January 12, 2014
Dietary supplement firms that have imported their products into China as "food" have ceased imports or been denied access after Chinese regulators vowed to crack down on this practice, sources told Natural Products INSIDER.
The U.S.-China Health Products Association (USCHPA) warned in October 2013 that the plan by China's Food and Drug Administration (CFDA) could force multinational companies to withdraw from the market because the process for obtaining approval to sell a product as a "health food" is a long, expensive endeavor.
According to two sources in China, foreign companies importing supplement brands into the countries stopped doing so in October.
"That is an indication it looks like the government is enforcing the rule for not allowing those types of products into China as food anymore," said Joe Zhou, CEO of TSI Group Ltd. in Shanghai, a global ingredients supplier for the dietary supplement industry.
Unlike U.S. FDA, CFDA does not recognize dietary supplements as a regulated category of products. Instead, supplements have been sold as "food" or "health food," USCHPA explained. Companies that seek a so-called blue hat to sell their product as a "health food" will incur $50,000 in registration fees and two to three years to complete the process, according to USCHPA.
Importing supplements as food through the Administration for Quality, Supervision, Inspection and Quarantine (AQSIQ) has been a cheaper and much easier process for firms, USCHPA said.
"Historically, it's been very difficult for U.S. companies to obtain blue-hat registration," noted Cara Welch, Ph.D., senior vice president of scientific and regulatory affairs with the Natural Products Association (NPA). "We've heard similarly CFDA is promising to crack down on this process. I agree it would significantly raise the cost."
Jeff Crowther, executive director of USCHPA in Beijing, pointed out that blue-hat registration could be extremely onerous for companies like NBTY Inc. and GNC Corp., which sell thousands of products. Neither company is a member of USCHPA.
If you took a small fraction of those products and obtained blue hats, it would add up to millions of dollars in registration fees, Crowther told INSIDER. "We don't know of any other market that requires it."
NBTY declined to comment, and GNC wouldn't provide details other than a boilerplate statement that it complies "with all relevant regulatory guidelines in each of the markets in which it currently does business."
Although USCHPA has been very vocal about the blue hat issue, U.S. supplement firms may be keeping a low profile for the time being.
"Once you grab the purse strings of those companies, I'm sure they are going to be screaming in Washington," Crowther said.
Zhou of TSI Group said the cost of blue-hat registration can be upward of $100,000 for a product. He noted about 11,000 products have received blue hat approval, with most of them going to Chinese-based companies.
Products with a blue hat are authorized to make 27 different claims about a health food such as how they relate to the immune system or heart health, Zhou explained. Firms that intend to make a claim must conduct studies on toxicity and safety, he said.
"The government has very detailed protocols for each of the 27 claims you want to make," Zhou explained.
By comparison, "imported foods" cannot make such claims. Zhou cited a lack of incentive to register products as a blue hat. He pointed out companies selling imported foods even make claims through advertisements or store displays in spite of the prohibition.
Crowther described most claims as "antiquated or kind of useless to some degree." He added the claims don't reflect the structure/function claims that the U.S. FDA permits supplement firms to make.
Read the second article in the Emerging Markets: China series here .
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