Similarly in devices we will be focusing on the increased reporting of medical device complications and we feel that this will go up approximately tenfold under the reporting regulation. SODIUM LABELING We have also focused on voluntary labeling in sodium and I am pleased to inform you that there has been a substantial improvement in the last year. We now have 46 of the total 51 processed food groups that are labeling sodium. This is up from 40 the year before, and approximately 39 percent of the grocery sales do contain some information on sodium. This is up nearly 10 percent from before. ACTION PLAN In addition to these activities I would like to mention another for your consideration. In coming into the office of Commissioner, the Secretary asked me to lead the planning process to prepare the agency for the 21st century and to build the scientific base within FDA to use science in decision making. The following major activities will be coming forth when the action plan is brought out within the next few weeks. First, again, focusing on human medicine we will be extending our effort on the drug approval process. We too agree that the process is onerous, slow and has denied the American people some drugs and this is therefore the highest priority in the action plan. The first of the ten points is the new drug approval process. I have only mentioned one aspect of this the NDA rewrite. We also will complete our rewrite of the investigational new drug regulations to be sure that we have innovation, as well as substantial management changes. The leadership at the top level of the Center for Drugs and Biologics has not changed. Dr. Hank Meyer is still the Director of the Center and Dr. Robert Temple, the Director of Drug Research and Review. We will similarly focus on devices. We feel that medical devices pose some of the greatest problems that face the agency, and our task forces are dealing with the criticism that has been brought to our attention, and we will look at the implementation of these task force responses. The third priority, as I mentioned, is in adverse reactions. We will also focus on risk assessment which is critical, whether it be in subtherapeutic antibiotics or in some of the issues such as pesticides and food, and we will focus on risk management as well. New technologies will be developed in biotechnology and especially in microelectronics. Recognizing the new technologies that are coming forward, we will focus on microelectronics to deal with devices. We will also focus on food safety, human nutrition, health fraud and some of the management issues within FDA. That covers most of the points that I have prepared in my action plan. DELANEY CLAUSE Mr. WHITTEN. Doctor, thank you very much. My earlier questions come from this fact. This is the appropriations subcommittee on agriculture and related agencies. When the Committee on Appropriations reorganized some years ago we deliberately kept the Food and Drug Administration. We are all members of several other subcommittees and as Chairman I am a member of all subcommittees. So I thought perhaps you might think that our only interest would be in agricultural phases. We are interested in agriculture, but a number of other things concern us. I think the Food and Drug Administration by and large has done a great job. I think maybe the Congress hasn't done as good a job because we still have the Delaney Clause which calls for zero. I recently had a visit from Mr. Gardner who is known as zero down there. He's the one who put his head down and described to us that he had changed the definition of zero. I asked him some questions in a serious tone and so forth until he realized what he had said. What he meant, of course, was that FDA had wasted certain requirements because zero is still zero. But it is bad when you get to where everybody is operating by sufferance, since you can find parts per trillion. I said in a book one time that I thought maybe you could find the carbon from the Chicago fire or the reverberations from the San Francisco earthquake. It does leave us here with the question of how far to go and what the rules are. But as long as you have a requirement for zero tolerance and there is no such thing as zero, it leaves folks operating by reason of sufferance. You enforce this and don't enforce that. USER CHARGES Now, the other thing that bothers me is your desire to charge fees in spite of the attitude of the Committee. We face in this bill a proposal for competitive research rather than special research. The only difference I can find is that with special research, Congress knows what they are buying. In competitive research you leave it up to the fellow who got the bid, and it's been my experience for years and years that scientists like to just research for research sake. Are you just trying to get a fund where you can play around with it and not have to account to somebody? Dr. YOUNG. No. The basic reason for dealing with a user fee is that we are concerned that we do not have the funds available to meet the very capital needs that are critical for the well being of the agency. Mr. WHITTEN. Don't you think you should appeal to the budget bureau rather than to the people? You would expect the drug houses to pass that on to the user, wouldn't you? Dr. YOUNG. I would