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Regulatory and Legal Aspects of Functional Foods: The Australian Perspective Christopher Preston, BSc., LL.B., and Mark Lawrence, M.S.

Food is essential for health and well-being. It provides nutrients and energy for growth, development, reproduc- tion, and activity. An adequate balance and quantity of nutrients, energy, and other components must be obtained from the different foods that make up the diet. In general, the composition and adequacy of the overall diet, rather individual foods, are critical to health outcomes. This is reflected in the basic tenet of nutrition that there is no such thing as a good or bad food, only good or bad diets.

It has been suggested that technological develop- ments in food processing and in the analysis of the rela- tionship between food and health may combine to chal- lenge the conventional classification of the relationship between food and health. For example, developments in molecular biology and genetics may increase scientists’ understanding of the knctional relationship of nutrients and biologically active food ingredients to the achieve- ment of optimum health throughout the life cycle and the prevention and treatment of chronic disease. It has been claimed that better knowledge of the genetic basis of cer- tain diseases and of individuals’ genetic profiles will make it possible to tailor individual nutritional interventions to the prevention and treatment of such diseases.’

Foods and Drugs

Regulators in Western societies have long drawn a dis- tinction, which is reflected in regulatory structures, be- tween food and drugs. A food is consumed to provide nutrition and to satisfy hunger, thirst, or a desire for taste, whereas drugs are taken for a specific therapeutic or pro- phylactic purpose. The primary regulatory issues for food are public health and safety and the provision of informa- tion to consumers. For drugs, by contrast, the primary regu- latory issues are safety, efficacy, and, to a lesser degree, marketing. Food can generally be eaten without restric-

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Christopher Preston is Principal Legal Adviser, Australia New Zealand Food Authority. Mark Lawrence is Senior Nutritionist, Australia New Zealand Food Authority.

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tion, while drugs are generally used only in accordance with a specified regimen.

The concept of functional foods challenges this di- chotomy. Functional foods, for this purpose, extend be- yond simple nutrient provision to serving a physiological role. Regulators will need to develop new structures to account for such foods. Some related issues include the need for and extent of substantiation, labeling, the activity of functional foods in the context of overall diet, monitor- ing and evaluating public health and safety impacts, and the role of nutrition education.

In Australia, current regulations are very clear that health claims in relation to food are prohibited. The Aus- tralian Food Standards Code, Standard A 1, clause 19, pro- hibits

therapeutic or prophylactic claims in relation to food; use of the word “health” as part of the name of a food; any representation in a food label that directly or by implication could be interpreted as advice of a medical nature; and any reference in a food label to a disease or physi- ological condition. The rationale for prohibiting the use of health claims

in relation to foods is based on public health nutrition principles.

Reduction in disease risk is associated with the total diet and lifestyle pattern, not the use of an individual food. Individual foods by themselves do not prevent or cause a disease. The etiology and progression of all of the chronic diseases in which diet has been shown to play either a causative or a preventive role are multifactorial in na- ture. The precise role of diet in many chronic diseases re- mains to be determined. The role of diet in the individual cannot be predicted because of marked individual variability that results mainly from hereditary and lifestyle factors. However, the Australian Food Standards Code is un-

dergoing a substantial policy review and the current prohi-

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bitions on health claims are being reexamined. In anticipa- tion of the possibility that foods may be developed that could legitimately warrant certain claims, the Australia New Zealand Food Authority is preparing a preemptive analy- sis and draft of a conceptual framework that sets out the position of functional foods and health claims in the con- tinuum of the relationship between food and health. The purpose of this framework is to enable the food industry to position its future research and development activities while protecting public health and safety.

Functional Foods

There is little published data and no local or international consensus on what constitutes a functional food. The Aus- tralia New Zealand Food Authority has adopted the fol- lowing preliminary definition: “Functional foods are simi- lar in appearance to conventional foods and are intended to be consumed as part of a usual diet, but have been modified to subserve physiological roles beyond the pro- vision of simple nutrient requirements.”

