FDA issues Warning Letters to eight companies marketing cannabidiol products.

  • As previously covered on this blog, FDA released a 2015 Q&A document stating its views that cannabidiol (CBD) products are excluded from the dietary supplement definition due to the existence of known substantial clinical investigations on this substance.  This is the so-called “drug exclusion” from the dietary supplement category.  Although FDA previously issued several Warning Letters to companies marketing CBD products as unapproved new drugs, we wondered whether future Warning Letters would target CBD supplements for running afoul of the “drug exclusion.”
  • On February 4, FDA sent Warning Letters to 8 companies marketing CBD products — some positioned as foods and others positioned as supplements — alleging that the products are unapproved new drugs.  In the Warning Letters targeting the supplements, FDA also alleged that the products run afoul of the “drug exclusion” due to the known existence of at least two investigational new drug applications (INDs) filed by companies studying the therapeutic effects of CBD.
  • As was the case in the 2015 FAQ document, FDA has invited parties to submit evidence that would call into question the Agency’s view that CBD products run afoul of the “drug exclusion.”  CBD marketers could challenge FDA’s conclusion by providing proof that dietary supplements containing CBD were lawfully on the market before the two known INDs for CBD were filed.  FDA’s reissuance of the “call for data” as part of the recent spate of Warning Letters suggests that the Agency has not yet reviewed any credible evidence on this point.  We anticipate that the regulatory battle over CBD and other hemp-based products will not conclude any time soon.

Sugar “sin taxes” in the spotlight.

  • Added sugar has been in the spotlight for years, particularly with respect to its potential contribution to obesity and other non-communicable diseases.  The WHO recently issued a report urging the food industry and global governments to take active steps to curb sugar consumption among children.  The report discussed the benefits of regulatory actions such as sugar taxes and restrictions on the marketing of sugary foods to children.  Mexico recently led the way in Latin America, implementing one of the world’s highest taxes (1 peso per liter) on sugar-sweetened beverages.
  • Some public health advocates predict that other countries will follow Mexico’s lead before the end of 2016 and will implement taxes and advertising restrictions on sugary beverages.  Although some question the effectiveness of these so-called “sin taxes,” data at the one-year mark in Mexico suggest that their tax reduced the consumption of sugary beverages by 12%.
  • Here in the U.S., legislative efforts to require warning labels on sugary beverages failed in California and New York, although the City and County of San Francisco passed legislation to require such warnings in 2015.  (San Francisco’s law is being challenged on First Amendment grounds).  Mayor Bloomberg’s controversial effort to effect a “big soda ban” in New York City also failed.  However, in 2014, Berkeley became the first city to pass an excise tax (1 penny per ounce) on sugar-sweetened beverages.  The Berkeley tax has only been effective since January 2015, so it may be too early to tell whether it is “working.”  Still, many public health advocates will be looking to data emerging from jurisdictions like Mexico and Berkeley to determine the feasibility and efficacy of this type of government initiative.  Their relative successes and failures will help determine the popularity and fate of “sin taxes” on both a domestic and a global scale.

FDA seeks $5.1 billion in funding for FY 2017.

  • As FDA’s implementation of the FDA Food Safety Modernization Act (FSMA) kicks into higher gear, adequate funding remains a topic of continued debate and discussion.  Many agree that FDA is routinely under-funded, which leads to implementation and enforcement challenges across all divisions of the Agency.
  • On February 9, FDA announced its request for a total budget of $5.1 billion to carry out its duties in FY 2017 (i.e., the period from October 1, 2016 through September 30, 2017).  Specific to the regulation of the food supply, FDA seeks to allocate an additional $18.4 million in budget authority and $193.2 million in user fees to its continued implementation of FSMA.  The Agency notes that additional funding will enable it to continue its work in verifying the safety of imported food and to conduct food safety audits of foreign food facilities (an area in which FDA has failed to meet inspection targets so far).
  • President Obama also has announced his proposed budget for FY 2017, and already it is being criticized for allocating insufficient additional funds specific to FSMA implementation.  Congress ultimately will need to take action, and we are likely to see continued debate and discontent surrounding various funding requests and approaches.  In particular, we suspect that industry stakeholders will be paying close attention to FDA’s planned dependence on user fees for FSMA implementation.  User fees remain unpopular in the food industry, and many hope that FDA will remain unsuccessful in its attempt to expand reliance on this source of funding.

FDA revisiting its safety criteria for raw milk cheese.

