MCC interviews Smitha G. Stansbury, a partner in the FDA and Life Sciences practice group of King & Spalding, resident in the firm’s Washington, D.C. office. Ms. Stansbury focuses her practice in the areas of FDA-regulated food safety and food labeling. This interview was first published in the Metropolitan Corporate Counsel, April 2015 issue.
MCC: What issues are top of mind for your clients in the food and beverage industry?
Stansbury: My clients include global food and beverage manufacturers, distributors, food industry trade associations, and retailers such as grocery stores. In 2015, food safety continues to be a hot topic as the U.S. Food and Drug Administration (FDA) works to implement the FDA Food Safety Modernization Act (FSMA). This groundbreaking piece of legislation was enacted in 2011, and is intended to help FDA better prevent, detect, and respond to food safety incidents. The legislation was passed, in part, due to concerns over some highly publicized foodborne illness outbreaks and associated product recalls.
Under a court order, FDA is expected to issue a number of final rules over the next 12 months that implement certain key FSMA provisions. Specifically, in the next few months, FDA is expected to issue final rules related to hazard analysis and preventive controls for human and animal food, produce safety, foreign-supplier verification programs, and the accreditation of third-party auditors. In 2016, FDA is expected to issue additional rules related to intentional adulteration and the sanitary transportation of food.
These rules will have a significant impact on the way entities in the food supply chain conduct their businesses. For example, registered food facilities will be required to have written food safety and food defense plans, maintain additional food safety-related records, and verify that their suppliers are producing food in compliance with FDA requirements. Similarly, certain farms will be required to follow new minimum standards for the safe production and harvesting of produce. There will be a far greater focus on the steps taken by companies to evaluate product hazards and to prevent them from occurring.
It should also be noted that FSMA provides FDA with additional enforcement authorities, such as mandatory recall authority and the authority to suspend a food facility’s registration. The suspension of registration is significant since it means that food from that facility may not be introduced into interstate or intrastate commerce, and may not be imported or exported. FSMA also enhances FDA’s existing administrative detention authority, gives FDA access to a broader range of food records, and tasks FDA with increasing its inspections of both domestic and foreign-registered food facilities. FDA has requested significant additional funding from Congress for 2016 to help with the implementation of FSMA.
Over the next couple of years, due to increased product monitoring, testing and recordkeeping under FSMA, I would not be surprised to potentially see a temporary increase in product recalls as companies are better able to identify and uncover product issues. In the long run, however, FDA, Congress, the food industry, and the general public are hopeful that FSMA will help greatly reduce the number and severity of foodborne illnesses and associated product recalls as companies institute better preventive controls throughout the food supply chain.
MCC: Under what circumstances might a recall be considered?
Stansbury: With respect to FDA-regulated products in the U.S., recalls are generally considered when a company becomes aware that a product it has manufactured or distributed is “adulterated” or “misbranded,” and is in violation of the Federal Food, Drug, and Cosmetic Act (FFDCA). For example, recalls often occur when a company becomes aware that a food contains an undeclared allergen, such as peanuts, or when a food is contaminated with a harmful bacteria (such as salmonella, E. coli, or listeria) or virus (such as norovirus in shellfish). Food and beverage recalls are also conducted for a variety of other reasons, such as chemical contamination, the presence of foreign objects, such as metal or glass, defective packaging, and/or misbranded labeling.
FDA classifies product recalls into three different classes, Class I, II and III, depending upon the severity of the potential health hazard. Class I recalls involve situations where there is a reasonable probability that use of, or exposure to, a violative product will cause serious adverse health consequences or death (such as when salmonella is found in a ready-to-eat food). Class II recalls involve situations where use of, or exposure to, a violative product may cause temporary or medically reversible adverse health consequences, or where the probability of serious adverse health consequences is remote (such as the presence of certain foreign objects in food). Finally, Class III recalls involve violative products that are not likely to cause adverse health consequences (such as low levels of pesticide residue in food or certain product labeling violations).
MCC: What is the typical corporate communication chain for uncovering product issues? At what point do you get involved in product recalls?
