Nutricosmetics Pose Intriguing Possibilities for Brands That Hit Wall with Skin-Care Claims RYAN NELSON [email protected]

Nutricosmetics Pose Intriguing Possibilities for Brands That Hit Wall with Skin-Care Claims RYAN NELSON Ryan.Nelson@Informa.Com

Rose Sheet Pharma intelligence rose.pharmamedtechbi.com August 2017 informa

Nutricosmetics Pose Intriguing Possibilities For Brands That Hit Wall With Skin-Care Claims RYAN NELSON [email protected]

key challenge that cosmetic skin- care brands face in the US is that A as soon as their offerings “do something,” they run the risk of drawing FDA’s attention and a warning letter for unapproved drug claims. In a 2015 interview with the Rose Sheet, Katherine Giannamore of law firm Sheha- deh Giannamore in Coral Gables, Fla., dis- cussed the limitations on cosmetic claims that routinely frustrate her clients. “What can be a problem is willingness to change something like ‘Gets rid of wrinkles’ to ‘Minimizes the appearance of wrinkles,’ because it can be wordy or less attractive. That’s where we run into issues,” she said. (Also see “Cosmetics That ‘Do Something’ A Regulatory Compliance Challenge” - Rose In the dietary supplement space, provided that you Sheet, 31 Mar, 2015.) FDA recognizes moisturization as a cos- have substantiation, “You don’t have to say, ‘Reduces the metics claim, and the agency takes no issue appearance of wrinkles.’ You can say, ‘Reduces wrinkles’ – with statements about making lines and wrinkles less noticeable simply by hydrat- sort of the golden goose, if you will, of cosmetics claims.” ing skin. Products that furnish such effects also are cosmetics, it says. – attorney Ivan Wasserman But in the competitive and highly lucrative anti-aging space, many brands are driven to promise their customers more. resent opportunity for beauty companies value to consumers’ diet for enhanced health FDA warning letters often follow. The agen- willing to pivot into new categories. or reduced disease risk, per the Dietary Sup- cy issued around 30 of those last year to skin- An FDA spokesperson noted in a July 19 plement Health and Education Act of 1994. care marketers, citing verboten structure/ email that “nutricosmetic” is not a defined “Dietary supplements marketed with function claims about cellular regeneration, term under the Federal Food, Drug and Cos- claims of cosmetic benefits are subject to collagen production and wrinkle reduction, metic Act, much like “cosmeceutical,” also the same regulations as any other product among others. (Also see “FDA Clampdown On applied to products that make a pretense of marketed as a dietary supplement,” the FDA Excessive Anti-Aging Claims May Lighten Up In straddling product categories. rep said. 2017” - Rose Sheet, 1 Dec, 2016.) Dietary supplements, on the other hand, There are privileges that come with be- But those are precisely the kinds of claims are defined by law – as ingestible products ing a dietary supplement as opposed to a that are being attached to nutricosmetics, containing vitamins, herbs, amino acids or cosmetic, albeit in exchange for heavier a growing class of products that could rep- other “dietary ingredients” to add nutritional compliance burdens. (Also see “Supplement CONTINUED ON PAGE 4

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Our selection of Rose Sheet content from the past month includes some of our most-viewed articles online and editors’ picks of top issues across the cosmetics and dietary supplement sectors. Please visit rose.pharmamedtechbi.com for full access to our comprehensive, up-to-the-minute news coverage and analysis.

■ ■ ■ ■ ■

COSMETICS COVER .Nutricosmetics Pose Intriguing Possibilities For Brands That Hit Wall With Skin-Care Claims 6 Care2 Petitions Top Beauty Firms To Call ‘Anti-Aging’ Products … Something Else 8 Rep. Pallone Seeks Answers In Tween Makeup Asbestos Controversy 10 Just For Men’s Hair-Dye Marketing Amounts To Civil Rights Violation – Plaintiff 11 Cosmetics Europe Reflects On WC10, Alternative Testing Landscape 12 European Agencies Readying Draft Guidance For Identifying Endocrine Disruptors 13 EU WORKING GROUP: Cosmetics Should Be ‘Free From’ Denigrating Ingredient Claims

DIETARY SUPPLEMENTS 15 Supplement, Drug Co-Packaging Potential Could Be Clipped In FDA Proposed Rule 17 Independent Pharmacies Stock Growth Opportunities In Health, Wellness And Beauty Aisles 19 Love Seated As Utah’s Next Supplement Industry Champion In Congress 20 PharmaTech Recalls Highlight Supplement GMP Diligence For Marketers – CRN 22 Sale To Icahn Off Table, Herbalife Tenders $600m Share Repurchase 23 Supplement Industry Investment Continues On Swander Pace Contract Manufacturing Move 24 Vitamin Shoppe Turnaround Tools Include Auto-Delivery, Price-Matching 26 Glutamine Claim Class Action Against GNC Gets Wide Berth For Relevant Studies

LEADERSHIP CORPORATE SALES ADVERTISING DESIGN SUPERVISOR Phil Jarvis, Richard Faint John Lucas, Elissa Langer Christopher Keeling Gayle Rembold Furbert

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3 | Rose Sheet | August 2017 © Informa UK Ltd 2017 COSMETICS

CONTINUED FROM COVER body’s supply of collagen,” as well as biotin, ing materials: “By supplementing with Neo- Industry Offers Cautionary Tale For Mandato- “the essential super beauty nutrient,” and Cell products, additional collagen peptides ry Cosmetic GMPs” - Rose Sheet, 14 Apr, 2015.) a cocktail of antioxidants from super-fruit are introduced into the extracellular fluid. Among the perks is greater leeway in the and green tea extracts, according to the The molecular receptors of the worker cells area of benefit claims. company’s website. are ‘turned on’ more frequently, thus con- Ivan Wasserman, a partner at Amin Talati A 10-count pack retails for around $9 tinuing the regeneration cycle at a healthy Upadhye who specializes in helping firms online. rate and rebuilding the collagen matrix to navigate the regulatory landscape for ReVival Labs, LLC’s youthH2O drink, in fla- more quickly.” health, wellness and beauty products, dis- vors including Blooming Apple, is described For $54, consumers can pick up a month’s cussed the emerging nutricosmetics space as “a proprietary blend of powerful super- supply of Murad, LLC’s Hydro-Glow Dietary in a July 26 interview with the Rose Sheet. foods and nutrients formulated through Supplements, featuring N-acetyl D-glucos- “The big benefit [of nutricosmetics] for advanced science and innovation to stimu- amine, which “acts as a ‘building block’ for a beauty company is that they can make late, replenish, and reactivate youthful ele- structural molecules such as hyaluronic structure/function claims, such as collagen ments and nutrients in your body.” acid and collagen, helping improve skin production, wrinkle reduction. You don’t A one-month supply (15 bottles) can be firmness and creating a reservoir of mois- have to say, ‘Reduces the appearance of purchased online for $28.99. ture within cells to boost hydration and wrinkles.’ You can say, ‘Reduces wrinkles’ – On its website, youthH2O lists benefits support healthy cellular functions.” sort of the golden goose, if you will, of cos- including: Murad targets the product to consumers metics claims,” he said. •• “Glowing, Firmer, Smoother Skin” interested in “visibly minimizing lines and The attorney continued, “There’s abso- wrinkles.” •• “Stimulate Skin Collagen” lutely no reason why FDA would object to Alternatively, Dermal Repair Complex that. It’s not a disease. The only way FDA can •• “Help Prevent Wrinkles” from Beverly Hills MD is formulated “to stop object to a dietary supplement structure/ •• “Protect Skin from Environmental the skin breakdown that comes with age.” function claim, taking substantiation aside Damage” The supplement – $58 for one bottle – – so assuming there’s proof – is if it’s a claim •• “Healthy, Strong, Luscious Hair” contains methylsulfonylmethane (MSM) to cure or treat disease. Wrinkles are not a to “strengthen collagen strands from deep •• “Healthy Strong Nails” disease.” inside skin for a firmer, more toned look,” as According to the company, the “break- well as vitamin B to “increase cell turnover through fountain of youth” also provides for a constantly renewed and energized A LOOK AT THE MARKETPLACE “immunity support,” another claim FDA has complexion,” among other potent ingredi- Generally speaking, the most visible nutri- targeted in warnings to topical skin-care ents, the company says. cosmetic marketers aren’t going quite that brands. The product also contains hydrolyzed far with their anti-aging claims, but they are Perricone MD similarly says its Skin & To- collagen, a common denominator for many availing themselves of claims that might raise tal Body Supplements – $155 for 60 packets offerings in the nutricosmetics space. flags at FDA if used to promote a cosmetic. – support a healthy immune system, as well Global supplier Gelita AG says its ingest- Some of their products have the added as “normal growth of hair and nails” and ible Verisol Bioactive Collagen Peptides in- bonus of being yummy, or advertisable as “normal skin health.” gredient, “specially optimized for beauty such. NeoCell Corporation, which touts itself applications,” has been linked to signifi- Applied Nutrition sells a strawberry and as “American’s No. 1 collagen brand,” pro- cantly higher skin elasticity (up to 15%) in kiwi-flavored Liquid Collagen Skin Revital- motes its line of supplements as helping to clinical testing. ization supplement in conveniently quaf- maintain a healthy collagen matrix in skin In another study of more than 100 wom- fable tubes. The drink provides 4,000 mg of as it ages. en ages 45 to 65, oral administration of hydrolyzed collagen to “help replenish the The company explains in online market- Verisol led to significantly reduced wrinkles and significantly higher skin procollagen concentration, according to the Germany- based firm’s website. It also cites cellulite and nail health/ In a 2000 final rule, FDA clarified that in the context of growth benefits backed by study results. dietary supplement structure/function claims, “mild “Verisol has enormous potential in the growing market of beauty and skin-im- conditions commonly associated with particular stages provement supplements, addressing skin issues from the inside-out. The use of col- of life or normal physiological processes will not be lagen in cosmetics is already common for considered diseases,” listing wrinkles, hair loss associated women – what’s new on the Western market is its stimulatory effect after oral intake,” with aging and noncystic acne as examples. Gelita notes.