  • For years, FDA has been warning consumers about the potential health risks associated with consuming raw milk products (i.e., products made from unpasteurized milk).  The Agency also has included raw milk cheese in its systematic surveillance sampling program.  In 2010, FDA published a Compliance Policy Guide (CPG) to provide guidance to FDA staff on enforcement policies for pathogens and other indicators of inadequate pasteurization or post-pasteurization contamination of dairy products.  Under the CPG, FDA may consider dairy products to be adulterated where tested samples contain specific levels of non-toxigenic E. coli.  This is because FDA views non-toxigenic E. coli as an indicator of fecal contamination and other unsanitary conditions in a processing plant.  In recent years, cheesemakers have expressed concerns about the necessity and scientific validity of FDA’s policy on this point.
  • On February 8, FDA announced its intent to revisit its rationale for testing for non-toxigenic E. coli in dairy products.  While FDA reconsiders its policy, the Agency will be pausing its testing program for non-toxigenic E. coli in cheese.
  • FDA’s announcement pledges a re-evaluation of its safety criteria under the framework set forth in the FDA Food Safety Modernization Act (FSMA) and specifically references the relevance of hazard analysis and risk-based preventive controls (HARPC).  It is not clear when FDA’s revisions to the 2010 CPG will be complete.  Nevertheless, it is interesting to see the Agency expressly citing a FSMA-based and science-focused rationale as among the reasons for a proactive change to its enforcement policies.

Chipotle dodges non-GM class action lawsuit…for now.  (subscription to Law360 required)

  • In 2015, Chipotle Mexican Grill launched a nationwide advertising campaign premised on the chain’s pledge to serve food made only with non-genetically modified (GM) ingredients.  However, the company continued to serve meat and dairy products from animals that consume GM crops, as well as beverages with GM ingredients (e.g., sodas with corn syrup from GM corn).  As previously covered on this blog, a class action lawsuit was filed against Chipotle in the “Food Court” (Northern District of California), based on allegations that the chain’s non-GM advertising campaign violates California consumer protection, false advertising, and unfair competition laws.
  • On February 5, the lawsuit was dismissed.  The judge found that the plaintiff had failed to specify that she purchased food in the “GM” categories (i.e., meat, dairy, or soft drinks) and thus failed to connect economic injury to the allegedly deceptive claims.  In the dismissal order, the judge also questioned the plaintiff’s allegations that a reasonable consumer would interpret Chipotle’s non-GM ingredient claims to extend to meat and dairy products derived from animals that never consumed any GM ingredients.
  • Although the plaintiff in this case may file an amended complaint in the future, the dismissal suggests that the court may be looking for additional support for the notion that reasonable consumers hold the same strict interpretation of non-GM claims.  Even Vermont’s GM labeling requirements provide exemptions for animal products derived from animals that consumed GM crops, which suggests that it might be an uphill battle to establish that such products should themselves be considered “GM.”

NOAA proposes new traceability program for certain types of seafood.

  • For years, the seafood industry has grappled with the issue of “seafood fraud,” which includes the substitution of cheaper species for more expensive ones.  Data from one of the largest seafood fraud investigations in the world indicate that snapper and tuna were mislabeled most frequently, with the majority of samples identified by DNA analysis as another fish species.  In 2014, the White House established a Presidential Task Force to combat illegal, unreported, and unregulated (IUU) fishing and seafood fraud.
  • On February 5, the National Oceanic and Atmospheric Administration (NOAA) issued a proposed rule to establish a new traceability program for certain seafood species associated with a high risk of IUU fishing and fraud, namely:  abalone, Atlantic cod, Pacific cod, blue crab, red king crab, dolphinfish (mahi mahi), grouper, red snapper, sea cucumber, shrimp, sharks, swordfish, and tunas (albacore, bigeye, skipjack, yellowfin, and bluefin).  The “at risk” list represents approximately 40% of U.S. seafood imports by value.  The new “Seafood Import Monitoring Program” comprises recordkeeping requirements and data reporting requirements at the point of entry for imported fish or fish products.  The goal of the program is to curb the import of products from IUU fishing and to decrease the incidence of seafood fraud.
  • The requirements are anticipated to affect hundreds of international fish brokers and thousands of importers.  NOAA has not provided an estimate of how much compliance with the new program will cost the industry, other that stating its belief that costs “will be relatively minor.”  NOAA is accepting comments on the proposed rule until April 5, and a final rule is anticipated in Fall 2016.

Recent consumer research data indicate changing perception of “food safety.”

