Dear Colleagues,

Health claims are usually viewed primarily through the lens of compliance. The marketing team proposes language, the scientific affairs team assembles the support, and the legal team decides whether the claim is defensible. A stronger claim can improve conversion, command a higher price point, open a new channel, or give clinicians a reason to recommend the product.

Clinical evidence can increase that value. But it also costs money, delays commercialization, and can come back null or unfavorable. Over the last several years, we have been formalizing this tradeoff as risk-adjusted claim value. For a proposed claim c and evidence strategy e, we compare expected incremental net present value against the best practical alternative:

E[NPV(c,e)] = ΔV_commercial − E[L_claim] − C_evidence

Where E denotes expected value, V_commercial the incremental commercial value of the claim, L_claim the loss associated with a challenge, and C_evidence the cost of generating the evidence. Most companies are reasonably good at estimating the commercial piece of the equation. They already forecast market depth, serviceability, acquisition cost, and lifetime value. However, risk is usually less defined. A claim becomes “conservative”, “aggressive”, or “high risk” even though those labels combine several events with very different probabilities. We find it more useful to break risk into conditional probabilities:

E[L_claim] = P(challenge) × P(material loss | challenge) × E[loss severity]

Severity includes legal cost and monetary remedies, but also the commercial value lost if the claim is narrowed, withdrawn, or becomes unusable in an important channel.

The public record is useful for estimating a priori risk and severity. Today:

• Challenges are uncommon. The overall challenge rate is <0.1% of supplement products per year. The FTC averaged about eight cases a year between 1998 and 2022 across supplements, foods, OTC drugs, devices, and diagnostics. Private plaintiffs are more active, and Perkins Coie counted 63 dietary supplement class actions in 2025.
• However, defeat when challenged is common. The National Advertising Division (NAD) completed 128 dispositions in 2024. Sixty resulted in modification or discontinuation, and another 26 combined substantiation with some modification or discontinuation. Compliance is voluntary and is reported at about 95%.
• Immediate monetary loss is secondary to claim loss. Monetary settlements rarely exceed 7 figures. On the other hand, a restricted claim can reduce conversion, pricing power, channel access, and the return on prior brand investment.

The FTC tends to pursue national advertising that shows a pattern of deception and potential consumer injury, and its orders are binding and can restrict a company’s future claims. In contrast, NAD cases are usually initiated by a competitor (101 of 128 dispositions in 2024), and the usual outcome is a recommendation to modify or discontinue the claim, with no monetary sanction. Voluntary compliance can make NAD look like a paper tiger. But NAD increasingly refers companies that ignore its recommendations to state attorneys general as well as the FTC. The risk profile will need to be updated if the tiger grows teeth.

Because challenges appear infrequent, evidence purchased only for legal insurance often has poor returns (a $500,000 RCT typically buys $80,000 of insurance). Returns are much better when the same trial also unlocks a substantially better claim or makes an important claim much harder to dislodge.

Where inputs are available for a given product category, we have begun to model the decision by simulation. We anchor probability distributions around plausible modal values for the upside (market depth, claim lift, LTV, etc) and the downside (trial risk, challenge probability, conditional loss, etc) and run Monte Carlo simulations across combinations of claim specificity and evidence investment. The result is a payoff surface rather than a binary recommendation*.

For a differentiated, IP-backed product, the surface usually supports deeper clinical investment. The return eventually peaks as additional specificity and additional studies cost incrementally more. For a generic or white-label product, the commercial return on additional evidence flattens much earlier. Some substantiation can still improve credibility, conversion, retailer access, and HCP confidence, but an expensive RCT supporting a highly specific generic claim may create knowledge that competitors can readily appropriate.

There are important exceptions that justify clinical investment in a nonproprietary product. They include high brand equity, a large SAM, an unusually strong claim “need state”, a retail or HCP channel that requires product-specific evidence, and formulation-specific data that create some degree of commercial exclusivity.