4 | Rose Sheet | August 2017 © Informa UK Ltd 2017 COSMETICS

“In Japan … which leads the way in the field of beauty care, foodstuffs containing collagen are already well established. This trend is also expected to spread quickly in According to a June 2017 report from Coherent Market Europe and the USA,” it says. Insights, the global nutricosmetics market reached $5bn in NON-DISEASE CLAIMS: LIVER 2016 and is projected to surpass $13.4bn by 2025. SPOTS, HAIR LOSS, EVEN ACNE? It’s unclear whether the majority of nutri- be made. Wrinkles and “other signs of aging Burdock said he’s not aware of any examples cosmetic marketers have robust scientific on the skin, e.g., liver spots, spider veins,” as – “but FDA certainly has the power to do so.” data to support their claims. well as hair loss associated with aging and Wasserman noted that even if non-dis- FDA explains on its website that it does noncystic acne, all appear on the list. ease nutricosmetic claims aren’t a priority not preapprove structure/function claims Such allowances could pose intrigu- for FDA in its enforcement work, US-based on dietary supplements, but manufacturing possibilities for cosmetics companies, advertising regulatory authorities do have ers must have evidence substantiating such which often are warned for claims about an eye out for overreaching claims on nu- claims as truthful and not misleading. treating dark spots or acne of any sort, not tricosmetic products. (Also see “Is ‘Moistur- In addition, they must submit a notifica- to mention wrinkles. (Also see “FDA Warning ol’ Up For Grabs? NBC’s Faux Nutricosmetic tion with the text of the claim to the agency Cites Ageless Derma’s Anti-Wrinkle, Brighten- May Be Worth Reconsidering” - Rose Sheet, within 30 days after marketing a product ing Claims” - Rose Sheet, 9 May, 2016.) 4 Aug, 2017.) with the claim. Murad seems to have capitalized on the The National Advertising Division has If the claim is used on supplement label- opportunity with its $50 Pure Skin Clarify- come down on nutricosmetic brands for ing, the label also must bear a disclaimer ing Dietary Supplement for “acne-prone inadequately supported claims about anti- that FDA has not evaluated the claim and skin.” The product provides “the nutrients aging skin-care effects and hair growth, and that the product is not intended to “diag- needed to support the body’s natural de- has gotten the Federal Trade Commission nose, treat, cure or prevent any disease.” fense against blemish-producing toxins,” involved in cases of noncompliance. (Also FDA specifically cites “Antioxidants main- helping to reduce blemishes and prevent see “NAD Tugs On FTC’s Sleeve Again About tain cell integrity” as a structure/function breakouts, the company says. New Nordic Supplement Claims” - Rose Sheet, claim that may be used for dietary supple- Along with the disclosures normally re- 21 Mar, 2016.) ments, assuming that it can be supported. quired for supplement structure/function However, it also has made clear – notably According to Wasserman, “FDA is very, claims, Murad specifies with a footnote in a case examining Irwin Naturals’ adver- very rarely challenging dietary supplement on its website that by “acne-prone skin,” it tising for its Doctor Developed Clear Pure – or cosmetics companies for that matter – means skin afflicted by non-cystic acne. Complexion dietary supplement – that firms on the adequacy of scientific evidence to can highlight benefits supported by ingre- support claims. It’s not an area that they get dient studies, as long as they tie such claims into often.” SUBSTANTIATE CLAIMS OR ROLL to the ingredients in their product rather However, the agency does intervene fre- THE DICE than the product itself. (Also see “In Brief” - quently in cases where claims identify prod- George Burdock, president of safety and Rose Sheet, 19 Mar, 2012.) ucts, in its view, as unapproved drugs. regulatory consulting firm Burdock Group, “NAD noted that although the Dietary On its website, FDA states that “if a prod- emphasized the importance of claims sub- Supplement Health and Education Act uct is intended, for example, to remove stantiation in a July 26 exchange with the (DSHEA) allows ‘structure function’ claims – wrinkles or increase the skin’s production of Rose Sheet. accompanied by required language – both collagen, it’s a drug or a medical device.” It For nutricosmetics, “you could prob- the Federal Trade Commission and NAD makes no mention of dietary supplements. ably say something like ingestion of gelatin require that all advertising claims relating But in a final rule issued in 2000, FDA can produce harder fingernails … but you to a product’s impact on human health be clarified that in the context of dietary sup- would still have to generate clinical test supported by competent and reliable sci- plement structure/function claims, “mild data to show harder fingernails following entific evidence,” NAD explained in its 2012 conditions commonly associated with ingestion of gelatin.” Irwin decision. particular stages of life or normal physi- Similarly, he said, “’maintaining cell in- “When making an express claim of prod- ological processes will not be considered tegrity’ or ‘collagen building’ are structure/ uct performance, an advertiser must be diseases.” function claims” permitted for dietary sup- able to demonstrate that its product, as Thus, claims about those conditions do plements, “but you still must have data to formulated for sale, actively performs the not require prior authorization from the support your claim if FDA comes knocking function promised or provides the benefit agency as health claims or premarket ap- at your door.” claimed in the advertisement,” the Advertis- proval as drug claims, the agency says. Asked if FDA has pressed companies to ing Self-Regulatory Council unit concluded, FDA includes a list of conditions in the rule produce evidence for beauty-related struc- advising Irwin only to limit its claims ac- about which structure/function claims could ture/function claims on dietary supplements, cordingly.

5 | Rose Sheet | August 2017 © Informa UK Ltd 2017 COSMETICS

GLOBAL NUTRICOSMETICS The global market research and con- concept is counterintuitive to many US con- TO TOP $13BN BY 2025 sulting firm, which is headquartered in sumers, and it’s been suggested that scien- For companies that effectively navigate the India with an office in Seattle, says Eu- tific evidence has been lacking in the past potential regulatory pitfalls, nutricosmetics rope accounted for more than 34% of for such offerings. could be a rewarding venture – in the US overall nutricosmetics revenue in 2016 But marketers have been working on their and especially overseas. and will continue to dominate the scene clinical science to shore up consumer confi- According to a June 2017 report from Co- through 2025. dence in ingestible products, and research herent Market Insights, the global nutricos- Analysts attribute slower uptake of nu- in recent years has indicated that younger metics market reached $5bn in 2016 and is tricosmetics in the US to American con- consumers in particular may be receptive to projected to surpass $13.4bn by 2025. sumers’ fixation on quick fixes, which pos- nutricosmetics and the promise of beauty The segment’s growth reflects increased es challenges for products designed to from within. (Also see “Nutricosmetics Firms’ interest among consumers in beauty, impart benefits only after weeks and even Science, Innovation May Win Over “Trusting” grooming and premature skin-aging pre- months of use. (Also see “Nutricosmetics In Youth” - Rose Sheet, 3 Oct, 2014.) vention. Meanwhile, the busy lifestyle of U.S. On The Rise; Savvy Marketing Could According to Coherent, the North Ameri- the swelling urban population makes vita- Spur Uptake” - Rose Sheet, 26 Nov, 2012.) can nutricosmetics market also will register mins and ready-to-drink beverages popular Whereas topical lotions and creams at “significant” growth over the forecast peri- choices for personal care on the go, Coher- least look and feel like they’re acting on od, with “lucrative” opportunities for players ent suggests. skin immediately, the “beauty from within” in the region.

Care2 Petitions Top Beauty Firms To Call ‘Anti-Aging’ Products … Something Else

JAMIE HAMMON [email protected]

are2.com, “the world’s largest social network for good,” has garnered more than 12,000 signatures on a C Perhaps the issue of anti-aging nomenclature is petition asking the Estee Lauder Compa- nies, Inc. and L’Oreal S.A. to stop using the merely an opportunity for brands to reexamine their term “anti-aging.” The petition follows an Aug. 14 announce- broader messaging at a time when traditional beauty ment from influential beauty and lifestyle magazine Allure that it will be phasing out norms are being challenged in the media, promoting use of the term. “Whether we know it or not, definitions more fluid and expansive than simply looking we’re subtly reinforcing the message that aging is a condition we need to battle” rather wrinkle-free and twenty-something. than the continuation of a life to celebrate, suggests Editor In Chief Michelle Lee. “Language matters,” she continues. “Yes, es for L’Oreal and Lauder to take a cue from munity,” while linking its 2,700 nonprofit Americans put youth on a pedestal. But let’s Allure and remove the term “anti-aging” from partners to potential donors. agree that appreciating the dewy rosiness of their beauty products and promotions. The anti-anti-aging petition makes a big youth doesn’t mean we become suddenly As a benefit corporation, or B Corp, Care2 ask of companies that sell youth and “hope hideous as years go by.” seeks to balance for-profit goals with non- in a jar” and raises questions of a practical The Care2 petition picks up where Lee left profit objectives, rather than being wholly nature. Market research plainly shows that off. “We need to stop the anti-aging bias. Ag- committed to increasing shareholder value. demand for anti-aging products is alive and ing is perfectly okay! It’s a beautiful thing to States including California, where Care2 is well and likely will remain so even if the de- be here on this earth and with every passing based, have passed laws recognizing B cor- scriptor “anti-aging” falls out of fashion. day we gain beauty, experience, wisdom, porations and establishing rules for trans- If the issue is simply a matter of seman- and appreciation for life,” states petition cre- parency and accountability, among other tics, neither Lee nor Julie M. offer sugges- ator Julie M. requirements and considerations. tions for replacement language of a more Suggesting that anti-aging marketing With more than 40m members, Care2 age-embracing persuasion, though the for- contributes to a culture of ageism, with dis- enables individuals like Julie M. to launch mer extends “major props” to unspecified criminatory effects against women, she urg- petitions to “make a difference in their com- companies that have already begun taking

6 | Rose Sheet | August 2017 © Informa UK Ltd 2017 COSMETICS steps in that direction. Perhaps the issue of anti-aging nomen- sharing stories that inspire action.” “Pro-age” seems to be the prevailing ter- clature is merely an opportunity for brands Spokesperson Alison Perris told The Rose minology among niche brands online. Unile- to reexamine their broader messaging at Sheet that Care2 petitions give consum- ver was an early example a decade ago with a time when traditional beauty norms are ers the opportunity to join forces, build a its Dovepro-age skin-care line and associated being challenged in the media, promoting movement and get the attention of corpo- marketing, which dovetailed with its “Real definitions more fluid and expansive than rations to create real change. Beauty” campaigning. (Also see “Dove Defies simply looking wrinkle-free and twenty- She highlighted some noteworthy suc- Pessimistic “Anti-Aging” Ideology With New something. cesses to date. Pro-Age Line” - Rose Sheet, 29 Jan, 2007.) And there are rising brands that are mak- After a series of petitions garnering more “To the rest of the beauty industry, we’re ing impacts with sophisticated skin-care than 100,000 signatures apiece, one Care2 calling on you now,” Lee says. “We know it’s lines without using overt anti-aging messag- activist spurred MetLife, Citigroup and IBM not easy to change packaging and marketing. Lauder recently invested in one. (Also see to pull funding from the New York Blood ing overnight. But together we can start to “DECIEM: Estee Lauder’s Key To Unlocking Mil- Center after it stopped providing for the change the conversation and celebrate the lennial Skin-Care Mindset?” - , 6 Jul, 2017.) lifelong care of 66 chimps bred for medi- beauty in all ages.” Industry forecaster Antoinette van den cal experimentation, contrary to previous L’Oreal and Lauder did not respond to a re- Berg predicted in 2012 that anti-aging would promises. quest for comment. If leading companies do lose steam in the next 10 years, suggest- In other instances, Care2 petitions opt to take such appeals seriously, it will be ing the beauty ideal was changing and that prompted travel company Lonely Plant to interesting to see what they come up with. “old is going to be cool.” (Also see “Anti-Aging stop promoting elephant rides online and In the premium and luxury tiers, “anti- Trend Could Slow As “Beauty Ideal” Changes – in their travel books and persuaded BMW aging” is not only a callout to a consumer Forecaster” - Rose Sheet, 28 May, 2012.) and Chase Bank to remove advertising from demographic actively seeking solutions for A report last year from market research far-right media outlet Breitbart News. signs of aging, but also in many cases a sig- firm Euromonitor International predicted L’Oreal is the world’s largest cosmetics nal that products contain strong concentra- that beauty marketers would be wise to company, reporting over $25 billion in rev- tions of expensive, innovative ingredients seize on trends of gender blurring and enue in 2016, and Lauder is the home of nu- to deliver those very benefits. pro-age sentiment to reach today’s con- merous famed brands including its name- In other words, the term is not necessar- sumers. (Also see “Euromonitor: Value Shop- sake, MAC, Clinique and La Mer. ily pure marketing that might just as well be ping, Gender-Blurring Among Top Consumer Care2 intends to monitor the momen- retired; rather, it serves as a fitting descrip- Trends For 2106” - Rose Sheet, 25 Jan, 2016.) tum of the anti-anti-aging petition and tion of a product class. Labeled by any other take additional steps to escalate based on name, the intended purpose of such prod- CARE2 HIGHLIGHTS PREVIOUS the engagement of its members. Potential ucts – and the reason consumers buy them SUCCESSES escalation could include digital delivery of – remains the same. Care2 bills itself as “the world’s largest so- petition signatures, Twitter storms and on- Lee notes in her article that “no one is cial network for good, with over 40 million the-ground rallies outside of the compa- suggesting giving up retinol.” standing together, starting petitions and nies’ headquarters, the rep said.

harma iteiece |

Rose Sheet delivers uniquely specialized coverage of regulatory, legislative, legal, scientific, business and marketing developments in the cosmetics and dietary supplements sector. rose.pharmamedtechbi.com

