Recent Recalls Provide Insight in Avoiding Future Contaminations

When considering whether to obtain recall insurance, firms should keep in mind that insurance must be comprehensive and tailored to fit the specific needs and distribution of the particular firm. The insurance should cover not only the lost value of the defective product received from the supplier, along with the cost of replacing that product, but also all costs associated with the following:

• the lost value of downstream product;
• costs incurred in connection with consumer complaints or illness, including medical bills;
• expenses associated with lost productivity and loss of profits in the event of a plant shutdown;
• costs associated with storage, transportation, destruction, and disposal of defective product;
• media and public relations costs; and,
• attorneys’ fees.

Massive food recalls are likely to continue occurring until the FDA can devote more resources to conducting compliance investigations and other enforcement activities that will ensure that food processors are complying with GMPs and measures such as the records maintenance regulations. Even with additional government resources allocated toward addressing food safety issues, the food industry must take responsibility for ensuring the safety of the food supply. While implementing the recommendations outlined in this article will not prevent food contaminations and related recalls from occurring, they may help to safeguard against these occurrences—or at least help to contain them before they spread through the entire food supply chain.

Sunday is a senior counsel in Foley and Lardner LLP’s Washington, D.C., office. Reach her at (202) 295-4720 or [email protected].