Acknowledgement: Elizabeth Wright from Dorsey’s litigation and products liability practice group prepared the following post on Nanotechnology and how companies need to prepare for coming regulations and liability risks.
If your company is not already selling a product incorporating engineered nanoscale materials or researching applications for nanotechnology, it likely will be in the near future. The impact nanotechnology is expected to have on our society and economy has been likened to the industrial revolution of the nineteenth century and the information technology revolution of the twentieth century. Already there are over 1000 consumer products involving nanotechnology on the market, ranging from cosmetics and sunscreens; to dietary supplements, pharmaceuticals and medical devices; to food and food packaging; to sporting goods and athletic wear. New products are coming on the market at a rate of three to four per week.
Nanotechnology is the science of the really tiny. There is no single definition of “nanotechnology” but the federal government’s interagency National Nanotechnology Initiative (NNI) defines it as “the understanding and control of matter at dimensions between 1 and 100 nanometers, where unique phenomena enable novel applications.” A nanometer (nm) is one billionth of a meter. To put this in perspective, a sheet of paper is approximately 100,000 nm thick. When reduced to nanoscale, common materials – gold, silver, aluminum, carbon and metal oxides, to name a few – exhibit properties that they do not possess at macromolecular scales. These novel properties – including extraordinary strength, greater chemical reactivity, and altered optical, electrical and magnetic behavior – give companies using engineered nanoscale materials the ability to develop products with the potential to solve some of the most challenging health, environmental and social issues. As important as nanotechnology is becoming, a 2008 survey revealed that nearly three-quarters of the population has little to no awareness of nanotechnology. Forty-nine percent say they have heard nothing about it. Of those that have heard of it, a 2005 study revealed that the public has little trust in government and industry to ensure the safe application of nanotechnology. That same study found that the public’s acceptance of nanotechnology could be improved if government and industry: provide the public with more information about nanotechnology products, engage in more testing of them, and better track the risks of products already on the market. Moreover, to the extent nanotechnology is incorporated into products the public perceives as having greater societal benefit – such as lower cost food, improved nutrition or more effective and less expensive healthcare – it is more likely to embrace nanotechnology.
Manufacturers who use nanotechnology need to be both sensitive to public perception and diligent in protecting themselves from the possibility that nanoscale materials in their products could lead to adverse health and environmental consequences. This is a difficult challenge. Many experts say that they cannot predict whether nanoscale materials will have adverse effects based upon the known toxicity of their bulk counterparts. Federal regulatory agencies charged with ensuring the safety of most consumer products – the FDA, EPA and CPSC – acknowledge that there is not enough information to fully assess whether nanoscale materials pose potential risks to humans and the environment. Unfortunately, the federal government is devoting relatively few resources to gathering additional information. Only about five percent of the federal government’s $1.5 billion 2009 NNI budget has been earmarked for research aimed primarily at evaluating nanoscale materials. Moreover, agencies charged with overseeing the safety of new products and technologies currently are poorly equipped from both a resource and authority perspective to assess and regulate nanotechnology.
The EPA appears to be taking the early lead on oversight of nanotechnology. Still, it has taken almost no action to regulate nanoscale materials. In October 2008, after the publication of studies equating the effects of exposure to carbon nanotubes (“CNTs”) to the effects of exposure to asbestos, the EPA announced that, for purposes of the Toxic Substances Control Act (TSCA), CNTs would be deemed to be chemical substances different from graphite and other carbon allotropes already listed on the TSCA Inventory. Therefore, manufacturers and importers of CNTs not already listed on the TSCA Inventory must file pre-manufacturing notices. It has issued a basic guidance to help manufacturers and importers with this determination. EPA also is considering a petition for rulemaking from a number of public interest groups requesting EPA to regulate all nanoscale silver products as pesticides. While it has not yet taken final action on the petition, the EPA has pursued an enforcement action against products incorporating nanoscale silver.
