scientists and other members of the public from examining and commenting on the facts which underlie agency decisions. As Peter Barton Hutt, former General Counsel of FDA, has stated:

"... by opening up the Agency to greater public scrutiny and accountability, by searching out the most reliable information on which to act, by actively seeking the views of all interest groups, and by increasing the involvement of independent experts outside the Agency, the possibility of arbitrary or irrational decisions can be reduced to a minimum." 22

Furthermore, without access to supporting data, informed public debate on controversial decisions and on broad questions such as the ethics of human testing becomes impossible.

FDA's trade secrets policy also detracts from the science environment at FDA. Professional staff are unable to discuss their work with colleagues outside the agency. They also are prevented from publishing articles in professional journals concerning subjects or materials on which they have worked. This reduces the professional stature of FDA personnel and contributes to their unhealthy sense of isolation from the rest of the scientific community.

By keeping scientific research hidden from public view, present policy often forces pharmaceutical companies to engage in testing which duplicates work already performed by other companies. Because duplicative testing has little social value, the ethics of such testing are always questionable. In fact, duplicative testing might lead to deaths or illnesses which could have been avoided had the investigator been familiar with another firm's findings. Moreover, duplicative clinical research wastes money and resources and channels skilled people and laboratory facilities away from more fruitful scientific endeavors.23

Finally, FDA's trade secrets policy interferes with the free exchange of scientific knowledge. As J. Richard Crout, M.D., Director of FDA's Bureau of Drugs, has stated, this policy "offends a basic ethic of scientists, which is to open their data and findings to everyone.' ." "The suppression of scientific data also hampers drug development by preventing researchers from being apprised fully of scientific advances which have a bearing on their work.

25

Senior officials at FDA have recognized the desirability of modifying the agency's trade secrets policy and have taken some useful steps in that direction. For example, many documents which were regarded as confidential under former policy are now available to the public. In addition, regulations concerning FDA administrative practices and procedures now provide that safety and effectiveness data may be available in camera inspection by individuals involved in formal administrative hearings.20

Despite these changes, most scientific data remain confidential. FDA officials state that the agency is prevented from releasing such data to the public by existing federal trade secrets statutes." The Panel does not fully endorse this view. The law is unsettled on whether animal and human test data properly fall within the definition of trade secrets and it is uncertain whether FDA's present policy would be sustained if it were challenged in court. Further, the broad definition of trade secrets used by FDA seems incorrect in light of the legislative history of the relevant provisions of the Federal Food, Drug, and Cosmetic and Freedom of Information Acts.28

Nonetheless, the Panel concludes that the need to make scientific data is urgent and therefore warrants immediate Congressional action. The Panel believes that this purpose can be achieved without eliminating the existing incentive to invest in drug research and development.

Specifically, the Panel recommends that Congress immediately amend the Federal Food, Drug, and Cosmetic Act to provide that safety and effectiveness data are not trade secrets for purposes of federal prohibitions against release of con

22 P. Hutt, The Philosophy of Regulation Under the Federal Food, Drug, and Cosmetic Act. 28 Food Drug Cosmetic L.J. 182 (1973).

23 Trade Secrets report, supra note 19. at 35-43.

24 Address by Dr. J. Richard Crout, Director, Bureau of Drugs, FDA, "New Drug Regulation and its Impact on Innovation." Third Seminar on Pharmaceutical Public Policy Issues (Dec. 15, 1975) in S. Mitchell and E. Link, eds., Impact of Public Policy on Drug Innovation and Pricing 249 (1976).

26 Trade Secrets report, supra note 19, at 24-26.

20 FDA Regulations on Administrative Practices and Procedures, § 10.20 (j) (3), 42 Fed. Reg. 15572 (1977) [hereinafter cited as Regulations].

27 18 U.S.C. § 1905 (1970): 21 U.S.C. § 331(j) (1972). In addition, safety and effectiveness data are said to fall within the exemption to the Freedom of Information Act for "trade secrets and commercial or financial information." 5 U.S.C. § 552(b) (4) (1976). 28 Trade Secrets report, supra note 19, at 21-23.

fidential and privileged information." This amendment would permit public disclosure of all safety and effectiveness data submitted in support of an IND or NDA but would preserve the confidentiality of other information, such as marufacturing processes and production and sales data, which traditionally and appropriately have been regarded as trade secrets. The Panel's report on FDA's trade secrets policy (Appendix Vol. IB) offers additional, detailed recommendations to facilitate the implementation of this amendment. These recommendations address the practical problems involved in releasing data which: 1) contain matters of personal privacy; 2) are often voluminous, and; 3) usually are collected in a piecemeal fashion.3

