Food and Drugs: Can Safety Be Ensured in a Time of Increased Globalization?

Description

Session One
The Scale of the Challenge: Overview and Case Studies
Welcoming Remarks: Richard N. Haass, President, Council on Foreign Relations
Opening Remarks: Margaret Hamburg, Commissioner, U.S. Food and Drug Administration
David Heymann
, Head and Senior Fellow, Centre on Global Health Security, Chatham House, United Kingdom
Gary Jay Kushner, Partner and Leader, Food and Agriculture Practice Area, Hogan Lovells US, LLP
Paul B. Orhii, Director General, National Agency for Food and Drug Administration and Control, Nigeria
Presider: Richard E. Besser, Chief Health and Medical Editor, ABC News
8:15 to 9:00 AM Breakfast Reception
9:00 to 10:30 AM Meeting

Session Two
Policy Challenges in a Globalized Era

Dirceu Barbano, Director-President, National Agency of Sanitary Surveillance, Brazil
Margaret Hamburg, Commissioner, U.S. Food and Drug Administration
Howard Zucker, Senior Adviser, Division of Global Health and Human Rights, Massachusetts General Hospital; Former Assistant Director-General, World Health Organization
Presider: Susan Dentzer, Editor-in-Chief, Health Affairs
10:45 AM to 12:00 PM Meeting

Session Three
Potential Solutions

Caroline Smith DeWaal
, Food Safety Director, Center for Science in the Public Interest
Aline Plan
çon, Head of INTERPOL-IMPACT Project and Head of Medical Products Counterfeiting, and Pharmaceutical Crime Unit (MPCPC), INTERPOL, France
Michael Robach, Vice President, Corporate Food Safety and Regulatory Affairs, Cargill, Inc.
Greg Simon, Senior Vice President, Worldwide Policy, Pfizer, Inc.
Presider and Closing Remarks: Laurie Garrett, Senior Fellow for Global Health, Council on Foreign Relations
12:00 to 12:45 PM Lunch
12:45 to 2:00 PM Meeting

Related Reading:
Backgrounder: Food and Drugs by Laurie Garrett and Yanzhong Huang

 

Audio
Transcript

RICHARD N. HAASS: Okay, if I could ask people to take their seats, including Ms. Hamburg.

Well, good morning. Welcome to the Council on Foreign Relations. Welcome to this temporary respite from the conversation about Egypt.

For those of you who are new to the council -- and I expect there's a few of you here who are -- we are an independent, nonpartisan membership organization. We're also a think tank and a publisher. And we are dedicated to increasing understanding of the world and the foreign policy choices facing this country.

This year happens to be the 90th anniversary of the Council on Foreign Relations. And all year, among everything else we do, we'll also be examining domestic issues, from education and immigration to debt and deficits and infrastructure, that have impact on foreign policy.

Today's symposium, as you all know, will look at food and safety issues -- again, another example of how the foreign policy agenda has dramatically evolved over the years beyond what you might call classic issues of war and peace.

The last 10 years has seen skyrocketing trade in food and drugs. The statistics are impressive. From 1990 to 2008, global food imports rose in value from $350 billion to over $1 trillion.

And globalization's had an even more significant impact on the pharmaceutical market. Today, drug manufacturers located outside the United States and Europe command 80 percent of the global market, up from 10 percent just two decades ago.

In many ways, this is a good-news story. Consumers enjoy dramatically improved access to food, especially meat and dairy products. And the rapid growth of pharmaceutical manufacturing in the developing world has not just expanded access to the drugs, but it's also brought income and skilled jobs to various economies.

But with this success, as you all know, has also come significant challenges. Regulatory organizations at the national level have had real trouble keeping up with the dramatic rise in the trade.

The Centers for Disease Control in Atlanta estimate that nearly 50 million Americans were sickened by contaminated food and drink in 2009 -- that's one out of every six Americans -- and that 3,000 died. And in Asia, Africa and Latin America, up to 30 percent of the medicines on sale might well be counterfeit, leading to countless deaths either as a direct result of the medicine or because the people did not get the medicine they in fact needed.

So we are very pleased here at the Council on Foreign Relations that we can offer this space for this symposium today to explore these issues in depth and to begin the process of developing policy recommendations. We're going to do it in thirds. The first panel led by ABC's chief medical editor, Richard Besser, will consider the recent history of the food and drug trade and examine the scale and complexity of the market. Panel two, moderated by Susan Dentzer, editor -- who edits Health Affairs -- not to be confused with Foreign Affairs -- will discuss the challenges faced by domestic regulators as they try to oversee an internationalized market. And the third of three will be led by our own Laurie Garrett, who's the council's senior fellow for global health and has done so much to get us involved in this set of issues, and I think to increase international awareness of this set of issues. And Laurie's panel will explore a variety of ideas and how the international community might best address this set of problems down the road.

Let me just make a few housekeeping announcements, so no one else does. This meeting is on the record, so what you can -- what you say can and will be used against you. It will also be recorded for posterity and it will live much longer than anyone in this room.

We're teleconferencing this meeting to our members in the nation's capital. But for all that we spend on this technology, it can easily be interfered with by your cell phones, so if you would be so good as to turn off your BlackBerrys, your iPhones and anything else. Since this is a meeting on health, we will make an exception for health-related devices, pacemakers and the like -- (laughter) -- but last I checked, cell phones do not fall in that category.

We are grateful to the Robina Foundation for their continued generous support of this -- of this program. It's part of a much larger effort looking at international institutions and global governance.

Last but not least is our initial speaker -- for those of you who don't know her, Margaret Hamburg; for those of you who do, Peggy Hamburg -- who's commissioner of the United States Food and Drug Administration. She is the 21st commissioner, if my math is right. And before she assumed this position, Dr. Hamburg was a vice president and senior scientist at the Nuclear Threat Initiative. She -- I will allow her to explain this sequencing of career. And she's also served as assistant secretary for policy and evaluation in the Department of Health and Human Services. And here in New York, she was commissioner of the Department of Health and Human Hygiene. And most important of all, the capstone of her career and the centerpiece of her resume, she is a long-standing member of the Council on Foreign Relations.

Peggy, welcome back to the Council on Foreign Relations. (Applause.)

MARGARET HAMBURG: Well, thank you very much. And it really is a pleasure to be here this morning. And I am a great admirer of this institution and a long-standing, proud member. And it's always nice to be back in New York City and to see my former mayor, Mayor Dinkins, who gave me my first real job in public health. So thank you very much, Mayor Dinkins. And I would say he epitomized during his tenure as mayor and mine as health commissioner what can be accomplished when political leadership and public-health needs and priorities actually come together. And he gave me enormous support when we put together our program to deal with the resurgence of tuberculosis, including extremely high levels of drug-resistant tuberculosis. And in just a few years time, applying simple public-health principles, we were able to turn the tide on that epidemic. So wonderful and (unexpected ?) to see you here, David.

Some of you may be surprised that the Council on Foreign Relations is addressing issues of food and drug safety and regulation, and it's a little bit off the core agenda for many meetings here. But it is highly appropriate, much needed, and very, very timely. And I really an delighted and grateful that the council has put this on the agenda and, of course, thank Laurie Garrett for helping to make this possible.

This event grew out of a series of conversations that Laurie and I had over a period of many months after I became FDA commissioner and really came to understand the new realities of food and drug regulation brought about by globalization -- realities that have really redrawn the path that food and medical products navigate to get to our homes, and realities that really make each and every one of us increasingly vulnerable and realities that challenge virtually all nations.

Today, we hope to start a conversation that will be continued in broader foreign policy and other circles and by next year, perhaps, even reaching the level of the G-20 for discussions. It's that important. We hope that, together, our speakers can communicate to each of you the scale of our challenge and the steps we must take to meet the unique public health demands of our globalized world, and to assure health, safety and security of people and nations all over the world.

We cannot afford to ignore these issues. Certainly, as FDA commissioner, I spend a lot of time grappling with them. They have major implications for how we fulfill our mission to promote and protect the health of the American people.

And in this context, let me tell you just a little bit about the agency and why this all matters so much. The FDA is responsible for overseeing the safety and manufacturing quality of food, drugs, medical devices, vaccines and biologics, cosmetics, dietary supplements, animal drugs and food, radiation-emitting devices and now, for the first time in FDA history, tobacco products as well. These products account for somewhere between 20 (percent) and 25 percent of every consumer dollar spent in this country. And I think with the possible exception of tobacco, we can safely say that these are products that people really need and they really rely on in fundamental ways just about every day. So as you can see, the scope of our responsibilities is enormous.

But during the early days of the FDA when, in fact, most of our authorities were actually put into place, the world was very different. Back then, most products that FDA regulated were domestically manufactured and really quite locally used. And for years, when it came to importation of foreign products, our activities went toward safety and quality, and to protect public health, focused on catching problems at the border. And then we began some limited some overseas inspections.

But those days are long gone. The realities of global economic conditions, as well as innovations in refrigeration, transportation and communication, have enabled and spurred consolidation and globalization. This has resulted in a striking rise in imports of foods, pharmaceuticals, medical devices and even, to some extent, biologics.

Today, the world in which FDA-regulated products are discovered, developed, processed and distributed is much, much bigger. FDA's traditional model of manufacturing site inspections and border examinations is simply not adequate in today's transformed world. In 2010 alone, FDA estimates that more than 20 million import lines of food, devices, drugs, cosmetics and tobacco arrived at U.S. ports of entry -- more than a three-fold increase in regulated imports from just a decade ago. Regulated products come from more than 300,000 facilities in more than 150 different countries all over the world, and they come into the United States through more than 300 different ports of entry.

At the same time, the supply chain from manufacturer to consumer has become more and more complex, involving a web of repackagers and redistributers and making oversight increasingly difficult. The numbers are staggering. In the food realm, about 40 (percent) or 45 percent of fresh fruit and produce and over 75 percent of seafood that we eat here in the United States actually comes from other countries. And for medical products, a stunning 80 percent of active pharmaceutical ingredients in our drugs come from outside our borders and about 40 percent of finished drugs themselves.

And, of course, much of this is positive. We can, for example, have fresh mangoes and strawberries all year round, and it probably does help to keep costs of some drugs and devices lower.

But there are also very serious, often negative implications. The global supply chain has led to the distribution of unsafe or ineffective products and harm caused by economic adulteration and intentional fraud.

I know that you'll soon be hearing directly from others, for example, about the tragic toll of the counterfeit trade in many parts of the world. But really, for nations large and small, the global supply chain presents many new national and international security threats.

In recent years in this country, we've experienced events, some clearly deliberate and some unintended, which have had serious consequences for life, health and safety, as well as for trade, commerce and the economy, ranging from contaminated heparin, a blood- thinning drug, to counterfeit glucose monitor strips and surgical mesh, to melamine-tainted vegetable protein and dairy products, and salmonella in peppers and other food-borne outbreaks, to name just a few.

And the world is poised for further globalization. There are macrotrends at work that are impacting global commerce, and the cumulative effect of these trends will ensure that 10 years in the future, the world will still be a very different place. Undoubtedly, the pressure to reduce costs and increase productivity will lead companies to continue to move manufacturing activities to new and different locations, looking for cheaper sites and global supply chains to reduce production costs.

And countries, like China and India, that already produce many of the food and medical products that Americans use will likely in the future not only produce these goods but will also be important centers for innovation, inventing new groundbreaking products that Americans will want to buy, which means that will have to continue to evolve to meet these new demands.

And we've already begun to do so. In the U.S., the Food Safety Modernization Act, which was signed into law earlier this month, calls on the FDA to put into place a significant new approach that among other things promotes a new level of accountability for all entities that are involved in the supply chain, from farm to fork. And although it's not perfect and we certainly do face challenges, especially including resources, it's a truly significant step in the right direction. Congress has also introduced a similar bill for drugs that would bring sorely needed modernization to our authorities, importantly in the global sphere.

But even with that progress, globalization presents huge and growing challenges. Regrettably, another public health crisis like heparin or melamine seems inevitable, unless we are able to truly forge changes in how we ensure the safety and quality of food and medical products for our citizens.

And at FDA, we've realized that in order to protect American consumers, we must work globally, because the products that our consumers use are no longer simply American products, they're global products. And we know that our counterparts in other nations face similar challenges for their citizens.

This is a moment for leaders around the world to create a new vision of how we regulate. We have a shared interest in assuring the safety and quality of food and medical products, and a shared responsibility for safety and quality. By working together to monitor and to improve safety and quality globally, we will benefit all of the citizens of the world. What I envision for the future is a public health safety net for consumers around the world that is created, supported and maintained by a global alliance of regulators, working closely with all our critical stakeholders.

Some of the work for this is already under way and has been for several years, as regulators from many nations have begun to collaborate. But these efforts need to be taken to the next level. We must ask ourselves how we can weave our various efforts into a coherent global system of oversight and safety. This will mean working together toward greater coordination and enforcement of regulatory standards across nations to ensure safety and quality, regardless of where a product is produced. We need not always apply absolutely identical methodologies, but we all need to work together toward the common goals of product safety and quality, and to harmonize approaches.

As part of these efforts, regulatory authorities, especially those with the greatest experience and resources, must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems, so that they can produce food and commodities that are safe, wholesome and meet international standards.

Those with the greatest experience and resources must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems so that they can produce food and commodities that are safe, wholesome, and meet international standards.

This is surely in our vital interest, but it will have broader benefits for public health and economic development within those countries as well.

And in addition to creating a global coalition of regulators, we must create a modern means to share data globally, and we must use those data and advanced analytics to proactively prevent and identify problems. Detecting and preventing global problems demands global intelligence-sharing and data mining.

Also, as the new food-safety law recognizes and requires, we must enlist public and private third parties as well as industry and other organizations to increase the global safety net. We must do this for food and medical products. And this is absolutely essential. Regulators cannot and should not do it alone.

Finally, we must create the momentum in the United States and in the global community to make these changes real and sustainable. These changes must begin now, but they will take time and the support of many people to fully implement. A strong global safety net will be challenging to weave, but we can do it together.

So let us continue the conversation today, and as regulators, consumers, academics, industry leaders -- (audio break).

MR. : (In progress after audio break) -- I want to welcome the audience who are out there in Washington, as well as on the teleconference.

MS. : Okay. They're connecting me, so --

MR. : And I don't want to use up a lot of time going through -- (audio break).

RICHARD E. BESSER: (Audio break) -- prepared for you, so we're going to dive in.

Let me introduce the panel, though, starting from the far end: David Heymann, who is head and senior fellow of the Center on Global Health Security, Chatham House, in the U.K.; Gary Jay Kushner, who's partner and leader in food and agricultural practice area at Hogan Lovells; and Paul Orhii, who's the director general of the National Agency for Food and Drug Administration and Control in Nigeria.

We're going to have a conversation up here for the next 25 or 30 minutes, and then open it up to members and guests to join in the conversation and ask questions.

So diving in, first talking about the drug side, in 2006 I was head of emergency response for the CDC. And we received a call from colleagues in Panama, and they were facing a situation there where an unusual neurologic syndrome was presenting to hospitals. And they wanted to know what was going on, and we sent a team down to work with them on that investigation.

And the lab at the CDC detected ethylene -- diethylene glycol in cough syrup that was being used throughout the country.

As the Panamanian government explored that situation further, they had a sense of the scope of the problem. Two hundred and sixty thousand bottles of cold medicine were contaminated with diethylene glycol. There were 100 confirmed deaths and thought to be far more than that in terms of the overall range of the problem.

The syrup had been manufactured in China and it had been certified as 99.5 percent pure glycerin. That was what was added into it.

That counterfeit glycerin had passed through three trading companies on three continents, not one of them had tested the syrup to confirm what was on the label. This isn't an isolated incident; there have been other problems with diethylene glycol in glycerin.

So I want to start by turning to David, who has worked in public health at WHO, at U.K., and at CDC. You convened a conference in December, a very important meeting at Chatham House on counterfeit drugs. And so that we're all on the same page, if you could first explain, what are counterfeit drugs? How do they vary from fraudulent drugs, of optimal drugs? And how big is this problem?

DAVID HEYMANN: Well, thanks, Richard. Yes, we did have a meeting at Chatham House in London because for the last 30 years, WHO has had a very difficult time in dealing with counterfeit drugs because of definition. And it's clear why this is a problem if you think about counterfeits. A counterfeit handbag, a counterfeit T-shirt doesn't really cause any harm; it's just -- it causes harm to the producer, but not to the user, whereas counterfeit drugs can cause harm to the user. And what's happened is that the discussions at WHO, trying to find a definition, have gone around many different words and never really focused on any one in particular. Those words are "substandard;" there are other words such as "falsified" and finally as "counterfeit."

And so the definition has been difficult. But substandard is very easy to understand. Substandard drugs and vaccines are those that don't meet regulatory requirements in the country in which they're produced or in the country in which they're imported. It's very easy to understand that. And it happens to both generics and to patented drugs as well. For example, here in the U.S., if you remember a few years ago, influenza vaccine came in from Europe and was substandard. This passed through the regulatory agencies in Europe and also came into the U.S., and it's a problem for industrialized country regulatory agencies.

Think of that problem in a country where biotechs are trying to set up their own production and development and don't have a regulatory agency that can help them make sure they have good products. If it happens in industrialized countries, what will happen in developing countries? But as Peggy said, there are ways that that can be dealt with. It can be dealt with bilaterally, by exchange and partnerships between regulatory agencies, or multilaterally through the World Health Organization.

So substandard is a very easy concept to understand, and this was one of the three concepts that was agreed at the Chatham House meetings. Substandard do not meet national regulatory requirement.

Under substandard, there are really two sub-classes: there's a falsified classification and there's a counterfeit classification. These are substandard drugs because they haven't met national or other regulatory requirements. But a counterfeit drug is one that's purely involved with trademark, and because it's involved with trademark, it's not as much a public health issue as an issue for the World Trade Organization and the World Intellectual Property Organization, which deal with counterfeits and with trademark issues. It's a criminal offense. It has public implications, but there is a framework within which that can be handled.

The framework that's missing is that framework for falsified medicines. These are medicines like in China, medicines that were produced with false ingredients maybe unknown to a very few people, but known to someone. It was a deliberate intent, as is counterfeit, a deliberate intent to falsify a medication. Those falsified medications, of course, are substandard because they don't pass through regulatory requirements.

So those were the three different definitions that came out of our meeting at Chatham House and which we hope will help WHO now move ahead with the definition. We had many people at this meeting.

We had WHO, the head of the the drug group at WHO, we had World Trade Organization, we had WIPO, we had Interpol. We had a whole group of people. And we hope that these three definitions, which are fairly clear to everybody, would be the ones that can help move forward in a public health way the discussions on counterfeit drugs.

BESSER: Great. Thanks very much. You -- it said that the disease that may be impacted the most by this may be malaria. A study in 2006 in the American Journal of Tropical Medicine and Hygiene found that 68 percent of anti-malarial drugs found in Laos, Myanmar, Vietnam and Cambodia did not have the correct amount of drug in them. And WHO estimates that as many as 200,000 lives that are lost each year to malaria may be preventable just by dealing with the issue of substandard drugs.

I want to turn to you, Paul. You gave a speech last year to the parliament in Nigeria. You've been a tremendous crusader in the area of control of counterfeit drugs. And you said that the culture of chasing fake drug dealers around the country is not sustainable in the long run. Sixty to 70 percent of essential medicines in your country are brought in from India and China. And you were calling for a more comprehensive approach.

Can you talk to us about the scope and scale of the problem of counterfeit drugs in Nigeria?

PAUL B. ORHII: Thank you. (Inaudible) -- let me use this opportunity to thank the Council on Foreign Relations for organizing this forum. This is a very, very important forum. I also want to use this opportunity to thank Dr. Margaret Hamburg and the U.S. FDA for the opportunity that they give developing countries, the -- (inaudible) -- authorities in developing countries to build our capacity. Been training some of her staff, and we're getting better and better. So I want to use this opportunity to thank the U.S. FDA and Dr. Hamburg for that.

I say the US, the culture of chasing counterfeiters within a country is not sustainable in the long run, because the problem has become much worse than before. In 2001, the instance of counterfeit medicines in Nigeria rose to over 40 percent. More than 40 percent of the drugs in Nigeria, especially anti-malarials, essential medicines, were counterfeits.

At that time, in developed countries, like the U.S., and Europe, they had less than 1 percent counterfeits in their systems. Now the problem has become much worse. The Pharmaceutical Security Institute and the -- (inaudible) -- that the counterfeit medical -- (inaudible) -- constitute about 35 to 200 billion business dollars a year. So you see that most of these counterfeits would be heading to countries with very weak resistance.

And even in Europe, advanced as it is, counterfeit medical markets have been found to -- is worth about 10.5 million euros. So this is scary. When we look at it, we budget how countries like ours with weaker regulatory systems can cope.

(Inaudible) -- is charged with the responsibility of regulating and controlling the manufacture, distribution, sale and use of all drugs, foods, cosmetics, medical devices, bottled water and many other products. But we are grossly understaffed for the kind of vast territory that we're called to protect and the kind of huge population. Our population is a -- what, 150 million people that we're called to serve. The borders are vast, poorly managed because of lack of funds. And even when we can man them, we do not man them as appropriately as we would have wanted to to be able to stop -- (inaudible).

I'll just give you an example. Only in 2009, we intercepted a consignment of sick medicines, more than 700,000 courses of anti- malaria drugs coming from China. They were labeled as made in India. But we were able to observe the -- (inaudible) -- from from China, and we took the matter up with these two countries, resulting in the arrest of -- and sentencing to death of six persons in China that were related to this manufacture and shipment of that consignment Nigeria.

We also were -- (inaudible) -- in Indian parliament, and then the big -- middle law making it a criminal -- punishable by lifetime jail term, the manufacture and distribution of -- (inaudible) -- products.

But our law is also very weak. And so we have now tried to review our law and have a member of parliament from Nigeria -- he also with us, will be submitting that law to them to help us pass the law so that we make more stringent punishments -- lifetime jail time, confiscation of assets -- in situations where we can determine that the fake product proximately caused the death or severe bodily injury of the victim. We want to be able to use some of the confiscated assets to legally compensate the victims.

We want to build international -- stronger international cooperation, because we cannot do it alone. That is why a formula -- this is (especially ?) important. And we are very, very happy that the U.S. and also the USDA are now paying attention to this, because it -- before, it was considered to be a problem of the developing world. And not much attention from the developed world was paid to this. Well, now we want -- we are very happy that we are now having stronger partners with this U.S. -- you cannot now have a stronger partner than the U.S. come in to take on this problem.

We are very excited. We want to -- (inaudible) -- that Dr. Hamburg mentioned here. We want to have -- build -- we're leveraging on cutting-edge technology to fight the problems. We're -- introduce new technology to fight the problem. And we're building both national, international and other regional cooperation -- (inaudible) -- fighting counterfeit medicine.

So the culture of just pursuing counterfeit medicines within your territory and trying to eliminate them is no longer sustainable. Officially, with the recent crackdown on illicit drugs, most of the former drug barons are now diverting -- they have now diverted their resources to manufacture and diffusion of counterfeit medical products. So the program has become more globalized, more militarized and more sophisticated. So it needs international cooperation, very strong international cooperation -- (inaudible) -- what we are doing now to be able to fight counterfeit medicines.

BESSER: You know, this is an issue that has an impact on your life. An attempt was made on your life this fall. And, you know, we talk about these issues in public health as health issues. Is there enough of a connection between the public health community and the legal community to take this on as a criminal issue and not just a health issue?

ORHII: It is a public health concern, but it's also a criminal issue. So I think we are working together with the legal system to try to see how we can impose stiffer penalties on people who engage in counterfeiting.

Of course, in Nigeria, it is very dangerous. I had a situation where we had sent our staff out to all these bakeries to make sure that they were not using potassium bromate, which has the potential to cause cancer.

I mean, one of these bakeries where staff found the banned potassium bromate, the staff of bakery descended on our staff, beat them to the point where they lost consciousness, bundled them into a vehicle, poured petrol on that vehicle and were about to set the vehicle ablaze with our staff inside when the police came in time to save them. So this is a very dangerous engagement in our countries.

But I think we are determined. The government is giving us enough support to be able to do this. We are getting international support now. And I think we will be able to solve the problems.

BESSER: Our session this morning isn't just focused on drugs. It's also dealing with the issue of globalization of our food supply. As Peggy Hamburg was saying, you can have a mango all year round in New York.

I started my career at CDC in foodborne disease and recall outbreaks of cyclospora from raspberries from South America, cholera from coconut milk from Thailand, and most recently the peppers/tomatoes that really cost the tomato industry in the U.S. a couple billion dollars from salmonella.

Right now, there's an issue of dioxins in Germany. And 4,000 farms were closed in Germany when it was discovered that there was dioxin-tainted industrial fatty oil mixed in to animal feed. That led South Korea to shutting off the importation of meat products from Germany; and now in the European community, concern over some eggs from Germany that are suspected of being contaminated.

So I want to pull into the conversation now Gary Kushner and ask you to comment on the scope and scale of globalization of food.

GARY JAY KUSHNER: Well, thank you. That's obviously at the heart of this program. And I should say, first of all, globalization is real, but it didn't just start. The international -- the growth of the international food market's probably been rising for the last 20 years. It's just now -- probably I would say an all-time high, and there are a number of reasons for that as Dr. Hamburg pointed out and Richard just pointed out as well. Consumers do want to have fresh products, fresh produce in particular, 12 months of the year. And we have the ability to provide that. But that means importing products from a number of different countries.

Food manufacturers recognize this. Many of them have a multinational focus. Many of them have plants in other countries and distribution centers in other countries. But the reality is that in order to provide the array of products that consumers expect does require importation, and we're now importing foods and ingredients from all over the world. And in some parts of the world, the controls are much stronger than they are here. And even where you've got regulatory controls, the key is enforcement of those controls and that also varies quite a bit globally.

I believe that the new Food Safety Modernization Act is a very, very important step forward in helping to harmonize regulation and ensure the safety of products coming into the United States.

Many of you may realize or may not know that food is regulated by a lot of different agencies, but primarily by the U.S. Department of Agriculture's Food Safety and Inspection Service and the Food and Drug Administration. FDA has regulatory authority over all foods, primary regulatory authority over all foods with the exception of meat and poultry. And meat and poultry, historically, has been regulated by the Food Safety and Inspection Service. There are historical reasons for that. I should say, though, meat and poultry is under what is called continuous inspection, that is, that the meat or poultry product may not be distributed in the United States unless it has been inspected or at least have the presence of a USDA inspector in the plant. And you'll see on a meat or poultry product, you'll see the stamp that says inspected and passed. And the Department of Agriculture is very jealous of that stamp because it's their Good Housekeeping stamp of approval.

The FDA on the other hand -- and I think the last time I looked, the USDA has at least 7,000 inspectors and perhaps more. But FDA is expected to regulate all of the rest of the food supply with far less in the way of resources. And the authority that FDA has or historically has had has been much less different than the USDA, yet so many of the ingredients that are coming into the United States that are being imported are under FDA's regulatory jurisdiction, which presents a real challenge.

Now, I will say that under the food modernization -- the Food Safety Modernization Act, importers will now be required to verify that the products that they import into the United States do meet the same safety standards that will be -- that are required of them in the United States, and that is a major step forward. Manufacturers in this country, particularly the larger national manufacturers, already have programs in place to ensure the safety of the products that they produce, as well as the raw materials that they use. And it's historically, food manufacturers have employed what's called the hazard analysis and critical control points program. The acronym is HACCP and it's referred to as HACCP. That has been mandatory for meat and poultry products since the early '90s, and it's been mandatory at FDA for a limited number of products, notably seafood and pasteurized juices.

Also, I would throw -- (inaudible) -- canned foods regulation into that same scope of regulation. But for the most part, products under FDA's jurisdiction have been manufactured under HACCP that has been voluntarily employed by the food industry. And if I want to digress just for a second because I'm a real believer in HACCP, HACCP was not developed by the government; it was developed by the food industry in the '60s basically to keep food as safe as possible for the space program. You can imagine, an astronaut with a food-borne illness in a little capsule would not be a terribly pleasant experience. (Scattered laughter.) And once it was adopted, more and more food companies designed food safety assurance programs based on HACCP principles.

So it's been a very, very good concept. Now, although the Food Safety Modernization Act does not call it HACCP, the controls, the kind of control, the principles on which this new law is based effectively means mandatory HACCP, and I, for one, and I represent the food industry, think that that is a very, very good step.

The challenge now for FDA will be enforcement, and remember as I mentioned, USDA products are inspected by our -- meat and poultry products are inspected by USDA, which has significant appropriations every year to support that inspection program. FDA now has the burden of employing similar controls on the rest of the food industry, yet Congress has not yet appropriated the money that FDA needs for that, and that has got to come.

There are some aspects of the new law that are self-executing. That doesn't mean they'll be enforced, but it does mean that companies will employ those because that last thing a food company wants is for its products or a competitor's products even to cause food-borne illness and generate adverse publicity about the whole product line.

It's important that the products be viewed as safe for consumers, so everyone has a vested interest in that. Many of the new provisions in the law -- of the new law, as I said, are self-executing and that's important. But other aspects, including FDA's required increased inspection of imported products and even inspection or verification of exporting facilities, is going to take money, and FDA simply hasn't been given that money yet.

So I think that's something that consumers, industry, everyone that needs to encourage Congress to do is to appropriate adequate funding for the new law to be implemented and enforced effectively.

BESSER: Thanks very much, Gary. I do want to now open up the conversation to members and their guests. And I'll ask you to wait for a microphone. And when you ask your question, please state your affiliation and whether there's someone it's directed to.

While we're waiting for the microphone to get around, I want to ask you, Paul, about Gary's comments about food production and the requirements that will be in place in terms of assuring the purity and safety of food.

What does that mean in terms of a burden on a developing country to have to have a system of food inspection, food testing, a HACCP control system? Is that something that's within the realm of possibility in Nigeria?

ORHII: Yes, it is already within the realm of possibility. In fact, we have a program in place. We already have, in fact, some expats from the FDA, from the Department of Agriculture -- have been in Nigeria with us working on developing food safety program under the HACCP program.

So it is within the realm of possibility. We already are doing inspections of food products, but we're clearly -- (inaudible) -- our capacity -- (inaudible) -- with the help of the USDA again.

So I think it is within the realm of possibilities.

BESSER: And Gary, flipping back to you. Many of the large- scale food producers in this country, you know, whether you're talking about McDonald's or Wal-Mart or a Costco, are establishing integrated systems of food production that ensure their own inspection overseas.

The impact of that in terms of building infrastructure within a developing country, do you see it as a positive step or something that may actually deter a developing country from developing their own system, as we're hearing about in Nigeria, of ensuring food safety?

KUSHNER: I'm not sure this answers your question, but the examples you gave, Walmart, Costco, for example, are primarily food retailers. And although some of them do have their own private label programs and some of them -- some retailers actually have products that they manufacture for themselves, for the most part, the retailers are purchasing products from manufacturers or from brokers that are going to be sold in their supermarkets.

That having been said, it's the same issue, and that is how do you make sure that the products that are coming in from other countries, whether they're going to a private label product that you're producing or a product that your supplier is producing, how do you make sure that those are produced under the same kinds of controls?

A major manufacturer will have as part of its HACCP program, its own HACCP program, will have programs or -- programs in place to inspect the incoming raw materials, to periodically test incoming raw materials and ingredients so that they can control as much as possible the product that's going into -- the ingredients going into their products.

In addition, they'll know their supplier, and that is a very, very -- it's a simple concept and an important concept that is for a food manufacturer to know its supplier. Now, it's impossible to know every supplier that supplies that supplier, but at least it's a very important step, particularly if you couple that with the controls that the importing company will have in place.

Let me just go back, though, to talk again about the difference between USDA and FDA, because I think it's instructive. The USDA, I think, since about 1968 -- I may be wrong on when this came into law, but since about '68, USDA -- the meat and poultry inspection laws have required that products coming in for importation, number one, come from countries that the inspection system has been determined by USDA to be equivalent to the U.S. inspection system. That is, the country must demonstrate that its inspection system is adequate and the individual plants that are going to be shipping products to the United States must be approved.

So that supply chain is very well controlled in the context of meat and poultry products. Again, less so in FDA products largely because of the historical nature of the laws that both agencies administer and the feasibility of the FDA insisting upon the importation of products being -- becoming from certified plants where they don't have that legal authority and even with that legal authority, the money is a real issue.

BESSER: Thank you. I think the first question, over here.

QUESTIONER: Good morning. Great panel. My name is Peter Pitts. I'm the president of the Center for Medicine in the Public Interest.

Dr. Hamburg mentioned at the outset the issue of global intelligence sharing, and you discussed the issue -- the definitional problems of counterfeit drugs, and I fear that we're still quite a ways off from a workable definition there. But short of kind of a global regulatory Marshall Plan, you know, how can we work together either on a formalized or an ad hoc basis to at least measure the problem of counterfeit medicine so we can begin to have a baseline and combat it?

BESSER: David, I'll throw that to you, first.

HEYMANN: Well, you know, it's only by global collaboration, as Peggy said earlier, that this can happen. The forum -- one of the fora in which it could happen is in the World Health Organization, but as I said, they've been blocked with a definitional problem that we hope can be unblocked eventually so they can move ahead and understand what they're working with.

I think we'll hear from other sources, other -- we'll have other opportunities to hear from Interpol and various places about what they're doing globally. But it will only work if the world works together in a multilateral framework.

There can be bilateral activities which are very important; FDA has people in China, has people in other countries, in India, and that's very important. But multilateral and bilateral together are the solution.

BESSER: David, just to add onto that. How much is the issue of patent protection confounding the issue of counterfeit drugs and drug safety?

HEYMANN: Well, it's a very important reason that the definition can't move ahead because some would say that generic drugs are counterfeits. There's a whole series of issues that are very -- are very difficult to deal with. And so that's why these three definitions, clearly making it understood what a substandard is, and then there are two substandard sets, counterfeits, which are trademarked, and falsified is a much better way to proceed and a much more logical way to do it.

There are mechanisms that can deal with trademark infringement and those are enforced. What's not available at present is this public health framework in which we can all work together because of the definition issue.

QUESTIONER: Thank you.

QUESTIONER: Thank you. My name is Mark Feinberg. I work in medical affairs and policy at Merck. I want to thank all the speakers for so succinctly and clearly highlighting the importance of this issue.

My question, really, for any of the speakers is, what will it take to actually move us down the path that Dr. Hamburg had articulated as sort of a much more integrated system that is really designed to accommodate the safety challenges posed by globalization? You know, how can we go down that path faster? And really what are the obstacles in the way beyond the sort of definitional thing that Dr. Heymann had mentioned?

BESSER: We'll go short on that because the next panel is going to be focusing more on control issues and policy issues. Paul, do you want to comment on that?

What will it take to get us from where we are now to more of an international system that is ensuring drug safety?

ORHII: Well, we said this initiative by the Council on Foreign Relations and the FDA is a good start. We can build on what we decide here today and then move on. Talking about the definition -- I think definitions of "counterfeit" have just been deliberately used to confuse the issues. We in developing countries that are most hit by the impact of counterfeit medicines will look at it purely from a public-health perspective. At the WHO, we have always emphasized counterfeit medicines, looking at them purely from the public health perspective.

I talked here about getting almost 40 percent of medicines in the system, counterfeit. This -- some of the medicines, the counterfeit medicines, if used to treat diseased like malaria, have the potential to develop resistant strains of microorganisms, which are not treatable by effective medicines, resulting in death and sometimes even the spread of some of these resistant strains to other countries. You know, they do not need passports or even a visa to cross international border lines.

That is why it is important the the Council on Foreign Relations and the FDA have summoned this meeting.

So I think it deliberately confuse -- (inaudible) -- attempted at the -- the last World Health assembly to agree to come to a definition of counterfeit medicines that deals exclusively with the public health concerns and not encompassing intellectual property issues. But I think we are working towards that, and we hope to be able to achieve that.

But we want a situation where we have a broader coalition, we have an international coalition of all relevant agencies. We (started ?) that impact. We have had impact where we have the INTERPOL, we have the -- (inaudible) -- we have all the relevant agencies that will help us find these counterfeits.

For developing countries, no country maybe in Africa is -- (inaudible) -- if we find counterfeit medicines in the system. (Inaudible) -- we cannot tackle that alone. But we need a big coalition that can reach out to all those people. And the example that I gave you of counterfeit medicines, anti-malaria that we intercepted in China, alone Nigeria could not have any -- don't have anything against China. But then we involved INTERPOL. We had to. And some of the people we -- (inaudible) -- Nigeria. But (anyway ?) they were out of the country beyond our jurisdiction. But INTERPOL reached them, and they have finally come back to Nigeria where we're prosecuting them now.

So what we want is a global coalition that would be very strong to help us fight counterfeit medicines. But I think we can view counterfeit medicines not encompassing any intellectual property issues, just purely from the public-health perspective. In a country like -- a developing country like Nigeria, it is a life-and-death issue. It is -- we're not talking about intellectual property here. We're talking simply about public-health challenges that we have.

BESSER: Thank you. One here, and then I'll move towards the back.

QUESTIONER: Yes. My name is Charles Clift. I'm from the Chatham House Centre on Global Health Security, a colleague of David's, who spoke.

Just to expand a little on the definition list used -- I don't want to go into it too much -- I mean, Dr. Orhii says, well, what we're interested in is public-health issues and counterfeit medicines, the medicines that are basically substandard and probably done deliberately, but nothing to do with intellectual property.

That applies -- lots of countries feel like that. Other countries such as, for instance, Brazil, say to us, a counterfeit medicine is one that infringes a trademark. And if it's simply substandard and deliberately done, it's a falsified medicine. And they have that in the legislation. So they have a very restrictive definition of counterfeit. But in a sense, we know what we mean, but we use the same term to describe different things. That is one of the problems.

But underlying the definitional issue is a number of countries, particularly those who produce generic medicines or some who consume them, fear that attacking counterfeit medicines will also be an attack on legitimate generic medicines of assured quality, on which many developing countries rely. Most of their medicines are generic. Unfortunately, many of them -- a certain proportion will not be of the right quality.

As regards this discussion today, I thought it might be helpful if we -- I think we're talking about two different things, which are related but are conceptually different. One is the problems of the legitimate supply chain. And that is what Dr. Hamburg was talking about, the 99 percent of her opening remarks. And that is one set of issues where, as she said, greater collaboration is needed between the regulatory authorities in both developed and developing countries because of the way the supply chain has become globalized.

Then there's the question of the illegitimate supply chain, which -- again, regulatory authorities have a role, but it's a multi-agency thing. You have customs, you have Interpol -- we'll be hearing from Interpol later this morning -- and there really -- one is about how do we protect the consumer from harm, and the other one is essentially about, once these dangerous medicines get on the market, how do we address -- how do we deal with the producers and the distributors and so on?

So I think we need -- it's helpful conceptually to separate those two issues, which need different policy measures to a great extent to tackle them.

BESSER: Thanks very much. In the back on the end.

QUESTIONER: (Off mic) -- Radio. Obviously, when one thinks about this generic-versus-counterfeit debate, one recalls the politics of the HIV/AIDS debate and the production of drugs that occurred several years ago. And my question has to do with food safety and food production. Many scholars of global food production point out that, for the model of the United States in terms of food production to be duplicated in the world, it would simply be impossible.

And we have, as you know, a lively debate in this country for decades about the very safety of our own food production in the United States. And I was wondering how the panel feels about those kind of issues entering the equation, because, you know, I can think of movies like "Food, Incorporated" and others which point out the problematics of the safety measures inherent in the United States itself in terms of food production.

So I was wondering what your thoughts are on that.

QUESTIONER: Gary, do you want to dive in on that one?

KUSHNER: Let me try. And here's where I'm going to sound like a food-industry flack, and I admit it. (Laughter.) I happen to believe that the food in the United States, the food production system, is a very effective system and makes for a very safe product.

Granted, there are -- have been -- obviously have been notorious foodborne-illness outbreaks that are unacceptable and need to be addressed. There are companies that do not follow basic good manufacturing practices. And that's also unacceptable and has to be addressed. And there are challenges that are inherent in a global system, or even a system that just in the United States, where you're distributing products all over the country and importing ingredients for use of those products.

As far as imposing our system, let's assume that our system is a safe one and we're trying to make it safer, or as safe as it can be. Trying to put that system in place in other countries requires a couple things. First of all, I think it's a shared responsibility between the food industry and the government in terms of the company that is importing a products wants -- has to be sure and has to be committed to doing everything it can feasibly do to make sure that the product it is importing is safe and meets U.S. standards. Same goes for countries -- companies and countries or exporters who want to send their products to the United States. They have to have a commitment -- if they want the U.S. marketplace, they have to have a commitment to follow and adopt the same kinds of food safety procedures that are in use here. And as far as the government goes, there's nothing that can substitute for government coordination.

We do have some international bodies -- Codex Alimentarius -- that sets international food standards; the World Trade Organization and other organizations that are set up largely to enhance our -- to enhance harmony between the regulatory approaches in different countries. Too often, those bodies take a very long time to reach resolution. And frankly, too often, countries will erect trade barriers in the -- in the guise of food-safety standards to protect their local industries and keep products out. And that -- that's something that I think we need to be very aggressive in challenging, whether it's us that's erected those barriers or other countries that are erecting those barriers.

BESSER: David, perhaps you can comment on the -- on the European situation on that, the issues of trade barriers being used as a front for food safety, and how you integrate across an area as diverse as Europe issues of food safety.

HEYMANN: Well, it's a -- it's a very interesting issue in Europe, as you know, because some countries themselves didn't have regulatory procedures for foods until just recently.

In fact, I can remember when I was working with WHO one of our directors, a Spanish woman, was called back to Spain to set up a few -- a food safety agency in that country. So it's a really new concept in some countries. In others, it's not so new. But you know, Europe works in two ways. They work nationally through their national agencies, and then they work internationally within Europe under the treaty of the European commission. And how those things will play out, I can't say. Charles, my colleague, might be able better to say, but he's shaking his head also. It's very difficult right now in Europe because there's no one voice. There's many national voices and one global voice which doesn't yet have its credibility established to be the leader.

BESSER: Thank you.

In the back.

I have the ability to point in a general direction, and hope the person with the microphone will find them.

Hands up again for -- here we have in the front. There's a couple up in the front. Thank you.

QUESTIONER: I'm -- (inaudible) -- from industry. I make active ingredients. And I have a concern that I think the issue is actually much bigger, and we're much further away from the solution. The reason why I think it's much bigger is because the supply chain is so fragmented and so porous that there are a lot more pharmaceuticals that are falsified because the active ingredient was falsified and substandard. And when a falsified API gets into the legal supply chain, you can't tell.

And if its toxicity is acute, you get red flags very quickly because people die. If the toxicity is not acute, if it's a genotoxic impurity, it will take many years before people die. So I think that's a problem. And all the real issues of people dying, like heparin, gentamicin, diethylene glycol, they all fall under the category of substandard APIs that got into the legal supply chain. And I think this is a huge problem that the definition of falsified pharmaceuticals hasn't yet started to address. The European directive that's currently being discussed probably would not cause heparin to be under -- you know, to be considered a crime.

And the other comment I had that we're much further from the actual solution is that falsified pharmaceuticals in many countries in Europe are not a crime. And you take this international collaboration, the only country that I know that has a blacklist of companies that have misbehaved is NASDAQ in Nigeria. And you have companies listed in the NASDAQ list in Nigeria that show up in European databases as approved sources of active ingredients. Thank you.

BESSER: Would you like to comment on that, Paul? I mean, the issue of a drug that is toxic, which is the example I gave of diethylene glycol, where it just speaks out that there are people dying from taking the drug, versus the issue of a drug that's, for instance, subthereupetic, the malaria issue, where it may not be clear whether the individual is dying from malaria or dying because there's dealing with a substandard product.

ORHII: Well, to all this is a big problem. Especially, like you just pointed out, medicine is -- (inaudible) -- is manufactured in one country. You don't know where the active pharmaceutical ingredients came from. So you don't even know -- these are the complex issues that I think we're here to address today, because we just realized that the industry has become globalized that you cannot just go to the root of the problem. So I think this is a good start to discuss other things. It's a big problem and very complex.

BESSER: You had a question here in the front.

QUESTIONER: Thank you. Susan Dentzer from Health Affairs.

I have a question for you, Gary. You mentioned the diffusion of authority in the domestic U.S. context as between the FDA and the -- and USDA. I'm wondering if you think there is any prospect of dealing with that now that the president has raised the notion of bringing salmon, for example, under one regulatory authority, as he mentioned in the State of the Union address. Is that at all in prospect, is that an issue with respect to enforcement here on the U.S. side?

And then secondly, what are the estimates of what the resources would be needed for FDA to be able to fully enforce the provisions of the Food Safety Modernization Act? Because in the great scheme of things, these are probably rather small resources in the larger context, but yet extremely important in not enforcing food safety.

KUSHNER: Thank you. Let me answer it in reverse. And Carolyn or Dr. Hamburg, correct me if I'm wrong, but I think the estimate for enforcing the new food safety law is somewhere in the vicinity of $1.4 billion over the first five years. I don't know if that's a lot of money or not. It used to be a lot of money -- (laughter) -- but looking at -- looking at our budget and our deficit, it's a drop in the bucket. And -- but it hasn't been appropriated at all, to the best of my knowledge. So that's obviously a concern that needs to be addressed.

Now, as far as single food agency, which is really at the base of your question, President Obama is not the first one to suggest that. That goes back many administrations. And I remember when President Clinton first took office in his first term, Vice President Gore came out with a report called "Reinventing Government," in which it recommended a single -- the adoption of a single food agency. And the play on that was that there are 14 or 15 different agencies within the federal government that regulate food and that it's so -- and sometimes at cross-purposes.

However -- and I suppose that if we were starting out in 1906 and if we were starting new, it would make some sense for there to be one agency under which all regulation came, so that we can make sure it's consistent throughout the agency and under the same kinds of policies. But it's not 1906. We've had a regulatory system that has evolved in terms of not only the laws that are administered but the regulations, case law interpreting those regulations. And I -- just as a practical matter, I think the idea of a single food agency would be more than challenging. And some people use the Department of Homeland Security as an example: as all you're doing is really changing the names on a bunch of different offices.

What's more important is to have a central concept -- a central approach or philosophy, if you will -- that is shared by the agencies, and where the agencies are given the direction as well as the ability to coordinate on the regulation of the different products. But again, that's, I think, a practical answer. If it were 1906 and we were starting all over, then the idea of a single food agency might be feasible.

My recollection, by the way, is the FDA came out of the U.S. Department of Agriculture, and at one time had been the Bureau of Chemistry at USDA, and was broken off. It was in the '40s, or I think in the early -- earlier.

MS.

: Earlier.

KUSHNER: Earlier.

BESSER: A question over here.

QUESTIONER: Hi. My name is Tom Bollyky. I'm a fellow at the Center for Global Development, and thank the panel for these great comments.

My question is for Gary. I think you're right that the Food Safety Modernization Act has wonderful -- has advanced the ball tremendously on imposing HACCP-like standards, and the question will be their enforcement. You mentioned before that you need roughly $1.3 billion to enforce those authorities. My question is, given the current political environment and budget situation, that money may not be coming. What would be your prescription for a low-resource enforcement of those standards? Is it more -- higher civil or criminal penalties? Is it a higher standard of care, easing tort liability for these actions? Is it better targeting of those enforcement resources? If we can't -- if Congress doesn't appropriate that money, what's your prescription for a way forward?

KUSHNER: Well, first of all, as I -- as I've said a couple of times, I favor giving FDA the resources it needs to do its job. You can't expect an agency to take on new responsibilities when it's already stretched very thin in terms of its resources.

But putting that aside, there is almost -- I think implicit in your answer is -- or in your question, is that in the absence of FDA enforcement the rules and regulations won't be followed, and that's simply not true. Food manufacturers, food marketers, have a vested commercial interest, if not a moral obligation, to make sure that the foods they sell are safe. If there's an outbreak in peanuts, for example, number one, it taints all peanut-based products, regardless of who makes them. But number two, so many products, for example, in the case of peanuts, utilize peanuts, peanut paste. So the number of recalls when the Peanut Corporation of America incident happened was -- the rippling effect was tremendous.

And food companies don't want that. They don't want it for commercial reasons. They don't want it because they protect those brand names. Food companies want food to be safe. So they are already -- that's why so many of them have adopted HACCP voluntarily or most of them have adopted some form of HACCP voluntarily.

There is going to be a small number of companies that are not going to follow the law and -- or don't know how to follow the regulations, and irrespective of FDA resources, we're going to -- we're -- that problem's going to be -- always going to be there. And I think the food industry companies simply have to do the best they can to, again, know their suppliers and make sure that they've got programs to ensure the safety of their products.

BESSER: Question over here.

QUESTIONER: Good morning. I'm Abdul Hakim (sp). I'm a former Senate staffer. Part of my question was really answered, but it actually raised another question. What do you see as hurdles as far as the U.S. consumer is concerned or the impact on the U.S. consumer in the quest for increased oversight, you know, in -- and safety regulations, in that quest? I mean, how do you -- how do you see -- what are some of the hurdles that will be experienced by the U.S. consumer?

And also, on the global scene, what is some of the economic impact that you foresee on other individual countries? And that's in light what Dr. Hamburg was mentioning, and it was also brought up as well that we ourselves have limited resources and, you know, we have deep pockets. So I mean, what would you see as some of the challenges faced by some of the other countries?

BESSER: Let's put a hold on the consumer hurdles, because that will be part of the next panel that's coming up.

But Paul, to ask you, in terms of some of the hurdles you face in Nigeria to implementing and enforcing broad regulation and control over drug and food supply, how many of the issues are internal to Nigeria that you can deal with as a country and how many require much broader cooperation and financial input and support from the global community?

ORHII: Well, most of the issues are interrelated. The staff strengths -- we need finances to have adequate staff strength, the kind of level that -- the -- of training of the staff. So all these are interrelated. The finances are very important. That is, we need international cooperation to be able to be more effective; the training of the staff; and then maybe to have adequate equipment, the kind of equipment that we need to be able to be more effective in monitoring these products. So I think everything is interrelated.

BESSER: Thank you.

In the middle.

QUESTIONER: (Inaudible) -- just going back to Susan Dentzer's question about a single food safety agency in the United States, I think the analogy is not really Homeland Security. I think more the issue is something that Europe faced in the wake of mad cow disease, and that is in this country with USDA, we have an agency that is both responsible for promotion of food as well as for food safety. Isn't that an inherent conflict of interest that needs to be addressed?

HEYMANN: You know, I've heard that argument made many times over the 30-plus years that I've worked as a food industry lawyer, and I just never -- candidly, I never saw much credence in that. The -- there are different agencies that are involved in product promotion within USDA, and those that are in -- responsible for ensuring food safety. The Food Safety and Inspection Service -- anyone I've ever dealt with at that agency has been bound and determined to make sure the product is safe and that if it bears the mark of inspection, that it has been inspected and has met USDA standards. I've never encountered a situation where a FSIS inspector or even the people who are at the head of that agency had to weigh the impact on the marketplace, necessarily, of our causing the product to be recalled or not. I just don't see that. I think that the -- that that agency has the integrity to do its job.

So I don't -- I've never understood as a conflict of interest. But if it is, then you establish a single food agency, but if -- only if it were realistic. And as I mentioned, I just don't know where you'd start to do that, and I don't know that the time and resources that would go into trying to establish a new agency would be effectively spent. Those resources could be better spent by better coordination and communication between the agencies that already have regulatory jurisdiction.

KUSHNER: Just to reflect on your -- on your comment, when I was still at CDC -- and it was before swine flu, when we were focused on bird flu -- there was a lot of effort on surveillance of birds. And I remember one conference call, and it had folks on from FDA and Department of Interior and Department of Agriculture. And we were talking about what the public health messages should be to people. And we were looking at bird migratory routes and surveillance in Alaska, and we were talking about risk and what people can do to protect themselves. And the message from USDA was: Eating chicken is still safe. And so it does kind of play into some of the internal tension over --

MR. : (Chuckles.)

KUSHNER: -- that I've always found a little incongruous, of a department that does contain and tries to put fire walls between the groups that are promoting meat exports and those that are assuring that the food supply is safe.

BESSER: Yes, here.

QUESTIONER: I'm Rob Cortel (ph) with Intelex, and we do risk analytic solutions. And among other things, FDA is a client, on their PREDICT system.

This is about scale. And what we know is that some countries actually create a large part of the problem. I was in Hong Kong about a year and a half ago, right after melamine. And I was told that many of the middle class there refused to buy imported food from mainland China because of their fears about controlling food safety there. And we know that melamine really was something that totally originated, almost culturally, out of China.

How do you deal, in terms of scale, with a country like China which really doesn't seem to share all the way down the same values and restrictions and commitment to food safety?

BESSER: David, let me throw that your -- that easy question your way.

MR. : Thank you. (Laughter.)

HEYMANN: It is an easy question. You know, it's only by not giving up that the international community can succeed. And there are examples of success in all areas, and there can be examples in this. But it takes -- it takes every effort of every country possible. The FDA is doing their part by putting people there. Other countries are setting up norms and standards. But the issue is, when there is an opportunity, show that that was wrong, and show it in a -- in a very important way and move the people on a bit more.

But it's a very difficult issue to do. And, you know, influencing people is very important, but it has to start at the very bottom. We can't always think that we'll be able to impose regulation. I remember speaking with a minister in one country. And that minister said: I will never set up another regulatory agency, because I don't have the way to enforce my regulation, and therefore it opens up a whole new area of corruption.

So it's a very difficult issue from the very bottom. And sometimes it works better if you begin at the top with a framework but at the bottom to help the people understand the importance of safety and let them deal with these issues. So it's -- it has to be a multi- pronged approach.

BESSER: At the consumer level, do you think that the consumer would be willing to pay for more expensive food and drugs that would be required to -- if you were going to have a regulatory system that was ensuring safety?

HEYMANN: You know, that's -- it's a good question. I can't answer that. But I expect that if a community understands that their children are at risk, they will invest in what they need to to make sure that their children are not a risk. And we've always thought that we can come from the top down and regulate them. We can't. There has to be a demand created, as there is for everything else. And that demand comes from NGOs, from education in school, from a whole series of people, which can work and pull down from the top what support they can get.

(Word inaudible.)

QUESTIONER: Well, this has been a marvelous first panel. You folks are just spectacular.

I wanted to ask a question that harps onto two prior questions here. One of the trends that really leaps out when you start analyzing what's (growing/going ?) on on the drug side is that increasingly, the active ingredients that one can purchase, frankly, on the Internet, with no quality control of any kind, are coming from either India or China.

So we started out politely going to this direction, but let's just go there. (Laughter.) And it's kind of shocking what -- one website alone offered 20,000 active ingredients from a couple hundred manufacturers in India.

And so the question I'm really getting at is how can we go into a world where we're seeing an increasing concentration of the raw ingredient production coming from two key countries, neither of which have very strong domestic regulation, where then does the burden shift to guarantee that that active ingredient is what it claims to be, that it has no contamination and that it could be safely formulated for the next step?

BESSER: Paul, I'll start with you. You've said that 60 (percent) to 70 percent of the drugs that are sold in Nigeria come from India and China, let alone other active ingredients and other products.

What would it mean to Nigeria if, say, the supply from China and India was cut off because it's not meeting its stringent standard?

ORHII: Well, that is why I have resisted the availability of quality pharmaceutical products manufactured in Nigeria to some extent. One of the -- (inaudible) -- manufactured locally is a national security matter because I cannot imagine if the supply is cut off from both India and China, I don't know what I'm going to do with one -- (inaudible).

And so we have insisted that we have to start developing our own local manufacturing capacity.

We have approached both -- we have dealt with India and China and there are two different approaches. India is not willing to work with us to find solutions to some of these problems. When I tried to engage the Chinese food and drug administration, their answer was just very short. They said it is the responsibility of the recipient country to ensure the quality of products coming into its own territory. It is not their own problem. They have to protect their own citizens.

I have to go maybe even -- (inaudible) -- the (Senate Committee on Health ?) to engage the China chamber of commerce. There, we've begun to get some response, and that is what led at present time to the arrest and conviction of the six -- sentencing of the six people that were engaging in counterfeit medicine to Nigeria to death.

So China is less willing to take on the responsibility of ensuring the quality of products leaving its territory. India, on the other hand, I have had a different response. In fact, they have worked with us and -- (inaudible) -- where if we get a fake product that comes from India, if we can prove that that it came from India, then the person who gave us information that led to the interception of that product gets a reward up to $2,000.

So I think that is a positive step. If we want to continue to work on that, to see how far we can go.

BESSER: David, from a U.K. perspective, is this something that the U.K. can have impact on a bilateral way with the quality coming from India and China? Or this is much bigger than that?

HEYMANN: This is an issue of two simple words, expected and respected. And it works. It works if you can make sure that everyone understands what's expected and what's respected.

Now, I'll give you an example of this. Back in 2003, I think, many of you remember this SARS outbreak, which originated in China. This was a very difficult time because countries were hiding lots of information because when they reported, they would have tourist sanctions, they would have importations -- were banned, a whole series of things. And so in the analysis of what was going on in China where a country would not report, it was decided that the only way that reporting could be guaranteed was if the norms changed. It's expected and respected to report.

And so the director-general of WHO actually went to the Chinese publicly, accused them of not reporting and it changed the situation and it has changed the situation globally. People are reporting H5N1. They're reporting other things. This is the same issue, Laurie (sp), with food or with medication. You must take the example. You must accuse somebody who is respected, who does it in the right way, must accuse that the norms are being broken and that it's expected and respected and then other countries must come in behind and say, yes, we agree.

BESSER: Well, I always love to end a panel in the middle of a great conversation because it means that people will come back for the next panel.

I want to thank the three members of the panel for their comments. (Applause.)

The next -- the next panel will start promptly at 10:45. So there's a very short break. Please get back to your seats before that starts so it doesn't interrupt the flow of that session. Thank you.

####

®FC¯END

®FL¯

.STX

(C) COPYRIGHT 2011, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.

NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR E-MAIL INFO@FEDNEWS.COM.

THIS IS A RUSH TRANSCRIPT.

-------------------------

LAURIE GARRETT: I'd like to encourage people to please take your seats. Perhaps someone at the back there could let people who are still noshing know that it is time to cease the noshing and come for the sitting and listening.

So as people begin to get seated, I just want to remind everybody -- because I did hear a cell phone go off during the last session -- that this time any cell phones that do go off I will fine you $50 and give it to the charity of our collective choice. (Laughter.) And I also want to remind everybody that you're on the record. So when you ask questions, keep that in mind, and that our audience in Washington is listening via teleconference.

And we going to close up now with I think the most important discussion of the day. Hopefully it will be your take-home messages that will resonate with you as you leave this session. I should preface by saying you may not be aware how unusual it is for the Council on Foreign Relations to dedicate such a significant block of time to a single issue, particularly one that, from the point of view of foreign policy advocates, might be considered a rather narrow set of issues. I think it speaks very well of the council in general.

I'm incredibly pleased that the council saw this as a significant and important issue, in part because it goes to the core of our weaknesses in global governance, and that is something that increasingly is occupying the attention of the Council on Foreign Relations. The vast number of areas -- everything from climate change, to threats of pandemics, to counterterrorism and Islamism, and what have you, issues that really cannot be addressed by a government acting alone adequately, but rather require marshalling forces for some form of global governance which currently does not exist.

What we're going to be looking at in this session is precisely that problem: What can we do to begin to get closer to solving some of these safety questions, at least to begin to venture into some appropriate directions that might take us towards the G-20 next year when President Obama will be the formal host and when it might quite possibly be an issue that could rise to that agenda.

And as you all know, you have the biographies of everybody in your packets, so I won't spend a lot of time tell you who everybody is. But I want to begin with Aline Plancon, who has come all the way from France to join us -- or Geneva?

ALINE PLANCON: Geneva.

GARRETT: Geneva. She runs the Medical Products Counterfeiting and Pharmaceutical Crime Unit -- there's a mouthful, otherwise MPCPC, which is also a mouthful.

What is that in French? What are the -- what's the acronym in French?

PLANCON: MPCPC.

GARRETT: Oh, thanks. (Laughter.) That never happens. That never happens. (Chuckles.)

Now, if I understand it, it was formerly created as an entity in 2006, but you didn't really get up and running until about a year ago. And you have a massive staff -- there's two of you.

PLANCON: (Chuckles.)

GARRETT: Did everybody hear that? (Laughter.)

And yet somehow, in your first year of operation, in August you were instrumental in the arrests of 80 people and the seizure of 10 tons of counterfeit drugs in East Africa; and in October, Operation Pangea III cracked down on illegal websites hawking counterfeit drugs -- 290 websites shut down, 76 arrests and a million pills seized. I'm not quite sure what might be.

But I am at a loss to understand how we should assume that INTERPOL has a serious commitment to this problem if you are two people, even two that work so hard that you're able to pull these arrests off.

PLANCON: Yeah, well, if you think differently, is how come INTERPOL came into the loop, into a pharmaceutical crime and an issue that he was not dedicated before? And how come in the history we've been trying -- and we are building up a capacity from the police point of view in order to provide an enforcement and an adequate response to these crimes.

So we are only two, but I'm proud that we are at least two, and we started with one. So when you think of it -- (laughter) --

GARRETT: You've doubled. (Chuckles.) (Laughter.)

(Cross talk.)

PLANCON: -- kind of increase in our staff, and we are getting better and better. So all I'm saying is, all staffing for us in INTERPOL; with this initiative at the WHO, this famous IMPACT; and we had some precedence in combating counterfeit medicine in Asia, but we were just baby born with that. And we had the opportunity and the willingness to build up this multi-disciplinary approach which we believe can make a difference.

So we've pooled resources. But with a number of networks, with a share of capacity that are not necessarily the same but that are complementary, we can make miracles. Like it was 2 million pills seized during Pangea. The countries where we've been interacted are starting with nothing, with not knowing even one another when we did some meetings between the police, the health and the customs. We've been trying to open the door to the private sector, which is also something very important to this project, and to get the scientific community helping them to identify the suspicious samples where we couldn't make it.

So, all in all, I would be more optimistic, saying that INTERPOL has been raising up the awareness towards its community with these crimes that we didn't know before, that is a serious criminal activity. The gangs are very sophisticated. They are very well organized. They know what they are doing and on which rules they are playing. We know that they are very dangerous of course, and they are using all the credibility and the weaknesses of the system, and what they want to do is money.

So the fact that we realized it. And they will never stop, because, so far, we're seeing the configuration where we are in a low risk for them -- the sanctions are very low, as you know -- and very high profit. So this is perfect. If you're a criminal, you should go into this business. (Laughter.) Therefore, the more we will stay into this configuration, and the less we will try and put the resources together -- that does not cost more than what it is now, it's just thinking differently, thinking outside the box -- we could make a difference.

And in our perspective in INTERPOL, we've tried to do that, and with the support of my top management -- Mr. Noble, and our member countries, we've been able to raise this crime as a top crime priority for the member countries of INTERPOL this year. So this is where we stand.

GARRETT: We earlier heard from Paul Orhii about the great dangers that enforcers, regulators may face in a country like Nigeria, and we've heard such stories from all over the world. There seems to be very strong indications that organized crime -- traditional organized crime is moving into this space in a very dramatic way, in part because they've been engaged in the theft and sale and counterfeiting of prescription narcotic drugs for a long time -- OxyContin, and Percocet, those sorts of drugs -- and then increasingly into drugs that have an effect on speed and diet.

But this -- it's a logical transition. These guys are pros. I mean, you're not up against some kids in a basement cranking out some phony aspirin.

PLANCON: Yeah, you're right, in the sense that they are very sophisticated. And they are testing the market. Some of them are pros in narcotics, and because of this benefit, they can make in medicines, they are testing the market to dedicate their activities onto purely counterfeit medicines.

We're also facing some gangs or mafias that are also dedicating their activities in other type of, what we call, pharmaceutical crimes -- and in that, we intend -- the theft of medicines, it is very common and dramatic for us, criminal activities, as well as the diversion, which is to us encompass the safety for the patient -- safety aspect, but also they undermine the credibility of the system.

So we are confronted to all these bunch of activities where these gangs are completely directing their activities, and they developing it, which is for us -- two, four, whatever persons we are -- a very big concern, and also for the INTERPOL community definitely.

GARRETT: And Greg Simon, I am sure that at Pfizer, while you may think it's wonderful that INTERPOL has an office, an office of two does not give Pfizer comfort when it comes to defending your brand. And I don't want to talk about your brand as a copyright issue, but what happens if drugs are released, claiming to be Pfizer drugs, that are actually poisonous, made by somebody else?

And so tell us what extent you go to, to essentially try to ensure the safety of the marketplace as a private corporation?

