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Food Safety Modernization ActFood Safety Modernization Act --What You Need To KnowWhat You Need To Know
Kenneth OdzaStoel Rives LLP
August 2011
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What You Need To KnowWhat You Need To Know
• FSMA changes the status quo
• Responding to FDA investigations
• Responding in a recall or threatened recall
• Further take-aways on preventing & mitigating liability
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Food Safety Modernization Act (H.R. 2751)Food Safety Modernization Act (H.R. 2751)
• Most expansive changes since 1938 Act
• Sweeping new enforcement authorities
• Exacting new food import requirements
• Major new program activities for FDA
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FSMA Provisions Effective NowFSMA Provisions Effective Now
• Stronger Records Access Authority (FSMA § 101)
• Mandatory Recall Authority (FSMA § 206)
• Increased Frequency of Inspections (FSMA § 201)
• Whistleblower Protection (FSMA § 402)
• Foreign Facilities and Refusal of Inspection (FSMA§ 306)
• Changes to Administrative Detention Standard(FSMA § 207)
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• When “reasonable probability” of“serious adverse healthconsequences”
• Includes records of other foodaffected in similar manner – NEW
• Proper credentials and writtennotice
Stronger Records Access Authority (FSMAStronger Records Access Authority (FSMA §§ 101)101)
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• Recall ordered if “reasonable probability” (1) food is adulteratedor misbranded and (2) serious adverse health consequences
• Opportunity for voluntary recall
• Hearing within two days of the order’s issuance
Mandatory Recall Authority (FSMAMandatory Recall Authority (FSMA §§ 206)206)
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• Immediate increasedfrequency of inspections
• Risk-based
Increased Frequency of Inspections (FSMAIncreased Frequency of Inspections (FSMA §§ 201)201)
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• Protects employees who
– Provide information re violation ofFDC Act
– Testify, assist or participate in aproceeding re violation
– Object to “activity, policy, practice orassigned task” they “reasonablybelieve to be a violation”
WhistleblowerWhistleblower ProtectionProtection (FSMA(FSMA §§ 402)402)
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• Foreign establishment must allow entry to U.S. inspector w/i 24hours of requesting entry
• Or, imported food will be refused admission
Foreign Facilities and RefusaForeign Facilities and Refusall of Inspectionof Inspection (FSMA(FSMA §§ 306)306)
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Broader Authority ToBroader Authority ToAdministratively Detain FoodsAdministratively Detain Foods
(FSMA(FSMA §§ 207)207)
• Effective w/in 180 days
• Lowers Standard For FDA To Detain Foods:– FDA only needs “A reason to believe” food is “adulterated or
misbranded.”
– Class I recall situation not required
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Selected FSMA ProvisionsSelected FSMA ProvisionsEffective SoonEffective Soon
• Amendments To The RFR (FSMA § 211)
• Suspension of Registration (FSMA § 102)
• Preventative Controls (FSMA § 103)
• FDA Lab Accreditation (FSMA § 202)
• Traceability (FSMA § 204)
• Major Changes To Regulation of Imports (FSMA § §301,302)
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Reportable Food Registry (RFR)Reportable Food Registry (RFR)
• “Reportable Food”- “Reasonable probability” of “serious adverse
health consequences to humans or animals”
• “Responsible Party”- FDA-registered facility where product is
“manufactured, processed, packed, or held”
• “Requirement”- Report to FDA portal within 24 hours
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• New “critical information” required
• Within 18 months, FDA will require“consumer-oriented information” including
– Description
– Product ID codes
– Contact information
– Anything else FDA deems necessary toenable a consumer to accurately identifywhether such consumer is in possessionof the reportable food
Amendments to RFR (FSMAAmendments to RFR (FSMA §§ 211)211)
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• If FDA determines “reasonableprobability” of food causing “seriousadverse health consequences,” it MAYsuspend registration
• Facilities that are “responsible” andthose that knew or had reason to knoware in jeopardy
• Informal hearing within two days
• FDA to consider corrective plans within14 days
• Effective in 18 months
Suspension of RegistrationSuspension of Registration
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• Hazard analysis and implementpreventative controls re:
– sanitation
– training
– environmental controls
– allergen controls
– a recall contingency plan
– GMPs
– supplier verification activities
Preventative Controls (FSMAPreventative Controls (FSMA §§ 103)103)
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Preventative Controls (cont’d)Preventative Controls (cont’d)
• Facilities are required to:– monitor the controls
– establish corrective actions
– maintain records of monitoring, instances of nonconformance, andcorrective actions taken
– verify that the plan is working and test programs
• Reduced to writing and made available to FDA duringinspections
• Effective within 18 months
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“Exemption” or “Tester Amendment”“Exemption” or “Tester Amendment”
• “Qualified Facility” Exempt From PreventativeControls
• “Qualified Facility” Defined As:1. “Very Small Business” As To Be Defined By Regs; or
2. “Limited Annual Monetary Value of Sales”
– Sales Direct To Consumers > Others; And
– All Sales < $500,000
– During Preceding 3 Year Period
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But What Is The “Exemption” Worth?But What Is The “Exemption” Worth?