Stansbury: Potential product issues can be identified by companies through both internal and external sources. A company, for example, may uncover an issue on its own through regular product quality monitoring or testing. A potential product issue could also be brought to a company’s attention by regulatory agencies, such as state or local health departments, FDA, the United States Department of Agriculture (USDA), and/or the Centers for Disease Control and Prevention (CDC). These agencies all have a role in identifying, investigating and responding to foodborne illness outbreaks and other food safety-related issues. Companies can also learn of product problems from their ingredient suppliers or from their customers. Responsible companies will work quickly to investigate the potential problem, identify the source of any issue, bracket the extent of the problem, take corrective action to ensure that the problem does not reoccur, and if needed, initiate a product recall in a quick and effective manner.
Different companies use their outside counsel in different ways with respect to product recalls, depending upon the size of the company and the degree to which they already have an experienced internal team in place. In many instances, I am involved long before an incident occurs by helping companies develop or update a written recall plan so that they can act quickly if and when they have to execute a product recall. In other situations, I am brought in after a potential product issue has been identified to assist the company and its recall team in evaluating whether a product is violative and/or a “reportable food” for purposes of submitting a report to FDA’s Reportable Food Registry (RFR); provide insight on FDA’s legal requirements and expectations for product recalls; review any draft communication documents; and/or coordinate interactions with FDA.
MCC: Discuss some best practices for being prepared to execute a recall.
Stansbury: It is very important that food and beverage companies plan and prepare for product recalls and have adequate insurance in place, since even the most responsible of companies may find themselves having to conduct a recall at some point. Companies should, for example, become familiar with FDA’s existing regulations and guidance documents related to product recalls, and should have a written recall plan and a recall team in place well in advance of a product problem. The recall team should be a cross-functional team with representatives from, among other things, manufacturing, quality assurance, logistics and distribution, public relations, scientific experts, legal and accounting. Companies should also test their recall plans by conducting mock recalls to identify any potential stumbling blocks in their ability to recall violative goods. Resolving any issues in advance makes all the difference when a company is called upon to quickly and effectively execute a product recall.
In addition to being prepared to execute a recall, it is important that all food and beverage companies take steps to prevent incidents from occurring in the first place by securing the manufacturing and distribution process. Manufacturers should, for example, conduct a hazard analysis and establish preventive controls, monitor and verify that those preventive controls are working, and take corrective actions as needed. Companies should also verify that their domestic and foreign suppliers are delivering high-quality and safe products, establish a food defense plan to protect against intentional adulteration, and take steps to ensure that food is being transported in a sanitary manner. FDA’s soon-to-be-released final rules under FSMA are expected to make many of these activities mandatory – including the development and maintenance of a written recall plan.
MCC: Would you say that this is a shared goal among regulators and companies? What are the stakes for the industry?
Stansbury: The food industry and regulators share a common goal of ensuring the safety of the American food supply. No one wants consumers to get sick from the food they consume. Although the requirements of FSMA may appear to be onerous, they are expected to be beneficial not only for the public by helping to prevent foodborne illnesses, but also for the food industry as a whole. When a product recall occurs, particularly in the context of a foodborne illness outbreak, it can have significant financial implications for the entity that produced the contaminated product given the costs associated with a product recall, lost sales and any resulting products liability lawsuits.
In addition, non-offending producers of food products that fall within the same product category of a recalled food could also be impacted. For example, according to a 2012 U.S. Government Accountability Office (GAO) report, the 2006 outbreak of E. coli linked to fresh spinach from California caused an estimated $100 million loss to the spinach industry as a whole. Similarly, following the 2008-2009 outbreak of salmonella associated with peanuts, general demand for peanut products reportedly declined for several months. The food industry benefits when its members are required to establish and follow robust food safety protocols.
MCC: Let’s delve into specifics. What are the elements of a good recall plan?
Stansbury: Recall plans can and will vary depending upon the company, but they should always reflect FDA’s regulations and guidance related to product recalls, which can be found in 21 C.F.R. §§ 7.40-7.59, and FDA’s “Guidance for Industry: Product Recalls, Including Removals and Corrections.”
