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Dietary Supplement Industry No Longer Flying Under State AGs Radar

Former Maryland Attorney General Doug Gansler said dietary supplement companies need to be engaged with their state’s attorney general and take any inquiries from state regulators very seriously.

The state attorneys general (AGs) are the chief legal and law enforcement officers in their states. They are responsible for enforcing their consumer protection acts and well as their state’s laws against unfair or deceptive acts or practices (the UDAP statutes). These two statutes—which apply to all consumer transactions—grant state AGs authority to regulate a wide array of industries.

Furthermore, what is unfair or deceptive under UDAP is often in the eye of the beholder, and a state AG may not view things the same way as industry or even FDA. Obviously, what is “safe" for the consumer should be determined by FDA and its scientists, consistent with the relevant federal statutes promulgated for that purpose.

However, assistant AGs—lawyers without any scientific background—in New York, Oregon and elsewhere have taken it upon themselves to encroach upon federal authority and bring claims, often later proven to be misguided, against supplement companies pursuant to their states’ consumer protection acts. Unless and until their jurisdiction is challenged in court, the state AGs will continue to pursue claims against the supplement industry.

While an AG will often wade into the dietary supplement industry in order to extract money for the state, he or she will often use the mere threat of an enforcement action to encourage companies to adopt what they believe to be more consumer-friendly policies, thereby purportedly helping consumers while sparing the target companies both the pain of expensive legal fees and the reputational damage of a formal action. This strategy can be a win-win for consumers and industry, as consumers may receive the benefit of cleaner disclosures and transparency going forward, and the companies avoid the messiness of a protracted legal proceeding.

Generally, an AG will delegate leadership on a particular issue to a high-level staffer in its consumer protection division. Oregon’s Assistant Attorney, David Hart, for example, leads the charge in the enforcement actions brought by his state’s office against several members of the supplement industry. Moreover, state AGs often leverage their power by forming coalitions, called a multistate, with other state AGs so that they can pool their resources to tackle more complex issues.

The Impact of AGs on the Supplements Industry

State AGs are elected directly by popular vote in 43 states. Thus, political considerations may factor into how an AG sets the investigative priorities of his or her office. Because the supplements industry is a US$37 billion, consumer-centric industry, state AGs pay extra attention to any perceived problems with it.

It is actually quite surprising, considering the importance of supplements in the lives of so many voters—with over 150 million regular supplement consumers nationally, that the industry was able to fly below the radar of state AGs until quite recently. That, of course, all changed in February 2015, when New York’s AG Eric Schneiderman issued cease-and-desist orders to four prominent supplements retailers. Since that time, the supplements sector has found itself in the crosshairs of state AGs from New York to Hawaii. In fact, the supplements industry has been the frequent topic of panel discussions at recent national AG meetings, and this new dynamic is not likely to change any time soon.

For this reason, supplement companies need to be engaged with their state’s AG and take any inquiries from state regulators very seriously. Companies should work with AGs to educate them about all the good that their products do for consumers, and they need to distance themselves from the few bad actors in the field.

If, despite these efforts, a state AG still opens an inquiry into a particular supplement company, the company needs to have a plan to respond promptly and productively to that AG inquiry so that any cloud over the business can be cleared up before it suffers any reputational or financial damage. A company’s first meeting with the AG should not be because the company is in trouble, and, at that meeting, the company should always be represented by a former attorney general or experienced counsel in the state AG space.

Looking to understand the breadth of AG’s authority and what may be coming next? Join us for the State Attorneys General: Communication & Mitigation Strategies workshop on Wednesday, Oct. 5, at SupplySide West 2016.

Doug Gansler, Esq., is a former two-term Attorney General from Maryland and the former president of the National Association of Attorneys General. Gansler chairs the Buckley Sandler State Attorneys General practice where he advocates and litigates on behalf of clients in the supplement industry and advises them on how to respond to inquiries from state AGs.

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