of the time. our report examines a number of other case studies including where manufacturers falsified or concealed records. we note the risks of patients receiving counterfeit or stolen products that penetrate our distribution system. let me reiterate the diethylene glycol poisoning. the substance moved from a broker in china to another broker in china, to a broker in europe. each time the label was replaced and the history of the product destroyed. indeed it was poisoning with this exact same substance that led the congress to pass the act in 1938. we must make sure the fdca reflects today's reality. the necessary steps are practical, feasible and crucial.

many have been included in previous bipartisan legislation before this committee. i mentioned inspections and the need that manufacturer's better assess their suppliers and are accountable for doing so. we also need to ensure that testing standards are updated. and that the fda has the tools it needs. for example, many people are surprised to learn that the fda can't order the recall of a drug product if it's aduller ated. they can do it for medical devices and food, they should have that authority for drugs. if they have it, it's less likely they'll need to use it. a regulatory scheme will reward the good players and assure the bad actors don't create a race to the bottom. let me say that american supports these changes. pew commissioned a poll last year that found voters are concerned with drugs from developing countries and across the political spectrum they overwhelmingly favor the provisions i outlined. as congress did 70 years ago, we

urge you to act to ensure safety. we shouldn't wait for another tragedy. thank you. >> thank you very much mr. coukell. we'll begin a round of five minute questions. dr. crosse. in the past you reported that fda data bases contained incorrect information about foreign drug establishments. what's the reason for this? and is this still the case that they contain incorrect information? >> it is still the case. there are several reasons. you heard paper based registration system that previously existed. now fda has gone to an electronic system which has reduced certain errors of data entry, they still don't have in place a requirement for any sort of unique identifier for a facility. they asked companies now with this electronic registration that they submit a unique

identifier, dunn & brad street number they can enter into the system. they cannot require companies to submit that. while many are complying, perhaps some of the ones you most want to have information about may not be complying with that. nevertheless you continue to have other systems that are populating fda databases with incorrect information. when shipments arrive at the border, the customs and border protection has a data system that does not use a unique identifier, and that sends incorrect information to fda. >> this is a question for all of you. could -- should we have a requirement that any finished drug, any ingredient that is manufactured in a foreign country that comes to this country have attached to it at all levels -- we know that very seldomly they don't go from a small plant like that to a

pharmacy in the united states. they go through a number of broke hes, in spain and canada and other places like that. should we require that every one of those three have a bar code attached to it so that it can be immediately traceable back to its origin. back to the very plant where it started? is that possible to do, and should we do it? >> i'm not sure about the feasibility of that. i think until you get data systems aligned between customs and border protection, and fda, you may still have problems with inaccurate information showing up from one agency to another. >> i'm just asking if that one plant has to put on, no mat he what it is, they have to put on a bar code and that has to follow all the way through to the final purchaser? is that possible? >> i can't speak to the feasibility of that. my sense is, it would be a significant cost and complexity

added to the distribution system that may be challenging for folks to comply with. i think we do have a strong -- very strong system today and we should look for opportunities to make that stronger. i worry about the cost and complexity of the system with so many independent actors in the supply chain. >> okay, i'm just asking for a simple bar code at every step of the way. is that possible? >> well, gpha's members have looked at bar codes for track and trace purposes in the united states. >> exactly. >> and it's -- doing it domestically, we've seen the feasibility as being probable because you can utilize integrated technologies and we can have manufacturer's, pharmacists, wholesalers on the same page. some of the challenges are, when you get into international regions, finding this harmonization so that the same bar code, same readers, same technologies all apply.

