How FSMA Changes The Status Quo For Food Businesses
1. How The FSMA Changes The Status Quo for Food Businesses Kenneth Odza Stoel Rives LLP http://www.foodliabilitylaw.com/ March 22, 2011
2. What You Need to Know FSMA/RFR – How does it affect you? What can you do to minimize regulatory obligations? Products Liability Exposure How to Reduce Risk Recall Strategies Action Steps
3. 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
4. FSMA 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)
16. 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
17. Amendments to RFR (FSMA § 211) 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 to enable a consumer to accurately identify whether such consumer is in possession of the reportable food
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19. Facilities that are “responsible” and those that knew or had reason to know are in jeopardy
27. maintain records of monitoring, instances of nonconformance, and corrective actions taken
28. verify that the plan is working and test programsReduced to writing and made available to FDA during inspections Effective within 18 months
29. Routine Environmental/Product Test Results Submitted To FDA (FSMA § 202) FDA Accredited Labs W/30 Months Testing by FDA Accredited Labs Mandated Results Sent Directly To FDA
30. Traceability (FSMA § 204) 270 days to establish traceability pilot program(s) Not required: a full pedigree, or a record of the complete previous distribution history of the food from the point of origin of such food records of recipients of a food beyond the immediate subsequent recipient of such food product tracking to the case level by persons subject to such requirements
38. The Road Ahead for FDA 10 rulemakings No fewer than 10 guidance documents 13 reports (some on a recurring basis) Numerous other resource-intensive implementation activities
40. Recalls Happen Our manufacturing process is cautiously and carefully monitored at all times to ensure a safe, clean, bacteria-controlled environment - from the selection of the finest source products, throughout production to testing of the finished product. We take quality and safety very seriously. Topps has steadily and attentively developed standards and procedures to make certain we manufacture a safe product. We are fully compliant with all USDA Good Manufacturing Practices, and we have fully adopted and closely follow a HACCP (Hazard Analysis and Critical Control Point) program. Topps Meat Company consistently employs technologically advanced equipment and our own safety innovations to create great tasting, quality products.
41. Recall Alone Can Be a Death Sentence After Extensive Beef Recall, Topps Goes Out of Business In a statement, Anthony D’Urso, the chief operating officer at Topps, in Elizabeth, N.J., said that the company “cannot overcome the reality of a recall this large.” He added, “This has been a shocking and sobering experience for everyone.” Executives at Topps, which made frozen hamburgers and other meat products for supermarkets and mass merchandisers, declined to discuss how and why the company collapsed so quickly, or whether they could have taken steps earlier to protect consumers or to head off the plant’s closure. 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
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43. Kills 20-30 percent of those hospitalized – more than any other food-borne pathogen
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45. More severe illness: infants, elderly people, and people with impaired immune systems
49. Farm Processor and Manufacturer Restaurant or Store Strict Liability – Who’s Liable Anyone “engaged in the business of selling or otherwise distributing” the defective food product. - Restatement Third, Torts: Product Liability § 7
50. Records Strategy Food Safety Plan Rehearse Recalls/RFR Events FDA Inspection Plan Review Manufacturing Strategies Revise Supplier Agreements Insurance Audit What You Should Do Now to Reduce Risk
51. Record Keeping Know What Records Will You Have To Produce Strategize To Protect Trade Secrets Strategize To Protect Records Of Unaffected Products Use FOIA Where Possible To Protect Records
52. Food Safety Plan May Not Want To Wait Until Regulations HACCP May Not Be Sufficient Though It’s a Start Look Specifically At Environmental Risks Such As: Allergens Listeria Be As Specific As Possible With Suppliers Anticipate That We Be Living Without FDA Regulations
59. FDA Inspection Plan Who Will Be Involved? Documents to Be Released and Signed: If documents are going to be released, have a standard “FOIA Letter” Test Results Photographs Interviews (who and review of legal counsel) Plan Protected by Privilege?
60. Manufacturing Practices How Can You Limit Recalls? Look at: “Carry-Over” Practices Cleaning SOPS Testing SOPs
61. Supplier Agreements Be Specific: Food Safety Plan Test Results Recalls Imports Records Access Audits Insurance Indemnity
62. Indemnification Language Totally Unambiguous Recognizes Strict Liability Concepts Indemnifies Regardless of Negligence Clear what “Recall” Costs Are Covered Not limited by Insurance Limits/Availability Insurance is limited, Indemnification Should Not Be But, Understand Your Suppliers Limits
63. Careful Review of Supplier/Vendor Agreement Seller agrees to defend, indemnify and hold harmless Buyer … for the recovery of damages… arising out of or alleged to have arisen out of (a) the delivery, sale, resale, labeling, use or consumption of any Product…
64. Careful Review of Supplier/Vendor Agreement (cont’d) Seller’s insurance described herein shall be primary and not contributory with Buyer’s insurance. Buyer shall be named as an additional insured… waivers of subrogation
65. Insurance Audit Right types of coverage Products Recall Sufficient limits Problematic Exclusions Legal counsel & trusted broker who understands the industry & your business
66. Pollution Exclusion All-risk policy $8M Claim (No Consumer Injuries) No coverage for Listeria b/c language in pollution exclusion
67. Found In A $50M Umbrella Policy For Produce Co. ORGANIC PATHOGENS EXCLUSION 1. Any actual, alleged or threatened exposure to, existence of, presence of, ingestion of, inhalation of or contact with any “biological agents” whether or not occurring alone.
68. Action Steps Supplier Agreements (indemnification, insurance, compliance with FSMA) Insurance Audit FDA Inspection Plan Food Safety Plan Plan for Import Compliance Recall Plan and Rehearsal