Centrum Silver is an example of the high brand equity play. It is a commodity multivitamin, but the brand is nationally distributed to a large market of older adults who worry about memory loss. The COSMOS-Mind trial tested the finished product in >2,000 seniors over 3 years, finding significant improvements in global cognition, memory, and executive function versus placebo. Centrum can now advertise the finished product as “clinically shown to support cognitive health,” which store-brand equivalents cannot similarly claim.

That is the basic framework. However, it used a relatively simple scenario with only two product archetypes, and treated evidence as a single axis. Real brands vary in scale and channel, while proposed studies vary in design, cost, and endpoint. Let’s see how those differences can change the payoff profile of alternative evidence strategies across brand and market conditions.

We simulated five evidence options across nine brand and market states. The scenarios range from single-ingredient literature to open-label studies (about $80,000 with patient-reported outcomes, about $200,000 with blood biomarkers) to a finished-product RCT (about $300,000 decentralized with PROMs, about $900,000 on site with biomarkers).

Break-even revenue ≈ C_evidence ÷ [ P(success) × Δ claim lift × contribution margin × years of advantage ]

Three findings emerged.

• Micro brands had little to gain from an RCT. For a $2M generic label, relying on dose-matched ingredient literature was usually the best strategy. NAD applied that standard to Alice Mushrooms in September 2026, accepting a saffron study at the product dose and rejecting two other ingredients at noncomparable doses.
• Open-label or pilot studies outperformed the ingredient literature for small IP-backed brands. These studies support a “clinically studied” claim, which consumers often misremember as “clinically proven” (Murphy et al. 2023). However, regulators are less forgiving of the stronger claim, with the NAD recommending against using “clinically proven” without randomized data (2021 Nano Glutathione and 2022 Culturelle IBS Complete Support decisions).
• RCTs were most valuable when they were needed to unlock a retail or professional channel. The claim must still match the result. Prevagen claimed memory benefits after its trial showed no overall effect, and a court ordered the claims removed in 2024. TruHeight claimed “clinically proven” from a 32-participant randomized trial whose reported difference the FTC judged not meaningful, and accepted a $4M FTC judgment in 2026.

Across these states, the best strategy was the least expensive study that changed the claim. Most brands should start with dose-matched literature and add studies as revenue grows, as a retailer or clinician asks for product data, or as they gain ownership of their evidence.

To see which assumptions matter most, we ran a sensitivity analysis for an intermediate revenue product, ranking each input by its correlation with the RCT’s advantage over the next best option.

Challenge risk had almost no bearing on the RCT decision. The strongest drivers were access to a gated channel (rank correlation 0.63), the prior that the product works (0.29), and the strength of the existing ingredient literature (−0.28), which lowers the value of a new trial. Challenge risk was negligible by comparison (<0.1), consistent with the poor return on evidence bought only as legal insurance.

In most companies, responsibility for evidence strategy is split across departments with different objectives. Marketing is rewarded for claim lift, R&D is focused on rigor, and legal is intent on minimizing downside. Each can make a locally sensible decision that is globally suboptimal. That tension is understandable, and probably healthy. However, a useful discipline is to align the intended claim, endpoint, and channel early.

It is also worth recognizing that clinical evidence is an investment in market access and claim value, but the advantage it creates depreciates as competitors catch up and standards change. The question is not simply whether to generate evidence, but when, how much, and for how long it is likely to retain value. We will take a look at claim utility decay in an upcoming Bulletin. Stay tuned.

The above content is updated as of October 2026, and subject to change. It is intended for strategic planning, and is not financial or legal advice.

Dear Colleagues,

Several years ago, a physician-led investment firm asked us to evaluate Iterum Therapeutics, an Irish company developing ORLYNVAH, a novel oral antibiotic for urinary tract infections. Despite the obvious nobility of combating antimicrobial resistance, we cautioned against the investment. Those investors are now taking a large loss, because Iterum filed to liquidate the company in March 2026.

We don’t think this is a story about a badly run company. It is about a market in which there is no buyer for antibiotics we might desperately need in the future.

Let’s look at what happened in this case.

