Anthony L. Young Kleinfeld, Kaplan & Becker LLP ayoung@kkblaw

1. Supply Side West 2009Energy Shots and Beverages: Growth, Innovation, Safety and Regulation Legal and Regulatory Issues Affecting Energy Shots and Beverages Anthony L. Young Kleinfeld, Kaplan & Becker LLP ayoung@kkblaw.com

2. ENERGY BEVERAGE WEBSITE • http://www.screamingenergy.com/ • More than you ever would want to know, but . . . • Products that stretch the imagination of even the most jaded marketeer

3. ENERGY BEVERAGE WEBSITE OCTOBER ENTRY

4. Food or Dietary Supplement • First Issue – What is it • Marketer picks the category - food or dietary supplement • Nutritional Facts for food • Supplement Facts for dietary supplements • Customers and retailers no longer make a distinction • 7-11 would know the difference?

5. Energy Shots and Beverages Focus on Particular Consumer Needs • Energy • Stimulation • Alertness • Focus • Attention • Stay awake • And more “energy”

6. Energy Shot Ingredients Besides SUGAR • Caffeine, guarana and other caffeine source ingredients • Taurine • L-carnitine • B vitamins • Ginseng • Amino acids

7. Taurine • Not technically an amino acid but referred to as one • Supports neurological development and helps regulate the level of water and mineral salts in the blood • Thought to have antioxidant properties • Some studies suggest taurine supplementation may improve athletic performance

8. B vitamins • Important in cell metabolism • Help convert food to energy • Well known for energy support

9. L-carnitine • Synthesized in the liver and kidneys from amino acids and stored in muscle • Helps the body turn fat into energy • May be difficult to formulate so that it survives processing

10. Ginseng and Ginkgo • Ginseng reported to increase the body’s resistance to stress (adaptogen) • Ginseng is traditionally used as a stimulant: thought to improve mental and physical performance • Ginkgo to enhance blood circulation • Ginkgo to enhance memory

11. Glucuronolactone • Carbohydrate • Produced by the metabolism of glucose in the liver • Structural component of most connective tissues

12. Milk Thistle Extract and Acai • Milk Thistle historically used to treat liver disease and to protect the liver against toxins • Acai has measured antioxidant properties (contains anthocyanins and flavonoids)

13. ENERGY and Shot Claims • Energy • Feel it in minutes • Energy for a specific period • Energy for a specific purpose • More energy • Claims are supported by energy related professional sports endorsements that reinforce ENERGY

14. ENERGY and Shot Claims • Some performance enhancment claims • Red Bull, the 800 lb Gorilla in the marketplace, appears to make some of the more aggressive and specific claims • All In is one to take in Vegas - it has an interesting poker tie-in, instead of the athlete ties of most energy beverages

15. RED BULL Claims • Increases performance • Increases concentration and reaction speed • Improves vigilance • Improves emotional status • Stimulates metabolism • Vitalizes body and mind • Developed for times of increased mental and physical exertion

16. Other Energy Drink Claims • twice the buzz of a regular energy drink • ideal for persons who need a boost but aren’t afforded the most timely restroom breaks • scientifically formulated to provide an incredible energy boost for those who lead active and exhausting lifestyles

17. ALL IN Claims • All In delivers the ideal premium energy drink to the fast moving world of poker. • All In is a premium product…without sugar, carbs, or excess calories.  • All in uses herbs, vitamins and amino acids and provides a smooth, sustained sharpening of focus and pure energy every poker player needs.

18. Other Energy Shot Products • Dr. Chao - Herbal Lady Drink (PMS) • Dr. Chao - Herbal Adult Drink • Dr. Chao – Herbal 21 Drink • Dr. Chao – Herbal Stress Reliever Drink • Note for Blumenthal – no Herbal Guy drink • And no Herbal Lawyer Up drink either

19. Herbal Lady Drink

20. Energy Shots and Beverages Labeled as Foods • Nutrition Facts Box is limited to nutrients – no place to display functional non-nutrients – so taurine and guarana cannot be included. • On the Information Panel, non nutrient ingredients must be included only in the ingredients declaration for the product.

