Dive Brief:
- The FDA released draft guidance Friday that will assist qualified facilities — like "very small businesses" — in complying with FSMA preventive control rules. The FDA opened the draft guidance to public comment for 180 days starting today before finalization.
- "Qualified facilities" follow modified versions of the FSMA preventive control rules as compared to larger manufacturers.
- Under the draft guidance "very small businesses" average less than $1 million in annual sales, adjusted for inflation, during the 3-year period prior to the applicable calendar year. Also included in that figure is the market value of any products that are manufactured, processed, packed, or held without sale, such as being held for a fee at a warehouse.
Dive Insight:
A very small business no longer qualifies if it is acquired by a parent company that has sales that exceed $1 million, either on its own or when combined with the smaller company. Once a startup of that size agrees to be acquired by a larger manufacturer, it loses its ability to qualify for the modified preventive control rules. This may be a hindrance to major manufacturers trying to buy up very small but promising businesses.
Once this guidance is finalized, major manufacturers that acquire "very small" businesses may have to provide assistance to the startup to help it comply with the standard preventive controls rules. Previously, that startup would have qualified for and adhered to the modified version.
Manufacturers may need to provide capital to enable the startup to purchase equipment or hire additional staff that will make their facility and operations compliant with standard preventive controls requirements.
According to the draft guidance, a facility may also qualify if:
"During the 3-year period preceding the applicable calendar year, the average annual monetary value of the food manufactured, processed, packed or held at such facility that is sold directly to qualified end-users during such period exceeded the average annual monetary value of the food sold by such facility to all other purchasers," and "The average annual monetary value of all food sold during the 3-year period preceding the applicable calendar year was less than $500,000, adjusted for inflation."
A manufacturer is left to determine on its own whether it is a qualified facility or not, subject to FDA verification.