Proposed Rule for Preventive Controls for

Animal Food

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Preliminary Regulatory Impact AnalysisU.S. Food and Drug Administration

Benefits of Proposed Rule• Reducing adulterated animal food incidents

would:– Reduce the risk of serious illness and death to

animals– Reduce the risk of adverse health effects to humans

handling animal food, and– Reduce the risk of consuming human food derived

from animals that consumed contaminated food

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Fewer Illnesses• The Preventive Controls for Animal Food rule is

not expected to prevent all illnesses associated with animal food contamination. It is expected to reduce some portion of contamination events.

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• Three options for definition of very small business: (based on size of qualified facilities – exempt

from preventive controls section)– Option 1: < $500k– Option 2: < $1 million– Option 3: < $2.5 million

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Analysis of Economic Impacts

Total Domestic Costs

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• Total annualized domestic costs

– $500k : $95 million – $1 million : $89 million – $2.5 million : $65 million

– Average Annualized Cost: $17,700 per facility*

(* facilities subject to both GMPs and preventive controls handling only animal food)

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Total Foreign Costs

• Total annualized foreign costs

– $500k : $34 million– $1 million : $30 million– $2.5 million : $22 million

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Major Costs to Facilities • Subject to Hazard Analysis and Preventive

Controls Requirements

• Major costs are for:– Hazard analysis – Process controls – Various sanitation controls– Monitoring and verification activities– Corrective actions

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Costs to Qualified Facilities • Total annualized cost under each option

– $500k : $2.7 million– $1 million : $3.6 million– $2.5 million : $6.8 million– Average Annualized Cost: $1,800 per facility

• Learn about rule• Attest to qualified status• One-time label change• Additional labor for GMPs

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Domestic Facility Count

• The rule covers most facilities required to register with FDA – We estimate 6,300 domestic facilities– Includes most FDA-regulated animal food

establishments in the U.S. – Another 6,800 domestic facilities handle foods

for both humans and animals

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Qualified Facilities

• From FDA Animal Food Facilities Registrations and Census data reported sales

– 1,500 facilities below $500,000 annually– 2,000 facilities below $1 million annually, and– 3,800 facilities below $2.5 million annually

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Foreign Facility Count• We estimate 1,800 foreign facilities that

only handle animal food

– FDA’s Food Facility Registration database – Includes foreign facilities that have registered

since 2010– Most foreign facilities that import to the U.S.

must satisfy the requirements of this rule – Another 3,900 foreign facilities registered as

handling foods for both humans and animals

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Example of an Estimated Cost to a Facility

• Hazard analysis – Initial cost to conduct hazard analysis and

create a written report• 24 hours x average cost of $88/hour

– Annual costs to update hazard analysis• 50% of initial cost

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Primary Data Sources

• ERG Report – Cost analysis of draft rule

• FDA Food Registration Database

• CVM/FDA subject matter experts

• Food GMP Survey – current/baseline industry practices

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Primary Data Sources (cont.)• Industry experts – expert elicitation about

food industry practices• Bureau of Labor Statistics, occupational

employment statistics for animal food industry (2012)

• Economic Census data (2007) for facility sizes

• Public data on current industry practices• What it will cost to comply with the rule –

individual provision cost estimates• Costs to facilities handling human and

animal foods• Impact to foreign facilities

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Some Areas for Your Comments

• Whether the rule will accomplish intended risk reduction

• Which option to use – number of qualified facilities

• Alternative regulatory options

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Some Areas for YourComments (cont.)

• Available at: http://www.fda.gov/downloads/Food/GuidanceRegulation/FSMA/UCM366905.pdf

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Preliminary Regulatory Impact Analysis