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Testimony on Paperwork Burdens on Small Business by Robert J. Byrd
Acting Deputy Commissioner for Management and Systems
Public Health Service
Food & Drug Administration
U.S. Department of Health and Human Services

Before the House Committee on Business, Subcommittee on Government Programs
July 24, 1996

Mr. Chairman and Members of the Subcommittee:

Good Morning, I am Robert Byrd, Acting Deputy Commissioner for Management and Systems. With me today is Mr. William Hubbard, Associate Commissioner for Policy Coordination and Mr. John Friel, Leader of FDA's Industry and Small Business Liaison Team.

The Food and Drug Administration (FDA) appreciates the opportunity to present to you FDA's efforts to reduce unnecessary regulations and paperwork burdens upon small business. In your letter of invitation you asked that we provide a progress report on our efforts to respond to the burden reduction goals of the Paperwork Reduction Act of 1995 as well as our response to the recommendations adopted by the delegates to the white House conference on Small Business regarding regulatory and paperwork burdens.

While FDA principally serves the general public in its health and safety mission, FDA also recognizes that it has responsibilities to the industries that it regulates. The public also demands timely access to medical innovations, especially innovations that have the potential to save lives, but without sacrificing health and safety. FDA sees its mission as meeting both these goals simultaneously. FDA counts small entrepreneurs among its most valued clients and has consistently sought to provide special assistance to them in their efforts to comply with necessary regulations.

Before discussing the relatively new requirements of the Paperwork Reduction Act of 1995 which was enacted in May 1995, let me provide a summary of the paperwork reduction and streamlining actions taken by FDA in recent years under direction of the Department of Health and Human Services (HHS). In September 1993, with implementation of the President Clinton's Executive Order 12866, HHS directed a comprehensive review of existing regulations with the objective of reducing the burden on business. To assist in identifying priorities for review of its existing regulations, FDA solicited recommendations from the public on its plans for review in a January 20, 1994 Federal Register notice. On May 8, 1995, HHS again requested public comment in the unified Agenda of its regulations, seeking suggestions for furthering regulatory reform efforts.

HHS' review accelerated with the establishment of regulatory reinvention task forces targeted at specific industries under the leadership of Vice President Gore. Working closely with the Domestic Policy Council, the Office of Management and Budget, and the National Economic Council, FDA played a lead role in the Reinventing Government (REGO) group on drugs and medical devices.

The President's March 4, 1995, directive challenged HHS to take additional steps to further reduce unnecessary regulatory burden and increase cooperation and coordination with the industries we regulate. Specifically the Department was asked to:

Conduct a page-by-page review of existing regulations with the goal of eliminating or reviewing those that are outdated or otherwise in need of reform;

• Change the way performance is measured by agencies and front-line regulators to focus on results rather than process and punishment;
  
  
• Create "grassroots partnerships" by getting out of Washington and convening groups of front-line regulators and the people affected by their regulations to discuss issues of concern; and Take steps to increase efforts to promote consensual rulemaking.

On April 21, 1995, the President further directed departments and agencies to implement policies to accomplish two additional tasks:

• Waive penalties for small businesses by exercising discretion, to the extent permitted by law, when the violations is corrected in a timely manner and/or the amount of any waived financial penalty is used to bring the entity into compliance; and
  
  
• Reduce by one-half (subject to certain exceptions) the frequency of regularly scheduled reports that the public is required to submit to the government.

FDA vigorously attended to the Presidential and department directives and identified and instituted a large number of regulatory, administrative and management reforms to make FDA more user friendly to business and to reduce regulatory burden. Some examples of FDA's accomplishments under the review:

• implemented new procedures for planning and tracking regulations,
  
  
• withdrew 98 outstanding proposed regulations,
  
  
• obtained public comment in January 1994 on its program areas to identify regulations that are outdated, burdensome, inefficient, or otherwise unsuitable or, unnecessary.
  
  
• conducted a comprehensive retrospective review of the Agency blood regulations.
  
  
• established an Office of Communications, Training and Manufacturers Assistance in the center for Biologics Evaluation and Research, providing firms with on line consultants saving paperwork and time by helping them submit a complete application the first time
  
  
• implemented procedures to acknowledge requests for exemption under the Small Business Exemption to the Nutrition Labeling and Education Act.