imagine that they would pass it on to the user. Mr. WHITTEN. Well, you have got a little more than imagination. You would be sure of it. Dr. YOUNG. I am confident they will. Mr. WHITTEN. Most people would like to have something they don't have to account for. I wonder if that's not in the back of your mind? Dr. YOUNG. No, it's not, sir. I am concerned, sir, definitely that we need to have facilities that enable us to continue to improve. We need to have the ability to bring information systems in and with the very great budget deficit problems that we had we felt that it might be worthwhile to bring this up again at this hearing. Mr. WHITTEN. By and large I think the agency has done a fine job through the years. It may be that we feel we have to keep you on track once in awhile. USER FEES Mr. WHITTEN. Was all "user fee" proposal work done on your employees' own time? Did you find a way to print the explanatory notes for user fees for free? Dr. YOUNG. Employees who worked on the user fee proposal did so on official time and the explanatory notes were prepared in the normal course of agency business. The agency did cease work on any user fee proposal that would be implemented during fiscal year 1985 in response to the Committee report on the 1985 appropriations bill. Mr. WHITTEN. What are your views about providing no appropriated funds for the Food and Drug Administration, but rather have it operate in entirely under user fees either in the 1986 budget or eventually? Dr. YOUNG. The Agency has certainly not proposed to be financed 100% by user charges, with no appropriated funds being made available to it. In the long term, I would personally like to see the development of a user fee program that would allow the Food and Drug Administration to assess user fees for an increasing number of activities, and that would allow funds from these user charges to be retained by the agency for use in enhancing the programs which generated the funds, without equivalent reductions in budget authority. I would regard this eventual development, however, as a supplementary source of funding for the agency, and not as a substitute for appropriated funds for the support of the basic operations of the Food and Drug Administration. Mr. WHITTEN. Where do you draw the line between public health benefit and profit-oriented benefit? Dr. YOUNG. I do not believe it is necessary to draw a line between public health benefit and profit-oriented benefit. Most government programs are designed to benefit the general public ultimately, and, where the Food and Drug Administration is involved, the public benefit is most commonly a public health benefit. But, actions the government takes often confer economic benefits on identifiable businesses as well, and where such benefits occur, there is statutory authority (31 U.S.C. S9701) to charge the business for the benefit that business receives regardless of the existence of a concurrent public benefit. Without question, the approval of a new drug application provides an economic benefit to the sponsor of that application. This occurs because, once that new drug application is approved, the sponsor has the right to sell that drug in the marketplace, and will usually make a substantial profit from it. It is the fact that these clear economic benefits accrue to the sponsor, an identifiable beneficiary of the services we perform, that makes it appropriate for us to charge the sponsor for the full cost of performing these services. Charging for the approval process is, however, perfectly consistent with the recognition, which we all share, that the requirement of premarket review of drugs is in the public's interest. CONTRACTING OUT (CIRCULAR A-76) Mr. WHITTEN. You are proposing to contract for services as required by OMB Circular A-76, but the funding associated with this reduction in staff years will be retained to support contracting costs, so why do it? Dr. YOUNG. Basically, the purpose of OMB Circular A-76 is to provide support services for government activities in the most economical way possible, whether that be by contract or by Federal employees. The Circular contains a very complex process by which we determine our precise work requirements for such services, review the efficiency of current operations, and then proceed to detailed cost comparisons between the cost of in-house operation versus bids received from contractors for such services. We are in the process of conducting a number of such reviews for functions thast could reasonably be contracted out, but we have not yet finished any of these studies. Consequently, we do not know until the final comparison of in-house costs against contractor bids whether we will actually contract for any services now conducted in-house. However, we did think it was reasonable to show some staffyear savings in the budget request, on the grounds that probably some of the support services now conducted by our own employees will eventually be aquired by contract. The reason we did not present dollar savings in the budget request is that we do not know how many functions, and which ones, will be contracted. Further, we do not know how large any savings to FDA might be if in fact contractors can provide services more cheaply than we can ourselves. I would note that the Circular A-76 guidelines