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Testimony on Combating Terrorism: Management of Medical Stockpiles by Robert F. Knouss, M.D.
Office of Emergency Preparedness
Public Health Service
U.S. Department of Health and Human Services

Before the House Committee on Government Reform, Subcommittee on National Security, Veterans' Affairs, and International Relations
February 23, 1999

Mr. Chairman and Members of the Committee,

I am Dr. Robert Knouss, Director of the Department of Health and Human Services' (DHHS) Office of Emergency Preparedness (OEP). I appreciate the opportunity to appear before you once again to discuss our program's activities.

Last September, I appeared before this Committee and spoke about OEP and the National Disaster Medical System (NDMS), its teams and activities. Today, I am here to discuss the recently released General Accounting Office (GAO) report after an audit of the four specialized pharmaceutical caches used by our National Medical Response Teams (NMRTs), and the cache used by the Marine Corps' Chemical Biological Immediate Response Force.

Background and Purpose of the Pharmaceutical Caches

In Fiscal Year (FY) 1997, the Congress appropriated $1.8 million to OEP for the creation of four stockpiles of specialized pharmaceuticals, and in FY 1999, an additional $1.4 million was provided with the funds appropriated to the Centers for Disease Control and Prevention (CDC) to increase the stocks to be able to treat more victims. These stockpiles were designed to be deployed with our four specialized disaster teams in responding to a weapons of mass destruction (WMD) event and providing medical care to its victims. Three of the teams (California, Colorado and North Carolina) can be deployed anywhere in the country. The Washington, D.C. team does not deploy outside of the Washington, D.C. metropolitan area. The stockpiles contain specialized pharmaceuticals to treat up to 5,000 victims of a chemical exposure to nerve agents such as sarin and VX; vesicants, such as mustard gas; and pulmonary agents such as phosgene. In addition, each stockpile has medicines to protect the team members from cyanide poisoning and antibiotics to begin to provide prophylactic treatment to team members should they be exposed to a biological agent. Each stockpile will also accommodate treatment of the team for radiation exposure.

As you know, OEP is also working with metropolitan areas across the U.S. to create Metropolitan Medical Response Systems (MMRS). Part of the purpose of these systems is to ensure that each metropolitan area has specialized pharmaceuticals on hand to protect and treat responders and to be able to begin to treat WMD victims. We knew that an individual metropolitan area might not be able to afford to keep all the stores of pharmaceuticals on hand that it might need in the event of a WMD attack. We also knew that it would take up to 12 hours to deploy the National Pharmaceutical Stockpile that CDC is developing. Therefore, we designed our stockpiles to be able to deploy with our NMRTs. The three deployable teams and the associated stockpiles can be at an airport (commercial or military) and be ready to board within four hours of notification. The NMRT stockpiles are designed primarily to provide additional supplies to local areas that have depleted their own pharmaceutical resources in the initial hours after a chemical attack, when time is of the essence. The NMRT stockpiles have also been used to pre-position supplies for designated special events.

In FY 1997, when we began developing the NMRT stockpiles, we did not want to develop new and expensive systems, and we looked for systems that were already in place, on which we could build. The Department of Veterans Affairs (VA) is one of the four partners in the National Disaster Medical System (NDMS) and manages one of the largest pharmacy systems in the country. Consequently, we approached VA with our proposal for the purchase, management and deployment of the NMRT stockpiles. VA was able to purchase the pharmaceuticals and supplies through their purchasing systems, and store the stockpiles at facilities in strategic locations near the NMRTs (Los Angeles, CA; Denver, CO; Winston-Salem, NC; and the Washington, D.C. metropolitan area).

GAO Report

The report recently issued by GAO raises important concerns about the manner in which these stockpiles were managed and the oversight provided by OEP. We have taken GAO's efforts and report seriously, and we are taking immediate steps to continue to ensure proper internal controls are in place and that we are in compliance with all regulations. Before commenting on the specific steps we are taking, however, I want to note that we have carefully reviewed the results of GAO's audit and do not believe that any of the issues cited degraded our ability to respond to a chemical attack should it have occurred over the last two years.

