Sprouts Farmers Market 2014 Annual Report Download - page 18

The USDA’s Food Safety Inspection Service (referred to as “FSIS”) is the public health agency
responsible for ensuring that the nation’s commercial supply of meat, poultry, and egg products is safe,
wholesome, and correctly labeled and packaged. FSIS inspectors conduct regular, mandatory on-site
inspections of processing and manufacturing facilities. When violations occur, the agency has broad
discretion to withhold FSIS inspection services, shut down processing facilities, and to take civil or criminal
actions against violators of applicable statutes and regulations. Additionally, the USDA’s Agricultural
Marketing Service (referred to as “AMS”) oversees the National Organics Program for all foods making
such “organic” claims. Under the Program, products labeled “organic” must be certified by an accredited
agent as compliant with USDA-established standards. The AMS may levy civil monetary penalties and
withdraw “organic” certification for up to five years per incident if violations are discovered.
Dietary Supplements. The FDCA has been amended several times with respect to dietary supplements,
in particular by the Dietary Supplement Health and Education Act of 1994 (referred to as “DSHEA”). DSHEA
established a framework governing the composition, safety, labeling, manufacturing and marketing of dietary
supplements, defined “dietary supplement” and “new dietary ingredient” and established new statutory criteria
for evaluating the safety of substances meeting the respective definitions. In the process, DSHEA removed
dietary supplements and new dietary ingredients from pre-market approval requirements that apply to food
additives and pharmaceuticals and established a combination of “notification” and “post marketing controls”
for regulating product safety, however, non-dietary ingredients in a dietary supplement remain subject to the
FDA’s food additive authorities. The FDA does not require notification to market a dietary supplement if it
contains only dietary ingredients that were present in the U.S. food supply prior to DSHEA’s enactment on
October 15, 1994. However, for a dietary ingredient not present in the food supply prior to this date, the
manufacturer must provide the FDA with information supporting the conclusion that the ingredient will
reasonably be expected to be safe at least 75 days before introducing a new dietary ingredient into interstate
commerce. As required by the FSMA, the FDA issued draft guidance in July 2011, which attempts to clarify
when an ingredient will be considered a “new dietary ingredient,” the evidence needed to document the safety
of a new dietary ingredient, and appropriate methods for establishing the identity of a new dietary ingredient.
In particular, the new guidance may cause dietary supplement products available in the market before
DSHEA to now be classified to include a “new dietary ingredient” if the dietary supplement product was
produced using manufacturing processes different from those used in 1994.
DSHEA also empowered the FDA to establish binding good manufacturing practice regulations
governing key aspects of the production of dietary supplements. DSHEA expressly permits dietary
supplements to bear statements describing how a product affects the structure, function and/or general
well-being of the body. Although manufacturers must be able to substantiate any such statement, no pre-
market approval authorization is required for such statements and manufacturers need only notify FDA that
they are employing a given claim. No statement may expressly or implicitly represent that a dietary
supplement will diagnose, cure, mitigate, treat, or prevent a disease. DSHEA does, however, authorize
supplement sellers to provide “third-party literature,” (e.g., a reprint of a peer-reviewed scientific publication
linking a particular dietary ingredient with health benefits) in connection with the sale of a dietary
supplement to consumers. This authorization is limited and applies only if the publication is printed in its
entirety, is not false or misleading, presents a balanced view of the available scientific information and does
not “promote” a particular manufacturer or brand of dietary supplement, and is displayed in an area
physically separate from the dietary supplements.
Food and Dietary Supplement Advertising. The FTC exercises jurisdiction over the advertising of foods
and dietary supplements. The FTC has the power to institute monetary sanctions and the imposition of
“consent decrees” and penalties that can severely limit a company’s business practices. In recent years,
the FTC has instituted numerous enforcement actions against dietary supplement companies for failure to
have adequate substantiation for claims made in advertising or for the use of false or misleading
advertising claims.
Compliance. As is common in our industry, we rely on our suppliers and contract manufacturers to
ensure that the products they manufacture and sell to us comply with all applicable regulatory and legislative
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