HAMBURG TO CHRISTMAS: BAH! HUMBUG!
Attorney Jonathan Emord
December 7, 2009
The FDA is on a rampage. One of FDA Commissioner Margaret A. Hamburg’s first acts was to reverse a Bush administration policy that forbad FDA district offices from taking unilateral enforcement action against a regulatee without first obtaining the consent of the FDA Chief Counsel’s office. The message Hamburg has sent to her legions is clear: go on the march and enforce FDA regulations with zeal. Within the agency bureaucrats frustrated by funding limitations and management directions to avoid action except in cases of perceived necessity are flush with new money and are making up for lost time. Dr. Hamburg wants to be known as the FDA Enforcer.
This comes not only at a time of national recession but also at a time when FDA has assumed new powers over the dietary supplement industry. The FDA Good Manufacturing Practice Guidelines for dietary supplements are over 1,000 pages of new regulations that give FDA broad new discretionary enforcement powers. So loosely worded are these regulations that it is impossible for any regulatee to know whether he or she is in compliance with them. An FDA investigator is free to find violations, and every violation is deemed by operation of law “adulteration” whether it involves a risk to human health or not. The rules are worded in a manner that would please Lao Tzu, Grand Councilor in the ancient state of Chin (the warring state of China that defeated all other warring states and unified the country under one emperor, Qin Shi Huangdi). Tzu believed that you should punish light crimes severely. By doing so, he believed there would eventually be no serious crimes. He also believed there were only two legitimate pursuits, agriculture and warfare, so all other occupations were to be made so burdensome through taxation and punishments that all would be drawn to laboring in the fields and to martial arts. He had edicts regulating behavior posted on high poles beyond the visual spectrum of most, causing almost all to violate the law from time to time out of ignorance. Those who violated the law were punished severely, often with corporal punishment, including severing of limbs.
Like Tzu, Hamburg appears to believe that she must punish light crimes severely. Rule violations that entail no actual harm to the public now carry with them severe regulatory rebukes. Daily the FDA press office generates news of its onslaught. The focus is not on arresting violations that cause harm but on punishing all violators, even those who have violated the law unwittingly and have done so in ways that have caused no demonstrable harm.
The effect is an extraordinary imposition of federal might on tender economic shoots. Small and medium sized companies in the food and supplement industries are feeling for the first time the mighty weight of an angry federal government. Whole product categories and claims are being driven from the market largely without judicial recourse. Few companies wish to risk the wrath of the agency because the agency can retaliate by conducting inspection after inspection, taxing the company’s resources beyond the breaking point. Few have the financial wherewithal to fight the agency in court, and the courts defer to agency enforcement with great regularity so they offer little hope of relief.
Effectively condemned without a trial, small regulated businesses bend to the FDA’s wishes and pray for the chance to remain in business. “When the people fear their government,” said Thomas Jefferson, “there is tyranny; when the government fears the people, there is liberty.” No one in the food and dietary supplement industries thinks the government fears them; rather, they are terrified of their government. They are beginning to understand the true definition of tyranny.
There are grave consequences that arise from Dr. Hamburg’s enforcement campaign. For every company she sacks, there are employees who become unemployed. For most of them, there are children at home dependent on the income who suddenly suffer. The federal wrecking ball Hamburg wields is destroying the life’s blood of the economy, small business after small business. Consumers too are denied access to goods, some of which reduce the incidence of disease or provide comfort or convenience. There is little concern for their welfare when a technical rule violation leads to a loss of desired consumer goods.
There is a gross disparity in this enforcement. With rare exceptions large companies, including pharmaceutical companies that hold FDA captive (yes, FDA fears those companies, so for them there is liberty), escape the agency’s wrath. For sure there have been some remarkable slaps given the pharmaceutical industry, but no take downs—no storming of the offices with U.S. Marshals, FDA agents, and DEA agents like they do to so many little guys. In most instances a single letter telling the parties in question of their law violations and demanding that they stop would suffice to end the law violations, but that would grab few headlines. To be perceived as the enforcer, Dr. Hamburg needs her press office to report on the exertion of raw federal power against the hapless supplement or food company.
To be sure there are instances where federal power should come to the rescue. Those involve direct threats to public health (e.g., the sale of contaminated food stuffs or drugs), but use of draconian measures against those whose violations do not threaten public health or against those all to willing to heed federal commands without a jack boot is economically destructive.
Before Dr. Hamburg has unleashed federal forces, she has not performed a single calculation of the costs of imposing force. How much federal force can the fragile economy, and this sector of the economy, take? That question is not evaluated. If the enforcement effort destroys 10,000 or 100,000 jobs; if it ruins an entire industry sector; if it creates an anti-competitive benefit for one industry over another—none of that matters to the leader of this agency.
Indeed, few people on earth enjoy the unbridled power of the FDA Commissioner. She rules over 20% of the American economy, effectively the entire drug, medical device, food, dietary supplement, and cosmetic markets. With an utterance, she can make a company or a market sector fabulously wealthy overnight and she can likewise crush into oblivion any company. Her powers are thus tyrannical. Day to day she experiences virtually no oversight. In bed with pharmaceutical company interests, Congress cares little for what Dr. Hamburg does except when it threatens those interests upon whom members depend to enrich their campaign coffers and provide them with employment after government service. The President is pleased to let Dr. Hamburg have free reign. The courts largely defer to the agency, except in exceptional cases. She is the most powerful governing force affecting the health care market in the United States yet she is largely unaccountable to the President, the Congress, the courts, and the American people. She is unelected.
The FDA is not an isolated case. Other federal agencies, the EPA, the DEA, the CPSC, the BLM, among many others, have likewise received new grants of authority to recommence enforcement. It is as if tens of thousands of battle tanks low on fuel and in need of spare parts have been refueled and retooled to lay waste to industries across the country, the very industries whose tax dollars finance the construction and operation of those tanks.
This bureaucratic enforcement not in cases of necessity but in all cases comes at a time when lessening of bureaucratic strictures is essential to the survival and growth of beleaguered small and medium sized businesses. The effective tax these enforcement efforts have on the economy is enormous and will retard small business growth for decades. Economic recovery and a return to near full employment depends on ease of entry into markets and on flexibility needed to grow and compete. In a federal world that contains a complex of regulation so immense that no one, literally no one, can confidently say that his or her business is in full compliance, strict enforcement of the law leads to the obliteration of that engine of recovery upon which this nation depends, small business.
If economic recovery is to occur in the short-term and be sustainable, there must be a roll-back of federal regulation, a refocus to unleash federal forces only against those whose transgressions threaten actual injury, and a commitment to use less draconian means in every instance where a warning can achieve law compliance without imposing economic injury. That common sense approach escapes the minds of those who care little for markets but much for their own power and prestige as regulators.
As new federal enforcement lays waste to small and medium sized businesses across the country, we should remember who is to blame for the destruction of American liberties and free enterprise. America will not regain its prominence as an economic giant unless it returns to a deregulatory agenda, humbles those in power, and unleashes the free market.
© 2009 Jonathan W. Emord - All Rights Reserved