Plans for the Fiscal Year 2001 Budget

Statement of

Jane E. Henney, Ph.D
Commissioner of Food and Drugs
U.S. Food and Drug Administration

before

the Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
House Committee on Appropriations

Accompanied by

Dr. Bernard Schwtz, Acting Deputy Commissioner
Mr. Robert J. Byrd, Deputy Commissioner for Management and Systems, Chief Financial Officer, Food and Drug Administration
Mr. Dennis P. Williams, Deputy Assistant Secretary, Budget, Department of Health and Human Services

February 29, 2000

INTRODUCTION

Mr. Chairman and members of Congress, it is my privilege today as Commissioner of Food and Drugs to present FDA's plans and expectations as reflected in the Administration's proposed budget for fiscal year 2001. One year ago, I told you that I was lured from the enchantments of New Mexico to renewed public service by the dedication, energy and commitment of the talented people in FDA. I was equally attracted by the enormity of the changing demands upon the Agency and the difference this agency can make in improving the public health.

Patients, researchers, health professionals, manufacturers, educators, grocers, public sector administrators or just ordinary citizens want a public health regulatory agency such as the FDA to be fair, competent and, above all, credible. I have heard this message in different words on many occasions in many settings this year. I believe that the accomplishments of the past year will demonstrate that FDA has done a remarkable job in maintaining the public's confidence and credibility even though we face numerous unpredictable issues on a day-to-day basis.

It may be all too easy for Americans to assume FDA's competence and credibility because we have long enjoyed public confidence in the past. However, from listening to my European counterparts, public confidence, once lost, is not easily or quickly restored. A series of highly publicized crises in Europe over the past several years have caused my counterparts to ask: What is FDA's secret and how does FDA utilize science and build consensus answers to so many inherently contentious issues? The answers are not found in FDA's organizational diagrams or job titles.

We find ourselves explaining modern versions of two very old history lessons -- what Alexis de Toqueville reported long ago to Europe about the uniquely open processes for American lawmaking (and in its modern derivative--rulemaking), and Dr. Harvey Wiley's discussions with President Theodore Roosevelt at the beginning of the last century about the importance of science-based regulatory decisions. From a world perspective, FDA's utilization of public issue meetings, access to agency information, voting advisory committees, requirements for scientific evidence and reliance on scientific facts in its decision-making process are more uniquely American than we may realize. The interplay of these features into an independent regulatory function that coexists with prescribed Congressional and Judicial roles constitutes the most envied regulatory model in the world.

Today, I share with you my priorities for preserving this capability and for preserving the agency's credibility with the American public. As we begin the 21st Century, fiscal Year 2001 will be critically important for FDA because so much of our environment is changing rapidly and our capability to understand, adapt and respond will be stretched to new limits. To maintain our strength:

• We must strengthen our science;
• We must address the highest priority risks;
• We must engage in effective collaborative and leveraged activities; and,
• We must design ever more predictable, timely and transparent regulatory processes.

Stronger science -- FDA's commitment to assuring safe products rests squarely on our ability to keep pace with the explosion in scientific advances - and then to use that knowledge to assure safe products. We must apply our intellectual capital at every point in the life cycle of the product. When consumers buy food items, drugs or medical devices, they're purchasing not only the product itself, but FDA's implicit assurance that the product is safe. To give them such assurance in a world with so many new products, FDA must quickly understand these sophisticated new products and the science within them and judge their suitability for the market place. Timing is everything! Wayne Gretzky, of ice hockey fame, was asked to tell what made him a successful player. He said: "I skate to where the puck will be." FDA is in a similar position. We must be able to anticipate and access the cutting-edge science that will be needed to regulate the products of future technology. When this is possible, we can apply this science at the point when the new technology arrives, and when it is absolutely essential to steward these products, many of them lifesaving, to the market.

FDA is the regulatory gateway through which an estimated $50 billion in annual biomedical research and development investment must pass and be judged. During the President's State of the Union address last month, he noted that innovations in science and technology will be the key to miraculous improvements in the quality of our lives and advances in the economy as we enter the 21st Century. He discussed the remarkable fruits of research - much of it taxpayer funded - that promise to improve both our health and the way health care is delivered. You and your colleagues on other appropriations committees have overseen a major expansion of Federal research in recent years, and those investments will pay dividends many times over for us all.

If FDA is not in a state of scientific readiness when applications are received, then we must either delay regulatory decisions on important new applications until we have adequate knowledge or make very conservative decisions in order to err on the side of caution. Neither of these choices is good for the American people because they delay the availability of critically needed treatment as well as result in increased health and economic costs. A recent industry survey by Pricewaterhouse Coopers concerning FDA's relationships with its regulated industries reinforces the need for FDA to be scientifically prepared. The survey concludes that FDA must invest in recruiting and training exceptionally qualified personnel at all levels. So I would urge your careful consideration of our resource needs as they relate to FDA's scientific strength.

FDA can deliver when properly resourced. Congress' authorization and support of the Prescription Drug User Fee Act and its Reauthorization in the FDA Modernization Act is a prime example. Review of drugs and biologics in the U.S. is now as fast or faster than anywhere in the world and this has been accomplished without lowering our very high standard for safety and effectiveness. We want to be able to perform this well in all of our products that require premarket evaluation.

ASSURING SAFETY BY MANAGING RISK

A strong FDA science capability is equally critical in understanding and managing risks associated with products that are already in the market place. Each year, hundreds of thousands of adverse experiences are reported in association with foods, drugs and medical devices. When we can apply cutting edge science to these problems, particularly in cooperation with our health and regulatory partners, as well as those in the regulated industry, we can quickly identify significant risks and minimize them.