Reinventing Government Initiatives:

Under the Clinton Administration's "Reinventing Government" initiative, FDA implemented a series of regulatory reforms, which will ultimately save the drug and device industries about $500 million per year. Most of those reforms will be accomplished through changes in FDA's current regulations. For example, these reforms:

• exempted from Premarket Notification requirements approximately 125 categories of low-risk medical devices from premarket review, adding to 441 categories already exempted.
  
  
• eliminated Establishment License Applications for most biotech drugs
  
  
• excluded drug and biologics manufacturers from requirements for most environmental assessments under the National Environmental Policy Act (NEPA)
  
  
• harmonized application forms for drugs and biologics, replacing 20 separate forms.

FDA proposed to delete or reinvent over 1,300 pages, or 74 percent, of its rules that have a regulatory impact, i.e., those other than approval or classification. If the pages that list product approvals or classifications, such as new animal drugs approved for marketing, are not counted, only 479 pages, or less than 15 percent of FDA's portion of the Code of Federal Regulations, remain unchanged.

PAPERWORK REDUCTION

Let us turn to the requirements of the Paperwork Reduction Act of 1995. As you can see from the examples recounted above, FDA has made a conscientious effort to comply with the requirements of both the Paperwork Reduction Act of 1980 and now 1995. While FDA's regulatory mandate is broad -- our regulatory authority covers products that account for 25 cents out of every dollar spent by American consumers -- the regulatory burden we place on industry is only 1/3 of one percent of the overall Government burden.

The passage of major now legislation, however, during this decade, has required FDA to promulgate new regulations which require information collection from the regulated industries. Despite these new requirements, I an pleased to say, however, that FDA has managed to maintain a relatively constant level of burden hours for its information collection requirements as evidenced by the estimated burden figures for the last 3 fiscal years for reporting, and recordkeeping:

The reasons the FDA information collection burden is increasing in FY 1996 include:

• The increased scope of the PRA of 1995 which now encompasses third party disclosure. As a result of this change, the burden figure must now include product labeling, and notification;
  
  
• Small Business Exemption notification requirements under the Nutrition Labeling and Education Act of 1990;
  
  
• Medical Device Adverse action reporting, Certification and Registration under the Safe Medical Devices Act Amendments of 1990, and
  
  
• Mammography Facilities Accrediting, Quality Standards and Certification Requirements under the Mammography Quality Standards Act of 1992.
  
  
• Seafood Hazard Analysis critical Control Point (HACCP) regulations which will help the seafood industry bring to market safe seafood which in turn will protect the regulations which will help the seafood industry bring American public from eating tainted product. While not based on & Statutory directive, these regulations are necessary because Of the changing nature of the seafood industry. The seafood industry is in agreement with and supports those requirements.

We are pleased, however, that we have controlled the growth of the level of burden despite the new collections driven by new statutory requirements. And, while we cannot, at this time, precisely quantify the results of FDA efforts to reduce the burden, we do know these efforts have mitigated the increases and will continue to have an effect as some identified reforms are fully implemented.

The challenge for regulatory agencies is to determine ways of providing direction to industry and collecting information without compromising our responsibility to the public. we are looking at other methods to carry out FDA's responsibilities while reducing the information collection burden on the public. It will be a major challenge for FDA to meet the specific burden reduction goals suggested in the PRA of 1995 in the immediate future. However, we are continuing to make a concerted effort to control the level of burden through new management initiatives. These new initiatives will require FDA to:

• Re-evaluate each information collection requirement to determine if it can be eliminated or made less burdensome.
  
  
• Seek public input to help improve our processes through announcements for comments in the Federal Register and through outreach efforts by our small business liaison offices at headquarters and in each of our field offices.
  
  
• Increase emphasis on technology to relieve paperwork burdens.
  
  
• Streamline our regulations implementation process under guidance of a recently established Regulations Management Working Group, and
  
  
• Review the impact of new regulations on small business under the Small Business Regulatory Enforcement Fairness Act. we have already formed an in-house task force to review the new law and to discuss the implications of that act with the chief regulatory staff within each FDA center. Special attention will be paid to the requirement to review the impact of any proposed rule that would have a significant impact on a substantial number of small businesses.

