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Food and Drug Administration

year. In 2004 total Department of Health and Human Congress, the Federal Food, Drug, and Cosmetic Act was
Services outlay was $543,215 billion. In 1998 the same passed. According to the FDA’s Web site, it contained the
outlay was $359,700 billion. following new provisions:
Defense spending was the largest item of discre-
• Extending control to cosmetics and therapeutic
tionary spending in the federal budget. In 2004 the devices
amount was $437,111 billion.
• Requiring new drugs to be shown safe before mar-
keting—starting a new system of drug regulation
INTEREST ON THE FEDERAL
• Eliminating the Sherley Amendment requirement to
GOVERNMENT’S DEBT
prove intent to defraud in drug misbranding cases
In 2004 the public debt of the United States was $739.1
• Providing that safe tolerance is set for unavoidable
billion. This amounted to $25,182 per capita for the
poisonous substances
United States. In contrast, the debt per capita in 1990 was
$13,000. The interest paid in 2004 was $321.6 billion. • Authorizing standards of identity, quality, and fill-
of-container for foods
Though fiscal policy could be an automatic stabilizer
for the economy because it automatically responds to • Authorizing factory inspections
changes in economic activity, government spending on • Adding the court injunctions to the previous penal-
such items as unemployment benefits generally increases ties of seizures and prosecutions
during a recession, moderating the extremes of the busi-
ness cycle, whereas government receipts such as income Later the FDA’s jurisdiction was expanded to
include microwaves and any radiation-emitting con-
taxes will fall during a recession, also moderating the
sumer products, as well as veterinary drugs and pet food.
extremes of the business cycle. Consequently, fiscal policy,
The agency monitors the manufacture, transportation,
along with monetary policy—which is dictated by the
and sale of food and drugs. To ensure its efficiency, the
Federal Reserve—has an important influence on the
FDA operates in 157 cities and employs approximately
health of the economy in the United States.
9000 people. Among its employees are chemists, micro-
SEE ALSO Government Role in Business biologists, and investigators who visit 15,000 locations
each year.
BIBLIOGRAPHY FDA inspectors visit businesses that are regulated by
Bruce, Neil (2001). Public finance and the American economy the FDA. If a problem exists, the FDA allows the com-
(2nd ed.). Reading, MA: Addison-Wesley. pany to voluntarily correct the problem or recall the faulty
Citizen’s guide to the federal budget: Budget of the United States product. If the company refuses to cooperate, the FDA
government (1996—). Retrieved March 5, 2006, from can go to court to force cooperation. Court action can
http://www.gpoaccess.gov/usbudget/citizensguide.html include criminal prosecution if necessary.
In the area of drug control, the FDA does not con-
duct its own experiments but closely examines the results
G. W. Maxwell
of the company’s research. FDA inspectors conduct three
types of inspections: study oriented, investigation ori-
ented, and bioequivalence inspections. Study-oriented
inspections are needed in case of new drug or new-prod-
FOOD AND DRUG uct applications for approval. An investigator-oriented
inspection may be ordered if other investigators looking at
ADMINISTRATION the same study think the findings are inconsistent. If one
The Food and Drug Act of 1906, which prohibited study is the sole basis for a marketer request, a bioequiva-
the interstate trade of misbranded or tainted food, drinks, lence study is conducted.
and drugs, was passed by Congress on the same day as the Once a drug or device is approved, the agency’s
Meat Inspection Act. At this time there was no Federal responsibility does not end. The FDA monitors any com-
Drug Administration, but there was a Bureau of Chem- plaints and looks for any adverse reactions associated with
istry. In 1927 a separate enforcement agency known as the the product. As a result, approximately 3,000 products are
Food, Drug and Insecticide Administration was create recalled each year.
and in 1930 it was renamed the Food and Drug Admin- In addition to ensuring the quality of the product
istration (FDA). In 1938 after five years of battle with itself, the FDA has had a major influence on businesses

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