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FDA’s New Suspension Authority Under FSMA Supplants Adulteration Standards in Section 342(f)

On November 26, 2012, the FDA suspended Sunland, Inc.’s food facility registration.  Sunland is the nation’s largest producer of organic peanut butter.  The FDA acted under the Food Safety Modernization Act’s (FSMA’s) new suspension/revocation authority contained in Section 415(b) of the Federal Food, Drug, and Cosmetic Act (FDCA).  FDA discovered salmonella contamination in Sunland’s operation linked to 41 reported cases in 20 states.  Salmonella poisoning undoubtedly threatens the public health.  The FSMA was intended to reach these situations.  But Section 415 of the FSMA grants blanket suspension authority that could soon become a major enforcement tool against unwitting food manufacturers and their agents.  Under Section 415(b), the FDA can reach companies marketing “unsafe” products, allowing FDA to bypass its substantially higher burden of proof in the adulteration statute (21 USC 342(f)).

How Section 415(b) Works:

The Bioterrorism Act of 2002 requires that all food facilities register with FDA before introducing or offering food for sale in interstate commerce.  A “facility” includes “any factory, warehouse, or establishment (including a factory, warehouse, or establishment of an importer) that manufactures, processes, packs, or holds food.”  See 21 USC 350d(c)(1).  That term encompasses dietary supplement manufacturers.  The FDCA prohibits introduction of a food in interstate commerce from a facility without a proper registration.  See 21 USC 331(d).  Therefore, all companies seeking to hold or manufacture foods and dietary supplements must have a valid registration.

Congress enacted the Bioterrorism Act to help FDA track consumer food products and thereby protect against contamination of the food supply, presumably by those intending to commit an act of terror.  Before the FSMA, food facilities simply executed a one-time registration with FDA, listing essential contact information.  The FSMA turns that registration provision into a modified licensing scheme.  FDA now has authority to revoke or suspend food facility registrations.  Per Section 415(b)(4), “[i]f the registration of a facility is suspended under this subsection, no person shall import or export food into the United States from such facility, offer to import or export food into the United States from such facility, or otherwise introduce food from such facility into interstate or intrastate commerce in the United States.”  See 21 USC 350d(b)(4).

Put simply, suspension of a food facility registration shuts down a food company.  Although a facility registration issues automatically, retention of that registration is now in FDA’s discretion.  This format resembles the DEA’s registration process, wherein physicians must hold valid DEA registrations to prescribe and/or dispense scheduled substances.  In fact, FDA’s new scheme so closely resembles a licensing format, Congress found the following disclaimer appropriate:  “[n]othing in this section shall be construed to authorize the Secretary to require an application, review, or licensing process for a facility to be registered, except with respect to the reinstatement of a registration that is suspended under subsection (b).”  See 21 USC 350d(d) (emphasis added).

Section 415(b) gives FDA an enforcement power wholly in the Commissioner’s discretion.   “If the Secretary determines that food manufactured, processed, packed, received, or held by a facility registered under [the Bioterrorism Act] has a reasonable probability of causing serious adverse health consequences or death to humans or animals, the Secretary may by order suspend the registration of a facility (A) that created, caused or was otherwise responsible for such reasonable probability; or (B)(i) that knew of, or had reason to know of, such reasonable probability; and (ii) packed, received, or held such food.”  See 21 U.S.C. § 350d(b)(1) (emphasis added).  The statute does not define “reasonable probability,” leaving enforcement in FDA’s discretion.  The statute includes no procedural safeguards against an abusive use of the discretionary power.

“Serious adverse health consequences” is also undefined, but likely equivalent to adverse event reporting standards.  See, e.g., 21 U.S.C. § 379aa-1(a)(2).  A “serious” adverse event is one that, inter alia, “requires, based on reasonable medical judgment, a medical or surgical intervention to prevent an outcome” such as death, a life-threatening experience, inpatient hospitalization, or a persistent or significant disability (including birth defects or congenital anomalies).  Id.  Therefore, the FDA can now suspend business operations whenever the agency perceives a “reasonable probability” that a food product will result in a life-threatening experience or inpatient hospitalization.

Conflict with Adulteration Standard:

Here the phrase “reasonable probability” undermines the pre-existing adulteration standard.  Although “probability” generally connotes a certain “likelihood” of occurrence, in practice the FDA may interpret the statute to mean “reasonable possibility.”  There is a palpable risk that FDA will overextend the suspension statute.  Nothing in Section 415(b) limits FDA’s suspension authority to errors in manufacturing.  Therefore, the FDA could theoretically use its suspension authority to reach so-called “adulterated” products of all kinds.

The energy drink market is a prime example.  A recent dash of adverse events have energy drinks in the national spotlight.  The FDA is again under pressure to investigate the safety of the energy drink market.  Before the FSMA amended Section 415, FDA proceeded against unsafe dietary supplements through the adulteration provision in 21 U.S.C. § 342(f).  Under that section, a dietary supplement is adulterated if it contains “a dietary ingredient that (A) presents a significant or unreasonable risk of illness or injury under (i) conditions of use recommended or suggested in labeling, or (ii) if no conditions of use are suggested or recommended in the labeling, under ordinary conditions of use.”  Id.

