On July 31, 2012, the Food and Drug Administration (FDA) announced the per hour FDA inspector charges it will levy against food companies in the upcoming fiscal year under the Food Safety Modernization Act (FSMA). Those rates are $221 per hour if no foreign travel is required and $289 per hour if foreign travel is required. The new rates will take effect October 1, 2012, and will be effective through September 30, 2013. FDA intends to reassess the rates for the fiscal year starting October 1, 2013.
The good news is that the new rates are lower than the present rates, which are $224 per hour is no foreign travel is required and $325 per hour if foreign travel is required. Perhaps the rate reduction signals that FDA is attempting to implement FSMA in light of known operational realities and pain tolerances for administrative fees that exist in the food industry.
With that said, it is important to remember that the FSMA’s fee structure represents hourly rates charged by each FDA inspector who participates in any type of billable activity related to a given case. As a reminder, billable activities include conducting reinspection at a facility, making preparations and arrangements for reinspection, traveling to and from a facility, analyzing records, analyzing samples, preparing reports or examining labels and performing any other activity deemed necessary to determine compliance with the regulation or statute found to be violated in an initial inspection. Other billable activities include conducting recall audit checks, reviewing periodic status reports, analyzing status reports and the results of audit checks, conducting inspections, traveling to and from locations and monitoring product disposition. Simply put, even with a reduced fee structure, FSMA-related fees can add up quickly and significantly impact businesses.
Because FDA recognizes that for some small businesses the full cost recovery of FDA reinspection or recall oversight could impose severe economic hardship, FDA intends to consider reducing certain fees for those firms. To this end, FDA is currently developing a guidance document to outline the process through which firms may request such a reduction of fees. Per the FDA, “FDA does not intend to issue invoices for reinspection or recall order fees until this guidance document has been published."
Jason R. Klinowski and John T. Shapiro are attorneys and members of the Food Industry Team at Freeborn & Peters LLP (Chicago).
FSMA Legislative Update: August 2012