when it comes to the international scope, there's issues that would have to be looked at to make sure that the viability of a bar code applied in china would be read all the way through the system and that data would be available to the end users. so there's challenges there. >> mr. vantrieste. >> i think it is definitely possible. how long would it take to be implemented. i think you can get the end result you need by requiring everybody in that supply chain to tell the final person who's going to use that raw material, the pharmaceutical manufacturer, who that original manufacturer was, and then the pharmaceutical manufacturer can provide the oversight of the supply chain once they know it. if we don't know, we know we have a problem. i think just requiring that transparency and disclosure will get to where you want to go much

faster. >> i agree, i think the underlying principle here is manufactur manufacturer's need to know the complete supply chain. and the fda has to be able to get access to the data if they need it. and we need a way for everybody to be on the same pageant. whether it's a bar code or some other means i think matters less. >> thank you all very much. >> your testimony suggests that poorly supply chain reforms could exacerbate drug shortage problems. could you elaborate a little bit? >> as we talked earlier about if we increase regulation, certain players who are in the business today may decide to get out of the business. they may be the only supplier of a key ingredient for a critical medicine to treat patients. any legislation that we do, i think we have to give the

secretary some latitude to prevent those suppliers from giving them enforcement discretion on where to apply the regulations. we don't want to see people exit the market. >> thank you, dr. crosse, what's wrong with the fda's drug supply chain information systems and what does the fda need to do to fix them? >> well, there are several problems. they had a long history of poor information technology systems and they're in a process now of trying to upgrade those systems across the board, across the entire agency. that's taking several years, and it's encountered many difficulties in trying to integrate what had been a number of different freestanding systems that were compatible. i mentioned just a moment ago one of the problems is that some of the key information they get comes from another agency, from customs and border protection which is not providing accurate information in many instances, because of the way certain

identifiers are generated in that system. fda has been taking some steps to try to verify information that they have, they've actually hired contractors to go now and look at certain suspect facilities to see if they're actually located where they've told the fda that they are. and they've found a number of facilities that are are not at the locations they've reported. it's taking fda a very long time to try to go through and make up time on these systems. and they still don't all talk to one another. >> thank you. dr. martello. can you give us an overview of your member company's quality control systems? do they customarily audit or inspect their suppliers? >> thank you for that question. the quality systems approach is really embodied in the current good manufacturing practice regulations. and our companies take great steps to comply with those. the gnp's regulations require that each facility have in place

a quality control unit that's responsible for all aspects of the manufacture of a drug product for all controllable incoming ingredients. and periodic testing throughout the process. taken with the new drug approval requirements in our closed distribution system help provide assurances that the medicines that patients take are safe and have the identity and the quality that they are reported to represent. >> thank you. mr. coukell. pew supports mandatory recall authority for drugs. how many times has a drug manufacturer refused fda's request to conduct a voluntary recall? >> thank you for the question, senator. i can give you an example in 2008 when the fda had to go to court to get some contaminated heparin off the market. i think the bigger concern is not the refusal, but if public health is at risk, the time it would take if the fda does have to go to court, it's the kind of authority that if they have it,

i think it will bring everyone to a consensus much more quickly about whether a voluntary recall is necessary. >> if a manufacturer refuse to conduct a voluntary recall, how does making it mandatory help? >> presumably there would be some sanction involved for refusing to do a mandatory recall. >> mr. johnson, the law requires fda to inspect domestic drug establishments every two years. the law is silent about how fda must inspect foreign establishments. can you elaborate on the need to level the playing field? >> thank you, senator enzi. yeah, currently there's two components to i think to answering that question. the first being the parity that foreign establishments should be inspected at the same level intensity and frequency as domestic facilities. there's a substantial cost for

inspections to drug companies. and i might use the example of companies setting in philadelphia or new jersey, may have fda visiting each month or the other month. and it takes resources, time, personnel to accommodate these inspections. the contrast is foreign inspections when companies, facilities are visited on a three, four, five-year basis. there's additional costs to the american industry and, more importantly, to the public health by having equivalence in terms of inspections, the fda has the opportunity to evaluate these foreign facilities, determine if there are any gmp or quality problems, supply chain issues and have those addressed in a timely basis. so bringing comperterability and inspection requirements, we believe, is very important component of supply chain security. >> thank you. my timez pexpired.

