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VI

“A detailed and candid analysis of the real importance of ultimately merging FDA into the proposed Department of Human Resources ..

DHR is building for the future, and trying to cure some of the problems of structure and fragmentation of responsibility from which HEW suffers. One of its principal objectives is to create a Health Administration which would serve as the framework for all significant health related programs in HEW and elsewhere in the domestic agencies. The loss of FDA would be a blow these aspirations in three ways:

(a) It would inevitably be interpreted as a rebuff to the President's DHR proposal;

(b) It would weaken the rationale behind an integrated upgraded Health Administration;

(c) It would, as a practical matter, have a weaker health organization, with less clout, and create some of the very fragmentation DHR intends to

cure. These arguments are not just organizational concerns. They reflect the reality that consumer health and safety concerns can best be met by making them part of our total health/safety strategy. FDA should not be narrowly viewed as only a regulatory function. It is more appropriately seen as having an enforcement capability whose presence in HEW adds an important dimension to the Department's ability to influence the whole field of health research, health care delivery, and the economics of health service.

We must build up the full range of health capability in HEW, and strengthen the ties between health-oriented programs and the other programs of HEW. This reasoning applies whether we are thinking in terms of HEW or of DHR, but DHR represents a fuller and more complete articulation of this strategy.

The loss of FDA would therefore be damaging for important substantive reasons. It would however, also probably have serious political repercussions, if its loss were interpreted as a refutation of the concepts behind DHR, or a slackening of the President's intense concern for the DHR legislation. There is a substantial pressure in the Congress for the dismemberment of HEW generally, and acceptance of the loss of FDA might be misconstrued as an opportunity to press for other forms of "independence."

VII

In the event that the Government Operations Committee determines that the FDA transfer into an independent Consumer Safety Agency is a viable approach, what additional related authorities or functions (if any) should also be logically transferred from HEW? from other departments and agencies?

S. 3419 would also transfer functions which have until now been assigned to the Division of Biologics Standards of the National Institutes of Health for regulating biologics to the new agency. We have, under Question 4, described a number of existing or potential interrelationships among the parts of the Public Health Service. We are in the process of transferring the regulatory responsibilities of the DBS to the FDA and these responsibilities would remain with FDA if an independent agency was formed. We believe it would do serious damage to the interrelationships among the health programs if any of these programs are transferred out of the Department.

There have been proposals to transfer to the Department of Human Resources the following activities from the Department of Agriculture : meat inspection, poultry inspection, nutrition research and surveillance, and egg inspection. Another related USDA activity is the Animal Virus, Serum and Toxin Act. These functions also relate to an independent Consumer Safety Agency if one is established.

EXHIBIT 11

LEAD CHRISTMAS TINSEL (ICICLES) To insure the expeditious removal of lead tinsel from the market, FDA's Bureau of Product Safety met with all of the lead tinsel manufacturers, lead foil suppliers, and a lead industry representative on August 12, 1971.

The manufacturers agreed to stop manufacturing lead tinsel on or before Christmas 1971 and to stop sale of lead tinsel on or before January 1, 1973. FDA will seek to prohibit import shipments of lead tinsel after January 1, 1972.

The industry has been advised that FDA will seek to have all further interstate shipments of lead tinsel discontinued after Christmas 1972. Represented in the agreement are:

Union Wadding Company, Pawtucket, Rhode Island
George Frank and Sons, Baltimore, Maryland
Brite Star Manufacturing Company, Philadelphia, Pennsylvania
National Tinsel Company, Manitowac, Wisconsin
Paper Novelty Manufacturing Company, Stamford, Connecticut
Rerere Copper and Brass, Brooklyn, New York
Lead Industries Association, New York, New York

Mystic Industries Corporation, Wakefield, Massachusetts
There was no written document prepared.

EXHIBIT 12

U.S. SENATE,
COMMITTEE ON LABOR ANI PUBLIC WELFARE,

Washington, D.C., May 3, 1972.
Hon. ELLIOT L. RICHARDSON,
Secretary, Department of Health, Education, and Welfare,
IT ashington, D.C.

DEAR MR. SECRETARY: I have carefully reviewed your testimony before the Labor and Public Welfare Committee and the Government Operations Committee regarding the "Consumer Safety Act of 1972" (S. 3419). Unfortunately, I had to leave the hearings because of other Senate business and could not personally explore with you your views on certain matters pertaining to the legislation. There are certain areas which were not fully developed at the hearings, and I believe additional clarification is needed. Attached is a list of questions which I have prepared.

Your answers to these questions would be most helpful in the Committees' consideration of the pending legislation, and your responses will be made a part of the hearing record of both Committees.