ORLYNVAH (sulopenem) is a penem, a close cousin of the carbapenems that shares their broad-spectrum activity, including against extended-spectrum beta-lactamase (ESBL) producing pathogens. ESBL organisms are responsible for nearly 200,000 infections and 10,000 deaths a year among hospitalized Americans. Carbapenems must be given intravenously, so a woman with an ESBL urinary infection and no oral option is either admitted to the hospital (roughly $4,000 a day) or sent home with a PICC line and a visiting nurse (also expensive).

As the first oral penem, ORLYNVAH represented a major advance for a problem with little options. Pfizer discovered sulopenem in the mid-1980s and abandoned it in 2010, citing a shift in focus, though published reviews point to development costs and market return. Corey Fishman and Michael Dunne (Iterum’s founding CEO and CMO, respectively) had already taken dalbavancin, another shelved Pfizer antibiotic, through Durata Therapeutics and sold the company to Actavis for $675 million. Why did dalbavancin work? Because it is an infusion. One dose can replace two weeks of intravenous vancomycin, allowing the hospital that buys it to capture the savings.

Fishman and Dunne named their next company Iterum - Latin for “again” - an inside joke that amused retail investors. In 2015, they licensed sulopenem under a deal in which commercial milestones did not begin until $250 million in sales. The premise was compelling. An oral step-down therapy could get patients out of the hospital sooner while allowing them to complete treatment at home.

Iterum then tested that step-down thesis in two randomized trials. Inexplicably, neither trial measured economic endpoints such as length of stay or readmission, and both missed non-inferiority against ertapenem in complicated urinary and intra-abdominal infection. That left the positive SURE 1 trial in uncomplicated UTI. Unable to finance another complicated UTI trial, Iterum settled for the narrower indication.

The company eventually secured FDA approval in October 2024, with approval limited to adult women with uncomplicated UTI and limited or no alternative oral treatment options. It launched the following August at roughly $3,600 per treatment course, into a market dominated by inexpensive generics. Uptake was minimal. Within months, Iterum ran out of money and its liquidators began withdrawing ORLYNVAH from the market.

None of this is unique to Iterum. AstraZeneca, Novartis and Sanofi exited antibacterial research between 2016 and 2018. Antibiotic developers Achaogen, Melinta and Tetraphase all collapsed. Seven of the 16 antibiotics approved in the US between 2009 and 2019 were worth close to zero by 2020. Not one antibiotic became a standalone commercial success.

Even the early success stories eventually became cautionary tales. Paratek Pharmaceuticals’ NUZYRA (omadacycline) was one of the strongest antibiotic launches of its generation and was once projected to exceed $500 million in peak sales. Its best year produced only about $138 million in revenue, despite substantial procurement by BARDA. When Paratek was acquired, much of the remaining upside was pushed into contingent value rights tied to future sales. Achaogen likewise received substantial BARDA support and still went bankrupt.

How do you commercialize a drug meant to be used sparingly? Why develop a medication you hope is never needed? There is no business success case in this category, only degrees of loss. Iterum compounded the problem by choosing uncomplicated UTI, the most genericized indication in medicine.

One response is to wait until resistance becomes urgent enough to support a conventional market. Perhaps scientific ingenuity, accelerated by AI-driven drug discovery, could then produce a treatment on demand.

We think programs like Warp Speed are the wrong comparison. Pfizer’s agreement, signed while its vaccine was still in Phase I/II, would pay for 100 million doses if the FDA authorized it. It was a guaranteed purchase, not ingenuity on demand. Not surprisingly, Pfizer declined research funding and took the purchase contract instead. The scientific platform was also already mature; mRNA technology had been in development for more than a decade and was ready to scale just in time for the pandemic.

There is legislation designed for this market failure. The Pioneering Antimicrobial Subscriptions To End Upsurging Resistance (PASTEUR) Act would pay for access to qualifying critical-need antimicrobials rather than leave manufacturers entirely dependent on prescription volume. The 2026 House proposal sets annual subscription amounts up to $300 million, offset by U.S. sales revenue, for terms of up to ten years. Despite bipartisan support and backing from more than 200 medical and public-health organizations, four versions of the bill have stalled. A key concern is whether Congress can reliably separate indispensable new antibiotics from costly incremental ones.

