Where is the Dietary Supplement Industry Vulnerable?

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New York, NY — The American Conference Institute’s 5th Annual Legal, Regulatory and Compliance Forum on Dietary Supplements, in partnership with the Council for Responsible Nutrition (CRN), gave the industry a picture of where it needs to concentrate its efforts through various panels this week.

For one, as we continue to transition into the Trump administration, John E. Villafranco, partner, Kelley Drye & Warren LLP, believes the U.S. Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) will be less activist compared to the Obama administration. This is based on the confirmation hearings of new FDA Commissioner Scott Gottlieb, who appears to have a pro-supplements stance. Additionally, FDA’s budget was significantly cut, leaving the Office of Dietary Supplement Programs (ODSP) underfunded, with a FY17 budget of $4.6 million. FDA has discretion over where it will devote its limited funds while industry lobbies the agency to earmark more money for ODSP. This limits FDA’s resources to take enforcement actions, but also slows the pre-market approval of dietary supplements and ingredients.

FTC leadership, in particular, is going through a major transition. Currently there are only two commissioners on what’s supposed to be a five-member commission, with one selected by the president to be chairman. Maureen Ohlhausen is acting chairman. The term of Terrell McSweeney, the only other commissioner, expires in September 2017. This will leave four open seats, including appointment of a chair.

Villafranco speculated on possible candidates who share an approach that opposes  aggressive oversight, in keeping with the politics of the Trump administration. Olhausen, for example, is known for advocating “regulatory humility,” but has a more aggressive stance on weight loss supplements, he said. The potential candidates, he added, were also linked in some way to former FTC chairman Tim Muris, who focused his energy on companies targeting vulnerable populations such as unscrupulous weight loss supplement companies. So this may be a reflection of the FTC that is to come.

However, recent FTC actions, particularly FTC vs. Bayer have really caught the attention of the industry. While breathing a sigh of relief that the court rejected the FTC demand that  dietary supplement manufacturers have two randomized controlled trials (RCTs) to substantiate advertising claims, a specter of anxiety has hung in the air. That is why trade organizations have invited FTC’s Richard Cleland, assistant director advertising practices, Bureau of Consumer Protection and Kat Dunnigan, senior staff attorney of the Advertising Self-Regulatory Council’s National Advertising Division (NAD) to discuss issues of advertising at events such as Natural Products Association’s The Big Natural and most recently the Legal, Regulatory and Compliance Forum on Dietary Supplements.

What we’ve learned is that while there is no set protocol for the number of studies required for substantiation of claims, clearly, some level of substantiation is required and at minimum, one well designed human trial should exist to support one’s claims. Issues that are on FTC’s radar, says Cleland, are withdrawal relief claims, pain-relief claims and memory claims. In one case of an unsubstantiated memory claim, FTC not only sued the manufacturer, but also the marketing company and other principals involved. In addition, FTC is keeping an eye on marketing that utilizes endorsements. Clearly, endorsements that are compensated for must be substantiated but even endorsements from strangers on social media that are appropriated by companies for marketing purposes must have the ability to be substantiated.

AGs May Fill A Vacuum

Keeping this in mind, the potential of a less aggressive federal regulatory environment is very real, leaving a vacuum likely to be filled by state attorney generals. Karl A. Racine, Attorney General (AG) of the District of Columbia addressed the forum on a panel alongside Sarah Topy, counsel, Procter & Gamble, George M. Karavetsos, attorney, DLA Piper LLP, and Justin J. Prochnow, shareholder, Greenberg Traurig, LLP. This provided a rare opportunity to get an attorney general’s perspective on enforcement actions and their outcomes. As many are aware, the actions of New York AG, Eric Schneiderman were game-changing, striking a major blow to the industry and have since influenced substantial initiatives at self-regulation such as CRN’s Supplement OWL and the Safety and Compliance Initiative.

Clearly, state AGs have a substantial platform on which they can influence change, even if the laws themselves aren’t necessarily changing. For example, Topy talked about how there remains the question of what is the right level of substantiation, because retailers are demanding substantiation for fear of actions from AGs or other agencies. This places a burden on the manufacturer. Racine expressed this is the result state AGs look for. It means their actions had an actual impact and made industry cautious. That is why these efforts at self-regulation are so valuable, because they give regulators less ammo and the industry better leverage. Another important thing to keep in mind is that state AGs are particularly sensitive to issues specific to their states or communities. Racine, for example, said that in D.C. this is diabetes, therefore supplements targeting blood sugar may be more vulnerable there. The most valuable piece of advice he gave is that industry should make an effort to have a dialogue with state AGs before any sort of actions take place and be proactive.

Currently, the regulatory environment, while looking up, is rather unpredictable, but by learning from our mistakes, being cognizant of important issues and actively self-regulating, we have the opportunity to thrive, protecting the industry from reproach and leaving unscrupulous companies to be dealt with, without negatively impacting industry as a whole.

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