GREG SIMON: Well, first we're trying to protect our mission. Our mission is the ethical production of medicines that help improve the health of people all over the world. So if somebody thinks they're getting a medicine to improve their health, and they think it's a Pfizer medicine, and they don't get that, then we can't fulfill our mission. It's really not about the name on the pill; it's really about what's in the pill.

We train the government on this. We have the world's best anti-counterfeiting lab in Groton, Connecticut. We recently hosted over 20 people from the Commerce Department, and USTR and others. We have ex-FBI officials. We are constantly in the business of staying one step ahead of an organized effort that can make anything look like a real Pfizer drug, or any other company's drugs, whether it's the aluminum blister pack the pill is in, or the coding, or the labeling, or the imprint, it is constant battle to stay ahead. It is that sophisticated. This is not --

GARRETT: How large is your operation? I mean, what is this costing the company? How many human beings do you have in the field and in the lab in Groton?

SIMON: I don't know the costs, and if I did know, I probably shouldn't tell you. But just like when the president goes to India, we don't say how much we're spending on security. But I know it's not $200 million a day. (Laughter.)

But we have hundreds of people around the world. And, in fact, we have training sessions all over the world -- literally, all over the world -- where we go in and train local government officials and police on how to detect, and to check on medicines. So we have hundreds of people engaged. At the Groton facility. we have about 50 to 100 people. It's also part of our research facility in Groton, Connecticut, which is one of the original Pfizer locations.

But the issue here is, anything that substitutes a product that it's intended -- anything that interferes with getting a product to you that you think is going to improve your health is an assault, because either you're being harmed or you think you're being helped and you're not. And whether it's Lipitor, or a cancer drug, or pain medicine or a malaria drug, whether we call it counterfeiting, or substandard or falsification, it is an assault on patients all over the world. And we are focused on trying to create a system where that is treated as seriously as the sale of illegal substances that people want to take.

Here these are things people need to take and it's not treated as seriously -- if I could say it -- as counterfeit music and counterfeit movie DVDs. When I was in the government, our relations with France were determined by Jack Valenti. Every year he'd go to France and argue about the right of American films to be freely distributed in France, which didn't like American movie industry, and the whole government was involved in that dispute. And here we treat illegal pharmaceutical drugs as either an IP issue, which I don't -- which I don't think it is -- or something that's not worth the full force of the U.S. government and world government getting behind it.

It depresses me to say this, but four or five years ago I testified to Senator, at the time, Enzi and Kennedy's committee about the future of the FDA. And I pointed out that their entire budget to defend the entire country from bad food and bad drugs was equal to the budget of the education department of Montgomery County. How can we get there from here if that's all we're willing to put behind it?

GARRETT: In practical terms, if your lab in Connecticut figures out that something that field agents -- let's just say, in Kenya -- have seized and sent to your Connecticut lab to analyze, they figure out that indeed it's not only phony but quite dangerous, there's something in the formulation that could have a toxic effect on people, who do you call? What do you do? What's the steps?

SIMON: Right, well, first we call both people at INTERPOL -- (laughter) --

GARRETT: Ring, ring. (Laughter.)

SIMON: We call our government. We call the --

GARRETT: What agency in our government?

SIMON: HHS. We call WHO. Depending on what it is. If it's an infectious disease, we might deal with the CDC.

And here's the -- here's the odd thing: We are moving in this detection space from a world in which the focus has been on neglected tropical diseases and infectious diseases to what is now a U.N. summit coming up this September on noncommunicable diseases, which include things like cardiovascular disease, cancers, diseases of aging, so-called, where the medicines that will be distributed around the world are going to be not the medicines that are donated, like we donate Zithromax for trachoma -- it's a blinding infection -- but medicines that we used to taking every day, like a Lipitor, like certain kinds of antidepressants or pain pills.

There's a huge market internationally for people to illegally provide those medicines because the price for those medicines around the world are automatically higher than the neglected tropical disease medicines which are intended for the poorest of the poor. And the noncommunicable diseases will be intended for people that we think of as -- in the middle income countries with a lot of poor people, like some of the Middle East countries, or some of the South American countries. We've been working with the Gates Foundation on what's called tiered pricing.

So there will be drugs that will be priced for the poorest of the poor, and drugs that are priced for the middle class, and there will be a huge effort underway to steal one and give it to the other.

GARRETT: That's bad, that's illegal, but that's not getting to our safety issue. That's a --

SIMON: Correct. That's just a --

GARRETT: -- separate problem.

Well, let me ask you about one that is at it. I was recently in a meeting with the health minister for one of the poorest states in India, and he described that they don't really have any problem with antibiotic-resistant bacterial disease, and so on, because they don't have a black market in drugs. And the reason they don't have a black market in drugs is that all drugs are provided free by the government.

And I said, well, that's great as long as you're dealing with, say, tuberculosis and malaria. But what are you going to do with your health transition when you're talking about diabetes, and therefore insulin every day; or, you know, heart disease, and therefore antihypertensive medication on a daily basis, something of that nature? Then, all of a sudden, we can see an entry point for the creation of black markets even in countries that traditionally have not had them. And so it seems like this is another potential danger point coming ahead.

SIMON: Yes. And there are two specific examples:

PATH, a nonprofit based in Seattle, recently created a meningitis-A vaccine very cheaply, and that will be distributed in many parts of Africa where this is the particular type of strain that's affected. Whenever something gets mass distributed, that's helpful, people will start producing what looks like it's the vaccine and is not. So automatically you can assume that someone's going to try to get in on that.

At the same time, when we provide new technologies that allow people who are community workers, instead of doctors, to do subcutaneous injections of treatment rather than intramuscular, which is a little more difficult, those technologies are cheaper and they're more easily distributed, and they will be the -- they will be attractive to people to mimic, with awful health effects, incredibly bad health effects.

So every time you do a step forward in a health product, you have to immediately go on the defensive. And we, as Pfizer, cannot solve this problem; and we, as the government, cannot solve this problem. We, as government and industry, can solve this problem. But we have to get over these barriers that have come up over the years that the two shouldn't be cooperating, and that's one of the problems.

GARRETT: Okay, I'm going to shift to food for a moment, because --

SIMON: Just to cheer up? (Laughter.)

GARRETT: Just to cheer everybody up, because, you know, food is a bit better organized and regulated than is the medical and drug chain.

Caroline, over at -- from your point of view, first of all, we do have this long-established Codex Alimentarius. It's been in place now for, what, five decades I believe. And it is internationally recognized, most of the nations of the world are signed on. That sounds like we have global governance. Does it work? Is it?

CAROLINE SMITH DEWAAL: Well, Laurie, it certainly is a start. But I think you have to start where public health starts, and that's at the local level. And at the national level in the U.S. we are just transitioning into this preventive system from one that's largely responding to outbreaks that are already happening. What's happening at Codex is one piece of a regulatory framework.

You've been talking on the drug side about enforcement. That's another piece. Codex does standards setting, and that's very important, but you need the whole framework under which those standards are going to be applied, and that's what's missing in many governments. What's exciting about the Codex Alimentarius is that it is international governments at the point of the FAO, the Food and Agriculture Organization, and the World Health Organization, and those two coming together to agree that these standards are important both for public health and for trade.

The difficulty with it is that -- and just to finish on what is good about it, it is an amazing experience to sit in a room with 200 countries -- people speaking many different languages, there is simultaneous interpretation, so that everyone can understand the positions and policies being established by the different governments. That is an amazing thing.

GARRETT: Just on that note, I've had some people tell me that it was easier to define brie cheese in the Codex than in the EU. (Laughter.)

DEWAAL: Yeah. Well, and the difficulty with Codex is that at times it seems like it's kind of broken down into a debate between the United States and the EU on different policy matters, and a lot of governments are sitting around, some are taking one side or another, but it's really largely sometimes just bilateral negotiation that's happening there.

It would make a lot more sense to have more commonality between those two major trading centers. For example, on the issue of growth hormones and the use of certain drugs in animals, not for the health of the animal, but to promote -- to allow them to grow faster and develop more quickly to go to slaughter. There is not an agreement between the U.S. and the EU. And so sometime those fights break down on the floor of Codex and you have a lot of people's time wasted while you watch essentially something being debated in a forum where it can't be resolved. It's got to be resolved between the U.S. and the EU.

GARRETT: In the last 10 years or so, what category would you say has represented the greatest risks to human health in terms of food contamination -- chemical contamination, bacterial, or the transmission of antibiotic resistance?

DEWAAL: Your question is an excellent one, and the answer would go to what region of the world you're talking about.

And this goes to another central point that I think is important for this group to understand. If the U.S. tries to manage food safety risks based on the standards that are important to food produced in the U.S., we will be missing the mark when it comes to imports. We have to actually know what the hazards are coming from those different countries. Things like -- we did a research project looking at outbreaks in different global regions, and I can tell you from that research, the chemical contaminants come up much more in the Asian region as an issue of public health concerns than they do in other regions of the world.

Antibiotic resistance is clearly a hazard that I believe has actually emerged through certain food products in the U.S. already. For ground beef, it's shown up in numerous outbreaks, and also in dairy products, especially raw milk, which I wouldn't advise anyone consuming. So we have already emerged various strains of salmonella that are showing up in the food supply that are antibiotic resistant.

But I think the issue of pathogens and chemical contaminants, as they're moving across the borders, needs the type of comprehensive approach that I think the commissioner was referencing in her first talk today. It's critically important, but we need to recognize that some of the tools to accomplish it already exist and need to be strengthened and further developed.

GARRETT: Michael Robach, I want to ask you a question about complexity, and before I get to it, I want to start with an anecdote, if you'll forgive me.

A few years ago there was an outbreak of E. coli 0157, including deaths in school children in Japan. The Japanese agencies were able to determine that it had something to do with school lunches, but couldn't figure out exactly what was responsible -- how these kids were getting E. coli -- and ended up shutting down schools all over Kyoto and Tokyo.

It was eventually determined, through about two years of investigation involving scientists at academic and government levels in at least four countries I know of, that it was all because the daikon seeds for those horseradish sprouts, that are so popular in sushi and sashimi, had grown in Idaho downstream from a big cattle site. And the E. coli had been shed by the cattle into the water supply; ended up absorbed into the seeds, so they could not be washed off, and they could actually be passed multi-generationally in the daikon.

This was an incredibly complicated chain of events. No one could have imagined such a thing. And nobody's regulatory or research systems are in place in any country I know of that could quickly track that one down, and have made it resolved in less than about the two years it took to figure it all out. I wonder if you can describe to us the complexity of the chain of what we call our food supply? Where is it coming from, and how much more complex is it as you escalate up to processed foods?

MICHAEL ROBACH: Well, I think you make a very good point. It's an extremely complex system. We look at the food system from origination, starting in a farm field, all the way through final consumption, and you can take many, many steps along the way. I remember being at a meeting -- the International Association of Food Protection last summer out in California, and there was an Irish professor giving a talk. And he put a hamburger -- a cheeseburger, actually -- up on the board. And as he went through all the components of that hamburger, with the lettuce, the tomato, the condiments, the salt, the spices, the bread, everything, I think he counted 54 countries that were involved in the production of that particular hamburger --

GARRETT: Wait. Let me just get that right. When you eat a hamburger, you're eating 54 countries? (Laughter.)

ROBACH: You very well could be. It is possible. It is possible.

And I take this -- I live this every day. I work for Cargill. We're a large international agribusiness firm. We operate in 67 countries around the world. We have about 1,200 food processing plants around the world. So this is my world. You know, this is what we live with each and every day and it is extremely complex. It's not simple. And it takes an awful lot of work, not only within the company, but then also with our suppliers, and our suppliers' suppliers, to really be able to focus in on what's really important from a positive public health standpoint.

And I want to go back and talk a little bit about something that Dr. Hamburg mentioned this morning, and that's something around alignment, and that's really getting focused on those elements that are extremely critical to the safety of our food supply. And one of the things that we've done within Cargill is we've taken the principles of Codex Alimentarius -- the principles of good hygiene, prerequisite programs and HACCP, and used that as the basis of our food safety systems around the world. So regardless of where we're producing, processing, marketing and selling, and eventually having consumption, we're operating against a single standard that are focused on those elements that are critical to the safety of the food.

People often get food safety and quality mixed up. They're very different. I mean, safe food is safe food, and those criteria are very clearly identified as you go through your risk assessment and do your hazard analysis, and understand what are those emerging issues or those existing issues that could impact your food supply? And you need to understand that, and have appropriate interventions in place, and be able to manage that risk to the best of your ability -- not that you're always going to be able to eliminate it, but manage it to the best of your ability.

And then, working with your downstream customers -- as we do with the McDonalds, the Nestles, the Krafts, the General Mills, the Coca Colas of the world -- working with them to make sure that what we've done to our products are also then carried on, so that they have the same systems we have in their products, and then working with consumers to assure that they understand their responsibility in handling and preparing food properly.

GARRETT: I'm going to ask you a question that Greg so skillfully dodged. (Laughter.)

If the FDA's budgetary capacity to deal with food and drug safety is about the same as the school system of Montgomery County, I'm going to take a wild guess and say that Pfizer is probably spending closer to the school system of New York City on their side of ensuring drug safety, at least for their product lines. What do you think is the ballpark of what kind of expenditure the private sector is making to take care of food safety?

ROBACH: I think the private sector is, you know, spending a tremendous amount of money and putting a tremendous amount of resources against food safety and assuring our food supply chain.

Clearly, the industry spends a lot more money than governments are capable of spending. And that's the way it should be, because it's our responsibility to make sure that we have a safe and a secure supply chain. So it is something that I feel personal about. I know my company, Cargill, our mission is to be the global leader in nourishing people, and we take very seriously.

And I look at the role of government as not necessarily to control what I do, but to make sure, and assure that companies are doing what they said they were going to do to produce safe food. They have an oversight responsibility. They don't have an active management responsibility. That's the responsibility of the private sector. Government's role is there to assure that what we said we were going to do, we're doing, and that what we said we were going to do is producing safe food.

And in that way I look at it as a partnership. And there should be alignment between the public sector and the private sector which, to me, gets embodied in those principles of Codex, the prerequisite programs and HACCP. And if we're all operating against those same criteria -- government from an oversight position, and industry from a business practice standpoint -- we're going to be in much better shape from a global food supply chain than we are today, where we've got things all over the board, and a lot of the things that we do for regulatory compliance have very little to do with food safety.

GARRETT: Well, let me come back to the "who do you call" question. We've heard that Paul Orhii has a blacklist in Nigeria of repeat offenders -- essentially, companies putting out fraudulent or unsafe products. That's one method of approaching it.

We heard from Greg a long list of who to call: There's some WHO (to) call, there's a call to INTERPOL, there's calls to CDC and the FDA, but not one sort of 911 version of: we found a violation; this is who I call.

If in food you -- I mean, your first thing of course is to say we're not taking your product into our system, our chain, because it's not reliable, but if you have a grower, a distributor, a processor that you see violations in repeatedly, is there a phone call?

ROBACH: Well, there's always a phone call.

There's an organization that we're part of in Europe right now that was formed within the animal feed industry -- because we were having folks coming up through Rotterdam with barges full of tainted soy beans and trying to sell those soy beans into the food, into the feed industry. And we finally formed a consortium of feed manufacturers, so that when somebody rejected that barge the first time, an e-mail went out to everybody else up the river. Because, they would just go up the river until they finally could find somebody to buy it. So now we have this early-warning system in place where an e-mail goes out, everybody knows what's going on, and then the Dutch government is informed. And that has really stopped that trade.

So we have a number of organizations that we work through. We have the GMA organization here in the United States. We work within some European, some Asian, some Latin American organizations where industry talks to one another. And when we know somebody is trying to move something that is economically adulterated or it's not what it purports to be, we have mechanisms so we can talk to one another. And we do talk to the FDA and we do talk to the USDA about things like that, because that is part of the partnership, and that's part of --

GARRETT: But there's no 911 for food --

ROBACH: There is no 911, you know. I mean, if I've got an issue with food, I'll pick up the phone and we'll call Mike Taylor at the FDA and say, hey, Mike, you know, this is going on, so he can get ORA involved and they can take appropriate action. Or we can call USDA, we can call FSIS and say, hey, something's going on out there. And we talk to our inspectors every day in our plants.

SIMON: Let me -- (inaudible) -- your question. (Inaudible) -- than us calling other people, we now are distributing technology for people who receive the drugs to text the supplier -- the legitimate supplier to see if the code matches this legitimate code. This is done in Africa so that you have a way of verifying that the lot you got is the lot that was supposed to be distributed. And this involves the pharmacist and the distributors locally, as well as the company internationally, so that we're using texting technology, because cell phones are far more distributed than anything else. We can now help people verify that they've gotten the real thing, and that's much better than us trying to chase the bad thing down.

GARRETT: Well, one of the big issues, Aline, that is an increasing problem on the drug side -- and there is evidence of it all over the world -- is stolen drugs intended for humanitarian relief purposes or for distribution through The Global Fund to fight AIDS, tuberculosis and malaria, or any of a number of bilateral programs that are part of health and development.

I know that I had the experience -- I traced one supply on the ground from -- donated by UNICEF and a host of other humanitarian groups to Ethiopia. And the drugs then were -- ended up in -- the drugs were then hijacked by Ethiopian thugs, basically, then sold through to Ingushetia, inside of Georgia, the often contested and recently source of warfare between Russia and Georgia. It was a sort of lawless state run by criminal gangsters, and their main source of income was stolen pharmaceuticals.

They didn't even remove the donation labels off these things. But I found them in marketplaces from Central Siberia all the way into the Czech Republic, all intended originally to help dying people in Ethiopia. We now have the scandal where The Global Fund is facing some real serious charges because they found that many of the funds distributed to key countries in Africa have, quote, unquote, "disappeared," and a lot of the antimalarials, the bed nets and anti-HIV drugs have, quote, unquote, "disappeared."

Now, one of the trends in all of this is realizing: Hey, you know, I make a certain amount of money. If I take the stolen drug and sell it somewhere, well, I can make twice as much money if I dilute the stolen drug down by 50 percent, repackage it, and now I sell twice as much elsewhere.

And this seems to be a rising trend. Now, are you -- do you have any capacity to intervene in these situations?

PLANCON: Thank you. First, I've got a question. Do you want to join my unit in INTERPOL? (Laughter.)

GARRETT: (Chuckles.)

PLANCON: Now, regarding these crimes, that's true that the first time we've been developing our capacity with (the Codex ?). So INTERPOL is a big family. We've got a network of 188 member countries, and we've got this automatic exchange of intelligence and also criminal information instantaneously -- oh, it's difficult in English. And so we are able to connect all these people together. You know, that you -- when you've got a guy who is arrested and identified in one country, you can immediately identify and inform the other countries where he stands.

So this is the criminal models behind, so now what about the products? And the problems that we are facing is sometimes it's difficult to know where the products are coming from. It's like we know where they are, we know -- we can identify some of the criminals behind, but we don't really know the whole picture, because we need to develop our capacity with the member countries, with the agencies we are working with, the private sector and all the others.

Now, we've been also facing this situation regarding the diversion and the theft. For the first time last year INTERPOL provided its capacity, services and communication to support the major theft that happened in the U.S. in order to alert the police forces all around the world of the possibility for them and for the health agencies to find out some products that were part of the theft. And therefore --

GARRETT: What was the -- can you tell us what the product was?

PLANCON: The product, no, but the company was Eli Lilly --

GARRETT: Okay.

PLANCON: -- and they are -- we are working, such as the others, through some networks. And so this went through the attention also of the police that we are also are trying to educate in investigating that crime.

As far as the diversion is concerned, it's also something that we've been immediately confronted with when we started this operation that we coordinated. And we found that some products could come in one country and would be found on the opposite side of the continent. But still no traceability and no -- (inaudible) -- from the, you know, people who sent it.

And so what we believe we've got is that there should be a change of mentality from all these donors and also the countries receiving these goods, so that we could develop a monitoring system that would not be constrained for anybody, but to involve this enforcement part of it that makes the chain safer, and that would allow the patients who should be getting these medicines to really get it, because at the end of the day sometimes they don't have it.

So by developing this investigation, and we are involved in some of the investigation of major diversion, we would like really to see a change into this -- into this approach of, you know, trying to investigate this crime, or at least to address it from everybody's perspective, and of course including ours.

GARRETT: Well, Caroline, everything comes down, whether you're on the food or drug side, to the ability to enhance surveillance and monitoring on the ground. You want countries, regardless of where they stand in GDP and where they stand in categories like "poor country," "emerging market," "developed," and so on, to have the capacity to do surveillance, and to be able to tell that the powdered milk actually is made from milk, as opposed to a chemical like melamine that was meant to be a coating on kitchen cabinets, or that the cough syrup is really cough syrup.

When we talk about enhancing surveillance capacity, sometimes it sounds like empty words. Who's doing the enhancing, and who's paying these people to do the surveillance? And how real is this, quote, unquote, "enhanced surveillance capacity?"

DEWAAL: Well, surveillance is the real portion of our food supply today that's happening at the local level. Public health surveillance -- which is where the outbreaks are occurring, documenting illnesses, deaths, hospitalizations -- that is the function of local governments.

And today that function is being severely threatened. We just did a survey of the U.S. when it came to food-borne illness outbreak surveillance -- which we think is a key indicator for any public health monitoring system, because the outbreaks occur fairly regularly, fairly predictably -- and we found a huge range. The best states are reporting about eight outbreaks per million population, but many states in the U.S. are reporting much, much lower than that, sometimes one outbreak per million or even less.

So we have a real crisis on the ground with local public health, and that's in a country that's quite wealthy. We've been starting to look at surveillance -- informal surveillance systems in other countries, in other regions of the world and, you know, we made some very interesting findings. I mean, Africa has a lot of reporting, but the outbreaks are huge and they're not well documented. You know, it's always reported as a water-borne outbreak from cholera, but we don't really know what's going on because they don't often have the lab capacity to do that.

The World Health Organization is right now setting up regional labs and working with governments and regions to ensure that they do have capacity to do this basic monitoring, and that will be helpful also as we improve for antibiotic-resistant strains of food-borne bacteria that can be coming through the food supply. So there is an effort to make this improved surveillance, but it really -- that surveillance component is really important because it tell us what we need to know about the imports that are coming from around the world.

Melamine -- nobody predicted melamine. But it actually came here first and was put into an ingredient that was used in pet food. So, in fact, we had the canary in the coal mine there when we had a major crisis in pet health because melamine had been consumed. That same ingredient then showed up in the infant formula in China and killed at least 50 infants and sickened thousands -- tens of thousands.

So it's really -- we need to listen to the surveillance, we need to recognize the canaries, and we need to take action a lot faster than I think we are today.

GARRETT: I want to ask each of you the same question before we go to the audience, and that is: If, indeed, you did have the ear of the sherpa team planning the G-20 for next year in Washington, what might you hope them to consider as a potential global policy initiative for the area that you're most concerned with?

And I'll start with you, Mike, down at the end and work our way across.

ROBACH: Well, I think the one thing that I'd like to see is better alignment across national governments, an alignment based back on -- and I said it before -- on the principles of Codex Alimentarius, both the prerequisite programs and HACCP.

And, you know, I believe that if national governments take those principles and use those as the basis of their regulatory programs, and we do that consistently, we're going to be in a much better place from a global food supply chain. The industry is already moving in that direction. The Global Food Safety Initiative is a consortium of small, medium and large companies, both producers, processors, retailers and food service -- food service providers, and we have adopted these benchmarked audits against food safety systems that are based in Codex as the way that we're moving our industry forward. And we're not only doing that within our own companies, but we're also driving this back to our supply chains.

And we talked earlier about capacity-building, and the GFSI group has put together an emerging markets program where it provides capacity-building through training and a step-wise progression through the process, so that emerging economies can adopt the critical elements in one year, and then build on that and adopt the next 50 percent of the principles of Codex the next year, and then finally through the third year become fully complaint. So it's a way -- it's an orderly way to build capacity, and build education and training in our supply chains, so that we're all focused on those elements that are critical to safe food.

So if governments could go through that same process and come to an agreement on what's important, and let's get alignment around those issues and provide regulatory oversight accordingly, I think we'd all be in a much better position.

GARRETT: Well, so far, if I'm the G-20 sherpa, you're music to my ears because you didn't ask for money. (Laughter.) You asked me to "align," which we can all release a statement and say: We shall endeavor to align. (Laughter.)

Aline?

PLANCON: Well, first I would ask the sherpa to put the line onto the agenda, okay, pharmaceutical crimes and public health and safety protection.

I think that if I would be able to convince, or to have my wishes come true, it would be to have this (equation ?) between the global health policy and being very sincere in putting in this enforcement -- necessary enforcement aspect in order to protect the public health and ensure the safety of the patients, which is recognizing that pharmaceutical crime is there, recognizing that we need to work together, that the model that we are experiencing are good, but they are definitely not enough and we need much more support in order to develop in a proper way.

And so try and get out of this situation where -- which is completely paradoxical, where we've got technical work that is very well recognized from the experts side, but the political world that are challenging the technicians because of ideological controversy. So I would wish that this controversy would find a way so that this global governance could embrace this ideology, where we can work together with different perspectives but aiming at the same goal.

GARRETT: Okay, now, I don't -- I think you also asked for an aligned policy.

PLANCON: No, because --

GARRETT: Did you have a budget?

PLANCON: Yes, I've got a budget proposal for you. (Laughter.)

GARRETT: Oh, you do. (Laughter.)

So you're coming to the G-20, and you want to what? I think you want to more than double your two personnel at INTERPOL.

PLANCON: Yeah, what we want is to replicate the -- (inaudible) -- impact, which is really getting all these branches of systems and competencies that together are making miracles.

GARRETT: Oh, miracles. Okay.

ROBACH: Laurie, Laurie, one point before I will leave I want to make clear. You made a comment about asking for money, I'm not asking for money, but what I would ask governments to do is to take a hard look and reallocate resources against those issues that are most important around prevention and focus on positive public health outcomes, because we spend an awful lot of money in infrastructure around the world, and governments around the world, that are not, in my opinion, moving us towards a preventive system, nor is it necessarily having a positive impact on public health.

So I think we can do a lot of reallocation out there and be a lot smarter about the way we spend our money.

GARRETT: (Audio break.)

SIMON: A lot of money for implementing in the G-20, a system to track products that can be accessed in any pharmacy anywhere in the world with a cell phone.

And we know how to do this. A few years ago, my credit card went to Istanbul without me. (Laughter.) And the credit card company called and said, are you in Istanbul? And I said, no. And they said, well, your credit card number is in Istanbul. And so if we can track that, we can track food and drugs that need to be labeled and tracked.

The financial services industry knows more about you than any other business -- not your doctor, but your financial services company, and if we can use that technology to guard health, it'll be a huge improvement.

GARRETT: So you want the G-20 to fund an agency to execute that?

SIMON: I want to be able to distribute that technology all through the G-20.

GARRETT: So what do you think that price tag is? Ballpark it. One million (dollars), 100 million (dollars), 1 billion (dollars)?

SIMON: Well, there's already a standard to do this, so you don't have to invent how you do it. So the technology to do it is, I would say probably in the G-20 I would predict that it would be less than $100 million, because what you're doing is you're educating people (that) they can do it using existing technology, and we already labeled the lots of drugs and we can do that more efficiently with this new standard. So this isn't about money so much as it is about awareness and commitment.

GARRETT: Caroline, you're on.

DEWAAL: All right.

Well, first, we're going to need a lot of money. (Laughter.) No, we're going to -- I would, I would approach them, first of all -- Mike and I are generally in agreement on the framework, so let's put that to the side. We all like the framework. In order to get that framework implemented, though, in a meaningful way, first of all, I would want them to fund these regional labs, and countries that want to participate should be monitoring -- sending samples in so we can monitor and determine the highest food safety risks for those countries.

And then those participants -- I bet Nigeria is right up there at the front of the line -- will get, like, I don't know, how much would a country need for capacity-building in this area, so we can build, develop the framework for that national program that can implement the preventive control systems, that can monitor that the companies are actually doing that, the things that are already built into the new U.S. law, and we could implement that framework through capacity-building.

So, Laurie, in short, I do think it would be expensive, but I think that capacity-building in this area will provide a huge benefit to that organized consumer voice. We talked about that in the last panel. We really need consumers to demand safe food and safe drugs from their government. And the industry plays a major role, but consumers can demand from their political players that these systems be implemented. But systems shouldn't be stovepiped just for exports. They really need to benefit the consumers in those countries.

GARRETT: Well, I can't help but think, if I'm a member of the United States Congress, the European parliament, any place where budget tightening is the name of the game right now, that I am going to take note of the massive level of expenditures that private sector is already making in these spaces, and wonder why it should involve more money coming from my taxpayers as opposed to levying the industries in some way. Why not a penny for every apple sold going towards apple safety? It seems to me as a consumer, one penny per apple, especially what I'm paying for apples these days, is not bad. (Scattered laughter.)

Let me, on that pontificating note, open it for your questions. And we'll start over here with Yanzhong Huang.

QUESTIONER: Yanzhong Huang from the Council on Foreign Relations.

I have a question about the marketing of counterfeit drugs. And according to WHO, half of the counterfeit drugs are marketed online. And online marketing we know that the counterfeiters operate through sites, you know, that could conceal their locations, identities. And some actually operate through those very, completely legitimate sites. You know, I -- whenever I went to a website of a major newspaper in Singapore, I would see this, you know, advertisement marketing so-called authentic Viagra, you know, on this site. (Chuckles.) And maybe Greg could address it.

Another problem that we have seen is that, for example, in Eastern Europe we saw that the counterfeiters actually tap into those drug trafficking channels to market their drugs. You know, so there's perhaps in some cases previous drug traffickers become today's counterfeiters, because this is less risky and equally profitable, if more -- if not more.

So I wonder maybe Aline now, or Greg could answer this question about how you address this non-traditional marketing issue.

GARRETT: Let me go first to Aline with the website issue, since you have already successfully cracked down on 290 of them.

PLANCON: Mm hmm. Yeah, the Internet -- "the cloud," as we call it -- is very challenging for all type of criminality. And that's true that these counterfeiters or the criminals use -- are using the Internet facilities to develop their business and to make sure that they can create, distribute, trade and deliver the illicit and counterfeit medicines using this Internet.

So through the experience that we've got, and thanks to the support of 44 countries, I mean, police, customs and health regulatory bodies, we could see and we could really experience -- see a really big difficulty to address that crime. And the reality is that the fact that no regulation on Internet is there poses problems to us is enforcement sure, tracking down the websites. And especially where they are is a challenge for the investigators, because effectively the criminals are going very quickly and they are very well organized in shutting down their websites and opening it again.

But with the public-private partnerships -- and in that I'm thinking about the service payment providers, for example, with the support of the banking system and the anti-money laundering agencies, we could try and develop some comprehensive enforcement, and combine activities whereby we are able now to understand a bit more what they are doing. And they are not doing only counterfeit medicines, they are doing other type of activities also in Internet -- I mean, using Internet. So I will answer my question, but open it to the others.

SIMON: Well, the good thing about the Internet is that you can also get the message back out about how dangerous it is to do this.

So you probably can't see these, but if you really want to get sick, go to realdanger.co.uk where they have a series of ads, one of which shows a man taking a medicine he bought online and pulling a rat out of his mouth. Another one shows a morgue and is says: When you buy drugs online, you may end up paying with more than a credit card. There have been study after study that shows how impervious people are to the dangers of buying drugs online.

And our people in Groton, Connecticut buy drugs online that they see advertised, and test them, and they do exactly what you say: They will be advertised for some virile purpose and they'll have a tiny bit of Viagra, and then they'll have a bunch of other staff, most of which is dangerous. So it is a real problem. And the Internet community, through social media, is part of the solution too.

GARRETT: Snake oil would be safer. (Laughter.)

SIMON: Snake oil, you know, the FDA got started on snake oil, and here we are a couple of hundred years later, a hundred years later -- (laughter) -- and we're still dealing with snake oil.

GARRETT: Way over here.

QUESTIONER: Liz Wishnick, Montclair State University and Columbia East Asian Institute.

My question is about food safety. We talked a lot today about empowering consumers. And I think that's a great idea, except consumers don't have enough information. For example, during the melamine crisis milk products were not on the list, where a country of origin had to be stated. So how do you know if you're buying something safe or not? I'm also told by my colleagues in the food sciences department that even food processors don't keep track very well of the origin of different batches of ingredients, let alone inform consumers about the country of origin of these ingredients.

So how are consumers supposed to be empowered without information? And what steps are being taken by corporations and governments to provide more information?

GARRETT: Mike, I'm going to throw that to you.

ROBACH: Sure.

No, it's a highly complex question. And I think we have to be careful. There's been a lot of work done around country-of-origin labeling. And I know in the meat business we deal with that. And we have cows that are grown in Canada and processed in the U.S., so is it a -- country of origin, is it Canada, or is it the U.S. or is it both? And what you end up seeing on labels when people are being required to do that, they're going to just throw on 10, 12, 13, 15 different countries. You know, whatever that ingredient may have come from, they're going to throw, you know, the name of the country on the label, which I don't think is very helpful to consumers.

So I take a step back and get back to my -- the whole concept of having food safety systems in place that are focused on those essential criteria. And I think that's where industry can do a better job of promoting the things that we do around food safety systems; and partner better with government, so that we're working more hand in hand in making sure that the systems we're using throughout our supply chains are giving us assurances that the products we put on the marketplace are safe. Because, from a perception standpoint, we want to have safe products in the marketplace. Recalls and illnesses don't do anyone any good. It doesn't do us any good. It doesn't do the government agencies any good. We all look bad at the end of the day.

So we do have a shared, I think, goal to make sure that, that doesn't happen. But, as you say, we also need to pull consumers into this, so that they understand what their role is. And that's just a precept of risk management is, you know, making sure that people are aware of the risks so that they can do something about it, as well to protect themselves. And we haven't done a real good job in that in the past. And I think right now we're starting to move in that direction. USDA is now working with the Ad Council on a series of public service announcements that will talk about safe food handling, and you know, where consumers have responsibility and accountability to make sure that they're doing things properly.

Obviously we have the responsibility to apply the best technology, the best science to our processes, and do the best monitoring to make sure that what we put out on the marketplace is safe. But unfortunately, when it leaves our facility, that's not where the road ends, and it moves forward. So we do have to do a better job of communicating and educating.

DEWAAL: Laurie, can I just add, though, this is also where the role of organized consumer associations does play a role.

During that melamine crisis, we were watch-dogging FDA to determine whether products had been released in the U.S. And through a project called Safe Food International, we also notified consumer organizations in other countries, some of whom then brought it forward to their governments. So there is a role here for the organized consumer movement who then can watch-dog their government.

ROBACH: We actually did a project in collaboration with -- I think, I think you were involved, Caroline, and Consumer Federation of America during the H5N1 outbreak. And we actually put out a sponsored piece that Consumer Federation of America with CSPI put out to their members about, you know, how you could protect yourself from H5N1. And I thought that was a good example of that collaboration between the industry and the consumer groups to get information out to people on how they could best protect themselves.

GARRETT: Okay.

Right there. Is it Seth?

QUESTIONER: Uh-oh.

GARRETT: Oh it is. Uh-oh. (Laughter.)

QUESTIONER: No, I'd like -- I'd like to keep going on this point.

GARRETT: Introduce yourself, please.

QUESTIONER: Seth Berkley, International AIDS Vaccine Initiative.

You know, maybe people care if things were made in 15 places. And maybe it would be good if that was on the label, because then people could choose. And I'm where the previous questioner was about this. In the melamine crisis, one of the problems is you didn't have an idea of origin of anything, and if you wanted to act responsibly, it was very difficult to do that.

Now, why is that important? From my perspective one of the things we have to do, with razor-thin margins -- and clearly, a country is going to try to push out their technologies, their foods, their drugs to others -- is you're going to have to have some type of consumer standards on quality, because you can't, you know, regulate your way out of this and test your way out of it. And so if one government, one source continues to be a problem, by, you know, having consumers know that products from that source, and if they vote with their feet, that will have a profound effect then on, you know, those governments wanting to crack down. It doesn't deal with obviously the, you know, illegal side and counterfeiting and gangs, but I'm talking about the local regulations.

And I think, you know, if I look at what's going on in the vaccine area, when a national regulatory agency gets condemned by the WHO, or reaccreditation gets pulled away, you know, it changes the dynamic in that country. And so I think -- it seems to me that, that pressure has to happen here, and I'm just wondering how one can make that happen?

SIMON: I think the question belies a sense of optimism about all things.

We tell people how many calories are in the food they get now in New York in fast-food restaurants and delis. It hardly changes any behavior. I think it's putting too much on consumers to boycott things from Thailand that say -- that are one of 50 countries listed on a package. I think that's incumbent on the manufacturer.

I think that we cannot get the -- the FDA cannot inspect the world. Those of us who buy products from other countries, as Pfizer does, have to enforce our standards on them, and when they violate those standards, it's our obligation to get them out of the chain.

And I think the FDA's job is to make sure we're doing our job, because they don't have enough people to do our job. Pfizer gets an enormous number of products now from other countries, and we require them to meet our standards in every way, and we do the inspecting. And then occasionally the FDA inspects our facilities overseas. They can't possibly be the first vanguard. And consumers can't either, because if they're not noticing the salt content of their food, they're not going to notice where the salt is from.

ROBACH: I would also -- I would also agree with those points, and I think it is incumbent upon the individual company to make sure they've got control of their supply chain.

But I also don't want to go down a road where you malign an entire geography for few bad actors, because you can only take a look at -- within the United States, and we have the same issue. We had the Peanut Corporation of America, which was a U.S. corporation which was not doing what they were supposed to do.

So you've got great plants in China; you've got bad plants in China. You've got great plants in the United States and you've got bad plants in the United States. So I think we have to be very careful that we don't overgeneralize this as a geography or a country issue.

GARRETT: You know, this reminds me of a question in the earlier session regarding brand.

One would argue, based on the experience that Jack in the Box went through, when E. coli 0157 was first discovered through their sale of hamburgers and children getting sick, and came to be known as the Jack in the Box disease; or that Tylenol went through many years ago as a result of a deliberate poisoning of a Tylenol bottles, and the company took more than a decade to bounce back to their original market position.

So one would imagine that brand protection alone would put a huge pressure on, but about all those steps in production? They have nothing to do with the brand. There's no brand label on my apple -- if there is, I'm ticked off -- or on my orange, it might say it came from Florida. So where -- what do we do about those segments where the brand pressure is not really an element?

ROBACH: Well, but there's pressure from the retailers on what they're buying and how they're buying. And so it's the retailers' brand. If you buy a bad apple, and you bought it at Safeway, you're going to be upset with Safeway, or Kroger or whomever you bought it from. So there is a responsibility of the brand that's delivering the food to the consumer. And there is brand equity there, because if you have a bad experience at a retailer, you're going to go someplace else.

GARRETT: Well, if all that took place --

ROBACH: So there is --

GARRETT: -- why isn't it working?

ROBACH: Well, I think we have to put things in perspective again. You know, I mean, it's not working as well as it could because we have a lot of disconnects that still exist. We have to do a much better job of coordinating our overall approach as it relates to food safety.

On the food side -- the meat side of the business is a little more organized, with USDA and FSIS having inspectors in every facility, doing continuous inspection as we heard this morning. On the FDA side, a lot of plants never see an inspector for many, many years, and if they do, it's usually because there may be a problem associated with that plant.

So on the USDA side, the focus has been on prevention for some time. FDA now, with the food safety modernization act, is now moving in the direction where this prevention focus is going to be part of the way business is done, as opposed to reacting to a problem: Let's anticipate and prevent as opposed to just react to.

GARRETT: Okay.

Way in the back there's a hand I've seen. Yes, you.

QUESTIONER: Thanks. Nancy Turett, from Edelman.

While we're talking about what experts need to do -- big companies, people with Ph.D.s, people who are policy leaders -- and looking at short-term issues, I just wanted to put on the table, and it's not maybe for this agenda, that we have a long-term challenge as well. And as you're talking about consumers -- thinking about what are the literacy requirements that really should be part of our school curricula around the world, as we're asking consumers to be able to make more and more decisions, whether it's about what they're eating, how much they're eating, where it came from, et cetera -- When we look at the financial crisis that we had globally, very recently, and it's actually still having some impact, one of the things there was a lot of discussion around was the financial literacy of consumers, if we're actually selling very, very high-stakes things directly to them.

GARRETT: So this is an interesting question. I was recently in a meeting with -- that I referred to before -- with a gentleman from India, and we were talking about using SMS texting to alert patients that it was time to come in for an appointment, what have you. And then it suddenly dawned on me, having spent time in India, and I said, wait a second, in your state, what's the literacy rate on women? And he said, 70 percent illiterate. So, so much for texting and cell phones to ensure drug safety, and so on.

SIMON: Well, that's why Howard Zucker, who may still be here -- Howard there -- worked with my old boss, Michael Milken and Tommy Thompson to send talking books to Afghanistan for illiterate women for prenatal care -- in their dialect. They could just see the picture, touch it, and it spoke to them about what they needed to do at every stage of pregnancy. There are answers to all of these issues.

QUESTIONER: Well, but putting high-risk products in consumers' hands -- I mean, I think the food industry agrees that we want to minimize the number of truly high-risk foods. But in developing countries, educating consumers on boiling water, sterilizing their water sources, and how safe food preparation is something that's got to be done whether people are literate or not.

ROBACH: When you said --

GARRETT: We have time for one --

ROBACH: But most of them -- but most of them know how to do that better than Americans.

QUESTIONER: Yeah.

GARRETT: We have time for one last question.

Right here.

(Off mike exchange.)

QUESTIONER: (Inaudible) -- Evian (sp).

I think the root cause of this is the speed of the change, and the fact that the oversight infrastructures didn't keep up with the change. And you now have people taking advantage of it because it's extremely profitable. So the question is all about enforcement and sanctions.

And if you look around the world, of all the agencies that I know, and there's probably a dozen of them, there's only two where the inspectors are actually trained to look out for fraud. In other words, an FDA inspector will go abroad and he'll first check whether: Can I believe these people? Can I trust them? And the Italians also -- very well trained. Everybody else assumes everybody is honest. You can't do that. (Laughter.)

GARRETT: I'm going to give this to Aline to comment.

PLANCON: That point --

GARRETT: Oh, sorry. You're not done?

QUESTIONER: No, I'm sorry.

The other issue is the industry has offered to pay for inspections for over five years. And what the industry sees is the regulators inspect based on proximity and not risk. They only inspect domestically because that's their comfort zone; they never go where they really should.

And I suppose the question to Aline is, what are you telling everybody that the regulators should be doing? Or is there a way that you can communicate to the regulators on what are their weaknesses and what they need to do?

PLANCON: Yeah, well, thank you.

First, in terms of enforcement, I agree with you that it's like corruption. I mean, you can talk about transparency and, you know, be candid, but as long as you don't enforce or you don't have enforcement behind the back of your head, people will not behave well. And I believe this is exactly the same with the counterfeit medicines and pharmaceutical crime. I believe that, as far as we are concerned, the experience we've been having with the regulators has been very interesting and very enriching us. And as long as we've got some progress to make, as police, we understand that the regulators also confronted some -- a number of challenges.

And I believe exchange of information, and really a timely manner exchange of datas among themselves, and maybe combine it with a police big database that we, you know, we experience and is working fine, may help train and sort out at least some critical situation whereby the patients or the society could know, and the regulators could maybe react in a timely manner.

So I cannot say or I cannot explain what a regulator would or should do. But what I can say is, by working together and exchanging the experience and the best practices, and building up the capacity together in that crime, really made these societies or agencies make a big step in improving their own methodology and capacity in enforcing that crime.

GARRETT: Well, I want to explain to everybody what our next steps will be at the council.

It is our intention to not drop the ball with this very excellent day of discussion, but rather to see this as the beginning of a process, which will now go to a closed-door process entirely off the record, a select series of meetings in conjunction with our partners at Chatham House in London and partners that we are developing in Asia. We hope to have key players engaged in each of these meetings going out over the next eight to 10 months with some hope of providing a clear policy advisory for the White House going towards the G-20 summit of next year.

So please understand this is only the beginning of the process. Stay tuned. If you feel that you would personally very much like to engage in this, please be in touch with Dan Barker.

Dan, could you stand up, please?

Dan works with the Global Health Program. And give him your card and indicate your interest and what particular subject area you may be most keen on focusing on.

I need to thank a number of people that have made this event happen:

The Robina Foundation for their financial support, that paid the airfare to bring so many wonderful people here today.

And of course Commissioner Hamburg, both her strong interest in this area and her very dedicated staff that worked so closely and made this possible. It's unbelievable for us. We're accustomed here at the council, dealing with things like United Nations agencies, where we fire off e-mail after e-mail after e-mail for three or four months before anybody responds. And with FDA, it's same-day business. Ahh -- (laughter) -- so fabulous.

And I want to thank a number of key staffers here in New York who've played a role. I pointed out Dan Barker.

Where is Zoe?

And Zoe Liberman, also of the Global Health Program.

Yanzhong Huang.

And Stacey La Follette, who is here somewhere, who was one of the key players in making this meeting happen.

I think that as a final note, I began earlier talking about the question of global governance, one of the interesting possibilities as you look at this food and drug space is that every human being on planet Earth has a stake in seeing this resolved. This is not an abstract problem like climate change, where many people can convince themselves that either it's not occurring, or it's too big and they are just a little person, what can they do about it, et cetera. Every single person on the planet takes drugs, depends on medicines, has injections and eats food. It doesn't get much more bottom line than that.

And if there is any opportunity to really mobilize some sense of what global governance might look like, this I think is an ideal place to begin -- to begin to think about a different scale and way of organizing that involves private players, public players, multilateral players, donor players and consumers, average citizenry, and some new kind of yet-to-evolve sense of what global governance could look like. So stay tuned.

Thanks to the panel -- all wonderful -- (inaudible, applause). Thanks to all of you.

####

®FC¯END

®FL¯

.STX

(C) COPYRIGHT 2011, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.

NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR E-MAIL INFO@FEDNEWS.COM.

THIS IS A RUSH TRANSCRIPT.

-------------------------

(Mr. Barbano's remarks are provided through interpreter.)

SUSAN DENTZER: Good morning. I'm Susan Dentzer from Health Affairs. I have the honor to be moderating our next panel -- our first panel, having laid out the scope of the issues with respect to drug and food safety. Our second panel is now going to focus on what problems have stood in the way of building what would otherwise be easy and obvious policy prescriptions. Now, "easy and obvious," of course, we will discuss over the course of this next panel, how easy and obvious those are.

Nonetheless, our first panel, I think, set up some of the issues that we will be talking about, those realities, as Commissioner Hamburg said, that make each and every one of us really vulnerable; whether they are weak laws, whether they are under-staffed regulatory agencies, whether it's diffuse authority, whether it's the complexity of the supply chain or what have you, or just the sheer volume.

Peggy Hamburg, I remember several years ago in the thick of the importation debate, going up to see a warehouse that FDA has out at JFK Airport where there were literally tens of thousands of seized packages of medications that had come in from other countries, individually imported by Americans, leaving me aghast at what Americans are willing to put into their bodies for one thing.

But secondly, just with a much fuller appreciation of just the scope of the issues as Laurie (sp) said, many of them being packages from Japan -- excuse me, from China and India, as well as other countries.

So we're going to be discussing what problems have stood in the way of building these easy and obvious policy prescriptions. And so we're delighted to have back with us, once again, Commissioner Hamburg in the center there. Also, just to my right here, Howard Zucker, who was formerly with the World Health Organization as assistant director- general in charge of the so-called health technology and pharmaceuticals cluster and also representative of the director- general on intellectual property, innovation and public health.

He's now senior adviser in the division of global health and human rights at Massachusetts General Hospital.

And we're also very happy to have with us Dirceu Barbano, who has been and is director of the National Agency of Sanitary Surveillance in Brazil since 2008. And also as the director -- chairman of that agency.

So, with that, let's go some further definition of the scope of the problems that are standing in the way of building easy and obvious solutions. And again, in the interests of giving some texture to this issue, I've asked each of our panelists to just frame a quick little case study in their memory that surfaces the complexity of the issues involved.

So, Commissioner Hamburg, let's start with you. What was your favorite experience in this field?

MARGARET HAMBURG: Well -- (laughter) -- I was asked to speak briefly, very briefly about a food safety issue, which actually occurred before my tenure as FDA commissioner, but was something that was very much in the papers and carries implications still, and that had to do with an event that was referenced earlier about salmonella contamination of peppers. And it was a complex challenge, both in relation to the complexity of the supply chain and agricultural practices and conditions across borders and the nature of the food supply.

But it also had to do with the challenges in terms of the underlying science and investigation of food-borne outbreaks. It was an instance where initially -- and others in the room were closer to it, so, you know, I may get the details wrong -- but we'll view it as a symbolic example of cases of food-born illness were reported, was linked to a certain strain of salmonella. It appeared to be linked to tomato products initially and some of the cases, I think, were emerging from Mexican food proprietors where peppers and tomatoes are often served together.

But in any case, it was initially believed to be tomatoes. As Dr. Besser mentioned in the first panel, took quite a toll on the tomato industry as the first warnings went out vis a vis the contamination of tomato products.

It actually emerged with further epidemiological investigation and analysis, FDA working closely with CDC, who takes the lead on the outbreak investigation and epidemiology that there was either cross- contamination between tomatoes and peppers or that it was actually the peppers, not the tomatoes that were the cause and that these were not domestic products, but, in fact, peppers coming in from Mexico, although peppers and tomatoes were, in fact, in Mexico being grown on the same farms as well.

So it was a very confusing picture about what the product was and the origin of the contamination. It was eventually linked back to a much more limited and specific set of circumstances in Mexico, the coordination of Mexican authorities and U.S. authorities to remediate the situation, to get the at-risk product off the market to inform the public all then fell into place.

But it was a prolonged period of trying to determine the source of the foodborne illness, with some missteps that required engagement of domestic food producers and providers as well as counterparts in Mexico. And at the end of the day it took a toll on human health, it took a toll on the economic health of several food industries, and even after the outbreak was actually controlled, persistent concerns about the safety and quality of those products more broadly.

So it does speak to a number of the important issues before us in terms of how can we work together to prevent problems like that from happening in the first place, as well as how can we harness across sectors and components of government to be able to identify and respond to problems as quickly as possible, to try to have seamless coordination across borders, and how to also communicate important information to consumers while they are trying to make choices, and also how to better let consumers know when, in fact, the acute episode has been resolved.

DENTZER: But it sounds like there was, at least initially, a lack of cooperation on the scientific side between Mexican authorities and U.S. authorities, yes? Was that a particular issue?

HAMBURG: You know, I don't think that was the case, but I could be wrong. I wasn't involved at the time. I think it was more complexity of understanding the issues and a failure to cooperate scientifically. There was confusion originally, because the initial outbreak investigation suggested the tomatoes. And I'm sure there was a reluctance to engage initially, where Mexico thought it was somebody else's problem, and now fingers were being pointed to them.

DENTZER: Denial, as they say, not just being a river in Egypt, as the bad joke goes. (Laughter.)

So Howard, in your case, you lived through, on the drug-safety side, a version of the events that were alluded to earlier, in the first panel. Tell us briefly about those, and specifically what obstacles surfaced.

HOWARD ZUCKER: Well, I think that the key issue here that I wanted to raise a little bit was about the impact, which was addressed at the beginning. When I -- when I arrived in Geneva, I literally, without exaggeration, I probably wasn't in my office more than a day and I already received calls from scientists, members from within the WHO as well as individuals in industry and civil-society groups, saying, what are we going to do about counterfeit medicines?

So from that generated the working group within WHO to talk about this, which ultimately crystallized into the International Medical Products Anti-Counterfeiting Task force, or IMPACT, which it's better known as, which I led for the first two years after it was formed.

What we did in that point was to try to bring together individuals from all different groups, whether it was FDA, EMEA, other regulatory agencies around the world.

DENTZER: EMA being the European --

ZUCKER: The European Medical -- yeah -- agency.

Also, OECD, Organization for Economic Cooperation and Development; industry, academia, and public-health experts from around the world -- and brought them together to say, how do we -- how do we tackle this? And from that came five different areas, which some of you might know, which involved everything from regulation, legislation, enforcement, technology and communication, and just touch upon each one of those, just briefly.

On the regulation side, which was led by Ilisa Bernstein from the FDA, who I believe is here today, there was a lot of work done to try to help countries where their regulatory protocols were not as well structured, and to help control some of these issues of counterfeit medicines, and working with those teams to put out documents and to work on this area.

From that, there was also work between the regulatory agencies and other -- regulatory team and other teams. At the legislative level, there was a discussion about putting forth a concept or a paper and also a model law -- and I don't like to use that word lightly, because I don't want to say that there was an actual law put forth -- but something which would be able to be brought back to individual countries, to the different member states, to say, this is a document which you could work from within your legal systems to make the issue of a -- someone who has either manufactured a counterfeit drug or has been within that chain of counterfeit medicine, basically charged with -- more than just an infringement on a patent right; something much more forceful. And if someone died as a result of it, is this sort of more of a homicide, murder, or something equivalent within their legal structure?

And then the next part was that you could have the laws written down, you can have the regulatory bodies there, but if there's no way to enforce it. So our feelings were that the enforcement part -- which was led by Aline Plancon, who's here and will speak later, which was an incredible team of actually looking at the world customs organizations, Interpol and other ways to try to tackle the issue of borders and sort of getting rid of some of the porous issues at the borders, and to try to also work with the legislative bodies and others to tackle that part.

And then the next part was the issue of technology, and that was led by Harvey Bale, who is from the at that time IFPMA, which is the International Federation of Pharmaceutical Manufacturers. And the thought there was there must be a way to use technologies that are out there to tackle this. And we recognized in many meetings that it has to be tailored to the country. So the concepts of using something like RFID, radio frequency identification, may work in the United States or in Europe or other countries where spending, you know, several thousand dollars would be effective, but that's not going to really solve this problem in countries where that's just an exorbitantly high price. So we realized we had to tailor, tailor to the individual countries.

As a matter of fact, at that meeting, we had a meeting in Prague, I had thrown out the idea of the concept of using cell phones text messaging to actually use a way to validate medical bottles through a randomized number system, and I put that out there at that point. And recently, in the last year, I've heard that that has now -- I'm pleased to say, is out there in Ghana and other parts of the world. So that is a -- an idea that, you know, was out there at that time or that we -- that I put out there, but others had said could be used and now has been working.

And the last part was communication. And the communication issue issue was, we can have all this in place, but if people don't know about the issues and the messages aren't getting out there, then it's not going to really be effective. And so that team was working on communications and basically sort of addressing and branding these issues.

And from that we generated about a hundred people working on this, from member states, and there are multiple meetings, and we're moving forward on this.

Now I recognize that the issue -- and you asked this before, because it was brought up -- that the WHO -- the issue of counterfeits and impact has had some criticism at the WHO and the World Health Assembly recently. But I do think that a lot of this is the issue of coupling the issue of counterfeit medicines and intellectual property rights. And I think that we really do need to recognize that these are two separate issues.

And there has been a lot of -- a political component to why these things are coupled. And I guess I would put on my lawyer's hat for a second and say that there's really -- you have to look at this from the concept of the legal phrase "mens rea," which is, is there a guilty mind on this? And so if someone's doing something with a guilty mind to move something forward in the supply chain of medicines, then that truly is something which we need to tackle and in a lot of ways with counterfeit as we move forward.

And lastly I just would say that if there is a generated effort and resources put forth to move this forward, I think that the entire concept could be pushed forward with those five areas, and we could tackle this problem effectively.

DENTZER: Okay. And you've given us a very nice additional list of issues that need to be transcendent.

So, Director Barbano, we'd like to hear your brief case study now of a particular issue that surfaced with respect to Brazil's interest in drug and food safety.

DIRCEU BARBANO: Good morning to all. I am going to ask Tim for his help, so that I may speak to you seamlessly.

I'd like to first of all thank Mr. Richard Haass, president of the council, as well as Laurie Garrett, senior fellow, for her invitation, as well as Daniel and Stacey (sp) and members of the staff for bringing us here.

I brought for this panel a case that is apparently simple, involving a fruit from the Amazon River in -- Amazon region in Brazil, a fruit called Acai.

I heard with attention to the debate in the previous panel.

I would like to say that it's -- it would not be very prudent of me to start discussion on this theme without first a few considerations about the larger theme of this event.

It is undeniable that we have a very major challenge ahead of us. The world is changing, and the economic conditions are changing very rapidly. More people consume products that are manufactured worldwide, and this reality is irreversible. We will increasingly consume products that are manufactured elsewhere. On the one hand, it may be a problem; but on the other hand, it may see -- may be seen as a solution, as countries develop and produce other products.

We need to take on the perspective of health -- caring for health, preserving life, and putting health and life above all else. Brazil has recently taken the decision to become a more developed country, a more socially just and more economically just country. And that means that we do not want industries that produce goods that put people's lives at risk. We expect that our agricultural resources produce products that are of quality for the Brazilian consumers and for exports to other countries. We expect our pharmaceutical industries to produce medications that can be consumed, that are of quality, and that can resolve health issues for the Brazilian people, and to preserve life and to treat the Brazilian national as we would treat any other person from any other country.

Therefore, this discussion about falsified products and substandard products is of great interest to the Brazilian government. But we must understand that the risks in the consumption of medications and food do not lie exclusively in these products. There are risks of different nature.

The lack of food is a risk. And the lack of access to medication is also a risk.

And there are risks inherent in the consumption of products from anywhere in the world. Recently we had a problem with a substance called imiglucerase, which is manufactured by a company that is known worldwide, called Genzyme. The Brazilian government is a large consumer of this product. And the contamination problem in the facilities, in the equipment used to produce this substance, made it unavailable to the Brazilian people.

So we are speaking about topics of a global nature. And our challenge is to identify ways to work the problem as a global issue.

DENTZER: And that is exactly the topic that we want to move to, if you would.

BARBANO: And to that effect, this incident involving acai is very interesting. In 2007 -- in 2007, a contamination was identified related to the Chagas disease through the consumption of this fruit. We in the Amazon River were -- region, we identified 123 people who had the Chagas disease and no history of having been bitten by the bug. And we further identified that these cases were related to the ingestion, the consumption of the fruit, which was a new way of transmission.

In 2007, this fruit was largely consumed in Brazil, and it was already being exported to other countries. There was a large effort undertaken by the Brazilian authorities through ANVISA at the federal level and the secretariats of health in the state and local levels in order to identify, track and find a solution for the problem. And we also had the help of Brazilian universities that are specialized in the study of tropical diseases.

And we discovered that for the transmission of the disease was -- occurred through the ingestion of the raw fruit. And based on that, we developed a large effort to train the people who are responsible for harvesting and storing the product.

So after this process was undertaken, no other case has been identified. It involved changes in the process of harvesting, storing and processing the fruit.

This case is very interesting because it shows that in many instances, global efforts will be insufficient. Because these are localized products, it involves workers who work on a seasonal level. And that certainly occurs on a global level in many areas that produces food and even medications for global consumption. And the Brazilian government is very willing to find a solution for these problems and to identify a way for the sanitary vigilance agencies to expand their activities --

DENTZER: All right. I just have to seize on this because you've just laid on the table an extremely interesting point here, which is that even though we've been talking about global food and drug safety, all of this begins and to a large -- to some degree, it should end at the local level. Unless individual countries are as expert as Brazil has shown itself to be in seizing the problem, we are going to continue to have these disasters occur.

So let's go back to some of the issues that have now been put on the table, it's the capacity of local authorities to have the ample science to quickly detect issues. There has to be in place regulatory capacity in order for them to do that. There may, indeed, need to be comparability of legislative authority in individual countries, hence, the need potentially for model legislation. There also has to be cooperation across borders, obviously, among these agencies, not just the regulatory agencies, but also the police authorities as well. And technology and communication also could play a very important role.

Howard, you mentioned the possibility of radio frequency identification or also the more low-tech cell phone approach. And then communication -- and this point I want to stay on because we haven't talked yet about the role of public outrage and public demand of improvement of local authorities.

I was struck in the background that Laurie (sp) and her colleagues prepared that the CDC estimates in 2009, there were 3,000 deaths in the United States from contaminated food and drinks alone. Not to put too fine a point on that, but that's equivalent to the World Trade Center bombings as a disaster in terms of fatalities.

So where is the public outrage? And that can serve as a force to push more countries along?

Peggy?

HAMBURG: Well, I think that public engagement is absolutely essential.

And I think that it speaks to the fact that, certainly, in our country and I think in many countries across the world, that at the end of the day, whatever your political stripe, whatever your views about government overall, there are some key functions of government that people have enormous reliance on. They want to be able to trust and have confidence that their food and water supply will be safe.

They want to know that the drugs that they are taking and giving their family are safe as well. And I think for the most part in the United States, people assume that to be true. I don't know as much about attitudes in other countries, but, you know, it's something where people don't think about it until there's a problem. That's always been the challenge of public health that until there's a problem, people take it for granted.

But I think we saw with the Food Safety Modernization Act, actually, enormous mobilization of consumer groups and advocates with industry and with other critical stakeholders to say we have an opportunity to do better. And while the U.S. food supply, you know is extremely safe, that 3,000 deaths a year is too many, manyfold preventable hospitalizations and, of course, huge preventable costs to industry as well. And so there was this galvanization that led to action, which will make a difference.

But one reason why I was very excited to have this forum today is that I think people have no idea in this country and around the world about the vulnerability of things that we count on every day, food, drugs, medical devices and other related products. And that we have a system that has big gaps in our protective mechanisms and that it's a growing problem, and that, in fact, it is a problem that goes beyond what any one nation can do alone no matter how well resourced, no matter how dedicated.

It is a problem that by its very nature requires a global alliance. In my remarks this morning, I said I think the time has come that we really need to create and formalize a global alliance of regulators that are committed to solving these problems together, to sharing information in new ways, sharing best practices in new ways, even sharing the workload in new ways, and importantly, working with industry and other stakeholders because it is a shared responsibility that goes beyond government as well. But I think that in all these efforts, that notion of shared responsibility and the critical central role of the consumer, because at the end of the day, it's all about serving them and protecting and promoting their health and well being.

DENTZER: So on the possibility that regulatory authorities and individual countries will not all leap to the fore to take up your challenge, could we conceive of a global citizen Facebook revolution to enlighten people throughout the world about the need for these issues, Howard?

ZUCKER: I think that would be a great way to move forward in using any technologies that are out there to get the message out. I think that we should look at the Internet and the possibilities like that, although many of the individuals who are affected by this are in regions of the world where Internet capabilities aren't there, which goes back to the issues of cell phones and what kind of more low-tech -- more simple technologies would be available.

But I think it's also an issue as the commissioner mentioned is the need to get this message communicated and almost create a grassroots effort to make people aware of the problems that are there.

DENTZER: Text for safe food, for example, something like that.

Director Barbano, to bring you into this conversation again. What was -- in Brazil, was there resistance to the various food processors or others to you as a regulatory agency wading into this? And if so, how did you overcome that?

BARBANO: There is always some conflict of interest when we speak about sanitary vigilance regulation. And certainly these conflicts exist in Brazil, as they do in the U.S. and Europe.

It's important in this global effort what the degree of autonomy these institutions have in their own countries. In Brazil, when we created Anvisa, there was a concern to protect Anvisa from these kind of pressures. For example, we can mention as an example the use of agricultural protection agents. So when Anvisa establishes a limit on the use of these substances, there is a conflict with the producers and the farmers. But Brazil has a legal system that is consistent and supports the agencies' decisions in this regard.

DENTZER: All right. We're now going to open this up to questions and discussions from those of you in the audience. And it would be very helpful if you'd raise your hands, obviously, and identify yourselves by name and affiliation and a microphone will circulate to you.

Let's start with a hand right up there. Terrific. Thank you.

QUESTIONER: Hi, I'm Jean Halloran from Consumers Union and I also work with Consumers International.

I think it's very important not to be naive about the potential for a grassroots groundswell for food safety. Consumers all over the world do care, but we just saw the case in China where one of the parents of a melamine injured child was organizing other parents and was thrown in jail.

So there are limitations, but particularly in some of the countries we're most concerned about for grassroots activism.

I think we also need to look at and I wonder if any of the panelists can comment on our trade policy, because we established trade agreements as if all other countries in the world share our values and share our regulatory systems and commitments to them. And then when we start getting substandard products in because they have maybe even laws on the books that they don't enforce, you know, it's like, oh, my goodness, what do we do; you know, we treat it as if it's a surprise.

And I wonder if we can begin factoring into our trade agreements provisions that allow us to treat other countries in terms of the reality of their safety system.

