stringent 
standards exist in some parts of the world.
    Senator Brown. Think about what you just said. I mean, if 
it's about costs and it's about labor costs, I find that a bit 
objectionable when seven people in Toledo apparently have died 
from some of these contaminated ingredients, and I find that 
objectionable enough.
    Do you believe or have you heard from American companies 
that they've gone abroad for chemical ingredients that end up 
in pharmaceuticals because of weaker environmental laws in 
those countries or weaker production outside of labor costs?
    Dr. Woodcock. I have not heard from pharmaceutical 
companies, I have heard from analysts of that industry, who 
have a laundry list of why this wave of outsourcing has 
occurred. FDA has not really----
    Senator Brown. I caught your response, I understand.
    Dr. Woodcock [continuing]. Economics, so we----
    Senator Brown. You know a lot about this.
    Dr. Woodcock. That's what we've been told, yes.
    Senator Enzi. Since you asked that question----
    Senator Brown. Senator Enzi, certainly.
    Senator Enzi [continuing]. I need to emphasize some 
education a little bit here as well.
    It's my understanding that some of the pharmaceutical firms 
are having trouble finding the kinds of engineers and 
scientists in this country. With our H1B and other visa 
problems, they can't get them into this country to do them, so 
the only option is to go somewhere else and do them, because if 
you don't have the technical people, you can't do it. I think 
there are more ingredients than just the environmental factors 
and, you know, we need to work on all the ingredients.
    Senator Brown. Sir, thank you for that. I don't believe for 
a minute it's all environmental factors, I think it's--I guess 
the question I mainly have, if it's cost more than 
availability, and Senator Enzi's point is well taken--if it's 
cost more than availability, that's one issue. When you cut in 
and slice into what the cost issues are, if it's labor costs, 
that's one thing.
    If it's the cost to avoid various kinds of health and 
safety regulations, think of the irony there, American 
companies go abroad to make ingredients, and they can make them 
cheaper abroad because of environmental issues, and then they 
sell them back to us for our children, for our parents, for our 
families. I just think that's a pretty interesting question.
    Other comments, Senator Allard.
    Senator Allard. Mr. Chairman, I want to follow up just a 
little bit.
    You mentioned that you have a hard time getting employees 
for the FDA to want to go to China.
    Dr. Woodcock. Well, foreign inspections in general.
    Senator Allard. Is language an issue? Does the Department 
of State help your employees learn Chinese in order to get over 
there? How do your employees become fluent in that language?
    Dr. Woodcock. We can hire employees who are fluent in 
Chinese, and we have a very diverse workforce at the FDA, and 
we have employees who are fluent in most languages around the 
world.
    I think much of our problem is developing an inspectorate 
who is willing to travel all the time. I mean, that's something 
that many people are not able to do, and go to these foreign 
countries and do these inspections. It's a difficult life to do 
that.
    Senator Allard. OK, thank you.
    Senator Brown. I have one last question, would anyone be 
able to estimate how much--I imagine this might be USDR more 
than you, but how we can get to this--what the total amount of 
imports for pharmaceutical ingredients--chemicals, potentially 
contaminated pharmaceutical ingredients--would be coming from 
China to the United States? You would have no record of that or 
ability to know that, I assume.
    Dr. Woodcock. Well, we hope that the kind of information 
technology system that we need to control this and to make sure 
we can regulate it properly--we need to know that kind of 
information. I can tell you, we don't know that right now.
    Senator Brown. Is that your responsibility to know it or 
should another Federal agency give that to you?
    Dr. Woodcock. We need to know it from a technical point of 
view. We should not let any ingredient in the country, unless 
it's coming in here for a legitimate purpose, without knowing 
how it's going to be used.
    We need to have a database that can verify that, so when 
pharmaceutical ingredients traverse our borders, we know we 
have control over that, we know what it's for, and it's 
legitimately in this country.
    Senator Brown. I would like to work with you on trying to 
figure that out. I think--when you think about this--if we knew 
a couple of facts here, what is the cost of the ingredients 
imported? I'm not talking about electronics or toys or anything 
like that--what are the costs of the ingredients imported? How 
much do American companies save by outsourcing these jobs--
outsourcing this work, which they didn't do before? How many 
public dollars are spent to protect the public because of some 
companies decisions to outsource these jobs and outsource 
this--not these jobs--this work?
    I think we'd learn a lot about what we really want to do, 
even to the point of, does it make sense that none of this be 
outsourced because of costs to taxpayers, deaths, illnesses, 
and ultimately, all of those factors, and where does that take 
us.
    I would like to work with you on figuring those questions 
out.
    Dr. Woodcock. Thank you.
    Senator Brown. Thank you, I appreciate this panel being 
here. Thank you very much.
    Dr. Woodcock. Thank you.
    Senator Brown. On the second panel, Glenn Morris is a 
Professor at the University of Florida, head of the Emerging 
Pathogens Institute, he was at the U.S. Department of 
Agriculture in the Clinton administration, helped found FoodNet 
at the CDC, and wrote the food portions of the recent FDA 
Science Board Report.
    Bill Hubbard is a former FDA official with over 30 years 
experience at the agency and has testified in front of House 
and Senate Committees many times.
    Bob Brackett, now of the Grocery Manufacturers Association, 
Dr. Bob Brackett has formerly led the Food Safety Center at the 
Food and Drug Administration.
    And Gerry Migliaccio is Director of Quality at Pfizer.
    Welcome all of you, and Mr. Hubbard, we will begin with 
you.

STATEMENT OF WILLIAM K. HUBBARD, FORMER ASSOCIATE COMMISSIONER 
    FOR POLICY AND PLANNING, FOOD AND DRUG ADMINISTRATION, 
                         WASHINGTON, DC

    Mr. Hubbard. Thank you, Senator Brown. I have a written 
statement, but I was asked to make very brief remarks, so I 
will keep them very brief.
    We have this tremendous contradiction in which we have 
built this enormously effective safety net for foods and drugs 
in the United States called the FDA that works very well. Yet, 
we have not given them the means to regulate drugs and foods 
from abroad at a time in which 80 percent of our drugs are 
coming from abroad, either in finished pharmaceuticals or the 
raw materials. Increasingly, our foods are coming from these 
foreign sources.
    As Dr. Woodcock said, we've built this domestic system, but 
then as all of these imports have become the principal source 
of some of these products, we have not then moved to build a 
similar system for imports. I think we're at great risk because 
we essentially have a largely unregulated supply, in some 
cases.
    The Heparin example, I fear is a sad but good example of a 
case study of the peril that our citizens are in. It originated 
in a developing country, which does not have a long history of 
regulation in production of these products. There was no 
regulation in that country, they don't regulate this Heparin 
that was being sent to us. There were tremendous profits to be 
made by substituting cheaper ingredients, and FDA sees that all 
the time with foods and drugs, where substitutions of cheaper 
ingredients occurred. You'll all remember the Diethylene 
Glycol, which killed many children in Haiti, Panama, Nigeria, 
and other places.
    There was no FDA inspection of this facility, and you have 
little likelihood that the counterfeiter is even going to get 
caught, and even less likelihood that the counterfeiter is 
going to be punished if he's identified.
    I suggest to you that this is going to happen again, and 
perhaps again and again, because we simply don't have a system 
of infrastructures set up to strengthen the FDA. The risk of 
even greater numbers of illnesses than the 81 we saw here, I 
believe, are highly possible. Just imagine if these 
counterfeiters, instead of trying to make a buck, wanted to 
simply kill or injure Americans. I suggest to you, it wouldn't 
have been all that hard, and the impact could have been 
catastrophic.
    I urge the Senate to consider some ways of strengthening 
the FDA and bring some sort of system in place over these 
products that largely does not exist today.
    Thank you.
    [The prepared statement of Mr. Hubbard follows:]
                Prepared Statement of William K. Hubbard
                              introduction
    Mr. Chairman and members of the committee, I am William K. Hubbard. 
Before my retirement after 33 years of Federal service, I served for 
many years with the U.S. Food and Drug Administration, and for my last 
14 years was an FDA Associate Commissioner responsible for, among other 
things, FDA's regulations and policy development. Although I remain 
retired since my departure from FDA in 2005, I serve as an advisor to 
The Alliance for a Stronger FDA, a consortium of patient, public 
interest, and industry organizations whose mission is to urge that 
FDA's appropriations be increased. The Alliance and its constituent 
members are greatly concerned that FDA's resource limitations have 
hampered the agency's ability to ensure the safety of our food and drug 
supply. Today's hearing is a timely example of one of those concerns--
the massive increase in pharmaceuticals being imported into the United 
States at a time in which FDA's capacity to oversee those foreign 
producers is in serious doubt. Accordingly, I wish to thank the 
committee for inviting me to testify on that subject today.
                               background
    As you know, Congress created the current regulatory structure for 
assuring the safety of human drugs in 1938, through its enactment of 
the Food, Drug and Cosmetic Act. That statute recognized that drugs 
could be a key component of our health care system, but that drugs were 
also powerful chemicals with the capability to produce great harm if 
not carefully regulated. Thus, Congress determined it necessary to 
create a relatively pervasive regulatory system which is comprised of 
three primary principles:

    1. Strictly regulated human testing and thorough FDA review, of 
drugs before they can be marketed. FDA takes great care that new drugs 
meet the required standard of safety and effectiveness, and as such has 
been recognized as the ``gold standard'' for drug approval. Further, 
with the resources Congress provided for additional medical staff via 
the Prescription Drug User Fee Act, FDA now approves new drugs as fast 
or faster than anywhere in the world, meaning that Americans have first 
access to new medical breakthroughs while retaining the safety 
assurances that our citizens expect.
    2. Postmarket monitoring of drugs once they are marketed to assure 
that the approval decision was appropriate. Congress has recognized 
that more information about a drug's safety will become available 
through the widespread use that occurs after its approval, and has 
instructed the agency to affirm that the approval decision was 
appropriate by tracking each drug's post-market safety profile. If 
safety concerns are identified that were not seen in the initial FDA 
review, the agency can remove a drug from the market, or otherwise 
intervene to ensure its continued safe use (such as through warnings or 
restricted distribution).
    3. Rigorous oversight of drug manufacturing, to assure that the 
drug approved by the FDA is the one that is actually manufactured and 
is of consistently high quality. A drug must be manufactured under 
specific controls mandated by FDA--known as Good Manufacturing 
Practices (GMPs). These include requirements that active ingredients of 
the drug be of a prescribed purity, strength and quality; that the drug 
be made in well controlled, sanitary conditions; that its labeling and 
packaging be equally well controlled; and that laboratory tests of the 
drug be performed routinely using well established scientific methods 
and properly calibrated equipment to confirm that the drug is always 
produced in the form approved by the FDA.
                     a record of remarkable success
    The result of this regime established by Congress and implemented 
by the FDA has been unsurpassed, and perhaps unequaled, in my opinion, 
by any American industry. The high standards for drug safety and 
efficacy that you and the FDA have demanded have led to a cascade of 
new discoveries across the decades that have placed the U.S. 
pharmaceutical industry far above foreign competitors in quantity and 
quality of new therapeutics. Indeed, countries around the world look to 
the FDA as the ``gold standard'' for determining if a new drug should 
be approved and for establishing safe manufacturing controls for 
marketed drugs. Today, physicians, pharmacists, and their patients have 
a very, very high confidence that the drugs they prescribe, dispense, 
and use are well understood, well made, and will perform as expected.
                          the global situation
    The portrait of pharmaceuticals elsewhere around the world is not 
so positive. Drugs developed and produced in other countries do not 
always have the same record of therapeutic success as American 
pharmaceuticals. But perhaps more importantly, unlike the relatively 
closed U.S. drug market, in most countries these products are subject 
to normal arbitrage, which means that drugs move about as much as 
electronics, apparel, auto parts and thousands of other goods. This has 
meant that drugs are often purchased from suppliers who have little or 
no oversight by regulatory bodies; that key elements of safe drug 
production are ignored--such as quality testing, expiration dating, and 
labeling controls; and that producers of substandard and counterfeit 
drugs have a relatively easy access to the marketplace.
    Specific examples of dangers in the international drug market 
abound. Let me list just a few:

     Last year's substitution of ethylene glycol (antifreeze) 
for pharmaceutical grade glycerin in an elixir that was linked to 46 
deaths in Panama, as well as to other deaths in Nigeria, India, South 
Africa, and Argentina. Those cases were ominously reminiscent of a 
similar contamination in 1996 that was associated with the deaths of 85 
children in Haiti. In both cases, the sources of the substitution were 
reported to be Chinese drug manufacturers, as was the diethylene glycol 
contamination of toothpaste that was found recently in many countries, 
including the United States. \1\ As the New York Times reported in 
2007, the counterfeit glycerin was traced through a pipeline ``from the 
Panamanian port of Colon, back through trading companies in Barcelona, 
Spain, and Beijing, to its beginning near the Yangtze Delta in a place 
local people call `chemical country'.''
---------------------------------------------------------------------------
    \1\ Ironically, and sadly, it was diethylene glycol substitution 
for glycerin in an elixir that killed over 100 Americans in 1937 and 
led Congress to enact the Food, Drug and Cosmetic Act, and thus create 
the drug safety system that the United States relies upon today.
---------------------------------------------------------------------------
     In just the past 2 years, seizures of fake drugs in the EU 
went from 500,000 tablets to almost 3 million. In addition, the UK's 
version of our FDA has recently been forced to conduct large scale 
recalls of counterfeit drugs that have made their way into their health 
care system.
     A recent ``sting'' operation by the The Sunday Times of 
London set up a phony drug wholesaler, who was able to buy large 
quantities of counterfeit drugs from a Chinese manufacturer, who was 
reported to make pharmaceutical ingredients for legal sale by day and 
fake drugs for illicit sale by night. The Times reported that 
counterfeiters are increasingly turning from fake handbags and currency 
to drugs, because the drugs are so easy to make and sell on world 
markets.
     The World Health Organization has reported that in some 
areas of the world, particularly parts of Africa and Asia, more than 
one-half of the pharmaceutical supply is counterfeit. Indeed, drug 
counterfeiting is considered to be endemic around the world, with the 
United States thus far one of the few exceptions. China is alleged to 
be a principle world supplier of such products.
     Many of our citizens are lured to purchase prescription 
drugs directly, via the Internet, from suppliers around the world, 
often masked as Canadian or European pharmacies, but in reality 
providing counterfeit and substandard drugs from some of the darkest 
corners of the globe.
     Within China itself, deaths from counterfeit and 
substandard drugs have often been described; some reports place them as 
high as 200,000 to 300,000 annually.

    I could go on with numerous other examples, many of which would 
include a frequent reference to China. But I do not intend to suggest 
that ``Made in China'' should become a synonym for danger. That 
country's enormous economic development in recent years has made it the 
source around the world of increasing percentages of many nations' 
consumer goods. Here in the United States, it is estimated that 40 
percent of all consumer products we purchase originate in China. Most 
are assuredly safe and an attractive bargain for Americans seeking to 
stretch their income as far as possible.
    But drugs are not socks or running shoes. They are special, and 
Congress recognized their unique importance to health--and their 
potential risk--when it gave FDA the authority so many years ago to 
create a comprehensive regulatory system over pharmaceuticals. I 
believe FDA did its part, and did it well--by bringing to bear the best 
scientific knowledge of drug development and production to create rules 
and procedures for assuring that our drugs are safely manufactured. 
However, I believe that we may now be at a turning point at which our 
future actions will determine whether we will go the way of other 
countries or stay on the path that has served us so well.
                         fda and imported drugs
    At a time in which drug safety problems overseas have become more 
and more prevalent, the United States has seen a massive change in 
sourcing of its pharmaceuticals. Today, the vast majority of our drugs 
have foreign components, either as so-called ``finished dosage form''--
the pill we get from the pharmacy; or Active Pharmaceutical 
Ingredient--the active ingredient that is shipped to the United States 
for production of the final pill form. Yet in the face of this flood of 
drugs and drug ingredients from overseas, what are we doing to assure 
that they are as safe as drugs produced in this country?
    Much of the recent concern about the quality of imported drugs 
focuses on whether FDA is capably regulating those products. I think 
not, but the reason for their failure is a critical piece in our 
understanding of how to correct the problems. We must recognize that 
FDA is asked to regulate these products with a law whose 70th 
anniversary is this year--a time in which there were few drugs being 
made anywhere in the world, and none being imported into the United 
States. The system created in 1938, with origins dating all the way to 
the turn of the last century, authorized FDA to examine imported drugs 
at the border and refuse entry to any drug that ``appeared'' to be 
unsatisfactory. Thus, the law placed the responsibility on the FDA to 
catch a problem and stop the drug's entry into our country, as opposed 
to asking the foreign manufacturer to demonstrate that they were taking 
care to follow established standards for drug production. So, while 
domestic drug manufacturers are held to a high standard of drug safety, 
with regular GMP inspections, foreign producers often need worry only 
about the remote possibility that an FDA inspector at a border crossing 
will find a problem and stop the drug's entry. Moreover, a domestic 
drug manufacturer using foreign ingredients can adhere to strict 
quality control procedures, yet be victimized by a contaminated 
ingredient that was unsuspected. \2\
---------------------------------------------------------------------------
    \2\ There is a long history of illegal additions and substitutions 
to our foods and drugs from foreign sources, ranging from illegal 
antibiotics in seafood, to the aforementioned antifreeze for glycerin, 
to the polysaccharide inulin in apple juice, to melamine in pet food, 
and most recently chondroitin to heparin.
---------------------------------------------------------------------------
    More specifically, we have failed to provide FDA with the 
appropriations and other tools it needs to carry out the mission we 
have assigned to them, such as:

     Staff to conduct regular inspections in foreign facilities 
as are now done for domestic manufacturing plants. The Food, Drug and 
Cosmetic Act dictates that each U.S. drug manufacturer be inspected at 
least every 2 years, but the current rate of foreign inspections is 
infrequent at best. Thus, we are buying ever larger percentages of our 
drug ingredients from producers in developing countries who receive 
virtually no FDA inspection, despite a congressional determination that 
domestic manufacturers be inspected regularly.
     Modern IT systems that would allow FDA to effectively 
track and monitor the production and movement of imports. The import 
data system is so old and communicates so poorly with other FDA 
information systems that it is difficult for FDA officials to use risk 
as a predominant driver of their compliance;
     Registration procedures for foreign drug manufacturing 
that would allow us to know who is making drugs for our market, where 
they are located, and what they are manufacturing; and
     Port inspectors to examine the almost 20 million annual 
shipments of foods, drugs, and other products that FDA is expected to 
regulate. For over 400 ports of entry, FDA has only 450 inspectors, 
meaning that most ports aren't staffed at all and many can be staffed 
only part time.
                          the heparin example
    We are, of course, especially mindful today of the recent deaths 
from contaminated heparin. It is, sadly, a good example of the problem 
FDA faces in assuring the safety of imported drugs. Indeed, I believe 
one could use the well worn cliche of a ``perfect storm'' in describing 
the conditions upon which the heparin incident unfolded--initial 
extraction of heparin on pig farms that have been described as 
``primitive,'' no regulation by authorities in the producing country, 
no FDA inspection of the heparin exporter's manufacturing facility, and 
violative conditions found by FDA in the manufacturing facility when 
subsequently inspected. When you add to that the technical capability 
of chemists to modify and substitute chondroitin for heparin, the 
resulting profit margin by using cheaper ingredients, the low risk of 
being caught substituting another ingredient, and the even more remote 
likelihood of being punished by U.S. authorities, one could accurately 
conclude that there was highly fertile ground upon which this could 
occur.
    I cannot overemphasize the disparity between such conditions and 
those in the United States. While certainly FDA has at times found U.S. 
manufacturing facilities in violation of GMPs, the circumstances here 
are far different. U.S. drug manufacturers accept the need for high 
standards in drug development and manufacturing and generally adopt 
those standards faithfully. Indeed, drugs manufactured in the United 
States are subject to a long list of stringent regulatory requirements, 
and failure of any of those requirements will render the drug 
``adulterated'' and thus illegal in this country. Moreover, drugs made 
in the United States under FDA's rigorous quality control standards 
have an extraordinarily good safety record, as measured by the paucity 
of manufacturing defects and deaths and illnesses related to 
manufacturing deficiencies.
                           what must be fixed
    We must find a way forward to ensure that drugs made with foreign 
ingredients meet the same high standards as those of fully domestic 
origin, by assuring the enforcement of the rules that govern drug 
production and the promulgation of needed new rules. It does no good to 
have rules if they are not obeyed, no good to set high standards if 
they are not used, and no good to develop advanced scientific skills if 
they are not employed. That some less developed countries have a record 
of serious problems in drug manufacturing is indisputable. And the 
disparity in drug inspections--in which FDA inspects U.S. facilities 
regularly and those in China and India almost never--is indefensible.
    Some would say that we should not be buying products such as drugs 
from developing nations, but that flies in the face of the reality of 
global free trade. Others would rely upon agreements negotiated with 
foreign countries, under which those nations would assure the safety of 
drugs exported to the United States. I believe that a developing 
country without a strong counterpart to the FDA is incapable of 
effectively implementing such an agreement, and that such a course of 
action is a prescription for frustration. In the end, I believe we must 
rely upon what we know has worked in the past to protect our drug 
supply--rigorous control of pharmaceuticals within a system closed to 
unregulated and unscrupulous suppliers and overseen by a strong FDA.
    More precisely, I urge you to consider the following ideas:

    1. An immediate infusion of new appropriations for FDA's drug 
oversight activities. As FDA's Science Board recently concluded, the 
agency is massively underfunded, and the paucity of resources for 
overseeing imported drugs is particularly glaring. Indeed, despite the 
fact that such a large proportion of our drug supply is of foreign 
origin, FDA's funding for regulating imported drugs is less than 2 
percent of the agency's budget.
    2. A requirement for GMP inspections of foreign drug manufacturing 
facilities, with an immediate focus on drugs made in countries without 
a history of safe drug production and internal regulation. Without such 
inspections, we essentially have no oversight of those manufacturers. A 
GMP inspection is far more than just a snapshot of that facility the 
day the inspector arrives. It is a detailed survey of how that plant 
has been operating for months, which allows a realistic conclusion 
about whether that facility can and does follow accepted drug 
production procedures. Relying on testing by the FDA or the U.S. drug 
company that receives the foreign ingredients is not a substitute for 
examining the source of production.
    3. Creation of a Foreign Inspectorate for the FDA that is dedicated 
to inspecting foreign manufacturing facilities. Currently, FDA must 
utilize its domestic inspection force to travel overseas to conduct 
inspections. That practice is expensive and often a hardship on 
inspectors. The agency needs to recruit an inspection force that is 
hired and trained to do foreign inspections, and many will need to be 
housed in the countries with the greatest number of manufacturing 
facilities.
    4. A requirement that all foreign drug producers register annually 
with the FDA. As the GAO has noted, FDA does not even have an accurate 
listing of drug manufacturers overseas. We need to know who is making 
our drugs, what compounds they are sending to our country, and where 
they are located.
    5. Appropriations and a specific congressional mandate to improve 
FDA's IT systems. If we don't even have a system for capturing who's 
making these products, where they are, what's coming into our country, 
and related critical information needs, we can't hope to begin the 
process of improving our coverage of imports. The IT systems should be 
configured in a way that allows the agency to use a myriad of risk 
factors, including potential impact on the public health, to direct its 
inspectional and import efforts. The Science Board recommends increased 
appropriations of $800 million for FDA's overall IT needs, so there is 
a long way to go if FDA is to have state-of-the-art information 
systems, but we could at least start with funding an effective import 
information system.
    6. A vigorous mechanism for testing drugs for ingredients or 
contaminants that are not approved for that compound. History has shown 
that processors, especially in less developed countries, can be adept 
at adding substances to increase the value of the product or decrease 
costs of production. But the danger of doing so is well established, 
and poses an enormous hole in the safety net we are trying to maintain.
    7. Clear authority for FDA to inspect in foreign countries. This is 
a very simple proposition--if a nation sending pharmaceutical 
ingredients to our country is unwilling to allow FDA inspectors to 
examine facilities in their country for adherence to our safety 
standards, then those ingredients should not be allowed into the United 
States.

