by Dr. Robert Walker

DR. WALKER: Good morning. As Linda indicated, Dr. Tollefson has been called away for other activities, and she was originally scheduled to discuss the budget. So, what you are going to hear today is the budget from my perspective, which is kind of like looking at the universe through a pinhole.

(Slide)

With that said, what I would like to do is to talk to you not so much about the specifics of the budget, but more of the mechanisms of how the NARMS budget is distributed. When the money comes into CVM, CVM generates IAGs, Interagency Agreements, with the two participating laboratories, CDC and USDA.

The monies that are allocated in these IAGs are for personnel, supplies, equipment and overhead. When we initiate get the IAGs, they may be broken down to a specific amount for personnel, a specific amount for overhead, et cetera. But once the IAGs are in place, the agencies, the participating laboratories, can redistribute that money however they need to, as long as the monies are used to generate NARMS related work.

In other words, if we gave $800,000 for personnel and they found that they had an increased need for personnel, they could take monies from equipment or some other source and add it to the personnel part of the budget. The only requirement is that however the money is spent, it is spent on NARMS-related activities.

Additional dollars that may go into the NARMS monies the labs receive is through supplies used for susceptibility testing, and Dave talked about this earlier. What we have found is, in order to increase the uniformity in the susceptibility testing work that we do, if we order a large batch of plates, we get a cost break because of the large volume that we order.

We then take that volume of plates and divide it amongst the three labs so that everybody is using the same lot numbers. We may have to do that several times throughout the year, but each time the lots are distributed throughout the three labs based on their needs.

(Slide)

So, just to give you an idea of how the mechanics of this works, if we look at the USDA budget, in the IAG they had about $800,000 for personnel. This person was a CVM person who was working at USDA to provide whatever assistance she could. This represents the central supplies, the cost of plates and other supplies relating to testing those plates. That comes out of CVM’s budget.

And then again, the different breakdown into the different types of testing that they are doing and the money that was allocated for that, for a total of a little over $2 million. And again, the specifics on Campy testing or Salmonella PFGE, that is all controlled internally by Paula and her group.

(Slide)

If we look at the CDC, it is kind of the same type of system where we have personnel monies, the CVM staff at CDC, central supplies. CDC is a little bit different than USDA in that as part of the retail meat program, in order for us to gain access to the isolates from the retail meats, CDC has contracted with 10 FoodNet sites to go out into the community -- Terry Proescholdt will talk about this later on -- and purchase meats, bring them back to their individual laboratories where they will isolate and identify the specific organisms. These isolates are then sent to CVM where we confirm the identification their identification. Once the identity is confirmed the isolates are subjected to susceptibility testing and whatever genetic analysis needs to be done.

CVM is not in a position to contract with these FoodNet sites or these state public health labs to go out and make these purchases. So, CDC has contracted with them. And the money -- approximately $500,000 goes from CVM into CDC for CDC to distribute it to the state public health labs that are participating in the retail meat study.

(Slide)

For CVM, again it is broken down basically the same way. And for those of you who are doing the math you will realize that this number down here is not correct This really should be $1,190,885. You might want to make a note on that for your handouts when you get them.

(Slide)

So , when you look at the expendable monies, and what we are talking about is the monies that are expendable from NARMS for the research or the surveillance program, this is how it breaks down for the animal arm, the human arm and the retail meat arm of NARMS. If you look at this, plus this, this would be what CDC gets. But keep in mind that not all of this money actually goes to CDC. It passes through CDC to the state labs.

This is the amount, $1,190,000 is what goes into the retail meat arm.. An additional $100,000 of NARMS monies goes to the WHO Global Salmonella Surveillance System. This value then comes out to be 5,446,000 for those of you who like to keep track of numbers.

Keep in mind that this is the mechanisms by which the NARMS money comes into CVM and then is distributed to the other arms. The specifics, in terms of the exact numbers, I think at this point in time this is not the issue. The issue is the mechanism by which the money is distributed and the amount of expendable money that is available. Are there any questions?

