Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

Speaker Firms and Organization:
Keller and Heckman LLP
Leslie T. Krasny
Partner
Hogan Lovells US LLP
Maile Gradison Hermida
Associate
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Partner Firms:
May 16, 2014
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Keller and Heckman counsels clients—from multinational corporations to start-up
companies—on compliance with food and drug laws and regulations throughout
the world. The products we help get to market include foods, pharmaceuticals,
medical devices, dietary supplements, tobacco products, and cosmetics. Our
attorneys advise clients on labeling and advertising issues, crisis management,
compliance with U.S. bioterrorism laws and other laws and regulations affecting
the global marketing of food and drug products, and product development and
approval strategies. Keller and Heckman clients benefit from the in-depth
expertise and extensive experience of our attorneys, many of whom have
scientific and technical backgrounds. Our attorneys have worked for private
industry; state, federal and international agencies; and consulting firms. And, with
a staff of over twenty scientists, we are a leader in the use of interdisciplinary
approaches to problem-solving.
Players in the food and agriculture sectors address regulatory
challenges at every stage of the production cycle, from farm to table.
Food production, processing, labeling, distribution, and advertising
present issues in which business and regulation intersect. Hogan
Lovells helps clients anticipate, shape, and comply with regulations
from numerous agencies at the national, state, and local levels. We
also assess and implement strategies that ensure compliance while
advancing business objectives. Our practice team includes lawyers
with high-level experience in government and who have served in
senior executive positions within the food industry, including as
general counsel to food companies and trade associations. Our
experience also extends into science and technology with several of
our lawyers having academic degrees and professional backgrounds
in these areas.

Brief Speaker Bios:
Leslie T. Krasny
Leslie Krasny, Partner at Keller and Heckman in San Francisco, practices regulatory law, focusing on food/dietary supplements with
respect to safety, labelling, advertising and substantiation. She represents food companies including growers, processors, distributors,
foodservice and retailers, and serves as General Counsel to the Produce Marketing Association. Leslie is a member of the Board of
Directors of the Food and Drug Law Institute, serves on its Food and Dietary Supplements Committee, and is on the Editorial Advisory
Board of Food Processing Magazine.
Prior to receiving her law degree, Leslie obtained a Masters in Cell and Molecular Biology and worked in pharmacology research at
the University of California, San Francisco and at Stanford University, School of Medicine. Her scientific background is valuable in
working with clients and with Keller and Heckman's scientific staff on legal matters involving technical complexity.
May 16, 2014
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► For more information about the speakers, you can visit:
http://theknowledgegroup.org/event_name/emerging-issues-fda-food-safety-foreign-suppliers-us-importers-rules-impact-and-guidance-in-
2014-live-webcast/
Maile Gradison Hermida practices with Hogan Lovells in the area of food and agriculture law. She represents food companies,
including manufacturers, distributors, retailers, and their trade associations. Her clients are regulated by the Food and Drug
Administration, Department of Agriculture, Federal Trade Commission, and other health and safety regulatory agencies at both the
federal and state levels.
Maile advises clients on the development of label claims, website and promotional campaigns for products, as well as the various
requirements applicable to the labeling of foods. She also provides assistance to trade associations and food companies
with fashioning comments and developing strategies in response to agency rulemaking and other public policy issues. Her practice is
increasingly focused on counseling companies and trade associations as to the implementation of the FDA Food Safety
Modernization Act. Maile also assists clients with responses to Federal Trade Commission, Congressional, and state Attorney General
investigations and counsels clients on the development, interpretation, and enforcement of laws and regulations governing
food production, processing, and distribution.

On July 26, 2013, the Food and Drug Administration (FDA) issued two proposed rules in accordance with
Sections 301 and 307 of the FDA Food Safety Modernization Act (FSMA): (1) governing foreign supplier
verification and (2) governing third-party audits and certification.
The proposed rules represent a significant change in FDA’s approach and attempt to enhance FDA
oversight of all imported human and animal food. Moreover, these rules require most importers to develop
and implement a Foreign Supplier Verification Program (FSVP) for all food that they import. Lastly, imports
that fail to comply with a FSVP may be subject to refusal of admission.
When finalized, the proposed rules will present a significant set of new compliance obligations for all food
and beverage importers. Food companies and importers should have a complete understanding of FDA’s
current thinking as reflected in this proposed rule to assess its potential impact on their businesses.
The Knowledge Group has assembled a panel of key thought leaders and practitioners to help you
understand the complex issues related to the proposed rule and its impact on your firm and the broader
market. The speakers will present their expert opinions in a two-hour LIVE Webcast.
May 16, 2014
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Featured Speakers:
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Leslie T. Krasny
Partner
Segment 1:
Associate
Segment 2:

