What are 3 examples of regulatory agencies?

Abstract

The term ‘regulatory agency’ is attached mainly to administrative entities intended to monitor and influence business activity in response to varieties of market failure. Observers have undertaken four general lines of inquiry into, and commentary about, such agencies: (1) creation dynamics, (2) types and tactics of influence by governmental principals and by attentive nongovernmental players, (3) circumstances that may undermine agency existence, and (4) how well regulatory agencies serve their assigned purposes. The United States and Europe manifest significant similarities and differences.

K. Good Clinical Practice

Regulatory agencies have placed much emphasis on the concept of conducting vaccine trials leading to vaccine licensure with designs and procedures that conform to “good clinical practice.” The essential elements of good clinical practice are outlined in Table 8. In essence, these elements are designed as basic criteria to ensure that trials are conducted in an ethically justifiable fashion, are scientifically sound, and are verifiable. The last feature refers to the need to create sufficient documentation during a trial that an independent auditor could verify that the findings of a trial accurately reflect the data actually collected.

TABLE 8. Principles of Good Clinical Practicea

1.

Clinical trials should be conducted in accordance with the ethical principles that have their origin in the Declaration of Helsinki and that are consistent with GCP and the applicable regulatory requirement(s).

Before a trial is initiated, foreseeable risks and inconveniences should be weighed against the anticipated benefit for the individual trial subject and society. A trial should be initiated and continued only if the anticipated benefits justify the risks.

The rights, safety, and well-being of the trial subjects are the most important considerations and should prevail over interests of science and society.

The available nonclinical and clinical information on an investigational product should be adequate to support the proposed clinical trial.

Clinical trials should be scientifically sound and described in a clear, detailed protocol.

A trial should be conducted in compliance with the protocol that has received prior Institutional Review Board (IRB)–Independent Ethics Committee (IEC) approval–favorable opinion.

The medical care given to and medical decisions made on behalf of subjects should always be the responsibility of a qualified physician or, when appropriate, a qualified dentist.

Each individual involved in conducting a trial should be qualified by education, training, and experience to perform his or her respective task(s).

Freely given informed consent should be obtained from every subject prior to clinical trial participation.

All clinical trial information should be recorded, handled, and stored in a way that allows its accurate reporting, interpretation, and verification.

The confidentiality of records that could identify subjects should be protected, respecting privacy and confidentiality rules in accordance with the applicable regulatory requirement(s).

Investigational products should be manufactured, handled, and stored in accordance with applicable good manufacturing practice (GMP). They should be used in accordance with the approved protocol.

Systems with procedures that assures the quality of every aspect of the trial should be implemented.

Independent Regulatory Agencies

Independent regulatory agencies can be described as public organizations with regulatory powers that are neither directly elected by the people nor directly managed by elected officials (Thatcher, 2007). In general, a regulatory institution is considered independent if it operates under the law and has arm’s-length relationships with private interests, arm’s-length relationships with political branches of the government, and organizational autonomy, including economic autonomy (BoKIR, 2017b). Although independent regulatory agencies operate at arm’s length from government rather than under direct control by government ministers, they are still representatives of the State.

Independent regulatory agencies have become a popular institutional form for economic regulation, as well as for safety regulation. Their popularity is attributed to their general capacity to combine professionalism, operational autonomy, political insulation, flexibility in adapting to changing circumstances, and policy expertise in highly complex spheres of activity. Independent regulatory agencies provide economic regulation (or oversight)6 for the ANSPs in the United Kingdom, Ireland, Australia, Canada, and New Zealand.

