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Jennifer Grebow is the editor-in-chief of Nutritional Outlook, an award-winning media-content provider in the dietary supplement and natural products market. Nutritional Outlook, an MJH Life Sciences brand, provides insights and industry updates critical to manufacturers of dietary supplements, healthy foods, and nutritious beverages. Nutritional Outlook keeps industry abreast of current market trends, research updates, news, and regulatory developments. Nutritional Outlook goes beyond the 24-hour news cycle and provides in-depth analysis to help industry players navigate the challenges and changes in the near- and long-term. Nutritional Outlook is a brand of MJH Life Sciences, the largest privately held, independent, full-service medical media company in North America, dedicated to delivering trusted health care news across multiple channels.
What can industry take away from this year’s New York Attorney General probe?
As far as New York Attorney General (NY AG) Eric Schneiderman is concerned, the dietary supplements industry might as well be wearing a target on its back. Ever since February when AG Schneiderman issued cease-and-desist letters to makers and retailers of herbal supplements for allegedly not meeting label claims, the AG, today with a coalition of fellow attorneys general behind him, has continued investigating and taking action against what he says are “serious problems” in the herbal supplements industry.
Cumulatively, these actions have industry leaders on high alert, so we took this opportunity to ask them:
“In your opinion, what effects-either good or bad-has the NY AG investigation had on the dietary supplements industry? Can you point to any positive takeaways for the industry?”
“We at 3i Solutions have found the attention emanating from the recent NY AG investigation a positive. The investigation questioned the testing and efficacy of the products addressed and led to criticism of the entire industry. While the original complaints were critical of the dietary supplement industry, the industry was able to respond to the discussion with new technology, such as improved bioavailability of products and enhanced delivery methods. The overall discussion eventually evolved into an opportunity to highlight improved technology and product improvements offered throughout the industry.
It is now clear to many that the industry is strongly committed to providing continuously improving products. As a response to the criticism, many companies and consumers were introduced to quality-oriented processes as well as new and innovative products. While the bulk of the media provided criticism, we were appreciative of the opportunities to present a positive response and reinforce the quality and technology that is prevalent from the vast majority of the dietary supplement industry. We look forward to the continued opportunity to showcase the improving technology and resulting benefits the industry continues to develop.”
“Certainly we are all aware the investigation has been damaging, as well as flawed, and shook the industry to the core. It was a wakeup call throughout the value chain as to the path going forward so that this doesn’t happen in the future. The takeaways have been multifaceted. They underscore the deep flaws and weaknesses in the supply chain of the nutraceuticals industry.
Suppliers must start raising the bar on their specifications. You will never totally eliminate economically motivated adulteration-in whatever form it takes-or greed, for that matter. What we can do is to subscribe and adhere to proper supplier qualification across the dietary supplement industry. This is critical for maintaining the integrity of the supply chain and will help protect consumers and branded companies alike.”
John R. Endres, ND
Chief Scientific Officer
AIBMR Life Sciences Inc.
“The recent activity of NY AG Eric Schneiderman has garnered a tremendous amount of attention by both consumers and the industry, and has highlighted the need for scientific and regulatory education for elected officials and consumers. As industry trade associations and others have clearly stated, FDA’s manufacturing regulations require supplement companies to verify that their products meet all specifications-including identity.
Use of DNA analysis without some other confirming analysis would be unlikely to meet this regulatory requirement. Publicizing erroneous information unnecessarily alarms consumers. While there is continued room for improvement in dietary supplement manufacturing and oversight, it should be strictly based upon validated science that is acceptable to most qualified scientists.”
Vice President, Head of Strategic Marketing and Program Operations, Dietary Supplements & Herbal Medicines
“The NY AG’s actions highlighted the importance and value of public standards-not just to public health, but also to industry. Before February of this year, many characterized DSHEA’s provision for private standards as a benefit for manufacturers. However, the NY AG actions revealed private standards also come with significant risk. Under this paradigm, it is not just manufacturers who are able to establish their own specifications for identity. In this instance, the Attorney General’s office essentially established its own identity test. Industry was right to call for transparency to ensure the tests used were fit for purpose.
However, industry should also be transparent. Public standards created through USP’s unique public process are the best way to ensure transparency and provide a uniform reference for both industry and regulators. Public standards protect public health by ensuring the consistency and quality of supplement products, but they also protect industry and retail brands by ensuring products will be judged by scientifically validated test methods that are fit for purpose.”
Partner, Cofounder, Chief Marketing Officer
“I think the results and fallout from the AG crisis have been mixed, but mostly good for the future of the industry in a very painful way. It definitely took a negative toll on consumer confidence regarding supplements, but in fairness that confidence was already waning. It simply exacerbated the erosion that was already happening. For far too long, we as an industry have rested on our laurels and assumed that the ‘heady’ years of the 1990s supplement boom would recycle once again. But that isn’t happening. And the consumer of the 90s isn’t the same consumer. They are smarter and more skeptical and have far more choices now.
