Mr. Chairman, thank you for the invitation to appear before the committee.
I returned two weeks ago from a trip to Beijing where I had the opportunity to see first hand not only the opportunities that China is embracing as it undergoes tremendous growth in its economy, but also its challenges. To put it simply, China's economic growth has outpaced the capacity of not only its decentralized regulatory institutions to exert authority over local producers, but also its marketplace systems, its cultural traditions, and its legal institutions to provide the complicated but effective system of overlapping checks that we enjoy here in the United States to help ensure the quality and safety of products.
The resulting episodes of lax safety standards, inattention to issues of freshness and purity, and outright corner cutting in an effort to further shave razor thin margins is not new to China. We remember 2004, to give just one example, when bad formula killed at least a dozen infants and sickened many others. The Chinese have been living with these challenges for a long time, and as a middle class develops there, and as information is more freely exchanged, they are becoming aware of these problems, are frustrated, and are demanding change. One senior Food and Drug Administration official appeared on Voice of America last week to discuss food safety issues and particularly China, and remarkably, the majority of calls he received were from local Chinese residents calling in to express frustration at their own regulatory system and the safety and quality of their food and drug products.
What is new is that China's integration into the world economy means that problems with its raw ingredients to food and medicines are made more widely manifest and innovations in distribution and supply chains means imported products are more widely distributed shortly after crossing our border, amplifying risks; whether it is at least 51 Panamanians who have died since October after using cough syrup tainted with a chemical cousin of antifreeze, consumers put at risk recently from using tainted toothpaste, or the by-products of a slip-shod manufacturing process that made their way into pet food bound for the U.S. and killed some American cats and sickened many animals. In all these cases, the potentially deadly ingredient originated in China.
As Ms. Emily Parker, a writer formerly based in Hong Kong and writing in the Wall Street Journal last week noted, the challenge of correcting these problems goes beyond regulatory tightening alone, even as China begins to institute some needed reforms and executes some high-profile, if not spotty discipline over its own regulatory system. Some of these challenges go to the core of the Chinese political system and its nascent legal institutions, where a system without popular elections or an effective system of checks and balances has helped create a culture in which the Chinese are not accountable to each other. Here in the U.S. we have evolved a transparent system for regulation where standards are established through a public process of comment and rule making, courts provide formal avenues for private parties to contest decisions, and congressional oversight helps to make sure that there are not inappropriate abuses. A uniform rule of law and other longstanding institutions help make sure our regulatory approaches are reasonably responsive to public needs.
By contrast to China, no one party or one group in the U.S. is given a top-down, monopolistic lever of control to deal with greed and ineptitude among private actors. In a system such as China, where the legal remedies are often arbitrary, safety and quality will not become an abiding faith in its manufacturing until the ruling bureaucracy inspires the formation of these institutions and makes the necessary structural reforms. The absence of these sorts of controls is hopefully a shortcoming that will right itself over time as China evolves into a more open and market-based society and a corporate culture evolves that is focused on minimizing errors and defects.
Early Signs of Change Mixed
The early signs are, at best, mixed, as China's fragmented bureaucracy can sometimes appear impervious to reform. China has met mounting concern over the safety of its food exports with alternating messages of concession and defiance. At once it has promised greater oversight and this year closed more than 180 illegal food producers, but at the same time points out that U.S. companies, too, have recently been implicated in the sale of tainted foodstuffs. In recent months, Beijing has stopped a number of shipments from the U.S. at its borders, at least creating the impression of retaliation and finger pointing.
The Chinese response, and the role of non-regulatory as well as regulatory institutions, bears reminding because they make it clear that regulation alone here in the U.S. cannot solve the safety challenges we face, nor can we rely on the Chinese government to easily initiate the necessary reforms. The fact is that many U.S. imports come from countries that do not have the same market pressures as the U.S. where brands can be decimated when things go wrong. This sort of market pressure serves as a more potent deterrent to bad behavior than any sanction that a regulator can levy, but in places like China, similar incentives are not as prominent. It is a fair bet that these market-based pressures are going to be faster to develop in China than any regulatory reforms once U.S. manufacturers hold their Chinese suppliers more accountable. We are going to have to rely on this broader system of institutions--including the imperative of U.S. suppliers to preserve their brands and avoid litigation--if we are to address the challenge we face from a increasingly globalized supply chain that sources materials from remote regions where we can never expect to be able to exert the same regulatory oversight we enjoy here at home.