In managing risk, FDA has always adhered to the principle that the most serious risks should be addressed first. This idea takes on added meaning, given the complexities of our 21^st Century environment. You will see evidence throughout our budget that the most serious problems are at the top of our list. To illustrate:

• The medical error initiative in our FY 2001 budget emphasizes FDA working with other agencies in the Department of Health and Human Services and with Departments across the Federal government as part of the President's new and comprehensive plan to improve health care through the prevention of medical errors and enhancement of patient safety.
• Drugs marketed and sold from illegitimate internet pharmacy sites present real risk for the American consumer. These have been made a priority for FY 2001. FDA will use prevailing Internet hardware and software to focus on suspect web sites, and will convey a rapid response team to deal with these sites. FDA also intends to work very closely with State authorities and other Federal agencies in order to expedite the elimination of this fraudulent activity. We also plan to step up our efforts to educate consumers about the risks involved and what types of sites or practices they should avoid.
• Again, we have addressed the most serious risks first as part of the Food Safety Initiative. If provided the funding requested we will be able to inspect the high risk food firms at least once a year. We would continue the work supported by the Congress in the past which focuses our efforts in the import arena by targeting imported produce that contain microbiological pathogens. Your support has also allowed us to invest in new science-based tools like PulseNet, a collaborative project between CDC, FDA, USDA and state health departments, which uses rapid analysis of bacterial DNA fingerprints to pinpoint the exact source of food borne illness outbreaks. More of these detection tools will revolutionize our ability to detect and prevent a wide range of adverse experiences and to focus on the most serious ones first; but we need resources to do this.

While we have identified the aforementioned as investments that would be focused on high risk in each of our product review centers, we must also focus and invest in applications that have the greatest potential for providing widespread health benefits. A critical provision provided by FDAMA is our ability to delegate to third parties the responsibility for reviewing medical device applications in lower risk categories. In this year's budget request, a Device user fee is proposed to further encourage reviews to be performed by third parties which will result in greater efficiencies for both FDA and the industry. This allows our Agency's scientific review resources to be dedicated to the more complex new products that often carry significant risks but have the potential for great health benefits.

COLLABORATION AND LEVERAGING OPPORTUNITIES

Working with FDA's assets alone is not sufficient to address the complex risk management challenges that we face. Many of the initiatives in the FY 2001 budget require our Agency to work in concert with a broad spectrum of stakeholders to strengthen the safety net for the U.S. consumer. A prime illustration of this approach is in Food Safety.

Because we regulate in a global market place, our collaborative efforts must extend beyond our domestic borders. In this regard, we collaborate with our foreign regulatory counterparts in joint efforts that include setting standards to reduce the risks of products to the consumer. Whether it's within our domestic boundaries, or beyond, FDA undertakes such collaborative initiatives because all parties can unify behind goals that are in the best interest of public health and safety. With such collective efforts we will be able to move our world to better health outcomes.

Open, transparent and predictable regulatory processes - Another key provision of the FDA Modernization Act of 1997 directed our Agency to consult with our many stakeholders on an ongoing basis, to keep them apprised of our strategies and new product decisions, and to generally make them an informed participant in our regulatory processes. The relevant principle, here, is that a confident and well-informed individual or industry also becomes a partner in shouldering the management of risks.

A recent example of this principle in action is the success FDA is enjoying in the "Take Time to Care" Initiative. This involves a partnership between FDA, the National Association of Chain Drug Stores, senior citizen groups, professional associations, business/labor women's organizations and other health organizations. This partnership effectively delivered an important message about safe drug use by distributing a brochure titled "My Medicines" through more than 20,000 pharmacy outlets to millions of citizens. The intent was to positively affect their use of medications. A national evaluation has revealed that 99% of both men and women found the drug information they received to be useful and 86% indicated an intention to speak with their physician or pharmacist about their medication.

We intend to keep these communication channels alive and "humming." This Spring we will listen at two additional stakeholder forums - the first at Stanford University in March, and the second at Duke University in April. At both of these sessions, we will no doubt receive suggestions on how to improve our programs and further strengthen our working relationships with our constituencies.

These 21^st Century ways of doing business -- strengthening science; addressing the highest risk priorities; collaborating effectively with our partners and leveraging our resources; and using open, transparent regulatory processes -- must be applied across the entire spectrum of product development, review and postmarket monitoring. The total safety assurance system requires FDA's best performance at several critical points. It starts with effective communication with industry prior to the submission of applications, thus improving the quality of submissions received and helping to reduce product development times. Next, we must monitor the progress of new therapies as they are developed, including the important responsibility of overseeing clinical trials. Once a product is approved for the market place, we must continue to assess and manage risk through regular plant inspections and analysis of adverse event reports. Feedback from our monitoring and analysis activities also influences future pre-market review decisions and appropriately informs us so that directed intervention can take place in the postmarket arena should threats to the public health and safety arise. Interventions can take several forms, including education, technical assistance and when necessary, enforcement actions and product removals. When we are able to play all of these roles effectively - bolstered by science and augmented by partners who share our goals - American citizens can be confident that an effective safety assurance system is in place. FDA's budget proposal for FY 2001 moves us toward that desirable state of affairs.

FDA ACCOMPLISHMENTS

When I appeared before you last year I outlined five issues that I considered to be my highest priorities. These were implementation of FDAMA, strengthening the Agency's science base, implementing the Food Safety initiative, assuring the safety of the U.S. blood supply, and reducing young people's use of tobacco products. I am pleased to report to you today that thanks to your continued support we have made significant progress in each of these priority areas:

FDAMA Implementation

Last year I committed to you that FDA's energies would be dedicated to carrying out both the spirit and letter of the Law. I am pleased to report another year of exceptional accomplishments in this regard.

To meet the letter and spirit of FDAMA a scientifically strong and efficient FDA must join forces with other organizations to address increasingly complex challenges in order to protect the public health. While consultation and collaboration with our constituents is not a new practice for FDA, the FDA Modernization Act made the collaborative principle so central to the agency's operations that its implementation required a fresh look at some of our long-standing practices. The Agency's record this past year provides demonstrable evidence that FDA is meeting FDAMA's expectations for outstanding effort and bold new thinking.

FDA has continued working to implement the many specific requirements of FDAMA. Last year I reported that the Agency had completed over 80 FDAMA-related actions. To date, the Agency has completed over 110 FDAMA-related actions with more expected; all within statutory deadlines. Some of the initiatives completed within the past year include: the OTC final monograph for sunscreens, a final rule to exempt selected class I medical devices from pre-market notification, a final rule that governs requirements associated with reporting adverse events for medical devices, and guidance that grants market exclusivity to drug sponsors who provide information relating to the use of the drug by children.

