Summer is for Vacation, not Detention: A Guide to Avoiding FDA Import Refusal and Detention

You import a product to the U.S. and then receive a notice from your customs broker that the shipment has been held by the FDA. Next, you receive a Notice of FDA Detention right when you are about to fulfill a huge Purchase Order. Now what? Is the shipment lost in FDA space or can you somehow resolve the issue and get the shipment released? What information do you need to provide FDA? How long will it take for them to respond? How do you manage customers, inventory, storage fees, and the optics of the Detention or Refusal while juggling FDA compliance?!

This is a typical scenario we see often and one we would like to address in this week’s Insights article!

Background

The U.S. Food and Drug Administration (FDA), the federal agency that regulates foods, beverages, dietary supplements, cosmetics, drugs, medical devices, tobacco and pet food/drug products, is uniquely tasked to both protect public health and to pioneer innovation in each of the regulated spaces. In its mission to protect public health, FDA employs various enforcement tools to ensure that non-violative product, e.g. product that is not misbranded or adulterated, does not enter the U.S. market. One such enforcement tool is the import refusal (usually stemming from an Import Detention), which involves FDA’s denial or refusal of U.S. product entry, and the requirement that a shipment must be exported or destroyed within ninety days.

With import refusals on the rise, particularly from companies within Europe, Canada and Asia exporting to the U.S., causing product delays, business disruption, lack of consumer confidence, and effects to a Company’s bottom line, the natural questions are: how do importers and exporters address an import refusal, and how can we avoid them in the first place? To address these questions, we’ll need to first provide some background.

Import Refusal as an Enforcement Tool: What to do Next

Importers seeking to import food products into the U.S. must provide certain product information prior to entry. This information includes product identification, the country of origin, name of the shipper, manufacturer and importer, and quantity of the goods. For imported goods, the first layer of FDA scrutiny occurs at the time of importation. Following FDA’s review of electronic documents, FDA compliance officers (stationed at various ports of entry) have the opportunity to examine product for labeling compliance, rodent or filth, or can send the product for further lab testing if the officer expects the product to present a greater quality issue. If the product is refused entry, which represents final agency action, the importer has limited options to contest FDA’s findings. The importer must re-export or destroy the goods within ninety days.

Failure to export or destroy the shipment timely can result in U.S. Customs and Border Protection assessing penalties for liquidated damages, which represents three times the value of the entered merchandise. While there is a filing and petition process to request mitigation of the fine, it is optimal to avoid this process by ensuring compliance with the terms of the FDA refusal order.

And what if the Company already sold the goods or a portion of the goods prior to receiving the FDA refusal order? While the terms of the FDA refusal order are fact-specific, FDA typically is required to issue a Notice of Detention, Hold or Refusal during the conditional release period. If the FDA issues the Notice during this period, and the Company has sold all or part of the goods subject to the Notice, the Company may need to consider a product recall. Again, failure to export or destroy all merchandise subject to the refusal notice can trigger a liquidated damages claim by U.S. Customs.

How to Avoid Import Refusal: FDA Detention Period

The most important step a Company can take is to respond to the FDA while the agency’s entry review is in process. Preceding an FDA import refusal notice is oftentimes a Notice of FDA Hold or an FDA Notice of Detention. This type of notification generally provides notice to the firm of a product compliance issue and the opportunity to provide written or oral testimony to demonstrate how the product is compliant or how it will be brought into compliance (e.g. via reconditioning of the product, if applicable). The Notice will provide a deadline for the firm to respond. Customarily, FDA provides a 14–21 day response period.

This is an important opportunity to understand the FDA’s compliance questions, to develop legal arguments to advocate for why the product is compliant or can become compliant based on regulation and facts and to demonstrate and request that the product should be released or reconditioned. However, depending on the compliance issues, the product may not be able to be reconditioned. For example, if the product is adulterated, it may not be possible to remove the offending quality concerns with the particular shipment. In these types of circumstances, the only option may be to have product refused with the possibility of product reconditioning at origin. But if the product can be brought into compliance, the Notice of Detention and Hearing period presents the optimal opportunity to address compliance concerns and attempt to secure product release. Depending on the facts and circumstances, FDA can provide a response within a few days up to a few weeks’ time. Sometimes, a response may take several weeks if different branches of the FDA are involved.

Prior to export of goods to the U.S., it is also important to identify the product’s US FDA and other federal regulatory requirements, including product registration, permits, product labeling, safety and manufacturing compliance, and recordkeeping. Investment in product compliance can significantly impact a Company’s long-term success with its bottom line and US trading relationship.

Throughout the FDA Refusal and/or Detention and Hearing process, it is critically important to have support for the product’s compliance and clear, thorough and professional presentation for why a product release is warranted. It is also important to dedicate time and resources to ensuring products are compliant with U.S. FDA and other agency regulations, as applicable, prior to product launch.

If FDA ultimately detains a shipment, it is important that the Company provide FDA a clear and well-supported position that is based in law and science, for why a product is compliant and should not be FDA refused. This will help the Company build trust with the FDA, avoid potential placement on Import Alert, and develop smoother import and trade practices.

Garg Law is an FDA regulatory compliance law firm specializing in the FDA product lifecycle of foods, beverages, dietary supplements, cosmetics, medical devices, OTC drugs, and veterinary products. The firm also assists with USDA, EPA, TTB and CPSC compliance. The firm focuses on providing international and domestic businesses strategic guidance on pre-launch and post-launch compliance, including responding to FDA enforcement actions. For assistance with import detentions, import refusals, import alerts, or other FDA regulatory compliance matters, please email us at info@garg-law.com.