Confusion, Costs Still Issues For FDA Food Import Program

Law360, New York (June 11, 2015, 11:45 AM ET) -- The Voluntary Qualified Importer Program ("VQIP") has been one of the more mysterious components of the Food Safety Modernization Act. The law instructs the US Food and Drug Administration to establish a program for the expedited review and importation of food from importers who achieve and maintain a high level of control over the safety and security of their supply chains.

Yet, in the four-plus years since the FSMA was enacted, there has been very little indication from the FDA about the agency’s interpretation of this mandate or how it intends to implement the program. Moreover, not since the FDA hosted a public meeting back on March 29, 2011, has industry had a meaningful opportunity to provide the FDA with feedback. As of June 4, 2015, however, the VQIP has been, to some extent, demystified with the FDA’s recent release of a new draft guidance document.

This draft guidance, issued as a Q&A, provides significant insight on how the FDA intends to implement the VQIP. It outlines the criteria for which importers are eligible to participate, and includes specific information on the benefits of importer participation in the VQIP and instructions for what an interested importer will need to provide the agency in order to participate.

The guidance also describes the conditions that may result in revocation of an importer’s participation in the VQIP. As a whole, this guidance provides the basic framework of the program. The guidance also illustrates the stringent requirements that potential participants will need to meet. Indeed, some may question whether the FDA is imposing requirements that will put participation out of reach for all but the biggest food companies. In addition, the guidance still leaves a number of information holes that the FDA will need to fill, particularly with regard to its review and enforcement of the program. This article reviews the framework of the program as described by the FDA and highlights areas of concern or where further guidance from FDA is needed.

VQIP Framework

Who Can Participate?

The FDA states that only food importers can participate in the VQIP, which includes the manufacturer, owner, consignee or importer of record of the food. Right off the bat, this scope presents an opportunity for confusion because this definition of food importer is different to the importer for purposes of the Foreign Supplier Verification Program (FSVP) and the juice or seafood hazard analysis and critical control point (HACCP) regulations.

The FSVP, one of the cornerstones of the FSMA, requires importers to conduct verification activities for all of their foreign suppliers to ensure that the food being imported has been produced under the same safety and quality standards as food produced in the US Under the FSVP proposed rule and HACCP regulations, “importer” is the owner or consignee at the time of entry into the US or the US agent or representative of the foreign owner or consignee at the time of entry into the US. The importer must be located in the US. Thus, the definitional scope of importer for FSVP purposes is different to that proposed for the VQIP. The FDA’s intent with the VQIP definition was to permit participation by importers not in the US, which, while a benefit for foreign importers, will likely create some confusion regarding the roles and responsibilities under each program.

For those who do meet the VQIP definition of importer, participation in the program itself will be dependent on meeting stringent eligibility criteria, as follows:

1. Have at least a three-year history of importing food into the US.

Implied in this criterion is the fact that participation in the VQIP does not obligate an importer to import all of its food under the VQIP. Instead, an importer can choose what food is desirable to meet the extra requirements of the VQIP, on top of existing FSVP verification activities.

The import history that the FDA will consider is based on all foods imported, not just those foods subject to the VQIP. If there is an import history of more than three years, the FDA can consider the entire history. This should not mean that an import or safety violation occurring in the past will be held against an importer; instead, the FDA will be looking to see how that particular violation was remedied but also the violation in the context of an importer’s entire history. For potential VQIP importers, now would be the time to conduct a historical compliance review to ensure that any potential flags are addressed.

2. Have a Data Universal Numbering System (DUNS) number.

A DUNS number is available for free upon request to Dun & Bradstreet Inc.

3. Use paperless filers/brokers who received a passing rating during their last FDA filer evaluation.

This criterion precludes the use of filers/brokers who have not been evaluated by the FDA, or who cannot document that they received a passing rating in their evaluation. This criterion also may overbroadly exclude filers/brokers who should be permitted to participate. The FDA states that its filer evaluation process currently does not distinguish between serious mistakes or omissions and typographical errors. Consequently, a filer/broker may undeservedly not have a passing rating.