i'll have questions i'll subnight thank you, enzi. and senator frankin. >> thank you. i'll try to be fast because i know senator bennet has to get out of here and i have to presnide a few minutes. dr. martello, as we heard from mr. johnston, the generic companies are working with fda do their fair share and provide the fda with additional resources to increase foreign inspection capacity. while i realize that the brand companies don't occupy as much as the market as the generics do, would your member companies be willing to contribute to securing the supply chain through increased user fees? >> thanks very much for that question. i think it's important to recognize that since 1992 the peduva user frees, prescription drug user fees that we're looking to reauthorize next year have supported preapproval inspections since their inception in 1992, and as the gao has reported the majority of

facility inspections that are conducted are both preapproval and gmp's inspections combined so our industry is really committed to this issue and has supported inspections in the form of the user fees as a portion of that since 1992. we also think, and we recognize, that frankly, there is -- there will never be enough resources for the agency to get to all of the places that they need to get and so that's why we believe that using a risk-based approach for fda to target facilities for inspection and really focus on the areas of highest risk will help do a great deal. you could couple that with reliance on third parents, again whether it be a credited third parents. with competent regulatory systems using those things together, we can expand the reach of the fda and help them do their job by focusing on the areas of highest risk and really increasing the number of facilities that the fda is visiting on a routine basis.

>> okay i guess i didn't totally understand your answer. mr. johnston, does generics put more resources into the supply chain, helping the fda through the supply chain. >> thank you. the user fee proposal that the fda is considering and i think that we've reached agreement on, doesn't specify how much resources, how many of the resources go into inspections. however, are there performance goals that will certainly drive the utilization of the resources towards inspections. and as we heard 80% of the incoming materials are foreign and foreign% of the products, fda will dedicate probably 40% or 50% of the user fee resources from the generic industry towards inspections and support for those inspections.

>> and i guess, dr. martello, i was asking, are you willing to put in more toward that end? >> the pedufa user fees have gon support preapproval inspections since 1992. the pedufa 5. >> preapproval inspections? >> preapproval, when a company files a new drug approval application the fda has the discretion of filling -- >> okay we're not talking about preapproval. i'm talking about the supply chain, the foreign supply chain. >> and many times as the gao has found a preapproval inspection is coup weld a good manufacturing practice inspection. n are getting those inspections on a regular basis and they are supported through the user fees and in the prescription drug fee provisions. >> okay what phrma would be willing to put more in to do that? to do the foreign supply chain? i think that's what i've been asking you and i don't quite feel like i'm getting a real answer.

i feel like i'm getting a circular kind of answer. >> across the board the prescription drug user fee act in the agreement that was just released increases resources for fda to conduct the necessary reviews of new drug approval applications -- >> well, that's drug approval. >> -- with that, a portion of that is targeted for inspections. >> what about existing drugs. >> our companies do our fair share to try to -- >> would do you more? >> i think we'd be happy to engage in conversations around that. we think giving the fda the opportunity to use risk to drive the intervals at which they inspection facilities will help expand their reach and help them maximize and use their resources efficiently because we know that resources are not unlimited. >> okay, thank you. thank you, mr. chairman. >> thank you franken. senator bennet. >> thank you, mr. chairman, and again -- excuse me, i really want to thank you for holding this hearing. this is an issue that i've been working on ever since i got here. and now i know why. the testimony i think has been

excellent today and i'm familiar with the work that everybody here has done. and i find remarkable the degree of consensus around a lot of the issues that we face and i think that reflects how big the gap is between a statute that was written in 1938 and the world as we're living in it today, the changes that are accelerating because of the shrinking global economy that we face, and this lack of -- an update -- or our lack of a regulatory regime that reflects reality is bad for our consumers and it's bad for our business, and i think that's why we need to be urgent in fixing it. and it's been remarkable to read some of the polling data around. there's some in the mandatory recall suggestion -- first of all the f all. 90% of the american people

support it and they believe that when they walk into their grocery store, their pharmacy, you know their drug has been likely produced in the united states. that's not true. and they believe that somebody has looked at it to make sure that it's safe. that's not true either. in fact what we've learned from the testimony today is that even if we discover that there's a problem, it's hard to track it down to the source in china. so there's a lot of work do here and whatever i can do to help you with it i'd want to do. i want to ask mr. coukell first and then let anybody else on the panel answer it. i just have one question. pew's done some great work on this, after the heparin report that you talked about. i think that it was very important and in that report it made the observation, the compliance within internal quality systems and regulations can represent up to 25% of a finished drug manufacturer's operating cost. and at the same time as we heard from miss crosse at the gao, it

