Americans are looking for ways to be healthier, and dietary supplements play a big role in that pursuit. A recent survey conducted by the Council for Responsible Nutrition found that 77% of adults take some type of dietary supplement on a regular basis. Over time, Amazon has become an attractive marketplace for supplements, including nutraceuticals. In fact, a search for “nutraceuticals” currently brings up over 2,000 results on Amazon.
Many people with keen business sense and an interest in health and wellness will realize this is a business worth exploring. Before you embark on selling private label nutraceuticals on Amazon, there are some things you need to consider.
What Exactly is a Nutraceutical?
According to Very Well Health, doctor Stephen DeFelice coined the term “nutraceutical” back in 1989. It is derived from the words “nutrition” and “pharmaceutical.” In its strictest definition, a nutraceutical is a “food or food component that claims to have health benefits, including treatment and prevention of disease.” Today, the term has a looser definition and has become synonymous with “dietary supplement.”
Your Nutraceutical Startup Business
All businesses, including manufacturers and distributors of nutraceuticals, have common startup needs. There are certain steps you should take when forming a new business.
Choosing a Business Name
You need to make sure the company name you want is not already in use. You will also need to do the same for any product names. Some names and terms are not trademarkable, while others could and should be to protect your brand. This is where trademark experience is invaluable.
Choosing an Entity Type
You must also decide what type of business entity you will operate under. Choosing the right entity is important for your current and future goals. An experienced business lawyer will dig deep and help you decide which entity is right for you; not just for now, but potentially for the entire life of your business.
Selecting a Manufacturer
Manufacturing nutraceuticals on your own is not a simple undertaking; you cannot simply set up a production facility in your basement or garage and start sales. The Food and Drug Administration (FDA) has strict guidelines for the manufacture of dietary supplements, called Current Good Manufacturing Practices (CGMP). As a result, to set yourself up as a manufacturer would require you to have compliant facilities, insurance, and certifications.
Most nutraceutical companies choose to outsource the manufacturing step. Many manufacturers can also help with warehousing, shipping, and other logistics. However, the burden is still on the business selling the nutraceuticals to make sure the outsourced facilities are compliant with all federal and state laws.
Understand Your Responsibilities and Liabilities as a Nutraceutical Seller
Manufacturing and selling nutraceuticals comes with its own responsibilities and liabilities that are specific to the dietary supplement industry. Companies must stay compliant or risk their business and their reputations.
Adverse Event Reporting
Nutraceutical companies are required to report any adverse events they learn about to the FDA. Nutraceutical companies must comply with this requirement, even if they feel the consumer’s complaint is dubious or not related to their supplement. The FDA maintains a list of reactions and illnesses they deem to be “an adverse event.” Consumers and healthcare providers may also report adverse events directly to the FDA.
The FDA requires that certain information appears on nutraceutical packaging:
- A description of the product identifying it as a supplement
- The names(s) of the manufacturer, packer, or distributor
- A complete list of ingredients, as well as inactive ingredients
- The net contents
- Many companies are also required to include a Supplement Facts panel.
*Certain small businesses may be exempt from this requirement.
Nutraceutical sellers must be careful in how they word and advertise the benefits of their products or the ingredients in their products. There is a fine line between saying that a product is potentially beneficial, versus you have clinical evidence that it will “cure” or “prevent” a certain ailment.
Most nutraceuticals will also be required by the FDA to include a disclaimer stating that the product “is not intended to diagnose, treat, cure or prevent any disease.”
Build a Strong DNA
The manufacture and sale of nutraceuticals are unlike any other consumer good. You must balance FDA requirements, CGMP, and the basics of operating a small business. Contact us to find out how our startup & business lawyers can help your nutraceutical company build a strong DNA, properly.