Introductory Observations
The major issues for the food industry in 2006 will continue to be obesity and health. Obesity continues to be of great importance to a variety of groups for differing reasons. Regulators are concerned because of the high mortality and morbidity rates associated with obesity and the resulting increase in expenditures of health care resources. Individual consumers are also becoming more concerned about their weight and health and, as a result, are seeking out diet and functional food products. Consumer groups continue to assert that the food industry is contributing to rising obesity levels through its advertising and promotion of nutritionally deficient foods, as well as its failure to develop and market more healthful products. All of these interests will continue to be factors during 2006, and will drive regulation as well as major shifts within the food industry such as self-regulation of advertising to children and the development of functional and health foods.
Meanwhile, broader issues such as biotechnology and nanotechnology will continue to highlight the growing divide between the European Union and the United States over application of the precautionary principle. Safety considerations have been altogether removed from discussions concerning regulation of biotechnology and other emerging technologies. Developing countries are increasingly moving to establish a European model for their domestic policies, leading to greater trade difficulties as the United States and other markets continue to invest in biotechnology and nanotechnology while, at the same time, the EU and other major markets continue to be skeptical of the use of anything other than conventional methods of food production.
The EU’s continued resistance to the use of biotechnology, and its rapid move towards a paternalistic regulatory system that attempts to guide consumers to make more healthy food choices, highlights the ongoing trade struggles that U.S.-based companies will face during the coming year. U.S. manufacturers are being increasingly forced into complying with the EU model if they want to continue to sell into European markets. At the same time, despite the imposition of sanctions, the EU will likely be unwilling to comply with the recent World Trade Organization ruling, which found that the EU’s de facto moratorium on the approval of biotech varieties is not based on sound science and is a violation of international trading rules.
Below is a discussion of the issues we believe will have the greatest impact on the food industry in 2006. Many recent regulatory developments have signaled major reforms are forthcoming for the food industry; changes that will not only influence product development and consumer choices, but also trade and possibly litigation.
- U.S. Regulatory Outlook
Obesity
The continuing concern over rising obesity rates in the United States, particularly among children, will continue to be a major driving force for regulatory initiatives directed towards the food industry in the coming year. It has been nearly two years since FDA’s release of a report prepared by the Agency’s Obesity Working Group ("OWG") which provided several recommendations for steps that FDA should take to combat obesity. In particular, the report recommended that FDA pursue several rulemakings to change existing requirements for food labels.
In response to the OWG’s recommendations, FDA issued two major advance notices of proposed rulemakings ("ANPRMs") addressing potential changes to the existing food labeling requirements. The first ANPRM requested comments on how calories appear on packaged food and how consumers use this information in making healthier dietary choices. FDA also requested comment on the reformulation of foods or redesign of packaging that may occur if any changes are made to the food label. The second ANPRM addressed the issue of serving size information on the food label, as well as possible ways to revise the label to make it easier for consumers to choose more healthful foods. For example, FDA asked whether changes should be made to require that prepackaged foods reasonably consumed in one eating occasion state the nutrition information for the entire package. These rulemakings will continue during the coming year, perhaps with the issuance of proposed rules sometime in 2006.
Health Claims
Health claims will also continue to be an active area in 2006. In November 2005, FDA held a public meeting to assess consumer perceptions of health claims, focusing in particular on the results of consumer research on health claims, and any implications of the available research for future consumer studies that may need to be conducted. The results of the research will be used to determine what future actions and/or policy changes may be appropriate.
Following FDA’s November 2005 meeting, the Federal Trade Commission ("FTC") recently submitted comments to the Agency outlining its position that the current wording of health claims is confusing to consumers. The FTC cited in particular the current scheme whereby health claims are approved based on their level of scientific support, e.g., unqualified health claims supported by significant scientific agreement, and the varying levels of qualified health claims. The comments reflect the FTC’s concern that the claims language approved by FDA "does not communicate the intended levels of scientific certainty to consumers," and that consumers are not able to adequately distinguish between the levels of science supporting the claims.
Other recent developments are also likely to have an impact on FDA’s future actions in the area of health claims. For example, after evaluating 22 clinical trials, researchers from the American Heart Association’s ("AHA") nutrition committee found that soy protein consumption has little impact on cholesterol reduction. The AHA’s findings could call into question the health claim that FDA approved in 1999 linking consumption of soy protein to a reduced risk of coronary heart disease ("CHD"). The claim is widely used on soy-containing food currently being sold in the United States. In response to the AHA’s findings, FDA will be reviewing the science supporting the soy protein claim to determine whether a re-evaluation is needed in light of the new scientific evidence which does not appear to support the current claim.