SMALL BUSINESS FORUM (SBF) RECOMMENDATIONS

You also asked that we address FDA's response to the recommendations of the White House Small Business Forum (SEF). FDA is substantially ahead in many SBF priority areas. we have small business representatives in each of the regional offices for ongoing outreach to small businesses.

In addition, small industry liaison offices operate in each of the FDA centers and in the Office of t.he Commissioner. Further, approximately 80 percent of the cases handled by the FDA Office of Ombudsman concern small businesses. We have strong interaction with our state, regional, and local regulatory counterparts to minimize duplication of paperwork and conflicting enforcement actions. in addition, FDA has moved aggressively to modernize its telecommunications network to facilitate the ongoing exchange of information. Finally, special provisions for small businesses are features of major FDA enabling legislation, including the Nutrition Labeling and Education Act, the Prescription Drug User Fee Act, and such regulations as the Hazard Analysis Critical Control Point (HACCP) food safety rules.

Following are brief summaries of the specific SEF recommendations with a notation about their potential impact on FDA.

1. REGULATORY DEVELOPMENT

1. SBF recommends one or more pilots in first quarter 195 involving use of electronic interactive comment periods in regulatory development. In conjunction with this, SBF also recommends use of a question and answer (Q and A) format for proposed rules. Other efforts to increase public access to, and participation in, rulemaking could include early identification of "stakeholders," frequent publication of Advanced Notices of Proposed Rulemaking, decreased use of interim final regulations, and increased use of meetings and public hearings to identify and discuss emerging issues and to share relevant information. The use of negotiated rulemaking "where appropriate" is endorsed.
   
   To some extent, the above recommendations are being met in FDA now. For example, CBER maintains a "Fax on Demand" system whereby regulatory proposals and other materials can be faxed to correspondents.
   
   FDA has experimented with electronic submissions on proposed regulations and we are considering such use in the future as well. A Q and A format for proposed rules are useful in some instances but have not been found to be appropriate for complicated rules which comprise most of FDA's rulemaking activity. The agency often uses this format in its guidance documents for industry.
   
   The Agency has taken recent steps to increase early consultation with the private sector in the development of regulations through a variety of means. The Agency has a long tradition of outreach to the regulated industry through regular and ongoing participation in industry's continuing education seminars and meetings. The Agency has also instituted a series of "grassroots meetings" around the country to bring together manufacturers and first line regulators to discuss current issues of concern. Since the beginning of Fiscal Year 1995, FDA has held 33 grassroots meetings.
   
   
2. Extend Comment Period - SBF suggests automatically extending the comment period on proposed regulations to allow additional time for small businesses to comment.
   
   Traditionally, FDA has allowed 60 days for public comment on proposed rules. on December 30, 1993, the President issued Executive Order 12889, which required Federal agencies to allow at least 75 days for public comment to technical regulations in order to give U.S. trading partners under NAFTA sufficient time to review such regulations. FDA has instituted an internal policy of allowing 90 days for comment on proposed rules; thus, allowing the public, including small businesses, sufficient time to submit comments.
   
   Although comment periods can be extended now upon reasonable request, there is currently no provision for automatic extension for any categories of correspondents such as small businesses. Potential problems with the proposal for automatic extension are the "hammers" that often occur in FDA legislation whereby regulations must be finalized within a specific time frame. Aside from that concern is the overall commitment to speedy promulgation of regulations, which could be compromised by this proposal.
   
   
3. Implementing Task Forces - SBF recommends that raderal/private task forces be formed to participate in regulatory development, compliance activities and to enhance communication.
   
   To a limited extent, FDA has utilized the task force model to develop legislative and regulatory proposals. This occurred in regard to the Prescription Drug User Fee Act, the Medical Device User Fee bill, and the Nutrition Labeling and Education Act of 1990 (KLEA) regulations, among others.
   
   
4. Agency Coordination - SBF suggests that FDA meet with the Food Safety and Inspection Service (FSIS) of the Department of Agriculture, and the Environmental Protection Agency (EPA) at least twice per year to coordinate regulatory projects and share information.
   
   FDA has a history of coordinating with other Federal agencies on specific projects (e.g., NLF-A), sometimes on an ongoing basis, e.g., the Centers for Disease Control and Prevention (CDC) on vaccines.
   
