U. S. Food and Drug Administration
Center for Food Safety and Applied Nutrition
March 1999

Economic Characterization of the
Dietary Supplement Industry
Final Report

Table of Contents

SECTION 2
PRODUCTION AND SUPPLY OF DIETARY SUPPLEMENTS

Dietary supplements are made up of a diverse group of products, so production practices differ as much as the products themselves. Even within a particular category of DS products, there may be many different types of production processes. However, information on how the products are produced is necessary for characterizing the supply of DS products. In this section, we describe the production processes for vitamins, minerals, herbals and botanicals, amino acids, proteins, and other DS products, as well as the final dosage forms of all DS products. Good manufacturing practices (GMPs) and costs of manufacturing are also described briefly.

2.1 Production Processes for DS Products

Within each DS product type are numerous different individual substances. For example, 11 vitamins and 13 minerals have been identified as essential nutrients for humans (Clayman, 1994), but additional non-essential vitamins and minerals have been identified as well (see Tables 2-1 and 2-2). Perhaps several hundred herbal and botanical products have been manufactured for human consumption. In this section, we summarize the production practices for each type of DS product for which we were able to obtain information. In addition to the primary DS product types, we also include information on algae, bee products, and teas.

2.1.1 Production Processes for Vitamins

Vitamins are a group of organic (carbon-containing) compounds that must be consumed in the diet in small quantities for normal metabolism, growth, and health (Hendler, 1990). Thirteen substances have been identified as vitamins for humans. Vitamins A, D, E, and K are characterized as fat-soluble vitamins. Vitamins B₁, B₂, B₃, B₆, B₁₂, and C; biotin; folic acid; and pantothenic acid are water-soluble vitamins (Ullman's Encyclopedia of Chemical Technology, 1996). Table 2-1 lists these vitamins along with information on their presence in foods, methods used for commercial production, companies engaged in production, and quantities produced. There are three basic methods for producing vitamins on a commercial scale: (1) synthesis, (2) fermentation, and (3) extraction from natural products. Table 2-1 also indicates which of these three methods is used for each vitamin. The following is a brief description of each method.

Synthesis

Synthesis, which involves the production of vitamins through the combination of basic chemicals, is by far the most widely used method of production. First, scientists determine how to synthesize the compounds in a laboratory; then manufacturers scale up the processes to industrial volumes. As Table 2-1 indicates, vitamin B₁₂ is the only one of the 13 vitamins that is not produced synthetically.

Table 2-1. Vitamins: Description, Occurrence, and Methods of Production

Fermentation

Fermentation is a process whereby bacteria are grown in tanks. The tanks, called "fermenters," are filled with a nutrient-rich medium and are inoculated with a strain of bacteria that will produce the desired vitamin. The fermenters are held at controlled temperatures to allow the bacteria to multiply at an optimum rate. Bacterial cells are then separated from the medium with filters or centrifuges, and the mass of cells is dried. Evaporation or spray drying can also be used to separate the cells from the medium. Various processes, which may include heating and the addition of chemicals, are then used to lyse, or break open, the cells, releasing the vitamin-rich cell contents. Further purification and concentration follows and may include solvent extraction. Several vitamins are produced through fermentation, and scientists are striving to improve techniques. Vitamin B₁2 is produced on an industrial scale exclusively through fermentation (Ullman's Encyclopedia of Chemical Technology, 1996).

Extraction from Natural Products

Scientists originally isolated each of the vitamins from some natural source. Vitamins A and D were originally isolated from fish liver oil; vitamin E from wheat germ oil; vitamin K from alfalfa; vitamins B₁ and B₆ from rice; vitamin B₂ from eggs; and vitamin B₁2, niacin, folic acid, pantothenic acid, and biotin from liver. Although it is possible to extract all vitamins from natural products, it is generally infeasible on an industrial scale. An exception to this is vitamin E, which is produced in large quantities from a by-product of vegetable oil production. Relatively small quantities of vitamins A and D are also extracted from fish oils. Various processes are used for extraction, including distillation and solvent extraction (Ullman's Encyclopedia of Chemical Technology, 1996).

