Election 2020: How a Biden-Harris Administration May Create Opportunities & Risks for OTC and Supplement Companies

Key Takeaways

• A Biden-Harris administration focused on more accessible, affordable and equitable health care may provide greater opportunities for the OTC and supplement industries.
• Increased regulatory oversight and litigation risk may accompany those increased opportunities.
• Focus will be on underserved, minority and otherwise vulnerable populations, as well as broader public health effects. 
  

As we look ahead to a Biden-Harris administration and its potential impact on the over-the-counter (“OTC”) and dietary supplements industries, we see both opportunities and risks. While democratic control is typically associated with more stringent regulation, a new administration focused on expanding access to affordable healthcare, particularly for minority and underserved populations, may also work to facilitate innovation. Of course, increased opportunities may, in turn, increase the potential for lawsuits.  We have no crystal ball.  But we offer this OnPoint to suggest a few of the trends we think worth watching in the years ahead.  

OTC Approvals and Litigation Risk from Recent Regulatory Changes.  Changes to the OTC regulatory scheme incorporated into the Coronavirus Aid, Relief and Economic Security (“CARES”) Act passed last March are expected to offer greater opportunities for approval of new active ingredients, as well as new delivery methods, over the next few years.  Combined with a more progressive agenda focusing on underserved populations and populations at increased risk of morbidity and mortality, one could project growth and innovation in several important sectors including women’s and reproductive health, chronic pain (which is associated with lower socioeconomic status), and weight management (as the health impacts of obesity have been sharply focused by COVID-19). Along with these greater opportunities, however, may also come greater litigation risks.  Plaintiffs’ attorneys may be expected to call attention to allegedly improper incentives created by new user fees.  Also, the old monograph system offered a defense of federal preemption against some non-product liability claims (e.g., consumer fraud claims). That seems less likely under the new administrative approval scheme.

Rx to OTC Switches. Very few products in the U.S. make the transition from prescription to OTC status. Three drug switch approvals earlier this year amounted to a virtual OTC product avalanche – the first batch of switch approvals since 2017. With more attention on underserved populations and health needs, as well as pressure to provide more affordable, accessible and convenient healthcare options, there may be increased incentives for manufacturers to pursue and the agency to approve more switches. The risk, of course, is that more self-diagnosis and treatment, without the benefit of a healthcare provider as learned intermediary, could mean increased litigation risk for product manufacturers and sellers.

Focus on Potential Public Health Impacts and Public Nuisance Claims. Both FDA and the plaintiffs’ bar are increasingly focused on drug effects that impact not just intended users, but also the broader community.  In a Biden-Harris administration, companies may expect regulatory and litigation scrutiny around potential harms caused by OTC products and supplements when not used as intended – including products that are misused or over-used.  Similarly, potential environmental harms are apt to garner increased attention, such as those caused by tamper-resistant and non-reusable packaging and disposal of unused product.  This may, however, also drive product innovations as more OTC brands are being developed to appeal to environmentally sensitive and public health minded consumers.

Marketing Scrutiny, Especially if Targeting Vulnerable Populations. Increased claims scrutiny and enforcement activity – as well as litigation potential – should be expected under a Biden-Harris administration, particularly around marketing to vulnerable populations.  For example, we would expect focus on marketing claims that target the elderly and involve products that purport to reduce the risk of COVID-19 or other infectious agents.  Marketing claims regarding dietary supplements that are aimed at teens may also come under greater scrutiny. Further, attention may be focused not just on manufacturers but also on retailers and others who offer product endorsements, testimonials and reviews and who independently track data on consumer preferences and purchasing trends, as well as product complaints.