30

It is plain that the protection of incentives to invest in drug research and development is a legitimate concern. Such protection, however, must strike a balance between encouraging openness and competition and preserving the drug industry's incentive to invest. Protection should not be afforded at the expense of withholding from the public critical information about the safety and effectiveness of new drugs. At present, not enough is known about the extent to which FDA's trade secrets policy is necessary to promote drug innovation. Therefore, the Panel recommends that Congress commence a study of drug innovation in the United States to determine ways in which drug research and development may be encouraged without resorting to the suppression of scientific data or the stifling of competition among pharmaceutical companies. Recognizing that this study may require several years to compete, the Panel suggests that, as an interim measure, some minimal protection be accorded the pharmaceutical industry. Specifically, Congress should provide that safety and effectiveness data may not be used by a sponsor's competitors to support an IND or NDA without the express permission of the sponsor for a specified period following either approval of the drug or enactment of the amendment, whichever is later. While this amendment might reduce current levels of protection by unveiling companies' research activities, it still would prevent a competing company from marketing "me-to" drugs without permission for a specified number of years after the innovator's own products have been approved by FDA.

[Exhibit 4]

EXCERPT FROM COUNCIL ON ENVIRONMENTAL QUALITY TOXIC
SUBSTANCE STRATEGY COMMITTEE WORK PLAN

(Federal Register, Nov. 4, 1977)

The work plan for the interagency Toxic Substances Strategy Committee is published here for public comment. This committee was established in response to the President's request, in his Environmental Message of May 23, 1977, that the Council on Environmental Quality develop an interagency program to eliminate overlaps and fill gaps in the collection of toxic chemicals data and to coordinate research and regulatory activities affecting them. This committee will serve at the principal forum for the development of Administration initiatives with respect to government-wide toxic substances strategy and policy . . .

II. INFORMATION AND DATA ACTIVITIES (CEQ LEAD)

The research, recordkeeping, and reporting requirements specified in the Toxic Substances Control Act of 1976 and in related authorities are extensive. These data requirements include information on production, testing, characterization, adverse reactions, exports, employment effects, health effects, and environmental effects. The production of these data involves the responsibilities of more than 32 Federal agencies. Moreover, enactment of TSCA has raised the expection that now the many diverse Federal activities under various legislation can be coordinated in a comprehensive program.

If timely and accurate data are to be collected with the least possible burden on business, industry, and the public, steps must be taken to coordinate the plan

Similar provisions are contained in other federal health and safety legislation. See, e.g.. Clean Air Act § 114(c), 42 U.S.C. §§ 1857f-6(b) (1976), providing for disclosure of "emission data;" Federal Water Pollution Control Act Amendments of 1972. § 308, 33 U.S.C. § 1318(b) (1976) providing for disclosure of "effluent datà ;" and Toxic Substances Control Act 14 (b), 21 U.S.C. § 2613(b) (1976), providing for release of "health and safety studies."

20 Trade Secrets report, supra note 19, at 47-54.

ning and activities of the major Federal producers and users of chemical data. This coordination will require a comprehensive inventory of what agencies are producing what data, by what means, and for what purposes. In addition, attention must be given to barriers that can impede interagency efforts and exchanges of information. Among those barriers are confidentiality provisions that protect identity and trade secrets; the lack of a standard method for classifying chemical substances and uses; and a lack of standard formats for reporting such items as the results of toxicological and epidemiological research.

Task IIA. Review of options paper on trade secrecy and confidentiality of trade secrets data. This task will be carried out for the Committee by a subcommittee on trade secrets and confidentiality (formerly a part of the Ad Hoc Interagency Toxic Substances Data Committee).

Current laws and practices restricting release of information by Federal agencies to other agencies and to the public and are not uniform. The subcommittee, assisted by CEQ staff, will prepare a report evaluating these laws and practices and presenting options for needed improvements, which will be the basis for the full Committee's actions and recommendations in this area. Issues to be addressed include the current ambiguities inherent in existing laws on the definition of trade secret or confidential material, the need for uniform and fair criminal sanctions for disclosure of such information, and the implications of removing certain restrictions on interagency exchange of information.