Among the other definitions that have been suggested, in Australia the Goodman Fielder Ltd. company proposes that “functional foods are those foods which provide spe- cific nutritional, dietary or metabolic benefits, and also potentially play a role in disease prevention, the mitigation of disease, the control of disease, over and above the tra- ditional nutritional sustenance provided by the wide range of foods.”

A Regulatory Paradigm

All definitions of functional foods involve the concept of a health benefit. To be effective, the benefit must be commu- nicated to potential purchasers, together with sufficient information to enable consumers to make informed choices about the use of the food. The issue of health claims is clearly a central aspect of regulation of functional foods.

Beyond this, the issue is less clear. Many definitions of functional food involve the concept of a food being modified in an undefined fashion. Other definitions allow for foods that have traditionally been part of diets (such as foods naturally high in dietary fiber) to have their func- tional character proclaimed.

No new compositional or safety issues are raised when a new claim is made about a food that has traditionally been consumed. However, such issues are raised when a food

contains a novel ingredient that has not been con- sumed as part of a population’s traditional diet; is consumed in larger quantities, or contains a nutri- ent or ingredient that is consumed in larger quantities, than is the case within the traditional diet; or is subject to a higher than usual level of refining. Such foods could be expected to require close regula-

tory scrutiny before approval. Thus, the regulation of func- tional foods comprises the regulation of health claims and

the regulation of novel ingredients if these are present. The regulatory paradigm does not address issues of

nutrition education or the monitoring of dietary interven- tions. These elements are essential to an overall perspec- tive on functional foods, of which regulation is just one part, and all elements need to be addressed in a coordi- nated and consistent policy approach. However, the focus of this paper is the regulatory paradigm suggested above.

Regulation of Claims

A conceptual framework for the regulation of health and related claims is outlined in Table 1. The three categories of intervention relevant to functional foods are the nutrition message, the generic health claim, and the specific health claim.

Nutrition Messages A nutrition message sets out in general terms the nutri- tional consequences of the intake of the nutrient (e.g., “This food is a good source of calcium, which helps build strong bones and teeth.”). This definition is very similar to the Codex Alimentarius definition of a nutrient function claim: “[A] nutrient function claim is a nutrition claim that sets out in general terms the nutritional consequences for the normal functions of the body of the intake of a particu- lar nutrient.”*

Nutrition messages provide information to promote consumer understanding of the relationship between spe- cific nutrients and nutritional outcomes. Nutrition messages must be true and must not mislead or deceive. Beyond such requirements, there is no need for specific regulation. Food manufacturers are permitted, and indeed should be encouraged, to use nutrition messages in association with their foods. Nutrition messages are currently permitted in Australia.

Generic Health Claims The Australia New Zealand Food Authority has adopted the following definition of a generic health claim: “A health claim which relates the nutrient or nutrients in a product to risk reduction of a disease condition” (e.g., “This food is low in fat, and low-fat diets are associated with reduced risk for some cancer^.").^

If general health claims were to be permitted in Aus- tralia, the Nutrition Labeling Education Act (NLEA) model from the U.S. Food and Drug Administration would be an option to consider, although it is not without its critics.

Specific Health Claims Functional foods are regarded as being in a conceptual stage of development, and the nature of potential prod- ucts and their associated claims cannot be predicted with certainty. However, the conventional analysis of the rela- tionship between food and health may be reassessed as functional foods are developed, and it is assumed that this

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Table 1. Draft Conceptual Framework for Health and Related Claims Nutrition Message

(Nutrient Health Claims Nutrient Function

Diet Claims Claim) Generic SDecific Drugs Context Based on the Based on the Based on the Based on the Based on the Based on the

relationship nutrient relationship relationship relationship relationship between total content of between a between a between an between a diet and individual nutrient and nutrient in a individual food drug and the health-related foods health-related diet and and health- treatment of a outcomes outcomes health-related related disease

outcomes outcomes

Audience Population Healthy Healthy Healthy Target Individuals individuals individuals individuals individuals with a disease

and population

Mechanism Dietary Code of General Regulation Regulation Therapeutic guidelines practice provisions in goods

food law regulation

Approach Nutrition Industry self- Industry self- Prohibition/ Case by case Case by case education regulation regulation model claims

agencies regulators regulators regulators regulators regulators Agency Public health Food Food Food Food Drug

HEALTH< >DISEASE INCREASING REGULATORY CONTROL-

reassessment will be justified by data subjected to a pro- cess of rigorous scientific substantiation.

