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Finally, the subcommittee will consider whether congressional intent in passing the Freedom of Information Act is being contravened by the extensive use of the act for commercial purposes."

I would like to ask all of the witnesses if they would forego reading their statements and just highlight what they think is important. That will give us more time to ask questions and to have a discussion. All of your statements will be printed in the record as though read.

Mr. Gardner ?



Mr. GARDNER. Mr. Chairman, I am Sherwin Gardner, Deputy Commissioner of the Food and Drug Administration. With me today is Stuart Pape, Associate General Counsel for the Food and Drug Administration.

I will offer my statement for the record, Mr. Chairman, and make two or three points to summarize the statement.

We deal with the trade secret exemption and reverse freedom of information lawsuits. I think it is important to note also that the agency has encountered a significant workload in administering the provisions of the Freedom of Information Act. We have compiled information on the extent that it impacts on the agency. To a certain extent, that workload is associated with the trade secret provisions of the act.

The agency receives a great deal of information submitted by companies seeking to market drugs, food additives, and other products. That information contains within it some data which are considered to be trade secrets-entitled to protection as well as a great deal of other information not entitled to protection and which can be ultimately disclosed. The problem is that that information is intermingled in the submissions. It requires a great deal of effort to separate it out.

So, one of the problems we have is that the cost of separating the data is quite excessive and seriously detracts from the other work of the agency and from making available information that people request and to which they are entitled.

We have published regulations 2 in a great deal of detail which help to circumvent that sort of problem by categorizing exactly what sorts of records the agency does have and what is contained in them to the extent that we can describe that generically--and which deal rather specifically with the kinds of things that are considered to be trade secret information and those which are not. That set of ground rules, then, is an invaluable aid in helping to avoid contests over what is releasable and what is not; although it has not avoided contests entirely, we think it has helped keep them to a minimum.

I See p. 425 of the appendix and p. 29 of the hearing text. ? See pp. 329, 345 in the appendix.

We have had experience with one reverse freedom of information suit. Although those kinds of suits are undesirable, in a sense that sort of a suit is helpful in that it helps to define the ground rules. If we should get additional suits and have to defend those, I think it would be detrimental to the administration of the act and the agency's business.

I think I will stop there and allow the other witnesses a chance.

Senator ABOUREZK. Thank you very much. Your prepared statement will be inserted in the record. [The prepared statement of Mr. Gardner follows:]

PREPARED STATEMENT OF SHERWIN GARDNER Mr. Chairman, The Freedom of Information (FOI) Act and the Food and Drug Administration's (FDA) implementing regulations have been important instruments for greater consumer participation in the affairs of the agency. We appreciate, therefore, the opportunity to participate in today's discussion of how the FOI law is working at the present time. As requested in your letter of invitation, I will deal specifically with two subjects: the trade secret exemption and reverse freedom of information lawsuits.


Before discussing those two subjects, I would like to make a few general observations about the impact of the FOI Act on FDA over the past few years. When our Public Information regulations were first proposed in May 1972, they represented a major change from prior agency policy. Before then FDA, like most other agencies, retained most of the records in its files as confidential. Thus, we estimate that before our regulations went into effect, 90 percent of FDA'S records were considered confidential; the same percentage of our records are now routinely disclosed.

While the objectives of the act have generally been achieved, it has also resulted in some heavy costs to the agency. The volume of requests has been greater than we anticipated. While in 1975 we received roughly 13,000 FOI requests, by 1976 we had received over 21,800. We are receiving upwards of 470 requests per week, many demanding voluminous documents and raising complex release policy issues. It is not at all unusual to receive requests asking for every record in FDA's possession on a particular topic. These requests are time-consuming and costly.

The agency estimates its uncompensated cost responding to all FOI requests exceeded $1 million in 1976. Fees which we are able to charge for requests produced only $96,000 in revenue (which, I might add, is not available for use by FDA).

The number of people working on FOI requests has also necessarily increased with the increase in requests. In 1974, seven person-years were spent on FOI; in 1975, this figure increased to 43 person-years and ballooned again in 1976 to 67 person-years.

The agency has been forced to absorb most of the staffing requirements of FOI. Because our scarce regulatory resources are being spent responding to FOI requests, money and personnel are being diverted from other programs designed to carry out the agency's mission of protecting the consumer. FDA scientists and other professionals, including medical officers, are too frequently diverted from their regular work to identify and analyze complex and sensitive FOI requests which cannot be handled by clerical personnel.