2.1.2 Production Processes for Minerals

Unlike vitamins, which are organic substances, minerals are inorganic compounds that are required in small quantities in the diet to maintain health. Inorganic substances that humans require in quantities greater than 100 milligrams per day are called "minerals," and those required in quantities less than 100 milligrams per day are called "trace elements" (Hendler, 1990). Table 2-2 lists 17 minerals that are commonly consumed in dietary supplements, along with the forms of the minerals used in supplements. Minerals, by their nature, come from the earth. They are derived from rocks or soils or may come from sea or lake water. Mineral supplements that are called "plant minerals" may actually be mined from deposits of sedimentary rock.

Chelated and Colloidal Minerals

Two forms of mineral supplements are marketed as being more easily absorbed by the body. These are chelated and colloidal minerals. A chelating agent is a molecule that binds to metal. Chelated minerals used in dietary supplements have been processed so that the metal atoms are surrounded by a chelating agent, in this case, amino acids (Reach 4 Life, 1998). A colloid is a suspension of extremely fine particles in a continuous medium. These particles do not settle out readily and are not readily filtered (The American Heritage Dictionary, 1985). Colloidal minerals used as dietary supplements are minerals that have been ground into very small particles and have been suspended in water. Colloidal mineral supplements come in liquid form (Reach 4 Life, 1998).

Table 2-2. Minerals Found in Dietary Supplements

2.1.3 Production Processes for Herbals and Botanicals

Dietary supplements from plant sources are sometimes referred to as "phytopharmaceuticals." They are produced from fresh, dried or otherwise preserved plants or parts of plants. The active ingredients are usually not completely isolated but rather are obtained along with other naturally occurring components of the plant. (These other components are often believed to influence the efficacy of the active ingredient.) Sometimes the active ingredients are concentrated, and undesirable substances such as chlorophyll, tannins, or resins, are removed (List and Schmidt, 1989). The following sections discuss the various stages of production of dietary supplements of plant origin.

Cultivation and Collection of Plant Materials

Most of the plants used for dietary supplements or medicinal purposes are cultivated, that is, grown on farms. Some, however, may be collected from the wild (Wijesekera, 1991). The following section discusses both methods for obtaining botanicals or herbals.

Packaging of Dried Plants

Once drying is complete, plants are packaged in preparation for shipping and further processing. Dried herbaceous plants are generally compressed into bales weighing from 60 to 100 kg (13 to 220 pounds), which are then sewn into fabric bags or wrapped in plastic. Materials that cannot be baled, such as roots and bark, are placed in sacks. Smaller bags may be used for dense materials such as dried fruits or seeds. Very fragile materials, such as flowers, are packaged in crates. Dried plant materials tend to be hygroscopic (readily absorbing moisture) and must be stored under controlled humidity. Highly hygroscopic materials are generally packed in plastic (Hornok, 1992).

Cleaning and Sorting

When the sacks or bales arrive at the processing facility, processors open the packages and clean the dried plants to remove as many impurities as possible. Sand is removed pneumatically and iron-containing metals are removed magnetically. Next, processors sort the plant pieces by size, since different end-uses require different particle sizes. For example, finely shredded material may be used for tea bags and somewhat less finely shredded material for loose teas or infusions, while coarsely shredded material may be sold directly to consumers or used for extraction. Particles that are already the desired size can go directly into storage to await further processing. Particles that are too big undergo additional grinding, cutting or shredding, and sieving. Various methods are used to reduce particle size including hammer action, pressure, friction, impact cutting, and shredding (List and Schmidt, 1989). Some plant materials are packaged and sold at this point without any additional processing. Some proceed through an extraction process, which the following section describes.

Extraction

Extraction is a process whereby the desired constituents of a plant are removed using a solvent. The following section describes several methods used for preparing extracts, including organic solvent extraction, supercritical gas extraction, and steam distillation.

Purification and Concentration of Miscella. Miscella that has been separated from the plant material generally contains some unwanted substances such as tannins, pigments, microbial contaminants, or residual solvent. Methods such as decanting, filtration, sedimentation, centrifuging, heating, adsorption, precipitation, and ion exchange are used to separate impurities from the miscella. Sometimes the miscella resulting from solvent extraction is used as the final dosage form. This is known as a "fluid extract" (List and Schmidt, 1989).