DR. ANGULO: In the opening slide you mentioned discretion of the agencies to move money, but we don’t -- we have to get permission. Well, CVM gives us permission to move money, but our finance office won’t allow us to move money, because we follow the interagency agreement as is given to us. So, we have to keep the money in the categories where it is coded to us when it comes to us. Unless we get an email or some written documentation from CVM for permission to move the money between.

We can’t move supply money to personnel money, et cetera. So, we have flexibility, but we have to get it in writing from CVM to make the changes and keep records of those changes.

DR. WALKER: Yes. That is an internal CDC thing, but I think you have found that if you communicate with us and ask for permission, it is given without any problem.

DR. ANGULO: That is right. We have always had permission to move, but we document the movement.

DR. WALKER: Okay. Yes, Paula.

DR. FEDORKA-CRAY: Bob, I think it is important to point out that those figures --

MS. SINDELAR: Can I make a comment here? For the purpose of transcription, for her ease, that was Dr. Fred Angulo, from CDC. And, Paula Cray. So, please identify yourself prior to your comments. Thank you.

DR. FEDORKA-CRAY: This is Dr. Paula Cray, from the U.S. Department of Agriculture. For the purpose of the interagency agreements, the interagency agreements do not reflect the numbers that have been shown on the slides, nor have these numbers been presented to at least the animal arm of NARMS in this particular fashion at any time during the past 11 years.

The inclusion of personnel and -- from CVM, Marcia Headrick was the NARMS coordinator. Our understanding is that she was not a directly -- directly placed to work exclusively with USDA. She coordinated, until very recently, all of the activities between CDC, FDA and USDA, and I think it would be inappropriate to count her salary toward a USDA figure.

In addition, the monies that have been expended on supplies, it was discussed early on in the program what the needs were with regard to the number of isolates that would be available, and it was always recognized that because of the -- particularly the slaughter and the diagnostic sources of isolates, that there would be an increased need for additional plates.

However, what the agency does not see is that in any given year we, between the three agencies, routinely trade or pass plates. We provided CDC with over 1,000 plates at one time for Salmonella. They provided us with 600 for Enterococci.

These numbers have gone back and forth over the year, in addition to supplies, and the supplies that FDA provides to us are strictly limited to Trek Diagnostic supplies, not other expendables that must go into the system, like gloves and tubes and gases and other media that are going to be required for the program. So, I think that there needs to be some additional detail that is reflected in order to accurately assess the amount of monies that each arm receives.

DR. WALKER: And I take what you say well. What I wanted to do is talk more about the mechanics. I am not involved in the budget. I am not in a position to go into the exact specifics on the budget.

You would notice that there was $67,500 listed for USDA for other supplies, and I recognize that the central supplies were Trek related supplies monies.

DR. YOUNGMAN: If I can just clarify a couple of things that you said though, Paula. The monies that were presented here, the budget figures you saw here, were for 2005 only. That is why you haven’t seen those exact numbers before. We are just talking about this year’s money.

We can never be certain of our exact budget because our FDA budget changes from year to year, and we have to work with the budget constraints we are given.

And also, to clarify about the CVM staff, the dollar figure that was put up there for a CVM staffer at USDA, we also supply a CVM staffer at CDC, and those monies do not come out of your IAG. Those monies are paid for separately out of FDA monies toward NARMS.

DR. FEDORKA-CRAY: This is Paula Cray again. I think that then that there needs to be a clarification made on those tables if the experts are looking at those figures and they don’t have an accurate assessment.

The interagency agreement that USDA received was $1.5 and 6/7 million for 2005, not $2 million that is reflected in the figures that were presented to you.

DR. WALKER: Right. And most of those figures that are on that page came directly from the IAG. The ones that would be the exception would be the $140,000 for Marcia and then the central supply monies would be different.

DR. MILLER: Marissa Miller. Bob, is there a special budgetary line item or appropriation for NARMS for FDA? And if not, how does CVM protect that money to make sure? I mean, a $5 million total is quite large part of the overall CVM budget I would think.