4. Must not have any imported food, including food not subject to VQIP, subject to an import alert or Class 1 recall.

5. Must not be subject to an ongoing FDA administrative or judicial action (e.g., import alert, injunction or debarment) or have a history of significant noncompliance activity relating to food safety (e.g., an “official action indicated” (OAI) inspection classification, with no documentation of appropriate corrective actions or one or more voluntary Class 1 recalls relating to food safety).

Notably, not only is the importer subject to this criterion, but also “nonapplicant entities,” which are those entities associated with a VQIP food that conduct activities throughout the supply chain necessary for ensuring that the eligibility requirements of the VQIP are met, such as the foreign supplier or filer/broker.

6. Importers who are also subject to the importer requirements under the FSVP or the juice or seafood HACCP regulations must be in compliance with these regulations. Alternatively, importers must identify the FSVP or HACCP importer for the food and ensure compliance with the applicable regulations.

Because the definition of importer for VQIP purposes is different than the definition for the FSVP, a food being imported under the VQIP may have two “importers” — the VQIP importer and FSVP/juice or seafood HACCP importer.

7. Must have a current facility certification for each foreign supplier of food you intend to import under the VQIP. This certification would be issued following a regulatory audit conducted by a third-party auditor/certification body accredited under the FDA’s third-party accreditation regulations, which have yet to be finalized.

On July 29, 2013, the FDA published for public comment its proposed rule to establish a program for accreditation of third-party auditors, also known as certification bodies, to conduct food safety audits and issue certifications of foreign facilities and the foods they produce. The goal of the third-party accreditation program is to have a group of accredited and recognized auditors who can certify foreign facilities as to their compliance with US law, which will alleviate the FDA’s burden and facilitate the FDA’s review of VQIP applications. Pursuant to a court-ordered deadline, the final rule on third-party accreditation should be published by Oct. 31, 2015.

8. Must develop and implement a VQIP quality assurance program ("QAP") and submit documentation of the QAP with the VQIP application.

The QAP is a new substantive requirement being implemented by the FDA for VQIP purposes. The FDA states that the QAP should be a compilation of the written policies and procedures used to ensure adequate control over the safety and security of imported foods. It should include the following substantive information:

• the corporate quality policy statement;
• the organization structure and functional responsibilities; and
• food safety policies and procedures.

These policies and procedures go beyond ensuring compliance with the FSVP or HAACP regulations, and require written procedures for maintaining current foreign supplier certifications (see number seven, above) and any food certifications that may be required, written procedures for communicating with the FDA and others in the supply chain regarding compliance issues that that pose a risk to public health, and written procedures for corrective actions for these compliance issues.

Food Defense Policies and Procedures

These should include not only procedures for ensuring compliance with the FDA’s intentional adulteration regulations (not yet finalized), but also procedures for controlling the safety and security of each VQIP food throughout the transportation supply chain. Participation in the US Customs and Border Patrol C-TPAT (Level 2 or Level 3) is sufficient assurance regarding the existence of transportation food defense procedures.

• A description of the experience and training for employees responsible for implementing the QAP.
• Procedures for implementation and updating the QAP, both internally and in the VQIP renewal application.
• Written procedures for establishing and maintaining required records.

9. Must not, within the past three years, have been the subject of any CBP penalties, forfeitures or sanctions that are related to the safety and security of any FDA-regulated product that you imported or offered for import.

10. Must pay the annual VQIP user fee before Oct. 1 of the year in which you intend to participate.

For the first year, the FDA has set the user fee at $16,400. The fee schedule will be set annually, based on the number of participants.

How Do I Participate?

Participation in the VQIP is for the U.S. fiscal year, which begins on Oct. 1. Importers who wish to join must submit a notice of intent to participate between Jan. 1 and May 31 of the prior fiscal year. The FDA has indicated that due to resource constraints, it will limit the number of participants in the first year to a maximum of 200, although it may be less depending on the FDA’s available resources to review applications.

Participation must be renewed annually and participation will be subject to a VQIP-specific FDA inspection.