Another key provision of the FDA Modernization Act was the reauthorization of the Prescription Drug User Fee Act of 1992. I am proud to report once again that FDA has met or exceeded practically all performance goals required. As I mentioned earlier, FDA has demonstrated that if we are provided adequate resources, we meet or exceed our goals.

Patients receiving safe and effective therapies they need in a timely fashion is the primary public health benefit of this program. The median approval times for NDA submissions in calendar 1999 was 13.8 months, but if the current rate of first review approvals is sustained, 2001 and 2002 median approval times may drop significantly. Median approval times for priority applications submitted in calendar 1999 dropped to 6 months, which is more than twice as fast as the corresponding times before PDFUA.

This shortening of development times also results in incredible savings to the pharmaceutical industry. A report released this past summer by the Tufts University Center for the Study of Drug Development shows that clinical development times for new drugs in 1996-1998 dropped 18% from the period of 1992-1995. Thus saving industry up to $2 billion for the $140 million annual PDUFA investment. This savings is realized not only because important new products go to market more rapidly, but also because drug firms are able to operate in a more predictable regulatory climate - one that makes their own product development planning more efficient.

It is also heartening to note that several new products that received approval this past year represented significant advances over those previously available.

For patients with HIV and AIDS FDA's work in 1999 added several new products to the growing number of treatments. One of them is Amprenavir (Agenerase), a new protease inhibitor that received an accelerated approval for use in children as young as four. Amprenavir attempts to prevent HIV from making new copies of itself by interfering with HIV protease enzyme.

For the elderly FDA approved new medications and indications added to the treatment options for many of the 18 million Americans - mostly senior citizens - affected with rheumatoid arthritis and osteoarthritis. The Agency also approved a combination of aspirin and extended-release dipyridamole (Aggrenox) to reduce the risk of stroke.

For people with diabetes three new products approved last year will bring benefits to many of the 16 million Americans affected by diabetes, a disease that can cause damage to the eyes, kidneys, heart and peripheral circulation.

For people with hepatitis C FDA approved several new treatments for the almost four million people in the U.S. who suffer from this disease. Hepatitis C, is the nation's most common blood-borne infection that poses a serious risk of cirrhosis, liver cancer and liver failure.

For people with rare diseases I am pleased, also, to report major progress in our Orphan Products Program, a key program developed after the passage of the Orphan Drug Act of 1983. Orphan products are those that treat diseases or conditions affecting fewer than 200,000 people. That program reached a major milestone last year by approving the 200^th designated orphan product. In 1999, 78 drugs and biological products received designation as orphan products - a 16% increase over 1998. We estimate that past levels of sponsor orphan designation applications may soon be doubled. Nineteen designated orphan drugs were approved for marketing in 1999, including treatments for neoplastic meningitis, ovarian cancer and hemophilia.

STRENGTHENING FDA's SCIENCE BASE

As I have mentioned previously, strong science is critical for FDA to safeguard the credibility of its regulatory decisions made at every stage during the life span of the product. Science must underpin every one of our activities including our consultation with product sponsors, review of commercial applications, the establishment of product and process standards, and the identification and correction of hazards in the market. FDA science must also provide the foundation for all of the Agency's negotiations on product standards in the international arena. In each of these facets of FDA responsibility, the Agency must keep pace with the incredible pace and complexity of new science developments. The biomedical science community is developing novel approaches to detect, treat, and prevent disease. If FDA does not keep pace, our judgements and decisions may become risk averse and at times slow, possibly wrong - or both. Neither of these is an acceptable outcome. The Agency must build its own capabilities and have the ability to leverage talents and expertise of scientists and scientific organizations outside of the organization.

Let me provide a few examples of the importance of science to our regulatory role:

• FDA scientists have developed a single rapid technique (rapid screen) that identifies as many as 13 common foodborne pathogens, including Salmonella spp., Shigella spp., and Escherichia coli 0157H7 from one sample in a test that takes only 8 hours to complete. This method is permitting faster hazard detection and removal of potentially dangerous foods from the marketplace.
• Our scientists also developed a test system that would help to determine the extent of interference of cardiac pacemakers caused by cellular telephones. This research has formed the basis of a standard for implantable cardiac pacemakers and defibrillators that are being proposed by the Association for the Advancement of Medical Instrumentation.
• FDA scientists have developed a transgenic model that can be used to screen for toxicities. By using this model, scientists are learning more about how specific chemicals cause toxicity in humans, and how to extrapolate results from animal species to the human. Some of our molecular epidemiologists have also worked with academia and industry to develop and validate a microchip product designed to identify individuals at risk for cancer and/or adverse drug interactions. The significance of this chip technology is that it allows for researchers to screen large numbers of people simultaneously for different types of biomarkers, or potential disease vulnerabilities.
• FDA has successfully launched the Product Quality Research Institute Initiative (PQRI). PQRI is a non-profit corporation whose mission is to conduct research to support science-based regulatory policy regarding product quality.
• FDA has also taken action to assure that our scientists keep pace with and effectively monitor products that are produced by state-of-the-art manufacturing and quality control technologies. This past fall FDA launched a new joint training program focused on emerging technologies of relevance to the Agency. The training is conducted in cooperation with the regulated industry. The first of these courses brought together more than 30 FDA field investigators, Center scientists and field lab analysts to a Merck manufacturing plant in Pennsylvania to address the address state-of-the-art sterilization methodologies. Similar advanced courses are planned for the future.

These selected examples illustrate the direct and immediate value of applying FDA's science expertise at critical junctures in the regulatory process.

To remain a strong science-based agency, we must continue to assess emerging technologies well in advance of their arrival on FDA's doorstep. We must prepare for and remain prepared to meet not only the public health challenges of today, but also the future challenges of a rapidly changing science and technology environment.

FOOD SAFETY INITIATIVE

FDA, in collaboration with the Centers for Disease Control and Prevention (CDC), the U.S. Department of Agriculture (USDA), and State and local governments, continued progress towards developing an integrated national food safety system. Your support has also provided for mechanisms in the shortening of several significant outbreaks of food borne illness, translating into fewer deaths and illnesses. In 1999, FDA placed particular emphasis on enhancing the safety of imported food products. At the border, FDA initiated a 1,000-sample survey of high volume fresh produce imports. Overseas, FDA doubled the number of foreign food establishment inspections, conducted five assessments of foreign food safety systems, and provided extensive education and technical assistance on use of the Good Agricultural Practices/Good Manufacturing Practices guidance for produce.

Other accomplishments in the food safety arena include the following:

• FDA and the U.S. Customs Service developed an Imported Foods Action Plan to further enhance border surveillance. The Plan will be implemented this year.
• FDA conducted the second year of seafood HACCP inspections, with priority to processors with implementation problems. FDA found clear progress by most seafood processors, but also issued warning letters to those firms with significant, unaddressed deficiencies.
• FDA issued two guidance documents to enhance the safety of sprouts, including guidance for microbiological testing.
• FDA published a proposed rule that would require refrigeration of shell eggs at retail and safe handling statements on labels of shell eggs.
• In collaboration with USDA, EPA and the Department of Commerce, FDA completed an Egg Safety Action Plan that identifies the systems and practices that need to be implemented to sharply reduce eggs as a source of human Salmonella enteritidis illness. Implementation will begin in FY 2000.
• FDA completed revisions to the Food Code to enhance the safety of food prepared outside the home, including restaurants, nursing homes, hospitals, and day care centers. The Food Code was adopted by agencies in 15 states.
• FDA continued the expansion of the National Antimicrobial Resistance Monitoring System (NARMS), a collaborative effort among the FDA, USDA, and CDC that monitors susceptibility to 17 antimicrobial drugs in food borne pathogens from human and animal clinical specimens, healthy farm animals, and carcasses of food-producing animals at slaughter. Important augmentations of the NARMS were funded from the Food Safety Initiative during fiscal year 1999.
• FDA also provided educational materials to farmers regarding how to prevent future outbreaks and the spread of the multi-resistant organism, Salmonella typhimurium DT104, among animals and to human beings. This was accomplished through collection of information from a field study, several farm-based efforts, and molecular genetic research on a Vermont dairy farm. On-farm poultry studies were initiated in five States in collaboration with USDA to determine the management, production, and drug use practices that influence the development of resistant zoonotic pathogens. Studies examining the effect of the prudent use of antimicrobials on chicken farms began in association with the University of California and Michigan State University.
• FDA and USDA collaborated with medical microbiologists from hospitals in Mexico and Guatemala who are interested in initiating an antimicrobial resistance monitoring program. This collaboration between the U.S. NARMS officials and the Mexican antimicrobial surveillance group represents the beginning of the first international human and animal monitoring system for food borne antimicrobial drug susceptibility surveillance in the Americas. The collaboration will lead to improvements in the Mexican Surveillance Program, which will reduce the possibility that contaminated food products will be shipped to the U.S.

ASSURING SAFETY OF THE U.S. BLOOD SUPPLY

Last year I shared with you that more than 3.5 million Americans receive blood from volunteer donors. The most serious risk that these citizens face is the possibility of transmitting undetected diseases. Blood shortages, however, can also present a life-threatening situation. In February 1999, the National Blood Data Resource Center (NBDRC), a corporation affiliated with the American Association of Blood Banks, published a projection that the Nation's demand for blood could exceed the available supply in the foreseeable future. FDA has the responsibility for balancing the need for greater blood supplies with the increased risk associated with more diverse sources of blood and wider access.

Last year I indicated that FDA had developed a Blood Action Plan to address these issues. I can report to you now that with your support the Agency has continued successful implementation of that Plan. The Plan is being jointly carried out by FDA, the Centers for Disease Control, the National Institutes of Health, and the Health Care Financing Administration. The Plan addresses highly focused areas of concern such as emergency operations, response to emerging diseases, updating and reinvention of regulations, monitoring the blood supply, and ensuring compliance with blood regulations. Last fiscal year, the Agency satisfied several key elements of the Plan:

• The Agency completed a systematic update of the blood regulations. As a result of this update, obsolete blood regulations were eliminated; and guidance documents are now focused on those standards that are enforceable.
• Under the Blood Action Plan, FDA is harmonizing its new Biologics License Application for blood products with its New Drug Application. In addition, FDA, CDC, and NIH representatives have formed an Emerging Infectious Diseases Committee that has developed plans for responding to emerging infections that threaten the blood supply.
• The Agency met its statutory requirement of inspecting all registered blood banks and source plasma operations within the past two years. Compliance of these establishments with current Good Manufacturing Practice requirements now exceeds 95%.
• Agency scientists responded to challenges by blood-borne pathogens for which there are no vaccines or adequate therapies. Blood supplies are often exposed to the dangers posed by such pathogens as HIV, Hepatitis B & C, and Transmissible Spongioform Encephalopathies (TSE). Because these pathogens have evaded known therapies, our strategy is to test and disqualify donors and blood donations found to be contaminated with these pathogens.

Assuring the safety of the blood supply is paramount; but FDA also recognizes that assuring the availability of safe blood is also a major public health challenge. To that end, FDA participated in a workshop this month sponsored by the National Heart Lung and Blood Institute, entitled: "National Strategy to Increase Blood Donation." Several initiatives were reviewed at this workshop, including: considering the use of previously deferred blood donations - e.g., therapeutic hemochromatosis donations, using computers to simplify blood donor interviews, and generally increasing donor incentives for participation.

Challenges to the safety of the U.S. blood supply remain ongoing. One of the Agency's most effective responses is to join forces with its fellow health and regulatory partners to stem these threats. The Blood Action Plan demonstrates such a united effort. I will keep you apprised of further developments fulfilling this critical Agency priority.

REDUCING YOUNG PEOPLE'S USE OF TOBACCO

I reported to you last year that over 400,000 Americans die from tobacco-related illnesses each year. Virtually all of these people began the use of tobacco as children. Thanks to funds you and your colleagues appropriated in FY 1998 and FY 1999, FDA, in cooperation with its federal and state partners, and with the retail community, has been able to launch an effective enforcement and outreach effort. We have early indications that these combined efforts are starting to have an effect. The University of Michigan's Institute for Social Research reported that although accessibility to cigarettes by 8^th graders was still very high (72%) that figure has been falling since 1996.