FDA enforced Section 342(f) through injunctions, seizures, and other remedies.  FDA was statutorily bound to proceed in the Article III courts:  “In any proceeding under this subparagraph, the United States shall bear the burden of proof on each element to show that a dietary supplement is adulterated.  The court shall decide any issue under this paragraph on a de novo basis.”  See 21 U.S.C. § 342(f).  In other words, the FDA ultimately had to rely on the federal Courts’ interpretation for relief; in the last analysis, the court, not FDA, determined whether the product was adulterated based on FDA’s evidence.

In the traditional model, the FDA pursued manufacturers through a Warning Letter followed by a complaint in the federal district court.  As defendants in a federal court action, manufacturers benefited from a favorable burden of proof, a favorable standard of review, and all evidentiary or procedural safeguards inherent in the judicial process.

In our energy drink example above, however, the FDA could feasibly approach manufacturers on a case-by-case basis, using the FSMA’s suspension authority to compel reformulation.  Section 415(b) ostensibly supplants the FDA’s burden in Section 342(f) (adulteration section).  If FDA can argue that a product “presents a significant or unreasonable risk of illness or injury” (21 U.S.C. § 342(f)), the agency can also argue the same product creates a “reasonable probability of causing serious adverse health consequences” (21 U.S.C. § 350d(b)).  The latter standard affords FDA authority for unilateral administrative action under FSMA’s suspension provision.

Assume that a company sells an energy supplement containing caffeine at potentially unsafe dosages.  Before the FSMA, FDA could pursue that company under the adulteration standards in Section 342(f).  FDA needed proof by a preponderance of the evidence on each element.  If successful, the ensuing injunction would prevent manufacturers from marketing the product or formulation at issue.  Now FDA can invoke its suspension authority, preventing a food manufacturer from selling all of its products in interstate commerce.  Faced with suspension, an energy drink supplier must show that FDA’s decision was arbitrary and capricious or unsupported by substantial facts.  The presentation would ultimately devolve into a scientific debate concerning the safety of caffeine at higher levels.  As long as FDA could marshal some evidence for its position, supported in this case by adverse event reports, companies might be without substantial recourse to prevent registration suspensions.  Absent a valid registration, no products would leave the warehouse.  To remain profitable, therefore, few companies could resist reformulation or other corrective measures to continue revenue streams.

Whether FDA will eventually use its broad Section 415(b) authority broadly remains to be seen.  But the temptation may prove too attractive.

What Happens After FDA Suspends?

FDA determines unilaterally whether suspension is appropriate under the elements in Section 415(b).  A food company facing suspension may request an informal hearing.  See 21 U.S.C. § 350d(b)(2).  The hearing must be held, unless otherwise agreed upon by the FDA and the company under section 415(b)(2), no later than two business days following the suspension.  The target company must request that hearing one business day from the date of the order.  The right to a hearing is waived absent that timely request.  21 CFR Part 16 governs the informal hearing. The request for a hearing can be declined if the company fails to raise a “genuine and substantial issue of fact” warranting a hearing.  See 21 CFR 16.26.  Alternatively, a company may choose to reinstate the registration by submitting a corrective action plan demonstrating remedial measures.

The Commissioner thus functions as investigator, prosecutor, judge, and jury.  There is no essential separation of functions, as is understood to be essential for Due Process and separation of powers.  In other words, if the FDA Commissioner determines that suspension is appropriate, she would need to reverse herself before finding that the suspension was wrongfully initiated.  The procedures in 21 CFR Part 16 provide little reassurance for targeted companies.  In fact, in the Sunland Letter Concerning Suspension, the FDA stated that “[a] hearing will not be granted on issues of policy or law.”  In other words, the agency will not consider arguments that the process violates due process or other constitutionally protected rights, or conflicts with other sections of the FDCA.  FDA’s decision is subject to judicial review, but under the deferential standards in the APA (5 U.S.C. § 706).  Accordingly, if the agency’s decision is supported by fact and not “arbitrary” or “capricious,” overcoming the informal suspension order in the courts may be difficult.  In any event, because business is stalled without a registration, waiting for recourse in the appellate courts would prove fatal for most businesses.

Registrants facing suspension may seek preliminary or emergency relief in the federal courts under a Temporary Restraining Order.  Even then, however, the standard of review would favor the FDA.  Ultimately, through Section 415(b), the FDA is dealing itself all aces.

A swift and forceful response is required.  Companies responding to FDA suspensions should consider a hybrid approach involving preliminary relief in the federal district courts, expert responses to FDA’s observations, and corrective action plans offered in the alternative.  A thorough response should reinstate business operations at the earliest opportunity, while preserving crucial legal arguments before the federal courts.

Food manufacturers should recognize the significance of Section 415(b) and take precautions to streamline a response, if necessary.  Because businesses have only two days to request a hearing on a suspension decision, documentation necessary for that request must be generated immediately after an adverse inspection.  Whenever FDA inspectors suggest that a failure of cGMPs may have resulted in contamination or adulterated product, companies should be prepared to offer rebuttal evidence.  Hearing requests under Part 16 must demonstrate a genuine and substantial issue with FDA’s fact-finding that militates against suspension.  Each situation will be unique.

Whether evaluating a concept, performing regulatory due diligence, maintaining or prosecuting regulatory filings, or contesting adverse litigation, Emord & Associates provides exceptional counsel for all your litigation and regulatory needs.

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