Important Regulatory Developments: FDA's Reportable Food Registry and Other Reporting Obligations

Important Regulatory Developments: FDA's Reportable Food Registry and Other Reporting Obligations

Reportable Food Registry John F. Lemker Partner Chicago, IL +1.312.807.4413 john.lemker@klgates.com

Establishment Registration All domestic food facilities are required to register even if food from the facility does not enter interstate commerce. Foreign facilities exporting to the United States are also required to register Registration applies to all facilities which process, handle and store foods and animal feed products regulated by FDA 2

Establishment Registration (continued) Exempted from registration are farms, restaurants, other retail food establishments, nonprofit food establishments in which food is prepared for or served directly to the consumer, certain fishing vessels, and facilities which are regulated exclusively by the U.S. Dept. of Agriculture. 3

Reportable Food Registry Section 417 RESPONSIBLE PARTY. The term responsible party, with respect to an article of food, means a person that submits the registration under section 415(a) for a food facility that is required to register under section 415(a), at which such article of food is manufactured, processed, packed, or held. REPORTABLE FOOD. The term reportable food means an article of food (other than infant formula) for which there is a reasonable probability that the use of, or exposure to, such article of food will cause serious adverse health consequences or death to humans or animals. 4

Reportable Food Registry Section 417 (continued) IN GENERAL. Except as provided in paragraph (2), as soon as practicable, but in no case later than 24 hours after a responsible party determines that an article of food is a reportable food, the responsible party shall (A) submit a report to the Food and Drug Administration through the electronic portal established under subsection (b) that includes the data elements described in subsection (e) (except the elements described in paragraphs (8), (9), and (10) of such subsection); and (B) investigate the cause of the adulteration if the adulteration of the article of food may have originated with the responsible party. 5

Reportable Food Registry Section 417 (continued) NO REPORT REQUIRED. A responsible party is not required to submit a report under paragraph (1) if (A) the adulteration originated with the responsible party; (B) the responsible party detected the adulteration prior to any transfer to another person of such article of food; and (C) the responsible party (i) corrected such adulteration; or (ii) destroyed or caused the destruction of such article of food Prohibited Acts Failure to submit a report or provide notification required by section 417(d) Submitting a false report or notification 6

Initial Report Content The registration numbers of the responsible party under section 415(a)(3) of the FD&C Act; The date on which the article of food was determined to be a reportable food; A description of the article of food including the quantity or amount; The extent and nature of the adulteration; The results of any investigation of the cause of the adulteration if it may have originated with the responsible party, when known; The disposition of the article of food, when known; and The information found in labeling. 7

FDA Response Place on Reportable Food Registry, if appropriate. Issue an alert or notification After consultation with the responsible party, FDA may require the responsible party to perform, as soon as practicable, but in no case later than the time specified by FDA, one or more of the following actions: Amend the report they submitted to FDA to include the contact information for the immediate previous source and/or immediate subsequent recipient of the article of food directly linked in the supply chain and notified by the responsible party; 8

FDA Response (continued) Provide notification to the immediate previous source and/or immediate subsequent recipient of the article of food that includes the following data elements: the date on which the article of food was determined to be a reportable food a description of the article of food including the quantity or amount; the extent and nature of the adulteration the results of any investigation of the cause of the adulteration if it may have originated with the responsible party, if known; the disposition of the article of food, when known; the product information typically found on packaging including product codes, use-by dates, and the names of manufacturers, packers, or distributors sufficient to identify the article of food; 9

FDA Response (continued) contact information for the responsible party; the contact information for parties directly linked in the supply chain and notified by the responsible party; the unique report number issued through the Reportable Food electronic portal to the person submitting the report; the actions that the recipient of the notification shall perform (i.e., submit a report to FDA, investigate the cause of the adulteration, and/or provide a notification to the recipient s immediate previous source and/or immediate subsequent recipient), as may be specified by FDA; and any other information FDA may require 10

Receipt of Notice FDA may require a responsible party that is the immediate previous source or immediate subsequent recipient of an article of food, after receiving a notification, to perform, as soon as practicable, but in no case later than a time specified by FDA, any of the following: Submit a report to FDA through the Reportable Food electronic portal Investigate the cause of the adulteration if the adulteration of the article of food may have originated with the responsible party Provide a notification to the immediate previous source or to the immediate subsequent recipient that includes specified data elements 11

Government Coordination/Cooperation FDA will share information and coordinate with USDA FDA will share information and coordinate efforts with state and local public health officials Federal, state or local public health official may submit a report through the portal 12

Record Maintenance - Inspection Responsible party must maintain records related to each report received, notification made, and report submitted to FDA for two years. FDA is permitted access under Section 414. 13

Issues Manufacturer may be excluded from initial decision making Customer testing Precipitous reporting 24 Hour Report Period When does clock start? What information triggers a reporting obligation? FDA example I received a positive microbiological test result indicating the presence of a pathogen in food. Based on this test result, the food would be reportable. However, I retested the food for the pathogen and the second test result did not indicate the presence of the pathogen. Should I still consider the food to be reportable? Yes. There are a number of explanations why a food may test positive for a pathogen in one test and negative in one or more additional tests although the food continues to be contaminated. For example, the distribution of a pathogen in the food may not be homogeneous. Therefore, absent other circumstances clearly demonstrating the inaccuracy of the first test result, the first test result upon which the reportable food determination was made should be considered valid. 14

Recall Product liability Limitations on use of report Collateral Consequences (i) SAFETY REPORT. A report or notification under subsection (d) shall be considered to be a safety report under section 756 and may be accompanied by a statement, which shall be part of any report released for public disclosure, that denies that the report or the notification constitutes an admission that the product involved caused or contributed to a death, serious injury, or serious illness. (j) ADMISSION. A report or notification under this section shall not be considered an admission that the article of food involved is adulterated or caused or contributed to a death, serious injury, or serious illness. Public access to Reportable Food Registry available under Freedom of Information Act 15

Maintenance and Inspection of Records Section 414, Maintenance and Inspection of Records of Paragraph 414(a) provides, in part: (a) Records Inspection If the Secretary has a reasonable belief that an article of food is adulterated and presents a threat of serious adverse health consequences or death to humans or animals, each person (excluding farms and restaurants) who manufactures, processes, packs, distributes, receives, holds, or imports such article shall, at the request of an officer or employee duly designated by the Secretary, permit such officer or employee, upon presentation of appropriate credentials and a written notice to such person,..., 16

Maintenance and Inspection of Records (continued) Paragraph 414(a) (continued) to have access and to copy all records relating to such article that are needed to assist the Secretary in determining whether the food is adulterated and presents a threat of serious adverse health consequences or death to humans or animals. The requirement under the preceding sentence applies to all records relating to the manufacture, processing, packing, distribution, receipt, holding, or importation of such article maintained by or on behalf of such person in any format (including paper and electronic formats) and at any location. 17

Maintenance and Inspection of Records (continued) Under Paragraph 414(b) FDA issued regulations which required persons who manufacture, process, pack, transport, distribute, receive, hold or import food to establish and maintain records which permit the identification of the immediate previous sources and the immediate subsequent recipients of food, including packaging. This permits product tracking. FDA s inspection authority is amended to permit access to records and information required under section 414. The refusal to permit access is a violation of the FFDCA. Inspection warrant enforced against Westco Fruit and Nuts, Inc. April 2009. 18

Imports Import Debarment 2003-2007 food imports increased from $45.6 billion to $64 billion 13% of average American diet 31% of fruits, juices and nuts 78.6% of fish and shellfish 19

Import Debarment (continued) Debarment for repeated or serious food import violations from importing or offering to import food into United States A person is subject to debarment if The person has been convicted of a felony for conduct relating to the importation into the United States of any food; or the person has engaged in a pattern of importing or offering for import adulterated food that presents a threat of serious adverse health consequences or death to humans or animals 20

Prohibited Act Import Debarment (continued) The importing or offering to import into the United States food by, with the assistance of or at the direction of a person debarred 21

Recommendations SOP Training / Awareness Experts Supplier / Manufacturer Agreement 22

FSIS FOOD Food REGULATION Safety Notification Requirements And Implications Robert G. Hibbert Partner Washington, DC +1.202.778.9315 robert.hibbert@klgates.com

2008 Farm Bill Amendments New notification requirement for adulterated or misbranded meat or poultry Prepare and maintain recall plan Document each reassessment of process control plan Make available upon request 24

Notification Requirement Any inspected establishment Believe or have reason to believe Adulterated or misbranded product Received by or originating from has entered commerce Promptly notify Secretary as to type, amount, origin and destination 25

Plans and Reassessment Effectively mandates recall plan Reassessment and relationship with HACCP and SSOP Records access issues Limited practical impact Contingent upon rulemaking 26

Notification Inspected establishments only All adulterated or misbranded products Need not be the source Requirement of specificity Contingent upon rulemaking 27

What is Adulterated? Focus upon microbiological contamination, especially in raw product Proviso language: Any harmful or deleterious substance which may be imjurious but if Non-added substance Quantity of substance does not ordinarily render injurious General exemption for raw products E.coli exception 28

What is Adulteration? Beef Evolution of Scope ground beef, trim, injected products Distinction from primals and subprimals Recent recalls Combination of relatively high incidence ( hot day ) and reported illnesses Does recall equal adulteration? 29