A claim for a functional food might be anticipated to relate consumption of the food with assistance in the pre- vention of a disease or the promotion of health. A claim for a functional food is intended to be quite distinct from more general health claims. Such a claim might be expected to link an individual food (albeit within the context of total diet) to a health-related outcome and be subject to specific case-by-case assessment, whereas a generic health claim relates the presence of a nutrient in a food to a general health benefit when the food is consumed as part of the total diet. Consequently, potential claims for functional foods might best be described as “specific health claims.”

The food industry may need some degree of market- ing exclusivity to ensure its ability to recoup the large fi- nancial investment required to perform the clinical research needed to meet regulatory requirements for specific health claims.

There may be a need for qualifying statements to complement functional food claims. These statements would address

conditions of use (for example, dosage and the need for the product to be prepared or consumed under certain conditions); specific information about the benefit (for example, its significance, who can be expected to receive it, and

how long it can be expected to last); and warning statements (for example, whether the prod- uct is unsuitable for certain people). It remains unclear whether a specific health claim would

need to be qualified by reference to the context of the total diet. Such claims would need to be approved on a case-by- case basis. To ensure that functional food messages are compatible with more general dietary guidelines, consider- ation should also be given to disqualifying claims on the basis of a food’s nutritional profile.

Substantiation Before approval, claims must be substantiated by scien- tific evaluation. In the United States, a framework has been proposed for the evaluation of the scientific data relevant to the health effects of a nutrient, food, or total diet? The framework sets out key procedural elements, such as the selection of qualified experts to evaluate the scientific data, the collection of relevant data, the deliberative evaluation of all existing data, and the rendering of a conclusion on the basis of the extent and quality of the data. It also con- siders issues to be addressed related to efficacy and safety, criteria for the evaluation of studies (e.g., taking into ac- count a preference for human studies, careful assessment of the total dietary intake of nutrients), and a model for assessment.

In regard to efficacy, the following questions are asked

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Does it work? Will the food or component in question cause a significant benefit when consumed as part of a healthy diet? How much is needed? Can a beneficial effect be achieved by consuming a reasonable amount of the food? Is a minimum or maximum amount required to achieve an effect? Who can benefit? (Most people, all individuals at moderate to high risk, or only some of these individu- als?) How does it work? Have the active components been identified? Is the biological mechanism fully under- stood? Are hypotheses regarding the mechanism sup- ported by data? Are there other benefits? Will consuming this food, either by itself or as part of the total diet, cause other health benefits? Is there related knowledge, for example, information on related foods, that may be relevant to understand- ing the efficacy or mechanisms of the food in ques- tion?

Regulation of Safety In the proposed U.S. framework, two questions are asked in relation to safety:

Are there toxicity or other safety concerns at reason- able or high consumption levels of the food? Are there any negative health consequences from consuming this food or from the resulting diet? Safety concerns can be addressed largely through

existing public health models that determine acceptable daily intake on the basis of toxicological studies, as well as appropriate dietary modeling to confirm the safety of the intervention.

The potential impact on population health is more dif- ficult to assess. Negative health effects can arise through overemphasis on functional foods, either singly or in com- bination, to the exclusion of a balanced diet. Given the evolving state of nutrition science and the roles of the many micronutrients required by the body, any interven- tion that encourages a move away from eating a balanced diet would be suspect.

Negative health effects can also arise if functional components or ingredients of a food are highlighted at the expense of the food’s total nutrient profile. If a substance that protects against tooth decay is added to confection- ery, this fact should not be highlighted without appropri- ate qualification by reference to the role of high-sugar and high-fat foods in the diet.