So the positive results of the AG crisis, for me, have been a painful wakeup call that if we as an industry don’t self-police very soon and actively work to restore consumer confidence, the consumer will abandon us for other healthful pursuits-namely, improved diet, increased exercise, functional foods, beverages, and other forms of dietary supplementation beyond pills and capsules. Already pill fatigue is setting in among both Boomers and Millennials. Millions of consumers are turning to functional foods for their added nutrition. The market is slowly slipping away from traditional supplement manufacturers, and most of them don’t even realize it. So if the AG scandal rattles a few industry cages, I say that’s a good thing. For far too long, the bad players have made it harder for the good players to succeed, and it’s time for the legitimate companies to stand tall and set some standards and support an independent third-party validation seal or certification that consumers can believe in. It’s the only way. The industry players who want to be here 10 years from now need to act now. It’s time to stop pontificating and playing ‘victim’ and start doing something to change the future.”
CEO and Executive Director
Organic & Natural Health Association
“This is a wakeup call. Challenges regarding quality and effectiveness are clearly not going away by simply stating that the industry is in fact regulated and FDA needs to do more. Organic & Natural has used the results of this investigation to take a proactive step and file a citizens’ petition with the FDA that would require raw-ingredient suppliers to adhere to cGMPs. The fact that the final law failed to include this requirement creates a weak link in the supply chain that must be addressed.
Yes, there are bad actors that reflect poorly on the industry as a whole. Yes, imposing additional quality measures will cost more money. Yes, ingredient suppliers should be using cGMPs. However, many are not, creating an uneven playing field in a price-sensitive environment. Supporting the petition is a public way to demonstrate commitment to transparency and traceability. Will it fix everything? It will not. What it will do is show that we can step up our game, engage in continual quality improvement across the industry, and restore consumer confidence in the products they purchase.”
United Natural Products Alliance
“DNA barcoding is a new science, and like all new technologies, its role and utility in the dietary supplement industry is only now evolving. Scientific organizations that set quality standards and establish analytical methods are investigating the potential of DNA barcoding as an additional tool to improve quality and plant identification. And, while the NY AG thinks DNA barcoding is a useful enforcement tool, we hope the proper role of DNA barcoding doesn’t become a weapon before it becomes a generally accepted analytical tool for botanical products.
It is well understood that botanical nomenclature is an ongoing process of refinement and clarification. The procedures to do so are methodical and consultative. Unfortunately, the recent actions of the NY AG do not contribute to the order of this process; rather, the aggressive tactics being used to force the use of DNA barcoding ârun counter to the logical adoption of this new technology.”
Kim Kawa, BSc
Natural Products Specialist
“Under the semblance of consumer protection, Eric Schneiderman’s stance on safety and fraud in the herbal supplement industry is a hot-button topic, raising awareness of the importance of transparency, traceability, and efficacy in the segment. Several industry professionals and trade publications have addressed Schneiderman’s lack of scientific protocol, while bringing light to the limitations of DNA barcoding on post-processed botanicals; some have further questioned the motives behind his actions. This is a good reminder that dietary supplements are already well regulated in this country-remember [DSHEA] that oversees all label claims, ingredients, and structure-function claims and, more recently, the Designer Anabolic Steroid Control Act (DASCA) of 2014 that provides new tools for swift identification of illegal drugs inaccurately marketed as dietary supplements.
Participating in third-party testing and acquiring third-party certifications is already standard practice and key to identifying reputable dietary supplement brands.
Presumably, Schneiderman’s efforts will neither negatively impact sales of nor decrease consumer confidence in herbal remedies and their safety. The herbal supplement segment is holding steady, even showing growth over last year-around 9% in all SPINS reporting retail channels (52 weeks ending August 9, 2015).”
Alex L. LeBeau, PhD
“In this case, the negatives outweigh the positives. The angle of attack by the NY AG is from the position that presumes the industry is inherently unsafe; further, the use of a questionable analytical methodology, details of which have yet to be released for evaluation by the scientific community, hints at the idea that the results obtained by the NY AG may not be as accurate for confirming the identity of the active ingredient in the dietary supplement as would results from other verifiable analytical techniques. Additionally, presenting analytical findings only (no data have been released) further adds to the idea that industry is willfully selling products that are misbranded (i.e., does not contain listed botanical) or adulterated (i.e., contains contaminants).
If there is any positive from this action, it is a warning to industry to be on the offensive when it comes to mislabeling or adulteration allegations and to prepare responses to such challenges. Conducting verifiable and continuous analysis on a product, including making the analytical data and methodology readily available in a case where the validity of a product is challenged, should make a manufacturer’s response to such allegations swift and reduce the amount of public scrutiny that a manufacturer may receive.”
