AI, the FDA, and the Health, Wellness, and Beauty Industries

Justin: 00:13

If you're a business leader or general counsel, you already know AI isn't just another tech trend. It's the next frontier reimagining and reshaping how companies operate and compete. With that transformation comes complexity around intellectual property, data rights, regulatory oversight, litigation exposure, and brand integrity. This podcast is designed to give you clarity. I'm Justin Pierce, cochair of Venable's intellectual property division.

Justin: 00:43

In this season, I'll talk with colleagues and industry leaders about how AI is reshaping business, ecommerce platforms, toy companies, industrial automation, luxury brands, beyond, and the legal strategies companies need to protect innovation while moving fast. Our goal is simple, to help you turn our legal insight into your competitive advantage. Welcome to season two of AI and IP, The Legal Frontier. This week, we're talking about AI, the FDA, and the beauty industry.

Justin: 01:23

Hi. I'm Justin Pierce, a partner at Venable and co chair of the firm's intellectual property division. As artificial intelligence becomes embedded in product development, marketing, and compliance workflows, regulated industries are navigating a rapidly shifting landscape. From AI assisted safety reviews at the FDA to AI generated substantiation for nutraceuticals, cosmetics, and medical devices, innovation is accelerating. But so are the regulatory and litigation risks. In this episode, we sit down with venerable FDA regulatory partner Claudia Lewis to explore how AI is reshaping the health, wellness, and beauty industries, how federal and state regulators are responding, and what companies must do to stay compliant while staying competitive.

Justin: 02:12

Claudia, welcome.

Claudia: 02:14

Thank you for having me. I'm very excited for our podcast today.

Justin: 02:18

Claudia, first, can you tell us how you came to Venable?

Claudia: 02:21

Well, joined Venable in 2005. I was a partner at a small boutique firm in Virginia, and our practice was solely focused on FDA regulatory work, and we did a fair amount of litigation. I ran into some of your colleagues, Justin, because you preceded me at Venable. True. And they convinced me to lateral over to Venable.

Claudia: 02:42

A great move. Been happy ever since. And I came to this practice sort of very serendipitously. At the time I went to law school, I won't date myself, regulatory work was and administrative work was all the rage. Think oil and gas, think energy, everything out west, like Texas, Oklahoma, Arizona, all of those states that have oil and gas.

Claudia: 03:08

And I teamed up with a law firm that was doing First Amendment litigation, and they were all food companies. And so litigation was never my thing. I'd sort of mustered through it for several years, and then I discovered that I really like the code of federal regulations, which is what FDA uses to regulate, all manner of companies under their jurisdiction.

Justin: 03:32

So in your current role now, you're a practice group leader in the firm's FDA practice. How did you come into that role, and what do you do as a practice group leader?

Claudia: 03:42

So the role has various different hats that you wear. Obviously, practice group leaders suggest that you have some expertise in the area that you're functioning in. You have oversight role with associates and the work that we do. I really see my role as the practice group leader is to make sure that the associates in our on our team, the partners on our team are getting good work, that they feel fulfilled, and they're happy at the firm, and that we're generating revenue.

Justin: 04:11

All good things.

Claudia: 04:12

Yes.

Justin: 04:13

I wanna dive into AI and particularly for products that are regulated under the FDA or FD and C Act. So given that AI is embedded now in product development, marketing, and various compliance functions in many companies, from your vantage point, how do you feel like AI is reshaping the regulatory landscape?

Claudia: 04:36

I think AI is just reshaping society generally, but in the regulatory landscape, I think there's still some learnings that are happening. How are we going to use it? Privacy considerations, hallucinations, all the things that anyone who's using AI is, dealing with. But in the regulatory space, I think the FDA has really embraced it in so many ways. From the top of the administration at the FDA, they have rolled out the fact that they're gonna be using regenerative AI.

Claudia: 05:05

Many of the centers are using it to help streamline scientific reviews, evaluate safety. Justin, you've heard me say this a million times, you know, the FDA's first and last questions about safety. And so before you say yes to a medical device, before you say yes to a drug, before you say yes to a novel food ingredient, there's a safety evaluation that goes on. And AI has really trimmed down the amount of literature searches and how fast that can take place. And to streamline some of the questions, here are some other considerations we should think about.