Clearly there is an important role for nutritional educa- tion in parallel with regulatory controls to minimize these potential negative effects and to moderate both claims and functional ingredients to ensure that functional foods can be included as part of a healthy and balanced population diet.

International Response

Enormous variation exists among countries in the types of messages and claims that may be used on foods. Most countries do not permit health claims, although many have the issue under review. Codex has a watching brief on this matter. Most countries are adopting a cautious approach.

US. Nutrition Labeling Education Act Initial reports on the implementation of the NLEA in the United States have described its labeling provisions as a “slippery slope” that is proving problematic for consum- ers, regulators, and the food industry alike. A review of this law has noted that

critics contend the encyclopedic nature of the infor- mation will leave consumers so confused that many will simply not bother reading it; food processors say they are too confused by the jumble of new rules and regulations; and the FDA has been inundated with thousands of pages of inquiries and requests for ~larification.~ It is important to keep this policy option in perspec-

tive. Fundamentally, the NLEA is about health claims, not functional foods.

Japan’s Foods for Specified Health Use The Japanese system of Foods for Specified Health Use is commonly referred to as an example of a regulatory system for functional foods. Strictly speaking, the Japanese sys- tem has not been established to address functional foods as such. Indeed, to the disappointment of the Japanese food industry, the Ministry of Health and Welfare deliber- ately avoided using the term functional food. Instead, the phrase tokuei hokenyo shokuhin was adopted. Literally translated, this means “food for specific health preserva- tion.”

It would appear that the Japanese system accommo- dates those foods that may loosely be classified as foods for special dietary uses or foods for special medical pur- poses (e.g., foods from which allergens have been removed) and permits more specific claims and warning statements on the product label. It may be of limited use as a model when considering the broader concept of functional foods.

Legal Environment

The effect of functional food regulation on existing theo- ries of public and private law regarding liability and obliga- tion is an often overlooked topic. In some cases, the po- tential legal liabilities are significant and require assess- ment.

Private Law Private-law theories relevant to functional foods include the laws of contract, tort, and product liability. The law of contract will often imply certain terms into contracts of

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supply between a retailer and a consumer. In Australia, for example, there is an implied term that a product is of mer- chantable quality (i.e., fit for the purposes for which the product is usually bought). Further, if a particular purpose for which the product is being bought is disclosed to the seller, and it is reasonable for the buyer to rely upon the seller’s expertise, there is a further warranty that the prod- uct is fit for that disclosed purpose. These terms cannot be excluded in consumer contracts.

When this theory is applied to functional foods, it means that a food marketed with a health claim must achieve the effect claimed in all prospective purchasers. It is not sufficient that the effect is achieved within the population in general unless the claim is qualified to that effect. Legal advice will need to be obtained on the wording of claims in light of the potential for liability.

The relevant law of tort is primarily the law of negli- gence, which is defined as failure to exercise a duty of care owed to another in circumstances in which loss or injury is a foreseeable result of such failure. A duty of care may well extend beyond contract law, where only the purchaser of the food has rights, and encompass all those who might potentially consume the food. Special care would be needed, for example, in the case of a functional food that might be consumed by infants or children as well as by adults. Similarly, care is needed to ensure that product de- velopment keeps pace with scientific knowledge, particu- larly knowledge that suggests problems might exist in rela- tion to the food.

The private-law theory of most direct relevance to h c - tional foods is that of product liability. In Australia, prod- uct liability is contained within a statutory scheme enacted as Part VA of the Trade Practices ActI974. This scheme imposes strict liability on a manufacturer for loss caused by a defective product. A product is defective if it fails to provide the level of safety that the community is entitled to expect. In particular, the scheme states that in determining the level of safety expected by the community, any claims and warnings on the product are to be taken into account. Clearly, under this scheme, claims about the health effect of a functional food have the potential to attract liability unless they are both accurate and effective in providing consumers with proper information about the food.

Consumers are not a homogeneous class, and courts will often consider the whole target audience for a claim in determining its meaning. In effect, this means the claim must be capable of being properly understood by the less educated in the population as well as by the average con- sumer.