    I believe FDA's scientists and regulatory officials are nothing 
short of terrific. They are well trained, intensely dedicated to the 
public health, and a true bargain for the American taxpayer. But they 
have been handed a task--an expectation--that they realistically cannot 
fulfill with their current resources. But history has shown that when 
FDA is given the resources and tools it needs to be effective, it will 
perform well and in doing so protect the health of those who depend 
every day on this critical agency.
    Thank you again for inviting me to give my views on this subject.

STATEMENT OF J. GLENN MORRIS, JR., DIRECTOR, EMERGING PATHOGENS 
       INSTITUTE, UNIVERSITY OF FLORIDA, GAINESVILLE, FL

    Senator Brown. I think your microphone's not on, Mr. 
Morris.
    Dr. Morris. Sorry about that. As a physician, the Heparin 
issues are ones that are near and dear to my heart. I see 
patients and as a physician we've been concerned about this, 
but today I'd like to focus more on the food issues.
    Again, we talk about food-borne disease outbreaks, but one 
of the things that concerns me is that while we saw an initial 
decline of overall incidents of food-borne diseases in this 
country after USDA HASSOP regulations over a decade ago, over 
the last several years these numbers have leveled off and we 
are essentially seeing the same numbers of food-borne disease 
cases as we have in the past.
    We're in a situation where we're kind of at the status quo, 
and I think there's very much a need to think creatively about 
ways in which we can try to continue to see improvement in 
terms of the overall rate of food-borne disease in this 
country.
    I think a key component of this is science. We need to have 
top quality science, both microbiologic and epidemiologic, much 
of that currently is not available.
    The key elements in this that have already been brought out 
multiple times, are the lack of resources to be able to build 
an appropriate science base within FDA. The other component is 
to have the regulatory underpinnings so that FDA can do the job 
that it needs to do, in terms of protecting our food supply.
    Again, FDA in terms of food, tends to be reactive. They 
respond to the crisis of the moment. I think what we need to be 
able to do is put in place a system that is preventive. I think 
FDA is headed in this direction, but at the moment has neither 
the resources nor the statutory authority to be able to do 
what's necessary to reach that point.
    [The prepared statement of Dr. Morris follows:]
      Prepared Statement of J. Glenn Morris, Jr., M.D., MPH&TM \1\
    Mr. Chairman, members of the committee, it is a pleasure to have 
the opportunity to provide you with information which may be of help in 
developing a common vision for the FDA role in food safety during the 
next decade. In particular, I would note the importance of the 
following issues:
---------------------------------------------------------------------------
    \1\ Dr. Morris is Director of the newly established Emerging 
Pathogens Institute (EPI) at the University of Florida, Gainesville, 
where he is also a Professor of Medicine (Infectious Diseases). From 
1994-96, Dr. Morris worked with the Food Safety Inspection Service, 
USDA, on development of the new HACCP regulations, and was instrumental 
in the establishment of FoodNet, the national surveillance system for 
foodborne illness. He has served on four National Academy of Sciences 
expert committees dealing with food safety, and currently serves on the 
Institute of Medicine's Food and Nutrition Board. Most recently, Dr. 
Morris served as a member of the FDA Science Board's Subcommittee on 
Science and Technology, which was responsible for the February 2008 
report ``FDA Science and Mission at Risk.''

     Food safety remains an important area of concern to the 
U.S. public. For the public, problems have been underscored by ongoing 
reports of foodborne disease outbreaks and major product recalls. 
However, from an epidemiologic perspective, it is perhaps more 
concerning that reported incidence rates for the major foodborne 
pathogens (based on 2007 FoodNet data) have remained relatively 
constant during the past several years, with some actual increases. 
This is in the context of initial declines in incidence rates in the 
early part of this decade, as compared with a 1996-1998 baseline. I was 
instrumental in the establishment of FoodNet in the mid-1990's, to 
serve as a means of assessing the public health impact of the new HACCP 
rules at USDA. While there are constraints on the interpretation of 
available CDC data, it is concerning that the initial declines in 
incidence rates seen in the years following the implementation of the 
USDA HACCP rule may have ``leveled off,'' suggesting the urgent need 
for new and innovative approaches to protect the health of the American 
people.
     FDA, with responsibility for overseeing an estimated 80 
percent of the Nation's food supply, must take the major leadership 
role in the development and implementation of such new approaches. As 
has been noted by multiple national committees (and by the FDA itself, 
in its Food Protection Plan), the FDA tends to be primarily reactive in 
issues of food safety: they spend most of their time putting out fires, 
rather than focusing on how to keep the fires from starting in the 
first place. There is a broad consensus that the agency must develop a 
pro-active, risk-based (and science-based) preventive approach to food 
safety. Initial steps in this direction have been taken by the agency, 
with the announcement of their Food Protection Plan. However, some key 
issues remain:

    Development of a risk- and science-based approach to prevention 
requires science. More specifically, there is a need for high quality 
surveillance, both microbiologic and epidemiologic, to clearly identify 
and delineate problem areas. This, in turn, must be combined with a 
strong analytic capacity, both to guide the original data collection 
and to ``make sense'' of the data when it is collected. In this regard, 
many of the European countries (such as the Netherlands and Denmark) 
are well ahead of us, having in place well-designed surveillance 
systems that are used to regularly ``tweak'' the approaches and focus 
areas of the associated food safety regulatory agencies. Development of 
public health-based performance standards, which, long-term, are a 
critical element of a risk-based prevention system, requires an even 
higher level of sophistication in surveillance and analysis. 
Unfortunately, the capacity at FDA for such analysis is limited, and 
there is at best a clouded vision of what is needed for development of 
such systems.
    As is true for many things in government, development of risk-based 
systems will require money--including substantial ``up front'' funding 
to get new systems in place. Long-term, there is little question that 
implementation of risk-based approaches will be cost-effective, both in 
terms of the agency budget and the reduction in costs associated with 
foodborne disease, but it will cost money to get there. I had the 
privilege of serving on the FDA Science Board Subcommittee on Science 
and Technology, which was responsible for the November 2007, report, 
``FDA Science and Mission at Risk.'' I strongly concur with the 
findings of the report. As the report has been widely circulated, I 
will not repeat the conclusions, other than to emphasis the critical 
need for adequate funding if the FDA is to continue to do its current 
job appropriately, let alone move forward with a vision for the future.
    While there is unquestionably a need for science, and the funding 
to support that science, we, unfortunately, find ourselves in a 
situation where there are even more basic steps that must be taken to 
move the agency to a point where science can be applied. In this 
context, I strongly applaud the efforts of this committee to provide 
the necessary legislative mandate for the agency to begin to move 
toward a preventive, risk-based future. At a very simplistic level, 
there is a need for legislation that will require inspections at 
consistent intervals, and give FDA the tools necessary to recall 
products that may contain pathogenic microorganisms or toxin materials. 
Moving up from there, there is a need to bring companies into the 
creation of a vision for improved food safety, with a willingness to 
assume responsibility for identifying potential foodborne hazards 
within their products. Ultimately, a smoothly functioning risk-based 
system will include key components of HACCP, with strong industry buy-
in and performance monitored by public health-based performance 
standards.
    We have a long way to go to reach this point, both in terms of 
science and regulatory structure. However, there is a need to get 
started--to depart from the status quo, and to begin to apply 
innovation and creativity to an inadequate and antiquated system. I 
applaud this committee for beginning to move in this direction.

    Senator Brown. Thank you, Dr. Morris.
    Dr. Brackett.

  STATEMENT OF BOB BRACKETT, PH.D., SENIOR VICE PRESIDENT AND 
   CHIEF SCIENTIFIC AND REGULATORY AFFAIRS OFFICER, GROCERY 
           MANUFACTURERS ASSOCIATION, WASHINGTON, DC

    Dr. Brackett. Thank you, Senator Brown.
    I think it's safe to say that the food industry is 
committed to work with Congress in addressing some of the new 
challenges that have been already identified, especially with 
those rising imports, as you've mentioned, and also change in 
consumer preferences. We're also committed to food safety 
reform, but believe that risk-based approaches to the 
prevention, as has been mentioned earlier, of contamination 
should continue to be the foundation of our food safety 
strategies, rather than reaction.
    In particular, we have several suggestions--including 
reforms that we think should be tackled, one of which is--
first, we would urge you to give FDA the power to establish 
safety standards for fresh fruits and vegetables.
    Second, that you require every food company have at least a 
written food safety plan that is available to FDA for their 
review.
    And third, we would urge you to require every food importer 
to police their foreign suppliers and to document, for FDA 
review, their food safety controls. We believe that these, and 
some of the other recommendations that were included in our 
written testimony, would significantly reduce the risk of 
contamination, and more importantly, food-borne illness.
    Clearly, FDA is going to need more resources if they're 
going to be able to accomplish this mission. Having said that, 
we are opposed to proposals to tax food companies, food 
facilities, and food imports, including the registration and 
import fees that have been proposed in the discussion draft of 
the Food and Drug Administration Globalization Act.
    Even though we do actually share the goals of the 
discussion draft, we have a number of concerns, and I would 
really like to raise three at this point.
    One is, while we support the requirements of a food safety 
plan, subject to FDA review, we oppose giving FDA inspectors 
the power to prescribe the specific safety controls that would 
be used.
    Two, we oppose the proposals to impose a re-inspection fee 
and civil penalties that would increase the cost of food, but 
will not have any impact on the safety of the food.
    And three, we're very troubled by proposals to effectively 
require that all foreign and domestic food facilities obtain 
third-party certification, regardless of risk. This would be a 
significant waste of resources that could, instead, be 
dedicated to more effective food safety measures.
    The food industry is willing to accept new mandates to 
improve the safety of foods, including new mandatory safety 
standards for fresh fruits and vegetables, and to police our 
foreign suppliers. At this point, we are very grateful for the 
opportunity to testify and to work with you and with the staff, 
both on the discussion draft of the Food and Drug 
Administration Globalization Act, as well as discuss some of 
the alternatives that we think would improve the safety of our 
foods overall.
    Thank you.
    [The prepared statement of Dr. Brackett follows:]
                 Prepared Statement of Robert Brackett
    Thank you, Mr. Chairman. My name is Robert Brackett and I am Senior 
Vice President and Chief Science and Regulatory Affairs officer for the 
Grocery Manufacturers Association.
    We commend and share your commitment to ensuring the safety of our 
Nation's food supplies and agree that a strong, adequately funded Food 
and Drug Administration (FDA) is fundamental to achieving this goal.
    Food and beverage companies already implement a variety of food 
safety measures and controls to ensure the safety and quality of our 
products and ingredients. Ensuring the safety of our products is our 
most important priority. We agree that Congress must take steps to help 
FDA and the food industry address new challenges posed by rising food 
imports and changing consumer preferences. We believe that a risk-based 
approach to the prevention of contamination should continue to be the 
foundation of nation's food safety strategies.
    We are grateful for your willingness to work with us to craft food 
safety legislation. While we support giving FDA additional resources, 
we strongly oppose placing annual taxes on food facilities or food 
importers to finance FDA operations. All Americans, not simply food 
companies, benefit from improvements to our Nation's food safety 
programs. We believe the costs of FDA inspections and research should 
be financed from general tax revenue, not from taxes imposed on food 
importers or facilities. While we support increased resources for FDA, 
we strongly oppose food taxes and ``fees'' that are not tailored to 
provide a government service to our industry and that will likely 
compound food costs at a time of record food inflation.
    While we support additional regulation of food companies and 
importers, we oppose overly prescriptive new food safety requirements 
and oppose providing FDA inspectors with broad authority to review the 
adequacy of food safety plans. While we support the requirement that 
all food companies have a food safety plan, we believe food companies 
should be given the discretion to identify appropriate safety controls 
and measures beyond those controls and measures already required by 
regulation. Prescriptive, across-the-board new regulatory requirements 
will stifle innovation, divert resources from proven food safety 
measures, and will increase food costs at a time of record food 
inflation.
    We are also very troubled by proposals to require FDA or third-
party certification for all food facilities, regardless of risk. In 
particular, we are concerned that a proposal last week by Chairman 
Dingell to require all foreign and domestic food facilities to obtain 
certification from FDA-accredited certifying agents would exhaust FDA 
resources and would improperly delegate FDA responsibilities. Because 
importers who fail to seek certification would face severe import 
limitations and unworkable testing requirements, the ``voluntary'' 
program outlined in Chairman Dingell's Discussion Draft is effectively 
mandatory. Rather than using public resources to strengthen our public 
food safety system, such proposals would effectively replace FDA with 
privately controlled and operated certifying agents with the power to 
determine whether a facility complies with Federal law.
    A massive across-the-board certification requirement that ignores 
risk is unworkable and wasteful of public and private sector resources. 
While there is a role for third party audits in our food safety system, 
we believe this role should be linked to demonstrated need, such as the 
certification of imports of certain high risk foods. Effectively 
requiring all domestic and foreign facilities to obtain certification 
would demand the creation of an unprecedented private army of third-
party certifiers that would be tantamount to creating a ``shadow'' 
government.
    While we believe that some facilities deserve greater scrutiny than 
others, we generally oppose rigid inspection schedules and instead 
believe that FDA inspections should be based upon risk. We also 
strongly oppose needless civil penalties and re-inspection fees. Food 
companies have powerful incentives to ensure the safety of food 
products and ingredients and current law already provides a wide range 
of enforcement tools, including seizure, injunction, and civil and 
criminal penalties. Giving FDA the power to assign massive fines and 
fees will dramatically alter the cooperative relationship between FDA 
and the food industry and will create a powerful incentive for FDA to 
find violations regardless of merit.
    We also oppose broad new reporting and labeling requirements. In 
particular, we oppose proposals to dramatically expand scope of the new 
reportable food registry and oppose proposals to require food companies 
to identify the source of all ingredients. Food companies combine 
dozens of ingredients from more than 160 countries and change the 
source of these ingredients every day. Unworkable new labeling 
requirements will increase the cost of food without improving the 
safety of food.
    We instead propose that Congress modernize our food safety system 
by making risk and the prevention of contamination the focus of our 
food safety strategies. In particular, we propose the following 
reforms:

     One, we urge you to give FDA the power to establish safety 
standards for fruits and vegetables. In particular, give FDA the power 
to establish food safety standards for particular fruits and 
vegetables--when risk and science demonstrate standards are needed. 
Under this proposal, FDA should be given the power to work with USDA 
and States to ensure standards are being met, and FDA should be given 
the power to work with States to tailor standards to meet local growing 
conditions.
     Two, we urge you to require food company to have a food 
safety plan. In particular, every food company selling food in the 
United States should conduct a food safety risk analysis that 
identifies potential sources of contamination, identifies appropriate 
food safety controls, verifies that those controls are effective, and 
documents those controls in a food safety plan subject to FDA review.
     Three, require every food importer to police their foreign 
suppliers. In particular, Congress should require that all food 
importers, subject to FDA guidance, document the food safety measures 
and controls being implemented by their foreign suppliers and should 
require food importers to make their foreign supplier food safety plan 
available to FDA. Food importers who demonstrate their products pose no 
meaningful risk should be eligible for expedited entry at the border so 
FDA can give greater scrutiny to high risk imports.
     Four, build the capacity of foreign governments and enlist 
the help of the private sector. In particular, Congress should direct 
FDA to develop a plan to help build the scientific and regulatory 
capacity of major exporters to the United States and should create a 
registry of private laboratories that meet FDA standards. In addition, 
FDA should enlist the help of accredited third party auditors to ensure 
that high risk imports meet Federal safety standards, to verify the 
contents of foreign supplier safety plans, and to help identify those 
imports eligible for expedited entry.

    We also believe that Congress should give the Secretary new powers 
to address bad actors. Although food companies routinely recall 
contaminated products, we believe Congress should give the Secretary 
the non-delegable power to order a recall, subject to due process 
protections, when a product poses the risk of severe health 
consequences of death and the company has refused to conduct a recall.
    Mr. Chairman, we are grateful for the opportunity to work with you 
to promote a risk-based approach to food safety regulation and to allow 
FDA the flexibility to respond to emerging risks in the manner that 
most efficiently uses the agency's precious resources. We look forward 
to working with you to develop and implement improvements that will 
make risk and prevention the focus of our Nation's food safety systems.
                                summary
    Food companies support efforts to modernize our food safety system 
by making risk and the prevention of contamination the focus of our 
food safety strategies. In particular, we propose the following 
reforms:

     Give FDA the power to establish safety standards for 
fruits and vegetables. In particular, give FDA the power to establish 
food safety standards for particular fruits and vegetables.
     Require food companies to have a food safety plan. In 
particular, every food company selling food in the United States should 
conduct a food safety risk analysis that identifies potential sources 
of contamination, identifies appropriate food safety controls, verifies 
that those controls are effective, and documents those controls in a 
food safety plan subject to FDA review.
     Require every food importer to police their foreign 
suppliers and build the capacity of foreign governments. In particular, 
Congress should require that all food importers document the food 
safety measures and controls being implemented by their foreign 
suppliers.
     Give the Secretary new powers to address bad actors. 
Although food companies routinely recall contaminated products, we 
believe Congress should give the FDA the power to order a recall, 
subject to due process protections, when a product poses the risk of 
severe health consequences or death and the company has refused to 
conduct a recall.

    Although we support giving FDA additional resources, we oppose 
taxes on food facilities and imports and we are troubled by proposals 
to require that all foreign and domestic food facilities obtain third-
party certification. We also oppose prescriptive new regulatory 
requirements, broad new labeling requirements, and civil penalty 
proposals that will increase food costs but will not improve food 
safety.

    Senator Brown. Thank you, Dr. Brackett.
    Mr. Migliaccio, good to see you, thanks for being here.

STATEMENT OF GERALD MIGLIACCIO, VICE PRESIDENT OF QUALITY, EHS 
             AND AGILITY, PFIZER, INC., PEAPACK, NJ

    Mr. Migliaccio. Thank you. I'd like to thank Chairman 
Kennedy and Ranking Member Enzi for inviting me to participate 
in this hearing. My name is Gerry Migliaccio, I'm the head of 
quality for Pfizer, Inc., the world's largest research-based 
biomedical and pharmaceutical company.
    This morning I'd like to just summarize my written 
testimony, which describes our approach to ensuring a secure 
pharmaceutical supply chain.
    Pfizer's reputation depends heavily on the quality and 
safety of the products it sells. We currently outsource about 
17 percent of the manufacture of active ingredients in drug 
products. Whether we produce internally or outsource, a secure 
supply chain is paramount in protecting the patients who use 
our products.
    The responsibility for assuring the security of the 
pharmaceutical supply chain is shared by industry and by FDA. 
As manufacturers in emerging countries enter and expand the 
global supply chain, both industry and FDA face significant 
challenges.
    Companies in emerging markets are generally operating in 
developing regulatory environments with novice inspectorates. 
Many have rudimentary quality systems or none at all. Before a 
U.S. pharmaceutical firm can consider sourcing from these 
suppliers, it is imperative that the firm work with the 
suppliers to upgrade their quality systems and standards.
    To accomplish this, Pfizer has taken steps to educate, to 
evaluate--and for lack of a better word--to enforce appropriate 
quality standards. We educated public workshops and private 
meetings with potential suppliers. We established clear 
expectations for quality systems, including the requirement for 
them to manage suppliers of raw materials.
    The evaluation of an active ingredient or drug product 
supplier is an essential element of Pfizer's quality system. 
The evaluation consists of a number of clearly defined steps.
    Quality can not be tested into a product, it must be 
designed in and assured by effective quality systems. It is 
neither technically nor physically feasible to test for all 
potential adulterants in every active ingredient and drug 
product entering the United States, therefore, the integrity of 
the supply chain must depend on careful selection of contract 
manufacturers and suppliers, and reliance on the quality 
systems they have in place. Those quality systems must include 
direct management and oversight of raw material suppliers.
    The Pfizer evaluation process is led by a dedicated quality 
unit and consists of a preliminary self-assessment by the 
contract manufacturer themselves, followed by a due diligence 
audit, action plans, and follow up audits, and finally, product 
quality assessment.
    If approved, routine oversight is provided by the quality 
unit and may include on-site visits during the manufacture of 
Pfizer products.
    Contract manufacturers and suppliers are eager to enter the 
global supply chain. Pfizer grants access only to those who 
have demonstrated that they have achieved the standards 
required, and that means both quality and environment health 
and safety standards. The rigor provides significant economic 
motivation for would-be contractors to upgrade and maintain 
their facilities and quality systems and secure their supply 
chains.
    We, at Pfizer, are admittedly moving in a very cautious 
manner when evaluating potential sources from developing 
countries, but it is imperative that we enforce our corporate 
standards in all countries.
    Thank you.
    [The prepared statement of Mr. Migliaccio follows:]
                 Prepared Statement of Gerry Migliaccio
    I would like to thank Chairman Kennedy and Ranking Member Enzi for 
inviting me to provide this written testimony and to participate in 
today's hearing, ``Restoring FDA's Ability to Keep America's Families 
Safe.'' My name is Gerry Migliaccio; I am the head of Quality for 
Pfizer Inc, the world's largest research-based biomedical and 
pharmaceutical company. In this testimony, I would like to outline 
Pfizer's approach to ensuring a secure pharmaceutical supply chain.
    Pfizer currently operates 57 manufacturing sites around the world. 
To complement our internal manufacturing, we currently outsource the 
manufacture of approximately 17 percent of our active ingredients and 
drug products. The drivers for outsourcing include: sourcing 
flexibility, competitiveness, need for special technology, cost control 
and site divestitures. Pfizer's reputation depends heavily on the 
quality and safety of the products it sells. Whether we produce 
internally or outsource, a secure supply chain is paramount in 
protecting the patients who use our products. Industry and FDA share 
the responsibility for assuring the security of the pharmaceutical 
supply chain. As companies in emerging countries enter and expand the 
global pharmaceutical supply chain, industry and FDA face significant 
challenges.
    Traditionally, pharmaceutical companies in the United States have 
sourced active ingredients and drug products from within the United 
States, from Europe, Japan and other developed countries. Our suppliers 
and contractors in these countries operate within sophisticated 
regulatory environments with highly competent inspectorates. Most 
operate to internationally recognized standards established by the 
International Council on Harmonization (ICH). Therefore, they generally 
have effective quality systems that provide a high degree of confidence 
in the overall supply chain.
    Companies in emerging markets are operating in a developing 
regulatory environment with a novice inspectorate. Many have 
rudimentary quality systems or none at all. Before a U.S. 
pharmaceutical firm can consider sourcing from these suppliers, it is 
imperative that the firm works with the suppliers to upgrade their 
quality systems and standards. To accomplish this, Pfizer and other 
companies have taken steps to Educate, Evaluate and for lack of a 
better word, Enforce appropriate quality standards.
                                educate
    Industry and FDA share the responsibility to educate manufacturers 
and regulatory authorities in emerging countries. FDA's proposal to 
place resources in select foreign countries will certainly aid their 
ability to educate and train foreign regulatory authorities and 
manufacturing firms. Industry, working through public workshops and 
private meetings with potential suppliers, should establish clear 
expectations. Compliance with ICH quality guidelines, effective quality 
systems including management and oversight of the suppliers supply 
chain, and compliance with appropriate environment, health and safety 
standards are just some of these expectations.
                                evaluate
    The evaluation of an active ingredient or drug product supplier, 
whether in a developed or developing country, is an essential element 
of a pharmaceutical firm's quality system. For Pfizer, the evaluation 
consists of a number of clearly defined steps that are articulated in a 
written standard operating procedure. The most important point to make 
regarding Evaluation is that you cannot test quality into a product; 
quality must be designed in and assured by effective quality systems. 
No amount of inspection and testing by itself will assure quality. It 
is neither technically nor physically feasible to test for all 
potential adulterants in every active ingredient and drug product 
entering the United States. Therefore, although we do a fair amount of 
statistically based sampling and testing, the integrity of the supply 
chain must depend on the careful selection of a contract manufacturer 
or supplier, and reliance on the quality systems they have in place. 
The quality systems must include direct management and oversight of raw 
material suppliers (the actual manufacturers, not commercial brokers).
    Pfizer has a dedicated quality assurance unit to evaluate and 
provide oversight to contract manufacturers. That unit, which is 
divided into three groups located in the United States, Europe and 
Asia, provides quality professionals who speak the local language and 
understand local customs and closely follow the operating practices of 
our suppliers.
    Pfizer initiates the process by providing the potential contract 
manufacturer a list of expectations and a self-assessment 
questionnaire. The response is reviewed and a decision made as to 
whether to proceed to the next step, a due diligence audit conducted by 
representatives from quality, manufacturing and other disciplines. This 
audit will examine the company's quality system including their sources 
of materials and control of their supply chain. (Frequently, Pfizer 
will insist that the contractor obtain materials only from Pfizer-
approved sources.) At the end of the audit, the results are reviewed 
and a decision is made whether to continue with the evaluation. The 
decision to continue is based on a conclusion that either the firm is 
in compliance with Pfizer standards or the firm has committed to an 
action plan to close compliance gaps. If the latter, follow-up audits 
are conducted until a determination is made that the firm is in 
compliance. Only when compliance with Pfizer standards is established, 
will the evaluation of active ingredient and drug product begin. The 
evaluation includes testing of quality attributes as well as a review 
of the overall process validation. The evaluation process utilizes risk 
assessment models to assist in the approval or rejection of a potential 
contract manufacturer. Once approved, quality oversight includes 
ongoing evaluation of changes, deviations, and trends, as well as on-
site reviews during production to ensure that standards are sustained.
                                enforce
    Contract manufacturers and suppliers are eager to enter the global 
supply chain. U.S. pharmaceutical firms should grant access only to 
those who have demonstrated that they have achieved the standards 
required. This rigor will provide significant economic motivation for 
would-be contractors to upgrade and maintain their facilities and 
quality system and secure their supply chains. Pfizer admittedly is 
moving in a very cautious manner when evaluating potential sources from 
developing counties, but it is imperative that we enforce our corporate 
standards for suppliers in all countries.
    Securing our supply chain through education, evaluation and 
enforcement requires a significant commitment of resources; this 
represents a necessary investment to fulfill our corporate 
responsibility to patients.