The miscella is sometimes concentrated in order to increase the proportion of the desired substance. This is done through evaporation or vaporization. Solvent is generally recovered and reused (List and Schmidt, 1989). The degree of concentration depends on the desired end product. Equipment for concentrating the miscella may include descending film, thin layer or plate concentrators. Any method used to concentrate the miscella must avoid excessive heat because the active compounds may be subject to degradation (Wijesekera, 1991). Sometimes extracts are dried completely using vacuum freeze dryers, cabinet vacuum dryers, continuously operating drum or belt dryers, microwave ovens, or atomizers. The technique for drying depends on the stability of the product and the amount of moisture that must be removed. The resulting powdered extract is less subject to microbial contamination than are liquid extracts (Hornok, 1992).

Extraction with Supercritical Gases. This is a method for extracting active ingredients using gases. The plant material is placed in a vessel that is filled with a gas under controlled temperature and high pressure. The gas dissolves the active ingredients within the plant material, then passes into a separating chamber where both pressure and temperature are lower. The extract precipitates out and is removed through a valve at the bottom of the chamber. The gas is then reused. Gases suitable for supercritical extraction include carbon dioxide, nitrogen, methane, ethane, ethylene, nitrous oxide, sulfur dioxide, propane, propylene, ammonia, and sulfur hexafluoride. An advantage of supercritical extraction is that it can take place at low temperature, thus preserving the quality of temperature-sensitive components (List and Schmidt, 1989).

Steam Distillation. Steam distillation is another method for extracting active ingredients from medicinal plants. The plant material is loaded onto perforated plates inside a cylindrical tank or still, and steam is injected from below. The steam dissolves the desired substances in the plant, then enters a condenser where it is condensed back into a liquid. This condensate then passes into a flask, where the extract either rises to the top or settles to the bottom and is separated from the water. Distillation is complete when there is no more extract present in the condensate. The water may be reused, and the extract is purified through centrifuging and filtering (Hornok, 1992).

Other Minor Extraction Methods. Other minor methods for making extracts include cold pressing and the enfleurage process. Cold pressing is a process used to extract essential oils from citrus plants through pressing (Hornok, 1992). The enfleurage process is the same as the technique used to make perfume from flowers: purified fats are used to extract essential oils from plant parts. Plant material is spread onto sheets of purified fat, which dissolve the essential oils (List and Schmidt, 1989).

Sometimes practitioners of herbal medicine prepare extracts for immediate use. These include aqueous extracts known as decoctions, infusions, or macerations. Plant material is mixed, agitated, and soaked in water to dissolve the active ingredients. Controlling microbial contamination can be difficult in aqueous extracts. Oily drug extracts, also called "medicinal oils," may be prepared by soaking or macerating the plant material in an oil such as almond, peanut, olive, poppy seed, apricot kernel, or peach kernel oil. Vinegar is sometimes used to extract active ingredients as well. Plant materials are soaked in acetic acid, and the vinegar is consumed as the final dosage form (List and Schmidt, 1989).

Controlling the Quality of Extracts

Once an extract has been produced by one of the methods mentioned above, producers can use a number of tests to evaluate the quality and purity of their product. First, they may examine the physical characteristics of the extract. This may include evaluating its appearance, pH, solubility, total solids content, ash content, and in the case of dried extracts, particle size. Next, they may analyze the components of the extract to be certain it contains the appropriate quantities of desired ingredients. Chromatography (including thin layer, column, high pressure liquid, and gas chromatography) may be used for this. Finally, they may test the extract for impurities such as residual solvents, herbicides, and pesticides and for microbial contamination (Wijesekera, 1991).

Some extracts are labeled and sold as standardized extracts. According to industry sources, the desired constituents in standardized extracts are measured and are listed as a percentage of the total weight of the extract. For example, echinacosides are the desired compounds present in echinacea extract. A capsule containing 250 mg of echinacea extract standardized to 4 percent would contain 10 mg of echinacosides. In some cases, the desired constituent is a known active ingredient. In cases where the active ingredient has not been identified, another "marker " compound, or substance that is known to be present in the plant, may be measured for the purpose of standardization. Spectrophotometric testing and high pressure liquid chromatography may be used to measure standardized constituents (Standardized Extract Product Guide, 1997).

