Tuesday 20 February 2018

Review of Proposed Rule for Foreign Supplier Verification Program Review; Part 1 The Aim and Purpose Animating the Rule

The US Food and Drug Administration announced the long awaited Foreign Supplier Verification Rule (FSVP) under the Food Safety Modernization Act (FSMA) on Friday (see our initial post here). At only 175 pages the rule is a light read compared to its siblings the proposed rule on preventative controls and GMP revisions and the proposed rule on produce safety. The Food Court team reviewed the proposed FSVP rule over the weekend and will write a series of posts over the next week or two outlining how the law proposes to regulate imports and what those changes mean for industry. As a member of industry reading this please consider the value of commenting on the new rule. A recent DC Circuit case held a failure to comment is a failure to later challenge the law.

Understanding the aim and intent of the rule-makers sheds important insight into how the law will operate. Mountains of words will be spent exploring exemptions, standards, criteria and records under the rule, but the spirit of the law is as important as the literal letter of it. The US FDA, along with Congress when passing FSMA, made clear the intent of the statute was to take a proactive, preventative, stance to food safety. Less obvious in the legislation was an intent to push responsibility for monitoring and maintaining safety solely from the shoulders of the FDA to industry itself. The proposed FSVP makes abundantly clear importers carry primary responsibility, and therefore primary liability, for the food (and dietary supplements)** imported into US commerce. This rule, along with all the rules under FSMA, is not as much about maintaining compliance with the FDA but avoiding litigation.

The purpose of the rule is to fill the gaps missed by the FDA. The reason for the shift from sole responsibility to shared responsibility is an admission by the Agency the task of ensuring imports are safe is too big for it. The rule clearly details why the FDA seeks to share responsibility with imports. It begins by explaining there are “more foreign firms registered with the FDA than domestic firms.” The numbers are currently 250,000 registered foreign firms to 167,000 domestic firms, which doesn’t account for the foreign firms not required to register because the food undergoes further manufacturing/processing  overseas. Even with the mandate in FSMA to double foreign inspections each year the Agency estimates it could only inspect 19,200 firms by 2016 meaning a foreign facility would only be inspected once every ten (10) years. This startling admission underscores why the proposed FSVP rule pushes for on-site audits annually for serious hazards, reassessments no later than every 3 years, and ongoing evaluation and verification activities. It also explains why no party named in the rule is fully exempt – there is a verification activity of some type for everyone.

The aim of the rule is also to ensure the same standards applied to domestic firms applies equally to foreign firms. Under the preventative controls and produce safety rule domestic firms will be subject to sweeping changes. The changes may not necessarily apply to foreign firms. The FSVP attempts to address this disparity while carefully expressing the rule is not intended to extent the preventative controls or produce safety rule beyond its stated terms. The FSVP rule repeatedly uses the phrase “same safety standard” when comparing foreign and domestic firms. Understanding this aim, it becomes clear why the FSVP rule adopted a HACCP style approach to assessing and monitoring hazards. HACCP is widely followed around the world making it a universal bridge for foreign firms to import food (and dietary supplements) into the US under the FSVP rule. HACCP is not followed by all firms, but smaller firms will now need to consider HACCP or its equivalent.

The essence of the rule requires importers to step-in for the FDA by developing and faithfully conducting foreign supplier verification activities.  It gives the Agency the authority to refuse imports for broader purposes – no longer simply because imported food may be adulterated, but also because verification activities were not completed. In creating this new mechanism the FSVP rule develops new liability hooks for importers. The rule also may ultimately replace the practice of buying at the best price with an increasing demand for comity and cooperation between supplier and importer.

Stay tuned for more details on how the rule proposes to regulate imports.

**The US FDA regulates dietary supplements as food products. Thus, dietary supplements are subject to FSMA and in this case the propsed FSVP rule. In fact the rule provides new requirements for the importation of dietary supplements, which will be explored in the posts to come.

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