    Senator Brown. Thank you very much, Mr. Migliaccio.
    The New England Journal of Medicine recently published, I 
believe it came out in the last few days, ``Contaminated 
Heparin Associated With Adverse Clinical Events, An Activation 
of the Contact System.'' Let me just read one paragraph, which 
I think echoes Mr. Hubbard's words pretty well.

          ``Urgent problems included an immediate and unknown 
        risk to patients lives, a threat to the supply of a 
        widely used essential drug, and the need for 
        international cooperation of managing the integrity of 
        a global supply chain. This crisis necessitates an 
        urgent need to both understand the basis for these 
        clinical events, and to prevent future occurrences.''

    Mr. Migliaccio, you said 17 percent of your active 
ingredients are outsourced?
    Mr. Migliaccio. Seventeen percent of our manufacturing--
both active and drug product is outsourced.
    Senator Brown. OK. How much does Pfizer save a year by 
doing that?
    Mr. Migliaccio. Senator, first of all, it's not always 
driven by cost savings. In a number of cases, it's technology. 
We have to outsource certain operations that we do not have the 
technical capability to do. Certainly competitiveness and cost 
is a driver.
    I do not have a number to present to you, I can research 
and get back to you----
    Senator Brown. I'd like that.
    Mr. Migliaccio. I don't have a number as to what 
outsourcing is saving us this year.
    Senator Brown. OK, I would like that.
    You say that, technically, we were not able to do that.
    When you made a decision, when Pfizer made a decision to 
begin buying ingredients from China, for example, was China 
technologically able to do that, at the time? And we weren't? 
Or did you go work with Chinese subcontractors to build that 
technological capacity, instead of building it here?
    Mr. Migliaccio. In the case of the most recent project 
we've been working on, the firm had a technical capability in 
steroid manufacturing.
    Senator Brown. ``The firm,'' meaning the Chinese?
    Mr. Migliaccio. The Chinese subcontractor, had a technical 
capability in that area, so that's why we sought to outsource.
    Senator Brown. We did not?
    Mr. Migliaccio. We had that technical capability, but they 
would increase our competitiveness in the market.
    Senator Brown. So, that was about cost?
    Mr. Migliaccio. Yes.
    Senator Brown. Could you present to the committee, in 
writing, any examples of when you made a decision to go 
offshore--especially China, but not confined to China--but 
country, let's say, confine it to countries that don't have the 
food safety net that we do in this country. Take out countries 
with comparable FDAs, if you will, that went offshore--you made 
a decision to go offshore, because at that time the country 
where you were located, had technological capacity that we 
didn't as a country. I would like to see any list of those 
manufacturing of ingredients that you could come up with that 
way.
    Mr. Migliaccio. That's fine. It's generally not countries, 
but firms.
    [The information requested follows:]

    Following are examples of technology that Pfizer outsources due to 
either limited or no internal capacity.

     Devices (e.g. pre-filled syringes, inhalation devices)
     Lyophillization (freeze drying)
     Specialized packaging
     Soft gelatin capsules
     Specialized active pharmaceutical ingredient technology 
(e.g. biotechnology)

    The majority of this outsourcing takes place in the United States 
and Europe.

    Senator Brown. Firms, but located in countries without the 
safety regimen of the FDA.
    Let me get to one more point, and then I want to ask Mr. 
Hubbard a question. I think if you'll look at what's 
happening--there's a Professor at Ashland University, not far 
from where I grew up, in North Central, OH, who took his 
students--this chemist who teaches college chemistry, not 
graduate school, this was not graduate school, it was a college 
chemistry class--took them to stores at Halloween last year, at 
Christmas, and then at Easter, and bought toys in these stores, 
very inexpensive toys, and then the students brought the toys 
back and they tested them for lead. The tests were off the 
charts on a number--or at least 10 percent of these items, each 
time he did it.
    I started thinking through this whole process. What's 
happened is Hasbro and other companies will outsource--American 
companies will outsource to China--to a country that doesn't 
have strong environmental worker safety laws--we know all of 
that. Then they will go to these Chinese sub-contractors, and 
they'll keep pushing these Chinese sub-contractors to cut 
costs. That's how we ended up with lead-based paint, in many 
cases, because it's cheaper to apply, cheaper to buy--all of 
that, cutting costs.
    Then bring it back here with a weaker inspection system. Is 
that a fair characterization of the way Pfizer operates, too?
    Mr. Migliaccio. No sir, it's not. In fact, probably, to 
my--well, let me describe it in these terms. We may get an 
original business proposal from a firm anywhere around the 
world, including the United States. Once I insert my 
organization, the cost always goes up.
    We have standards. And we insist that we achieve those 
standards. When we go into, whether it's China or Ireland or 
the U.K., we are evaluating, and it's all about presence. Dr. 
Woodcock said it all earlier as well, it's all about having a 
presence in those countries.
    We have an organization that is--I have 66 quality 
professionals that are spread around the world managing our 
contract manufacturers. They are on-site, they are there, and 
we're enforcing our quality standards, we are enforcing 
environmental health and safety standards that exceed, well 
exceed, local requirements. In fact, it adds to the cost, in 
some cases significantly, but it's the standards that we've 
established.
    Senator Brown. Thank you Mr. Migliaccio.
    Real quick, Mr. Hubbard, I'm hearing--I do a series of 
round tables around Ohio--I invite 15, 20 people in communities 
all over the State and just ask some questions for an hour and 
a half, and I've begun to hear people bring up this whole 
dental implant issue with lead. I heard it last week and 
earlier this week in Perry County, in a little town southeast 
of Columbus. What's the best solution for dealing--is it--one, 
it is an increasingly extensive problem, and two, what's the 
best way to deal with it?
    Mr. Hubbard. Well, various dental amalgams have been 
suspected of having problems, they had mercury in them and I 
believe the dental industry's been removing the mercury. I'm 
not familiar with this particular lead issue. I think you said 
that you thought the bridge material may have come from 
overseas?
    Senator Brown. That's what my understanding is. I don't 
know enough yet to know, for sure.
    Mr. Hubbard. The FDA clearly has limits for lead 
contamination in all of its products, foods and drugs and 
medical devices, so it may well be that that was a violated 
product that was missed.
    Senator Brown. OK.
    Senator Enzi.
    Senator Enzi [presiding]. Thank you.
    First of all, I'd like to thank Dr. Woodcock for staying to 
hear the second panel. It's an unusual treat for us to see the 
person that has some capability in this area listening to what 
the others have to say. Listening isn't a talent that happens a 
lot around here, so thank you very much.
    Let's see, I'll start off with a question for Dr. Brackett. 
I agree with your suggestion that these food safety activities 
should be focused on high-risk foods or facilities. Could you 
tell me more about how you classify a food or facility as high-
risk?
    Dr. Brackett. Sure, Senator Enzi. There's a number of 
different factors that can be added into that, one of which is 
the characteristics of the food itself, that is, if it supports 
the growth of microorganisms or if it's been associated with 
food-borne illness in the past, that automatically would raise 
it up.
    Also, the history of the company itself and what their 
compliance record has been in the past might also raise that up 
to a higher class of risk. Then there are those types where 
there's been a history, where there's been little or no problem 
of food-borne illness, where the compliance history has been 
good, they should not be getting the same sort of scrutiny that 
one that is at that higher risk should be getting.
    Senator Enzi. I always appreciate that clarification, that 
there are different levels and some people deserve inspections 
more than others.
    Mr. Migliaccio, I don't have any ``are you still beating 
your wife''-type questions for you.
    [Laughter.]
    I've been trying to picture, I know that part of the 
process with Heparin was to have people cut up pig guts and 
strip them all day. I'm trying to figure out if there's anybody 
in Wyoming that's interested in that kind of a job, or anybody 
in Ohio that's interested in that kind of a job.
    You describe the strides that Pfizer takes to ensure the 
quality, safety, and integrity of the products you manufacture, 
which extends to qualifying the suppliers that you use. In your 
view, are the activities and steps you describe typical of the 
pharmaceutical manufacturers, including manufacturers of 
generic products and active pharmaceutical ingredients?
    Mr. Migliaccio. Senator, I can only speak with respect to 
companies that I'm closely associated with, and those are 
generally PhRMA member companies. Generally, in discussions 
that I have with my counterparts in PhRMA member companies, 
they all have comparable quality systems in place.
    Senator Enzi. Is part of the incentive that's built into 
this thing the hopeful good faith that people are going to have 
in your company to continue to buy your products?
    Mr. Migliaccio. It's our reputation, Senator. I mean, if we 
have recalls or deaths because of contaminated product, it is 
our reputation, and it's our patients. We want all of our 
patients to feel secure that when they see the Pfizer logo on a 
product, they know it's the highest quality.
    Senator Enzi. Again, I'll be providing all of you with some 
questions that I'm not going to have time to ask, and some of 
them are more technical than what people would even be 
interested in knowing around here. I know there have been 
instances in the past with, maybe not with your pharmaceutical 
company, but others, where some of that integrity has been 
lost. I'd like to have some of the cost figures that are 
involved in that, just to show what kind of incentive there is 
to do this qualifying of suppliers and these activities that 
you've mentioned, but I'll ask that one in writing.
    I'll go back to Dr. Brackett. In your testimony, you 
indicate support for requiring every company to have a food 
safety plan, and you indicate that the plan would be subject to 
FDA review. However, you also State that you oppose providing 
the FDA inspectors with broad authority to review the adequacy 
of the plan. What am I missing?
    Dr. Brackett. Well, I guess maybe you misunderstood what I 
said, or I wasn't very clear. We actually do think that there 
should be a food safety plan with each part of the industry, 
each company.
    We don't oppose them having the review, I think that's the 
purpose for having the plan. What we oppose is having the 
agency have the ability to dictate what the response would be 
or what the specific remedy would be, technologically. We think 
that within the food industry there is the expertise to solve 
the problem without the agency being very prescriptive. We 
often find that when a regulatory agency is very prescriptive, 
that sort of stymies creativity and new ways of achieving the 
same goal.
    Senator Enzi. You're suggesting some flexibility with 
principles then, am I getting that right?
    Dr. Brackett. Well, that's right. I think--the plan itself 
is like a plan for building a house, you can't build a house 
unless you know where you're going, what you're going to do to 
solve the problem ahead of time. The food safety plan allows 
the company to look carefully at what the food safety problems 
might be, do a risk assessment, provide some way of preventing 
those problems from occurring, and then also knowing that the 
agency would have the chance to look over their shoulder and 
make sure that they're not trying to avoid addressing some of 
the problems, without providing a solution.
    Senator Enzi. Thank you. As we've heard in the previous 
testimony, there are circumstances that changes would happen 
because some of the tests that would have picked up--or the 
chemicals had been doctored in such a way, perhaps, that they 
didn't--they were able to pass the tests and new tests were 
required in order to catch them.
    Dr. Brackett. Yes, Senator, you make an excellent question, 
that as science moves forward, I think it's important for the 
industry to have the flexibility to adopt that new science, 
rather than being kept in the past by old dictates.
    Senator Enzi. Thank you.
    Mr. Migliaccio, I imagine your company's had quite a few 
laws and regulations to comply with, but as an industry leader, 
I would expect that you go beyond those requirements to 
institute best practices that meet very high standards. Could 
you describe the safety and quality measures that might go 
beyond FDA mandates?
    Mr. Migliaccio. Well, if you look at the GNP regulations, 
and if you look at the FDA's quality system guidance, they 
clearly call for the Quality Unit to oversee operations that 
are being done under contract, but they're not explicit. I 
think the fact that we have established an organization around 
the world who have a significant presence at our contractors, 
probably exceeds what most would interpret the regulations and 
the guidance to require.
    Senator Enzi. I know that was kind of an unfair question. 
Again, I'll have some more detail I'll want to get out in that 
particular area.
    I do have questions for the other two, too, but my time has 
also expired and other meetings call. I'm the last one here, so 
I will submit questions in writing, as will other members of 
the Senate, and we'll ask you to respond as promptly as 
possible so that we can look for solutions, so that we can do 
more hearings, so that we can get down to the principles that 
need to be taken on, and hopefully have some bipartisan support 
in making sure that our food and drug supply is as safe as 
possible.
    I thank you all, and the meeting is adjourned.
    [Additional material follows.]