Food Safety Modernization Act
 Importers – required to establish foreign supplier verification program (FSVP)
 Same level of public health protection as required under Hazard Analysis and Risk-Based
Preventive Controls (HARPC) or Produce Safety Standards
 Not adulterated or misbranded (allergen labeling)
 Such other requirements as FDA deems necessary to show that imported food is as safe as food
produced in U.S.
 Importer definition
 U.S. owner/consignee of food at time of entry, or
 if none, U.S. agent/representative of foreign owner/ consignee
 FDA must consider differences among importers and types of imported food, including level of risk
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Food Safety Modernization Act
 Records must be maintained for at least 2 years, and be made available to FDA upon request
 Exemptions -- seafood, juice, low-acid canned food facilities in compliance with HACCP; R&D;
personal consumption
 Prohibited act to import food if importer does not have FSVP in compliance with FSMA
 FSMA -- verification activities may include:
 Monitoring records for shipments
 Lot-by-lot certification of compliance
 Annual on-site inspections
 Checking HARPC plan of foreign supplier
 Periodically testing and sampling shipments
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Proposed FSVP Rule
Who/what is covered?
 Importer – same definition as statute
 Foreign supplier – the establishment that manufactures or processes the food, raises the animals, or
harvests the food that is exported to the U.S. without further manufacturing or processing by another
establishment, except further activities of a de minimis nature, such as labeling
 Food – “(1) articles used for food or drink for man or other animals, (2) chewing gum, and (3) articles
used for components of any such article.” Section 201(f) of the FD&C Act. Pesticides are
excluded. Definition includes food and feed ingredients and additives (including substances that
migrate into food from packaging and other articles that contact food).
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Proposed FSVP Rule
 Exemptions
 Seafood/juice facilities in compliance with HACCP
 Low-acid canned foods (micro hazards only)
 Alcohol beverages (facilities w/ Dept. of Treasury approval)
 R&D; personal consumption
 Transshipment or import for further processing and export
 Modified requirements
 Very small importers and imported food from very small foreign suppliers (annual food sales
<$500,000 )
 Importers of food from countries with officially recognized or equivalent food safety systems
 Importers of dietary supplements/components subject to current good manufacturing practices
(CGMPs)
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Proposed FSVP Rule
FSVP activities
 Review and document compliance status (foods and foreign suppliers):
 FDA Warning Letters
 Import alerts
 Requirement for certification under FSMA
 FDA Form 483
 Establishment Inspection Reports
 Recall notices
 Documents relating to injunctions and seizures
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Proposed FSVP Rule
FSVP activities
 Hazard analysis – reasonably likely to occur (RLTO)
 Potential hazards – biological/chemical/physical/ radiological agent that is reasonably likely to
cause illness or injury in absence of controls
 Reasonably likely to occur – prudent importer would establish/verify controls: experience/illness
data/scientific reports/other info provides basis to conclude reasonable possibility the hazard will
occur in absence of controls
 Hazard evaluation factors:
o Ingredients
o Foreign supplier’s establishment/equipment (condition/layout, etc.)
o Transportation practices/storage and distribution
o Harvesting/manufacturing/packing/packaging material
o Intended or reasonably foreseeable use
o Other relevant factors
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Proposed FSVP Rule
FSVP activities
 Verification and related activities
 List of foreign suppliers
 Hazards controlled by foreign supplier
o Option 1: For high-risk hazards (reasonable probability of causing serious adverse health
consequences or death to humans or animals (SAHCODHA)), importer must conduct onsite
auditing. For non-SAHCODHA risks, importers must choose at least one verification activity.
For hazards associated with raw agricultural commodities (RACs) subject to produce safety
rule, onsite auditing is required.
o Option 2: For all hazards, importers must choose at least one verification activity.
 Hazards controlled by importer – document use of procedures that control the hazard
 Hazards controlled by importer’s customer – obtain written assurance that specified procedures
control the hazard
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Proposed FSVP Rule
FSVP activities
 Complaints, investigations and corrective actions
 Review complaints
 Investigate possible adulteration or misbranding
 Take corrective actions if foods do not meet applicable U.S. food safety requirements
 Revise if FSVP is inadequate
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Proposed FSVP Rule
FSVP activities
 Reassessment of FSVP
 Reassess, at a minimum, within 3 years of establishing FSVP or last assessment
 Reassess effectiveness if importer becomes aware of new information re potential hazards, such
as:
o Changes in raw materials or sources of raw materials
o Product formulation
o Processing methods
o Distribution systems
o Intended use
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Proposed FSVP Rule
FSVP activities
 Identification of importer at entry
 If no U.S. owner/consignee, the foreign owner/consignee must designate a U.S. agent or
representative
 Importers must obtain a Dun & Bradstreet Data Universal Numbering System (DUNS®) number
 Importer name and DUNS number must be provided electronically when filing for entry with
Customs and Border Protection
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Proposed FSVP Rule
FSVP activities
 Records
 Sign and date records re FSVP -- initial completion and any revisions
 In English
 Must be made available promptly to FDA on request
 Maintain at importer’s place of business or reasonably accessible location (including electronic
retrieval)
 Retain for at least 2 years or, for records in use for a period of time (e.g., hazard analyses), until
at least 2 years after the use is discontinued
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Proposed FSVP Rule
 Qualified Individual
 Must develop FSVP
 Must perform or oversee most verification activities
o Reviewing compliance status
o Conducting hazard analysis
o Performing foreign supplier verification activities
o Reviewing complaints, conducting investigations, taking corrective actions
o Reassessing FSVP and revising as appropriate
 Must have the necessary education, training and experience to perform the required activities
 Need not be an employee; may be a 3rd party auditor or an employee of a foreign government
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Comments to FDA on Proposed Rule
 Key industry concerns
 Final regulation should be flexible re verification (Option 2)
 Existing industry verification activities, best practices, and standards (e.g., the Global Food
Safety Initiative) should be recognized by FDA, as appropriate.
 FDA should clarify how it will determine whether a country’s food safety system provides the
“same level” of public health protection as FDA
 Importers should not be required to maintain traceability records beyond “one step back” in the
supply chain
 Authorization to import should not be withdrawn for a technical infraction unrelated to food safety
 Importers should not be required to maintain a list of foreign suppliers.
 FDA should not be given remote access to records
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Comments to FDA on Proposed Rule
 Key consumer interest concerns
 FDA should require importers to verify “legal status” of a foreign supplier in its own country,
including warning letters, regulatory violations, or other legal actions by that government for
violating foreign food safety laws.
 FDA should require importers to conduct their own verification activities for imported food
substances that are marketed based on foreign supplier’s self-determined GRAS position.
 For some high-risk hazards, product and environmental testing should be required in addition to
onsite audits.
 FDA should provide additional guidance re “hazard” and should interpret the term broadly to
ensure that importers address all potential food safety risks presented by the imported food.
May 16, 2014
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Leslie T. Krasny
Partner
Segment 1:

