Thursday, May 6, 2010

Interesting views on a Sensitive Subject

 Wall Street, the Downfall of the Economy, and Dietary Supplements?

By Steve Mister and Mike Greene

As the U.S. Senate takes up the issue of financial regulatory reform this week, rumors are
spreading that it includes a little-known provision that would spell the end of the dietary
supplement industry as we know it. Several grassroots consumer organizations have
even launched a campaign urging consumers to write to their members of Congress and
oppose the bill on that basis, claiming that a possible amendment to the bill that would
provide the Federal Trade Commission (FTC) with more authority is really a secret plot
by Chairman Waxman to undermine DSHEA. The problem is: this claim is not truthful,
it’s misleading and it’s not substantiated by the evidence. If it were a dietary supplement
advertisement, this propaganda would be illegal.

However, just like many impermissible advertising claims, there is a nugget of truth
buried in all the hyperbole. And that truth could have negative consequences for dietary
supplement advertising and a host of other consumer products that are regulated by the
FTC. The tricky part is separating the truth from the fiction. So here is what we know to
be true:

• This week, the Senate is holding floor debate on S 3217, the Restoring American
Financial Stability Act—which is intended to provide reform of the nation’s
regulation of financial institutions. The bill creates a new federal Consumer Financial
Protection Agency (CFPA) with this mission, which incidentally, will remove FTC’s
oversight of financial products and services and give it to the new CFPA.

• The House version of the legislation, HR 4173, was passed by the House of
Representatives back in December. It includes a provision that would offset the
FTC’s reduced authority over financial products with expanded rulemaking authority.
Currently, the FTC may not issue formal rulemaking without getting prior approval
from Congress to conduct such rulemaking. Other agencies with narrower
substantive mandates (like FDA and EPA) have this authority to issue substantive
rulemaking. The FTC used to have it, but after expansive misuse of that power in the
1970s, it was removed from the FTC.

• The House version of the bill was managed by Financial Services Committee
Chairman Barney Frank. Certain provisions were managed on the House floor during
debate by the Energy and Commerce Committee Chairman (and long-time industry
critic) Henry Waxman. That does not mean that Congressman Waxman is the source
of this provision.

• The provision is detrimental to dietary supplements along with a whole host of other
industries that make or market consumer products that are under the jurisdiction of
the FTC. It would give the FTC unfettered ability to make substantive rules
governing the marketing of these products without strict Congressional oversight.

History demonstrates that an FTC with broad jurisdiction and substantive rulemaking
authority can run amok.

• One need only look at recent FTC activity under its existing powers to see examples
of an agency that would like to increase the level of support required for consumer
advertising (new standards for testimonials, a requirement for product-specific
clinical trials, disclosure of financial support for research, etc.)

• There is speculation that Senator Rockefeller may offer the same amendment to the
Senate version of the bill. CRN, along with over 40 other trade associations
representing a broad swath of consumer industries have opposed the provision and are
urging Senator Rockefeller not to offer the language to the Senate bill.

Those are the facts. Granting the FTC new authority across broad sectors of the American
economy is not a necessary or relevant response to the causes of the recent recession. The
financial troubles of the past year have not been laid at the FTC’s doorstep, and
provisions to expand the Commission’s authority are out of place in legislation to reform
the financial system. CRN and other like-minded business groups believe that these
FTC-related issues deserve their own due consideration and debate in the more
appropriate context of an FTC reauthorization, as has been done in the past. In that
context, we could lay out the reasons for our opposition and be sure the concerns are
properly considered.

Unfortunately, the effort to prevent this amendment has led to much misinformation.
Blogs and websites are perpetuating rumors that ultimately discredit the industry’s
legitimate concerns and undermine the credibility and goodwill that industry has built as
a reliable source of information. For example:

o The amendment specifically targets the dietary supplement industry – This is not
true. Nowhere in the amendment are dietary supplements singled out for
disparate treatment. Although the FTC’s history of interest in supplements likely
means that expanded authority would lead to expanded interest in supplements,
the provision addresses all of the FTC’s jurisdiction.

o The amendment is a sneak attack by Congressman Waxman – Again, not true.

There is nothing that suggests Senator Rockefeller is being influenced by
Congressman Waxman. Moreover, there is nothing in the House debate that
indicates that he—as opposed to Congressman Frank—was the original source of
the language. This is a case of identifying an industry critic with the cause to
misrepresent this as a plot against supplements.

o A prosecution by the FTC means “secret FTC courts,” a presumption of guilt and
criminal penalties. Merely telling the truth can still get an advertiser thrown in
jail – Do we really need to respond to this one? Administrative law judges
adjudicate FTC proceedings, all of which are appealable to the District court, and
provide due process protections to the litigants. In fact, a recent decision
completely dismissed the FTC’s case, holding that the advertiser’s support for its
supplement ad was sufficient, even where there was conflicting data about the
efficacy of the product.

o This amendment is the end of the dietary supplement marketplace; it will take
your vitamins away from you – C’mon, how many times will we try this
exaggerated claim before consumers realize we are just “crying wolf”? Yes, the
expanded FTC authority could make it more difficult to craft advertising to our
consumers, but it is hardly the end of the industry. Overplaying our hand makes it
hard to be taken serious when a real threat (like the McCain bill) does arise.

It is up to industry and consumers to correct this misinformation as quickly as possible
before any further damage is done to the credibility of mainstream, responsible dietary
supplement industry and the propaganda being circulated makes us all look paranoid and

Steve Mister and Mike Green, both employees of the Council for Responsible Nutrition, clearly stated that this article represents their opinions and does not necessarily reflect the views of CRN or an official position of the association.