SPI - Food, Drug, and
Cosmetic Packaging Materials Committee
September 15, 1998 Newsletter

* * * For Members Only * * *

1. Congress Passes Bill to Protect Biomaterials Suppliers from Unfounded Lawsuits

2. Funding Decisions for the FCN Program to Be Made in the Next Few Weeks

3. Nomination Process Continues for Henney

4. FDA Announces Goals and Initiatives to Improve Performance and Customer Service

5. National Academy of Sciences Report Recommends Unified Federal Food Safety Framework

6. President Clinton Establishes President's Council on Food Safety; Public Meeting Scheduled

7. Burr Introduces Uniform Labeling Legislation

The Society of the Plastics Industry, Inc.
Food, Drug, and Cosmetic Packaging Materials Committee

Dear Ladies and Gentlemen:

This letter contains information on several issues of interest to the food packaging industry. Most notable is the passage of the Biomaterials Access Assurance Act that was signed into law by President Clinton on August 13, 1998. The letter also has an update on the status of the funding for the Food Contact Notification program. Congress will make a decision on the funds that are to be appropriated for this program when it votes on the Agriculture Appropriations bill in the next few weeks, so we are working feverishly to ensure that the otification program will be funded and implemented as envisioned. In addition, we discuss issues such as the pending approval of the nomination of Dr. Jane Henney as FDA Commissioner, as well as the continuing interest in the possibility of a new agency or at least a new cooperative arrangement to help ensure the safety of the food supply.

1.Congress Passes Bill to Protect Biomaterials Suppliers from Unfounded Lawsuits

In a surge of activity just prior to the August recess, Congress passed the long-anticipated Biomaterials Access Assurance Act of 1998, which had been reintroduced in this Congress by Representative George Gekas (R-PA). After both the House and Senate passed the bill by voice vote, the President signed it into law on August 13, 1998. The Act provides protection from unfounded product liability lawsuits against component and raw material suppliers for medical implants. Congress passed the legislation because of concerns over the depletion of stocks of raw materials due to a reluctance by many companies to supply the medical device market in an environment of rising litigation costs. Even though no biomaterials supplier has ever been found liable in a lawsuit involving defective implants, in many cases suppliers have been forced to incur enormous costs associated with pretrial discovery and motions. Congress was concerned that, if the present situation continued, it would jeopardize the availability of many implants and increase the costs to consumers of available implants.

The new law applies to all actions brought in state or federal courts under a claim for product liability. The law basically codifies certain common law defenses already available in many states to biomaterials suppliers in these types of lawsuits. The rationale behind the theory of these defenses is that the manufacturer of a final product is in a better position to judge the suitability of the product for its intended use and it is the manufacturer that owes the duty of care to the patient. While limiting the scope of liability for biomaterial suppliers under product liability actions, the new law does not affect suits for breach of warranty or contract. In addition, suits brought alleging harm from silicone breast implants are not affected by the law.

The true benefit of the new law is not that biomaterials suppliers will avoid liability for harm from medical implants unrelated to a defect caused by the supplier: courts had never found suppliers liable for these injuries in the past. The true benefit is that the new law will limit the costs that a supplier could incur from being named as a defendant in a lawsuit. As described in more detail below, in most cases under the new law, a biomaterials supplier is entitled to expedited dismissal from a lawsuit and is only subject to demands of a claimant's discovery requests in very limited circumstances. The Act contains a narrow procedure by which a supplier may be brought back into a lawsuit after judgement and be found liable, but only if evidence was introduced during the trial that demonstrated, by a preponderance of the evidence, that the biomaterials supplier was liable because of negligence or intentional tortious conduct.

Specifically, the Act's liability protection is available to those persons who supply, directly or indirectly, a component part or raw material that is used in an implant provided that the supplier (1) was not the manufacturer of the implant (i.e., did not engage in the manufacture, preparation, propagation, compounding, or processing of the implant); (2) was not the seller of the implant (i.e., did not in the course of business sell, distribute, lease, package, label, or otherwise place the implant in the stream of commerce); or (3) did not furnish raw materials or component parts for the implant that failed to meet contractual requirements, its own published specifications, or those specifications required by law or regulation.