7 | Rose Sheet | August 2017 © Informa UK Ltd 2017 COSMETICS

Rep. Pallone Seeks Answers In Tween Makeup Asbestos Controversy

JAMIE HAMMON [email protected]

ween Brands, Inc. says the Just Shine Shimmer Powder sold in its tween- T focused Justice stores nationwide contains no asbestos, contrary to an inves- tigative report from an ABC affiliate in July. Both parties cite third-party testing from accredited labs. Meanwhile, the current availability of the makeup product in question – and other Justice cosmetics potentially made from the same materials – is unclear. Rep. Frank Pallone, D-N.J., aims to get insight into the situation where others, including the Rose Sheet, have failed. Tween Brands’ parent company Ascena Retail Group Inc. did not respond to an Aug. 9 re- quest for information. The controversy arose when WTVD, an ABC-owned television station in Durham, N.C., reported on independent test results it received for a number of makeup products sold at shopjustice.com and Justice stores, “Given the recent reports of possible contamination which total more than 900 in the US and Canada, according to Ascena. of this product, I am concerned about the possibility that The Greensboro-based Scientific Analyti- some of your other products may have been tainted with cal Institute, which lists asbestos analysis at the top of its services list, conducted the these dangerous materials,” Pallone states in his testing. Findings for one product, the shimmer powder, were “alarming,” WTVD said. Aug. 7 letter to Justice. Analysis showed the presence of tremo- lite asbestos fibers “throughout” the powder. Four heavy metals – barium, chromium, adding that it had launched its own investi- went directly in the trash when I learned selenium and lead – also were detected, ac- gation into the matter. about this. I’ve been a long time customer cording to the report. Three days later, it posted an update on of Justice, but this has left a very bad taste SAI’s Sean Fitzgerald, director of research Facebook and its e-commerce website, as- in my mouth.” and analytical services, didn’t mince words suring customers that an unnamed ISO- The concerns are understandable, given in his reaction to the findings. “I would treat certified testing lab detected no asbestos in that asbestos fibers are notoriously toxic it like a deadly poison, because it is,” he said. its Just Shine Shimmer Powder. Conflicting when inhaled – a not-so-remote possibil- New Albany, Ohio-based Tween Brands/ reports “are simply inaccurate,” the com- ity for young consumers using a powder Justice – the largest tween specialty re- pany says. makeup product. tailer in the world, which targets its cloth- Concerns and questions remain among Fitzgerald noted the inevitable source ing, accessories and other lifestyle prod- Facebook commenters. of the asbestos allegedly detected by SAI, ucts to girls ages six to 12 – initially said “Sorry,” says one, “but I’m not willing to pointing to the talc at the top of the pow- it had ceased sales of the product, both take a chance with my daughter’s health. der’s ingredient list. in stores and online, “out of an abundance … I was in a Justice store tonight, and FDA explains on its website that both talc of caution.” the products are still on the shelf. … I’m and asbestos are naturally occurring min- In a July 16 Facebook post, the company shocked that you seem to be okay with erals, often found in close proximity in the stressed its “long and strong history of con- this. I had bought my daughter two of the earth. The agency recognizes that improper cern for the health and safety of our girls,” products in question months ago, and they mining site selection or insufficient purifica-

8 | Rose Sheet | August 2017 © Informa UK Ltd 2017 COSMETICS tion of talc ore can put contaminated talc in the latest, including: The congressman’s Justice inquiry comes the supply chain and ultimately in finished •• copies of all reports from independent less than a week after he published a letter personal-care products. testing labs concerning Just Shine Shim- from FDA that painted a concerning pic- FDA’s analysis of raw material talc and mer Powder; ture of the agency’s capacity to regulate talc-containing cosmetics in recent years imported cosmetics, with less than 1% of whether it is possible for some batches of has been reassuring, with no samples found •• 2.9m cosmetic imports physically inspected a cosmetic product to show contamina- to contain traces of asbestos, but the opti- by agency officials in fiscal 2016. (Also see tion while others do not; mistic results have been tempered by low “Rep. Pallone Galvanized By FDA’s ‘Troubling levels of participation among suppliers. •• the source and origin of the Just Shine Overview’ Of Cosmetic Imports” - Rose Sheet, (Also see “FDA: No Asbestos Found In Talc Shimmer Powder ingredients; 3 Aug, 2017.) Products Sampled, But Results Limited” - Rose •• a thorough description of steps taken to Pallone likely will take both FDA’s input Sheet, 19 Mar, 2012.) ensure that Justice Retail’s products con- and any information he receives from Jus- Attorney Stephen Hoke of Hoke LLC sug- tain only appropriately sourced ingredi- tice into a planned September hearing to gested in a December 2016 article that talc- ents, including talc; renew discussions regarding cosmetics containing cosmetic manufacturers could regulatory reform. •• an overview of the tests Justice Retail find themselves increasingly in plaintiffs’ According to his office, he plans to for- conducts prior to releasing cosmetic and sights with traditional targets drying up in mally introduce in the new Congress a pro- personal-care products to the public to the ongoing “asbestos wars.” (Also see “Not posal he released in discussion form last ensure that consumers are not at risk of Just J&J’s Problem: The Evolving Talc Litiga- September, drafted in bipartisan partner- exposure to hazardous materials; and tion Landscape” - Rose Sheet, 13 Dec, 2016.) ship with Rep. Leonard Lance, R-N.J. (Also •• how many adverse events have been re- see “Pallone Proposes House Companion To PALLONE SEEKS INFO FROM ported to FDA, and how many consumer PCPSA; Will 2017 Be The Year For Reform?” - JUSTICE BY MONTH’S END complaints reported to Justice Retail, for Rose Sheet, 14 Sep, 2016.) Pallone steps into the Justice asbestos dis- any cosmetic or personal-care product That bill would have beefed up FDA’s pute with a history of involvement in cos- sold by the company. oversight powers and imposed new re- metics issues and a newly sparked interest Pallone takes interest in a statement in- sponsibilities on cosmetics manufactur- in cosmetics oversight reform. cluded in the company’s 2016 annual report ers, generally in line with provisions in the In a publicly released Aug. 7 letter to Lece filed with the US Securities and Exchange proposed Personal Care Products Safety Lohr, president of Justice’s kids segment, Commission, indicating that it purchases “a Act in the Senate, which was reintroduced the House Energy and Commerce ranking significant portion” of its merchandise “di- in May by Sens. Dianne Feinstein, D-Calif., member underscores the carcinogenic dan- rectly from foreign markets, including Asia, and Susan Collins, R-Maine. (Also see “Cos- gers of asbestos and the hazards of expo- the Middle East and Africa, and indirectly metics Reform Bill Relaunches In Senate, sure to heavy metals such as lead. (Also see through domestic vendors with foreign Sending Stakeholders To Familiar Corners” “FDA’s 10ppm Cosmetic Lead Limit Criticized, sources.” - Rose Sheet, 12 May, 2017.) Including By Industry Player” - Rose Sheet, 28 Feb, 2017.) “Given the recent reports of possible contamination of this product, I am concerned about the possibility that some of your other products may have been tainted with these dangerous materials,” Pallone says. According to WTVD and SAI, other Justice harma iteiece | makeup products it tested were not found to contain asbestos, including Just Shine Baked Blush and Just Shine Shimmer Bronz- ing Powder. However, the company also offers a Just Shine Cosmetic Girl Shimmer Set, which is still available for purchase on its website Delivering uniquely specialized and includes a shimmer powder variant, the lead ingredient of which is talc. coverage in the cosmetics and Pallone seeks clarification on comments dietary supplements sector. made by Justice regarding the “troubling” contamination allegations and asks for the rose.pharmamedtechbi.com retailer to provide the Energy & Commerce Committee with information by Aug. 28 at

9 | Rose Sheet | August 2017 © Informa UK Ltd 2017 COSMETICS

Just For Men’s Hair-Dye Marketing Amounts To Civil Rights Violation – Plaintiff

RYAN NELSON [email protected]

ith racial tensions running high turer says the suit’s equal rights allegations men is around 21.2%, compared with 4.2% in the US, a California plaintiff is stretch the statute “well beyond the break- in White males. W suing Combe Incorporated for ing point.” Both suits also cite Environmental Protec- “reckless indifference of basic civil rights” due According to the firm, the cited law re- tion Agency findings linking PPD to severe to alleged disproportionate and inadequate- quires plaintiffs to show that defendants acute and chronic injuries ranging from con- ly disclosed risks that a Just For Men product had the intent to discriminate on the basis tact dermatitis to renal failure, convulsions poses to African American consumers. of race, which then interfered with a plain- and comas, as well as the ingredient’s 2006 Filed in June in California’s Northern Dis- tiff’s right to make and enforce contracts. status as “Allergen of the Year,” as declared by trict, Oakland Division, the complaint pro- Such factors are not remotely evident or the American Contact Dermatitis Society. poses certification of nationwide and Cali- relevant in the facts laid out in Stringer’s Combe continues to battle actions consol- fornia consumer classes, seeking damages, complaint, Combe says. idated in the Southern District of Illinois – In restitution, declaratory and injunctive relief “To the contrary, Plaintiff alleges that Re: Just For Men Mass Tort Litigation – con- and all other remedies deemed appropriate Combe violated section 1981 by encourag- cerning alleged allergic reactions sustained by the court. ing consumers to purchase Combe’s prod- by users. Plaintiff John Stringer alleges that Just ucts, rather than refusing to sell products to The firm notes in its motion to dismiss the For Men has been actively targeting its Jet them, a theory that cannot legally support a California suit that Stringer’s attorney Jay Ur- Black shade to African Americans for the section 1981 claim,” the defendant says. ban is a member of the steering committee past decade, using legendary Black sports for plaintiffs’ leadership counsel in the mass figures in its marketing to induce purchases. tort. At the same time, he says, the brand A VARIATION ON COMMON THEME White Plains, N.Y.-based Combe isn’t the has failed to warn and even concealed the The plaintiff also alleges violations of only hair-dye marketer to be hit with a pu- fact that the shade in question contains 17 California’s Unfair Competition Law and tative class action alleging inadequately dis- times more p-phenylenediamine – a rec- Consumer Legal Remedies Act, similar to closed PPD risks. ognized “strong sensitizer” – than lighter litigation filed last year in San Diego County Coty, Inc. and Procter & Gamble Co., the shades intended for White consumers, and Superior Court, according to Combe. current and former owners of Clairol, are em- that sensitization rates to PPD are five times In the immediate instance, Combe says broiled in litigation in Alabama’s Southern greater among African American males Stringer has not identified with any level District alleging negligent design and failure than White males. of detail the deceptive representations he to warn, among other violations, in connec- “In the face of this unacceptable risk viewed or relied upon in purchasing and us- tion with the brand’s PPD-containing Balsam disparity between the races, Defendants ing the Just For Men product. Such defects Color hair-dye kit. (Also see “Clairol Hair-Dye neglected to warn or disclose that African are fatal to his CLRA and UCL claims, the American males had a significantly height- company asserts. Suit Cites PPD Use, ‘Inadequate’ Home Sensiti- ened propensity for severe physical injury If the suit isn’t dismissed, it should at least zation Test” - Rose Sheet, 6 Feb, 2017.) or that the Jet Black color shade was unrea- be stayed to await the outcome of the San Meanwhile, L’Oreal USA, Inc. is fighting sonably dangerous,” the complaint alleges. Diego litigation, Combe says. consolidated litigation in New York’s South- It adds that Combe’s “discriminatory, In November 2016, Combe successfully ern District that targets labeling and mar- fraudulent and unfair business practices dismissed litigation in Missouri’s Eastern Dis- keting for a hair relaxer from its Soft Sheen- prevented Plaintiff from making an in- trict in which plaintiffs sought the establish- Carson brand, which specializes in meeting formed decision and unfairly diminished his ment of a fund to pay for ongoing diagnostic African-American women’s needs. (Also see ability to come to a meeting of the minds tests to assess class members’ sensitization “L’Oreal Hair-Relaxer Class Action A Far Cry contractually with the Defendants prior to to PPD as a result of Just For Men use – costs From WEN, Or Next Plaintiff Payout?” - Rose making his purchase.” they were “reasonably certain to incur.” Sheet, 1 Feb, 2017.) The plaintiff’s leading argument is that The judge in that case determined that While PPD isn’t mentioned, a number such claims represent violations of federal plaintiffs had not pled any recognizable the- of other purportedly “caustic” ingredients equal rights law related to the making and ories of liability. are, with plaintiffs maintaining that warn- enforcing of contracts (42 U.S. Code § 1981). The Missouri suit highlighted the same ing statements on the product’s packaging Combe filed motions to dismiss and 2001 Cleveland Clinic study that Stringer do not cure statements from the brand that strike class allegations Aug. 17. In its bid does in his complaint, noting findings indi- misrepresent the offering as a relatively safe for dismissal, the Just For Men manufac- cating that PPD sensitization among Black and gentle option.