Task IIB. Assessment of mechanisms for addressing information needs and their impacts (Strategy Committee lead, with input from Data Committee, IRLG and Commerce). The Strategy Committee will have the benefit of a report by the Ad Hoc Interagency Toxic Substances Data Committee (or its successor) concerning the needs of Federal agencies for various types of chemicals-related data; the adequacy of existing Federal data systems to meet those needs, and methods and policies for improved exchange of information among Federal agencies. The IRLG will study the area of reporting and recordkeeping requirements and will make recommendations for necessary follow-up; it will also be working on development of compatible testing standards and guidelines. Following review of these reports and activities, the Strategy Committee (with the special assistance of Commerce) will evaluate the adequacy of current efforts relating to chemicals information. The Committee will also look at the impacts on industry, environmental groups, and other interest groups of the various information requirements and programs.

[Exhibit 6]

SCHIFFER LETTER ON CONSULTATION WITH REQUESTER

Senator JAMES ABOUREZK,

CENTER FOR LAW AND SOCIAL POLICY,
Washington, D.C., September 19, 1977.

Subcommittee on Administrative Practice and Procedure,

Dirksen Senate Office Building,

Washington, D.C.

DEAR SENATOR ABOUREZK: I want to thank you again for the invitation to testify at the hearings of September 15, 1977, held by the Senate Subcommittee on Administrative Practice and Procedure regarding the Freedom of Information Act. I enjoyed the opportunity to present views from the point of view of those seeking information under the Act.

In the course of the hearing, you asked whether agency officials should consult with information providers in making decisions about disclosability, and I indicated that such consultation seemed appropriate so that a complete agency record could be made. I then urged that review of the agency decision should be made on the basis of the agency record, rather than de nova.

What I neglected to mention, but believe to be equally important, is that the agency should consult with the information requester as well before making decisions about disclosability, at least in those instances where an information provider is seeking to bar release. Only by such consultation can the agency assure that it has a full range of views and evidence to consider in making the decision.

Again, thank you for the opportunity to testify.

Sincerely yours,

Lois J. SCHIFFER.

[Exhibit 7]

MACHINERY & ALLIED PRODUCTS INSTITUTE COMMENTS ON DEFENSE DEPARTMENT PROPOSED FOIA REGULATIONS

MACHINERY & ALLIED PRODUCTS INSTITUTE,

Washington, D.C., September 2, 1977.

(Bulletin No. 5624)

FREEDOM OF INFORMATION ACT-GOVERNMENT CONTRACTS

PROPOSED NEW DEPARTMENT OF DEFENSE FREEDOM-OF-INFORMATION-ACT REGULATIONS

The Department of Defense announced in the Federal Register of August 10 proposed regulations which would revise existing procedures and guidelines for (1) DOD Components handling public requests under the Freedom of Information Act (FOIA), and (2) the public in obtaining records under the Act. Although comments are invited, it is expected that the final regulations will vary from those proposed only in technical detail.

The Institute believes these regulations will be of considerable interest to companies engaged in government contract activity. Accordingly, as a matter of information this letter sketches the more important procedural changes which the proposal would accomplish. Because of their length, the regulations themselves are not included. We assume that most member companies have access to the August 10 issue of the Federal Register. If not, MAPI will be pleased to supply a copy of the proposed regulations upon request.

The intrinsic importance of these regulations would seem to be heightened both by the recent action of the Attorney General in announcing his intention to further the sweeping disclosure policy of FOIA by reducing the Justice Department's defense of cases arising under the Act (see MAPI Bulletin No. 5588) and by announcement of FOIA oversight hearings in both the Senate and the House. MAPI will appear at least on the Senate side.

In the Federal Register announcement comments on this proposal are requested by September 9. However, because of the importance of these regulations and because of their publication during the congressional recess and the height of the vacation season, the Institute requested and was granted an extension to September 26 for comments. Having in mind the possibility of an Institute statement, we would appreciate receiving comments of interested member companies, including copies of statements filed directly with the Department of Defense.

The review of the proposed regulations which follows is not intended to be exhaustive, but focuses upon those aspects that are of particular interest to MAPI member companies.