21. FDA Regulations Limit Health and Nutrient Content Claims for Foods and Dietary Supplements • Nutrient content claim regulations limit claims about the presence of ingredients to FDA - recognized nutrients. • To tout the presence of ingredients, the actual amount per serving must be stated.

22. First Amendment and FDA • In 2002 FDA asked for comment on those FDA claim rules believed to infringe on truthful and not misleading commercial speech. • Nutrient content claim regulations were identified as First Amendment suspect – but this proceeding never got off the ground, and now never will.

23. Nutritive Value - Food • FDA defines nutritive value as value in sustaining human existence by such processes as promoting growth, replacing lost nutrients, or providing energy • Physiological effect that provides a benefit through growth or health improvement probably meets the definition

24. Claims for Foods More Restrictive than Dietary Supplements • Health Claims – F and DS • Qualified Health Claims – F and DS • Structure Function Claims for foods based on nutritive value effects or taste or aroma of the food – F • Structure Function Claims for dietary ingredients based on demonstrated effect on structure or function of the body – DS

25. Dietary Supplements in Conventional Food Form • May be in conventional food form but must be represented as supplement and not conventional food • May not be represented as a meal or meal replacement or snack • May not be linked to a meal or conventional food form • Labels, labeling and advertising must stay out of food arena

26. New Ingredients for Energy Shots • New ingredients or novel forms of old ingredients must meet regulatory requirements for foods or supplements • New or novel food ingredients must be GRAS or food additive approved • Dietary ingredients must be old ingredients or lawfully marketed new dietary ingredients

27. Ingredients In Energy Drinks • Surprised to see that there is little exotica in the ingredients • Marketeers here appear to be looking for marketing niches based on endorsements, affiliations and packaging

28. GRAS Substances for Food Energy Shots • § 402(a)(2)(C): adulterated if it contains an “unsafe” food additive • § 409: “unsafe” food additive is one not covered by an FDA regulation, OR • the substance is GRAS through common knowledge throughout the scientific community • Reasonable certainty that the substance is not harmful under the specific intended conditions of use – (reasonable certainty of no harm)

29. Conditions of Use • GRAS notifications to FDA must list the foods for which the ingredient is intended • 21 CFR Sec. 170.3 • Must describe and list proposed amounts for the food category • Many food ingredients are NOT GRAS for all uses

30. GRAS Self-Affirmation • Scientific Procedures • Generally available and accepted scientific data • Ordinarily published • Corroborated by unpublished data • Normally reviewed by expert panel • OR • Common use in food prior to 1958 • NO FDA REVIEW LEGALLY REQUIRED FOR EITHER CATEGORY

31. GRAS Self-Affirmation • GRAS self-affirmation is a predicate for the use of an ingredient in food • Panel of Experts review and conclusion is important to customers • If FDA finds the ingredient and questions its use, the GRAS Self-Affirmation package provides a defensive conversation piece

32. GRAS Self-Affirmation • Largest ingredient customers (Coca-Cola, Pepsi) may not accept GRAS self-affirmation for an ingredient • If FDA disagrees with the use of a self-affirmed ingredient in food they may advise customer that their products may be adulterated. • FDA may make products containing the ingredient subject to seizure or injunction

33. GRAS NOTIFICATION TO FDA • Since mid-1997 GRAS Notification may voluntarily be submitted to FDA • Proposed Rule 62 FR 18938 4/17/97 • If successful, results in a “No-Question” letter • Replaces the old GRAS-affirmation process • Replaces a regulatory process that was too long – required too much FDA buy-in

34. FDA GRAS NOTIFICATION WEBSITE • FDA provides guidance to those considering GRAS notification • FDA provides chronology of GRAS notifications and responses • FDA response letters provide good guidance on data requirements • FDA provides guidance on estimating total dietary intake of the substance

