The FDA Food Advisory Committee, at its meeting of June 25, 1999, discussed a draft report submitted by its Research/Economic Incentives Working Group (IWG). The IWG report is incorporated as the main body of this Committee report.
The Committee voted unanimously to adopt the report and to submit it to FDA along with additional comments. The Committee agreed unanimously to comment in its report on efforts by other groups to discuss the issues addressed by the IWG, and agreed by a vote of six to two also to include commentary on a letter from the Internal Revenue Service (IRS) on tax incentives for research.
The Committee submits this report in recognition that the issue of research incentives is not resolved by the report, and that discussion of the issue may continue in a variety of venues.
Submission of this Committee report discharges the responsibilities of the FDA Food Advisory Committee with respect to its charge regarding research and economic incentives for health claims.
Food Advisory Committee comments
The Committee notes that the IWG report is consistent with conclusions of other groups and individuals on the issue of incentives. Because IWG discussions did not focus on how others have responded to the issue of incentives, some members preferred to omit from the IWG report discussion of conclusions by others. However, the Committee wishes to acknowledge the conclusions of others in its full report to the FDA, and the consistency of such conclusions with those of the IWG.
Some of the IWG's views and recommendations echo, rather than respond to, the Keystone report. In addition to Keystone and the IWG, other groups and individuals have also struggled with this issue. The University of Illinois Functional Foods for Health Program held a workshop in November 1997, attended by the Program's industry partners among others, to discuss research incentives. While incentives were considered to be desirable, there was a lack of consensus on what the incentives should be. As noted in the IWG report, Dr. Childs' survey of the food industry did not reveal a consistency of views. Mr. Michael R. Taylor, a former FDA Deputy Commissioner for Policy, prepared a paper for the 1997 Food and Drug Law Institute Annual Education Conference in which he argued that the goal should not be incentives or research for their own sake. Rather, the goal should be to meet a critical consumer need, i.e., to maximize the flow of truthful, non-misleading information that consumers can use to construct healthier diets.
The IWG had requested clarification from the Internal Revenue Service (IRS) on current provisions in the tax law that may provide economic incentive for research related to health claims. The IRS response was received after the IWG had completed its discussions and had prepared its draft report. Comment on the IRS response is therefore included in this portion of the Committee report. The full text of the IRS response is incorporated as an appendix to this Committee report.
The questions asked of the IRS concerned tax incentives for basic research, research specifically relating to diet and health, and consumer research. The IRS response addressed both tax deductions and tax credits as possible incentives. Whether an expenditure qualifies for an incentive as a research activity would depend on the facts in each individual case. However, it appears clear that the consumer research envisioned in the questions posed to the IRS would not qualify. It appears that qualifying research would have to have been conducted before development of a commercial product and cannot be research related to adapting products to new use conditions. It is not clear from the IRS response whether qualifying basic research may be performed within a company; the response seems to imply that such research may be funded by the company but must be performed by another entity.
The IRS response thus appears to support the conclusion of the IWG that tax incentives the food industry would find to be most useful in encouraging health claims research require additional legislation. Because tax law is outside the statutory responsibility of FDA, the Committee recommends that interested parties in the food industry pursue this economic avenue by submitting draft legislation to the appropriate Congressional committees.
The Committee's complete comments on research incentives issues, as recorded on pages 87-107 of the June 25, 1999, meeting transcript, are incorporated into this report by reference.
Background
The final report of The Keystone National Policy Dialogue on Food, Nutrition, and Health was released in March, 1996 by The Keystone Center, Keystone, CO and Washington, DC. The report addressed issues on conveying dietary information to consumers. It focused primarily on the use of health claims on the labels or in labeling of food products. The Keystone Dialogue (hereafter, Keystone) advanced 17 recommendations in its final report, directed toward the private, academic and public sectors.
