Natural Products Insider

SEP-OCT 2018

INSIDER is the leading information source for marketers, manufacturers and formulators of dietary supplements, healthy foods and cosmeceuticals. Since 1997, INSIDER has been serving the needs of the global nutrition industry.

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34 INSIDER September/October 2018 Similar to a gazelle roaming the African plains, a dietary supplement company must be aware of various threats that lurk in the distance. To succeed in this highly competitive industry, dietary supplement companies often seek the newest ingredients and innovative delivery methods. They also rely on advertising the benefi ts of their products to gain new customers and a greater share of the market. Most companies understand they must comply with federal regulations (FDA and FTC) and individual state laws, but often they forget about private actions. It's common to associate enforcement against a dietary supplement company (at the hands of a private attorney) with personal injury lawsuits brought when a consumer sustains injury from using a product. This type of risk can often be mitigated by having adequate liability insurance and using ingredients that have a long history of safety data to support them. However, over the years, there has been a rise of class-action lawsuits based on a false advertising or misbranding theory. The term "class action" refers to a type of lawsuit, brought in either state or federal court, on behalf of a group of individuals who have suffered similar harm or losses. Class-action lawsuits usually seek monetary damages on behalf of the group of plaintiffs, referred to as the "class." Rather than naming each individual plaintiff, a class-action lawsuit will typically name one individual, the "lead" or "named" plaintiff, to represent the entire group. Two popular types of class-action lawsuits brought against dietary supplement companies are those based on false advertising or misbranding. These types of class-action lawsuits are based on the theory that consumers were defrauded into purchasing the product. The class-action lawsuit based on false advertising alleges the claims made about the product at issue are not substantiated, and therefore, consumers purchased the product based on false and misleading advertising. The standard for substantiation is "competent and reliable scientifi c evidence." Per FTC, this means claims made about a dietary supplement must be based on "tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner by persons qualifi ed to do so, using procedures generally accepted in the profession to yield accurate and reliable results." Class-action attorneys commonly argue the studies used to support the claims are based on a larger dosage than those used in the product. For example, if the research states 5 g of creatine can increase strength, but the supplement contains 3 g of creatine, a claim that the product can increase strength would not be substantiated. As a result, to reduce the risk of this type of class-action lawsuit, dietary supplement companies should ensure their formulations use equal, or greater, dosages as those used in the studies that support their claims. The second type of class-action lawsuit is based on misbranding. Under the Dietary Supplement Health and Education Act of 1994 (DSHEA), a "dietary supplement" is a product that contains one or more "dietary ingredients." Dietary ingredients are defi ned as vitamins, minerals, herbs or other botanicals, amino acids, and dietary substances for use by man to supplement the diet by increasing the total dietary intake. Dietary ingredients also include extracts, metabolites or concentrates of the preceding substances. Class actions based on misbranding allege one or more ingredients in the product do not meet the defi nition of "dietary ingredients," and, as a result, labelling these products as "dietary supplements" causes the product to be misbranded under the law. The class-action attorney will argue that consumers who purchased these products did so based on the false representation that the product was a dietary supplement. To reduce the risk of this type of class- action lawsuit, it is vital dietary supplement companies ensure all the ingredients used in their products meet the DSHEA defi nition of "dietary ingredients." Class-action lawsuits are diffi cult and expensive to defend. Settlement will involve a payment of money. It can occur at various stages, and it is prudent not to ignore a demand letter, but to address it sooner rather than later. If it goes to the litigation stage, it is usually resolved with a payment to all members of the class in the form of a refund, a coupon for future purchases, or some other remuneration. However, the defendant must also pay all the administrative fees, a cash payment to the lead plaintiff and the plaintiff's attorney fees for bringing the action, which is usually the biggest expense. This is in addition to the defendant's own attorney fees and costs. Supplement companies thinking about formulating and advertising a new product should give thought not only to what a regulator may say, but whether the company has made itself an easy target for a class-action lawsuit. Jonathan (Jay) Manfre, Esq., is an associate attorney at Collins Gann McCloskey & Barry PLLC (cmgesq.com). Alan Feldstein, Esq., is of counsel to Collins Gann McCloskey & Barry PLLC. The Rising Prevalence of Dietary Supplement Class-Action Lawsuits by Jay Manfre and Alan Feldstein Legal: Class-Action Lawsuits Class-action lawsuits are difficult and expensive to defend. Settlement will involve a payment of money.

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