Food Advertising
Advertising of so-called "junk foods," particularly to children, continues to be a highly controversial issue, and one that is potentially prime for lawsuits. A recent survey suggests that 75 percent of food advertising specifically targeted at children promotes products that are nutritionally deficient and high in calories. In response, Center for Science in the Public Interest
("CSPI") and the Campaign for Commercial-Free Childhood recently announced their intent to file a lawsuit against Kellogg and media conglomerate Viacom, the parent company of Nickelodeon, over their marketing of nutritionally deficient foods to children. The lawsuit, when filed, will request that the companies be prohibited from marketing "nutritionally poor" foods to audiences comprised of more than 15 percent of children under 8 years of age. In addition, the suit will request that Kellogg and Viacom be prohibited from using websites, toy giveaways, and contests to market foods to children under 8. A similar lawsuit, aimed at removing soft drinks out of U.S. schools based on obesity concerns, has also been threatened, lending support to claims suggesting that obesity litigation will become the next "tobacco."
Some Congressional leaders have added their voices to the call for greater restrictions on food advertisements and promotions targeted at children. Last year, in a speech given at a joint conference of the nation’s advertising associations, Senator Tom Harkin said that the food industry must act quickly to stop the advertising aimed at children, strongly suggesting that if the industry failed to act on the issue, Congress would intervene. However, the extent to which Congress could institute legislation restricting food advertisements to children is unclear given the Constitutional protections afforded to commercial speech and advertising in the United States. Nonetheless, as seen with tobacco, advertising restrictions can be imposed when public health is at risk.
The industry is beginning to respond as evidenced by the Children’s Advertising Review Unit’s ("CARU") recent announcement that it will review its guidelines on how companies should advertise their products to children. Consumer groups and regulators have suggested that the current voluntary guidelines, which are over 30 years old, should be updated. The review is intended to supplement the steps many food companies are already taking internally to address their own policies on advertising to children. Following approval by the National Advertising Review Council ("NARC"), which is CARU’s administrative parent, the recommendations derived from the CARU review will be posted for public comment. After the comment period, the NARC Board will consider and act on the recommendations.
Health and Functional Foods
The low carb trend has receded dramatically, replaced by the much-lower profile glycemic index, which appears to have far greater staying power. At the same time, the packaged foods, functional foods, "nutraceuticals," and dietary supplement markets are seeing a variety of new innovations. Of these, the move toward increased use, in a variety of products, of Omega- 3 fatty acid-containing ingredients is one of the most ubiquitous. A number of branded staples, including bread, pasta, eggs, milk and yogurt containing DHA and EPA were introduced over the course of the past year. Much of the activity occurred, predictably, after FDA extended the qualified health claim linking DHA and EPA to reduced risk of coronary heart disease from dietary supplements to foods. There is every reason to believe that this trend will intensify in the coming year.
Antioxidant-containing products are also becoming increasingly popular, with dark chocolate and pomegranate juice leading the way. Additionally, whole grain products have become more visible this past year, due in large part to the attention focused on whole grains in USDA’s new Dietary Guidelines for Americans. At the same time, with the arrival of mandatory allergen and trans fat labeling in the United States on January 1, 2006, manufacturers have been gearing up to label their products accordingly. Examples of this include the decision by some food companies to focus on the development of products labeled as "gluten-free" that are targeted to consumers who suffer from Celiac Disease, as well as the reformulation of products to decrease or eliminate trans fats. Also, in a move that signals how the trans fat issue could extend to foods consumed in restaurants, the New York City Department of Mental Health and Hygiene recently launched a Trans Fat Education Campaign aimed at educating consumers, city restaurants, and other food service establishments about why trans fat is bad, and how it can be avoided.
Finally, 2005 ended with an announcement by the Kellogg Company that they are now using Vistive™, a low-linoleic soy product produced by Monsanto from transgenic soybeans, as a substitute for trans-fats in some of their products. Several other companies also have plans to use Nutrium™ oil, a similar product produced by another consortium, by 2007. This, as we will see, has implications, not only for the outlook regarding nutrition, but also for a potential sea change in the industry’s approach to the use of transgenic ingredients in packaged food products.
II. Current European Union Regulatory Environment Relative to Product Composition, Health Claims and Labeling
The EU remains in transition in its efforts to establish a regional food safety authority, and to complete and implement a comprehensive set of laws governing both what can be placed in food, functional foods, "nutraceuticals," and dietary supplements, and what can be said to consumers on the labels and through the advertising for these products. As discussed in greater detail below, several directives are currently under development that will have a direct effect on these issues.