A supplier may be found liable as a manufacturer of the implant if the supplier was registered or was required to register as a manufacturer of an implant under the medical device regulations, or if the supplier was required to include the implant on a list of devices filed with the Agency. Alternatively, a supplier may be found liable as a manufacturer if the court finds that the supplier was related by common ownership or control to a liable manufacturer, where the manufacturer lacks sufficient financial resources to satisfy a judgment in favor of the claimant.

A supplier may be found liable as a seller only if it held title to the implant and then acted as a seller after its initial sale, acted under contract as seller to arrange for transfer to the person claiming liability after the initial sale, or if the court finds that the supplier was related by common ownership or control to a seller meeting the above requirements and the seller lacks sufficient financial resources to satisfy a possible judgment.

The third exception to the liability protection for suppliers under the Act allows a claimant or manufacturer to bring suit against the supplier under applicable state or federal law if the supplier failed to meet contractual requirements or required specifications for the material and the failure to meet those standards was an actual or proximate cause of the injury to the claimant. These requirements and specifications include those contained in: (1) the contract between the supplier and person who contracted for supplying the product, (2) accepted standards pursuant to law, (3) standards published by the supplier itself, (4) standards provided by the biomaterials supplier to the person who contracted for the product, or (5) specifications and standards for the product contained in a master file or other submission to FDA for the purpose of the premarket approval or review of the medical device.

As stated above, the advantage of this legislation to biomaterials suppliers is the fact that suppliers meeting the above requirements will be able to be dismissed quickly from lawsuits and will not have to incur the costs and endure the inconvenience of defending unmeritorious civil actions. Under the new law, a biomaterials supplier may move to be dismissed from the case at any time. Once the motion to dismiss is filed, no discovery against the supplier is permitted except for very limited purposes. The discovery limitations are a tremendous benefit to a supplier named in a lawsuit, because pretrial motions for discovery can be expensive, inconvenient, and often can force the disclosure of sensitive documents.

Although the new law contains a provision by which a supplier may be subsequently found liable after being dismissed from a case, the conditions under which this provision can be effected are extremely limited. It is doubtful that this provision will have much impact on the industry. In fact, the Committee Report that accompanied the bill states that the provision is intended to be used only in egregious cases. The report goes on to state that "[t]he Committee has not found a single case that has gone to final judgment where a biomaterials supplier has been held liable. While this procedure may identify such a case, if one ever arises, courts should police its use to ensure that it does not become a routine post-trial motion. It is for extreme, unusual cases."

2.Funding Decisions for the FCN Program to Be Made in the Next Few Weeks

Congress is now back from its August recess and moving to pass the remainder of the Fiscal Year 1999 spending bills before it adjourns again in October. Among the bills that need to be completed is the Agriculture Appropriations bill, which will fund FDA in the coming year. As you know, this bill is particularly important to the food packaging industry this year because it will, hopefully, fund the implementation of the newly enacted Food Contact Notification (FCN) system. You will recall from our prior letters that, in the Food and Drug Administration Modernization Act of 1997 (FDAMA), Congress called for $1.5 million in FY 99 funding for FDA to implement the FCN program.

As it now stands, the Senate and the House have passed different versions of the Agriculture Appropriations bill, which must be reconciled by conference committee. The House version of the bill contains language both in the bill itself and in the accompanying committee report to fund the program. Specifically, the House legislative proposal states that FDA will be funded at a level of $1,003,772,000, ". . . of which $500,000 shall be available for development of the systems and regulations necessary to implement the program under section 409(h) of the Act." The committee report language reads as follows:

The Food and Drug Administration Modernization Act authorized a new pre-market notification system for food packaging materials. The current lengthy review process has resulted in significant lost sales to stakeholder companies. The outdated system causes decisions to not bring new products to market. The Committee provides $500,000 to begin the development of the new approval process system.

The Senate version of the bill does not contain any funding earmarked for the FCN program, but the Senate committee report does contain language that supports the program's implementation. This language reads as follows:

The FDA Modernization Act of 1997 (FDAMA) streamlined the regulatory process for approving food contact materials under a Premarket Notification (PMN) system. The Committee is aware of the need to implement the provision in order to spur innovative, new, and improved food packaging materials that can keep food fresher, safer, and extend its shelf life.

Because the House and Senate bills contain different language on this issue, funding for the FCN system must be discussed and resolved in the conference committee, which will reconcile the two versions. We are continuing to work with the government affairs experts at SPI and its member companies to obtain as much of the $1.5 million specified by Congress in FDAMA as possible.

