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Pre-planning and investing in regulatory compliance measures are key to success
The US is the most lucrative wellness market in the world – and for some small and medium-sized enterprises (SMEs) that produce supplements, the potential for growth and a bigger bottom line is difficult to ignore.
And who would blame them? The US wellness sector is valued at US$2tn and is poised to continue growing, recording an average annual growth rate of 8.3% between 2019 and 2023, according to research by the Global Wellness Institute.
In contrast, China’s market, ranked the second-largest in the world, trails at a more modest US$870bn, followed by Germany at $310bn.
However, rushing in without being fully compliant could result in products being blacklisted or seized at the border, says Jennifer Diaz, an attorney and founding partner at Miami-based Diaz Trade Law, which specializes in customs and US Food and Drug Administration (FDA) laws and compliance.
Here, Diaz offers her top five tips for new brands to stay compliant and off the FDA’s blacklist.
1. Know the regulators
One of the first steps for SMEs planning to import supplements into the US is to register with the FDA, as they are considered a food product, Diaz says.
Companies also need to designate a US agent to act on their behalf before shipments begin.
“Most entities also don’t realize that the US has 47 regulatory agencies that can regulate imports and exports, so you may be dealing with multiple federal regulatory agencies that regulate your product,” she adds.
For example, the FDA, Federal Trade Commission (FTC) and US Customs regulate the imported supplements market, she says.
2. Beware of being blacklisted
One underestimated risk for SMEs launching their supplements in the US is the FDA’s import alert system, which Diaz describes as a blacklist for companies that have failed to comply with regulations.
This could be anything from mislabeling products to not using English on labels, making false medical claims, or failing to register with the FDA, Diaz explains, adding that it is time-consuming and costly to be removed from the list.
“Many SMEs don’t have the ability to survive the enforcement because the full weight of the government on you when you’re non-compliant is big,” she says.
“The government does not have the resources to hold your hand and help you when it comes to compliance – the expectation is that the product is already compliant and you’re smart enough to pick the right business partners and agents before you launch.”
3. Be wary of influencers
Marketing claims, even those from third parties such as influencers, also fall under FDA and FTC regulations, according to Diaz.
“What many don’t realize is that the FDA can legally make your life miserable over your marketing claims, in addition to what’s on your product,” Diaz says.
For example, suppose a business sends a supplement to an influencer to promote it on social media and they claim that it cured their cancer. In this case, the company is deemed liable if they don’t “de-escalate” the claim, Diaz explains.
“The FDA has the legal ability to issue a company a warning letter for the claims that they make on their website or for the claims that influencers make on their behalf on social media.”
4. Set a budget for compliance
Not spending the time or money on pre-compliance preparation can also lead to costly errors, says Diaz.
“It could be hundreds of thousands of dollars if your goods are seized or you receive an FDA audit or warning letter,” she says.
Diaz recommends that SMEs conduct independent testing in a laboratory to verify ingredient claims, as well as taking out product liability insurance to protect against litigation and organizing a legal review of all labels, ingredients and marketing content.
5. Protect your brand
Diaz also recommends that SMEs protect their brands by registering them with the US Patent and Trademark Office.
“Once you register your trademark, you should also record it with US Customs and then teach them how to spot copies of your brand, such as unique packaging,” Diaz says.
“Customs then logs it in its secret database and it goes to all customs officers – there are 60,000 customs officers in the country at 328 ports of entry – and they will fine the offender and alert you if they spot a fake.”
