The Trump Effect: Uncertainty vs. Opportunity for Natural Products Industry Oversight

This is part one of a two-part series on the potential effect of the Trump Administration on the natural products industry. Part two will explore leadership changes at FDA and USDA.

The buckshot of executive orders (EOs) coming from the freshly inaugurated President Donald Trump has resulted in federal agencies and stakeholders scrambling to decipher what is and is not being targeted. The orders were enacted quickly, without much internal review and lacking some specifics.

The moves by the Trump administration have left many gray areas that continue to confuse and challenge agencies and industries, including the natural products trade.

Potential FDA Personnel Issues

Three days after his inauguration, Trump issued an EO freezing government hiring. The freeze is temporary, but it may impact the Office of Dietary Supplement Programs (ODSP) at FDA, which was established in late 2015.

As of September, ODSP had 26 full-time employees on paper, although there were three vacancies, Marianna Naum, an FDA spokeswoman, said at the time. The agency did not respond to requests for comment on the current figures.

Several FDA activities may fall under the “public safety" exception laid out in Trump’s order, perhaps enabling ODSP to fill any current vacancies. “The head of any executive department or agency may exempt from the hiring freeze any positions that it deems necessary to meet national security or public safety responsibilities," Trump wrote in the hiring freeze EO.

In a Jan. 27 memo, the Alliance for a Stronger FDA (Alliance) claimed some FDA activities should fall under the public safety and national security exemptions: “… [B]ioterrorism work is national security and front-line food and drug inspectors are clearly necessary for the immediate protection of public safety," the independent, nonprofit corporation wrote in the document.

A White House official advised a Washington Post reporter that public health jobs are included in public safety.

"It's not clear that .... when the White House said public health is part of public safety, they might well have been talking about clinicians at VA [Veteran’s Affairs] and not drug reviewers and food safety regulators," said Steven Grossman, deputy executive director of the Alliance, in a phone interview. "I consider them all to be public health, and therefore, public safety. But the question becomes, is that going to be broadly or narrowly construed?"

Responding earlier this month to an inquiry from INSIDER on the hiring freeze, an FDA spokesperson said, “We are in the process of reviewing the executive order and ... guidance, and how it applies to FDA."

The Council for Responsible Nutrition (CRN) plans to advocate for an increased ODSP budget during the upcoming appropriations cycle for fiscal year 2018 (FY18), said Steve Mister, president and CEO of the trade organization, in a phone interview.

Still, he described as “smoke and mirrors" the implication that only 26 people at FDA regulate dietary supplements in the United States.

FDA inspections of supplement cGMPs (current good manufacturing practices) are covered by the district offices, he explained, so there are scores of inspectors at the district level not counted among those 26 full-time FDA employees, and additional parts of FDA are involved with supplements as well, including the Office of Chief Counsel.

Still, Mister said the additional resources are vital for oversight of cGMPs, adverse event reporting, adulteration/spiking and reasonable test methods for ingredient identification. He stressed the importance of demonstrating DSHEA (The Dietary Supplement Health and Education Act of 1994) works after 22 years on the books.

“It's very important to show that it actually is working because if people don't see enforcement of the law, and they see bad actors who are doing things that are illegal without some sort of retribution, it feeds the critics of this industry who say the law doesn't work," Mister explained. "The law, the framework, absolutely works, but it has to have enforcement behind it."

Grossman noted the president would typically release a budget outline in late February, but this document is expected to leave out the particulars. A full budget doesn’t usually appear until around May, which gives agencies time to submit management plans and other information. As the budget process unfolds, Senate and House Appropriations committees, which each have subcommittees specific to FDA, will issue reports and appropriation bills.

“Unless the committee gives some direction to FDA, it's presumed they will spend the money in the way the president requests it," Grossman explained.

Members of the House of Representatives sent the White House’s Office of Management and Budget (OMB) a letter on Feb. 7, asking for more clarification on whether the hiring freeze applies to FDA, which has around 1,000 vacancies.

“Hiring top talent is critical to fulfilling FDA’s mission of advancing public health," the lawmakers wrote to OMB. “We are concerned that hampering FDA’s ability to hire puts important bipartisan priorities…and the agency’s commitments…at risk."