   
5. Name a small business ombudsman
   
   The FDA Office of Chief Mediator and Ombudsman comprises four professional and two support.staff. A majority of the work of the office (approx. 80 percent) involves the small business community. The entire staff of the Office of the Chief Mediator and ombudsman is available to work with small businesses.
   
   
6. Educational Efforts. SEF recommends increasing educational efforts to provide guidance to small firms.
   
   The Agency already makes an intensive effort to educate regulated industry, including smaller firms. Among the Agency initiatives are "grassroots meetings," which focus on critical regulatory topics and are open to anyone. FDA also regularly participates in conferences sponsored by trade associations.
   
   
7. Teleconferencing. A recent and growing innovation is the satellite teleconference, which places firms and Agency experts in an interactive setting to discuss topics of the day, Firms can participate in the teleconference downlink and interact directly with FDA staff. The cost of this technology remains a barrier to,its proliferation, but if and when costs decrease, FDA will stand ready to utilize this technology. The Agency has held several pilot programs in this area and recognizes the clear potential in this area

II. COMMUNICATIONS

Technologies/Infrastructure

1. Electronic Regulatory Information Center (ERIC) - ERIC would provide computerized and hard copy information for regulated industry on regulatory requirements. Regulatory agencies would provide guidebooks describing their regulatory process, copies of handbooks, notices, NPRM'A, etc. SBF also recommends that an electronic bulletin board be established by each regulatory agency.
   
   The above recommendations are useful and reasonable. Aside from some initial work in producing materials such as a "plain English" guide to Agency procedure for small businesses, the principal expense to the Agency would be in keeping the ERIC system current on a broad range of Agency initiatives.
   
   The Agency's is responding by providing an Internet connection in each program area. Internet home pages now is contain news releases, enforcement reports, drug and device approval lists, medical device and radiological health news, FDA Medical Bulletin, AIDS information, FDA Consumer magazine, Federal Register summaries, congressional testimony, speeches, upcoming meetings, import alerts, online user guide, regulatory proposals, existing compliance guidance, regulations, and statutes. FDA is receiving more information from both industry and the general public via International and continues to explore ways to institutionalize and optimize use of this technology.
   
   
2. CD-ROM - SBF encourages FDA to make proposals available on CD-ROM. CD-ROM access to FDA manuals and documents, including major enactments, Federal Register announcements, the FDA phone book, ORA Guides, CDM guides, etc. is available by subscription from HHs's office of information Technology Services for $300/yr. it is updated quarterly.

Strategies

1. Rule summaries - SEP suggests that FDA prepare short summaries of each rule and use intermediaries to publicize the rules.
   
   Like other Federal agencies, FDA is required to include a summary description of proposed and final regulations published in the Federal Exciters. These summaries are intended to be clear and concise. in addition, FDA is now in the process of implementing the provisions of the new small Business Regulatory Fairness Act, which among other things, requires publication of a "plain English" summary of the provisions of significant new regulations. FDA currently distributes copies of proposals, final rules, etc. to trade associations and to the trade press, which do an effective job of translating them into lay language. Press releases, talk papers, "Dear Colleague" letters, etc. are examples of written educational materials which are regularly developed and distributed widely by the Agency. Additionally, FDA has an established network of small business representatives in each of its regional offices, which maintains regular contact and outreach to small industry.

III. ENFORCEMENT AND COMPLIANCE

1. Violations and penalties - SBF is encouraging FDA to be more open about publicizing its regulatory activities, such as the nature of violations being sought out and the type of penalties likely to be assessed.
   
   While an element of surprise is essential to FDA's "spot-check" enforcement strategy, this does not foreclose a degree of openness on the part of the Agency about its enforcement priorities and strategies. we are currently piloting a program which permits preannounced inspections of some manufacturers' facilities where there are no public health concerns at issue. Notes about adjudicated cases are published monthly in the FDA Consumer. Moreover, FDA participates in regular public meeting's with industry and the food and drug bar, at which there is open discussion about the Agency's enforcement strategies. Finally, FDA Guidance Manuals are available to the public and set out many specific details about the Agency's enforcement methodology.
   
