Nutraceuticals — dietary supplements — are very popular and some of our clients have asked us, here at Revision Legal, how to start a nutraceutical business. Like any start-up, there are practical, financial and legal challenges. You will need experienced business lawyers and, if you plan to operate online, you will need online business attorneys and ecommerce business lawyers. In this article, we will start with some basics on setting up a new business and then offer some tips specific to the nutraceutical industry.

Basics on Starting a New Business

Becoming an entrepreneur is involved, time consuming and takes a lot of advance planning. So, being a start-up can be anxiety-inducing, but also exhilarating at times. What follows may seem daunting (and it can be). But, the most practical advice is: KEEP IT SIMPLE. Start with one product, one target audience and one sales channel and see how it goes. As you succeed, expand the products, the customer base and the sales channels.

Here are the basic steps for any new business:

• Create your business plan — this involves finding start-up capital (money); identifying what you want to sell or manufacture; identifying and locating your target customers; mapping your cash-flows; identifying sales, costs, and profit potentials; finding a lender (if possible and/or desired), etc.
• Form a corporate entity — you will need to come up with a good name for your business; you do not want to operate a nutraceutical business as a sole proprietorship; indeed, that may not be possible; you will need an experienced business lawyer to help with this
• Obtain tax ID numbers for your new company (or other corporate entity) along with business bank accounts, sales tax ID numbers, etc.
• Obtain local business permits and licenses (as needed)
• Obtain appropriate business insurance — every business needs insurance appropriate to the type of business and this is even more true for a nutraceutical business; a nutraceutical business is considered a “high-risk” business, so the insurance will be higher; if you cannot afford insurance, then go back to the first step and re-work your business plan
• Identify and locate suppliers and vendors, shippers, credit card and payment processing companies that specialize in supplement and nutraceutical products, etc.
• Purchase or lease your business location — at first, this may be where you live, but be aware that operating a business from your home has implications for home-owners’ insurance and, potentially, for local ordinances and even HOA regulations, etc.
• If you will be operating online, create your website and/or open your online sellers’ accounts — note that websites have a number of legal requirements, particularly if you are collecting customer data and information
• Establish your branding and trademarking — this is often linked to the name of your business
• Begin the process of becoming an employer — maybe not immediately, but at some point, you will likely want to hire employees; becoming an employer entails a host of obligations like withholding income taxes, satisfying labor law obligations, etc.
• And more

Some Specific Issues for Starting a Nutraceutical Business

The nutraceutical industry lies at the boundary of food, medicines and drugs that are regulated by the federal Food and Drug Administration (“FDA”). If you are planning to manufacture and/or sell medicines and prescription drugs, then you will need FDA approval and licensing and will need to meet all of the FDA regulations. However, nutraceuticals are generally NOT regulated by the FDA as long as they are made and marketed for the treatment of diseases or other medical conditions. Thus, your nutraceutical business must be exceedingly careful about how its products are labeled and marketed. Otherwise, the FDA will come to investigate.

Aside from the FDA, be aware that, like most ingestible products, nutraceuticals are subject to State and federal regulations that are intended to safeguard quality and safety. Among many other things, these include regulations for your physical facility and for product warnings and labeling.

Contact Revision Legal

If you have questions, contact the business lawyers at Revision Legal.You can contact us through the form on this page or call (855) 473-8474. We are lawyers specializing in internet law.

FDA Regulatory Framework for Dietary Supplements

Nutraceutical companies operate primarily under the regulatory framework established by the Dietary Supplement Health and Education Act of 1994 (DSHEA), codified at 21 U.S.C. §§ 321(ff) and 343(r). DSHEA defines dietary supplements as products intended to supplement the diet that contain one or more dietary ingredients — including vitamins, minerals, herbs, botanicals, amino acids, and substances that supplement the diet by increasing total dietary intake. Under DSHEA, dietary supplements do not require pre-market approval from the FDA. However, manufacturers bear responsibility for ensuring that their products are safe before marketing them.