DENTZER: All right, which gets us into an arena of trade policy, and I don't know that we have any experts on trade policy on the panel. But Peggy, do you want to take a crack at --

HAMBURG: Well, you know, I certainly don't pretend to be a trade policy expert, but what I hopefully am is a public health expert. And I think that that is the principle we need to organize our actions around; and we need to make sure that citizens of any nation, rich or poor, can have access to adequate food supplies and quality food supplies; and that, you know, there's a lot more that can and should be done; and that as we think about how to respond to a globalized world in a way that helps protect our own nation -- and that is my mandate as FDA commissioner, is to promote and protect the health of the American people -- I think it's critically important that I recognize and step up to the plate; that if I am to do that job well, it also means that I need to in fact care and invest and advocate for the quality of those commodities in other nations; and that at the end of the day, we need to try to approach ways, not to make every country identical in how they regulate these products, not to assume that every country, large and small, is going to have systems that look just like the U.S. FDA or other food and drug oversight entities from other countries, but that there will be some basic principles, there will be sharing of best practices, there will be efforts to proactively help build capacity through technical assistance and information-sharing; and that we will work in ways that are national, regional and global to really ensure that there's a minimum threshold of standards for food products around the world.

And I think that is, you know, the goal that I bring to this.

DENTZER: Well, how much contact do you have with the U.S. Trade Representative's office or the customs folks in terms of enforcing some of these food safety, or, for that matter, drug safety issues?

HAMBURG: Well, I would have to say that I don't think at present that there is enough conversation, communication and mutual understanding. And I think that we need as the U.S. Food and Drug Administration to, in fact, sit down more frequently with our counterparts. And it's something that I've engaged in.

I think the danger in not having this conversation is that, in fact, decisions get made on the basis of trade and commerce that may not, in fact, factor in critical aspects of public health. And so I think it's very, very important that we make sure that the public health issues are fully understood and aired as many of these broader trade debates go forward.

DENTZER: And I don't suppose we have any reason to believe that other countries do this markedly different, that there's more discussion among the trade authorities in other countries or is there?

HAMBURG: You know, my sense is that for many years there have been sort of parallel tracks and that, in fact, the public health issues have not been as central to the discussions as they need to be. We need to make sure that things that really matter for health, well being, and, in fact, safety and security more broadly are integrated into these discussions and ultimately into our policies.

DENTZER: Okay. That's terrific. Let's take a question over here, please.

QUESTIONER: Hi. Erik Olson with the Pew Charitable Trusts.

I had a question. One of the biggest policy challenges has been addressed a couple of times, but we haven't really heard an answer. FDA now, as I understand it, is inspecting about 1 percent of our imports, so 99 percent of the imported foods are not inspected.

We've heard it's going to cost $1.4 billion for FDA just to implement the new food safety law over the next five years. Assuming that all the budget cuts that everyone is talking about may hit FDA and other agency -- food safety agencies, what would the role be potentially for fees on the industry to help pay for this implementation? We know in PDUFA for drugs, the drug industry pays fees to pay for their regulatory system in part. And I believe that the Obama administration supported the House legislation that add fees for food safety implementation.

Is that something that really might be part of the solution here, not just in the United States, but potentially more globally, to make sure that this new web of international trade and food, and frankly, in drugs, really -- that we get a handle on it, that regulatory authorities can inspect more than 1 percent of the imports and perhaps do some of the overseas inspections that are required in the new legislation.

HAMBURG: I think there really are two overlapping issues here, and we don't want to completely put them together, one is the question of how do we implement the food safety bill, which is enormously important and does begin to get at some of the global food safety issues that are so critically important. And there's no question that the law puts forward a number of very prescriptive actions for us to take, all of which are very important and much needed, including enhancing inspectional activities. And yet it's an unfunded mandate as we like to say. And it does raise serious issues for us.

As was mentioned in the first panel, industry cares enormously, in fact, about achieving the goals of this new legislation and strengthening food safety, and importantly, implementing the preventive focus that's part of the Food Safety Modernization Act to prevent problems from happening in the first place rather than trying to scramble after them once they've occurred.

And so I do think that industry is willing to step up to the plate in terms of resources and partnership to take more responsibility and accountability.

For their contribution to ensuring the safety of the global and domestic supply chain. And so we really need to work on that. And we really need to make sure that the goal of the Food Safety Modernization Act can be realized in our implementation.

I think looking more broadly at the circumstances of globalization and what it means for medical product and food safety, we have to recognize this isn't a problem that our nation or any other nation can inspect its way out of. It really is a problem that requires a fundamental shift in how we think about the problem and how we work together as two partners across nations and governments, as well as across sectors.

Because of the complexity of the global supply chain and the magnitude of the problem, you know, really means that we have to to, you know, work together in completely new ways, sharing information, sharing best practices, sharing workload as I said before we need really different systems that break down some of the traditional stovepipes of our different institutions to think and act in multinational coordinated ways. And I think that's a huge challenge, but it's also, I think, the only way we will achieve success and there is a huge opportunity to do things in new and different ways because the challenges before us simply demand it.

DENTZER: Peggy, you used a phrase in your opening remarks that that there are 20 million different lines -- did I get that right? -- of -- that's all products imported into the United States that are under FDA's jurisdiction reinforcing your point that we can't inspect our way out of this because there's no way we're going to inspect 20 million lines. And that's lines, so I assume it's multiple products in each of those lines.

HAMBURG: You know, we can do a better job with inspection and we need to. It's not that inspection doesn't have a role; it has a huge role, both at the borders and in the different countries where products are being made. But we have to do much more than that and it involves taking an approach that both is much more collaborative and also much more risk-based -- you know, we really need to focus on the things that will make the most difference.

And assessing and monitoring risk is a dynamic, ongoing process, but again, it can only be done effectively if we're really sharing information across governments and across sectors to understand the range of vulnerabilities, how those vulnerabilities may be changing because some products may be vulnerable because of bad actors that become identified in one country or another. That information gets shared and then we can all act on that information.

Products may become more vulnerable because of environmental conditions that may actually change the risk profile and sharing information on that. And certain products are more vulnerable by their very nature. But the more we can really take a risk-based approach, the more we can really take a preventive approach and the more we can really take a approach of true collaboration, the more progress we'll make towards our goals.

DENTZER: Great. All right. Let's go to a question right there in the middle, please.

QUESTIONER: Dan Spiegel, Covington & Burling. Turning to the World Health Organization for a moment, the program that Dr. Zucker put together, the impact program I think we ought to say is no longer the program that he originally designed, which was originally supported by consensus. That consensus has -- at the member state level has broken down. And my question for Director Barbano is, could you inform us, do you know why Brazilian diplomats in Geneva have worked so hard against a WHO role that would strengthen its enormative standard- setting and its operational capacity to work in innovative ways to deal with drug and food safety?

BARBANO: This issue is very much related to what Dr. Heymann alluded to in the previous panel. The Brazilian position in this regard is very clear.

Not to assume that every country large and small is going to have systems that look just like the U.S. FDA or other food and drug oversight entities from other countries. But that there will be some basic principles, there will be sharing of best practices. There will be efforts to proactively help build capacity through technical assistance and information-sharing. And that we will work in ways that are national, regional and global to really ensure that there's a minimum threshold of standards for food products around the world. And I think that is, you know, the goal that I bring to this.

DENTZER: Well, how much contact do you have with the U.S. Trade Representative's office or the customs folks in terms of enforcing some of these food safety, or, for that matter, drug safety issues?

HAMBURG: Well, I would have to say that I don't think at present that there is enough conversation, communication and mutual understanding. And I think that we need as the U.S. Food and Drug Administration to, in fact, sit down more frequently with our counterparts. And it's something that I've engaged in.

I think the danger in not having this conversation is that, in fact, decisions get made on the basis of trade and commerce that may not, in fact, factor in critical aspects of public health. And so I think it's very, very important that we make sure that the public health issues are fully understood and aired as many of these broader trade debates go forward.

DENTZER: And I don't suppose we have any reason to believe that other countries do this markedly different, that there's more discussion among the trade authorities in other countries or is there?

HAMBURG: You know, my sense is that for many years there have been sort of parallel tracks and that, in fact, the public health issues have not been as central to the discussions as they need to be. We need to make sure that things that really matter for health, well being, and, in fact, safety and security more broadly are integrated into these discussions and ultimately into our policies.

DENTZER: Okay. That's terrific. Let's take a question over here, please.

QUESTIONER: Hi. Erik Olson with the Pew Charitable Trusts.

I had a question. One of the biggest policy challenges has been addressed a couple of times, but we haven't really heard an answer. FDA now, as I understand it, is inspecting about 1 percent of our imports, so 99 percent of the imported foods are not inspected.

We've heard it's going to cost $1.4 billion for FDA just to implement the new food safety law over the next five years. Assuming that all the budget cuts that everyone is talking about may hit FDA and other agency -- food safety agencies, what would the role be potentially for fees on the industry to help pay for this implementation? We know in PDUFA for drugs, the drug industry pays fees to pay for their regulatory system in part. And I believe that the Obama administration supported the House legislation that add fees for food safety implementation.

Is that something that really might be part of the solution here, not just in the United States, but potentially more globally, to make sure that this new web of international trade and food, and frankly, in drugs, really -- that we get a handle on it, that regulatory authorities can inspect more than 1 percent of the imports and perhaps do some of the overseas inspections that are required in the new legislation.

HAMBURG: I think there really are two overlapping issues here, and we don't want to completely put them together, one is the question of how do we implement the food safety bill, which is enormously important and does begin to get at some of the global food safety issues that are so critically important. And there's no question that the law puts forward a number of very prescriptive actions for us to take, all of which are very important and much needed, including enhancing inspectional activities. And yet it's an unfunded mandate as we like to say. And it does raise serious issues for us.

As was mentioned in the first panel, industry cares enormously, in fact, about achieving the goals of this new legislation and strengthening food safety, and importantly, implementing the preventive focus that's part of the Food Safety Modernization Act to prevent problems from happening in the first place rather than trying to scramble after them once they've occurred.

And so I do think that industry is willing to step up to the plate in terms of resources and partnership to take more responsibility and accountability.

MORE

ZUCKER: Well, this is where I think it comes down to the public and all those who work in this area to say we need to separate these out to a certain extent. For example, there is areas of overlap in the sense that there are issues of patents on medicine. But I think the more we merge these together -- and we have to remember, from a historical perspective, while this whole issue of counterfeit medicines was being addressed to the World Health Organization, there was also the whole issue of intellectual property rights which was moving forward. There was issues of vaccines in Indonesia and some of the issues with the flu.

And so all these things were sort of in the mix. And I think it's very important to tease these out. As the clinician, sometimes you sort of have to tease out on medical problem from the other. And you can look at them together, but you have to sort of separate them out at times and address them separately. And I think that until we do that a little bit, we're going to run into some problems.

DENTZER: And the question will be whether 20 countries could get together and do precisely that.

Let's take a question all the way in the back. I've been neglecting the back of the room.

QUESTIONER: Hello, everyone, my name is Ashifi Gogo. I'm the CEO of Sproxil. We provide SMS verification services with (NASDAQ ?) in Nigeria.

I wanted to provide an alternative view on the first question, which is public advocacy of food safety concerns based on my experience in Nigeria. A consumer called in indicating that there was a mixture of genuine and fake medication, and information was passed on to the -- (inaudible) -- was able to take action and find the counterfeiter in the act selling fake drugs to consumers, using SMS technology.

So I'm wondering, is sort of a hotline police tipoff style system instead of maybe a public NGO might be a way to engage consumers who are in pharmacies multiple times a week to essentially report incidents of suspicious activity in pharmacies to enhance the safety for the public?

DENTZER: Well, anything like that?

HAMBURG: Well, I'll start and others will, I'm sure, want to elaborate. Reports from consumers about the quality of their products and adverse reactions, very, very important to the work that we do at FDA. And we rely on getting that kind of information and encourage it.

One of the challenges with these substandard drugs is that consumers may not recognize that they're not getting what they think they're getting, and that's one of the very serious dangers is that you may think you're getting a drug that's treating your condition. But if you are doing poorly, you may not realize it's because the drug isn't adequate; you may think your disease is just progressing or think maybe you're on the wrong medicine. But sometimes you don't know, and that's one of the dangers with malaria medications -- what we're seeing is, you know, not only are populations being treated with drugs that are inactive, but also contributing to the drug problem of drug resistance because they may be being partially treated with a substandard drug. And then, in fact, you're creating a problem with the organism, which then means that the actual quality drugs no longer treat it as well because of resistance.

So they're very complex problems that can unfold if you think about the challenge of whether a person is taking the drugs that they're thinking that they're taking. When it actually has a toxic component, it makes it a lot easier.

Someone commented that when there's a problem that's acute, the red flags go up and you can usually respond. But when it's a chronic exposure that can be damaging or an inadequate drug, it's much harder for the consumer to always be aware, but any reports are valuable. Also, reports of what appear to be inappropriate practices in pharmacies are also very, very valuable. And I think that, you know, if we're going to be successful, we need to galvanize as much of that kind of consumer information as we can and match that to other types of information so that we can get the clearest picture that we possibly can so that actions that are meaningful can be taken.

ZUCKER: One of the other things that WHO had started back in '07 was the concept of having some way to track and having -- basically, through the computers there is a way you can go onto a map, find out, file reports in, tap on that country, tap on that region and they have a lot of information coming back. Larry Reggie (sp) who was incredibly instrumental, a lot of the work on this, was trying to push that forward at that point. And I don't know where it is at this point, but that was one one of the concepts of trying to do just what was mentioned -- you mentioned to track.

DENTZER: Is that the equivalent of a global sort of adverse- event reporting sharing capacity?

ZUCKER: That was -- that was -- it was sort of -- the concept came from that kind of system, because that was being done for issues of flu at the time.

DENTZER: Perhaps somebody in the audience knows the status of that.

Dr. Barbano?

BARBANO: Susan, in Brazil in 2009, the Brazilian Congress adopted a law that establishes a system to control -- to track medications. And we are in the final stages of identifying the technology that will be used. And that technology will allow the consumer to verify the authenticity of the medication at the pharmacy. Many other countries in the world already use that technology. The FDA has expressed its interest in familiarizing itself with the technology, and we already have two teams exchanging information.

DENTZER: And what is the technology?

BARBANO: It's a technology that uses a bilateral code based on data metrics and (a seal ?). And that will allow a database to be established, which will allow for tracking the medication and some device to verify the authenticity. And this has the full support of the pharmaceutical industries in Brazil, both the national industries and foreign.

I'd like to mention something that might be of interest to this event. The OAS has created a network. Brazil joined the network at the end of last year. It is called the Safe Consumption Network in Health. This is the first step to create the network that will have the capability to centralize alerts and make them available in a portal. I believe that the OAS will have this portal functioning within three months in English, Spanish and Portuguese.

HAMBURG: And that's under the auspices of the Organization of American States. Is FDA a party to that? Do we know?

BARBANO: Yes.

HAMBURG: I -- I am glad to hear that. I have to confess I don't know the details. But we try to get our fingers into any international or regional activity that we can, because it really is, I think, so important to us.

DENTZER: So the point was made earlier that many countries will not have the capacity to use some of these technological solutions because of resource constraints. But here is Brazil, a middle-income country, putting in place what sounds like -- is it -- is it a bar-coding system that was put in place? So it's not out of the question that these technologies could become more useful in these countries. So perhaps we'll have some conversation about addressing those capacities.

BARBANO: After we began conducting electronic elections in Brazil, the world began to believe that we have some technological -- (laughter).

DENTZER: Okay, well -- and then -- (laughter) -- and then you can export the technology back to the United States.

(Laughter.) Okay.

Question over here, please.

QUESTIONER: Hello. My name is James Tunkey. I'm an entrepreneur as well as a director of the International Council for the Life Sciences. I just first want to congratulate the council and Laurie Garrett for putting this conversation together.

My question is for the panel. It doesn't seem to me that we've moved from a consideration of intellectual property rights and the private profit motive to the reputation risk really that is posed to government organization in the case of failure of food safety.

And I think that there's some real contrasting styles of approach to governments, both in governance of private enterprise, as we see here in the United States primarily; and governments in Brazil, which continues to really have a much more state-centric approach to drug development and production.

And so if you could just speak a little bit about the policy challenges of moving from the view of one that's focused on intellectual property rights protection by private industry to one that's focused on reputation risk of food failure safeties (sic), I'd appreciate it. Thank you.

DENTZER: Well, I'm unclear as to whether your question pertains to the drug safety or the food safety issue. So -- both? Okay.

So -- well, let's have at it.

HAMBURG: I mean, at the end of the day, I think that agencies like the Food and Drug Administration and the industries that we regulate do have common purpose, in that trust and confidence in the work that we do and the products in question is the ultimate goal, and that -- you know, I certainly think that if you look at history, you can see that industry, in fact, does better when there is a strong, well-functioning regulatory authority. And I think that as we were working on the Food Safety Modernization Act, we saw industry's real engagement and investment in systems and a legal regulatory framework that would support their ability to maintain trust and confidence in their -- in their brands.

So I think it's a hugely galvanizing principle. I don't know exactly how you frame the issues of intellectual property versus the reputational. I think often they intersect. If you have a brand-name product, you want to keep that brand.

But I think that, you know, stepping back and just looking at the importance of confidence in the products -- you know, whether they're generic drugs or brand-name drugs; whether they're food manufactured by a big multinational company or at a more, you know, local community level -- that still is, I think, an organizing principle. And it's where a strong but modern and, I think, you know, clear regulatory approach supports the ability of industry to achieve their goal, and in fact, our interests do align.

I don't know if that answers your question or not, but --

DENTZER: It sounds like the Chinese authorities decided to get everybody's attention by putting a few people to death. Presumably, we will come up with a more collaborative approach -- (laughter) -- as Peggy mentioned earlier.

We are out of time for this panel -- sad to say -- but I think we've worked our way through a series of the issues that we've already discussed, whether it's the lack of regulatory capacity, whether it's differences in legislation, whether it's incapacity in terms of technology.

But I think fundamentally you also heard under the surface of the comments today, fundamental other lacking obstacles that we'll have to get over in order to do more in this area. One is will; it's just plain will, countries having the will to do this. It's engendering a greater awareness among consumers in particular. And essentially, we will also eventually have to address the lack of resources being devoted to this capacity among all these countries.

So join me now in thanking this panel for a terrific discussion. (Applause.)

####

®FC¯END

®FL¯

.STX

(C) COPYRIGHT 2011, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.

NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR E-MAIL INFO@FEDNEWS.COM.

THIS IS A RUSH TRANSCRIPT.

-------------------------

RICHARD N. HAASS: Okay, if I could ask people to take their seats, including Ms. Hamburg.

Well, good morning. Welcome to the Council on Foreign Relations. Welcome to this temporary respite from the conversation about Egypt.

For those of you who are new to the council -- and I expect there's a few of you here who are -- we are an independent, nonpartisan membership organization. We're also a think tank and a publisher. And we are dedicated to increasing understanding of the world and the foreign policy choices facing this country.

This year happens to be the 90th anniversary of the Council on Foreign Relations. And all year, among everything else we do, we'll also be examining domestic issues, from education and immigration to debt and deficits and infrastructure, that have impact on foreign policy.

Today's symposium, as you all know, will look at food and safety issues -- again, another example of how the foreign policy agenda has dramatically evolved over the years beyond what you might call classic issues of war and peace.

The last 10 years has seen skyrocketing trade in food and drugs. The statistics are impressive. From 1990 to 2008, global food imports rose in value from $350 billion to over $1 trillion.

And globalization's had an even more significant impact on the pharmaceutical market. Today, drug manufacturers located outside the United States and Europe command 80 percent of the global market, up from 10 percent just two decades ago.

In many ways, this is a good-news story. Consumers enjoy dramatically improved access to food, especially meat and dairy products. And the rapid growth of pharmaceutical manufacturing in the developing world has not just expanded access to the drugs, but it's also brought income and skilled jobs to various economies.

But with this success, as you all know, has also come significant challenges. Regulatory organizations at the national level have had real trouble keeping up with the dramatic rise in the trade.

The Centers for Disease Control in Atlanta estimate that nearly 50 million Americans were sickened by contaminated food and drink in 2009 -- that's one out of every six Americans -- and that 3,000 died. And in Asia, Africa and Latin America, up to 30 percent of the medicines on sale might well be counterfeit, leading to countless deaths either as a direct result of the medicine or because the people did not get the medicine they in fact needed.

So we are very pleased here at the Council on Foreign Relations that we can offer this space for this symposium today to explore these issues in depth and to begin the process of developing policy recommendations. We're going to do it in thirds. The first panel led by ABC's chief medical editor, Richard Besser, will consider the recent history of the food and drug trade and examine the scale and complexity of the market. Panel two, moderated by Susan Dentzer, editor -- who edits Health Affairs -- not to be confused with Foreign Affairs -- will discuss the challenges faced by domestic regulators as they try to oversee an internationalized market. And the third of three will be led by our own Laurie Garrett, who's the council's senior fellow for global health and has done so much to get us involved in this set of issues, and I think to increase international awareness of this set of issues. And Laurie's panel will explore a variety of ideas and how the international community might best address this set of problems down the road.

Let me just make a few housekeeping announcements, so no one else does. This meeting is on the record, so what you can -- what you say can and will be used against you. It will also be recorded for posterity and it will live much longer than anyone in this room.

We're teleconferencing this meeting to our members in the nation's capital. But for all that we spend on this technology, it can easily be interfered with by your cell phones, so if you would be so good as to turn off your BlackBerrys, your iPhones and anything else. Since this is a meeting on health, we will make an exception for health-related devices, pacemakers and the like -- (laughter) -- but last I checked, cell phones do not fall in that category.

We are grateful to the Robina Foundation for their continued generous support of this -- of this program. It's part of a much larger effort looking at international institutions and global governance.

Last but not least is our initial speaker -- for those of you who don't know her, Margaret Hamburg; for those of you who do, Peggy Hamburg -- who's commissioner of the United States Food and Drug Administration. She is the 21st commissioner, if my math is right. And before she assumed this position, Dr. Hamburg was a vice president and senior scientist at the Nuclear Threat Initiative. She -- I will allow her to explain this sequencing of career. And she's also served as assistant secretary for policy and evaluation in the Department of Health and Human Services. And here in New York, she was commissioner of the Department of Health and Human Hygiene. And most important of all, the capstone of her career and the centerpiece of her resume, she is a long-standing member of the Council on Foreign Relations.

Peggy, welcome back to the Council on Foreign Relations. (Applause.)

MARGARET HAMBURG: Well, thank you very much. And it really is a pleasure to be here this morning. And I am a great admirer of this institution and a long-standing, proud member. And it's always nice to be back in New York City and to see my former mayor, Mayor Dinkins, who gave me my first real job in public health. So thank you very much, Mayor Dinkins. And I would say he epitomized during his tenure as mayor and mine as health commissioner what can be accomplished when political leadership and public-health needs and priorities actually come together. And he gave me enormous support when we put together our program to deal with the resurgence of tuberculosis, including extremely high levels of drug-resistant tuberculosis. And in just a few years time, applying simple public-health principles, we were able to turn the tide on that epidemic. So wonderful and (unexpected ?) to see you here, David.

Some of you may be surprised that the Council on Foreign Relations is addressing issues of food and drug safety and regulation, and it's a little bit off the core agenda for many meetings here. But it is highly appropriate, much needed, and very, very timely. And I really an delighted and grateful that the council has put this on the agenda and, of course, thank Laurie Garrett for helping to make this possible.

This event grew out of a series of conversations that Laurie and I had over a period of many months after I became FDA commissioner and really came to understand the new realities of food and drug regulation brought about by globalization -- realities that have really redrawn the path that food and medical products navigate to get to our homes, and realities that really make each and every one of us increasingly vulnerable and realities that challenge virtually all nations.

Today, we hope to start a conversation that will be continued in broader foreign policy and other circles and by next year, perhaps, even reaching the level of the G-20 for discussions. It's that important. We hope that, together, our speakers can communicate to each of you the scale of our challenge and the steps we must take to meet the unique public health demands of our globalized world, and to assure health, safety and security of people and nations all over the world.

We cannot afford to ignore these issues. Certainly, as FDA commissioner, I spend a lot of time grappling with them. They have major implications for how we fulfill our mission to promote and protect the health of the American people.

And in this context, let me tell you just a little bit about the agency and why this all matters so much. The FDA is responsible for overseeing the safety and manufacturing quality of food, drugs, medical devices, vaccines and biologics, cosmetics, dietary supplements, animal drugs and food, radiation-emitting devices and now, for the first time in FDA history, tobacco products as well. These products account for somewhere between 20 (percent) and 25 percent of every consumer dollar spent in this country. And I think with the possible exception of tobacco, we can safely say that these are products that people really need and they really rely on in fundamental ways just about every day. So as you can see, the scope of our responsibilities is enormous.

But during the early days of the FDA when, in fact, most of our authorities were actually put into place, the world was very different. Back then, most products that FDA regulated were domestically manufactured and really quite locally used. And for years, when it came to importation of foreign products, our activities went toward safety and quality, and to protect public health, focused on catching problems at the border. And then we began some limited some overseas inspections.

But those days are long gone. The realities of global economic conditions, as well as innovations in refrigeration, transportation and communication, have enabled and spurred consolidation and globalization. This has resulted in a striking rise in imports of foods, pharmaceuticals, medical devices and even, to some extent, biologics.

Today, the world in which FDA-regulated products are discovered, developed, processed and distributed is much, much bigger. FDA's traditional model of manufacturing site inspections and border examinations is simply not adequate in today's transformed world. In 2010 alone, FDA estimates that more than 20 million import lines of food, devices, drugs, cosmetics and tobacco arrived at U.S. ports of entry -- more than a three-fold increase in regulated imports from just a decade ago. Regulated products come from more than 300,000 facilities in more than 150 different countries all over the world, and they come into the United States through more than 300 different ports of entry.

At the same time, the supply chain from manufacturer to consumer has become more and more complex, involving a web of repackagers and redistributers and making oversight increasingly difficult. The numbers are staggering. In the food realm, about 40 (percent) or 45 percent of fresh fruit and produce and over 75 percent of seafood that we eat here in the United States actually comes from other countries. And for medical products, a stunning 80 percent of active pharmaceutical ingredients in our drugs come from outside our borders and about 40 percent of finished drugs themselves.

And, of course, much of this is positive. We can, for example, have fresh mangoes and strawberries all year round, and it probably does help to keep costs of some drugs and devices lower.

But there are also very serious, often negative implications. The global supply chain has led to the distribution of unsafe or ineffective products and harm caused by economic adulteration and intentional fraud.

I know that you'll soon be hearing directly from others, for example, about the tragic toll of the counterfeit trade in many parts of the world. But really, for nations large and small, the global supply chain presents many new national and international security threats.

In recent years in this country, we've experienced events, some clearly deliberate and some unintended, which have had serious consequences for life, health and safety, as well as for trade, commerce and the economy, ranging from contaminated heparin, a blood- thinning drug, to counterfeit glucose monitor strips and surgical mesh, to melamine-tainted vegetable protein and dairy products, and salmonella in peppers and other food-borne outbreaks, to name just a few.

And the world is poised for further globalization. There are macrotrends at work that are impacting global commerce, and the cumulative effect of these trends will ensure that 10 years in the future, the world will still be a very different place. Undoubtedly, the pressure to reduce costs and increase productivity will lead companies to continue to move manufacturing activities to new and different locations, looking for cheaper sites and global supply chains to reduce production costs.

And countries, like China and India, that already produce many of the food and medical products that Americans use will likely in the future not only produce these goods but will also be important centers for innovation, inventing new groundbreaking products that Americans will want to buy, which means that will have to continue to evolve to meet these new demands.

And we've already begun to do so. In the U.S., the Food Safety Modernization Act, which was signed into law earlier this month, calls on the FDA to put into place a significant new approach that among other things promotes a new level of accountability for all entities that are involved in the supply chain, from farm to fork. And although it's not perfect and we certainly do face challenges, especially including resources, it's a truly significant step in the right direction. Congress has also introduced a similar bill for drugs that would bring sorely needed modernization to our authorities, importantly in the global sphere.

But even with that progress, globalization presents huge and growing challenges. Regrettably, another public health crisis like heparin or melamine seems inevitable, unless we are able to truly forge changes in how we ensure the safety and quality of food and medical products for our citizens.

And at FDA, we've realized that in order to protect American consumers, we must work globally, because the products that our consumers use are no longer simply American products, they're global products. And we know that our counterparts in other nations face similar challenges for their citizens.

This is a moment for leaders around the world to create a new vision of how we regulate. We have a shared interest in assuring the safety and quality of food and medical products, and a shared responsibility for safety and quality. By working together to monitor and to improve safety and quality globally, we will benefit all of the citizens of the world. What I envision for the future is a public health safety net for consumers around the world that is created, supported and maintained by a global alliance of regulators, working closely with all our critical stakeholders.

Some of the work for this is already under way and has been for several years, as regulators from many nations have begun to collaborate. But these efforts need to be taken to the next level. We must ask ourselves how we can weave our various efforts into a coherent global system of oversight and safety. This will mean working together toward greater coordination and enforcement of regulatory standards across nations to ensure safety and quality, regardless of where a product is produced. We need not always apply absolutely identical methodologies, but we all need to work together toward the common goals of product safety and quality, and to harmonize approaches.

As part of these efforts, regulatory authorities, especially those with the greatest experience and resources, must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems, so that they can produce food and commodities that are safe, wholesome and meet international standards.

Those with the greatest experience and resources must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems so that they can produce food and commodities that are safe, wholesome, and meet international standards.

This is surely in our vital interest, but it will have broader benefits for public health and economic development within those countries as well.

And in addition to creating a global coalition of regulators, we must create a modern means to share data globally, and we must use those data and advanced analytics to proactively prevent and identify problems. Detecting and preventing global problems demands global intelligence-sharing and data mining.

Also, as the new food-safety law recognizes and requires, we must enlist public and private third parties as well as industry and other organizations to increase the global safety net. We must do this for food and medical products. And this is absolutely essential. Regulators cannot and should not do it alone.

Finally, we must create the momentum in the United States and in the global community to make these changes real and sustainable. These changes must begin now, but they will take time and the support of many people to fully implement. A strong global safety net will be challenging to weave, but we can do it together.

So let us continue the conversation today, and as regulators, consumers, academics, industry leaders -- (audio break).

MR. : (In progress after audio break) -- I want to welcome the audience who are out there in Washington, as well as on the teleconference.

MS. : Okay. They're connecting me, so --

MR. : And I don't want to use up a lot of time going through -- (audio break).

RICHARD E. BESSER: (Audio break) -- prepared for you, so we're going to dive in.

Let me introduce the panel, though, starting from the far end: David Heymann, who is head and senior fellow of the Center on Global Health Security, Chatham House, in the U.K.; Gary Jay Kushner, who's partner and leader in food and agricultural practice area at Hogan Lovells; and Paul Orhii, who's the director general of the National Agency for Food and Drug Administration and Control in Nigeria.

We're going to have a conversation up here for the next 25 or 30 minutes, and then open it up to members and guests to join in the conversation and ask questions.

So diving in, first talking about the drug side, in 2006 I was head of emergency response for the CDC. And we received a call from colleagues in Panama, and they were facing a situation there where an unusual neurologic syndrome was presenting to hospitals. And they wanted to know what was going on, and we sent a team down to work with them on that investigation.

And the lab at the CDC detected ethylene -- diethylene glycol in cough syrup that was being used throughout the country.

As the Panamanian government explored that situation further, they had a sense of the scope of the problem. Two hundred and sixty thousand bottles of cold medicine were contaminated with diethylene glycol. There were 100 confirmed deaths and thought to be far more than that in terms of the overall range of the problem.

The syrup had been manufactured in China and it had been certified as 99.5 percent pure glycerin. That was what was added into it.

That counterfeit glycerin had passed through three trading companies on three continents, not one of them had tested the syrup to confirm what was on the label. This isn't an isolated incident; there have been other problems with diethylene glycol in glycerin.

So I want to start by turning to David, who has worked in public health at WHO, at U.K., and at CDC. You convened a conference in December, a very important meeting at Chatham House on counterfeit drugs. And so that we're all on the same page, if you could first explain, what are counterfeit drugs? How do they vary from fraudulent drugs, of optimal drugs? And how big is this problem?

DAVID HEYMANN: Well, thanks, Richard. Yes, we did have a meeting at Chatham House in London because for the last 30 years, WHO has had a very difficult time in dealing with counterfeit drugs because of definition. And it's clear why this is a problem if you think about counterfeits. A counterfeit handbag, a counterfeit T-shirt doesn't really cause any harm; it's just -- it causes harm to the producer, but not to the user, whereas counterfeit drugs can cause harm to the user. And what's happened is that the discussions at WHO, trying to find a definition, have gone around many different words and never really focused on any one in particular. Those words are "substandard;" there are other words such as "falsified" and finally as "counterfeit."

And so the definition has been difficult. But substandard is very easy to understand. Substandard drugs and vaccines are those that don't meet regulatory requirements in the country in which they're produced or in the country in which they're imported. It's very easy to understand that. And it happens to both generics and to patented drugs as well. For example, here in the U.S., if you remember a few years ago, influenza vaccine came in from Europe and was substandard. This passed through the regulatory agencies in Europe and also came into the U.S., and it's a problem for industrialized country regulatory agencies.

Think of that problem in a country where biotechs are trying to set up their own production and development and don't have a regulatory agency that can help them make sure they have good products. If it happens in industrialized countries, what will happen in developing countries? But as Peggy said, there are ways that that can be dealt with. It can be dealt with bilaterally, by exchange and partnerships between regulatory agencies, or multilaterally through the World Health Organization.

So substandard is a very easy concept to understand, and this was one of the three concepts that was agreed at the Chatham House meetings. Substandard do not meet national regulatory requirement.

Under substandard, there are really two sub-classes: there's a falsified classification and there's a counterfeit classification. These are substandard drugs because they haven't met national or other regulatory requirements. But a counterfeit drug is one that's purely involved with trademark, and because it's involved with trademark, it's not as much a public health issue as an issue for the World Trade Organization and the World Intellectual Property Organization, which deal with counterfeits and with trademark issues. It's a criminal offense. It has public implications, but there is a framework within which that can be handled.

The framework that's missing is that framework for falsified medicines. These are medicines like in China, medicines that were produced with false ingredients maybe unknown to a very few people, but known to someone. It was a deliberate intent, as is counterfeit, a deliberate intent to falsify a medication. Those falsified medications, of course, are substandard because they don't pass through regulatory requirements.

So those were the three different definitions that came out of our meeting at Chatham House and which we hope will help WHO now move ahead with the definition. We had many people at this meeting.

We had WHO, the head of the the drug group at WHO, we had World Trade Organization, we had WIPO, we had Interpol. We had a whole group of people. And we hope that these three definitions, which are fairly clear to everybody, would be the ones that can help move forward in a public health way the discussions on counterfeit drugs.

BESSER: Great. Thanks very much. You -- it said that the disease that may be impacted the most by this may be malaria. A study in 2006 in the American Journal of Tropical Medicine and Hygiene found that 68 percent of anti-malarial drugs found in Laos, Myanmar, Vietnam and Cambodia did not have the correct amount of drug in them. And WHO estimates that as many as 200,000 lives that are lost each year to malaria may be preventable just by dealing with the issue of substandard drugs.

I want to turn to you, Paul. You gave a speech last year to the parliament in Nigeria. You've been a tremendous crusader in the area of control of counterfeit drugs. And you said that the culture of chasing fake drug dealers around the country is not sustainable in the long run. Sixty to 70 percent of essential medicines in your country are brought in from India and China. And you were calling for a more comprehensive approach.

Can you talk to us about the scope and scale of the problem of counterfeit drugs in Nigeria?

PAUL B. ORHII: Thank you. (Inaudible) -- let me use this opportunity to thank the Council on Foreign Relations for organizing this forum. This is a very, very important forum. I also want to use this opportunity to thank Dr. Margaret Hamburg and the U.S. FDA for the opportunity that they give developing countries, the -- (inaudible) -- authorities in developing countries to build our capacity. Been training some of her staff, and we're getting better and better. So I want to use this opportunity to thank the U.S. FDA and Dr. Hamburg for that.

I say the US, the culture of chasing counterfeiters within a country is not sustainable in the long run, because the problem has become much worse than before. In 2001, the instance of counterfeit medicines in Nigeria rose to over 40 percent. More than 40 percent of the drugs in Nigeria, especially anti-malarials, essential medicines, were counterfeits.

At that time, in developed countries, like the U.S., and Europe, they had less than 1 percent counterfeits in their systems. Now the problem has become much worse. The Pharmaceutical Security Institute and the -- (inaudible) -- that the counterfeit medical -- (inaudible) -- constitute about 35 to 200 billion business dollars a year. So you see that most of these counterfeits would be heading to countries with very weak resistance.

And even in Europe, advanced as it is, counterfeit medical markets have been found to -- is worth about 10.5 million euros. So this is scary. When we look at it, we budget how countries like ours with weaker regulatory systems can cope.

(Inaudible) -- is charged with the responsibility of regulating and controlling the manufacture, distribution, sale and use of all drugs, foods, cosmetics, medical devices, bottled water and many other products. But we are grossly understaffed for the kind of vast territory that we're called to protect and the kind of huge population. Our population is a -- what, 150 million people that we're called to serve. The borders are vast, poorly managed because of lack of funds. And even when we can man them, we do not man them as appropriately as we would have wanted to to be able to stop -- (inaudible).

I'll just give you an example. Only in 2009, we intercepted a consignment of sick medicines, more than 700,000 courses of anti- malaria drugs coming from China. They were labeled as made in India. But we were able to observe the -- (inaudible) -- from from China, and we took the matter up with these two countries, resulting in the arrest of -- and sentencing to death of six persons in China that were related to this manufacture and shipment of that consignment Nigeria.

We also were -- (inaudible) -- in Indian parliament, and then the big -- middle law making it a criminal -- punishable by lifetime jail term, the manufacture and distribution of -- (inaudible) -- products.

But our law is also very weak. And so we have now tried to review our law and have a member of parliament from Nigeria -- he also with us, will be submitting that law to them to help us pass the law so that we make more stringent punishments -- lifetime jail time, confiscation of assets -- in situations where we can determine that the fake product proximately caused the death or severe bodily injury of the victim. We want to be able to use some of the confiscated assets to legally compensate the victims.

We want to build international -- stronger international cooperation, because we cannot do it alone. That is why a formula -- this is (especially ?) important. And we are very, very happy that the U.S. and also the USDA are now paying attention to this, because it -- before, it was considered to be a problem of the developing world. And not much attention from the developed world was paid to this. Well, now we want -- we are very happy that we are now having stronger partners with this U.S. -- you cannot now have a stronger partner than the U.S. come in to take on this problem.

We are very excited. We want to -- (inaudible) -- that Dr. Hamburg mentioned here. We want to have -- build -- we're leveraging on cutting-edge technology to fight the problems. We're -- introduce new technology to fight the problem. And we're building both national, international and other regional cooperation -- (inaudible) -- fighting counterfeit medicine.

So the culture of just pursuing counterfeit medicines within your territory and trying to eliminate them is no longer sustainable. Officially, with the recent crackdown on illicit drugs, most of the former drug barons are now diverting -- they have now diverted their resources to manufacture and diffusion of counterfeit medical products. So the program has become more globalized, more militarized and more sophisticated. So it needs international cooperation, very strong international cooperation -- (inaudible) -- what we are doing now to be able to fight counterfeit medicines.

BESSER: You know, this is an issue that has an impact on your life. An attempt was made on your life this fall. And, you know, we talk about these issues in public health as health issues. Is there enough of a connection between the public health community and the legal community to take this on as a criminal issue and not just a health issue?

ORHII: It is a public health concern, but it's also a criminal issue. So I think we are working together with the legal system to try to see how we can impose stiffer penalties on people who engage in counterfeiting.

Of course, in Nigeria, it is very dangerous. I had a situation where we had sent our staff out to all these bakeries to make sure that they were not using potassium bromate, which has the potential to cause cancer.

I mean, one of these bakeries where staff found the banned potassium bromate, the staff of bakery descended on our staff, beat them to the point where they lost consciousness, bundled them into a vehicle, poured petrol on that vehicle and were about to set the vehicle ablaze with our staff inside when the police came in time to save them. So this is a very dangerous engagement in our countries.

But I think we are determined. The government is giving us enough support to be able to do this. We are getting international support now. And I think we will be able to solve the problems.

BESSER: Our session this morning isn't just focused on drugs. It's also dealing with the issue of globalization of our food supply. As Peggy Hamburg was saying, you can have a mango all year round in New York.

I started my career at CDC in foodborne disease and recall outbreaks of cyclospora from raspberries from South America, cholera from coconut milk from Thailand, and most recently the peppers/tomatoes that really cost the tomato industry in the U.S. a couple billion dollars from salmonella.

Right now, there's an issue of dioxins in Germany. And 4,000 farms were closed in Germany when it was discovered that there was dioxin-tainted industrial fatty oil mixed in to animal feed. That led South Korea to shutting off the importation of meat products from Germany; and now in the European community, concern over some eggs from Germany that are suspected of being contaminated.

So I want to pull into the conversation now Gary Kushner and ask you to comment on the scope and scale of globalization of food.

GARY JAY KUSHNER: Well, thank you. That's obviously at the heart of this program. And I should say, first of all, globalization is real, but it didn't just start. The international -- the growth of the international food market's probably been rising for the last 20 years. It's just now -- probably I would say an all-time high, and there are a number of reasons for that as Dr. Hamburg pointed out and Richard just pointed out as well. Consumers do want to have fresh products, fresh produce in particular, 12 months of the year. And we have the ability to provide that. But that means importing products from a number of different countries.

Food manufacturers recognize this. Many of them have a multinational focus. Many of them have plants in other countries and distribution centers in other countries. But the reality is that in order to provide the array of products that consumers expect does require importation, and we're now importing foods and ingredients from all over the world. And in some parts of the world, the controls are much stronger than they are here. And even where you've got regulatory controls, the key is enforcement of those controls and that also varies quite a bit globally.

I believe that the new Food Safety Modernization Act is a very, very important step forward in helping to harmonize regulation and ensure the safety of products coming into the United States.

Many of you may realize or may not know that food is regulated by a lot of different agencies, but primarily by the U.S. Department of Agriculture's Food Safety and Inspection Service and the Food and Drug Administration. FDA has regulatory authority over all foods, primary regulatory authority over all foods with the exception of meat and poultry. And meat and poultry, historically, has been regulated by the Food Safety and Inspection Service. There are historical reasons for that. I should say, though, meat and poultry is under what is called continuous inspection, that is, that the meat or poultry product may not be distributed in the United States unless it has been inspected or at least have the presence of a USDA inspector in the plant. And you'll see on a meat or poultry product, you'll see the stamp that says inspected and passed. And the Department of Agriculture is very jealous of that stamp because it's their Good Housekeeping stamp of approval.

The FDA on the other hand -- and I think the last time I looked, the USDA has at least 7,000 inspectors and perhaps more. But FDA is expected to regulate all of the rest of the food supply with far less in the way of resources. And the authority that FDA has or historically has had has been much less different than the USDA, yet so many of the ingredients that are coming into the United States that are being imported are under FDA's regulatory jurisdiction, which presents a real challenge.

Now, I will say that under the food modernization -- the Food Safety Modernization Act, importers will now be required to verify that the products that they import into the United States do meet the same safety standards that will be -- that are required of them in the United States, and that is a major step forward. Manufacturers in this country, particularly the larger national manufacturers, already have programs in place to ensure the safety of the products that they produce, as well as the raw materials that they use. And it's historically, food manufacturers have employed what's called the hazard analysis and critical control points program. The acronym is HACCP and it's referred to as HACCP. That has been mandatory for meat and poultry products since the early '90s, and it's been mandatory at FDA for a limited number of products, notably seafood and pasteurized juices.

Also, I would throw -- (inaudible) -- canned foods regulation into that same scope of regulation. But for the most part, products under FDA's jurisdiction have been manufactured under HACCP that has been voluntarily employed by the food industry. And if I want to digress just for a second because I'm a real believer in HACCP, HACCP was not developed by the government; it was developed by the food industry in the '60s basically to keep food as safe as possible for the space program. You can imagine, an astronaut with a food-borne illness in a little capsule would not be a terribly pleasant experience. (Scattered laughter.) And once it was adopted, more and more food companies designed food safety assurance programs based on HACCP principles.

So it's been a very, very good concept. Now, although the Food Safety Modernization Act does not call it HACCP, the controls, the kind of control, the principles on which this new law is based effectively means mandatory HACCP, and I, for one, and I represent the food industry, think that that is a very, very good step.

The challenge now for FDA will be enforcement, and remember as I mentioned, USDA products are inspected by our -- meat and poultry products are inspected by USDA, which has significant appropriations every year to support that inspection program. FDA now has the burden of employing similar controls on the rest of the food industry, yet Congress has not yet appropriated the money that FDA needs for that, and that has got to come.

There are some aspects of the new law that are self-executing. That doesn't mean they'll be enforced, but it does mean that companies will employ those because that last thing a food company wants is for its products or a competitor's products even to cause food-borne illness and generate adverse publicity about the whole product line.

It's important that the products be viewed as safe for consumers, so everyone has a vested interest in that. Many of the new provisions in the law -- of the new law, as I said, are self-executing and that's important. But other aspects, including FDA's required increased inspection of imported products and even inspection or verification of exporting facilities, is going to take money, and FDA simply hasn't been given that money yet.

So I think that's something that consumers, industry, everyone that needs to encourage Congress to do is to appropriate adequate funding for the new law to be implemented and enforced effectively.

BESSER: Thanks very much, Gary. I do want to now open up the conversation to members and their guests. And I'll ask you to wait for a microphone. And when you ask your question, please state your affiliation and whether there's someone it's directed to.

While we're waiting for the microphone to get around, I want to ask you, Paul, about Gary's comments about food production and the requirements that will be in place in terms of assuring the purity and safety of food.

What does that mean in terms of a burden on a developing country to have to have a system of food inspection, food testing, a HACCP control system? Is that something that's within the realm of possibility in Nigeria?

ORHII: Yes, it is already within the realm of possibility. In fact, we have a program in place. We already have, in fact, some expats from the FDA, from the Department of Agriculture -- have been in Nigeria with us working on developing food safety program under the HACCP program.

So it is within the realm of possibility. We already are doing inspections of food products, but we're clearly -- (inaudible) -- our capacity -- (inaudible) -- with the help of the USDA again.

So I think it is within the realm of possibilities.

BESSER: And Gary, flipping back to you. Many of the large- scale food producers in this country, you know, whether you're talking about McDonald's or Wal-Mart or a Costco, are establishing integrated systems of food production that ensure their own inspection overseas.

The impact of that in terms of building infrastructure within a developing country, do you see it as a positive step or something that may actually deter a developing country from developing their own system, as we're hearing about in Nigeria, of ensuring food safety?

KUSHNER: I'm not sure this answers your question, but the examples you gave, Walmart, Costco, for example, are primarily food retailers. And although some of them do have their own private label programs and some of them -- some retailers actually have products that they manufacture for themselves, for the most part, the retailers are purchasing products from manufacturers or from brokers that are going to be sold in their supermarkets.

That having been said, it's the same issue, and that is how do you make sure that the products that are coming in from other countries, whether they're going to a private label product that you're producing or a product that your supplier is producing, how do you make sure that those are produced under the same kinds of controls?

A major manufacturer will have as part of its HACCP program, its own HACCP program, will have programs or -- programs in place to inspect the incoming raw materials, to periodically test incoming raw materials and ingredients so that they can control as much as possible the product that's going into -- the ingredients going into their products.

In addition, they'll know their supplier, and that is a very, very -- it's a simple concept and an important concept that is for a food manufacturer to know its supplier. Now, it's impossible to know every supplier that supplies that supplier, but at least it's a very important step, particularly if you couple that with the controls that the importing company will have in place.

Let me just go back, though, to talk again about the difference between USDA and FDA, because I think it's instructive. The USDA, I think, since about 1968 -- I may be wrong on when this came into law, but since about '68, USDA -- the meat and poultry inspection laws have required that products coming in for importation, number one, come from countries that the inspection system has been determined by USDA to be equivalent to the U.S. inspection system. That is, the country must demonstrate that its inspection system is adequate and the individual plants that are going to be shipping products to the United States must be approved.

So that supply chain is very well controlled in the context of meat and poultry products. Again, less so in FDA products largely because of the historical nature of the laws that both agencies administer and the feasibility of the FDA insisting upon the importation of products being -- becoming from certified plants where they don't have that legal authority and even with that legal authority, the money is a real issue.

BESSER: Thank you. I think the first question, over here.

QUESTIONER: Good morning. Great panel. My name is Peter Pitts. I'm the president of the Center for Medicine in the Public Interest.

Dr. Hamburg mentioned at the outset the issue of global intelligence sharing, and you discussed the issue -- the definitional problems of counterfeit drugs, and I fear that we're still quite a ways off from a workable definition there. But short of kind of a global regulatory Marshall Plan, you know, how can we work together either on a formalized or an ad hoc basis to at least measure the problem of counterfeit medicine so we can begin to have a baseline and combat it?

BESSER: David, I'll throw that to you, first.

HEYMANN: Well, you know, it's only by global collaboration, as Peggy said earlier, that this can happen. The forum -- one of the fora in which it could happen is in the World Health Organization, but as I said, they've been blocked with a definitional problem that we hope can be unblocked eventually so they can move ahead and understand what they're working with.

I think we'll hear from other sources, other -- we'll have other opportunities to hear from Interpol and various places about what they're doing globally. But it will only work if the world works together in a multilateral framework.

There can be bilateral activities which are very important; FDA has people in China, has people in other countries, in India, and that's very important. But multilateral and bilateral together are the solution.

BESSER: David, just to add onto that. How much is the issue of patent protection confounding the issue of counterfeit drugs and drug safety?

HEYMANN: Well, it's a very important reason that the definition can't move ahead because some would say that generic drugs are counterfeits. There's a whole series of issues that are very -- are very difficult to deal with. And so that's why these three definitions, clearly making it understood what a substandard is, and then there are two substandard sets, counterfeits, which are trademarked, and falsified is a much better way to proceed and a much more logical way to do it.

There are mechanisms that can deal with trademark infringement and those are enforced. What's not available at present is this public health framework in which we can all work together because of the definition issue.

QUESTIONER: Thank you.

QUESTIONER: Thank you. My name is Mark Feinberg. I work in medical affairs and policy at Merck. I want to thank all the speakers for so succinctly and clearly highlighting the importance of this issue.

My question, really, for any of the speakers is, what will it take to actually move us down the path that Dr. Hamburg had articulated as sort of a much more integrated system that is really designed to accommodate the safety challenges posed by globalization? You know, how can we go down that path faster? And really what are the obstacles in the way beyond the sort of definitional thing that Dr. Heymann had mentioned?

BESSER: We'll go short on that because the next panel is going to be focusing more on control issues and policy issues. Paul, do you want to comment on that?

What will it take to get us from where we are now to more of an international system that is ensuring drug safety?

ORHII: Well, we said this initiative by the Council on Foreign Relations and the FDA is a good start. We can build on what we decide here today and then move on. Talking about the definition -- I think definitions of "counterfeit" have just been deliberately used to confuse the issues. We in developing countries that are most hit by the impact of counterfeit medicines will look at it purely from a public-health perspective. At the WHO, we have always emphasized counterfeit medicines, looking at them purely from the public health perspective.

I talked here about getting almost 40 percent of medicines in the system, counterfeit. This -- some of the medicines, the counterfeit medicines, if used to treat diseased like malaria, have the potential to develop resistant strains of microorganisms, which are not treatable by effective medicines, resulting in death and sometimes even the spread of some of these resistant strains to other countries. You know, they do not need passports or even a visa to cross international border lines.

That is why it is important the the Council on Foreign Relations and the FDA have summoned this meeting.

So I think it deliberately confuse -- (inaudible) -- attempted at the -- the last World Health assembly to agree to come to a definition of counterfeit medicines that deals exclusively with the public health concerns and not encompassing intellectual property issues. But I think we are working towards that, and we hope to be able to achieve that.

But we want a situation where we have a broader coalition, we have an international coalition of all relevant agencies. We (started ?) that impact. We have had impact where we have the INTERPOL, we have the -- (inaudible) -- we have all the relevant agencies that will help us find these counterfeits.

For developing countries, no country maybe in Africa is -- (inaudible) -- if we find counterfeit medicines in the system. (Inaudible) -- we cannot tackle that alone. But we need a big coalition that can reach out to all those people. And the example that I gave you of counterfeit medicines, anti-malaria that we intercepted in China, alone Nigeria could not have any -- don't have anything against China. But then we involved INTERPOL. We had to. And some of the people we -- (inaudible) -- Nigeria. But (anyway ?) they were out of the country beyond our jurisdiction. But INTERPOL reached them, and they have finally come back to Nigeria where we're prosecuting them now.

So what we want is a global coalition that would be very strong to help us fight counterfeit medicines. But I think we can view counterfeit medicines not encompassing any intellectual property issues, just purely from the public-health perspective. In a country like -- a developing country like Nigeria, it is a life-and-death issue. It is -- we're not talking about intellectual property here. We're talking simply about public-health challenges that we have.

BESSER: Thank you. One here, and then I'll move towards the back.

QUESTIONER: Yes. My name is Charles Clift. I'm from the Chatham House Centre on Global Health Security, a colleague of David's, who spoke.

Just to expand a little on the definition list used -- I don't want to go into it too much -- I mean, Dr. Orhii says, well, what we're interested in is public-health issues and counterfeit medicines, the medicines that are basically substandard and probably done deliberately, but nothing to do with intellectual property.

That applies -- lots of countries feel like that. Other countries such as, for instance, Brazil, say to us, a counterfeit medicine is one that infringes a trademark. And if it's simply substandard and deliberately done, it's a falsified medicine. And they have that in the legislation. So they have a very restrictive definition of counterfeit. But in a sense, we know what we mean, but we use the same term to describe different things. That is one of the problems.

But underlying the definitional issue is a number of countries, particularly those who produce generic medicines or some who consume them, fear that attacking counterfeit medicines will also be an attack on legitimate generic medicines of assured quality, on which many developing countries rely. Most of their medicines are generic. Unfortunately, many of them -- a certain proportion will not be of the right quality.

As regards this discussion today, I thought it might be helpful if we -- I think we're talking about two different things, which are related but are conceptually different. One is the problems of the legitimate supply chain. And that is what Dr. Hamburg was talking about, the 99 percent of her opening remarks. And that is one set of issues where, as she said, greater collaboration is needed between the regulatory authorities in both developed and developing countries because of the way the supply chain has become globalized.

Then there's the question of the illegitimate supply chain, which -- again, regulatory authorities have a role, but it's a multi-agency thing. You have customs, you have Interpol -- we'll be hearing from Interpol later this morning -- and there really -- one is about how do we protect the consumer from harm, and the other one is essentially about, once these dangerous medicines get on the market, how do we address -- how do we deal with the producers and the distributors and so on?

So I think we need -- it's helpful conceptually to separate those two issues, which need different policy measures to a great extent to tackle them.

BESSER: Thanks very much. In the back on the end.

QUESTIONER: (Off mic) -- Radio. Obviously, when one thinks about this generic-versus-counterfeit debate, one recalls the politics of the HIV/AIDS debate and the production of drugs that occurred several years ago. And my question has to do with food safety and food production. Many scholars of global food production point out that, for the model of the United States in terms of food production to be duplicated in the world, it would simply be impossible.

And we have, as you know, a lively debate in this country for decades about the very safety of our own food production in the United States. And I was wondering how the panel feels about those kind of issues entering the equation, because, you know, I can think of movies like "Food, Incorporated" and others which point out the problematics of the safety measures inherent in the United States itself in terms of food production.

So I was wondering what your thoughts are on that.

QUESTIONER: Gary, do you want to dive in on that one?

KUSHNER: Let me try. And here's where I'm going to sound like a food-industry flack, and I admit it. (Laughter.) I happen to believe that the food in the United States, the food production system, is a very effective system and makes for a very safe product.

Granted, there are -- have been -- obviously have been notorious foodborne-illness outbreaks that are unacceptable and need to be addressed. There are companies that do not follow basic good manufacturing practices. And that's also unacceptable and has to be addressed. And there are challenges that are inherent in a global system, or even a system that just in the United States, where you're distributing products all over the country and importing ingredients for use of those products.

As far as imposing our system, let's assume that our system is a safe one and we're trying to make it safer, or as safe as it can be. Trying to put that system in place in other countries requires a couple things. First of all, I think it's a shared responsibility between the food industry and the government in terms of the company that is importing a products wants -- has to be sure and has to be committed to doing everything it can feasibly do to make sure that the product it is importing is safe and meets U.S. standards. Same goes for countries -- companies and countries or exporters who want to send their products to the United States. They have to have a commitment -- if they want the U.S. marketplace, they have to have a commitment to follow and adopt the same kinds of food safety procedures that are in use here. And as far as the government goes, there's nothing that can substitute for government coordination.

We do have some international bodies -- Codex Alimentarius -- that sets international food standards; the World Trade Organization and other organizations that are set up largely to enhance our -- to enhance harmony between the regulatory approaches in different countries. Too often, those bodies take a very long time to reach resolution. And frankly, too often, countries will erect trade barriers in the -- in the guise of food-safety standards to protect their local industries and keep products out. And that -- that's something that I think we need to be very aggressive in challenging, whether it's us that's erected those barriers or other countries that are erecting those barriers.

BESSER: David, perhaps you can comment on the -- on the European situation on that, the issues of trade barriers being used as a front for food safety, and how you integrate across an area as diverse as Europe issues of food safety.

HEYMANN: Well, it's a -- it's a very interesting issue in Europe, as you know, because some countries themselves didn't have regulatory procedures for foods until just recently.

In fact, I can remember when I was working with WHO one of our directors, a Spanish woman, was called back to Spain to set up a few -- a food safety agency in that country. So it's a really new concept in some countries. In others, it's not so new. But you know, Europe works in two ways. They work nationally through their national agencies, and then they work internationally within Europe under the treaty of the European commission. And how those things will play out, I can't say. Charles, my colleague, might be able better to say, but he's shaking his head also. It's very difficult right now in Europe because there's no one voice. There's many national voices and one global voice which doesn't yet have its credibility established to be the leader.

BESSER: Thank you.

In the back.

I have the ability to point in a general direction, and hope the person with the microphone will find them.

Hands up again for -- here we have in the front. There's a couple up in the front. Thank you.

QUESTIONER: I'm -- (inaudible) -- from industry. I make active ingredients. And I have a concern that I think the issue is actually much bigger, and we're much further away from the solution. The reason why I think it's much bigger is because the supply chain is so fragmented and so porous that there are a lot more pharmaceuticals that are falsified because the active ingredient was falsified and substandard. And when a falsified API gets into the legal supply chain, you can't tell.

And if its toxicity is acute, you get red flags very quickly because people die. If the toxicity is not acute, if it's a genotoxic impurity, it will take many years before people die. So I think that's a problem. And all the real issues of people dying, like heparin, gentamicin, diethylene glycol, they all fall under the category of substandard APIs that got into the legal supply chain. And I think this is a huge problem that the definition of falsified pharmaceuticals hasn't yet started to address. The European directive that's currently being discussed probably would not cause heparin to be under -- you know, to be considered a crime.

And the other comment I had that we're much further from the actual solution is that falsified pharmaceuticals in many countries in Europe are not a crime. And you take this international collaboration, the only country that I know that has a blacklist of companies that have misbehaved is NASDAQ in Nigeria. And you have companies listed in the NASDAQ list in Nigeria that show up in European databases as approved sources of active ingredients. Thank you.

BESSER: Would you like to comment on that, Paul? I mean, the issue of a drug that is toxic, which is the example I gave of diethylene glycol, where it just speaks out that there are people dying from taking the drug, versus the issue of a drug that's, for instance, subthereupetic, the malaria issue, where it may not be clear whether the individual is dying from malaria or dying because there's dealing with a substandard product.

ORHII: Well, to all this is a big problem. Especially, like you just pointed out, medicine is -- (inaudible) -- is manufactured in one country. You don't know where the active pharmaceutical ingredients came from. So you don't even know -- these are the complex issues that I think we're here to address today, because we just realized that the industry has become globalized that you cannot just go to the root of the problem. So I think this is a good start to discuss other things. It's a big problem and very complex.

BESSER: You had a question here in the front.

QUESTIONER: Thank you. Susan Dentzer from Health Affairs.

I have a question for you, Gary. You mentioned the diffusion of authority in the domestic U.S. context as between the FDA and the -- and USDA. I'm wondering if you think there is any prospect of dealing with that now that the president has raised the notion of bringing salmon, for example, under one regulatory authority, as he mentioned in the State of the Union address. Is that at all in prospect, is that an issue with respect to enforcement here on the U.S. side?

And then secondly, what are the estimates of what the resources would be needed for FDA to be able to fully enforce the provisions of the Food Safety Modernization Act? Because in the great scheme of things, these are probably rather small resources in the larger context, but yet extremely important in not enforcing food safety.

KUSHNER: Thank you. Let me answer it in reverse. And Carolyn or Dr. Hamburg, correct me if I'm wrong, but I think the estimate for enforcing the new food safety law is somewhere in the vicinity of $1.4 billion over the first five years. I don't know if that's a lot of money or not. It used to be a lot of money -- (laughter) -- but looking at -- looking at our budget and our deficit, it's a drop in the bucket. And -- but it hasn't been appropriated at all, to the best of my knowledge. So that's obviously a concern that needs to be addressed.

Now, as far as single food agency, which is really at the base of your question, President Obama is not the first one to suggest that. That goes back many administrations. And I remember when President Clinton first took office in his first term, Vice President Gore came out with a report called "Reinventing Government," in which it recommended a single -- the adoption of a single food agency. And the play on that was that there are 14 or 15 different agencies within the federal government that regulate food and that it's so -- and sometimes at cross-purposes.

However -- and I suppose that if we were starting out in 1906 and if we were starting new, it would make some sense for there to be one agency under which all regulation came, so that we can make sure it's consistent throughout the agency and under the same kinds of policies. But it's not 1906. We've had a regulatory system that has evolved in terms of not only the laws that are administered but the regulations, case law interpreting those regulations. And I -- just as a practical matter, I think the idea of a single food agency would be more than challenging. And some people use the Department of Homeland Security as an example: as all you're doing is really changing the names on a bunch of different offices.

What's more important is to have a central concept -- a central approach or philosophy, if you will -- that is shared by the agencies, and where the agencies are given the direction as well as the ability to coordinate on the regulation of the different products. But again, that's, I think, a practical answer. If it were 1906 and we were starting all over, then the idea of a single food agency might be feasible.

My recollection, by the way, is the FDA came out of the U.S. Department of Agriculture, and at one time had been the Bureau of Chemistry at USDA, and was broken off. It was in the '40s, or I think in the early -- earlier.

MS.

: Earlier.

KUSHNER: Earlier.

BESSER: A question over here.

QUESTIONER: Hi. My name is Tom Bollyky. I'm a fellow at the Center for Global Development, and thank the panel for these great comments.

My question is for Gary. I think you're right that the Food Safety Modernization Act has wonderful -- has advanced the ball tremendously on imposing HACCP-like standards, and the question will be their enforcement. You mentioned before that you need roughly $1.3 billion to enforce those authorities. My question is, given the current political environment and budget situation, that money may not be coming. What would be your prescription for a low-resource enforcement of those standards? Is it more -- higher civil or criminal penalties? Is it a higher standard of care, easing tort liability for these actions? Is it better targeting of those enforcement resources? If we can't -- if Congress doesn't appropriate that money, what's your prescription for a way forward?

KUSHNER: Well, first of all, as I -- as I've said a couple of times, I favor giving FDA the resources it needs to do its job. You can't expect an agency to take on new responsibilities when it's already stretched very thin in terms of its resources.

But putting that aside, there is almost -- I think implicit in your answer is -- or in your question, is that in the absence of FDA enforcement the rules and regulations won't be followed, and that's simply not true. Food manufacturers, food marketers, have a vested commercial interest, if not a moral obligation, to make sure that the foods they sell are safe. If there's an outbreak in peanuts, for example, number one, it taints all peanut-based products, regardless of who makes them. But number two, so many products, for example, in the case of peanuts, utilize peanuts, peanut paste. So the number of recalls when the Peanut Corporation of America incident happened was -- the rippling effect was tremendous.

And food companies don't want that. They don't want it for commercial reasons. They don't want it because they protect those brand names. Food companies want food to be safe. So they are already -- that's why so many of them have adopted HACCP voluntarily or most of them have adopted some form of HACCP voluntarily.

There is going to be a small number of companies that are not going to follow the law and -- or don't know how to follow the regulations, and irrespective of FDA resources, we're going to -- we're -- that problem's going to be -- always going to be there. And I think the food industry companies simply have to do the best they can to, again, know their suppliers and make sure that they've got programs to ensure the safety of their products.

BESSER: Question over here.

QUESTIONER: Good morning. I'm Abdul Hakim (sp). I'm a former Senate staffer. Part of my question was really answered, but it actually raised another question. What do you see as hurdles as far as the U.S. consumer is concerned or the impact on the U.S. consumer in the quest for increased oversight, you know, in -- and safety regulations, in that quest? I mean, how do you -- how do you see -- what are some of the hurdles that will be experienced by the U.S. consumer?