However, the average citizen is not the main beneficiary of our work on FOI requests. Individual citizens were responsible for only eight percent of FDA's FOI requests in 1976 and the press and public interest groups were responsible for only about five percent. Most of the agency's FOI requests—more than 80 percent in 1976—originated from industry or persons working on their behalf.

Indeed, it is difficult to avoid the conclusion that FOI is substantially being used as a means of corporate intelligence gathering. This certainly is not what the FOI Act was designed to achieve.


While it has been difficult to forecast and deal with FOI workloads and related problems, we have had some success in planning for problems related to the handling of confidential materials. From the outset, the agency realized that the trade secret issue would be one of the most complex and difficult to cope with. It was decided that the ground rules for disclosing or not disclosing information-including informatio on trade secrets-should be laid out in considerable detail in our implementing regulations. As a result, FDA's public information regulations may be the most comprehensive issued by any Federal agency.

There was an additional reason for the lengthy and detailed treatment. The Federal Food, Drug, and Cosmetic Act makes it a crime for any FDA employee to disclose any information acquired under the authority of certain sections of the act, concerning any method or process which as a trade secret is entitled to protection.” 1

FDA is the recipient and custodian of a vast amount of scientific, technical and business information. Because “trade secret” information is frequently intermingled with such data, FDA's policy for many years was simply to refuse requests for most of the material in its official files. In our regulations, 2 we have now defined trade secret and have elaborated in detail upon what information in agency documents would be made public. The regulations utilize the definition set forth in the prestigious Restatement of Torts, which emphasizes that the information must provide an advantage to competitors to be regarded as confidential. Included in FDA's list of items regarded as confidential are safety and effectiveness data contained in new drug and new animal drug applications (although such data are available under certain circumstances such as when the drug has been disapproved or withdrawn from the market). The data, in summary form, are also available when the drug has been approved for marketing.

Our regulations and the accompanying preamble describe each exemption and the rationale for the exemption in detail. Significantly, they also list the kinds of documents, or information contained in documents, which FDA routinely obtains, and states our policy on disclosure. We believe this specificity has produced the intended beneficial results. It has minimized protracted disputes and litigation over substantive disclosure questions. Also, it has allowed for greater consistency in decisions of what is disclosable and has helped to prevent errors in the release or withholding of information,

I do not intend to suggest that we have not encountered any opposition on substantive disclosure questions or that there is total public confidence in our ability to apply our regulations. On the contrary, we have been challenged on both scores. The most notable challenge has come from the Pharmaceutical Manufacturers Association (PMA) which filed suit in 1975 in the United States District Court for the District of Columbia (Pharmaceutical Manufacturers Association v. Mathews, 401 F. Supp. 444 (D.D.C. 1975), Subsequent Opinion, 411 F. Supp. 576 (D.D.C. 1976)) seeking an order declaring invalid and enjoining the enforcement of certain provisions of our regulations. The most important issue in the lawsuit involved the question of whether PMA's member companies are entitled to administrative notice and an opportunity to consult with the FDA on every contemplated disclosure by the agency of information submitted by, obtained from, or pertaining to them or their products.

Fortunately, the courts ruled in favor of the agency on this issue. In our judgment, our entire FOI operation would have been seriously threatened if PMA had been successful. Nor do we feel that providing notice in advance of erery disclosure would provide benefits justifying the time and expense required. If the public is to have prompt access to agency records, the disclosure process cannot be encumbered with elaborate procedures that give private persons, with an interest in confidentiality, an opportunity-in every instance to attempt to persuade, cajole or negotiate about the disclosure deci. sions. Detailed regulations, such as ours, and notice in limited situations where the disclosure decision is close, are preferable.

1 See exhibit 20, n. 324 of the appendix. 2 See pp. 329, 345 of the appendix.


We have welcomed court challenges on substantive disclosure issues as we believe these are in the public interest.

There is a real question, however, whether reverse FOI suits-brought by firms attempting to prevent Government agencies from releasing recordssubstantially serve the public interest. Fortunately, FDA has had to defend only one such lawsuit. We believe that the detailed treatment of nondisclosable data in our regulations has contributed to our good fortune in this area.

I am sure the subcommittee is aware that the FOI amendments require the courts to handle expeditously FOI cases seeking disclosure of records. It has been our experience, however, that these cases are not processed as rapidly as one would hope. Moreover, the law makes no provision for expediting reverse cases. Although FDA's experience is limited, we understand that reverse cases make their way through the courts at an even slower rate than the regular FOI cases. This is significant since, as long as the suit is pending in the courts, the records will not be released.


