Does pre-market notification, proposed as way to regain consumer confidence, have an anti-competitive streak?

By Hank Schultz contact

- Last updated on GMT

Image: © iStockPhoto / bernie_moto
Image: © iStockPhoto / bernie_moto

Related tags: Dietary supplement

Discussions continue within the industry whether some form of pre-market notification could be a valuable modification of existing dietary supplement regulations.  But rifts are appearing over whether the implementation of such a system might unfairly benefit some companies over others.

The issue has been percolating for a while​ and was brought to a head by publicity surrounding the investigation of herbal dietary supplements by New York Attorney General Eric Schneiderman. In the view of some industry insiders, Schneiderman’s attack exposed weaknesses within the regulatory structure put into place  by the Dietary Supplements Health and Education Act of 1994 (DSHEA). In their view the “not regulated/lightly regulated” drumbeat has had its effect and can no longer be ignored.

Time for a change

One of the proponents of regulation modification is Mark LeDoux, CEO of contract manufacturer Natural Alternatives International Inc. LeDoux said he’s convinced something must be done to regain consumer confidence in the industry. LeDoux is not alone in remarking on how few consumers seem to have come to the defense of dietary supplements during the NYAG affair. LeDoux said he will be hosting a meeting soon at his offices in the Los Angeles area with several senior executives of major companies to further discuss the plan. LeDoux said he hasn’t hidden his advocacy of the idea, having written about it on his CEO blog.

“It points out why I think it’s time to consider a national dietary supplement registry. The idea is modeled after the Canadian system, where companies have a unique number on their products. Any of us who have been involved in making products and selling products internationally have already dealt with this idea. We are not talking about any additional effort than what is involved in registering for those systems,” ​LeDoux told NutraIngredients-USA.

LeDoux said the system under consideration within his group is not as extensive as the Canadian system, in which safety and to some degree evidence of efficacy are adjudicated within the registration process. The advantage to industry is that some potentially powerful health claims can then be made on products, but the system has proven to be costly and cumbersome in that it requires the submission of detailed dossiers. Rather, LeDoux said the registry was envisioned as a notification process in which a company would say, this is who I am and where I can be located and here’s the product I intend to market and what it contains.

“We are not talking about any additional work,”​ LeDoux said.

Steve Holmes, regulatory affairs manager for Metagenics, said he believes the time has come for such a discussion, even if many industry insiders are squeamish about discussion modifications of DSHEA.

“I know there are some people out there who are saying that is very dangerous and we shouldn’t even talk about it, but I think that’s naive. There should be some sort of educated, rational discussion within the industry,”​ he said.

"I would rather have the industry control a notification/registration process and not have Congress or the government regulators tell us what the next step will be. Out of all of the developed countries the US is probably the only one that does not have some sort of premarket notification. If you look at Canada, Europe, Japan, South Korea . . . all of these have countries some sort of system in place. I think it’s a little naive to think that the US is going to continue to be the only one that does not have something like this in place,”​ Holmes said.

Supplements and bottle © monticelllo
The notification process would say, this is who I am and where I can be located and here’s the product I intend to market and what it contains, said Mark LeDoux.Image: © iStockPhoto / monticelllo

Misplaced effort?

Jim Emme, CEO of finished goods manufacturer NOW Foods, said while he has closely monitored the discussions around the notification proposal, he's not sure it's where the industry ought to be focusing its attention. Issues of adulteration are what really threaten consumer confidence, and potentially their health and safety, he said.

"We believe that the biggest problem in our industry is an inconsistent supply chain. The source of ingredients is more diverse than it ever has been. We see more and more problems with ingredients than we did in the past and we reject more and more material. I don't know where that material goes after we reject it,"​ he said. "You have to be vigilant in your testing for contamination and adulterants. We believe that's where the industry should be putting its efforts."

