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Focus: Global Supply Chain and Logistics

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From SCDigest's On-Target e-Magazine

June 29 , 2011

Global Supply Chain News: US FDA Announces Broad Program to Help it Keep Up with Increasingly Impossible Demands for Protections Against Tainted Imports

A Can of Tuna's Long Journey; Agency Announces Four Pillars of New Strategy the Focus Heavily on Collaboration and IT; Says it Cannot Meet the Requirements of 2011 Food Safety Act with Status Quo

SCDigest Editorial Staff

In the face of an unprecedented and overwhelming work load due to the globalization of supply chains, the US Food and Drug administration last week announced a new plan designed to help it meet the requirements of the Food Safety Act (FSA) of 2011 and operate more effectively given its current and likely future resources.

In a new report titled "The Pathway to Global Product Safety and Quality," the FDA says that "We live in a nation that increasingly relies on other countries to produce the food, drugs, cosmetics, and devices we use in our daily lives." (The full report is available here: The Pathway to Global Product Safety and Quality.

SCDigest Says:

The FDA has also opened additional offices in key international locations and materially increased the number of certain types of foreign inspections. It says inspections of overseas drug manufacturing plants, for example, have increased from 333 in 2007 to 424 in 2009.

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The FDA estimates that between 10% and 15% of all food consumed by US households is imported from abroad. Additionally, nearly two-thirds of the fruits and vegetables and about 80% of seafood eaten domestically come from outside the US. Surprisingly, the FDA also says that half of all medical devices used in this country are imported, while 80% of the active pharmaceutical ingredients in medications sold here are manufactured offshore.

This obviously makes the FDA's job of keeping US consumers safe increasingly complex, as not only more finished products are entering the US market from abroad, but also a growing number of ingredients for other food or medical products that go into the finished product.

Currently, nearly 25 cents of every dollar spent by Americans are on products regulated by the agency. FDA-regulated products account for about 10% of all imports into the U.S., arriving from more than 300,000 facilities in 150 different countries - obviously an impossible job for the FDA to manage by itself, not only due to the scope of the resources that would be required but the fact that these facilities are operating within sovereign countries outside the FDA's sphere of direct control.

Interestingly, the report notes the supply chain cost pressures on US companies as driving this level of global outsourcing, which it expects to continue to grow rapidly. Between 2007 and 2015, it is estimated that imports of FDA-regulated products will triple, corresponding to a 15% annual growth rate.

"The pressure for cost savings will be intense for food and consumer goods companies," the report says, noting a similar trend in pharma and medical products. "Consolidation among retailers has already given a few powerful, global players tremendous leverage to negotiate down prices as they compete for cost conscious shoppers."

Complicating matters even further for the FDA is the FSA of 2011, which gives the FDA a new legislative mandate to require comprehensive, prevention-based controls across the food supply and new tools to hold all players in the supply chain accountable.

"The law represents a paradigm shift in the area of imports," the report says. "For the first time, importers will have explicit responsibility to verify that their foreign supplies have adequate preventive controls in place and that the food they ship to the U.S. is otherwise safe. The agency also has the power to establish a third-party program for certifying that foreign food facilities comply with U.S. food safety standards, to require certification as a condition of entry for certain high risk foods, and to reject entry of food if the foreign facility or country refuses an inspection by FDA or its designee."

These requirements are likely to have a significant impact on the resources and certification programs of US importers. But the FDA recognizes at the same time that "Despite such recent improvements, FDA does not—nor will it—have the resources to adequately keep pace with the pressures of globalization."

(Global Supply Chain Article Continued Below)

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It cited the example of the number of processing steps or supply chain touch points for something as seemingly simple as a can of imported tuna, as shown in the graphic below.

New Plan to Address the Challenges

The report notes the FDA has to date primarily relied on inspection sites at US ports to protect against tainted or unsafe imports. More recently, however, it added the PREDICT system, which it says "uses novel data analytics from the entire life cycle of a product to better identify and target high-risk products before they enter the country."

But the FDA understands these and other moves are simply not enough. So in the report, it announced four pillars of a new strategy to maintain food and medical safety with its given level of resources. They rely heavily on inter-country cooperation and better IT systems:

(1) The assembly of global coalitions of regulators dedicated to building and strengthening the product safety net around the world. The FDA hopes to align a number of countries to in effect rely on the safety inspection and monitoring processes of other countries. Critical to this, the report says, is focusing on ensuring the same outcomes, not trying to define a single global standard for the process used to achieve the goal.

(2) Development of a global data information system and network in which regulators worldwide can regularly and proactively share real-time information and resources across markets. The FDA intends to set up master data standards again with other countries to enable to smooth flow of safety information across borders, citing the work Interpol has successfully achieved with a similar program of electronic data sharing.

(3) Expansion of FDA capabilities in intelligence gathering and use, with an increased focus on risk analytics and thoroughly modernized IT capabilities. Current systems are good but cannot allow the FDA to scale to current needs, and therefore must be updated with richer analytic capabilities.

(4) FDA will effectively allocate agency resources based on risk, leveraging the combined efforts of government, industry, and public- and private-sector third parties. As FDA evolves and continues to become a more agile, forward-looking, intelligence-driven organization, these activities will be more directly aligned against a robust set of risk-based priorities, with agency staff spending a more significant share of their energies on the products and producers around the globe that represent the greatest potential harm to public health. At the same time, FDA will maintain broad-based oversight of the entire range of products within its purview by developing compliance and inspection programs that contemplate enlisting public and private third parties to conduct audits and other oversight activities on behalf of FDA.

These ideas have all been around for a decade or more, but the growing number of incidents, the passage of the Food Safety Act mandates in response, the projected growth in imports of products under the FDA's jurisdiction have combined it appeared to get these tactics off the ground. How fast this can happen will be the real question.

What's your reaction to the FDA's new analysis and four-step strategy? Is it enough? Can anything be enough? Do you think these actions can be implemented in a timely manner? Anything else you would recommend? Let us know your thoughts at the Feedback button below.

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