Since ORLYNVAH, three new oral antibiotics for urinary tract infection have entered the market and may yet succeed. Pivya (pivmecillinam, approved April 2024) is a forty-year-old European molecule with no development costs to recover. Blujepa (gepotidacin, approved March 2025) and Utebzi (tebipenem pivoxil, approved June 2026) were developed by and licensed to GSK, respectively. None had to shop for a commercial or buyout partner after approval.

Pfizer was ultimately correct. Our investment view is therefore cautious. Antibiotics can be excellent drugs and poor assets. The immediate market advantage is produced by avoiding hospitalization, replacing repeated intravenous treatment, and securing contracted purchases. The possibility that society may desperately need a drug someday is not, by itself, a good business model.

The above content is updated as of September 2026, and subject to change. It is intended for strategic planning, and is not financial or legal advice.

Dear Colleagues,

The FDA and Congress are pursuing the most active federal push in many years to tighten oversight of dietary supplements. We expect stronger requirements for product documentation and traceability, affecting both new dietary ingredient notification (NDIN) and generally recognized as safe (GRAS) pathways. Let’s take a closer look.

NDIN Update

Today, a manufacturer must file a new dietary ingredient notification (NDIN) at least 75 days before marketing a dietary ingredient that was not sold in the United States before October 15, 1994, unless the ingredient later entered the food supply without chemical alteration. Ingredients that predate that cutoff are old dietary ingredients (ODI) and exempt from notification. Enforcement of NDI/ODI remains uneven, and is done through warning letters and reversals such as FDA’s December 2025 decision on nicotinamide mononucleotide.

The Dietary Supplement Listing Act of 2026 (S. 3677, Sen. Durbin, and H.R. 8370, Rep. Dexter) amends the Federal Food, Drug, and Cosmetic Act through a new Section 403D to create the first mandatory listing requirement for supplements, and would cover all SKUs sold by the company. Each public listing would include:

• Product, brand, and flavor names
• Complete ingredient list and electronic copy of the label
• Serving size and directions for use
• Allergen statements, warnings, and safety language
• Every structure or function claim on the label or package insert.

FDA would publish these nonconfidential fields in a searchable database within two years of enactment. Separately, the FDA could request nonpublic supply chain information. Within 5 days of that request, the responsible party would need to provide the name and address of every facility where the product is manufactured, packed, labeled, or stored, along with every supplier of its dietary ingredients. FDA would keep such information confidential.

For most organizations, compliance is largely a matter of timely filing and updated records. The bill would not create premarket approval, would add no testing requirement, and would keep proprietary blends and intellectual properties confidential. A product on the market by January 1, 2027 would have 18 months from enactment to file its listing, and two years to print the FDA-assigned listing number on the label. A product launched after that date would have no grace period. Failure to list, to update a listing, or to produce requested information would result in misbranding and expose the product to seizure.

Prognosis†: 3% to advance beyond committee, 1% to be enacted

GRAS Update

A substance is GRAS when qualified experts generally recognize it as safe under the conditions of intended use. Although GRAS applies to conventional foods and additives, many supplements use GRAS substances as ingredients or excipients.

In December 2025, FDA submitted a proposed Rule (RIN 0910-AJ02) to the Office of Management and Budget (OMB). If finalized, the Rule would largely eliminate the self-affirmed GRAS pathway by requiring companies to notify FDA, with supporting safety data, before introducing a substance to market as GRAS. The proposal is expected to exempt substances already listed or affirmed as GRAS, as well as substances for which FDA has issued a “No Questions” letter.

The proposal has remained under review at OMB’s Office of Information and Regulatory Affairs (OIRA) well past the 90-day period such reviews customarily take. Prior guidance suggested publication no sooner than mid 2026, which has now arrived. The Rule could be issued at any time, or it could remain pending indefinitely. The delay may reflect concern about whether FDA can require GRAS notification without congressional action. In 2021, the U.S. District Court for the Southern District of New York upheld the FDA’s voluntary GRAS framework, but a compulsory reporting system would likely require Congress to pass new legislation.