The U.S. still has the safest food and drug supply in the world, but the dramatic changes in the nature of the food and drugs arriving in the U.S. from other countries necessitate a new approach. FDA processed 15 million shipments of goods in 2006, up 60 percent since 2003. Products arrived from more than 230 countries and more than 300,000 manufacturers. More and more drugs, especially generics, get their raw material from China and India, where local controls are weak. Against this, FDA has about 625 inspectors for foods and 260 for pill-type drugs. The FDA has primary responsibility for inspecting shipments of drugs and most foods.
Though no regulatory system can eliminate every risk, simply put, our present approach is not adapted to deal with the fact that companies are sourcing more of their raw materials from less developed countries that do not have the same regulatory protections in place as the U.S. does. While we need to rely on a broader set of institutions to exert more pressure on Chinese suppliers to improve their attention to safety and purity, there is no question that our regulatory tools here in the U.S. can benefit from change and especially from new resources to help address the challenges posed by our globalized supply chain. It is these efforts--the changes we can make here at home, with our own regulatory institutions--where I want to begin my discussion today. In particular, I was asked by the Committee to address the recent regulatory action directed against certain fish imported from China.
Increased Scrutiny of Chinese Farmed Fish
The U.S. FDA recently announced that it was stepping up scrutiny of Chinese farm-raised seafood. The FDA's decision to detain and test all Chinese shipments of shrimp, catfish, basa, dace and eel unless they are proven to be free of residues of illegal antibiotics and chemicals comes after a string of safety alerts over Chinese food exports to the U.S. The FDA's new requirements for more widespread inspections and testing of Chinese farmed fish--in practical terms--amounts to a ban on many of these Chinese farmed fish products.
The move came after a series of FDA inspections surfaced persistent safety concerns with these products. The FDA said it had tested 89 samples of seafood from China from October 2006 to May 2007 and found that 25 percent of the farm-raised products contained potentially unsafe residues that are not approved for use in the U.S. On May 2, for instance, the FDA stopped a shipment of frozen catfish fillets exported to the U.S. by Guangxi Nanning Baiyang Food Co. because they contained traces of unsafe animal drugs, according to a listing in FDA's online database. Ruian Huasheng Aquatic Products Factory in Zhejiang province had a shipment of monkfish rejected by the FDA in May for being "filthy," according to the FDA database. Many of the contaminants were the antimicrobials nitrofuran, malachite green, gentian violet, and fluoroquinolone. None of these substances is approved for use in farm-raised seafood in the United States, and the use of nitrofurans and malachite green in aquaculture is also prohibited by Chinese authorities.
It is true that the levels of the drug residues that have been found in seafood are very low, most often at or near the minimum level of detection. FDA put ranges for the antibiotics at 1 to 30 parts per billion in the tested seafood. Experts have said that the presence of these antibiotics does not pose an imminent hazard to peoples' health because they are being detected at such low levels. While probably true, I know that these words are not entirely reassuring to consumers, especially when the chemicals are potentially unsafe with prolonged exposure. That is why the regulatory action FDA has taken is prudent and timely. The bottom line is that use of all of these substances is unnecessary if proper steps are taken to provide for appropriate sanitation and controls on the process for farming fish.
The fact also remains that these deliberate contaminants can pose long term health concerns. For example, the use of fluoroquinolones in food animals may increase antibiotic resistance to this critically important class of antibiotics. Chinese officials have acknowledged that fluoroquinolones are used in Chinese aquaculture and are permitted for use in China. But the risks are not confined to the propagation of antibiotic resistant organisms that make some drugs less effective at treating human infections. Some of these substances have been shown to be carcinogenic with long-term exposure.
For example, the chemical dye malachite green, which is used to battle fish parasites and fungal infections, has been shown in lab tests to increase cancer rates in rats and mice fed malachite green and leucomalachite green, which is formed from malachite green, at doses ranging from 100 to 600 parts per million for two years. A toxicology study published in June 2004 by the National Toxicology Program on malachite green and leucomalachite green contained two-year feed studies that showed carcinogenic activity for malachite green and leucomalachite green respectively, in rats. For these reasons, last year, the FDA restricted imports of eel from China after FDA tests found that 91 percent of those sampled contained the substance — some at levels up to 3,239 parts per billion, which is disturbingly high--and China banned malachite green in 2002, yet the violations show it is still widely used.
