Food and beverage COVID-19 regulatory updates

As the coronavirus disease 2019 (COVID-19) pandemic continues to impact the food and beverage industry, DLA Piper will issue regular updates related to key regulatory actions from relevant regulatory bodies, including the US Food and Drug Administration (FDA), US Department of Agriculture, and relevant state and local authorities as applicable. The below content is intended to build on our prior alert, which can be found here, to keep our clients and industry members aware of ongoing commentary and guidance from US regulators.

COVID-19 modification to Produce Safety Rule exemption

On May 22, 2020, the FDA issued guidance entitled “Temporary Policy During the COVID-19 Public Health Emergency Regarding the Qualified Exemption from the Standards for the Growing, Harvesting, Packing, and Holding of Produce for Human Consumption.” This guidance provides that in order to support affected farms in selling food to all available buyers during the COVID-19 public health emergency, the FDA does not intend to enforce the criteria for sales to qualified end-users when determining eligibility for the qualified exemption under the Produce Safety Rule, under certain circumstances.

For farms that were eligible for the qualified exemption in 2020, eligibility for qualified exemption status for 2021, and until the end of the public health emergency, may be determined based on: 

1. Documentation that the farm met all of the criteria for the qualified exemption in 2020, based on records from 2017, 2018, and 2019; and
2. Documentation that the average annual monetary value of all food the farm sold during the preceding three-year period (e.g. 2018, 2019, and 2020 for determining status in 2021) was less than $500,000, adjusted for inflation.

If the farm has not been in operation long enough to have annual sales values for the three-year period preceding 2020, eligibility for qualified exemption status (for 2021 and until the end of the public health emergency) may be determined based on: 

1. Documentation that for the year(s) the farm was in operation prior to 2020, the average annual monetary value of food sold directly to qualified end-users exceeded the average annual monetary value of food sold to all other buyers, and the average annual monetary value of all food the farm sold was less than $500,000, adjusted for inflation; and 
2. Documentation that the average annual monetary value of all food the farm sold during the preceding three years (or the year(s) for which the farm was in operation if less than three years) was less than $500,000, adjusted for inflation.

Lastly, if a farm was newly operational and began sales in 2020, eligibility for qualified exemption status (for 2021 and until the end of the public health emergency) may be determined based on: 

1. Documentation (e.g., contracts with buyers) that provides a sufficient basis to establish that, had there not been market disruption due to the COVID-19 pandemic, the average monetary value of food sold directly to qualified end-users in 2020 was reasonably anticipated to exceed the average annual monetary value of food sold to all other buyers; and the monetary value of all food sold in 2020 was less than $500,000; and
2. Documentation that the average annual monetary value of all food the farm sold during the preceding three years (or the year(s) for which the farm was in operation if less than three years) was less than $500,000, adjusted for inflation.

Temporary food labeling policy: Minor formulation changes and vending machines

On May 22, 2020, the FDA issued guidance entitled “Temporary Policy Regarding Certain Food Labeling Requirements During the COVID-19 Public Health Emergency: Minor Formulation Changes and Vending Machines.” This guidance provides flexibility for manufacturers to use existing labels, without making otherwise required changes, when making minor formula adjustments due to unforeseen shortages or supply chain disruptions brought about by the COVID-19 pandemic. It also provides temporary flexibility to the vending machine industry regarding vending machine labeling requirements.

More specifically, the FDA guidance states that the FDA does not intend to object to temporary and minor formulation changes that do not have conforming label changes when there are supply disruptions or ingredient shortages as a result of COVID-19. This includes temporary omissions of minor, non-characterizing ingredients from a formulation without corresponding labeling changes; reductions of minor ingredients in a formulation without a labeling change if the reduction does not significantly change the order of predominance in the ingredient list; temporary substitutions of non-characterizing ingredients, which are generally present at two percent or less, for other safe and suitable ingredients (provided there are no safety or allergen concerns introduced); temporary substitutions of fats or oils which are not prominent ingredients without a label change; temporary substitutions of different varieties of the same ingredient without a labeling change; substitution of similar ingredients from a different geographic origin without a labeling change; and substitutions of unbleached flour for bleached without a corresponding label change.

