FDA AND THE DRUG INDUSTRY OUT TO DESTROY THE SUPPLEMENT INDUSTRY

By Attorney Jonathan Emord

Author of "The Rise of Tyranny" and

"Global Censorship of Health Information" and

"Restore The Republic"

February 25, 2013

NewsWithViews.com

A decade ago advisors to the leading dietary supplement companies and to their principal trade association came to the remarkable conclusion that they could not build a workable relationship with the FDA unless the FDA came to regulate every aspect of the production, holding and distribution of dietary supplements. For decades FDA had endeavored to restrict what could be said about supplements and remove supplements from the market. After much discussion, many leading supplement companies and their trade association followed the advice given them and drafted proposed regulations that would permit FDA to impose process controls governing every aspect of sourcing, production, holding, and distribution of dietary supplements. The proposal was breathtaking in its grant of discretionary power, enabling the FDA to regulate everything from the location of hand washing stations to the qualifications of quality control personnel. The proposal subsumed local health and safety and zoning laws. The promise made by the industry to its members was simple: Join us in granting FDA these powers and FDA will change its view of the industry and embrace us rather than destroy us.

At that time I was a lone critic of the proposal. I explained that the proposal was based on a fundamental misunderstanding of the relative bargaining power of the supplement industry in the FDA’s regulatory universe. I explained that the proposal would not change FDA’s negative view of the supplement industry, would redound to the detriment of the industry (in costs and loss of freedom) and would ultimately inure to the benefit of the FDA’s most favored regulatee, the drug industry. The metaphor I used in speeches at the time (and since) was that of a rogue elephant (the drug industry), ridden by a blind mahout or elephant driver (the FDA), equipped with a riding crop (regulation). A pesky flea on the flank of the elephant represented the dietary supplement industry. Ridden by a blind driver, the elephant could go wherever it wanted; the blind mahout was dependent on the elephant for guidance. The mahout’s only concern was to help the elephant avoid distress; so long as the flea took no action that would irritate the elephant, the flea could abide in peace but, whenever the flea annoyed the elephant, the mahout would use his riding crop to hammer the flea into quiescence.

On the black day when the industry finally presented the proposed cradle to grave GMP regulations to the FDA, the FDA seized the day, recognizing that in fact it had received the industry’s head on a silver platter. The industry continued to operate on a surreal plane, predicting that adoption of the GMPs signaled a new day for the dietary supplement industry where those who complied would buy themselves peace with the FDA. Not so. For decades FDA had endeavored to break down the supplement industry, the arguments about supplement safety were but a pretext (by and large dietary supplements have been safer than even foods). Science concerning dietary supplements had revealed them variously to have therapeutic effects, associating them with disease treatment and prevention. The FDA’s statutory mandate (a gift of drug industry lobbying of Congress in the 1960s)--and its predisposition in light of the lucrative post-government employment offered by the drug industry--reinforced an agency role antagonistic to the food and supplement industries.

To ensure that the drug industry would enjoy a monopoly over the use of therapeutic claims, it endeavored to tame the supplement market (censoring its speech and endeavoring to remove specific products). To that end, whenever the food or supplement market included claims that a food or supplement could treat or prevent disease, the FDA was quick to stamp out those claims, sending in agents and sometimes U.S. Marshals to shut down the operations with broad search and seizure warrants (on the legal fiction that the products had been transformed into drugs by the claims made for them). For decades, FDA has endeavored to assert greater control over what had historically been a robust free market in supplements. The agency tried to reclassify supplements as unapproved food additives but the courts shot down that effort, to coerce and cajole the market into dropping claims of health benefits but the courts demanded that truthful disease prevention claims be allowed, to reclassify supplements with certain dose levels of vitamins and minerals as drugs but Congress adopted legislation forbidding that move, and to ban supplement ingredients altogether.

As Congress found in the 1980s, the FDA’s history reveals a bias against dietary supplements. That bias complements its bias in favor of drugs. At the same time that FDA expended millions annually cracking down on dietary supplement companies, it relished in a cozy relationship with the drug industry. Repeatedly FDA’s Commissioner approved drugs over the safety objections of the agency’s medical reviewers. FDA’s Center for Drug Evaluation and Research director engaged in direct ex parte communications with drug company executives assuring them that medical reviewers who objected to drugs then under review would be punished, ostracized, and removed from cases or that public relations efforts of those drug firms would be complemented by favorable statements from FDA.