Let me cite a few highlights of the program efforts in 1999 that are contributing to this hopeful turn-around in youth smoking:

• In the enforcement area, FDA now has contracts in place with all 50 states and 3 territories to conduct compliance checks of retail establishments. This establishment of a comprehensive compliance network exceeded all of our expectations. As a result, in 1999 we achieved a 166% increase in the number of compliance checks conducted. Existing contracts resulted in a total of 107,200 compliance checks completed.
• We also provided retailers with a mediation procedure to resolve civil monetary penalty complaints and avoid litigation. Many of the violators were small businesses such as convenience stores or gasoline stations. During a mediation conference call, the mediator offers the retailer suggestions for preventing future violations. This process has resulted in almost all cases being settled to the satisfaction of the retailer. They have been very favorably impressed. FDA has also capitalized on information technology by designing and installing a computer system to automate the program's processes and to develop and maintain a list of retailers selling tobacco in each state. This is of tremendous benefit to the states because it gives them a way of tracking up to 1.5 million retailers who may be selling tobacco. It also provides the States with the legal record that may be necessary for later civil monetary penalty proceedings.
• FDA has also been active in attempting to reach retailers through a broad scoped advertising and education campaign. In addition to reminding retailers and sales clerks not to sell to minors and to check young peoples' photo identification, the campaign also urges customers to cooperate with retailers to help keep young people tobacco-free. Last year, FDA received the marketing industry's highest honor for effective advertising, the EFFIE Award, for its advertising and education campaign.

In addition to the priority areas I have outlined above, we have also undertaken work in a variety of high profile and controversial areas -- bioengineered foods and dietary supplements, to name a few. We are making strides in these areas, but each is a work in progress.

A final issue I raised with the Committee last year as a recently confirmed Commissioner, was my desire and intention to restructure and streamline the Office of the Commissioner in order to realign resources and functions. I appreciate the Committee's support of my plans. The reorganization is now complete. We are now undertaking an additional step to reinvent many of our processes to make the Office of the Commissioner and the Agency programs which it supports operate in an efficient and effective manner. During the course of this past year I appointed two people to key leadership positions in the Agency. Dr. David Fiegel is our new Director of the Center for Medical Devices and Radiological Health. He brings with him an extensive background in the academic sector as well as managerial experience in two of our other product centers - Biologics and Drugs; Dennis Baker is our Associate Commissioner for Regulatory Affairs. Mr. Baker was Chief of the Bureau of Food and Drug Safety within the Texas Department of Health?. and while he was in that position he established a strong reputation for being a regulatory 'reinventor.' He will be a very valuable resource to me as we work closely with the states to achieve our mutual public health and safety goals.

Now, let me discuss our fiscal year 2001 request before you for your consideration.

FY 2001 BUDGET

No matter how many or laudable our accomplishments may be, there still is much to do. This year's budget is reflective of the high priority areas where we need your support to assure that strong science will guide our decisions and ensure a strong safety net is in place for the American Consumer. The fiscal year 2001 President's budget request for FDA is $1,390,831,000 -- an increase of $176 million over FDA's fiscal year 2000 enacted level. This budget targets improvements that will:

1. bring new products to market through strong science; and
2. assure a strong safety net for products on the market through strong science.

By strengthening both of these areas, FDA is assuring safety throughout the life cycle of the product.

In addition, the budget identifies major initiatives of special note and interest to the President and the Congress including Food Safety, Youth Tobacco Prevention and Bioterrorism. The budget also targets critically needed improvements to FDA's Infrastructure - specifically replacement of the Agency's Los Angeles regional laboratory facility, completion of the Center for Food Safety and Applied Nutrition in College Park, Maryland and continued support for the Arkansas Regional Laboratory.

Let me briefly highlight our major initiatives in each of these areas:

Bringing New Products to Market Through Strong Science

1. $42 million to enhance the science-based review of new health-giving products so that they can more rapidly enter the market place.
2. Improving pre-market review of products submitted and accelerating the process of generic drug review thereby reducing the cost of medical care to the public;
3. Expanding the scientific expertise to meet increasing demands while maintaining FDA's high standards.

Assuring A Strong Safety Net Through Strong Science

4. $15.9 million to reduce the number of Americans who die annually from medical errors, currently estimated at 100,000. We would significantly upgrade and make more comprehensive our adverse event report systems, including those for dietary supplements and animal drugs. With our labeling initiative we would also be able to reduce the errors made because names of drugs sound similar.
5. $13.5 million to better ensure the safety of products on the market by conducting more inspections to support statutory compliance;
6. $10.0 million to protect consumers from illegitimate Internet pharmacies that inappropriately prescribe medications, increase the risk of dangerous drug interactions or sell potentially counterfeited or contaminated drugs. Our rapid response team would be supported with upgrades to our computer technology used to identify, investigate, and prosecute illegitimate Internet pharmacies. In addition, we would enhance our public education campaign on safe ways to purchase pharmaceuticals over the Internet.

Initiatives of Special Note and Interest to the President and the Congress

7. $30.0 million to enhance the safety of the food supply through strengthening key elements of the President's Food Safety Initiative by increasing inspection frequency for high risk food firms; implementation of an Egg Safety Action Plan; developing nation-wide standards for food safety; and expanding the research activities necessary to support the entire initiative.
8. $11.5 million to ensure expeditious development and licensure of vaccines to be used in response to possible bioterrorist attacks; and to respond to foodborne contamination.
9. $5.0 million to promote and protect the health of our nation's youth by reducing the number of young people who begin to use tobacco products. Compliance checks and compliance-based outreach efforts would increase with these funds.

FDA Infrastructure Improvements

10. $20.0 million to replace our outdated and unsafe Los Angeles laboratory facility. This facility is the site that must test many of the products imported from foreign countries, particularly food products;
11. $5 million in one-time costs to move the Center for Food Safety and Applied Nutrition into a new facility at the University of Maryland in College Park.
12. $3 million to continue the next phase of the plan for the Arkansas Regional Laboratory.

In addition, the Agency is requesting $14.2 million in proposed existing user fees; and $19.5 million in proposals for new user fees.

Each of these requests is described in more detail which follows:

BRINGING NEW PRODUCTS TO MARKET THROUGH STRONG SCIENCE

New products entering the marketplace will change the face of health care and will help us lead longer, healthier lives. They will also bring enormous economic benefits, both in lessening the cost of health care and in returning profits on the investments that are being made in research.

We are requesting $42 million to enhance the review of new health-giving products so that they can be considered in a timely fashion for entry into the market place. FDA efforts will focus on: direct food additive petitions; generic drugs; animal drugs; children's vaccines; the blood supply; pandemic flu; and medical device re-use. The requested funding for direct food additive petitions, together with funds provided in FY 2000, would provide full funding for this important program.

FDA will use new funding to develop a focused effort in the rapidly evolving field of food biotechnology. FDA requires scientific expertise capable of reviewing products developed through the tools of biotechnology and for providing public assurance of their safety.

ASSURING A STRONG SAFETY NET THROUGH STRONG SCIENCE

Medical Errors ($12.8 million) . One of my first initiatives as Commissioner was to establish a Task Force to evaluate the system for managing the various risks of FDA-approved medical products. The task force issued a report in May 1999, entitled, "Managing the Risks from Medical Product Use". The report confirmed that the high standard of premarket review has been maintained even as our reviews have become more timely. However, several key areas were identified where the safety net for consumers and patients could be strengthened. This report has led to a bold initiative in which FDA is a key participant along with other major health agencies in the public sector as well as health practioners, hospitals, and states. In a related study the Institute of Medicine (IOM) estimates that close to 100,000 Americans may be dying each year as a result of preventable medical errors because of failures within the complex systems of modern health care. The aim of FDA's initiative in response to its own report and the IOM study is to aggressively deal with the medical errors and adverse events that are reported annually in the U.S.

Patients, doctors, nurses and other health professionals represent a key human component of our health care delivery system. This same system also includes a vast array of drugs, medical devices, blood and other biological products that are regulated by FDA. While the causes of medical error cover a broad spectrum, many involve the use of medical products. Preventing the errors can save people's lives and the health care system and society billions of dollars annually in unnecessary costs. FDA is working with agencies within DHHS and across the Federal government to develop and implement strategies to prevent medical errors.

Features that contribute to errors in actual product use are not always identifiable before FDA approval. Once products are widely used in today's complex and fast-paced healthcare delivery system, these "human factors" can emerge as safety risks. The Agency has a number of surveillance systems to identify harm resulting from use of FDA-regulated products. We receive problem reports from hospitals, other health-care facilities and individual health care professionals. When the FDA is alerted to problems with a medical product, we conduct a thorough safety analysis using medical and scientific experts to identify critical factors causing the problem, and to identify problematic product features and safety procedures. To prevent further harm to patients, FDA takes actions necessary to minimize problems including communicating with doctors, other health professionals, and patients and requiring changes to the medical product. The "lessons learned" about safe product features are incorporated into the Agency's review of future products.

Recent and dramatic increases in the complexity and numbers of newly-approved medical products, the trend toward their increased patient use, and increased time and cost pressures on health care providers, have raised the level of risk for human error in the use of medical products. While FDA receives over 300,000 reports each year, it is known that the vast majority of incidents are not reported.

The estimated costs for these medical errors are as high as $29 billion a year. Increased resources will allow the agency to elicit more complete reporting as well as analyze report data in a timely manner and to invest in information technology to develop more effective systems. The Administration has set the goal to reduce preventable medical errors by 50% within the next 5 years. FDA's request includes an additional $12.8 million. If provided these funds we will:

1. Improve the reporting systems for blood errors and accidents;
2. Implement Phase II pilot of the Medical Device Surveillance Network (MeDSuN) to address under-reporting and incomplete user facility reporting of medical device errors. To accomplish this, FDA will recruit over 150 hospital reporting sites into a national reporting network. This system has the potential to be extended to drugs and other areas in future years.
3. Increase FDA's capacity to conduct multi-factor analyses to correctly identify the sources of safety problems and potential solutions. This includes establishing links to safety databases maintained within community healthcare delivery systems and regional safety surveillance systems as well as augmenting our expertise in medical epidemiology and statistical analysis.
4. Develop new standards to ensure that pharmaceuticals are packaged and labeled in a manner that promotes patient safety.
5. Increase FDA's capacity to act on safety findings, through better risk communication to providers and patients who use medical products; and partnerships with other health agencies and health care organizations.

Adverse Event Reporting Systems ($3.1 million). In addition to the adverse events discussed as part of medical errors, FDA monitors adverse events related to dietary supplements and animal drugs.

The dietary supplement industry is one of the fastest growing industries in the world. Dietary supplement sales have nearly doubled in the past five years and one study estimates that sales will increase by over 90 percent over the next six years. Surveys show that over half of the US population now uses some type of dietary supplement, spending over $12 billion per year for these products. FDA estimates that the industry markets approximately 29,000 of these products which are sold under 75,000 distinct labels.

The number of adverse event reports related to animal drug products has risen from about 1,000 per year in the early nineties to over 12,000 for 1999. Because FDA does not have the resources to process these reports in a timely manner, they must be triaged and only those showing the most serious health hazards are evaluated.

Consequently, a substantial backlog exists in reviewing adverse event reports in both of these important areas. This budget request will improve our Adverse Event Reporting System (AERS) for animal drugs and dietary supplements. This will enable us to provide greater assurances to consumers that problems will be identified and action taken promptly.

Inspectional Activities ($13.5 million). FDA inspections, laboratory analysis, and related surveillance activities are the primary means of assuring industry compliance and thus consumer safety once products are in use. New technologies, international regulatory commitments, and increasing coordination with State partners require new and challenging expansions of FDA's traditional inspection role.

FDA's ability to physically verify the safety of domestic and imported products has eroded considerably in all product areas, even as consumer expectations continue to rise. We are falling significantly short of the minimum inspection obligations required by the FDC Act.

Import entries alone increased 14 percent in FY 1999, and over all, less than one percent of import entries are physically examined. Even in conjunction with its State regulatory partners, FDA is able to annually inspect less than a third of the domestic firms within its purview. The number of foreign and domestic inspections for foods, drugs, and devices (excluding mammography), has decreased from 28,000 to 22,000 between 1991 and 1999. This decrease of 6,000 inspections, or 21 percent, is due to the impact of the time required to perform the increasingly complex science based inspections, the almost static level of investigative personnel in the past eight years, and the increases in imports. The total volume of FDA-regulated imports is estimated to exceed $50 billion per year and imports continue to grow in volume, complexity, and diversity of sources.

FDA requests $13.5 million in additional funding to improve statutory inspection coverage for Human Drugs, Biologics, Animal Drugs and Medical Devices, where the law requires specific inspection frequency. The requested funds will keep the FDA from falling behind the fiscal year 2000 level of inspectional effort. Through the use of leveraging and expanding existing state contracts, FDA will make modest gains in inspection coverage. Specific performance improvements are identified in FDA's FY 2001 Performance Plan. These funds will also allow FDA to enhance laboratory testing for pesticides, chemical contaminants and dietary supplements.

Internet Sales of Drugs ($10 million). The number of people who use the Internet for the purchase of medical products is growing rapidly. Many consumers including those in rural or remote areas or those that can not leave their homes because of disabilities or who are elderly greatly benefit from the access and convenience features of this option. However, on line sale of prescription drugs also poses risks for the consumer. When buying from a brick and mortar pharmacy, a corner drug store, a strong safety net of State and Federal laws exists. Prescription drugs are to be dispensed only with a valid prescription, because they are not safe for use without the supervision of a licensed health care practitioner and dispensed from a licensed pharmacy. The availability of pharmaceuticals from the Internet can greatly disrupt this safety net. Patients who buy prescription drugs from Internet websites operating outside the law are at increased risk. During fiscal year 1999, illicit or illegal operated sites grew dramatically and we anticipate this trend to increase. This initiative will enable us to track down illegitimate operations and educate consumers by coordinating efforts with the states.

For fiscal year 2001, FDA seeks $10 million primarily to conduct investigations and to carry out a public education campaign on safe ways to purchase pharmaceuticals over the Internet. FDA would use part of this request to support a rapid response team and to upgrade our computer technology to identify, investigate and prosecute illegitimate Internet pharmacies.

INITIATIVES OF SPECIAL NOTE AND INTEREST TO THE PRESIDENT AND THE CONGRESS

Food Safety Initiative ($30 million). The world of food has changed significantly over the past 50 years. Consumers' diets are more varied and include foods that are more susceptible to foodborne pathogens. A much larger percentage of meals are prepared and consumed outside the home. Vulnerable populations have increased by as much as 25 percent of the U.S. population to include pregnant women, children, the elderly, and immuno-compromised persons. Finally, the number of identified pathogens found in food has more than tripled. More to the point, these pathogens are more deadly.

The Food Safety Initiative represents a multi-year, inter-agency effort to respond to these changes and to improve food safety for the Nation. This initiative has successfully built a strong foundation for a state-of-the-art, science-based food safety system, and has promoted partnering among the key Federal agencies (FDA, USDA, and CDC), States, academia, industry, and consumers. A total of $218 million, representing a $30 million increase, is requested for FDA for fiscal year 2001. With this $30 million increase in funding we will:

1. Expand research and risk assessment activities that provide the cornerstone for a science-based food safety system. Food safety research is critical for the rapid and accurate identification of foodborne hazards; for regulatory enforcement; for the development of effective intervention techniques; and for better detection of antibiotic resistance. Risk assessment activities provide the information necessary to allocate food safety resources to the highest risks in the food supply.
2. Develop consistent nationwide food safety standards. Standards development includes technical standards for particular products or processes, as well as product and/or process-specific guidance documents and regulations. Such standards provide consumers with increased assurance regarding the uniformity and safety of the food they consume. In addition, by providing current, clear and understandable expectations for industry, food safety standards provide a "level playing field" for food producers and processors.
3. Begin implementation of the Egg Safety Action Plan to sharply reduce eggs as a source of human Salmonella enteritidis (SE) illness in the U.S. While eggs are an important source of protein in the diet, an estimated 1 in 20,000 eggs in the U.S. contain the SE bacteria and can cause illness if eaten raw in food or not thoroughly cooked before consumption. The Egg Safety Action Plan presents a comprehensive nationwide strategy to address this important food safety and public health concern.
4. Expand domestic inspections to ensure annual inspection of all establishments producing food that is at high risk of microbiological contamination or high risk of causing severe disease. There are approximately 6,250 such firms. By "high risk" we mean: infant formula; ready-to-eat foods; heat and serve products; seafood; and low acid canned foods and acidified foods. The new resources would also be used to enhance FDA's oversight of state inspection programs, as well as to enhance laboratory capabilities for the analytical support associated with these inspections.
5. Complete the National Antimicrobial Resistance Monitoring System (NARMS) by adding national and international data collection sites. At this fully operational level, NARMS will provide an effective early warning system to detect the emergence of antimicrobial resistance among foodborne pathogens. Also, develop new methods for routine surveillance of fluoroquinolone resistant Salmonella and Camploybacter to gather the data needed to make informed risk decisions concerning the use of quinolone-based antimicrobials in poultry and antibiotic resistance.
6. Develop new methods for routine surveillance of fluoroquinolone resistant Salmonella and Campylobacter to gather the data needed to make informed risk decisions concerning the use of quinolone-based antimicrobials in poultry and antibiotic resistance.

Food Safety Initiative investments for the past three years have paid tremendous dividends. Foodborne outbreaks have been shortened. The risk of foodborne illness and death related to microbiological contamination of both domestic and imported foods has decreased. With the resources requested in fiscal year 2001, we will continue to provide the U.S. with a consistent, uniform system to respond to foodborne illness that will contribute significantly to shortened outbreaks and reduced incidence of illness and death.

Countering Bioterrorism ($11.5 million)

. Preparing for and responding to an attack involving biological agents is critical. Our task is made more complex by the large number and characteristics of many of the potential agents, many of which are rarely encountered naturally and have the ability to remain undetected for long periods of time. There is often potential for secondary transmission as they could be genetically engineered to resist current therapies and evade vaccine-induced immunity. While there is a clear and unquestionable need to develop specialized vaccines for these biological agents, there are limited commercial interests or market incentives addressing this problem. Thus, it falls upon the Federal government to ensure that such vaccines are developed.