Independent regulatory agencies need to be accountable for the exercise of their regulatory power (BoKIR, 2017b). Decisions they make have different impacts on the interests of different stakeholders, with some stakeholders gaining more or loosing relative to others. There needs to be checks that the decisions made by these bodies are consistent with the objectives of the regulation they are implementing. Key measures used to hold regulatory agencies accountable for the decisions they make include the following:

transparency in agency processes

appeal processes on the decisions regulators make and on procedural fairness

public consultation processes in the formation of agency decisions

requirements for the agency to give reasons for their decisions

requirements for the agency to report to the legislature on a regular basis

When regulatory agencies mandated in the 1960s and 1970s that clinical trials of new treatments conform to research methodology, including randomization, double-blind design, and placebo controls, they affirmed a shift that had taken place in American (and much of Western) medicine. For four millennia, and well into the 1950s, medical practice had been governed by expert opinion, and treatments were at best placebos, pharmacologically inert substances, or at worst filled the cemeteries. The new standard for clinical research encountered challenges from its inception, as doubts arose about blindability in double-blind studies, the definition of placebo, and the ethics of depriving some patients of a potentially effective medication. The debate continues.

Process-Hygiene Disinfectants

Regulatory agencies overseeing market entries in this product field generally act with specific statutory authority over the labels on disinfectants, and hence exercise full control over the claims made for every biocidal formulation currently sold in the regulated territory. Efficacy data requirements are detailed in published protocols, and microbiology laboratory data to meet these needs are increasingly produced by third-party contractors operating under prescribed conditions (such as Good Laboratory Practices [GLP] in the United States), which are designed to enhance the prospects for reproducibility of the test data. Reference to these requirements, promulgated by national authorities in Canada, the United States, and the European Economic Community, is recommended for an explicit account of the requisite experimental protocols and standard test parameters, rather than by exploration of the peer-reviewed literature on this subject. Regulatory authorities often arrive at designated protocols as a result of multilaboratory comparative studies, and these data may end up being published in the mainstream food-hygiene or microbiology literature; however, agencies’ adherence to their own published stipulations takes precedence over reference to methods described in peer-reviewed journals. This fact must be considered by those planning the assembly of data packs in support of the registration of products for commercial sale.

Product safety is a responsibility of the regulatory authorities and requires acute toxicological evaluation of the product as sold (i.e., the label specifies the toxicity of the concentrate in the bottle or container, if the product is sold for dilution by the user). Acute toxicity testing for food-hygiene disinfectants usually requires oral, dermal, and aerosol exposure of rodents and rabbits, under stringently controlled conditions. For novel biocidal entities introduced into the market for the first time, subchronic exposures involving protracted periods of administration of the test article to animals are required.

The demands of the food industry ultimately determine the viability of disinfectant products in the marketplace. The requirements for simultaneous cleaning and disinfection have led to the introduction of a large number of product formulations containing surface-active nonbiocidal constituents whose influence on the overall acceptability of the biocide may be profound and powerfully potentiating. Buildup of blood, serum, and meat residues is a major impediment to the efficient exercise of biocidal properties, and detergent dispersal, often with high temperatures, is increasingly used to improve performance. Higher temperatures generally enhance antimicrobial efficacy, although instability of iodine-containing disinfectants can be a major deterrent to their use in this mode. Extremes of pH and water hardness can effectively counteract the effects of a biocide, too, so that free-chlorine-dependent biocides, for example, become nonfunctional outside a narrow pH range. Certain QACs are seriously adversely affected by both pH and the hardness of the water used to dilute them for rinses and sprays.

Label claims on environmental disinfectants encompass all the conditions of the recommended use patterns, and these claims need to be adhered to diligently if the products are going to perform as expected, based on the laboratory testing. Misuse and abuse, inappropriate dilution, inadequate storage conditions, and improper application techniques often turn out to be the sources of product failures when these occur in real-world food-processing applications. In practice, cleaning agents in the formulations are especially important to compensate for these possible errors. Cleaning capacities are not classified or tested by the regulatory agencies, however, and the characteristics of the so-called inert compounds usually are held as proprietary information by the manufacturers and are not required to be revealed on the labels.

Sanitizing formulations popularly used for food-contact surfaces are expected to exercise their biocidal effects extremely rapidly, against all bacteria types, to bring about a rapid reduction of the contaminating microorganism numbers. They may not have the power to effect pathogen destruction over the longer term on a scale comparable to those products identified as environmental hard-surface disinfectants. Adequate training of personnel is the key to compliance with different types of designated use patterns for environmental biocides in food-processing facilities.

