The U.S. Practice of Regulatory Review Food Labeling Case Example Christine Kymn White House Office of Information and Regulatory Affairs U.S./Colombia RIA and GRP Workshop Bogota, Colombia April 11, 2018 Any views expressed here are solely those of the presenter, and do not necessarily reflect the position of the Office of Management and Budget or the Executive Office of the President.

Food Labeling: Revisions of the Nutritional and Supplemental Facts Label The Nutrition Facts Label Final Rule amends prior labeling regulations for foods to provide updated nutrition information on the label to assist consumers in maintaining healthy dietary practices. The Serving Size Final Rule amends prior regulations on serving sizes based on newer consumption data and other recent scientific evidence to provide updated serving size information on the label to assist consumers in maintaining healthy dietary practices. These final rules’ impacts are characterized by substantial uncertainty, with annualized benefits shown via sensitivity analysis to potentially range between $0.2 and $2 or $5 billion, and annualized costs ranging between $0.2, $0.5 and $0.8 billion, over the next twenty years (2014 dollars) at seven percent interest. Alternatives: Variation in compliance periods (2 to 4 years). Rules finalized in May 2016. In October2017, FDA proposed to extend the compliance date from July 2018 to January 2020 for manufacturers $10 or more in annual food sales; and to January 2021 for those with less than $10 million in annual food sales.

Need to Regulate Purpose: amend prior labeling regulations for foods to provide updated nutrition information on the label to assist consumers in making informed purchasing decisions. Market Failure: Information failure can provide an economic rationale for the mandatory disclosure of nutrition information. The government does not necessarily have to intervene to address a market failure from a lack of information. However, when individuals find collecting information costly, time-consuming, or both, the revealed private demand for information may differ from the socially optimal level of information Reduce information failure arising from lack of consumer access to sufficient information; understanding of that information may assist consumers in making healthy dietary choices. Changes in labeling may also assist consumers by making the long-term health consequences of consumer food choices more salient and by providing contextual cues of food consumption (behavioral economics concepts).

Food Labeling Benefits Measured consumer welfare gains as the WTP for nutrient content based on revealed preference data, i.e., food consumption and prices. Assumption: labeling reveals the true marginal cost of consumption, an individual responds to that information by internalizing the health costs as if they have experienced a change in the price of that good. Compare the change in nutrient intake based on changes attributable to NLEA to the equivalent price change that would have to occur to produce the same response given that preferences and tastes also influence the demand for food.

Summary of Food Labeling Benefits

Food Labeling Costs Relabeling Costs - minor label change or an extensive or major label redesign Recordkeeping Costs - recordkeeping costs associated with making and keeping records sufficient to verify the label declaration for the amounts of added sugars, dietary fiber, soluble fiber, insoluble fiber, vitamin E, and folate/folic acid; research and additional labeling costs related to the new dietary fiber definition Labeling costs associated with future Universal Product Code (UPC) growth Reformulation Costs – reformulating products to continue to make certain health claims and nutrient content claims or as a result of the requirement to display new information on the product label

Summary of Food Labeling Costs

Summary of Food Labeling Costs

Summary of Food Labeling Costs

Summary of Food Labeling Costs

Summary of Food Labeling Costs

Net Benefits

Summary Table – Food Labeling

Thank you! Questions? christine.j.kymn@omb.eop.gov