William B. Schultz Interview 7

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ORAL HISTORY OF WILLIAM B. SCHULTZ, ESQ.
This is the seventh interview conducted on behalf of the Oral History Project of the District of
Columbia Circuit. This interview of William B. Schultz was conducted on Saturday, November
20, 2021, by Stephen J. Pollak in Washington, D.C.
.
Mr. Pollak: Good morning Bill Schultz. We’re in the period of the 102nd Congress, 1991-
92. I wonder if you’d set the stage by identifying who was President, the
majorities in Congress, and where you were working.
Mr. Schultz: I had been working for Congressman Waxman on the Hill for a year. I began
during the second half of the 101st Congress and George Bush was President.
This was two years into his one-term presidency. The Democrats controlled the
House, as they had for about 40 years, and they controlled the Senate as well.
I technically worked for the Energy and Commerce Committee, chaired
by Congressman John Dingell, a very powerful big figure. In reality, I worked
for Congressman Henry Waxman, the Chairman of the Subcommittee on Health
and the Environment. In those days, the subcommittee chairs had an enormous
amount of power and the ability to drive legislation. In the Senate, our
counterpart was Senator Kennedy, who chaired the Senate Health Committee.
Mr. Pollak: I see. And was there legislation introduced in that Congress on prescription drug
user fees?
Mr. Schultz: Yes. We introduced many bills, and we held hearings on drug prices and
various other matters including an FDA enforcement bill.
Mr. Pollak: Who’s the “we”?
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Mr. Schultz: Well, I’m just thinking of Congressman Waxman, myself, and whomever we
were working with on the Democrats’ staff. But I’m basically talking about
things I was responsible for. The most significant piece of legislation enacted
was a Prescription Drug User Fee Act. This was designed to transfer money to
the FDA to fund the review of new drugs. The impetus for it was the AIDS
crisis. For many, many years, the Food and Drug Administration had been
criticized for being slow in approving drugs, and it was said in those days that
Great Britain and other countries in Europe got drugs approved more quickly
than we did. Critics blamed our bureaucracy for slowing it down. In fact, in the
late 1980s I served on the Scheurer-Gore Commission on the Federal Drug
Approval Process, which was a congressional commission that issued a report on
the so-called drug lag, namely delays in approving prescription drugs in the
United States.
Congressman Waxman and Senator Kennedy had tried to get additional
appropriations to FDA to hire more staff to do the work more quickly, but they
never succeeded. The idea was to adopt a law that would require drug
manufacturers to pay fees on new drug applications that would provide the FDA
with additional funds to support the drug approval process. Congressman
Waxman, Senator Kennedy, and other Democrats had been opposed to the idea
for many years because they objected to having the industry pay the agency that
regulated it and feared this could lead to industry capture of the agency.
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Then, in the early 1980s the AIDS epidemic came along, and with it a
tremendous desire and pressure on the FDA to review and approve AIDS drugs.
The lack of resources was an impediment to drugs that could address this health
crisis. Ultimately Congressman Waxman came around to the idea. I was in
charge of the legislation and began negotiations with FDA and the drug industry
to try to reach agreement. The drug companies didn’t want to pay fees to offset
the federal debt, nor did they want the fees used to increase FDA’s enforcement
activities. They wanted an assurance that these fees would only be used to hire
additional personal and that the result would be quicker drug approvals.
Mr. Pollak: Could that be worked out?
Mr. Schultz: Well, that was the challenge. We absolutely did not want to set a deadline that
the FDA would have to meet. We never wanted the FDA to approve a drug
because of a deadline. We only wanted them to approve a drug because it met a
standard of safety and efficacy.
Mr. Pollak: But could you direct the money into additional staff for the FDA for the
approval process?
Mr. Schultz: We worked with the FDA. The agency needed to sign off on the goals. We
agreed to a five-year plan. The first year or two was devoted to hiring. The
agency told us not to expect any progress in the first year or two because it
needed time to hire additional staff and to set up the program. After the hiring
period, for each subsequent year there was a goal that a percentage of drugs had
to meet this new target. And, by year five, the agency’s goal was to reach a
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decision on ninety percent of all drugs applications within ten months or a year.
Just for context, the agency was taking two and a half to three years to approve a
drug from the time the new drug application was filed.
Mr. Pollak: And what happened if it turned thumbs down? Did there have to be a new
application? Is that the way it worked?
Mr. Schultz: It depends. But thumbs down would meet the goal. In some cases, it would be a
matter of supplemental application. And in some cases it could be a new
application. But often if it’s thumbs down, it’s not that the basic clinical trial
failed, but that that the application was deficient in some aspect.
Mr. Pollak: Well, it sounds like a textbook occasion for development of legislation to satisfy
the various interests before it could get passed.
Mr. Schultz: It was a big success in that all the goals were met and by year five the FDA was
approving ninety percent of the drug applications within the goals. This was a
five-year experiment. And at the end of five years, if Congress wanted to renew
it, we’d have to enact new legislation.
Mr. Pollak: And what happened?
Mr. Schultz: Everyone saw it as a success, and it’s been renewed every five years since 1991.