FDA was the primary focus of most of the Keystone recommendations. The agency sought advice from its Food Advisory Committee (FAC) on options for implementing several of the recommendations. An FAC subgroup, the Research and Economic Incentives Working Group (IWG), was asked to consider the following two Keystone recommendations:
FDA is a regulatory agency. Its limited research funds are expended almost entirely on intramural research needs that support its regulatory responsibilities. Consequently, FDA focused its charge to the FAC and the IWG -- "Identify and prioritize options for implementing the recommendation." -- on the latter Keystone recommendation. The IWG discussions centered on potential economic incentives for industry, and FDA's role or involvement in the development and implementation of such incentives.
IWG Members
The FAC members of the IWG were: Ms. Donna Richardson, Chair, Dr. Rhona Applebaum and Dr. Katherine L. Clancy. Guest experts and liaisons who served as members were: Prof. Marsha Cohen, Hastings College of the Law, University of California; Dr. Gilbert Leveille, private consultant and former Vice President of Nabisco Brands Inc.; Dr. Donna Porter, Library of Congress; Dr. James Stanley, Vice President for Scientific and Regulatory Affairs, Pepsi-Cola International; and Ms. Ellen Sullivan, Science Communications Manager, Institute of Food Technologists. FDA staff participating were: Dr. Lynn Larsen, FAC Executive Secretary; Dr. Christine Lewis, Office of Special Nutritionals; and Dr. Diane Robertson and Ms. Ann Depman, Office of Policy, Planning and Strategic Initiatives.
IWG meetings and other relevant activities
The first IWG meeting was held February 4, 1997. Mr. Michael Davey of the Congressional Research Service (CRS) presented data on private and public funding of research in the United States. He also provided a number of CRS reports on research incentives and models for research support. IWG member Dr. Leveille discussed nutrition research funding from the industry perspective, noting that of the new products arising from this research only about 1% achieve market success. Dr. Guy Johnson, Director of Nutrition at Pillsbury and a Keystone Dialogue participant, provided his perspectives on the Dialogue's discussions. He noted the lack of consensus on the need for incentives among the Keystone participants. Mr. Phil Derfler, of FDA's Office of the General Counsel, briefed the IWG on the statutory structures and legal standards governing FDA involvement in incentives for research, and how these differ for foods and drugs. Following these presentations, the IWG discussed these issues and others related to the group's charge.
Subsequent to the first IWG meeting Dr. James Stanley prepared a discussion draft on research tax credits available to the industry as a stimulant for research. This document provided a discussion focus for the second IWG meeting.
Dr. Nancy Childs of St. Joseph's University presented her survey of industry views on research incentives to the entire FAC at its September 1997 meeting. The incentives addressed by the survey were those cited in the Keystone report. The results revealed that views on the incentives varied somewhat among the FDA-regulated industries surveyed.
The second IWG meeting was held on September 25-26, 1997 in conjunction with the FAC meeting. The IWG agreed that it is a challenge to motivate food manufacturers to invest in nutrition research, but reached no consensus on the need for incentives to perform such research. The IWG suggested that, beyond existing incentives mechanisms, simplification of the health claims petition and authorization process, along with clarification of the meaning of "significant scientific agreement" and "emerging science" (issues assigned to other working groups) would be the most important incentives.
The IWG met Feb. 11, 1998, following the FAC meeting to review a draft final report. Final language was negotiated and agreed upon.
The IWG initially approached its task without questioning the need for incentives. It accepted the charge to identify and prioritize options for FDA to implement incentives. The IWG's discussions, however, failed to yield an incentive scheme that would be acceptable to the diverse segments of the conventional food and dietary supplement industries. As a consequence, the IWG questioned whether additional incentives (see discussion below) were actually necessary, and failed to reach consensus on this issue.
There are a number of existing or inherent motivations for individuals or organizations to perform research. The stimuli may be economic or non-economic, as outlined in the Keystone report.
