Four of the country’s largest retailers received notices from the New York Attorney General’s Office in early February demanding that they cease and desist selling adulterated or mislabeled herbal dietary supplements. These notices identified herbal products such as Ginkgo biloba, St. John’s wort, garlic, echinacea and saw palmetto that the retailers were selling under private label brand names. Relying on analytic test results that used DNA barcoding technology, the notices asserted many of the tested products “were either unrecognizable or a substance other than what they claimed to be, and therefore, constitute contaminated or substituted products." Basically, these retailers were accused of deceptive trade practices and false advertising for selling products that do not contain the herbal ingredients identified on their labels.
The notices made national news and, not surprisingly, raised concerns within the dietary supplement industry. Even companies that are confident in the accuracy of their labels might wonder what to do if they ever receive a similar notice, whether it is practical to fight the “800-pound gorilla," and what they can do beforehand.
Get the right people to help. Any company receiving a cease and desist notice must recognize the need for outside help. This includes legal counsel experienced with government investigations for deceptive trade practices. The investigation will overlap with substance of FDA’s GMP (good manufacturing practice) and labeling regulations, so the company’s lawyers should be experienced in this area as well. The company should consider retaining an expert consultant on scientific issues, particularly analytical testing of supplements. In today’s age of instant communication, it is sometimes helpful to engage a public relations consultant.
Respond strategically. The cease and desist notice will almost certainly include requests for documents or other information. The New York Attorney General’s February requests sought information about the products’ manufacturers, manufacturing agreements, analytical testing and detailed information about GMPs and adverse event reports (AERs). All of this information should be readily accessible either in company records or, if applicable, from its contract manufacturer.
But the company must do more than simply hand over documents. It needs to work with its lawyers and scientific experts, including in-house personnel, to organize the information persuasively and effectively. The company should also collect records and information that will be important for its defense, above and beyond what the government requests. This might include documents concerning the specifications for finished products and each of their herbs and other dietary ingredients, analytical testing showing compliance with the specifications, as well as a review and approval by the company’s quality control (QC) personnel. The company will also want scientific evidence to support the reliability and validity of the type of analytical testing that it uses to verify identity, purity, strength, composition and contamination limits. Also, be sure the reserve samples for each manufacturing lot at issue are readily available.
Balancing cooperation, negotiation and a vigorous defense. The extent to which a company should focus on negotiations as opposed to actively preparing to defend itself in court often boils down to a business decision, with the strength of the company’s legal position being a primary factor. One critical legal consideration will be the company’s GMP documentation, especially the analytic test results for the specific manufacturing lots at issue. Does the company’s testing show that its products contain the ingredients in the amounts disclosed on the label? Is that testing scientifically valid?
One dispute brewing in the New York Attorney General investigation is whether DNA barcoding is reliable. This method uses a short genetic marker in an organism’s DNA to identify it as belonging to a particular species. Several dietary supplement trade associations have criticized certain aspects of DNA barcoding. Among other things, these groups say it is not reliable for identifying herbal extracts or highly processed herbs in finished products. If the company has confidence in its own testing and believes the government’s testing is vulnerable, it may want to defend itself in court rather than negotiate a settlement with the government. Other legal considerations include the time it takes to go through the litigation process, the chances of winning at trial and, of course, the costs of litigation versus the costs of settlement.
Be prepared before receiving a notice. Every company hopes it never receives a cease and desist notice. Nevertheless, every dietary supplement company should be prepared if or when that happens. The good news is that much of this can be taken care of through GMP compliance and, for companies that use contract manufacturers, a good manufacturing agreement.
For GMPs, good recordkeeping is critical. A company that manufactures its own products should be able to access, almost immediately, critical documents such as specifications for the identity, purity, strength and contamination limits for products’ dietary ingredients and the finished products test results that verify compliance. In addition, companies should havedocumentation showing its QC personnel reviewed and approved the test results before any product from the manufacturing lot was released, or, if applicable, showing the nonconforming product was rejected.
Even if the company does not manufacture its own products, it is ultimately responsible for selling a product that complies with all applicable laws. FDA has issued numerous Warning Letters in the past few years to private label distributors for GMP issues, which include reminders that while companies may contract out certain manufacturing operations, they cannot contract out the ultimate responsibility to ensure products are manufactured pursuant to GMPs. The question is how much oversight the private label distributor is required to exercise. A good manufacturing agreement helps address this and also makes it easier for the company to obtain information needed to defend a cease and desist notice.
A manufacturing agreement should clearly define each side’s rights and responsibilities. A few key points for private label distributors to consider include:
· The manufacturer’s duty to comply with GMP regulations and allow for regular GMP audits by an independent third party.
· The right to obtain copies of any manufacturing records, with a provision for expedited production (e.g., within 48 hours) in emergency situations, such as a government investigation.
· Copies of analytic test results for each manufacturing lot within each shipment of finished products, or written certification of compliance by the manufacturer.
· An indemnification provision holding the manufacturer responsible for any monetary losses incurred as a result of a government investigation, as a well as consumer claims and lawsuits that are related to product manufacturing. This provision should include payment of the legal fees and other costs (e.g., expert consultants) reasonably necessary to defend against such actions.
Compliance with GMPs must be non-negotiable. The other items are common practice, but they are subject to negotiation like most terms of a contract.
Another action the private label distributor can take to prepare for a cease and desist notice is to make periodic requests for GMP records. This will help ensure that critical documents can be obtained if needed on a short deadline. The people who make these periodic requests should be the same people who would be called upon for responding to a cease and desist notice.
Antonio Gallegos, Greenberg Traurig LLP, Denver office, provides regulatory compliance, dispute resolution and trial strategies for the food, dietary supplement and medical device industries. He represents businesses and individuals in lawsuits, arbitrations, mediations, government investigations and regulatory enforcement actions. Gallegos also advises on compliance with regulations administered by FDA, FTC, U.S. Department of Agriculture (USDA), Drug Enforcement Administration (DEA) and similar state-level agencies.