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cience &.: Technoloa REGULATION GETTING THE LEAD OUT AT THE FDA Kessler promised to reshape the agency. How's he doing? T he event was a study in how much a hidebound federal agency can change. A clinical trial published in September, 1992, proved that Vasotec, a Merck & Co. drug that treats severe heart problems, also helps victims of milder heart ailments. To be approved for the new use, the drug normally would have endured a lengthy review at the Food & Drug Ad- ministra- EN ENT1~6 tion. But this time, the FDA moved swiftly. Before Merck could file an application, FDA reviewers got test data from the National In- stitutes of Health, started the regulatory process, and in six months were ready to grant approval. "We've never done that before," says Dr. Robert J. Temple, a top official at the FDA's Center for Drug Evaluation & Research. eAOCL06. That's becoming a refrain at the FDA. For years, the agency whose proudest accomplishment was keeping thalidomide off the U. S. market in the 1960s seemed to nurture inaction. But in 1990, Dr. Da- vid A. Kessler became commissioner on the heels of a scandal involving fraudu- lent applications for generic drugs. Kess- ler promised a transformation, and in short order restored the agency's cred- ibility by cracking down on everything from falsely labeled "fresh" orange juice to potentially dangerous breast implants. Next, he has borrowed what he calls "the best practices of the private sector" to tackle the vastly harder job of mak- ing the agency a more efficient regula- tor. If his strategy pays off, thousands of companies will get their devices and drugs to market sooner, giving such products more moneymaking years be- fore their lucrative patents expire. Suc- cess could also make the FDA a model for Vice-President Al Gore's plan to streamline the federal bureaucracy. FDA officials warn against expecting too much too soon. "In companies, this kind of change takes at least six years- and in government it may take longer," says former Booz, Allen & Hamilton Inc. consultant Mary Jo Veverka, now the FDA's deputy commissioner for manage- ment and systems. Some agency-watch- ers, fed up with continuing delays in approval of medical devices and other products, are downright downbeat. "It's all smoke and mirrors," scoffs one in- fluential food-and-drug attorney. "The FDA is more poorly managed today than at any time in the past 30 years." The evidence, however, suggests oth- erwise. Giving the FDA's 21 field offices more authority and cutting down on headquarters reviews has sped up en- forcement: The agency now cranks out requests for injunctions, such as a recent one against Warner-Lambert Co. alleging shoddy manufacturing, in fewer than 40 days instead of 100. Biotech drug re- viewers are whittling away at applica- tions that have lingered for up to five years. Regulations, such as the massive 1992 rewrite of food-labeling rules, are being issued on time instead of years late. And after winning congressional approval to bill companies $100,000 for each drug evaluation, Kessler raised his budget 8.7% this year, to $826 million, and began hiring enough extra review- ers to cut average drug approval time from 22 months to 12 by 1997. "The changes have been excellent first steps," says Kenneth P. Berkowitz, a vice-pres- ident at drugmaker Hoffmann-La Roche Inc. "Kessler has planted the seeds for a more effective FDA." It's hard to make such gains without pain, of course. Some highly regarded senior officials have left or been forced out. And many career staffers resent the implication that they were bumbling managers before Kessler arrived. "At least we've managed to train David to ° , „~ommiss :ioners ,Added new layer oF~ tohelp run the.agency, commissioner ~.t,~. is occupied with crises or : .~o~he~busm,,ess. = ~ , . ........ . . ....:'r _.`..*w:~ '' ,~%:~a..'~:: ... . ~. t Reorganized the FDA's centers For biologics and Foods around products, not scientific disciplines, to focus on product approval. t : Now has simi(ar.divisions, suchtl?as oncology, ,, .,,, , , ~vork tooether within different FDA centers ., instead of autonomousl -Y~ y. • To speed enforcement actions and drug reviews, has given field offices and lower-level managers more authority. ~.: .f:,.:~.,,-• ,-. ...>., t Pushed through a plan tcicollicf millions~illions in fees to pay for 620 new reviewer's and speed ' drug approvals. •Has goaded companies into submitting better drug applications by refusing to accept substandard ones. say that he wants to make the place even better, instead of implying we were a bunch of jerks," comments one top of- ficial. Still, even the most entrenched bureaucrats agree that the FDA's struc- ture badly needed fixing. The problems started at the top. "The first day I got here, I was called to the Health & Human Services Dept. [the FDA's parent]," says Kessler. "For a whole day, nothing else got done." So he installed five deputies to oversee pol- icy, manage crises, deal with Congress and the outside world, handle day-to- day operations, and revamp the agency's 96 BUSINESS WEEK/OCTOBER 25, 1993 SCIENCE & TECHNOLOGY

