New Import Fees from FDA May Drive Food Prices

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WholeFoods Magazine Staff
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The U.S. Food and Drug Administration (FDA) now has broader authority to levy fees for the re-inspection of imported food. The new fee structure comes as a result of certain sections of the recently passed Food Safety Modernization Act (FSMA), and some parties fear it may result in burdensome fees for small companies and in higher food prices.

The three new fee categories, each tied a section of FSMA, were detailed in a recent FDA notice in the Federal Register, as follows: “(1) Certain domestic and foreign facility re-inspections (section 743(a)(1)(A)), (2) failure to comply with a recall order under section 423 or 412(f) of the FD&C Act (section 743(a)(1)(B)), and (3) certain importer re-inspections (section 743(a)(1)(D)).” It is this last category that may provide particular difficulty for industry, according to Benjamin L. England, a former regulatory counsel at FDA, and founder and CEO of FDAImports.com. “My gut reaction is that at least 40% of the current detentions that are food detentions are going to be suddenly subject to fees,” he says.

When FDA inspects food for admission to the country, the scenarios that qualify as an official “examination” include analysis of physical samples of the product, a review of the product’s label, a review of sample results from a reliable third party, relevant epidemiological evidence, the results from an FDA or third party inspection of a facility where the food was processed, information contained in an import alert and other cases, according to the Federal Register notice. These “examinations” can be used to fulfill the initial requirement that FDA “identify noncompliance materially related to a food safety requirement of the FD&C Act.” After this first examination, any subsequent action to verify the safety of or readmit the product is now subject to a fee.

For Fiscal Year (FY) 2012, the agency has assessed these fees at a rate of $224/hour of re-inspection if no foreign travel is required, and $335/hour if it is. All agency work time devoted to each re-inspection will be subject to this rate, payable by the company importing the food. England expects these fees to become a factor right away. “The government already has a mechanism for collecting fees like that. The FDA already collects fees for any operations that they perform on a product that has to be reconditioned,” he says, noting that this has included cases like relabeling or reformulating a product, and that this statute has been in place since 1906.

What is new is the now foreseeable scenario where a company will be responsible for multiple redundant fees, at costs that England sees mounting into the thousands of dollars. He explains that the time it takes FDA to review a re-submitted label or private lab analysis, as well as every subsequent import after an import alert is issued could be subject to a fee. Typically five clean shipments are required before the removal of an import alert. Requesting removal from an import alert is also subject to the fee, per the Federal Register notice. “Any of these scenarios are going to be troublesome, because there’s no cushion in the market,” England says. While some consumer categories like organic may be better equipped to absorb the fees, food prices overall may reflect the change, England feels.

The FY 2012 rates become effective October 1, 2011. Public comments on the fee structures, meanwhile, are open until October 31, 2011, according to FDA. The agency notes in the Federal Register that it may make special considerations in the future for small businesses that would suffer unduly from the fees, but that the rules for FY 2012 will not change. FDA may, however, consider waiving some fees in FY 2012 based on “severe economic hardship, the nature and extent of the underlying violation, and other relevant factors.”

Published in WholeFoods Magazine, October 2011