The Success of Supplements

May Be Their Undoing

by Scott Tips

Editor of Health Freedom News
Board Member and Legal Counsel for NHF

Summer 2004

Many years ago I was representing a client selling a homeopathic product that, because of its huge success, had encountered the unwanted attention of the Food and Drug Administration. In a meeting with one of the FDA agents in charge of its investigation of that product, I was told in a moment of candor that “We are only interested in taking action against your client’s product, or any other homeopathic product for that matter, because it has been successful.” “That’s ridiculous,” I remember thinking at the time, “they are attacking my client’s product and putting us to all this expense and trouble simply because a lot of consumers want to buy it and it’s therefore a threat to existing orthodox drug products.”

Years later, after that meeting, the Dietary Supplement Health and Education Act of 1994 (DSHEA) was passed. The FDA lost many (but not all) of its arbitrary powers of life and death over dietary supplements, and the whole-foods marketplace exploded with the unleashed creativity of the marketplace. At the time, there were about 4,000 supplements on the market, including vitamins, minerals, amino acids, and herbs. Ten years later, according to a recent Institute of Medicine report, it was estimated that about 29,000 supplement products are now on the market with another 1,000 new products being introduced annually. In fact, the same report notes that every year American consumers spend $18 billion on dietary supplements. And these purchases are not narrowly based either - more than half of all adult American consumers either buy or take supplements in one form or another. Clearly, even though it has not always been smooth sailing, this market has enjoyed enormous success.

But as with my long-ago client’s homeopathic product, success attracts attention. And that attention may not always be desirable. In this case, the success of supplements has drawn legal, legislative, and regulatory attention. That unwanted attention sometimes seeks to feed off of that success through money-hungry product-liability and consumer-action lawsuits (such as the many lawsuits brought under California’s Proposition 65, where manufacturers, distributors, and health-food stores have been hit with claims for huge damages over herbal and dietary-supplement products that allegedly contain toxic levels of lead and other harmful substances) or it may seek to stifle and limit the success of natural products by imposing regulatory burdens upon this unexpectedly strong source of competition.

Regulations Are Not “Cost Free”

Most people presume, without thinking, that regulations are “cost free,” that by simply passing a law or regulation mandating health or wealth one can improve the world without cost. But that is far from the truth. In fact, regulations typically impose a huge burden and cost upon society. As author Doug Bandow pointed out in his 1993 article “Wanted: A Real Deregulatory Revolution” (www.fff.org/freedom/0193c.asp), “There are few aspects of the workplace . . . exempt from governmental meddling. Federal controls, supplemented by state and local rules, raise business costs, which destroy jobs and hike consumer prices. All told, figures Thomas Hopkins, an economics professor at the Rochester Institute of Technology, regulation is costing $400 billion a year, or about $4,000 per household. That comes to a 13 percent reduction in the average household's standard of living of $32,000 annually. The largest single source of regulatory costs is what Professor Hopkins terms ‘process regulation,’ particularly due to various paperwork and reporting requirements.”

Also contrary to what most people think, regulations are generally not opposed by large, well-established businesses, which tend to see regulatory burdens as important in keeping out new competition. Such large businesses actually support regulations that will reduce competition in the marketplace and ensure their own survival. Sheldon Richman, writing in his piece “Free Markets Are Not Conservative” (Nov. 2001), noted that “[o]lder and bigger firms can more easily contend with such [regulatory] burdens than newer, smaller ones can. IBM and AT&T have bigger legal and accounting departments than some nascent garage operation. Many ideas for new businesses never get off the ground because of the regulatory and tax barriers.”

In short, Richman says, “[b]usinessmen know their fate is in the consumers’ hands. They know there is no safe harbor in the free market — which is why so many companies try to get government to adopt anti-market — that is, anti-consumer — regulations and taxes. It’s the only way to prevent consumers from switching to a competitor they like better.”
A Clouded Sky

So, ten years into DSHEA, we have great success, a much larger marketplace with many more supplement choices than ever before in the history of humanity, and a blue sky overhead that seemingly stretches forever. Yet that sky has clouds. Not only do lawsuits threaten the supplements market; but, more importantly, others - particularly pharmaceutical companies - are correctly seeing the success of the supplements market as a threat to their financial bottomline. It is not exactly a state secret that consumers have been losing faith in pharmaceuticals and turning en masse to alternative health products.