And also, on the global scene, what is some of the economic impact that you foresee on other individual countries? And that's in light what Dr. Hamburg was mentioning, and it was also brought up as well that we ourselves have limited resources and, you know, we have deep pockets. So I mean, what would you see as some of the challenges faced by some of the other countries?

BESSER: Let's put a hold on the consumer hurdles, because that will be part of the next panel that's coming up.

But Paul, to ask you, in terms of some of the hurdles you face in Nigeria to implementing and enforcing broad regulation and control over drug and food supply, how many of the issues are internal to Nigeria that you can deal with as a country and how many require much broader cooperation and financial input and support from the global community?

ORHII: Well, most of the issues are interrelated. The staff strengths -- we need finances to have adequate staff strength, the kind of level that -- the -- of training of the staff. So all these are interrelated. The finances are very important. That is, we need international cooperation to be able to be more effective; the training of the staff; and then maybe to have adequate equipment, the kind of equipment that we need to be able to be more effective in monitoring these products. So I think everything is interrelated.

BESSER: Thank you.

In the middle.

QUESTIONER: (Inaudible) -- just going back to Susan Dentzer's question about a single food safety agency in the United States, I think the analogy is not really Homeland Security. I think more the issue is something that Europe faced in the wake of mad cow disease, and that is in this country with USDA, we have an agency that is both responsible for promotion of food as well as for food safety. Isn't that an inherent conflict of interest that needs to be addressed?

HEYMANN: You know, I've heard that argument made many times over the 30-plus years that I've worked as a food industry lawyer, and I just never -- candidly, I never saw much credence in that. The -- there are different agencies that are involved in product promotion within USDA, and those that are in -- responsible for ensuring food safety. The Food Safety and Inspection Service -- anyone I've ever dealt with at that agency has been bound and determined to make sure the product is safe and that if it bears the mark of inspection, that it has been inspected and has met USDA standards. I've never encountered a situation where a FSIS inspector or even the people who are at the head of that agency had to weigh the impact on the marketplace, necessarily, of our causing the product to be recalled or not. I just don't see that. I think that the -- that that agency has the integrity to do its job.

So I don't -- I've never understood as a conflict of interest. But if it is, then you establish a single food agency, but if -- only if it were realistic. And as I mentioned, I just don't know where you'd start to do that, and I don't know that the time and resources that would go into trying to establish a new agency would be effectively spent. Those resources could be better spent by better coordination and communication between the agencies that already have regulatory jurisdiction.

KUSHNER: Just to reflect on your -- on your comment, when I was still at CDC -- and it was before swine flu, when we were focused on bird flu -- there was a lot of effort on surveillance of birds. And I remember one conference call, and it had folks on from FDA and Department of Interior and Department of Agriculture. And we were talking about what the public health messages should be to people. And we were looking at bird migratory routes and surveillance in Alaska, and we were talking about risk and what people can do to protect themselves. And the message from USDA was: Eating chicken is still safe. And so it does kind of play into some of the internal tension over --

MR. : (Chuckles.)

KUSHNER: -- that I've always found a little incongruous, of a department that does contain and tries to put fire walls between the groups that are promoting meat exports and those that are assuring that the food supply is safe.

BESSER: Yes, here.

QUESTIONER: I'm Rob Cortel (ph) with Intelex, and we do risk analytic solutions. And among other things, FDA is a client, on their PREDICT system.

This is about scale. And what we know is that some countries actually create a large part of the problem. I was in Hong Kong about a year and a half ago, right after melamine. And I was told that many of the middle class there refused to buy imported food from mainland China because of their fears about controlling food safety there. And we know that melamine really was something that totally originated, almost culturally, out of China.

How do you deal, in terms of scale, with a country like China which really doesn't seem to share all the way down the same values and restrictions and commitment to food safety?

BESSER: David, let me throw that your -- that easy question your way.

MR. : Thank you. (Laughter.)

HEYMANN: It is an easy question. You know, it's only by not giving up that the international community can succeed. And there are examples of success in all areas, and there can be examples in this. But it takes -- it takes every effort of every country possible. The FDA is doing their part by putting people there. Other countries are setting up norms and standards. But the issue is, when there is an opportunity, show that that was wrong, and show it in a -- in a very important way and move the people on a bit more.

But it's a very difficult issue to do. And, you know, influencing people is very important, but it has to start at the very bottom. We can't always think that we'll be able to impose regulation. I remember speaking with a minister in one country. And that minister said: I will never set up another regulatory agency, because I don't have the way to enforce my regulation, and therefore it opens up a whole new area of corruption.

So it's a very difficult issue from the very bottom. And sometimes it works better if you begin at the top with a framework but at the bottom to help the people understand the importance of safety and let them deal with these issues. So it's -- it has to be a multi- pronged approach.

BESSER: At the consumer level, do you think that the consumer would be willing to pay for more expensive food and drugs that would be required to -- if you were going to have a regulatory system that was ensuring safety?

HEYMANN: You know, that's -- it's a good question. I can't answer that. But I expect that if a community understands that their children are at risk, they will invest in what they need to to make sure that their children are not a risk. And we've always thought that we can come from the top down and regulate them. We can't. There has to be a demand created, as there is for everything else. And that demand comes from NGOs, from education in school, from a whole series of people, which can work and pull down from the top what support they can get.

(Word inaudible.)

QUESTIONER: Well, this has been a marvelous first panel. You folks are just spectacular.

I wanted to ask a question that harps onto two prior questions here. One of the trends that really leaps out when you start analyzing what's (growing/going ?) on on the drug side is that increasingly, the active ingredients that one can purchase, frankly, on the Internet, with no quality control of any kind, are coming from either India or China.

So we started out politely going to this direction, but let's just go there. (Laughter.) And it's kind of shocking what -- one website alone offered 20,000 active ingredients from a couple hundred manufacturers in India.

And so the question I'm really getting at is how can we go into a world where we're seeing an increasing concentration of the raw ingredient production coming from two key countries, neither of which have very strong domestic regulation, where then does the burden shift to guarantee that that active ingredient is what it claims to be, that it has no contamination and that it could be safely formulated for the next step?

BESSER: Paul, I'll start with you. You've said that 60 (percent) to 70 percent of the drugs that are sold in Nigeria come from India and China, let alone other active ingredients and other products.

What would it mean to Nigeria if, say, the supply from China and India was cut off because it's not meeting its stringent standard?

ORHII: Well, that is why I have resisted the availability of quality pharmaceutical products manufactured in Nigeria to some extent. One of the -- (inaudible) -- manufactured locally is a national security matter because I cannot imagine if the supply is cut off from both India and China, I don't know what I'm going to do with one -- (inaudible).

And so we have insisted that we have to start developing our own local manufacturing capacity.

We have approached both -- we have dealt with India and China and there are two different approaches. India is not willing to work with us to find solutions to some of these problems. When I tried to engage the Chinese food and drug administration, their answer was just very short. They said it is the responsibility of the recipient country to ensure the quality of products coming into its own territory. It is not their own problem. They have to protect their own citizens.

I have to go maybe even -- (inaudible) -- the (Senate Committee on Health ?) to engage the China chamber of commerce. There, we've begun to get some response, and that is what led at present time to the arrest and conviction of the six -- sentencing of the six people that were engaging in counterfeit medicine to Nigeria to death.

So China is less willing to take on the responsibility of ensuring the quality of products leaving its territory. India, on the other hand, I have had a different response. In fact, they have worked with us and -- (inaudible) -- where if we get a fake product that comes from India, if we can prove that that it came from India, then the person who gave us information that led to the interception of that product gets a reward up to $2,000.

So I think that is a positive step. If we want to continue to work on that, to see how far we can go.

BESSER: David, from a U.K. perspective, is this something that the U.K. can have impact on a bilateral way with the quality coming from India and China? Or this is much bigger than that?

HEYMANN: This is an issue of two simple words, expected and respected. And it works. It works if you can make sure that everyone understands what's expected and what's respected.

Now, I'll give you an example of this. Back in 2003, I think, many of you remember this SARS outbreak, which originated in China. This was a very difficult time because countries were hiding lots of information because when they reported, they would have tourist sanctions, they would have importations -- were banned, a whole series of things. And so in the analysis of what was going on in China where a country would not report, it was decided that the only way that reporting could be guaranteed was if the norms changed. It's expected and respected to report.

And so the director-general of WHO actually went to the Chinese publicly, accused them of not reporting and it changed the situation and it has changed the situation globally. People are reporting H5N1. They're reporting other things. This is the same issue, Laurie (sp), with food or with medication. You must take the example. You must accuse somebody who is respected, who does it in the right way, must accuse that the norms are being broken and that it's expected and respected and then other countries must come in behind and say, yes, we agree.

BESSER: Well, I always love to end a panel in the middle of a great conversation because it means that people will come back for the next panel.

I want to thank the three members of the panel for their comments. (Applause.)

The next -- the next panel will start promptly at 10:45. So there's a very short break. Please get back to your seats before that starts so it doesn't interrupt the flow of that session. Thank you.

####

®FC¯END

®FL¯

.STX

(C) COPYRIGHT 2011, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.

NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR E-MAIL INFO@FEDNEWS.COM.

THIS IS A RUSH TRANSCRIPT.

-------------------------

RICHARD N. HAASS: Okay, if I could ask people to take their seats, including Ms. Hamburg.

Well, good morning. Welcome to the Council on Foreign Relations. Welcome to this temporary respite from the conversation about Egypt.

For those of you who are new to the council -- and I expect there's a few of you here who are -- we are an independent, nonpartisan membership organization. We're also a think tank and a publisher. And we are dedicated to increasing understanding of the world and the foreign policy choices facing this country.

This year happens to be the 90th anniversary of the Council on Foreign Relations. And all year, among everything else we do, we'll also be examining domestic issues, from education and immigration to debt and deficits and infrastructure, that have impact on foreign policy.

Today's symposium, as you all know, will look at food and safety issues -- again, another example of how the foreign policy agenda has dramatically evolved over the years beyond what you might call classic issues of war and peace.

The last 10 years has seen skyrocketing trade in food and drugs. The statistics are impressive. From 1990 to 2008, global food imports rose in value from $350 billion to over $1 trillion.

And globalization's had an even more significant impact on the pharmaceutical market. Today, drug manufacturers located outside the United States and Europe command 80 percent of the global market, up from 10 percent just two decades ago.

In many ways, this is a good-news story. Consumers enjoy dramatically improved access to food, especially meat and dairy products. And the rapid growth of pharmaceutical manufacturing in the developing world has not just expanded access to the drugs, but it's also brought income and skilled jobs to various economies.

But with this success, as you all know, has also come significant challenges. Regulatory organizations at the national level have had real trouble keeping up with the dramatic rise in the trade.

The Centers for Disease Control in Atlanta estimate that nearly 50 million Americans were sickened by contaminated food and drink in 2009 -- that's one out of every six Americans -- and that 3,000 died. And in Asia, Africa and Latin America, up to 30 percent of the medicines on sale might well be counterfeit, leading to countless deaths either as a direct result of the medicine or because the people did not get the medicine they in fact needed.

So we are very pleased here at the Council on Foreign Relations that we can offer this space for this symposium today to explore these issues in depth and to begin the process of developing policy recommendations. We're going to do it in thirds. The first panel led by ABC's chief medical editor, Richard Besser, will consider the recent history of the food and drug trade and examine the scale and complexity of the market. Panel two, moderated by Susan Dentzer, editor -- who edits Health Affairs -- not to be confused with Foreign Affairs -- will discuss the challenges faced by domestic regulators as they try to oversee an internationalized market. And the third of three will be led by our own Laurie Garrett, who's the council's senior fellow for global health and has done so much to get us involved in this set of issues, and I think to increase international awareness of this set of issues. And Laurie's panel will explore a variety of ideas and how the international community might best address this set of problems down the road.

Let me just make a few housekeeping announcements, so no one else does. This meeting is on the record, so what you can -- what you say can and will be used against you. It will also be recorded for posterity and it will live much longer than anyone in this room.

We're teleconferencing this meeting to our members in the nation's capital. But for all that we spend on this technology, it can easily be interfered with by your cell phones, so if you would be so good as to turn off your BlackBerrys, your iPhones and anything else. Since this is a meeting on health, we will make an exception for health-related devices, pacemakers and the like -- (laughter) -- but last I checked, cell phones do not fall in that category.

We are grateful to the Robina Foundation for their continued generous support of this -- of this program. It's part of a much larger effort looking at international institutions and global governance.

Last but not least is our initial speaker -- for those of you who don't know her, Margaret Hamburg; for those of you who do, Peggy Hamburg -- who's commissioner of the United States Food and Drug Administration. She is the 21st commissioner, if my math is right. And before she assumed this position, Dr. Hamburg was a vice president and senior scientist at the Nuclear Threat Initiative. She -- I will allow her to explain this sequencing of career. And she's also served as assistant secretary for policy and evaluation in the Department of Health and Human Services. And here in New York, she was commissioner of the Department of Health and Human Hygiene. And most important of all, the capstone of her career and the centerpiece of her resume, she is a long-standing member of the Council on Foreign Relations.

Peggy, welcome back to the Council on Foreign Relations. (Applause.)

MARGARET HAMBURG: Well, thank you very much. And it really is a pleasure to be here this morning. And I am a great admirer of this institution and a long-standing, proud member. And it's always nice to be back in New York City and to see my former mayor, Mayor Dinkins, who gave me my first real job in public health. So thank you very much, Mayor Dinkins. And I would say he epitomized during his tenure as mayor and mine as health commissioner what can be accomplished when political leadership and public-health needs and priorities actually come together. And he gave me enormous support when we put together our program to deal with the resurgence of tuberculosis, including extremely high levels of drug-resistant tuberculosis. And in just a few years time, applying simple public-health principles, we were able to turn the tide on that epidemic. So wonderful and (unexpected ?) to see you here, David.

Some of you may be surprised that the Council on Foreign Relations is addressing issues of food and drug safety and regulation, and it's a little bit off the core agenda for many meetings here. But it is highly appropriate, much needed, and very, very timely. And I really an delighted and grateful that the council has put this on the agenda and, of course, thank Laurie Garrett for helping to make this possible.

This event grew out of a series of conversations that Laurie and I had over a period of many months after I became FDA commissioner and really came to understand the new realities of food and drug regulation brought about by globalization -- realities that have really redrawn the path that food and medical products navigate to get to our homes, and realities that really make each and every one of us increasingly vulnerable and realities that challenge virtually all nations.

Today, we hope to start a conversation that will be continued in broader foreign policy and other circles and by next year, perhaps, even reaching the level of the G-20 for discussions. It's that important. We hope that, together, our speakers can communicate to each of you the scale of our challenge and the steps we must take to meet the unique public health demands of our globalized world, and to assure health, safety and security of people and nations all over the world.

We cannot afford to ignore these issues. Certainly, as FDA commissioner, I spend a lot of time grappling with them. They have major implications for how we fulfill our mission to promote and protect the health of the American people.

And in this context, let me tell you just a little bit about the agency and why this all matters so much. The FDA is responsible for overseeing the safety and manufacturing quality of food, drugs, medical devices, vaccines and biologics, cosmetics, dietary supplements, animal drugs and food, radiation-emitting devices and now, for the first time in FDA history, tobacco products as well. These products account for somewhere between 20 (percent) and 25 percent of every consumer dollar spent in this country. And I think with the possible exception of tobacco, we can safely say that these are products that people really need and they really rely on in fundamental ways just about every day. So as you can see, the scope of our responsibilities is enormous.

But during the early days of the FDA when, in fact, most of our authorities were actually put into place, the world was very different. Back then, most products that FDA regulated were domestically manufactured and really quite locally used. And for years, when it came to importation of foreign products, our activities went toward safety and quality, and to protect public health, focused on catching problems at the border. And then we began some limited some overseas inspections.

But those days are long gone. The realities of global economic conditions, as well as innovations in refrigeration, transportation and communication, have enabled and spurred consolidation and globalization. This has resulted in a striking rise in imports of foods, pharmaceuticals, medical devices and even, to some extent, biologics.

Today, the world in which FDA-regulated products are discovered, developed, processed and distributed is much, much bigger. FDA's traditional model of manufacturing site inspections and border examinations is simply not adequate in today's transformed world. In 2010 alone, FDA estimates that more than 20 million import lines of food, devices, drugs, cosmetics and tobacco arrived at U.S. ports of entry -- more than a three-fold increase in regulated imports from just a decade ago. Regulated products come from more than 300,000 facilities in more than 150 different countries all over the world, and they come into the United States through more than 300 different ports of entry.

At the same time, the supply chain from manufacturer to consumer has become more and more complex, involving a web of repackagers and redistributers and making oversight increasingly difficult. The numbers are staggering. In the food realm, about 40 (percent) or 45 percent of fresh fruit and produce and over 75 percent of seafood that we eat here in the United States actually comes from other countries. And for medical products, a stunning 80 percent of active pharmaceutical ingredients in our drugs come from outside our borders and about 40 percent of finished drugs themselves.

And, of course, much of this is positive. We can, for example, have fresh mangoes and strawberries all year round, and it probably does help to keep costs of some drugs and devices lower.

But there are also very serious, often negative implications. The global supply chain has led to the distribution of unsafe or ineffective products and harm caused by economic adulteration and intentional fraud.

I know that you'll soon be hearing directly from others, for example, about the tragic toll of the counterfeit trade in many parts of the world. But really, for nations large and small, the global supply chain presents many new national and international security threats.

In recent years in this country, we've experienced events, some clearly deliberate and some unintended, which have had serious consequences for life, health and safety, as well as for trade, commerce and the economy, ranging from contaminated heparin, a blood- thinning drug, to counterfeit glucose monitor strips and surgical mesh, to melamine-tainted vegetable protein and dairy products, and salmonella in peppers and other food-borne outbreaks, to name just a few.

And the world is poised for further globalization. There are macrotrends at work that are impacting global commerce, and the cumulative effect of these trends will ensure that 10 years in the future, the world will still be a very different place. Undoubtedly, the pressure to reduce costs and increase productivity will lead companies to continue to move manufacturing activities to new and different locations, looking for cheaper sites and global supply chains to reduce production costs.

And countries, like China and India, that already produce many of the food and medical products that Americans use will likely in the future not only produce these goods but will also be important centers for innovation, inventing new groundbreaking products that Americans will want to buy, which means that will have to continue to evolve to meet these new demands.

And we've already begun to do so. In the U.S., the Food Safety Modernization Act, which was signed into law earlier this month, calls on the FDA to put into place a significant new approach that among other things promotes a new level of accountability for all entities that are involved in the supply chain, from farm to fork. And although it's not perfect and we certainly do face challenges, especially including resources, it's a truly significant step in the right direction. Congress has also introduced a similar bill for drugs that would bring sorely needed modernization to our authorities, importantly in the global sphere.

But even with that progress, globalization presents huge and growing challenges. Regrettably, another public health crisis like heparin or melamine seems inevitable, unless we are able to truly forge changes in how we ensure the safety and quality of food and medical products for our citizens.

And at FDA, we've realized that in order to protect American consumers, we must work globally, because the products that our consumers use are no longer simply American products, they're global products. And we know that our counterparts in other nations face similar challenges for their citizens.

This is a moment for leaders around the world to create a new vision of how we regulate. We have a shared interest in assuring the safety and quality of food and medical products, and a shared responsibility for safety and quality. By working together to monitor and to improve safety and quality globally, we will benefit all of the citizens of the world. What I envision for the future is a public health safety net for consumers around the world that is created, supported and maintained by a global alliance of regulators, working closely with all our critical stakeholders.

Some of the work for this is already under way and has been for several years, as regulators from many nations have begun to collaborate. But these efforts need to be taken to the next level. We must ask ourselves how we can weave our various efforts into a coherent global system of oversight and safety. This will mean working together toward greater coordination and enforcement of regulatory standards across nations to ensure safety and quality, regardless of where a product is produced. We need not always apply absolutely identical methodologies, but we all need to work together toward the common goals of product safety and quality, and to harmonize approaches.

As part of these efforts, regulatory authorities, especially those with the greatest experience and resources, must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems, so that they can produce food and commodities that are safe, wholesome and meet international standards.

Those with the greatest experience and resources must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems so that they can produce food and commodities that are safe, wholesome, and meet international standards.

This is surely in our vital interest, but it will have broader benefits for public health and economic development within those countries as well.

And in addition to creating a global coalition of regulators, we must create a modern means to share data globally, and we must use those data and advanced analytics to proactively prevent and identify problems. Detecting and preventing global problems demands global intelligence-sharing and data mining.

Also, as the new food-safety law recognizes and requires, we must enlist public and private third parties as well as industry and other organizations to increase the global safety net. We must do this for food and medical products. And this is absolutely essential. Regulators cannot and should not do it alone.

Finally, we must create the momentum in the United States and in the global community to make these changes real and sustainable. These changes must begin now, but they will take time and the support of many people to fully implement. A strong global safety net will be challenging to weave, but we can do it together.

So let us continue the conversation today, and as regulators, consumers, academics, industry leaders -- (audio break).

MR. : (In progress after audio break) -- I want to welcome the audience who are out there in Washington, as well as on the teleconference.

MS. : Okay. They're connecting me, so --

MR. : And I don't want to use up a lot of time going through -- (audio break).

RICHARD E. BESSER: (Audio break) -- prepared for you, so we're going to dive in.

Let me introduce the panel, though, starting from the far end: David Heymann, who is head and senior fellow of the Center on Global Health Security, Chatham House, in the U.K.; Gary Jay Kushner, who's partner and leader in food and agricultural practice area at Hogan Lovells; and Paul Orhii, who's the director general of the National Agency for Food and Drug Administration and Control in Nigeria.

We're going to have a conversation up here for the next 25 or 30 minutes, and then open it up to members and guests to join in the conversation and ask questions.

So diving in, first talking about the drug side, in 2006 I was head of emergency response for the CDC. And we received a call from colleagues in Panama, and they were facing a situation there where an unusual neurologic syndrome was presenting to hospitals. And they wanted to know what was going on, and we sent a team down to work with them on that investigation.

And the lab at the CDC detected ethylene -- diethylene glycol in cough syrup that was being used throughout the country.

As the Panamanian government explored that situation further, they had a sense of the scope of the problem. Two hundred and sixty thousand bottles of cold medicine were contaminated with diethylene glycol. There were 100 confirmed deaths and thought to be far more than that in terms of the overall range of the problem.

The syrup had been manufactured in China and it had been certified as 99.5 percent pure glycerin. That was what was added into it.

That counterfeit glycerin had passed through three trading companies on three continents, not one of them had tested the syrup to confirm what was on the label. This isn't an isolated incident; there have been other problems with diethylene glycol in glycerin.

So I want to start by turning to David, who has worked in public health at WHO, at U.K., and at CDC. You convened a conference in December, a very important meeting at Chatham House on counterfeit drugs. And so that we're all on the same page, if you could first explain, what are counterfeit drugs? How do they vary from fraudulent drugs, of optimal drugs? And how big is this problem?

DAVID HEYMANN: Well, thanks, Richard. Yes, we did have a meeting at Chatham House in London because for the last 30 years, WHO has had a very difficult time in dealing with counterfeit drugs because of definition. And it's clear why this is a problem if you think about counterfeits. A counterfeit handbag, a counterfeit T-shirt doesn't really cause any harm; it's just -- it causes harm to the producer, but not to the user, whereas counterfeit drugs can cause harm to the user. And what's happened is that the discussions at WHO, trying to find a definition, have gone around many different words and never really focused on any one in particular. Those words are "substandard;" there are other words such as "falsified" and finally as "counterfeit."

And so the definition has been difficult. But substandard is very easy to understand. Substandard drugs and vaccines are those that don't meet regulatory requirements in the country in which they're produced or in the country in which they're imported. It's very easy to understand that. And it happens to both generics and to patented drugs as well. For example, here in the U.S., if you remember a few years ago, influenza vaccine came in from Europe and was substandard. This passed through the regulatory agencies in Europe and also came into the U.S., and it's a problem for industrialized country regulatory agencies.

Think of that problem in a country where biotechs are trying to set up their own production and development and don't have a regulatory agency that can help them make sure they have good products. If it happens in industrialized countries, what will happen in developing countries? But as Peggy said, there are ways that that can be dealt with. It can be dealt with bilaterally, by exchange and partnerships between regulatory agencies, or multilaterally through the World Health Organization.

So substandard is a very easy concept to understand, and this was one of the three concepts that was agreed at the Chatham House meetings. Substandard do not meet national regulatory requirement.

Under substandard, there are really two sub-classes: there's a falsified classification and there's a counterfeit classification. These are substandard drugs because they haven't met national or other regulatory requirements. But a counterfeit drug is one that's purely involved with trademark, and because it's involved with trademark, it's not as much a public health issue as an issue for the World Trade Organization and the World Intellectual Property Organization, which deal with counterfeits and with trademark issues. It's a criminal offense. It has public implications, but there is a framework within which that can be handled.

The framework that's missing is that framework for falsified medicines. These are medicines like in China, medicines that were produced with false ingredients maybe unknown to a very few people, but known to someone. It was a deliberate intent, as is counterfeit, a deliberate intent to falsify a medication. Those falsified medications, of course, are substandard because they don't pass through regulatory requirements.

So those were the three different definitions that came out of our meeting at Chatham House and which we hope will help WHO now move ahead with the definition. We had many people at this meeting.

We had WHO, the head of the the drug group at WHO, we had World Trade Organization, we had WIPO, we had Interpol. We had a whole group of people. And we hope that these three definitions, which are fairly clear to everybody, would be the ones that can help move forward in a public health way the discussions on counterfeit drugs.

BESSER: Great. Thanks very much. You -- it said that the disease that may be impacted the most by this may be malaria. A study in 2006 in the American Journal of Tropical Medicine and Hygiene found that 68 percent of anti-malarial drugs found in Laos, Myanmar, Vietnam and Cambodia did not have the correct amount of drug in them. And WHO estimates that as many as 200,000 lives that are lost each year to malaria may be preventable just by dealing with the issue of substandard drugs.

I want to turn to you, Paul. You gave a speech last year to the parliament in Nigeria. You've been a tremendous crusader in the area of control of counterfeit drugs. And you said that the culture of chasing fake drug dealers around the country is not sustainable in the long run. Sixty to 70 percent of essential medicines in your country are brought in from India and China. And you were calling for a more comprehensive approach.

Can you talk to us about the scope and scale of the problem of counterfeit drugs in Nigeria?

PAUL B. ORHII: Thank you. (Inaudible) -- let me use this opportunity to thank the Council on Foreign Relations for organizing this forum. This is a very, very important forum. I also want to use this opportunity to thank Dr. Margaret Hamburg and the U.S. FDA for the opportunity that they give developing countries, the -- (inaudible) -- authorities in developing countries to build our capacity. Been training some of her staff, and we're getting better and better. So I want to use this opportunity to thank the U.S. FDA and Dr. Hamburg for that.

I say the US, the culture of chasing counterfeiters within a country is not sustainable in the long run, because the problem has become much worse than before. In 2001, the instance of counterfeit medicines in Nigeria rose to over 40 percent. More than 40 percent of the drugs in Nigeria, especially anti-malarials, essential medicines, were counterfeits.

At that time, in developed countries, like the U.S., and Europe, they had less than 1 percent counterfeits in their systems. Now the problem has become much worse. The Pharmaceutical Security Institute and the -- (inaudible) -- that the counterfeit medical -- (inaudible) -- constitute about 35 to 200 billion business dollars a year. So you see that most of these counterfeits would be heading to countries with very weak resistance.

And even in Europe, advanced as it is, counterfeit medical markets have been found to -- is worth about 10.5 million euros. So this is scary. When we look at it, we budget how countries like ours with weaker regulatory systems can cope.

(Inaudible) -- is charged with the responsibility of regulating and controlling the manufacture, distribution, sale and use of all drugs, foods, cosmetics, medical devices, bottled water and many other products. But we are grossly understaffed for the kind of vast territory that we're called to protect and the kind of huge population. Our population is a -- what, 150 million people that we're called to serve. The borders are vast, poorly managed because of lack of funds. And even when we can man them, we do not man them as appropriately as we would have wanted to to be able to stop -- (inaudible).

I'll just give you an example. Only in 2009, we intercepted a consignment of sick medicines, more than 700,000 courses of anti- malaria drugs coming from China. They were labeled as made in India. But we were able to observe the -- (inaudible) -- from from China, and we took the matter up with these two countries, resulting in the arrest of -- and sentencing to death of six persons in China that were related to this manufacture and shipment of that consignment Nigeria.

We also were -- (inaudible) -- in Indian parliament, and then the big -- middle law making it a criminal -- punishable by lifetime jail term, the manufacture and distribution of -- (inaudible) -- products.

But our law is also very weak. And so we have now tried to review our law and have a member of parliament from Nigeria -- he also with us, will be submitting that law to them to help us pass the law so that we make more stringent punishments -- lifetime jail time, confiscation of assets -- in situations where we can determine that the fake product proximately caused the death or severe bodily injury of the victim. We want to be able to use some of the confiscated assets to legally compensate the victims.

We want to build international -- stronger international cooperation, because we cannot do it alone. That is why a formula -- this is (especially ?) important. And we are very, very happy that the U.S. and also the USDA are now paying attention to this, because it -- before, it was considered to be a problem of the developing world. And not much attention from the developed world was paid to this. Well, now we want -- we are very happy that we are now having stronger partners with this U.S. -- you cannot now have a stronger partner than the U.S. come in to take on this problem.

We are very excited. We want to -- (inaudible) -- that Dr. Hamburg mentioned here. We want to have -- build -- we're leveraging on cutting-edge technology to fight the problems. We're -- introduce new technology to fight the problem. And we're building both national, international and other regional cooperation -- (inaudible) -- fighting counterfeit medicine.

So the culture of just pursuing counterfeit medicines within your territory and trying to eliminate them is no longer sustainable. Officially, with the recent crackdown on illicit drugs, most of the former drug barons are now diverting -- they have now diverted their resources to manufacture and diffusion of counterfeit medical products. So the program has become more globalized, more militarized and more sophisticated. So it needs international cooperation, very strong international cooperation -- (inaudible) -- what we are doing now to be able to fight counterfeit medicines.

BESSER: You know, this is an issue that has an impact on your life. An attempt was made on your life this fall. And, you know, we talk about these issues in public health as health issues. Is there enough of a connection between the public health community and the legal community to take this on as a criminal issue and not just a health issue?

ORHII: It is a public health concern, but it's also a criminal issue. So I think we are working together with the legal system to try to see how we can impose stiffer penalties on people who engage in counterfeiting.

Of course, in Nigeria, it is very dangerous. I had a situation where we had sent our staff out to all these bakeries to make sure that they were not using potassium bromate, which has the potential to cause cancer.

I mean, one of these bakeries where staff found the banned potassium bromate, the staff of bakery descended on our staff, beat them to the point where they lost consciousness, bundled them into a vehicle, poured petrol on that vehicle and were about to set the vehicle ablaze with our staff inside when the police came in time to save them. So this is a very dangerous engagement in our countries.

But I think we are determined. The government is giving us enough support to be able to do this. We are getting international support now. And I think we will be able to solve the problems.

BESSER: Our session this morning isn't just focused on drugs. It's also dealing with the issue of globalization of our food supply. As Peggy Hamburg was saying, you can have a mango all year round in New York.

I started my career at CDC in foodborne disease and recall outbreaks of cyclospora from raspberries from South America, cholera from coconut milk from Thailand, and most recently the peppers/tomatoes that really cost the tomato industry in the U.S. a couple billion dollars from salmonella.

Right now, there's an issue of dioxins in Germany. And 4,000 farms were closed in Germany when it was discovered that there was dioxin-tainted industrial fatty oil mixed in to animal feed. That led South Korea to shutting off the importation of meat products from Germany; and now in the European community, concern over some eggs from Germany that are suspected of being contaminated.

So I want to pull into the conversation now Gary Kushner and ask you to comment on the scope and scale of globalization of food.

GARY JAY KUSHNER: Well, thank you. That's obviously at the heart of this program. And I should say, first of all, globalization is real, but it didn't just start. The international -- the growth of the international food market's probably been rising for the last 20 years. It's just now -- probably I would say an all-time high, and there are a number of reasons for that as Dr. Hamburg pointed out and Richard just pointed out as well. Consumers do want to have fresh products, fresh produce in particular, 12 months of the year. And we have the ability to provide that. But that means importing products from a number of different countries.

Food manufacturers recognize this. Many of them have a multinational focus. Many of them have plants in other countries and distribution centers in other countries. But the reality is that in order to provide the array of products that consumers expect does require importation, and we're now importing foods and ingredients from all over the world. And in some parts of the world, the controls are much stronger than they are here. And even where you've got regulatory controls, the key is enforcement of those controls and that also varies quite a bit globally.

I believe that the new Food Safety Modernization Act is a very, very important step forward in helping to harmonize regulation and ensure the safety of products coming into the United States.

Many of you may realize or may not know that food is regulated by a lot of different agencies, but primarily by the U.S. Department of Agriculture's Food Safety and Inspection Service and the Food and Drug Administration. FDA has regulatory authority over all foods, primary regulatory authority over all foods with the exception of meat and poultry. And meat and poultry, historically, has been regulated by the Food Safety and Inspection Service. There are historical reasons for that. I should say, though, meat and poultry is under what is called continuous inspection, that is, that the meat or poultry product may not be distributed in the United States unless it has been inspected or at least have the presence of a USDA inspector in the plant. And you'll see on a meat or poultry product, you'll see the stamp that says inspected and passed. And the Department of Agriculture is very jealous of that stamp because it's their Good Housekeeping stamp of approval.

The FDA on the other hand -- and I think the last time I looked, the USDA has at least 7,000 inspectors and perhaps more. But FDA is expected to regulate all of the rest of the food supply with far less in the way of resources. And the authority that FDA has or historically has had has been much less different than the USDA, yet so many of the ingredients that are coming into the United States that are being imported are under FDA's regulatory jurisdiction, which presents a real challenge.

Now, I will say that under the food modernization -- the Food Safety Modernization Act, importers will now be required to verify that the products that they import into the United States do meet the same safety standards that will be -- that are required of them in the United States, and that is a major step forward. Manufacturers in this country, particularly the larger national manufacturers, already have programs in place to ensure the safety of the products that they produce, as well as the raw materials that they use. And it's historically, food manufacturers have employed what's called the hazard analysis and critical control points program. The acronym is HACCP and it's referred to as HACCP. That has been mandatory for meat and poultry products since the early '90s, and it's been mandatory at FDA for a limited number of products, notably seafood and pasteurized juices.

Also, I would throw -- (inaudible) -- canned foods regulation into that same scope of regulation. But for the most part, products under FDA's jurisdiction have been manufactured under HACCP that has been voluntarily employed by the food industry. And if I want to digress just for a second because I'm a real believer in HACCP, HACCP was not developed by the government; it was developed by the food industry in the '60s basically to keep food as safe as possible for the space program. You can imagine, an astronaut with a food-borne illness in a little capsule would not be a terribly pleasant experience. (Scattered laughter.) And once it was adopted, more and more food companies designed food safety assurance programs based on HACCP principles.

So it's been a very, very good concept. Now, although the Food Safety Modernization Act does not call it HACCP, the controls, the kind of control, the principles on which this new law is based effectively means mandatory HACCP, and I, for one, and I represent the food industry, think that that is a very, very good step.

The challenge now for FDA will be enforcement, and remember as I mentioned, USDA products are inspected by our -- meat and poultry products are inspected by USDA, which has significant appropriations every year to support that inspection program. FDA now has the burden of employing similar controls on the rest of the food industry, yet Congress has not yet appropriated the money that FDA needs for that, and that has got to come.

There are some aspects of the new law that are self-executing. That doesn't mean they'll be enforced, but it does mean that companies will employ those because that last thing a food company wants is for its products or a competitor's products even to cause food-borne illness and generate adverse publicity about the whole product line.

It's important that the products be viewed as safe for consumers, so everyone has a vested interest in that. Many of the new provisions in the law -- of the new law, as I said, are self-executing and that's important. But other aspects, including FDA's required increased inspection of imported products and even inspection or verification of exporting facilities, is going to take money, and FDA simply hasn't been given that money yet.

So I think that's something that consumers, industry, everyone that needs to encourage Congress to do is to appropriate adequate funding for the new law to be implemented and enforced effectively.

BESSER: Thanks very much, Gary. I do want to now open up the conversation to members and their guests. And I'll ask you to wait for a microphone. And when you ask your question, please state your affiliation and whether there's someone it's directed to.

While we're waiting for the microphone to get around, I want to ask you, Paul, about Gary's comments about food production and the requirements that will be in place in terms of assuring the purity and safety of food.

What does that mean in terms of a burden on a developing country to have to have a system of food inspection, food testing, a HACCP control system? Is that something that's within the realm of possibility in Nigeria?

ORHII: Yes, it is already within the realm of possibility. In fact, we have a program in place. We already have, in fact, some expats from the FDA, from the Department of Agriculture -- have been in Nigeria with us working on developing food safety program under the HACCP program.

So it is within the realm of possibility. We already are doing inspections of food products, but we're clearly -- (inaudible) -- our capacity -- (inaudible) -- with the help of the USDA again.

So I think it is within the realm of possibilities.

BESSER: And Gary, flipping back to you. Many of the large- scale food producers in this country, you know, whether you're talking about McDonald's or Wal-Mart or a Costco, are establishing integrated systems of food production that ensure their own inspection overseas.

The impact of that in terms of building infrastructure within a developing country, do you see it as a positive step or something that may actually deter a developing country from developing their own system, as we're hearing about in Nigeria, of ensuring food safety?

KUSHNER: I'm not sure this answers your question, but the examples you gave, Walmart, Costco, for example, are primarily food retailers. And although some of them do have their own private label programs and some of them -- some retailers actually have products that they manufacture for themselves, for the most part, the retailers are purchasing products from manufacturers or from brokers that are going to be sold in their supermarkets.

That having been said, it's the same issue, and that is how do you make sure that the products that are coming in from other countries, whether they're going to a private label product that you're producing or a product that your supplier is producing, how do you make sure that those are produced under the same kinds of controls?

A major manufacturer will have as part of its HACCP program, its own HACCP program, will have programs or -- programs in place to inspect the incoming raw materials, to periodically test incoming raw materials and ingredients so that they can control as much as possible the product that's going into -- the ingredients going into their products.

In addition, they'll know their supplier, and that is a very, very -- it's a simple concept and an important concept that is for a food manufacturer to know its supplier. Now, it's impossible to know every supplier that supplies that supplier, but at least it's a very important step, particularly if you couple that with the controls that the importing company will have in place.

Let me just go back, though, to talk again about the difference between USDA and FDA, because I think it's instructive. The USDA, I think, since about 1968 -- I may be wrong on when this came into law, but since about '68, USDA -- the meat and poultry inspection laws have required that products coming in for importation, number one, come from countries that the inspection system has been determined by USDA to be equivalent to the U.S. inspection system. That is, the country must demonstrate that its inspection system is adequate and the individual plants that are going to be shipping products to the United States must be approved.

So that supply chain is very well controlled in the context of meat and poultry products. Again, less so in FDA products largely because of the historical nature of the laws that both agencies administer and the feasibility of the FDA insisting upon the importation of products being -- becoming from certified plants where they don't have that legal authority and even with that legal authority, the money is a real issue.

BESSER: Thank you. I think the first question, over here.

QUESTIONER: Good morning. Great panel. My name is Peter Pitts. I'm the president of the Center for Medicine in the Public Interest.

Dr. Hamburg mentioned at the outset the issue of global intelligence sharing, and you discussed the issue -- the definitional problems of counterfeit drugs, and I fear that we're still quite a ways off from a workable definition there. But short of kind of a global regulatory Marshall Plan, you know, how can we work together either on a formalized or an ad hoc basis to at least measure the problem of counterfeit medicine so we can begin to have a baseline and combat it?

BESSER: David, I'll throw that to you, first.

HEYMANN: Well, you know, it's only by global collaboration, as Peggy said earlier, that this can happen. The forum -- one of the fora in which it could happen is in the World Health Organization, but as I said, they've been blocked with a definitional problem that we hope can be unblocked eventually so they can move ahead and understand what they're working with.

I think we'll hear from other sources, other -- we'll have other opportunities to hear from Interpol and various places about what they're doing globally. But it will only work if the world works together in a multilateral framework.

There can be bilateral activities which are very important; FDA has people in China, has people in other countries, in India, and that's very important. But multilateral and bilateral together are the solution.

BESSER: David, just to add onto that. How much is the issue of patent protection confounding the issue of counterfeit drugs and drug safety?

HEYMANN: Well, it's a very important reason that the definition can't move ahead because some would say that generic drugs are counterfeits. There's a whole series of issues that are very -- are very difficult to deal with. And so that's why these three definitions, clearly making it understood what a substandard is, and then there are two substandard sets, counterfeits, which are trademarked, and falsified is a much better way to proceed and a much more logical way to do it.

There are mechanisms that can deal with trademark infringement and those are enforced. What's not available at present is this public health framework in which we can all work together because of the definition issue.

QUESTIONER: Thank you.

QUESTIONER: Thank you. My name is Mark Feinberg. I work in medical affairs and policy at Merck. I want to thank all the speakers for so succinctly and clearly highlighting the importance of this issue.

My question, really, for any of the speakers is, what will it take to actually move us down the path that Dr. Hamburg had articulated as sort of a much more integrated system that is really designed to accommodate the safety challenges posed by globalization? You know, how can we go down that path faster? And really what are the obstacles in the way beyond the sort of definitional thing that Dr. Heymann had mentioned?

BESSER: We'll go short on that because the next panel is going to be focusing more on control issues and policy issues. Paul, do you want to comment on that?

What will it take to get us from where we are now to more of an international system that is ensuring drug safety?

ORHII: Well, we said this initiative by the Council on Foreign Relations and the FDA is a good start. We can build on what we decide here today and then move on. Talking about the definition -- I think definitions of "counterfeit" have just been deliberately used to confuse the issues. We in developing countries that are most hit by the impact of counterfeit medicines will look at it purely from a public-health perspective. At the WHO, we have always emphasized counterfeit medicines, looking at them purely from the public health perspective.

I talked here about getting almost 40 percent of medicines in the system, counterfeit. This -- some of the medicines, the counterfeit medicines, if used to treat diseased like malaria, have the potential to develop resistant strains of microorganisms, which are not treatable by effective medicines, resulting in death and sometimes even the spread of some of these resistant strains to other countries. You know, they do not need passports or even a visa to cross international border lines.

That is why it is important the the Council on Foreign Relations and the FDA have summoned this meeting.

So I think it deliberately confuse -- (inaudible) -- attempted at the -- the last World Health assembly to agree to come to a definition of counterfeit medicines that deals exclusively with the public health concerns and not encompassing intellectual property issues. But I think we are working towards that, and we hope to be able to achieve that.

But we want a situation where we have a broader coalition, we have an international coalition of all relevant agencies. We (started ?) that impact. We have had impact where we have the INTERPOL, we have the -- (inaudible) -- we have all the relevant agencies that will help us find these counterfeits.

For developing countries, no country maybe in Africa is -- (inaudible) -- if we find counterfeit medicines in the system. (Inaudible) -- we cannot tackle that alone. But we need a big coalition that can reach out to all those people. And the example that I gave you of counterfeit medicines, anti-malaria that we intercepted in China, alone Nigeria could not have any -- don't have anything against China. But then we involved INTERPOL. We had to. And some of the people we -- (inaudible) -- Nigeria. But (anyway ?) they were out of the country beyond our jurisdiction. But INTERPOL reached them, and they have finally come back to Nigeria where we're prosecuting them now.

So what we want is a global coalition that would be very strong to help us fight counterfeit medicines. But I think we can view counterfeit medicines not encompassing any intellectual property issues, just purely from the public-health perspective. In a country like -- a developing country like Nigeria, it is a life-and-death issue. It is -- we're not talking about intellectual property here. We're talking simply about public-health challenges that we have.

BESSER: Thank you. One here, and then I'll move towards the back.

QUESTIONER: Yes. My name is Charles Clift. I'm from the Chatham House Centre on Global Health Security, a colleague of David's, who spoke.

Just to expand a little on the definition list used -- I don't want to go into it too much -- I mean, Dr. Orhii says, well, what we're interested in is public-health issues and counterfeit medicines, the medicines that are basically substandard and probably done deliberately, but nothing to do with intellectual property.

That applies -- lots of countries feel like that. Other countries such as, for instance, Brazil, say to us, a counterfeit medicine is one that infringes a trademark. And if it's simply substandard and deliberately done, it's a falsified medicine. And they have that in the legislation. So they have a very restrictive definition of counterfeit. But in a sense, we know what we mean, but we use the same term to describe different things. That is one of the problems.

But underlying the definitional issue is a number of countries, particularly those who produce generic medicines or some who consume them, fear that attacking counterfeit medicines will also be an attack on legitimate generic medicines of assured quality, on which many developing countries rely. Most of their medicines are generic. Unfortunately, many of them -- a certain proportion will not be of the right quality.

As regards this discussion today, I thought it might be helpful if we -- I think we're talking about two different things, which are related but are conceptually different. One is the problems of the legitimate supply chain. And that is what Dr. Hamburg was talking about, the 99 percent of her opening remarks. And that is one set of issues where, as she said, greater collaboration is needed between the regulatory authorities in both developed and developing countries because of the way the supply chain has become globalized.

Then there's the question of the illegitimate supply chain, which -- again, regulatory authorities have a role, but it's a multi-agency thing. You have customs, you have Interpol -- we'll be hearing from Interpol later this morning -- and there really -- one is about how do we protect the consumer from harm, and the other one is essentially about, once these dangerous medicines get on the market, how do we address -- how do we deal with the producers and the distributors and so on?

So I think we need -- it's helpful conceptually to separate those two issues, which need different policy measures to a great extent to tackle them.

BESSER: Thanks very much. In the back on the end.

QUESTIONER: (Off mic) -- Radio. Obviously, when one thinks about this generic-versus-counterfeit debate, one recalls the politics of the HIV/AIDS debate and the production of drugs that occurred several years ago. And my question has to do with food safety and food production. Many scholars of global food production point out that, for the model of the United States in terms of food production to be duplicated in the world, it would simply be impossible.

And we have, as you know, a lively debate in this country for decades about the very safety of our own food production in the United States. And I was wondering how the panel feels about those kind of issues entering the equation, because, you know, I can think of movies like "Food, Incorporated" and others which point out the problematics of the safety measures inherent in the United States itself in terms of food production.

So I was wondering what your thoughts are on that.

QUESTIONER: Gary, do you want to dive in on that one?

KUSHNER: Let me try. And here's where I'm going to sound like a food-industry flack, and I admit it. (Laughter.) I happen to believe that the food in the United States, the food production system, is a very effective system and makes for a very safe product.

Granted, there are -- have been -- obviously have been notorious foodborne-illness outbreaks that are unacceptable and need to be addressed. There are companies that do not follow basic good manufacturing practices. And that's also unacceptable and has to be addressed. And there are challenges that are inherent in a global system, or even a system that just in the United States, where you're distributing products all over the country and importing ingredients for use of those products.

As far as imposing our system, let's assume that our system is a safe one and we're trying to make it safer, or as safe as it can be. Trying to put that system in place in other countries requires a couple things. First of all, I think it's a shared responsibility between the food industry and the government in terms of the company that is importing a products wants -- has to be sure and has to be committed to doing everything it can feasibly do to make sure that the product it is importing is safe and meets U.S. standards. Same goes for countries -- companies and countries or exporters who want to send their products to the United States. They have to have a commitment -- if they want the U.S. marketplace, they have to have a commitment to follow and adopt the same kinds of food safety procedures that are in use here. And as far as the government goes, there's nothing that can substitute for government coordination.

We do have some international bodies -- Codex Alimentarius -- that sets international food standards; the World Trade Organization and other organizations that are set up largely to enhance our -- to enhance harmony between the regulatory approaches in different countries. Too often, those bodies take a very long time to reach resolution. And frankly, too often, countries will erect trade barriers in the -- in the guise of food-safety standards to protect their local industries and keep products out. And that -- that's something that I think we need to be very aggressive in challenging, whether it's us that's erected those barriers or other countries that are erecting those barriers.

BESSER: David, perhaps you can comment on the -- on the European situation on that, the issues of trade barriers being used as a front for food safety, and how you integrate across an area as diverse as Europe issues of food safety.

HEYMANN: Well, it's a -- it's a very interesting issue in Europe, as you know, because some countries themselves didn't have regulatory procedures for foods until just recently.

In fact, I can remember when I was working with WHO one of our directors, a Spanish woman, was called back to Spain to set up a few -- a food safety agency in that country. So it's a really new concept in some countries. In others, it's not so new. But you know, Europe works in two ways. They work nationally through their national agencies, and then they work internationally within Europe under the treaty of the European commission. And how those things will play out, I can't say. Charles, my colleague, might be able better to say, but he's shaking his head also. It's very difficult right now in Europe because there's no one voice. There's many national voices and one global voice which doesn't yet have its credibility established to be the leader.

BESSER: Thank you.

In the back.

I have the ability to point in a general direction, and hope the person with the microphone will find them.

Hands up again for -- here we have in the front. There's a couple up in the front. Thank you.

QUESTIONER: I'm -- (inaudible) -- from industry. I make active ingredients. And I have a concern that I think the issue is actually much bigger, and we're much further away from the solution. The reason why I think it's much bigger is because the supply chain is so fragmented and so porous that there are a lot more pharmaceuticals that are falsified because the active ingredient was falsified and substandard. And when a falsified API gets into the legal supply chain, you can't tell.

And if its toxicity is acute, you get red flags very quickly because people die. If the toxicity is not acute, if it's a genotoxic impurity, it will take many years before people die. So I think that's a problem. And all the real issues of people dying, like heparin, gentamicin, diethylene glycol, they all fall under the category of substandard APIs that got into the legal supply chain. And I think this is a huge problem that the definition of falsified pharmaceuticals hasn't yet started to address. The European directive that's currently being discussed probably would not cause heparin to be under -- you know, to be considered a crime.

And the other comment I had that we're much further from the actual solution is that falsified pharmaceuticals in many countries in Europe are not a crime. And you take this international collaboration, the only country that I know that has a blacklist of companies that have misbehaved is NASDAQ in Nigeria. And you have companies listed in the NASDAQ list in Nigeria that show up in European databases as approved sources of active ingredients. Thank you.

BESSER: Would you like to comment on that, Paul? I mean, the issue of a drug that is toxic, which is the example I gave of diethylene glycol, where it just speaks out that there are people dying from taking the drug, versus the issue of a drug that's, for instance, subthereupetic, the malaria issue, where it may not be clear whether the individual is dying from malaria or dying because there's dealing with a substandard product.

ORHII: Well, to all this is a big problem. Especially, like you just pointed out, medicine is -- (inaudible) -- is manufactured in one country. You don't know where the active pharmaceutical ingredients came from. So you don't even know -- these are the complex issues that I think we're here to address today, because we just realized that the industry has become globalized that you cannot just go to the root of the problem. So I think this is a good start to discuss other things. It's a big problem and very complex.

BESSER: You had a question here in the front.

QUESTIONER: Thank you. Susan Dentzer from Health Affairs.

I have a question for you, Gary. You mentioned the diffusion of authority in the domestic U.S. context as between the FDA and the -- and USDA. I'm wondering if you think there is any prospect of dealing with that now that the president has raised the notion of bringing salmon, for example, under one regulatory authority, as he mentioned in the State of the Union address. Is that at all in prospect, is that an issue with respect to enforcement here on the U.S. side?

And then secondly, what are the estimates of what the resources would be needed for FDA to be able to fully enforce the provisions of the Food Safety Modernization Act? Because in the great scheme of things, these are probably rather small resources in the larger context, but yet extremely important in not enforcing food safety.

KUSHNER: Thank you. Let me answer it in reverse. And Carolyn or Dr. Hamburg, correct me if I'm wrong, but I think the estimate for enforcing the new food safety law is somewhere in the vicinity of $1.4 billion over the first five years. I don't know if that's a lot of money or not. It used to be a lot of money -- (laughter) -- but looking at -- looking at our budget and our deficit, it's a drop in the bucket. And -- but it hasn't been appropriated at all, to the best of my knowledge. So that's obviously a concern that needs to be addressed.

Now, as far as single food agency, which is really at the base of your question, President Obama is not the first one to suggest that. That goes back many administrations. And I remember when President Clinton first took office in his first term, Vice President Gore came out with a report called "Reinventing Government," in which it recommended a single -- the adoption of a single food agency. And the play on that was that there are 14 or 15 different agencies within the federal government that regulate food and that it's so -- and sometimes at cross-purposes.

However -- and I suppose that if we were starting out in 1906 and if we were starting new, it would make some sense for there to be one agency under which all regulation came, so that we can make sure it's consistent throughout the agency and under the same kinds of policies. But it's not 1906. We've had a regulatory system that has evolved in terms of not only the laws that are administered but the regulations, case law interpreting those regulations. And I -- just as a practical matter, I think the idea of a single food agency would be more than challenging. And some people use the Department of Homeland Security as an example: as all you're doing is really changing the names on a bunch of different offices.

What's more important is to have a central concept -- a central approach or philosophy, if you will -- that is shared by the agencies, and where the agencies are given the direction as well as the ability to coordinate on the regulation of the different products. But again, that's, I think, a practical answer. If it were 1906 and we were starting all over, then the idea of a single food agency might be feasible.

My recollection, by the way, is the FDA came out of the U.S. Department of Agriculture, and at one time had been the Bureau of Chemistry at USDA, and was broken off. It was in the '40s, or I think in the early -- earlier.

MS.

: Earlier.

KUSHNER: Earlier.

BESSER: A question over here.

QUESTIONER: Hi. My name is Tom Bollyky. I'm a fellow at the Center for Global Development, and thank the panel for these great comments.

My question is for Gary. I think you're right that the Food Safety Modernization Act has wonderful -- has advanced the ball tremendously on imposing HACCP-like standards, and the question will be their enforcement. You mentioned before that you need roughly $1.3 billion to enforce those authorities. My question is, given the current political environment and budget situation, that money may not be coming. What would be your prescription for a low-resource enforcement of those standards? Is it more -- higher civil or criminal penalties? Is it a higher standard of care, easing tort liability for these actions? Is it better targeting of those enforcement resources? If we can't -- if Congress doesn't appropriate that money, what's your prescription for a way forward?

KUSHNER: Well, first of all, as I -- as I've said a couple of times, I favor giving FDA the resources it needs to do its job. You can't expect an agency to take on new responsibilities when it's already stretched very thin in terms of its resources.

But putting that aside, there is almost -- I think implicit in your answer is -- or in your question, is that in the absence of FDA enforcement the rules and regulations won't be followed, and that's simply not true. Food manufacturers, food marketers, have a vested commercial interest, if not a moral obligation, to make sure that the foods they sell are safe. If there's an outbreak in peanuts, for example, number one, it taints all peanut-based products, regardless of who makes them. But number two, so many products, for example, in the case of peanuts, utilize peanuts, peanut paste. So the number of recalls when the Peanut Corporation of America incident happened was -- the rippling effect was tremendous.

And food companies don't want that. They don't want it for commercial reasons. They don't want it because they protect those brand names. Food companies want food to be safe. So they are already -- that's why so many of them have adopted HACCP voluntarily or most of them have adopted some form of HACCP voluntarily.

There is going to be a small number of companies that are not going to follow the law and -- or don't know how to follow the regulations, and irrespective of FDA resources, we're going to -- we're -- that problem's going to be -- always going to be there. And I think the food industry companies simply have to do the best they can to, again, know their suppliers and make sure that they've got programs to ensure the safety of their products.

BESSER: Question over here.

QUESTIONER: Good morning. I'm Abdul Hakim (sp). I'm a former Senate staffer. Part of my question was really answered, but it actually raised another question. What do you see as hurdles as far as the U.S. consumer is concerned or the impact on the U.S. consumer in the quest for increased oversight, you know, in -- and safety regulations, in that quest? I mean, how do you -- how do you see -- what are some of the hurdles that will be experienced by the U.S. consumer?

And also, on the global scene, what is some of the economic impact that you foresee on other individual countries? And that's in light what Dr. Hamburg was mentioning, and it was also brought up as well that we ourselves have limited resources and, you know, we have deep pockets. So I mean, what would you see as some of the challenges faced by some of the other countries?

BESSER: Let's put a hold on the consumer hurdles, because that will be part of the next panel that's coming up.

But Paul, to ask you, in terms of some of the hurdles you face in Nigeria to implementing and enforcing broad regulation and control over drug and food supply, how many of the issues are internal to Nigeria that you can deal with as a country and how many require much broader cooperation and financial input and support from the global community?

ORHII: Well, most of the issues are interrelated. The staff strengths -- we need finances to have adequate staff strength, the kind of level that -- the -- of training of the staff. So all these are interrelated. The finances are very important. That is, we need international cooperation to be able to be more effective; the training of the staff; and then maybe to have adequate equipment, the kind of equipment that we need to be able to be more effective in monitoring these products. So I think everything is interrelated.

BESSER: Thank you.

In the middle.

QUESTIONER: (Inaudible) -- just going back to Susan Dentzer's question about a single food safety agency in the United States, I think the analogy is not really Homeland Security. I think more the issue is something that Europe faced in the wake of mad cow disease, and that is in this country with USDA, we have an agency that is both responsible for promotion of food as well as for food safety. Isn't that an inherent conflict of interest that needs to be addressed?

HEYMANN: You know, I've heard that argument made many times over the 30-plus years that I've worked as a food industry lawyer, and I just never -- candidly, I never saw much credence in that. The -- there are different agencies that are involved in product promotion within USDA, and those that are in -- responsible for ensuring food safety. The Food Safety and Inspection Service -- anyone I've ever dealt with at that agency has been bound and determined to make sure the product is safe and that if it bears the mark of inspection, that it has been inspected and has met USDA standards. I've never encountered a situation where a FSIS inspector or even the people who are at the head of that agency had to weigh the impact on the marketplace, necessarily, of our causing the product to be recalled or not. I just don't see that. I think that the -- that that agency has the integrity to do its job.

So I don't -- I've never understood as a conflict of interest. But if it is, then you establish a single food agency, but if -- only if it were realistic. And as I mentioned, I just don't know where you'd start to do that, and I don't know that the time and resources that would go into trying to establish a new agency would be effectively spent. Those resources could be better spent by better coordination and communication between the agencies that already have regulatory jurisdiction.

KUSHNER: Just to reflect on your -- on your comment, when I was still at CDC -- and it was before swine flu, when we were focused on bird flu -- there was a lot of effort on surveillance of birds. And I remember one conference call, and it had folks on from FDA and Department of Interior and Department of Agriculture. And we were talking about what the public health messages should be to people. And we were looking at bird migratory routes and surveillance in Alaska, and we were talking about risk and what people can do to protect themselves. And the message from USDA was: Eating chicken is still safe. And so it does kind of play into some of the internal tension over --

MR. : (Chuckles.)

KUSHNER: -- that I've always found a little incongruous, of a department that does contain and tries to put fire walls between the groups that are promoting meat exports and those that are assuring that the food supply is safe.

BESSER: Yes, here.

QUESTIONER: I'm Rob Cortel (ph) with Intelex, and we do risk analytic solutions. And among other things, FDA is a client, on their PREDICT system.

This is about scale. And what we know is that some countries actually create a large part of the problem. I was in Hong Kong about a year and a half ago, right after melamine. And I was told that many of the middle class there refused to buy imported food from mainland China because of their fears about controlling food safety there. And we know that melamine really was something that totally originated, almost culturally, out of China.

How do you deal, in terms of scale, with a country like China which really doesn't seem to share all the way down the same values and restrictions and commitment to food safety?

BESSER: David, let me throw that your -- that easy question your way.

MR. : Thank you. (Laughter.)

HEYMANN: It is an easy question. You know, it's only by not giving up that the international community can succeed. And there are examples of success in all areas, and there can be examples in this. But it takes -- it takes every effort of every country possible. The FDA is doing their part by putting people there. Other countries are setting up norms and standards. But the issue is, when there is an opportunity, show that that was wrong, and show it in a -- in a very important way and move the people on a bit more.

But it's a very difficult issue to do. And, you know, influencing people is very important, but it has to start at the very bottom. We can't always think that we'll be able to impose regulation. I remember speaking with a minister in one country. And that minister said: I will never set up another regulatory agency, because I don't have the way to enforce my regulation, and therefore it opens up a whole new area of corruption.

So it's a very difficult issue from the very bottom. And sometimes it works better if you begin at the top with a framework but at the bottom to help the people understand the importance of safety and let them deal with these issues. So it's -- it has to be a multi- pronged approach.

BESSER: At the consumer level, do you think that the consumer would be willing to pay for more expensive food and drugs that would be required to -- if you were going to have a regulatory system that was ensuring safety?

HEYMANN: You know, that's -- it's a good question. I can't answer that. But I expect that if a community understands that their children are at risk, they will invest in what they need to to make sure that their children are not a risk. And we've always thought that we can come from the top down and regulate them. We can't. There has to be a demand created, as there is for everything else. And that demand comes from NGOs, from education in school, from a whole series of people, which can work and pull down from the top what support they can get.

(Word inaudible.)

QUESTIONER: Well, this has been a marvelous first panel. You folks are just spectacular.

I wanted to ask a question that harps onto two prior questions here. One of the trends that really leaps out when you start analyzing what's (growing/going ?) on on the drug side is that increasingly, the active ingredients that one can purchase, frankly, on the Internet, with no quality control of any kind, are coming from either India or China.

So we started out politely going to this direction, but let's just go there. (Laughter.) And it's kind of shocking what -- one website alone offered 20,000 active ingredients from a couple hundred manufacturers in India.

And so the question I'm really getting at is how can we go into a world where we're seeing an increasing concentration of the raw ingredient production coming from two key countries, neither of which have very strong domestic regulation, where then does the burden shift to guarantee that that active ingredient is what it claims to be, that it has no contamination and that it could be safely formulated for the next step?

BESSER: Paul, I'll start with you. You've said that 60 (percent) to 70 percent of the drugs that are sold in Nigeria come from India and China, let alone other active ingredients and other products.

What would it mean to Nigeria if, say, the supply from China and India was cut off because it's not meeting its stringent standard?

ORHII: Well, that is why I have resisted the availability of quality pharmaceutical products manufactured in Nigeria to some extent. One of the -- (inaudible) -- manufactured locally is a national security matter because I cannot imagine if the supply is cut off from both India and China, I don't know what I'm going to do with one -- (inaudible).

And so we have insisted that we have to start developing our own local manufacturing capacity.

We have approached both -- we have dealt with India and China and there are two different approaches. India is not willing to work with us to find solutions to some of these problems. When I tried to engage the Chinese food and drug administration, their answer was just very short. They said it is the responsibility of the recipient country to ensure the quality of products coming into its own territory. It is not their own problem. They have to protect their own citizens.

I have to go maybe even -- (inaudible) -- the (Senate Committee on Health ?) to engage the China chamber of commerce. There, we've begun to get some response, and that is what led at present time to the arrest and conviction of the six -- sentencing of the six people that were engaging in counterfeit medicine to Nigeria to death.

So China is less willing to take on the responsibility of ensuring the quality of products leaving its territory. India, on the other hand, I have had a different response. In fact, they have worked with us and -- (inaudible) -- where if we get a fake product that comes from India, if we can prove that that it came from India, then the person who gave us information that led to the interception of that product gets a reward up to $2,000.

So I think that is a positive step. If we want to continue to work on that, to see how far we can go.

BESSER: David, from a U.K. perspective, is this something that the U.K. can have impact on a bilateral way with the quality coming from India and China? Or this is much bigger than that?

HEYMANN: This is an issue of two simple words, expected and respected. And it works. It works if you can make sure that everyone understands what's expected and what's respected.

Now, I'll give you an example of this. Back in 2003, I think, many of you remember this SARS outbreak, which originated in China. This was a very difficult time because countries were hiding lots of information because when they reported, they would have tourist sanctions, they would have importations -- were banned, a whole series of things. And so in the analysis of what was going on in China where a country would not report, it was decided that the only way that reporting could be guaranteed was if the norms changed. It's expected and respected to report.

And so the director-general of WHO actually went to the Chinese publicly, accused them of not reporting and it changed the situation and it has changed the situation globally. People are reporting H5N1. They're reporting other things. This is the same issue, Laurie (sp), with food or with medication. You must take the example. You must accuse somebody who is respected, who does it in the right way, must accuse that the norms are being broken and that it's expected and respected and then other countries must come in behind and say, yes, we agree.

BESSER: Well, I always love to end a panel in the middle of a great conversation because it means that people will come back for the next panel.

I want to thank the three members of the panel for their comments. (Applause.)