With it came more and more money, so that today, user fees pay about seventy
percent of the drug budget at FDA. I think, when we started, it was maybe thirty
percent. And this has been a model for the FDA and for other agencies as a way
to get additional funding without appropriations and without raising taxes. At
FDA, it’s now used for medical devices, for food additives, for generic drugs,
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tobacco, and I think the animal drugs. It’s used for almost all the application
programs at FDA.
Two potential negatives are first, with the drug industry paying for
seventy percent of the FDA’s budget, it really opens the agency up to charges of
industry capture — charges that this critical function is being funded by industry
and may compromise the FDA’s decision-making. In addition, because this has
to be negotiated every five years, the legislation is a vehicle for other kinds of
provisions, some of which have been positive and some of which have weakened
the FDA’s authority.
It has allowed industry to foster a close working relationship with the
FDA, which has clear plusses and minuses. As a result, the drug approval
process operates more efficiently in a fairer way for the industry and a better
way for patients in terms of the speed of drug approval. I am not aware of
examples in which standards have been compromised because of user fees, but
there certainly are examples where legislation had been enacted that has
weakened some of FDA’s authority.
I have to admit that when we worked on this legislation we probably
assumed the Democrats would always have control of the House, that
Congressman Waxman would always be chairman of the Subcommittee on
Health and the Environment, and that the Democrats in the House could block
any bad legislation. But if we assumed that we were wrong.
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Mr. Pollak: Do you want to say a few words about how this all was coordinated, so that it
not only got through the House of Representatives, but the Senate as well?
Mr. Schultz: Yes, at that time the FDA’s staff person for Senator Kennedy was Mark
Childress, with whom I worked very closely on this and other legislation. I’m
sure we and the Senate held hearings. We worked very closely together, but in
this case the House led the drafting and the negotiation. By the time it was done,
there was such broad agreement with the drug industry, FDA, the Republican
Administration, the Democrats in the House, that I think the Senate was happy to
accept it and pass it as well.
Mr. Pollak: I see. Well. Do you want to turn to the change brought about by the election of
1992?
Mr. Schultz: In 1992, President George Bush lost the election to Bill Clinton, who would now
be the first Democratic President in 12 years. We saw this as a sea change and a
huge opportunity since the political appointees in the executive branch would
now be replaced and there would be opportunities for progressive legislation.
President Clinton announced that after he dealt with economic legislation his
number one priority would be national health insurance. This had been Senator
Kennedy’s life work and something that Congressman Dingell and Congressman
Waxman had also been very dedicated to.
Mr. Pollak: So did the change in administrations have an effect on the Hill and on your own
employment?
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Mr. Schultz: Democrats still controlled the House and Senate so there wasn’t much change of
Hill staff. If the Bush Administration wanted to enact legislation, they had to
deal with the Democrats. They might have been closer with the Republicans on
the Hill, but the Democrats had all the power. They had all the committee
chairs. They called all the hearings. They decided what legislation was going to
move. We were very central to any legislation or oversight. When President
Clinton took office, now all of a sudden the White House was the one taking the
lead on legislation. And in some ways, I think congressional Democrats and
their staff became less important.
To give an example, on Clinton’s healthcare bill, the Clinton
Administration wanted to write that bill itself, and they ended up taking
something like ten months just to draft the legislation. By that time, we had lost
the momentum. And while there was a lot of involvement from staff on the Hill,
we were not driving that legislation or any other major legislation. In terms of
my work, I was interested in working in the Administration, at FDA.
Commissioner Dave Kessler had been appointed by George Bush, but he was a
very progressive Commissioner and very popular among the Democrats,
particularly on the Hill. President Clinton decided to retain him, which meant
any positions at the FDA, any Deputy Commissioner positions, Commissioner
positions, or the Chief Counsel were not open. I had only been in my job on the
Hill two years so in any event it was probably too early to leave.
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Mr. Pollak: I see. So that brings us to the story of the Clinton healthcare plan, the
Healthcare Task Force, the Hill’s role in that activity, and your own role. And as
history records, the plan did not succeed. Describe the process, why it failed,
and the lessons learned.
Mr. Schultz: I should emphasize, I was on the sidelines. Our subcommittee was in the center
of the negotiations and we had experts on Medicare, Medicaid, and healthcare
financing, and they were very much a part of it. Peter Budetti, a former
committee staff member, was hired by the White House to do a major part of the
drafting. My involvement was on drug price issues and product liability.
President Clinton appointed his fellow Rhodes Scholar Ira Magaziner
and his wife Hillary Clinton to lead the task force. Clinton said he considered
Magaziner one of the brightest people he had known. Neither had any
background in healthcare. Ira Magaziner led the policy analysis and set up
working groups.
Mr. Pollak: Where did he come from? What got him the job?
Mr. Schultz: He came from Rhode Island. I think he had been in business and had done some
political work there. That’s all I remember about his background.
The Healthcare Task Force was set up and I think there were about 500
people on it. They were from all over the country and included Hill staff. I was
on the drug working group focused on drug prices, and on a second group
focused on product liability. Each group was maybe six or eight people.