To take another example among the chemicals found in the imported farmed fish, crystal violet, sometimes referred to as the medicinal preparation gentian violet, and another dye in the triphenylmethane family that has antifungal properties similar to those of malachite green. It has been used for treatment or prevention of external fungal and parasitic infection in fish and fish eggs. Like Malachite green, crystal violet is readily absorbed into fish tissue from water exposure and is reduced metabolically by fish to one form of the chemical, called the leuco moiety, leucocrystal violet. Several studies by the National Toxicology Program also report on carcinogenic and mutagenic effects of crystal violet in rodents. The substance has also been linked to increased risk of human bladder cancer. The leuco form has been shown to cause kidney, liver, and lung tumors in mice.
There are also two prominent reports issued by the National Toxicology Program on nitrofurans; TR-337 published in June 1988 and TR-341 published in Sept 1989. Both of these reports conclude that under the conditions of two year feed studies, where mice and rats were fed these substances over a period of two years, there was clear evidence of carcinogenic activity of these compounds. In 1991, FDA withdrew the approvals of two nitrofuran drugs, nitrofuranzone and furazolidone. These two drugs had several approved new animal drug applications for both poultry and swine. It was determined that this class of compounds could induce cancer in man or animals. FDA issued a Federal Register Notice in 1991 that explains in detail the reasons for the withdrawal.
The regulatory actions that FDA has taken recently with respect to Chinese farmed fish as well as its increase vigilance over other high-risk products are important steps to protect the public health, but the question is, "what more can be done?". I spoke about the need for the development in China of the same non-regulatory institutions that we rely on here in the U.S. as well as a better-developed legal system guided by the rule of law. This means the equitable application of laws. I believe these institutions will evolve more rapidly as the Chinese begin to realize that their economic growth is at stake. But as they do, and in the meantime, the question remains: What more can be done in the U.S. to help promote safety?
Steps Food Producers Can Take to Ensure Safety
I believe one lesson for food producers can be learned from efforts undertaken by drug makers who source the raw material for drug products in China. Many of these drug makers do not simply purchase their bulk drug product, called active pharmaceutical ingredients or API, from Chinese producers on the open wholesale market. Instead, they go into China and control or play a prominent role in almost every aspect of the production process, from standing up the facilities that manufacture the raw product to inspecting them to managing the shipment of these goods to the border to getting them FDA inspected. Drug companies that source their material in China work to squeeze out the endless series of middleman that typically plague the Chinese production process but add no real value--only costs and risk. In fact, a highly reputable independent American drug rating agency, the U.S. Pharmacopea, recently set up an office in China for the purpose of helping American firms certify and inspect their manufacturing operations in that country. The fact is that many U.S. food producers are now taking a more active role in policing their own supply chain. Many of these producers are finding that in order to protect their brands, they will need to control or exert oversight over more aspects of the production process for their raw goods, even if that means going onto Chinese farms, for example, and helping to develop better production methods and oversee processing.
As for FDA's role, our inspection model at FDA worked better when the volume and complexity of imported products were small, grew slowly and was limited to a more discrete set of goods. But the FDA can no longer be globally dispersed, sending its dwindling cadre of increasingly reluctant inspectors into every foreign factory. They often do not speak the local language, understand the culture or know the home-grown criminals. Our system for inspecting food and drug imports into the U.S. is outdated, designed to regulate a mostly domestic industry, not to deal with a globalized world. FDA needs to target its inspection resources more effectively to areas of highest risk and monitor reputable firms empowered by the agency to police their own supply chains. The agency has comprehensive a plan to pursue some of these objectives.
Some of these reforms stem from lessons learned in response to concerns about terrorism, which provide a foundation for building a more modern, risk-based approach to inspecting all of our imports. These starts with better information systems for tracking products and more collaboration with foreign regulatory agencies so that FDA can gather better information about products before they arrive in the U.S. and target inspectional resources. The bioterrorism-focused system uses information that FDA collects from importers, and greater cooperation with overseas law enforcement and regulatory agencies, to make targeted decisions about which imports to sample based on the possibility for tampering. Top-secret software used to analyze risks means that products such as loose spices imported from the Middle East probably will get far more scrutiny than whole produce from Canada.