The next -- the next panel will start promptly at 10:45. So there's a very short break. Please get back to your seats before that starts so it doesn't interrupt the flow of that session. Thank you.

####

®FC¯END

®FL¯

.STX

(C) COPYRIGHT 2011, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.

NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR E-MAIL INFO@FEDNEWS.COM.

THIS IS A RUSH TRANSCRIPT.

-------------------------

RICHARD N. HAASS: Okay, if I could ask people to take their seats, including Ms. Hamburg.

Well, good morning. Welcome to the Council on Foreign Relations. Welcome to this temporary respite from the conversation about Egypt.

For those of you who are new to the council -- and I expect there's a few of you here who are -- we are an independent, nonpartisan membership organization. We're also a think tank and a publisher. And we are dedicated to increasing understanding of the world and the foreign policy choices facing this country.

This year happens to be the 90th anniversary of the Council on Foreign Relations. And all year, among everything else we do, we'll also be examining domestic issues, from education and immigration to debt and deficits and infrastructure, that have impact on foreign policy.

Today's symposium, as you all know, will look at food and safety issues -- again, another example of how the foreign policy agenda has dramatically evolved over the years beyond what you might call classic issues of war and peace.

The last 10 years has seen skyrocketing trade in food and drugs. The statistics are impressive. From 1990 to 2008, global food imports rose in value from $350 billion to over $1 trillion.

And globalization's had an even more significant impact on the pharmaceutical market. Today, drug manufacturers located outside the United States and Europe command 80 percent of the global market, up from 10 percent just two decades ago.

In many ways, this is a good-news story. Consumers enjoy dramatically improved access to food, especially meat and dairy products. And the rapid growth of pharmaceutical manufacturing in the developing world has not just expanded access to the drugs, but it's also brought income and skilled jobs to various economies.

But with this success, as you all know, has also come significant challenges. Regulatory organizations at the national level have had real trouble keeping up with the dramatic rise in the trade.

The Centers for Disease Control in Atlanta estimate that nearly 50 million Americans were sickened by contaminated food and drink in 2009 -- that's one out of every six Americans -- and that 3,000 died. And in Asia, Africa and Latin America, up to 30 percent of the medicines on sale might well be counterfeit, leading to countless deaths either as a direct result of the medicine or because the people did not get the medicine they in fact needed.

So we are very pleased here at the Council on Foreign Relations that we can offer this space for this symposium today to explore these issues in depth and to begin the process of developing policy recommendations. We're going to do it in thirds. The first panel led by ABC's chief medical editor, Richard Besser, will consider the recent history of the food and drug trade and examine the scale and complexity of the market. Panel two, moderated by Susan Dentzer, editor -- who edits Health Affairs -- not to be confused with Foreign Affairs -- will discuss the challenges faced by domestic regulators as they try to oversee an internationalized market. And the third of three will be led by our own Laurie Garrett, who's the council's senior fellow for global health and has done so much to get us involved in this set of issues, and I think to increase international awareness of this set of issues. And Laurie's panel will explore a variety of ideas and how the international community might best address this set of problems down the road.

Let me just make a few housekeeping announcements, so no one else does. This meeting is on the record, so what you can -- what you say can and will be used against you. It will also be recorded for posterity and it will live much longer than anyone in this room.

We're teleconferencing this meeting to our members in the nation's capital. But for all that we spend on this technology, it can easily be interfered with by your cell phones, so if you would be so good as to turn off your BlackBerrys, your iPhones and anything else. Since this is a meeting on health, we will make an exception for health-related devices, pacemakers and the like -- (laughter) -- but last I checked, cell phones do not fall in that category.

We are grateful to the Robina Foundation for their continued generous support of this -- of this program. It's part of a much larger effort looking at international institutions and global governance.

Last but not least is our initial speaker -- for those of you who don't know her, Margaret Hamburg; for those of you who do, Peggy Hamburg -- who's commissioner of the United States Food and Drug Administration. She is the 21st commissioner, if my math is right. And before she assumed this position, Dr. Hamburg was a vice president and senior scientist at the Nuclear Threat Initiative. She -- I will allow her to explain this sequencing of career. And she's also served as assistant secretary for policy and evaluation in the Department of Health and Human Services. And here in New York, she was commissioner of the Department of Health and Human Hygiene. And most important of all, the capstone of her career and the centerpiece of her resume, she is a long-standing member of the Council on Foreign Relations.

Peggy, welcome back to the Council on Foreign Relations. (Applause.)

MARGARET HAMBURG: Well, thank you very much. And it really is a pleasure to be here this morning. And I am a great admirer of this institution and a long-standing, proud member. And it's always nice to be back in New York City and to see my former mayor, Mayor Dinkins, who gave me my first real job in public health. So thank you very much, Mayor Dinkins. And I would say he epitomized during his tenure as mayor and mine as health commissioner what can be accomplished when political leadership and public-health needs and priorities actually come together. And he gave me enormous support when we put together our program to deal with the resurgence of tuberculosis, including extremely high levels of drug-resistant tuberculosis. And in just a few years time, applying simple public-health principles, we were able to turn the tide on that epidemic. So wonderful and (unexpected ?) to see you here, David.

Some of you may be surprised that the Council on Foreign Relations is addressing issues of food and drug safety and regulation, and it's a little bit off the core agenda for many meetings here. But it is highly appropriate, much needed, and very, very timely. And I really an delighted and grateful that the council has put this on the agenda and, of course, thank Laurie Garrett for helping to make this possible.

This event grew out of a series of conversations that Laurie and I had over a period of many months after I became FDA commissioner and really came to understand the new realities of food and drug regulation brought about by globalization -- realities that have really redrawn the path that food and medical products navigate to get to our homes, and realities that really make each and every one of us increasingly vulnerable and realities that challenge virtually all nations.

Today, we hope to start a conversation that will be continued in broader foreign policy and other circles and by next year, perhaps, even reaching the level of the G-20 for discussions. It's that important. We hope that, together, our speakers can communicate to each of you the scale of our challenge and the steps we must take to meet the unique public health demands of our globalized world, and to assure health, safety and security of people and nations all over the world.

We cannot afford to ignore these issues. Certainly, as FDA commissioner, I spend a lot of time grappling with them. They have major implications for how we fulfill our mission to promote and protect the health of the American people.

And in this context, let me tell you just a little bit about the agency and why this all matters so much. The FDA is responsible for overseeing the safety and manufacturing quality of food, drugs, medical devices, vaccines and biologics, cosmetics, dietary supplements, animal drugs and food, radiation-emitting devices and now, for the first time in FDA history, tobacco products as well. These products account for somewhere between 20 (percent) and 25 percent of every consumer dollar spent in this country. And I think with the possible exception of tobacco, we can safely say that these are products that people really need and they really rely on in fundamental ways just about every day. So as you can see, the scope of our responsibilities is enormous.

But during the early days of the FDA when, in fact, most of our authorities were actually put into place, the world was very different. Back then, most products that FDA regulated were domestically manufactured and really quite locally used. And for years, when it came to importation of foreign products, our activities went toward safety and quality, and to protect public health, focused on catching problems at the border. And then we began some limited some overseas inspections.

But those days are long gone. The realities of global economic conditions, as well as innovations in refrigeration, transportation and communication, have enabled and spurred consolidation and globalization. This has resulted in a striking rise in imports of foods, pharmaceuticals, medical devices and even, to some extent, biologics.

Today, the world in which FDA-regulated products are discovered, developed, processed and distributed is much, much bigger. FDA's traditional model of manufacturing site inspections and border examinations is simply not adequate in today's transformed world. In 2010 alone, FDA estimates that more than 20 million import lines of food, devices, drugs, cosmetics and tobacco arrived at U.S. ports of entry -- more than a three-fold increase in regulated imports from just a decade ago. Regulated products come from more than 300,000 facilities in more than 150 different countries all over the world, and they come into the United States through more than 300 different ports of entry.

At the same time, the supply chain from manufacturer to consumer has become more and more complex, involving a web of repackagers and redistributers and making oversight increasingly difficult. The numbers are staggering. In the food realm, about 40 (percent) or 45 percent of fresh fruit and produce and over 75 percent of seafood that we eat here in the United States actually comes from other countries. And for medical products, a stunning 80 percent of active pharmaceutical ingredients in our drugs come from outside our borders and about 40 percent of finished drugs themselves.

And, of course, much of this is positive. We can, for example, have fresh mangoes and strawberries all year round, and it probably does help to keep costs of some drugs and devices lower.

But there are also very serious, often negative implications. The global supply chain has led to the distribution of unsafe or ineffective products and harm caused by economic adulteration and intentional fraud.

I know that you'll soon be hearing directly from others, for example, about the tragic toll of the counterfeit trade in many parts of the world. But really, for nations large and small, the global supply chain presents many new national and international security threats.

In recent years in this country, we've experienced events, some clearly deliberate and some unintended, which have had serious consequences for life, health and safety, as well as for trade, commerce and the economy, ranging from contaminated heparin, a blood- thinning drug, to counterfeit glucose monitor strips and surgical mesh, to melamine-tainted vegetable protein and dairy products, and salmonella in peppers and other food-borne outbreaks, to name just a few.

And the world is poised for further globalization. There are macrotrends at work that are impacting global commerce, and the cumulative effect of these trends will ensure that 10 years in the future, the world will still be a very different place. Undoubtedly, the pressure to reduce costs and increase productivity will lead companies to continue to move manufacturing activities to new and different locations, looking for cheaper sites and global supply chains to reduce production costs.

And countries, like China and India, that already produce many of the food and medical products that Americans use will likely in the future not only produce these goods but will also be important centers for innovation, inventing new groundbreaking products that Americans will want to buy, which means that will have to continue to evolve to meet these new demands.

And we've already begun to do so. In the U.S., the Food Safety Modernization Act, which was signed into law earlier this month, calls on the FDA to put into place a significant new approach that among other things promotes a new level of accountability for all entities that are involved in the supply chain, from farm to fork. And although it's not perfect and we certainly do face challenges, especially including resources, it's a truly significant step in the right direction. Congress has also introduced a similar bill for drugs that would bring sorely needed modernization to our authorities, importantly in the global sphere.

But even with that progress, globalization presents huge and growing challenges. Regrettably, another public health crisis like heparin or melamine seems inevitable, unless we are able to truly forge changes in how we ensure the safety and quality of food and medical products for our citizens.

And at FDA, we've realized that in order to protect American consumers, we must work globally, because the products that our consumers use are no longer simply American products, they're global products. And we know that our counterparts in other nations face similar challenges for their citizens.

This is a moment for leaders around the world to create a new vision of how we regulate. We have a shared interest in assuring the safety and quality of food and medical products, and a shared responsibility for safety and quality. By working together to monitor and to improve safety and quality globally, we will benefit all of the citizens of the world. What I envision for the future is a public health safety net for consumers around the world that is created, supported and maintained by a global alliance of regulators, working closely with all our critical stakeholders.

Some of the work for this is already under way and has been for several years, as regulators from many nations have begun to collaborate. But these efforts need to be taken to the next level. We must ask ourselves how we can weave our various efforts into a coherent global system of oversight and safety. This will mean working together toward greater coordination and enforcement of regulatory standards across nations to ensure safety and quality, regardless of where a product is produced. We need not always apply absolutely identical methodologies, but we all need to work together toward the common goals of product safety and quality, and to harmonize approaches.

As part of these efforts, regulatory authorities, especially those with the greatest experience and resources, must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems, so that they can produce food and commodities that are safe, wholesome and meet international standards.

Those with the greatest experience and resources must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems so that they can produce food and commodities that are safe, wholesome, and meet international standards.

This is surely in our vital interest, but it will have broader benefits for public health and economic development within those countries as well.

And in addition to creating a global coalition of regulators, we must create a modern means to share data globally, and we must use those data and advanced analytics to proactively prevent and identify problems. Detecting and preventing global problems demands global intelligence-sharing and data mining.

Also, as the new food-safety law recognizes and requires, we must enlist public and private third parties as well as industry and other organizations to increase the global safety net. We must do this for food and medical products. And this is absolutely essential. Regulators cannot and should not do it alone.

Finally, we must create the momentum in the United States and in the global community to make these changes real and sustainable. These changes must begin now, but they will take time and the support of many people to fully implement. A strong global safety net will be challenging to weave, but we can do it together.

So let us continue the conversation today, and as regulators, consumers, academics, industry leaders -- (audio break).

MR. : (In progress after audio break) -- I want to welcome the audience who are out there in Washington, as well as on the teleconference.

MS. : Okay. They're connecting me, so --

MR. : And I don't want to use up a lot of time going through -- (audio break).

RICHARD E. BESSER: (Audio break) -- prepared for you, so we're going to dive in.

Let me introduce the panel, though, starting from the far end: David Heymann, who is head and senior fellow of the Center on Global Health Security, Chatham House, in the U.K.; Gary Jay Kushner, who's partner and leader in food and agricultural practice area at Hogan Lovells; and Paul Orhii, who's the director general of the National Agency for Food and Drug Administration and Control in Nigeria.

We're going to have a conversation up here for the next 25 or 30 minutes, and then open it up to members and guests to join in the conversation and ask questions.

So diving in, first talking about the drug side, in 2006 I was head of emergency response for the CDC. And we received a call from colleagues in Panama, and they were facing a situation there where an unusual neurologic syndrome was presenting to hospitals. And they wanted to know what was going on, and we sent a team down to work with them on that investigation.

And the lab at the CDC detected ethylene -- diethylene glycol in cough syrup that was being used throughout the country.

As the Panamanian government explored that situation further, they had a sense of the scope of the problem. Two hundred and sixty thousand bottles of cold medicine were contaminated with diethylene glycol. There were 100 confirmed deaths and thought to be far more than that in terms of the overall range of the problem.

The syrup had been manufactured in China and it had been certified as 99.5 percent pure glycerin. That was what was added into it.

That counterfeit glycerin had passed through three trading companies on three continents, not one of them had tested the syrup to confirm what was on the label. This isn't an isolated incident; there have been other problems with diethylene glycol in glycerin.

So I want to start by turning to David, who has worked in public health at WHO, at U.K., and at CDC. You convened a conference in December, a very important meeting at Chatham House on counterfeit drugs. And so that we're all on the same page, if you could first explain, what are counterfeit drugs? How do they vary from fraudulent drugs, of optimal drugs? And how big is this problem?

DAVID HEYMANN: Well, thanks, Richard. Yes, we did have a meeting at Chatham House in London because for the last 30 years, WHO has had a very difficult time in dealing with counterfeit drugs because of definition. And it's clear why this is a problem if you think about counterfeits. A counterfeit handbag, a counterfeit T-shirt doesn't really cause any harm; it's just -- it causes harm to the producer, but not to the user, whereas counterfeit drugs can cause harm to the user. And what's happened is that the discussions at WHO, trying to find a definition, have gone around many different words and never really focused on any one in particular. Those words are "substandard;" there are other words such as "falsified" and finally as "counterfeit."

And so the definition has been difficult. But substandard is very easy to understand. Substandard drugs and vaccines are those that don't meet regulatory requirements in the country in which they're produced or in the country in which they're imported. It's very easy to understand that. And it happens to both generics and to patented drugs as well. For example, here in the U.S., if you remember a few years ago, influenza vaccine came in from Europe and was substandard. This passed through the regulatory agencies in Europe and also came into the U.S., and it's a problem for industrialized country regulatory agencies.

Think of that problem in a country where biotechs are trying to set up their own production and development and don't have a regulatory agency that can help them make sure they have good products. If it happens in industrialized countries, what will happen in developing countries? But as Peggy said, there are ways that that can be dealt with. It can be dealt with bilaterally, by exchange and partnerships between regulatory agencies, or multilaterally through the World Health Organization.

So substandard is a very easy concept to understand, and this was one of the three concepts that was agreed at the Chatham House meetings. Substandard do not meet national regulatory requirement.

Under substandard, there are really two sub-classes: there's a falsified classification and there's a counterfeit classification. These are substandard drugs because they haven't met national or other regulatory requirements. But a counterfeit drug is one that's purely involved with trademark, and because it's involved with trademark, it's not as much a public health issue as an issue for the World Trade Organization and the World Intellectual Property Organization, which deal with counterfeits and with trademark issues. It's a criminal offense. It has public implications, but there is a framework within which that can be handled.

The framework that's missing is that framework for falsified medicines. These are medicines like in China, medicines that were produced with false ingredients maybe unknown to a very few people, but known to someone. It was a deliberate intent, as is counterfeit, a deliberate intent to falsify a medication. Those falsified medications, of course, are substandard because they don't pass through regulatory requirements.

So those were the three different definitions that came out of our meeting at Chatham House and which we hope will help WHO now move ahead with the definition. We had many people at this meeting.

We had WHO, the head of the the drug group at WHO, we had World Trade Organization, we had WIPO, we had Interpol. We had a whole group of people. And we hope that these three definitions, which are fairly clear to everybody, would be the ones that can help move forward in a public health way the discussions on counterfeit drugs.

BESSER: Great. Thanks very much. You -- it said that the disease that may be impacted the most by this may be malaria. A study in 2006 in the American Journal of Tropical Medicine and Hygiene found that 68 percent of anti-malarial drugs found in Laos, Myanmar, Vietnam and Cambodia did not have the correct amount of drug in them. And WHO estimates that as many as 200,000 lives that are lost each year to malaria may be preventable just by dealing with the issue of substandard drugs.

I want to turn to you, Paul. You gave a speech last year to the parliament in Nigeria. You've been a tremendous crusader in the area of control of counterfeit drugs. And you said that the culture of chasing fake drug dealers around the country is not sustainable in the long run. Sixty to 70 percent of essential medicines in your country are brought in from India and China. And you were calling for a more comprehensive approach.

Can you talk to us about the scope and scale of the problem of counterfeit drugs in Nigeria?

PAUL B. ORHII: Thank you. (Inaudible) -- let me use this opportunity to thank the Council on Foreign Relations for organizing this forum. This is a very, very important forum. I also want to use this opportunity to thank Dr. Margaret Hamburg and the U.S. FDA for the opportunity that they give developing countries, the -- (inaudible) -- authorities in developing countries to build our capacity. Been training some of her staff, and we're getting better and better. So I want to use this opportunity to thank the U.S. FDA and Dr. Hamburg for that.

I say the US, the culture of chasing counterfeiters within a country is not sustainable in the long run, because the problem has become much worse than before. In 2001, the instance of counterfeit medicines in Nigeria rose to over 40 percent. More than 40 percent of the drugs in Nigeria, especially anti-malarials, essential medicines, were counterfeits.

At that time, in developed countries, like the U.S., and Europe, they had less than 1 percent counterfeits in their systems. Now the problem has become much worse. The Pharmaceutical Security Institute and the -- (inaudible) -- that the counterfeit medical -- (inaudible) -- constitute about 35 to 200 billion business dollars a year. So you see that most of these counterfeits would be heading to countries with very weak resistance.

And even in Europe, advanced as it is, counterfeit medical markets have been found to -- is worth about 10.5 million euros. So this is scary. When we look at it, we budget how countries like ours with weaker regulatory systems can cope.

(Inaudible) -- is charged with the responsibility of regulating and controlling the manufacture, distribution, sale and use of all drugs, foods, cosmetics, medical devices, bottled water and many other products. But we are grossly understaffed for the kind of vast territory that we're called to protect and the kind of huge population. Our population is a -- what, 150 million people that we're called to serve. The borders are vast, poorly managed because of lack of funds. And even when we can man them, we do not man them as appropriately as we would have wanted to to be able to stop -- (inaudible).

I'll just give you an example. Only in 2009, we intercepted a consignment of sick medicines, more than 700,000 courses of anti- malaria drugs coming from China. They were labeled as made in India. But we were able to observe the -- (inaudible) -- from from China, and we took the matter up with these two countries, resulting in the arrest of -- and sentencing to death of six persons in China that were related to this manufacture and shipment of that consignment Nigeria.

We also were -- (inaudible) -- in Indian parliament, and then the big -- middle law making it a criminal -- punishable by lifetime jail term, the manufacture and distribution of -- (inaudible) -- products.

But our law is also very weak. And so we have now tried to review our law and have a member of parliament from Nigeria -- he also with us, will be submitting that law to them to help us pass the law so that we make more stringent punishments -- lifetime jail time, confiscation of assets -- in situations where we can determine that the fake product proximately caused the death or severe bodily injury of the victim. We want to be able to use some of the confiscated assets to legally compensate the victims.

We want to build international -- stronger international cooperation, because we cannot do it alone. That is why a formula -- this is (especially ?) important. And we are very, very happy that the U.S. and also the USDA are now paying attention to this, because it -- before, it was considered to be a problem of the developing world. And not much attention from the developed world was paid to this. Well, now we want -- we are very happy that we are now having stronger partners with this U.S. -- you cannot now have a stronger partner than the U.S. come in to take on this problem.

We are very excited. We want to -- (inaudible) -- that Dr. Hamburg mentioned here. We want to have -- build -- we're leveraging on cutting-edge technology to fight the problems. We're -- introduce new technology to fight the problem. And we're building both national, international and other regional cooperation -- (inaudible) -- fighting counterfeit medicine.

So the culture of just pursuing counterfeit medicines within your territory and trying to eliminate them is no longer sustainable. Officially, with the recent crackdown on illicit drugs, most of the former drug barons are now diverting -- they have now diverted their resources to manufacture and diffusion of counterfeit medical products. So the program has become more globalized, more militarized and more sophisticated. So it needs international cooperation, very strong international cooperation -- (inaudible) -- what we are doing now to be able to fight counterfeit medicines.

BESSER: You know, this is an issue that has an impact on your life. An attempt was made on your life this fall. And, you know, we talk about these issues in public health as health issues. Is there enough of a connection between the public health community and the legal community to take this on as a criminal issue and not just a health issue?

ORHII: It is a public health concern, but it's also a criminal issue. So I think we are working together with the legal system to try to see how we can impose stiffer penalties on people who engage in counterfeiting.

Of course, in Nigeria, it is very dangerous. I had a situation where we had sent our staff out to all these bakeries to make sure that they were not using potassium bromate, which has the potential to cause cancer.

I mean, one of these bakeries where staff found the banned potassium bromate, the staff of bakery descended on our staff, beat them to the point where they lost consciousness, bundled them into a vehicle, poured petrol on that vehicle and were about to set the vehicle ablaze with our staff inside when the police came in time to save them. So this is a very dangerous engagement in our countries.

But I think we are determined. The government is giving us enough support to be able to do this. We are getting international support now. And I think we will be able to solve the problems.

BESSER: Our session this morning isn't just focused on drugs. It's also dealing with the issue of globalization of our food supply. As Peggy Hamburg was saying, you can have a mango all year round in New York.

I started my career at CDC in foodborne disease and recall outbreaks of cyclospora from raspberries from South America, cholera from coconut milk from Thailand, and most recently the peppers/tomatoes that really cost the tomato industry in the U.S. a couple billion dollars from salmonella.

Right now, there's an issue of dioxins in Germany. And 4,000 farms were closed in Germany when it was discovered that there was dioxin-tainted industrial fatty oil mixed in to animal feed. That led South Korea to shutting off the importation of meat products from Germany; and now in the European community, concern over some eggs from Germany that are suspected of being contaminated.

So I want to pull into the conversation now Gary Kushner and ask you to comment on the scope and scale of globalization of food.

GARY JAY KUSHNER: Well, thank you. That's obviously at the heart of this program. And I should say, first of all, globalization is real, but it didn't just start. The international -- the growth of the international food market's probably been rising for the last 20 years. It's just now -- probably I would say an all-time high, and there are a number of reasons for that as Dr. Hamburg pointed out and Richard just pointed out as well. Consumers do want to have fresh products, fresh produce in particular, 12 months of the year. And we have the ability to provide that. But that means importing products from a number of different countries.

Food manufacturers recognize this. Many of them have a multinational focus. Many of them have plants in other countries and distribution centers in other countries. But the reality is that in order to provide the array of products that consumers expect does require importation, and we're now importing foods and ingredients from all over the world. And in some parts of the world, the controls are much stronger than they are here. And even where you've got regulatory controls, the key is enforcement of those controls and that also varies quite a bit globally.

I believe that the new Food Safety Modernization Act is a very, very important step forward in helping to harmonize regulation and ensure the safety of products coming into the United States.

Many of you may realize or may not know that food is regulated by a lot of different agencies, but primarily by the U.S. Department of Agriculture's Food Safety and Inspection Service and the Food and Drug Administration. FDA has regulatory authority over all foods, primary regulatory authority over all foods with the exception of meat and poultry. And meat and poultry, historically, has been regulated by the Food Safety and Inspection Service. There are historical reasons for that. I should say, though, meat and poultry is under what is called continuous inspection, that is, that the meat or poultry product may not be distributed in the United States unless it has been inspected or at least have the presence of a USDA inspector in the plant. And you'll see on a meat or poultry product, you'll see the stamp that says inspected and passed. And the Department of Agriculture is very jealous of that stamp because it's their Good Housekeeping stamp of approval.

The FDA on the other hand -- and I think the last time I looked, the USDA has at least 7,000 inspectors and perhaps more. But FDA is expected to regulate all of the rest of the food supply with far less in the way of resources. And the authority that FDA has or historically has had has been much less different than the USDA, yet so many of the ingredients that are coming into the United States that are being imported are under FDA's regulatory jurisdiction, which presents a real challenge.

Now, I will say that under the food modernization -- the Food Safety Modernization Act, importers will now be required to verify that the products that they import into the United States do meet the same safety standards that will be -- that are required of them in the United States, and that is a major step forward. Manufacturers in this country, particularly the larger national manufacturers, already have programs in place to ensure the safety of the products that they produce, as well as the raw materials that they use. And it's historically, food manufacturers have employed what's called the hazard analysis and critical control points program. The acronym is HACCP and it's referred to as HACCP. That has been mandatory for meat and poultry products since the early '90s, and it's been mandatory at FDA for a limited number of products, notably seafood and pasteurized juices.

Also, I would throw -- (inaudible) -- canned foods regulation into that same scope of regulation. But for the most part, products under FDA's jurisdiction have been manufactured under HACCP that has been voluntarily employed by the food industry. And if I want to digress just for a second because I'm a real believer in HACCP, HACCP was not developed by the government; it was developed by the food industry in the '60s basically to keep food as safe as possible for the space program. You can imagine, an astronaut with a food-borne illness in a little capsule would not be a terribly pleasant experience. (Scattered laughter.) And once it was adopted, more and more food companies designed food safety assurance programs based on HACCP principles.

So it's been a very, very good concept. Now, although the Food Safety Modernization Act does not call it HACCP, the controls, the kind of control, the principles on which this new law is based effectively means mandatory HACCP, and I, for one, and I represent the food industry, think that that is a very, very good step.

The challenge now for FDA will be enforcement, and remember as I mentioned, USDA products are inspected by our -- meat and poultry products are inspected by USDA, which has significant appropriations every year to support that inspection program. FDA now has the burden of employing similar controls on the rest of the food industry, yet Congress has not yet appropriated the money that FDA needs for that, and that has got to come.

There are some aspects of the new law that are self-executing. That doesn't mean they'll be enforced, but it does mean that companies will employ those because that last thing a food company wants is for its products or a competitor's products even to cause food-borne illness and generate adverse publicity about the whole product line.

It's important that the products be viewed as safe for consumers, so everyone has a vested interest in that. Many of the new provisions in the law -- of the new law, as I said, are self-executing and that's important. But other aspects, including FDA's required increased inspection of imported products and even inspection or verification of exporting facilities, is going to take money, and FDA simply hasn't been given that money yet.

So I think that's something that consumers, industry, everyone that needs to encourage Congress to do is to appropriate adequate funding for the new law to be implemented and enforced effectively.

BESSER: Thanks very much, Gary. I do want to now open up the conversation to members and their guests. And I'll ask you to wait for a microphone. And when you ask your question, please state your affiliation and whether there's someone it's directed to.

While we're waiting for the microphone to get around, I want to ask you, Paul, about Gary's comments about food production and the requirements that will be in place in terms of assuring the purity and safety of food.

What does that mean in terms of a burden on a developing country to have to have a system of food inspection, food testing, a HACCP control system? Is that something that's within the realm of possibility in Nigeria?

ORHII: Yes, it is already within the realm of possibility. In fact, we have a program in place. We already have, in fact, some expats from the FDA, from the Department of Agriculture -- have been in Nigeria with us working on developing food safety program under the HACCP program.

So it is within the realm of possibility. We already are doing inspections of food products, but we're clearly -- (inaudible) -- our capacity -- (inaudible) -- with the help of the USDA again.

So I think it is within the realm of possibilities.

BESSER: And Gary, flipping back to you. Many of the large- scale food producers in this country, you know, whether you're talking about McDonald's or Wal-Mart or a Costco, are establishing integrated systems of food production that ensure their own inspection overseas.

The impact of that in terms of building infrastructure within a developing country, do you see it as a positive step or something that may actually deter a developing country from developing their own system, as we're hearing about in Nigeria, of ensuring food safety?

KUSHNER: I'm not sure this answers your question, but the examples you gave, Walmart, Costco, for example, are primarily food retailers. And although some of them do have their own private label programs and some of them -- some retailers actually have products that they manufacture for themselves, for the most part, the retailers are purchasing products from manufacturers or from brokers that are going to be sold in their supermarkets.

That having been said, it's the same issue, and that is how do you make sure that the products that are coming in from other countries, whether they're going to a private label product that you're producing or a product that your supplier is producing, how do you make sure that those are produced under the same kinds of controls?

A major manufacturer will have as part of its HACCP program, its own HACCP program, will have programs or -- programs in place to inspect the incoming raw materials, to periodically test incoming raw materials and ingredients so that they can control as much as possible the product that's going into -- the ingredients going into their products.

In addition, they'll know their supplier, and that is a very, very -- it's a simple concept and an important concept that is for a food manufacturer to know its supplier. Now, it's impossible to know every supplier that supplies that supplier, but at least it's a very important step, particularly if you couple that with the controls that the importing company will have in place.

Let me just go back, though, to talk again about the difference between USDA and FDA, because I think it's instructive. The USDA, I think, since about 1968 -- I may be wrong on when this came into law, but since about '68, USDA -- the meat and poultry inspection laws have required that products coming in for importation, number one, come from countries that the inspection system has been determined by USDA to be equivalent to the U.S. inspection system. That is, the country must demonstrate that its inspection system is adequate and the individual plants that are going to be shipping products to the United States must be approved.

So that supply chain is very well controlled in the context of meat and poultry products. Again, less so in FDA products largely because of the historical nature of the laws that both agencies administer and the feasibility of the FDA insisting upon the importation of products being -- becoming from certified plants where they don't have that legal authority and even with that legal authority, the money is a real issue.

BESSER: Thank you. I think the first question, over here.

QUESTIONER: Good morning. Great panel. My name is Peter Pitts. I'm the president of the Center for Medicine in the Public Interest.

Dr. Hamburg mentioned at the outset the issue of global intelligence sharing, and you discussed the issue -- the definitional problems of counterfeit drugs, and I fear that we're still quite a ways off from a workable definition there. But short of kind of a global regulatory Marshall Plan, you know, how can we work together either on a formalized or an ad hoc basis to at least measure the problem of counterfeit medicine so we can begin to have a baseline and combat it?

BESSER: David, I'll throw that to you, first.

HEYMANN: Well, you know, it's only by global collaboration, as Peggy said earlier, that this can happen. The forum -- one of the fora in which it could happen is in the World Health Organization, but as I said, they've been blocked with a definitional problem that we hope can be unblocked eventually so they can move ahead and understand what they're working with.

I think we'll hear from other sources, other -- we'll have other opportunities to hear from Interpol and various places about what they're doing globally. But it will only work if the world works together in a multilateral framework.

There can be bilateral activities which are very important; FDA has people in China, has people in other countries, in India, and that's very important. But multilateral and bilateral together are the solution.

BESSER: David, just to add onto that. How much is the issue of patent protection confounding the issue of counterfeit drugs and drug safety?

HEYMANN: Well, it's a very important reason that the definition can't move ahead because some would say that generic drugs are counterfeits. There's a whole series of issues that are very -- are very difficult to deal with. And so that's why these three definitions, clearly making it understood what a substandard is, and then there are two substandard sets, counterfeits, which are trademarked, and falsified is a much better way to proceed and a much more logical way to do it.

There are mechanisms that can deal with trademark infringement and those are enforced. What's not available at present is this public health framework in which we can all work together because of the definition issue.

QUESTIONER: Thank you.

QUESTIONER: Thank you. My name is Mark Feinberg. I work in medical affairs and policy at Merck. I want to thank all the speakers for so succinctly and clearly highlighting the importance of this issue.

My question, really, for any of the speakers is, what will it take to actually move us down the path that Dr. Hamburg had articulated as sort of a much more integrated system that is really designed to accommodate the safety challenges posed by globalization? You know, how can we go down that path faster? And really what are the obstacles in the way beyond the sort of definitional thing that Dr. Heymann had mentioned?

BESSER: We'll go short on that because the next panel is going to be focusing more on control issues and policy issues. Paul, do you want to comment on that?

What will it take to get us from where we are now to more of an international system that is ensuring drug safety?

ORHII: Well, we said this initiative by the Council on Foreign Relations and the FDA is a good start. We can build on what we decide here today and then move on. Talking about the definition -- I think definitions of "counterfeit" have just been deliberately used to confuse the issues. We in developing countries that are most hit by the impact of counterfeit medicines will look at it purely from a public-health perspective. At the WHO, we have always emphasized counterfeit medicines, looking at them purely from the public health perspective.

I talked here about getting almost 40 percent of medicines in the system, counterfeit. This -- some of the medicines, the counterfeit medicines, if used to treat diseased like malaria, have the potential to develop resistant strains of microorganisms, which are not treatable by effective medicines, resulting in death and sometimes even the spread of some of these resistant strains to other countries. You know, they do not need passports or even a visa to cross international border lines.

That is why it is important the the Council on Foreign Relations and the FDA have summoned this meeting.

So I think it deliberately confuse -- (inaudible) -- attempted at the -- the last World Health assembly to agree to come to a definition of counterfeit medicines that deals exclusively with the public health concerns and not encompassing intellectual property issues. But I think we are working towards that, and we hope to be able to achieve that.

But we want a situation where we have a broader coalition, we have an international coalition of all relevant agencies. We (started ?) that impact. We have had impact where we have the INTERPOL, we have the -- (inaudible) -- we have all the relevant agencies that will help us find these counterfeits.

For developing countries, no country maybe in Africa is -- (inaudible) -- if we find counterfeit medicines in the system. (Inaudible) -- we cannot tackle that alone. But we need a big coalition that can reach out to all those people. And the example that I gave you of counterfeit medicines, anti-malaria that we intercepted in China, alone Nigeria could not have any -- don't have anything against China. But then we involved INTERPOL. We had to. And some of the people we -- (inaudible) -- Nigeria. But (anyway ?) they were out of the country beyond our jurisdiction. But INTERPOL reached them, and they have finally come back to Nigeria where we're prosecuting them now.

So what we want is a global coalition that would be very strong to help us fight counterfeit medicines. But I think we can view counterfeit medicines not encompassing any intellectual property issues, just purely from the public-health perspective. In a country like -- a developing country like Nigeria, it is a life-and-death issue. It is -- we're not talking about intellectual property here. We're talking simply about public-health challenges that we have.

BESSER: Thank you. One here, and then I'll move towards the back.

QUESTIONER: Yes. My name is Charles Clift. I'm from the Chatham House Centre on Global Health Security, a colleague of David's, who spoke.

Just to expand a little on the definition list used -- I don't want to go into it too much -- I mean, Dr. Orhii says, well, what we're interested in is public-health issues and counterfeit medicines, the medicines that are basically substandard and probably done deliberately, but nothing to do with intellectual property.

That applies -- lots of countries feel like that. Other countries such as, for instance, Brazil, say to us, a counterfeit medicine is one that infringes a trademark. And if it's simply substandard and deliberately done, it's a falsified medicine. And they have that in the legislation. So they have a very restrictive definition of counterfeit. But in a sense, we know what we mean, but we use the same term to describe different things. That is one of the problems.

But underlying the definitional issue is a number of countries, particularly those who produce generic medicines or some who consume them, fear that attacking counterfeit medicines will also be an attack on legitimate generic medicines of assured quality, on which many developing countries rely. Most of their medicines are generic. Unfortunately, many of them -- a certain proportion will not be of the right quality.

As regards this discussion today, I thought it might be helpful if we -- I think we're talking about two different things, which are related but are conceptually different. One is the problems of the legitimate supply chain. And that is what Dr. Hamburg was talking about, the 99 percent of her opening remarks. And that is one set of issues where, as she said, greater collaboration is needed between the regulatory authorities in both developed and developing countries because of the way the supply chain has become globalized.

Then there's the question of the illegitimate supply chain, which -- again, regulatory authorities have a role, but it's a multi-agency thing. You have customs, you have Interpol -- we'll be hearing from Interpol later this morning -- and there really -- one is about how do we protect the consumer from harm, and the other one is essentially about, once these dangerous medicines get on the market, how do we address -- how do we deal with the producers and the distributors and so on?

So I think we need -- it's helpful conceptually to separate those two issues, which need different policy measures to a great extent to tackle them.

BESSER: Thanks very much. In the back on the end.

QUESTIONER: (Off mic) -- Radio. Obviously, when one thinks about this generic-versus-counterfeit debate, one recalls the politics of the HIV/AIDS debate and the production of drugs that occurred several years ago. And my question has to do with food safety and food production. Many scholars of global food production point out that, for the model of the United States in terms of food production to be duplicated in the world, it would simply be impossible.

And we have, as you know, a lively debate in this country for decades about the very safety of our own food production in the United States. And I was wondering how the panel feels about those kind of issues entering the equation, because, you know, I can think of movies like "Food, Incorporated" and others which point out the problematics of the safety measures inherent in the United States itself in terms of food production.

So I was wondering what your thoughts are on that.

QUESTIONER: Gary, do you want to dive in on that one?

KUSHNER: Let me try. And here's where I'm going to sound like a food-industry flack, and I admit it. (Laughter.) I happen to believe that the food in the United States, the food production system, is a very effective system and makes for a very safe product.

Granted, there are -- have been -- obviously have been notorious foodborne-illness outbreaks that are unacceptable and need to be addressed. There are companies that do not follow basic good manufacturing practices. And that's also unacceptable and has to be addressed. And there are challenges that are inherent in a global system, or even a system that just in the United States, where you're distributing products all over the country and importing ingredients for use of those products.

As far as imposing our system, let's assume that our system is a safe one and we're trying to make it safer, or as safe as it can be. Trying to put that system in place in other countries requires a couple things. First of all, I think it's a shared responsibility between the food industry and the government in terms of the company that is importing a products wants -- has to be sure and has to be committed to doing everything it can feasibly do to make sure that the product it is importing is safe and meets U.S. standards. Same goes for countries -- companies and countries or exporters who want to send their products to the United States. They have to have a commitment -- if they want the U.S. marketplace, they have to have a commitment to follow and adopt the same kinds of food safety procedures that are in use here. And as far as the government goes, there's nothing that can substitute for government coordination.

We do have some international bodies -- Codex Alimentarius -- that sets international food standards; the World Trade Organization and other organizations that are set up largely to enhance our -- to enhance harmony between the regulatory approaches in different countries. Too often, those bodies take a very long time to reach resolution. And frankly, too often, countries will erect trade barriers in the -- in the guise of food-safety standards to protect their local industries and keep products out. And that -- that's something that I think we need to be very aggressive in challenging, whether it's us that's erected those barriers or other countries that are erecting those barriers.

BESSER: David, perhaps you can comment on the -- on the European situation on that, the issues of trade barriers being used as a front for food safety, and how you integrate across an area as diverse as Europe issues of food safety.

HEYMANN: Well, it's a -- it's a very interesting issue in Europe, as you know, because some countries themselves didn't have regulatory procedures for foods until just recently.

In fact, I can remember when I was working with WHO one of our directors, a Spanish woman, was called back to Spain to set up a few -- a food safety agency in that country. So it's a really new concept in some countries. In others, it's not so new. But you know, Europe works in two ways. They work nationally through their national agencies, and then they work internationally within Europe under the treaty of the European commission. And how those things will play out, I can't say. Charles, my colleague, might be able better to say, but he's shaking his head also. It's very difficult right now in Europe because there's no one voice. There's many national voices and one global voice which doesn't yet have its credibility established to be the leader.

BESSER: Thank you.

In the back.

I have the ability to point in a general direction, and hope the person with the microphone will find them.

Hands up again for -- here we have in the front. There's a couple up in the front. Thank you.

QUESTIONER: I'm -- (inaudible) -- from industry. I make active ingredients. And I have a concern that I think the issue is actually much bigger, and we're much further away from the solution. The reason why I think it's much bigger is because the supply chain is so fragmented and so porous that there are a lot more pharmaceuticals that are falsified because the active ingredient was falsified and substandard. And when a falsified API gets into the legal supply chain, you can't tell.

And if its toxicity is acute, you get red flags very quickly because people die. If the toxicity is not acute, if it's a genotoxic impurity, it will take many years before people die. So I think that's a problem. And all the real issues of people dying, like heparin, gentamicin, diethylene glycol, they all fall under the category of substandard APIs that got into the legal supply chain. And I think this is a huge problem that the definition of falsified pharmaceuticals hasn't yet started to address. The European directive that's currently being discussed probably would not cause heparin to be under -- you know, to be considered a crime.

And the other comment I had that we're much further from the actual solution is that falsified pharmaceuticals in many countries in Europe are not a crime. And you take this international collaboration, the only country that I know that has a blacklist of companies that have misbehaved is NASDAQ in Nigeria. And you have companies listed in the NASDAQ list in Nigeria that show up in European databases as approved sources of active ingredients. Thank you.

BESSER: Would you like to comment on that, Paul? I mean, the issue of a drug that is toxic, which is the example I gave of diethylene glycol, where it just speaks out that there are people dying from taking the drug, versus the issue of a drug that's, for instance, subthereupetic, the malaria issue, where it may not be clear whether the individual is dying from malaria or dying because there's dealing with a substandard product.

ORHII: Well, to all this is a big problem. Especially, like you just pointed out, medicine is -- (inaudible) -- is manufactured in one country. You don't know where the active pharmaceutical ingredients came from. So you don't even know -- these are the complex issues that I think we're here to address today, because we just realized that the industry has become globalized that you cannot just go to the root of the problem. So I think this is a good start to discuss other things. It's a big problem and very complex.

BESSER: You had a question here in the front.

QUESTIONER: Thank you. Susan Dentzer from Health Affairs.

I have a question for you, Gary. You mentioned the diffusion of authority in the domestic U.S. context as between the FDA and the -- and USDA. I'm wondering if you think there is any prospect of dealing with that now that the president has raised the notion of bringing salmon, for example, under one regulatory authority, as he mentioned in the State of the Union address. Is that at all in prospect, is that an issue with respect to enforcement here on the U.S. side?

And then secondly, what are the estimates of what the resources would be needed for FDA to be able to fully enforce the provisions of the Food Safety Modernization Act? Because in the great scheme of things, these are probably rather small resources in the larger context, but yet extremely important in not enforcing food safety.

KUSHNER: Thank you. Let me answer it in reverse. And Carolyn or Dr. Hamburg, correct me if I'm wrong, but I think the estimate for enforcing the new food safety law is somewhere in the vicinity of $1.4 billion over the first five years. I don't know if that's a lot of money or not. It used to be a lot of money -- (laughter) -- but looking at -- looking at our budget and our deficit, it's a drop in the bucket. And -- but it hasn't been appropriated at all, to the best of my knowledge. So that's obviously a concern that needs to be addressed.

Now, as far as single food agency, which is really at the base of your question, President Obama is not the first one to suggest that. That goes back many administrations. And I remember when President Clinton first took office in his first term, Vice President Gore came out with a report called "Reinventing Government," in which it recommended a single -- the adoption of a single food agency. And the play on that was that there are 14 or 15 different agencies within the federal government that regulate food and that it's so -- and sometimes at cross-purposes.

However -- and I suppose that if we were starting out in 1906 and if we were starting new, it would make some sense for there to be one agency under which all regulation came, so that we can make sure it's consistent throughout the agency and under the same kinds of policies. But it's not 1906. We've had a regulatory system that has evolved in terms of not only the laws that are administered but the regulations, case law interpreting those regulations. And I -- just as a practical matter, I think the idea of a single food agency would be more than challenging. And some people use the Department of Homeland Security as an example: as all you're doing is really changing the names on a bunch of different offices.

What's more important is to have a central concept -- a central approach or philosophy, if you will -- that is shared by the agencies, and where the agencies are given the direction as well as the ability to coordinate on the regulation of the different products. But again, that's, I think, a practical answer. If it were 1906 and we were starting all over, then the idea of a single food agency might be feasible.

My recollection, by the way, is the FDA came out of the U.S. Department of Agriculture, and at one time had been the Bureau of Chemistry at USDA, and was broken off. It was in the '40s, or I think in the early -- earlier.

MS.

: Earlier.

KUSHNER: Earlier.

BESSER: A question over here.

QUESTIONER: Hi. My name is Tom Bollyky. I'm a fellow at the Center for Global Development, and thank the panel for these great comments.

My question is for Gary. I think you're right that the Food Safety Modernization Act has wonderful -- has advanced the ball tremendously on imposing HACCP-like standards, and the question will be their enforcement. You mentioned before that you need roughly $1.3 billion to enforce those authorities. My question is, given the current political environment and budget situation, that money may not be coming. What would be your prescription for a low-resource enforcement of those standards? Is it more -- higher civil or criminal penalties? Is it a higher standard of care, easing tort liability for these actions? Is it better targeting of those enforcement resources? If we can't -- if Congress doesn't appropriate that money, what's your prescription for a way forward?

KUSHNER: Well, first of all, as I -- as I've said a couple of times, I favor giving FDA the resources it needs to do its job. You can't expect an agency to take on new responsibilities when it's already stretched very thin in terms of its resources.

But putting that aside, there is almost -- I think implicit in your answer is -- or in your question, is that in the absence of FDA enforcement the rules and regulations won't be followed, and that's simply not true. Food manufacturers, food marketers, have a vested commercial interest, if not a moral obligation, to make sure that the foods they sell are safe. If there's an outbreak in peanuts, for example, number one, it taints all peanut-based products, regardless of who makes them. But number two, so many products, for example, in the case of peanuts, utilize peanuts, peanut paste. So the number of recalls when the Peanut Corporation of America incident happened was -- the rippling effect was tremendous.

And food companies don't want that. They don't want it for commercial reasons. They don't want it because they protect those brand names. Food companies want food to be safe. So they are already -- that's why so many of them have adopted HACCP voluntarily or most of them have adopted some form of HACCP voluntarily.

There is going to be a small number of companies that are not going to follow the law and -- or don't know how to follow the regulations, and irrespective of FDA resources, we're going to -- we're -- that problem's going to be -- always going to be there. And I think the food industry companies simply have to do the best they can to, again, know their suppliers and make sure that they've got programs to ensure the safety of their products.

BESSER: Question over here.

QUESTIONER: Good morning. I'm Abdul Hakim (sp). I'm a former Senate staffer. Part of my question was really answered, but it actually raised another question. What do you see as hurdles as far as the U.S. consumer is concerned or the impact on the U.S. consumer in the quest for increased oversight, you know, in -- and safety regulations, in that quest? I mean, how do you -- how do you see -- what are some of the hurdles that will be experienced by the U.S. consumer?

And also, on the global scene, what is some of the economic impact that you foresee on other individual countries? And that's in light what Dr. Hamburg was mentioning, and it was also brought up as well that we ourselves have limited resources and, you know, we have deep pockets. So I mean, what would you see as some of the challenges faced by some of the other countries?

BESSER: Let's put a hold on the consumer hurdles, because that will be part of the next panel that's coming up.

But Paul, to ask you, in terms of some of the hurdles you face in Nigeria to implementing and enforcing broad regulation and control over drug and food supply, how many of the issues are internal to Nigeria that you can deal with as a country and how many require much broader cooperation and financial input and support from the global community?

ORHII: Well, most of the issues are interrelated. The staff strengths -- we need finances to have adequate staff strength, the kind of level that -- the -- of training of the staff. So all these are interrelated. The finances are very important. That is, we need international cooperation to be able to be more effective; the training of the staff; and then maybe to have adequate equipment, the kind of equipment that we need to be able to be more effective in monitoring these products. So I think everything is interrelated.

BESSER: Thank you.

In the middle.

QUESTIONER: (Inaudible) -- just going back to Susan Dentzer's question about a single food safety agency in the United States, I think the analogy is not really Homeland Security. I think more the issue is something that Europe faced in the wake of mad cow disease, and that is in this country with USDA, we have an agency that is both responsible for promotion of food as well as for food safety. Isn't that an inherent conflict of interest that needs to be addressed?

HEYMANN: You know, I've heard that argument made many times over the 30-plus years that I've worked as a food industry lawyer, and I just never -- candidly, I never saw much credence in that. The -- there are different agencies that are involved in product promotion within USDA, and those that are in -- responsible for ensuring food safety. The Food Safety and Inspection Service -- anyone I've ever dealt with at that agency has been bound and determined to make sure the product is safe and that if it bears the mark of inspection, that it has been inspected and has met USDA standards. I've never encountered a situation where a FSIS inspector or even the people who are at the head of that agency had to weigh the impact on the marketplace, necessarily, of our causing the product to be recalled or not. I just don't see that. I think that the -- that that agency has the integrity to do its job.

So I don't -- I've never understood as a conflict of interest. But if it is, then you establish a single food agency, but if -- only if it were realistic. And as I mentioned, I just don't know where you'd start to do that, and I don't know that the time and resources that would go into trying to establish a new agency would be effectively spent. Those resources could be better spent by better coordination and communication between the agencies that already have regulatory jurisdiction.

KUSHNER: Just to reflect on your -- on your comment, when I was still at CDC -- and it was before swine flu, when we were focused on bird flu -- there was a lot of effort on surveillance of birds. And I remember one conference call, and it had folks on from FDA and Department of Interior and Department of Agriculture. And we were talking about what the public health messages should be to people. And we were looking at bird migratory routes and surveillance in Alaska, and we were talking about risk and what people can do to protect themselves. And the message from USDA was: Eating chicken is still safe. And so it does kind of play into some of the internal tension over --

MR. : (Chuckles.)

KUSHNER: -- that I've always found a little incongruous, of a department that does contain and tries to put fire walls between the groups that are promoting meat exports and those that are assuring that the food supply is safe.

BESSER: Yes, here.

QUESTIONER: I'm Rob Cortel (ph) with Intelex, and we do risk analytic solutions. And among other things, FDA is a client, on their PREDICT system.

This is about scale. And what we know is that some countries actually create a large part of the problem. I was in Hong Kong about a year and a half ago, right after melamine. And I was told that many of the middle class there refused to buy imported food from mainland China because of their fears about controlling food safety there. And we know that melamine really was something that totally originated, almost culturally, out of China.

How do you deal, in terms of scale, with a country like China which really doesn't seem to share all the way down the same values and restrictions and commitment to food safety?

BESSER: David, let me throw that your -- that easy question your way.

MR. : Thank you. (Laughter.)

HEYMANN: It is an easy question. You know, it's only by not giving up that the international community can succeed. And there are examples of success in all areas, and there can be examples in this. But it takes -- it takes every effort of every country possible. The FDA is doing their part by putting people there. Other countries are setting up norms and standards. But the issue is, when there is an opportunity, show that that was wrong, and show it in a -- in a very important way and move the people on a bit more.

But it's a very difficult issue to do. And, you know, influencing people is very important, but it has to start at the very bottom. We can't always think that we'll be able to impose regulation. I remember speaking with a minister in one country. And that minister said: I will never set up another regulatory agency, because I don't have the way to enforce my regulation, and therefore it opens up a whole new area of corruption.

So it's a very difficult issue from the very bottom. And sometimes it works better if you begin at the top with a framework but at the bottom to help the people understand the importance of safety and let them deal with these issues. So it's -- it has to be a multi- pronged approach.

BESSER: At the consumer level, do you think that the consumer would be willing to pay for more expensive food and drugs that would be required to -- if you were going to have a regulatory system that was ensuring safety?

HEYMANN: You know, that's -- it's a good question. I can't answer that. But I expect that if a community understands that their children are at risk, they will invest in what they need to to make sure that their children are not a risk. And we've always thought that we can come from the top down and regulate them. We can't. There has to be a demand created, as there is for everything else. And that demand comes from NGOs, from education in school, from a whole series of people, which can work and pull down from the top what support they can get.

(Word inaudible.)

QUESTIONER: Well, this has been a marvelous first panel. You folks are just spectacular.

I wanted to ask a question that harps onto two prior questions here. One of the trends that really leaps out when you start analyzing what's (growing/going ?) on on the drug side is that increasingly, the active ingredients that one can purchase, frankly, on the Internet, with no quality control of any kind, are coming from either India or China.

So we started out politely going to this direction, but let's just go there. (Laughter.) And it's kind of shocking what -- one website alone offered 20,000 active ingredients from a couple hundred manufacturers in India.

And so the question I'm really getting at is how can we go into a world where we're seeing an increasing concentration of the raw ingredient production coming from two key countries, neither of which have very strong domestic regulation, where then does the burden shift to guarantee that that active ingredient is what it claims to be, that it has no contamination and that it could be safely formulated for the next step?

BESSER: Paul, I'll start with you. You've said that 60 (percent) to 70 percent of the drugs that are sold in Nigeria come from India and China, let alone other active ingredients and other products.

What would it mean to Nigeria if, say, the supply from China and India was cut off because it's not meeting its stringent standard?

ORHII: Well, that is why I have resisted the availability of quality pharmaceutical products manufactured in Nigeria to some extent. One of the -- (inaudible) -- manufactured locally is a national security matter because I cannot imagine if the supply is cut off from both India and China, I don't know what I'm going to do with one -- (inaudible).

And so we have insisted that we have to start developing our own local manufacturing capacity.

We have approached both -- we have dealt with India and China and there are two different approaches. India is not willing to work with us to find solutions to some of these problems. When I tried to engage the Chinese food and drug administration, their answer was just very short. They said it is the responsibility of the recipient country to ensure the quality of products coming into its own territory. It is not their own problem. They have to protect their own citizens.

I have to go maybe even -- (inaudible) -- the (Senate Committee on Health ?) to engage the China chamber of commerce. There, we've begun to get some response, and that is what led at present time to the arrest and conviction of the six -- sentencing of the six people that were engaging in counterfeit medicine to Nigeria to death.

So China is less willing to take on the responsibility of ensuring the quality of products leaving its territory. India, on the other hand, I have had a different response. In fact, they have worked with us and -- (inaudible) -- where if we get a fake product that comes from India, if we can prove that that it came from India, then the person who gave us information that led to the interception of that product gets a reward up to $2,000.

So I think that is a positive step. If we want to continue to work on that, to see how far we can go.

BESSER: David, from a U.K. perspective, is this something that the U.K. can have impact on a bilateral way with the quality coming from India and China? Or this is much bigger than that?

HEYMANN: This is an issue of two simple words, expected and respected. And it works. It works if you can make sure that everyone understands what's expected and what's respected.

Now, I'll give you an example of this. Back in 2003, I think, many of you remember this SARS outbreak, which originated in China. This was a very difficult time because countries were hiding lots of information because when they reported, they would have tourist sanctions, they would have importations -- were banned, a whole series of things. And so in the analysis of what was going on in China where a country would not report, it was decided that the only way that reporting could be guaranteed was if the norms changed. It's expected and respected to report.

And so the director-general of WHO actually went to the Chinese publicly, accused them of not reporting and it changed the situation and it has changed the situation globally. People are reporting H5N1. They're reporting other things. This is the same issue, Laurie (sp), with food or with medication. You must take the example. You must accuse somebody who is respected, who does it in the right way, must accuse that the norms are being broken and that it's expected and respected and then other countries must come in behind and say, yes, we agree.

BESSER: Well, I always love to end a panel in the middle of a great conversation because it means that people will come back for the next panel.

I want to thank the three members of the panel for their comments. (Applause.)

The next -- the next panel will start promptly at 10:45. So there's a very short break. Please get back to your seats before that starts so it doesn't interrupt the flow of that session. Thank you.

####

®FC¯END

®FL¯

.STX

(C) COPYRIGHT 2011, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.

NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR E-MAIL INFO@FEDNEWS.COM.

THIS IS A RUSH TRANSCRIPT.

-------------------------

RICHARD N. HAASS: Okay, if I could ask people to take their seats, including Ms. Hamburg.

Well, good morning. Welcome to the Council on Foreign Relations. Welcome to this temporary respite from the conversation about Egypt.

For those of you who are new to the council -- and I expect there's a few of you here who are -- we are an independent, nonpartisan membership organization. We're also a think tank and a publisher. And we are dedicated to increasing understanding of the world and the foreign policy choices facing this country.

This year happens to be the 90th anniversary of the Council on Foreign Relations. And all year, among everything else we do, we'll also be examining domestic issues, from education and immigration to debt and deficits and infrastructure, that have impact on foreign policy.

Today's symposium, as you all know, will look at food and safety issues -- again, another example of how the foreign policy agenda has dramatically evolved over the years beyond what you might call classic issues of war and peace.

The last 10 years has seen skyrocketing trade in food and drugs. The statistics are impressive. From 1990 to 2008, global food imports rose in value from $350 billion to over $1 trillion.

And globalization's had an even more significant impact on the pharmaceutical market. Today, drug manufacturers located outside the United States and Europe command 80 percent of the global market, up from 10 percent just two decades ago.

In many ways, this is a good-news story. Consumers enjoy dramatically improved access to food, especially meat and dairy products. And the rapid growth of pharmaceutical manufacturing in the developing world has not just expanded access to the drugs, but it's also brought income and skilled jobs to various economies.

But with this success, as you all know, has also come significant challenges. Regulatory organizations at the national level have had real trouble keeping up with the dramatic rise in the trade.

The Centers for Disease Control in Atlanta estimate that nearly 50 million Americans were sickened by contaminated food and drink in 2009 -- that's one out of every six Americans -- and that 3,000 died. And in Asia, Africa and Latin America, up to 30 percent of the medicines on sale might well be counterfeit, leading to countless deaths either as a direct result of the medicine or because the people did not get the medicine they in fact needed.

So we are very pleased here at the Council on Foreign Relations that we can offer this space for this symposium today to explore these issues in depth and to begin the process of developing policy recommendations. We're going to do it in thirds. The first panel led by ABC's chief medical editor, Richard Besser, will consider the recent history of the food and drug trade and examine the scale and complexity of the market. Panel two, moderated by Susan Dentzer, editor -- who edits Health Affairs -- not to be confused with Foreign Affairs -- will discuss the challenges faced by domestic regulators as they try to oversee an internationalized market. And the third of three will be led by our own Laurie Garrett, who's the council's senior fellow for global health and has done so much to get us involved in this set of issues, and I think to increase international awareness of this set of issues. And Laurie's panel will explore a variety of ideas and how the international community might best address this set of problems down the road.

Let me just make a few housekeeping announcements, so no one else does. This meeting is on the record, so what you can -- what you say can and will be used against you. It will also be recorded for posterity and it will live much longer than anyone in this room.

We're teleconferencing this meeting to our members in the nation's capital. But for all that we spend on this technology, it can easily be interfered with by your cell phones, so if you would be so good as to turn off your BlackBerrys, your iPhones and anything else. Since this is a meeting on health, we will make an exception for health-related devices, pacemakers and the like -- (laughter) -- but last I checked, cell phones do not fall in that category.

We are grateful to the Robina Foundation for their continued generous support of this -- of this program. It's part of a much larger effort looking at international institutions and global governance.

Last but not least is our initial speaker -- for those of you who don't know her, Margaret Hamburg; for those of you who do, Peggy Hamburg -- who's commissioner of the United States Food and Drug Administration. She is the 21st commissioner, if my math is right. And before she assumed this position, Dr. Hamburg was a vice president and senior scientist at the Nuclear Threat Initiative. She -- I will allow her to explain this sequencing of career. And she's also served as assistant secretary for policy and evaluation in the Department of Health and Human Services. And here in New York, she was commissioner of the Department of Health and Human Hygiene. And most important of all, the capstone of her career and the centerpiece of her resume, she is a long-standing member of the Council on Foreign Relations.

Peggy, welcome back to the Council on Foreign Relations. (Applause.)

MARGARET HAMBURG: Well, thank you very much. And it really is a pleasure to be here this morning. And I am a great admirer of this institution and a long-standing, proud member. And it's always nice to be back in New York City and to see my former mayor, Mayor Dinkins, who gave me my first real job in public health. So thank you very much, Mayor Dinkins. And I would say he epitomized during his tenure as mayor and mine as health commissioner what can be accomplished when political leadership and public-health needs and priorities actually come together. And he gave me enormous support when we put together our program to deal with the resurgence of tuberculosis, including extremely high levels of drug-resistant tuberculosis. And in just a few years time, applying simple public-health principles, we were able to turn the tide on that epidemic. So wonderful and (unexpected ?) to see you here, David.

Some of you may be surprised that the Council on Foreign Relations is addressing issues of food and drug safety and regulation, and it's a little bit off the core agenda for many meetings here. But it is highly appropriate, much needed, and very, very timely. And I really an delighted and grateful that the council has put this on the agenda and, of course, thank Laurie Garrett for helping to make this possible.

This event grew out of a series of conversations that Laurie and I had over a period of many months after I became FDA commissioner and really came to understand the new realities of food and drug regulation brought about by globalization -- realities that have really redrawn the path that food and medical products navigate to get to our homes, and realities that really make each and every one of us increasingly vulnerable and realities that challenge virtually all nations.

Today, we hope to start a conversation that will be continued in broader foreign policy and other circles and by next year, perhaps, even reaching the level of the G-20 for discussions. It's that important. We hope that, together, our speakers can communicate to each of you the scale of our challenge and the steps we must take to meet the unique public health demands of our globalized world, and to assure health, safety and security of people and nations all over the world.

We cannot afford to ignore these issues. Certainly, as FDA commissioner, I spend a lot of time grappling with them. They have major implications for how we fulfill our mission to promote and protect the health of the American people.

And in this context, let me tell you just a little bit about the agency and why this all matters so much. The FDA is responsible for overseeing the safety and manufacturing quality of food, drugs, medical devices, vaccines and biologics, cosmetics, dietary supplements, animal drugs and food, radiation-emitting devices and now, for the first time in FDA history, tobacco products as well. These products account for somewhere between 20 (percent) and 25 percent of every consumer dollar spent in this country. And I think with the possible exception of tobacco, we can safely say that these are products that people really need and they really rely on in fundamental ways just about every day. So as you can see, the scope of our responsibilities is enormous.

But during the early days of the FDA when, in fact, most of our authorities were actually put into place, the world was very different. Back then, most products that FDA regulated were domestically manufactured and really quite locally used. And for years, when it came to importation of foreign products, our activities went toward safety and quality, and to protect public health, focused on catching problems at the border. And then we began some limited some overseas inspections.

But those days are long gone. The realities of global economic conditions, as well as innovations in refrigeration, transportation and communication, have enabled and spurred consolidation and globalization. This has resulted in a striking rise in imports of foods, pharmaceuticals, medical devices and even, to some extent, biologics.

Today, the world in which FDA-regulated products are discovered, developed, processed and distributed is much, much bigger. FDA's traditional model of manufacturing site inspections and border examinations is simply not adequate in today's transformed world. In 2010 alone, FDA estimates that more than 20 million import lines of food, devices, drugs, cosmetics and tobacco arrived at U.S. ports of entry -- more than a three-fold increase in regulated imports from just a decade ago. Regulated products come from more than 300,000 facilities in more than 150 different countries all over the world, and they come into the United States through more than 300 different ports of entry.

At the same time, the supply chain from manufacturer to consumer has become more and more complex, involving a web of repackagers and redistributers and making oversight increasingly difficult. The numbers are staggering. In the food realm, about 40 (percent) or 45 percent of fresh fruit and produce and over 75 percent of seafood that we eat here in the United States actually comes from other countries. And for medical products, a stunning 80 percent of active pharmaceutical ingredients in our drugs come from outside our borders and about 40 percent of finished drugs themselves.

And, of course, much of this is positive. We can, for example, have fresh mangoes and strawberries all year round, and it probably does help to keep costs of some drugs and devices lower.

But there are also very serious, often negative implications. The global supply chain has led to the distribution of unsafe or ineffective products and harm caused by economic adulteration and intentional fraud.

I know that you'll soon be hearing directly from others, for example, about the tragic toll of the counterfeit trade in many parts of the world. But really, for nations large and small, the global supply chain presents many new national and international security threats.

In recent years in this country, we've experienced events, some clearly deliberate and some unintended, which have had serious consequences for life, health and safety, as well as for trade, commerce and the economy, ranging from contaminated heparin, a blood- thinning drug, to counterfeit glucose monitor strips and surgical mesh, to melamine-tainted vegetable protein and dairy products, and salmonella in peppers and other food-borne outbreaks, to name just a few.