Meanwhile, nobody in the Clinton White House realized that this task force was
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an advisory committee, subject to the Federal Advisory Committee Act that
requires certain transparency rules be followed when the government is getting
advice from outside groups.
They were of course, sued, and the work was tied up to some extent in
the litigation that the Administration eventually lost. I mention this as an
example of just how inexperienced the Clinton White House was in the ways of
Washington. After the small committees did their work, they presented their
work to Ira Magaziner and maybe a couple of other White House staffers, who
would ask questions. And these meetings were held at all hours of the day and
night. I went to one that was held at midnight on a Saturday night.
Ultimately, a bill was produced that was more than one thousand three
hundred pages long and by then a lot of the momentum had been lost. It was too
late, and the sponsors could not get the votes in the Senate. It just crashed and
burned, was a huge disappointment, and probably led to Clinton losing the
House and the Senate in the 1994 midterm elections. The Democrats lost eight
seats in the Senate and 54 in the House, giving the Republicans control of the
House for the first time in 46 years.
Going back to the healthcare legislation, while I was peripherally
involved, I was not organizing the hearings or negotiating the bill as was almost
the entire remainder of the Waxman staff. Instead, I worked on the tobacco
hearings.
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Mr. Pollak: Before you get to tobacco, what were the lessons learned from the healthcare
failure? And you might say a word on whether those lessons were applied
during the Obama years when you were involved with healthcare legislation, I
believe. It was turned around and was successful.
Mr. Schultz: There are two lessons that come to mind. First, the Clinton plan took on too
much. It would have replaced much of the healthcare system that existed,
including employer insurance, which is where most people not on Medicare or
Medicaid get their insurance and which was often largely paid for by the
employers. This was a massive change, and it opened the sponsors to attacks
aimed at people who were basically satisfied with their health insurance.
National health insurance was needed for people who didn’t have insurance, but
those who had coverage were, for the most part, satisfied. The drug companies,
the hospitals, the insurance companies, the doctors, and other powerful interests
exploited this and made people very uncomfortable with the idea that their
health insurance would change.
The Obama plan on the other hand was modeled after legislation
enacted in Massachusetts when Mitt Romney was governor. It focused on a very
narrow slice of the market, those people who couldn’t get health insurance or
couldn’t get good health insurance. It barely touched Medicare or employer
insurance. It was for individuals and small businesses who had to pay more
because they couldn’t take advantage of a plan that covered a large number of
individuals. It was also for people with pre-existing conditions who couldn’t buy
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health insurance, or, if they could get it, couldn’t afford it. It changed a much
narrower part of the market.
The other lesson was that trying to control this from the White House
was not a good idea. The White House process was too slow, and the Clintons
didn’t have buy-in from the Hill once the legislation was drafted. The Obama
Administration did exactly the opposite. They basically turned it over to the
Hill, so much so that some of my former congressional colleagues thought the
Administration had gone too far the other way. But in the end, it was successful.
We can get to that later.
Mr. Pollak: So, you continued on Waxman’s staff and you might try to identify the timing.
You began to be concerned with tobacco.
Mr. Schultz: My colleague Phil Barnett and I were fortunate to be occupied with tobacco.
Everyone else on our staff was wringing their hands over what was going on
with healthcare. The tobacco initiative was started by David Kessler, the
Commissioner of the FDA. At some point during his tenure, he began an
investigation of the tobacco industry.
I had known David since 1980. He went to Harvard Medical School and
Chicago Law School and then did his residency at Johns Hopkins. As I
mentioned, during his residency he worked for Senator Hatch on food safety
legislation. He then became a hospital administrator, but stayed very involved in
FDA issues. He wrote articles for medical journals during the 1980s. He would
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sometimes send me a draft, and I’d send him comments back. So, we had a bit
of a professional relationship.
In 1989, when FDA Commissioner Frank Young was ousted, David
Kessler persuaded Senator Hatch to advocate for him as FDA Commissioner.
He got the job, but not before a law was passed making the FDA Commissioner
a presidential appointee requiring Senate confirmation. It was Senator Al Gore’s
idea and he persuaded Henry Waxman to go along with it.
Kessler was nominated in November of 1990. Normally you couldn’t
start a Senate-confirmed position without a hearing, markup, and vote in the
Senate, but there wasn’t time. Senator Hatch convinced Senator Kennedy to
waive the hearing, and they confirmed him in a perfunctory manner so he could
start immediately.
At some point Commissioner Kessler started investigating the tobacco
industry to determine whether there was support for declaring that nicotine made
tobacco a drug and cigarettes a combination drug/medical device. If so, tobacco
could be regulated under the Federal Food, Drug, and Cosmetic Act.
Up to that point, tobacco was largely unregulated. Cigarette advertising
was minimally regulated by the Federal Trade Commission, but the product
itself was exempt from regulation. And anybody in the public health field knew
that the greatest opportunity to save lives was to regulate tobacco. I used to say
that tobacco killed more people than everything else I worked on and all the
public health issues I didn’t work on put together. At that time about 50,000
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people a year were killed on highways. Over 58,000 Americans were killed in
the Vietnam War. Tobacco was killing 500,000 people in the United States.