i re- iica- tive ~ive are ,ars Inal for his ion, ew- ime ihe Ps° che tr a out led 'ed mt ing •At to on cs olog 3r 9 --lev Y el nsin ,)eed :cep x- Ss 0 s t antiquated communications systems. More than just extra bodies, the new team represented a leap in management expertise. "In the past, management meant doing the budget, allocating office space, and doling out parking spots" in- stead of actually running things, says Kessler. "The agency never asked how work should get done." wiosmtRAM. As a result, the FDA was largely shaped by historical accident. Each of its five mostly autonomous prod- uct-review centers evolved its own idio- syncratic ways of doing business. The Center for Food Safety & Applied Nutri- tion, for example, was once the Bureau of Science, and its primary mission was developing scientific tools to help inspec- tors spot contaminated food. That mis- sion was history when Kessler took over, but the center was still organized around scientific disciplines-which had little connection with newer roles such as regulating food additives. "I tried my damnedest during my tenure as [center director] to work out a program of re- search that was mission-oriented-and wasn't successful," says Richard J. Ronk, now director of the product policy staff. ASSESSMENT - Mixed. The FDA works fciter on many things nnrw_ lv,l.nmw .M;F..e f.wl i.r.1..i.d i...,.. +{,. ~ commissioner. ; / Product reviews are being done faster. ~ Promises more effcienry, but gains are still in ~" °~he future. It~l 10- FDA enforcers are moving 30% to 60% faster than before. The FDA hopes to halve average approval : : fime by 1997. F~... 10- Refusals have jumped from rare to nearly 30% of applications. Kessler's solution was to reorganize the center along "product" lines, such as seafood and food labels. The changes were wrenching, in part because Health & Human Services sat on the plan for months after its February, 1991, an- nouncement. But the overhauled Food Safety center passed its first big test- implementing the 1990 Nutritional Label- ing & Education Act on time. It did so because all the food-labeling expertise that previously was scattered throughout the FDA had been put in a new division within the center. "We would never have gotten food labeling done had it not Now WHEN You CHANGE JOBS, You DON'T HAvE To LEAVE YoUR INVESTMENT STRATEGY BEHIND. Roll over your retirement distribution to Schwab and you can take advantage of investments similar to those you currently enjoy. • Our Mutual Fund OneSource" service offers over 200 well-known mutual funds with no loads and no transaction fees - so you'll find more choices to match your goals. • With our No-Fee IRA, you'll never pay an annual fee for the life of your account if your assets reach $10,000 or more by September 15, 1994. • Our free Guide to Maximizing Your Retirement Plan Distribution explains your alternatives and how to save on taxes by avoid- ing the 20% withholding tax. Call 1-800-442-5111 ext. 59. CharlesSchwab Helping Investors Help Themselves' We will provide you with a free prospectus for any fund available through Schwab. Please review the prospectus carefully before investing. Some funds may charge 12b-1 fees in excess of 0.25%. Maintenance fees for special assets such as limited partnerships and promissory notes still apply. ©1993 Charles Schwab & Co., Inc. Member SIPUNYSE Turn your excess inventory 'I'm a via pmidrnt bmruse I wld 22.000 gizmos into a tax break and this ymr. Hmu'd you Ixivme a o.p.t' help send needy kids to college. Call for your free guide I to learn how donating your , ~ slow moving inventory ~ can mean a generous TAX WRITE OFF . V, for our com an y p y. Call (708) 690-0010 P. O. Box 3021, Glen Ellyn, IL 60138 FAX (708) 690-0565 Excess inventory today ... student opportunity tomorrow t_,, '.l e ii " t fg l l 'r mnde e grmt dmt on thc 200.000 t-'7G , Ii g/zmos you didn't aell Ieat year.' r IV ~, I GGY SCIENCE & TECHNOLOGY BUSINESS WEEK/OCTOBER 25, 1993 97