1. Food Supplements Directive: One of the major pieces of the puzzle is the EU Food Supplements Directive (2002/46/EC). The next stage of development will be the expected new Directive on maximum nutrient levels. U.S. industry has taken the position that any restrictions below the levels generally agreed in scientific risk assessment in FNB, EVM or SCF-EFSA, will create an artificial trade barrier. The EU has been asked not to introduce arbitrary reduction factors (of maximum levels) in their risk management process because that has already been done during risk assessment.
2. Traditional Herbal Medicinal Products Directive: (2002/24/EC): The information we are receiving is that most U.S. companies have no intention of going through the complex and expensive process required to register a product under THMPD.
3. Food Fortification Regulation: This regulation is unlikely to see further progress until late Spring.
4. Nutrition and Health Claims Regulation: This is likely to be sent to a Conciliation Committee with no further progress likely before late March. The U.S. government has conveyed the following simple messages to the EU, with industry support:
- The current draft Nutrition and Health Claims Regulation text of December 9 continues to require premarket registration of all claims. The Commission and Member State Council rejected the European Parliament amendments that would have allowed for the premarket notification of lower-level claims. The U.S. Government expressed support for a system involving premarket notification in lieu of the premarket registration process, which would take approximately 12 months, on the basis that such a process would be overly burdensome, restrictive and commercially difficult for U.S. companies to comply with. The implicit acknowledgement is that higher-level claims, i.e., those for disease risk reduction, will still undergo a premarket registration process because the EU has made it clear that this matter is non-negotiable.
- Much of the practical effect of the draft Nutrition and Health Claims Regulation will be determined by the level of required scientific substantiation for making claims. The U.S. Government has asked the EU to do what can be done to make the substantiation requirements workable, and not overly burdensome.
The relevant EU institutions continue to do much of their debating in theory, likely with little idea of what the regulation will look like in a final version, or whether and how implementation can be accomplished. Accordingly, there needs to be greater consideration and discussion than has been the case in the draft to date, for the following:
- notification vs. registration;
- scientific substantiation from a wide base of scientific knowledge rather than a narrow set of test data;
- flexibility in the wording of claims to account for linguistic and cultural differences; and
- a defined and workable process for the creation of, and addition to, national lists of generic claims.
5. Novel Foods Regulation (258/97): As national regulators step up their efforts to challenge the novel foods status of certain product ingredients, e.g., in some instances challenging perfectly legitimate non-novel food ingredients, there is increasing confusion among U.S. companies about exactly which foods and ingredients are properly regulated as novel foods. Accordingly, the U.S. Government has requested that the EU provide greater clarity concerning the criteria for novel food status. In response, the Commission has indicated its intent to revise the Novel Foods Regulation in 2007.
A Closer Look at Key Issues
1. Health and Nutrition Claims: One of the most important issues for the food industry, as noted earlier, is the Commission’s proposed regulation on health and nutrition claims. The proposal would require all claims to be substantiated by scientific evidence, and establishes thresholds for use of terms such as "low fat," "high fiber" or "light."
The proposal also includes controversial plans for nutritional profiles leading to a ban on claims for high fat, sugar and salt products or otherwise unhealthful foods. Last year, the European Parliament rejected the profiles in its first reading of the measure, but the vote was close and unlikely to be replicated in second reading where voting rules are different. In first readings, a simple majority of members voting at the time is all that is needed to clear amendments, such as those deleting nutritional profiles from the bill. But in second readings, an amendment needs a majority of all 732 Members of Parliament ("MEPs"), or 367 votes. Unlike the first reading, where MEPs are often absent, many members are actually in the chamber to vote at second readings.
Moreover, when it comes to nutritional profiles, the Council of Ministers’ initial, or "common," position is based on an idea first circulated within Parliament: namely, that the profiles take into account a food’s overall nutritional composition, as well as its role and importance in the diet, particularly for children and vulnerable groups, rather than simply considering a food’s fat, sugar or salt content. This could well find favor with parliamentarians in second reading. The Commission would adopt the profiles that the European Food Safety Authority would draft, probably within two years of the regulation’s adoption.
The Council of Ministers and Parliament continue to disagree about the claims clearance system, with governments opting for prior authorization and the assembly favoring a simple notification procedure. Again, the outcome of the Parliament vote may differ at second reading. But if the two bodies fail to find common ground in behind-the-scenes brokering that will run in parallel to parliamentary scrutiny of the bill, then they could be forced into conciliation negotiations, where they have eight weeks to find a compromise or the proposals fail.