Almost as many people a year die from tobacco as have died in the U.S. from
the Coronavirus, every year.
Kessler led the investigation and he got to the point where he wanted to
move forward and realized he couldn’t do this alone. He sent a letter to
Congress, laying out the case and asking for guidance. We knew at that point
we needed to start tobacco hearings.
Mr. Pollak: That was a real moment in time. Well, so what did you do? Who were the
players?
Mr. Schultz: We worked very closely with David Kessler and his colleagues at FDA. On the
Hill, the staff was Phil Barnett and me. Phil Schiliro, Waxman’s administrative
assistant, also made a major contribution.
Mr. Pollak: Did it move forward in the House and not in the Senate?
Mr. Schultz: Yes, we jumped ahead and took the lead. I think we held almost all the hearings.
One interesting thing about a legislative committee, which is what Congressman
Waxman chaired, is that it can also hold oversight hearings on subjects within its
jurisdiction. We probably held five or six hearings. The first one was with Dr.
Kessler. He laid out the case. He had done extensive patent research and had a
comprehensive argument not only that nicotine was addictive but also that the
tobacco companies were manipulating nicotine to make it more addictive.
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Sometime early during this series of hearings, CBS’s 60 Minutes did a
story about tobacco giant Philip Morris in which they alleged that Philip Morris
was spiking tobacco with added nicotine to make it more addictive. The 60
Minutes episode led to a lawsuit that Philip-Morris brought against CBS. All of
this had the effect of making tobacco a huge national issue.
In those days, many Americans got the news through network evening
broadcasts. During our investigation, the Waxman hearings were often the top
story on the evening news. The hearings were based initially on work the FDA
did, but we also demanded documents from the tobacco companies under threat
of a subpoena.
As I mentioned, Phil Barnett and I shared an office, and it was filled
with boxes of documents that we were going through as quickly as we could. I
remember many late nights when we would be in our office going through
documents, preparing for a hearing, writing questions, knowing that that hearing
would be at the top of the evening news the next day.
During the most notable hearing we asked the CEOs or heads of the
major tobacco companies to testify. And they had never done this before. They
had always declined any invitation to testify. At that point, the executives had
enormous clout on Capitol Hill. It had never been possible to pass any
meaningful legislation because they had so much sway over members of
Congress. But in this case we were prepared for them not to show. We were
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going to hold the hearing anyway and have Congressman Waxman pose
questions to empty chairs with their name tags.
The ranking Republican on the subcommittee, Tom Bliley, was from
Virginia where Philip Morris was located. Bliley told the CEOs that if they
didn’t show up, he wasn’t going to support them. As a result, they all came.
Because this was an oversight hearing, we worked with the Commerce
Committee’s oversight subcommittee staff to find out the right procedures for an
oversight hearing. And we did something that we had never done before: We
had the CEOs sworn in before they started testifying. There is a very famous
picture where they are all raising their right hands and swearing to tell the truth.
They then later testified that nicotine is not addictive.
I’m sure that the hearing was on the evening news. Journalist Ted
Koppel, who had a very popular late night TV news show, covered the hearing
and devoted an entire program to it. The other thing we did that we had never
done before is coordinate the questions among the members. Usually in a
congressional hearing, each member gets five minutes to ask questions. This is
why hearings are often not very effective at soliciting information. The hearings
would start with the chair, who would get five minutes, and then the ranking
Republican would get five minutes. It would go back and forth, alternating from
Democrat to Republican.
For this hearing, we wrote a set of questions and gave them to the top
three or four Democrats on the subcommittee. It was as though there was a
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script passed down from member to member to give it as much continuity as we
possibly could. The most famous part of the hearing came when the question
was asked that everybody knew would be asked: “Is nicotine addictive?” And
each of the CEOs testified that in his opinion nicotine was not addictive.
Ultimately, another member of Congress referred their testimony to the
Department of Justice for a criminal investigation of perjury. In the end Justice
didn’t prosecute. But this was all very high drama.
Prior to the hearing we had been talking to a former Philip Morris
researcher named Dr. Victor DeNoble. It had been his job to research the
addictiveness of nicotine. His team had done animal studies and other work that
was far more sophisticated than any other scientist had. And when he was ready
to publish his articles, Philip Morris wouldn’t allowed it. Somehow, FDA found
him.
Dr. DeNoble had left Philip Morris and was willing to testify, but he
signed a non-disclosure agreement with Philip Morris. So in our hearing with
the CEOs, Mike Synar, who was one of our star committee members, questioned
the CEO of Philip Morris with cameras rolling. Mike said, “Will you commit
not to prosecute Dr. DeNoble if he comes before our committee and testifies?”
And the head of Philip Morris had no choice but to agree to that. I think he was
completely surprised and unprepared. That opened-up a whole other line of
inquiry that we wouldn’t have had.
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We then held an entire hearing devoted to Dr. DeNoble’s research. We
held a hearing devoted to low-tar, low-nicotine cigarettes. But with the
documents we had and the work that the FDA had done, and the exceptional
press attention, we were able to hold some very exciting hearings. The CEO
hearing is part of famous congressional lore.