10 | Rose Sheet | August 2017 © Informa UK Ltd 2017 COSMETICS

Cosmetics Europe Reflects On WC10, Alternative Testing Landscape

RYAN NELSON [email protected]

nnovative alternative testing methods and els that exist and the data they provide and associated data have proliferated in a world placing that information in the context of I increasingly free of cosmetic animal testing, ingredient safety assessment. but questions remain about how such data Taalman offered the example of mamma- relate to human biology and how they might lian cell assays for genotoxicity testing. “If be applied in safety assessments required for we see that a certain gene is up-regulated new ingredients. or down-regulated, what does that really In an Aug. 29 interview, Rob Taalman, sci- mean for the cell? Is the cell going to die, or ence and research director at trade group is the cell going to adapt to the new situa- Cosmetics Europe, offered his outlook on tion? Is it going to lead to organ failure or a the alternative testing landscape following mechanism in the body that deals with that the 10th World Congress on Alternatives and failure? Is it reversible?” Animals in the Life Sciences (WC10), held Aug. He continued, “We’re trying to better 20-24 in Seattle, Wash. understand what the in vitro data that we Cosmetics Europe contributed around 20 generate at the cell level, and nowadays oral and poster presentations to the event, in- increasingly at the 3D level, which is more forming attendees about progress achieved the organ level – what does that mean for stakeholders are working to inculcate regu- on the alternative testing front and the orga- systemic biology?” lators and industry toxicologists with the nization’s role in driving advances. He pointed to programs such as the US modified mindset that’s required to break Highlights include skin sensitization and Environmental Protection Agency and Na- from animal-testing tradition and embrace eye irritation testing strategies currently in tional Institutes of Health’s ToxCast and the more integrated alternative framework the regulatory acceptance pipeline at the Tox21, respectively, which have produced that’s evolving. Organization for Economic Co-operation and data on thousands of chemicals and predic- Taalman explained, “We are having a dis- Development. tive models for toxicity using high-through- cussion with experts and regulators about Cosmetics Europe also kicked off a new put screening assays and computational what the significance of the data is and how research program last year, its Long Range approaches. much confidence we have in findings they Science Strategy, aimed largely at addressing “There are so many data nowadays,” Ta- say that this chemical has a toxicological gaps in emerging approaches for assessing alman noted. “One experiment could gen- property that leads to adverse effects in hu- chemicals’ systemic effects – i.e., impacts at cell erate 1 million data points. In the old days mans, or it doesn’t. How many data do we or organ levels – without the use of animals. there were maybe 500, but now it’s 1 mil- need, and what kind of data?” This means exploring techniques for lion. So how do you compute and use that He added, “The modern validation of measuring and predicting chemical absorp- information in a meaningful way, knowing these new approaches is not per se about tion, distribution, metabolism and elimi- both the biological significance of the data one method against another. It’s about the nation (toxicokinetics), as well as toxicity and putting them in the context of safety?” whole integrated approach to come to a effects caused by a chemical’s interaction conclusion about safety. It’s more a toolbox with the organism (toxicodynamics), as ex- that we have to answer specific questions. plained in a research newsletter published CULTIVATING MINDSET CHANGE For a certain complex, for a certain chemis- by the association in August. Such questions are being attacked collab- try or class of chemicals, you use one set of “The low-hanging fruit is gone, and the oratively by a diverse set of experts, from tools, and for another you use another set endpoints that we are working on now are biologists and chemists to mathematicians, of tools.” the very difficult and complex endpoints all striving to make sense of the myriad For the time being, cosmetics ingredient that we need to tackle,” Taalman said. available data in a way that ultimately will innovation in the EU continues to be ham- It’s not just a matter of developing new support go-to processes for safety determi- pered by the lack of validated, regulatory- in vitro technologies and testing methods nations when questions arise about new or accepted alternative methods for key safety where they are lacking, though needs in existing ingredients. endpoints. Animal testing on cosmetic in- that area remain. According to the exec, The validation and regulatory acceptance gredients has been banned in the EU for all WC10 saw a shift in conversation away from of alternative testing strategies depend on toxicological endpoints since March 2013. mechanistic testing issues, with greater fo- these efforts. (Also see “EU Hopes To Make Animal-Test Ban cus on understanding the alternative mod- Meanwhile, Cosmetics Europe and other Global Model” - Rose Sheet, 18 Mar, 2013.)

11 | Rose Sheet | August 2017 © Informa UK Ltd 2017 COSMETICS

European Agencies Readying Draft Guidance For Identifying Endocrine Disruptors

RYAN NELSON [email protected]

cientific staff from the European Chemicals Agency and European S Food Safety Authority have drafted guidance to assist industry in identifying It may behoove cosmetics companies to keep tabs on the pesticides and biocides with endocrine- EC’s final criteria and the guidance development process disrupting properties in accordance with criteria developed by the European Com- with the Cosmetics Regulation review pending. mission. The criteria are based on the World Health Organization’s definition of an endo- fierce debate around the endocrine dis- a consulting group on their draft guidance crine disruptor as “an exogenous substance ruptor criteria since they were first issued for implementing the EC’s criteria in the or mixture that alters function(s) of the en- in draft form in June 2016. (Also see “EC Re- biocidal and pesticides sectors, according docrine system and consequently causes leases Endocrine-Disruptor Criteria, Drawing to a July 20 release. adverse health effects in an intact organ- Heavily On WHO Definitions” - Rose Sheet, 24 The agencies have issued an outline of ism, or its progeny, or (sub)populations.” Jun, 2016.) the document that’s publicly available. The Essentially, the EC explains on its web- Industry has been particularly critical of document includes sections on informa- site, endocrine disruptors have a hormonal the absence of a potency consideration. tion sources for endocrine disruptor iden- function and an adverse effect, with dem- On its website, the European Chemical tification, hazard identification strategy onstrated causality between the two. Industry Council (Cefic) notes, “We con- and “how to assess and conclude on the The EC was charged with defining endo- sider potency, a fundamental and well- strength of evidence in terms of adversity.” crine disruptors for application under a pair established principle of toxicology, as a key Once the European Parliament and Coun- of regulations governing chemicals use, re- element for the identification of endocrine cil adopt final endocrine disruptor criteria, sulting in draft criteria for plant protection disruptive substances of regulatory concern. ECHA/EFSA intends to launch a public con- products and biocidal products. Ignoring potency could lead to the prohibi- sultation on their guidance. The proposals are now slated for consid- tion of many synthetic substances that are It may behoove cosmetics companies to eration by European Parliament and the no more harmful than everyday plant-based keep tabs on the EC’s final criteria and the Council after the summer recess. foods such as grains, vegetable and fruits.” guidance development process with the While the regulations earmarked for NGOs and some EU member states, on the Cosmetics Regulation review pending. amendment with the criteria have no bear- other hand, have argued that the proposed ing on cosmetics, the EC said in July that criteria are not restrictive enough – covering they “will provide a stepping stone for fur- “proven” and “presumed” but not “suspect- ther actions to protect health and the ened” endocrine disruptors, for example – and vironment by enabling the Commission to contain too many exemptions. start working on a new strategy to mini- In a July 4 member state vote on the cri- harma iteiece | mize exposure of EU citizens to endocrine teria for plant protection products, Den- disruptors, beyond pesticides and biocides.” mark and Sweden were among the few who Specifically, “the strategy will aim to cover voted against them, citing the proposed for example toys, cosmetics and food pack- framework’s “unprecedented high level of aging,” the EC noted. evidence to identify endocrine disruptors Delivering uniquely The European Cosmetics Regulation in- compared to other problematic substances.” specialized coverage in cludes an Article 15 provision directing the Overall, they contended that the criteria EC to “review this Regulation with regard fail to meet the level of protection foreseen the cosmetics and dietary to substances with endocrine-disrupting by legislators. supplements sector. properties” when community or interna- Parliament will now have the opportu- tionally agreed criteria for identifying endo- nity to object to the criteria, an option some crine-disrupting substances are available. Green Party members reportedly intend to That was supposed to happen by January exercise. rose.pharmamedtechbi.com 11, 2015. In the meantime, ECHA and EFSA are Regulatory delays have occurred due to awaiting a second round of feedback from

12 | Rose Sheet | August 2017 © Informa UK Ltd 2017 COSMETICS

EU WORKING GROUP: Cosmetics Should Be ‘Free From’ Denigrating Ingredient Claims

RYAN NELSON [email protected]

European Commission working can give an authoritative interpretation of group has produced updated guid- Union law,” it notes. A ance advising against use of “free That said, if national authorities were to from” claims on cosmetics that are based on apply the guidelines strenuously in their reg- a “presumed negative perception” of ingre- ulatory work, it almost certainly would have dient safety – for example, “paraben-free.” a transformative effect on cosmetics market- The technical document on cosmetic ing and related competitive dynamics. claims was developed by a sub-working group, endorsed by the Working Group on Cosmetic Products and published recently ‘PARABEN-FREE,’ ‘PRESERVATIVE- to the EC’s website. FREE’ CLAIMS ADDRESSED The document builds on (and renames) The working group – which is chaired by the previous guidelines to EU Regulation No. EC and made up of EU member state repre- 655/2013, which entered into force in sentatives, trade organizations and consum- July 2013, setting forth common criteria While not legally binding, er advocacy groups – says “free from” claims for the justification of cosmetic product should not be allowed when they imply an claims, as dictated by the European Cos- the document is intended unwarranted safety message that denigrates metics Regulation. an ingredient or ingredient group. Responsible persons in the EU must en- to serve as a tool detailing In an annex specifically devoted to “free sure that claims on marketed cosmetic prod- best practices for case- from” claims, the group offers “paraben-free” ucts are in compliance with the criteria and as an example, pointing out that certain backed by substantiating evidence, which by-case application by parabens have been determined safe for use gets stored in mandatory product informa- in cosmetics products under conditions de- tion files accessible to national authorities. member states in their fined by the EU Cosmetics Regulation. One of the general criteria for cosmetic implementation of “Considering the fact that all cosmetic claims established by the 2013 regulation is products must be safe, the claim ‘free from “fairness,” which means in part that claims overarching EU regulations. parabens’ should not be accepted, because “shall be objective and shall not denigrate it is denigrating the entire group of para- the competitors, nor shall they denigrate bens,” the guidance states. ingredients legally used.” However, all participating member states Similarly, phenoxyethanol and triclosan The denigration issue is highly topical agreed that clarification was needed to sup- are permitted cosmetic preservatives in the amid rampant use of claims in the EU – and port national regulators’ oversight of claims EU and therefore should not be demonized the US – that highlight the absence of in- that position products as “free from” autho- by claims promoting products as free of the gredients permitted by law, but perhaps rized ingredients, such as preservatives that substances, the working group adds. unpopular with, or distrusted by, consum- are listed as permitted in Annex V of the At a time when a growing number of cos- ers. (Also see “’Free Of’ Marketing: Honestly, Cosmetics Regulation. metic preservatives are being scheduled Why Bother?” - Rose Sheet, 11 Mar, 2016.) “Such a claim is considered to be denigrat- for bans or restrictions in the EU, the com- The EC submitted a report to the Euro- ing, as it is giving a negative impression to the mission has been warning industry of late pean Parliament and Council last year, also consumer about an authorized and scientifi- to take care with those options that remain required by the Cosmetics Regulation, in cally proven safe ingredient,” the EC noted. and avoid stigmatizing them. (Also see “EC which it concluded that the European regu- The newly issued guidance is not an offi- Trims Permitted Cosmetic Preservatives List, latory framework for claims and advertising cial EC document and is not legally binding. Warns About ‘Stigmatizing’ Safe Options” - is effective at ensuring a high level of con- Rather, the document is intended to serve Rose Sheet, 24 Jul, 2017.) sumer protection and industry competi- as a tool, detailing best practices for case- If the “free from” claims of concern were tiveness. by-case application by member states in to be actively targeted in the EU, it would Based on member state contributions to their implementation of the overarching EU dramatically alter the cosmetics marketing the report, 90% of analyzed cosmetic claims regulations, the cosmetics working group landscape. were found to be compliant with the com- explains. It’s hard to imagine that rigorous imple- mon criteria. “Only the European Court of Justice mentation of the prescribed standards at

13 | Rose Sheet | August 2017 © Informa UK Ltd 2017 COSMETICS the member state level would not elicit regulation, with examples provided, and an uproar from brands that have built an it contains an annex on “best practice for ethos and audience on the idea that exist- claim substantiation evidence.” ing regulations are not sufficiently strin- With cosmetic formulators’ gent to protect consumers from hazardous preservative palette rapidly POSSIBLE ‘INFORMED CHOICE’ chemicals. LOOPHOLE The working group also advises a clamp- shrinking, many industry With formulators’ preservative palette rap- down on “free from preservatives” claims idly shrinking, many industry stakeholders on products that use any ingredient with stakeholders are anxious are anxious to see “free from” claims curbed anti-microbial effects, even if the substance to see “free from” claims and likely would embrace the EC working is not included in Annex V of the Cosmetics group’s guidelines as capable of promoting Regulation. curbed and likely would overall industry health. (Also see “Podcast: This would help to establish an equal Preservatives Crisis Calls For Marketing Revo- playing field between cosmetic manufac- embrace the EC working lution” - Rose Sheet, 28 May, 2015.) turers that use conventional preservatives group’s guidelines as However, brands that are called out by and those relying on “natural” or non-tra- regulators for using denigrating “free from” ditional preservative systems, which often capable of promoting claims may be able to underline a counter- tout their offerings as preservative-free. point in the same document. The guidance In the US, while use of non-traditional, overall industry health. notes that “free from” claims should be per- “gentler” preservatives plays well with “nat- mitted when they enable informed choice ural” consumers, FDA has made products from allergenic/sensitizing substances” among a specific target group of end users. that contain them a priority in its inspection should not be allowed because that assur- For example, the working group says, work due to concerns about contamination ance cannot realistically be provided, the “free from acetone” may be useful to con- risks. (Also see “FDA Has Eye On ‘Non-Tra- working group says. sumers wishing to avoid the chemical’s ditional Preservative’ Use, Updates Internal The technical guide includes a desig- strong smell, and vegan consumers may Guide” - Rose Sheet, 1 Mar, 2016.) nated annex for “hypoallergenic” claims, benefit justifiably from “free from animal- It seems reasonable that such products outlining factors that should be taken into derived ingredients” claims. should not be able to carry claims imply- account by responsible persons and used Brands may well argue that sizeable de- ing superior safety compared with prod- as substantiation for such statements. mographics are actively looking to avoid ucts that feature proven (if unfashionable) Working group members agreed that parabens and certain other permitted in- preservative workhorses. Compliance with the standards for “free from” and “hypoal- gredients, regardless of what the EC and the EC working group’s guidelines would lergenic” claims should be applicable as of its scientific advisory bodies say about the deprive marketers of that unfair advantage July 1, 2019. ingredients’ safety. in the European bloc. The document also goes into greater Such an interpretation, if accepted by The document also discourages use of detail regarding broad claims criteria for national authorities, would essentially pre- overly broad claims suggesting guaranteed legal compliance, truthfulness, evidential serve the status quo, potentially leading to safety properties based on the absence of support, honesty, fairness and informed further degradation of vital cosmetic ingre- particular ingredients. For example, “free decision-making than is available in the dients in the public eye.

harma iteiece |

14 | Rose Sheet | August 2017 © Informa UK Ltd 2017 DIETARY SUPPLEMENTS Supplement, Drug Co-Packaging Potential Could Be Clipped In FDA Proposed Rule

MALCOLM SPICER [email protected]

ietary supplements sold in tandem in an Over-the-Counter Monograph – doesn’t with pharmaceuticals, including allow exemptions for supplements that are D some currently available, are con- sold as part of a single package with a drug. sidered unapproved drugs under a pro- “When used as part of a fixed-combina- posed rule on co-packaging drug products tion or co-packaged drug, dietary supple- that FDA anticipates finalizing in a year. ments are considered to be an active in- Innovus Pharmaceuticals Inc. is among gredient in that product and subject to the the firms offering a supplement and OTC requirements of this proposed rule,” CDER drug sold in tandem. Innovus in July said in the proposed rule. launched tandem sales of its Apeaz OTC In a footnote clarifying its thinking in the pain relief topical and its ArthriVarx joint proposal rule, CDER said it considers “di- health supplement, with both products etary supplements that are combined into sold together though not in a single pack- a single dosage form with, or co-packaged age, or co-packaged. Innovus Pharmaceuticals offers its with, a drug to meet the definition of ‘drug’ Innovus CEO Bassam Damaj said the Apeaz topical analgesic OTC only in under” FDA regulations. The center also tandem sales with its ArthriVarx joint San Diego firm, which commercializes stated in the footnote that the “proposed health supplement. OTC drugs and other consumer products rule does not otherwise address nor affect for men’s and women’s health, vitality and FDA policy on dietary supplements.” respiratory diseases, is testing the market However, the proposed rule would affect for supplements and OTCs sold together. the supplement industry. Moreover, defin- “We’re looking to see how it’s going to per- “Depending on the ing dietary supplements as drugs in a pro- form,” Damaj said in an interview. posed rule on drug co-packaging appears FDA’s Center for Drug Evaluation and Re- specific facts and to the industry as a short-sighted and unfair search says it would determine on a case- circumstances, a dietary regulatory statement. by-case basis whether co-packaged nonprescription drugs and vitamin, mineral or supplement co-packaged supplement products already available in A DRUG REGULATION FOR the US are in violation of a proposed rule on with an OTC drug could SUPPLEMENT MARKETING? drug co-packaging. The agency published suggest or imply that the The Council for Responsible Nutrition let the proposed rule in December 2015, and FDA know about its concerns in May 2016 its latest regulatory agenda update, which dietary supplement is comments on the proposed rule. is non-binding. estimates October 2018 “FDA was ostensibly putting out a pro- publication of a final rule. intended for a drug use posed rule around drugs and we saw them “It is difficult to respond to questions and would, therefore, be referencing supplements. We dropped [com- about hypothetical scenarios, particularly ments] into the agency just to remind them where the outcome is rather fact-depen- considered a drug under” that that, ‘Hey this is not supposed to be a dent/fact specific. Depending on the specif- conversation about supplements. If you want ic facts and circumstances, a dietary supple- FDA regulations. to have that, you should have that separately, ment co-packaged with an OTC drug could – CDER but not in the context of this drug rule,’” said suggest or imply that the dietary supple- CRN President and CEO Steve Mister. ment is intended for a drug use and would, FDA previously has compelled firms that therefore, be considered a drug under” FDA were combining drug and dietary supple- regulations, said Tralisa Colby, a public af- ments in a single formulation to cease fairs specialist in CDER’s Office of Commu- making and marketing the products, en- nications. forcement that met little pushback. (Also However, the proposed rule – Fixed-Combi- see “Bayer Warning Letters Reinforce FDA Ban nation and Co-Packaged Drugs: Applications On Supplement/Drug Combinations” - Pink for Approval and Combinations of Active In- Sheet, 3 Nov, 2008.) gredients Under Consideration for Inclusion But offering separate supplement and

15 | Rose Sheet | August 2017 © Informa UK Ltd 2017 DIETARY SUPPLEMENTS drug products in a single package is unlike mon as active ingredients in joint health cines that are meant for either a chronic combining supplement and drug ingredi- supplements, methyl-sulfonyl methane condition or you’re taking them every sin- ents in a single formulation. (MSM) and glucosamine sulfate. gle day,” Mister said. FDA seems to be on thin regulatory ice, “There are no other products that con- For instance, consumers using daily OTC Mister says, to include vitamins, minerals tain those five ingredients at those concen- allergy remedies and omega-3s or herbals and supplements in the proposed drug co- trations and tested in the collagen arthritis daily would appreciate the convenience of packaging rule. “It says that a dietary sup- model showing efficacy,” Damaj said. the drug and supplements being available plement becomes a drug by virtue of being According to its label, Apeaz is indicated together. packaged with a drug.” for temporary relief of minor aches and “Why couldn’t the manufacturer whose “Now we are moving from just not put- pains of muscles and joints associated with making both of those products co-package ting the ingredients in the same pill to simple backache, arthritis, strains, bruises them for consumer convenience?” Mister where FDA seems to be saying, ‘Well, you and sprains. said, adding, “Even if it’s not on the condi- can’t even co-package them together.’ We Innovus says ArthriVarx’s “two main in- tion [indicated for the OTC], it’s just conve- don’t see anything in [FDA regulations] that gredients” are the herb andrographolide nient to have them all packaged together.” prohibits that,” he said in an interview. paniculate and hyaluronic acid in a formu- Innovus’ Apeaz and ArthriVarx offering “We’re saying, ‘This is not the place to lation “designed to maximize joint health.” is gauging consumer regard for the con- have that conversation, FDA. If you want to venience of supplements and drugs sold have it then you should have a conversa- SALES DRIVER FOR FIRMS … together. “So far the response has been tion separately about the co-packaging of Including a vitamin, mineral or supplement great. We’ve been shipping a lot of orders,” supplements with a drug.’” product that complements the indicated Damaj said. FDA is not estimating when the final rule effect of a nonprescription drug available in Innovus markets a total of 25 consumer will be published beyond the regulatory a single package, as Innovus is doing with health products, including OTC topicals agenda statement as it considers CRN’s and Apeaz and ArthriVarx, could have appeal as for premature ejaculation prevention and other comments on the proposed rule. “We a sales driver. hemorrhoid treatment and supplements have received several comments including That is an option CRN wants FDA to allow for prostate health, bladder control and some concerning co-packaging OTC drugs the industry. “We could foresee that some- sexual health. It also expects FDA approval with dietary supplements and are still re- body might want to have supplements and this year for its abbreviated new drug ap- viewing those comments as we develop the an OTC medicine that are shrink-wrapped plication filed in 2015 for a fluticasone pro- final rule,” CDER’s Colby said. together,” Mister said. portionate spray intranasal corticosteroid, While a tandem offering with a topical a generic of GlaxoSmithKline Consumer DISTINGUISHING SUPPLEMENT drug and an oral supplement might ap- Healthcare LP’s Flonase Allergy Relief. (Also FROM MEDICINE? pear as easier for users to distinguish be- see “Fluticasone Spray Competition Grows Part of FDA’s concerns about co-packaging tween the two products, CRN expects it With Perrigo Launch Of West-Ward Product” a supplement and a drug is that consum- is not asking too much of consumers to - Pink Sheet, 6 Jun, 2016.) ers would confuse the products’ doses and correctly follow dose and usage directions In 2016, Innovus closed its $630,000 directions, perhaps using the drug product for co-packaged oral delivery drugs and acquisition of brands from Beyond Hu- indefinitely as most supplements are used, supplements. man LLC, a firm known for its testosterone or using a supplement at the dosage indi- “What I think consumers are smart booster supplement Beyond T Human and cated for the co-packaged drug. enough to know is that if it has a Supple- its natural human growth agent HGA. (Also That isn’t a potential problem with Inno- ment Facts box on it, it’s a supplement, and see “Industry Roundup: Supplement Labeling vus’ Apeaz OTC and ArthriVarx supplement, if it has a Drug Facts box on it, it’s a drug,” Guide Corrected, Nu Skin Settles” - Rose Sheet, Damaj said. “The topical product is com- Mister said. 7 Mar, 2016.) pletely different and it is not in the same “If you have two products that are co- More recently, Innovus in June licensed box as Apeaz,” he said. packaged and they each have their own exclusive rights to the University of Iowa Although dissimilar in delivery format, labeling consumer can figure out that one Research Foundation’s US patent applica- the topical drug and the oral supplement is a supplement and one is a drug.” tion on use of thymol and carvacrol (mono- provide complementary benefits, which is terpene phenols) for induction of increased why Innovus is offering them together only. … CONVENIENCE FOR skeletal muscle endurance, lean muscle “When somebody orders Apeaz, they get it CONSUMERS mass and reduced adiposity. The mono- with the supplement,” Damaj said. In addition to consumers correctly distin- terpene phenols are considered generally Apeaz is an OTC topical analgesic mono- guishing packages of nutritionals from drugs, recognized as safe by FDA for use in dietary graph compliant drug for arthritis pain re- trends in nonprescription drug use support supplements and conventional foods and lief containing– camphor 4%, menthol 10% allowing co-packaging the products. beverages. (Also see “Tech Transfer Roundup: and methyl salicylate 30% – that also con- “What’s happening at the same time is Janssen, Eisai, Apexian, Innovus And More” - tains excipient ingredients that are com- you’re seeing more and more OTC medi- Scrip, 11 Jul, 2017.)

16 | Rose Sheet | August 2017 © Informa UK Ltd 2017 DIETARY SUPPLEMENTS

Independent Pharmacies Stock Growth Opportunities In Health, Wellness And Beauty Aisles

EILEEN FRANCIS [email protected]

ndependent pharmacies typically use less tamin and supplement products and may OPEN DOORS TO ADDITIONAL shelf space than chain pharmacies for di- favor a single brand at a time as they do not SHELF SPACE I etary supplements, presenting opportu- have space for a large assortment of prod- Some firms send salespersons with prod- nities for marketers to work with them and ucts and brands in each category. ucts, planograms and point-of-purchase make more room available for their prod- “One thing manufacturers could do to in- materials and, in some cases buy the inven- ucts, says Kyle Lentz of health care retailing crease their exposure [is] to offer training to tory of a competitor brand to open addi- consultancy Hamacher Research Group. the pharmacist on how to set their depart- tional shelf space or provide their products “If you go to a chain or mass outlet, you ment and what products to carry in their at no costs to retailers, Lentz said. will see a good 20 to 24 feet of vitamins and department. Making sure pharmacists are Marketers also may ask retailers to pair dietary supplements [shelving] but in small up-to-date on current items, and where to their brands up with pharmacists’ recom- independent chains, you’re talking about place them, and providing sell sheet infor- mendations. For example, a probiotic mar- small footprints, with the largest about 8 to mation on what they do will go a long way keter could encourage pharmacists provid- 12 feet,” said Lentz, a category management for the manufacturer,” he said. ing antibiotics to suggest their probiotics and business strategy analyst for the health Many marketers already know the advan- for patients to help avoid digestive prob- and beauty segment. tages an aggressive outreach program can lems associated with the drugs. That dynamic creates an atmosphere yield. “Manufacturers do pay more atten- Although VMS is the biggest segment where one brand is highlighted at a time tion to small chain and independent phar- among health, wellness and beauty prod- and where “hot” items are replaced every macies in the vitamins and dietary supple- ucts in mass-merchandise and drug chain three months, he added in an interview on ments category [than other categories] outlets, it is the No. 2 segment at indepen- Aug. 29. because they are selling a complete line dents, according to Hamacher. OTC cold Lentz also noted most independent phar- of products and are willing to make deals and allergy products lead all segments at macies, about 40% of all US drug stores, with the pharmacies to carry their line over independent pharmacies. generally offer the current top-selling vi- someone else’s line.” Vitamins and supplements accounted for 11.4% of total health, wellness and beauty dollar sales in independent stores for the TIPS FOR APPROACHING AND CONNECTING 12-month period ended June 2017, ac- WITH INDEPENDENTS cording to data provided by Hamacher, of Waukesha, Wis., from figures from market research firm Information Resources Inc. • understand independents’ customer • include independent pharmacies and from 12 wholesale firms that serve base and whether an OTC product is in store locator sections of roughly 16,000 of the 20,000 independent geared toward them; manufacturer and brand websites; pharmacies in the US (see chart next page). In a January “Retailer Category Tips” for • pace of getting new products in-store • remain consistent, and build trust selling vitamins and supplements, Lentz noted independent pharmacies can grow sales is slower than in retail chains, and and your reputation through visibility of multivitamins, despite limited shelf space, marketers working with wholesale and repetition; by installing planograms that combine “best distributors have more success; of” vitamins, supplements and nutritionals • identify thought leaders and to highlight strong-selling items. • customer requests and recommen- pharmacist influencers as pharma- For firms that do not have shelf space to dations are a key driver of moving cists trust their peers; offer full lines of vitamins, Hamacher’s TEMPS products in store and keeping them Category Management program reviews 27 health, beauty and wellness categories an- there; • provide in-store tools and support in- nually to determine which items are best po- cluding displays, education materials, sitioned for success in community pharma- • independents like facts – tell them coupons or rebates for products; cies, according to Hamacher’s website. why they need your product and Digestive health product sales are third back it up with clinical research; • offer samples. in independent pharmacies with 10.89% of dollar sales; pain relief is fourth with 9.26%.

17 | Rose Sheet | August 2017 © Informa UK Ltd 2017 DIETARY SUPPLEMENTS

COLD/ALLERGY CATEGORY LEADS Health, Wellness And Beauty Category Sales Rankings IN CHAIN STORES Sales of OTC cold and allergy products lead In Independent Pharmacies other health, wellness and beauty categories in independent pharmacies and are expected to grow on OTC allergy switches and children’s items, says Hamacher. Lentz noted in a recent blog post that cold and allergy OTC sales for the 12 months through June 2017 accounted for 17.9% of health, wellness and beauty dollar sales in independent pharmacies, down slightly from the previous period. SanofiXyzal 24HR (levocetirizine dihy- drochloride) OTC allergy switch launched in February and significant launches of children’s products, including the return of Johnson & Johnson’s Children’s Tylenol cold products and innovative items such as Mondelez International Inc.’s Halls Kids Cough & Sore Throat suckers, should boost the segment for the next period, Lentz stated in his post. “Adding these new products to your assortment will help drive consumers to the department and boost sales,” he wrote. Xyzal Allergy is the first Rx-to-OTC switch of the ingredient levocetirizine dihydrochlo- ride, available in 5mg tablets indicated for children 6 and up and adults and in a 2.5mg per 5mL oral solution for children 2 and up as well as older children. (Also see “Xyzal Switch Extends Sanofi Into OTC 24-Hour Children’s An- tihistamine” - Pink Sheet, 2 Feb, 2017.) In January, New Brunswick, N.J.-based VMS is the No. 2 segment among health, wellness and beauty products in independent pharmacies, but it leads mass-merchandise and drug chain outlets, according to Hamacher. J&J reported its OTC analgesics segment was back on track after the company reme- Hamacher Resource Group Proprietary Wholesaler Withdrawal data. diated three manufacturing sites subject to a consent decree with FDA following good dren fear choking risks. retailers received their information from manufacturing practice problems; J&J has Each pop contains 5mg menthol, the their sales rep, who would drop by their returned to store shelves all product lines same active ingredient in traditional Halls store once a month. They would have deals, that were recalled as problems at the three lozenges. Throat Pops debuted in July work with the independent pharmacist. plants became known. (Also see “J&J Pro- along with Halls Kids Vitamin C Pops. Those days are pretty much gone,” he said. motes Preventive Care, Wellness In US Health The OTC cold and allergy product cat- The move away from the personalized Debate” - Pink Sheet, 26 Jan, 2017.) egory ranking demonstrates the different approach is a given somewhat, consider- In April, J&J announced that sales of its selling opportunity for the drugs in the in- ing tighter budgets for many OTC mar- adult and children’s Tylenol products were dependent pharmacy channel compared keters, staffing concerns and difficulty in ahead of other products in the category. to major drug chains, where they trail the targeting independents spread across the (Also see “Tylenol Delivers J&J Relief As Glob- vitamins and dietary supplement catego- country, he noted. al ‘Consumer Staples’ Sales Slump” - Pink ry, Lentz said. Further, drug wholesalers aim to provide Sheet, 18 Apr, 2017.) some services OTC marketers previously did Lentz said Halls Cough & Sore Throat OTC DRUG OPPORTUNITY in promoting products to independents, Pops, in a lollipop delivery format contain- UNTAPPED educating them on the drugs and supporting cough and sore throat ingredients, Lentz noted drug manufacturers rarely con- ing them with sales collateral. Third-party likely will be purchased for children be- nect with independent pharmacists to sell resource firms such as Hamacher also fill tween 6 to 11 as parents of younger chil- more of their products. “Ten to 15 years ago, that role, working with retailers in helping

18 | Rose Sheet | August 2017 © Informa UK Ltd 2017 DIETARY SUPPLEMENTS drive front-of-store sales by identifying fast- alone should still consider reaching out to in- Gamble Co. and J&J are using digital apps selling products and finding the right prod- dependents, not only to move products into or are partnering with health care pro- uct placement, pricing and promotions for store but to encourage pharmacists to rec- fessionals and pharmacists to drive sales selling products. ommend their products, suggested Lentz. of their products in drug stores. P&G in- OTC marketers can work with Hamacher For example, when patients receive vests in continuing education programs and other resource partners to navigate the prescriptions that induce photo-sensitiv- with pharmacists and dentists. (Also see channel and get their message and prod- ity, pointing out sunscreen products they “Technology Gap Separates OTC Drug Firms ucts in front of independent pharmacies. should purchase along with the drug. From Self-Care Sales Growth” - Pink Sheet, Those drug firms that stay the course Some marketers, including Procter & 16 Mar, 2017.)

Love Seated As Utah’s Next Supplement Industry Champion In Congress EILEEN FRANCIS [email protected]

he departure of one member of activity in Utah,” said Israelsen Loren, presi- Utah’s congressional delegation as dent of Salt Lake City-based UNPA. T a co-chair of the dietary supple- “Rep. Love’s leadership will help the ment industry caucus makes room for an- Caucus continue to educate policymakers other, Rep. Mia Love, to take the seat. about this growing industry’s significant Supplement industry trade associa- and positive impact on consumer health tions on Aug. 1 announced that Love, a and the US economy,” said AHPA President Republican in her second term after win- Michael McGuffin. ning re-election in 2016, was chosen by Love, who was mayor of Saratoga Springs, the 32-member Congressional Dietary Utah, before being elected to Congress, Supplement Caucus to succeed former serves on the House Financial Services Rep. Jason Chaffetz as one of the House Committee and on its Monetary Policy and co-chairs. Colorado Democrat Jared Polis Trade, Financial Institutions and Consumer also is a co-chair. Credit, and Terrorism and Illicit Financing Utah is a hotbed of nutritional and subcommittees. health and wellness product development Chaffetz, who was Oversight and Gov- and manufacturing and is home to a pri- ernment Reform Committee chairman, mary author of the Dietary Supplement Utah Republican Mia Love is a House resigned from Congress mid-term in June Health and Education Act and staunch co-chair of the Congressional Dietary and is rumored to be eyeing Utah’s next industry advocate, Sen. Orrin Hatch, a Re- Supplement Caucus. race for governor in 2020. The other House publican who is a Senate co-chair of the co-chair will open up at the end of the caucus with Sen. Martin Heinrich, D-NM. current term in 2018 as Polis announced “Not only do dietary supplement com- in June he will leave to seek the Demo- panies provide jobs and opportunities crat nomination for governor in Colorado. in my state, they give consumers the op- “Rep. Love’s leadership will (Also see “Making Nutritionals Eligible For portunity to make educated choices to help the Caucus continue Health Savings Accounts Whets Congress’ fill critical nutrient gaps and achieve bet- Appetite” - Rose Sheet, 14 Jul, 2017.) ter health,” Love stated in the release an- to educate policymakers One of the Senate co-chair seats also nouncing her appointment. could open at the end of Congress’ cur- The American Herbal Products Associa- about this growing rent term. Hatch decided on seeking re- tion and the United Natural Products Alli- industry’s significant election in 2012 relatively late in the pro- ance acknowledged Love’s familiarity with cess and after several Utah Republicans, the supplement industry’s economic im- and positive impact on including Chaffetz, stated their interest in pact and its public health benefits. seeking the GOP nomination for his post. “We look forward to working with her to consumer health and the He was elected to the Senate in 1976 and help grow the $41 billion national dietary economy.”– AHPA President is 83 years old. (Also see “Hatch Faces Pos- supplement industry, which includes more sible Primary Contest With Chaffetz” - Pink than $13 billion in supplement business Michael McGuffin Sheet, 4 Jul, 2011.)

PharmaTech Recalls Highlight Supplement GMP Diligence For Marketers – CRN

EILEEN FRANCIS [email protected]

he Council for Responsible Nutrition retailers, health care facilities, pharmacies manufacturing practices requirements. reminds dietary supplement firms and online (see table next page). “You’ve got to know everything that has T about due diligence in tracking sup- FDA said it has received multiple adverse happened with your material up stream,” ply chains and responding quickly to man- event reports related to Rx oral liquid docu- MacKay said. “There’s no signing away re- ufacturing problems following FDA’s warn- sate sodium products in 2017 but it did not sponsibilities and if you have a supplier [or ing about the risk of an antibiotic-resistant state whether it received any reports from contract manufacturer] making something bacteria in supplements made by contract consumers, health care professionals or for you, it’s your responsibility to get in there manufacturer PharmaTech LLC, manufacturers on supplements potentially and make sure they are doing it correctly.” The Centers for Disease Control and Pre- linked to B. cepacian contamination. FDA’s 2007 supplement GMPs final rule vention recently found a strain of burk- places the onus of manufacturing violations holderia cepacian (B. cepacia), a pathogen FOLLOW GMP COMPLIANCE on marketers or own-label distributors even known for rotting onions and especially risky UPSTREAM though they have contracted manufactur- for people with health problems such as a In an Aug. 15 interview, CRN Senior Vice ing to other firms. The agency has warned weakened immune system and chronic lung President, Scientific and Regulatory Affairs numerous own-label marketers about GMP disease, during lab testing of an Rx laxative Duffy MacKay said the PharmaTech-related problems since beginning inspections un- PharmaTech makes, oral liquid docusate. recalls should remind marketers receiving der the rule in 2010. (Also see “GMP Warn- American Academy of Pediatrics represen- products from contract manufacturers that ings Follow Thin Corrective Action Evidence, tative Meg Fisher, a physician and medical they are responsible to confirm compliance Reliance On Contract Manufacturers” - Rose director of the Unterberg Children’s Hospital by those firms with FDA’s supplement good Sheet, 31 May, 2017.) in New York, says bacteria such as B. cepacia is not rare on food and especially in non- acidic liquids, but it is a “major pathogen” for some patients with cystic fibrosis and for im- SECOND PHARMATECH RECALL IN A YEAR munocompromised hosts. “This is bacteria that exists on soil and plants; likely most of us eat it without difficulty This is a second wave of recalls for PharmaTech in a year following a recall of Rugby- and without realizing it,” said Fisher, also chair- branded docusate sodium laxative in August 2016 as a “precautionary measure” woman of the Monmouth Medical Center pe- after two consumers complained and later expanded the recall as a precautionary diatrics department, in an Aug. 15 email. move. (Also see “PharmaTech Adds Supplements To Recall Nearly A Month After Drugs” - After CDC passed on its information to Rose Sheet, 10 Aug, 2016.) FDA, the agency informed marketer Rug- by Laboratories Inc., owned by Cardinal PharmaTech had expanded its liquid dose manufacturing facility two years earlier, Health Inc. subsidiary Harvard Drug Group moving from one line to three fully automated lines and adding two mixing tanks LLC, that it had received adverse event re- to its production line to meet demand for manufacturing capacity. ports due to potential B cepacian in liquid In October 2016, an FDA investigation into infections reported for at least 60 people prescription drugs and the firm recalled two Rx Rugby products made by PharmaT- in eight states – mostly patients in intensive care units – identified an outbreak of b. ech on Aug. 3. FDA cepacia in more than 10 lots of pharmaceutical oral liquid laxative docusate sodium Recalls of supplements PharmaTech manufactured by PharmaTech. The agency identified water the firm used in manu- made at the same facility in Davie, Fla., facturing as the source of the contamination. Contaminated pharmaceutical stool where the contaminated drug product was softeners carrying the pathogen were labeled under Rugby and Major brands and made were initiated on Aug. 10 by Rugby several others; no adverse event reports linked to the contamination were received Labs along with Harvard Drug Group’s for supplements. Major Pharmaceuticals Inc. and Leader Brands units, each of which markets name- Separately, PharmaTech in 2015 recalled a pair of Rugby supplements it made sake brands. The recalls comprise 22 multi- for Harvard after determining they might be labeled with incorrect names, vitamins, vitamin D and other liquid sup- expiration dates and lot numbers. (Also see “FDA Recalls For June 10-Aug. 12” - plements, including products indicated for Pink Sheet, 17 Aug, 2015.) infants and children, distributed through

Supplement Recalls By Leader, Major and Rugby Labs Among the supplement GMP requirements is manufacturers using water that is FIRM/PRODUCTS SIZE PRODUCT UPC to become part of a supplement product comply with applicable federal, state and LEADER BRANDS local requirements and that the water does “not contaminate the dietary supplement.” Liquid Multivitamin Supplement for Infants 50 mL 096295128611 Most marketers have quality agreements and Toddlers 50mL with their suppliers or contract manufacturers, and set product specifications, while Liquid Vitamin D Supplement for Breastfed 400 IU/50 mL 096295128628 performing audits and testing their products Infants 400 IU 50mL independently. “If your name is on a product, make sure MAJOR PHARMACEUTICALS whoever is making it for you is in compliance with all their regs, including regulations Certa-Vite Liquid 236 mL 00904-5023-09 for liquid products, and if they get dinged, whether through a warning letter or any Poly-Vita Drops 50 mL 00904-5099-50 other violation including on your own audits, you have to do your due diligence and Poly-Vita Drops w/Iron 50 mL 00904-5100-50 additional testing to make sure those products are made in compliance,” MacKay said. Ferrous Drops Iron Supplement 50 mL 00904-6060-50 Asked whether marketers should discon- tinue working with a manufacturer whose D-Vita Drops 50 mL 00904-6273-50 GMP issues have led to recalls and other issues, McKay said it depends multiple Tri-Vita Drops 50 mL 00904-6274-50 variables. “It could be that your product is being manufactured at a completely differ- Senna Syrup 237 mL 00904-6289-09 ent facility than the one that is in question. Or you recently audited the facility making RUGBY LABORATORIES your vitamin product and therefore there is nothing to worry about,” he said C Liquid 500 mg/118 mL 00536-0160-97 He pushed back against the potential for the recalls to be cited by critics of FDA’s Diocto Liquid 473 mL 00536-0590-85 regulation for supplement manufacturing and marketing. (Also see “Supplement Pre- Ferrous Sulfate Elixir 473 mL 00536-0650-85 market Approval Resurfaces From Blumen- thal, Durbin” - Rose Sheet, 18 May, 2016.) Fer Iron Liquid 50 mL 00536-0710-80 “The original products and original issue is for a facility registered to make drug Senexon Liquid 237 mL 00536-1000-59 products, so any criticism of dietary supplements related to this case would have to Diocto Syrup 60mg/15 mL 00536-1001-85 carry over to drug products. Anyone who tries to turn this into a story about how Aller Chlor Syrup 473 mL 00536-1025-47 supplement regulates are less than perfect is misguided,” MacKay said. Calcionate Syrup 120 mL 00536-2770-85 The industry for its part has banded together to encourage responsible players Cerovite Liquid 16 ounce 00536-2790-59 to meet FDA’s good manufacturing practices rule. The Standardized Information on Dietary Ingredients Work Group, formed D3 400iu Liquid 236 mL 00536-8400-80 by trade groups including CRN, in June launched an updated draft of guides to Poly-Vitamin Liquid 50 mL 00536-8450-80 help manufactures and marketers comply with GMPs and other regulations. (Also see Tri-Vitamin Liquid 50 mL 00536-8501-80 “SIDI Supplier Protocol Update Adds To Bur- geoning Self-Regulation Library” - Rose Sheet, Poly-Vitamin w/Iron Liquid 50 mL 00536-8530-80 1 Jun, 2017.)

Sale To Icahn Off Table, Herbalife Tenders $600m Share Repurchase

so far this year. Scee predicts the price band offered in the repurchase is “too restrictive,” and as a result, the full $600m tender is “unlikely” to be completed.

ACKMAN SUSTAINS $1B SHORT SELL The share buyback likely intensifies the battle between Icahn, who owns about 25% of the firm, and hedge fund manager Bill Ackman, who invested $1bn in a short sell anticipating its failure. In 2012, Ackman’s Pershing Square Capi- tal firm made a $1b short bet on the firm’s stock, predicting it would fall to zero and accusing the direct marketer of operating utritional and weight loss supple- way to return capital to shareholders that a pyramid scheme of distributors recruit- ment direct seller Herbalife Ltd. seek liquidity under current market condi- ing and selling to other distributors and not N backs away from a sale to investor tions while, at the same time, providing selling products to consumers. The firm’s Carl Icahn, potentially to take the firm pri- such tendering shareholders potential ad- shares were trading between $42 and $51 vate, and tenders a $600m share buyback. ditional value in the event Herbalife is taken at that time. To provide “some protection” should dis- private within two years.” In July 2016, Herbalife settled with the cussions about a sale to Icahn or other inves- Herbalife said so far in 2017 has ac- Federal Trade Commission to end an investors start again and Herbalife is taken private quired approximately $299m of its shares tigation linked to Ackman’s allegation that within two years, the Los Angeles-based firm on the open market. Analysts suspected it inflated reported retail sales by its net- on Aug. 21 said it is offering shareholders a the firm was teeing up for a share re- work of independent distributors. The firm guarantee of an additional cash payment purchase when it announced a $1.45bn agreed to pay FTC $200m and make chang- should that occur in that time. senior secured credit facility in Febru- es including determining compensation Additionally, Herbalife board members ary. (Also see “Herbalife Share Repurchase for its independent distributors based on and Icahn say they do not intend to tender Likely: Health And Wellness Industry News actual end-user sales, rather than on sales their shares in the offer, which expires on Roundup” - Rose Sheet, 16 Feb, 2017.) to other distributors; limiting distributors’ Sept. 19 but could be extended. initial and monthly purchases; and allowing Herbalife said discussions with an inves- ICAHN CONFIDENCE FACES more time for distributors to claim refunds. tor regarding acquiring the firm and tak- CHINA TEST It also was required to hire an independent ing it private were “formally terminated’ on Despite Icahn’s confidence in the company, monitor to audit its compensation practices Aug. 16. some analysts express concern with fall- for seven years. (Also see “Herbalife Claims While Herbalife didn’t identify the inves- out from anti-corruption charges in China, No Harm, But FTC Hails ‘Unprecedented’ Set- tor it negotiated with, its release states that which also led to an investigation by the US tlement’s Impact” - Rose Sheet, 15 Jul, 2016.) Icahn and his affiliated entities agreed to not Securities and Exchange Commission. In August 2016, Icahn increased his Herb- increase their aggregate ownership above Scee said Chinese authorities recently in- alife investment to 21% of its shares and 50% “unless they have agreed to acquire dicated they are heating up investigations criticized Ackman has suffering from “Herb- 100% of its outstanding common shares,” into multi-level marketing companies such alife obsession.” (Also see “Herbalife, Direct which would make it a private company. as Herbalife, which she says has shaken in- Sellers Defend Business Against Pyramid Al- Renaissance Sector Research analyst April vestor confidence and dragged the firm’s legations” - Rose Sheet, 28 Jan, 2013.) Scee speculated Icahn was the investor ne- share price down 6% since Aug. 14. When Icahn received FTC clearance in gotiating with Herbalife. She notes the tender offer is a “show of October to increase his ownership to 50%, The frim is offering a price of $60 to $68 for confidence” that the business will not be analysts speculated he may take the com- each share tendered. The firm’s stock price impacted by events in China and also ad- pany private. (Also see “Herbalife Under SEC climbed 12% to $69.39 in same-day trading. dresses investor disappointment with the Scrutiny On Regulatory Compliance In China” It said a share buyback “is an appropriate “cadence” of the firm’s repurchase program - Rose Sheet, 23 Jan, 2017.)

Supplement Industry Investment Continues On Swander Pace Contract Manufacturing Move

MALCOLM SPICER [email protected]

rivate equity activity in the nutri- The merged company will continue attractive overall growth rate and a strong tional products industry continues as manufacturing operations both in Captek’s outlook. Growing consumer interest in self- P Swander Pace Capital’s Captek Soft- headquarters and at J+D Labs’ Vista, Calif., care remains a key driver for current and gel International Inc. business acquires facility. Products for both firms’ existing cus- future growth. another contract manufacturer, J+D Labs tomers as well as for additional contracts “We continue to see this idea of a more Pharma Manufacturing Inc. Captek lands could be manufactured at aware and active consumer who wants to Swander Pace expands Captek’s operations either site, which combined include more invest in their own health and wellness,” less than two years after acquiring the Cer- than 300,000 square feet of manufacturing, Conway said from SDR Ventures’ headquar- ritos. Calif., firm, which makes vitamin, min- warehousing, and analytical testing labs, ters in Greenwood Village, Colo. eral and supplement softgels for more than Swander Pace says. “We’re seeing this convergence of healthy 200 brands in 20 countries, in an investment The firm made its first 2017 move in the living and that consumer-driven mentality that comes seven months after investing in a space in January by completing its invest- showing tremendous pickup for a lot of cat- plant-based protein product firm. ment in Reliance Holdings Inc., manufactur- egories, healthy aging being one of them,” Swander Pace isn’t alone among private er and marketer of PlantFusion plant-based he added. equity firms already buying into or selling protein products available in the natural SDR Ventures projects a 12% com- ownership or stakes in vitamin, mineral and store channel, through its Branch Brook pound annual growth rate through 2020 supplement manufacturers, and those inves- Holdings partnership with United Natural for healthy aging supplements, a category tors should get ready for more competition Foods Inc. and Jefferson Capital Partners Conway noted as an example of the market for their acquisition targets in the space as A year earlier, Swander Pace, with offices investors see. “At 12% CAGR, all you need to well as for more potential buyers for assets in Bedminster, N.J., San Francisco, and To- do is find a winner in a category to outpace they’re selling. ronto, acquired health and wellness prod- the category,” he said. “You look at any consumer-branded private uct manufacturer and marketer Swanson “When you’re shooting fish in a barrel equity business and they either have a portfo- Health Products Inc., and a month before and all the fish are growing at 12% CAGR, lio holding or are actively looking for a portfo- that deal it acquired Captek from Prairie chances are you’re going to get a pretty lio holding in health and wellness or healthy Capital and Skyline Global Partners in De- good outcome.” living or more specifically in the vitamin, min- cember. (Also see “Swanson Health Sale At L.E.K., Wood sees the supplement mar- eral and supplement space,” said Travis Con- Could Lead Private Equity Spike In Supple- ket attractive for investing due to the “fun- way, managing director at SDR Ventures Inc., ment Space” - Rose Sheet, 26 Jan, 2016.) damentals” of a growing consumer base as which consults with privately held businesses It has invested and sold its stakes in Re- not only younger consumers are interested on acquisitions and investments. new Life Holdings Corp., owner of probiot- in supplementing their diets with nutrition- When investors look at the nutritional prod- ics developer ReNew Life Formulas Inc., and als, but older consumers also account for an ucts space, says L.E.K. Consulting research in Santa Cruz Nutritionals Inc. (Also see “Clo- “especially important” target market. Alex Wood, they’re seeing opportunities to rox Pays $290M To Digest Entry Into Probiotics Another fundamental of the market’s invest in companies with potential to rise to With Renew Life” - Rose Sheet, 5 May, 2016.) strong outlook is that more consumers, par- the top of and become a dominant business More recent private equity activity in the ticularly “aging baby boomers” are turning in still largely segmented product categories. supplement manufacturing space was Car- to vitamins, minerals and supplements to “Companies recognize that there’s still lyle Group L.P.’s sale of its controlling interest help manage chronic conditions. With more segmentation,” Wood said, adding that in Nature’s Bounty Co., formerly NBTY Inc., to of the population in the US and other devel- supplement manufacturing “is a pretty in- Kohlberg Kravis Roberts & Co. L.P. (Also see “KKR oped countries living longer, the number of teresting investment category when you Steers Nature’s Bounty With Carlyle In Back Seat consumers with chronic conditions associ- compare it to food and beverage overall, After Seven-Year Ride” - Rose Sheet, 24 Jul, 2017.) ated with aging also will grow, steadily in- which is a much slower growing category.” creasing the market for those products. J+D Labs makes more than 1,000 unique Wood pointed out retailers are stocking nutraceutical formulations in the US, re- TARGETS LIKE ‘FISH IN A BARREL’ more vitamins and supplements at drug, cently making more than 250 NutraStock Product categories such as sports nutrition grocery, convenience and mass-merchan- brand bulk stock supplements available to and healthy aging are growing faster than dise stores, still another fundamental its marketing and retail customers, accord- most and are likely to stand out to investors, behind the industry’s growth. “Retail- ing to Swander Pace’s Aug. 4 release an- but product types and companies across ers stock what they know the customer nouncing the deal. the space are part of an industry with an wants,” he said.

