The price for this insurance has been going down at a rapid rate since about 2005. It was going up in a very rapid rate between about 2001 and 2005 but then it started to come down. Most people thought, “Oh, well finally the insurance companies have figured out that the supplements are safe and they’re lowering their prices for this insurance.” That’s not true, however, because you cannot really pick up the newspaper, or get on the internet, or do whatever you do to get information without finding recalls of contaminated or tainted dietary supplements, nearly every day. Further, the normal roller coaster cycle of commercial insurance in the US had a lot to do with premiums declining, without regard to the merits or demerits of insuring the products produced by dietary supplement industry.
Today, and historically, there are three particular segments of the nutraceutical industry that are looked at with a jaundiced eye by insurance underwriters. You can probably guess what those are: Sports nutrition products, sexual enhancement products and weight loss products. Historically these three categories have produced the most claims for the insurers, so they do learn from the past like any intelligent person.
Look at the sports nutrition segment, and the ingredient DMAA. The FDA ordered that DMAA be removed from the market in 2013, effectively making it illegal. Remember ephedra, made illegal in 2004? DMAA was deja vu all over again. Ephedra was a stimulant that was overused and abused and allegedly killed some people. It was very popular with weight loss people and sports nutrition people for a long time, and then it was made illegal.
And when you have alleged fatalities and resulting lawsuits you are going to higher premiums for nutraceutical product liability insurance.
The second category is sexual enhancement products which of course are very popular for all the reasons we won’t go into to.
Do They Really Work? You Have Cialis And Viagra And All That So Why Would People Use Something Else? Why Wouldn’t People Just Go To The Doctor And Get Viagra Or Cialis?
I think the obvious issue is cost, because those drugs are fairly expensive as opposed to dietary supplements which claim to do the same thing but are less expensive. Ever since Cialis And Viagra came out several years ago you’ve now got all of these dietary supplements, some made here, some made overseas and imported here that are spiked with cousin drugs of Cialis and Viagra.
Don’t get me wrong, there are plenty of legitimate sexual enhance net products out there, created by passionate individuals who care about producing a “natural” sexual enhancement product, free of stimulants and not spiked with illegal drugs. But recently the FDA has been clamping down hard on this category, trying to flush out the bad players. They have required many companies to cease selling products and performing recalls on contaminated and/or products that may be dangerous for some people to consume. And a lot of regular people simply don’t hear about this activity. A lot of sexual enhancement products are found by consumers and sold on the internet only so it’s hard to even know who the sellers are, where they are, and where the products actually come from. And a lot of regular people simply don’t hear about this stuff. A lot of this stuff is sold on the internet only so it’s hard to even know where they are, who they are, or where they come from. They’re out there.
What about weight loss products?
This category is kind of a combination of the problems seen in sports nutrition and sexual enhancement products. Some products are spiked with illegal drugs, and some have mild stimulants that are totally legal. Again, don’t get me wrong there are lots of passionate makers and markets of weight loss products with nothing illegal or dangerous about them. The problem for consumers, not to mention the underwriters of nutraceutical product liability insurance, is to separate the wheat for the chaff, not an easy task.
It is interesting to note that one of the major industry associations, the American Herbal Products Association, has a website dedicated to chronicling FDA-mandated recalls specifically for these three categories of products. Do consumers look at these? Doubtful. Do insurance underwriters look at or for this kind of information? Yes. And it affects their perception of these three categories.
What Tragedy That Ensues When The FDA Clamps Down On A Small Company?
For many companies that sell only one or two products, such as sexual enhancement products or a single weight loss product, if the product found to be spiked with an illegal drug they often just shut them down. They’re out of business. What happens, however, is a lot of them just pop up over somewhere else. Sooner or later, they’re back in business because. As you well know, selling on the internet is not rocket science and has almost zero barriers to entry. Anybody can do it, and they can sell a lot before they get caught.
Let’s be fair. The FDA is also inspecting other companies within their purview besides supplement companies. They’re inspecting food companies, medical device companies, and drug companies. It’s across the board. I don’t believe they are picking on the supplement industry, although there are many who might disagree with me on that. However, the supplement industry may indeed be the easiest target for FDA, but that’s open to debate too.
The dietary supplement and nutraceutical industries are not easy or cheap to offer product liability insurance to, for all of the above reasons.[author-box-2]