would take fda nine years to inspect the foreign facilities. so you begin to added that stuff together and ask yourself about an american manufacturer here who is following good manufacturering practices. expect a surprised inspection from the fda every two years. versus a foreign firm that will never be inspected. it doesn't have to follow any of these practices. and on top of everything else, when they are inspected as we heard in the testimony on the first pam, they're given warning. that the inspectors are coming. mr. coukell, what do you think the three most important things that we can do to level this playing field and make sure that we're protecting, both the safety of our citizens, which is the most important thing, and also the playing field for

american business which is a vitally important part of our economy. >> senator, thank you for the question and for your continued commitment to this issue in this area. i think you make a very important point. so the good actors whether they be in the u.s. or outside of the u.s. are spending time and resources to make sure that they're manufacturing a sterile other consistent and predictable high-quality. and so if you have somebody out there who's tempted to cut corners and not do things to a high standard and there's no chance that anyone's going to show up and hold them to the high standard, then they can do that and so that does create an uneven playing field. and so we absolutely need a system where we take the existing inspection of resources and deploy them in a way that the highest risk facilities, wherever they are, are getting

inspected and that we're taking steps to make sure that finite resources are a stretch, so that we aren't inspecting the same facilities that the europeans are inspecting twice in a year, where someone out there is not getting inspected where we're relying on additional sources of information and whether the manufacturers themselves are providing better documentation when they're taking all of the right steps. and again, if you're an importer and you have something coming in to the country it would cost you money if it sits there in the customs. meanwhile, the fda is dealing with, how do we screen all of the stuff that's coming in? so if we have a system where the fda can say, yeah, they've showns that you this is good, quality stuff let's get it in the country, meanwhile they can focus on the bad actors that benefits everybody. >> just one second left. does anybody feel compelled? >> yeah i think senator, the one other thing that you talk about leveling the playing field. when i'm inspected by a foreign entity, even the europeans, i

have to pay for that inspection. so why aren't ingredient manufacturers in foreign countries who get fda inspections require to pay for those inspections to help justify the resources needed to do that? >> thank you. thanks, mr. chairman. well, i just -- i would say, i'm surplus senator mikulski's left because in the spirit of what she said i couldn't agree with her more. and i think would it be surprising -- several of you talked about enforcement, too, which i would add to the list. i mean the idea that the penalty for counterfeiting drugs is lower than the penalty for counterfeiting a dvd, for example, mr. chairman, just doesn't make any sense to anybody that's living in colorado, and it shouldn't. and those are the kind of commonsense things that i think that we could fix if we get the chance to do it, so thank you if your leadership. >> and thank you also for your leadership, senator bennet.

thank you all for being here. close by saying that this committee is committed, i think on a bipartisan basis, to move ahead in this area. i don't know that we have crystallized exactly what it is that we want to do. we're seeking information from all of the players in the field out there. from companies, phrma, generics, fda, others to come up with the best formula that we want to put in the pedufa, the reauthorization next year. but again, i just -- simply need know to why it is that we can't have a system that doesn't cost a lot, i mean it costs something i understand that, but i think indication are that the consumers are willing to pay a little bit more for heightened security of the products they're

buying, in this case drugs, to ensure that inspections are held and that companies are held to the highest standards of good manufacturing practices that there's a transparency to the system. if mr. van trieste, if your research and stuff could find out where that heparin came from which you've done and yet i've heard from mr. coukell that no one's been held accountable so obviously there is a way of traceability. we need to know -- everyone along that line needs to be held accountable. everyone. and the only way that you can be held accountable is to know who you are at every step of the way. that's my question on the bar codes or some other similar situation like that that we can do that. interesting point i think was raised -- i forget who raised it -- about coordination with

other countries, europe and others, so that, number one, we can assure that that manufacturing facilities and supplier countries are inspected, but we want to ensure that they're inspected, but we don't want to be duplicative. we don't want you to know, one country inspects it and then another country and then another country. we want to make sure that we have some coordination with other countries in that process. and we also, while i support mandatory recall, that's sort of after the fact. that's fine to have that, but it seems to me that we want to get in front of that. so that if there's any indication at all that we can go right back to the source and correct that at the source as soon as possible and to have penalties it just boggles my mind that we have some data and