I would appreciate your response as soon as possible.
With warm personal regards,
Sincerely,

JACOB K. JAVITS.

QUESTIONS SUBMITTED BY SENATOR JACOB K. JAVITS TO SECRETARY RICHARDSON IN

CONJUNCTION WITH HEARINGS BEFORE THE GOVERNMENT OPERATIONS COMMITTEE AND THE LABOR AND PUBLIC WELFARE COMMITTEE ON S. 3419, “THE CONSUMER SAFETY ACT OF 1972***

1. The possibility of an alternative legislative measure has been discussed. It would elevate the responsibility for Consumer Safety within the Department of HEW and insure to its administrator final authority to establish standards, promulgate regulations, determine when and whom to prosecute, and to enforce agency rules and orders. You voiced “no ohjection" to the basic thrust of this type of proposal at the hearings before the Government Operations Committee. Can you detail further for us how you would structure such a proposal?

2. The Administration argues that the FDA should be retained in HEW to allow for coordination with the other health components of the Department. Please describe specifically how these components have interacted with FDA in the past, with supporting data if available. Also, how would you anticipate such interaction to prevail in the future if FDA were to remain in HEW? And, could such interaction still result if FDA were transferred to an independent agency?

3. Whaterer structure is finally approved, it should have authority to institute, defend and appeal court actions in certain instances to enforce the laws subject to its jurisdiction without going through the Justice Department. I believe you indicated it would be desirable. Could you tell me how you think this should work?

4. Section 112 (S. 3419) provides for an annual report to Congress and the President, with budget data, without review by OMB. Would you support this authority for a reorganized FDA within HEW?

TESTIMONY OF FRANK C. CARLUCCI, ASSOCIATE DIRECTOR, OFFICE

OF MANAGEMENT AND BUDGET, ACCOMPANIED BY CHARLES F. BINGMAN

Mr. Carlucci. Thank you, Mr. Chairman. It is a pleasure to appear before this committee.

The Congress and the administration have reached a general understanding of the need for regulation on product safety standards.

What is at issue is the question of where the organizational responsibility should be for the administration of this new authority along with the equally important issue of where FDA and DBS should be located.

Secretary Richardson has dealt with the reasons why these activities belong to HEW. I would like to add the views of this administration on the broad concerns for governmental organization which are at issue here.

I know that the Senate Government Operations Committee is fully aware of the significance of the President's departmental reorganization program, since the bills which would create these four new purpose-oriented departments are now actively under consideration by this committee.

S. 1432

One of these proposals calls for the creation of a Department of Human Resources which will bring together all programs directed at the well-being of individuals and families. Within DHR would be created the Health Administration which would bring together not only the present health-oriented activities of HEW but activities now in other departments such as meat and poultry inspection, and flammable fabrics concerns. Thus, for the first time, we will create a complete health program capability under single leadership, capable of pursuing an integrated strategy for meeting the health problems of our citizens.

S. 3 419

S. 3419 asks us to accept that status, as an “independent agency” is necessary for the administration of product safety functions, and that such independence will guarantee more effective pursuit of these functions than the same authorities carried out within the framework of HEW. There is, however, no compelling evidence to support this view. The history of Federal regulatory agencies contains many examples where such“independence” has not produced greater visability, public interest, or freedom from pressure.

It is more realistic to recognize that regulatory and compliance functions can be made to work well within executive branch agencies when properly organized and supported.

LEADERSHIP AND SUPPORT

The crucial needs are quality of leadership, the degree of executive and congressional backing and support, and the commitment of appropriate resources to the task. These crucial needs are being met for FDA. The fiscal year 1973 budget for FDA, including funds budgeted

interaction to prevail in the future if FDA were to remain in HEW? And, could such interaction still result if FDA were transferred to an independent agency?

The following are specific examples of programs which have involved a coordinated effort between FDA and other HEW agencies : Methadone and drug abuse

Control of the use of methadone as an alternative to heroin addiction and other problems pertaining to drug abuse require continuing cooperation between the National Institute of Mental Health (NIMH) and the FDA. The immediate need has been to make certain that established methadone treatment methods and adequate controls are being scrupulously observed in the centers approved for investigational use of the drug. At the direction of the Assistant Secretary for Health and Scientific Affairs, NIMH and FDA personnel are being assigned to the task of inspecting centers using methadone to ensure that deficiencies are corrected. FDA and NIMH also work closely together to provide the necessary technical advice to the Bureau of Narcotics and Dangerous Drugs regarding the abuse potential of drugs proposed for control under the Controlled Substances Act. Blood banks

