Proposition 65 and Supplements

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1 Proposition 65 and Supplements Nutrition Industry Association John Venardos Senior Vice President Worldwide Regulatory & Government Affairs Herbalife International of America, Inc. 5/23/2011

2 SYNOPSIS Now more than ever, our industry is affected by the policies, laws and regulations emanating not just from Washington but also at the state level. A good example is Proposition 65. Supplement companies and ingredient suppliers need to exert better control over their supply chain and to remain vigilant as to litigation if they are to adapt and survive. 2

3 WHAT WE WILL DISCUSS: The Political Climate How Are Chemicals Added to the List? About Warnings About Safe Harbors Recent actions by bounty hunters Actions by District Attorneys Prospect for National Uniformity 3

4 THE POLITICAL CLIMATE Democrats control all statewide offices Democrats control the legislature Bounty hunters and the plaintiff bar is a significant contributor towards Democratic political campaigns Ambitious District Attorneys are more engaged 4

5 WHAT IS PROPOSITION 65? Proposition 65 requires businesses to notify Californians about significant amounts of chemicals in the products they purchase, in their homes or workplaces, or that are released into the environment. 5

6 WHAT IS PROPOSITION 65? The Office of Environmental Health Hazard Assessment (OEHHA) administers the Proposition 65 program. OEHHA, part of the California EPA, also evaluates all currently available scientific information on substances considered for placement on the Proposition 65 list. OEHHA's website 6

7 WHAT IS PROPOSITION 65? The list contains a wide range of naturally occurring and synthetic chemicals that are known to cause cancer or birth defects or other reproductive harm. These chemicals include additives or ingredients in pesticides, common household products, food, drugs, dyes, or solvents. Listed chemicals may also be used in manufacturing and construction, or they may be byproducts of chemical processes, such as motor vehicle exhaust. 7

8 WHAT IS PROPOSITION 65? There are four principal ways for a chemical to be added to the Prop 65 list. A chemical can be listed if either of two independent committees of scientists and health professionals finds that the chemical has been clearly shown to cause cancer or birth defects or other reproductive harm. These two committees the Carcinogen Identification Committee (CIC) and the Developmental and Reproductive Toxicant (DART) Identification Committee -- are part of OEHHA's Science Advisory Board. The committee members are appointed by the Governor. 8

9 HOW ARE CHEMICALS ADDED TO THE LIST? When determining whether a chemical should be placed on the list, committees base decisions on the most current scientific information available. OEHHA staff scientists compile all relevant scientific evidence on various chemicals for the committees to review. The committees also consider comments from the public before making their decisions. 9

10 HOW ARE CHEMICALS ADDED TO THE LIST? A second way is if an organization designated as an "authoritative body" by the CIC or DART Identification Committee has identified it as causing cancer or birth defects or other reproductive harm. Organizations having been designated as authoritative bodies: the U.S. EPA, U.S. FDA, National Institute for Occupational Safety and Health, National Toxicology Program, and International Agency for Research on Cancer. 10

11 HOW ARE CHEMICALS ADDED TO THE LIST? A third way for a chemical to be listed is if a state or federal government agency requires it be labeled or identified as causing cancer or birth defects or other reproductive harm. Most chemicals listed in this manner are prescription drugs that are required by the U.S. FDA to contain warnings relating to cancer or birth defects or other reproductive harm. 11

12 HOW ARE CHEMICALS ADDED TO THE LIST? A fourth way requires the listing of chemicals meeting certain scientific criteria and identified in the California Labor Code as causing cancer or birth defects or other reproductive harm. This method established the initial chemical list following voter approval of Proposition 65 in 1986 and continues to be used as a basis for listing as appropriate. 12

13 HOW ARE CHEMICALS ADDED TO THE LIST? Listing via the Labor Code short-circuits the scientific review that otherwise takes place and works as a mandate to OEHHA to list the substance at issue. Pending litigation in California courts will determine if this listing mechanism is within the scope of the enabling statute (If not, then this listing mechanism could no longer be used). Court of Appeals will take up this issue in a hearing on April 5. 13

14 ABOUT SAFE HARBORS To guide businesses in determining whether a warning is necessary or whether discharges of a chemical into drinking water sources are prohibited, OEHHA has developed safe harbor numbers. A business has safe harbor from Proposition 65 warning requirements or discharge prohibitions if exposure to a chemical occurs at or below these levels. These safe harbor numbers consist of no significant risk levels for chemicals listed as causing cancer and maximum allowable dose levels for chemicals listed as causing birth defects or other reproductive harm. 14

15 ABOUT SAFE HARBORS Because businesses do not file reports with OEHHA regarding what warnings they have issued and why, OEHHA is not able to provide further information about any particular warning. The business issuing the warning should be contacted for specific information, such as what chemicals are present, and at what levels, as well as how exposure to them may occur. 15

16 ABOUT SAFE HARBORS OEHHA has established safe harbor numbers for nearly 300 chemicals to date and continues to develop safe harbor numbers for listed chemicals. 16

17 NATURAL SOURCES Another limitation of Prop 65 is that it exempts "natural sources". About two years ago, caffeine was being considered as a DART but OEHHA exempted coffee upfront from any label warning because it is a "natural source". If caffeine is a DART it's a DART, whether it comes from coffee or tea or wherever. That a can of Coke has to include the warning, but not a Starbuck's coffee is curious. 17

18 RECENT ACTIONS BY BOUNTY HUNTERS 18

19 ACTIONS BY DISTRICT ATTORNEYS AND AG Recently, the naturally-occurring levels of lead were reduced effective this Fall; while applicable to parties in the Warner-Lambert case (may be imported into the pending Prop 65 vitamin cases). State AG's office has taken the position during the past two years that older settlements do not bind the state to respect contaminant thresholds stated in the agreements as safe harbors, making the published settlements much less valuable as guidelines. 19

20 ACTIONS BY DISTRICT ATTORNEYS AND AG Irwin Naturals, Inc. was ordered to pay a $2.65 million settlement. District attorney offices in 10 counties, accused Irwin of violating Proposition 65, which requires companies to label products that expose consumers to more than half a microgram of lead per day. Irwin also was accused of not reimbursing customers in a timely fashion for returned products and for charging customers for products that were not ordered. The settlement requires the dietary supplement company to include a warning label on products that exceed lead levels. In the settlement, Irwin is required to pay $1.95 million in penalties to help enforce state consumer protection laws, and $100,000 in restitution to people who did not receive refunds. A total of $600,000 is also expected to be paid for investigative costs, according to a statement released by the Orange County DA. 20

21 ACTIONS BY DISTRICT ATTORNEYS AND AG The issue of lead in dietary supplements has seen more than day notices filed in the past five years; the AG sued 54 dietary supplement companies in 2008 for lead in multivitamins and other products. One challenge is with the uncertain standards for lead. Also, companies must determine average" exposures over an extended time span, while also considering exposure levels by consumption rates. 21

22 PROSPECT FOR NATIONAL UNIFORMITY For more than a century, national uniformity of food laws has been a long sought goal of the food industry. While early statutes tried to improve uniformity, state and local requirements established in the 1800s continued in effect throughout the U.S. Food traveling in interstate commerce frequently required manufacturers to meet different nutrition labeling and/or safety standards in different states, creating additional expense and confusion. 22

23 PROSPECT FOR NATIONAL UNIFORMITY In the 109th Congress, The National Uniformity for Food Act of 2005 (H.R. 4167) was introduced that would amend the FFDCA to prohibit any state or other locality from establishing or continuing in effect for food traveling in interstate commerce any requirement not identical to an existing federal provision, including provisions related to adulterated food; raw agricultural commodities containing unsafe pesticides; unapproved irradiated foods; unsafe color or food additives; tolerances for poisonous ingredients; conditions for emergency permit control and their suspension; access for inspection and dietary supplement labeling regulations. The bill would allow a state to petition for an exemption or to establish a national standard related to food regulation. 23

24 PROSPECT FOR NATIONAL UNIFORMITY States would be allowed to establish requirements that otherwise would violate a FDCA provision, if the requirement is needed to address an imminent hazard that is likely to result in serious adverse health consequences. H.R was passed by the House but died in the Senate. The National Uniformity for Food Act of 2006 (S. 3128) was introduced, with several changes from the House passed version. A Senate hearing was held, but no final action was taken. 24

25 THANKS! Call or write with questions: John Venardos