FDA is an important contributor to the Nation's capability to respond to potential chemical and biological threats from bioterrorism. The FDA's critical role in bioterrorism includes assuring that new vaccines and drugs are safe and effective, safeguarding the food supply, and conducting research for diagnostic tools and treatment of disease outbreaks. Whether the issue is the development and use of rapid diagnostics to quickly identify a suspected biological agent or the capability to make available and administer large quantities of a vaccine, immune globulin, or drug to counter the effects of a bioweapon, FDA's research is the linchpin that makes it possible for the Centers for Disease Control and Prevention (CDC), the National Institutes of Health (NIH), the Office of Emergency Preparedness (OEP), the Department of Defense (DOD), and others to effectively respond.

FDA's research includes the development of new analytical approaches and methodologies to determine if new products provide needed benefits without causing adverse side effects that would outweigh those benefits. This research includes both laboratory and non-laboratory investigations to address FDA's regulatory responsibilities.

Due to the highly toxic nature of the agents identified as potential bioterrorist agents, specialized equipment and facilities are necessary and needed in the FDA to understand these agents to prevent, diagnose and treat outbreaks.

Other Bioterrorism activities that support FDA's efforts are:

1. Vaccine development in collaboration with NIH, CDC, DOD, academia, and private industry to ensure expeditious development and licensure of vaccines for smallpox, anthrax, plague, tularemia, Q-fever, encephalitis-causing alpha viruses, and botulinum; Coordination of vaccine, drug and device stockpiling and preparation for emergency response including rapid detection and decontamination procedures;
2. Development of new diagnostic products, rapid methods development, and comprehensive reviews for new drugs, therapeutics, and vaccines including new uses of existing products; development and stockpiling of specialized immune globulins; expansion of research to identify toxicity indicators associated with biological warfare agents; and, initiation of a monitoring system for chemical and biological agents in feed for food-producing animals.
3. In collaboration with NIH, CDC, DOD, academia and private industry, ensure that rapid methods are developed to detect biological agents that may contaminate the food supply.

The fiscal year 2001 request is $11.5 million. This funding will allow the Agency to expeditiously review and approve every drug, therapeutic, vaccine, and anti-toxin to be administered to humans; complete the FDA review process for safety and efficacy of the pharmaceuticals, rapid diagnostics, and vaccines that are needed in the event of a bioterrorist attack; and, to educate vaccine manufacturers on the information needed for FDA approval.

Preventing Tobacco Use Among Children ($5 million). Tobacco products are responsible for more than 400,000 deaths annually due to cancer, respiratory illness, heart disease, and other health problems, representing five million years of potential life lost each year. Each day, nearly 3,000 young people across the country begin smoking regularly. Of these 3,000 young people, 1,000 will die prematurely because as a child they decided to smoke. Conservative estimates are that children and adolescents illegally purchase tobacco products 250 million times each year.

The Agency has devised a three-pronged approach of enforcement and evaluation, compliance outreach, and product regulation. The $5.0 million in this request will be used to increase leveraging contracts with State and local tobacco stakeholders to allow more compliance checks of age and ID restrictions, and 100 percent re-checks of violators. It will also be used to develop a reliable, national list of tobacco retailers and complete installation of an information technology system to automate the program's business and communications processes, as well as increase the scope of the media campaign aimed at increasing retailer awareness of, and compliance with, the tobacco regulation.

Our overall goal -- to reduce young peoples' use of tobacco - is a goal upon which we can all agree. We will continue to work with other organizations within the Department of Health and Human Services, other agencies, the States, and other stakeholders.

FDA INFRATRUCTURE

Los Angeles Laboratory ($20 million). FDA's field laboratories provide critical laboratory and analytical support to the domestic and import inspection effort and are a key element in the science base of FDA. The Los Angeles District annually reviews nearly 1.2 million import line entries, almost 24 percent of the Agency total. In FY 1999 alone, the Los Angeles laboratory analyzed 22.9 percent of the imported Foods samples taken by FDA. This laboratory facility is over 40 years old, outmoded and unsafe.

FDA simply cannot remain in the present Pico Boulevard facility in Los Angeles. We have the land and construction plans to relocate the laboratory to Irvine, California. This will assure that products are safe, provide the ability to partner more effectively with State laboratory personnel, and provide a safe working environment for FDA employees.

FDA requests $20.0 million to fund a portion of the construction of the Los Angeles Laboratory and Office project. The request also includes $23.0 million as an advance appropriation in fiscal year 2002 to complete the project. This construction will consolidate all three Los Angeles district sites into one location, replacing three existing leases totaling $2 million annually. The new construction will concentrate the scientific talent available to permit better management of the analytical workload and will provide significant improvement in operational efficiency, especially during emergencies.

If funding is not provided, the Agency will be forced to shift work to labs in other states, further from the point of entry. This will obviously have an impact on FDA's import surveillance capability, the southern California food import industry and our consumers.

College Park Relocation ($5 million) and Arkansas Regional Laboratory ($3 million). In 2001, the Center for Food Safety and Applied Nutrition (CFSAN) will be moving to a newly constructed facility in College Park, Maryland. Funds are needed to pay for one-time costs associated with equipping and occupying this facility. The FY 2001 funding will support: telecommunications equipment and necessary network connections, files consolidation and moving costs. We will also continue construction of the next phase of the Arkansas Regional Laboratory.

CONCLUSION

In summary, Mr. Chairman, fiscal year 2001 is the year in which FDA must cope with the maturation of two of the most massive and significant change forces the agency has ever faced. In 2001, the increasing impact of molecular science--genomics in particular-and the information revolution-especially the internet and its linkage to an array of real-time data that was unimaginable only a few years ago-will combine their forces to change how many FDA regulated products are discovered, researched, manufactured, distributed, marketed and advertised. When the world around us changes this much, we must be prepared to respond in order to assure that products are still safe for American consumers. Our credibility to provide valid assurance is at risk without strong science, effective collaborations and consultation, and even greater openness and transparency in our processes.

I wish to thank the members of this Committee, their staff and the staff of the individual subcommittee members for their support this year. This subcommittee has many legacies, from improved agricultural production to safer consumer products to protection of the American farmer. I ask that you add another critically important one to the list - bringing forth the technological promise of the 21st century. If you will give FDA the resources to do the job I will commit to you that those funds will be used wisely. I look forward to discussions with this committee to ensure that we are able to fulfill our mission in this challenging environment.

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