And the world is poised for further globalization. There are macrotrends at work that are impacting global commerce, and the cumulative effect of these trends will ensure that 10 years in the future, the world will still be a very different place. Undoubtedly, the pressure to reduce costs and increase productivity will lead companies to continue to move manufacturing activities to new and different locations, looking for cheaper sites and global supply chains to reduce production costs.

And countries, like China and India, that already produce many of the food and medical products that Americans use will likely in the future not only produce these goods but will also be important centers for innovation, inventing new groundbreaking products that Americans will want to buy, which means that will have to continue to evolve to meet these new demands.

And we've already begun to do so. In the U.S., the Food Safety Modernization Act, which was signed into law earlier this month, calls on the FDA to put into place a significant new approach that among other things promotes a new level of accountability for all entities that are involved in the supply chain, from farm to fork. And although it's not perfect and we certainly do face challenges, especially including resources, it's a truly significant step in the right direction. Congress has also introduced a similar bill for drugs that would bring sorely needed modernization to our authorities, importantly in the global sphere.

But even with that progress, globalization presents huge and growing challenges. Regrettably, another public health crisis like heparin or melamine seems inevitable, unless we are able to truly forge changes in how we ensure the safety and quality of food and medical products for our citizens.

And at FDA, we've realized that in order to protect American consumers, we must work globally, because the products that our consumers use are no longer simply American products, they're global products. And we know that our counterparts in other nations face similar challenges for their citizens.

This is a moment for leaders around the world to create a new vision of how we regulate. We have a shared interest in assuring the safety and quality of food and medical products, and a shared responsibility for safety and quality. By working together to monitor and to improve safety and quality globally, we will benefit all of the citizens of the world. What I envision for the future is a public health safety net for consumers around the world that is created, supported and maintained by a global alliance of regulators, working closely with all our critical stakeholders.

Some of the work for this is already under way and has been for several years, as regulators from many nations have begun to collaborate. But these efforts need to be taken to the next level. We must ask ourselves how we can weave our various efforts into a coherent global system of oversight and safety. This will mean working together toward greater coordination and enforcement of regulatory standards across nations to ensure safety and quality, regardless of where a product is produced. We need not always apply absolutely identical methodologies, but we all need to work together toward the common goals of product safety and quality, and to harmonize approaches.

As part of these efforts, regulatory authorities, especially those with the greatest experience and resources, must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems, so that they can produce food and commodities that are safe, wholesome and meet international standards.

Those with the greatest experience and resources must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems so that they can produce food and commodities that are safe, wholesome, and meet international standards.

This is surely in our vital interest, but it will have broader benefits for public health and economic development within those countries as well.

And in addition to creating a global coalition of regulators, we must create a modern means to share data globally, and we must use those data and advanced analytics to proactively prevent and identify problems. Detecting and preventing global problems demands global intelligence-sharing and data mining.

Also, as the new food-safety law recognizes and requires, we must enlist public and private third parties as well as industry and other organizations to increase the global safety net. We must do this for food and medical products. And this is absolutely essential. Regulators cannot and should not do it alone.

Finally, we must create the momentum in the United States and in the global community to make these changes real and sustainable. These changes must begin now, but they will take time and the support of many people to fully implement. A strong global safety net will be challenging to weave, but we can do it together.

So let us continue the conversation today, and as regulators, consumers, academics, industry leaders -- (audio break).

MR. : (In progress after audio break) -- I want to welcome the audience who are out there in Washington, as well as on the teleconference.

MS. : Okay. They're connecting me, so --

MR. : And I don't want to use up a lot of time going through -- (audio break).

RICHARD E. BESSER: (Audio break) -- prepared for you, so we're going to dive in.

Let me introduce the panel, though, starting from the far end: David Heymann, who is head and senior fellow of the Center on Global Health Security, Chatham House, in the U.K.; Gary Jay Kushner, who's partner and leader in food and agricultural practice area at Hogan Lovells; and Paul Orhii, who's the director general of the National Agency for Food and Drug Administration and Control in Nigeria.

We're going to have a conversation up here for the next 25 or 30 minutes, and then open it up to members and guests to join in the conversation and ask questions.

So diving in, first talking about the drug side, in 2006 I was head of emergency response for the CDC. And we received a call from colleagues in Panama, and they were facing a situation there where an unusual neurologic syndrome was presenting to hospitals. And they wanted to know what was going on, and we sent a team down to work with them on that investigation.

And the lab at the CDC detected ethylene -- diethylene glycol in cough syrup that was being used throughout the country.

As the Panamanian government explored that situation further, they had a sense of the scope of the problem. Two hundred and sixty thousand bottles of cold medicine were contaminated with diethylene glycol. There were 100 confirmed deaths and thought to be far more than that in terms of the overall range of the problem.

The syrup had been manufactured in China and it had been certified as 99.5 percent pure glycerin. That was what was added into it.

That counterfeit glycerin had passed through three trading companies on three continents, not one of them had tested the syrup to confirm what was on the label. This isn't an isolated incident; there have been other problems with diethylene glycol in glycerin.

So I want to start by turning to David, who has worked in public health at WHO, at U.K., and at CDC. You convened a conference in December, a very important meeting at Chatham House on counterfeit drugs. And so that we're all on the same page, if you could first explain, what are counterfeit drugs? How do they vary from fraudulent drugs, of optimal drugs? And how big is this problem?

DAVID HEYMANN: Well, thanks, Richard. Yes, we did have a meeting at Chatham House in London because for the last 30 years, WHO has had a very difficult time in dealing with counterfeit drugs because of definition. And it's clear why this is a problem if you think about counterfeits. A counterfeit handbag, a counterfeit T-shirt doesn't really cause any harm; it's just -- it causes harm to the producer, but not to the user, whereas counterfeit drugs can cause harm to the user. And what's happened is that the discussions at WHO, trying to find a definition, have gone around many different words and never really focused on any one in particular. Those words are "substandard;" there are other words such as "falsified" and finally as "counterfeit."

And so the definition has been difficult. But substandard is very easy to understand. Substandard drugs and vaccines are those that don't meet regulatory requirements in the country in which they're produced or in the country in which they're imported. It's very easy to understand that. And it happens to both generics and to patented drugs as well. For example, here in the U.S., if you remember a few years ago, influenza vaccine came in from Europe and was substandard. This passed through the regulatory agencies in Europe and also came into the U.S., and it's a problem for industrialized country regulatory agencies.

Think of that problem in a country where biotechs are trying to set up their own production and development and don't have a regulatory agency that can help them make sure they have good products. If it happens in industrialized countries, what will happen in developing countries? But as Peggy said, there are ways that that can be dealt with. It can be dealt with bilaterally, by exchange and partnerships between regulatory agencies, or multilaterally through the World Health Organization.

So substandard is a very easy concept to understand, and this was one of the three concepts that was agreed at the Chatham House meetings. Substandard do not meet national regulatory requirement.

Under substandard, there are really two sub-classes: there's a falsified classification and there's a counterfeit classification. These are substandard drugs because they haven't met national or other regulatory requirements. But a counterfeit drug is one that's purely involved with trademark, and because it's involved with trademark, it's not as much a public health issue as an issue for the World Trade Organization and the World Intellectual Property Organization, which deal with counterfeits and with trademark issues. It's a criminal offense. It has public implications, but there is a framework within which that can be handled.

The framework that's missing is that framework for falsified medicines. These are medicines like in China, medicines that were produced with false ingredients maybe unknown to a very few people, but known to someone. It was a deliberate intent, as is counterfeit, a deliberate intent to falsify a medication. Those falsified medications, of course, are substandard because they don't pass through regulatory requirements.

So those were the three different definitions that came out of our meeting at Chatham House and which we hope will help WHO now move ahead with the definition. We had many people at this meeting.

We had WHO, the head of the the drug group at WHO, we had World Trade Organization, we had WIPO, we had Interpol. We had a whole group of people. And we hope that these three definitions, which are fairly clear to everybody, would be the ones that can help move forward in a public health way the discussions on counterfeit drugs.

BESSER: Great. Thanks very much. You -- it said that the disease that may be impacted the most by this may be malaria. A study in 2006 in the American Journal of Tropical Medicine and Hygiene found that 68 percent of anti-malarial drugs found in Laos, Myanmar, Vietnam and Cambodia did not have the correct amount of drug in them. And WHO estimates that as many as 200,000 lives that are lost each year to malaria may be preventable just by dealing with the issue of substandard drugs.

I want to turn to you, Paul. You gave a speech last year to the parliament in Nigeria. You've been a tremendous crusader in the area of control of counterfeit drugs. And you said that the culture of chasing fake drug dealers around the country is not sustainable in the long run. Sixty to 70 percent of essential medicines in your country are brought in from India and China. And you were calling for a more comprehensive approach.

Can you talk to us about the scope and scale of the problem of counterfeit drugs in Nigeria?

PAUL B. ORHII: Thank you. (Inaudible) -- let me use this opportunity to thank the Council on Foreign Relations for organizing this forum. This is a very, very important forum. I also want to use this opportunity to thank Dr. Margaret Hamburg and the U.S. FDA for the opportunity that they give developing countries, the -- (inaudible) -- authorities in developing countries to build our capacity. Been training some of her staff, and we're getting better and better. So I want to use this opportunity to thank the U.S. FDA and Dr. Hamburg for that.

I say the US, the culture of chasing counterfeiters within a country is not sustainable in the long run, because the problem has become much worse than before. In 2001, the instance of counterfeit medicines in Nigeria rose to over 40 percent. More than 40 percent of the drugs in Nigeria, especially anti-malarials, essential medicines, were counterfeits.

At that time, in developed countries, like the U.S., and Europe, they had less than 1 percent counterfeits in their systems. Now the problem has become much worse. The Pharmaceutical Security Institute and the -- (inaudible) -- that the counterfeit medical -- (inaudible) -- constitute about 35 to 200 billion business dollars a year. So you see that most of these counterfeits would be heading to countries with very weak resistance.

And even in Europe, advanced as it is, counterfeit medical markets have been found to -- is worth about 10.5 million euros. So this is scary. When we look at it, we budget how countries like ours with weaker regulatory systems can cope.

(Inaudible) -- is charged with the responsibility of regulating and controlling the manufacture, distribution, sale and use of all drugs, foods, cosmetics, medical devices, bottled water and many other products. But we are grossly understaffed for the kind of vast territory that we're called to protect and the kind of huge population. Our population is a -- what, 150 million people that we're called to serve. The borders are vast, poorly managed because of lack of funds. And even when we can man them, we do not man them as appropriately as we would have wanted to to be able to stop -- (inaudible).

I'll just give you an example. Only in 2009, we intercepted a consignment of sick medicines, more than 700,000 courses of anti- malaria drugs coming from China. They were labeled as made in India. But we were able to observe the -- (inaudible) -- from from China, and we took the matter up with these two countries, resulting in the arrest of -- and sentencing to death of six persons in China that were related to this manufacture and shipment of that consignment Nigeria.

We also were -- (inaudible) -- in Indian parliament, and then the big -- middle law making it a criminal -- punishable by lifetime jail term, the manufacture and distribution of -- (inaudible) -- products.

But our law is also very weak. And so we have now tried to review our law and have a member of parliament from Nigeria -- he also with us, will be submitting that law to them to help us pass the law so that we make more stringent punishments -- lifetime jail time, confiscation of assets -- in situations where we can determine that the fake product proximately caused the death or severe bodily injury of the victim. We want to be able to use some of the confiscated assets to legally compensate the victims.

We want to build international -- stronger international cooperation, because we cannot do it alone. That is why a formula -- this is (especially ?) important. And we are very, very happy that the U.S. and also the USDA are now paying attention to this, because it -- before, it was considered to be a problem of the developing world. And not much attention from the developed world was paid to this. Well, now we want -- we are very happy that we are now having stronger partners with this U.S. -- you cannot now have a stronger partner than the U.S. come in to take on this problem.

We are very excited. We want to -- (inaudible) -- that Dr. Hamburg mentioned here. We want to have -- build -- we're leveraging on cutting-edge technology to fight the problems. We're -- introduce new technology to fight the problem. And we're building both national, international and other regional cooperation -- (inaudible) -- fighting counterfeit medicine.

So the culture of just pursuing counterfeit medicines within your territory and trying to eliminate them is no longer sustainable. Officially, with the recent crackdown on illicit drugs, most of the former drug barons are now diverting -- they have now diverted their resources to manufacture and diffusion of counterfeit medical products. So the program has become more globalized, more militarized and more sophisticated. So it needs international cooperation, very strong international cooperation -- (inaudible) -- what we are doing now to be able to fight counterfeit medicines.

BESSER: You know, this is an issue that has an impact on your life. An attempt was made on your life this fall. And, you know, we talk about these issues in public health as health issues. Is there enough of a connection between the public health community and the legal community to take this on as a criminal issue and not just a health issue?

ORHII: It is a public health concern, but it's also a criminal issue. So I think we are working together with the legal system to try to see how we can impose stiffer penalties on people who engage in counterfeiting.

Of course, in Nigeria, it is very dangerous. I had a situation where we had sent our staff out to all these bakeries to make sure that they were not using potassium bromate, which has the potential to cause cancer.

I mean, one of these bakeries where staff found the banned potassium bromate, the staff of bakery descended on our staff, beat them to the point where they lost consciousness, bundled them into a vehicle, poured petrol on that vehicle and were about to set the vehicle ablaze with our staff inside when the police came in time to save them. So this is a very dangerous engagement in our countries.

But I think we are determined. The government is giving us enough support to be able to do this. We are getting international support now. And I think we will be able to solve the problems.

BESSER: Our session this morning isn't just focused on drugs. It's also dealing with the issue of globalization of our food supply. As Peggy Hamburg was saying, you can have a mango all year round in New York.

I started my career at CDC in foodborne disease and recall outbreaks of cyclospora from raspberries from South America, cholera from coconut milk from Thailand, and most recently the peppers/tomatoes that really cost the tomato industry in the U.S. a couple billion dollars from salmonella.

Right now, there's an issue of dioxins in Germany. And 4,000 farms were closed in Germany when it was discovered that there was dioxin-tainted industrial fatty oil mixed in to animal feed. That led South Korea to shutting off the importation of meat products from Germany; and now in the European community, concern over some eggs from Germany that are suspected of being contaminated.

So I want to pull into the conversation now Gary Kushner and ask you to comment on the scope and scale of globalization of food.

GARY JAY KUSHNER: Well, thank you. That's obviously at the heart of this program. And I should say, first of all, globalization is real, but it didn't just start. The international -- the growth of the international food market's probably been rising for the last 20 years. It's just now -- probably I would say an all-time high, and there are a number of reasons for that as Dr. Hamburg pointed out and Richard just pointed out as well. Consumers do want to have fresh products, fresh produce in particular, 12 months of the year. And we have the ability to provide that. But that means importing products from a number of different countries.

Food manufacturers recognize this. Many of them have a multinational focus. Many of them have plants in other countries and distribution centers in other countries. But the reality is that in order to provide the array of products that consumers expect does require importation, and we're now importing foods and ingredients from all over the world. And in some parts of the world, the controls are much stronger than they are here. And even where you've got regulatory controls, the key is enforcement of those controls and that also varies quite a bit globally.

I believe that the new Food Safety Modernization Act is a very, very important step forward in helping to harmonize regulation and ensure the safety of products coming into the United States.

Many of you may realize or may not know that food is regulated by a lot of different agencies, but primarily by the U.S. Department of Agriculture's Food Safety and Inspection Service and the Food and Drug Administration. FDA has regulatory authority over all foods, primary regulatory authority over all foods with the exception of meat and poultry. And meat and poultry, historically, has been regulated by the Food Safety and Inspection Service. There are historical reasons for that. I should say, though, meat and poultry is under what is called continuous inspection, that is, that the meat or poultry product may not be distributed in the United States unless it has been inspected or at least have the presence of a USDA inspector in the plant. And you'll see on a meat or poultry product, you'll see the stamp that says inspected and passed. And the Department of Agriculture is very jealous of that stamp because it's their Good Housekeeping stamp of approval.

The FDA on the other hand -- and I think the last time I looked, the USDA has at least 7,000 inspectors and perhaps more. But FDA is expected to regulate all of the rest of the food supply with far less in the way of resources. And the authority that FDA has or historically has had has been much less different than the USDA, yet so many of the ingredients that are coming into the United States that are being imported are under FDA's regulatory jurisdiction, which presents a real challenge.

Now, I will say that under the food modernization -- the Food Safety Modernization Act, importers will now be required to verify that the products that they import into the United States do meet the same safety standards that will be -- that are required of them in the United States, and that is a major step forward. Manufacturers in this country, particularly the larger national manufacturers, already have programs in place to ensure the safety of the products that they produce, as well as the raw materials that they use. And it's historically, food manufacturers have employed what's called the hazard analysis and critical control points program. The acronym is HACCP and it's referred to as HACCP. That has been mandatory for meat and poultry products since the early '90s, and it's been mandatory at FDA for a limited number of products, notably seafood and pasteurized juices.

Also, I would throw -- (inaudible) -- canned foods regulation into that same scope of regulation. But for the most part, products under FDA's jurisdiction have been manufactured under HACCP that has been voluntarily employed by the food industry. And if I want to digress just for a second because I'm a real believer in HACCP, HACCP was not developed by the government; it was developed by the food industry in the '60s basically to keep food as safe as possible for the space program. You can imagine, an astronaut with a food-borne illness in a little capsule would not be a terribly pleasant experience. (Scattered laughter.) And once it was adopted, more and more food companies designed food safety assurance programs based on HACCP principles.

So it's been a very, very good concept. Now, although the Food Safety Modernization Act does not call it HACCP, the controls, the kind of control, the principles on which this new law is based effectively means mandatory HACCP, and I, for one, and I represent the food industry, think that that is a very, very good step.

The challenge now for FDA will be enforcement, and remember as I mentioned, USDA products are inspected by our -- meat and poultry products are inspected by USDA, which has significant appropriations every year to support that inspection program. FDA now has the burden of employing similar controls on the rest of the food industry, yet Congress has not yet appropriated the money that FDA needs for that, and that has got to come.

There are some aspects of the new law that are self-executing. That doesn't mean they'll be enforced, but it does mean that companies will employ those because that last thing a food company wants is for its products or a competitor's products even to cause food-borne illness and generate adverse publicity about the whole product line.

It's important that the products be viewed as safe for consumers, so everyone has a vested interest in that. Many of the new provisions in the law -- of the new law, as I said, are self-executing and that's important. But other aspects, including FDA's required increased inspection of imported products and even inspection or verification of exporting facilities, is going to take money, and FDA simply hasn't been given that money yet.

So I think that's something that consumers, industry, everyone that needs to encourage Congress to do is to appropriate adequate funding for the new law to be implemented and enforced effectively.

BESSER: Thanks very much, Gary. I do want to now open up the conversation to members and their guests. And I'll ask you to wait for a microphone. And when you ask your question, please state your affiliation and whether there's someone it's directed to.

While we're waiting for the microphone to get around, I want to ask you, Paul, about Gary's comments about food production and the requirements that will be in place in terms of assuring the purity and safety of food.

What does that mean in terms of a burden on a developing country to have to have a system of food inspection, food testing, a HACCP control system? Is that something that's within the realm of possibility in Nigeria?

ORHII: Yes, it is already within the realm of possibility. In fact, we have a program in place. We already have, in fact, some expats from the FDA, from the Department of Agriculture -- have been in Nigeria with us working on developing food safety program under the HACCP program.

So it is within the realm of possibility. We already are doing inspections of food products, but we're clearly -- (inaudible) -- our capacity -- (inaudible) -- with the help of the USDA again.

So I think it is within the realm of possibilities.

BESSER: And Gary, flipping back to you. Many of the large- scale food producers in this country, you know, whether you're talking about McDonald's or Wal-Mart or a Costco, are establishing integrated systems of food production that ensure their own inspection overseas.

The impact of that in terms of building infrastructure within a developing country, do you see it as a positive step or something that may actually deter a developing country from developing their own system, as we're hearing about in Nigeria, of ensuring food safety?

KUSHNER: I'm not sure this answers your question, but the examples you gave, Walmart, Costco, for example, are primarily food retailers. And although some of them do have their own private label programs and some of them -- some retailers actually have products that they manufacture for themselves, for the most part, the retailers are purchasing products from manufacturers or from brokers that are going to be sold in their supermarkets.

That having been said, it's the same issue, and that is how do you make sure that the products that are coming in from other countries, whether they're going to a private label product that you're producing or a product that your supplier is producing, how do you make sure that those are produced under the same kinds of controls?

A major manufacturer will have as part of its HACCP program, its own HACCP program, will have programs or -- programs in place to inspect the incoming raw materials, to periodically test incoming raw materials and ingredients so that they can control as much as possible the product that's going into -- the ingredients going into their products.

In addition, they'll know their supplier, and that is a very, very -- it's a simple concept and an important concept that is for a food manufacturer to know its supplier. Now, it's impossible to know every supplier that supplies that supplier, but at least it's a very important step, particularly if you couple that with the controls that the importing company will have in place.

Let me just go back, though, to talk again about the difference between USDA and FDA, because I think it's instructive. The USDA, I think, since about 1968 -- I may be wrong on when this came into law, but since about '68, USDA -- the meat and poultry inspection laws have required that products coming in for importation, number one, come from countries that the inspection system has been determined by USDA to be equivalent to the U.S. inspection system. That is, the country must demonstrate that its inspection system is adequate and the individual plants that are going to be shipping products to the United States must be approved.

So that supply chain is very well controlled in the context of meat and poultry products. Again, less so in FDA products largely because of the historical nature of the laws that both agencies administer and the feasibility of the FDA insisting upon the importation of products being -- becoming from certified plants where they don't have that legal authority and even with that legal authority, the money is a real issue.

BESSER: Thank you. I think the first question, over here.

QUESTIONER: Good morning. Great panel. My name is Peter Pitts. I'm the president of the Center for Medicine in the Public Interest.

Dr. Hamburg mentioned at the outset the issue of global intelligence sharing, and you discussed the issue -- the definitional problems of counterfeit drugs, and I fear that we're still quite a ways off from a workable definition there. But short of kind of a global regulatory Marshall Plan, you know, how can we work together either on a formalized or an ad hoc basis to at least measure the problem of counterfeit medicine so we can begin to have a baseline and combat it?

BESSER: David, I'll throw that to you, first.

HEYMANN: Well, you know, it's only by global collaboration, as Peggy said earlier, that this can happen. The forum -- one of the fora in which it could happen is in the World Health Organization, but as I said, they've been blocked with a definitional problem that we hope can be unblocked eventually so they can move ahead and understand what they're working with.

I think we'll hear from other sources, other -- we'll have other opportunities to hear from Interpol and various places about what they're doing globally. But it will only work if the world works together in a multilateral framework.

There can be bilateral activities which are very important; FDA has people in China, has people in other countries, in India, and that's very important. But multilateral and bilateral together are the solution.

BESSER: David, just to add onto that. How much is the issue of patent protection confounding the issue of counterfeit drugs and drug safety?

HEYMANN: Well, it's a very important reason that the definition can't move ahead because some would say that generic drugs are counterfeits. There's a whole series of issues that are very -- are very difficult to deal with. And so that's why these three definitions, clearly making it understood what a substandard is, and then there are two substandard sets, counterfeits, which are trademarked, and falsified is a much better way to proceed and a much more logical way to do it.

There are mechanisms that can deal with trademark infringement and those are enforced. What's not available at present is this public health framework in which we can all work together because of the definition issue.

QUESTIONER: Thank you.

QUESTIONER: Thank you. My name is Mark Feinberg. I work in medical affairs and policy at Merck. I want to thank all the speakers for so succinctly and clearly highlighting the importance of this issue.

My question, really, for any of the speakers is, what will it take to actually move us down the path that Dr. Hamburg had articulated as sort of a much more integrated system that is really designed to accommodate the safety challenges posed by globalization? You know, how can we go down that path faster? And really what are the obstacles in the way beyond the sort of definitional thing that Dr. Heymann had mentioned?

BESSER: We'll go short on that because the next panel is going to be focusing more on control issues and policy issues. Paul, do you want to comment on that?

What will it take to get us from where we are now to more of an international system that is ensuring drug safety?

ORHII: Well, we said this initiative by the Council on Foreign Relations and the FDA is a good start. We can build on what we decide here today and then move on. Talking about the definition -- I think definitions of "counterfeit" have just been deliberately used to confuse the issues. We in developing countries that are most hit by the impact of counterfeit medicines will look at it purely from a public-health perspective. At the WHO, we have always emphasized counterfeit medicines, looking at them purely from the public health perspective.

I talked here about getting almost 40 percent of medicines in the system, counterfeit. This -- some of the medicines, the counterfeit medicines, if used to treat diseased like malaria, have the potential to develop resistant strains of microorganisms, which are not treatable by effective medicines, resulting in death and sometimes even the spread of some of these resistant strains to other countries. You know, they do not need passports or even a visa to cross international border lines.

That is why it is important the the Council on Foreign Relations and the FDA have summoned this meeting.

So I think it deliberately confuse -- (inaudible) -- attempted at the -- the last World Health assembly to agree to come to a definition of counterfeit medicines that deals exclusively with the public health concerns and not encompassing intellectual property issues. But I think we are working towards that, and we hope to be able to achieve that.

But we want a situation where we have a broader coalition, we have an international coalition of all relevant agencies. We (started ?) that impact. We have had impact where we have the INTERPOL, we have the -- (inaudible) -- we have all the relevant agencies that will help us find these counterfeits.

For developing countries, no country maybe in Africa is -- (inaudible) -- if we find counterfeit medicines in the system. (Inaudible) -- we cannot tackle that alone. But we need a big coalition that can reach out to all those people. And the example that I gave you of counterfeit medicines, anti-malaria that we intercepted in China, alone Nigeria could not have any -- don't have anything against China. But then we involved INTERPOL. We had to. And some of the people we -- (inaudible) -- Nigeria. But (anyway ?) they were out of the country beyond our jurisdiction. But INTERPOL reached them, and they have finally come back to Nigeria where we're prosecuting them now.

So what we want is a global coalition that would be very strong to help us fight counterfeit medicines. But I think we can view counterfeit medicines not encompassing any intellectual property issues, just purely from the public-health perspective. In a country like -- a developing country like Nigeria, it is a life-and-death issue. It is -- we're not talking about intellectual property here. We're talking simply about public-health challenges that we have.

BESSER: Thank you. One here, and then I'll move towards the back.

QUESTIONER: Yes. My name is Charles Clift. I'm from the Chatham House Centre on Global Health Security, a colleague of David's, who spoke.

Just to expand a little on the definition list used -- I don't want to go into it too much -- I mean, Dr. Orhii says, well, what we're interested in is public-health issues and counterfeit medicines, the medicines that are basically substandard and probably done deliberately, but nothing to do with intellectual property.

That applies -- lots of countries feel like that. Other countries such as, for instance, Brazil, say to us, a counterfeit medicine is one that infringes a trademark. And if it's simply substandard and deliberately done, it's a falsified medicine. And they have that in the legislation. So they have a very restrictive definition of counterfeit. But in a sense, we know what we mean, but we use the same term to describe different things. That is one of the problems.

But underlying the definitional issue is a number of countries, particularly those who produce generic medicines or some who consume them, fear that attacking counterfeit medicines will also be an attack on legitimate generic medicines of assured quality, on which many developing countries rely. Most of their medicines are generic. Unfortunately, many of them -- a certain proportion will not be of the right quality.

As regards this discussion today, I thought it might be helpful if we -- I think we're talking about two different things, which are related but are conceptually different. One is the problems of the legitimate supply chain. And that is what Dr. Hamburg was talking about, the 99 percent of her opening remarks. And that is one set of issues where, as she said, greater collaboration is needed between the regulatory authorities in both developed and developing countries because of the way the supply chain has become globalized.

Then there's the question of the illegitimate supply chain, which -- again, regulatory authorities have a role, but it's a multi-agency thing. You have customs, you have Interpol -- we'll be hearing from Interpol later this morning -- and there really -- one is about how do we protect the consumer from harm, and the other one is essentially about, once these dangerous medicines get on the market, how do we address -- how do we deal with the producers and the distributors and so on?

So I think we need -- it's helpful conceptually to separate those two issues, which need different policy measures to a great extent to tackle them.

BESSER: Thanks very much. In the back on the end.

QUESTIONER: (Off mic) -- Radio. Obviously, when one thinks about this generic-versus-counterfeit debate, one recalls the politics of the HIV/AIDS debate and the production of drugs that occurred several years ago. And my question has to do with food safety and food production. Many scholars of global food production point out that, for the model of the United States in terms of food production to be duplicated in the world, it would simply be impossible.

And we have, as you know, a lively debate in this country for decades about the very safety of our own food production in the United States. And I was wondering how the panel feels about those kind of issues entering the equation, because, you know, I can think of movies like "Food, Incorporated" and others which point out the problematics of the safety measures inherent in the United States itself in terms of food production.

So I was wondering what your thoughts are on that.

QUESTIONER: Gary, do you want to dive in on that one?

KUSHNER: Let me try. And here's where I'm going to sound like a food-industry flack, and I admit it. (Laughter.) I happen to believe that the food in the United States, the food production system, is a very effective system and makes for a very safe product.

Granted, there are -- have been -- obviously have been notorious foodborne-illness outbreaks that are unacceptable and need to be addressed. There are companies that do not follow basic good manufacturing practices. And that's also unacceptable and has to be addressed. And there are challenges that are inherent in a global system, or even a system that just in the United States, where you're distributing products all over the country and importing ingredients for use of those products.

As far as imposing our system, let's assume that our system is a safe one and we're trying to make it safer, or as safe as it can be. Trying to put that system in place in other countries requires a couple things. First of all, I think it's a shared responsibility between the food industry and the government in terms of the company that is importing a products wants -- has to be sure and has to be committed to doing everything it can feasibly do to make sure that the product it is importing is safe and meets U.S. standards. Same goes for countries -- companies and countries or exporters who want to send their products to the United States. They have to have a commitment -- if they want the U.S. marketplace, they have to have a commitment to follow and adopt the same kinds of food safety procedures that are in use here. And as far as the government goes, there's nothing that can substitute for government coordination.

We do have some international bodies -- Codex Alimentarius -- that sets international food standards; the World Trade Organization and other organizations that are set up largely to enhance our -- to enhance harmony between the regulatory approaches in different countries. Too often, those bodies take a very long time to reach resolution. And frankly, too often, countries will erect trade barriers in the -- in the guise of food-safety standards to protect their local industries and keep products out. And that -- that's something that I think we need to be very aggressive in challenging, whether it's us that's erected those barriers or other countries that are erecting those barriers.

BESSER: David, perhaps you can comment on the -- on the European situation on that, the issues of trade barriers being used as a front for food safety, and how you integrate across an area as diverse as Europe issues of food safety.

HEYMANN: Well, it's a -- it's a very interesting issue in Europe, as you know, because some countries themselves didn't have regulatory procedures for foods until just recently.

In fact, I can remember when I was working with WHO one of our directors, a Spanish woman, was called back to Spain to set up a few -- a food safety agency in that country. So it's a really new concept in some countries. In others, it's not so new. But you know, Europe works in two ways. They work nationally through their national agencies, and then they work internationally within Europe under the treaty of the European commission. And how those things will play out, I can't say. Charles, my colleague, might be able better to say, but he's shaking his head also. It's very difficult right now in Europe because there's no one voice. There's many national voices and one global voice which doesn't yet have its credibility established to be the leader.

BESSER: Thank you.

In the back.

I have the ability to point in a general direction, and hope the person with the microphone will find them.

Hands up again for -- here we have in the front. There's a couple up in the front. Thank you.

QUESTIONER: I'm -- (inaudible) -- from industry. I make active ingredients. And I have a concern that I think the issue is actually much bigger, and we're much further away from the solution. The reason why I think it's much bigger is because the supply chain is so fragmented and so porous that there are a lot more pharmaceuticals that are falsified because the active ingredient was falsified and substandard. And when a falsified API gets into the legal supply chain, you can't tell.

And if its toxicity is acute, you get red flags very quickly because people die. If the toxicity is not acute, if it's a genotoxic impurity, it will take many years before people die. So I think that's a problem. And all the real issues of people dying, like heparin, gentamicin, diethylene glycol, they all fall under the category of substandard APIs that got into the legal supply chain. And I think this is a huge problem that the definition of falsified pharmaceuticals hasn't yet started to address. The European directive that's currently being discussed probably would not cause heparin to be under -- you know, to be considered a crime.

And the other comment I had that we're much further from the actual solution is that falsified pharmaceuticals in many countries in Europe are not a crime. And you take this international collaboration, the only country that I know that has a blacklist of companies that have misbehaved is NASDAQ in Nigeria. And you have companies listed in the NASDAQ list in Nigeria that show up in European databases as approved sources of active ingredients. Thank you.

BESSER: Would you like to comment on that, Paul? I mean, the issue of a drug that is toxic, which is the example I gave of diethylene glycol, where it just speaks out that there are people dying from taking the drug, versus the issue of a drug that's, for instance, subthereupetic, the malaria issue, where it may not be clear whether the individual is dying from malaria or dying because there's dealing with a substandard product.

ORHII: Well, to all this is a big problem. Especially, like you just pointed out, medicine is -- (inaudible) -- is manufactured in one country. You don't know where the active pharmaceutical ingredients came from. So you don't even know -- these are the complex issues that I think we're here to address today, because we just realized that the industry has become globalized that you cannot just go to the root of the problem. So I think this is a good start to discuss other things. It's a big problem and very complex.

BESSER: You had a question here in the front.

QUESTIONER: Thank you. Susan Dentzer from Health Affairs.

I have a question for you, Gary. You mentioned the diffusion of authority in the domestic U.S. context as between the FDA and the -- and USDA. I'm wondering if you think there is any prospect of dealing with that now that the president has raised the notion of bringing salmon, for example, under one regulatory authority, as he mentioned in the State of the Union address. Is that at all in prospect, is that an issue with respect to enforcement here on the U.S. side?

And then secondly, what are the estimates of what the resources would be needed for FDA to be able to fully enforce the provisions of the Food Safety Modernization Act? Because in the great scheme of things, these are probably rather small resources in the larger context, but yet extremely important in not enforcing food safety.

KUSHNER: Thank you. Let me answer it in reverse. And Carolyn or Dr. Hamburg, correct me if I'm wrong, but I think the estimate for enforcing the new food safety law is somewhere in the vicinity of $1.4 billion over the first five years. I don't know if that's a lot of money or not. It used to be a lot of money -- (laughter) -- but looking at -- looking at our budget and our deficit, it's a drop in the bucket. And -- but it hasn't been appropriated at all, to the best of my knowledge. So that's obviously a concern that needs to be addressed.

Now, as far as single food agency, which is really at the base of your question, President Obama is not the first one to suggest that. That goes back many administrations. And I remember when President Clinton first took office in his first term, Vice President Gore came out with a report called "Reinventing Government," in which it recommended a single -- the adoption of a single food agency. And the play on that was that there are 14 or 15 different agencies within the federal government that regulate food and that it's so -- and sometimes at cross-purposes.

However -- and I suppose that if we were starting out in 1906 and if we were starting new, it would make some sense for there to be one agency under which all regulation came, so that we can make sure it's consistent throughout the agency and under the same kinds of policies. But it's not 1906. We've had a regulatory system that has evolved in terms of not only the laws that are administered but the regulations, case law interpreting those regulations. And I -- just as a practical matter, I think the idea of a single food agency would be more than challenging. And some people use the Department of Homeland Security as an example: as all you're doing is really changing the names on a bunch of different offices.

What's more important is to have a central concept -- a central approach or philosophy, if you will -- that is shared by the agencies, and where the agencies are given the direction as well as the ability to coordinate on the regulation of the different products. But again, that's, I think, a practical answer. If it were 1906 and we were starting all over, then the idea of a single food agency might be feasible.

My recollection, by the way, is the FDA came out of the U.S. Department of Agriculture, and at one time had been the Bureau of Chemistry at USDA, and was broken off. It was in the '40s, or I think in the early -- earlier.

MS.

: Earlier.

KUSHNER: Earlier.

BESSER: A question over here.

QUESTIONER: Hi. My name is Tom Bollyky. I'm a fellow at the Center for Global Development, and thank the panel for these great comments.

My question is for Gary. I think you're right that the Food Safety Modernization Act has wonderful -- has advanced the ball tremendously on imposing HACCP-like standards, and the question will be their enforcement. You mentioned before that you need roughly $1.3 billion to enforce those authorities. My question is, given the current political environment and budget situation, that money may not be coming. What would be your prescription for a low-resource enforcement of those standards? Is it more -- higher civil or criminal penalties? Is it a higher standard of care, easing tort liability for these actions? Is it better targeting of those enforcement resources? If we can't -- if Congress doesn't appropriate that money, what's your prescription for a way forward?

KUSHNER: Well, first of all, as I -- as I've said a couple of times, I favor giving FDA the resources it needs to do its job. You can't expect an agency to take on new responsibilities when it's already stretched very thin in terms of its resources.

But putting that aside, there is almost -- I think implicit in your answer is -- or in your question, is that in the absence of FDA enforcement the rules and regulations won't be followed, and that's simply not true. Food manufacturers, food marketers, have a vested commercial interest, if not a moral obligation, to make sure that the foods they sell are safe. If there's an outbreak in peanuts, for example, number one, it taints all peanut-based products, regardless of who makes them. But number two, so many products, for example, in the case of peanuts, utilize peanuts, peanut paste. So the number of recalls when the Peanut Corporation of America incident happened was -- the rippling effect was tremendous.

And food companies don't want that. They don't want it for commercial reasons. They don't want it because they protect those brand names. Food companies want food to be safe. So they are already -- that's why so many of them have adopted HACCP voluntarily or most of them have adopted some form of HACCP voluntarily.

There is going to be a small number of companies that are not going to follow the law and -- or don't know how to follow the regulations, and irrespective of FDA resources, we're going to -- we're -- that problem's going to be -- always going to be there. And I think the food industry companies simply have to do the best they can to, again, know their suppliers and make sure that they've got programs to ensure the safety of their products.

BESSER: Question over here.

QUESTIONER: Good morning. I'm Abdul Hakim (sp). I'm a former Senate staffer. Part of my question was really answered, but it actually raised another question. What do you see as hurdles as far as the U.S. consumer is concerned or the impact on the U.S. consumer in the quest for increased oversight, you know, in -- and safety regulations, in that quest? I mean, how do you -- how do you see -- what are some of the hurdles that will be experienced by the U.S. consumer?

And also, on the global scene, what is some of the economic impact that you foresee on other individual countries? And that's in light what Dr. Hamburg was mentioning, and it was also brought up as well that we ourselves have limited resources and, you know, we have deep pockets. So I mean, what would you see as some of the challenges faced by some of the other countries?

BESSER: Let's put a hold on the consumer hurdles, because that will be part of the next panel that's coming up.

But Paul, to ask you, in terms of some of the hurdles you face in Nigeria to implementing and enforcing broad regulation and control over drug and food supply, how many of the issues are internal to Nigeria that you can deal with as a country and how many require much broader cooperation and financial input and support from the global community?

ORHII: Well, most of the issues are interrelated. The staff strengths -- we need finances to have adequate staff strength, the kind of level that -- the -- of training of the staff. So all these are interrelated. The finances are very important. That is, we need international cooperation to be able to be more effective; the training of the staff; and then maybe to have adequate equipment, the kind of equipment that we need to be able to be more effective in monitoring these products. So I think everything is interrelated.

BESSER: Thank you.

In the middle.

QUESTIONER: (Inaudible) -- just going back to Susan Dentzer's question about a single food safety agency in the United States, I think the analogy is not really Homeland Security. I think more the issue is something that Europe faced in the wake of mad cow disease, and that is in this country with USDA, we have an agency that is both responsible for promotion of food as well as for food safety. Isn't that an inherent conflict of interest that needs to be addressed?

HEYMANN: You know, I've heard that argument made many times over the 30-plus years that I've worked as a food industry lawyer, and I just never -- candidly, I never saw much credence in that. The -- there are different agencies that are involved in product promotion within USDA, and those that are in -- responsible for ensuring food safety. The Food Safety and Inspection Service -- anyone I've ever dealt with at that agency has been bound and determined to make sure the product is safe and that if it bears the mark of inspection, that it has been inspected and has met USDA standards. I've never encountered a situation where a FSIS inspector or even the people who are at the head of that agency had to weigh the impact on the marketplace, necessarily, of our causing the product to be recalled or not. I just don't see that. I think that the -- that that agency has the integrity to do its job.

So I don't -- I've never understood as a conflict of interest. But if it is, then you establish a single food agency, but if -- only if it were realistic. And as I mentioned, I just don't know where you'd start to do that, and I don't know that the time and resources that would go into trying to establish a new agency would be effectively spent. Those resources could be better spent by better coordination and communication between the agencies that already have regulatory jurisdiction.

KUSHNER: Just to reflect on your -- on your comment, when I was still at CDC -- and it was before swine flu, when we were focused on bird flu -- there was a lot of effort on surveillance of birds. And I remember one conference call, and it had folks on from FDA and Department of Interior and Department of Agriculture. And we were talking about what the public health messages should be to people. And we were looking at bird migratory routes and surveillance in Alaska, and we were talking about risk and what people can do to protect themselves. And the message from USDA was: Eating chicken is still safe. And so it does kind of play into some of the internal tension over --

MR. : (Chuckles.)

KUSHNER: -- that I've always found a little incongruous, of a department that does contain and tries to put fire walls between the groups that are promoting meat exports and those that are assuring that the food supply is safe.

BESSER: Yes, here.

QUESTIONER: I'm Rob Cortel (ph) with Intelex, and we do risk analytic solutions. And among other things, FDA is a client, on their PREDICT system.

This is about scale. And what we know is that some countries actually create a large part of the problem. I was in Hong Kong about a year and a half ago, right after melamine. And I was told that many of the middle class there refused to buy imported food from mainland China because of their fears about controlling food safety there. And we know that melamine really was something that totally originated, almost culturally, out of China.

How do you deal, in terms of scale, with a country like China which really doesn't seem to share all the way down the same values and restrictions and commitment to food safety?

BESSER: David, let me throw that your -- that easy question your way.

MR. : Thank you. (Laughter.)

HEYMANN: It is an easy question. You know, it's only by not giving up that the international community can succeed. And there are examples of success in all areas, and there can be examples in this. But it takes -- it takes every effort of every country possible. The FDA is doing their part by putting people there. Other countries are setting up norms and standards. But the issue is, when there is an opportunity, show that that was wrong, and show it in a -- in a very important way and move the people on a bit more.

But it's a very difficult issue to do. And, you know, influencing people is very important, but it has to start at the very bottom. We can't always think that we'll be able to impose regulation. I remember speaking with a minister in one country. And that minister said: I will never set up another regulatory agency, because I don't have the way to enforce my regulation, and therefore it opens up a whole new area of corruption.

So it's a very difficult issue from the very bottom. And sometimes it works better if you begin at the top with a framework but at the bottom to help the people understand the importance of safety and let them deal with these issues. So it's -- it has to be a multi- pronged approach.

BESSER: At the consumer level, do you think that the consumer would be willing to pay for more expensive food and drugs that would be required to -- if you were going to have a regulatory system that was ensuring safety?

HEYMANN: You know, that's -- it's a good question. I can't answer that. But I expect that if a community understands that their children are at risk, they will invest in what they need to to make sure that their children are not a risk. And we've always thought that we can come from the top down and regulate them. We can't. There has to be a demand created, as there is for everything else. And that demand comes from NGOs, from education in school, from a whole series of people, which can work and pull down from the top what support they can get.

(Word inaudible.)

QUESTIONER: Well, this has been a marvelous first panel. You folks are just spectacular.

I wanted to ask a question that harps onto two prior questions here. One of the trends that really leaps out when you start analyzing what's (growing/going ?) on on the drug side is that increasingly, the active ingredients that one can purchase, frankly, on the Internet, with no quality control of any kind, are coming from either India or China.

So we started out politely going to this direction, but let's just go there. (Laughter.) And it's kind of shocking what -- one website alone offered 20,000 active ingredients from a couple hundred manufacturers in India.

And so the question I'm really getting at is how can we go into a world where we're seeing an increasing concentration of the raw ingredient production coming from two key countries, neither of which have very strong domestic regulation, where then does the burden shift to guarantee that that active ingredient is what it claims to be, that it has no contamination and that it could be safely formulated for the next step?

BESSER: Paul, I'll start with you. You've said that 60 (percent) to 70 percent of the drugs that are sold in Nigeria come from India and China, let alone other active ingredients and other products.

What would it mean to Nigeria if, say, the supply from China and India was cut off because it's not meeting its stringent standard?

ORHII: Well, that is why I have resisted the availability of quality pharmaceutical products manufactured in Nigeria to some extent. One of the -- (inaudible) -- manufactured locally is a national security matter because I cannot imagine if the supply is cut off from both India and China, I don't know what I'm going to do with one -- (inaudible).

And so we have insisted that we have to start developing our own local manufacturing capacity.

We have approached both -- we have dealt with India and China and there are two different approaches. India is not willing to work with us to find solutions to some of these problems. When I tried to engage the Chinese food and drug administration, their answer was just very short. They said it is the responsibility of the recipient country to ensure the quality of products coming into its own territory. It is not their own problem. They have to protect their own citizens.

I have to go maybe even -- (inaudible) -- the (Senate Committee on Health ?) to engage the China chamber of commerce. There, we've begun to get some response, and that is what led at present time to the arrest and conviction of the six -- sentencing of the six people that were engaging in counterfeit medicine to Nigeria to death.

So China is less willing to take on the responsibility of ensuring the quality of products leaving its territory. India, on the other hand, I have had a different response. In fact, they have worked with us and -- (inaudible) -- where if we get a fake product that comes from India, if we can prove that that it came from India, then the person who gave us information that led to the interception of that product gets a reward up to $2,000.

So I think that is a positive step. If we want to continue to work on that, to see how far we can go.

BESSER: David, from a U.K. perspective, is this something that the U.K. can have impact on a bilateral way with the quality coming from India and China? Or this is much bigger than that?

HEYMANN: This is an issue of two simple words, expected and respected. And it works. It works if you can make sure that everyone understands what's expected and what's respected.

Now, I'll give you an example of this. Back in 2003, I think, many of you remember this SARS outbreak, which originated in China. This was a very difficult time because countries were hiding lots of information because when they reported, they would have tourist sanctions, they would have importations -- were banned, a whole series of things. And so in the analysis of what was going on in China where a country would not report, it was decided that the only way that reporting could be guaranteed was if the norms changed. It's expected and respected to report.

And so the director-general of WHO actually went to the Chinese publicly, accused them of not reporting and it changed the situation and it has changed the situation globally. People are reporting H5N1. They're reporting other things. This is the same issue, Laurie (sp), with food or with medication. You must take the example. You must accuse somebody who is respected, who does it in the right way, must accuse that the norms are being broken and that it's expected and respected and then other countries must come in behind and say, yes, we agree.

BESSER: Well, I always love to end a panel in the middle of a great conversation because it means that people will come back for the next panel.

I want to thank the three members of the panel for their comments. (Applause.)

The next -- the next panel will start promptly at 10:45. So there's a very short break. Please get back to your seats before that starts so it doesn't interrupt the flow of that session. Thank you.

####

®FC¯END

®FL¯

.STX

(C) COPYRIGHT 2011, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.

NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR E-MAIL INFO@FEDNEWS.COM.

THIS IS A RUSH TRANSCRIPT.

-------------------------

RICHARD N. HAASS: Okay, if I could ask people to take their seats, including Ms. Hamburg.

Well, good morning. Welcome to the Council on Foreign Relations. Welcome to this temporary respite from the conversation about Egypt.

For those of you who are new to the council -- and I expect there's a few of you here who are -- we are an independent, nonpartisan membership organization. We're also a think tank and a publisher. And we are dedicated to increasing understanding of the world and the foreign policy choices facing this country.

This year happens to be the 90th anniversary of the Council on Foreign Relations. And all year, among everything else we do, we'll also be examining domestic issues, from education and immigration to debt and deficits and infrastructure, that have impact on foreign policy.

Today's symposium, as you all know, will look at food and safety issues -- again, another example of how the foreign policy agenda has dramatically evolved over the years beyond what you might call classic issues of war and peace.

The last 10 years has seen skyrocketing trade in food and drugs. The statistics are impressive. From 1990 to 2008, global food imports rose in value from $350 billion to over $1 trillion.

And globalization's had an even more significant impact on the pharmaceutical market. Today, drug manufacturers located outside the United States and Europe command 80 percent of the global market, up from 10 percent just two decades ago.

In many ways, this is a good-news story. Consumers enjoy dramatically improved access to food, especially meat and dairy products. And the rapid growth of pharmaceutical manufacturing in the developing world has not just expanded access to the drugs, but it's also brought income and skilled jobs to various economies.

But with this success, as you all know, has also come significant challenges. Regulatory organizations at the national level have had real trouble keeping up with the dramatic rise in the trade.

The Centers for Disease Control in Atlanta estimate that nearly 50 million Americans were sickened by contaminated food and drink in 2009 -- that's one out of every six Americans -- and that 3,000 died. And in Asia, Africa and Latin America, up to 30 percent of the medicines on sale might well be counterfeit, leading to countless deaths either as a direct result of the medicine or because the people did not get the medicine they in fact needed.

So we are very pleased here at the Council on Foreign Relations that we can offer this space for this symposium today to explore these issues in depth and to begin the process of developing policy recommendations. We're going to do it in thirds. The first panel led by ABC's chief medical editor, Richard Besser, will consider the recent history of the food and drug trade and examine the scale and complexity of the market. Panel two, moderated by Susan Dentzer, editor -- who edits Health Affairs -- not to be confused with Foreign Affairs -- will discuss the challenges faced by domestic regulators as they try to oversee an internationalized market. And the third of three will be led by our own Laurie Garrett, who's the council's senior fellow for global health and has done so much to get us involved in this set of issues, and I think to increase international awareness of this set of issues. And Laurie's panel will explore a variety of ideas and how the international community might best address this set of problems down the road.

Let me just make a few housekeeping announcements, so no one else does. This meeting is on the record, so what you can -- what you say can and will be used against you. It will also be recorded for posterity and it will live much longer than anyone in this room.

We're teleconferencing this meeting to our members in the nation's capital. But for all that we spend on this technology, it can easily be interfered with by your cell phones, so if you would be so good as to turn off your BlackBerrys, your iPhones and anything else. Since this is a meeting on health, we will make an exception for health-related devices, pacemakers and the like -- (laughter) -- but last I checked, cell phones do not fall in that category.

We are grateful to the Robina Foundation for their continued generous support of this -- of this program. It's part of a much larger effort looking at international institutions and global governance.

Last but not least is our initial speaker -- for those of you who don't know her, Margaret Hamburg; for those of you who do, Peggy Hamburg -- who's commissioner of the United States Food and Drug Administration. She is the 21st commissioner, if my math is right. And before she assumed this position, Dr. Hamburg was a vice president and senior scientist at the Nuclear Threat Initiative. She -- I will allow her to explain this sequencing of career. And she's also served as assistant secretary for policy and evaluation in the Department of Health and Human Services. And here in New York, she was commissioner of the Department of Health and Human Hygiene. And most important of all, the capstone of her career and the centerpiece of her resume, she is a long-standing member of the Council on Foreign Relations.

Peggy, welcome back to the Council on Foreign Relations. (Applause.)

MARGARET HAMBURG: Well, thank you very much. And it really is a pleasure to be here this morning. And I am a great admirer of this institution and a long-standing, proud member. And it's always nice to be back in New York City and to see my former mayor, Mayor Dinkins, who gave me my first real job in public health. So thank you very much, Mayor Dinkins. And I would say he epitomized during his tenure as mayor and mine as health commissioner what can be accomplished when political leadership and public-health needs and priorities actually come together. And he gave me enormous support when we put together our program to deal with the resurgence of tuberculosis, including extremely high levels of drug-resistant tuberculosis. And in just a few years time, applying simple public-health principles, we were able to turn the tide on that epidemic. So wonderful and (unexpected ?) to see you here, David.

Some of you may be surprised that the Council on Foreign Relations is addressing issues of food and drug safety and regulation, and it's a little bit off the core agenda for many meetings here. But it is highly appropriate, much needed, and very, very timely. And I really an delighted and grateful that the council has put this on the agenda and, of course, thank Laurie Garrett for helping to make this possible.

This event grew out of a series of conversations that Laurie and I had over a period of many months after I became FDA commissioner and really came to understand the new realities of food and drug regulation brought about by globalization -- realities that have really redrawn the path that food and medical products navigate to get to our homes, and realities that really make each and every one of us increasingly vulnerable and realities that challenge virtually all nations.

Today, we hope to start a conversation that will be continued in broader foreign policy and other circles and by next year, perhaps, even reaching the level of the G-20 for discussions. It's that important. We hope that, together, our speakers can communicate to each of you the scale of our challenge and the steps we must take to meet the unique public health demands of our globalized world, and to assure health, safety and security of people and nations all over the world.

We cannot afford to ignore these issues. Certainly, as FDA commissioner, I spend a lot of time grappling with them. They have major implications for how we fulfill our mission to promote and protect the health of the American people.

And in this context, let me tell you just a little bit about the agency and why this all matters so much. The FDA is responsible for overseeing the safety and manufacturing quality of food, drugs, medical devices, vaccines and biologics, cosmetics, dietary supplements, animal drugs and food, radiation-emitting devices and now, for the first time in FDA history, tobacco products as well. These products account for somewhere between 20 (percent) and 25 percent of every consumer dollar spent in this country. And I think with the possible exception of tobacco, we can safely say that these are products that people really need and they really rely on in fundamental ways just about every day. So as you can see, the scope of our responsibilities is enormous.

But during the early days of the FDA when, in fact, most of our authorities were actually put into place, the world was very different. Back then, most products that FDA regulated were domestically manufactured and really quite locally used. And for years, when it came to importation of foreign products, our activities went toward safety and quality, and to protect public health, focused on catching problems at the border. And then we began some limited some overseas inspections.

But those days are long gone. The realities of global economic conditions, as well as innovations in refrigeration, transportation and communication, have enabled and spurred consolidation and globalization. This has resulted in a striking rise in imports of foods, pharmaceuticals, medical devices and even, to some extent, biologics.

Today, the world in which FDA-regulated products are discovered, developed, processed and distributed is much, much bigger. FDA's traditional model of manufacturing site inspections and border examinations is simply not adequate in today's transformed world. In 2010 alone, FDA estimates that more than 20 million import lines of food, devices, drugs, cosmetics and tobacco arrived at U.S. ports of entry -- more than a three-fold increase in regulated imports from just a decade ago. Regulated products come from more than 300,000 facilities in more than 150 different countries all over the world, and they come into the United States through more than 300 different ports of entry.

At the same time, the supply chain from manufacturer to consumer has become more and more complex, involving a web of repackagers and redistributers and making oversight increasingly difficult. The numbers are staggering. In the food realm, about 40 (percent) or 45 percent of fresh fruit and produce and over 75 percent of seafood that we eat here in the United States actually comes from other countries. And for medical products, a stunning 80 percent of active pharmaceutical ingredients in our drugs come from outside our borders and about 40 percent of finished drugs themselves.

And, of course, much of this is positive. We can, for example, have fresh mangoes and strawberries all year round, and it probably does help to keep costs of some drugs and devices lower.

But there are also very serious, often negative implications. The global supply chain has led to the distribution of unsafe or ineffective products and harm caused by economic adulteration and intentional fraud.

I know that you'll soon be hearing directly from others, for example, about the tragic toll of the counterfeit trade in many parts of the world. But really, for nations large and small, the global supply chain presents many new national and international security threats.

In recent years in this country, we've experienced events, some clearly deliberate and some unintended, which have had serious consequences for life, health and safety, as well as for trade, commerce and the economy, ranging from contaminated heparin, a blood- thinning drug, to counterfeit glucose monitor strips and surgical mesh, to melamine-tainted vegetable protein and dairy products, and salmonella in peppers and other food-borne outbreaks, to name just a few.

And the world is poised for further globalization. There are macrotrends at work that are impacting global commerce, and the cumulative effect of these trends will ensure that 10 years in the future, the world will still be a very different place. Undoubtedly, the pressure to reduce costs and increase productivity will lead companies to continue to move manufacturing activities to new and different locations, looking for cheaper sites and global supply chains to reduce production costs.

And countries, like China and India, that already produce many of the food and medical products that Americans use will likely in the future not only produce these goods but will also be important centers for innovation, inventing new groundbreaking products that Americans will want to buy, which means that will have to continue to evolve to meet these new demands.

And we've already begun to do so. In the U.S., the Food Safety Modernization Act, which was signed into law earlier this month, calls on the FDA to put into place a significant new approach that among other things promotes a new level of accountability for all entities that are involved in the supply chain, from farm to fork. And although it's not perfect and we certainly do face challenges, especially including resources, it's a truly significant step in the right direction. Congress has also introduced a similar bill for drugs that would bring sorely needed modernization to our authorities, importantly in the global sphere.

But even with that progress, globalization presents huge and growing challenges. Regrettably, another public health crisis like heparin or melamine seems inevitable, unless we are able to truly forge changes in how we ensure the safety and quality of food and medical products for our citizens.

And at FDA, we've realized that in order to protect American consumers, we must work globally, because the products that our consumers use are no longer simply American products, they're global products. And we know that our counterparts in other nations face similar challenges for their citizens.

This is a moment for leaders around the world to create a new vision of how we regulate. We have a shared interest in assuring the safety and quality of food and medical products, and a shared responsibility for safety and quality. By working together to monitor and to improve safety and quality globally, we will benefit all of the citizens of the world. What I envision for the future is a public health safety net for consumers around the world that is created, supported and maintained by a global alliance of regulators, working closely with all our critical stakeholders.

Some of the work for this is already under way and has been for several years, as regulators from many nations have begun to collaborate. But these efforts need to be taken to the next level. We must ask ourselves how we can weave our various efforts into a coherent global system of oversight and safety. This will mean working together toward greater coordination and enforcement of regulatory standards across nations to ensure safety and quality, regardless of where a product is produced. We need not always apply absolutely identical methodologies, but we all need to work together toward the common goals of product safety and quality, and to harmonize approaches.

As part of these efforts, regulatory authorities, especially those with the greatest experience and resources, must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems, so that they can produce food and commodities that are safe, wholesome and meet international standards.

Those with the greatest experience and resources must work together to help build regulatory capacity in those countries that are more resource-poor and with still-developing systems so that they can produce food and commodities that are safe, wholesome, and meet international standards.

This is surely in our vital interest, but it will have broader benefits for public health and economic development within those countries as well.

And in addition to creating a global coalition of regulators, we must create a modern means to share data globally, and we must use those data and advanced analytics to proactively prevent and identify problems. Detecting and preventing global problems demands global intelligence-sharing and data mining.

Also, as the new food-safety law recognizes and requires, we must enlist public and private third parties as well as industry and other organizations to increase the global safety net. We must do this for food and medical products. And this is absolutely essential. Regulators cannot and should not do it alone.

Finally, we must create the momentum in the United States and in the global community to make these changes real and sustainable. These changes must begin now, but they will take time and the support of many people to fully implement. A strong global safety net will be challenging to weave, but we can do it together.

So let us continue the conversation today, and as regulators, consumers, academics, industry leaders -- (audio break).

MR. : (In progress after audio break) -- I want to welcome the audience who are out there in Washington, as well as on the teleconference.

MS. : Okay. They're connecting me, so --

MR. : And I don't want to use up a lot of time going through -- (audio break).

RICHARD E. BESSER: (Audio break) -- prepared for you, so we're going to dive in.

Let me introduce the panel, though, starting from the far end: David Heymann, who is head and senior fellow of the Center on Global Health Security, Chatham House, in the U.K.; Gary Jay Kushner, who's partner and leader in food and agricultural practice area at Hogan Lovells; and Paul Orhii, who's the director general of the National Agency for Food and Drug Administration and Control in Nigeria.

We're going to have a conversation up here for the next 25 or 30 minutes, and then open it up to members and guests to join in the conversation and ask questions.

So diving in, first talking about the drug side, in 2006 I was head of emergency response for the CDC. And we received a call from colleagues in Panama, and they were facing a situation there where an unusual neurologic syndrome was presenting to hospitals. And they wanted to know what was going on, and we sent a team down to work with them on that investigation.

And the lab at the CDC detected ethylene -- diethylene glycol in cough syrup that was being used throughout the country.

As the Panamanian government explored that situation further, they had a sense of the scope of the problem. Two hundred and sixty thousand bottles of cold medicine were contaminated with diethylene glycol. There were 100 confirmed deaths and thought to be far more than that in terms of the overall range of the problem.

The syrup had been manufactured in China and it had been certified as 99.5 percent pure glycerin. That was what was added into it.

That counterfeit glycerin had passed through three trading companies on three continents, not one of them had tested the syrup to confirm what was on the label. This isn't an isolated incident; there have been other problems with diethylene glycol in glycerin.

So I want to start by turning to David, who has worked in public health at WHO, at U.K., and at CDC. You convened a conference in December, a very important meeting at Chatham House on counterfeit drugs. And so that we're all on the same page, if you could first explain, what are counterfeit drugs? How do they vary from fraudulent drugs, of optimal drugs? And how big is this problem?

DAVID HEYMANN: Well, thanks, Richard. Yes, we did have a meeting at Chatham House in London because for the last 30 years, WHO has had a very difficult time in dealing with counterfeit drugs because of definition. And it's clear why this is a problem if you think about counterfeits. A counterfeit handbag, a counterfeit T-shirt doesn't really cause any harm; it's just -- it causes harm to the producer, but not to the user, whereas counterfeit drugs can cause harm to the user. And what's happened is that the discussions at WHO, trying to find a definition, have gone around many different words and never really focused on any one in particular. Those words are "substandard;" there are other words such as "falsified" and finally as "counterfeit."

And so the definition has been difficult. But substandard is very easy to understand. Substandard drugs and vaccines are those that don't meet regulatory requirements in the country in which they're produced or in the country in which they're imported. It's very easy to understand that. And it happens to both generics and to patented drugs as well. For example, here in the U.S., if you remember a few years ago, influenza vaccine came in from Europe and was substandard. This passed through the regulatory agencies in Europe and also came into the U.S., and it's a problem for industrialized country regulatory agencies.

Think of that problem in a country where biotechs are trying to set up their own production and development and don't have a regulatory agency that can help them make sure they have good products. If it happens in industrialized countries, what will happen in developing countries? But as Peggy said, there are ways that that can be dealt with. It can be dealt with bilaterally, by exchange and partnerships between regulatory agencies, or multilaterally through the World Health Organization.

So substandard is a very easy concept to understand, and this was one of the three concepts that was agreed at the Chatham House meetings. Substandard do not meet national regulatory requirement.

Under substandard, there are really two sub-classes: there's a falsified classification and there's a counterfeit classification. These are substandard drugs because they haven't met national or other regulatory requirements. But a counterfeit drug is one that's purely involved with trademark, and because it's involved with trademark, it's not as much a public health issue as an issue for the World Trade Organization and the World Intellectual Property Organization, which deal with counterfeits and with trademark issues. It's a criminal offense. It has public implications, but there is a framework within which that can be handled.

The framework that's missing is that framework for falsified medicines. These are medicines like in China, medicines that were produced with false ingredients maybe unknown to a very few people, but known to someone. It was a deliberate intent, as is counterfeit, a deliberate intent to falsify a medication. Those falsified medications, of course, are substandard because they don't pass through regulatory requirements.

So those were the three different definitions that came out of our meeting at Chatham House and which we hope will help WHO now move ahead with the definition. We had many people at this meeting.

We had WHO, the head of the the drug group at WHO, we had World Trade Organization, we had WIPO, we had Interpol. We had a whole group of people. And we hope that these three definitions, which are fairly clear to everybody, would be the ones that can help move forward in a public health way the discussions on counterfeit drugs.

BESSER: Great. Thanks very much. You -- it said that the disease that may be impacted the most by this may be malaria. A study in 2006 in the American Journal of Tropical Medicine and Hygiene found that 68 percent of anti-malarial drugs found in Laos, Myanmar, Vietnam and Cambodia did not have the correct amount of drug in them. And WHO estimates that as many as 200,000 lives that are lost each year to malaria may be preventable just by dealing with the issue of substandard drugs.

I want to turn to you, Paul. You gave a speech last year to the parliament in Nigeria. You've been a tremendous crusader in the area of control of counterfeit drugs. And you said that the culture of chasing fake drug dealers around the country is not sustainable in the long run. Sixty to 70 percent of essential medicines in your country are brought in from India and China. And you were calling for a more comprehensive approach.