A good recall plan will have a means of tracking all of the company’s action steps as they occur, such as when a potential product problem was identified, how the initial risk was evaluated, when production was stopped, and how wholesalers were notified. A good recall plan will also have, among other things, a master list of all relevant names and contact information for the members of the recall team, any outside advisors and key regulatory contacts; a list for evaluating whether an issue presents a health problem; a plan for how the company will quickly obtain the necessary records and secure the product; a plan for obtaining the list of basic information that would be provided to FDA (such as identity of the product, distribution information, reason for recall, health hazard evaluation and recall strategy); and drafts of any communication documents such as press releases. FDA’s proposed rule on preventive controls for human food would require registered food facilities to establish and maintain a written recall plan.
MCC: What about recordkeeping practices?
Stansbury: Robust recordkeeping practices and sufficient product coding/lot numbers can help companies quickly identify the source and scope of a product problem and better track, trace and recall particular products in the event of a product emergency. Detailed manufacturing, processing and testing records can help show, for example, that a tainted ingredient was only used in specific lots of product that were manufactured on a specific date at one production facility. This type of information can help limit the scope and cost of a product recall.
MCC: These are emotional issues for consumers. When disaster strikes and a company has to recall a product, what are some effective strategies for managing the reputational consequences?
Stansbury: Consumers rightfully expect the foods and beverages they consume to be safe and lawful. Even the most diligent of companies, however, may find themselves needing to conduct a product recall. From a reputational standpoint, companies will be able to better regain consumer trust if they quickly and correctly identify the source of a product problem, take appropriate corrective actions to help prevent the issue from occurring again in the future, work cooperatively with FDA and/or other regulatory agencies to conduct an effective product recall, and have adequate infrastructure and staffing in place to respond to what may be a large number of consumer inquiries related to the product recall. A company that does not appear to have a good handle on the problem, is at odds with the relevant agency, or is otherwise unresponsive or disorganized will not be viewed favorably by the public.
MCC: What’s the difference between a company-initiated recall and one initiated by the FDA?
Stansbury: Most recalls are company-initiated voluntary recalls. These are situations where a company identifies a product problem, or hears of a product problem by FDA or others, and decides on its own initiative to conduct a recall of the violative product. It is important to note that a “recall” is defined in 21 C.F.R. § 7.3(g) to mean a firm’s removal or correction of a marketed product that the FDA considers to be in violation of the laws it administers and against which the agency would initiate legal action. A product recall does not include a market withdrawal or a stock recovery.
In addition to firm-initiated voluntary recalls, FDA can also specifically request that a company conduct a voluntary recall. Specifically, under 21 C.F.R. § 7.45, FDA may request a firm to initiate a voluntary recall if the distributed product presents a risk of illness or injury or gross consumer deception, the firm has not initiated a recall of the product, and an agency action is necessary to protect the public health and welfare. In such situations, FDA will generally notify the firm; identify the specific violation, the health hazard classification of the violative product, and the recall strategy; and provide other appropriate instructions for conducting the recall.
Finally, FSMA provided FDA with mandatory recall authority. Under 21 U.S.C. § 350l, if a company does not voluntarily recall a product, FDA may order a product recall when there is a reasonable probability that an article of food is adulterated, or misbranded with respect to allergen labeling, and the use of or exposure to the article will cause serious adverse health consequences or death. There is nothing in this new authority that limits the agency’s ability to request a voluntary recall or to issue an order to cease distribution or to recall under any other provision of the FFDCA. FDA’s mandatory recall authority is expected to be used in relatively narrow circumstances given that the vast majority of companies will voluntarily recall a product when requested by FDA.
MCC: In closing, please expand on the nature of the relationship between regulators and the food and beverage industry.
Stansbury: FSMA places significant new responsibilities on both FDA and the food industry to better ensure the safety of the United States food supply. The various controls and activities required by FSMA are expected to benefit not just the public health, but also the food industry as a whole, since all companies will be held to a higher food safety standard. There is hope that the stricter controls may result in fewer food safety incidents, greater consumer confidence, and fewer instances where non-offending producers are impacted by recalls that occur within their own product category. Under FSMA, industry is expected to work in partnership with FDA towards a common goal of providing safe food products to the American public.