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On Small Business
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Posted at 06:01 PM ET, 09/13/2012

Small business owners’ most common misconceptions about FDA compliance


A scientist dispenses organic solvent for a lab test at the U.S. Food and Drug Administration (FDA) in Silver Spring, Maryland, August 14, 2012.( REUTERS/Jason Reed )
Small business owners who don’t directly deal with food or medicine often think they’re in the clear when it comes to the Food and Drug Administration.

One attorney says it’s time to think again.

Alan Minsk, partner at law firm Arnall Golden Gregory and leader of its Food and Drug Practice team, focuses on FDA compliance issues, particularly with pharmaceutical, biologic, medical device, cosmetic and food companies. Over the years, he has noticed some common misconceptions concerning FDA compliance for small businesses. Here are the top four:

The FDA has bigger fish to fry. I’m a small business, so regulators won’t notice if I don’t comply.

Some business owners feel they’re “under the radar” because they’re small, Minsk said. But the FDA is a public health organization — “if they see a violation, they see a violation,” regardless of the company’s size.

Every Tuesday, the FDA posts public warning letters for non-compliant firms on its Web site. “A lot of them are small mom and pop companies, livestock companies, or small Internet companies selling dietary supplements,” he said, explaining that people often expect only large pharmaceutical firms to be the target of FDA regulations, but smaller businesses are just as frequently cited for violations.

My small business doesn’t deal with medicine or food, so I don’t need to be FDA compliant.

Some businesses simply don’t realize they’re regulated by the FDA, Minsk said. But it’s important to research compliance if the business has any possible claims or products distantly related to health or food, even if it’s not explicitly a drug, food or medical device.

For example, if business sells a chair claiming it can “help lower back pain,” or sells beads claiming they have “therapeutic benefits for arthritis,” the business has made claims referencing a specific medical condition for which the product may allegedly help. These kinds of claims — seemingly innocuous — can subject the business to FDA regulations, Minsk said.

I’ve done a cost-benefit analysis, and FDA compliance is too expensive. Since my business is small and won’t hurt anyone, I’ll just wait for the FDA to reach out to me if they notice a violation.

“Every company makes a cost-benefit analysis,” Minsk said, but “if you’re playing bluff or poker with the FDA, you’ll typically lose.”

Some business owners may feel that guaranteeing compliance — in terms of quality assurance, clinical trials, hiring lawyers, etc. — may just be too expensive, and spending on money on these regulations will deprive them of capital their competitors might be spending on improving their product.

“Some CEOs will tell you, ‘I want to comply but also have to run a business,’” Minsk said.

However, while the FDA does not necessarily have time to crack down on all minor violations, non-compliance could actually put businesses at a competitive disadvantage in their industry.

If they realize a business is eschewing government regulation, doctors, patients, and consumers may turn to your competitors, in whom they have more confidence, Minsk said.

My product is perfect just the way it is.

When cited by the FDA, some entrepreneurs think their product’s integrity is being challenged. “Companies frequently fall in love with their product, and think their reasoning can do no wrong,” — particularly when the product has been on the market for a while, according to Minsk.

But the FDA analyzes products and services from a public health perspective, and it is compelled to examine anything that could possibly constitute a public risk.

The best way to comply is to “be critical of your own opinion and position,” remain flexible, and to keep the FDA updated in the compliance enforcement area. In addition to putting your business at a disadvantage, Minsk said, non-compliance could result in a messy recall and clean-up process.

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Has your business run into issues with the FDA? Please share your experiences in the comments below.

By  |  06:01 PM ET, 09/13/2012

 
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