Claudia: 05:42

They really have used it as a baseline tool inside the FDA.

Justin: 05:46

And leads to my next question. How do you feel like the FDA itself is either keeping pace with AI, AI tools? Are they using it? You mentioned a little bit in your answer to the prior question.

Claudia: 05:58

FDA is divided into different centers depending on which regulated product you're looking at. At the top of the podcast, we talked about that FDA regulates about 30¢ of every dollar that you spend. So whether it's a conventional food, a medical device, an animal product, a biologic, a cosmetic OTC drug, the FDA said that they want AI tools to be a part of the agency's tool chest, if you will. And it's really indicated for efficiency and time saving.

Claudia: 06:27

And they really want to cut down on how long it takes the agency to to review something to when they can say yes or that they signed off on it. And so I have seen them give workshops and and all kinds of announcements about it, So it's really underway.

Justin: 06:45

A good part of your practice, I understand, also encompassing advertising for some of the industries we talked about. Obviously, the regulatory agency for advertising is FTC. If you were to compare and contrast maybe FDA with FTC in terms of how they're embracing AI, have you seen a difference? Has there been enough time yet to even see a discernible difference?

Claudia: 07:07

Obviously, this is all very new and novel to everyone, and I think that part of my answer to your question is that the FDA is very much a compliance agency. So they're trying to solicit compliance. And so there's a set of rules, and if you comply with them, then typically FDA is okay with it. And they take enforcement action when there's something really outside colored outside the lines. And, usually, when you've colored outside the lines, the agency sends you a note.

Claudia: 07:33

Hey. We're not happy about that. Can you tell us how you're gonna come into compliance? And if you do come into compliance, then the FDA is okay with it. The FTC, on the other hand, is an enforcement agency.

Claudia: 07:44

So their AI tools are really looking to see if you're complying with the laws despite the fact that you're willing to comply with them. So I always describe the FTC as sort of the police officer that everyone's speeding, but you were caught by the the police officer that day. And so their AI tools are used to look at from an investigative role, and to make sure that you're complying with the AI regulations in terms of, did you say that it was an AI tool that's collecting the reviews? Did you say that it was AI person who was gonna be taking your, order information? So it's sort of a different vantage point.

Justin: 08:22

FTC being much more enforcement oriented, it sounds like.

Claudia: 08:25

Exactly.

Justin: 08:26

So when it comes to product development and substantiation with AI, how are food, beverage, nutraceutical, cosmetic companies using AI in r and d or in product formulation?

Claudia: 08:41

Everyone's using AI right now. And so I have some companies who are using it similar to the FDA as a threshold, just sort of getting ideas and making sure that they've covered all the different pieces, and then doing their own sort of pressure tests. And then I have other clients who are like, hey. I had Claudia, I got this whole thing pulled together about AI. What do you think of it?

Claudia: 09:01

And when we've had a chance to review, sometimes it's great, needs some few tweaks, and sometimes it's just a hallucination, unfortunately.

Justin: 09:09

Interesting.

Claudia: 09:10

So part of our feedback is that AI is definitely a a worthwhile tool and something that you should use, and it does provide economy of scales because as you imagine, building substantiation, coming up with clinical trials is all quite expensive, and where you can reduce timelines and costs, that's always a good thing. But you wanna make sure that if those efficiencies don't mean that you create something that's not reliable and can't be used.

Justin: 09:36

Do you think, at least based on what you've seen thus far, this use increasing use of AI for r and d or product formulation, is that increasing risk exposure in your view?

Claudia: 09:47

I think it has the potential to increase it, but I think that most companies are using AI fairly responsibly. It used to be that people would come to us and say, can you put something together? And now, AI has put it together and we're just sort of confirming it or working with a consultant to confirm it. So most companies are acting really, responsibly in in getting that second check, that third confirmation before they move forward with something.