Several bills are now pending in the House and Senate that would supply the FDA with various levels of authority. Ranked in order of least to greatest restrictiveness to supplement vendors:

• The “Food Chemical Reassessment Act of 2025” (H.R. 4306, Rep. Schakowsky), introduced on July 10, 2025, is the least disruptive. It would govern only the postmarket side and would leave the self-affirmation pathway intact. The bill would require the FDA to reassess ≥10 marketed food substances or classes every three years. It further named the first candidates to be reviewed, which include butylated hydroxyanisole (BHA), butylated hydroxytoluene (BHT), propyl gallate, sodium benzoate, sodium nitrite, and synthetic dyes.

  Prognosis†: 2% chance to advance beyond committee, <1% chance to be enacted.

• The “GRAS Oversight and Transparency Act” (H.R. 7291, Rep. Lawler), introduced on January 30, 2026, is narrowly targeted. The bill would create an interagency board (HHS, FDA, USDA, EPA) to review only manufacturer GRAS designations made before 2000. Manufacturers would have 90 days to identify covered designations. Reviews would occur over two, four, and ten years. The board and the Act would sunset after ten years.

  Prognosis†: 3% chance to advance beyond committee, 1% chance to be enacted

• The “GRAS Act” (H.R. 4958, Rep. Pallone), introduced on August 12, 2025, would require companies to notify FDA before marketing a substance as GRAS for a new use, and before representing a previously unmarketed substance as GRAS. Therefore, these changes apply prospectively. The FDA would need to issue a written No Objection statement before commercialization. The bill would also require public disclosure, public comment, reassessment of ≥10 substances or classes every three years, and user fees to fund petitions, notices, and reassessments.

  Prognosis†: 10% chance to advance beyond committee, 3% chance to be enacted

• The “Ensuring Safe and Toxic Free Foods Act of 2025” (S. 2341, Sen. Markey), introduced on July 17, 2025, is more restrictive. It would narrow what can qualify as GRAS and would apply retroactively. Companies would have two years to notify FDA of every ingredient already marketed through self determination. The bill would also exclude substances associated with carcinogenic, reproductive, developmental, or other specified toxic effects, and would require FDA to reassess ≥10 substances or classes every three years.

  Prognosis†: 2% chance to advance beyond committee, <1% chance to be enacted

• Finally, the “Better FDA Act of 2025” (S. 3122, Sen. Marshall), introduced on November 6, 2025, is the most onerous. It would require the FDA to maintain a public list of GRAS substances and would apply retroactively. Existing GRAS substances would need to be listed or under review within two years. New substances would require notice 120 days before first use. If FDA did not preliminarily exclude a substance within 180 days, the substance would be added to the list. The bill would also create postmarket reassessment and petition pathways.

  Prognosis†: 5% chance to advance beyond committee, 3% chance to be enacted

States have begun setting their own supplement ingredient and sales rules, and a product that fully complies with FDA can still violate a stricter state law. The Dietary Supplement Regulatory Uniformity Act (H.R. 7366, Rep. Langworthy) is a federal measure aimed at remedying these discrepancies. It would make FDA the single national standard, superseding state requirements that conflict with or exceed federal rules, while still allowing a pathway to petition FDA where a state has a genuine, evidence-based local concern. In practice, a product lawful under FDA rules could not be restricted under a different standard state by state.

Enactment of at least one bill written by the close of the 2027 congressional session is unlikely (5-10%), but the probability of the FDA obtaining notification authority of a broadly similar character through a compromise bill or omnibus vehicle is more probable (15-20%).

Looking Ahead

Near and medium term risk to the industry remains low, especially for partners that already prepare their portfolios under NDIN standards. Even so, the vast majority of our client base is taking proactive steps now, rather than waiting to see whether these proposals materialize.

We are tracking the Rule’s progress and each of the pending bills. If necessary, we are happy to assist your teams in preparing NDIN or GRAS documentation and comments for the OIRA review. An update about the legislative posture will be sent out in another quarter.

The above content is updated as of June 2026, and subject to change. It is intended for strategic planning, and is not legal advice.

†From govtrack.us. For reference, only 11% of all bills advance beyond committee and 2% are enacted.