Natural Products Insider

NOV-DEC 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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naturalproductsinsider.com 145 SupplySide West Preview compliance cost more for NBTY, but the additional terms can be tricky to implement, and failure to do so allows the government to come back with another enforcement action. Following the New York AG's initial actions, the Oregon AG, working with FDA, fi led suit against GNC in October 2015. According to the Oregon AG, GNC violated the Oregon Unlawful Trade Practices Act by selling dietary supplements wrongfully containing picamilon and BMPEA (beta- methylphenethylamine). As a result, the complaint alleged the supplements were unapproved drugs that may not be lawfully sold in the United States. Attached to the Oregon AG's complaint was a declaration from an FDA offi cial, Cara Welch, Ph.D., who explained picamilon is not found in nature and does not fi t any of the dietary ingredient categories under the Federal Food, Drug and Cosmetic Act (FD&C). FDA then followed up in December 2015, sending warning letters to companies marketing dietary supplements containing picamilon. As exemplifi ed above, AGs often work together. Another way that AGs communicate is through the National Association of Attorneys General (NAAG). NAAG provides the AGs with training, research and analysis on a variety of subjects. It also affords the AGs a forum for pooling their knowledge and resources and discussing commonly observed issues. These efforts sometimes result in collective AG action. The AGs also sometimes work with FTC. For example, in January 2017, FTC and the New York AG together sued dietary supplement manufacturers and sellers in the Southern District of New York. According to the complaint, the marketers allegedly made false and unsubstantiated claims that their product improves memory, provides cognitive benefi ts and is clinically shown to work. In September 2017, the court granted the defendants' motion to dismiss, and the appeal to the Second Circuit is currently pending. Similarly, in February 2017, FTC and the Maine AG sued nine defendants, alleging they deceptively marketed two dietary supplements, CogniPrin and FlexiPrin. The defendants include both entities and individuals, who were named both in their individual capacity and in their offi cial capacity. According to the agencies, the defendants used radio infomercials deceptively formatted as talk shows, featuring purported experts who made unsubstantiated claims that the supplements improve memory and reduce back and joint pain. The agencies also alleged defendants published print ads featuring fi ctitious endorsers to make similarly false and misleading claims. Along with the complaint, the agencies simultaneously fi led three settlements with six defendants, barring them from making similar claims and prohibiting them from engaging in a range of marketing practices. In August 2017, FTC settled with the remaining three defendants. These settlements bar the defendants from engaging in the conduct alleged in the complaint and require them to pay FTC so that it can refund consumers. The genesis of AG actions in dietary supplement cases can often result from something entirely unrelated to the product's health claims. AGs must be responsive to consumer complaints— consumers are, after all, capable of fi ring AGs who they think aren't doing a good job. Accordingly, AGs place great emphasis on responding to consumers complaining about out-of-pocket losses. Ineffective products that have continuity plans and recurring charges are likely to generate consumer complaints, and AGs take these seriously. The consequences of AG actions can be quite signifi cant for the targets of an investigation. Apart from the costs of the investigation with fees and document production, and then any settlement costs and ongoing costs of compliance, the negative press associated with AG actions is often followed by private class actions. The industry response has been impressive, seeking to engage in outreach to the AGs. For example, in early 2016, the Council for Responsible Nutrition (CRN) invited the Alabama AG to tour a dietary supplement manufacturing and packaging facility. Events like these can educate the AGs on how the industry follows cGMPs and is regulated, and how "responsible parties" conduct business. While the policy decisions and guidance of FTC and FDA must be the primary focus of attention for the dietary supplement industry, the above litany of actions demonstrates AGs are often the foot soldiers for costly enforcement actions. With an AG's mandate to respond to consumer complaints—and the threat of an AG being fi red for failing to do so—a company that generates unhappy consumers can easily fi nd itself being the center of an AG's attention. Outreach to AGs will not only build up an understanding of the industry and the best practices of its participants—it will also go a long way toward establishing effective lines of communication between the industry and state enforcers. That said, the best defense for members of the industry will be to have solid marketing disclosures, solid substantiation for health claims and solid customer service. These measures will ensure consumers aren't complaining about a company's supplements, but getting out of them all the results that were promised. Richard Lawson is a partner in the consumer protection practice of the law fi rm Manatt, Phelps & Phillips LLP (manatt.com), where he concentrates his practice on FTC and state attorney general investigations and litigation. Before joining Manatt, Richard served as the director of the Consumer Protection Division for the Florida Attorney General's Offi ce. Shoshana Speis er is a litigation associate in Manatt's New York offi ce. With an AG's mandate to respond to consumer complaints—and the threat of an AG being fired for failing to do so—a company that generates unhappy consumers can easily find itself being the center of an AG's attention.

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