Overview
• FDA’s proposal would create a private auditing system for leveraging FDA inspection of foreign
facilities under the Mandatory Import Certification (MIC) program or importers using the Voluntary
Qualified Importer Program (VQIP)
• FDA would recognize accreditation bodies
• Accreditation bodies would accredit auditors/certification bodies
• Auditors/certification bodies would audit and certify foreign facilities or foreign foods at least once a
year
May 16, 2014
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Associate
Segment 2:

Key Areas of Interest for Food Manufacturers
Program comes with following “bells and whistles”:
• Auditors would be required to report to FDA immediately any conditions identified during a food safety
audit that present a “serious risk to public health” (broadly defined)
• Regulatory audit reports would need to be sent to FDA routinely within 45 days of audit completion
• Laboratory results taken during an accredited audit may be required to be automatically sent to FDA
by accredited laboratories
• Third-party audits must be unannounced
Therefore, when these “bells and whistles” apply is very important.
May 16, 2014
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Associate
Segment 2:

When Third-Party Certification Would be Required
• Third-Party Certification would be required for:
– MIC as determined by FDA
• Foreign country’s regulatory system must be found to be “inadequate”
• FDA has suggested such a determination will be infrequent
– VQIP
– (Narrow scope – specified in FSMA)
• Same or similar requirements could affect:
– FSVP/Domestic Supplier Verification
– Consultative audits
– (Potentially very broad scope)
May 16, 2014
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Associate
Segment 2:

Key Terms
• Accreditation Body:
– The authority recognized by FDA to accredit/audit certification bodies.
– Government or private organization
• Auditor/certification body:
– The body accredited to inspect foreign eligible entities.
– Means the same as “third-party auditors” in FSMA
– Used interchangeably in this presentation
• Eligible Entity:
– Foreign facility that elects to be audited
– Facility has the same meaning as under Bioterrorism Act
May 16, 2014
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Associate
Segment 2:

Key Terms
• Food Safety Audit:
– Regulatory Audit
• Audit to determine whether eligible entity complies with FDA regulations
• Used to determine whether food can be certified for import to U.S.
– Consultative Audit
• Audit to evaluate compliance with FDA requirements and industry standards
• For internal purposes only – but would still trigger proposed reporting requirements of
serious health risks and potentially of all sample testing results
May 16, 2014
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Associate
Segment 2:

Accreditation Body: Proposed Requirements
• Must be recognized by FDA
• Authority to accredit certification bodies
• Conduct annual assessment of accredited bodies
• Must maintain records for 5 years
• FDA recognition would last 5 years
• FDA could revoke recognition for cause
May 16, 2014
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Associate
Segment 2:

Auditor/Certification Body: Accreditation
• Accredited by recognized accreditation body
• Accreditation would last 4 years
• FDA would retain authority to directly withdraw accreditation for cause
May 16, 2014
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Associate
Segment 2:

Certification Process
• Auditor/Certification body issues certification based on satisfactory regulatory audit
• Certifications would last 12 months
May 16, 2014
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Associate
Segment 2:

Food Safety Audits
• In general
– Records review and on-site inspection components
• Inspection of facility, processes, and food products
– On-site inspection conducted unannounced within a 30-day window identified by eligible entity
– Records review can be pre-scheduled
– Sampling
• Environmental or product sampling as appropriate
• Must use accredited lab for analyzing samples
• FSMA requires accredited labs to report sample results to FDA in specified circumstances
– Audits must be documented in audit reports
May 16, 2014
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Associate
Segment 2:

Food Safety Audits
• Regulatory Audits
– To determine compliance with FDA regulations for purposes of certification
– Copies of reports sent to certifier’s accreditation body
– Audit report must be sent to FDA within 45 days
– Serious findings (Class I or II) reported to FDA “immediately”
– Certain lab tests to accredited labs and send to FDA
– Audits unannounced
May 16, 2014
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Associate
Segment 2:

Food Safety Audits (Recap)
• Reporting Obligations for Certification Body
– Regulatory Audits (MIC and VQIP):
• Auditor must submit written audit report to FDA within 45 days
• Auditor would be required to immediately report Class I or Class II recall risk-level conditions
to FDA
• All lab results would be reported to FDA by the accredited lab
– Consultative audit reports would not be automatically filed with FDA, but:
• Auditor would be required to immediately report Class I or Class II recall risk-level conditions
to FDA
• All lab results may be reported to FDA by the accredited lab
• FDA would have access to consultative audit reports under its emergency records access
authority under the Bioterrorism Act
May 16, 2014
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Associate
Segment 2:

False Statements to Auditors
• False statements to auditors could be prosecuted criminally
– Not addressed in proposed rule, but FSMA section 303(b) provides that any false statement by a
foreign entity under the scope of an audit by a accredited third-party auditor could be prosecuted
criminally as if it were a false statement to FDA
– Based on the proposed rule, this liability would seemingly apply to regulatory and consultative
audits
May 16, 2014
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Associate
Segment 2:

Potential Impact on Related Programs: FSVP
• FSVP
– FDA solicited comment on whether to require adherence to third-party audit rules whenever an
accredited auditor is chosen to conduct the on-site FSVP audit
– FDA has suggested it might make use of accredited auditors mandatory for FSVP third party
audit purposes
– Would significantly expand scope of accredited audits
– Could make third-party certification a “surrogate” FDA inspection program
NOTE: FDA has since stated that these “bells and whistles” will not be applicable to FSVP
audits
May 16, 2014
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Associate
Segment 2:

Potential Impact on Related Programs: Consultative Audits
• Consultative Audits
– The proposed rule would subject consultative audits to significant reporting requirements
• Class I and II recall risk level conditions
• Potentially all laboratory testing results
– Consultative audits are often undertaken to help a company improve its operations
– Could stifle use of consultative audits or FDA-approved auditors
– Could result in split between accredited and non-accredited auditors
Note: Significant issue for public comment to the FDA
May 16, 2014
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Associate
Segment 2:

Scope of FDA Reporting Requirement
• Statute says auditors must immediately report to the FDA any “serious risk to public health”
• FDA says this is broader than “Class I” and also includes “Class II” –level risks
• Counter argument is:
– “serious risk” = Class I
– “risk to public health” = RFR standard, which exempts products still under the control of the
manufacturer because consumers are not at risk – i.e., no public health concern
Therefore, industry argued for Class I/RFR standard
May 16, 2014
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Associate
Segment 2:

Key Issues in Public Comments
• FDA reporting requirements (“bells and whistles”) should only apply to statutory programs – MIC and
VQIP – and not apply to voluntary use of third parties under FSVP
• Immediate reporting under “serious risk to public health” should only apply to “Class I-level risks” as
incorporated into RFR paradigm – i.e., no reporting if still under manufacturer control
• Reporting to FDA should not apply to consultative audits, as not required by FSMA and would
discourage use of FDA-approved auditors for those purposes
May 16, 2014
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Associate
Segment 2:

Conclusions
• FDA does need added control over imported food
• The third-party accreditation rule should not have a direct impact on most food manufacturers (outside
of those participating in VQIP)—if FDA sticks to the statute
• The proposed rule suggested that FDA considered expanding beyond the statute for FSVP, but they
seem to have backtracked during the comment period
• Comments from the food industry reinforced this point
May 16, 2014
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Associate
Segment 2:

May 16, 2014
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Q&A:
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Leslie T. Krasny
Partner
Segment 1:
Associate
Segment 2:

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