Seeing this epic change, the pharmaceutical companies have almost certainly made their own projections as to this new market’s potential – if it continues unchecked. The last thing these companies would like to see is a growing whole-foods market destroying their profits. And they did not become billion-dollar companies because they were run by dumb people. They have known for some time that they either must put a lid on the competition using laws and regulations or else buy out the competition. Or both.

Regulations Will Be Used More Aggressively To Limit The Market

In a stunning coincidence then, the FDA has been tightening up its regulatory control over the supplements market over the last few years. And to do that, the FDA has been using the very law – DSHEA – that has been derided in a carefully orchestrated press campaign as the odious law that has left us all unprotected from the evils of unregulated supplements.

Speaking before the American Society for Pharmacology and Experimental Therapeutics and the American Society for Nutritional Sciences last April, FDA Acting Commissioner Dr. Lester M. Crawford said, "Unlike most foods, some dietary supplements are pharmacologically active. And we have seen over the last 10 years a huge growth in the dietary supplements industry, including the introduction of products that seem far removed from the vitamins and minerals of the pre-DSHEA days. We have become increasingly aware of the potential health problems some of these products pose."

FDA’s press release on this speech then brags about its recent enforcement actions: “In the last 6 months, FDA has inspected 180 domestic dietary supplement manufacturers; sent 119 warning letters to dietary supplement distributors; refused entry to 1,171 foreign shipments of dietary supplements; and seized or supervised voluntary destruction of almost $18 million worth of mislabeled or adulterated products.” “We will continue to aggressively enforce DSHEA against unsafe or mislabeled products,” Crawford is also quoted as saying.

As for the future, the FDA admits that it is “developing approaches to systematically review the evidence about the safety of individual dietary supplements.” FDA will evaluate the available pharmacology, published literature (including animal, in vitro, epidemiological, and clinical trial data) evidence-based reviews, and adverse event information - the approach that formed the scientific foundation for FDA's recent rulemaking on ephedra – and take action against other supplements that it finds offensive. So, expect more ephedra-type bans from the FDA based upon its bad science.

The FDA also intends to take more intensive action against supplement claims. As you know, supplement labels can make claims about the effect of a supplement on the body’s structure or function, but the claims must be truthful and not misleading. The FDA wants to clamp down on these and other claims and will be issuing a compliance policy guide at some time in the future detailing what data the FDA would find acceptable to substantiate such claims. Expect these substantiation requirements to be stringent.

This tightening by the FDA of its regulatory control over dietary supplements is in direct response to the industry’s huge success and the threat that success poses. Coupled with the drug-like Good Manufacturing Practices (GMPs) that FDA seeks to shove down the throats of manufacturers, the near-hysterical media campaign to demonize and denigrate supplements, and the onslaught of legislation meant to address the supplement-safety “problem,” the FDA’s tightening of the screws on the industry should not be taken lightly. All of these actions are more carefully coordinated than they are meant to seem.

If You Can’t Beat Them, Buy Them Out.

At the same time, pharmaceutical companies have been increasingly buying into the whole-foods industry. They have snapped up supplement companies and, with the change, a new mentality has entered into our market. In some ways it is a more professional and corporate oriented view, but it also is oftentimes less innovative and creative. These are companies that seem to be more accepting of regulations and limitations upon the creative, competitive forces of our industry.

And this is reflected in the industry associations that have them as member companies. These associations perform useful, even critical, functions for the industry and their member companies, but are now much less vigorous about defending our rights to buy and sell dietary supplements. In an interview appearing in a recent issue of The New Yorker, even industry representative Annette Dickinson, president of the Council for Responsible Nutrition (CRN), has been reported as wanting a more limited supplements market than currently exists. According to the interviewer, “In Dickinson’s view, the industry would be better served if it returned its focus to the core nutrients – basic vitamin and mineral supplements.” Unfortunately, these are the kind of views that will accept restrictions on innovative health products (and coincidentally reduce competition with pharmaceuticals).