The Unknown Insurance for N-Acetyl Cysteine (NAC)
The FDA’s public decisions on NAC have impacted the supplement industry. This ingredient has been used in products for decades without any issues, and yet the FDA has “determined that NAC is excluded from the dietary supplement definition under the FD&C Act because NAC was approved as a new drug before it was marketed as a dietary supplement (or food).”
The FDA has also announced final guidance on their enforcement for NAC, in products labeled as dietary supplements.
Over the many years of NAC being sold in or as a dietary supplement, there have been Zero federally reported Adverse Events thus, fortifying it’s low risk for public consumption.
The FDA’s stance on N-Acetyl Cysteine quickly impacted the sales for companies selling NAC or products with NAC in the formula, primarily, with AMAZON!
Amazon quickly took action on NAC products removing them from their offerings, and that was a financial blow to many businesses.
The FDA’s announcements coupled with Amazon’s actions towards NAC products has caused concern for many supplement companies and further raised questions with consumers.
Despite the above, not a single body has brought up the Insurability for businesses selling NAC. And whether that could positively impact the NAC product marketplace.
THE BASICS
All supplement manufacturer’s carry a Commercial General Liability / Product Liability insurance policy. This purchase is going to involve an Insurance Broker (Represents your Business) and an Insurance Company (Provides the Policy).
Over the years, manufacturers of supplements have more than likely observed and reviewed their Liability Policy and it’s form titled “Ingredient Exclusions” or “Banned Substances.” With this review, you will take a look of ingredients that are excluded from Liability coverage and should be avoided when manufacturing certain products. Unless- there is an “Exception” to an ingredient exclusion, which gives coverage “Back” for that single ingredient. (For Example: Yohimbe).
The review of this form usually stops after doing a quick skim of the bullet point list of Ingredients.
However, there is usually a leading exclusion of coverage around this list that reads similar to the below. NOTE: the below is anonymous highlight of actual policy language pulled from Insurance Companies that will insure Dietary Supplements.
THE DEEP DIVE
Insurance Company #1 Exclusion:
“This insurance does not apply to any damages, loss, cost or expense arising out of the actual, alleged or threatened hazardous properties of any goods or products:
- Declared unsafe by the applicable governmental or regulatory authority having jurisdiction on the basis of such hazardous properties, regardless of whether or not such goods or products were declared unsafe before or after
- The goods or products were disposed of, distributed, handled, manufactured or sold; or
- Such damages, loss, cost were incurred; or
- Disposed of, distributed, handled, manufactured or sold without approval by the applicable governmental or regulatory authority having jurisdiction”
Insurance Company #2 Exclusion:
“Any other substance, ingredient or product, in any combination, that the US FDA has determined as of the inception date of this policy is not a dietary ingredient or a dietary supplement under DSHEA”
Insurance Company #3 Exclusion:
“…Furthermore, this policy excludes any liability arising from any product which breaches and/or is non-compliant with US Federal and or State Law and or DEA rules”
Insurance Company #4 Exclusion:
“Any product, supplement, additive, substance, ingredient or compound manufactured, imported, formulated, sold or distributed by you or on your behalf by others in violation of any regulation or law”
As you can see from the Exclusionary language above, NAC is not specifically called out as an Ingredient, however, will be captured by this language in the event of a Claim. Which would most likely barre coverage for the business.
Insurance companies and underwriters are not as well versed on these recent developments and therefore have no urgency to address their policy language for NAC.
Many, if not all, companies selling NAC have unfortunately been unknowingly un-insured for any claims tied back to an NAC product! To further that, new businesses looking to use this ingredient have often been told they have an “un-insurable” business because of this one ingredient.
THE SOLUTION
Over the past couple of months, we have worked closely with the Natural Products Association (NPA) and industry experts to develop a solution for this insurance problem. Effectively, giving back and specifically calling out that products with NAC will be covered, despite the exclusionary language.
Through our partnership with the NPA, we are able to provide it’s members with Liability Coverage when it comes not only to selling Supplements, but also those containing NAC!
If you are selling, used to sell, or want to sell, products containing NAC, please reach out to me for further information.