2. Fortification: Closely linked to the claims proposal is a measure on fortification, which also goes into its second parliamentary reading in the first half of this year. The proposed regulation would list EU approved vitamins and minerals that can be added to foods as well as other substances whose use is banned or restricted. The other substances list is in three parts:
- Substances that are banned;
- Restricted substances; and
- Substances that are still under scrutiny.
Nutrition labeling would be mandatory for all fortified foods.
However, plans to overhaul the EU’s nutrition labeling directive itself are firmly on hold until at least 2007, although the Commission will continue to "reflect" throughout 2006 on whether a change is needed and, if so, what sort of revision is warranted. Currently nutrition labeling is voluntary in the EU unless a company makes a claim. The Commission had been looking to make nutrition labeling mandatory in all cases but industry, particularly small firms, objected to the costs involved, as did some of the new member-states from Eastern Europe that joined the EU in 2004.
3. Additives, Enzymes and Flavorings: Sometime in early 2006, the Commission is expected to publish three proposals in the food chemicals area addressing additives, enzymes and flavorings. The first proposal for a regulation on additives is expected to consolidate four existing directives into a single global law. Commission sources have indicated that the proposal will combine the framework additives directive with laws on colors, sweeteners and additives other than colors and sweeteners, but will not require reauthorization nor will it set a time limit on approvals. Earlier in the drafting process, plans were floated to require renewals, with approvals valid for ten years, although that idea now has been dropped. Once the law is adopted by the Council of Ministers and European Parliament sometime in 2007, the Commission is expected to launch a review of existing additives to ensure that those listed are not obsolete.
The Commission will also soon publish proposals for a regulation on enzymes, harmonizing diverse national laws in this area. Currently, there are no EU rules on enzymes, which causes trade problems with 25 differing national regimes. However, according to sources at the Commission, the new law will only cover enzymes added to foods or those used as processing aids, not those in supplements. Media reports have sparked fears in the supplement industry that supplements would be targeted under future regulations.
The third proposal for a regulation on flavorings will update the current 1988 directive, which a source at the Commission described as "old and badly written" and in need of modernization. Meanwhile, early in the year, the EU will formally adopt a directive updating the law on additives other than colors and sweeteners that changes the way nitrates are measured. Currently the directive measures nitrates by residues. The revised directive will establish limits by added amount, thereby drastically cutting levels of the substances in foods such as cold meats, cheese and fish.
This activity takes place against the backdrop of several studies and recommendations regarding additives that are likely to be of major concern to industry. Most recently, researchers at the University of Liverpool studied the effects of combining the food coloring brilliant blue (E133) with monosodium glutamate ("MSG"; E621), and the coloring quinoline yellow (E951) with the sweetener aspartame (E951). According to the report, published in the journal Toxicological Sciences, when these additives were combined in levels similar to those consumed in a typical children’s snack and drink, they stunted the growth of nerve cells in mice, interfering with proper signaling functions. The researchers claimed that the combination of brilliant blue and MSG could inhibit cell growth up to four times more than the additives on their own, while for quinoline yellow and aspartame the increase was characterized as seven times greater. The three-year study was funded by Organix Brands, manufacturers of a range of organic foods for children.
In response to the study, the UK’s Food Standards Agency ("FSA") said "all of the additives included in the study are permitted for use in food under current EU legislation following a rigorous safety assessment. The safety of all additives is kept under review." The researchers claimed that "even though the use of single food additives at their regulated concentrations is believed to be relatively safe, their combined effects are unclear and until now have not been widely studied."
Indeed, in its statement, the FSA also pointed out that it is funding research "to investigate possible effects of mixtures of chemicals, including food additives. The latest Agency call for research specifically requests proposals for research investigating the effects of exposure to multiple chemicals occurring in food. The Agency is also funding research on the effects of two groups of colour additives on the behaviour of 3-year old and 8-9-year old children. This report is expected in spring 2007."
Brilliant blue, which is currently banned in the majority of EU member states, is used in sweets, confectionery, dessert and edible ices, as well as in some soft drinks and baked goods. Quinoline yellow is banned in foods in Australia, the United States and Norway, but its applications in other markets include a variety of confectionery products. MSG is banned in baby food in some countries, but is used in a variety of snacks. Aspartame is currently used in more than 6,000 food and drink products around the world and as a table-sweetener.
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