Mr. Pollak: CEOs of the tobacco companies?
Mr. Schultz: Yes. I’m now seeking to force the oil companies to take steps to reduce climate
change. Recently there was a hearing before the House Committee on Oversight
and Reform in which the Committee called all the oil company CEOs. The
congressional members at that hearing kept referring to the tobacco hearings and
saying, what you’ve done is just like what the tobacco companies did.
Our investigation, Kessler’s investigation, other investigations, and
ultimately lawsuits revealed that for forty or fifty years the tobacco industry,
through its trade association, had a plan to confuse the debate over the safety of
cigarettes and whether nicotine was addictive. Through scientific papers and
various strategies, their whole effort was to create doubt so that they could
continue to sell their products knowing full well that nicotine was addictive and
tobacco was deadly.
Mr. Pollak: And what was your responsibility for the hearings? Did you set them up?
Mr. Schultz: Phil Barnett and I were the committee staffers. We decided what the subject was
going to be; we decided who was going to testify; we wrote the opening
statement for Congressman Waxman; we wrote the questions that he and other
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Democrats were going to ask at the hearing; and we worked very closely with
David Kessler and his colleagues at FDA to get ideas and information.
Mr. Pollak: And did you have to subpoena the witnesses?
Mr. Schultz: We didn’t have subpoena authority. We would have had to get authority from
the full committee to do that, but we didn’t subpoena any witnesses. As I said,
the CEOs were forced by Congressman Bliley to testify. Many of the other
witnesses were friendly witnesses. They were happy to testify.
Mr. Pollak: And what was Congressman Bliley’s position?
Mr. Schultz: He was the ranking Republican on our subcommittee, so he was the lead
Republican. We didn’t know what his motivation was but in later years when I
was at FDA working on tobacco, I worked with his staff on various issues. I
learned that Congressman Bliley spoke about how his wife had gotten sick from
tobacco and I think he had real health concerns about tobacco. Even though he
supported the industry, I think he really understood the dangers.
Mr. Pollak: How did this end?
Mr. Schultz: In the 1994 midterm elections the Democrats lost the House. Congressman
Waxman lost his chairmanship as did Congressman Dingell. And Congressman
Bliley became the Chair and immediately announced that he was closing down
the tobacco investigation. That was the end of the tobacco investigation.
I’ll tell you an inside Washington story that occurs to me. The powerful
Congressman John Dingell was chair of both the Energy and Commerce
Committee and the Oversight Subcommittee. The Energy and Commerce
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Committee Chief of Staff, Michael Kitzmiller, left his job to set up his own shop
and was looking for work. After our hearings started, the tobacco industry
signed a contract with him to represent them in any oversight investigation
before the committee. The fee was $500,000 a year for five years, an enormous
sum of money in 1994. The tobacco companies may have thought they were
going to need to stop Congressman Waxman, and in particular stop any
subpoenas that would have to be authorized by Congressman Dingell. They
probably also hired him to advise them on members and who might be
sympathetic and who might not, and all the things that Washington lobbyists do.
I heard that after the 1994 election when the hearings were closed down, the
tobacco companies went to Kitzmiller and said, “Well now, there’s no more
work to do so we want to terminate our contract.” And he said, “Oh no, it’s a
five-year contract, I’m at your service for five years at five hundred thousand
dollars a year.”
Mr. Pollak: And you’ve already talked about the legacy of the hearings. It showed how you
could bring the CEOs to the Congress and obtain their testimony.
Mr. Schultz: I think today swearing witnesses in is a much more common practice, even
before a legislative committee. But those hearings have become famous, in part
because of the testimony that nicotine is not addictive. Everybody today
understands it’s not true.
Mr. Pollak: And why did responsible men so testify?
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Mr. Schultz: Well, a CEO of a tobacco company in those days had no choice, particularly
because of the product liability complications of admitting it was addictive. This
is probably why they didn’t want to testify in the first place.
At that point the tobacco industry had been sued many times but had
never lost. And a principal argument was that smoking is a matter of free
choice. If a person got sick from smoking or got cancer or died, well, that was
their choice and it’s their fault. But once you understand two things, that
nicotine is addictive and that people start smoking when they are children, the
free choice argument falls apart.
Mr. Pollak: And have there been successful lawsuits between then and now?
Mr. Schultz: Yes. I can’t recount them all, but there have been successful lawsuits brought by
smokers and their families. And of course, the state attorneys general all
brought lawsuits against the tobacco companies that were successful and led to a
very large settlement. We could talk about that later.
Mr. Pollak: So, in the summer of ‘94, you made a job change.
Mr. Schultz: Right and I had always been very fortunate in terms of job changes. And in this
case, there were two jobs at FDA that I had been interested in. One was Chief
Counsel. That seemed like the most natural job for me.
Mr. Schultz: But the General Counsel at HHS, Harriet Rabb, whom the FDA Chief Counsel
worked for, had made a decision not to fill that job with a political appointee.
So that job was not open to me. The other job was FDA Deputy Commissioner
of Policy, a position that David Kessler had created. That person was in charge
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of all FDA policy initiatives, including regulations and initiatives on the Hill.
