FDA Wants to Regulate Supplement Industry

The funny thing about the supplement industry is that despite its $27 billion annual revenue, no one really knows what's inside those pricey little bottles. The industry is very much unregulated, and as any container of skin-bursting muscle mix you buy from GNC (NYSE: GNC) will tell you, the statements on these bottles have not been evaluated by the US Food and Drug Administration (FDA).

This industrial freedom stems from 1994's Dietary Supplement and Health Education Act (DHSEA), which liberated dietary supplements from the pesky regulatory requirements that are placed on the mundane, non-anabolic food found in plain-Jane supermarkets. The bill handed over administrative responsibilities entirely to the supplement purveyors themselves, only requiring them to provide the FDA with notice of the production and safety of products containing New Dietary Ingredients (NDIs), ingredients not present in the market before the enactment of the DHSEA, before they hit shelves.

Naturally, this didn't work out as planned. Since there was never a definitive list of dietary ingredients marketed before the enactment of the bill, the responsibility fell on the supplement industry to determine what was and was not an NDI, which it didn't do. This has resulted in a market boasting 56,000 supplements, only 700 of which the FDA has received any sort of notification about.

The FDA apparently isn't too happy with this and has recently set out to impose more stringent regulations on the wheeling, dealing supplement market. These new requirements, put forth as the "Draft Guidance on New Dietary Ingredients," would not only require notification and comprehensive testing for products requiring NDIs, but also for products containing new combinations of any two previously approved ingredients. The draft has elicited quite the response from supplement makers who claim that the proposed regulations are not just stringent, but overbearing and extremely costly.

Bill Sardi, president of Knowledge of Health Inc. and supplement industry observer, places the cost of compliance with the new FDA guidelines, which would require the testing of 40,000 of the 56,000 available dietary supplements, at approximately eight years worth of industry revenue. This doesn't account for the cost of re-testing, which might well be necessary. Less than 33% of NDI notifications are approved upon initial submission.

Such exorbitant costs could force the supplement industry to cut corners to simply meet requirements. This could mean cutting production on supplements not profitable enough to justify the cost of testing, raising the price on available supplements to recoup necessary expenditures, or general downsizing. There are also questions about the effects this could have on supplement retail chains like GNC and Vitamin Shoppe (NYSE: VSI).

Some industry members, such as Atrium Innovations (TSX: ATB), say they are both outraged and confused why the FDA wants to impose such potentially harmful regulations on an industry that reportedly contributes $61 billion annually to the national economy and employs some 500,000 people. In December, the company issued a statement that explained: "We question why, after 17 years, FDA has promulgated such stringent guidelines, as we do not believe that a consumer safety crisis exists to merit such action by the agency."

As is common in such situations, activist Websites have popped up pressing supplement consumers to write, call, and email their state representatives to fight these regulations. But it's not getting the level of attention necessary to make people take notice. One can't help wonder, however, if all this could have been avoided by simple compliance with the DHSEA.