Can you talk to us about the scope and scale of the problem of counterfeit drugs in Nigeria?

PAUL B. ORHII: Thank you. (Inaudible) -- let me use this opportunity to thank the Council on Foreign Relations for organizing this forum. This is a very, very important forum. I also want to use this opportunity to thank Dr. Margaret Hamburg and the U.S. FDA for the opportunity that they give developing countries, the -- (inaudible) -- authorities in developing countries to build our capacity. Been training some of her staff, and we're getting better and better. So I want to use this opportunity to thank the U.S. FDA and Dr. Hamburg for that.

I say the US, the culture of chasing counterfeiters within a country is not sustainable in the long run, because the problem has become much worse than before. In 2001, the instance of counterfeit medicines in Nigeria rose to over 40 percent. More than 40 percent of the drugs in Nigeria, especially anti-malarials, essential medicines, were counterfeits.

At that time, in developed countries, like the U.S., and Europe, they had less than 1 percent counterfeits in their systems. Now the problem has become much worse. The Pharmaceutical Security Institute and the -- (inaudible) -- that the counterfeit medical -- (inaudible) -- constitute about 35 to 200 billion business dollars a year. So you see that most of these counterfeits would be heading to countries with very weak resistance.

And even in Europe, advanced as it is, counterfeit medical markets have been found to -- is worth about 10.5 million euros. So this is scary. When we look at it, we budget how countries like ours with weaker regulatory systems can cope.

(Inaudible) -- is charged with the responsibility of regulating and controlling the manufacture, distribution, sale and use of all drugs, foods, cosmetics, medical devices, bottled water and many other products. But we are grossly understaffed for the kind of vast territory that we're called to protect and the kind of huge population. Our population is a -- what, 150 million people that we're called to serve. The borders are vast, poorly managed because of lack of funds. And even when we can man them, we do not man them as appropriately as we would have wanted to to be able to stop -- (inaudible).

I'll just give you an example. Only in 2009, we intercepted a consignment of sick medicines, more than 700,000 courses of anti- malaria drugs coming from China. They were labeled as made in India. But we were able to observe the -- (inaudible) -- from from China, and we took the matter up with these two countries, resulting in the arrest of -- and sentencing to death of six persons in China that were related to this manufacture and shipment of that consignment Nigeria.

We also were -- (inaudible) -- in Indian parliament, and then the big -- middle law making it a criminal -- punishable by lifetime jail term, the manufacture and distribution of -- (inaudible) -- products.

But our law is also very weak. And so we have now tried to review our law and have a member of parliament from Nigeria -- he also with us, will be submitting that law to them to help us pass the law so that we make more stringent punishments -- lifetime jail time, confiscation of assets -- in situations where we can determine that the fake product proximately caused the death or severe bodily injury of the victim. We want to be able to use some of the confiscated assets to legally compensate the victims.

We want to build international -- stronger international cooperation, because we cannot do it alone. That is why a formula -- this is (especially ?) important. And we are very, very happy that the U.S. and also the USDA are now paying attention to this, because it -- before, it was considered to be a problem of the developing world. And not much attention from the developed world was paid to this. Well, now we want -- we are very happy that we are now having stronger partners with this U.S. -- you cannot now have a stronger partner than the U.S. come in to take on this problem.

We are very excited. We want to -- (inaudible) -- that Dr. Hamburg mentioned here. We want to have -- build -- we're leveraging on cutting-edge technology to fight the problems. We're -- introduce new technology to fight the problem. And we're building both national, international and other regional cooperation -- (inaudible) -- fighting counterfeit medicine.

So the culture of just pursuing counterfeit medicines within your territory and trying to eliminate them is no longer sustainable. Officially, with the recent crackdown on illicit drugs, most of the former drug barons are now diverting -- they have now diverted their resources to manufacture and diffusion of counterfeit medical products. So the program has become more globalized, more militarized and more sophisticated. So it needs international cooperation, very strong international cooperation -- (inaudible) -- what we are doing now to be able to fight counterfeit medicines.

BESSER: You know, this is an issue that has an impact on your life. An attempt was made on your life this fall. And, you know, we talk about these issues in public health as health issues. Is there enough of a connection between the public health community and the legal community to take this on as a criminal issue and not just a health issue?

ORHII: It is a public health concern, but it's also a criminal issue. So I think we are working together with the legal system to try to see how we can impose stiffer penalties on people who engage in counterfeiting.

Of course, in Nigeria, it is very dangerous. I had a situation where we had sent our staff out to all these bakeries to make sure that they were not using potassium bromate, which has the potential to cause cancer.

I mean, one of these bakeries where staff found the banned potassium bromate, the staff of bakery descended on our staff, beat them to the point where they lost consciousness, bundled them into a vehicle, poured petrol on that vehicle and were about to set the vehicle ablaze with our staff inside when the police came in time to save them. So this is a very dangerous engagement in our countries.

But I think we are determined. The government is giving us enough support to be able to do this. We are getting international support now. And I think we will be able to solve the problems.

BESSER: Our session this morning isn't just focused on drugs. It's also dealing with the issue of globalization of our food supply. As Peggy Hamburg was saying, you can have a mango all year round in New York.

I started my career at CDC in foodborne disease and recall outbreaks of cyclospora from raspberries from South America, cholera from coconut milk from Thailand, and most recently the peppers/tomatoes that really cost the tomato industry in the U.S. a couple billion dollars from salmonella.

Right now, there's an issue of dioxins in Germany. And 4,000 farms were closed in Germany when it was discovered that there was dioxin-tainted industrial fatty oil mixed in to animal feed. That led South Korea to shutting off the importation of meat products from Germany; and now in the European community, concern over some eggs from Germany that are suspected of being contaminated.

So I want to pull into the conversation now Gary Kushner and ask you to comment on the scope and scale of globalization of food.

GARY JAY KUSHNER: Well, thank you. That's obviously at the heart of this program. And I should say, first of all, globalization is real, but it didn't just start. The international -- the growth of the international food market's probably been rising for the last 20 years. It's just now -- probably I would say an all-time high, and there are a number of reasons for that as Dr. Hamburg pointed out and Richard just pointed out as well. Consumers do want to have fresh products, fresh produce in particular, 12 months of the year. And we have the ability to provide that. But that means importing products from a number of different countries.

Food manufacturers recognize this. Many of them have a multinational focus. Many of them have plants in other countries and distribution centers in other countries. But the reality is that in order to provide the array of products that consumers expect does require importation, and we're now importing foods and ingredients from all over the world. And in some parts of the world, the controls are much stronger than they are here. And even where you've got regulatory controls, the key is enforcement of those controls and that also varies quite a bit globally.

I believe that the new Food Safety Modernization Act is a very, very important step forward in helping to harmonize regulation and ensure the safety of products coming into the United States.

Many of you may realize or may not know that food is regulated by a lot of different agencies, but primarily by the U.S. Department of Agriculture's Food Safety and Inspection Service and the Food and Drug Administration. FDA has regulatory authority over all foods, primary regulatory authority over all foods with the exception of meat and poultry. And meat and poultry, historically, has been regulated by the Food Safety and Inspection Service. There are historical reasons for that. I should say, though, meat and poultry is under what is called continuous inspection, that is, that the meat or poultry product may not be distributed in the United States unless it has been inspected or at least have the presence of a USDA inspector in the plant. And you'll see on a meat or poultry product, you'll see the stamp that says inspected and passed. And the Department of Agriculture is very jealous of that stamp because it's their Good Housekeeping stamp of approval.

The FDA on the other hand -- and I think the last time I looked, the USDA has at least 7,000 inspectors and perhaps more. But FDA is expected to regulate all of the rest of the food supply with far less in the way of resources. And the authority that FDA has or historically has had has been much less different than the USDA, yet so many of the ingredients that are coming into the United States that are being imported are under FDA's regulatory jurisdiction, which presents a real challenge.

Now, I will say that under the food modernization -- the Food Safety Modernization Act, importers will now be required to verify that the products that they import into the United States do meet the same safety standards that will be -- that are required of them in the United States, and that is a major step forward. Manufacturers in this country, particularly the larger national manufacturers, already have programs in place to ensure the safety of the products that they produce, as well as the raw materials that they use. And it's historically, food manufacturers have employed what's called the hazard analysis and critical control points program. The acronym is HACCP and it's referred to as HACCP. That has been mandatory for meat and poultry products since the early '90s, and it's been mandatory at FDA for a limited number of products, notably seafood and pasteurized juices.

Also, I would throw -- (inaudible) -- canned foods regulation into that same scope of regulation. But for the most part, products under FDA's jurisdiction have been manufactured under HACCP that has been voluntarily employed by the food industry. And if I want to digress just for a second because I'm a real believer in HACCP, HACCP was not developed by the government; it was developed by the food industry in the '60s basically to keep food as safe as possible for the space program. You can imagine, an astronaut with a food-borne illness in a little capsule would not be a terribly pleasant experience. (Scattered laughter.) And once it was adopted, more and more food companies designed food safety assurance programs based on HACCP principles.

So it's been a very, very good concept. Now, although the Food Safety Modernization Act does not call it HACCP, the controls, the kind of control, the principles on which this new law is based effectively means mandatory HACCP, and I, for one, and I represent the food industry, think that that is a very, very good step.

The challenge now for FDA will be enforcement, and remember as I mentioned, USDA products are inspected by our -- meat and poultry products are inspected by USDA, which has significant appropriations every year to support that inspection program. FDA now has the burden of employing similar controls on the rest of the food industry, yet Congress has not yet appropriated the money that FDA needs for that, and that has got to come.

There are some aspects of the new law that are self-executing. That doesn't mean they'll be enforced, but it does mean that companies will employ those because that last thing a food company wants is for its products or a competitor's products even to cause food-borne illness and generate adverse publicity about the whole product line.

It's important that the products be viewed as safe for consumers, so everyone has a vested interest in that. Many of the new provisions in the law -- of the new law, as I said, are self-executing and that's important. But other aspects, including FDA's required increased inspection of imported products and even inspection or verification of exporting facilities, is going to take money, and FDA simply hasn't been given that money yet.

So I think that's something that consumers, industry, everyone that needs to encourage Congress to do is to appropriate adequate funding for the new law to be implemented and enforced effectively.

BESSER: Thanks very much, Gary. I do want to now open up the conversation to members and their guests. And I'll ask you to wait for a microphone. And when you ask your question, please state your affiliation and whether there's someone it's directed to.

While we're waiting for the microphone to get around, I want to ask you, Paul, about Gary's comments about food production and the requirements that will be in place in terms of assuring the purity and safety of food.

What does that mean in terms of a burden on a developing country to have to have a system of food inspection, food testing, a HACCP control system? Is that something that's within the realm of possibility in Nigeria?

ORHII: Yes, it is already within the realm of possibility. In fact, we have a program in place. We already have, in fact, some expats from the FDA, from the Department of Agriculture -- have been in Nigeria with us working on developing food safety program under the HACCP program.

So it is within the realm of possibility. We already are doing inspections of food products, but we're clearly -- (inaudible) -- our capacity -- (inaudible) -- with the help of the USDA again.

So I think it is within the realm of possibilities.

BESSER: And Gary, flipping back to you. Many of the large- scale food producers in this country, you know, whether you're talking about McDonald's or Wal-Mart or a Costco, are establishing integrated systems of food production that ensure their own inspection overseas.

The impact of that in terms of building infrastructure within a developing country, do you see it as a positive step or something that may actually deter a developing country from developing their own system, as we're hearing about in Nigeria, of ensuring food safety?

KUSHNER: I'm not sure this answers your question, but the examples you gave, Walmart, Costco, for example, are primarily food retailers. And although some of them do have their own private label programs and some of them -- some retailers actually have products that they manufacture for themselves, for the most part, the retailers are purchasing products from manufacturers or from brokers that are going to be sold in their supermarkets.

That having been said, it's the same issue, and that is how do you make sure that the products that are coming in from other countries, whether they're going to a private label product that you're producing or a product that your supplier is producing, how do you make sure that those are produced under the same kinds of controls?

A major manufacturer will have as part of its HACCP program, its own HACCP program, will have programs or -- programs in place to inspect the incoming raw materials, to periodically test incoming raw materials and ingredients so that they can control as much as possible the product that's going into -- the ingredients going into their products.

In addition, they'll know their supplier, and that is a very, very -- it's a simple concept and an important concept that is for a food manufacturer to know its supplier. Now, it's impossible to know every supplier that supplies that supplier, but at least it's a very important step, particularly if you couple that with the controls that the importing company will have in place.

Let me just go back, though, to talk again about the difference between USDA and FDA, because I think it's instructive. The USDA, I think, since about 1968 -- I may be wrong on when this came into law, but since about '68, USDA -- the meat and poultry inspection laws have required that products coming in for importation, number one, come from countries that the inspection system has been determined by USDA to be equivalent to the U.S. inspection system. That is, the country must demonstrate that its inspection system is adequate and the individual plants that are going to be shipping products to the United States must be approved.

So that supply chain is very well controlled in the context of meat and poultry products. Again, less so in FDA products largely because of the historical nature of the laws that both agencies administer and the feasibility of the FDA insisting upon the importation of products being -- becoming from certified plants where they don't have that legal authority and even with that legal authority, the money is a real issue.

BESSER: Thank you. I think the first question, over here.

QUESTIONER: Good morning. Great panel. My name is Peter Pitts. I'm the president of the Center for Medicine in the Public Interest.

Dr. Hamburg mentioned at the outset the issue of global intelligence sharing, and you discussed the issue -- the definitional problems of counterfeit drugs, and I fear that we're still quite a ways off from a workable definition there. But short of kind of a global regulatory Marshall Plan, you know, how can we work together either on a formalized or an ad hoc basis to at least measure the problem of counterfeit medicine so we can begin to have a baseline and combat it?

BESSER: David, I'll throw that to you, first.

HEYMANN: Well, you know, it's only by global collaboration, as Peggy said earlier, that this can happen. The forum -- one of the fora in which it could happen is in the World Health Organization, but as I said, they've been blocked with a definitional problem that we hope can be unblocked eventually so they can move ahead and understand what they're working with.

I think we'll hear from other sources, other -- we'll have other opportunities to hear from Interpol and various places about what they're doing globally. But it will only work if the world works together in a multilateral framework.

There can be bilateral activities which are very important; FDA has people in China, has people in other countries, in India, and that's very important. But multilateral and bilateral together are the solution.

BESSER: David, just to add onto that. How much is the issue of patent protection confounding the issue of counterfeit drugs and drug safety?

HEYMANN: Well, it's a very important reason that the definition can't move ahead because some would say that generic drugs are counterfeits. There's a whole series of issues that are very -- are very difficult to deal with. And so that's why these three definitions, clearly making it understood what a substandard is, and then there are two substandard sets, counterfeits, which are trademarked, and falsified is a much better way to proceed and a much more logical way to do it.

There are mechanisms that can deal with trademark infringement and those are enforced. What's not available at present is this public health framework in which we can all work together because of the definition issue.

QUESTIONER: Thank you.

QUESTIONER: Thank you. My name is Mark Feinberg. I work in medical affairs and policy at Merck. I want to thank all the speakers for so succinctly and clearly highlighting the importance of this issue.

My question, really, for any of the speakers is, what will it take to actually move us down the path that Dr. Hamburg had articulated as sort of a much more integrated system that is really designed to accommodate the safety challenges posed by globalization? You know, how can we go down that path faster? And really what are the obstacles in the way beyond the sort of definitional thing that Dr. Heymann had mentioned?

BESSER: We'll go short on that because the next panel is going to be focusing more on control issues and policy issues. Paul, do you want to comment on that?

What will it take to get us from where we are now to more of an international system that is ensuring drug safety?

ORHII: Well, we said this initiative by the Council on Foreign Relations and the FDA is a good start. We can build on what we decide here today and then move on. Talking about the definition -- I think definitions of "counterfeit" have just been deliberately used to confuse the issues. We in developing countries that are most hit by the impact of counterfeit medicines will look at it purely from a public-health perspective. At the WHO, we have always emphasized counterfeit medicines, looking at them purely from the public health perspective.

I talked here about getting almost 40 percent of medicines in the system, counterfeit. This -- some of the medicines, the counterfeit medicines, if used to treat diseased like malaria, have the potential to develop resistant strains of microorganisms, which are not treatable by effective medicines, resulting in death and sometimes even the spread of some of these resistant strains to other countries. You know, they do not need passports or even a visa to cross international border lines.

That is why it is important the the Council on Foreign Relations and the FDA have summoned this meeting.

So I think it deliberately confuse -- (inaudible) -- attempted at the -- the last World Health assembly to agree to come to a definition of counterfeit medicines that deals exclusively with the public health concerns and not encompassing intellectual property issues. But I think we are working towards that, and we hope to be able to achieve that.

But we want a situation where we have a broader coalition, we have an international coalition of all relevant agencies. We (started ?) that impact. We have had impact where we have the INTERPOL, we have the -- (inaudible) -- we have all the relevant agencies that will help us find these counterfeits.

For developing countries, no country maybe in Africa is -- (inaudible) -- if we find counterfeit medicines in the system. (Inaudible) -- we cannot tackle that alone. But we need a big coalition that can reach out to all those people. And the example that I gave you of counterfeit medicines, anti-malaria that we intercepted in China, alone Nigeria could not have any -- don't have anything against China. But then we involved INTERPOL. We had to. And some of the people we -- (inaudible) -- Nigeria. But (anyway ?) they were out of the country beyond our jurisdiction. But INTERPOL reached them, and they have finally come back to Nigeria where we're prosecuting them now.

So what we want is a global coalition that would be very strong to help us fight counterfeit medicines. But I think we can view counterfeit medicines not encompassing any intellectual property issues, just purely from the public-health perspective. In a country like -- a developing country like Nigeria, it is a life-and-death issue. It is -- we're not talking about intellectual property here. We're talking simply about public-health challenges that we have.

BESSER: Thank you. One here, and then I'll move towards the back.

QUESTIONER: Yes. My name is Charles Clift. I'm from the Chatham House Centre on Global Health Security, a colleague of David's, who spoke.

Just to expand a little on the definition list used -- I don't want to go into it too much -- I mean, Dr. Orhii says, well, what we're interested in is public-health issues and counterfeit medicines, the medicines that are basically substandard and probably done deliberately, but nothing to do with intellectual property.

That applies -- lots of countries feel like that. Other countries such as, for instance, Brazil, say to us, a counterfeit medicine is one that infringes a trademark. And if it's simply substandard and deliberately done, it's a falsified medicine. And they have that in the legislation. So they have a very restrictive definition of counterfeit. But in a sense, we know what we mean, but we use the same term to describe different things. That is one of the problems.

But underlying the definitional issue is a number of countries, particularly those who produce generic medicines or some who consume them, fear that attacking counterfeit medicines will also be an attack on legitimate generic medicines of assured quality, on which many developing countries rely. Most of their medicines are generic. Unfortunately, many of them -- a certain proportion will not be of the right quality.

As regards this discussion today, I thought it might be helpful if we -- I think we're talking about two different things, which are related but are conceptually different. One is the problems of the legitimate supply chain. And that is what Dr. Hamburg was talking about, the 99 percent of her opening remarks. And that is one set of issues where, as she said, greater collaboration is needed between the regulatory authorities in both developed and developing countries because of the way the supply chain has become globalized.

Then there's the question of the illegitimate supply chain, which -- again, regulatory authorities have a role, but it's a multi-agency thing. You have customs, you have Interpol -- we'll be hearing from Interpol later this morning -- and there really -- one is about how do we protect the consumer from harm, and the other one is essentially about, once these dangerous medicines get on the market, how do we address -- how do we deal with the producers and the distributors and so on?

So I think we need -- it's helpful conceptually to separate those two issues, which need different policy measures to a great extent to tackle them.

BESSER: Thanks very much. In the back on the end.

QUESTIONER: (Off mic) -- Radio. Obviously, when one thinks about this generic-versus-counterfeit debate, one recalls the politics of the HIV/AIDS debate and the production of drugs that occurred several years ago. And my question has to do with food safety and food production. Many scholars of global food production point out that, for the model of the United States in terms of food production to be duplicated in the world, it would simply be impossible.

And we have, as you know, a lively debate in this country for decades about the very safety of our own food production in the United States. And I was wondering how the panel feels about those kind of issues entering the equation, because, you know, I can think of movies like "Food, Incorporated" and others which point out the problematics of the safety measures inherent in the United States itself in terms of food production.

So I was wondering what your thoughts are on that.

QUESTIONER: Gary, do you want to dive in on that one?

KUSHNER: Let me try. And here's where I'm going to sound like a food-industry flack, and I admit it. (Laughter.) I happen to believe that the food in the United States, the food production system, is a very effective system and makes for a very safe product.

Granted, there are -- have been -- obviously have been notorious foodborne-illness outbreaks that are unacceptable and need to be addressed. There are companies that do not follow basic good manufacturing practices. And that's also unacceptable and has to be addressed. And there are challenges that are inherent in a global system, or even a system that just in the United States, where you're distributing products all over the country and importing ingredients for use of those products.

As far as imposing our system, let's assume that our system is a safe one and we're trying to make it safer, or as safe as it can be. Trying to put that system in place in other countries requires a couple things. First of all, I think it's a shared responsibility between the food industry and the government in terms of the company that is importing a products wants -- has to be sure and has to be committed to doing everything it can feasibly do to make sure that the product it is importing is safe and meets U.S. standards. Same goes for countries -- companies and countries or exporters who want to send their products to the United States. They have to have a commitment -- if they want the U.S. marketplace, they have to have a commitment to follow and adopt the same kinds of food safety procedures that are in use here. And as far as the government goes, there's nothing that can substitute for government coordination.

We do have some international bodies -- Codex Alimentarius -- that sets international food standards; the World Trade Organization and other organizations that are set up largely to enhance our -- to enhance harmony between the regulatory approaches in different countries. Too often, those bodies take a very long time to reach resolution. And frankly, too often, countries will erect trade barriers in the -- in the guise of food-safety standards to protect their local industries and keep products out. And that -- that's something that I think we need to be very aggressive in challenging, whether it's us that's erected those barriers or other countries that are erecting those barriers.

BESSER: David, perhaps you can comment on the -- on the European situation on that, the issues of trade barriers being used as a front for food safety, and how you integrate across an area as diverse as Europe issues of food safety.

HEYMANN: Well, it's a -- it's a very interesting issue in Europe, as you know, because some countries themselves didn't have regulatory procedures for foods until just recently.

In fact, I can remember when I was working with WHO one of our directors, a Spanish woman, was called back to Spain to set up a few -- a food safety agency in that country. So it's a really new concept in some countries. In others, it's not so new. But you know, Europe works in two ways. They work nationally through their national agencies, and then they work internationally within Europe under the treaty of the European commission. And how those things will play out, I can't say. Charles, my colleague, might be able better to say, but he's shaking his head also. It's very difficult right now in Europe because there's no one voice. There's many national voices and one global voice which doesn't yet have its credibility established to be the leader.

BESSER: Thank you.

In the back.

I have the ability to point in a general direction, and hope the person with the microphone will find them.

Hands up again for -- here we have in the front. There's a couple up in the front. Thank you.

QUESTIONER: I'm -- (inaudible) -- from industry. I make active ingredients. And I have a concern that I think the issue is actually much bigger, and we're much further away from the solution. The reason why I think it's much bigger is because the supply chain is so fragmented and so porous that there are a lot more pharmaceuticals that are falsified because the active ingredient was falsified and substandard. And when a falsified API gets into the legal supply chain, you can't tell.

And if its toxicity is acute, you get red flags very quickly because people die. If the toxicity is not acute, if it's a genotoxic impurity, it will take many years before people die. So I think that's a problem. And all the real issues of people dying, like heparin, gentamicin, diethylene glycol, they all fall under the category of substandard APIs that got into the legal supply chain. And I think this is a huge problem that the definition of falsified pharmaceuticals hasn't yet started to address. The European directive that's currently being discussed probably would not cause heparin to be under -- you know, to be considered a crime.

And the other comment I had that we're much further from the actual solution is that falsified pharmaceuticals in many countries in Europe are not a crime. And you take this international collaboration, the only country that I know that has a blacklist of companies that have misbehaved is NASDAQ in Nigeria. And you have companies listed in the NASDAQ list in Nigeria that show up in European databases as approved sources of active ingredients. Thank you.

BESSER: Would you like to comment on that, Paul? I mean, the issue of a drug that is toxic, which is the example I gave of diethylene glycol, where it just speaks out that there are people dying from taking the drug, versus the issue of a drug that's, for instance, subthereupetic, the malaria issue, where it may not be clear whether the individual is dying from malaria or dying because there's dealing with a substandard product.

ORHII: Well, to all this is a big problem. Especially, like you just pointed out, medicine is -- (inaudible) -- is manufactured in one country. You don't know where the active pharmaceutical ingredients came from. So you don't even know -- these are the complex issues that I think we're here to address today, because we just realized that the industry has become globalized that you cannot just go to the root of the problem. So I think this is a good start to discuss other things. It's a big problem and very complex.

BESSER: You had a question here in the front.

QUESTIONER: Thank you. Susan Dentzer from Health Affairs.

I have a question for you, Gary. You mentioned the diffusion of authority in the domestic U.S. context as between the FDA and the -- and USDA. I'm wondering if you think there is any prospect of dealing with that now that the president has raised the notion of bringing salmon, for example, under one regulatory authority, as he mentioned in the State of the Union address. Is that at all in prospect, is that an issue with respect to enforcement here on the U.S. side?

And then secondly, what are the estimates of what the resources would be needed for FDA to be able to fully enforce the provisions of the Food Safety Modernization Act? Because in the great scheme of things, these are probably rather small resources in the larger context, but yet extremely important in not enforcing food safety.

KUSHNER: Thank you. Let me answer it in reverse. And Carolyn or Dr. Hamburg, correct me if I'm wrong, but I think the estimate for enforcing the new food safety law is somewhere in the vicinity of $1.4 billion over the first five years. I don't know if that's a lot of money or not. It used to be a lot of money -- (laughter) -- but looking at -- looking at our budget and our deficit, it's a drop in the bucket. And -- but it hasn't been appropriated at all, to the best of my knowledge. So that's obviously a concern that needs to be addressed.

Now, as far as single food agency, which is really at the base of your question, President Obama is not the first one to suggest that. That goes back many administrations. And I remember when President Clinton first took office in his first term, Vice President Gore came out with a report called "Reinventing Government," in which it recommended a single -- the adoption of a single food agency. And the play on that was that there are 14 or 15 different agencies within the federal government that regulate food and that it's so -- and sometimes at cross-purposes.

However -- and I suppose that if we were starting out in 1906 and if we were starting new, it would make some sense for there to be one agency under which all regulation came, so that we can make sure it's consistent throughout the agency and under the same kinds of policies. But it's not 1906. We've had a regulatory system that has evolved in terms of not only the laws that are administered but the regulations, case law interpreting those regulations. And I -- just as a practical matter, I think the idea of a single food agency would be more than challenging. And some people use the Department of Homeland Security as an example: as all you're doing is really changing the names on a bunch of different offices.

What's more important is to have a central concept -- a central approach or philosophy, if you will -- that is shared by the agencies, and where the agencies are given the direction as well as the ability to coordinate on the regulation of the different products. But again, that's, I think, a practical answer. If it were 1906 and we were starting all over, then the idea of a single food agency might be feasible.

My recollection, by the way, is the FDA came out of the U.S. Department of Agriculture, and at one time had been the Bureau of Chemistry at USDA, and was broken off. It was in the '40s, or I think in the early -- earlier.

MS.

: Earlier.

KUSHNER: Earlier.

BESSER: A question over here.

QUESTIONER: Hi. My name is Tom Bollyky. I'm a fellow at the Center for Global Development, and thank the panel for these great comments.

My question is for Gary. I think you're right that the Food Safety Modernization Act has wonderful -- has advanced the ball tremendously on imposing HACCP-like standards, and the question will be their enforcement. You mentioned before that you need roughly $1.3 billion to enforce those authorities. My question is, given the current political environment and budget situation, that money may not be coming. What would be your prescription for a low-resource enforcement of those standards? Is it more -- higher civil or criminal penalties? Is it a higher standard of care, easing tort liability for these actions? Is it better targeting of those enforcement resources? If we can't -- if Congress doesn't appropriate that money, what's your prescription for a way forward?

KUSHNER: Well, first of all, as I -- as I've said a couple of times, I favor giving FDA the resources it needs to do its job. You can't expect an agency to take on new responsibilities when it's already stretched very thin in terms of its resources.

But putting that aside, there is almost -- I think implicit in your answer is -- or in your question, is that in the absence of FDA enforcement the rules and regulations won't be followed, and that's simply not true. Food manufacturers, food marketers, have a vested commercial interest, if not a moral obligation, to make sure that the foods they sell are safe. If there's an outbreak in peanuts, for example, number one, it taints all peanut-based products, regardless of who makes them. But number two, so many products, for example, in the case of peanuts, utilize peanuts, peanut paste. So the number of recalls when the Peanut Corporation of America incident happened was -- the rippling effect was tremendous.

And food companies don't want that. They don't want it for commercial reasons. They don't want it because they protect those brand names. Food companies want food to be safe. So they are already -- that's why so many of them have adopted HACCP voluntarily or most of them have adopted some form of HACCP voluntarily.

There is going to be a small number of companies that are not going to follow the law and -- or don't know how to follow the regulations, and irrespective of FDA resources, we're going to -- we're -- that problem's going to be -- always going to be there. And I think the food industry companies simply have to do the best they can to, again, know their suppliers and make sure that they've got programs to ensure the safety of their products.

BESSER: Question over here.

QUESTIONER: Good morning. I'm Abdul Hakim (sp). I'm a former Senate staffer. Part of my question was really answered, but it actually raised another question. What do you see as hurdles as far as the U.S. consumer is concerned or the impact on the U.S. consumer in the quest for increased oversight, you know, in -- and safety regulations, in that quest? I mean, how do you -- how do you see -- what are some of the hurdles that will be experienced by the U.S. consumer?

And also, on the global scene, what is some of the economic impact that you foresee on other individual countries? And that's in light what Dr. Hamburg was mentioning, and it was also brought up as well that we ourselves have limited resources and, you know, we have deep pockets. So I mean, what would you see as some of the challenges faced by some of the other countries?

BESSER: Let's put a hold on the consumer hurdles, because that will be part of the next panel that's coming up.

But Paul, to ask you, in terms of some of the hurdles you face in Nigeria to implementing and enforcing broad regulation and control over drug and food supply, how many of the issues are internal to Nigeria that you can deal with as a country and how many require much broader cooperation and financial input and support from the global community?

ORHII: Well, most of the issues are interrelated. The staff strengths -- we need finances to have adequate staff strength, the kind of level that -- the -- of training of the staff. So all these are interrelated. The finances are very important. That is, we need international cooperation to be able to be more effective; the training of the staff; and then maybe to have adequate equipment, the kind of equipment that we need to be able to be more effective in monitoring these products. So I think everything is interrelated.

BESSER: Thank you.

In the middle.

QUESTIONER: (Inaudible) -- just going back to Susan Dentzer's question about a single food safety agency in the United States, I think the analogy is not really Homeland Security. I think more the issue is something that Europe faced in the wake of mad cow disease, and that is in this country with USDA, we have an agency that is both responsible for promotion of food as well as for food safety. Isn't that an inherent conflict of interest that needs to be addressed?

HEYMANN: You know, I've heard that argument made many times over the 30-plus years that I've worked as a food industry lawyer, and I just never -- candidly, I never saw much credence in that. The -- there are different agencies that are involved in product promotion within USDA, and those that are in -- responsible for ensuring food safety. The Food Safety and Inspection Service -- anyone I've ever dealt with at that agency has been bound and determined to make sure the product is safe and that if it bears the mark of inspection, that it has been inspected and has met USDA standards. I've never encountered a situation where a FSIS inspector or even the people who are at the head of that agency had to weigh the impact on the marketplace, necessarily, of our causing the product to be recalled or not. I just don't see that. I think that the -- that that agency has the integrity to do its job.

So I don't -- I've never understood as a conflict of interest. But if it is, then you establish a single food agency, but if -- only if it were realistic. And as I mentioned, I just don't know where you'd start to do that, and I don't know that the time and resources that would go into trying to establish a new agency would be effectively spent. Those resources could be better spent by better coordination and communication between the agencies that already have regulatory jurisdiction.

KUSHNER: Just to reflect on your -- on your comment, when I was still at CDC -- and it was before swine flu, when we were focused on bird flu -- there was a lot of effort on surveillance of birds. And I remember one conference call, and it had folks on from FDA and Department of Interior and Department of Agriculture. And we were talking about what the public health messages should be to people. And we were looking at bird migratory routes and surveillance in Alaska, and we were talking about risk and what people can do to protect themselves. And the message from USDA was: Eating chicken is still safe. And so it does kind of play into some of the internal tension over --

MR. : (Chuckles.)

KUSHNER: -- that I've always found a little incongruous, of a department that does contain and tries to put fire walls between the groups that are promoting meat exports and those that are assuring that the food supply is safe.

BESSER: Yes, here.

QUESTIONER: I'm Rob Cortel (ph) with Intelex, and we do risk analytic solutions. And among other things, FDA is a client, on their PREDICT system.

This is about scale. And what we know is that some countries actually create a large part of the problem. I was in Hong Kong about a year and a half ago, right after melamine. And I was told that many of the middle class there refused to buy imported food from mainland China because of their fears about controlling food safety there. And we know that melamine really was something that totally originated, almost culturally, out of China.

How do you deal, in terms of scale, with a country like China which really doesn't seem to share all the way down the same values and restrictions and commitment to food safety?

BESSER: David, let me throw that your -- that easy question your way.

MR. : Thank you. (Laughter.)

HEYMANN: It is an easy question. You know, it's only by not giving up that the international community can succeed. And there are examples of success in all areas, and there can be examples in this. But it takes -- it takes every effort of every country possible. The FDA is doing their part by putting people there. Other countries are setting up norms and standards. But the issue is, when there is an opportunity, show that that was wrong, and show it in a -- in a very important way and move the people on a bit more.

But it's a very difficult issue to do. And, you know, influencing people is very important, but it has to start at the very bottom. We can't always think that we'll be able to impose regulation. I remember speaking with a minister in one country. And that minister said: I will never set up another regulatory agency, because I don't have the way to enforce my regulation, and therefore it opens up a whole new area of corruption.

So it's a very difficult issue from the very bottom. And sometimes it works better if you begin at the top with a framework but at the bottom to help the people understand the importance of safety and let them deal with these issues. So it's -- it has to be a multi- pronged approach.

BESSER: At the consumer level, do you think that the consumer would be willing to pay for more expensive food and drugs that would be required to -- if you were going to have a regulatory system that was ensuring safety?

HEYMANN: You know, that's -- it's a good question. I can't answer that. But I expect that if a community understands that their children are at risk, they will invest in what they need to to make sure that their children are not a risk. And we've always thought that we can come from the top down and regulate them. We can't. There has to be a demand created, as there is for everything else. And that demand comes from NGOs, from education in school, from a whole series of people, which can work and pull down from the top what support they can get.

(Word inaudible.)

QUESTIONER: Well, this has been a marvelous first panel. You folks are just spectacular.

I wanted to ask a question that harps onto two prior questions here. One of the trends that really leaps out when you start analyzing what's (growing/going ?) on on the drug side is that increasingly, the active ingredients that one can purchase, frankly, on the Internet, with no quality control of any kind, are coming from either India or China.

So we started out politely going to this direction, but let's just go there. (Laughter.) And it's kind of shocking what -- one website alone offered 20,000 active ingredients from a couple hundred manufacturers in India.

And so the question I'm really getting at is how can we go into a world where we're seeing an increasing concentration of the raw ingredient production coming from two key countries, neither of which have very strong domestic regulation, where then does the burden shift to guarantee that that active ingredient is what it claims to be, that it has no contamination and that it could be safely formulated for the next step?

BESSER: Paul, I'll start with you. You've said that 60 (percent) to 70 percent of the drugs that are sold in Nigeria come from India and China, let alone other active ingredients and other products.

What would it mean to Nigeria if, say, the supply from China and India was cut off because it's not meeting its stringent standard?

ORHII: Well, that is why I have resisted the availability of quality pharmaceutical products manufactured in Nigeria to some extent. One of the -- (inaudible) -- manufactured locally is a national security matter because I cannot imagine if the supply is cut off from both India and China, I don't know what I'm going to do with one -- (inaudible).

And so we have insisted that we have to start developing our own local manufacturing capacity.

We have approached both -- we have dealt with India and China and there are two different approaches. India is not willing to work with us to find solutions to some of these problems. When I tried to engage the Chinese food and drug administration, their answer was just very short. They said it is the responsibility of the recipient country to ensure the quality of products coming into its own territory. It is not their own problem. They have to protect their own citizens.

I have to go maybe even -- (inaudible) -- the (Senate Committee on Health ?) to engage the China chamber of commerce. There, we've begun to get some response, and that is what led at present time to the arrest and conviction of the six -- sentencing of the six people that were engaging in counterfeit medicine to Nigeria to death.

So China is less willing to take on the responsibility of ensuring the quality of products leaving its territory. India, on the other hand, I have had a different response. In fact, they have worked with us and -- (inaudible) -- where if we get a fake product that comes from India, if we can prove that that it came from India, then the person who gave us information that led to the interception of that product gets a reward up to $2,000.

So I think that is a positive step. If we want to continue to work on that, to see how far we can go.

BESSER: David, from a U.K. perspective, is this something that the U.K. can have impact on a bilateral way with the quality coming from India and China? Or this is much bigger than that?

HEYMANN: This is an issue of two simple words, expected and respected. And it works. It works if you can make sure that everyone understands what's expected and what's respected.

Now, I'll give you an example of this. Back in 2003, I think, many of you remember this SARS outbreak, which originated in China. This was a very difficult time because countries were hiding lots of information because when they reported, they would have tourist sanctions, they would have importations -- were banned, a whole series of things. And so in the analysis of what was going on in China where a country would not report, it was decided that the only way that reporting could be guaranteed was if the norms changed. It's expected and respected to report.

And so the director-general of WHO actually went to the Chinese publicly, accused them of not reporting and it changed the situation and it has changed the situation globally. People are reporting H5N1. They're reporting other things. This is the same issue, Laurie (sp), with food or with medication. You must take the example. You must accuse somebody who is respected, who does it in the right way, must accuse that the norms are being broken and that it's expected and respected and then other countries must come in behind and say, yes, we agree.

BESSER: Well, I always love to end a panel in the middle of a great conversation because it means that people will come back for the next panel.

I want to thank the three members of the panel for their comments. (Applause.)

The next -- the next panel will start promptly at 10:45. So there's a very short break. Please get back to your seats before that starts so it doesn't interrupt the flow of that session. Thank you.

####

®FC¯END

®FL¯

.STX

(C) COPYRIGHT 2011, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.

NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR E-MAIL INFO@FEDNEWS.COM.

THIS IS A RUSH TRANSCRIPT.

-------------------------

(Mr. Barbano's remarks are provided through interpreter.)

SUSAN DENTZER: Good morning. I'm Susan Dentzer from Health Affairs. I have the honor to be moderating our next panel -- our first panel, having laid out the scope of the issues with respect to drug and food safety. Our second panel is now going to focus on what problems have stood in the way of building what would otherwise be easy and obvious policy prescriptions. Now, "easy and obvious," of course, we will discuss over the course of this next panel, how easy and obvious those are.

Nonetheless, our first panel, I think, set up some of the issues that we will be talking about, those realities, as Commissioner Hamburg said, that make each and every one of us really vulnerable; whether they are weak laws, whether they are under-staffed regulatory agencies, whether it's diffuse authority, whether it's the complexity of the supply chain or what have you, or just the sheer volume.

Peggy Hamburg, I remember several years ago in the thick of the importation debate, going up to see a warehouse that FDA has out at JFK Airport where there were literally tens of thousands of seized packages of medications that had come in from other countries, individually imported by Americans, leaving me aghast at what Americans are willing to put into their bodies for one thing.

But secondly, just with a much fuller appreciation of just the scope of the issues as Laurie (sp) said, many of them being packages from Japan -- excuse me, from China and India, as well as other countries.

So we're going to be discussing what problems have stood in the way of building these easy and obvious policy prescriptions. And so we're delighted to have back with us, once again, Commissioner Hamburg in the center there. Also, just to my right here, Howard Zucker, who was formerly with the World Health Organization as assistant director- general in charge of the so-called health technology and pharmaceuticals cluster and also representative of the director- general on intellectual property, innovation and public health.

He's now senior adviser in the division of global health and human rights at Massachusetts General Hospital.

And we're also very happy to have with us Dirceu Barbano, who has been and is director of the National Agency of Sanitary Surveillance in Brazil since 2008. And also as the director -- chairman of that agency.

So, with that, let's go some further definition of the scope of the problems that are standing in the way of building easy and obvious solutions. And again, in the interests of giving some texture to this issue, I've asked each of our panelists to just frame a quick little case study in their memory that surfaces the complexity of the issues involved.

So, Commissioner Hamburg, let's start with you. What was your favorite experience in this field?

MARGARET HAMBURG: Well -- (laughter) -- I was asked to speak briefly, very briefly about a food safety issue, which actually occurred before my tenure as FDA commissioner, but was something that was very much in the papers and carries implications still, and that had to do with an event that was referenced earlier about salmonella contamination of peppers. And it was a complex challenge, both in relation to the complexity of the supply chain and agricultural practices and conditions across borders and the nature of the food supply.

But it also had to do with the challenges in terms of the underlying science and investigation of food-borne outbreaks. It was an instance where initially -- and others in the room were closer to it, so, you know, I may get the details wrong -- but we'll view it as a symbolic example of cases of food-born illness were reported, was linked to a certain strain of salmonella. It appeared to be linked to tomato products initially and some of the cases, I think, were emerging from Mexican food proprietors where peppers and tomatoes are often served together.

But in any case, it was initially believed to be tomatoes. As Dr. Besser mentioned in the first panel, took quite a toll on the tomato industry as the first warnings went out vis a vis the contamination of tomato products.

It actually emerged with further epidemiological investigation and analysis, FDA working closely with CDC, who takes the lead on the outbreak investigation and epidemiology that there was either cross- contamination between tomatoes and peppers or that it was actually the peppers, not the tomatoes that were the cause and that these were not domestic products, but, in fact, peppers coming in from Mexico, although peppers and tomatoes were, in fact, in Mexico being grown on the same farms as well.

So it was a very confusing picture about what the product was and the origin of the contamination. It was eventually linked back to a much more limited and specific set of circumstances in Mexico, the coordination of Mexican authorities and U.S. authorities to remediate the situation, to get the at-risk product off the market to inform the public all then fell into place.

But it was a prolonged period of trying to determine the source of the foodborne illness, with some missteps that required engagement of domestic food producers and providers as well as counterparts in Mexico. And at the end of the day it took a toll on human health, it took a toll on the economic health of several food industries, and even after the outbreak was actually controlled, persistent concerns about the safety and quality of those products more broadly.

So it does speak to a number of the important issues before us in terms of how can we work together to prevent problems like that from happening in the first place, as well as how can we harness across sectors and components of government to be able to identify and respond to problems as quickly as possible, to try to have seamless coordination across borders, and how to also communicate important information to consumers while they are trying to make choices, and also how to better let consumers know when, in fact, the acute episode has been resolved.

DENTZER: But it sounds like there was, at least initially, a lack of cooperation on the scientific side between Mexican authorities and U.S. authorities, yes? Was that a particular issue?

HAMBURG: You know, I don't think that was the case, but I could be wrong. I wasn't involved at the time. I think it was more complexity of understanding the issues and a failure to cooperate scientifically. There was confusion originally, because the initial outbreak investigation suggested the tomatoes. And I'm sure there was a reluctance to engage initially, where Mexico thought it was somebody else's problem, and now fingers were being pointed to them.

DENTZER: Denial, as they say, not just being a river in Egypt, as the bad joke goes. (Laughter.)

So Howard, in your case, you lived through, on the drug-safety side, a version of the events that were alluded to earlier, in the first panel. Tell us briefly about those, and specifically what obstacles surfaced.

HOWARD ZUCKER: Well, I think that the key issue here that I wanted to raise a little bit was about the impact, which was addressed at the beginning. When I -- when I arrived in Geneva, I literally, without exaggeration, I probably wasn't in my office more than a day and I already received calls from scientists, members from within the WHO as well as individuals in industry and civil-society groups, saying, what are we going to do about counterfeit medicines?

So from that generated the working group within WHO to talk about this, which ultimately crystallized into the International Medical Products Anti-Counterfeiting Task force, or IMPACT, which it's better known as, which I led for the first two years after it was formed.

What we did in that point was to try to bring together individuals from all different groups, whether it was FDA, EMEA, other regulatory agencies around the world.

DENTZER: EMA being the European --

ZUCKER: The European Medical -- yeah -- agency.

Also, OECD, Organization for Economic Cooperation and Development; industry, academia, and public-health experts from around the world -- and brought them together to say, how do we -- how do we tackle this? And from that came five different areas, which some of you might know, which involved everything from regulation, legislation, enforcement, technology and communication, and just touch upon each one of those, just briefly.

On the regulation side, which was led by Ilisa Bernstein from the FDA, who I believe is here today, there was a lot of work done to try to help countries where their regulatory protocols were not as well structured, and to help control some of these issues of counterfeit medicines, and working with those teams to put out documents and to work on this area.

From that, there was also work between the regulatory agencies and other -- regulatory team and other teams. At the legislative level, there was a discussion about putting forth a concept or a paper and also a model law -- and I don't like to use that word lightly, because I don't want to say that there was an actual law put forth -- but something which would be able to be brought back to individual countries, to the different member states, to say, this is a document which you could work from within your legal systems to make the issue of a -- someone who has either manufactured a counterfeit drug or has been within that chain of counterfeit medicine, basically charged with -- more than just an infringement on a patent right; something much more forceful. And if someone died as a result of it, is this sort of more of a homicide, murder, or something equivalent within their legal structure?

And then the next part was that you could have the laws written down, you can have the regulatory bodies there, but if there's no way to enforce it. So our feelings were that the enforcement part -- which was led by Aline Plancon, who's here and will speak later, which was an incredible team of actually looking at the world customs organizations, Interpol and other ways to try to tackle the issue of borders and sort of getting rid of some of the porous issues at the borders, and to try to also work with the legislative bodies and others to tackle that part.

And then the next part was the issue of technology, and that was led by Harvey Bale, who is from the at that time IFPMA, which is the International Federation of Pharmaceutical Manufacturers. And the thought there was there must be a way to use technologies that are out there to tackle this. And we recognized in many meetings that it has to be tailored to the country. So the concepts of using something like RFID, radio frequency identification, may work in the United States or in Europe or other countries where spending, you know, several thousand dollars would be effective, but that's not going to really solve this problem in countries where that's just an exorbitantly high price. So we realized we had to tailor, tailor to the individual countries.

As a matter of fact, at that meeting, we had a meeting in Prague, I had thrown out the idea of the concept of using cell phones text messaging to actually use a way to validate medical bottles through a randomized number system, and I put that out there at that point. And recently, in the last year, I've heard that that has now -- I'm pleased to say, is out there in Ghana and other parts of the world. So that is a -- an idea that, you know, was out there at that time or that we -- that I put out there, but others had said could be used and now has been working.

And the last part was communication. And the communication issue issue was, we can have all this in place, but if people don't know about the issues and the messages aren't getting out there, then it's not going to really be effective. And so that team was working on communications and basically sort of addressing and branding these issues.

And from that we generated about a hundred people working on this, from member states, and there are multiple meetings, and we're moving forward on this.

Now I recognize that the issue -- and you asked this before, because it was brought up -- that the WHO -- the issue of counterfeits and impact has had some criticism at the WHO and the World Health Assembly recently. But I do think that a lot of this is the issue of coupling the issue of counterfeit medicines and intellectual property rights. And I think that we really do need to recognize that these are two separate issues.

And there has been a lot of -- a political component to why these things are coupled. And I guess I would put on my lawyer's hat for a second and say that there's really -- you have to look at this from the concept of the legal phrase "mens rea," which is, is there a guilty mind on this? And so if someone's doing something with a guilty mind to move something forward in the supply chain of medicines, then that truly is something which we need to tackle and in a lot of ways with counterfeit as we move forward.

And lastly I just would say that if there is a generated effort and resources put forth to move this forward, I think that the entire concept could be pushed forward with those five areas, and we could tackle this problem effectively.

DENTZER: Okay. And you've given us a very nice additional list of issues that need to be transcendent.

So, Director Barbano, we'd like to hear your brief case study now of a particular issue that surfaced with respect to Brazil's interest in drug and food safety.

DIRCEU BARBANO: Good morning to all. I am going to ask Tim for his help, so that I may speak to you seamlessly.

I'd like to first of all thank Mr. Richard Haass, president of the council, as well as Laurie Garrett, senior fellow, for her invitation, as well as Daniel and Stacey (sp) and members of the staff for bringing us here.

I brought for this panel a case that is apparently simple, involving a fruit from the Amazon River in -- Amazon region in Brazil, a fruit called Acai.

I heard with attention to the debate in the previous panel.

I would like to say that it's -- it would not be very prudent of me to start discussion on this theme without first a few considerations about the larger theme of this event.

It is undeniable that we have a very major challenge ahead of us. The world is changing, and the economic conditions are changing very rapidly. More people consume products that are manufactured worldwide, and this reality is irreversible. We will increasingly consume products that are manufactured elsewhere. On the one hand, it may be a problem; but on the other hand, it may see -- may be seen as a solution, as countries develop and produce other products.

We need to take on the perspective of health -- caring for health, preserving life, and putting health and life above all else. Brazil has recently taken the decision to become a more developed country, a more socially just and more economically just country. And that means that we do not want industries that produce goods that put people's lives at risk. We expect that our agricultural resources produce products that are of quality for the Brazilian consumers and for exports to other countries. We expect our pharmaceutical industries to produce medications that can be consumed, that are of quality, and that can resolve health issues for the Brazilian people, and to preserve life and to treat the Brazilian national as we would treat any other person from any other country.

Therefore, this discussion about falsified products and substandard products is of great interest to the Brazilian government. But we must understand that the risks in the consumption of medications and food do not lie exclusively in these products. There are risks of different nature.

The lack of food is a risk. And the lack of access to medication is also a risk.

And there are risks inherent in the consumption of products from anywhere in the world. Recently we had a problem with a substance called imiglucerase, which is manufactured by a company that is known worldwide, called Genzyme. The Brazilian government is a large consumer of this product. And the contamination problem in the facilities, in the equipment used to produce this substance, made it unavailable to the Brazilian people.

So we are speaking about topics of a global nature. And our challenge is to identify ways to work the problem as a global issue.

DENTZER: And that is exactly the topic that we want to move to, if you would.

BARBANO: And to that effect, this incident involving acai is very interesting. In 2007 -- in 2007, a contamination was identified related to the Chagas disease through the consumption of this fruit. We in the Amazon River were -- region, we identified 123 people who had the Chagas disease and no history of having been bitten by the bug. And we further identified that these cases were related to the ingestion, the consumption of the fruit, which was a new way of transmission.

In 2007, this fruit was largely consumed in Brazil, and it was already being exported to other countries. There was a large effort undertaken by the Brazilian authorities through ANVISA at the federal level and the secretariats of health in the state and local levels in order to identify, track and find a solution for the problem. And we also had the help of Brazilian universities that are specialized in the study of tropical diseases.

And we discovered that for the transmission of the disease was -- occurred through the ingestion of the raw fruit. And based on that, we developed a large effort to train the people who are responsible for harvesting and storing the product.

So after this process was undertaken, no other case has been identified. It involved changes in the process of harvesting, storing and processing the fruit.

This case is very interesting because it shows that in many instances, global efforts will be insufficient. Because these are localized products, it involves workers who work on a seasonal level. And that certainly occurs on a global level in many areas that produces food and even medications for global consumption. And the Brazilian government is very willing to find a solution for these problems and to identify a way for the sanitary vigilance agencies to expand their activities --

DENTZER: All right. I just have to seize on this because you've just laid on the table an extremely interesting point here, which is that even though we've been talking about global food and drug safety, all of this begins and to a large -- to some degree, it should end at the local level. Unless individual countries are as expert as Brazil has shown itself to be in seizing the problem, we are going to continue to have these disasters occur.

So let's go back to some of the issues that have now been put on the table, it's the capacity of local authorities to have the ample science to quickly detect issues. There has to be in place regulatory capacity in order for them to do that. There may, indeed, need to be comparability of legislative authority in individual countries, hence, the need potentially for model legislation. There also has to be cooperation across borders, obviously, among these agencies, not just the regulatory agencies, but also the police authorities as well. And technology and communication also could play a very important role.

Howard, you mentioned the possibility of radio frequency identification or also the more low-tech cell phone approach. And then communication -- and this point I want to stay on because we haven't talked yet about the role of public outrage and public demand of improvement of local authorities.

I was struck in the background that Laurie (sp) and her colleagues prepared that the CDC estimates in 2009, there were 3,000 deaths in the United States from contaminated food and drinks alone. Not to put too fine a point on that, but that's equivalent to the World Trade Center bombings as a disaster in terms of fatalities.

So where is the public outrage? And that can serve as a force to push more countries along?

Peggy?

HAMBURG: Well, I think that public engagement is absolutely essential.

And I think that it speaks to the fact that, certainly, in our country and I think in many countries across the world, that at the end of the day, whatever your political stripe, whatever your views about government overall, there are some key functions of government that people have enormous reliance on. They want to be able to trust and have confidence that their food and water supply will be safe.

They want to know that the drugs that they are taking and giving their family are safe as well. And I think for the most part in the United States, people assume that to be true. I don't know as much about attitudes in other countries, but, you know, it's something where people don't think about it until there's a problem. That's always been the challenge of public health that until there's a problem, people take it for granted.

But I think we saw with the Food Safety Modernization Act, actually, enormous mobilization of consumer groups and advocates with industry and with other critical stakeholders to say we have an opportunity to do better. And while the U.S. food supply, you know is extremely safe, that 3,000 deaths a year is too many, manyfold preventable hospitalizations and, of course, huge preventable costs to industry as well. And so there was this galvanization that led to action, which will make a difference.

But one reason why I was very excited to have this forum today is that I think people have no idea in this country and around the world about the vulnerability of things that we count on every day, food, drugs, medical devices and other related products. And that we have a system that has big gaps in our protective mechanisms and that it's a growing problem, and that, in fact, it is a problem that goes beyond what any one nation can do alone no matter how well resourced, no matter how dedicated.

It is a problem that by its very nature requires a global alliance. In my remarks this morning, I said I think the time has come that we really need to create and formalize a global alliance of regulators that are committed to solving these problems together, to sharing information in new ways, sharing best practices in new ways, even sharing the workload in new ways, and importantly, working with industry and other stakeholders because it is a shared responsibility that goes beyond government as well. But I think that in all these efforts, that notion of shared responsibility and the critical central role of the consumer, because at the end of the day, it's all about serving them and protecting and promoting their health and well being.

DENTZER: So on the possibility that regulatory authorities and individual countries will not all leap to the fore to take up your challenge, could we conceive of a global citizen Facebook revolution to enlighten people throughout the world about the need for these issues, Howard?

ZUCKER: I think that would be a great way to move forward in using any technologies that are out there to get the message out. I think that we should look at the Internet and the possibilities like that, although many of the individuals who are affected by this are in regions of the world where Internet capabilities aren't there, which goes back to the issues of cell phones and what kind of more low-tech -- more simple technologies would be available.

But I think it's also an issue as the commissioner mentioned is the need to get this message communicated and almost create a grassroots effort to make people aware of the problems that are there.

DENTZER: Text for safe food, for example, something like that.

Director Barbano, to bring you into this conversation again. What was -- in Brazil, was there resistance to the various food processors or others to you as a regulatory agency wading into this? And if so, how did you overcome that?

BARBANO: There is always some conflict of interest when we speak about sanitary vigilance regulation. And certainly these conflicts exist in Brazil, as they do in the U.S. and Europe.

It's important in this global effort what the degree of autonomy these institutions have in their own countries. In Brazil, when we created Anvisa, there was a concern to protect Anvisa from these kind of pressures. For example, we can mention as an example the use of agricultural protection agents. So when Anvisa establishes a limit on the use of these substances, there is a conflict with the producers and the farmers. But Brazil has a legal system that is consistent and supports the agencies' decisions in this regard.

DENTZER: All right. We're now going to open this up to questions and discussions from those of you in the audience. And it would be very helpful if you'd raise your hands, obviously, and identify yourselves by name and affiliation and a microphone will circulate to you.

Let's start with a hand right up there. Terrific. Thank you.

QUESTIONER: Hi, I'm Jean Halloran from Consumers Union and I also work with Consumers International.

I think it's very important not to be naive about the potential for a grassroots groundswell for food safety. Consumers all over the world do care, but we just saw the case in China where one of the parents of a melamine injured child was organizing other parents and was thrown in jail.

So there are limitations, but particularly in some of the countries we're most concerned about for grassroots activism.

I think we also need to look at and I wonder if any of the panelists can comment on our trade policy, because we established trade agreements as if all other countries in the world share our values and share our regulatory systems and commitments to them. And then when we start getting substandard products in because they have maybe even laws on the books that they don't enforce, you know, it's like, oh, my goodness, what do we do; you know, we treat it as if it's a surprise.

And I wonder if we can begin factoring into our trade agreements provisions that allow us to treat other countries in terms of the reality of their safety system.

DENTZER: All right, which gets us into an arena of trade policy, and I don't know that we have any experts on trade policy on the panel. But Peggy, do you want to take a crack at --

HAMBURG: Well, you know, I certainly don't pretend to be a trade policy expert, but what I hopefully am is a public health expert. And I think that that is the principle we need to organize our actions around; and we need to make sure that citizens of any nation, rich or poor, can have access to adequate food supplies and quality food supplies; and that, you know, there's a lot more that can and should be done; and that as we think about how to respond to a globalized world in a way that helps protect our own nation -- and that is my mandate as FDA commissioner, is to promote and protect the health of the American people -- I think it's critically important that I recognize and step up to the plate; that if I am to do that job well, it also means that I need to in fact care and invest and advocate for the quality of those commodities in other nations; and that at the end of the day, we need to try to approach ways, not to make every country identical in how they regulate these products, not to assume that every country, large and small, is going to have systems that look just like the U.S. FDA or other food and drug oversight entities from other countries, but that there will be some basic principles, there will be sharing of best practices, there will be efforts to proactively help build capacity through technical assistance and information-sharing; and that we will work in ways that are national, regional and global to really ensure that there's a minimum threshold of standards for food products around the world.

And I think that is, you know, the goal that I bring to this.

DENTZER: Well, how much contact do you have with the U.S. Trade Representative's office or the customs folks in terms of enforcing some of these food safety, or, for that matter, drug safety issues?

HAMBURG: Well, I would have to say that I don't think at present that there is enough conversation, communication and mutual understanding. And I think that we need as the U.S. Food and Drug Administration to, in fact, sit down more frequently with our counterparts. And it's something that I've engaged in.

I think the danger in not having this conversation is that, in fact, decisions get made on the basis of trade and commerce that may not, in fact, factor in critical aspects of public health. And so I think it's very, very important that we make sure that the public health issues are fully understood and aired as many of these broader trade debates go forward.

DENTZER: And I don't suppose we have any reason to believe that other countries do this markedly different, that there's more discussion among the trade authorities in other countries or is there?

HAMBURG: You know, my sense is that for many years there have been sort of parallel tracks and that, in fact, the public health issues have not been as central to the discussions as they need to be. We need to make sure that things that really matter for health, well being, and, in fact, safety and security more broadly are integrated into these discussions and ultimately into our policies.

DENTZER: Okay. That's terrific. Let's take a question over here, please.

QUESTIONER: Hi. Erik Olson with the Pew Charitable Trusts.

I had a question. One of the biggest policy challenges has been addressed a couple of times, but we haven't really heard an answer. FDA now, as I understand it, is inspecting about 1 percent of our imports, so 99 percent of the imported foods are not inspected.

We've heard it's going to cost $1.4 billion for FDA just to implement the new food safety law over the next five years. Assuming that all the budget cuts that everyone is talking about may hit FDA and other agency -- food safety agencies, what would the role be potentially for fees on the industry to help pay for this implementation? We know in PDUFA for drugs, the drug industry pays fees to pay for their regulatory system in part. And I believe that the Obama administration supported the House legislation that add fees for food safety implementation.

Is that something that really might be part of the solution here, not just in the United States, but potentially more globally, to make sure that this new web of international trade and food, and frankly, in drugs, really -- that we get a handle on it, that regulatory authorities can inspect more than 1 percent of the imports and perhaps do some of the overseas inspections that are required in the new legislation.

HAMBURG: I think there really are two overlapping issues here, and we don't want to completely put them together, one is the question of how do we implement the food safety bill, which is enormously important and does begin to get at some of the global food safety issues that are so critically important. And there's no question that the law puts forward a number of very prescriptive actions for us to take, all of which are very important and much needed, including enhancing inspectional activities. And yet it's an unfunded mandate as we like to say. And it does raise serious issues for us.

As was mentioned in the first panel, industry cares enormously, in fact, about achieving the goals of this new legislation and strengthening food safety, and importantly, implementing the preventive focus that's part of the Food Safety Modernization Act to prevent problems from happening in the first place rather than trying to scramble after them once they've occurred.

And so I do think that industry is willing to step up to the plate in terms of resources and partnership to take more responsibility and accountability.

For their contribution to ensuring the safety of the global and domestic supply chain. And so we really need to work on that. And we really need to make sure that the goal of the Food Safety Modernization Act can be realized in our implementation.

I think looking more broadly at the circumstances of globalization and what it means for medical product and food safety, we have to recognize this isn't a problem that our nation or any other nation can inspect its way out of. It really is a problem that requires a fundamental shift in how we think about the problem and how we work together as two partners across nations and governments, as well as across sectors.

Because of the complexity of the global supply chain and the magnitude of the problem, you know, really means that we have to to, you know, work together in completely new ways, sharing information, sharing best practices, sharing workload as I said before we need really different systems that break down some of the traditional stovepipes of our different institutions to think and act in multinational coordinated ways. And I think that's a huge challenge, but it's also, I think, the only way we will achieve success and there is a huge opportunity to do things in new and different ways because the challenges before us simply demand it.

DENTZER: Peggy, you used a phrase in your opening remarks that that there are 20 million different lines -- did I get that right? -- of -- that's all products imported into the United States that are under FDA's jurisdiction reinforcing your point that we can't inspect our way out of this because there's no way we're going to inspect 20 million lines. And that's lines, so I assume it's multiple products in each of those lines.

HAMBURG: You know, we can do a better job with inspection and we need to. It's not that inspection doesn't have a role; it has a huge role, both at the borders and in the different countries where products are being made. But we have to do much more than that and it involves taking an approach that both is much more collaborative and also much more risk-based -- you know, we really need to focus on the things that will make the most difference.

And assessing and monitoring risk is a dynamic, ongoing process, but again, it can only be done effectively if we're really sharing information across governments and across sectors to understand the range of vulnerabilities, how those vulnerabilities may be changing because some products may be vulnerable because of bad actors that become identified in one country or another. That information gets shared and then we can all act on that information.

Products may become more vulnerable because of environmental conditions that may actually change the risk profile and sharing information on that. And certain products are more vulnerable by their very nature. But the more we can really take a risk-based approach, the more we can really take a preventive approach and the more we can really take a approach of true collaboration, the more progress we'll make towards our goals.

DENTZER: Great. All right. Let's go to a question right there in the middle, please.

QUESTIONER: Dan Spiegel, Covington & Burling. Turning to the World Health Organization for a moment, the program that Dr. Zucker put together, the impact program I think we ought to say is no longer the program that he originally designed, which was originally supported by consensus. That consensus has -- at the member state level has broken down. And my question for Director Barbano is, could you inform us, do you know why Brazilian diplomats in Geneva have worked so hard against a WHO role that would strengthen its enormative standard- setting and its operational capacity to work in innovative ways to deal with drug and food safety?

BARBANO: This issue is very much related to what Dr. Heymann alluded to in the previous panel. The Brazilian position in this regard is very clear.

Not to assume that every country large and small is going to have systems that look just like the U.S. FDA or other food and drug oversight entities from other countries. But that there will be some basic principles, there will be sharing of best practices. There will be efforts to proactively help build capacity through technical assistance and information-sharing. And that we will work in ways that are national, regional and global to really ensure that there's a minimum threshold of standards for food products around the world. And I think that is, you know, the goal that I bring to this.

DENTZER: Well, how much contact do you have with the U.S. Trade Representative's office or the customs folks in terms of enforcing some of these food safety, or, for that matter, drug safety issues?

HAMBURG: Well, I would have to say that I don't think at present that there is enough conversation, communication and mutual understanding. And I think that we need as the U.S. Food and Drug Administration to, in fact, sit down more frequently with our counterparts. And it's something that I've engaged in.

