Nutraceutical and Dietary Supplement Companies Come Under Increased Scrutiny

General News & Firm Announcements   |   Thursday, August 08, 2019

Crossover Regulatory Authority of the FTC-FDA

"Let food be thy medicine and medicine be thy food." - Hippocrates

This inspiring quote, attributed to Hippocrates, has all but become an underlying assumption that drives the nutraceutical and dietary supplement industry. Trouble is, Hippocrates never said it. In fact, a 2013 research report indicates that there was no such statement in his writings. 

Nevertheless, the misquotation has given some members of the scientific community a plausible argument. Since nutraceuticals and dietary supplements are derived from foods, the assertion goes, they provide increased health benefits over the basic nutritional value found in regular foods. But, it’s also worth noting that the father of Western medicine himself had concluded something different. Hippocrates drew a clear line between the efficacy of medicine and food, never confusing one with the other.

Most nutraceutical and dietary supplement companies make claims that, by taking their nutritional supplement products, a person can maintain and improve health, delay the aging process, support healthy functioning, and prevent - and even cure - chronic diseases. And, indeed, recent scientific research does support some of these claims.

Today, the oft-quoted Hippocrates is of little concern to the Federal Trade Commission and the Food and Drug Administration. But, what does keep them active is ensuring that marketers and manufacturers sell safe products while making claims that are honest and not misleading.

While the regulatory environment rarely remains unchanged, companies launching new products and making new types of products claims must know the limits of their claims pertaining to health, disease prevention and cures. This article is aimed at providing insights and steps that you can take to avoid FDA and FTC investigations and enforcement, allowing you to remain a credible and honest player in this important industry. 

We’ve come a long way since the age of Hippocrates…

These days, the nearly universal acceptance of the health benefits of nutraceuticals and dietary supplements has lead to the rise of a $40 billion industry. According to the FDA, there are 80,000 dietary supplement products available to American consumers. Three out of four Americans take a dietary supplement on a regular basis, according to FDA Commissioner, Scott Gottlieb. 

With a marketplace that big, it should come as no surprise that federal agencies are now looking more closely at companies that make false health claims about their products, or sell products of dubious safety. Importantly, only FDA-approved pharmaceuticals may be labeled with statements about curing diseases, and marketing materials are often considering “labeling.”

In his February 2019 statement, Gottlieb announced that the FDA will be increasing its scrutiny and enforcement to ensure that American consumers taking dietary supplements are not at risk of negative health consequences.

In The Beginning There Was Orrin Hatch, The Grandfather Of The Supplement Industry

Former U.S. Senator Orrin Hatch of Utah is arguably the single most important individual responsible for the legislative and legal framework that allows the dietary supplement industry to flourish. He is widely credited with personally ushering through Congress the Dietary Supplement Health and Education Act of 1994, (DSHEA). The Act permits a company to make health claims about their dietary supplement products while exempting them from federal review and oversight about their effectiveness and safety prior to going to market. As a result, it is only after the FDA is informed of health and safety issues that it can investigate claims and bring enforcement action. This tends to suggest that the FDA has been left with somewhat toothless regulatory enforcement power under DSHEA. 

The Act also exempted - or grandfathered - dietary supplement products from FDA approval, if they were on the market prior to 1994. Thus, manufacturers are free to market dietary supplement ingredients that were marketed prior to 1994 without notifying the FDA. If a manufacturer desires to market a new dietary ingredient that was not on the market prior to 1994, then the manufacturer must merely provide notice to the FDA of history of use or other evidence that the new dietary ingredient is reasonably expected to be safe. Notably the FDA does not approve new dietary ingredients; instead, manufacturers merely give the FDA notice of their future use of these new ingredients.

Depending on which side of the regulatory divide you're on, the Act has exuberant supporters and vocal detractors. Some say it has resulted in a robust innovative industry. Critics assert that it has left the door open for unscrupulous operators to sell products with bogus ingredients - or worse - products that are dangerous and that have caused hospitalizations and even death. 

For Hatch though, his loyalty to the supplement industry in Utah has worked in mutually beneficial ways. 

Since its passage, "the supplements industry grew from $9 billion in 1994 to more than $50 billion today," according to a Los Angeles Times article. Today, in Utah, the supplement industry is worth more than $7 billion, and is the biggest industry in the state, thanks in large measure to Hatch and his colleagues.

In return for his fealty, Hatch has received generous campaign contributions from Utah dietary supplement firms, which most likely helped him secure his Senate seat for 42 years. His son, Scott Hatch, is a successful industry lobbyist, “as are at least five of the senator’s former aides.” His grandson and son-in-law sell herbal and nutritional treatments at their Utah chiropractic clinic which adds to their revenue and income, according to a New York Times article. 

While this article takes no position on the strengths and weaknesses of DSHEA, it is important to point out its consequences for both the industry and for consumers. 