                          ADDITIONAL MATERIAL

Prepared Statement of Roger Bate, Resident Fellow, American Enterprise 
     Institute and Richard Tren, Director, Africa Fighting Malaria
    Thank you Chairman Kennedy, Senator Enzi, and members of the 
committee for the opportunity of submitting testimony for this 
important hearing. Keeping American families safe, improving medical 
care and health outcomes is immensely important. Our testimony 
highlights the growing dangers of counterfeit and substandard medicines 
in the United States and around the world. We believe that in restoring 
the FDA's ability to keep American families safe, the U.S. Congress 
will not only save lives at home, but will help to improve standards of 
medical care and drug quality for many millions of people around the 
world, particularly the poor and vulnerable in Africa.
                              introduction
    The tragic deaths of 81 patients from tainted heparin treatment 
highlight the potential danger of cheaply produced, often counterfeit, 
medicine imported from abroad. Congress is indeed paying attention, as 
this hearing follows closely on Chairman Dingell's House hearing on 
April 22; yet we fear it may miss the point.
    Importing finished medicines and the active pharmaceutical 
ingredients (API) used to make them, reduces price. And India and China 
have some of the cheapest production around. All three presidential 
candidates--Senators Clinton, Obama, and McCain--support making drug 
importation easier.
    What they, and others, seldom acknowledge however, is the risk 
inherent in such importation, especially when done by individuals 
outside the secure supply chain. According to FDA, over half the drugs 
Americans buy over the Internet don't work; at least one North American 
death has been officially linked to drugs purchased in this way.
    This episode exposes the ugly little secret that in the quest to 
produce cheap drugs, quality is sometimes sacrificed. Substandard and 
counterfeit drugs are prolific in many countries in Africa, Asia, and 
elsewhere, where government regulatory agencies are not as adept as the 
FDA, and businesses are not as vigilant as U.S. companies (such as 
Baxter, Covidien and B. Braun), all of which took the initiative by 
issuing precautionary recalls of heparin. In some European countries, 
notably Finland, incidence of counterfeit products may be as high as 8 
percent of total pharmaceutical sales, although in the United Kingdom, 
like the United States, it is under 1 percent.
    Companies are better positioned to source and import drugs than are 
patients, since they have experience, expertise--and reputations to 
maintain. Western governments and agencies, such as the World Customs 
Organization and Interpol, should continue to encourage vigilance in 
exporting countries; the FDA should send more inspectors to randomly 
check on drug production in China and India.
    In the United States, high commercial and regulatory standards have 
limited counterfeits in the market. But this has led to complacency, 
and political opinion is now leaning towards allowing more third-party 
intermediaries to import drugs from overseas. This may reduce costs in 
the short run, but may also introduce more counterfeits. While 
regulators can oversee legitimate companies, they have very little 
defense against the myriad actors that importation encourages, 
including criminal operators. An unchecked drive for the cheapest drugs 
will increase the risk of more heparin-type incidents.
    U.S. companies already import 40 percent of API from India and 
China, and this is expected to rise to 80 percent within a decade. 
While a few companies in both countries have the technical capacity to 
make good drugs and API, regulatory structures are weak, and their 
markets are plagued by counterfeit and substandard medicines which 
annually kill tens, maybe hundreds, of thousands of their residents.
    American consumers benefit when U.S. companies import API from 
Asia, assuming these companies pass cost savings on to consumers. This 
system should continue. But there is a risk, and to deny it, or leave 
individuals to make the decisions, is folly.
                          defining the problem
    What constitutes a ``counterfeit'' drug varies from country to 
country. WHO broadly defines a fake or counterfeit drug as ``a medicine 
which is deliberately and fraudulently mislabeled with respect to 
identity and source. Counterfeiting can apply to both branded and 
generic products, and may include products with the correct ingredients 
or with the wrong ingredients, without active ingredients, with 
insufficient active ingredients or with fake packaging.'' For the most 
part, ``originator pharmaceuticals,'' also known as branded 
pharmaceuticals, are the main target of counterfeiters, since they 
promise high profit margins.
    As with any illegal activity, the scope of the problem is 
impossible to define with precision. Unofficial estimates from 
researchers on the proportion of counterfeit drugs in the 
pharmaceutical markets across the world range from a high of 50 percent 
to a low of 1 percent, with other estimates from reputable researchers 
at 40, 30, and 17 percent. WHO reported in 2006 that the fake drug 
industry has annual revenues of over $40 billion--a figure sure to 
increase as more cases of counterfeit drugs are investigated and 
reported. The U.S. Food and Drug Administration (FDA) reports that the 
number of open investigations into domestic counterfeit drugs jumped 
from about 5 per year in the 1990s to more than 20 by 2000; in 2004 
alone, there were 58 documented investigations. WHO cites the Center 
for Medicine in the Public Interest's prediction that counterfeit drug 
sales will reach $75 billion globally in 2010--an increase of more than 
90 percent from 2005.
                       this rolex might kill you
    Counterfeit drugs are commonly made and distributed by criminal 
gangs, who are attracted by the high profit margins of the trade. Many 
counterfeiters use fake Western addresses to impress patients and 
doctors in poor countries. These gangs also peddle other illicit items, 
such as narcotics, arms, and fake jewelry. Like fake Rolexes, fake 
drugs are often hard to identify. A fake Rolex will probably tell time, 
but when examined closely, most people can tell it is a fake. The 
ineffectiveness of fake drugs may be revealed only when a life has been 
put at risk. Fake drugs also undermine confidence in branded products 
and even entire health-care systems.
    Counterfeit drugs contain little or none of the active ingredients 
of legitimate drugs, with varying consequences depending on the 
disease. An outright lack of active ingredients may cause death, 
particularly in infants. In some cases, the material substituted for 
the authentic active ingredient may be toxic, leading to allergic 
reactions or death. In July 2007, a 57-year-old Canadian woman died 
after ingesting counterfeit antidepressants and acetaminophen that 
contained toxic levels of aluminum, phosphorus, titanium, tin, 
strontium, arsenic, and other heavy metals. In the heparin case, the 
component substituted for heparin was not approved for medical use 
because it causes severe allergic reactions.
    Too little active ingredient poses another problem. Low-strength 
medicines will only knock out the weaker strains of the parasite or 
disease, leaving the stronger ones to thrive and develop resistance to 
the drug. This means that even the genuine drug will be rendered 
useless to the patient; his or her only option will be to try to get 
access to vastly more expensive second-line drugs. If the disease 
develops population-level resistance, a whole drug class will be lost.
    Dora Akunyili, the director general of the Nigerian National Agency 
for Food and Drug Administration and Control, astutely analyzes the 
situation in her country and elsewhere:

      ``The evil of fake drugs is worse than the combined scourge of 
malaria and HIV/AIDS put together. . . . Whereas HIV/AIDS can be 
avoided, and malaria can be prevented, fake drugs kill en masse, and 
anyone can be a victim.''