Many currently marketed nanotechnology products fall under the FDA’s purview. For products such as cosmetics and food supplements, the FDA has virtually no authority to review their safety prior to marketing. For products such as drugs and medical devices, where it does have premarket approval authority, the FDA already has approved at least 20 drugs incorporating nanotechnology for treatment of breast and ovarian cancers, multiple sclerosis, hepatitis, high cholesterol, and for use in anesthesia. It has approved devices such as dental restoratives and anti-bacterial wound dressings, and there are numerous sunscreens and cosmetics on the market which claim to employ nanoscale materials. While it acknowledges that the toxicity of materials in bulk form cannot be used to predict whether the same materials are toxic on nanoscale levels, the FDA has stated that, for now, it will nevertheless regulate based upon the safety assessment of the nanoscale material in its bulk form. Thus, for products such as drugs and medical devices incorporating nanotechnology for which the FDA has premarket review authority, the review criteria have not yet changed. With respect to labeling, the FDA concluded that “the current science does not support a finding that classes of products with nanoscale materials necessarily present greater safety concerns” therefore the FDA “does not believe there is a basis for saying that, as a general matter, a product containing nanoscale materials must be labeled as such.”
Approximately half of the consumer products currently marketed fall under the purview of the Consumer Products Safety Commission (“CPSC). Its authority, however, does not include pre-market testing or approval of products, and it has only limited ability to provide guidance with respect to nanotechnology materials. Its burden with respect to consumer products incorporating nanoscale materials is compounded because no one at the CPSC is charged with focusing specifically on nanotechnology and because the CPSC’s budget in 2010 to develop agency expertise in nanotechnology is only $200,000. Although the CPSC acknowledges the extensive use of nanoscale materials (particularly nanoscale silver) in a variety of consumer products, including those intended for children, its modest goal for 2010 is to conduct a literature search and develop experimental procedures for testing products incorporating nanoscale silver beginning in 2011.
As a result of a perception that the pace of innovation outpaces knowledge regarding the risks and in light of the virtual regulatory vacuum, there have been calls for moratoriums on commercialization of new products containing engineered nanoscale materials, particularly with respect to cosmetics, sunscreens, food products, food packaging, food contact materials and agrochemicals until nanotechnology-specific safety laws are established. At a minimum there have been demands for regulations requiring product labels to disclose the use of nanoscale materials. Potential lawsuits also pose a risk for manufacturers of products incorporating nanoscale materials. Relying upon a few reports of the potential risks of CNTs, members of the plaintiffs’ bar have already seized upon nanotechnology as the next potential source of lawsuits. CNTs already are being called the next asbestos, and numerous websites have sprung up advertising for plaintiffs’ that believe that they have been injured by exposure to them.
What Your Company Can Do
The public’s fear of nanotechnology and the plaintiffs’ bar’s willingness to inflame them, combined with the absence of any current regulatory guidance, create the potential for expensive and time-consuming litigation. To minimize the risk of potential litigation and liability, there are a number of actions companies pursuing the development of products incorporating nanotechnology can take.
First, identify, manage and reduce potential risks early. Citing other new technologies that have been widely embraced only to have their risks only discovered years later, Dupont Chairman and CEO, Chad Holliday and Environmental Defense President Fred Krupp argue that “[a]n early and open examination of the potential risks of a new product or technology is not just good common sense — it’s good business strategy.” Dupont implemented that strategy by partnering with Environmental Defense to create the Nano Risk Framework, a six-step process for evaluating and addressing potential risks of nanoscale materials used in a company’s products throughout the life cycle of the product. The Nano Risk Framework is available at http://nanoriskframework.com/page.cfm?tagID=1081. Click here.
Second, work to further public awareness of the advantages of nanotechnology. Often citing public resistance to genetically modified crops and food, commentators have pointed out the importance of positive public perception in order to further investment in, and consumer acceptance of, nanotechnology. Thus, where appropriate and permissible, a company may wish to include information on its label concerning nanoscale ingredients or components.
Third, participate in federal agencies’ requests for public comment regarding various issues surrounding nanotechnology. The current regulatory vacuum is not likely to last. Whatever guidance might result from regulatory agencies’ requests for input are likely to become the minimum standard your company will be expected to meet to avoid future liability.
Finally, post-marketing surveillance of any potential risks of a nanotechnology product is essential. Even though there may be no evidence of a defect at the time the product was sold a growing number of states have recognized a post-sale duty to warn the purchaser or consumer of later discovered defects when a reasonable seller would have done so.
Dorsey attorneys are following the latest developments in nanotechnology and all aspects of the relevant law, including regulatory, transactions and litigation. We would be happy to assist you in dealing with the unknown aspects of nanotechnology materials, the absence of regulatory guidance, and the potential threat of litigation.
For more inforamtion on this topic, please contact Elizabeth Wright at Wright.Elizabeth@dorsey.com