So, You Think You are Ready for a RECALL?

Transcription

1 So, You Think You are Ready for a RECALL? Shawn K. Stevens Global Food Safety Lawyer stevens@foodindustrycounsel.com Gale Prince Your Food Safety Coach gale@galeprince.com

2 Recalls Are Not Going Away Recalls are becoming more complex!

3 Recalls Are Becoming More Complex! Recall and Food Service are faced with about 6 product recalls per day 7 days per week. Do you know where your products are distributed? Have you thought about the Impact of FSMA and new FSIS enforcement policies on recalls? Do you know your supplier s and customer s food safety plan?

4 FDA Recall Trend-line

5 USDA Recall Trend-line

6 USDA/FSIS Recalls by Class All classifications are up and have been on the rise the last few years Class I Class II Class III

7 USDA/FSIS Recall Reasons

8 USDA/FSIS Recall Reasons 2010 was the last year that microbiological issues were the leading cause for meat product recalls ALLERGEN ISSUES have risen by 200% since 2010 and have dominated while causing the most recalls in the meat category Historically, wheat, soy, and milk have been the most common undeclared allergens with soy being the front runner almost every year

9 USDA/FSIS Recall Reasons 80 Allergen Related Allergen issues are rising. Undeclared soy has been the #1 issue the last 3 years.

10 USDA/FSIS Recall Reasons Recalls for undeclared peanuts in meat products have not been common over the years In early 2015, 20% of allergen related recalls were due to contamination from undeclared peanut protein in a widely used spice ingredient Once again, undeclared soy was at the top and was responsible for 30% of the allergen recalls

11 USDA/FSIS Recalls Microbiological This decline is a good indication that the meat industry s recent emphasis on control and testing is helping to produce a safer product

12 USDA/FSIS Recalls Pathogens Salmonella Listeria monocytogenes E. coli O157:H7 or others Similar to FDA s data, Listeria was the top micro concern and the blame for almost 50% of USDA micro related recalls the last 3 years

13 USDA/FSIS Recalls Allergen vs. Microbiological Related Recalls Allergen Micro Allergen issues have increased dramatically while microbiological issues have decreased slowly

14 USDA/FSIS Recalls Recalls by Type of Meat 28% 6% 33% 33% Beef Pork Chicken Turkey Recalls for beef, pork, and chicken products have been dispersed evenly the last few years

15 USDA/FSIS Recalls Number of Recalling Firms As the number of USDA recalls have increased, so has the number of recalling firms

16 Importance of History Those Who Do Not Learn From History Are Doomed to Repeat It! Source: Winston Churchill

17 Economics of Food Safety Failures

18 Product Recalls Are Costly Preliminary recall costs reported by firms of recent recalls: $56,000,000 $35,000,000 $60,000,000 $30,000,000 $37,000,000 $103,000,000 $78,000,000 Some firms cease doing business These costs DO NOT include litigation costs

19 Product Recalls Can Be Costly LET S BREAK IT DOWN Averages on Some Additional Recent, Lower-Profile Real-World Examples and Associated Costs

20 Product Recalls Can Be Costly Direct Recall Costs Media Consultants / technical experts / legal costs directly associated with recall announcement and short-term crisis management $250,000 to $2,000,000+

21 Product Recalls Can Be Costly Direct Recall Costs Customer notification, retrieval, storage and destruction of returned products (includes charge-backs) $250,000 to $2,500,000+

22 Product Recalls Can Be Costly Direct Recall Costs Direct Replacement Costs [commercial customers] $250,000 to $6,000,000+

23 Product Recalls Can Be Costly Indirect Recall Costs Claims management / legal team to address and resolve immediate postrecall consumer illness (non-suit) or product replacement costs $250,000 to $2,500,000+

24 Product Recalls Can Be Costly Indirect Recall Costs Total Potential Pre-Litigation Recall Costs $1,500,000 to $23,000,000

25 Product Recalls Can Be Costly Indirect Recall Costs Legal expenses to defend against commercial customer (external brand damage) claims or consumer illness claims $500,000 to $10,000,000+

26 Product Recalls Can Be Costly Indirect Recall Costs Lost profits / brand damages asserted by commercial customers $2,000,000 to $10,000,000+

27 Product Recalls Can Be Costly Indirect Recall Costs Personal injury damage claims asserted by injured consumers [single HUS case = $1 m to $15 m] $2,000,000 to $50,000,000+

28 Product Recalls Can Be Costly Direct and Indirect Recall Costs Total Potential Post-Litigation Recall Costs $6,000,000 to $95,000,000+