The guidance also describes when a participant must amend their VQIP application to maintain eligibility for the program. A VQIP application must be amended when the participant:

• removes a food or foreign supplier listed on the VQIP application that is subject to an ongoing FDA administrative or judicial action (e.g., import alert, seizure or injunction);
• removes an FSVP or HACCP importer of a food who is the subject of an ongoing FDA administrative or judicial action (e.g., import Alert or debarment); 
• removes a filer/broker who does not meet the VQIP filer/broker requirements;
• provides updates to the QAP food safety or food defense policies or procedures;
• removes a food label that is no longer applicable to a food and add a new food label;
• provides a current facility certification issued by an accredited auditor/certification body; and
• provides information or documentation requested by the FDA to correct deficiencies.

Participation can be revoked if an importer no longer meets the eligibility criteria, although reinstatement during that fiscal year may be possible, or if the importer participates in smuggling or other fraudulent activities. In the latter case, reinstatement in the VQIP is not possible. To ensure continued participation, participants are advised to report any deviations from the QAP to the FDA, including a plan for correction of the deviations.

What Do I Get for Participating?

The FDA expects that the benefits of participation in the VQIP will include:

Expedited Entry

The FDA believes that expedited entry will incentivize importers to adopt a robust system of supply chain management that will then allow the FDA to focus its resources on food entries that pose a higher risk to public health.

• Limited examination and/or sampling of VQIP food entries to “for-cause” situations, such as when the food is or may be associated with a risk to the public health, or when the FDA needs to obtain statistically necessary risk-based microbiological samples or audit the VQIP.
• A risk to public health would be, for example, an investigation of an outbreak or illness associated with the type of food or with a foreign supplier covered by an approved VQIP application. In the case of microbiological sampling, this would be related to specific risk-based surveillance assignments and would occur after the food is released from import status.
• Any examination of entries and sample collection will take place at the VQIP food destination or other location preferred by the VQIP importer.
• Any samples will receive expedited laboratory analysis.
• The FDA will maintain a VQIP Importers Help Desk.
• The FDA will post a publicly available list of approved VQIP importers.

Conclusions Regarding the VQIP

With this draft guidance document, the FDA has gone a long way toward demystifying the VQIP — who can participate, requirements for participation and benefits of participation. The benefits of participation in the VQIP appear to provide a tangible commercial advantage that should be highly attractive to companies. In particular, expedited entry would be a considerable benefit for those importers with products that have limited shelf life, such as produce or dairy products, to get foods to market more quickly. For high-volume importers, the assurance that examination and sampling will be limited to “for-cause” situations and that samples will receive expedited laboratory analysis will likely encourage participation.

Despite these benefits, however, it is questionable whether the VQIP will be an accessible program across the broader food industry. As repeatedly stated by the FDA, FSMA was a game changer, moving the agency’s focus from responding to food safety concerns to prevention. In turn, the FDA is requiring industry to implement many new and stringent food safety and compliance activities. As can be seen in the many FDA-proposed rules, FSMA implementation imposes significant burdens on industry to establish current and ongoing compliance with these food safety rules. The VQIP presents yet another significant compliance burden, albeit one with a tangible, beneficial outcome.

The VQIP draft guidance demonstrates that the FDA is not just looking for importers to demonstrate compliance with the existing regulatory framework provided by the FSVP, intentional adulteration, and HACCP regulations, but to go well beyond those regulations, with the development of a new quality assurance program that will need personnel, training and resources to implement. For midsized or smaller food companies, these extra burdens, in combination with a substantial user fee, could put participation in the VQIP out of reach.

Finally, the FDA is quite vague in the guidance about what it intends to do with all the information provided through the VQIP, as both an ongoing matter and for enforcement purposes. It is clear that the information supplied as part of the VQIP application will be evaluated upfront for eligibility and participation purposes, but absent from the guidance is any discussion regarding how the FDA intends to monitor continuing compliance or use the information for enforcement purposes. These are matters that the FDA should clarify moving forward.

In conclusion, the draft guidance represents a significant step forward for the VQIP, providing significant insight on the FDA’s implementation plan. Yet the guidance also raises a number of concerns regarding whether participation will be feasible for any but the largest food companies. The guidance also leaves open questions about the FDA’s review and enforcement of the program. Interested companies should take advantage of this opportunity to submit comments to the FDA on the VQIP, to make sure that the agency will operate a useful and accessible program.

—By Deborah C. Attwood, Steptoe & Johnson LLP

Deborah Attwood is an associate in Steptoe & Johnson's Washington, DC, office.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.