    Yet counterfeiting pharmaceuticals usually carries far lower 
penalties than producing and selling narcotics--and because it is just 
as lucrative, it is becoming a booming business. The extent of the 
problem is shocking: counterfeit drugs manufactured by South American 
narcotics gangs or unregistered chemical works in China have 
infiltrated legitimate supply chains and ended up in pharmacies, 
clinics, and hospitals all over the world. Even well-respected, high-
quality pharmacies such as CVS and Rite Aid have been fooled in the 
past; the recent infiltration of fake heparin was effected through 
established, here-before reliable supply channels.
    At present count, 81 deaths have been associated with violent 
allergic reactions to a heparin-like substitute introduced into active 
pharmaceutical ingredients manufactured in China and imported into the 
United States and other western countries, where it was used to 
manufacture medicines. The adulterated product passed standard quality 
tests and only after suspicious symptoms and deaths had occurred was 
the product tested further. FDA scientists determined that suspicious 
lots of API used to make the drug were imported from China and appeared 
to contain 5 to 20 percent of a heparin-like compound which mimicked 
heparin activity so closely that it was not recognized by routine 
testing.
    Raw heparin is normally sourced from the intestines of pigs, while 
the contaminant--oversulfated-chondroitin sulfate--comes from the 
cartilage of the animal. It is more abundant and cheaper than raw 
heparin, and not registered for medical use because it causes severe 
allergic reactions. The FDA was careful to avoid the word 
``counterfeiting,'' when pressed by reporters, but Dr. Janet Woodcock, 
its Director of the Center for Drug Evaluation and Research, noted that 
the Agency was ``99 percent sure [the contaminant] is not a natural 
component that got in there as part of the purification process.''
    FDA inspection of the Changzhou, China facility of Scientific 
Protein Laboratories LLC (SPL), the company responsible for producing 
the suspect API, revealed insufficient standard-setting and a lack of 
good recordkeeping. On Monday, when the Chinese Government suggested 
that the problem may have originated within the United States, the FDA 
quickly responded by issuing a warning to SPL (and indirectly 
criticizing the Chinese Government) citing ``significant deviations'' 
from good manufacturing processes at its Changzhou facility and 
recommending disapproval of applications to manufacture other active 
pharmaceutical ingredients.
    The FDA and affected companies appear to be managing the incident 
well, minimizing American exposure to suspect lots while ensuring that 
patients are guaranteed supplies of genuine drugs. On January 17, 
Baxter International voluntarily recalled nine lots of its injection 
multi-dose vials of the drug, and in late February, expanded the recall 
to all remaining lots and doses of the multi-dose product. Meanwhile, 
FDA investigated both the Wisconsin and Changzhou, China facilities of 
SPL; shortly thereafter, SPL's Wisconsin facility announced it was 
recalling the heparin it had distributed to a number of companies. The 
FDA also investigated a New Jersey facility to find out whether the 
heparin could have been contaminated by its packaging. The diligence 
appears to be paying off: no new deaths associated with the suspicious 
allergic reaction since the end of February have been reported 
(although the FDA has revised the total number of deaths attributed to 
the allergic reaction several times since then, probably earlier deaths 
now attributed to the contaminated product).
            tracking counterfeit medicines around the globe
    The problem of counterfeiting drugs is rampant in both developed 
and developing countries. In wealthier developed countries, 
counterfeiting most frequently affects ``lifestyle drugs'' such as 
hormones, steroids, erectile dysfunction, and anti-allergy medicines. 
In the 1990s, several deaths associated with the use of a fake version 
of the antibiotic gentamicin occurred in the United States. More 
recently, in May 2003, nearly 20 million doses of fake Lipitor, a 
cholesterol-lowering medication, had to be pulled from U.S. pharmacies. 
Altogether, because wealthy countries have stricter regulatory 
mechanisms, and since most patients in wealthy countries can afford 
branded medicines, counterfeits account for less than 1 percent of the 
market value--although 50 percent of Internet sales are estimated to be 
counterfeit.
    In developing countries, the scale of the problem is 
disproportionately worse. The latest joint estimates by WHO, the 
Organisation for Economic Co-operation and Development, and the 
Pharmaceutical Security Institute show that more than 30 percent of 
medicines in some areas of Latin America, Southeast Asia, and sub-
Saharan Africa are counterfeit. For Africa, data is scarcer, but the 
situation is similarly bad. In 2005, a random survey by Kenya's 
National Quality Control Laboratories and the Pharmacy and Poisons 
Board found that almost 30 percent of the drugs in Kenya were 
counterfeit. Some of the drugs were no more than chalk or water.
    In poor countries, essential and life-saving drugs used to treat 
infectious diseases such as tuberculosis and malaria are often the 
drugs threatened by counterfeiting. Since the burden of these diseases 
is greatest in these countries, and because people tend to be 
disproportionately poor, they will often buy counterfeit drugs on the 
black market, despite poor quality and even appearance. In our 
anecdotal experience--poor family members of the very sick often buy 
anything they can afford rather than do nothing.
                      malaria: a critical example
    A field survey from 2002 to 2003 showed that 53 percent of 
artemisinin-based antimalarials--the most effective treatment 
available--bought in several Southeast Asian countries were counterfeit 
and contained incorrect levels of the active ingredient. The authors 
noted that the problem seemed to have increased significantly compared 
with their previous survey in 1999-2000.
    In 2006, researchers conducted a quality-control study of 
antimalarial tablet samples purchased on the black market in Angola, 
Burundi, and the Democratic Republic of the Congo. The results identify 
a variety of problems: dubious packaging, low content of the active 
ingredient, and substandard technological properties (including very 
low dissolution profiles). In a 2003 survey, researchers found that the 
active ingredient content in at least one of three formulations of 
counterfeit drugs tested in seven African countries was below the 
minimum level recommended for the product.
    Malaria claims over 1 million lives every year, mostly among 
children in Africa. The disease is entirely curable, but urgent 
treatment is necessary because the disease can progress very quickly, 
particularly in young children or pregnant women. In most of Africa, 
people procure their malaria treatment from the private sector, 
frequently paying out-of-pocket for poor quality medicines and 
sometimes for fakes. While most African countries have officially 
changed their malaria drug treatment policies to the new, effective 
artemisinin-based combination therapies (ACTs), most have not removed 
the less effective artemisinin monotherapies from their drug 
registries. Untested, unregulated and potentially dangerous medicines 
are frequently sold and are widely used. The problem of substandard 
treatment of malaria is of particular concern due to the dangers of 
drug resistance. No new classes of malaria treatment will be available 
within at least 10 years making it imperative to ensure the highest 
standards of treatment and care with the existing drug regimen.
    The failure to improve treatment standards for malaria exposes the 
deficiencies in drug regulation policies in many poor countries. Yet 
instead of focusing on better policing and ensuring higher standards of 
imported drugs, industrial policies in many malarial countries favor 
local production of malaria medicines. These policies, often supported 
by donor nations, will further burden the regulatory agencies in 
malaria countries. There is little evidence that local production of 
medicines produces cheaper, high quality drugs.
                     targeting best-known diseases
    HIV/AIDS and bird flu treatments are also being jeopardized. In a 
2004 study, one researcher discovered counterfeit antiretrovirals 
(stavudine-lamivudine-nevirapine and lamivudine-zidovudine) in central 
Africa. This is alarming because the previously effective first-line 
therapy for treating HIV could soon be rendered defunct as the virus 
develops resistance. The bird flu scare led to an increased demand for 
the antiviral drug Tamiflu, one of the proven remedies for the disease. 
Soon thereafter, fake versions of the drug were flooding the Internet.
    Developing countries are not only markets for counterfeit drugs--
they also produce the fakes, according to a report from the 
International Policy Network (IPN). The chief culprits are Asian 
countries like China and India, where oversight is weakest. According 
to figures cited in the British Medical Journal, China had 500 illegal 
medicine factories in 2001; in the same year, the San Francisco 
Examiner reported that the Chinese government closed 1,300 factories 
while investigating 480,000 cases of counterfeit drugs. According to 
the IPN report, about 15,000 manufacturers of copies operate in India, 
and while the majority are legitimate (even if their drugs are 
substandard), ``a small minority are `fly-by-night' operations that do 
not comply with proper regulatory standards.'' Most of the counterfeit 
medicines in Nigeria, for example, originate in India, which led 
Nigerian authorities to threaten to ban the import of all drugs from 
India in 2003. With an influx of legitimate Chinese investment in 
Africa, however, informed sources say that China may soon take the lead 
in this odious trade. The manufacture of fake medicines also flourishes 
in Latin American countries like Argentina, Brazil, Mexico, and 
Venezuela.
    The production of counterfeit medicine often occurs through a 
multi-national chain of production and sale that originates in 
countries that either do not recognize or loosely enforce patent laws, 
where the drugs can be synthesized or their component parts bought. A 
copy manufacturer operating in Argentina, Greece, or Mexico purchases 
the ingredients from a country such as India or Thailand, then presses 
the tablets or makes the pills and prints counterfeit labels.
    Wilfrid Roge, a former French Customs official who is now director 
of corporate economic security at the French pharmaceutical company 
Sanofi-Aventis, describes a typical path for counterfeits:

          ``The products are transported to free trade zones in Dubai 
        in the Middle East and are exported to Latin American countries 
        like Panama. The products are then re-exported to North America 
        and Europe through the United Kingdom and some north European 
        countries.''