3.Nomination Process Continues for Henney

On September 2, Dr. Jane Henney, President Clinton's nominee for the post of FDA Commissioner, testified before the Senate Labor and Human Resources Committee and fielded numerous questions regarding user fees, food safety, tobacco, medical devices, and particularly the French abortion pill, RU-486. Dr. Henney was nominated earlier this summer to fill the open FDA Commissioner position vacated by Dr. David Kessler more than a year ago. At this point, it is unclear whether the Senate will vote on Dr. Henney's nomination before Congress adjourns for the November elections.

Senate Labor Committee Chairman James Jeffords (R-VT) submitted more than 100 written questions to Dr. Henney on July 31 dealing with drugs, biologics, biotechnology, food safety, food labeling, imported food safety enforcement, irradiation, tobacco, and medical devices. Dr. Henney responded to Jeffords with a 71 page document in which she stated that she would be committed to reviewing the Center for Food Safety and Applied Nutrition's (CFSAN's) procedures to streamline the food additive petition review process and to ensure that FDA review expertise is used most efficiently. Also, Dr. Henney commented on the CFSAN budget, but was vague in her responses, especially on the user-fee issue. Members of the Labor Committee submitted follow-up questions after the hearing on a broad range of issues, including user fees, FDAMA implementation, FDA's budget, and the irradiation of foods.

Dr. Henney has the support of numerous public health groups across the nation. In fact, three former HHS secretaries -- Otis Bowen from the Reagan administration and Margaret Heckler and Lewis Sullivan from the Bush administration -- have voiced their support for Dr. Henney's nomination. Although Dr. Henney's confirmation is not yet certain, her timely response to the committee's questions, the relatively early scheduling of her nomination hearing, and the support she has received from organizations throughout the country suggest that she may eventually be confirmed.

One possible factor that could stall Dr. Henney's confirmation is how some Republicans in the Senate react to her views on FDA's handling of the RU-486 abortion pill. Another potential problem with the nomination is simply the lack of time and the need to complete the pending appropriations bills before the 105th Congress completes its second session. Senator Kennedy (D-MA), who has been Dr. Henney's most vocal supporter in Congress, has strongly urged his Republican counterparts to confirm Dr. Henney no later than October 9, which is the scheduled date for the end of the session. A vote from the Senate Labor Committee may occur by mid-September. If the committee vote is positive, the Dr. Henney nomination will then proceed to the entire Senate for final consideration and vote.

4. FDA Announces Goals and Initiatives to Improve Performance and Customer Service

FDA recently issued its Fiscal Year 1999 Performance Plan, which details the Agency's performance commitments for the coming year. As expected, the Food Safety Initiative (FSI) is predominant among the Agency's major goals, including increasing the use of Hazard Analysis Critical Control Point (HACCP) procedures for the seafood industry and the adoption of the 1997 Food Code by the states. Also important in the plan, however, is the Agency's commitment to improve petition review. FDA has stated that it intends to act on 30% of the outstanding food and color additive petitions within 12 months, reduce the number of overdue petitions by 30%, and finalize rulemaking for the GRAS notification process.

FDA also stated in the plan that it will complete efforts to reform the premarket approval process for food and color additives. Although the Agency believes that substantial reforms have already been made in this area, additional efforts are needed to reduce the backlog to ensure timely review. One item that the plan identifies to help streamline the petition review process is the electronic data management system being put into place by the Office of Premarket Approval (OPA). The new system will manage petitions and petition-like documents, direct workflow, and provide EPA staff with real-time reporting of the status of petitions.

In a related matter, in response to a 1993 Executive Order from President Clinton challenging federal agencies to improve customer service, FDA recently issued its customer service plan. Of particular interest to the food packaging industry, the plan states that the regulated industry is entitled to timely review of product applications, reasonable access to appropriate staff, and better communication from Agency personnel. In addition, the Center for Food Safety and Nutrition (CFSAN) intends to improve its customer service through enhancing its Internet site to include relevant information on rules and guidance and information to assist in the preparation of petitions, notifications, and other submissions. CFSAN also announced that it will hold workshops with the regulated industry to clarify what information is needed in submissions to the Agency. It remains to be seen whether tangible improvements will be seen in FDA's customer service.