3.1 Introduction

In March 2012, Eike Batista was the 18th richest person in the world with assets estimated at US$34.5 billion (http://www.bbc.co.uk/portuguese/noticias/2013/07/130705_eike_campeoes_nacionais_ru.shtml.) He was the featured cover article on one of the main weekly magazines in Brazil, which spoke of a businessman who would be the idol of the new Brazilian millionaires, a group that “works hard, competes honestly, is proud to generate employment and is not ashamed of being rich” (Veja, 2012).

His business complex consisted of a group of companies called EBX, which specialized in commodities. The main company, Oil Exploration (OGX), promised to rival the giant state oil company – Petrobras – in the amount of oil produced. To build ships capable of transporting this expected huge production, EBX set up the OSX shipyard. These ships would also be used to transport minerals mined by MMX. Since the OSX ships would need a port, Eike created LLX Logistics, of which the main project was the Açu “superport.” There were also companies in the areas of power generation (MPX) and coal mining (CCX), among other smaller ones.

Between 2006 and 2010, the EBX group went public and offered shares on the Bolsa de Valores de São Paulo – BOVESPA (São Paulo Stock Exchange). OGX had the largest initial public offering in the history of Bovespa.

The son of an ex-Minister of Mines and Energy and ex-president of the state mining company Vale do Rio Doce during the military government, Eike had always rubbed shoulders with political leaders. In 2009, he donated R$10 million to the Rio de Janeiro campaign to host the 2016 Olympic Games. He was the single largest individual donor to the ex-president Luís Inácio Lula da Silva presidential campaign in 2006 and the largest private donor for the film Lula, filho do Brasil (Lula, Son of Brazil), which portrayed a heroic image of Mr. Lula da Silva (Lazzarini, 2011, p. 1). He lent his plane to a State of Rio de Janeiro governor for private trips. (http://www.bbc.co.uk/portuguese/noticias/2013/07/130704_eike_batista_ascensao_e_queda_lgb.shtml). For the board of directors of his main firm, he invited no less than an ex-Minister of Finance, ex-Minister of the Supreme Federal Court and an ex-Senator and ex-Minister of Mines and Energy.

On July 1, 2013, the Eike Batista Empire began to collapse, revealing a history based on the expropriation of minority shareholders, taking advantage of regulatory agency political and administrative weaknesses, subsidized credit provided by publicly owned banks and capitalizing based on pension funds controlled by state companies.

The starting point in the crisis was a declaration by the OGX oil company that their most promising field, Blue Shark (Tubarão Azul), was commercially unviable, which unleashed a crisis of confidence in the company and dropped its stock prices. Since the group of businesses was interconnected, the other companies were also damaged. After all, if there was no oil to be explored, what would one do with the ships that would transport it, and the port that would dock them? Also, problems in mineral production and in some LLX and OSX projects completed the negative prospect.

It is interesting to note that the wells in the field now considered unviable had been, a year earlier, declared viable by the company, which was officially registered with the regulatory agency, the Agência Nacional do Petróleo – ANP (National Petroleum Agency). Even though faced with the inconsistency of information and OGX actions, the ANP did not adopt any punitive measures, but only waited the period demanded by regulation while minority stakeholders saw their investments go up in smoke (O Globo, 2013).

The regulatory agency for the capital market, the Comissão de Valores Mobiliários – CVM (Securities Commission), and the stock exchange (Bovespa) also showed passive behavior regarding the episode.1 The Eike Batista companies and the businessman himself did not operate by the rules imposed on open capital societies. Initial stock offers were made when the companies were still in a pre-operational stage, not generating income and with future profit based on optimistic projections. No restrictions were imposed on this type of offer either by Bovespa or CVM rules, as is normally done in other countries, such as by the Securities and Exchange Commission (SEC) in the United States.