35. Successful GRAS Notifications • Pre-submission meeting with FDA with Expert Panel Report as meeting baseline • Listening carefully to what FDA says pre-submission • Some published data and information • Data and information package presents quality relevant data • GRAS notification is written by someone schooled in FDA data requirements and FDA lines of inquiry

36. Successful GRAS Notifications • Panel of Experts ARE “qualified by training and experience to evaluate the safety of the substance under the conditions of use” proposed • The proposed conditions of use are not controversial for the ingredient • Panel of Experts addresses all relevant and expected issues including any raised by FDA pre-submission

37. FDA Informal Responses • FDA GRAS Notification review staff is experienced and knowledgeable • Review staff is not restrained from asking questions to clarify the submission • Review staff will advise notifier if the notification is going to receive an unfavorable response

38. Old Dietary Ingredients • On the market prior to October 15, 1994 • Must be one of the defined dietary supplement ingredient catagories • Must not have been a new drug ingredient – ephedrine HCl example • And probably not on the market as a drug

39. New Dietary Ingredients • Developed since October 15, 1994 • NDI premarket notification required unless the ingredient is present in the food supply and is used in a form in which the food has not been chemically altered • If you claim it is new, different or never before available, you need to respect the NDI requirements

40. Basic Safety Premise • Reasonable expectation of safety when used or consumed as directed • Don’t test new product ingredients on the customer • How would you like to testify in court that “you thought it was safe” but had never sought to substantiate it. • Have a reasonable basis that ingredient combinations are safe.

41. New Sheriff in Town • With the changed Administration, expect more concern around safety of foods and dietary supplements • The National Nanny is back in residence, we will be told what is good for us • Expect some focus on large amounts of SUGAR and CAFFEINE in products.

42. Energy Shots are “Functional Foods” • Industry has said that no new regulatory definition or distinct regulatory approach is necessary for the evaluation of the safety of ingredients added to ``functional foods'‘. • More use of labeling and restrictions on use was suggested for GRAS review of functional ingredients.

43. Energy Drinks Under Scrutiny • 12 year old reports results of study conducted to see if energy drinks like “Monster” delivered as intended. Brendan D. O’Neil – future MD • Caffeinated “Monster” against decaffeinated Sprite • “Monster” as compared with soday had no significant effect on exercise performance.

44. Energy Drink Study Author

45. Energy Drink Safety • These products are being sold to people who want a faster lifestyle, the issue of the safety of caffeine, as well as other ingredients will be raised about this category. • Similar to the sports supplement model, the marketing is to a population that makes itself vulnerable.

46. Caffeine • Medline Plus says: It is recommended that pregnant women consume less than 300 mg of caffeine a day. • Caffeine passes into breast milk in small amounts and may build up in the nursing baby. • FFDCA Section 201(n) material information for Moms – why NOT require added caffeine to be labeled?

47. Caffeine • Major marketers of caffeine containing beverages include the amount of caffeine on their product labels. • Some energy shot product contain caffeine amount labeling and a caution regarding use by pregnant women.

48. Additional Energy Drink Consideration • Took a boat tour of the Chicago River • First drink on the bar menu was Red Bull and Vodka • All foods should be compatible with all foods – so mixing into cocktails is no surprise • But formulators should take the liquor mixing into consideration

49. WHERE’S THE ACTION? • CALIF AG lawsuit against Kellogg's for Immunity Claim on cereals – no surgical mask for Tony the Tiger – Pvt lawsuits follow • Consumer class action against Danone and over $30 million (note $ not Euros) • Lawsuits over “natural” and the like • Success has benefits, and a price

50. FDA Functional Food HearingNovember 2006 • There was no support for a requirement that companies that market ingredients for addition to ``functional foods'' notify FDA prior to introducing the ingredients into interstate commerce.