1. Washington, D.C. ● Brussels ● San Francisco ● Shanghai Presented to: FDLI Safeguarding Ingredient Supply Chain Conference September 10, 2013 Washington, DC Frederick A. Stearns Keller and Heckman LLP 1001 G Street, NW, Washington, DC 20001 Phone: 202-434-4288 Email: stearns@khlaw.com Food Safety Modernization Act (FSMA) and Global Food Safety Measures for Functional Food and Dietary Ingredients

2. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 20132 Agenda Food Safety Modernization Act (FSMA) Enacted January 4, 2011 Applicability to ingredient suppliers? Provisions Improving capacity to prevent food safety problems Improving capacity to detect and respond to food safety problems Improving safety of imported food  Global Food Safety Initiative (GFSI)

3. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 20133 A Note on Timing...  August 2012: FDA sued by Center for Food Safety (public interest group) FDA missed several statutory deadlines for regulations CFS sought court order compelling action  April 2013: Court agreed FDA violated FSMA Parties to propose implementation schedule by May 20, 2013 (extended to June 10)  June 21, 2013: Court-ordered rulemaking deadlines: November 30, 2013: all proposed rules to be published March 31, 2014: latest allowed comment deadline June 30, 2015: publication of final regulations

4. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 20134 Who Must Register? “Any factory, warehouse, or establishment (including a factory, warehouse, or establishment of an importer) that manufactures, processes, packs, or holds food [for consumption in the United States].” - FD&C Act § 415(c)(1)

5. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 20135 What is “food”? “[F]ruits, vegetables, fish, dairy products, eggs, raw agricultural commodities for use as food or as components of food, animal feed (including pet food), food and feed ingredients, food and feed additives, dietary supplements and dietary ingredients, infant formula, beverages (including alcoholic beverages and bottled water), live food animals, bakery goods, snack foods, candy, and canned foods.” - 21 C.F.R. § 1.227(b)(4)(ii)

6. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 20136 Improving Capacity to Prevent Food Safety Problems  Title I Major Provisions Record keeping and inspection of records Registration of food facilities Hazard analysis, risk-based preventative controls, and food safety plans Contaminant-specific regulations FDA reporting requirements

7. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 20137 Hazard Analysis, Risk-Based Preventative Controls (HARPC) and Food Safety Plans  Hazard analysis Registered facility required to conduct a written analysis of known or reasonably foreseeable hazards affecting food (e.g., biological, chemical, physical, radiological, natural toxins, pesticides, drug residues, decomposition, parasites, allergens, unapproved food and color additives) A hazard re-evaluation required at least every three years or sooner if there is reasonable potential for a new hazard or significant increase in a previously identified hazard Delayed implementation of this section for small businesses

8. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 20138 HARPC and Food Safety Plans (2)  Risk-based preventative controls - facility must: Implement preventive controls to minimize or prevent the hazard Monitor effectiveness of controls, establish corrective actions, and verify effectiveness of their activities Maintain records relating to monitoring activities, verification activities, and efficacy of preventive controls for at least two years Develop a written plan documenting compliance Make food safety plan and all related records available to FDA upon written or oral request

9. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 20139 HARPC Proposed Rules  Published in 78 Fed. Reg. 3646 (Jan. 16, 2013) HARPC statutory provision in effect on July 5, 2012 FDA: enforcement will not start until a date to be specified in the final regulations Comments accepted until November 15, 2013  Proposal: Clarifies definition of “farm” for registration Revises current Good Manufacturing Practice (GMP) regulations now in 21 C.F.R. Part 110 Implements HARPC requirements of FDC Act

10. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201310 Proposed Rules - HARPC Exemptions  “Qualified facilities” Based on low annual food sales (threshold to be set)  Low-risk, on-farm activities performed by very small or small businesses  Foods subject to HACCP regulation  Dietary supplements (in compliance with): 21 CFR Part 111 (cGMPs) Serious adverse event reporting  Alcoholic beverages  Activities within the definition of “farm”

11. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201311 Improving Capacity to Detect and Respond to Food Safety Problems  Title II Major Provisions: Inspections Traceability and surveillance Laboratory accreditation and testing Recall authority Administrative detention Reportable Food Registry

12. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201312 Improving Safety of Imported Food  Title III Major Provisions Foreign supplier verification program Voluntary qualified importer program Import certification and accreditation

13. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201313 FSVP – Proposed Regulations  Published at 78 Fed. Reg. 45730 (July 29, 2013)  Intended to be consistent with HARPC to avoid duplicate requirements  Applies to “importer” US purchaser of goods If none yet, US consignee If none yet, US agent for of foreign owner  Importers required to develop, maintain, and follow FSVP for each imported food (unless an exemption applies)

14. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201314 FSVP Proposal - Exemptions  Juice and seafood in compliance with HAACP  Food imported for research and evaluation  Food imported for personal consumption  Alcoholic beverages  Food transshipped or imported for further export and not consumed/distributed in US  Products complying with low acid canned food requirements (exempt for microbiological hazards only)

15. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201315 FSVPs – Basic Elements  Compliance status review of foods and suppliers  Hazard analysis  Foreign supplier verification activities  Investigations and corrective action (if needed)  Periodic reassessment of FSVP  Importer identification at entry  Recordkeeping

16. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201316 FSVPs – Dietary Supplement Components  Dietary supplement component importer must: Maintain list of foreign suppliers Identify importer at time of entry Keep records Annually obtain written certification from dietary supplement customers that they are in compliance with specification provisions of 21 CFR Part 111  Otherwise, subject to full FSVP requirements  No reduced burden for conventional food/food ingredients  [Curious: regulation defines “dietary supplement component” but does not use the term]

17. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201317 Global Food Safety Initiative (GFSI)  Launched in 2000  Managed by The Consumer Goods Forum  Independent global network More than 650 members 70 countries represented  Both “retail” and “manufacturing” members

18. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201318 GFSI Effect  “Once certified, accepted everywhere” Certification to GFSI-recognized scheme reduces need for multiple quality audits  GFSI “business case” for suppliers: “Certificated companies are more disciplined, more efficient and more profitable” “Certificated companies show equivalence of process across countries and continents” “GFSI recognised standards are accessible and are shared by many” “Certificated companies will have a legal defence in place”

19. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201319 Companies Accepting GFSI-Recognized Schemes

20. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201320 FDA Position on GFSI?  FSMA “Frequently Asked Questions”: “I.4.9 Has FDA considered using the GFSI (Global Food Safety Initiative) program as the (or one of a few) third party accreditation?” “.. FDA is currently developing regulations and model accreditation standards directed by FSMA section 307 on third-party accreditation. FSMA directs the agency to look to existing standards to avoid unnecessary duplication of costs and efforts.... To the extent that the questioner is asking whether FDA will rely on GFSI benchmarked standards, we cannot answer the question at this time. To the extent that the question is asking whether GFSI will have a role in the third- party program, we can say that after the third-party rulemaking is final, the program will go into effect and accreditation bodies can begin to seek FDA recognition and likewise, third-party auditors (also known as certification bodies) can begin to seek accreditation from an accreditation body recognized by FDA.”

21. │ www.khlaw.com │ K ELLER AND H ECKMAN LLP Copyright © 201321 Conclusion  FSMA presents substantial challenges to food and food ingredient manufacturers Significant aspects of law still to be implemented FDA is behind schedule with regulations/guidances  GFSI may provide an opportunity to meet some requirements, but too early to tell

22. Washington, D.C. ● Brussels ● San Francisco ● Shanghai DISCLAIMER: This presentation and the accompanying discussion provide general information on recent legal and regulatory developments. They are not intended to be, and should not be relied upon as, legal advice. Frederick A. Stearns Keller and Heckman LLP 1001 G Street, NW, Washington, DC 20001 Phone: 202-434-4288 Email: stearns@khlaw.com Thank you! Questions? Please contact: