A Note to Amazon and Sellers – Collision of Expectation Imminent on New Retail Superhighway

January 9, 2018

A Transparency Collision will likely occur when consumers’ or customers’ expectations differ from reality. The outcome of this type of collision will create both fallout and opportunity. And, this collision is imminent for a rapidly increasing component of the dietary supplement industry; Amazon dietary supplement brands. There are now almost 14,000 of these brands according to a recent search for “vitamins” on the Amazon platform. On November 15, 2017, the number of Amazon vitamin category sellers was exactly 13,929.

Trust Transparency Consulting has been tracking this market for several years and working with the emerging brands using Amazon and other reseller channels. One element which appears almost universal to the new entrepreneurs’ business practice is a lack of awareness of the FDA regulations. All of our regulations are put in place to provide a safe and verifiable food-category product, yet many Amazon entrepreneurs treat dietary supplement products with the same attention to quality control as they would any other manufactured widget. The reality is that these dietary supplement widgets come with extra responsibility, including requirements and regulations for safety and quality as products are ingested into the human body.

In recent years, industry (and regulators) called on retail to provide that penultimate gatekeeper responsibility for consumers and to ensure the brands they carried were examples of best of class manufacturing. Many retailers stepped up, engaged, and put pressure on manufacturing and all the way up the supply chain. New brand proliferation, the reduction of barriers to entry, lack of attention by Amazon and resellers now risk undermining these activities and introducing a whole new era of risk – and expectation collision.

There are seven key areas where key brick and mortar gatekeepers such as GNC, Vitamin Shoppe, Sprout’s, Wal-Mart, Costco, etc. maintained specific attention to the FDA cGMP requirements. This gatekeeper responsibility has been diluted or outright forgotten, and the result is, for the most part, that regulatory required activities are either not conducted or the responsibility is shifted to an unaccountable third party such as the contract manufacturer.

The seven key requirements often overlooked by new dietary supplement e-commerce entrepreneurs are:

  1. Adverse Event Reporting
  2. Third party verified testing
  3. Retained samples program
  4. Stability Testing
  5. Allergen Confirmation
  6. Claim Substantiation
  7. Quality Control Trained Individual

In addition, emerging responsibilities are not even considered (such as FSMA roles and obligations.)

  1. Adverse Event Reporting, the most basic, important and required responsibility of all the elements discussed here, ensures that every bottle and website provides a contact number where a consumer can inform the brand of an adverse event or serious adverse event.
  2. Third party verified testing –Most brand companies rely completely on the testing provided by their contract manufacturer to verify the safety and purity of a manufactured product, a practice that is both unsafe and unwise.
  3. Retained samples – FDA cGMPs require the brand to maintain retained samples under defined storage conditions to insure a climate controlled and unopened sample of a product is available in case a problem in the marketplace occurs.
  4. Stability Testing ensures the product is meeting the expiration date expectations set forth at date of manufacture. If an expiration date is used it is expected that there is a process and methodology to validate the information.
  5. Allergen confirmation is a key tenet of FDA regulation, especially under the Food Safety Modernization Act. Increasingly, this is a risk area.
  6. Section 403(r)(6) of the Federal Food, Drug, and Cosmetic Act (the Act) (21 U.S.C. 343(r)(6)) requires that a manufacturer of a dietary supplement making a nutritional deficiency, structure/function, or general well-being claim have substantiation that the claim is truthful and not misleading. This same section requires the brand to submit this information to the FDA.
  7. FDA cGMP requires a person within the organization be a quality control trained individual.

The FDA has the right to inspect any dietary supplement brand for all of the above-mentioned requirements, but the reality is that the FDA has limited resources to enforce inspection on even a small portion of the brands currently available. Yet the expectation for consumers as to the safety and efficacy of products and to trust the verification processes are separate from FDA’s inability to enforce the regulations. And the proliferation of reseller markets and e-tailing is creating a big black hole. The regulations are in place to provide confidence and support for the safety of the ingestible products delivered by dietary supplement providers. Where the brick and mortar gatekeeper processes once provided a greater assurance these regulations are upheld, the current e-commerce gatekeeper will eventually be forced to do the same out of liability concern.

It will be interesting to watch this new paradigm unfold. Despite the low-risk supplements pose, there will certainly be test cases and some resellers stepping up to become gatekeepers for the future.

Consider this a part 1 on this issue. Stay tuned as we provide more detail on brand and the reseller obligations, and additional discussion on what needs to emerge for this part of the supplements universe to be risk-managed.

Trust Transparency will use this blog in upcoming weeks to go into further detail the specific points of each of these key areas of consideration.

by Scott Steinford & Len Monheit

Scott Steinford and Len Monheit are Managing Partners at Trust Transparency Consulting

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Lori Diez combines compassion and excellence to lead organizations to their next level. A small-town Texas childhood taught her the value of hard work and relationships, which she uses to foster teamwork that brings results that have transformed cultures and programs to their highest potential. Her successful career in pharmaceutical and nutraceutical sales leadership and event hosting has prepared her to deliver results as the COO of TrustTransparency, where she uses her industry knowledge to ensure that the company’s operations run smoothly as they support nutraceutical companies in their mission to help others. Lori’s passion for charity reflects her belief that individuals working together can change the world, no matter how small their contribution to the effort. This year, she looks forward to continuing over a decade of service at the Houston Livestock Show And Rodeo, where she will be the Chairman of the Livestock Committee.

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