Consider these recent enforcement actions:

  • The FDA issued warnings from 2007 through 2016 indicating that “unapproved pharmaceutical ingredients were identified in 776 dietary supplements, and these products were commonly marketed for sexual enhancement, weight loss, or muscle building.” 
  • February 2019: the FTC took enforcement action against 17 companies making illegal claims about their product’s ability to increase cognitive function. 
  • January 2018: the FDA and the FTC sent warning letters to 11 companies selling products that "illegally" claimed to cure or treat opioid addiction and withdrawal.
  • 2013: Hawaii Department of Health reported that seven previously health patients developed severe acute hepatitis and liver failure after using OxyELITE Pro, a dietary supplement promoted for weight loss and muscle increase. The Centers for Disease Control and Prevention attributed 47 hospitalizations, three liver transplants, and one death to OxyELITE. 
  • 2015: Eric T. Schneiderman, the New York State attorney general, requested that retailers remove certain supplements from their shelves after state testing concluded that many products were fraudulently claiming that products contained certain ingredients. For example, Walmart was selling a Ginkgo biloba that contained no Ginkgo biloba DNA. According to the New York Times, “it was a mixture of rice, mustard, wheat and radish.”

Still, on the positive side, there is a growing body of scientific evidence to suggest that some nutraceuticals can lead to positive outcomes, especially in certain complementary cancer treatments. However, only FDA-approved pharmaceuticals have governmental permission to be labeled with statements about curing diseases, due to the fact that these companies and products are under strict FDA regulation.

The Intersection of FDA & FTC Jurisdiction: It’s Shades of Grey

In the race to get products to market, the "act now, ask questions later” marketing strategy can often be a serviceable one - until your company receives a letter from the FDA or the FTC. 

That said, understanding the nuances of FDA and FTC regulations about advertising, labeling, and promotion can be a challenge. That’s why we suggest that you contact our experienced legal team before you launch a marketing campaign. Kronenberger Rosenfeld has successfully assisted many clients with FDA and FTC legal compliance matters. 

The FDA and FTC have historically focused on their different jurisdictions. For example, the FDA enforces claims made in packaging and labeling, while FTC enforcement deals with advertising claims.

Today, the distinctions between labeling and advertising and the boundaries of FDA and FTC enforcement are not always straightforward, especially with the rise of websites, social media platforms, mobile apps, and influencer marketing.

For example, there have been cases where the FDA interpreted claims posted on websites as labeling, even though website claims functioning as advertising traditionally come under FTC oversight. In fact, the FDA’s explicit opinion is that when a company references its website on its product label, under certain circumstances that website is “labeling.” See Wilson v. Frito-Lay North America Inc., 961 F.Supp.2d 1134, 1143 (N.D. Cal. Apr.1.2013), for a discussion of this topic.

To 'Like' Or 'Unlike': That's The Question

Social media platforms like Facebook and Twitter have created an entirely new paradigm for marketers. And, by extension, an entirely new set of issues for the FTC and FDA. 

Thus far, both agencies have considered these platforms as advertising. But, does a 'like' or a 'retweet' by a company constitute an endorsement by the company of a disease curing claim? For the FDA, the answer is, it depends. 

In 2012, the FDA took the unprecedented step of issuing a Warning Letter to AMARC Enterprises for allegedly promoting PolyMVA as a drug that can be used “in the cure, mitigation, treatment, or prevention of disease.” The company posted a ‘like’ on its Facebook page after a consumer posted a favorable comment about how the supplement helped stave off the consumer’s cancer without the use of “chemo and radiation.” The message was clear. Manufacturers and marketers who “like” Facebook comments are endorsing the underlying claim. 

Even though the FDA did not expand on how “liking” a user’s comment amounts to a drug promotion, it suggests that the FDA considers “liking” a third-party disease-curing comment as establishing a claim that implies a cure for a disease. 

The FTC Carries a Big Stick

While FDA regulations covering dietary supplements have historically been weak, FTC oversight is real and a major threat to marketers that cross the line into explicit or implicit false marketing claims. Remedies that the FTC may seek in an FTC lawsuit or administrative action include:

  • Temporary and permanent injunctions, restitution, consumer redress, and civil penalties.
  • Cease and desist orders containing provisions that can run the gamut from relatively mild restrictions to highly restrictive provisions that can have a major impact on a business, especially if the restrictions are on products strategically positioned to a company’s growth.
  • Civil penalties and damages in the millions of dollars are not uncommon.
  • Corrective advertising, including disclosures, which can have damaging effects on a company’s reputation.

If the FTC settles a case, it is often through a stipulated final court order and injunction in federal court, with provisions regarding prohibited conduct, periodic reporting requirements, record keeping requirements, money damages and civil penalties paid to the FTC, and retention of court jurisdiction for at least fifteen or twenty years. 

FTC and FDA Issues are Hard. Getting Help is Easy.

If your company is facing issues related to complying with FTC and FDA rules regarding the marketing of dietary supplements, we would be happy to bring our experience to bear for you. We look forward to assisting you.  You can also find some great information in The Essential Guide to FTC Compliance, Investigations and Enforcement.

Karl Kronenberger
(415) 955-1155, ext. 114
[email protected]

 

This entry was posted on Thursday, August 08, 2019 and is filed under General News & Firm Announcements, Internet Law News.




Karl S. Kronenberger
Partner




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