Mark A. LeDoux
Chairman and CEO
Natural Alternatives International Inc.
“As of this date, one retailer has negotiated out of the cease-and-desist and has resumed selling products. Some in industry believe that the settlement with the NY AG was premature; others believe it was a reasonable action in light of mounting class action lawsuits filed against the several targets of this investigation. The ensuing discussions in the press, the concerns expressed by doctors and media alike regarding the ‘unregulated’ industry, reached a cacophony of sorts, and the resultant impact has been a reduction of consumer confidence, as measured by a recent Nutrition Business Journal study.
It is not my intent to cast opinion or judgment on the players in this drama, but rather to suggest a way to help alleviate the ongoing lament of often ill-informed media that the dietary supplement industry is unregulated by the FDA. Those of us in industry know this is not the case, as do the recipients of warning letters and recall notices by the agency. The consumer does not know this, however, and therein lies the difficulty in assuaging consumer concerns and restoring credibility.”
Dr. Cheryl Luther
General Manager, Dietary Supplements
“Due to the NY AG’s actions, the dietary supplement companies are striving to restore and maintain brand integrity by demonstrating their commitment to producing safer products for their customers.
Retailers and consumers want to know they can trust the safety and quality of supplements, and NSF technical experts have helped in two ways. First, guiding our customers through the third-party certification process is one important way manufacturers and retailers can convey this confidence to consumers and regulators. NSF has also worked closely with our customers to help educate consumers about how to find supplements that have been analytically tested to confirm label contents.
NSF has seen an increase in certification requests that, while may not be directly linked to the NY AG’s action, are a positive sign that manufacturers and retailers are looking for that added assurance in their dietary supplement to restore consumer confidence.”
“As there will always be two sides to every coin, there are two sides to this investigation by the NY AG. On one side, the dietary supplement industry got a wakeup call. With major companies involved, this made the nation’s headlines, so for the NY AG’s political career, this was a major accomplishment. Although misguided, and amusingly single-minded on the tactic of using DNA testing on extracts, [by] completely ignoring the prevalent issue of sports supplements being spiked with steroidal compounds, [the investigation] indicates a political motivation was at play here.
From a business-to-business perspective, it’s been normal; less than 1% of our customers have asked us for DNA analysis, mainly because it’s not required by FDA, which is our governing law for supplements, not the NY AG’s office.
On a positive note, though DNA testing was incorrectly used to check for label claims and allergens, there are other tests and allergen screenings that actually have a significant impact on quality assurance, and we believe contract manufacturers and marketing companies will start to seriously implement such tests into their products, at the very least to satisfy the more inquisitive consumer base that has arisen from this action by the attorney general.”
President & CEO
Council for Responsible Nutrition
“The NY AG’s erroneous investigation using DNA barcode testing on herbal extracts demonstrates just how much damage misguided enforcement actions can do. More than the AG’s investigation itself, the publicity from it has spawned countless class action lawsuits built on nothing more than the allegations of the AG’s DNA testing, which has been revealed to be wrong. It has fed negative media coverage of the industry and skepticism among lawmakers and consumers about our products, without justification. And it has driven many manufacturers and suppliers to feel compelled to use DNA barcoding in their testing protocols, even where it may not be particularly accurate or the most appropriate measure.
While DNA testing is becoming more sophisticated, its application to finished dietary supplements is still being refined; it’s not a panacea for all quality issues in the industry. So implementing it right now across the board, particularly with finished products, may just be adding costs to the system, without any consumer benefit.
If anything good has come out of it, it’s a renewed conversation at all stages of the supply chain-all the way through to retailers and consumers-about quality and transparency. That’s a conversation that is always worth having.”
Irfan Qureshi, ND
Chief Regulatory Officer
Vitamin Research Products
“While the premise of the NY AG’s action against certain dietary supplement retailers and manufacturers was faulty because of the use of non-validated and unverified DNA methods, I believe the AG’s action will spur companies in the industry to reevaluate their processes and procedures across the board. In light of this action and other signs of increasing scrutiny by regulatory agencies, state AGs, Congress, and plaintiff’s attorneys, dietary supplement companies of all sizes will likely face difficulty operating their businesses using current practices and are likely to experience significant challenges in the short-term; however, the companies that adapt and adjust to the challenges that lie ahead are the ones likely to thrive in the new regulatory paradigm.
The industry needs to reevaluate and increase investment in the science behind ingredients and substantiation of advertising claims, as well as their quality and testing practices, to ensure full compliance with cGMP guidelines. The industry players that adapt will be the ones that benefit long-term and become stronger for it. Consumers have been clear in communicating their desire to take charge of their own well-being by seeking out natural alternatives to support health. As an industry, it’s our job to assure their confidence in the products we sell.”