information that companies that have supplied dangerous products to this country, you know, they leave that building and they move across the street or they move to another community and they open up another facility and we have no traceability, whatsoever, as to who they are. and yet they can continue to sell their products. so traceability, the enforcement of good manufacturing practices, and more of a general agreement among countries on inspections and making sure that as you said mr. van trieste, if you're inspected you have to pay for it because you're shipping to other countries, european countries. well, it seems to me this, again, if they want to ship to this country, they should, number one, allow inspections and as you pointed out, i think

ms. autor pointed out, a lot of these times these are delayed. they are put off, put off, put off for year after year. the other thing is that i'm very much leaning towards this idea of more of a risk assessment. in other words, you know there are companies that have good manufacturing practices. they've been in business for some time, yet we, by law, say they have to be inspected every two years. maybe they don't need to be but maybe we need to use that personnel to go after the plants that haven't been to get actors or new plants that haven't been inspected at all. so these are all of the things that this committee is going to be looking at. we appreciate all of your testimonies and we'd appreciate any further input, advice, consultation that you have with us as we proceed on this. i'm committed to doing this. sometime -- well, sometime next year because we have to reauthorize pedufa and we didn't

get into medical device but pedufa and the medical device user fee act. and keep in mind, is there -- is there a fee? is there something that should be attached to a product, an ingredient, a finished product that -- that would go for only one purpose and that is to fda for inspections and an enforcement? if you have thoughts on that, please submit them to the committee. without further -- thanks, again, i appreciate you all being here. i thought it was a great hearing. and believe me, we'll be having more. so i request that the record be kept open for ten days it allow senators, submit questions and statements for the record. with that the committee will stand adjourned. thank you very much.

>> on sunday, representative henry waxman on the house energy and commerce committee talks about republican plans to roll back regulations on the environmental protection agency and other energy issues. that is at 10:00 a.m. and 6:00 p.m. eastern on c-span. >> debate will start at 4:30 on the trade preferences bill. they will take up a vote at 5:30. it is likely to become a vehicle to ratify a trade agreements. you can watch live coverage of the senate on monday starting at 2:00 p.m. on c-span2. on tuesday, the house returns for legislative business. members will address a number of suspension bills. later in the week, they are expected to continue debate on a resolution that would extend funding for short-term

government programs to november 18. both on the measure are possible on wednesday. -- votes on the measures are possible on wednesday. >> on sunday, speeches by texas gov. rick perry and michele bachmann. >> i was not one of those people who knew at the age of 12 that he wanted to be a doctor, a lawyer, a governor, or a president. i spent many a night pondering my purpose, talking to god, wondering what to do with this one life among the billions on the planet. what i learned as i wrestled with god is that i did not have to have all of the answers. they would be revealed to me in

due time. >> as nominee, i will not rest until i can elect 13 more light- ined senatorsum-spline who will go with me to repeal obamacare. i will go across the country. i will raise money for them. i will do whatever it takes to make sure they are elected because we must pass the filibuster-proof senate. that is the number we need, 13 more senators come to get up to the 60 senator mark. >> watched both of those speeches tomorrow night on c- span. on monday, president obama will outline paying for his jobs program without adding to the deficit. he discusses some of the measures and urges congress to pass it.

the republican address talks about how federal regulations are hampering job creation. >> i have spent some time lately traveling the country and talking with folks outside of washington. the number one issue for the people i meet is how to get back to a place where we are creating good, middle-class jobs that pay well and offer security. that is the idea behind the american jobs act. it is a jobs bill that does two simple things. it puts more people back to work and more money in the pockets of people who are working. this puts construction workers back to work for building roads and bridges and modernizing our schools. it puts teachers back in the classrooms. it keeps cops and firefighters on our streets. it gives tax credits to companies that hire veterans. if you sign up to fight for our country, the last thing you should have to do is fight for a job when you come home. the jobs bill connects the long- term unemployed to temporary work to keep their skills sharp while they look for a job.

