Dietary Supplements: Made in the USA?

Sep 13, 2016
Volume: 
19
Issue: 
7
Seeing “Made in the USA” on a label can cause even a crusty old cynic’s heart to swell. And in this year of the Olympic Games, a presidential election, and an ambient sense that the world is coming unmoored, that pledge of domestic production is, for many Americans, especially grounding. So grounding, in fact, that a 2015 Consumer Reports survey found eight in 10 Americans claiming they’d rather buy an American-made product than an imported one, with more than six in 10 pledging a willingness to pay as much as 10% more for it.

 

Yet if “Made in the USA” declarations project patriotism, pride, or preferential trade policy to the purchaser of a watch or riding lawnmower, to the supplement shopper the claim’s implications are arguably more significant—namely, quality and safety. Or, as Eugene Ung, CEO, Best Formulations (City of Industry, CA), puts it, “There is an expectation, at least on the part of the U.S. consumer, that supplements should be made in the USA.” Their bottom line, he wagers, is that “with anything you put in your body, people get a little more concerned about its origins.”

This leaves today’s supplement marketers—who operate in a competitive global environment—balancing the financial as well as reputational costs of domestic versus overseas manufacturing when deciding where to produce their products. Not surprisingly, there’s no quick formula for balancing that equation, but there is hard-earned advice that can steer companies to solutions that work for them and their patrons.

 

“Made in the USA” Matters

When it comes to nutritional supplements, not to mention functional foods and beverages, “Made in the USA” is a valuable claim in the consumer’s eyes. And though nobody’s determined definitively what drives consumers to domestically produced health-and-wellness products, “It stands to reason that it could be a mixture of patriotism, the value placed on American jobs, or possibly some suspicion about the quality or safety of foreign-made products,” says John E. Villafranco, partner, Kelley Drye & Warren LLP (Washington, DC).

As someone who counsels clients on advertising law, product labeling, and health and safety claims, Villafranco knows whereof he speaks. And so does Ung, who works with marketers to produce nutritional supplements for consumers in the States and abroad. He’s found that not only is a claim to U.S. manufacture “really important in the dietary supplement market”; it’s more important there than it is in the market for, say, textiles or electronics, where “people just don’t seem to care.”

 

Leveraging the Claim

In one sense, the value of a “Made in the USA” claim is a product of people’s perceptions. But it’s also the result of a labeling regime, overseen by the Federal Trade Commission (FTC), that prescribes when a marketer can claim that something truly is made in the USA.

And yet the extent to which supplement shoppers or marketers fully grasp what the claim means—or what requirements a marketer must meet to legally proclaim it—remains slim. As Villafranco has observed, “Many product sellers seek to use ‘Made in the USA’ claims, or more qualified claims about U.S. origin, even if a ‘Made in the USA’ claim is not possible based on FTC standards.”

In short, those standards dictate that “all or virtually all” of a product be made in the United States for a product legitimately to declare itself “Made in the USA.” And by “made,” Villafranco adds, what we’re talking about “comes down to both sourcing and the actual creation of the product.” Generally speaking, “If all ingredients are domestic and the product is manufactured in the United States,” he says, “the product will count as ‘Made in the USA.’”

Alas, says Ung, “I think there’s a lot of grey area, and some companies may stretch” the “Made in the USA” designation. For example, certain ingredients common to supplement formulations aren’t readily available from domestic sources; indeed, “in our industry, a lot of the raw materials are made in China,” Ung notes. “Whether the end-consumer knows that or not, it’s somewhat disguised because there are contract manufacturers in the middle.” And as if that’s not enough, when the contract manufacturers themselves operate abroad, a product’s origin story grows even harder to follow.

 

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