The person in that job worked very closely with the Commissioner.
There was a staff of about ten very talented people, mostly lawyers, and
a much larger staff that processed regulations. Mike Taylor had filled that
position in the Bush Administration and at the beginning of the Clinton
Administration, but he left to be head of the Food Safety and Inspection Service
at the U.S. Department of Agriculture. So that job was vacant. David Kessler
asked me if I was interested in that job and I said I was. I accepted the job during
the summer before the election and I was scheduled to start at the end of the
congressional legislative session. I had no idea that I would’ve lost my job on
the Hill because of the election. After the election in November 1994, we were
all shocked that the Democrats lost. I was the only one on the staff with a job
because after the election there were no committee staff allocated to the top
Democrat on the subcommittee. That meant the only staff positions for
Congressman Waxman were on his personal staff. Phil Barnett and the staff
director Karen Nelson joined Phil Schiliro on personal staff and everyone else
found new jobs.
Mr. Pollak: Was your position as Deputy Commissioner of the FDA a Senate-confirmed
position?
Mr. Schultz: No.
Mr. Pollak: So, President Clinton named you? or David Kessler?
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Mr. Schultz: Well, David Kessler selected me, but I had to be approved by the Department of
Health and Human Services and the White House since it was a political
appointment. And it’s a cumbersome process. It’s quite onerous, and you have
to have an FBI check, which takes months.
Mr. Pollak: Months while you continued on staff of the committee?
Mr. Schultz: Yes, and they wanted me to stay until the end of that session because we had a
lot of legislative work going on. We didn’t know we weren’t going to be in the
majority.
The major piece of legislation I remember that was enacted was the
Dietary Supplement Health and Education Act. Unlike other legislation I
worked on, this was a step backwards in terms of the authority of the Food and
Drug Administration. But David Kessler got more aggressive in regulating
dietary supplements.
If you think about it, the FDA regulates drugs and it regulates food, but
dietary supplements fell somewhere in the middle. For example, Vitamin C or
calcium sold as just Vitamin C or calcium was regulated more like a food.
Which means very light regulation with no pre-market approval. On the other
hand, if you sell Vitamin C to cure the common cold, it’s now being sold to treat
a disease and it’s a drug. And that’s prohibited unless you get approval from the
FDA, which requires clinical studies to back up your claims.
The FDA had a very inconsistent history about regulating dietary
supplements, and historically when FDA tried, it had been slapped down by
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Congress. But David Kessler had been fairly aggressive, and the dietary
supplement industry started fighting back. They had a lot of allies on Capitol
Hill and a lot of allies in the public. They decided to advocate for legislation to
take away FDA’s authority. The industry got members of the public riled up,
and the Hill got more mail that year on this topic than any other we were
considering. The supplement industry had Democrats and Republicans
supporting them. Senator Hatch was a big supporter. Iowa Senator Tom Harkin,
a Democrat on the Senate Health Committee, was a big supporter. Congressman
Bill Richardson, a Democrat from New Mexico who later became Secretary of
Energy, was a big supporter of dietary supplements. Maryland Senator Barbara
Mikulski, also a Democrat, was supportive.
There were hearings before Senator Kennedy’s committee. This really
horrible, strongly supported bill passed in the Senate by voice vote. There was
very little resistance, and very little appetite for pushing back. The only one
willing to fight was Congressman Waxman. I was his staffer, and we thought
we had the ability to keep the bill from moving through the House because it
could not move through the House unless it went through our subcommittee.
Congressman Waxman could decide not to move the bill and the bill wouldn’t
go anywhere. There was only one way around that and it was almost never used.
With a discharge petition, a majority of the members of the House could petition
to overrule the subcommittee chair and discharge the bill out of the
subcommittee for a full House vote.
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My recollection is that a majority or near majority of the House
cosponsored the bill. We were clearly being threatened with the discharge
petition and we knew that it if it didn’t happen that year it would happen the
next. Having the bill discharged would have put Congressman Waxman in a
very weak position. I was charged with getting the best legislation we could,
and we started a long negotiation with the industry, FDA, and congressional
staff.
Eventually the leaders in the House and Senate met to hash out the final
issues. We had negotiated everything we could but we could not agree on some
items. The most important one was that the industry wanted the ability to sell
dietary supplements without FDA approval to make something called
structure/function claims. Earlier I recounted how structure/function claims were
allowed in the bill when Congressman Waxman agreed that it would be
sufficient if there was a disclaimer that the claims were not approved by FDA.
That was a major setback, but in the end we had improved the bill quite a bit.
There were certainly no celebrations in the Waxman office when it passed.
Mr. Pollak: What is the reference you make in your outline to a New York Times article and
Mel Gibson video?