it gives hundreds of thousands of young people the hope of a job next summer. this jobs bill cuts taxes for every small-business owner in america. because them even more for small business owners that hire new workers and raise workers' salaries. it cuts taxes for every working family in america so you will have more money in your pockets. businesses know they will have more customers to buy what they sell. that is the american jobs act. you can check it out yourself on whitehouse.gov. it will create jobs and not add to the deficit. it will be paid for. on monday, i will lay out a plan on how to do that. we will follow basic principles. we will make sure we live within our means. we will ask everyone to pay their fair share. right now, we've got to get congress to pass a jobs bill. everything in the act is the kind of thing that has been

supported by democrats and republicans before. if they are ideas that you agree with, then everyone of you can help to make it happen by telling your congressperson to pass this jobs bill right away. some of them would rather wait another year to wage another election and then work together right now. most americans do not have the luxury of waiting. it was three years ago this week that the financial crisis on wall street made things much more difficult for working folks on main street. too many are still hurting as a result. the time for action is now. no more games, no more gridlock, no more division or delay. it is time for the people you sent to washington to put the country before party. this stop worrying so much about their jobs and start worrying more about years. it is time to get to work in show the world why the united states of america remains the greatest nation on earth. thank you. >> i serve as the house republicans' chief deputy whip.

i have the honor of representing the people of illinois in the sixth congressional district. i am frustrated with the jobs crisis. within 650,000 people are out of work in illinois region more than 650,000 people are out of work in illinois. we continue to face government barriers to job creation. among them are unsustainable debt, the constant threat of higher taxes, and excessive regulation. i would like to talk to you about excessive federal regulations, how they hurt regulation -- budgets, and what we can do about it. things have changed quickly and for the worse. washington has become a red tape factory with more than 4000 rules in the pipeline. hundreds of them would cost our country more than hundreds of millions of dollars annually. what may be a faceless regulation to most can have a profound impact on local

economies and families like yours. just one rule has chicago white metal casting fighting to survive in an already tough economy. they are already facing a stream of regulations. they will soon face new regulations from unelected bureaucrats implementing a back door national energy tax, after it failed in congress. they already have one employee who spends half of his time dealing with existing federal audits, certification requirements, and complex paperwork. by now you have probably heard about the case of boeing. the chicago-based company invested more than $1 billion in the new plant in south carolina that would generate thousands of good paying jobs only to be sued by the government and told the plant cannot open. no one in the government that is selected some of them.

they are being sued by the national labor relations board which is charged for looking out for labor unions. i would like to share the story of gibson guitars. a few weeks ago, they were raided by armed federal agents. no charges have been filed. regulators did not explain what they may have done wrong or how to rectify the situation. i like to know how job creators can be expected to prosper if the threat of a federal raid is hanging over them. stories like these are cropping up coast to coast. one illinois farmer stood up at a town hall meeting last month and pleaded with the president. he said, please do not challenge us with more rules and regulations from washington. i could not have said it better myself. that farmer was one of several job creators who attended the president's speech to the congress as guests of speaker john boehner.

they're working to address the concerns with real solutions. in the house, the majority leader has scheduled several bills for a vote this fall aimed at cutting red tape and addressing the excessive washington imposed regulations that hamper job creation. this week, the house passed the bill to eliminate the barriers that boeing faces. it stops the government from telling an employer where it cannot and can create jobs. we can take common-sense steps like these and still have rules that look out for our health and safety. what is important is that these rules are effective and dependable. job creators should be able to focus on their work, not on washington's busy work. the president talked about the urgency of this moment. he said that we can act right now. i agree. he can help us to fix the hostile regulatory environment immediately. he already canceled some

counterproductive rules that hurt our economy. he can cancel more. he can call on the senate to pass the dozen or so jobs bills we passed in the house and ones that are on the way. that includes the boeing bill i just mentioned. there's also common-sense legislation gives congress a say before washington imposes new rules and regulations. instead of being circumvented, the people's representatives should be able to hold accountable unelected bureaucrats to encroach on our freedom and make it harder to create jobs. i hope the president will consider our ideas. let's work together and remove barriers to job creation. let's help small businesses return to creating jobs so that they can pick up where they left they can pick up where they left off instead of