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P-A VOLUNTARY ALPHABETICAL LISTING OF INACTIVE INGREDIENTS PERMITS INDUSTRY TO SET RULES FOR SOME OF KEY FEATURES: TRADE SECRET EXEMPTION SPECIFIED

Executive Summary

The Proprietary Assn.'s voluntary inactive ingredient labeling program gives the OTC industry control over two of the most important aspects of labeling disclosure: the order of ingredient listing; and the treatment of trade secret material. OTC inactive ingredient listing, according to the voluntary plan, will be on an alphabetical basis -- instead of the descending order of predominance rule which governs cosmetic and food labeling. Trade secrets are defined in the Proprietary Assn. (P-A) program as ingredients which confer "a significant competitive advantage" and the identity of which "cannot be determined using modern analytical technology." By developing its own program, P-A is setting the rules for the relabeling effort. P-A Chairman Charles Pergola told the assn's. annual meeting that the guidelines "not only serve the consumers' right to know, but also help this industry keep govt. intervention in your business to a minimum." The assn. was further able to keep control over the deadline for implementation: Dec. 1, 1985. Cosmetic Experience Helped P-A moved rapidly on the relabeling project. The assn. board appointed a task force in February, a draft of voluntary guidelines was sent to the membership in April, and the board ratified the plan at its annual meeting session on May 13 -- three months from conception to board approval. The assn. was aided in its effort to develop guidelines by the experience of the cosmetic and food industries in inactive listing. The P-A program, in fact, incorporates many of the features of those programs. The treatment of flavors and fragrances, for example, is modeled after the cosmetic ingredient labeling rules. "Flavors and fragrances may be listed as 'favors' and 'fragrances,'" the P-A proposal says. In an annotated version of the guidelines distributed at the May 13-16 annual meeting, P-A explained that flavors and fragrances may be lumped together under the two general terms because those product components are often "composed of minute quantities of a large number of ingredients." P-A noted: "This is how FDA's cosmetic ingredient regulation handles this subject." Similarly, P-A adopted the recommendation for use of counter displays or tear-off pads for inactive ingredient labeling for products with less than 12 square inches of product container surface. P-A noted that the small container provision is patterned "on a similar provision in the cosmetic ingredient labeling regulation." P-A further cited the CTFA Ingredient Dictionary as one of the four reference works for the names of inactive ingredients. The other source books are U.S. Pharmacopoeia/Natl. Formulary, USAN and USP Dictionary of Drug Names, and Food Chemical Codex. In addition to contact with the cosmetic labeling program through members with products in both classes, P-A sought input from the Cosmetic, Toiletry & Fragrance Assn. (CTFA) through a representative on its task force. The Pharmaceutical Mfrs. Assn. (PMA) was also represented on the task force. The PMA board has considered t he inactive listing subject, but the demands of patent restoration and overseas lobbying have kept that issue on the back-burner. P-A explained the rationale for alphabetical listing of ingredients in an annotated version of its guidelines. The alphabetical listing, the assn. said, "should make it easier for consumers to locate ingredients of interest." P-A noted that "those who wish to avoid certain ingredients will do so based on their presence or absence, and not based on their relative quantity as compared to other inactive ingredients." Consumer "Right To Know" And "Need To Know" Is Philosophical Background For Labeling Guides OTC inactive ingredient labeling differs from food labeling, P-A observed, in that the drug disclosure is aimed at providing safety/allergic reaction information while the rationale for food labeling is economic. "While consumers have an [economic] interest in knowing whether canned peas contain more water than peas," P-A said, "the relative quantities of inactive ingredients in an OTC medicine have nothing to do with its economic worth." P-A Public Affairs VP Jack Walden put the disclosure policy in the perspective of a program to fulfill the general public's "right to know" and the "need to know" of a limited number of the population. "No matter how harmless a substance may be for the vast majority of the people," Walden observed, "that substance may cause problems for a few." He cited the Yellow No. 5 example. Tartrazine, he pointed out, must be avoided by about one in 5,000 people, Walden estimated. That would indicate about 40,000 Americans are sensitive to Yellow No. 5. The P-A voluntary program asks OTC mfrs. to treat samples and institutional packages with the same inactive ingredient labeling as products "intended for retail sale." The assn. noted: "In view of the goal of the program -- enabling consumers to identify inactive ingredients they may wish to avoid -- including of samples is especially important because the sample may be the consumer's first exposure to a product." The guidelines exempt listing of "incidental ingredients" except where "the omission of the incidental ingredient would constitute a failure to reveal a material fact." That clause "is intended to require the listing of incidental ingredients such as residual sulfites, because the presence of sulfites even at 'incidental' levels, is a material fact to consumers who are severely allergic to sulfites." The annotated version of the P-A guidelines contain a specific, three-part defintion of incidental ingredients. The public interest in sulfites is clearly one of the background issues behind P-A's proposal for the voluntary guides. In addition to the wide publicity that sulfites have received in the media, the issue was debated at an NIH drug allergy conference last November. The concern over sulfites in drugs has led some companies, such as Boehringer-Ingelheim to consider removing the substance from their products ("The Pink Sheet" Dec. 5, 1983, p. 14). P-A also faced the interest in inactive ingredients generated by the Brown suit for release of information on drugs containing lactose. As a result of the Brown suit, FDA asked trade assns. to address the inactive ingredient labeling issue in a letter to the trade last January ("The Pink Sheet" Jan. 23, T&G-6). FDA assured wide media coverage of P-A's guidelines with a May 14 "Talk Paper" response to the trade assn. decision. FDA Acting Com. Novitch termed the trade assn. action "very welcome." Novitch said: "The listing of inactive ingredients will help avoid those rare but serious situations in which an individual is allergic to even small amounts of a substance." Miles Exec VP George Davy, chairman of the P-A inactive ingredient task force, summarized the background to the labeling program in a presentation May 14 to the first general session of the assn.'s annual meeting, Davy said: "This program is being undertaken now because it is the judgment of your executive cmte. and board that the need is apparent and the time is ripe." Davy pointed out that the assn. recognized "growing interest at the political and consumer levels for inactive ingredient listing." Recent Marketing Efforts To Position OTCs By Inactive Ingredient Profiles Makes Labeling Easier On the Hill, P-A recognized the first stages of political interest in a bill introduced by Rep. Ottinger (D-NY). Although that bill was not being pursued actively, it provided a vehicle for legislative interest if it developed further. The possibility of Hill interest in inactive ingredients was further raised recently in the E-Ferol vitamin hearings, at which an inactive ingredient was mentioned as one of the potential factors in the product's effect on premature babies. Ottinger called the P-A guides "an important first step." However, the congressman continued his call for legislation and asked P-A to support his bill. While P-A's code can be viewed as a pre-emptive action to forestall govt. regulation or legislation on inactive ingredient listing, the code also reflects a significant marketing trend in the industry. Ayerst, for example, has made significant in-roads into the antacid market with Riopan, promoted as sodium free. Similarly, S. C. Johnson is making its first attempt into the OTC drug category with a sugar-free laxative. It is not a large step from interest in promoting products based on inactive ingredient profiles to the industry-wide decision to include those ingredient profiles in consumer labeling. P-A stressed the importance of compliance with the guides as a deterrent to further govt. action. The assn. worked to assure compliance during the guideline development stage by making certain that the majority of large OTC marketers were represented on the Davy task force. In addition to Davy's company, Miles, the other firms represented on the task force included: J&J, Robins, Schering-Plough, Whitehall, P&G, B-M, Pfizer, Combe, MenJames, L. Perrigo, Squibb, Glenbrook, Rich-Vicks, and MK Labs.

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