Proposals for Solidifying FDA Starts with Resources
FDA never permanently received the number of inspectors it was promised shortly after 9/11 to improve oversight of food from deliberate tampering. I recently left the FDA, where I worked as a deputy commissioner, and staffing shortfalls were a daily burden on the Agency. But adding new manpower to the FDA will not solve this problem alone. Neither will merely testing more batches of goods, which can be prohibitively expensive. The FDA needs to be given an opportunity to pursue the policy reforms it is formulating under the leadership of Commissioner von Eschenbach to develop a system for better identifying and prioritizing risks from imported products all along their life cycle, and not just at the border. It also needs to be able to be given the flexibility to implement its plans for re-organizing its current staffing model, in particular certain aspects of its highly trained field force, to make sure that its resources are aligned with emerging risks. As the set of issues that FDA confronts changes over time, and as scientific advances give the agency new opportunities to more efficiently manage these risks, the agency needs the flexibility to re-direct its experts and its resources to meet new challenges and also needs the resources to invest in training its staff.
Rather than remaining a primary line of defense where we rely on testing at the point of entry, the border needs to be a checkpoint to make sure foreign firms have complied with health and safety requirements imposed along the supply chain. We cannot expect to be able to test all food products coming into the U.S., nor can we "test in" safety. Safety needs to be assured by making sure that importers have complied with requirements put in place along the supply chain, such as how products were manufactured or how they were handled during their transport. This requires better information about goods coming in and more cooperation with foreign agents so FDA can identify lapses in regulatory compliance or higher-risk products. Even with these reforms, the FDA cannot be everywhere, every time a risk arises, especially as the supply chain for both food and drug products continues to grow more diverse and more global. Ultimately, FDA needs to enable companies to be inspected by reputable private third parties that are certified by the agency.
I also do not believe we need a new "separate food agency." Government challenges are never solved with simply more bureaucracy and the history of "consolidating" other federal agencies into still larger organizations does not suggest that this is a successful model. The FDA has a long tradition of serving in its present food safety role and the agency's unique culture of public health protection and promotion and its scientific tradition is ideally suited to fulfilling the food protection mission. But that mission needs to be properly paid for. More resources for the FDA's Center for Food Safety and Applied Nutrition are also needed so the food center can continue to be able to keep up with other workload responsibilities, such as the need to issue rules, especially those that govern food safety issues, such as regulations on testing protocols, record retention, and quality assurance and control.
There are also steps the food center can take through the issuance of new regulations to streamline some of its current operations that do not deal as directly with food safety issues but are more a service that the agency performs to industry, such as the issuance of standards of identity or import certificates, so that FDA can better focus its resources on areas of highest public health risk. With so many pressing health challenges, there is no good reason that the FDA needs to be so intimately involved in issues such as the multi-decade effort to determine when peanut butter can be called peanut butter. It would seem that those functions can be sorted out through private means with the agency perhaps playing a more limited refereeing role. But re-developing its current procedures through the issuance of new regulations--for example, those that could reduce the agency's role in developing identity standards--to in turn free up some resources to be directed at safety issues also requires an up front investment in time that the center literally does not have because it is so pressed right now with its critical food safety responsibilities. To help ensure adequate and stable funding, the food industry might well consider a user fee program to help pay for some of the agency's functions, especially those that are more service directed. Other FDA user fee programs have helped the agency ensure more stable funding and improved the quality of the management and the resources available to develop sound science. The food center has a limited user fee program around the review of certain food additives that can be expanded.
There are other steps might be taken to help the food center better focus on its core food protection mission and seek alternative resources for some of its other functions. For example, the cosmetics industry might submit to a user fee program to help fund the FDA's cosmetics program, which is currently housed inside the food center and has also suffered from under-investment as resources were diverted to areas of higher public health risk. The alternative may well be that the cosmetics program is eventually shifted to the FDA's drug center, where more resources might be available to fund the program but the industry might also find itself subject to regulatory creep as the drug standard gets subtly and inadvertently applied to cosmetic products, in particular increasingly popular "cosmeceuticals."
In the end, the fact remains that our current regulatory system was designed to deal with a mostly domestic food and drug industry, not a globalized system such as the one we have today. Adapting to this new challenge is going to take more comprehensive thinking, the kind that is being put forward by the agency under the leadership of its Commissioner. It is also going to require more reliance on appropriately regulated private entities, as well as appropriate resources to enable FDA to address its increasingly complex challenges.
Scott Gottlieb, M.D., is a resident fellow at AEI.