Minor formulation changes are interpreted as follows:

• SAFETY: the ingredient being substituted for the labeled ingredient does not cause any adverse health effect (including food allergens, gluten, sulfites, or other ingredients known to cause sensitivities (see section C.2.a) in some people, for example, glutamates);  
• QUANTITY: the ingredient is generally present at two percent or less by weight of the finished food;
• PROMINENCE: the ingredient being omitted or substituted for the labeled ingredient is not a major (prominent) ingredient (for example, replacing rice flour for wheat flour in a muffin) or an ingredient that is the subject of a label statement (such as, butter in a cookie with a “Made with real butter” claim); 
• CHARACTERIZING OR INGREDIENT IN NAME: the ingredient being omitted or substituted for the labeled ingredient is not a characterizing ingredient (such as omitting raisins in a raisin bread) where the presence of the ingredient has a material bearing on consumer purchasing;
• CLAIMS: an omission or substitution of the ingredient does not affect any voluntary nutrient content or health claims on the label; and
• NUTRITION/FUNCTION: an omission or substitution of the labeled ingredient does not have a significant impact on the finished product (including nutritional differences or functionality).

Additionally, the May 22 Guidance provides that with respect to vending machine operators who own or operate 20 or more vending machines during the COVID-19 pandemic, the FDA does not intend to enforce vending machine labeling requirements for the duration of the COVID-19 public health emergency.

FDA reporting measures for food establishments Experiencing COVID-19 disruptions

On May 27, 2020, the FDA issued new guidance entitled “Reporting a Temporary Closure of Significantly Reduced Production by a Human Food Establishment and Requesting FDA Assistance During the COVID-19 Public Health Emergency.”  The guidance details a mechanism by which FDA-regulated establishments can voluntarily notify the agency of temporary closures and significant reductions of production during the pandemic and can request assistance from FDA regarding issues that may affect continuity of operations.  

The reporting and requesting protocol set forth in the guidance is as follows:  

1. Establishments that wish to voluntarily report a temporary closure/significant production reduction or request assistance should do so through the FDA’s Center for Food Safety and Applied Nutrition’s (CFSAN’s) Food and Cosmetic Information Center (FCIC).  The CFSAN FCIC can be accessed here; 
2. Check the box “Is your inquiry specific to Coronavirus?” on the FCIC webpage, which will display an option to choose to report a temporary closure or a significant reduction in production due to circumstances associated with COVID-19 and request assistance;  
3. Check the box “Report a Temporary Closure/Production Reduction and Request Assistance,” which will result in users receiving an email with a link to provide information;
4. Via the email link, complete and submit the form requesting the following information:
• Whether the establishment is a facility, a farm, or a mixed-type facility;
• Whether assistance is requested and a brief description of the nature of the request; 
• The name, address, and contact information for the establishment;
• If applicable, the Food Facility Registration Number and Food Establishment Inventory (FEI) Number, so that FDA can cross reference the notification or request with information in its databases;
• If applicable, information about when an establishment closed or reduced operations that significantly impact production (or estimates doing so) and an estimate of how long the establishment will likely remain closed or at partial operation; 

• Examples of reduced operations that significantly impact production include operation alterations that reduce production volume by a significant percentage (e.g., reductions of 15 percent or greater), but not temporary operation changes to accommodate activities like additional cleaning; and

• The number of employees at the establishment.

Temporary policy for alcohol manufacturers for incorporation into hand sanitizer products

On June 1, 2020, the FDA updated its guidance entitled “Temporary Policy for Manufacturers of Alcohol for Incorporation into Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19).” The guidance expands on the temporary policy FDA rendered in March 2020 and is specific to manufacturers seeking to produce alcohol (ethanol) for incorporation into alcohol-based hand sanitizers and does not extend to other types of active ingredients such as isopropyl alcohol.

The temporary policy states that due to the COVID-19 public health emergency, the FDA does not intend to take action against alcohol production firms that manufacture alcohol (ethanol or ethyl alcohol) for use as the active pharmaceutical ingredient in alcohol-based hand sanitizers for consumer use and for use as healthcare personnel hand rubs for the duration of the emergency, provided that the following circumstances are present:

1. To meet component quality requirements for hand sanitizer production, the alcohol manufactured as an active pharmaceutical ingredient is not less than 94.9 percent ethanol by volume.
2. Any water used to adjust the finished ethanol content in the alcohol active pharmaceutical ingredient is sterile (e.g., by boiling, distillation, or other process that results in water that meets the specifications for Purified Water USP). Water is used as quickly as possible after it is rendered sterile or purified.
3. The alcohol (ethanol) is denatured either by the alcohol provider or at the point of production of the finished hand sanitizer, with the alcohol intended for incorporation into a finished product labeled accurately as “denatured” or “undenatured” accordingly. Beyond alcohol, water, and denaturants (if added at the point of production), the alcohol production firm does not add other ingredients. Different or additional ingredients may impact the quality and potency of the finished hand sanitizer product and increase the risk of accidental ingestion in children.
4. The alcohol production firm ensures the ethanol content in the finished active pharmaceutical ingredient before being denatured is at least 94.9 percent by volume. If the alcohol is to be distributed to another firm for producing the hand sanitizer, it is labeled with the ethanol content determined by an appropriate test so that the hand sanitizer can be reliably produced at the intended labeled strength. A simple record should be used to document key steps and controls.
5. The alcohol is prepared under sanitary conditions and equipment used is well maintained and fit for this purpose.
6. The alcohol production firm uses the most accurate method of analysis available at the site for verification of ethanol content in a sample before each batch is released for distribution or for use in producing the hand sanitizer.
7. The alcohol active pharmaceutical ingredient, if distributed to other producers, is labeled consistent with the attached labeling in Appendices A and B.
8. Alcohol production firms register their facility and list these products in the FDA Drug Registration and Listing System. Firms that are required to register their foreign establishment with FDA must list all known importers in the United States in their registration. Upon completion of registration and listing, firms receive automatic confirmation from FDA and do not need to wait for further communication from FDA before the firm can begin to distribute these products.

Temporary policy for compounding of alcohol-based hand sanitizer products

On June 1, 2020, the FDA updated its guidance entitled “Policy for Temporary Compounding of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency Immediately in Effect Guidance for Industry.” The policy indicates that because of the public health emergency posed by COVID-19, the FDA does not intend to take action against compounders that prepare alcohol-based hand sanitizers for consumer use and for use as healthcare personnel hand rubs for the duration of the public health emergency declared, provided the following circumstances are present:

1. The hand sanitizer is compounded using only the following ingredients in the preparation of the product:
   1. Select one of two options:
      1. Alcohol (ethanol) that is not less than 94.9 percent ethanol by volume; OR (ii) United States Pharmacopeia (USP grade) Isopropyl Alcohol (IPA)
   2. Glycerin (glycerol) USP or Food Chemical Codex (FCC) (also known as “food grade”)
   3. Hydrogen peroxide
   4. Sterile water (e.g., by boiling, distillation, or other process that results in water that meets the specifications for Purified Water USP). Water should be used as quickly as possible after it is rendered sterile or purified.
2. The alcohol (ethanol) is denatured either by the alcohol producer or at the point of production of the finished hand sanitizer product. Alcohol and Tobacco Tax and Trade Bureau regulations in 27 CFR part 20 and 21, respectively, describe requirements pertaining to, and provide a number of formulas for, denaturing alcohol. Formulas for use in hand sanitizers under FDA’s temporary policies include:
   1. Formula No. 40A or No. 40B with or without the tert-butyl alcohol
   2. Formula No. 3C (isopropyl alcohol21)
3. The finished hand sanitizer product is compounded according to the following formula consistent with World Health Organization (WHO) recommendations:
   1. Alcohol (ethanol) (formulated to 80 percent, volume/volume (v/v)) in an aqueous solution; or Isopropyl Alcohol (formulated to 75 percent, v/v) in an aqueous solution
   2. Glycerin (glycerol) (1.45 percent v/v)
   3. Hydrogen peroxide (0.125 percent v/v)
   4. Sterile distilled water or boiled cold water

   And the compounder does not add other active or inactive ingredients, such as ingredients to improve the smell or taste due to the risk of accidental ingestion in children. Different or additional ingredients may impact the quality and potency of the product.

4. The compounder pays particular attention to ensure the ethanol or isopropyl alcohol active ingredient is correct and the correct amount of the active ingredient is used.
5. The hand sanitizer is prepared under conditions routinely used by the compounder to compound similar nonsterile drugs.
6. The hand sanitizer product is produced as an aqueous solution and not as a gel, foam, or aerosol spray. The compounder packages the finished hand sanitizer product in packaging appropriate for liquid drug products that will seal sufficiently to prevent evaporation of the alcohol or IPA. Manual pump sprays that seal sufficiently to prevent evaporation are consistent with this policy.
7. The hand sanitizer is labeled consistent with the attached labeling in Appendix A (Labeling for Ethyl Alcohol Formulation Consumer Use), Appendix B (Labeling for Isopropyl Alcohol Formulation Consumer Use), Appendix C (Labeling for Ethyl Alcohol Formulation Health Care Personnel Hand Rub Use), or Appendix D (Labeling for Isopropyl Alcohol Formulation Health Care Personnel Hand Rub Use).

If you have any questions regarding these new requirements and their implications, please contact the author or your DLA Piper relationship attorney.

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This information does not, and is not intended to, constitute legal advice. All information, content, and materials are for general informational purposes only. No reader should act, or refrain from acting, with respect to any particular legal matter on the basis of this information without first seeking legal advice from counsel in the relevant jurisdiction.