So it was that a decade ago in speech after speech I urged the dietary supplement industry to reject the notion of going to FDA with cradle to grave regulations (the cGMPs) but to no avail. The industry went to the FDA with the regulations already drafted and obtained the support of Senators Hatch and Harkin along the way. The agency received the proposed regulations and then proceeded to ratchet them up several notches. After they were published in the federal register and available for comment, I filed comments on behalf of the Alliance for Natural Health-USA. Those comments included an economic analysis by regulatory economist Joanna Shepherd-Bailey, Professor of Law and Economics at Emory University. Her assessment revealed that upwards of 50% of the dietary supplement industry would be eliminated by enforcement of the regulations and that all players would incur several hundred thousand dollars of new costs annually, all without any demonstrable increase in the relative safety of an already very safe dietary supplement market. Suddenly those who favored the regulations began to have doubts.

Several filed comparable comments in which they explained that the impact of the regulations would be profoundly negative on the dietary supplement industry, resulting in increased supplement costs, decreased supplement availability, and increased incidence of supplement company closures and consequential unemployment. But alas it was too late, FDA had what it wanted and proceeded to adopt final rules. We filed duplicate comments concerning the regulations with the Office of Management and Budget, which assesses whether the economic impact statements associated with proposed regulations are accurate reflections of cost. Apparently OMB chimed in, withholding allowance of the regulations and telling FDA that its rosy economic projections conflicted with likely costs, as expressed in the economic assessments provided the agency. To the surprise of many observers, in its final rule FDA essentially adopted the predictions of adverse economic impact, rejecting its earlier rosy prognostications, agreeing that adoption of the rule would result in the closure of many firms, increased costs for supplements, and decreased availability of products.

As predicted, the regulations have been taming the dietary supplement industry, forcing the closure of several firms and costing even the biggest players huge sums annually in a futile effort to satisfy the ever changing regulatory demands of the FDA. The extraordinary discretion given FDA’s investigators under the GMPs ensures that they may lord over companies, making companies change all manner of operations to satisfy an agent’s whim or caprice. Failure to do so results in issuance of “observations” in a Form 483, which must be satisfied immediately or enforcement will follow.

The regulations have so intimidated supplement companies that they have been transformed from robust market players to timid, largely impotent actors who labor under the constant fear that an investigator will show up and find something remiss, no matter how minor, which will under the GMPs be deemed adulteration even if products produced are perfectly safe. The authority FDA always sought over the industry to cabin it, consolidate it, and intimidate it into subservience to the dictates of the agency has been achieved.

This objective is but a part of a much bigger picture, apparently misunderstood by those who advocated the GMPs. As science has revealed therapeutic effects of supplements, they have become of greater interest to the agency’s most favored regulatees, the drug industry. So long as the market for supplements is robust with many players and products, competition keeps prices and profits relatively low (by drug company standards). However, if the market is honed down to a few actors, prices will rise and the opportunity to market supplements as the equivalent of over-the-counter drugs becomes more promising. At present the drug industry sits like hyenas on the edge of the supplement market. As FDA beats up that market and reduces the number of players in it, the hyenas continue to gather and prepare to seize the prey. Once enforcement under the GMPs and the new Food Safety Modernization Act provisions result in significant market consolidation, the drug industry will increasingly enter the market, buy the concerns, and establish a major presence.

Once FDA’s favored regulatee, the drug industry, has taken over much of the supplement market, the agency will—under drug industry lobbying—warm to the idea of reducing the effective barriers now present on supplement claims, permitting supplements to be marketed with therapeutic claims more akin to over-the-counter drugs. In exchange for those changes, the drug industry will be required to give up more control over aspects of production and content of products, resulting in even more market concentration.

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That bargain the drug industry will embrace because the right to make claims for specific products will enhance their marketability and because further lessening in what may be sold will invite increased prices. Many other changes are predictable once the FDA’s favored regulatee takes control over most of the supplement market.

Ironically, those who favored the GMPs because they thought they would remove small players and build a better relationship with FDA were right; they just misunderstood who would receive those oligopolistic benefits (it was not the leaders of the dietary supplement industry who advocated the GMPs, it was the drug industry).