2.1.4 Production Processes for Amino Acids

Amino acids, which are the building blocks of proteins, are known as "chiral" compounds. This means that they exist in two forms that are mirror images of one another, like right and left hands. Amino acids are identified as either L or D, to indicate the chiral form of the molecule. Living organisms can only use the L form of amino acids, and are unable to recognize the D form. The amino acids used in dietary supplements are generally the L form and are labeled as such (L-cystein, L-lysine).

Amino acids used in dietary supplements can be made through either synthesis or fermentation. The synthesis of an amino acid starts with basic chemicals and results in a 50-50 distribution of the L and D forms. Since the D form is useless to humans, it is generally removed. The fermentation process for producing amino acids uses yeasts that are fed nutrients from plant sources such as corn or soy. The yeasts are grown under controlled conditions and the amino acids are extracted from the yeast (see Section 2.1.1 on vitamins for a more detailed description of the fermentation process). Since yeasts are living organisms, this method results in 100 percent L-form amino acids (Heartland Lysine, 1998; Musashi USA, 1998).

2.1.5 Production Processes for Proteins

Various types of purified plant and animal proteins are sold as dietary supplements in the form of powders or granules. Soy is a major source of these proteins. The term soy protein refers to a processed, edible dry soybean product. The production of soy proteins for human consumption is generally a separate process from the production of vegetable oils or animal feeds. Soybeans that are rejected from the food-grade process are diverted to these other uses. Some general categories of soy proteins are full-fat soy flour, defatted soy flour, soy protein concentrates, and soy protein isolates. Full-fat soy flour, which is about 40 percent protein, is made by grinding whole, dried soybeans. Defatted soy protein is made from soybeans that have undergone solvent extraction to remove oil. It contains 52 to 54 percent protein. Soy protein concentrates are flours that have had all water or alcohol-soluble components removed. These are at least 65 percent protein. Soy protein isolates, which are 90 percent protein, are concentrates that have been rid of fiber. Soy concentrates and isolates often undergo additional processing, such as pH adjustment or hydrolysis, before drying. (Hydrolysis is the decomposition of a compound by reaction with water.) There are numerous options for further processing soy proteins, many of which are trade secrets (Erickson, 1995).

Whey and casein are two other types of protein used in dietary supplements. Both are products of the dairy industry. Whey is a by-product of the manufacture of cheese, and casein is the main protein found in milk and cheese. Other sources of protein used in dietary supplements include eggs, grains and other vegetable sources, and collagen, which is extracted from the cartilage and connective tissue of slaughtered animals.

2.1.6 Production Processes for Animal Products

Some dietary supplements of animal origin are compounds that have been purified from parts of animals, using techniques such as solvent extraction or column chromatography, while others are composed of whole concentrated animal tissue. For example, chondroitin sulfate, a dietary supplement used to relieve symptoms of arthritis, is extracted mainly from bovine trachea, or sometimes from shark cartilage (Sturtz, 1998). Dietary supplements known as "glandulars" are raw animal glands such as the pituitary, prostate, or thyroid glands that have been lyophilized (freeze-dried) and placed in capsules or tablets (110% Products, 1998).

2.1.7 Production Processes for Other DS Products

A number of dietary supplements are not included in this section on production processes because information is not available from secondary sources. In addition, any available information on the dietary supplements referred to as "constituents, metabolites, and concentrates" has been included in one of the other categories. For example, concentrated extracts are discussed in the section on Herbals and Botanicals. Available information on several miscellaneous dietary supplements is presented below.