29 Economics of Food Safety Not Included in these Costs Does not include the cost in lost sales Cost of restoring the business Loss of profits Loss of jobs Damage to brand value Short term Long term

30 Major Loss Club McNeil - Tylenol Perrier water Pepsi Jack-in-Box General Mills - Cheerios Hudson Foods* Firestone Topps Foods Company* Menu Foods* Mattel Inc. Hillfarm Dairy* Blue Bell Maple Leaf Foods PCA* Basic Food Flavors Johnson & Johnson Kellogg Wright County Egg Farm Abbott Jensen Farms* Cargill Meat Solutions Sunland, Inc.* XL Foods

31 Incident and Reason Maple Leaf Foods PCA* Basic Food Flavors Johnson & Johnson Kellogg Wright County Egg Farm Abbott Jensen Farms* Cargill Meat Solutions Sunland, Inc.* XL Foods Blue Bell PostProcess/Environment GMP / Criminal Activities GMP/ Environment Packaging Packaging GMP Pest control/ingredients Ignorance Micro GMP/Facility/Equipment QA Failure Micro, GMP s, Equipment

32 FDA Imports Contaminants Chemical Contaminants 14% 14% 6% 0% 2% 32% 24% 8% Toxins Antibiotics Heavy metals Additives Drugs Pesticides Preservatives Misc

33 Projected Costs of YOUR Product Recall Discussion

34 Projected Cost of Your Product Recall Lot Size Ability to Lock in Lot Size Distribution Retrieval costs Product Customer complaints Disposal cost Publication notification costs

35 Projected Cost of Your Product Recall Customer complaints Lost sales Production Downtime (hourly/daily) Re-introduction costs to regain shelf space Brand Damage Litigation costs (personal injury and commercial) Regulatory compliance costs

36 The ROI of Recall Prevention and Preparedness Discussions

37 Prevention The THREE Cs of FOOD SAFETY CULTURE COMPASSION COMMITMENT COMMUNICATION

38 Prevention Management Support Culture Supplier Verification Facility Equipment Process Controls Validation People training

39 Preparedness Crisis Management Planning Creating an Effective Recall Plan Current??? Are ALL of the Needed Procedures Outlined??? How many PAGES is it???

40 Preparedness Crisis Management Planning GALE s BRILLIANT ADVICE Five Steps to a Recall Plan 1. Incident Investigation 2. Prepare Recall Information 3. Recall Announcement 4. Effectiveness Checks 5. Close Out SHAWN S ADDITIONAL 2 CENTS Six Cs of Recall Management 1. Commencement 2. Containment 3. Communication - Regulatory Authorities - Customers / Consumers - Media 4. Coverage 5. Compliance 6. Claims Management

41 Preparedness Crisis Management Planning

42 Preparedness Crisis Management Planning

43 Preparedness Crisis Management Planning

44 Preparedness Crisis Management Planning Recall Plan Policy Statement Identify who has authority Identify who has the responsibility Recall Coordinator Outline responsibilities of all recall committee members Mock recalls Outline Procedures for Handling Tampering and Extortion Threats

45 Recall Plan Preparedness Crisis Management Planning Media training and media management Insurance checklists and notifications Claims handling systems and guidelines Customer retention program

46 Preparedness Crisis Management Planning OTHER NEEDED PROTECTIONS Criminal Protection Audit and Program Indemnity and Hold Harmless Agreement Review Recall and other Insurance Considerations

47 Challenges (= opportunities) Discussions

48 Challenges Supplier side Hazard analysis on the supply side Hazard analysis to often only focused on domestic supply Products subject to Economic Adulteration Lot identification Process validation Testing program Trust but verify COA s

49 Challenges Inventory management Process Process validation Allergen Control Rework Lot code identification Sanitation Verifications

50 Challenges Allergen Control Use Electronic Control From product development to final packaging Electronic proof reading Bar Code scanning Verification of cleaning programs

51 Challenges Customer Know how the customer is handling your product Know something about their distribution If you are selling a raw ingredient for further processing know their process

52 Challenges Industry Product and Environmental Testing FSIS Product and Environmental Testing Whole Genome Sequencing Litigation Trends Regulatory Enforcement Trends Records and Documentation

53 Responsibilities

54 Our Responsibilities Moral To do what is right for our customers Legal To meet regulatory requirements Both as a Corporation and each of us Personally

55 Food Safety A Shared Responsibility

56 Commitment and Dedication Is Essential in Achieving Safe Food Thank You For Your Attention