The New cGMP Regulated Industry: Friend or Foe?
Unless you’ve been living under a rock for the past decade you are probably well aware of the fact the federal government is not happy with dietary supplement industry. Over the past few months there has been quite a bit of rumbling among industry insiders because of some increased enforcement efforts which have included search and seizure, recalls, and even raids by the DEA for alleged contamination of supplements with controlled substances.
The reason for this increased is because of the lack of quality control in this loosely regulated industry. However, it seems the times of loose regulation are over once the cGMP’s (current Good Manufacturing Processes) go into effect this month for the majority of supplement firms whether distributors or manufacturers.
Essentially cGMP’s have been put into place because the loose enforcement of DSHEA (Dietary Supplement Health and Education Act of 1994) didn’t motivate the vast majority of supplement firms to adhere to strict quality control (QC) protocols. The combination of loose enforcement and poor quality control in some cases has allowed some particularly dangerous products to reach the mass market. It has also allowed for products which do not meet label claims to get into the hands of consumers as well.
In reality, some of the new QC protocols and labeling requirements in this newly cGMP regulated era call for stricter measures and oversight than the pharmaceutical industry. Ultimately, these will greatly benefit the vast majority of consumers but there is a very harsh reality which will be faced along the way.
You would have to assume that one of the driving factors in loose QC would be due to costs. It’s not cheap to manufacture, warehouse, or distribute goods under QC protocols which rival the pharmaceutical industry. Climate controlled warehousing, shelf stability, pre and post production testing, and the documentation to serve as proof that all these processes exist and are monitored on a daily business is relatively expensive for a smaller to medium sized supplement firm. Therefore, corners would have to be cut to preserve the coveted profit margin. I should state this now that not all firms cut corners, however relative to the new regulation it would appear that based on the current FDA perspective, they believe the probability is high.
The reality of the situation is that increased costs of production will be carried over to the consumer or some firms which will probably cease to exist. More than likely we will see a consolidation of manufacturing and supplement distribution firms who use third party manufacturing as well. This is the downside of increased production costs. Unfortunately, some very innovative firms that don’t have the proper funding might go by the wayside should they decide to remain autonomous.
Now I don’t want to worry a lot of you out there because believe it not, many firms have already been adhered to cGMP’s for quite some time now. Organizations like the Natural Products Association and the NSF have helped lead the way to offer certification programs to qualify and feature some of the best in the business. Furthermore, brands that are sold in countries which have their own cGMP requirements like Canada and Australia are well ahead of the curve as well. These supplement firms don’t have a lot of maneuvering to do because they’ve been exceedingly proactive in their approach to the new regulatory environment.
Ultimately, the FDA is empowered to protect the consumers and to offer guidance to pharma, the food industry, and the dietary supplement industry. Politics aside, the new cGMP’s are here because the vast majority of supplement firms have been somewhat resistant to implementing proper quality control which would benefit the consumer and ultimately their long term vitality in the evolving regulatory environment. As one industry insider put it, “Can you blame them? The industry should have been doing these things all along.” Wholeheartedly ’d have to agree but sincerely hope it doesn’t stifle innovation to the detriment of the consumer and their access to cost effective dietary supplements.
If you want to actively join in a cGMP discussion on the forum please check out this forum thread linked here.
June 4, 2009 at 9:23 am
–Ultimately, the FDA is empowered to protect the consumers and to offer guidance to pharma, the food industry, and the dietary supplement industry. Politics aside, the new cGMP’s are here because the vast majority of supplement firms have been somewhat resistant to implementing proper quality control which would benefit the consumer and ultimately their long term vitality in the evolving regulatory environment. –
Dan,
Your posts are missed. Unfortunately, every time you venture into issues of economics you demonstrate that your specialization lies elsewhere. Given the need for a division of labor, this is nothing to be ashamed of. However, you are clearly wrong and your positions are indefensible against basic logic.
The FDA may be empowered, but it’s mission is not what you assume. Government agencies are monopolies and they act like them: the mission doesn’t matter once competition is gone. Therefore, food and quality protection is highly subordinated to ensuring market stasis and salary gains for FDA member employees. Unfortunately, government monopolies are not only efficient but exceptionally dangerous institutions. Every action by the FDA is backed by the power of state guns, state prisons and the state judiciary. Make no mistake, when Ma Bell owned the phones, they were never going to threaten you with pistols and steal your freedom. The FDA has no qualms to make threats and will gladly steal years from your life for engaging in voluntary, peaceful exchange.
Your statement that the FDA needed to regulated quality control is complete hogwash. The FDA is taking more control because they can. The employees of the FDA are entrepreneurial. By expanding power and scope more high paying jobs are created, more careers made and more influence assured. Moreover, given that the FDA is a monopoly, those new high salary jobs don’t require much work. After all, when the mission fails, and people die from contamination, no organization is present to replace FDA. In effect, FDA employees are only incented to find ways to keep their jobs, not to actually work. This last part, when matched to the ability to arrest, is fundamental to understanding the dangers of the central authority.
When you say that consumers will benefit from FDA regulation, you burden yourself too much. You are suggesting something that has never happened and never will happen: a state-run monopoly actually producing good without greater negative. As Jefferson quipped, “ Were we to be directed from Washington when to sow and when to reap, we should soon want bread” - as shall prove with quality control. Now that you have Central Authority command, if you want to create a higher standard, you cannot. If you want to create a new quality standard, using new metrics, you cannot. Innovation is dead. Consumer dictated choices are gone. All choice will be ruled by the lowest common denominator at FDA.
Far more intelligent, and far more responsible, would be a voluntary system of compliance with the FDA regulations. Enable the product manufacturer/marketer to determine the relative benefits of adhering to state-controlled monopolistic regulations. Enable those who turn from regulation to choose a system wherein they mark their bottles, “this product is not regulated for quality control by the FDA.” In the end, you should advocate that we should all be free; free to enjoy our lives and free to exchange voluntary exchange.
All of those who have invited the FDA into this industry have done so for their short-term financial gain. They have determined that increased regulation means increased “barriers to entry” which means reduced competition. What they don’t know is that a regulated market has a greatly reduced upside. CGMPs are just the beginning for the FDA. Those hungry employees will see virgin fields of opportunity; opportunity to control the lives of others while earning $105,000/year with a guaranteed pension.
Since you are such an intelligent man, you might like the economics of von Mises and the Austrian School. You can find a ton of resources the Mises Institutes. A great adjunct is the “Broken Window Fallacy,” a tremendous treatise on unintended consequences. You may not like much of what they say, but they are certainly the sages when it comes to understanding the criminality of the state.
The solution was never to subject us all to monopoly; life is more than a binary choice; more than a false dichotomy. Disaster awaits; make as much as you can now. In tens years this industry will be neutered.