Justin: 10:12

Okay. And has it changed sort of the process? You mentioned they're coming to you, sounds like maybe work product that's a draft or two down the road. You're looking at it to check for various things. Are you working iteratively at all with any clients where maybe they do one piece, you're looking at something, sending it back, they kinda take another stab at it or another draft, and it goes back to you?

Claudia: 10:33

Absolutely. Because none of this happens in the vacuum. So the FDA is looking at the safety perspective. The client is looking at it from a marketing and safety perspective. And so AI is not able to say, oh, FTC decided this particular set of claims was not substantiated because the science either was too new or the delivery method wasn't congruent with what you were putting out into the marketplace.

Claudia: 11:01

And so you still need a human set of eyes to say, there is a disconnect still here because the case law says one thing and you wanna say something different. Or this has already been litigated. Let's move away from that.

Justin: 11:16

So what happens in the off chance and we hope unlikely, scenario where AI generated research or analysis that supports, let's say, substantiation or some product claim or even r and d turns out to be inaccurate or the subject of a hallucination in some way? What are some of the risks that could follow? What would you do in that situation to help that client maybe ameliorate or reduce or mitigate the risk?

Claudia: 11:45

You know, part of our job, you asked me what I do as a practice group leader is, like, this is always a risk based analysis that's going on here. What is the benefit versus the risk? And so if they come to us, it's very unusual for us to say, we can't use any of this. So we really try to rehabilitate, and we bring in specialists. Like, our team will add its legal acumen, and then we'll have scientists who says, well, this wasn't powered sufficiently or the suggestion for the power analysis or we have too many endpoints, we need to reduce the endpoints.

Claudia: 12:18

Or, to get to clinically meaningful, this needs to move from ninety days to a hundred eighty days. So there's lots of different iterations and expertise that we bring to the marketplace and to the evaluation that AI is not doesn't have those nuances quite yet.

Justin: 12:35

Got it.

Narrator: 12:38

Advertising law regulations are getting tougher and harder to navigate. On Venable's Ad Law Toolkit show, hosts Len Gordon, Shahin Rothermel and their colleagues break down the latest risks and trends. From FTC investigations and privacy rules to influencer marketing, green claims, and state AG actions. Each episode gives brands practical insights to spot issues early and move forward with confidence. Search for the AdLaw Toolkit Show wherever you listen.

Justin: 13:13

So one aspect of FDA regulation outside of, let's say, cosmetics and beauty, a big piece of this is in the drug area. So if an AI generates a claim as part of this whole product substantiation process that moves a product, maybe that was a nutraceutical or vitamin of some type into drug territory, who's held responsible? Is it the AI? Is it the company?

Claudia: 13:40

Well, unfortunately, the AI came up with a claim, but once you put it out into the marketplace, the FDA and FTC and other various regulatory bodies find the company who disseminated the information to be responsible. But our team does this all the time in terms of making sure that AI has an idea, and before we move forward, we'll say, well, this idea is making your product a biologic. Did you intend that? Or this idea is causing your product to be a drug. Did you intend that?

Claudia: 14:12

Here is a way that you can fit into one category or another, and that's how we proceed. And then you might still go back to AI with a new idea. Right. It's not so much that AI is sort of the first stop. It could be part of their iterative process as well, Justin.

Justin: 14:28

That to me underscores why clients in this area, clients frankly in any area, but dealing with this kind of regulatory risk have to come to a knowledgeable attorney to get those kinds of opinions and make it iterative and get the back and forth to get what I would say is the real product and an accurate product.

Claudia: 14:47

Absolutely. Yeah. And the other thing that I would add to that is depending on what you're trying to accomplish, get the agency involved into it early. If you've decided that you're gonna solely rely on AI for a big portion of something, let's talk to the agency about how they feel about that, and if it's reliable, and if we're using the right standards, those types of things.

Justin: 15:08

So if a client's doing something cutting edge like that, they should walk with you or approach the agency through or with you to maybe float those ideas and get a pre look or preview of what they're gonna do.

Claudia: 15:19

Because there's nothing more expensive than you've done all this work and the FDA is gonna say no.

Justin: 15:24

That's not a good outcome.