DR. WALKER: Well, I wish Linda was here to give you more information on that. I am not in the budget channel. My area is in the science. I’m not sure if this is a direct line.

DR. YOUNGMAN: I apologize that Linda Tollefson is not here. She might be able to answer your question. In actual fact, she is really the one who could answer questions about the NARMS budget. So, Bob and I are trying to cover as best we can for her today.

DR. WALKER: Based on the things that I hear it may be a line item or at least it is specifically discussed by Congress. But I don’t know the politics of how it channels down through the budgeting process.

DR. MILLER: Do you happen to know? Have you ever had a GAO audit and what the results were from that?

DR. WALKER: Not as far as I know. We have not had a GAO audit.

DR. McEWEN: Scott McEwen. Are there other sort of in-kind contributions that help to sustain and support NARMS that don’t appear in the budget?

DR. WALKER: Are there other sources of funding that can be fed into it?

DR. McEWEN: Well, funding or in-kind contributions from the different agencies. Salaries of people I guess that don’t show up in the budget that participate in NARMS or other stakeholder groups that helps furnish samples. That kind of thing. I am just trying to get a feel for other activities that support NARMS that may not appear in the financial statement.

DR. WALKER: I don’t know what CDC and USDA does. I am sure that they have peripheral activities that all contribute to it. I know at CVM we have a number of people that work directly, and indirectly, with the NARMS program doing things like Dave talked about, the Pulsed-Field Gel Electrophoresis that are not figured into the NARMS budget.

In other words, we don’t have anybody at OR that is directly involved with NARMS who is doing Pulsed-Field Gel Electrophoresis, but we do have an OR team that is involved with Pulsed-Field Gel Electrophoresis that deal with a lot of NARMS isolates.

DR. ALTEKRUSE: On that point, one example of -- and Dr. Kotarski brought this up. One example of an in-kind contribution would be that both APHIS and FSIS isolate Salmonella and provide them to the USDA/ARS laboratory for the characterization. So, that is a fairly substantial in-kind contribution.

DR. WALKER: Yes, Fred.

DR. ANGULO: We all have in-kind additional support. At CDC it is on the scale of -- about matching is the word that we get from the interagency agreement. So, of all our NARMS activities, which include everything from education to core surveillance to applied epidemiology studies, et cetera, that are the total resources that are contributed to animal resistance testing and susceptibility testing, the interagency agreement provides about half of all of our resources.

DR. WALKER: Okay. Yes, Lyle.

DR. VOGEL: Mostly just a comment. I wish Linda Tollefson or Steve Sundlof were here to address the budget issues and questions, because one of our discussion questions was how do we suggest that we enhance or sustain funding for NARMS.

I think it would be important for us to know that if, for example, we went to Congress and was able to either create a line item for NARMS, if that would be acceptable to the agency. If not a line item, if we got increased funding specified for NARMS, would FDA use it for NARMS or would they divert to something else?

DR. WALKER: I think those are good points.

DR. FEDORKA-CRAY: This is Paula Cray again. I just want to go on record, like Dr. Angulo, that the Agriculture Research Service and USDA, including, like Sean Altekruse said, APHIS and FSIS, would spend well in excess of what receive for the IAG if we looked at the isolation and receipt of all of the isolates and what it would cost.

In addition, we also have directed appropriations from within our unit and a number of permanent staff who are directly associated with NARMS.

DR. WALKER: Okay.

DR. MILLER: Bob, just looking at the possibility of any redundancies, at one time CVM was talking to the sponsors about doing post-marketing surveillance, either helping to pay for NARMS or doing their own post-marketing surveillance. Particularly of the new fluoroquinolone approvals.

Was that ever set up and are there data available from any post-marketing activities?

Also, at one point CDER was looking to set up a resistance monitoring, sort of a clinical failures sort of database, and has that been done?

