This blog replaces the earlier archives I had posted on the Internet and includes various memos sent to the clients of the VitaminLawyer.com (now the Vitamin Consultancy). It includes archived copies of memos from 2004 through 2007 and subsequent memos will be posted as they are issued.
Thursday, November 7, 2013
Investing in Regulatory Compliance RoI
Memorandum from Ralph Fucetola JD
Re: Investing in Regulatory Compliance
Date: November 7,
To: All Potential Natural Product Company Investors
This Memorandum is to acquaint
you with the benefits to your Company raising sufficient capital to comply
fully with FDA/FTC SOP/ GMP & Clinical Study Guidelines.
lead to good claims; good claims lead to increased ROI!
Properly Structured Standard
Operating Procedures and
Trained Employees lead to
significant regulatory savings.
Even more evidence that the agencies are serious
about nutrient & natural product claims; this from the Natural Products
Association in March 2011:
“A new and completely different type of safety website is
now open for business. Almost anyone can post information on SaferProducts.gov about a
consumer product they believe might be dangerous or has already caused a safety
problem. Not only will this database of consumer comments be public, it also
will be searchable. "Through this database consumers will have open access
to product safety information that they’ve never seen before, and this
information will empower them to make safer choices," said Inez Tenenbaum,
chairman of the U.S. Consumer Product
does that mean? It means your Company reputation
can be ruined by willful false posters; it means the govt will be trolling the
site to find companies to harass…
And consider these “data points” from the last two
editions of my Vitamin Lawyer Update
eMemo: the UK advertising agency, the ASA now states, according to
WINSH.org, “research on the ingredients was not the same as research on the
Let’s repeat the key phrase: “…research on the ingredients was not the same as
research on the product itself…” – and “research on the product itself” means a Clinical Trial, of course! The substantiation generated by the
Clinical Trial is the legal basis for making product claims.
The Natural Products Association (NPA) said in
February ‘11 – “Time's Up: FDA has begun real enforcement of dietary supplement
GMPs. Companies of all sizes are being inspected. Are you ready?”
your Company ready? What does it take to be ready? See Below.
The above Red Letter warnings from
the NPA & ASA urgently restate what I’ve been telling my perceptive clients
regarding the vitamin or natural products companies. Are you ready for the FDA
inspectors? Below are the 4 essential
steps you must take with estimates of the investments these essential steps
require from your Company. You need to budget this investment now and start to
do what you can to be prepared; in this way you will outperform the competition
who will not be so prepared.
HHS Secretary Sibelius admitted a
couple years ago that she has a $16 Billion slush fund under Obamacare that can
be used to fund activities like the FDA’s 4,000 new inspectors… and FDA has
already dramatically increased inspections, without those new bureaucrats! SOP
Certification Training is what your company needs.
Says FDA -
"...documentation of employee
training is necessary to track which employees have been trained in which operations. Therefore, final Sec.
111.14(b)(2) requires you to keep documentation of
training, including the date of the training, the type of training, and the person(s)
trained." Federal Register, page 34811
Operating Procedures – in
place and up-to-date. GMP compliant detailed SOP documentation not only
satisfies FDA & FTC, but also helps you organize your business!
Substantiation Notebook –
in place and up-to-date; this Notebook is a MUST if you get inspected! The
Notebook should includs copies of the Structure and Function Claims Notices
companies are required to file with the FDA within 30 days of marketing any
ROI can be strongly enhanced by copy-writers who know how to avoid Red Flag
claims & Illegal Testimonials!
Third-Party Clinical Trial of your product; you can no longer fully rely on
published science about isolated ingredients.
The Dietary Supplement and Natural
Remedies market is at a unique moment in its recent history.
The market has grown from
under a billion dollars when the Dietary Supplement Health and Education Act
(DSHEA) passed in 1994 (the first law allowing claims to be made for such
products) to about $50 billion in 2009. The current recession is only having a marginal effect on the nutrient market
and one survey shows that 51% of the purchasers would cut back on food
purchases rather than vitamin purchases. At the same time, significant
regulatory initiatives have occurred during the past years with potential
impact on the market. After 14 years, FDA finally issued Good Manufacturing
Practice (GMP) regulations for the industry during June, 2007 which became
completely effective in June 2009.
All of these factors contribute to a growing industry that
typically sees, after initial investment, a cost of goods, for start-ups, at
about 20 to 25% of retail, rapidly moving down to 10% as new companies are able
to order product runs in the hundreds of thousands of capsules.
Bottom line: savvy
investors, seeking reasonably assured ROI, will find in the natural products
market potential opportunity, if the
Company invests in in Regulatory Compliance!