Claudia: 15:26

No. So it's and it's a really sad day. You know, that doesn't happen very often. But as you know, Justin, clients come to you at various process, you know

Justin: 15:35

Right.

Claudia: 15:35

In various stages of the project. And sometimes you're just sort of going back and fixing a problem and then moving forward.

Justin: 15:44

Right. With that then, what are some of the biggest challenges you see in the industries that you represent and serve in terms of risks with respect to AI?

Claudia: 15:55

I think that not to sound repetitive, I think that nuance piece is very important. A lot of times, studies and safety tell one story, and then when you're talking to the government or whether it be the federal government or the states, they're looking for something a little bit different. And until you really have dug into what is gonna be acceptable now if you're talking about vitamin C, no one's harassing you about whether vitamin C supports the immune system or things like that.

Justin: 16:24

Right.

Claudia: 16:24

But when you're talking about stem cells or whether it produces collagen or some of these things that we see across the board, how much creatine should you be taking a day? Protein is everywhere.

Justin: 16:38

Interesting.

Claudia: 16:40

So all of those things, in order to be a market leader and have some space in the market, sometimes you take you're a little aggressive with the claims. And depending on where that, you know, aggression kind of lands, and that's not a bad thing. You have to make space for yourself. The state regulators are looking for something different than, you know, what AI just printed out from a web search.

Justin: 17:05

I think that's a distinction that's important for our audience and clients that the perspectives even of a federal agency can be very different from all the different states in terms of what they're looking at, what they may prioritize. So with that, as we think about those differences, one other topic comes to mind relevant to risk. You and I had a good discussion not long ago about AI and just how different terminology is and how everyone's understanding is not uniform. What do you make of that with respect to risks that you have to deal with for clients?

Claudia: 17:38

So typically, when a client comes to me and says, oh, I we put this through AI, and I'm like, what are you using? What do you mean by AI? And let's have a conversation about that because it has so many different meanings. And then what, you know, Arizona is okay with, it may not be the same as California. What the FDA is thinking about AI is not the same as, you know, what the client might be thinking about.

Claudia: 18:00

So I usually try to start the conversation with, which tool are you using? What did you use it for? Different tools have different expertise, and they've learned different things, and are more reliable. So it just really depends on what the subject matter might be.

Justin: 18:16

That also reminds me of this kind of situation that many of our attorneys are starting to face. What would you do in your area? Maybe it's already happened if a client has uploaded something confidential or advice you've given to them that was supposed to be confidential privileged to a public chatbot or degenerative AI? Your your thoughts on the repercussions and maybe even what you would do in that scenario.

Claudia: 18:44

So the privacy is something I do talk about. So when clients talk about, we're gonna use AI, make sure that you're not putting in information that you think is proprietary to you. Make sure you're not putting in information that might be considered public health information. A lot of these clinical trials have patient information, confidential information. And, you know, once it's out there, you can't get it back.

Claudia: 19:09

Right. And that confidentiality has two different perspectives, and I'm not a a a privacy expert. But it's personal information and also litigation. Like, you don't want this information to be discoverable. And if you've spent the money to go through an attorney, you wanna make sure that that attorney client privileges attaches.

Claudia: 19:31

And litigation is very prolific right now.

Justin: 19:34

Right.

Claudia: 19:34

We have trolls. We have, plaintiff's bar who's looking to see if your claims are substantiated accurately. And if you put something in in AI that I said, maybe you shouldn't think about that claim or we're not sure about the substantiation for that claim, then your attorney client privileges can be violated or, cleared.

Justin: 19:57

Good point.

Claudia: 19:58

So you just have to be very careful that everything that you put into a chatbot or whatever tool you're using is information that you don't mind people seeing generally.

Justin: 20:07

Yeah. Excellent advice. So thinking about the regulatory trajectory here, knowing that AI and how it's being regulated, particularly in the FDA sense, is still relatively early. Do you expect any formal guidance to come out of the FDA with respect to AI?