In the recent reverse FOI case brought against the agency by Syntex, Inc., which, incidently has been pending for nearly a year, the principal issue involves the release of what the agency considers to be summaries of safety and efficacy data pertaining to a new drug. Syntex claims that the data are not summaries but rather constitute part of the full reports of the data generated from preclinical and clinical trials, on the theory that these data are essential to obtain a license to market the product. The data provide an important competitive advantage over those who do not have access to it, for they must duplicate the data to obtain a license to compete. The license in this case is, of course, the new drug application approved by the FDA.

The agency has generally agreed with this position since enactment of the Federal Food, Drug, and Cosmetic Act in 1938, by interpreting the term “method or process which as a trade secret is entitled to protection” in section 301 (j)? as encompassing animal and human testing data. Later, however, the agency adopted a policy of releasing a summary of such data when a drug was approved for marketing.

The result of the longstanding FDA interpretation of safety and efficacy data as trade secrets is, on the one hand, to protect manufacturers' investments in drug development and thus provide an incentive for further research, but, on the other hand, it requires scarce research resouces to be spent duplicating studies which have already established the safety and effectiveness of marketed drugs. On an ethical level, the confidentiality accorded to scientific studies can delay the dissemination of new medical knowledge and, if clinical trials are repeated, may place human subjects at risk without a justifiable corresponding benefit to themselves or the public. Finally, the "secrecy" of the data frequently limits public acceptance of FDA's judgment on specific drugs, and may understandably weaken public confidence in the agency.

Legal constraints rather than agency policy choice has largely dictated FDA's policies and practices with respect to release of safety and efficacy data. Agency representatives have on numerous occasions since the early 1960's indicated in public statements that current statutory prohibitions prevent disclosure of useful information contained in the agency's files, and particularly, data relating to the safety and effectiveness of drugs. FDA has repeatedly stated that it cannot unilaterally change its longstanding interpretation of the law, on which the industry has relied for almost 40 years.

FDA believes that scientific data, including safety and efficacy data now considered trade secrets, should be made public recognizing the potential negative impact this might have on drug research. This dilemma is not properly one for FDA to solve by itself, even if it legally could. Rather, it is an important public policy issue that can and should be addressed primarily by Congress. If any change is to be made in the handling of the full reports of the safety and effectiveness data submitted to the agency as part of a drug application, it should properly be made by Congress through new legislation, and not by the FDA through regulations.

1 See exhibit 20, p. 324 of the appendix.


Overall, the FOI Act and our implementing regulations have resulted in substantial public benefits, although, as I noted earlier, they have also produced some disappointing effects. Contrary to some fears expressed at the time the regulations were first published, our policy of disclosure has not hindered communications or relations with anyone outside the Federal Government nor has it impeded internal agency deliberations. It has, of course, properly encouraged closer public scrutiny of our actions, and thus has enhanced public accountability of the Agency.

Mr. Chairman, that concludes my formal statement. I will be happy to answer any questions you or members of the subcommittee may have.

Senator ABOUREZK. That was a good presentation for catching you unaware.

Mr. GARDNER. Thank you.
Senator ABOUREZK. Mr. Norton ?


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Mr. Norton. Mr. Chairman, I am Gerald Norton, Deputy General Counsel of the Federal Trade Commission. With mé is Barry Rubin, who is Assistant to the General Counsel.

I will be presenting staff views which do not necessarily reflect the views of the Commission or any commissioner.

I think one initial observation to make about the act and exemption 4 is that the problems, as with any general statute that applies across the whole Government, are going to vary somewhat from agency to agency. Maybe the solutions should also be tailored to deal with particular problems in a way the act at present does not.

The statutory standard is the first place where the problems of ad-ministering the act begin. The act refers to trade secrets or confidential commercial and financial information. The trade secret" part does not, for the Trade Commission, present a serious problem because most of what would constitute trade secrets that we encounter are also encompassed by the "commercial or financial information" standard. In any event, the FTC Act has a specific provision which prohibits the Commission from making public trade secrets.

So, we are only concerned with the commercial and financial information segment of the test. But, even so, that has been construed by the courts in a way—perhaps not surprisingly, in light of the generality of those terms—that does not lend itself to easy application. It is in the nature of a subjective standard in the sense that its application requires a focus on particular facts pertaining to particular documents and whether their release would be likely to cause substantial competitive harm to the company that submitted the information.

That is just a very difficult test to apply without getting into a whole lot of facts and evidence about the nature of the industry and the ways in which particular information might be harmful.

Senator ABOUREZK. Do you think it is possible for Congress to legislate more specific standards which the agency should follow, or do you think the existing broad guidelines are better?


1 See exhibit 21, p. 324 of the appendix.

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