Vitamin Shoppe Turnaround Tools Include Auto-Delivery, Price-Matching

MALCOLM SPICER [email protected]

itamin Shoppe Inc. is opening a kit of sales-boosting tools, including V auto-delivery and price-matching, to stem an 8.4% drop in net sales in its latest quarter and a nearly 60% drop in its share price this year. The nutritional and health and wellness product manufacturer and retailer on Aug. 9 reported 70% of its sales decline in its fiscal 2017 second quarter was in sports supplement sales, where CEO Colin Watts says there is an “historically high level of competitive activity.” “It became increasingly clear our level of marketing spend and promotion are not enough,” Watts said during Vitamin Shop- pe’s same-day earnings briefing. While the Secaucus, N.J.-based firm since late 2015 has looked to boost sales through a retail re-invention strategy for improving VENDOR TOOLS, TOO customers’ shopping experience with a better store layout, product assortment and website In addition to rolling out sales-driving tools, Vitamin Shoppe announced its improvements, it now is making changes that “platinum vendor relationship” program, launching with bringing Healthy Natural give customer more options. (Also see “VSI, MP Q1 Results: Health And Wellness Industry News” Solutions LLC’s Nu Life Therapeutics brand supplements to the US. - Rose Sheet, 15 May, 2017.) Vitamin Shoppe on July 26 said it offers its PVR program as an incubation partner- Watts said the tools are “directly focused on customer acquisition, price, value and ship to a limited number of vendors to provide their brands with enhanced visibility customer retention.” in stores and online, greater access to the firm’s in-store representatives and addi- Vitamin Shoppe’s Spark subscription au- tional opportunities to participate in its marketing programs. In the Healthy Natural to-delivery program, accessible online and Solutions partnership, Vitamin Shoppe receives increased financial commitment in-store, drove 60% average sales increases from the Canadian firm and brand launch exclusivity. in test stores during the first quarter and spending by customers using the program Nu Life, available for more than 50 years in Canada, includes 18 products across since the beginning of the year grew 90%, categories including multivitamins, bone and joint and heart health, digestive the firm said. It is being extended across its health aids, and women’s and men’s health. stores during the current quarter. Auto-delivery subscription users sign on for regular deliveries, usually monthly, of prod- “particularly with our younger customers sales specifically with another sale-driving ucts and are billed automatically with each … a strong uptick in interest in subscrip- tool, its KVI – key value item – strategy shipment. The programs are an effective tool tion-based fulfillment in our category offer- of reducing prices across the most com- some manufacturers are using to take cus- ing better convenience and savings to our petitive categories. KVI is increasing store tomers from generally larger competitors that loyal customers,” Watts said. traffic and customers’ overall purchase sell predominantly through stores with some Spark will include a 10% discount on amounts. e-commerce, but with few auto-delivery of- some products and a quarterly box of free Additionally, its “Shop with Confidence” fers. (Also see “OTC Drug Firms’ Online Subscrip- samples, award twice as much in loyalty tool allows store clerks to meet lower pric- tion Sales Would Jeopardize Retail Partnerships” points to customers’ accounts and allow es that customers find competitors are of- - Pink Sheet, 8 Sep, 2016.) users to rapidly change their orders. fering for products; a four-month pilot pro- Vitamin Shoppe market research shows The firm is targeting sports nutrition gram increased unit sales 5%, the firm said.

SHARE PRICE DROP CONTINUES Shoppe’s] ability to stabilize its business as COO LEAVES Watts says the firm and its retail managers it undergoes its re-invention strategy,” Hig- have high expectations for results from its gins said. AFTER A YEAR new tools, which were announced at Vita- The firm’s second-quarter results sent min Shoppe’s national conference in July. the share price down 36.5% to end the day Vitamin Shoppe’s turnaround attempt “Our front-line leaders recognized that at a record low, $6.10 won’t have Jason Reiser as chief operat- this new program empowers them with It reported $304.8m in net sales on a ing officer. more tools to deal with the new competi- 7.6% slip in in-store sales and 20.2% drop tive landscape and build and maintain in sales from its website. After generating Reiser was hired in July 2016 as the their relationships with their customers,” $10.4m in net income in the year-ago pe- firm’s first COO and as an executive vice the CEO said. riod, Vitamin Shopped reported a net loss president and had overall day-to-day Vitamin Shoppe was due to point new of $156.6m; the earnings loss per share responsibility for store operations, mer- tools at spurring sales growth as more was $6.73, compared to a 44-cent EPS gain chandising, supply chain and information vitamin and supplement sales are going a year ago. technology and for leading those teams to drug, grocery and mass-merchandise It revised its 2017 same-store sales out- retail chains and GNC Holdings Inc. is look to negative mid-single digits from through implementing its retail re-inven- generating growth with the streamlined previous guidance of negative low- to mid- tion strategy. (Also see “Executive Decisions pricing and free myGNC loyalty program single digits. Roundup: CHPA And AHPA Boards, Vitamin it launched in January. (Also see “’New’ GNC Vitamin also announced it will close its Shoppe COO” - Rose Sheet, 20 Jun, 2016.) Tag Sticks With Turnaround Results Still In North Bergen, M.J., distribution center, its ‘Early Days’” - Rose Sheet, 28 Jul, 2017.) longest operating center, when the lease However, according to a June 22 filing Deutsch Bank Market Research analyst expires in a year. The firm expects that Vitamin Shoppe made to the Securi- Shane Higgins, in an Aug. 8 note preview- transitioning supply chain operations ties and Exchange Commission, Reiser ing Vitamin Shoppe’s earnings statement, from to other centers to be substantially resigned from his posts Jun 17 in a pointed out its share price is down 58.5% completed by the end of 2017. It expects through year-to-date and there’s little evi- to incur charges of around $4m, with $3m decision that “was not the result of any dence pointing to an end to the ride. incurred in 2017, from the facility closing, dispute or disagreement” with the firm. “Despite a depressed valuation, we con- and to gain savings of $4m to $5m start- tinue to have concerns around [Vitamin ing by the second half of 2018.

harma iteiece |

Glutamine Claim Class Action Against GNC Gets Wide Berth For Relevant Studies

MALCOLM SPICER [email protected]

federal judge rejects all of GNC said the studies the plaintiff noted did not Holdings Inc.’s arguments to dis- include any support for the label claims and miss a class action complaint alleg- GNC didn’t argue that the plaintiff had ac- A A federal judge “rejects ing its Pro Performance glutamine supple- knowledged any substantiation. ments do not provide the labeled benefits, GNC’s arguments that Plaintiffs arguing that their evidence including that the plaintiff challenged mul- supports their complaints have “effectively tiple products after buying only one type. Plaintiff cannot rely on the pled themselves out of court” when their In a July 19 opinion in US District Court for complaints also acknowledge evidence the Northern Illinois District, Judge Amy St. studies because they do countering theirs, St. Eve said. “Plaintiff in Eve denied GNC’s motion to dismiss, moving not involve the Products, this case has not done the same, and GNC the complaint toward a decision on certifying does not contend that Plaintiff has alleged a class. St. Eve also rejected GNC’s argument their specific dosages, and that some studies support the claims on the that studies of products with different for- Products’ labels,” she said. mulations or delivery formats than the chal- their methods of ingestion.” “In short, the studies support the allegation lenged Pro Performance supplements are in- The “allegations boil down that glutamine supplements do not have the appropriate as evidence for the allegations in benefits claimed on the Products’ labels.” the complaint filed in November 2016. to a claim that glutamine in The plaintiff purchased GNC’s Pro Perfor- She said she “rejects GNC’s arguments that mance L-Glutamine Powder 5000 in 2016 Plaintiff cannot rely on the studies because supplement form does not for his own use from a GNC store in Chicago they do not involve the Products, their spe- have the benefits listed on for approximately $29.99. cific dosages, and their methods of inges- The proposed class is consumers who tion” as “GNC fails to explain … how any of the Products’ labels.” purchased the same Pro Performance prod- these differences are material.” The “allega- uct or the brand’s L-Glutamine 1500, Rapid- tions boil down to a claim that glutamine in Drive Glutamine 2500 Power Chew and Pro supplement form does not have the benefits see “Another Court Ruling Rejects RCT Stan- RapidDrive Glutamine 5000 versions. Na- listed on the Products’ labels,” the judge said. dard For Supplement Claims” - Rose Sheet, tional Class: All persons in the United States The relevance of studies supporting ad 30 May, 2017.) who purchased the Products. claims frequently is questioned by the Coun- The complaint seeks certification in na- cil of Better Business Bureaus’ industry self- COMPLAINT ONLY NOTES tional and multi-state classes, with Illinois regulation divisions’ reviews of advertising; SUPPORTING EVIDENCE as a sub-class, and alleges violations of state findings are common in reviews of nutri- “Many healthy people are under the im- consumer fraud, deceptive business prac- tional product ads that studies of individual pression, perpetuated by the likes of [GNC], tices, breach of expressed warranty and un- ingredients rather than a finished product, or that a supplemented intake of glutamine fair enrichment laws. that measure results that differ from claimed has beneficial effects. This is frequently benefits are not reliable scientific support. the case among athletes and bodybuild- (Also see “Poor Fit For FitTea Evidence, No Free ers, who commonly consume glutamine Pass For Testimonials – NAD” - Rose Sheet, 18 one to three times daily,” argued the plain- Jan, 2017.) tiff’s attorneys, from the Bruno Firm in Chi- However, the ruling on GNC’s motion to cago and Barbat, Mansour & Suciu PLLC in harma iteiece | dismiss shows the judge interprets rulings Bloomfield Hills, Mich. on similar complaints in the Northern Illi- The complaint alleges that GNC’s “recov- nois District as allowing evidence from stud- ery, muscle, and anti-catabolic claims” for Delivering uniquely ies that are not so finely aligned with chal- the Pro Performance products “are blatantly specialized coverage in lenged products. false according to numerous scientific re- Nutritional product manufacturers have search papers,” with nine studies noted in the cosmetics and dietary had success arguing in court against Fed- the document. supplements sector. eral Trade Commission orders that human While GNC argued other studies that find clinical trials are necessary to substantiate glutamine use provides those benefits ren- rose.pharmamedtechbi.com health and structure/function claims. (Also der the complaint groundless, the judge