Unclear Benefits, High Costs Drive Early Lack of Interest in FDA's VQIP Trusted Trader Program

As this year’s deadline for applications for the Voluntary Qualified importer Program approaches, formal interest in the Food and Drug Administration’s trusted trader scheme for food importers is nearly non-existent, despite high hopes from the agency when it was announced several years ago. Unclear benefits, a high cost of participation and a multitude of barriers to entry are among several issues keeping importers away, experts on importing food say.

FDA recently announced the approval of Costco as VQIP’s first participant, for the fiscal year 2020 program year. But a Freedom of Information Act request submitted by International Trade Today revealed that FDA only received one other application to participate in FY20, and that, as of early March, no importers had applied to participate in FY21.

The application deadline for FY21 is still some ways off at the end of May, and FDA remains hopeful participation in the program will increase. “While FDA cannot forecast participation in the VQIP at this time, the agency expects to see continual, growing interest in the program as benefits are realized across the food industry,” an FDA spokeswoman said. But current levels are far from the 200 applications FDA said it expected to approve in the program’s first year when it issued the guidance document outlining VQIP in 2016 (see 1611100028).

Part of the problem is that the program lacks clearly defined benefits, said Richard Chiang, a consultant with FDA Specialist and former FDA official. One perk of VQIP participation is prioritization of laboratory samples. But there isn’t an established time frame for FDA lab testing. It can take a week, several weeks or even months. That makes it hard to tell whether any given shipment really gets through it quicker, Chiang said. There’s “no accountability” for FDA to prioritize VQIP participants.

Another promised benefit is that FDA will limit sampling and examinations to “for cause” situations and statistically necessary risk-based microbiological samples. “That’s 90% of FDA tests,” Chiang said. “Everything is ultimately going to be used for statistical analysis at FDA,” Chiang said. FDA may really not take a sample of a given shipment from a VQIP importer, but it could also take a sample and cite its policy on obtaining statistically necessary microbiological samples, he said. “There’s not a lot of assurances there. What FDA offers is just not very clear.”

And in any case, once an importer establishes a history of compliance, it’s not going to be examined too much anyway, said Erik Lieberman, president of US Food Imports. FDA’s PREDICT risk screening system is going to target new importers and products from new suppliers, not importers with a good compliance history, he said.

The lack of clear benefits is compounded by the high cost of VQIP participation, Lieberman said. The fee for participation in FY20 was $16,681 (see 1907240039), and that covers only one year in the program. “You had better be importing a lot and seeing a significant benefit to justify that cost,” he said. Certainly a smaller importer is not going to want to pay it.” And there are other costs, too, including annual third-party audits for each supplier of food covered by the importer’s VQIP application.

Seeing enough benefits to make that cost worth it is also difficult because of the way the program is structured, Lieberman said. FDA only approves specific foods from specific suppliers for VQIP on a product-by-product basis. An importer that imports the same product from the same supplier year after year may find the program worthwhile, but a retailer sourcing from a variety of suppliers and changing suppliers regularly might find it hard to justify VQIP’s time and effort.

While some of VQIP’s requirements are mandated by law, some increased flexibility from FDA could help the program gain steam, Lieberman said. FDA could approve product categories instead of specific products to allow more foods to benefit without amending an application or conducting another supplier audit. Or the program could be made more like the Customs-Trade Partnership Against Terrorism (C-TPAT) in that it applies to all of an importer’s shipments in some way, he said. For example, all food shipments from a VQIP participant could get a lower risk score in PREDICT, while foods specifically covered by the program get an even lower score.

Chiang, who has had a couple of inquiries from clients expressing interest in VQIP participation, said the conversation usually “stops when they hear about the user fee.” But it’s not a given that VQIP will be a failure, he said. “I think a lot of people are in wait-and-see mode, and that’s why they’re not committed yet. They want to see how other companies benefit.”