Federally supported intramural and extramural research programs are driven by a number of factors, some of which are unique to the government. Congress may, through the appropriations process or public laws, direct a Federal agency to perform or fund specific research. NIH programs for dietary supplements and alternative medicines are examples. The statutes that a science-based Federal regulatory agency administers shape its mission, its intramural research, and its support of extramural research. FDA research on analytical methods to detect and measure nutrients and contaminants in foods is an example. Major public health concerns within the purview of an agency may also be incentives for Federal intramural and extramural research. The program focus within each NIH Institute, and FDA and USDA microbiology research related to food safety are examples. The research interests of the Federal government and other government guidance, oversight and regulatory activities also serve as incentives for research outside the government. Examples include: direct financial support (e.g., NIH grants); collaborative studies (e.g., for verification of analytical methods); and efforts to address public health issues that are the major focus of government programs (e.g., diet and health linkages).
The Keystone report included a discussion of non-economic incentives for research. It identified a quest for knowledge and a fundamental curiosity about the world - with a concomitant hope to improve it - as centuries-old motivating forces behind scientific research.
The Keystone report also cited recognition for accomplishments as a motivating factor. Such recognition may be a non-economic or an economic motivation, and it might apply to organizations as well as individuals.
While altruism and recognition may be factors, the major motivation for most corporate support of research is to ensure or enhance economic success for the company. As stated in the Keystone report:
"The primary incentive for investment by food manufacturers in scientific research is a reasonable return on the money invested. Food manufacturers have an inherent economic incentive to provide characteristics that will enhance demand for and increase the market share of their products."
In that context, most incentives for corporate research on diet and health will be those that directly offset or otherwise reduce the cost of research, or those that increase the likelihood of marketing a successful product. Most existing incentives cited in the Keystone report address the marketing side of this evaluation. These incentives include consumer demand for products (as evidenced by consumer purchases and market surveys, and influenced by media attention), competitive pressures with subsequent development of or entry into market niches, advances in food technology that permit decreased production costs or production of products with increased marketability (i.e., driving or driven by consumer demand), and flexible labeling that can capture consumers' attention. Also listed in the report are tax incentives, which offset research costs by balancing them against a reduced tax burden.
The Keystone report proposed four new incentives for consideration. Two focused solely on marketing. The first proposed incentive was a confidential lead time between FDA authorization of a health claim (announced privately to a petitioning firm) and public announcement of the authorization. This proposal would provide a company that invested in and conducted the research with an initial market advantage, but the claim would still be available to all manufacturers after the public announcement. The second proposed marketing incentive was a more lengthy period of marketing exclusivity after public announcement of a claim authorization.
The third proposed incentive was compulsory royalties set at a rate to provide a "reasonable return" on the research investment. This proposal focused on direct reduction of research costs. The fourth proposed incentive sought to address both the research cost and marketing aspects by combining exclusivity, additional tax credits, and government research grants to firms engaging in health claims research.
The IWG considered all the existing incentives and the additional ones proposed in the Keystone report. As already noted, the IWG reached no consensus that any additional incentives are needed at this time. Furthermore, it is clear that several proposed incentives would require legislation, especially the one involving tax law, which is outside of FDA jurisdiction. The IWG did, however, agree that FDA might examine the lead time concept, wherein a petitioner could be ready to market a product as soon as FDA publicly announced authorization of a health claim, to determine whether it has statutory authority to administratively adopt this option. If so, this simple action might be worth pursuing in the interest of promoting public health.
The IWG could not agree that new research incentives were needed. However, it noted that the Food and Drug Administration Modernization Act of 1997 (FDAMA), enacted in November of 1997, may have provided additional incentives. Under Title III of that Act, a health claim may be authorized if a company bases the claim on an authoritative statement by certain scientific bodies of the government (e.g., the National Institutes of Health) or the National Academy of Sciences. A company must notify FDA, but agency pre-authorization is not required. A label statement must meet the basic statutory requirements for a health claim, and accurately reflect the authoritative statement. Within that framework, a company has flexibility in crafting the label statement of the claim. With respect to health claim petitions submitted to FDA, Title III sets time-limits for agency action, or the petition is considered to be denied. If FDA initiates rulemaking and does not complete the process in a specified timeframe, the agency must report the reasons to Congress.
The IWG suggests that FDAMA provides three incentives for companies to provide consumers with diet and health information. First, basing a claim on an authoritative statement has the potential to facilitate the process of developing a claim and placing it on products in the marketplace. Second, there may be increased flexibility in the wording of a claim, depending upon the nature of the authoritative statement on which it is based. Finally, for claims based on information other than authoritative statements, the time limits placed on FDA may lead to more rapid agency decisions.
The Keystone report (pg.80), in addressing the need for incentives, listed four obstacles to industry investment in health claims research. The report suggested that because of the lack of experience with the new health claims approval process, it was not possible to predict the outcome of a petition. In particular, there was a lack of certainty or predictability about what constituted "significant" scientific agreement. The fact that supporting research must be on the public record and that any successful petition was equally available to competitors (i.e., was nonproprietary) also were listed as obstacles. The fourth obstacle was the assertion that research which fails to establish the requisite level of scientific agreement was of diminished value because the statute and regulations do not allow reference to early research "that may indicate a potential diet-disease link."
The IWG suggests that the issue of "unpredictability" is related to Keystone recommendations on "significant" scientific agreement. As such, this issue is beyond the IWG's purview, but may be addressed by any recommendations emerging from the deliberations of the FAC Significant Scientific Agreement Working Group. Similarly, the issue of "early research" is related to the Keystone report recommendations on emerging science and is addressed by the charge to the FAC Emerging Science Working Group.
The IWG further suggests that the issues of nonproprietary claims and data in the public domain cannot be addressed by FDA at this time. Public availability of data is a statutory requirement. Congress would need to be persuaded to amend the statute to ameliorate this perceived obstacle to health claims research. The statute also does not currently provide for proprietary claims, and Congressional action likely would be needed to authorize exclusivity.
The IWG encourages additional discussion of collaborative research efforts to further understand the relationships between foods and health.
Some interested parties have suggested that a structure-function claim might be an alternative to a health claim on a food label. Structure-function claims do not require pre-clearance by FDA, but do pose a risk, if not carefully evaluated, that FDA may categorize a product as a drug, based upon statutory definitions. The IWG believes that there is still some uncertainty about the appropriate boundaries on structure/function claims, and encourages FDA to provide clarifying guidance.(1)
FDA is a science-based regulatory agency that conducts research primarily to address questions related to its regulatory enforcement responsibilities. With decreasing Federal funding of research on diet and health, and decreasing agency funds generally (except in the area of food safety), it would seem to be inappropriate to expect FDA - in and of itself - to provide economic incentives for health claims research. Furthermore, several incentives suggested in the Keystone report would require legislative action, some of which is outside FDA's statutory responsibilities (e.g., tax law).
Therefore the following are the views and recommendations of the IWG:
Submitted by the Research/Economic Incentives Working Group -
|
Ms. Donna Richardson, Chair Dr. Rhona Applebaum Dr. Katherine L. Clancy Prof. Marsha Cohen Dr. Gilbert Leveille Dr. Donna Porter |
Dr. James Stanley Ms. Ellen Sullivan Dr. Christine Lewis Dr. Diane Robertson Ms. Ann Depman Dr. Lynn Larsen |
(1) The White House Commission on Dietary Supplement Labels provided a similar recommendation in its
November 1997 report. Subsequent to the February 1998 IWG meeting, FDA published a proposal (Federal
Register of April 9, 1998 (vol. 63, no. 82), pp. 23623-32) regarding such claims.
This document was issued on June 25, 1999.
For more recent information on Dietary Supplements
See
http://www.cfsan.fda.gov/~dms/supplmnt.html
Hypertext updated by cjm/kwg 2000-NOV-22