The fake drugs eventually make their way through several cut-rate 
brokers to a pharmaceutical distributor.
    These findings suggest that massive amounts of fake drugs are 
circulating in drug distribution chains. Even more worrisome, many 
patients are taking incorrect doses or compositions of drugs--with 
potentially lethal outcomes.
                          cashing in on death
    In studies all over the world, counterfeit medicines, which contain 
little or no active ingredients, have no therapeutic benefits to 
patients. During the Niger meningitis epidemic of 1995, for example, 
2,500 people died as a result of fake vaccines. In Haiti, Nigeria, 
Bangladesh, India, and Argentina, throughout the 1990s, more than 500 
patients (mostly children) died after ingesting diethylene glycol (a 
chemical commonly used as antifreeze) offered as paracetamol syrup. 
Today, due in part to lax regulatory standards in China, we are seeing 
contaminated toothpaste from China containing the same ingredient.
    WHO estimates that 1 million deaths occur from malaria every year. 
It is logical to conclude that this chilling estimate could be 
significantly reduced if the medicines available were effective, of 
good quality, and used correctly. WHO suggests that an astonishing 
200,000 malaria deaths per year would be prevented absent fakes and 
poorly prescribed medicines. In 1999, at least 30 people died in 
Cambodia after taking counterfeit antimalarials prepared with 
sulphadoxine-pyrimethamine (an older, less effective antimalarial), 
which were marketed as the more advanced artesunate. A study conducted 
in Southeast Asia in 2001 revealed that 38 percent of 104 antimalarial 
drugs on sale in pharmacies did not contain any active ingredients and 
had led to several preventable deaths.
    Perhaps one of the most worrying implications of the counterfeit 
boom is the acceleration of new, drug-resistant pathogens, parasites, 
and bacteria. The IPN report found this especially true of malaria and 
HIV/AIDS. Scientists have begun to observe resistant strains of bird 
flu, which could indicate that fakes are already penetrating the market 
for bird flu drugs. The International Federation of Pharmaceutical 
Manufacturers and Associations (IFPMA) says that ``drug resistance 
resulting from the use of counterfeit medicines is among key factors 
contributing to the upsurge of major infectious diseases in developing 
countries.''
    Aside from their hefty death toll, counterfeit drugs undermine 
incentives to invest in further research and development. The use of 
fake drugs also undermines confidence in health-care systems, health 
professionals, pharmaceutical manufacturers, and distributors. It 
deprives pharmaceutical companies of significant financial resources 
and places financial burdens on patients and governments with two major 
consequences: money is wasted on drugs that do not work, and additional 
funds must be spent on purchasing genuine products to deal with the 
ensuing devastation that toxic or under-strength products cause. This 
is particularly damaging in developing countries, where disposable 
income for health care is significantly constrained.
                     fighting counterfeiting drugs
    Since its inception in 1946, WHO has often attempted to quell the 
spread of counterfeit drugs. Article 2 of the WHO Constitution 
establishes its obligation to set standards for pharmaceutical 
products. WHO initiated programs for the prevention and detection of 
counterfeit drugs, and in 1982 established a Counterfeit Drug Database. 
In 1992, WHO joined forces with IFPMA to settle on a working definition 
of a counterfeit drug. More recently, in 2000, WHO convened a working 
group on drug quality and counterfeiting. Made up of WHO officials and 
organizations representing patients, pharmacists, and medical 
professionals, the group hopes to raise awareness about the problem of 
counterfeiting while promoting effective regulatory safeguards to 
ensure that patients are protected from the hazardous effects of these 
medications. WHO is also promoting its International Medical Products 
Anti-Counterfeiting Taskforce, which is slowly mobilizing resources on 
a multilateral basis.
    At the national level, some countries are taking steps to tackle 
this problem. Nigeria, which has a major problem with counterfeits, 
issues bulletins and maintains a Web site with information on 
counterfeit drugs and food to educate consumers. In 1996, the 
Philippines enacted a law permitting random sampling and monitoring of 
drug quality in pharmacies and hospitals and punishment of offenders 
with long prison sentences or hefty fines. The government in China, 
where many products are fraudulently manufactured, has taken the 
drastic step of sentencing an official formerly in charge of food and 
drug safety, Zheng Xiaoyu, to death for accepting bribes to approve 
counterfeit products. More punitive sentencing for those peddling fake 
drugs is certainly warranted, but it is only part of the solution. 
According to the legal literature, increasing the potential punitive 
cost (judicial sentences) of illegal activity often does not lower the 
activity significantly, but rather just increases the level of 
brutality involved. Stricter penalties must be combined with increased 
monitoring activity by technically qualified laboratories and concerted 
policing.
                       fighting substandard drugs
    Although WHO has done much to prevent the spread of fake drugs, it 
has actually encouraged the use of substandard drugs through the 
promotion of products it classifies as generics--but whose quality has 
not been verified by a stringent regulatory authority. As widely 
documented, this has been a significant problem for HIV drugs. 
Unfortunately, the Global Fund to Fight AIDS, Tuberculosis and Malaria 
has exacerbated the problem by listing generic drugs on its approved 
antimalarial compliance list that have not demonstrated bioequivalence 
therapies by registering with a competent agency. Sources inform us 
that nearly 20 percent of total purchases by the Global Fund--well over 
450 transactions--are for non-approved drugs. European and Indian 
companies have also exploited loopholes in domestic legislation, which 
have allowed them to copy drugs for export without undertaking 
significant quality testing. Belgium and Italy in particular have 
allowed drugs produced in their countries to compete for Global Fund 
awards without having them fully tested.
    It is uncertain how damaging substandard, pseudo-generic drugs may 
be for patient safety. Their use--and hence impact--is set to grow even 
faster than the market for fake drugs. This is disquieting, since the 
Global Fund does not see this as a problem. It continues to use funds 
from the Bill and Melinda Gates Foundation and the G8 countries to 
purchase such drugs. The Global Fund mistakenly assumes that because 
the drugs are cheaper, more lives will be saved, which is only true if 
the copies are bioequivalent to the originals. Meanwhile, the Fund 
continues to show antipathy toward the research-based pharmaceutical 
industry. The recent Board decision to increase access to antimalarials 
of unproven quality was the desire to prevent Novartis, the producer of 
Coartem, the best drug on the market, from increasing its dominance, 
even though Novartis sells the drug at cost.
    When the new head of the Global Fund was asked about this issue in 
Washington in May 2007, he brushed it off. Only when tragedy strikes 
will action be taken. Action is vital because substandard drugs can be 
more dangerous than fakes--especially at the population level. Since 
they contain active ingredients, but at sub-lethal levels for the 
bacteria/parasite, they breed resistance.
    Approval of poor copy drugs also provides cover for the broader 
acceptance of total fakes. When doctors and patients are inundated with 
new copy drugs, it is more difficult for doctors to discern total 
fakes, making drug policing more complicated and expensive.
                             looking ahead
    The problem of counterfeiting requires a concerted effort from all 
stakeholders. As one top health official from the Philippines noted,

          ``The fight [against counterfeit medicines] is a cooperative 
        undertaking.'' As the IPN paper notes, to contain the global 
        counterfeiting scourge, it is crucial ``to address those 
        lacunae of governance which allow LDC counterfeiters to ply 
        their trade with relative impunity.''

Most importantly, it is essential that intellectual property rights and 
the rule of law be upheld in the countries where the majority of these 
drugs are produced. In South American countries, the penalty for 
illicit cocaine and heroin dealing is 15 years of jail time. The 
penalty for the production and sale of fake drugs is only 6 months; the 
perpetrator may be out on bail in only days. These sentencing 
incongruities should be rectified. Stiff penalties are needed because 
counterfeiting offers high profits, with comparatively low risks. In 
2003, an expert committee in India recommended that the maximum penalty 
for the sale or manufacture of fake medicines be changed from life 
imprisonment to the death penalty and that the minimum prison sentence 
for these offenses be increased from 5 to 10 years. But as noted above, 
increasing sentencing without massively increasing policing will have 
little impact on the fake drug market.
    Promoting generics as an alternative to tackling drug 
counterfeiting is not a viable option unless the recognized 
international standards--including the bioequivalence requirement--are 
in place to ensure the quality of product. Unless such standards are 
set, aid agencies will continue to exacerbate and tolerate bad medicine 
in the market.
                                summary
    Counterfeit and substandard medicines are an insidious threat to 
the United States and to global health more broadly, and the risks they 
pose have been largely underestimated to date. Counterfeits containing 
no active ingredient will fail to cure disease; those with wrong 
ingredients may cause mental and physical damage--and even death. 
Counterfeits containing insufficient active ingredients breed 
resistance, which can make authentic drugs useless. No area of the 
world is unaffected, as exposed by the recent deaths in the United 
States from tainted heparin. Mounting evidence shows that the problem 
is disproportionately severe in developing and emerging-market 
countries, which also have the highest burden of infectious diseases. 
National governments have the primary responsibility--both in stopping 
criminal manufacturing and distribution and in protecting their 
citizens from counterfeit products. The Food & Drug Administration 
(FDA) is highly active in fulfilling this responsibility, but this is 
not true in many other countries in the world. Multilateral 
organizations such as the World Health Organization (WHO), the World 
Customs Organization (WCO), and the International Criminal Police 
Organization (Interpol) must do more to expose the problem and help 
countries tighten regulatory controls. Companies affected by 
counterfeiting in developing countries are expending private resources 
to perform roles which should be carried out by police and regulators, 
including assisting multilateral organizations in building capacity 
among local customs and regulatory officials.
   Responses to Questions of Senators Kennedy, Enzi, Burr, and Brown 
                          by Gerald Migliaccio
                      questions of senator kennedy
    Question 1. Your testimony confirmed my impression that responsible 
brand and generic companies have robust systems to evaluate and audit 
the companies from whom they source drug ingredients. I think it's 
pretty clear, however, that not all companies do what Pfizer and other 
responsible companies do. How wide spread do you believe these 
practices are?
    Answer 1. It is difficult to give an accurate estimate of the 
percentage of industry that follows similar practice. Since my close 
association is with PhRMA companies, I can say that most have robust 
systems. However, I cannot give an informed answer for other industry 
segments.

    Question 2. I believe practices on sourcing ingredients, including 
requiring drug companies to audit their suppliers, should be 
requirements that FDA should evaluate and enforce. Do you agree?
    Answer 2. 21 CFR 211 and the FDA Quality Systems Guidance clearly 
require the Quality Unit to oversee activities conducted under contract 
by third parties. I agree that evaluation of a drug company's quality 
system, specifically in the area of management of suppliers and 
contractors, should be an area of strong focus during FDA inspections.

    Question 3. What do you think of Bill Hubbard's suggestion that we 
improve the tests for impurities and contaminants in drug ingredients?
    Answer 3. My 29 years of experience in the pharmaceutical industry 
have convinced me that it is not possible to test quality into a 
product. We must rely on quality systems to assure quality. We develop 
analytical testing methods to measure the purity and potency of active 
ingredients and drug products. These methods are designed to detect 
known process-related substances such as reaction byproducts, residual 
starting materials, residual solvents, degradation products, and other 
process-related impurities. No analytical method is capable of 
detecting all potential adulterants in an active ingredient or drug 
product. Furthermore, since testing is destructive, we can only test a 
very small portion of a batch. The quantity tested is statistically 
valid and more than adequate for measuring attributes that are uniform 
throughout the product, but it is possible that intentional 
adulteration would not be found to be uniformly distributed. In the 
end, excessive testing will provide a false sense of security to the 
American public.
                       questions of senator enzi
    Question 1. I agree with you when you say that no amount of testing 
or inspection can ensure quality and safety. But I do think that 
product testing and facility inspection are still very important, as 
we've seen with the heparin incident. Could you go into more detail 
about the role that testing plays in safety?
    Answer 1. Statistical sampling and testing does provide assurance 
that an active ingredient or drug product meets the requirements for 
potency and purity established by FDA to ensure safety and efficacy. 
The testing methods used are designed to measure the active substance 
to determine potency, usually against a reference standard of the 
ingredient. In addition, purity methods are employed that are designed 
to detect known process-related substances such as reaction byproducts, 
residual starting materials, residual solvents, degradation products, 
and other process-related impurities. The chemical characteristics of 
the active substance and potential impurities heavily influence the 
design of the analytical methods. Contaminants or adulterants with 
similar chemical characteristics may also be detected with the same 
methods used for potency and purity. However, contaminants and 
adulterants with different chemical characteristics may not be detected 
with these methods. There is no single method that is capable of 
detecting all potential contaminants or adulterants in every active 
ingredient and drug product.

    Question 2. Can you discuss some of the differences, particularly 
with respect to safety and quality, between sourcing ingredients from 
other countries, as Pfizer does, and the proposals to permit commercial 
importation of drugs from foreign countries?
    Answer 2. When Pfizer imports a pharmaceutical product into the 
United States, that material is being imported from an FDA-approved 
site and with a supply change that is managed by Pfizer. When an 
individual or wholesaler imports material, there is no guarantee that 
the material is coming from an FDA-approved source, and the supply 
chain is not secure. The product is essentially unprotected as it 
passes through the supply chain. Importation facilitated by parallel 
trade provisions in the EU has led to rampant counterfeiting. 
Counterfeit Pfizer products have been confirmed in 21 of the 27 EU 
member countries. Counterfeit products have also been confirmed in the 
legitimate supply chain (on pharmacy shelves and dispensed to patients) 
in at least 3 EU member states. This issue is not limited to Pfizer; 
Lilly, Astra Zeneca and Bristol Myers Squibb counterfeit products have 
also been detected in the EU. According to the WHO, between 2001 and 
2005, there were 27 instances in which counterfeit medicines breached 
the legitimate supply chain in the EU.
                       questions of senator burr
    Question 1. There has been some discussion at this hearing about 
why drug companies contract with manufacturers in foreign countries 
instead of locating all manufacturing in the United States. You 
mentioned that some rationale is cost-based, which I understand. If 
Pfizer was forced to locate all manufacturing of all product 
ingredients and finished products in the United States, would you end 
up having to charge more for the finished product? Given some 
individuals' intense concern over high drug prices, I would think 
Congress would not want to do anything that would further drive up drug 
prices.
    Answer 1. There are various factors which result in some products 
for the U.S. market being manufactured outside the United States. The 
more difficult operating environment and the slower growth rate in the 
industry has led companies to consolidate their global operations; 
seeking the most cost-effective locations to produce these products. 
This has led to the utilization of their newer facilities available 
outside the United States and/or the minimization of capital investment 
and operating costs. In addition, several countries have created 
significant industrial incentive programs which make it more attractive 
for companies to operate there. They have also created strong 
educational systems which produce very capable engineers and scientists 
that are made available to industry at a competitive cost. Companies 
weigh these competitive factors in determining where to manufacture.

    [Whereupon, at 11:02 a.m. the hearing was adjourned.]

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