Several regulatory obligations attach immediately upon starting a nutraceutical business. The facility where supplements are manufactured, packaged, or held must register with the FDA under 21 C.F.R. Part 1, and registration must be renewed every two years. The facility must also comply with current Good Manufacturing Practice (cGMP) regulations under 21 C.F.R. Part 111, which govern everything from personnel training and sanitation to batch production records and laboratory controls. FDA inspections of supplement manufacturers are common, and cGMP violations — even technical paperwork violations — can result in warning letters, import alerts, and product recalls.

New Dietary Ingredient Notifications

If your nutraceutical product contains a “new dietary ingredient” — defined as a dietary ingredient that was not marketed in the United States before October 15, 1994 — you must submit a New Dietary Ingredient (NDI) notification to the FDA at least 75 days before introducing the product to market. Under 21 U.S.C. § 350b, the notification must include information demonstrating that the ingredient will reasonably be expected to be safe under the conditions of use recommended or suggested in the labeling. The FDA has broad discretion to object to NDI notifications and has objected to many submissions it deemed insufficient. Engaging experienced regulatory counsel before selecting ingredients — particularly novel botanical extracts, isolated compounds, or synthetic analogs of natural substances — can prevent costly delays and reformulation requirements.

Labeling Law: What You Can and Cannot Say

One of the most consequential legal decisions a nutraceutical startup makes is how to label its products. The law distinguishes between three types of claims, and the regulatory consequences depend on which type is made:

• Nutrient content claims — claims about the level of a nutrient in the product (e.g., “high in vitamin C” or “low fat”). These are permitted but must conform to FDA definitions in 21 C.F.R. Part 101.
• Structure/function claims — claims about how a nutrient or ingredient affects the normal structure or function of the body (e.g., “calcium builds strong bones” or “supports immune health”). These are permitted for dietary supplements without FDA pre-approval, but must be truthful, not misleading, substantiated by competent and reliable scientific evidence, and accompanied by the mandatory disclaimer: “This statement has not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.” Manufacturers must also notify the FDA within 30 days of first marketing a product bearing a structure/function claim.
• Disease claims — claims that a product diagnoses, treats, cures, or prevents a disease. Making a disease claim on a dietary supplement automatically converts the product into an unapproved drug, subjecting it to the full drug approval requirements under 21 U.S.C. § 355. The FDA and FTC aggressively pursue supplement companies that make unapproved disease claims, particularly in the areas of cancer, diabetes, cardiovascular disease, and — as became prominent during COVID-19 — infectious disease.

FTC Enforcement: Substantiation for Advertising Claims

While the FDA regulates labeling, the Federal Trade Commission regulates advertising — including websites, social media, and influencer marketing. The FTC requires that health-related advertising claims for nutraceuticals be substantiated by “competent and reliable scientific evidence.” The FTC defines this as tests, analyses, research, or studies conducted and evaluated objectively by qualified experts that are generally accepted in the relevant scientific community. Anecdotal testimonials and general statements about traditional use are not sufficient substantiation for specific health outcome claims.

The FTC has brought numerous enforcement actions against nutraceutical companies for unsubstantiated health claims, resulting in consent orders, disgorgement of revenue, and civil penalties. When planning your product marketing and website content, an experienced nutraceutical attorney and regulatory consultant should review all claim language before publication to ensure it is properly substantiated and appropriately qualified.

Contact Revision Legal for Nutraceutical Business Legal Services

Launching a nutraceutical business without experienced legal counsel is a high-risk venture. Regulatory missteps in labeling, advertising claims, or GMP compliance can result in FDA warning letters, FTC consent orders, product recalls, and class action lawsuits. Revision Legal’s business attorneys provide entity formation, contract drafting, IP registration, and e-commerce legal services for nutraceutical startups and established supplement brands. Call us at 231-714-0100 or visit our contact page to speak with an attorney who understands the nutraceutical industry’s specific legal requirements.