Declaring that the Food and Drug Administration "has not kept up either with scientific advances or with changing needs of society," Secretary of Health, Education and Welfare Joseph A. Califano Jr. yesterday called for a large-scale revision in government regulation of the drug industry.

The basic statute under which the FDA approves and regulates drug Distribution "unnecessarily increases the prices we pay for drugs," Califano said. "It keeps from consumers information necessary to participate in the decision as to whether they themselves need drugs."

Addressing a lunch meeting of Public Citizen, consumer activist Ralph Nader's organization, Califano expressed strong support for many of the drug law revisions now being considred by Congress, such as requiring more complete drug labeling for consumers and strengthening the FDA's ability to recall dangerous drugs.

He also urged new FDA laws to require public disclosure of drug manufacturers' scientific test information. "For the past 40 years the FDA has interpreted current law to prohibit disclosure of those tests as "trade secrets," Califano said. Although the law should protect "bona fide trade secrets," he said, "we need procedures that invite the scientific community and the public in rather than fence them out."

Current FDA law, which has undergone major revision twice since the agency was established in 1906, is so complicated and unwieldy that it needs "a top-to-bottom, thorough overhaul," Califano said. New law, he said, should require:

A "clear and comprehensive mandate to require patient package inserts that provide information to the patient in language everyone can understand."

A "comprehensive, accurate surveillance system for adverse drug reactions." Under present law, if the FDA wants to suspend marketing of a questionable drug, the manufacturer may continue selling it as the suspension litigation proceeds. Immediate removal of a drug is possible only when the Secretary of HEW declares the drug an "imminent health hazard" - and this has been done only once.

This procedure needs to be replaced. Califano said, with law giving the FDA clear authority to withdraw drugs from the market when problems develop, and possibly to specify that certain drugs be distributed only at selected sites, such as hospitals and drug treatment centers.

One proposal before Congress has recommended replacing the "imminent health hazard" standard, allowint the FDA instead to halt drug sales when "necessary to reduce or eliminate a significant risk of illness, injury, or lack of effective treatment."

Public access to test data used to prove safety and effectiveness of new drugs.

Accelaration of the drug approval process, which Califano said sometimes drags on unnecessarily at the expense of patients who might benefit from the new drugs.

Elimination of what Califano called "unnecessary repetition of research," which he said drug companies are now forced into even when marketing products essentially the same as already tested drugs.