• Qualified Facility Must Submit to FDA:1. “Documentation that either:
a. demonstrates” you have “identified potentialhazards associated with the food being produced”and “implementing” and “monitoring” preventativecontrols; or
b. “as specified” by FDA that shows compliancewith “State, local, county, or other applicable non-Federal food safety law; AND
2. “Documentation, as specified by FDA in a guidancedocument “that the facility is a qualified facility.”
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Routine Environmental/Product TestRoutine Environmental/Product TestResults Submitted To FDA (FSMAResults Submitted To FDA (FSMA §§ 202)202)
• FDA AccreditedLabs W/30 Months
• Testing by FDAAccredited LabsMandated
• Results SentDirectly To FDA
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• 270 days to establish traceabilitypilot program(s)
• Not required:– a full pedigree, or a record of the
complete previous distribution historyof the food from the point of origin ofsuch food
– records of recipients of a food beyondthe immediate subsequent recipient ofsuch food
– product tracking to the case level bypersons subject to such requirements
Traceability (FSMATraceability (FSMA §§ 204)204)
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• Importers required to perform “risk-based foreign supplier verificationactivities”
• FDA required to determine content ofprogram within 1 year
• Importer: U.S. owner or consignee offood at the time of entry into U.S. orU.S. agent or representative of foreignowner or consignee
Foreign Supplier Verification ProgramForeign Supplier Verification Program (FSMA(FSMA §§ 301)301)
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• Within 18 months, FDA shall“provide for the expedited reviewand importation of food” forimporters who participatevoluntarily
• Will require third-party certification
• Importer: “the person that bringsfood, or causes food to bebrought, from a foreign countryinto the customs territory of theUnited States”
Voluntary Qualified Importer Program (FSMAVoluntary Qualified Importer Program (FSMA §§ 302)302)
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• FDA may require third-partycertification as a condition of import
• FDA can create system ofaccreditation for auditors
• Program may be funded through feesimposed on auditors
Import CertificationsImport Certifications (FSMA(FSMA §§ 302)302)
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The Road Ahead for FDAThe Road Ahead for FDA
• 10 rulemakings
• No fewer than 10 guidancedocuments
• 13 reports (some on a recurringbasis)
• Numerous other resource-intensiveimplementation activities
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Appropriate Strategy &Appropriate Strategy &RelationshipRelationship with FDAwith FDA
• Cooperative but firm
• Understandcommunication is 1-way
• Understand & assertrights
• Role-play during recallrehearsal
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How To Respond To An FDAHow To Respond To An FDAInvestigationInvestigation
• Understand why FDA is there
• Exit interviews
• Responding to form 483 observations
• Responding to a warning letter
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What are Form 483 ObservationsWhat are Form 483 Observationsand Warning Letters?and Warning Letters?
• Form 483 observations:
– prepared at the Investigator level
• Warning Letter:
– significant review by relatively high levels of authority
• Understand that FDA does not believe you arecomplying with the law
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What Do During Exit InterviewWhat Do During Exit Interview
• Make certain everything is clear.
• Seek to correct any errors in the findings.
• Note observations, comments, and commitments inthe escort inspection notes.
• Do not argue or appear defiant
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How to Respond to 483How to Respond to 483Observations and Warning LettersObservations and Warning Letters
•Observation/violation correct? - Persuade FDA that youhave:
• capacity to comply
• knowledge base to make the commitment successful
• have commitments in place that regardless of cost, develop andmaintain compliant systems
•Observation/violation not correct? - Persuade FDA ofits error & protect company from agency or privatelitigation
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When toWhen to Involve Legal CounselInvolve Legal Counsel??
• Before inspection/investigation
• Earliest possible juncture
• Good lawyer should notnecessarily escalate situation
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FDA Inspection PlanFDA Inspection Plan
• Who will be involved?
• Documents to be releasedand signed: If documents aregoing to be released, have astandard “FOIA Letter”
• Test results
• Photographs
• Interviews (who and reviewof legal counsel)
• Plan protected by privilege?
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Products Liability Exposure &Products Liability Exposure &RecallsRecalls
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Recalls HappenRecalls Happen
Our manufacturing process is cautiously and carefully monitored at alltimes to ensure a safe, clean, bacteria-controlled environment - fromthe selection of the finest source products, throughout production totesting of the finished product. We take quality and safety veryseriously.