Algae

Single-celled algae, such as spirulina, have been consumed by humans throughout the world for centuries. The Aztecs harvested and consumed naturally occurring spirulina. At present, algae for human consumption is produced by various means, ranging from harvesting it from natural lakes and ponds to using sophisticated fermentation equipment to create it. Algae requires carbon, generally in the form of carbon dioxide, as well as nitrogen and phosphorus. It also needs small quantities of micronutrients. Water that is polluted with organic waste is ideal for growing algae. Algae can be raised outdoors in lakes, ponds and ditches. It is harvested by skimming with screens or cloths. Sometimes flocculating agents, such as lime, are added to the water to facilitate harvesting. After harvesting, the algae is dewatered through centrifuging and dried using sun drying, spray drying, or most often, drum drying (Encyclopedia of Food Science, Food Technology, and Nutrition, 1993).

Teas

As mentioned in the section on Herbals and Botanicals, plant materials that have been dried, cleaned, sorted, and shredded to the appropriate particle size may be sold as teas. Fine particles are used for tea bags, and coarser particles are used for loose teas. Green teas, which are said to have antioxidant qualities, are made from tea leaves that have been blanched or roasted to stop the process of fermentation that produces black teas (Best, 1996). Some teas may contain ingredients such as flavorings or extracts in addition to shredded plant materials (LEAVES Pure Teas, 1998).

Bee Products

Propolis, bee pollen, and royal jelly are all coproducts of honey production that are used in dietary supplements. Propolis is a sticky substance that is secreted by bees to seal cracks and spaces within the hive. Its antimicrobial properties help to control the growth of bacteria and fungus within the hive. Beekeepers can collect small quantities of propolis by hand by scraping it out of the crevices and corners of the hive. Those who collect it commercially may place a fine-mesh plastic screen about an inch above the hive. In the fall, the bees attempt to seal the space between the screen and the hive with propolis. The beekeeper later removes the screen along with the propolis. A healthy hive can produce about 200 grams of propolis in a season.

To collect pollen from bees, beekeepers construct pollen traps. These are screens that the bees must crawl through in order to enter the hive. As they crawl through the mesh, about 10 percent of the pollen that they are carrying is scraped off and falls into a clean tray below. Beekeepers can collect 2 to 3 kg of pollen from a single hive in one season without causing a shortage for the bees.

Royal jelly is a substance that bees produce in minute quantities to feed larvae that are to become queen bees. It is collected by hand with either a special spoon or a suction device. Royal jelly degrades easily and should be refrigerated in air-tight brown glass containers.

Many beekeepers collect propolis, pollen, and royal jelly for their own use and do not sell it commercially. Only large beekeeping operations produce enough of these substances for commercial marketing (Schech, 1998).

2.2 Final Dosage Forms

Although the production practices for DS products differ, the final dosage forms among them are similar in many cases. In this section we describe how products are put into the form in which they are purchased by consumers.

2.2.1 Capsule Dosage Forms

Gelatin capsules were invented in the 1830s by a pharmacist who wanted to make unpalatable medicines easier to swallow. Both hard and soft capsules have similar ingredients, which include gelatin and water, and possibly colorants, preservatives, opacifying agents, flavors, and sweeteners. Soft capsules also contain plasticizers such as glycerin or sorbitol to keep them pliable. The following is a brief description of the production processes for hard and soft capsules.

Hard Capsules

The process for manufacturing hard capsules is highly automated. Rows of mold pins that are shaped like either the body or cap of a capsule are lowered into tanks containing a gelatin solution. The gelatin coats the pins and hardens. After drying, the capsule bodies and caps are removed from the pins and cut to the correct length. The caps are placed on the bodies, and the empty capsules are sealed in moisture-proof containers for shipping and storage until use (Swarbrick and Boylan, 1990).

Hard gelatin capsules can be filled with many types of materials, including powders, granules, pastes, oily liquids, suspensions, and solutions. Gelatin capsules cannot be used for substances that have a high water content because water will soften or dissolve the gelatin. Substances that must be consumed in large volume are not well suited for capsules either, since there is a limit to the size of capsule that can be easily swallowed. Substances that react with gelatin, such as formaldehyde, should also be avoided (Swarbrick and Boylan, 1990).