DR. WALKER: Dealing with the CDER question first, as far as I know, CDER has not done, and it is probably primarily due to budgets. There also are two excellent surveillance systems in human medicine that may be able to address those issues. One is Focus Technologies and the other is Sentry, which are very extensive surveillance monitoring systems that deal with hospitals throughout the country or throughout the world.

In terms of post-marketing for CVM, there is not a specific post-marketing program that has been set up. The surveillance system that they have established is NARMS and NARMS deals with the pre-marketing and the post-marketing, to the pre-approval and the post-approval. In other words,we would like to think that the data we generate is used by the pharmaceutical industry to help them in their drug approval process.

In fact, we had a VMAC Meeting this last year where one of the drug companies actually used some NARMS data to fill in some information for the Guidance 152 Document.

What we are seeing in terms of susceptibility isolates or susceptibility profiles on these organisms coming from retail meats, coming from zoonotic foodborne pathogens would represent a post-marketing approval for drugs that are being used in veterinary medicine, and we are seeing changes in susceptibility in the zoonotic foodborne pathogens.

DR. ANGULO: I think one of the important background pieces that I think we should provide is that NARMS really went through a remarkable growth spurt. I mean, we grew to this budget, our current budget approaching $2 million in this five-year window and had rapid increases, and that was because resources were provided to FDA. Actually, the lead agency is CFSAN through the President’s -- at that time it was the President’s Food Safety Initiative.

President Clinton had a five-year Food Safety Initiative which brought important new resources to the government. The first year award, for example, was $36 million and that money then got allocated to the different agencies that work in food safety, which was largely the Center for Food Safety and Applied Nutrition at FDA. But a piece of that went to CVM for NARMS, and almost all of the CVM food safety allocated money has been used to support NARMS.

A piece actually went to CDC to support surveillance activities and food safety, which was FoodNet and PulseNet, which were largely funded through the Food Safety Initiative, and each year the Food Safety Initiative during this five-year period grew and had more resources. And therefore, the CVM slice of the Food safety Initiative grew and NARMS resources grew.

That initiative is no longer active. In fact, this year we see a decline in food safety resources government-wide and it is quite marked actually at CFSAN because CFSAN had the biggest piece of the Food Safety Initiative. It was also quite marked at CDC in our other activities related to food safety.

And also, as expected, we have a decline this year in CVM. In fact, every year that there is not an increase there is a decline because we -- I hope people noticed on the breakdown that by far our biggest part of the budget, of course, is personnel and personnel have a seven percent increase every year. So, if we don’t have an increase in the budget, in fact, it results in a decline.

So this year, the fact that we had a decline in the order of five or eight percent each, actually represents a 15 percent decline in our budget because of the increases in personnel. All that is to say it is just a different climate in atmosphere in the government in terms of resources and all programs are being reduced, and we can clearly anticipate, in fiscal year ‘06, a decline in resources in food safety and adecline, therefore, in NARMS.

I would expect that we would anticipate a 10-percent decline in our real resources, and we are wrestling with how to deal with that and I am sure other agencies are wrestling how to deal with that too. But there is not anything on the horizon that we are aware of that would replace these funds.

There is not new government initiatives in food safety, there is not a government-wide initiative on antibiotic resistance, which we have been trying to -- various groups have been trying to do. But there is not a new initiative that would bring new resources for antibiotic resistance. I think it is just the new reality that we can expect continued declines in the next five-year cycle.

DR. WALKER: I appreciate what you are saying, Fred. I think, with that in mind and we look at the 2006 and 2007 budget, while we don’t know what those budgets are going to be at this point in time, I think that we can safely assume that they will either be the same or a decrease.

And if they are the same, then just the cost of personnel is going to be a decrease to all of us. So I think what it means is those of us who are involved in this work really need to look at the work that we are doing.

And going back to Lyle’s question of how can we sustain or enhance the funding, I think it is looking at the quality of the data that we are generating and making sure that all of that data that we generate maximizes the potential for human health care, and there are a number of ways of doing it.

