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The Trump Administration, a Year in Review: A Regulatory Perspective

Almost a year into the President Donald Trump administration, FTC and FDA activity has decreased in the supplement and food industries, either due to a direction from the White House or due to a lack of leadership.

As with any change in presidents, a question at the onset of the Donald Trump administration focused on whether the dietary supplement industry would benefit? Nearly 10 months into Trump’s presidency, this question is hard to answer because our industry has seen little to no immediate and widespread effect. During his campaign, President Trump made promises regarding de-regulation and aggressively criticized FDA for over regulation. He campaigned about the overregulated food and farming industries, while also repeatedly criticizing the lengthy drug-approval process.

Now that President Trump has taken office, he is following through on his promise to de-regulate. He almost immediately signed Executive Order 13771, which requires two existing regulations to be eliminated for every new federal regulation passed. While facially, this seems to reduce regulation, the executive order has been heavily criticized and is proving to be harder to implement than envisioned. The order does not seem to take into consideration that efforts to eliminate a regulation can trigger a similar administrative law process for implementing new laws, sometimes complete with draft rules, comment periods and regulation rewriting. Additionally, the administrative rule-making process can also be subject to litigation, which can only lengthen the process. By attempting to eliminate the “red tape,” Trump may have inadvertently added another layer on top.

While some of President Trump’s ideas to de-regulate may not be as smooth as intended, he did appoint Dr. Scott Gottlieb as the new FDA commissioner. Notably, Commissioner Gottlieb has been critical of the FDA, especially the generic drug program, in the past. Since Trump’s presidency started and Gottlieb’s confirmation, enforcement by FDA appears to have noticeably decreased in the food and supplement space. While there has not been an official statement indicating a change in enforcement priority, the numbers are curious.

One indicator of FDA’s activity level, when it comes to enforcement, is the number of warning letters issued. These warning letters are issued to protect consumers from harmful products, products processed in unsanitary environments, and to ensure a high-quality manufacturing and labeling process. But to date in 2017, fewer warning letters have been issued by this time of the year since 2008. For example, in 2016, FDA’s Center for Food Safety and Applied Nutrition (CFSAN) issued 46 warning letters, according to its online database. To date this year, CFSAN has issued 11 warning letters, meaning it is on pace to finish off 2017 with 14 warning letters in total. CFSAN is not the only body that issues warning letters, as FDA’s district offices individually have the capacity to do so, as well. However, the numbers from CFSAN are telling. While the decrease in enforcement is obvious, what is less clear is whether this decrease in enforcement is based on a directive from the Trump administration, a result of a lack of government resources or is simply FDA’s unclarity of its path moving forward under this administration.

On the other hand, the Trump administration’s effect on FTC seems to be apparent. All signs, so far, appear to point to a less interventionist approach by FTC. President Trump appointed Commissioner Maureen Ohlhausen as the Acting Chairman of FTC. In May 2017, FTC announced several priorities under the Trump administration, including a desire to create jobs, correcting of federal government reach in a number of areas and reforming regulatory processes to reduce burdensome regulation. A task force was created to focus on occupational licensing reform, with the goal of removing unnecessary and excessive occupational licensing requirements. As Ohlhausen stated in a speech to industry, “You shouldn’t need a permission slip from the government to start a new business or to get a new job, unless there exists a compelling public health or safety reason.”

More important is FTC’s focus on eliminating government overreach. Ohlhausen noted she has directed FTC’s enforcement efforts to those matters that involve substantial harm to consumers. In the past, arguably, some FTC enforcement actions seemed to be based on speculative harms, which are not based on facts or sound economic theory. But now, FTC, under Ohlhausen, seems to be putting forth a policy that when free-market competition is impeded, consumers ultimately lose the benefit.

This seemingly more passive enforcement viewpoint could be especially important to food and supplement industries, as staff under the previous administration appear to have taken a more stringent approach in evaluating substantiation for various product claims. If a company has ever been on the receiving end of a Civil Investigative Demand (CID) from FTC, it can attest to the fact that a CID can impose substantial costs and burdens upon a company. FTC has stated it will revisit its CID practices to determine whether it can advance is mission, without unduly burdening legitimate business activity. While FTC has recently committed to reviewing its enforcement practices, it remains unclear as to how it will continue to substantively engage with companies on enforcement actions regarding substantiation. Will regulators continue to advance rigorous substantiation requirements, such as two double-blind, placebo-controlled human clinical trials, for all performance claims, or will FTC loosen up on its interpretation of “competent and reliable scientific evidence?”

The changes seen in 2017 so far at both FDA and FTC could be the result of directives from the Trump administration, but they also could be tied to the time it has taken the administration to fill key regulatory posts (some key positions have yet to be filled). For example, Commissioner Gottlieb was appointed to his position at FDA in May, roughly four months after President Trump took office. Additionally, FTC currently only has two commissioners instead of the usual five. Having only two commissioners, one Republican and one Democrat, may be causing a backlog, as generally a majority vote of commissioners is necessary for FTC to bring an enforcement action in court, as well as an agreement to settle a threatened enforcement action.

In mid-October, however, the White House announced Trump’s plan to nominate Joseph Simons, an antitrust lawyer, as chairman of the Commission. National media also reported Trump planned to select Noah Phillips and Rohit Chopra to round out the five-member Commission.

It is not clear why the Trump administration did not immediately pounce on the opportunity to have a majority Republican commission. What is known is that for every day new commissioners are not appointed, President Trump and his administration lose the ability to have a partisan hold on an administrative agency that is by definition, regulating trade–something he promised to de-regulate.

In sum, other than a slight decrease in FDA-enforcement activity, the tangible effect of the Trump administration on food and supplement industries has been minimal so far. It remains to be seen whether Trump’s two-for-one regulation policy can provide benefit to companies within our industry. However, anyone who knows President Trump and followed his campaign knows he probably has a plan for both FDA and FTC, and the plan is “huge.” Stay tuned.

Abhishek Gurnani is a partner at Amin Talati Upadhye. Gurnani represents a wide variety of health and wellness-focused companies addressing issues such as quality control (QC), recalls, government investigations and class action lawsuits, as well as dealing with matters before FDA, FTC, U.S. Customs and USDA.

With a background in both biology and chemistry, Amit Sharma advises on laws and related legal strategies for companies in the food, beverage, supplement, drug and cosmetic industries. Sharma, as associate at Amin Talati Upadhye, primarily helps clients with compliance and disputes before FDA, FTC, USDA, NAD and U.S. Customs. Amit also reviews product labels and packaging for compliance and advises on claim substantiation for websites and other advertising such as social media, print, radio television and internet.

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