Possible limitation of consumer choice

But the executives of some companies view this movement with suspicion. Rhetoric about reestablishing consumer confidence is all fine and good, but what kind of a marketplace might result? When the dust settles, would the additional costs of the system being proposed have pushed some smaller companies out of business to the benefit of their larger, better funded competitors?

In the view of many within the industry the Canadian system seems to have done that to some degree. The costs of registering products has been seen to greatly limit the choice available to Canadian consumers.

“If people are talking about what effect the Canadian model has had, it adds such costs to a product,” ​said Beth Lambert, CEO of Herbalist & Alchemist, a smaller company with an extensive list of tinctures and other herbal products. The cost of entering the Canadian market was such that the company decided they couldn’t do it themselves.

“We actually got a Canadian partner who is committed to being in the Canadian market and they spent thousands of dollars to do the necessary work and they only want to carry what they consider to be high value products,”​ she said. Some of H&A’s product list, products which Lambert believes can be of great benefit to a small number of consumers with a particular health complaint, just didn’t make sense for that partner, she said, so Canadian consumers simply have to do without.

“I honestly think that we have sufficient regulation at this point. I just really think it needs to be enforced. If you are a dietary supplement manufacturer, you already need to register your facility with FDA. By law under the dietary supplement regulations we have to have contact information on every bottle. I’ve never had anyone complain about not being able to get information on our company or that we don’t answer questions,​” Lambert said.

“Unless we are really talking about people who are bad actors, people who are not following the law. I don’t know if additional regulation is going to get those people to comply,”​ she said.

Anticompetitive concerns 

The Canadian model adds costs to a product, and limits the choice available to Canadian consumers, said some industry sources. Image: © iStockPhoto

“The question is how is this benefiting the consumer? I don’t see any of the small companies jumping up and down saying this is going to really improve out industry. It may benefit the pocketbooks of certain companies that produce things in large amounts,” ​Lambert said.

While proponents of the system say that the burdens it might impose would be light, even a small straw could break a diminutive camel’s back, say small company advocates. FDA already seems to have too much to do, so a user fee seems the most likely way a new regulatory structure could be funded.

“A user fee may be established if there is pre-market registration," ​said Metagenics' Holmes. "If it is a significant amount of money it will be a hardship for some companies. If there were user fees of hundreds of dollars it could definitely put a lot of smaller companies, especially the herbal companies, out of business. It would be a disaster for the industry.”​ 

Much of the information being envisioned for the registration system is already being collected by one agency or another or provided to consumers in some way. Production facilities must be registered both under the Bioterroism Act and the Food Safety Modernization Act. Certain information is required to be on product labels, including ingredient information and allergen warnings, and labels must have company contact information so that consumers can report adverse events. Information that appears on packages is being gathered by the National Institutes of Health in a dietary supplement label database. 

Cost of doing business?

Some observers say, however, that it can be difficult for outsiders not familiar with the industry to know where to go to get the information they might need quickly, as in a case of a toxic reaction. If the burdens of a registry could be kept within reason, such a system, with all that information in one place, could address those criticisms and help bolster consumer confidence, proponents say.

“In its most simplified form, yes, for some level of comfort, I would agree that such a pre-market registration could actually be good for the industry, and such a move has the potential to improve upon DSHEA,” ​said Shaheen Majeed, marketing director for ingredient supplier and contract manufacturer Sabinsa Corp.

LeDoux said that the anti-competitive concerns aside, a system along the lines of what he’s proposing may very likely become a simple cost of doing business.

“I sell products in 40 countries and in 39 of them I have to go through this process. Self regulation was a nice try but I don’t know that is has worked,”​ he said.

“I have had a conversation with a prominent critic of our industry who thinks this is a great idea. If we are going to regain and establish consumer confidence I think we need to consider this,” ​LeDoux said.

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1 comment

The safety of your supply chain

Posted by Jeff Nedelman,

If you cannot guarantee the very basic thing, the safety of your supply chain, why should you be in business? What are you really selling? You don't know.

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