I think the danger in not having this conversation is that, in fact, decisions get made on the basis of trade and commerce that may not, in fact, factor in critical aspects of public health. And so I think it's very, very important that we make sure that the public health issues are fully understood and aired as many of these broader trade debates go forward.

DENTZER: And I don't suppose we have any reason to believe that other countries do this markedly different, that there's more discussion among the trade authorities in other countries or is there?

HAMBURG: You know, my sense is that for many years there have been sort of parallel tracks and that, in fact, the public health issues have not been as central to the discussions as they need to be. We need to make sure that things that really matter for health, well being, and, in fact, safety and security more broadly are integrated into these discussions and ultimately into our policies.

DENTZER: Okay. That's terrific. Let's take a question over here, please.

QUESTIONER: Hi. Erik Olson with the Pew Charitable Trusts.

I had a question. One of the biggest policy challenges has been addressed a couple of times, but we haven't really heard an answer. FDA now, as I understand it, is inspecting about 1 percent of our imports, so 99 percent of the imported foods are not inspected.

We've heard it's going to cost $1.4 billion for FDA just to implement the new food safety law over the next five years. Assuming that all the budget cuts that everyone is talking about may hit FDA and other agency -- food safety agencies, what would the role be potentially for fees on the industry to help pay for this implementation? We know in PDUFA for drugs, the drug industry pays fees to pay for their regulatory system in part. And I believe that the Obama administration supported the House legislation that add fees for food safety implementation.

Is that something that really might be part of the solution here, not just in the United States, but potentially more globally, to make sure that this new web of international trade and food, and frankly, in drugs, really -- that we get a handle on it, that regulatory authorities can inspect more than 1 percent of the imports and perhaps do some of the overseas inspections that are required in the new legislation.

HAMBURG: I think there really are two overlapping issues here, and we don't want to completely put them together, one is the question of how do we implement the food safety bill, which is enormously important and does begin to get at some of the global food safety issues that are so critically important. And there's no question that the law puts forward a number of very prescriptive actions for us to take, all of which are very important and much needed, including enhancing inspectional activities. And yet it's an unfunded mandate as we like to say. And it does raise serious issues for us.

As was mentioned in the first panel, industry cares enormously, in fact, about achieving the goals of this new legislation and strengthening food safety, and importantly, implementing the preventive focus that's part of the Food Safety Modernization Act to prevent problems from happening in the first place rather than trying to scramble after them once they've occurred.

And so I do think that industry is willing to step up to the plate in terms of resources and partnership to take more responsibility and accountability.

MORE

ZUCKER: Well, this is where I think it comes down to the public and all those who work in this area to say we need to separate these out to a certain extent. For example, there is areas of overlap in the sense that there are issues of patents on medicine. But I think the more we merge these together -- and we have to remember, from a historical perspective, while this whole issue of counterfeit medicines was being addressed to the World Health Organization, there was also the whole issue of intellectual property rights which was moving forward. There was issues of vaccines in Indonesia and some of the issues with the flu.

And so all these things were sort of in the mix. And I think it's very important to tease these out. As the clinician, sometimes you sort of have to tease out on medical problem from the other. And you can look at them together, but you have to sort of separate them out at times and address them separately. And I think that until we do that a little bit, we're going to run into some problems.

DENTZER: And the question will be whether 20 countries could get together and do precisely that.

Let's take a question all the way in the back. I've been neglecting the back of the room.

QUESTIONER: Hello, everyone, my name is Ashifi Gogo. I'm the CEO of Sproxil. We provide SMS verification services with (NASDAQ ?) in Nigeria.

I wanted to provide an alternative view on the first question, which is public advocacy of food safety concerns based on my experience in Nigeria. A consumer called in indicating that there was a mixture of genuine and fake medication, and information was passed on to the -- (inaudible) -- was able to take action and find the counterfeiter in the act selling fake drugs to consumers, using SMS technology.

So I'm wondering, is sort of a hotline police tipoff style system instead of maybe a public NGO might be a way to engage consumers who are in pharmacies multiple times a week to essentially report incidents of suspicious activity in pharmacies to enhance the safety for the public?

DENTZER: Well, anything like that?

HAMBURG: Well, I'll start and others will, I'm sure, want to elaborate. Reports from consumers about the quality of their products and adverse reactions, very, very important to the work that we do at FDA. And we rely on getting that kind of information and encourage it.

One of the challenges with these substandard drugs is that consumers may not recognize that they're not getting what they think they're getting, and that's one of the very serious dangers is that you may think you're getting a drug that's treating your condition. But if you are doing poorly, you may not realize it's because the drug isn't adequate; you may think your disease is just progressing or think maybe you're on the wrong medicine. But sometimes you don't know, and that's one of the dangers with malaria medications -- what we're seeing is, you know, not only are populations being treated with drugs that are inactive, but also contributing to the drug problem of drug resistance because they may be being partially treated with a substandard drug. And then, in fact, you're creating a problem with the organism, which then means that the actual quality drugs no longer treat it as well because of resistance.

So they're very complex problems that can unfold if you think about the challenge of whether a person is taking the drugs that they're thinking that they're taking. When it actually has a toxic component, it makes it a lot easier.

Someone commented that when there's a problem that's acute, the red flags go up and you can usually respond. But when it's a chronic exposure that can be damaging or an inadequate drug, it's much harder for the consumer to always be aware, but any reports are valuable. Also, reports of what appear to be inappropriate practices in pharmacies are also very, very valuable. And I think that, you know, if we're going to be successful, we need to galvanize as much of that kind of consumer information as we can and match that to other types of information so that we can get the clearest picture that we possibly can so that actions that are meaningful can be taken.

ZUCKER: One of the other things that WHO had started back in '07 was the concept of having some way to track and having -- basically, through the computers there is a way you can go onto a map, find out, file reports in, tap on that country, tap on that region and they have a lot of information coming back. Larry Reggie (sp) who was incredibly instrumental, a lot of the work on this, was trying to push that forward at that point. And I don't know where it is at this point, but that was one one of the concepts of trying to do just what was mentioned -- you mentioned to track.

DENTZER: Is that the equivalent of a global sort of adverse- event reporting sharing capacity?

ZUCKER: That was -- that was -- it was sort of -- the concept came from that kind of system, because that was being done for issues of flu at the time.

DENTZER: Perhaps somebody in the audience knows the status of that.

Dr. Barbano?

BARBANO: Susan, in Brazil in 2009, the Brazilian Congress adopted a law that establishes a system to control -- to track medications. And we are in the final stages of identifying the technology that will be used. And that technology will allow the consumer to verify the authenticity of the medication at the pharmacy. Many other countries in the world already use that technology. The FDA has expressed its interest in familiarizing itself with the technology, and we already have two teams exchanging information.

DENTZER: And what is the technology?

BARBANO: It's a technology that uses a bilateral code based on data metrics and (a seal ?). And that will allow a database to be established, which will allow for tracking the medication and some device to verify the authenticity. And this has the full support of the pharmaceutical industries in Brazil, both the national industries and foreign.

I'd like to mention something that might be of interest to this event. The OAS has created a network. Brazil joined the network at the end of last year. It is called the Safe Consumption Network in Health. This is the first step to create the network that will have the capability to centralize alerts and make them available in a portal. I believe that the OAS will have this portal functioning within three months in English, Spanish and Portuguese.

HAMBURG: And that's under the auspices of the Organization of American States. Is FDA a party to that? Do we know?

BARBANO: Yes.

HAMBURG: I -- I am glad to hear that. I have to confess I don't know the details. But we try to get our fingers into any international or regional activity that we can, because it really is, I think, so important to us.

DENTZER: So the point was made earlier that many countries will not have the capacity to use some of these technological solutions because of resource constraints. But here is Brazil, a middle-income country, putting in place what sounds like -- is it -- is it a bar-coding system that was put in place? So it's not out of the question that these technologies could become more useful in these countries. So perhaps we'll have some conversation about addressing those capacities.

BARBANO: After we began conducting electronic elections in Brazil, the world began to believe that we have some technological -- (laughter).

DENTZER: Okay, well -- and then -- (laughter) -- and then you can export the technology back to the United States.

(Laughter.) Okay.

Question over here, please.

QUESTIONER: Hello. My name is James Tunkey. I'm an entrepreneur as well as a director of the International Council for the Life Sciences. I just first want to congratulate the council and Laurie Garrett for putting this conversation together.

My question is for the panel. It doesn't seem to me that we've moved from a consideration of intellectual property rights and the private profit motive to the reputation risk really that is posed to government organization in the case of failure of food safety.

And I think that there's some real contrasting styles of approach to governments, both in governance of private enterprise, as we see here in the United States primarily; and governments in Brazil, which continues to really have a much more state-centric approach to drug development and production.

And so if you could just speak a little bit about the policy challenges of moving from the view of one that's focused on intellectual property rights protection by private industry to one that's focused on reputation risk of food failure safeties (sic), I'd appreciate it. Thank you.

DENTZER: Well, I'm unclear as to whether your question pertains to the drug safety or the food safety issue. So -- both? Okay.

So -- well, let's have at it.

HAMBURG: I mean, at the end of the day, I think that agencies like the Food and Drug Administration and the industries that we regulate do have common purpose, in that trust and confidence in the work that we do and the products in question is the ultimate goal, and that -- you know, I certainly think that if you look at history, you can see that industry, in fact, does better when there is a strong, well-functioning regulatory authority. And I think that as we were working on the Food Safety Modernization Act, we saw industry's real engagement and investment in systems and a legal regulatory framework that would support their ability to maintain trust and confidence in their -- in their brands.

So I think it's a hugely galvanizing principle. I don't know exactly how you frame the issues of intellectual property versus the reputational. I think often they intersect. If you have a brand-name product, you want to keep that brand.

But I think that, you know, stepping back and just looking at the importance of confidence in the products -- you know, whether they're generic drugs or brand-name drugs; whether they're food manufactured by a big multinational company or at a more, you know, local community level -- that still is, I think, an organizing principle. And it's where a strong but modern and, I think, you know, clear regulatory approach supports the ability of industry to achieve their goal, and in fact, our interests do align.

I don't know if that answers your question or not, but --

DENTZER: It sounds like the Chinese authorities decided to get everybody's attention by putting a few people to death. Presumably, we will come up with a more collaborative approach -- (laughter) -- as Peggy mentioned earlier.

We are out of time for this panel -- sad to say -- but I think we've worked our way through a series of the issues that we've already discussed, whether it's the lack of regulatory capacity, whether it's differences in legislation, whether it's incapacity in terms of technology.

But I think fundamentally you also heard under the surface of the comments today, fundamental other lacking obstacles that we'll have to get over in order to do more in this area. One is will; it's just plain will, countries having the will to do this. It's engendering a greater awareness among consumers in particular. And essentially, we will also eventually have to address the lack of resources being devoted to this capacity among all these countries.

So join me now in thanking this panel for a terrific discussion. (Applause.)

####

®FC¯END

®FL¯

.STX

(C) COPYRIGHT 2011, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.

NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR E-MAIL INFO@FEDNEWS.COM.

THIS IS A RUSH TRANSCRIPT.

-------------------------

LAURIE GARRETT: I'd like to encourage people to please take your seats. Perhaps someone at the back there could let people who are still noshing know that it is time to cease the noshing and come for the sitting and listening.

So as people begin to get seated, I just want to remind everybody -- because I did hear a cell phone go off during the last session -- that this time any cell phones that do go off I will fine you $50 and give it to the charity of our collective choice. (Laughter.) And I also want to remind everybody that you're on the record. So when you ask questions, keep that in mind, and that our audience in Washington is listening via teleconference.

And we going to close up now with I think the most important discussion of the day. Hopefully it will be your take-home messages that will resonate with you as you leave this session. I should preface by saying you may not be aware how unusual it is for the Council on Foreign Relations to dedicate such a significant block of time to a single issue, particularly one that, from the point of view of foreign policy advocates, might be considered a rather narrow set of issues. I think it speaks very well of the council in general.

I'm incredibly pleased that the council saw this as a significant and important issue, in part because it goes to the core of our weaknesses in global governance, and that is something that increasingly is occupying the attention of the Council on Foreign Relations. The vast number of areas -- everything from climate change, to threats of pandemics, to counterterrorism and Islamism, and what have you, issues that really cannot be addressed by a government acting alone adequately, but rather require marshalling forces for some form of global governance which currently does not exist.

What we're going to be looking at in this session is precisely that problem: What can we do to begin to get closer to solving some of these safety questions, at least to begin to venture into some appropriate directions that might take us towards the G-20 next year when President Obama will be the formal host and when it might quite possibly be an issue that could rise to that agenda.

And as you all know, you have the biographies of everybody in your packets, so I won't spend a lot of time tell you who everybody is. But I want to begin with Aline Plancon, who has come all the way from France to join us -- or Geneva?

ALINE PLANCON: Geneva.

GARRETT: Geneva. She runs the Medical Products Counterfeiting and Pharmaceutical Crime Unit -- there's a mouthful, otherwise MPCPC, which is also a mouthful.

What is that in French? What are the -- what's the acronym in French?

PLANCON: MPCPC.

GARRETT: Oh, thanks. (Laughter.) That never happens. That never happens. (Chuckles.)

Now, if I understand it, it was formerly created as an entity in 2006, but you didn't really get up and running until about a year ago. And you have a massive staff -- there's two of you.

PLANCON: (Chuckles.)

GARRETT: Did everybody hear that? (Laughter.)

And yet somehow, in your first year of operation, in August you were instrumental in the arrests of 80 people and the seizure of 10 tons of counterfeit drugs in East Africa; and in October, Operation Pangea III cracked down on illegal websites hawking counterfeit drugs -- 290 websites shut down, 76 arrests and a million pills seized. I'm not quite sure what might be.

But I am at a loss to understand how we should assume that INTERPOL has a serious commitment to this problem if you are two people, even two that work so hard that you're able to pull these arrests off.

PLANCON: Yeah, well, if you think differently, is how come INTERPOL came into the loop, into a pharmaceutical crime and an issue that he was not dedicated before? And how come in the history we've been trying -- and we are building up a capacity from the police point of view in order to provide an enforcement and an adequate response to these crimes.

So we are only two, but I'm proud that we are at least two, and we started with one. So when you think of it -- (laughter) --

GARRETT: You've doubled. (Chuckles.) (Laughter.)

(Cross talk.)

PLANCON: -- kind of increase in our staff, and we are getting better and better. So all I'm saying is, all staffing for us in INTERPOL; with this initiative at the WHO, this famous IMPACT; and we had some precedence in combating counterfeit medicine in Asia, but we were just baby born with that. And we had the opportunity and the willingness to build up this multi-disciplinary approach which we believe can make a difference.

So we've pooled resources. But with a number of networks, with a share of capacity that are not necessarily the same but that are complementary, we can make miracles. Like it was 2 million pills seized during Pangea. The countries where we've been interacted are starting with nothing, with not knowing even one another when we did some meetings between the police, the health and the customs. We've been trying to open the door to the private sector, which is also something very important to this project, and to get the scientific community helping them to identify the suspicious samples where we couldn't make it.

So, all in all, I would be more optimistic, saying that INTERPOL has been raising up the awareness towards its community with these crimes that we didn't know before, that is a serious criminal activity. The gangs are very sophisticated. They are very well organized. They know what they are doing and on which rules they are playing. We know that they are very dangerous of course, and they are using all the credibility and the weaknesses of the system, and what they want to do is money.

So the fact that we realized it. And they will never stop, because, so far, we're seeing the configuration where we are in a low risk for them -- the sanctions are very low, as you know -- and very high profit. So this is perfect. If you're a criminal, you should go into this business. (Laughter.) Therefore, the more we will stay into this configuration, and the less we will try and put the resources together -- that does not cost more than what it is now, it's just thinking differently, thinking outside the box -- we could make a difference.

And in our perspective in INTERPOL, we've tried to do that, and with the support of my top management -- Mr. Noble, and our member countries, we've been able to raise this crime as a top crime priority for the member countries of INTERPOL this year. So this is where we stand.

GARRETT: We earlier heard from Paul Orhii about the great dangers that enforcers, regulators may face in a country like Nigeria, and we've heard such stories from all over the world. There seems to be very strong indications that organized crime -- traditional organized crime is moving into this space in a very dramatic way, in part because they've been engaged in the theft and sale and counterfeiting of prescription narcotic drugs for a long time -- OxyContin, and Percocet, those sorts of drugs -- and then increasingly into drugs that have an effect on speed and diet.

But this -- it's a logical transition. These guys are pros. I mean, you're not up against some kids in a basement cranking out some phony aspirin.

PLANCON: Yeah, you're right, in the sense that they are very sophisticated. And they are testing the market. Some of them are pros in narcotics, and because of this benefit, they can make in medicines, they are testing the market to dedicate their activities onto purely counterfeit medicines.

We're also facing some gangs or mafias that are also dedicating their activities in other type of, what we call, pharmaceutical crimes -- and in that, we intend -- the theft of medicines, it is very common and dramatic for us, criminal activities, as well as the diversion, which is to us encompass the safety for the patient -- safety aspect, but also they undermine the credibility of the system.

So we are confronted to all these bunch of activities where these gangs are completely directing their activities, and they developing it, which is for us -- two, four, whatever persons we are -- a very big concern, and also for the INTERPOL community definitely.

GARRETT: And Greg Simon, I am sure that at Pfizer, while you may think it's wonderful that INTERPOL has an office, an office of two does not give Pfizer comfort when it comes to defending your brand. And I don't want to talk about your brand as a copyright issue, but what happens if drugs are released, claiming to be Pfizer drugs, that are actually poisonous, made by somebody else?

And so tell us what extent you go to, to essentially try to ensure the safety of the marketplace as a private corporation?

GREG SIMON: Well, first we're trying to protect our mission. Our mission is the ethical production of medicines that help improve the health of people all over the world. So if somebody thinks they're getting a medicine to improve their health, and they think it's a Pfizer medicine, and they don't get that, then we can't fulfill our mission. It's really not about the name on the pill; it's really about what's in the pill.

We train the government on this. We have the world's best anti-counterfeiting lab in Groton, Connecticut. We recently hosted over 20 people from the Commerce Department, and USTR and others. We have ex-FBI officials. We are constantly in the business of staying one step ahead of an organized effort that can make anything look like a real Pfizer drug, or any other company's drugs, whether it's the aluminum blister pack the pill is in, or the coding, or the labeling, or the imprint, it is constant battle to stay ahead. It is that sophisticated. This is not --

GARRETT: How large is your operation? I mean, what is this costing the company? How many human beings do you have in the field and in the lab in Groton?

SIMON: I don't know the costs, and if I did know, I probably shouldn't tell you. But just like when the president goes to India, we don't say how much we're spending on security. But I know it's not $200 million a day. (Laughter.)

But we have hundreds of people around the world. And, in fact, we have training sessions all over the world -- literally, all over the world -- where we go in and train local government officials and police on how to detect, and to check on medicines. So we have hundreds of people engaged. At the Groton facility. we have about 50 to 100 people. It's also part of our research facility in Groton, Connecticut, which is one of the original Pfizer locations.

But the issue here is, anything that substitutes a product that it's intended -- anything that interferes with getting a product to you that you think is going to improve your health is an assault, because either you're being harmed or you think you're being helped and you're not. And whether it's Lipitor, or a cancer drug, or pain medicine or a malaria drug, whether we call it counterfeiting, or substandard or falsification, it is an assault on patients all over the world. And we are focused on trying to create a system where that is treated as seriously as the sale of illegal substances that people want to take.

Here these are things people need to take and it's not treated as seriously -- if I could say it -- as counterfeit music and counterfeit movie DVDs. When I was in the government, our relations with France were determined by Jack Valenti. Every year he'd go to France and argue about the right of American films to be freely distributed in France, which didn't like American movie industry, and the whole government was involved in that dispute. And here we treat illegal pharmaceutical drugs as either an IP issue, which I don't -- which I don't think it is -- or something that's not worth the full force of the U.S. government and world government getting behind it.

It depresses me to say this, but four or five years ago I testified to Senator, at the time, Enzi and Kennedy's committee about the future of the FDA. And I pointed out that their entire budget to defend the entire country from bad food and bad drugs was equal to the budget of the education department of Montgomery County. How can we get there from here if that's all we're willing to put behind it?

GARRETT: In practical terms, if your lab in Connecticut figures out that something that field agents -- let's just say, in Kenya -- have seized and sent to your Connecticut lab to analyze, they figure out that indeed it's not only phony but quite dangerous, there's something in the formulation that could have a toxic effect on people, who do you call? What do you do? What's the steps?

SIMON: Right, well, first we call both people at INTERPOL -- (laughter) --

GARRETT: Ring, ring. (Laughter.)

SIMON: We call our government. We call the --

GARRETT: What agency in our government?

SIMON: HHS. We call WHO. Depending on what it is. If it's an infectious disease, we might deal with the CDC.

And here's the -- here's the odd thing: We are moving in this detection space from a world in which the focus has been on neglected tropical diseases and infectious diseases to what is now a U.N. summit coming up this September on noncommunicable diseases, which include things like cardiovascular disease, cancers, diseases of aging, so-called, where the medicines that will be distributed around the world are going to be not the medicines that are donated, like we donate Zithromax for trachoma -- it's a blinding infection -- but medicines that we used to taking every day, like a Lipitor, like certain kinds of antidepressants or pain pills.

There's a huge market internationally for people to illegally provide those medicines because the price for those medicines around the world are automatically higher than the neglected tropical disease medicines which are intended for the poorest of the poor. And the noncommunicable diseases will be intended for people that we think of as -- in the middle income countries with a lot of poor people, like some of the Middle East countries, or some of the South American countries. We've been working with the Gates Foundation on what's called tiered pricing.

So there will be drugs that will be priced for the poorest of the poor, and drugs that are priced for the middle class, and there will be a huge effort underway to steal one and give it to the other.

GARRETT: That's bad, that's illegal, but that's not getting to our safety issue. That's a --

SIMON: Correct. That's just a --

GARRETT: -- separate problem.

Well, let me ask you about one that is at it. I was recently in a meeting with the health minister for one of the poorest states in India, and he described that they don't really have any problem with antibiotic-resistant bacterial disease, and so on, because they don't have a black market in drugs. And the reason they don't have a black market in drugs is that all drugs are provided free by the government.

And I said, well, that's great as long as you're dealing with, say, tuberculosis and malaria. But what are you going to do with your health transition when you're talking about diabetes, and therefore insulin every day; or, you know, heart disease, and therefore antihypertensive medication on a daily basis, something of that nature? Then, all of a sudden, we can see an entry point for the creation of black markets even in countries that traditionally have not had them. And so it seems like this is another potential danger point coming ahead.

SIMON: Yes. And there are two specific examples:

PATH, a nonprofit based in Seattle, recently created a meningitis-A vaccine very cheaply, and that will be distributed in many parts of Africa where this is the particular type of strain that's affected. Whenever something gets mass distributed, that's helpful, people will start producing what looks like it's the vaccine and is not. So automatically you can assume that someone's going to try to get in on that.

At the same time, when we provide new technologies that allow people who are community workers, instead of doctors, to do subcutaneous injections of treatment rather than intramuscular, which is a little more difficult, those technologies are cheaper and they're more easily distributed, and they will be the -- they will be attractive to people to mimic, with awful health effects, incredibly bad health effects.

So every time you do a step forward in a health product, you have to immediately go on the defensive. And we, as Pfizer, cannot solve this problem; and we, as the government, cannot solve this problem. We, as government and industry, can solve this problem. But we have to get over these barriers that have come up over the years that the two shouldn't be cooperating, and that's one of the problems.

GARRETT: Okay, I'm going to shift to food for a moment, because --

SIMON: Just to cheer up? (Laughter.)

GARRETT: Just to cheer everybody up, because, you know, food is a bit better organized and regulated than is the medical and drug chain.

Caroline, over at -- from your point of view, first of all, we do have this long-established Codex Alimentarius. It's been in place now for, what, five decades I believe. And it is internationally recognized, most of the nations of the world are signed on. That sounds like we have global governance. Does it work? Is it?

CAROLINE SMITH DEWAAL: Well, Laurie, it certainly is a start. But I think you have to start where public health starts, and that's at the local level. And at the national level in the U.S. we are just transitioning into this preventive system from one that's largely responding to outbreaks that are already happening. What's happening at Codex is one piece of a regulatory framework.

You've been talking on the drug side about enforcement. That's another piece. Codex does standards setting, and that's very important, but you need the whole framework under which those standards are going to be applied, and that's what's missing in many governments. What's exciting about the Codex Alimentarius is that it is international governments at the point of the FAO, the Food and Agriculture Organization, and the World Health Organization, and those two coming together to agree that these standards are important both for public health and for trade.

The difficulty with it is that -- and just to finish on what is good about it, it is an amazing experience to sit in a room with 200 countries -- people speaking many different languages, there is simultaneous interpretation, so that everyone can understand the positions and policies being established by the different governments. That is an amazing thing.

GARRETT: Just on that note, I've had some people tell me that it was easier to define brie cheese in the Codex than in the EU. (Laughter.)

DEWAAL: Yeah. Well, and the difficulty with Codex is that at times it seems like it's kind of broken down into a debate between the United States and the EU on different policy matters, and a lot of governments are sitting around, some are taking one side or another, but it's really largely sometimes just bilateral negotiation that's happening there.

It would make a lot more sense to have more commonality between those two major trading centers. For example, on the issue of growth hormones and the use of certain drugs in animals, not for the health of the animal, but to promote -- to allow them to grow faster and develop more quickly to go to slaughter. There is not an agreement between the U.S. and the EU. And so sometime those fights break down on the floor of Codex and you have a lot of people's time wasted while you watch essentially something being debated in a forum where it can't be resolved. It's got to be resolved between the U.S. and the EU.

GARRETT: In the last 10 years or so, what category would you say has represented the greatest risks to human health in terms of food contamination -- chemical contamination, bacterial, or the transmission of antibiotic resistance?

DEWAAL: Your question is an excellent one, and the answer would go to what region of the world you're talking about.

And this goes to another central point that I think is important for this group to understand. If the U.S. tries to manage food safety risks based on the standards that are important to food produced in the U.S., we will be missing the mark when it comes to imports. We have to actually know what the hazards are coming from those different countries. Things like -- we did a research project looking at outbreaks in different global regions, and I can tell you from that research, the chemical contaminants come up much more in the Asian region as an issue of public health concerns than they do in other regions of the world.

Antibiotic resistance is clearly a hazard that I believe has actually emerged through certain food products in the U.S. already. For ground beef, it's shown up in numerous outbreaks, and also in dairy products, especially raw milk, which I wouldn't advise anyone consuming. So we have already emerged various strains of salmonella that are showing up in the food supply that are antibiotic resistant.

But I think the issue of pathogens and chemical contaminants, as they're moving across the borders, needs the type of comprehensive approach that I think the commissioner was referencing in her first talk today. It's critically important, but we need to recognize that some of the tools to accomplish it already exist and need to be strengthened and further developed.

GARRETT: Michael Robach, I want to ask you a question about complexity, and before I get to it, I want to start with an anecdote, if you'll forgive me.

A few years ago there was an outbreak of E. coli 0157, including deaths in school children in Japan. The Japanese agencies were able to determine that it had something to do with school lunches, but couldn't figure out exactly what was responsible -- how these kids were getting E. coli -- and ended up shutting down schools all over Kyoto and Tokyo.

It was eventually determined, through about two years of investigation involving scientists at academic and government levels in at least four countries I know of, that it was all because the daikon seeds for those horseradish sprouts, that are so popular in sushi and sashimi, had grown in Idaho downstream from a big cattle site. And the E. coli had been shed by the cattle into the water supply; ended up absorbed into the seeds, so they could not be washed off, and they could actually be passed multi-generationally in the daikon.

This was an incredibly complicated chain of events. No one could have imagined such a thing. And nobody's regulatory or research systems are in place in any country I know of that could quickly track that one down, and have made it resolved in less than about the two years it took to figure it all out. I wonder if you can describe to us the complexity of the chain of what we call our food supply? Where is it coming from, and how much more complex is it as you escalate up to processed foods?

MICHAEL ROBACH: Well, I think you make a very good point. It's an extremely complex system. We look at the food system from origination, starting in a farm field, all the way through final consumption, and you can take many, many steps along the way. I remember being at a meeting -- the International Association of Food Protection last summer out in California, and there was an Irish professor giving a talk. And he put a hamburger -- a cheeseburger, actually -- up on the board. And as he went through all the components of that hamburger, with the lettuce, the tomato, the condiments, the salt, the spices, the bread, everything, I think he counted 54 countries that were involved in the production of that particular hamburger --

GARRETT: Wait. Let me just get that right. When you eat a hamburger, you're eating 54 countries? (Laughter.)

ROBACH: You very well could be. It is possible. It is possible.

And I take this -- I live this every day. I work for Cargill. We're a large international agribusiness firm. We operate in 67 countries around the world. We have about 1,200 food processing plants around the world. So this is my world. You know, this is what we live with each and every day and it is extremely complex. It's not simple. And it takes an awful lot of work, not only within the company, but then also with our suppliers, and our suppliers' suppliers, to really be able to focus in on what's really important from a positive public health standpoint.

And I want to go back and talk a little bit about something that Dr. Hamburg mentioned this morning, and that's something around alignment, and that's really getting focused on those elements that are extremely critical to the safety of our food supply. And one of the things that we've done within Cargill is we've taken the principles of Codex Alimentarius -- the principles of good hygiene, prerequisite programs and HACCP, and used that as the basis of our food safety systems around the world. So regardless of where we're producing, processing, marketing and selling, and eventually having consumption, we're operating against a single standard that are focused on those elements that are critical to the safety of the food.

People often get food safety and quality mixed up. They're very different. I mean, safe food is safe food, and those criteria are very clearly identified as you go through your risk assessment and do your hazard analysis, and understand what are those emerging issues or those existing issues that could impact your food supply? And you need to understand that, and have appropriate interventions in place, and be able to manage that risk to the best of your ability -- not that you're always going to be able to eliminate it, but manage it to the best of your ability.

And then, working with your downstream customers -- as we do with the McDonalds, the Nestles, the Krafts, the General Mills, the Coca Colas of the world -- working with them to make sure that what we've done to our products are also then carried on, so that they have the same systems we have in their products, and then working with consumers to assure that they understand their responsibility in handling and preparing food properly.

GARRETT: I'm going to ask you a question that Greg so skillfully dodged. (Laughter.)

If the FDA's budgetary capacity to deal with food and drug safety is about the same as the school system of Montgomery County, I'm going to take a wild guess and say that Pfizer is probably spending closer to the school system of New York City on their side of ensuring drug safety, at least for their product lines. What do you think is the ballpark of what kind of expenditure the private sector is making to take care of food safety?

ROBACH: I think the private sector is, you know, spending a tremendous amount of money and putting a tremendous amount of resources against food safety and assuring our food supply chain.

Clearly, the industry spends a lot more money than governments are capable of spending. And that's the way it should be, because it's our responsibility to make sure that we have a safe and a secure supply chain. So it is something that I feel personal about. I know my company, Cargill, our mission is to be the global leader in nourishing people, and we take very seriously.

And I look at the role of government as not necessarily to control what I do, but to make sure, and assure that companies are doing what they said they were going to do to produce safe food. They have an oversight responsibility. They don't have an active management responsibility. That's the responsibility of the private sector. Government's role is there to assure that what we said we were going to do, we're doing, and that what we said we were going to do is producing safe food.

And in that way I look at it as a partnership. And there should be alignment between the public sector and the private sector which, to me, gets embodied in those principles of Codex, the prerequisite programs and HACCP. And if we're all operating against those same criteria -- government from an oversight position, and industry from a business practice standpoint -- we're going to be in much better shape from a global food supply chain than we are today, where we've got things all over the board, and a lot of the things that we do for regulatory compliance have very little to do with food safety.

GARRETT: Well, let me come back to the "who do you call" question. We've heard that Paul Orhii has a blacklist in Nigeria of repeat offenders -- essentially, companies putting out fraudulent or unsafe products. That's one method of approaching it.

We heard from Greg a long list of who to call: There's some WHO (to) call, there's a call to INTERPOL, there's calls to CDC and the FDA, but not one sort of 911 version of: we found a violation; this is who I call.

If in food you -- I mean, your first thing of course is to say we're not taking your product into our system, our chain, because it's not reliable, but if you have a grower, a distributor, a processor that you see violations in repeatedly, is there a phone call?

ROBACH: Well, there's always a phone call.

There's an organization that we're part of in Europe right now that was formed within the animal feed industry -- because we were having folks coming up through Rotterdam with barges full of tainted soy beans and trying to sell those soy beans into the food, into the feed industry. And we finally formed a consortium of feed manufacturers, so that when somebody rejected that barge the first time, an e-mail went out to everybody else up the river. Because, they would just go up the river until they finally could find somebody to buy it. So now we have this early-warning system in place where an e-mail goes out, everybody knows what's going on, and then the Dutch government is informed. And that has really stopped that trade.

So we have a number of organizations that we work through. We have the GMA organization here in the United States. We work within some European, some Asian, some Latin American organizations where industry talks to one another. And when we know somebody is trying to move something that is economically adulterated or it's not what it purports to be, we have mechanisms so we can talk to one another. And we do talk to the FDA and we do talk to the USDA about things like that, because that is part of the partnership, and that's part of --

GARRETT: But there's no 911 for food --

ROBACH: There is no 911, you know. I mean, if I've got an issue with food, I'll pick up the phone and we'll call Mike Taylor at the FDA and say, hey, Mike, you know, this is going on, so he can get ORA involved and they can take appropriate action. Or we can call USDA, we can call FSIS and say, hey, something's going on out there. And we talk to our inspectors every day in our plants.

SIMON: Let me -- (inaudible) -- your question. (Inaudible) -- than us calling other people, we now are distributing technology for people who receive the drugs to text the supplier -- the legitimate supplier to see if the code matches this legitimate code. This is done in Africa so that you have a way of verifying that the lot you got is the lot that was supposed to be distributed. And this involves the pharmacist and the distributors locally, as well as the company internationally, so that we're using texting technology, because cell phones are far more distributed than anything else. We can now help people verify that they've gotten the real thing, and that's much better than us trying to chase the bad thing down.

GARRETT: Well, one of the big issues, Aline, that is an increasing problem on the drug side -- and there is evidence of it all over the world -- is stolen drugs intended for humanitarian relief purposes or for distribution through The Global Fund to fight AIDS, tuberculosis and malaria, or any of a number of bilateral programs that are part of health and development.

I know that I had the experience -- I traced one supply on the ground from -- donated by UNICEF and a host of other humanitarian groups to Ethiopia. And the drugs then were -- ended up in -- the drugs were then hijacked by Ethiopian thugs, basically, then sold through to Ingushetia, inside of Georgia, the often contested and recently source of warfare between Russia and Georgia. It was a sort of lawless state run by criminal gangsters, and their main source of income was stolen pharmaceuticals.

They didn't even remove the donation labels off these things. But I found them in marketplaces from Central Siberia all the way into the Czech Republic, all intended originally to help dying people in Ethiopia. We now have the scandal where The Global Fund is facing some real serious charges because they found that many of the funds distributed to key countries in Africa have, quote, unquote, "disappeared," and a lot of the antimalarials, the bed nets and anti-HIV drugs have, quote, unquote, "disappeared."

Now, one of the trends in all of this is realizing: Hey, you know, I make a certain amount of money. If I take the stolen drug and sell it somewhere, well, I can make twice as much money if I dilute the stolen drug down by 50 percent, repackage it, and now I sell twice as much elsewhere.

And this seems to be a rising trend. Now, are you -- do you have any capacity to intervene in these situations?

PLANCON: Thank you. First, I've got a question. Do you want to join my unit in INTERPOL? (Laughter.)

GARRETT: (Chuckles.)

PLANCON: Now, regarding these crimes, that's true that the first time we've been developing our capacity with (the Codex ?). So INTERPOL is a big family. We've got a network of 188 member countries, and we've got this automatic exchange of intelligence and also criminal information instantaneously -- oh, it's difficult in English. And so we are able to connect all these people together. You know, that you -- when you've got a guy who is arrested and identified in one country, you can immediately identify and inform the other countries where he stands.

So this is the criminal models behind, so now what about the products? And the problems that we are facing is sometimes it's difficult to know where the products are coming from. It's like we know where they are, we know -- we can identify some of the criminals behind, but we don't really know the whole picture, because we need to develop our capacity with the member countries, with the agencies we are working with, the private sector and all the others.

Now, we've been also facing this situation regarding the diversion and the theft. For the first time last year INTERPOL provided its capacity, services and communication to support the major theft that happened in the U.S. in order to alert the police forces all around the world of the possibility for them and for the health agencies to find out some products that were part of the theft. And therefore --

GARRETT: What was the -- can you tell us what the product was?

PLANCON: The product, no, but the company was Eli Lilly --

GARRETT: Okay.

PLANCON: -- and they are -- we are working, such as the others, through some networks. And so this went through the attention also of the police that we are also are trying to educate in investigating that crime.

As far as the diversion is concerned, it's also something that we've been immediately confronted with when we started this operation that we coordinated. And we found that some products could come in one country and would be found on the opposite side of the continent. But still no traceability and no -- (inaudible) -- from the, you know, people who sent it.

And so what we believe we've got is that there should be a change of mentality from all these donors and also the countries receiving these goods, so that we could develop a monitoring system that would not be constrained for anybody, but to involve this enforcement part of it that makes the chain safer, and that would allow the patients who should be getting these medicines to really get it, because at the end of the day sometimes they don't have it.

So by developing this investigation, and we are involved in some of the investigation of major diversion, we would like really to see a change into this -- into this approach of, you know, trying to investigate this crime, or at least to address it from everybody's perspective, and of course including ours.

GARRETT: Well, Caroline, everything comes down, whether you're on the food or drug side, to the ability to enhance surveillance and monitoring on the ground. You want countries, regardless of where they stand in GDP and where they stand in categories like "poor country," "emerging market," "developed," and so on, to have the capacity to do surveillance, and to be able to tell that the powdered milk actually is made from milk, as opposed to a chemical like melamine that was meant to be a coating on kitchen cabinets, or that the cough syrup is really cough syrup.

When we talk about enhancing surveillance capacity, sometimes it sounds like empty words. Who's doing the enhancing, and who's paying these people to do the surveillance? And how real is this, quote, unquote, "enhanced surveillance capacity?"

DEWAAL: Well, surveillance is the real portion of our food supply today that's happening at the local level. Public health surveillance -- which is where the outbreaks are occurring, documenting illnesses, deaths, hospitalizations -- that is the function of local governments.

And today that function is being severely threatened. We just did a survey of the U.S. when it came to food-borne illness outbreak surveillance -- which we think is a key indicator for any public health monitoring system, because the outbreaks occur fairly regularly, fairly predictably -- and we found a huge range. The best states are reporting about eight outbreaks per million population, but many states in the U.S. are reporting much, much lower than that, sometimes one outbreak per million or even less.

So we have a real crisis on the ground with local public health, and that's in a country that's quite wealthy. We've been starting to look at surveillance -- informal surveillance systems in other countries, in other regions of the world and, you know, we made some very interesting findings. I mean, Africa has a lot of reporting, but the outbreaks are huge and they're not well documented. You know, it's always reported as a water-borne outbreak from cholera, but we don't really know what's going on because they don't often have the lab capacity to do that.

The World Health Organization is right now setting up regional labs and working with governments and regions to ensure that they do have capacity to do this basic monitoring, and that will be helpful also as we improve for antibiotic-resistant strains of food-borne bacteria that can be coming through the food supply. So there is an effort to make this improved surveillance, but it really -- that surveillance component is really important because it tell us what we need to know about the imports that are coming from around the world.

Melamine -- nobody predicted melamine. But it actually came here first and was put into an ingredient that was used in pet food. So, in fact, we had the canary in the coal mine there when we had a major crisis in pet health because melamine had been consumed. That same ingredient then showed up in the infant formula in China and killed at least 50 infants and sickened thousands -- tens of thousands.

So it's really -- we need to listen to the surveillance, we need to recognize the canaries, and we need to take action a lot faster than I think we are today.

GARRETT: I want to ask each of you the same question before we go to the audience, and that is: If, indeed, you did have the ear of the sherpa team planning the G-20 for next year in Washington, what might you hope them to consider as a potential global policy initiative for the area that you're most concerned with?

And I'll start with you, Mike, down at the end and work our way across.

ROBACH: Well, I think the one thing that I'd like to see is better alignment across national governments, an alignment based back on -- and I said it before -- on the principles of Codex Alimentarius, both the prerequisite programs and HACCP.

And, you know, I believe that if national governments take those principles and use those as the basis of their regulatory programs, and we do that consistently, we're going to be in a much better place from a global food supply chain. The industry is already moving in that direction. The Global Food Safety Initiative is a consortium of small, medium and large companies, both producers, processors, retailers and food service -- food service providers, and we have adopted these benchmarked audits against food safety systems that are based in Codex as the way that we're moving our industry forward. And we're not only doing that within our own companies, but we're also driving this back to our supply chains.

And we talked earlier about capacity-building, and the GFSI group has put together an emerging markets program where it provides capacity-building through training and a step-wise progression through the process, so that emerging economies can adopt the critical elements in one year, and then build on that and adopt the next 50 percent of the principles of Codex the next year, and then finally through the third year become fully complaint. So it's a way -- it's an orderly way to build capacity, and build education and training in our supply chains, so that we're all focused on those elements that are critical to safe food.

So if governments could go through that same process and come to an agreement on what's important, and let's get alignment around those issues and provide regulatory oversight accordingly, I think we'd all be in a much better position.

GARRETT: Well, so far, if I'm the G-20 sherpa, you're music to my ears because you didn't ask for money. (Laughter.) You asked me to "align," which we can all release a statement and say: We shall endeavor to align. (Laughter.)

Aline?

PLANCON: Well, first I would ask the sherpa to put the line onto the agenda, okay, pharmaceutical crimes and public health and safety protection.

I think that if I would be able to convince, or to have my wishes come true, it would be to have this (equation ?) between the global health policy and being very sincere in putting in this enforcement -- necessary enforcement aspect in order to protect the public health and ensure the safety of the patients, which is recognizing that pharmaceutical crime is there, recognizing that we need to work together, that the model that we are experiencing are good, but they are definitely not enough and we need much more support in order to develop in a proper way.

And so try and get out of this situation where -- which is completely paradoxical, where we've got technical work that is very well recognized from the experts side, but the political world that are challenging the technicians because of ideological controversy. So I would wish that this controversy would find a way so that this global governance could embrace this ideology, where we can work together with different perspectives but aiming at the same goal.

GARRETT: Okay, now, I don't -- I think you also asked for an aligned policy.

PLANCON: No, because --

GARRETT: Did you have a budget?

PLANCON: Yes, I've got a budget proposal for you. (Laughter.)

GARRETT: Oh, you do. (Laughter.)

So you're coming to the G-20, and you want to what? I think you want to more than double your two personnel at INTERPOL.

PLANCON: Yeah, what we want is to replicate the -- (inaudible) -- impact, which is really getting all these branches of systems and competencies that together are making miracles.

GARRETT: Oh, miracles. Okay.

ROBACH: Laurie, Laurie, one point before I will leave I want to make clear. You made a comment about asking for money, I'm not asking for money, but what I would ask governments to do is to take a hard look and reallocate resources against those issues that are most important around prevention and focus on positive public health outcomes, because we spend an awful lot of money in infrastructure around the world, and governments around the world, that are not, in my opinion, moving us towards a preventive system, nor is it necessarily having a positive impact on public health.

So I think we can do a lot of reallocation out there and be a lot smarter about the way we spend our money.

GARRETT: (Audio break.)

SIMON: A lot of money for implementing in the G-20, a system to track products that can be accessed in any pharmacy anywhere in the world with a cell phone.

And we know how to do this. A few years ago, my credit card went to Istanbul without me. (Laughter.) And the credit card company called and said, are you in Istanbul? And I said, no. And they said, well, your credit card number is in Istanbul. And so if we can track that, we can track food and drugs that need to be labeled and tracked.

The financial services industry knows more about you than any other business -- not your doctor, but your financial services company, and if we can use that technology to guard health, it'll be a huge improvement.

GARRETT: So you want the G-20 to fund an agency to execute that?

SIMON: I want to be able to distribute that technology all through the G-20.

GARRETT: So what do you think that price tag is? Ballpark it. One million (dollars), 100 million (dollars), 1 billion (dollars)?

SIMON: Well, there's already a standard to do this, so you don't have to invent how you do it. So the technology to do it is, I would say probably in the G-20 I would predict that it would be less than $100 million, because what you're doing is you're educating people (that) they can do it using existing technology, and we already labeled the lots of drugs and we can do that more efficiently with this new standard. So this isn't about money so much as it is about awareness and commitment.

GARRETT: Caroline, you're on.

DEWAAL: All right.

Well, first, we're going to need a lot of money. (Laughter.) No, we're going to -- I would, I would approach them, first of all -- Mike and I are generally in agreement on the framework, so let's put that to the side. We all like the framework. In order to get that framework implemented, though, in a meaningful way, first of all, I would want them to fund these regional labs, and countries that want to participate should be monitoring -- sending samples in so we can monitor and determine the highest food safety risks for those countries.

And then those participants -- I bet Nigeria is right up there at the front of the line -- will get, like, I don't know, how much would a country need for capacity-building in this area, so we can build, develop the framework for that national program that can implement the preventive control systems, that can monitor that the companies are actually doing that, the things that are already built into the new U.S. law, and we could implement that framework through capacity-building.

So, Laurie, in short, I do think it would be expensive, but I think that capacity-building in this area will provide a huge benefit to that organized consumer voice. We talked about that in the last panel. We really need consumers to demand safe food and safe drugs from their government. And the industry plays a major role, but consumers can demand from their political players that these systems be implemented. But systems shouldn't be stovepiped just for exports. They really need to benefit the consumers in those countries.

GARRETT: Well, I can't help but think, if I'm a member of the United States Congress, the European parliament, any place where budget tightening is the name of the game right now, that I am going to take note of the massive level of expenditures that private sector is already making in these spaces, and wonder why it should involve more money coming from my taxpayers as opposed to levying the industries in some way. Why not a penny for every apple sold going towards apple safety? It seems to me as a consumer, one penny per apple, especially what I'm paying for apples these days, is not bad. (Scattered laughter.)

Let me, on that pontificating note, open it for your questions. And we'll start over here with Yanzhong Huang.

QUESTIONER: Yanzhong Huang from the Council on Foreign Relations.

I have a question about the marketing of counterfeit drugs. And according to WHO, half of the counterfeit drugs are marketed online. And online marketing we know that the counterfeiters operate through sites, you know, that could conceal their locations, identities. And some actually operate through those very, completely legitimate sites. You know, I -- whenever I went to a website of a major newspaper in Singapore, I would see this, you know, advertisement marketing so-called authentic Viagra, you know, on this site. (Chuckles.) And maybe Greg could address it.

Another problem that we have seen is that, for example, in Eastern Europe we saw that the counterfeiters actually tap into those drug trafficking channels to market their drugs. You know, so there's perhaps in some cases previous drug traffickers become today's counterfeiters, because this is less risky and equally profitable, if more -- if not more.

So I wonder maybe Aline now, or Greg could answer this question about how you address this non-traditional marketing issue.

GARRETT: Let me go first to Aline with the website issue, since you have already successfully cracked down on 290 of them.

PLANCON: Mm hmm. Yeah, the Internet -- "the cloud," as we call it -- is very challenging for all type of criminality. And that's true that these counterfeiters or the criminals use -- are using the Internet facilities to develop their business and to make sure that they can create, distribute, trade and deliver the illicit and counterfeit medicines using this Internet.

So through the experience that we've got, and thanks to the support of 44 countries, I mean, police, customs and health regulatory bodies, we could see and we could really experience -- see a really big difficulty to address that crime. And the reality is that the fact that no regulation on Internet is there poses problems to us is enforcement sure, tracking down the websites. And especially where they are is a challenge for the investigators, because effectively the criminals are going very quickly and they are very well organized in shutting down their websites and opening it again.

But with the public-private partnerships -- and in that I'm thinking about the service payment providers, for example, with the support of the banking system and the anti-money laundering agencies, we could try and develop some comprehensive enforcement, and combine activities whereby we are able now to understand a bit more what they are doing. And they are not doing only counterfeit medicines, they are doing other type of activities also in Internet -- I mean, using Internet. So I will answer my question, but open it to the others.

SIMON: Well, the good thing about the Internet is that you can also get the message back out about how dangerous it is to do this.

So you probably can't see these, but if you really want to get sick, go to realdanger.co.uk where they have a series of ads, one of which shows a man taking a medicine he bought online and pulling a rat out of his mouth. Another one shows a morgue and is says: When you buy drugs online, you may end up paying with more than a credit card. There have been study after study that shows how impervious people are to the dangers of buying drugs online.

And our people in Groton, Connecticut buy drugs online that they see advertised, and test them, and they do exactly what you say: They will be advertised for some virile purpose and they'll have a tiny bit of Viagra, and then they'll have a bunch of other staff, most of which is dangerous. So it is a real problem. And the Internet community, through social media, is part of the solution too.

GARRETT: Snake oil would be safer. (Laughter.)

SIMON: Snake oil, you know, the FDA got started on snake oil, and here we are a couple of hundred years later, a hundred years later -- (laughter) -- and we're still dealing with snake oil.

GARRETT: Way over here.

QUESTIONER: Liz Wishnick, Montclair State University and Columbia East Asian Institute.

My question is about food safety. We talked a lot today about empowering consumers. And I think that's a great idea, except consumers don't have enough information. For example, during the melamine crisis milk products were not on the list, where a country of origin had to be stated. So how do you know if you're buying something safe or not? I'm also told by my colleagues in the food sciences department that even food processors don't keep track very well of the origin of different batches of ingredients, let alone inform consumers about the country of origin of these ingredients.

So how are consumers supposed to be empowered without information? And what steps are being taken by corporations and governments to provide more information?

GARRETT: Mike, I'm going to throw that to you.

ROBACH: Sure.

No, it's a highly complex question. And I think we have to be careful. There's been a lot of work done around country-of-origin labeling. And I know in the meat business we deal with that. And we have cows that are grown in Canada and processed in the U.S., so is it a -- country of origin, is it Canada, or is it the U.S. or is it both? And what you end up seeing on labels when people are being required to do that, they're going to just throw on 10, 12, 13, 15 different countries. You know, whatever that ingredient may have come from, they're going to throw, you know, the name of the country on the label, which I don't think is very helpful to consumers.

So I take a step back and get back to my -- the whole concept of having food safety systems in place that are focused on those essential criteria. And I think that's where industry can do a better job of promoting the things that we do around food safety systems; and partner better with government, so that we're working more hand in hand in making sure that the systems we're using throughout our supply chains are giving us assurances that the products we put on the marketplace are safe. Because, from a perception standpoint, we want to have safe products in the marketplace. Recalls and illnesses don't do anyone any good. It doesn't do us any good. It doesn't do the government agencies any good. We all look bad at the end of the day.

So we do have a shared, I think, goal to make sure that, that doesn't happen. But, as you say, we also need to pull consumers into this, so that they understand what their role is. And that's just a precept of risk management is, you know, making sure that people are aware of the risks so that they can do something about it, as well to protect themselves. And we haven't done a real good job in that in the past. And I think right now we're starting to move in that direction. USDA is now working with the Ad Council on a series of public service announcements that will talk about safe food handling, and you know, where consumers have responsibility and accountability to make sure that they're doing things properly.

Obviously we have the responsibility to apply the best technology, the best science to our processes, and do the best monitoring to make sure that what we put out on the marketplace is safe. But unfortunately, when it leaves our facility, that's not where the road ends, and it moves forward. So we do have to do a better job of communicating and educating.

DEWAAL: Laurie, can I just add, though, this is also where the role of organized consumer associations does play a role.

During that melamine crisis, we were watch-dogging FDA to determine whether products had been released in the U.S. And through a project called Safe Food International, we also notified consumer organizations in other countries, some of whom then brought it forward to their governments. So there is a role here for the organized consumer movement who then can watch-dog their government.

ROBACH: We actually did a project in collaboration with -- I think, I think you were involved, Caroline, and Consumer Federation of America during the H5N1 outbreak. And we actually put out a sponsored piece that Consumer Federation of America with CSPI put out to their members about, you know, how you could protect yourself from H5N1. And I thought that was a good example of that collaboration between the industry and the consumer groups to get information out to people on how they could best protect themselves.

GARRETT: Okay.

Right there. Is it Seth?

QUESTIONER: Uh-oh.

GARRETT: Oh it is. Uh-oh. (Laughter.)

QUESTIONER: No, I'd like -- I'd like to keep going on this point.

GARRETT: Introduce yourself, please.

QUESTIONER: Seth Berkley, International AIDS Vaccine Initiative.

You know, maybe people care if things were made in 15 places. And maybe it would be good if that was on the label, because then people could choose. And I'm where the previous questioner was about this. In the melamine crisis, one of the problems is you didn't have an idea of origin of anything, and if you wanted to act responsibly, it was very difficult to do that.

Now, why is that important? From my perspective one of the things we have to do, with razor-thin margins -- and clearly, a country is going to try to push out their technologies, their foods, their drugs to others -- is you're going to have to have some type of consumer standards on quality, because you can't, you know, regulate your way out of this and test your way out of it. And so if one government, one source continues to be a problem, by, you know, having consumers know that products from that source, and if they vote with their feet, that will have a profound effect then on, you know, those governments wanting to crack down. It doesn't deal with obviously the, you know, illegal side and counterfeiting and gangs, but I'm talking about the local regulations.

And I think, you know, if I look at what's going on in the vaccine area, when a national regulatory agency gets condemned by the WHO, or reaccreditation gets pulled away, you know, it changes the dynamic in that country. And so I think -- it seems to me that, that pressure has to happen here, and I'm just wondering how one can make that happen?

SIMON: I think the question belies a sense of optimism about all things.

We tell people how many calories are in the food they get now in New York in fast-food restaurants and delis. It hardly changes any behavior. I think it's putting too much on consumers to boycott things from Thailand that say -- that are one of 50 countries listed on a package. I think that's incumbent on the manufacturer.

I think that we cannot get the -- the FDA cannot inspect the world. Those of us who buy products from other countries, as Pfizer does, have to enforce our standards on them, and when they violate those standards, it's our obligation to get them out of the chain.

And I think the FDA's job is to make sure we're doing our job, because they don't have enough people to do our job. Pfizer gets an enormous number of products now from other countries, and we require them to meet our standards in every way, and we do the inspecting. And then occasionally the FDA inspects our facilities overseas. They can't possibly be the first vanguard. And consumers can't either, because if they're not noticing the salt content of their food, they're not going to notice where the salt is from.

ROBACH: I would also -- I would also agree with those points, and I think it is incumbent upon the individual company to make sure they've got control of their supply chain.

But I also don't want to go down a road where you malign an entire geography for few bad actors, because you can only take a look at -- within the United States, and we have the same issue. We had the Peanut Corporation of America, which was a U.S. corporation which was not doing what they were supposed to do.

So you've got great plants in China; you've got bad plants in China. You've got great plants in the United States and you've got bad plants in the United States. So I think we have to be very careful that we don't overgeneralize this as a geography or a country issue.

GARRETT: You know, this reminds me of a question in the earlier session regarding brand.

One would argue, based on the experience that Jack in the Box went through, when E. coli 0157 was first discovered through their sale of hamburgers and children getting sick, and came to be known as the Jack in the Box disease; or that Tylenol went through many years ago as a result of a deliberate poisoning of a Tylenol bottles, and the company took more than a decade to bounce back to their original market position.

So one would imagine that brand protection alone would put a huge pressure on, but about all those steps in production? They have nothing to do with the brand. There's no brand label on my apple -- if there is, I'm ticked off -- or on my orange, it might say it came from Florida. So where -- what do we do about those segments where the brand pressure is not really an element?

ROBACH: Well, but there's pressure from the retailers on what they're buying and how they're buying. And so it's the retailers' brand. If you buy a bad apple, and you bought it at Safeway, you're going to be upset with Safeway, or Kroger or whomever you bought it from. So there is a responsibility of the brand that's delivering the food to the consumer. And there is brand equity there, because if you have a bad experience at a retailer, you're going to go someplace else.

GARRETT: Well, if all that took place --

ROBACH: So there is --

GARRETT: -- why isn't it working?

ROBACH: Well, I think we have to put things in perspective again. You know, I mean, it's not working as well as it could because we have a lot of disconnects that still exist. We have to do a much better job of coordinating our overall approach as it relates to food safety.

On the food side -- the meat side of the business is a little more organized, with USDA and FSIS having inspectors in every facility, doing continuous inspection as we heard this morning. On the FDA side, a lot of plants never see an inspector for many, many years, and if they do, it's usually because there may be a problem associated with that plant.

So on the USDA side, the focus has been on prevention for some time. FDA now, with the food safety modernization act, is now moving in the direction where this prevention focus is going to be part of the way business is done, as opposed to reacting to a problem: Let's anticipate and prevent as opposed to just react to.

GARRETT: Okay.

Way in the back there's a hand I've seen. Yes, you.

QUESTIONER: Thanks. Nancy Turett, from Edelman.

While we're talking about what experts need to do -- big companies, people with Ph.D.s, people who are policy leaders -- and looking at short-term issues, I just wanted to put on the table, and it's not maybe for this agenda, that we have a long-term challenge as well. And as you're talking about consumers -- thinking about what are the literacy requirements that really should be part of our school curricula around the world, as we're asking consumers to be able to make more and more decisions, whether it's about what they're eating, how much they're eating, where it came from, et cetera -- When we look at the financial crisis that we had globally, very recently, and it's actually still having some impact, one of the things there was a lot of discussion around was the financial literacy of consumers, if we're actually selling very, very high-stakes things directly to them.

GARRETT: So this is an interesting question. I was recently in a meeting with -- that I referred to before -- with a gentleman from India, and we were talking about using SMS texting to alert patients that it was time to come in for an appointment, what have you. And then it suddenly dawned on me, having spent time in India, and I said, wait a second, in your state, what's the literacy rate on women? And he said, 70 percent illiterate. So, so much for texting and cell phones to ensure drug safety, and so on.

SIMON: Well, that's why Howard Zucker, who may still be here -- Howard there -- worked with my old boss, Michael Milken and Tommy Thompson to send talking books to Afghanistan for illiterate women for prenatal care -- in their dialect. They could just see the picture, touch it, and it spoke to them about what they needed to do at every stage of pregnancy. There are answers to all of these issues.

QUESTIONER: Well, but putting high-risk products in consumers' hands -- I mean, I think the food industry agrees that we want to minimize the number of truly high-risk foods. But in developing countries, educating consumers on boiling water, sterilizing their water sources, and how safe food preparation is something that's got to be done whether people are literate or not.

ROBACH: When you said --

GARRETT: We have time for one --

ROBACH: But most of them -- but most of them know how to do that better than Americans.

QUESTIONER: Yeah.

GARRETT: We have time for one last question.

Right here.

(Off mike exchange.)

QUESTIONER: (Inaudible) -- Evian (sp).

I think the root cause of this is the speed of the change, and the fact that the oversight infrastructures didn't keep up with the change. And you now have people taking advantage of it because it's extremely profitable. So the question is all about enforcement and sanctions.

And if you look around the world, of all the agencies that I know, and there's probably a dozen of them, there's only two where the inspectors are actually trained to look out for fraud. In other words, an FDA inspector will go abroad and he'll first check whether: Can I believe these people? Can I trust them? And the Italians also -- very well trained. Everybody else assumes everybody is honest. You can't do that. (Laughter.)

GARRETT: I'm going to give this to Aline to comment.

PLANCON: That point --

GARRETT: Oh, sorry. You're not done?

QUESTIONER: No, I'm sorry.

The other issue is the industry has offered to pay for inspections for over five years. And what the industry sees is the regulators inspect based on proximity and not risk. They only inspect domestically because that's their comfort zone; they never go where they really should.

And I suppose the question to Aline is, what are you telling everybody that the regulators should be doing? Or is there a way that you can communicate to the regulators on what are their weaknesses and what they need to do?

PLANCON: Yeah, well, thank you.

First, in terms of enforcement, I agree with you that it's like corruption. I mean, you can talk about transparency and, you know, be candid, but as long as you don't enforce or you don't have enforcement behind the back of your head, people will not behave well. And I believe this is exactly the same with the counterfeit medicines and pharmaceutical crime. I believe that, as far as we are concerned, the experience we've been having with the regulators has been very interesting and very enriching us. And as long as we've got some progress to make, as police, we understand that the regulators also confronted some -- a number of challenges.

And I believe exchange of information, and really a timely manner exchange of datas among themselves, and maybe combine it with a police big database that we, you know, we experience and is working fine, may help train and sort out at least some critical situation whereby the patients or the society could know, and the regulators could maybe react in a timely manner.

So I cannot say or I cannot explain what a regulator would or should do. But what I can say is, by working together and exchanging the experience and the best practices, and building up the capacity together in that crime, really made these societies or agencies make a big step in improving their own methodology and capacity in enforcing that crime.

GARRETT: Well, I want to explain to everybody what our next steps will be at the council.

It is our intention to not drop the ball with this very excellent day of discussion, but rather to see this as the beginning of a process, which will now go to a closed-door process entirely off the record, a select series of meetings in conjunction with our partners at Chatham House in London and partners that we are developing in Asia. We hope to have key players engaged in each of these meetings going out over the next eight to 10 months with some hope of providing a clear policy advisory for the White House going towards the G-20 summit of next year.

So please understand this is only the beginning of the process. Stay tuned. If you feel that you would personally very much like to engage in this, please be in touch with Dan Barker.

Dan, could you stand up, please?

Dan works with the Global Health Program. And give him your card and indicate your interest and what particular subject area you may be most keen on focusing on.

I need to thank a number of people that have made this event happen:

The Robina Foundation for their financial support, that paid the airfare to bring so many wonderful people here today.

And of course Commissioner Hamburg, both her strong interest in this area and her very dedicated staff that worked so closely and made this possible. It's unbelievable for us. We're accustomed here at the council, dealing with things like United Nations agencies, where we fire off e-mail after e-mail after e-mail for three or four months before anybody responds. And with FDA, it's same-day business. Ahh -- (laughter) -- so fabulous.

And I want to thank a number of key staffers here in New York who've played a role. I pointed out Dan Barker.

Where is Zoe?

And Zoe Liberman, also of the Global Health Program.

Yanzhong Huang.

And Stacey La Follette, who is here somewhere, who was one of the key players in making this meeting happen.

I think that as a final note, I began earlier talking about the question of global governance, one of the interesting possibilities as you look at this food and drug space is that every human being on planet Earth has a stake in seeing this resolved. This is not an abstract problem like climate change, where many people can convince themselves that either it's not occurring, or it's too big and they are just a little person, what can they do about it, et cetera. Every single person on the planet takes drugs, depends on medicines, has injections and eats food. It doesn't get much more bottom line than that.

And if there is any opportunity to really mobilize some sense of what global governance might look like, this I think is an ideal place to begin -- to begin to think about a different scale and way of organizing that involves private players, public players, multilateral players, donor players and consumers, average citizenry, and some new kind of yet-to-evolve sense of what global governance could look like. So stay tuned.

Thanks to the panel -- all wonderful -- (inaudible, applause). Thanks to all of you.

####

®FC¯END

®FL¯

.STX

(C) COPYRIGHT 2011, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.

NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL 202-347-1400 OR E-MAIL INFO@FEDNEWS.COM.

THIS IS A RUSH TRANSCRIPT.

-------------------------

More on this topic

Transcript: Foreign Affairs Media Call on Iraq and ISIS

Steven Simon, former senior director for Middle Eastern and North African affairs at the National Security Council, and Barak Mendelsohn, associate professor of political science at Haverford College discuss the fight between the Iraqi government and the Islamic State in Iraq and al-Sham (ISIS).

Iraqi President Fuad Masum on ISIS and Iraq's Challenges

Iraqi President Fuad Masum joins Michael R. Gordon, national security correspondent for the New York Times, to discuss ISIS and the current situation in Iraq.

Next Steps for U.S. Foreign Policy on Syria and Iraq

Before the House Foreign Affairs Committee's Subcommittee on the Middle East and North Africa, CFR Senior Fellow Elliott Abrams details the United States' goals in Iraq and Syria: to alleviate the humanitarian and refugee crisis; to prevent an Iranian victory in Syria; and to strike devastating blows at the Islamic State.

Terms of Use: I understand that I may access this audio and/or video file solely for my personal use. Any other use of the file and its content, including display, distribution, reproduction, or alteration in any form for any purpose, whether commercial, non commercial, educational, or promotional, is expressly prohibited without the written permission of the copyright owner, the Council on Foreign Relations. For more information, write publications@cfr.org.