The Future of the FDA in the Next Administration

Oct. 27, 2008— -- It is now eight days before a historic election, but no matter which candidate becomes the next president of the United States, he will face a long list of challenges.

As with most remarkable moments in history, it is often the unseen and unexpected challenge that gets new presidents into the most trouble.

One unacknowledged challenge that could cause major difficulty for an incoming president is the impending breakdown of the regulatory system that oversees food and drug safety. We have seen early warning signs of failure, but like the warnings before Hurricane Katrina, they have been ignored by the current administration.

Recent drug recalls and food alerts are the early warning signals. These include beef recalled for mad cow and E. coli contamination, mystery salmonella outbreaks that took weeks before the source was identified, tainted shipments of heparin from raw materials that originated in China, recalls of the multiple sclerosis drug Tysabri because it was linked to a rare, and sometimes fatal brain infection, the diabetes drug Avandia, and the Vioxx recalls and generics manufacturers that produced pills that were not equivalent to the brand-name medicines.

The Food and Drug Administration has responsibility for reviewing, approving and regulating drugs, biologics, medical devices and cosmetics sold in the United States, while oversight of food safety is shared by a total of 12 different agencies that have responsibility for enforcing 30 federal laws.

One example demonstrates how food safety is hampered by a fragmented division of responsibility. Multiple Chinese companies were found to have used melamine, a nitrogen-based industrial chemical that artificially increased protein content in dairy products.

This caused an uproar in China and among its trading partners around the world last month after traces of the toxin were discovered in baby milk formula, leading to the deaths of several infants and the illness of thousands more. After the revelation of foreign alerts, testing was done in the United States and it was found that products ranging as far as contaminated Chinese candy had gained access to our consumers. This leads us to question the jumble that is our nation's food inspection system.

As a brief illustration:

Production of poultry, meat and egg products are overseen by the Department of Agriculture.

All other domestic food production, and purity of imports, is overseen by the FDA.

The National Institute of Standards and Technology oversees food packaging.

The Customs and Border Service inspects agricultural products entering the United States at 326 land and water ports of entry.

The Environmental Protection Agency regulates use of pesticides in food and establishes maximum allowable residue levels in food and animal feed.

The National Marine Fisheries Service conducts voluntary, fee-for-service inspections of seafood safety and quality.

This Is Not 1938

The current oversight system for food and drugs is based on the Food, Drug and Cosmetic Act, passed into law 70 years ago, in 1938. That was a simpler time. There were no biologically created drugs; it was nine years before the granting of a patent for manufacturing penicillin, and several years before the first cancer chemotherapy agent was tested. It was a time when most of the fresh fruit and vegetables consumed by people in cities came from farms not more than 50 miles away.

Food and drug production is very different in 2008 than it was in 1938. Sophisticated lifesaving drugs often rely on raw materials from faraway places. They require multiple manufacturing processes that can be outsourced to several suppliers in different locations where the FDA may have little or no presence. Food comes from all across the world, with Mexico, China and Canada being the top three suppliers to the United States. But the funding has not kept pace with the challenges.

Between 2001 and 2007, food imports grew 75 percent, but FDA-inspected firms shrunk by 7 percent. According to a June 2008 report by the Government Accountability Office, the number of domestic food firms within the FDA's jurisdiction increased to about 65,500 from 51,000 while the number of them inspected declined. The FDA plans to spend about $90 million during fiscal years 2008 and 2009 but, according to FDA estimates, inspecting every firm would cost about $524 million.

Fixing the oversight process for food and drugs, by comparison to other crises, would be a relatively straightforward process and would yield rapid, tangible results. No matter who becomes our next president, it should be a top priority for the upcoming congressional session.

Break Up the FDA

By breaking up the FDA and consolidating responsibility for food into one agency and drug safety into another, we would increase accountability, reduce costly duplication, speed response to threats and improve the quality of oversight to protect ourselves and our children. Such a move would make economic sense as well, reassuring consumers throughout the world that food and drug products produced and consumed in the United States are safe and effective.

Millions of lives depend on it for their personal safety and just as importantly; it could be a step toward a restoration of faith in our government.

Steve Brozak is president of WBB Securities, an independent broker-dealer and investment bank specializing in biotechnology, medical devices and pharmaceutical research. Larry Jindra is director of research for WBB Securities.