The challenge of ensuring safe operation of blood banks is a joint effort involving an interrelationship between a regulatory agency, the Division of Biologics Standards in NIH (which is to be transferred to the FDA, effective July 1, 1972), and other health components of the Department—the National Heart and Lung Institute of NIH and the Health Services and Mental Health Administration. The President has directed the Department to make an intensive study of the existing system and to recommend a plan for developing a safe, fast and efficient nationwide blood collection and distribution system. Because of its related authority in approving drugs and containers used in the storage of blood, the Food and Drug Administration is actively participating in this study. Regulation of laboratory and diagnostic products

This is an area of concern to all three major health agencies, FDA, NIH, and HSMHA. FDA's responsibilities to ensure the safety and efficacy of these products relate closely to the activities of the Center for Disease Control in laboratory methods and its responsibility for licensing clinical laboratories. These efforts are also related to the responsibilities of the Division of Biologics Standards for regulation of allergenic products and derivatives. Recently, an interagency operating plan was developed to spell out the initial responsibilities of these health agencies in this area. Each agency will contribute to the task of ensuring that the regulation of diagnostic kits, reagents, and instrument is effectively carried out. Food poisoning and injury data

The epidemiological investigative capability of the Center for Disease Control (CDC) in the Health Services and Mental Health Administration is an important means of alerting FDA to cases of food poisoning. FDA also uses the mortality and injury data collected by the National Center for Health Services in HSMHA, particularly in the area of product safety. Medical devices

Innovation, research, and protection of the public against inadequately tested and controlled medical devices are shared concerns of all health agencies (as for example, in the development of an artificial heart). The Department's proposed medical device legislation is cognizant of both public interest aims and contemplates coordination among the health research, regulatory, and services elements of the Department.

We foresee the further strengthening of relationships between the health regulatory functions and other health functions in the Department in large part as a consequence of growth in specific health-related scientific and technical programs. The unified direction of a cabinet office provides the greatest opportunity to expand and improve the coordination of health programs.

This coordination would be exceedingly more difficult if the agencies involved were not subject to unified direction of one Department. Where related programs are fragment

Apartments, there is a greater likelihood that problems approach

ated and differences would be left unresolved, and that is

erest would not be shared.

objectives for which the funds are requests, ask ourselves whether these are the necessary and proper objectives, whether the agency proposal is the most effective and economical way to meet those objectives and whether duplication and overlapping within the agency or with other agencies is being avoided.

Omission of such a review by the Chief Executive promotes a degree of waste and fiscal unmanageability. It also invites other agencies, activitis, and interests to slip the leash and substitute promotion for effective management.

The Office of Management and Budget can well understand the attraction for any given agency to be relieved from the review by the Chief Executive. But the President is expected to present to the Congress a responsible Government-wide program and budget which weighs all of the needs of the American people.

The Office of Management and Budget, in accordance with the provisions of the Budget and Accounting Act and the Antideficiency Act, is the President's staff arm in his performance of this task.

Avoiding waste, overlap, and duplication, asking hard questions of those who want to spend the taxpayer's money, saying "No" to inflated budgets, and making hard priority choices is neither easy nor popular, but the work of the Congress and the needs of the country would suffer if this discipline were not exercised.

Section 112 would have the effect of exacerbating controversy within the agency and with the President by fixing on how much the President's budget differed from internal agency submissions. We certainly continue to favor full disclosure to the Congress, but in a manner which allows the executive branch to meet its own responsibilities.

Much the same case pertains with respect to legislative recommendations. Proposed legislation is an important way for the President to exert his leadership in addressing national problems. The Office of Management and Budget serves the important functions of assisting in the development of the legislative authority he needs to meet his executive responsibilities. Furthermore, the Office of Management and Budget is the central organization which brings together the views of all Federal agencies in response to the requests of the Congress itself, and assists the President in presenting orderly and well-considered views on the great mass of legislation introduced in the Congress each year.

SECTION 112 OF S. 3419

Section 112 of the bill attempts in a detailed manner to prescribe how the President should operate. Accordingly, we view the language of section 112 as undermining the President's role as the head of the executive branch.

The Senate Government Operations Committee has the opportunity to weigh the broader long-term interests of reform and restructuring of the Federal Government in its consideration of S. 3419. I believe both the substantive interests of consumer health and safety and the effective organization of these responsibilities are best served by rejection of the proposed independent Consumer Safety Agency.

I am prepared to answer any questions you may have, Mr. Chairman. Senator Percy. Thank you very much, indeed, Mr. Carlucci.

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