  • With implementation of the FDA Food Safety Modernization Act (FSMA) in full swing — and with FDA’s hazard analysis and risk-based preventive control (HARPC) requirements set to take effect for most companies this September — “food safety” is a major topic of discussion among industry stakeholders today.
  • From a recent survey of 5,000 consumers conducted by Deloitte (in partnership with the Food Marketing Institute (FMI) and the Grocery Manufacturers Association (GMA)), data indicate that consumers now take a broader approach to the concept of “food safety” than some might think.  Unsurprisingly, a majority of participants expected safe food to be “free from harmful elements.”  However, significant percentages of participants also opted for other criteria not typically considered to define “food safety” such as:  (1) clear and accurate labeling; (2) clear information on ingredient sourcing (e.g., traceability, transparency); (3) fewer ingredients/less processing; and (4) nutritional content.
  • We are unlikely to see the concept of “food safety” abandon its traditional underpinnings in the production of sanitary and pathogen-free food.  However, these data suggest that consumer perception may be evolving toward a more complex and nuanced definition of “food safety” that could influence the way manufacturers and marketers position their products in the years ahead.

Survey of FDA import data suggests food imported from low-GDP countries may pose higher risks.

  • Particularly now that FDA has issued a final rule to implement the Foreign Supplier Verification Program (FSVP) under the FDA Food Safety Modernization Act (FSMA), the food industry is more engaged than ever in the analysis of risks associated with foods imported from different countries and suppliers.
  • A survey of data from 2002-2012 on food import violations from the FDA Operational and Administrative System for Import Support (OASIS) indicates a distinction between high-risk and low-risk countries.  The countries with the highest refusal rates were major trading partners associated with high import volumes, i.e., Mexico, China, India, the United Kingdom, and Canada.  However, once researchers normalized refusals by volume, the list of high-risk countries did not include high-income countries.  Iraq emerged as the highest-risk country based on these data, followed by Somalia, Algeria, Zimbabwe, and the British Pacific Islands.
  • The researchers acknowledge limitations in the data, but they conclude that perhaps these results will help U.S. importers decide whether the cost savings associated with using suppliers from lower-cost source countries are worthwhile given the potential for increased risk.  Particularly as companies prepare for FSVP compliance, the impact of risk analyses such as this could produce significant changes in the global supply chain.

Organic & Natural Health Association abandons plan to develop a “natural” seal program.

  • As the food industry is well aware, significant risk, debate, and confusion surround the use of “natural” claims in food labeling and advertising.  FDA’s informal policy is that “natural” means nothing artificial (including artificial flavors) or synthetic (including all color additives regardless of source) has been included in or has been added to a food that would not normally be expected to be in the food.  In reality, however, the definition of “natural” frequently is revisited and restricted by the litigation landscape.  For years, industry stakeholders have debated the benefits of a “natural” definition and how to go about creating one.  In 2014, stakeholders formed the “Organic & Natural Health Association” (Organic & Natural) and announced a plan to create transparent and objective criteria for the use of the term, “natural,” along with a voluntary regulatory compliance and certification program.
  • In late January 2016, Organic & Natural announced its plan to abandon the “natural” seal initiative.  At the group’s annual conference, the CEO announced that a conflict of interest existed between trying to define “natural” standards and issuing a “natural” seal.  Particularly in light of FDA’s ongoing request for information and comments from interested stakeholders on the use of the term “natural” in food labeling — which some see as a signal of potential future regulatory action in this area — Organic & Natural is concerned about the ability to create an industry-sponsored certification program with sufficient buy-in.  The group now will shift its focus to developing a “natural” definition and educating consumers about the meaning of this term.
  • FDA recently extended its deadline for accepting comments on the “natural” definition to May 10, 2016, so interested stakeholders are encouraged to submit their positions to the Agency over the next few months.  It is not clear whether or when FDA ultimately will take formal regulatory action to define the term, “natural,” so the food industry still may continue to operate in the realm of risk and ambiguity for years to come.

USDA reportedly unable to broker GM labeling compromise.

  • The food industry faces the impending July 1 effective date for Vermont’s labeling requirement for genetically modified (GM) foods with no imminent reprieve in sight.  Hopes of a 2015 federal legislative solution did not materialize.  The food industry’s legal challenge to Vermont’s law is still pending.  And recently, a major food company broke with many of its peers to announce its support for federally mandated GM labeling requirements.
  • It has now been reported that consumer activists and food industry representatives have been meeting with the Secretary of Agriculture, Tom Vilsack, to try to negotiate a GM labeling compromise.  Unfortunately, after two meetings, discussions appear to have led nowhere.  Although Secretary Vilsack has not openly acknowledged his involvement in this process, a consumer activist blog reported that there was not enough common ground between the different groups to facilitate a resolution.
  • The reported breakdown of informal discussions regarding GM labeling may not come as a surprise to either side in the debate.  As food companies continue their preparations to comply with Vermont’s labeling requirements later this year, many wonder what — if anything — will emerge as a workable solution for both sides.

For more information on the status of the GM labeling debate and the implications of federal legislation in this area, see the article, “GMO Disclosure Debate Divides the Food Industry,” authored by Eve Pelonis and Alissa Jijon, available here (subscription to Law360 required).