CPR Member Scholars Rena Steinzor Lisa Heinzerling, Tom McGarity, Sidney Shapiro, and I submitted comments to the FDA on two food safety rules—one on raw produce, and one on preventive controls for human food (which applies to food manufacturers and processors).
In separate blogs posted today, we address issues of regulatory design and how the costs of both these rules would be significantly smaller than suggested in the FDA’s economic analyses. Here, we explain why these rules offer much greater benefits than those presented in the agency’s analyses. (The analyses for both rules essentially rely on the same benefits methodology.)
The FDA estimates that the produce rule would prevent about 1.75 million foodborne illnesses, representing an annual benefit to society of $1.04 billion. For the preventive controls rule, the FDA calculates the annual burden of illnesses attributed to processed foods—nearly one million illnesses, which cost society about $2 billion—without estimating how effective the rule would be in reducing them (presumably because it is difficult to predict how each facility would design and implement its own unique food safety plan).
As we explain in our comments, the Food Safety Modernization Act (FSMA) does not call for the use of a “cost-benefit standard” that involves quantifying and monetizing all the potential benefits of the proposed rules (an inherently flawed task) and finding the optimal balance between costs and benefits. Instead, given the relevant statutory mandates, the FDA should base the rules’ standards on the best available methods for preventing food safety hazards, while ensuring that the overall costs remain reasonable.
Nevertheless, to the extent that the FDA continues to use these economic analyses, either as a decisionmaking tool or as a way of expressing the rules’ impacts, they should at least be made as comprehensive and accurate as possible.
Errors and Omissions
For both rules, the FDA neglected to consider the benefits of preventing deaths resulting from “unidentified” pathogens (those that are just emerging or not easily identified through tests), even though the agency estimated that millions of such illnesses are caused by foods covered under the rules. The agency’s data source suggested these pathogens have a significant death rate.
After correcting these and other oversights, the benefits of the produce rule rise to $1.66 billion (a 60-percent increase over the original estimate), and the cost of illnesses attributed to processed foods rises to $2.25 billion (a 14-percent increase). While these technical problems were apparent in the FDA’s original drafts, the fact that they remained in the analyses even after the painstaking extended review by the White House Office of Information and Regulatory Affairs (OIRA) speaks poorly of the quality of OIRA’s review process (at least when it comes to ensuring that benefits are adequately accounted for).
Converting Illnesses to Dollar Losses: What’s Lost in Translation
Estimating how much each foodborne illness “costs,” and thus how much value could be “saved” by avoiding illnesses under the rule, can only be done through an awkward alchemy. It begins with a list of symptoms and consequences (e.g., diarrhea, cramps, vomiting, hospitalization); this is turned into a “health state” representing a certain level of functional disability and discomfort; this state corresponds to a number from 0 to 1 that represents the “quality of life” lost due to illness (based on surveys of random individuals asked to imagine how long they would choose to live in certain vaguely described health states); and then this number is translated into a dollar figure, adding in medical expenses. The result is a “cost per illness.”
This methodology, at its best, can never truly capture the intangible losses caused by sickness. But even assuming the methods are sound, the FDA makes some questionable judgments and assumptions that seriously minimize the impact of foodborne illness.
Even though non-hospitalized cases of Shigella, Listeria, and Salmonella produce fever, cramps, and diarrhea that is “often bloody,” the FDA concludes that a person with one of these illnesses “would not be anxious or depressed.” Even more disturbing, none of the illnesses or complications is considered to cause “extreme” anxiety or depression—not even end stage renal disease.
The FDA determines the magnitude of an illness’ impact with reference to a “health baseline” that is supposed to represent the average, already-imperfect state of health of the U.S. population. But this baseline reflects only the health of the adult population, so the agency underestimates the much more dramatic loss faced by child victims. In fact, foodborne illnesses disproportionately affect children, who made up 36 percent of all confirmed cases in 2012.
The FDA attempts to incorporate several long-term complications of foodborne illness, which are often much more devastating than the acute infection itself. But the agency’s list only scratches the surface. It fails to account for some of the most common and well-documented issues, like fetal complications due to Listeria in pregnant women, which can cause lifelong neurological problems, or post-infectious irritable bowel syndrome. Foodborne infections also lead to other complications that are hard to predict but nonetheless very real, including learning disabilities, complications of surgery, weakened immune systems, and organ damage.
A number of other illness-related costs are missing from the agency’s analysis—from the days that a sick person’s caregiver has to take off work, to the costs of laboratory analysis and pharmaceuticals. A recent study provides pathogen-specific estimates that account for some of these missing costs. Using these more comprehensive figures, the benefits of the produce rule would be $2.90 billion (180 percent higher than the FDA’s original estimate), and the burden of illnesses caused by processed foods would be $3.00 billion (52 percent higher).
Omission of Other Kinds of Benefits from the Discussion
The food safety improvements required by these rules would bring many additional benefits, completely apart from the cost of avoided illnesses, although they are not discussed at all in the analyses.
For example, reductions in contamination would reduce the number of recalls over time and thus prevent some of their far-reaching economic costs. These frequent recalls are incredibly damaging to a company’s bottom line and its long-term reputation.
Their negative effects often spread to unaffected companies (e.g., sales of jarred peanut butter dropped by half even though it was not implicated in the peanut paste outbreak), and may even destroy the market for other commodities (e.g., the tomato industry lost $200 million when tomatoes were mistakenly suspected in a jalapeño outbreak). The stigma on certain commodities remains long after the outbreak is over: It took more than a year for spinach sales to return to normal levels after the 2006 recall.
And while we never stop hearing about “job-killing regulations,” these rules could help save thousands of jobs by averting outbreaks that throw companies into bankruptcy. Last month, the nation’s largest organic peanut processor closed down, saddled with overwhelming debts after a 2012 outbreak. Roughly 100 people lost their jobs (40 more were set to be hired), peanut growers in the region were left without a major customer, and the city lost substantial tax revenue.
Other benefits completely missing from the analyses include: (1) avoided costs of investigating and responding to outbreaks, which are mostly borne by severely underfunded state and local health departments; (2) avoided panic felt by people who have eaten food later recalled for contamination, even if they do not ultimately get sick; (3) avoided costs of lawsuits that inevitably follow major outbreaks; (4) the protection and promotion of U.S. export sales, which may be disrupted by contamination events—or alternately, encouraged by safer practices; and (5) the psychological benefits to consumers of having a safer food supply.
What is particularly mind-boggling is that the FDA originally included well-reasoned, qualitative discussions of some of these benefits (avoided recalls and consumer peace of mind) in the draft analyses that it sent to the White House for review, but OIRA deleted them entirely from both documents. As a result, the final analyses do not do justice to the true scope of benefits we can expect from these rules.