Various types of machines are used for filling hard capsules. They all automate the same basic steps. The empty shells are first all pointed in the same direction, with the bottoms pointing down. The cap is removed from the bottom using suction. A dosing head places the correct amount of material into the capsule, and the cap is replaced. For powders and dry solids, there are direct and indirect filling machines. Machines that use the capsule itself to measure the correct volume of material are known as direct filling machines. Indirect filling machines have a separate chamber that premeasures the correct quantity to be placed in each capsule. Machines for filling capsules with liquids use volumetric pumps to measure the correct dose (Swarbrick and Boylan, 1990).

The equipment used to make hard gelatin capsules is very costly. For this reason, these capsules are manufactured in large quantities by only a few companies (Swarbrick and Boylan, 1990).

Soft Capsules

Soft capsules, which are also called "softgels," are one-piece, hermetically sealed, soft gelatin shells that contain a liquid or semiliquid substance. They are formed, filled and sealed in one continuous operation. As with hard capsules, substances that dissolve or react with the gelatin are not suitable for encapsulation in softgels.

Softgels are produced as follows: Melted gelatin flows from two tanks in thin streams onto two rotating cooling drums, forming two thin ribbons of gelatin. These ribbons, which are lubricated with mineral oil, pass over guide rolls and are brought together through rotating die rolls. These die rolls pinch the two ribbons together to form the capsule. Before the two ribbons are completely pinched together, a pump injects the fill material into the pocket that has been formed between the two ribbons. The die then seals off the pocket to form a capsule and stamps it out of the ribbons. The filled capsules pass through a solvent to remove the lubricant and are dried. The equipment used to produce softgels also requires a large capital investment and is generally performed by large manufacturers on a contract basis (Swarbrick and Boylan, 1990).

2.2.2 Tablet Dosage Forms

Tablets are a solid dosage form that come in various shapes and sizes. They are formed by compression and generally contain additives to aid in their manufacture, as well as various colorants and coatings. The additives used to make tablets are called "adjuncts." These may include diluents or fillers to add bulk; binders, or adhesives to help hold tablets together; disintegrating agents to aid in the breakup of the tablet after swallowing; and lubricating agents to allow the material to flow freely through the tablet-making equipment. The machines used to make tablets use punches or dies that apply tremendous pressure to powdered or granular material, compressing it into tablets. Tablets can be made through a single compression, or layered tablets may be made using multiple compressions (Ansel, Popovich, and Allen, 1995).

Once tablets are formed, they may be coated with a sugar, film, or enteric coating. Sugar coatings protect the active ingredients in the tablet from air and humidity and cover bad flavors. They also can be used to make tablets larger and easier to handle. Film-coated tablets are covered with a thin layer of a polymer that protects the tablet and makes it easier to swallow. This film breaks apart in the stomach. Enteric coatings remain intact until the tablet reaches the intestines. Chewable tablets, which have no coating, are also made by compression. This type of tablet is commonly used for children's vitamins. They are generally made from a mannitol base with added colors and flavors (Ansel, Popovich, and Allen, 1995).

Dissolution of Capsules and Tablets

Both hard and soft capsules and tablets can be tested to determine how readily they dissolve. The rate of dissolution is an important characteristic of capsules and tablets since it is indicative of the substance's absorption and availability within the body. A fairly simple apparatus is used to measure the rate of dissolution for these dosage forms. The equipment consists of a series of wells or containers with the dissolution solvent kept at a constant temperature by a water bath. The tablets are introduced directly into the dissolution solvent and stirred with a paddle or are introduced in a basket attached to a shaft that is rotated. The capsules and tablets are mixed with the dissolution solvent until the dissolution time has expired. Then the solvent is analyzed for dissolved constituents to determine the dissolution rate (Hines, 1998).

2.2.3 Liquid Dosage Forms

Liquid dosage forms include solutions, syrups, and elixirs. Solutions contain active ingredients plus a solvent, which is generally water. They are prepared on an industrial scale in large, thermostatically controlled mixing vats with openings for mechanical stirrers (Ansel, Popovich, and Allen, 1995). Syrups are concentrated aqueous preparations that generally contain sugar or a sugar substitute, flavorings, colorings, and preservatives, along with the active ingredient. They may also contain additional solvents, solubilizing agents, thickeners, or stabilizers. Most syrups contain 60 to 80 percent sugar because of its sweetness, viscosity, and stability. Syrups can be prepared using heat to dissolve the sugar and active components or without heat, using agitation to dissolve the ingredients. Sometimes sugar syrup is prepared separately and cooled before mixing with a fluid extract. Elixirs are similar to syrups except that they contain some alcohol and less sugar. They are useful for delivering substances that are not soluble in water alone (Ansel, Popovich, and Allen, 1995).