5. National Academy of Sciences Report Recommends Unified Federal Food Safety Framework

In a report released August 20, a National Academy of Sciences (NAS) panel urges Congress to replace the current federal food safety system with a unified and central framework for managing the federal food safety system. The NAS panel prepared the report, Ensuring Safe Food: From Production to Consumption, at the request of USDA's Agricultural Research Service and Representative Vic Fazio (D-CA). While the report calls for a more integrated federal food safety system, it stops short of endorsing the idea of a single food safety agency.

The major problem with the current framework, according to the panel, is that federal efforts to ensure food safety are highly fragmented. For instance, more than 12 agencies are responsible for food safety activities at the federal level. The various agencies responsible for food safety have attempted to coordinate efforts, but these attempts have often resulted in even more confusion. According to the report, the current system is poorly integrated with state and local activities, and lacks direction from a single leader who can represent the government on food safety issues.

To that end, the NAS report recommends a unified, science-based food safety plan headed by a Cabinet-level member of the administration. This presidentially-appointed official would have statutory and budgetary authority over other Cabinet members who direct food safety programs. Further, this Cabinet member would have responsibility for managing food borne outbreaks, setting standards for food safety, inspection, monitoring, disease surveillance, risk assessment, enforcement, research, and education. The report also notes that Congress should develop a single set of food safety regulations and to allow imports only from countries with equivalent standards.

Reaction to the NAS study has been mixed. Some, such as officials from the National Food Processors Association, have praised the panel for recommending a single food safety policy, rather than a single agency, while others are lobbying Congress to appropriate funds for a second study that will focus on more logistic matters of regulation and will more directly examine the merits of a single food agency.

6. President Clinton Establishes President's Council on Food Safety; Public Meeting Scheduled

On August 25, five days after the National Academy of Sciences (NAS) released a report criticizing federal efforts to coordinate food safety activities, President Clinton issued an Executive Order establishing the President's Council on Food Safety. Jointly chaired by the Secretary of Health and Human Services, the Secretary of Agriculture, and the Assistant to the President for Science and Technology, the Council will attempt to develop a comprehensive strategic plan for federal food safety activities and will advise the President and federal agencies on food safety issues. In addition to the three joint chairs, Council members include the Administrator of the Environmental Protection Agency, the Secretary of Commerce, the Director of the National Partnership for Reinventing Government, the Director of the Office of Management and the Budget, and the Assistant to the President for Domestic Policy.

As one of the first orders of business, the Council will review the NAS report, Ensuring Safe Food: From Production to Consumption. The Council will hold a public meeting to obtain comments on the NAS report, the development of a comprehensive strategic plan, and related food safety issues on October 2, 1998, in Arlington, Virginia. The Council will then submit its views on the NAS recommendations to the President by late February 1999.

7. Burr Introduces Uniform Labeling Legislation

On August 3, Representative Richard Burr (R-NC) introduced the National Uniformity for Food Act of 1998 (H.R. 4383), and it was referred to the House Commerce Committee. The bill would amend the Federal Food, Drug, and Cosmetic Act (FFDCA) to prevent states from enforcing any requirements relating to food safety warnings that are not identical to requirements under the FFDCA. This would eliminate state-by-state labeling requirements, such as those imposed by California Proposition 65. H.R. 4383 makes FDA the authoritative body that determines whether a manufacturer would have to put a warning on its label. Also, the legislation addresses safety tolerance issues for food and stipulates that a tolerance level set by FDA becomes the national standard to be used by all states. Burr's bill is identical to one introduced in the Senate by Pat Roberts (R- KS) on July 27 (S. 2356), which was referred to the Senate Labor and Human Resources Committee.

For some time, the food industry has placed a high priority on national uniformity of labeling legislation, calling it a "common sense initiative" and "consumer-friendly legislation." The Grocery Manufacturers Association, a leading proponent of national uniformity, believes that the two bills would leave to the states and local governments what has traditionally been their jurisdiction: food sanitation, religious dietary labeling, all date labeling, and shellfish warnings. Under the new bills, states would remain free to enact rules in areas where FDA has taken no action. The National Food Processors Association (NFPA) stated that standards to ensure food safety and prevention of deception should be the same for citizens across the entire country.

Neither H.R. 4383 nor S. 2356 has been placed on the calendar by their respective committees, so it is unclear at this time whether the 105th Congress will take up either bill before the end of the session.

As always, if you have any questions or comments about any of the issues discussed in this letter, we would be pleased to hear from you.

Cordially yours,

Ralph A. Simmons

(202) 434-4120
simmons@khlaw.com

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