Eike used the mandatory “disclosure of relevant information to the market” to make optimistic predictions regarding production, when the law states that such kinds of communication should be restricted to objective, proven facts in order to avoid the speculation and manipulation of stock prices. Similarly, the entrepreneur actively used his Twitter account to disclose optimistic projections regarding business production and profitability. This type of misleading propaganda went largely unnoticed by the Securities Commission, deceiving minority investors. Remuneration for company executives was based on stock market values, inducing them to publicize optimistic information, inflating stock prices and directly affecting their personal worth.

The businessman sold part of his OGX stock 20 days before announcing that Blue Shark field was not profitable. The regulatory agencies only began proceedings that could lead to punitive action 2 years after this maneuver. In the midst of the crisis, Eike decided to transfer R$50 million (about US$22 million) of OGX capital to OSX. This action harmed stakeholders in the first company and favored those in the second, again with no apparent reaction by the Securities Commission (O Globo, 2013).

Exasperated with what was considered Securities Commission indolence, an investor published an open letter to the president on the Internet, suggesting possible maneuvers Eike could make to bypass rules and exploit legal loopholes:

Dear Mr. President:

Even though I publicly predicted that OGX controller Mr. Eike Batista would sell OGXP3 stock between the end of August and the first of September (…), the Security Commission did nothing. According to Article 118[1] of Security Commission Instruction 461, this regulatory agency should have cancelled all deals made by Eike Batista in the last exchanges, being that the sales were made using insider information (…). After realizing at the beginning of this year that the greater part of the oil fields explored was unprofitable, Mr. Eike Batista transferred 123 million shares of company stock. And, as everyone knows, he did this before disclosing to the market that OGX would cease exploration of a major part of what had originally been projected (http://www.infomoney.com.br/ogxpetroleo/noticia/2951706/investidor-que-alertou-sobre-vendas-eike-explica-truque-put-ogx).

This is a clear example of regulatory agency sluggishness – the Securities Commission (CVM) and ANP. They were unable to protect minority shareholder property rights and exposed the stock market to a crisis of confidence.

Public banks lent a lot of money (with subsidized interest rates) to the EBX group. At the time the crisis came into the open, The National Bank for Economic and Social Development (BNDES), a Brazilian development bank that is 100% state owned, had lent R$10.4 billion (about US$4.5 billion) and the Caixa Economica Federal, R$1.4 billion (about US$600 million). (http://www.bbc.co.uk/portuguese/noticias/2013/07/130704_eike_batista_ascensao_e_queda_lgb.shtml). The BNDES subsidiary company (BNDESpar) also participated by investing another R$500 million (about US$220 million) in EBX stock. (http://www.bbc.co.uk/portuguese/noticias/2013/07/130705_eike_campeoes_nacionais_ru.shtml).

According to a very common standard in the Brazilian financial and capital markets, in addition to public banks, state-employee pension funds are also used to finance projects that have received government blessing. The Bank of Brazil and Correios (the postal service, which is 100% state owned) employee funds also hold credit in the EBX group, with the Correios having invested 20% of its total stock portfolio in Eike’s shares (O Globo, 2013). Commenting on the EBX case, The New York Times observed that “governing structures subject to corruption in Brazil remained largely the same throughout the long economic boom, as authorities channeled huge resources of the state to projects controlled by tycoons” (The New York Times, 2013).

At the time of writing, the fall of Mr. Batista’s Empire was still under way, with new developments unfolding: minority shareholders filing law suits, the Securities Commission beginning investigations and the entrepreneur taking steps to sell companies and restructure the group.

The facts that had occurred up to this time, however, are a vivid illustration of how economic power and political influence can be used to bypass laws and allow very rich individuals to expropriate taxpayers, minority shareholders and public pension fund account holders. Weak and slow judicial and regulatory institutions that allow for such behavior are, according to theories described in the next section, the historic result of nations with a high level of inequality. Such fragile institutions biased in favor of the very rich have had a harmful effect on long-term economic growth.

1.3.1 Develop or Adopt Standards

Standards determine the performance boundaries for the process plant. They set minimum safety performance, specify job requirements, and ensure that equipment and facilities meet minimum engineering design requirements. They provide a benchmark for measurement. They are used to set priorities for issues. They help guide the selection of strategies and measure the effectiveness of the implementation. For this reason, the model begins with the development or adoption of standards and ends with performance measured against standards.