Private-law theories of liability are not a hindrance to the development of functional foods, but regulatory ap- proval of a claim will be of limited use in defending a claim in a product liability action. It may provide some mitiga- tion, but it will not absolve the manufacturer of liability. The important issue is to ensure that functional food claims

are properly qualified where necessary and are communi- cated in a fashion that is accurate and comprehensible to the target consumers.

Public Law Few public-law issues relate to functional foods, but an important one is the need for functional food regulation to be consistent with the principles of the Sanitary and Phytosanitary Agreement of the World Trade Organiza- tion (WTO). This agreement is one of many WTO mea- sures that seeks to ensure that regulation is aimed at achiev- ing a legitimate public health objective rather than impos- ing a nontariff barrier to trade.

In essence, WTO compliance can be ensured in two ways: by justifying the proposed measure in terms of pub- lic health and safety, and by drawing upon a provision in the agreement which states that a regulation that conforms to any relevant international standard is deemed not to impose an unwarranted burden on trade. In this context, the review of health claims by the Codex Alimentarius Com- mission takes on great significance.

Scope for Alignment It is worthwhile to take stock of the potential for functional food regulation to be aligned, either within the world com- munity or within regional trading areas. At first glance, differences in dietary concerns, both social and nutritional, seem to present obstacles to alignment. In Australia, for example, population dietary concerns relate primarily to overnutrition, so dietary guidelines focus on the need to limit intake of particular nutrients. Deficiency concerns ex- ist, but only for identifiable subpopulations for which an intervention can be targeted. However, this is not the case across the Asia-Pacific region, so a functional food de- signed for the Australian context may be of limited use elsewhere.

However, potential for alignment may exist on the ba- sis of the principles used to control and substantiate claims. Although such alignment would not provide direct access to international markets, it would provide substantial equivalence in assessment. The development of Codex functional food standards will be instructive on this point.

Further Regulatory Issues In Australia, any proposal to amend the current prohibi- tion on health claims is likely to prove contentious. Many public health and consumer agencies and professionals are strongly opposed to the concepts of both health claims and functional foods. They regard these concepts as moti- vated primarily by marketing objectives within the food industry and the inappropriate interpretation of medical research by scientists who are not experts in public health matters.

It is often assumed that the introduction of techno- logical interventions, such as functional foods, that claim

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to deliver health-related outcomes will provide a panacea for society’s health problems-ranging from reducing hos- pital waiting lists to promoting longevity. However, closer examination of the assumptions behind such interventions and analysis of the outcomes of previous interventions suggest that expectations regarding realistic health out- comes must be kept in perspective. The health benefits of a technology, including a specially formulated food, that might be demonstrated for individuals in controlled envi- ronments cannot be assumed to apply to whole popula- tions.

Critical factors explain the distinction in the likelihood of an intervention having a health impact at an individual or a population level. These factors include the accessibil- ity of the intervention to the total population. A lack of understanding of appropriate usage or actual costs is among several considerations that can make interventions poorly accessible to population groups, sometimes even those groups to which the intervention is targeted.

The nature of the research is also important. For ex- ample, a trial of a product containing a special fiber may indicate that it will reduce cholesterol levels in hypercho- lesterolemic men. Such a result prompts several questions, including: Can it be assumed that this benefit will also apply to men with normal cholesterol levels? For women? For children? How much fiber must be consumed? Will the fiber have a beneficial effect on morbidity and mortality rates?

Need for a Public Process

The issue of functional foods requires close attention by

regulators, industry, researchers, and consumers. Each has a unique perspective, and consensus should not be as- sumed. Each group has real concerns and real hopes for what can be achieved through the inclusion of hnctional foods within diets, yet wavers with a Malthusian doubt that the future may hold nothing but failure. For the poten- tial of functional foods to be achieved, all groups must be involved.

The Australia New Zealand Food Authority develops regulations through an open consultative process in which matters are assessed within an agreed, transparent policy framework. One of the key strengths of this process is the ability to draw out community views and to explore ways in which everyone’s needs can be met. This can only be effective if all groups participate, and only through partici- pation will a true regulatory analysis of functional foods be developed.

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