Getting The Lead Out At The Fda

The 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 Administration. But this time, the FDA moved swiftly. Before Merck could file an application, FDA reviewers got test data from the National Institutes 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.

BACKLOG. 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. David A. Kessler became commissioner on the heels of a scandal involving fraudulent applications for generic drugs. Kessler promised a transformation, and in short order restored the agency's credibility 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 making the agency a more efficient regulator. If his strategy pays off, thousands of companies will get their devices and drugs to market sooner, giving such products more moneymaking years before their lucrative patents expire. Success 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 management and systems. Some agency-watchers, fed up with continuing delays in approval of medical devices and other products, are downright downbeat. "It's all smoke and mirrors," scoffs one influential food-and-drug attorney. "The FDA is more poorly managed today than at any time in the past 30 years."

The evidence, however, suggests otherwise. Giving the FDA's 21 field offices more authority and cutting down on headquarters reviews has sped up enforcement: 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 reviewers are whittling away at applications 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 reviewers 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-president 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 say that he wants to make the place even better, instead of implying we were a bunch of jerks," comments one top official. Still, even the most entrenched bureaucrats agree that the FDA's structure 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 policy, manage crises, deal with Congress and the outside world, handle day-to-day operations, and revamp the agency's 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" instead of actually running things, says Kessler. "The agency never asked how work should get done."

IDIOSYNCRATIC. As a result, the FDA was largely shaped by historical accident. Each of its five mostly autonomous product-review centers evolved its own idiosyncratic ways of doing business. The Center for Food Safety & Applied Nutrition, for example, was once the Bureau of Science, and its primary mission was developing scientific tools to help inspectors spot contaminated food. That mission 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 research that was mission-oriented--and wasn't successful," says Richard J. Ronk, now director of the product policy staff.

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, announcement. But the overhauled Food Safety center passed its first big test--implementing the 1990 Nutritional Labeling & 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 been for the reorganization," says center director Fred R. Shank.

The FDA's new emphasis on moving the freight has also overturned long-standing practices in the field. In the past, says New York District Director Edward T. Warner, the FDA's six regional offices tried to cover the waterfront on the theory that every industry the FDA oversees needs close attention. "One of the things we've learned from Dr. Kessler is focus and planning," says Warner. "Rather than trying to take on 60 industries simultaneously and overextending ourselves, we are drawing priorities." In Warner's district, that has meant fewer checks of food warehouses and cosmetic companies and tighter scrutiny of generic drugmakers and the smoked-fish industry, where contamination can mean food poisoning. Coupled with more authority and faster action at headquarters, this "means I'm able to make better use of my resources," says Warner.

At the same time, the FDA is fixing countless little things. Consider communications. "Information is the agency's lifeblood, but they've been ages behind in computer and communications technology," says Dr. Cheryl F. Graham, former director of the Drug Marketing, Advertising & Communications Div. Veverka counted it a triumph when staffers figured out how to address one another over what she calls the agency's "Tower of Babel"--six different E-mail systems. Then there's the matter of the forms companies must fill out to report adverse reactions to drugs or other products. Each center had its own form and requirements. Kessler has made them all the same. "It sounds so simple," he says. "But anyone who has been in the federal government knows these are the real challenges."

Plenty more lie ahead. One big difference between a company and the FDA, for instance, is that agency officials manage exclusively by head count, not the dollar size of their payroll. In other words, Congress gives them a certain number of staff, not just a budget. As a result, expensive scientists may get hired when cheaper technicians could do. Veverka has a plan to manage by payroll, which might require some top-level retraining. "The agency's not ready for it yet," she says. "We basically have scientific managers who don't even know their own payroll costs."

Such constraints mean that FDA management still is a long way from rivaling the private sector's best. What's more, some execs in regulated companies dislike some of the changes so far. Some former FDA officials among these say that giving field offices more authority, for example, has made enforcement more arbitrary. And so far, the revamping of the Center for Devices, tarnished by heart-valve and breast-implant controversies, has resulted mainly in slower approvals of products. But overall, most observers agree, Kessler's FDA has demonstrated that, even in government, necessity can be the mother of reinvention. Says Carl B. Feldbaum, president of the Biotechnology Industry Organization: "Kessler has brought the FDA into the 20th century."

KESSLER'S Actions/Assessment
      -- Added new layer of deputy commissioners to help run the agency when the
      commissioner is occupied with crises or other business.    
      -- Mixed. The FDA works faster on many things at once, but some staffers feel
      isolated from the commissioner.
      -- Reorganized the FDA's centers for biologics and foods around products, not
      scientific disciplines, to focus on product approval.
      -- Product reviews are being done faster.
      -- Now has similar divisions, such as oncology, within different FDA centers
      work together instead of autonomously.
      -- Promises more efficiency, but gains are still in the future.
      -- To speed enforcement actions and drug eviews, has given field offices and
      lower-level managers more authority.
      -- FDA enforcers are moving 30% to 60% faster than before.
      -- Pushed through a plan to collect millions in fees to pay for 620 new
      reviewers and speed drug approvals.
      -- The FDA hopes to halve average approval time by 1997.
      -- Has goaded companies into submitting better drug applications by refusing to
      accept substandard ones.  
      - Refusals have jumped from rare to nearly 30% of applications.  
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