Standards may be developed by companies (in-house standards), industry associations, international organizations, or legislation. For example, in-house standards or guidelines may be developed for the design of plant equipment and facilities. Standards may also be developed for the design of offices. Style guides may be created to guide the design of procedures to ensure that each is formatted the same way. Industry technical organizations, such as the American Petroleum Institute (API) or the Canadian Chemical Producers Society (CCPS), develop guidelines for member companies to adapt to their operations. Industry standards serve several purposes. For one thing, it is more efficient for member companies to pay for part of the development of a set of guidelines than for each company to develop its own. Moreover, industry standards are generally consensus documents. They contain the best information from each of the contributing companies. So, the standards should be as good or better than those developed by any one member company. Finally, they provide consistency for regulators. Regulators who are comfortable with the standards tend to spend less time auditing the companies that adopt them.

Most regulatory agencies have developed minimum performance and design standards to which the process industries are required to adhere. Examples include

OSHA Regulation (Standards-29CFR) Process safety management of highly hazardous chemicals; 1910.119.

Califomia Code of Regulations, Title 8, Section 5110, Repetitive Motion Injuries, Article 106—Ergonomics.

Washington State, WAC 296-62-051 Ergonomics.

Contra Costa County, Califomia, Ordinance 98-48, Section 450-8.016 (B) Requirements to develop a written human factors (HF) program.

European Union Council Directive 90/270/EEC “Work with Display Screen Equipment,” May 29, 1990.

British Columbia, Canada, OHS Regulation Part 4, General Conditions, Ergonomics, 1998.

International bodies have developed standards that cut across country boundaries. Examples include

ISO/DIS6385: 2002—Ergonomic principles in the design of work systems.

International Standards Organization (ISO) Ergonomic requirements for office work with visual display terminals, 1992.

ISO 2631-1 (1997) Mechanical vibration and shock—Evaluation of human exposure to whole-body vibration.

Citations/“Case Law”

Citations from regulatory agencies provide some measure for acceptable risk. For example, if an agency fines a company say $50,000 following a fatal accident, then it could be argued that the agency has set $50,000 as being the value of a human life. (Naturally, the agency’s authority over what level of fines to set is constrained by many legal, political, and precedent boundaries outside their control, so the above line of reasoning provides only limited guidance at best.) Even if the magnitude of the penalties is ignored, an agency’s investigative and citation record serve to show which issues are of the greatest concern to it and to the community at large.

Stringent Drug Regulatory Agencies

Some drug regulatory agencies have gained an important transnational drug regulatory role. When such agencies have international relevance it is because their decisions have assumed an impact beyond their respective, national stakeholders. The countries included in this category are the regulatory authority member countries of the Pharmaceutical Inspection Cooperation Scheme (PIC/S) and/or the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH). The countries include all European Union member countries, the United States, Australia, Canada, Iceland, Japan, Liechtenstein, Malaysia, Norway, Singapore, and Switzerland. Although not a medicines registration agency, the European Medicines Agency (EMEA) has an increasingly important role in international pharmaceuticals registration decision making. The decisions of these ‘stringent’ drug regulatory agencies are important, as they have implications for the range of products that can be procured using the resources of some of the large international donors and financing mechanisms, include the Global Fund to Fight AIDS, TB, and Malaria (Global Fund), the President's Emergency Plan for AIDS Relief (PEPFAR), and the President's Malaria Initiative (PMI).

2.1.9 National and international regulatory agencies

The national and international regulatory agencies are responsible for defining the legal framework governing the transport sector, in areas such as competition, safety and security, operations standards and procedures, and labor. They may have the authority to monitor and enforce compliance with the rules. There are various international regulatory agencies, which are usually responsible for a specific mode of transport (e.g., the International Civil Aviation Authority for air transport, the International Maritime Organisation for sea transport, the International Road Transport Union for road transport, and the Intergovernmental Organisation for International Carriage by Rail for rail transport).