Managing Partner, Strategic Communication
The Shelton Group
“The industry’s reaction to the NY AG and resulting negative media and class action lawsuits has been illuminating. There’s increased focus on actual quality, with more testing and ingredient-quality scrutiny. Some companies posturing as the responsible core of the industry that didn’t actually walk their talk started assessing their liabilities and vulnerabilities and making changes. This isn’t just because of the AG’s actions, but also the significantly increased likelihood of expensive class action lawsuits.
We’re all talking about the industry’s regulatory framework in broader terms and discussing a wider variety of options than we have for over 20 years. It’s illuminated which companies are primarily here to make money without an inherent commitment to also making a significant impact on human health. Pay attention, because this is important. Some companies will adamantly oppose a revised regulatory landscape that would limit consumer options, and others support it as an opportunity to limit competition.
Some are saying that the industry is arriving at consensus to embrace the Canadian regulatory model. That would benefit the group of large international companies pushing the idea, but we’re actually a long, long way from any such consensus. This will continue to be very interesting.”
Executive Director and President
CoQ10 Association and the Natural Algae Astaxanthin Association
“Whether you are quoting Friedrich Nietzsche or singing Kelly Clarkson, the idea is the same: If it doesn’t kill you, it makes you stronger. The recent NY AG attack served this expression to the nutritional industry. Fearing the worst was the order of the day, many thought the apocalypse of this industry was now occurring. Some still question the fallout of all the negative publicity. While we know that we, as an industry, were not killed, are we stronger? Only time can truly provide the details of that analysis, as we are still too close to the event to know for sure.
But one real-time barometer that can possibly provide a glimpse of the impact is the stock analysis of the publicly traded supplement companies. In looking at an analysis of a smattering of companies scoping a six-month range of per-share pricing, it is clear we are mostly stronger:
Stock 2/11/15 8/11/15 Change
GNC $43.35 $50.51 17%
NAII $5.34 $5.97 12%
CYAN $7.30 $7.88 8%
VSI $42.13 $37.54 -11%
USANA $99.19 $161.87 63%
HLF $34.82 $59.70 71%
In general, this type of news ultimately provides a chance to respond to our critics with facts that support the strength of our safety, science, and efficacy. Unfortunately, it does appear we have to encounter bad news before our good news is noticed. But we do appear to have been made stronger as a result of our response, and I for one believe this trend will continue.”
“The last time I played with fire, I nearly burnt my face off. It took this severe lesson to teach the young teenager I was at the time that such was not a sustainable activity. So I stopped playing with fire. Unfortunately, this industry is guided by insufficiently written and -implemented cGMPs, and we have accepted substandard testing regimes: essentially, playing with fire.
The recent actions by the NY AG have, even though it was a misapplication of science, served to shine light on our deficient quality-control standards and given us all an additional motivation to correct our internal issues. Here’s a fact: if all players in this industry dipped into that healthy profit margin and simply stopped buying low-priced, poor-quality material and tested each and every batch using the appropriate testing methods, then quality concerns about our industry wouldn’t be in the news. Now, as we slump our heads in embarrassment from the NY AG’s beating, we need to go back to the drawing boards and choose the high road. We all know what it will take: quality ingredients in therapeutic doses tested by good labs using multiple appropriate testing methods.”
Kelley Drye & Warren LLP
“A key takeaway for the industry is that the NY AG’s office is a unique regulator often requiring a unique response. It is not unusual for it to delve into specialized areas concomitantly governed by federal agencies, and it is likewise not unusual for it to publicize its investigations from day one.
In its first large-scale effort to target the supplement industry, the office coupled strong allegations that products failed to contain declared ingredients with strong media outreach. Several trade groups responded in the media, and one company issued an early press release raising factual disputes. Many months in, though, even with a media response, there still isn’t apparent public understanding of key facts-including that the AG’s office has refused to release its product testing, and that from what information is available, its testing appears to rely on a shaky methodology. Against this background, the NY AG’s office has persisted and recently issued a second round of letters based on the same type of testing.
Following its first battle with the NY AG’s office, the supplement industry no doubt has a keen sense of how the office operates and uses media to its advantage. With that knowledge, and if the ingredient investigations ultimately affect sales, the industry will likely hone its media capabilities even more and be prepared to launch an even swifter and more forceful response to any future NY AG actions.”
Lu Ann Williams
Head of Research
Innova Market Insights
“Trust is the biggest issue affecting the food and supplement industry right now. It’s a huge challenge, but situations like this always present opportunities. For companies that have strong science, that have always put quality first, it’s an opportunity to reassure consumers that they can trust their products. I think the situation is similar to what was happening in the food industry in Europe before EFSA [the European Food Safety Authority] cracked down on claims. I remember giving a presentation on claims years ago, and when I was finished, I thought to myself that it was out of control. It can be a painful process, but in the end, the companies that are producing high-quality products and being honest will consumers should benefit.”