Claudia: 20:25

I do. I I think this administration is pretty proactive on a lot of things, and I expect that there would be guidance. And I think so that we're all on the same page, you heard me talk about when you're regulating medical devices, there's some standardization that has to take place in order for the agency to get to a yes. And so I really would imagine that the guidance will come out in terms of, here are the three tools we find most reliable. We're not saying that you can't use something different. It's just these are the ones that we sort of vet it and feel most comfortable with.

Justin: 20:59

My next question as we come to a close here is where do you see AI and personalized nutrition going in the future?

Claudia: 21:07

I think that it is going to be the new telehealth. I wanna manage my cholesterol. I want to run faster. I have a marathon that I'm dealing with. As I mentioned, how much creatine?

Claudia: 21:20

How much protein? How much sleep do I need? All of those things are already happening. So before we got on, Justin, we were talking about wearables and data going back and forth. I think that all that information is going to be something that's front and center, and that consumers want it.

Claudia: 21:39

I think that the FDA is, comfortable with it. We have a general health wellness category, because a lot of these wearables would be considered devices, meaning that you need full FDA approval for them.

Justin: 21:51

Right.

Claudia: 21:51

And so I feel like FDA is niching out from its not onerous, but more oversight regulatory process to allowing, you know, health and wellness to take its own path without so much FDA oversight.

Justin: 22:08

So we've covered a lot of topics today, and I'll go next into some takeaways. I'll start with a couple takeaways that I see from your great insight thus far. One for sure is if you are a company that's in the health, wellness, medical device, drug, or cosmetics industry, clearly based on this conversation, you should be coming to see Claudia and her team and getting advice before you make a move, particularly with respect to AI. The other piece I wanna underscore is just based on our discussion. It seems to me that if you are creating a product and you're using AI as part of that ideation, creation, r and d, claim substantiation process, work iteratively with knowledgeable counsel to reduce your risk.

Justin: 22:53

How about takeaways on your side, Claudia?

Claudia: 22:55

I think those are perfect takeaways. And one thing that Justin has been very kind, not to mention, he's one of the best IP attorneys in the country. That iterative process protects you from a regulatory standpoint, but it probably warrants some IP considerations considerations too too in in terms terms of of how how you're you're designing designing your creativity and protecting that process can be, an important and valuable tool as well. Great. As you're learning how to do this, how do I keep it for myself, or make people pay me to to figure out how to do it?

Claudia: 23:28

I think that the nuances with where the regulators are sitting, what's happening with litigation, it used to be the FDA. Now the states are intertwined in this. I just think that the iterative process has to be holistic as opposed to one dimensional as well. I think, otherwise, just have fun with it. I mean, I really love this area of the law.

Claudia: 23:51

It's a passion of mine, as I mentioned. You know, I'm hungry. I did you know, food was one it was a reason I was so attracted to this, area. But all kidding aside, I think that AI is really going to help us make some strides, and I hope that there's some really good innovations that lead to longevity.

Justin: 24:11

That's great. Well, Claudia, thank you. This has been very insightful. I think we've all learned a lot. And I'd be remiss if I didn't mention that Claudia Lewis herself has an upcoming podcast that'll be called the Beauty Glow Up that will be coming out soon through Venable as well.

Justin: 24:27

So thanks again, Claudia.

Claudia: 24:29

Thank you for having me, Justin. I'm looking forward to the Glow Up. I'm doing it with my partner, Kristen Ruisi. We had a beauty salon that happened all year last year. You missed it. Don't worry. We'll cover it on the podcast. Excellent. And, thank you for having me.

Justin: 24:43

Thank you. That's about all we have time for today. I want to thank Claudia Lewis for helping us understand how AI is transforming FDA regulated consumer industries, what risk companies need to watch for, and how thoughtful, iterative legal guidance can help innovators move forward confidently in the health and wellness space. You can read more about how Venable is helping businesses navigate the AI frontier by visiting venable.com/ai. Please join us next week when I talk to my colleague, Venable partner Calvin Nelson, and CSC leasing general counsel Chris Crook about practical, real world AI adoption inside a fast moving company.

Justin: 25:31

I'm Justin Pierce. Thanks for listening to AI and IP, the Legal Frontier.