Topps has steadily and attentively developed standards andprocedures to make certain we manufacture a safe product. We arefully compliant with all USDA Good Manufacturing Practices, and wehave fully adopted and closely follow a HACCP (Hazard Analysis andCritical Control Point) program.
Topps Meat Company consistently employs technologically advancedequipment and our own safety innovations to create great tasting,quality products.
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Recall Alone Can Be a DeathRecall Alone Can Be a DeathSentenceSentence
Workers leaving the Topps Meat plant in Elizabeth, N.J., on Friday.The company, which opened in 1940, went out of business shortly
after it issued a recall that expanded to 21.7 million pounds of ground beef.
Source: http://www.nytimes.com/2007/10/06/us/06topps.html?_r=2
In a statement, Anthony D’Urso, the chief operatingofficer at Topps, in Elizabeth, N.J., said that thecompany “cannot overcome the reality of a recall thislarge.”He added, “This has been a shocking and soberingexperience for everyone.”Executives at Topps, which made frozen hamburgersand other meat products for supermarkets and massmerchandisers, declined to discuss how and why thecompany collapsed so quickly, or whether they couldhave taken steps earlier to protect consumers or tohead off the plant’s closure.
After Extensive Beef Recall, Topps Goes Out of Business
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• Follow recall plan
• Log events, actions, and communications
• Record all reported injuries
• Document investigation
• Institute litigation “hold”
• Cooperate and communicate withgovernment officials
Potential Recall Event: What to DoPotential Recall Event: What to Do
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• Pregnant women, newborns,and adults with weakenedimmune systems
• Kills 20-30 percent of thosehospitalized – more than anyother food-borne pathogen
• Expected FSMA impact :increased enviro testing
ListeriaListeria MonocytogenesMonocytogenes
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SalmonellaSalmonella
• Diarrhea, fever, andabdominal cramps
• More severe illness: infants,elderly people, and peoplewith impaired immunesystems
• Increasing diversity ofproducts
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• Lots of publicity
• Can result in kidney failure anddeath
• Expect increased focus byFDA (and USDA) on non-O157 STECs
• Changes “60 day rule”?
E. coliE. coli
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Product wasProduct wasdefectivedefective
Defect causedDefect causedinjuryinjury
Focus is on theFocus is on the productproduct, not fault or lack of care, not fault or lack of care
Strict LiabilityStrict Liability
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Anyone “engaged in the business of selling orAnyone “engaged in the business of selling orotherwise distributing” the defective food product.otherwise distributing” the defective food product.
- Restatement Third, Torts: Product Liability § 7
FarmProcessor andManufacturer
Restaurant orStore
StrictStrict LiabilityLiability –– Who’s LiableWho’s Liable
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• Separate Ownership of Farm/Retail/Wholesale
• Supplier Agreements –
• FSMA compliance - be specific
• Access to records and audits
• Indemnification – unambiguous
• Insurance – product, CGL, recall, AI, audit
More on How to ReduceMore on How to Reduce RiskRisk
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… for the recovery of damages…arising out of or alleged to havearisen out of (a) the delivery, sale,resale, labeling, use or consumptionof any Product…
Seller agrees to defend, indemnifyand hold harmless Buyer
Careful Review of Supplier/Vendor AgreementCareful Review of Supplier/Vendor Agreement
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Seller’s insurancedescribed herein shallbe primary and notcontributory withBuyer’s insurance.
Buyer shall be namedas an additionalinsured…
waivers of subrogation
Careful Review of Supplier/Vendor Agreement (cont’d)Careful Review of Supplier/Vendor Agreement (cont’d)
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InsuranceInsurance
• Sufficient coverage– Products
– Recall
• Sufficient limits
• Involve legal counsel and trusted broker whounderstands the industry and your business
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ORGANIC PATHOGENS EXCLUSION
1. Any actual, alleged or threatenedexposure to, existence of, presence of,ingestion of, inhalation of or contact withany “biological agents” whether or notoccurring alone.
Example of What to Look Out for in Liability InsuranceExample of What to Look Out for in Liability InsuranceCoverageCoverage
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Should You Buy Recall Insurance?Should You Buy Recall Insurance?
• Class II or III recalls
• Administrative detention
• Mistaken recalls
• Recall b/c of competitor's product
• Warranty of fitness exclusion
• Third party coverage
• Lost profits/revenue
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ActionAction StepsSteps
• Review and Amend– Supplier Agreements (indemnification, insurance,
compliance with FSMA)
– Insurance Coverage (re-examine recall coverage)
• Prepare for Import Compliance
• Work With State/Local Officials on “Friendly” FoodSafety Compliance
• Recall Plan and Rehearsal
• FDA Inspection Plan
• Comment on Rulemaking