While the letter was focused on drug policy and oversight issues, any clarification from OMB may provide insights on ODSP and other areas of FDA relevant to natural products regulation.

Even if FDA is subject to the hiring freeze, it’s only expected to be temporary, and it’s possible the agency would bring on new employees under the public safety exemption. FDA and the dietary supplement division—before it was elevated to an office in late 2015—have increased personnel during hiring freezes.

“I was there during a hiring freeze, and we managed to hire more people," said Daniel Fabricant, Ph.D., former director of FDA’s Division of Dietary Supplement Programs and current executive director and CEO of the Natural Products Association (NPA), in a phone interview. “We got extra money for electronic portals. Why? Because we made a good case for it."

He maintained the staff at ODSP is smart enough to make a good case for what they need, even if the hiring freeze lingers for a while.

“The dietary supplement program is one area of CFSAN (Center for Food Safety and Nutrition) where there is real enforcement action, so they should be justified in getting a bigger slice of the pie," Fabricant stated, noting the rate of enforcement actions does not mean the industry is bad, but means this is “an area of action."

“You are not seeing a drop-off of enforcement action from the last administration, as evidenced by the injunction last week," said Fabricant, who referenced a case brought by the U.S. Justice Department against a dietary supplement company in California. “I don’t think you will see a wholesale change in enforcement."

Regulatory Restriction Creates Uncertainty

Rulemaking is another animal entirely. Trump issued a “One in, Two Out" executive order on Jan. 30, essentially mandating that two existing regulations be scrapped for every one new regulation implemented, to reduce regulatory burdens and costs.

Coupled with the temporary federal hiring freeze Trump signed on Jan. 23, the new flurry of executive orders has left FDA and other agencies unsure about how to proceed with pending regulations and guidance. In a late January meeting with pharmaceutical CEOs, Trump said he hopes to eliminate between 75 and 80 percent of all FDA regulations.

OMB issued an interim guidance to federal agencies on Feb. 2, using a Q&A format to provide more details on how the White House views the “One in, Two Out" EO. Trump’s order impacts “significant regulatory actions" (as defined in an executive order signed by President Bill Clinton in 1993) that are issued by agencies between Jan. 20 and Sept. 30, 2017.

Clinton’s order (#12866) partly defined a significant regulatory action as one that may produce “an annual effect on the economy of US$100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities."

‘One in, Two Out’ Impact on NDI Guidance

For the dietary supplement industry, one of the most important regulatory documents still not finalized is the guidance on new dietary ingredient (NDI) notifications. How the executive order impacts guidance documents is not clear. OMB noted, “New significant guidance or interpretive documents will be addressed on a case-by-case basis."

Whether the NDI guidance meets the criteria above remains an open question.

“Clearly, there’s no black and white answer about whether the ’Two for One’ policy would apply to the final NDI guidance," concluded Will Woodlee, a Washington-based partner at Kleinfeld, Kaplan & Becker LLP, who has reviewed Trump’s EO and the OMB guidance.

Trump’s order indicated new regulations must result in no additional costs, when factoring in repealed regulations, “unless otherwise required by law or consistent with advice provided in writing by the Director of the Office of Management and Budget (Director)."

The FDA Food Safety Modernization Act (FSMA) required FDA to publish guidance within 180 days of its enactment, clarifying when a dietary supplement ingredient is an NDI and discuss related issues, including the evidence needed to document the safety of a new ingredient.

“Agencies may proceed with significant regulatory actions that need to be finalized in order to comply with an imminent statutory or judicial deadline, even if they are not able to identify offsetting regulatory actions by the time of issuance," the OMB guidance stated.

FSMA didn’t specify whether the NDI guidance needed to be in draft or final form, raising the question of whether FDA has complied with an imminent statutory deadline by publishing the 102-page draft NDI document this past summer.

If a significant regulatory action is required by law, but isn’t deadline-sensitive, OMB recommended an agency consult with a desk officer at the OMB’s Office of Information and Regulatory Affairs (OIRA). It’s conceivable FDA would find it must consult with a desk officer on the NDI guidance, even if the agency finds it’s not under a statutory deadline to publish the final document.

“But again it’s not at all clear whether the ‘otherwise required by law’ provision would allow FDA to circumvent or sidestep the ‘Two for One’ requirements," Woodlee said.

FDA declined to comment on how the executive order could impact the NDI guidance. The agency referred an inquiry to the White House, which did not immediately respond Tuesday to a request for comment.

Mister said he views the Trump administration’s policies as an opportunity for the supplement industry and FDA to collaborate on voluntary initiatives, even if the agency is barred from publishing formal guidance documents.

"We think this is a really nice invitation for us to engage with FDA on some of our voluntary guidelines and best practices," he said, “and have them at the table helping us ... figure out what should be best practices for the industry."

Trump’s “Two for One" order also may affect several other food policy issues pending at FDA and USDA, including implementation of FSMA.

FDA also requested comment on use of the term “natural" in the labeling of food products, and Congress directed USDA (in The National Bioengineered Food Disclosure Law) to develop a national mandatory system for revealing the presence of bioengineered material.

Even if Trump’s policies don’t prevent the NDI guidance from moving forward, it could face scrutiny under the Trump administration’s net-zero financial goal, as could all natural products industry guidance and regulations.

“It’s all on the table, and it should be," Fabricant said, noting that since these regulations and guidance go through OMB, the administration will have an opportunity to scrutinize and make changes based on costs vs. benefits. “For the past eight years, we didn’t have that," he said, referencing the Barack Obama administration. “The benefit was always assumed."

He reminded NPA has long argued the NDI guidance needs to undergo a proper economic analysis. “Are there ways to ensure safety of NDIs that are not as costly?" Fabricant asked.

For Fabricant, Trump’s deregulation is more about accountability. “Now we have a White House that actually wants to measure the benefit, and that is good news," he said.

Is Industry On ‘Regulatory Holiday’?

The general goal of the Trump administration is to reduce burdensome and redundant regulations. On the surface, this might sound like a great opportunity for the natural products industry, but a celebration is premature. While less oversight may provide more freedom for companies to operate and innovate, public confidence depends greatly on FDA’s ability to ensure conventional foods, dietary supplements, drugs and other regulated products are safe.

“If I've learned anything in my years in the industry, [it] is don't mess with people's food," said Loren Israelsen, president of the United Natural Products Alliance (UNPA), in a phone interview. “The first time there's any sort of food safety problem, there will be criticisms that taking the cop off the beat, when it comes to safe peanut butter and jelly sandwiches, and tomatoes, leafy green vegetables, seafood, and so on, is not what the American public is interested in."

The mere appearance that the “cop is off the beat" during the Trump administration may also have a negative effect on compliance with federal regulations, such as the requirement to file an NDI notification with FDA.

“The real question is, what's on people's minds in the industry?" Israelsen asked.  “Do they think, ‘Hey, now it's a regulatory holiday. The cop is off the street. Why bother to file an NDI?’ We will argue vigorously that is not the way to approach this."

Israelsen said ODSP has held the position that the NDI notification requirement is rooted in the statute.

“That's not a regulation," he said. "That's not guidance. That's the law, and if you don't do it and [FDA] comes in and inspects, you are going to get busted for it."

Susan Winckler, a former FDA chief of staff who now serves as chief risk management officer for Leavitt Partners—founded by former Health and Human Services (HHS) Secretary Mike Leavitt—described the EO on new regulations as “a slowdown in federal policy and rulemaking."

“It does not equate to a slowdown in federal inspections and enforcement actions," she said Feb. 9 during a conference in Salt Lake City hosted by UNPA. “[That’s a] very different thing."

However, any regulatory gap under this EO might be filled by state legislatures and state attorneys general. "A slow-down in policy and clarity, I think, absolutely opens the door to states becoming more interested in doing something, particularly if there is a problem," Winckler said.

Winckler doesn’t expect FDA to sit on its hands for the next four years. “And particularly if there are safety problems, there will absolutely be enforcement action," she said.

Check out Health INSIDER Podcast 37: Assessing Trump Administration, NDI Guidance at UNPA Conference.