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Speaker Firms and Organization: Keller and Heckman LLP Leslie T. Krasny Partner Hogan Lovells US LLP Maile Gradison Hermida Associate Thank you for logging into today’s event. Please note we are in standby mode. All Microphones will be muted until the event starts. We will be back with speaker instructions @ 11:55am. Any Questions? Please email: [email protected] Group Registration Policy Please note ALL participants must be registered or they will not be able to access the event. If you have more than one person from your company attending, you must fill out the group registration form. We reserve the right to disconnect any unauthorized users from this event and to deny violators admission to future events. To obtain a group registration please send a note to [email protected] or call 646.202.9344. Presented By: May 16, 2014 1 Partner Firms:

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

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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. To view the webcast go to this link: http://youtu.be/jrxi67UjiHw To learn more about the webcast please visit our website: http://theknowledgegroup.org/

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Page 1: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

Speaker Firms and Organization:

Keller and Heckman LLPLeslie T. Krasny

Partner

Hogan Lovells US LLPMaile Gradison Hermida

AssociateThank you for logging into today’s event. Please note we are in standby mode. All Microphones will be muted until the event starts. We will be back with speaker instructions @ 11:55am. Any Questions? Please email: [email protected]

Group Registration Policy

Please note ALL participants must be registered or they will not be able to access the event. If you have more than one person from your company attending, you must fill out the group registration form. We reserve the right to disconnect any unauthorized users from this event and to deny violators admission to future events.

To obtain a group registration please send a note to [email protected] or call 646.202.9344.

Presented By:

May 16, 2014

1

Partner Firms:

Page 2: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

May 16, 2014

2

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Page 3: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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Page 4: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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Page 6: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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.

Page 7: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

7

► 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

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.

Page 8: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

8

Page 9: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

Featured Speakers:

May 16, 2014

9

Leslie T. KrasnyPartnerKeller and Heckman LLP

Segment 1:Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 10: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

10

Leslie T. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 11: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

11

Leslie T. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 12: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

12

Leslie T. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 13: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

13

Leslie T. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 14: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

14

Leslie T. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 15: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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 distributiono Harvesting/manufacturing/packing/packaging materialo Intended or reasonably foreseeable use o Other relevant factors

May 16, 2014

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Leslie T. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 16: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 17: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

17

Leslie T. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 18: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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 materialso Product formulationo Processing methodso Distribution systemso Intended use

May 16, 2014

18

Leslie T. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 19: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

19

Leslie T. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 20: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 21: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

Proposed FSVP Rule

Qualified Individual Must develop FSVP Must perform or oversee most verification activities

o Reviewing compliance statuso Conducting hazard analysiso Performing foreign supplier verification activitieso Reviewing complaints, conducting investigations, taking corrective actionso 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. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 22: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 23: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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. KrasnyPartnerKeller and Heckman LLP

Segment 1:

Page 24: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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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Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 25: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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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Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 26: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

26

Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 27: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

27

Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 28: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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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Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 29: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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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Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

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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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Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

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Certification Process

• Auditor/Certification body issues certification based on satisfactory regulatory audit• Certifications would last 12 months

May 16, 2014

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Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

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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

32

Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

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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

33

Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 34: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

34

Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

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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

35

Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 36: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

36

Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 37: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

37

Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 38: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

38

Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 39: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

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

39

Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

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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

40

Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

Page 41: Emerging Issues: FDA Food Safety Foreign Suppliers & US Importers Rules Impact and Guidance in 2014 LIVE Webcast

May 16, 2014

41

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42

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► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type your

question in the box that appears and click send.

► Questions will be answered in the order they are received.

Q&A:

May 16, 2014

44

Leslie T. KrasnyPartnerKeller and Heckman LLP

Segment 1:Maile Gradison HermidaAssociateHogan Lovells US LLP

Segment 2:

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May 16, 2014

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