Mr. Schultz: This is an example of what it was like dealing with the well-funded proponents
of dietary supplement legislation and their allies. There was a very effective
campaign that generated an enormous amount of mail, and this was before the
days of e-mail. The companies and their lobbyists managed to get a front-page
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story in The New York Times attacking FDA, attacking its regulation of dietary
supplements, and touting the merits of dietary supplements. The article was
riddled with inaccuracies, which I identified. Because my wife is a reporter, I
knew how to handle this. I called the reporter but more important I called the
editor and said you have to run a correction. The article was filled with
inaccuracies and The Times did something I had never seen before. Instead of
running a simple correction, the usual practice, The New York Times ran a
second article correcting the first. It wasn’t on the front page, but the paper
recognized that their reporter had been taken in by the untruthful propaganda of
the dietary supplement industry.
Another example of their aggressive tactics was a video combining two
issues we were working on. In addition to dietary supplements, I was also
working on a bill to give FDA more enforcement authority. Because the
enforcement statute was so old, it hadn’t given the agency subpoena authority or,
for example, the authority to seize adulterated foods. As a result, FDA had to
rely on the states, which had much more authority.
So, we were working on both an enforcement bill and the dietary
supplement bill. The star of the video was Mel Gibson. It begins with a picture
of a big white house on a hill. When the viewer enters the house with the
camera, Mel Gibson is in his kitchen. The counters are completely clean and
white and there are bright white lights. All of a sudden several men carrying
guns with FDA written on their vests break through the door and enter the house.
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Mel Gibson turns around and says, “Guys, it’s only vitamins,” and the camera
shows vitamin bottles on the kitchen counter. The message was that FDA is
about to take away your vitamins. That video was passed around and was very,
very popular. That was what we were up against. Our side didn’t have those
kinds of resources.
Mr. Pollak: And you reference in your outline a check scandal, what’s that?
Mr. Schultz: This grew out of the policies of the Congressional Federal Credit Union, where
staff and members could have checking accounts and there were no fees charged
on those accounts. It turned out if you were a member of Congress you could
overdraw on that checking account and the checks wouldn’t bounce. They
would be covered, and it would be expected that you would ultimately make the
deposit and make it all even. As far as I know that is what happened frequently
to members, and it allowed members not to pay attention to their balances
because there was no consequence to overdrawing. Somehow this was
discovered and published. Some members had negative balances 400 times;
Henry Waxman was one of them. He handled it very well. He publicly
admitted what he had done. He didn’t try to hide it, and the story went away.
This incident was used effectively by Newt Gingrich leading the
Republicans to attack the Democrats and people’s faith in Congress. Combined
with what had happened to the healthcare bill, the check scandal was a major
factor in the Democrats losing the House. In fact, Tom Foley, the Speaker of the
House, lost his seat in Congress, the only Speaker ever to lose his seat while he
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was Speaker. So the fall of 1994 was a tough time for Democratic members of
the House of Representatives. After the disastrous midterm election, Newt
Gingrich became Speaker of the House and there was a whole different
atmosphere with fundamental attacks on basic structures, on the Food and Drug
Administration, and on the federal government.
Mr. Pollak: You left the Hill with some hard knocks.
Mr. Schultz: Yes, I didn’t have bad feelings about it, but it was a real learning experience. I
felt we accomplished a lot in terms of strengthening the FDA’s ability to protect
the public health from unsafe drugs and foods.
Mr. Pollak: Is there more to say about David Kessler, a figure who has been a big player
from that era to the present?
Mr. Schultz: I worked with David when I was a congressional staffer and then I worked
closely with him when he was FDA Commissioner. He is an enormous talent.
He is obviously very bright, but a lot of people are very bright. He was well
educated, with a medical degree and a law degree. He instinctively knew how to
accomplish things in government, something that very few people in these
positions understand. And the first thing he understood was how to use the press
to protect himself.
He became a very popular figure with the press. He was on 60 Minutes,
he was quoted frequently, and he cultivated excellent relationships with
reporters. He understood, for example, that if he ever gave a speech, he had to
make news. He never wanted to go even to the Food and Drug Law Institute and
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just make a speech. He always had to have something new and always had to
make news.
His popularity meant it was very hard for the President to fire him
because that was going to be bad politics. When Kessler was finalizing the
Nutrition Labeling and Education Act regulations, there was significant
disagreement with the White House staff. But my understanding is that
ultimately President Bush did not overrule him because he did not want to have
to deal with the debacle of David Kessler resigning. I’ll get to it, but we had a
similar situation with tobacco.
The other thing David understood was how to redesign the FDA
leadership to make it more effective. When he began as Commissioner, I think
there was a Commissioner and a career Deputy Commissioner. He immediately
created a structure so that he had the Deputy Commissioner for Policy, a Deputy
Commissioner for Public Affairs, and a Deputy Commissioner for
Administration who handled the budget. He made all these appointments and he
worked very, very closely with the head of legislative affairs and press affairs.
He was very generous to staff, very respectful, and very focused.
For example, when he was working on tobacco, he would spend his time
reading patents and reading articles. He was able to let go of all his other
responsibilities at FDA. It infuriated a lot of the FDA center directors, but it
allowed him to accomplish big things.
Mr. Pollak: When did you go on duty as a Deputy Commissioner?