   
2. Measure Compliance - SBF recommends that the Agency begin measuring success in terms of the rate of regulatory compliance achieved rather than in terms of the number of citations and fines levied.
   
   FDA currently has three rewards for "front-line" regulators that include the criteria of "innovative" regulation. Personnel performance plans have been changed to be based on efficient compliance achieved. The Agency has also implemented a compliance Achievement Reporting System to capture all forms of efficient and effective compliance.
   
   
3. Volunteers- - SBF recommends that, when businesses volunteer to assist the Agency in conducting a study they be "held harmless" for any violations that may be uncovered in their operations.
   
   This is done by FDA on a regular basis. Examples include drug companies which have opened their plants for visits by reviewers of drug applications. In addition, food canners have opened their plants for visits by FDA inspectors to observe the canning process during HACCP training.
   
   
4. Grace Periods - SBF recommends that, where permitted by law, the Agency allow grace periods before enforcement of significant regulations.
   
   In appropriate situations, FDA currently permits grace periods prior to enforcement of new regulations. Recent examples have included the HACCP rules and provisions of the Nutrition Labeling and Education Act (NLFA).

IV. REDUCTION OF PAPERWORK AND RECORD KEEPING BURDENS

1. Electronic Forms - SBF recommends the utilization of electronic forms, where applicable.
   
   To date, the Agency has two pilot programs (in CDER and CBER) involving electronic filing. A number of filings of abbreviated new drug applications (CANDA's) and product licensing applications (CAPLA's) have been done by computer and this system appears to be very promising, especially in the case of larger clinical trial-s. A preliminary analysis suggests that review times can be reduced by 15 - 25 percent through use of electronic filings.
   
   
2. Stated/Federal - SBF suggests that the Agency work to coordinate with the states to avoid duplication of effort and paperwork.
   
   This is an area where FDA has been active for some time and we are continuing to do more. The FDA Office of Regulatory Affairs includes an Office of Federal/State Relations, charged with coordinating Agency enforcement efforts with state and local counterparts (health departments, offices of attorney general, etc.) The FDA's National/Regional/State Telecommunications Exchange Network allows daily interactions with the State and regional food and drug authorities about enforcement priorities and plans. Frequent meetings occur throughout the year between FDA and State and regional officials. FDA has provided financial support to the Association of Food and Drug Officials (AFDO) to allow a full contingent of state officials to attend.
   
   FDA also provides training to some 200 State and local officials each year.
   
   In some categories of enforcement, FDA relies completely on the States -- shellfish sanitation and interstate milk shipment are two examples. In other cases, FDA contracts with the States to conduct inspections and other enforcement activities. Health fraud is an area wherein FDA works hand in hand with the States' attorneys general.
   
   Recently, FDA announced an expanded effort to create a new partnership with State, regional, and local food and drug officials and with industry and academia. "ORA 2111 is fostering development of a broad range of partnerships to avoid duplication and share resources. This effort envisions joint efforts involving training, public education, enforcement priorities, decision-making, information gathering, emergency response, and other activities.
   
   Obsolete regulations - SBF recommends that the Agency work to eliminate obsolete and redundant regulations.
   
   As recounted earlier in this testimony, in 1993 FDA eliminated a substantial backlog of old and obsolete proposed regulations. In 1995 FDA identified for elimination, 735 pages governing the regulation of antibiotic and insulin products from its Code of Federal Regulations. These regulations were written as required by provisions in the Federal Food, Drug, and Cosmetic Act which are seen as obsolete. The Administration is working to repeal the sections 506 and 507 of the FDC Act.
   
   
3. D. Different sizes - SBP recommends tailoring regulations to different sized entities and utilizing phase-ins and exemptions. Tailoring regulations to differing sized entities is something FDA does widely. A recent example is the financial disclosure regulations, which contain special disclosure provisions for small clinical investigators.

In summary, since 1993, with the implementation of the President's Executive Order on regulatory planning and review,FDA has been working vigorously in the game spirit Congress has adopted in the Paperwork Reduction Act of 1995. We have identified unnecessary regulations and eliminated or streamlined reporting requirements resulting in significant decreases in the burden of our regulations. To control paperwork burden in the future, we have developed a paperwork reduction management plan.

We will continue to work with you and the industry in that spirit while fulfilling our health and safety mission.