One of the things that you will hear in this next couple of days is the reporting system that is going to be coming forth from the three different arms. While it is important to generate data, it is also important to be able to report the data and do so in such a way so as to increase the visibility and the utility of the NARMS program to the country.

DR. ANGULO: I agree complete. And just to emphasize -- it gets exactly at Sue Kotarski’s point, which is to reassess the goals of NARMS and what are the real core functions, because the reality is we can expect these really steep cuts.

I have seen the pass through budget on the Food Safety Initiative for next year, and we are all anticipating important cuts in the food safety. You are optimistic to expect equal funding. Every scenario that we have worked on is anticipating deep cuts in food safety next year.

DR. WALKER: Yes, Dan.

DR. SAHM: Just a follow up on this topic and a point that Marissa brought up and then a question. On the human side, as part of a new drug application, CDER does want to see the sponsor’s commitment to post-marketing surveillance, and it is on their dime to see how their drug continues to perform once it is being used in the clinical environment. So, the precedent is set there on the human side.

So my question is how difficult or how much of an uphill climb would it be for CVM to have that same expectation for clients who are applying -- for sponsors applying for new drugs used in the animal industry?

DR. WALKER: Well, that is a good question and that is a very complex question. There are a couple of major differences between human medicine and veterinary medicine, in terms of the microbiology.

The first is that all of the human laboratories, or at least theoretically all of the human laboratories generating this information, do so under fairly regulated quality control testing methods, and they are tested I think twice yearly to assure that they are adhering to appropriate standard, quality control and testing methods.

One of the things that facilitates that is as a drug in human medicine moves through the approval process, one of the very first things that they do is they go to a contract laboratory and ask that laboratory to generate testing methods and quality control ranges for their drugs. So then, when they go into the clinical phase of their durug testing all of the isolates can be tested under standardized testing methods. From this the sponsor can establish a baseline data representing the pathogens susceptibility to their drug at the time of approval.

In veterinary medicine a pharmaceutical company does not have to go through quality control testing prior to the drug approval. In other words, a lot of times sponsors will present drugs packages to CVM where they have generated clinical data, but it was generated without the benefit of QC organisms and quality control testing. Without the benefit of appropriate testing methods, including the use of QC organisms and QC ranges the sponsors have no point of reference once their drug is approved.

The other thing is that a lot of times when drugs gets approved in veterinary medicine, they do not have to go to CLSI for QC testing or interpretative criteria. The pharmaceutical company can provide values to the laboratories that they have decided for QC range should and interpretive criteria without the benefit of a appropriate testing procedures but rather based on marketing strategies.

The other thing that comes into play here is that the veterinary diagnostic laboratories, or the laboratories doing the isolation, identification and susceptibility testing for veterinary isolates, while many of them may be laboratories associated with human medicine, the pathogens they encounter from animal sources are going to be different than what they normally see. On the other hand, the majority of the laboratories processing specimens from animals are not human clinical laboratories and as such they do not use standardized testing methods including an appropriate quality control program that monitors the quality of data generated by those laboratories.

So again, we are dealing with, in human medicine, microbiological procedures that are fairly tightly controlled and regulated. In veterinary medicine we haven’t reached that stage of perfection yet. So I think it would be difficult for the pharmaceutical companies to generate the type of information that you are talking about.

I think it could be done if there was a concentrated effort to get this ball rolling. Probably within five years. But I don’t see the concentrated effort being made to do that.

DR. SAHM: Thanks. That helps understand, Bob. Just as a follow up to that, the guidance for industry from the FDA on the human side didn’t always require this either. In fact, one of the major sections for the NDA in microbiology now is how well does your drug perform according to standard methodology?

It all rolls together, as you have pointed out. So you can’t do one without first expecting that the clients or the sponsors or whatever, when they submit a drug -- do you have a good way of testing in the clinical laboratory? Maybe the analogy would be do you have a good way of diagnostic veterinary laboratories testing your drug in the real world?