Based on the result of the GAO audit, however, we have signed a new interagency agreement with the VA that spells out each agency's responsibilities and activities, including:

  • Assurance of appropriate storage and physical security of the stockpiles. The stockpiles will be in secured locations, with restricted personnel access. In addition, controlled substances will be ordered, received, stored and issued according to applicable DEA and OMB regulations.

  • Strengthening of internal controls. OEP and VA personnel, with possible assistance and oversight from the HHS Inspector General's office, will conduct an initial 100 percent inventory and will be matched with inventory records. All out of date pharmaceuticals will be replaced, and we will assure that lot numbers are recorded correctly. Regular and no-notice audits will be conducted.

  • Establishment of a schedule of regular communications. VA will provide inventory updates on a regular and recurring basis and will also provide reports on inventory replacements and changes. OEP will provide regular and recurring management oversight.

The FY 2001 President's budget includes resources for the stockpile management activities that the VA will now conduct and four our additional activities.

Ability to Respond
We certainly understand GAO's concerns that insufficient management and oversight controls do not provide any assurance that, even if the audit had been 100 percent correct on one day, there are no absolute assurances that the same would be true the next day, or at the time of deployment However, we are concerned with GAO's implication that we would not have been able to respond effectively to a WMD incident. A "12 percent error rate" has to be put in the context of the type of items that were included in this calculation, and how the error rate was calculated. An excess of large gloves and an undercounting of medium size gloves is not a significant problem. And it is our understanding that an individual item could have produced up to three errors ­ if it was over (or under) the count, if the lot number was recorded incorrectly, and if the expiration date was not the same as the inventory listing. Substitutions of an equivalent product also do not affect response capacity. To reiterate, we recognize the significant concern is not whether there is a 100 percent inventory accuracy, but whether the principles of quality control, quality assurance and inventory management have been utilized.

GAO has provided us with the spreadsheets from their audit of each cache. We have taken a serious look at the audit of each of the VA caches. We found that, for the most part, the errors occurred in the number of medical supplies, and that most of the errors were because of surplus quantities, not shortages. We focused our activities on the pharmaceuticals and controlled substances, and found that most of the missing pharmaceuticals at the time of the audit occurred at one location. Since being provided the audit results, we have been working with the VA to assure that these errors, regardless of level of significance, are corrected.

Security is a principal concern. As a result, we will be moving the location of one of our stockpiles so that it can be more readily monitored. In doing so, we want to be particularly careful, however, that we not increase the time that it would take to mobilize our team with its medical supplies and pharmaceuticals.

Further Actions

With the signature of the new agreement, we will accomplish the following:

  • Have a more effective control environment - Requirements for stricter inventory control and monitoring, as well as for regular reporting and feedback, are included in the new agreement. In addition, VA officials have informed us that there are now clear lines of command and assignments for stockpile management. The new agreement includes the funding of additional staffing at the VA for close stockpile management.

  • Properly record information and communicate with management - OEP will provide funds for additional staff and improved computerized inventory records at the VA to help ensure that the information is recorded properly and kept up to date. In addition, OEP and VA are instituting a monthly reporting system and periodic meetings with management.

  • Ensure monitoring - VA staff is providing additional and regular on-site monitoring of the stockpiles. OEP staff or appropriate contractual staff, will conduct announced and no-notice inspections of each stockpile.

  • Conduct risk assessments and implement control activities that are linked to the results of a mission risk assessment - The agreement provides that VA, with an OEP representative present, prepare a risk analysis of each location of storage. This analysis includes estimation of the risk's significance, assessment of the likelihood of its occurrence, decisions and recommendations on managing the risks and actions. Based on these analyses, OEP and VA will ensure appropriate risk management.

In conclusion, I want to reiterate that we are working very diligently within our own office and with the VA to correct the problems that GAO found, to do a 100 percent inventory, to ensure that current stocks and record keeping are accurate and up to date, and to develop and implement the proper management controls and oversight to ensure that the stockpiles are ready to deploy and that we are in compliance with all laws and regulations.

Mr. Chairman, this concludes my testimony. I will be pleased to answer any questions you may have.

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