include not only consideration of current direct operating costs, but also the cost of capital equipment and facilities and the total costs of employee benefits such as retirement. Thus, it is quite possible that contracting for a particular activity could be more economical in the long run, but not result in any immediate savings for FDA—that is, is conceivable that a contractor's bid will be very close to our direct current costs, but that contracting will reduce Federal expenditures in the long run because it does not create Federal employee entitlements to future retirement benefits. Mr. WHITTEN. Please provide for the record your submission to OMB which generated this contracting proposal. What appeals did you make to their decision? Dr. YOUNG. I would like to note that the development of our review process under Circular A-76 has in a way paralleled the budget process in the past year, although our staffyear estimates have changed as the inventory of activities to be reviewed has been refined. In the Spring of 1984, OMB issued new guidelines on im plementing the Circular. As a result, we conducted an extensive series of meetings with staff from all parts of FDA, to be sure that we were consistently carrying out those guidelines. Based on this process, our budget request to OMB included a target of 95 staffyears that might be saved by contracting. However, in early Fall OMB issued new guidelines limiting consideration to fourteen categories of support services commonly used by the government, such as certain types of ADP services, building maintenance, and the like. Based on these new guidelines, we had to review our inventory of affected activities again, and this resulted in the estimate of 56 staffyears in the budget request which is before the Committee. I would be happy to provide for the record the page from our request to OMB which referenced these Circular A-76 reviews. [The information follows:] Funding at the current services level will provide for cost increases necessary to sustain FDA's current level of program operations. In addition, FDA will also reduce its total FTEs from the current operating level by contracting for the equivalent of an estimated 95 FTEs, in concert with the principles of OMB circular A-76. Dollars associated with these FTEs will be retained to fund contracting costs. While the majority of FDA's activities are inherently governmental functions not subject to contracting out under A-76, there are some support functions which can be reviewed to determine whether they could be economically carried out by contract. Although the precise positions to be reviewed have not been established, FDA will strive for a reduction of 95 FTEs in 1986. With regard to the overall effort to carry out commercial-type activities by contract when that is both justifiable and economical, it should be noted that FDA already contracts for the equivalent of about 700 FTEs for functions covered by Circular A-76—that is, although most of what FDA does is of a direct regulatory nature and cannot be contracted, the Agency has for many years used contracts to provide a significant portion of the overall staffing necessary for the Agency to meet its mission. This request also reflects a reduction of 6 FTEs ($180,000) due to streamling of personnel support operations. The mandatory cost increases included in this request are only those clearly necessary to meet direct payroll and other operating costs. FDA presently expects to be able to occupy Module #1 of its new laboratory facilities at Beltsville on June 1, 1986. Consequently, estimates are included in mandatory operating costs for four months of operation of the building, including utility costs and support contracts necessary to manage and maintain the facility. The Agency is not requesting additional staffyears for this purpose, but will provide necessary building and laboratory support by contract. This request included certain one-time costs of occupying the facility, such as moving equipment and supplies from FB-8, employee entitlements to relocation allowances, and the minimum level of equipment needed to properly operate the new laboratories. Since this facility is intended only to replace existing lab and animal support space at FB-8, there will be related savings in GSA rental charges from vacating space in FB-8. However, there will be a necessary delay while FDA makes necessary renovations and consolidates the activities remaining in FB-8 before the space can be returned to GSA for use by another occupant. Therefore, these savings will not begin until some time in FY 1987. User charges were proposed in the Agency's 1985 budget, but Congress directed FDA not to implement such charges in FY 1985. However, we are reproposing such fees in the 1986 budget. This request, therefore, includes projected collections of $5 million in user charges annually, primarily from fees paid by the industy for human drug product applications. STAFFING REDUCTIONS Mr. WHITTEN. Please provide for the record a detailed explanation of the savings you expect to achieve as a result of reducing 18 staff years for foods, 19 staff years for human drugs and biologies, 3 staff years for animal drugs and feeds, 10 staff years for devices and radiological products, 2 staff years for NCTR, and 4 staff years |