What is Adulteration? Poultry Salmonella in raw product not normally injurious Frozen entrée category specialized history Modification in labeling and controls Potential for zero tolerance Implications for other products 30

What is Misbranding? Traditional role of prior approval Growth and future of generic approval Claims controversies FDA regulated ingredients Competitive implications 31

Food Safety Working Group (Salmonella) New standards by end of 09 Reduce prevalence in turkey and chicken Verification program goal 90% compliance by end of 10 32

Food Safety Working Group (E.Coli) Immediate improved instructions Verify success in reducing presence of e.coli Immediate increase in sampling 33

Ambiguity vs. Certainty Adulteration model -- binary and straightforward Pathogen reduction model return to performance standards? HACCP model process vs. results and continuous improvement Potentially conflicting roles of Inspectors, Food Safety Reviewers and Policymakers 34

Conclusion Notification requirement a legal mandate Will be resolved through rulemaking Must be integrated with other on-going activities Impossible to segregate process and policy issues Requires active participation by interested parties 35

Reportable Food Registry: Enforcement Threat Steven M. Kowal Partner Chicago, IL +1.312.807.4430 steven.kowal@klgates.com

Prohibited Acts The Prohibited Acts section has been amended to include: (mm) The failure to submit a report or provide a notification required under section 417(d) (nn) The falsification of a report or notification required under section 4.17(d) Section 417(d) states in pertinent part: 1) in no case later than 24 hours after a responsible party determines that an article of food is a reportable food, the responsible party shall a) Submit a report to the Food and Drug Administration 6) After consultation with the responsible party that submitted a report under Paragraph (1) the Secretary may require such a responsible party to : b) Provide a notification i. To the immediate previous source : ii. To the immediate subsequent recipient 37

Misdemeanor Criminal Enforcement Both misdemeanor and felony provisions Commission of any prohibited act in Section 301 can result in criminal liability Misdemeanor violation does not require personal knowledge or participation Responsible relation to a violation is enough Strict liability crime 38

Felony Criminal Enforcement Prohibited act becomes a felony in two ways Second strict liability violation Commission of prohibited act with intent to defraud or mislead Intent will be inferred from circumstances 39

Penalties Incarceration Criminal Enforcement Misdemeanors one year per count Regulatory felonies three years per count General criminal statues five years to twenty years per count Government seeks to prosecute individuals for deterrent effect United States v. Abtox, Inc. et al. Ross Caputo, President ten years of incarceration James Reilly, CFO six years of incarceration 40

Criminal Enforcement Penalties Fines Misdemeanors Individual - $100,000 per count Company - $200,000 per count Felony Individual - $250,000 per count Company - $500,000 per count Alternative calculation Twice gain or loss caused by the illegal conduct 41

Subpoenas Investigation Section 414(a) Records Inspection provides: If the Secretary has a reasonable belief that an article of food is adulterated and presents a threat of serious adverse health consequences or death to humans or animals, each person who manufactures, processes, packs, distributes, receives, holds, or imports such article shall permit access to all records relating to the manufacture, processing, packing, distribution, receipt, holding or importation of such article. 21 C.F.R. 1.361 provides such records must be made available not to exceed 24 hours from the time of receipt of the official request,. 42

Administrative Warrants Investigation Compliance can be enforced through an administrative warrant Issued by a judge or magistrate No requirement to demonstrate probable cause A warrant is issued based on a general administrative plan for enforcement derived from neutral sources 43

Government Investigations Defense Response Ambush interviews Interviews are pursued aggressively Can occur anywhere and at any time Uncertainty concerning legal rights and obligations Confer substantial psychological advantages on the government Unable to contact a lawyer No opportunity to review information Agents treat uncooperative response as evidence of guilt Atmosphere of intimidation Interview is voluntary 44

Government Investigations Defense Response Ambush interviews Ability to choose includes the power to refuse Participation cannot be compelled A subpoena cannot be used to secure an interview Little incentive to consent No reason to sign or affirm statements There is no such thing as off the record The statements will be used against the individual and the company Former employees are not insulated from contact or prosecution 45

Government Investigations Defense Response Search Warrants/Administrative Warrants Warrant requires approval of a judicial officer Executed by a team of government agents who take control of the facility Warrants are used to: Avoid destruction of evidence Shock and intimidate Identify and interview employees 46

Government Investigations Defense Response Search Warrants/Administrative Warrants In responding to the execution of a warrant: Do not impede the agents Designate a senior executive to deal with the agents Ask to review a copy of the warrant Answer only questions that relate to the location of documents If the search exceeds the scope of the warrant, complain to the agent in charge Protest the seizure of privileged materials 47

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