United States: Are You Getting Too Much State AG Enforcement In Your Dietary Supplement Business?

In February, New York AG Eric Schneiderman announced the results of an investigation into store-branded dietary supplements sold at major national retailers. The investigation alleged, after the use of a novel testing technique, that some of the supplements did not contain the active ingredient claimed on the label, and in a few cases, contained potential allergens or other contaminants. For the supplement retailers involved, the AG's investigation presented two elements of surprise: first for what it allegedly discovered, and second for the implicit assertion of state authority in an area typically thought to be under federal regulation.

Dietary supplement labels sit at the regulatory intersection of two federal agencies: the Food and Drug Administration (FDA) regulates product claims made on the labels, and the Federal Trade Commission (FTC) addresses business practices that are unfair or deceptive, as well as prevents advertising that is misleading. Yet the jurisdictional line between the FDA and the FTC can be rather thin. For example, in POM Wonderful v The Coca Cola Company, the Supreme Court made it clear that even when a product otherwise satisfies FDA labeling requirements, it can still violate other aspects of federal law (i.e., the Lanham Act) if the label is found to be deceptive.

AGs have worked closely with the FTC on deceptive advertising and other issues involving food labels. For example, in 2009 the FTC worked with State AGs to prevent consumer confusion through a voluntary food labeling practice that used the term "Smart Choices" to imply that the labeled food was healthy. In 2010 the FTC worked together with State AGs to look into yogurt products claiming to improve digestive health, and to challenge claims that breakfast cereals increased children's immunity.

The AG's investigation into supplements begs the question of whether State AGs can also work effectively with the FDA?

Supplements and the FDA

The FDA has primary jurisdiction over dietary supplement labels. Under the principles of federalism (and 21 U.S.C. Sec. 343-1), states are restricted from taking actions that directly conflict with FDA label requirements. However, states can pass, and vigorously enforce, their own, similar labeling requirements. States can also attack mislabeled products under state laws against deceptive practices.

The Dietary Supplement Heath and Education of Act of 1994 (DSHEA) sets the parameters for defining a dietary supplement. Qualifying "ingredients" include vitamins, minerals, herbs, amino acids, concentrates and extracts, and any "substance for use by man to supplement the diet." 21 U.S.C. 321 (ff). That final ingredient may seem overly broad, but the FDA has narrowed it by limiting it to products that have previously been part of the human diet. Supplements can come in various ingestible forms (pills, liquid, powder, etc.), but cannot be represented, or intended for use, as a conventional food or drug (i.e., the diagnosis, cure, mitigation, treatment, or prevention of a disease).

The FDA requires only a few actions prior to putting a supplement on the market. First, if the supplement presents a " new dietary ingredient," the FDA will require the supplement manufacturer to adequately substantiate that the new ingredient is reasonably expected to be safe when used under the conditions recommended by the supplement's label. An ingredient is "new" if it was not marketed in the U.S. prior to October 1994 (passage of DSHEA) as a dietary supplement, and was not previously present in the food supply in its current form.

Second, the FDA requires manufacturers and retailers to conform to the FDA's current Good Manufacturing Practices (cGMP Rules) for dietary supplements. The cGMP Rules provide specific instructions for producers regarding the preparation, packaging, and storage of dietary supplements. The cGMP Rules require supplement manufacturers to establish cleaning, testing, quality control, and handling procedures, and to include record-keeping and other transparency provisions. The FDA has published a guidebook to help businesses better comply with the cGMP Rules.

Generally, the FDA presumes that established dietary supplements are safe, and as such, does not require safety and efficacy testing prior to placing an established supplement on the market. If, however, the agency comes to understand that "adulterated" or "misbranded" supplements are being sold on the market, it can institute an enforcement action together with the U.S. Department of Justice, seeking to enjoin the implicated company (see, e.g., enforcement action filed against James G. Cole, Inc.). For these purposes, the FDA defines a supplement as adulterated if it "presents a significant or unreasonable risk of illness or injury" under the recommended or ordinary conditions of use. It considers a supplement misbranded if "its labeling is false or misleading in any particular, including...ingredients."

Although the FDA can take action against adulterated and misbranded supplements, under current law and a 2006 court of appeals decision ( Nutraceutical Corporation v. von Eschenbach), the burden of detecting and proving misbranding is on the agency. And when the FDA indicates that a supplement is adulterated or misbranded, the manufacturer is typically given the opportunity to respond and present proposed adjustments to the FDA prior to a lawsuit by a U.S. Attorney.

The State AG Investigation

The New York AG's investigation, now joined by 13 other State AGs, was initially framed as a question of whether the supplement companies were deceiving consumers through their labels (State AGs have broad authority to prevent deceptive practices). Now, though, the message has morphed into one of increased scrutiny of the FDA's system for regulating supplement labels, including a perceived lack of enforcement and reliance on self-testing protocols. For example, in April the group of investigating AGs asked Congress to direct the FDA to develop enhanced, uniform, industry-wide quality assurance and verification regimes to guarantee the source, identity, purity, and potency of herbal and dietary supplements.

In May, the investigating AGs wrote a letter to the Acting Commissioner of the FDA, outlining flaws in and requesting reforms to the current way the FDA regulates dietary supplements. The AGs specifically took issue with cGMPs, arguing that the process:

  • provides too much leeway to manufacturers to set their own label specifications and then create their own tests for confirming label claims;
  • does not apply to ingredient suppliers, many of which are overseas;
  • does not require manufacturers to engage in any confirmatory testing to ensure that supplements are free of common allergens; and
  • does not create universal definitions for key terms—like "natural" or "extract"—allowing manufacturers to use such terms ambiguously.

But how far will AGs be able to push in this area? This investigation is not the first time that State AGs have veered into FDA turf. In the late 1980s, a group of AGs challenged nutritional claims put forward by food product monoliths, like Kraft, Campbell's, and Nabisco. Those collective AG investigations into consumer product claims, although not always successful, helped nudge Congress to pass the Nutrition Labeling and Education Act of 1990.

In the current political morass, it is unlikely that the State AGs will succeed in pushing Congress or the FDA to enhance significantly dietary supplement testing protocols or to more closely scrutinize other claims made on supplement labels, even though individual members of Congress are showing increased interest in the area. But, it is also unlikely that the AGs will go away. At least one retailer has agreed to adopt testing protocols that go well beyond FDA requirements in order to appease the investigating AG's demands—adopting a more strenuous type of testing methodology to confirm the authenticity of the stated active ingredients, and employing additional consumer education practices. For the other retailers involved, the investigation continues.

Looking Ahead

Rising consumer demand will continue to challenge the FDA to regulate dietary supplements, and the FTC will certainly continue to take an interest in these products. Since the DSHEA was passed in 1994, the dietary supplements industry has grown substantially. Yet, because these agencies have limited enforcement resources, there is a growing justification for state involvement. Indeed, many states are already finding new ways to respond to consumer requests for greater transparency in food labeling, and State AGs are taking greater numbers of enforcement measures.

For companies that sell or manufacture dietary supplements, it is probably necessary, now more than ever, to track state law issues and AG actions. Regulatory compliance on a 50-state level might not be easy for businesses to swallow, but avoiding State AG investigations is becoming a crucial supplement to a healthy business practice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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