The Scale of the Challenge: Overview and Case Studies

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.

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THIS IS A RUSH TRANSCRIPT.

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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.

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THIS IS A RUSH TRANSCRIPT.

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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.

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THIS IS A RUSH TRANSCRIPT.

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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.

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THIS IS A RUSH TRANSCRIPT.

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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.

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