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Mr. Schultz: My plan had been to stay through the election and then maybe take some time
off and begin in January 1995. But David had other ideas. In the fall of 1994,
David and FDA were fully engaged in devising tobacco regulation. It was a
huge project, divided into two separate efforts. One was a legal document
explaining that FDA had jurisdiction over tobacco, and the second was the actual
regulation. Before FDA could do anything, Kessler had to convince everybody
in the executive branch that the agency had the legal authority, so the
jurisdictional document was critical.
The jurisdiction over drugs depends on intent. Let me explain. The
water in this bottle obviously isn’t a drug. But if I decide to sell it to cure cancer
and I advertise it that way, my intent is that this water can actually be used to
cure cancer and it’s now a drug. It can be regulated by FDA.
Similarly, tobacco by itself might not be a drug no matter how bad it is
for anybody or how addictive it is. But if FDA could show that the companies
intended it to be used as a drug because they intended it to be addictive, now all
of sudden tobacco is a drug. For most drugs that FDA regulates, intent is fairly
easy to establish. FDA officials can use the label and the advertising to show
that the purpose is to treat or prevent a disease, which establishes intent.
FDA hadn’t established that intent for tobacco, and Kessler’s
investigation had been geared at demonstrating intent. He and his colleagues
found industry documents that showed tobacco companies marketed the product
to kids and fully understood that getting children addicted would lead to greater
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sales in the future. The fact that they understood the addiction and understood
its consequences went a long way to proving intent. We were also helped by the
fact that nicotine was sold by FDA as a tobacco cessation treatment, so nicotine
had long been recognized as a drug. It clearly had drug-like effects, mainly that
it was addictive.
This was a very, very tricky area. David asked me if I would spend the
fall before I took my job as Deputy Commissioner writing the jurisdictional
statement. The idea was that I would draft it with Ann Witt. Ann had been at
the Office of Chief Counsel for years, but then she had been detailed to work on
the tobacco team with the Commissioner. She is an incredibly talented, bright,
and creative lawyer. David thought if I went into the office I was supposed to
occupy, there would be no way I could work on writing a document. One thing I
learned as Deputy Commissioner was that I didn’t have time to write testimony
or speeches. The Deputy Commissioner is constantly in demand for meetings in
the agency, at HHS, and the White House, and to testify on the Hill.
David found an office several floors down from the Commissioner’s
office and his idea was that Ann and I would work there and wouldn’t tell
anybody. Of course, people found out, but the two of us stayed in this office
writing the jurisdictional statement.
Mr. Pollak: For whom to read?
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Mr. Schultz: It was reviewed by lawyers at FDA, HHS, and the White House, and by Walter
Dellinger, head of the Office of Legal Counsel, who advised the White House on
legal issues.
Interestingly, David took the position that while the regulation formally
had to be reviewed and cleared by HHS and the White House, the decision to
declare jurisdiction was his. As the FDA Commissioner he could make that
decision. He understood he had to get other people on board, but he always held
that out as his prerogative. FDA jurisdiction was key to getting White House
approval for tobacco regulation. He was so intent on it that ultimately when we
published the proposed legislation in the Federal Register, he insisted the
jurisdictional statement be a separate document. One document that went
through government review, and one document signed by the Commissioner.
Mr. Pollak: That was the key job for you.
Mr. Schultz: Yes. It’s the one time I got to do what I call real work. When you’re in these
high-level positions, you may accomplish a lot but it’s a struggle to find time to
read cases and write documents. Of course, the document went through a lot of
changes after we did our work. We wrote the first draft that was the basis for it.
Mr. Pollak: What it had turned on was the timing. When did you spend time working with
Ann Witt? When did you publish the jurisdictional statement in the Federal
Register?
Mr. Schultz: I’ll give an overview of the sequence of events. At that time the proposed
regulation was also being developed. These two things are being done
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simultaneously in the fall of 1994 and until August 1995. In August 1995 the
jurisdictional statement16 and the proposed rule17 were published simultaneously
in the Federal Register.
Mr. Pollak: They were published for comment?
Mr. Schultz: We didn’t ask for comment on the jurisdictional statement. We just declared
jurisdiction, but the proposed rule was published for comment.
Mr. Pollak: You want to continue this story?
Mr. Schultz: Sure. There was a lot to do between the initial work and the actual publication
of the proposed rule. The jurisdictional statement went on its track, work
continued to be done on it, and I think documents continued to be collected.
Meanwhile, the huge project of putting together this proposed rule went on.
David Kessler had detailed people from all over the agency to work on it.
The real key was the focus on children. He was convinced that the only
way he could get this through the White House and the Department of Health
and Human Services was the focus on children. The whole idea of the rule was
to protect children from tobacco. The only way to do that is to find a way to
regulate advertising and sales. This included, for example, limited vending
machines to bars. No more vending machines in schools or bowling alleys.
There would be a real limit on vending machines. The regulation included limits
16 Analysis Regarding the Food and Drug Administration’s Jurisdiction Over Nicotine-Containing Cigarettes and
Smokeless Tobacco Products, 60 Fed. Reg. 41453 (Aug. 11, 1995).
17 Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco Products to Protect
Children and Adolescents, 60 Fed. Reg. 41314 (proposed Aug. 11, 1995).
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on free samples, cigarettes. It included a national rule that you had to be 18
years old to buy tobacco.