It does go hand-in-hand. I understand what you are saying.

DR. WALKER: I have looked at some packages that come in where the pharmaceutical company says that they have done the testing in accordance with CLSI. And so, my question would be what QC organisms did you use, how often did you use them and what was your dilution range?

And when I get the information back, I find that they used the four standard QC organisms, but two of them had no QC range for the drug that was being tested. One of them had a QC range below the dilution range that was tested. The other one had a QC range above the dilution range that was tested.

So, in actual fact, they were using the CLSI QC organisms, and as such said they were following CLSI guidelines, but in actual fact, there was no QC there. This is a problem.

When I was in the vet diagnostic arena, that was one of the things that we tried to do; was to establish a quality control testing method among the participating diagnostic laboratories. We tried to get all of them to buy into the CLSI testing procedures.

There are two other problems that we have in relation to this. One is the veterinary pharmaceutical industry is somewhat reluctant, and perhaps rightfully so, to go public with their drug too early in the process because that gives their competitors an idea as to what is coming out.

The marketing in veterinary medicine is very important.-- I have heard that in human medicine they won’t even consider an anti-infective unless it is going to make $1 million a day. That is $365 million a year. Veterinary medicine, a good product may make -- and Sue can tell me if I am wrong. It may make $100 million a year. Considerably less than anything that is a poor drug in human medicine.

The other thing is that if a sample goes into a human diagnostic lab or a human clinical micro lab for culture and susceptibility, I would imagine it could cost upward of $75 or more. I know of some vet diagnostic labs that charge nothing because the money is just not there.

I know when I was in that arena I charged $25, and when I raised the price to $28, you could almost hear the "ah," but it was just to do the quality of testing that I thought we needed to do.

Okay. Thank you.

DR. YOUNGMAN: Thank you very much, Dr. Walker. The next thing on our agenda is a 15-minute break. We are going to try to keep on time as best we can, but I imagine we can’t really do a 10-minute. So, if we could come back in 15 minutes, at about 10:35 or thereabouts, please, and we will start again. Thank you.

(Whereupon, at 10:21 a.m., a recess was taken.)

DR. YOUNGMAN: In the interest of trying to keep on time, if we could start again, please. I just want to remind everyone that the main purpose of our meeting today and tomorrow is to try and address the questions that are in the booklets that you have been provided that are headed with discussion points.

So, as the talks are occurring today, if you could consider those questions, those are the things that we would really like to hear your individual responses to. And if we could keep the focus on that, that would be really, really helpful.

Our next speaker is Dr. David White, who is going to be talking about the Retail Meat Arm of NARMS.

DR. McEWEN: In a quick leaf through here, I am not sure the questions are in here.

(Pause.)

DR. YOUNGMAN: I’m sorry for the confusion. There were two different booklets that were passed out. The panelists’ booklets do not have the discussion points in the front. The booklet that I got does have the discussion points in the front. We will make sure that the panelists get copies of the discussion points.

(Pause.)

DR. YOUNGMAN: I apologize. We will make sure that the panelists get copies of the discussion points. They were in the larger booklets that I had seen that the participants got. I apologize for that, but we will make sure that you get them.

DR. McEWEN: One other procedural point. Do you suggest going through these question by question at some point? You know, the panel member offering their perspective? Or do you see us interjecting as we go along?

DR. YOUNGMAN: Well, if you check the agenda, those are points that are going to come up later in the day. Each of the questions that are part of the discussion points will be raised later in the day.

Okay. And if I can, I will turn it over toDr. White.

DR. CHILLER: Dave, I just wanted to say one thing. Tom Chiller. I passed out to each of you guys CDC’s external review that was conducted last year. It has the reviewer’s summary comments to the different questions we addressed.

Also, highlighted is sort of CDC’s response.

It is just an internal document that we put together, but I thought it might be helpful at least this evening, when you are sort of digesting all of this information, to see what we had done last year. Obviously I will be talking about that in just a couple of talks from now too.