Food Safety Modernization Act will increase product recall exposure
Food borne illness hits an estimated 48 million people every year in America. One hundred thousand people will be hospitalized and thousands die annually. In response, Congress passed new legislation earlier this year that will have a profound impact on risk management of the food industry.
Under this legislation, the Food Safety Modernization Act (FSMA), the FDA is authorized to mandate a recall of unsafe food if the food company fails to do it voluntarily. The law also provides a more flexible standard for administrative retention (the procedure FDA uses to keep suspect food from being moved); allows FDA to suspend the registration of a food facility associated with unsafe food, thereby preventing it from distributing food; and directs the agency to improve its ability to rack both domestic and imported foods.
More specifically, the FSMA will require reports of likely serious adverse events to a central portal that will be transparently posted on the internet. While this may increase awareness and response times for adverse event, this will also become a red flag for plaintiffs and their lawyers. It will also increase adverse publicity. This increases the likelihood of needing quick product recalls at greater expense than in the past. Most food companies do not purchase insurance for product recall but it may become more popular given the changes to this system under FSMA Section 211.
Leafy green-related outbreak prevention will be regulated more heavily by FSMA Section 105, particularly for local and mid-sized producers. FDA will roll out regulations that will impact this growing part of the market and there is fear that these regulations may be unaffordable for smaller suppliers. A restaurant chain that buys from smaller suppliers will also be expected to be certain that its suppliers are certified.
Broader enforcement powers and record review powers under FSMA will also increase expenses for food companies. These changes impact food manufacturers, food wholesalers, food retailers and even larger restaurants. The rules also apply to foreign suppliers and processing facilities.
In short, the game has changed for the food industry and a comprehensive review of risk management programs is in order.
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