Summary

The proposed regulations, which if adopted would supersede present DOD regulations published in February 1975, would, among other things: Provide more detailed guidance for FOIA requesters and DOD units processing FOIA requests; codify the DOD administrative practice of encouraging requesters to file "non-FOIA requests"; not require persons to invoke FOIA as a condition of obtaining DOD records; modify Exemption 3 (the exemption for other statutes) treatment to reflect the 1976 Sunshine Act amendment; modify DOD interpretation of Exemption 4 (confidential business information) statutory language "obtained from a person" and "confidential"; provide that release will not be delayed beyond statutory time limits as a result of an information supplier's objections absent a court order; and provide that information suppliers be informed of court action challenging agency decision not to disclose. MAPI Comment

More detailed guidance for FOIA requesters and DOD units processing FOIA requests. It is our understanding that the purpose of the proposed FOIA regulation is to provide more detailed guidance for FOIA requesters and DOD units processing FOIA requests rather than effecting a substantive overhaul of DOD FOIA procedures. In most instances the proposed regulation either promulgates a previously informal DOD practice or effects technical refinements that reflect recent statutory changes and case law developments.

Codify DOD administrative practice of encouraging requesters to file “nonFOIA requests."-Section 286.6(a)(2)(ii) of the proposed regulation outlines

a so-called "best approach" of achieving DOD's objectives of maximum disclosure consistent with legitimate public and private interests. This section would codify an informal DOD practice of distinguishing between requests for DOD records made under FOIA and other requests for DOD information. Only “FOIA requests," whether or not specifically identified as such, would be subject to FOIA requirements, including that Act's stringent time limits. A "FOIA request" is defined by § 286.6(a)(3) as “[a] request for DOD records made by a member of the public who either explicitly or implicitly invokes the Freedom of Information Act, this Part, this section, or Component supplementing regulations."

Present administrative practice and the proposed regulations-but not present regulations-distinguish between FOIA requests and non-FOIA requests. Under one interpretation this distinction could be at odds with the applicable FOIA statutory language which states" * each agency, upon any request for records *** shall make the records promptly available [subject, of course, to statutory exemptions] to any person." (Emphasis added.)

FOIA need not be invoked as a condition of obtaining DOD records.—In a new statement of DOD policy, § 286.3 (b) of the proposed regulation provides that DOD shall "[n]ot require a requester who complies with reasonable rules set forth by a Component to invoke the FOIA in order to obtain records from DoD." Modification of Exemption 3 to reflect the 1976 Sunshine Act amendment.— Exemption 3 was amended in 1976 by the Government in the Sunshine Act, P.L. 94-409, § 5b. As amended it protects information "specifically exempted from disclosure by statute *** provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld." Previously Exemption 3—without limitation or qualification-covered information "specifically exempted from disclosure by statute." The proposed regulation under Exemption 3 reflects this recent statutory revision.

By its terms this exemption, unlike other statutory exemptions to FOIA, is mandatory. Of particular importance to business is whether 18 U.S.C. § 1905 qualifies an Exemption 3 statute. 18 U.S.C. § 1905 makes it a criminal offense for a federal employee to make disclosures "not authorized by law" of trade secrets and other confidential business information obtained during the course of his employment. If 18 U.S.C. § 1905 qualifies as an Exemption 3 statute, a supplier of the types of information described therein would have sufficient grounds to request the enjoining of disclosure thereof because Exemption 3 would protect such information from required FOIA disclosure and 18 U.S.C. § 1905 would preclude voluntary agency disclosure thereof. The present regulation lists 18 U.S.C. § 1905 as an Exemption 3 statute. The proposed regulation, consistent with the report of the House Committee on Government Operations on the Sunshine Act, omits 18 U.S.C. § 1905 from its examples of Exemption 3 statutes. However, we have been informally advised that DOD is not taking an official position on this point. In addition, the pertinent language in the House Committee Report is somewhat qualified and there is also a "legislative history" question as to whether the Report language is controlling.

Modification of DOD interpretation of Exemption 4 (confidential business information) language “obtained from a person" and "confidential.”—FOIA Exemption 4 relates to "trade secrets and commercial or financial information obtained from a person and privileged or confidential." The proposed DOD regulation differs from the present regulation in its interpretation of the Exemption 4 statutory language "obtained from a person" and "confidential." Under the proposed regulation information "obtained from a person" is that "which a Component receives from a source outside the Component," while under the present regulation information "obtained from a person" is that which a Component "receives from a person." However, the great majority of cases bearing on this issue hold that information "obtained from a person" is that obtained from a person outside of government rather than merely "from a source outside the Component [from which the information is requested]."

3

Both the proposed and present regulations apply the National Parks test of confidentiality with an addition which may be subject to legal question. In order

2 See MAPI Memorandum G-89 at pp. 18-20 and 40-42.

3 This test was first applied in National Parks and Conservation Association v. Morton, 498 F. 2d 765 (D.C. Cir. 1974). See MAPI Memorandum G-89 at p. 25.