2.2.4 Powder and Granule Dosage Forms

Powders are fine particles of material in dry form. Powders used for medicinal purposes must be a homogeneous blend of all desired components and must be of an appropriate particle size. Various types of mills and pulverizing equipment are used to reduce particle size, and standardized sieves are used to measure particle size. Granules are agglomerates of smaller particles. They are made by blending a liquid with a powder, then passing the mixture through a sieve to produce the desired granule size. The granules are then dried (Ansel, Popovich, and Allen, 1995).

2.2.5 Lozenge Dosage Forms

Lozenges are made to dissolve slowly in the mouth for local effect. They can be made by compression with a tableting machine, or if the active ingredient is heat resistant, lozenges can be produced with hard-candy-making equipment. The active ingredients are added to a hot, concentrated sugar syrup that is molded and cooled (Ansel, Popovich, and Allen, 1995).

2.2.6 Packaging of Dietary Supplements

The purpose of packaging is to provide protection, presentation, identification, information, and convenience from the time a product is manufactured until it is consumed. The type of packaging used will depend on the characteristics of the product, such as its sensitivity to moisture, oxygen, or light or its reactivity with the packaging material. The form of the product is also important. Whether the product is a tablet, capsule, liquid, or granule will determine the appropriate packaging. Plastic bottles and jars are commonly used to package dietary supplements. Other types of packaging include glass bottles, jars, vials, and ampules, as well as bags or pouches made of plastic film, laminates, aluminum foil, or paper. Some types of packaging, such as blister packs, are a combination of several materials. Packaging is sometimes performed on a contract basis (Lockhart and Paine, 1996).

2.3 Good Manufacturing Practices

A draft report prepared by representatives of several trade associations for FDA in 1995 outlines good manufacturing practices (GMPs) for the dietary supplement industry (U.S. Dept. of Health and Human Services, 1997). These practices are modeled after GMPs for food, not those for pharmaceuticals. The majority of the GMPs in this report are identical to those for food. However, in some instances the report provides more detailed recommendations for the manufacture of dietary supplements than for foods. For example, the section of the report on production and process controls contains detailed guidelines for quality control, maintenance of laboratory records, and specification of expiration dates. It calls for manufacturers to keep master production and control records, as well as individual production and control records for each batch produced. The report also specifies that raw materials should be examined, identified, and tested prior to use. It recommends that manufacturers establish procedures for ensuring the quality and composition of the final product. Instructions on appropriate packaging and labeling are included, as are procedures for handling complaints (Council for Responsible Nutrition, 1995).

2.4 Production Costs for Dietary Supplements

Data on production costs for DS products are not readily available from secondary data sources. However, some information can be obtained on the relative costs of labor and materials at the 4-digit Standard Industrial Classification (SIC) level from the U.S. Bureau of the Census. Table 2-3 presents the number of employees, payroll expenses, costs of materials, and value of industry shipments for each of the six SIC codes that encompass the majority of the DS industry. DS products fall predominately in SIC 2833, Medicinal Chemicals and Botanical Products, and 2834, Pharmaceutical Preparations; however, other types of firms are also included in these SICs.

The percentages of payroll expenses and cost of materials relative to value of shipments are calculated in Table 2-3 for each SIC. For most of the SIC codes, the cost of materials is half or more of the value of shipments, and payroll expenses are much less. For SIC 2833, the cost of materials made up about 48 percent of the value of shipments in 1996. For 2834, in comparison, cost of materials made up only 30 percent of the value of shipments in 1996. The percentages of labor expenses for each were 9 percent and 10 percent, respectively, in 1996. In general, from 1994 to 1996, it appears that labor expenses were falling and costs of materials were rising relative to value of shipments.

Table 2-3. Labor and Materials Expense for SIC Codes that Contain Dietary Supplement Products: 1994-1996

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