I would be worried if its coming off in bits. Can't be good for the tummy and their is always the choking hazard.
And do check to see if manufactured in China. I threw away a rubber bone that you could fill with water and/or freeze, as I thought it would be good for Bacca while he was teething in the summertime. I found out it was made in China and was worried about lead content in the dyes. Maybe that's unreasonable, but better safe than sorry.
p.s. the things our dogs will chew! Indy loves hard plastic....so ball point pens don't last long around our house, if he manages to get his teeth on them. The worst thing I got him at was a plastic push pin (you know for posting paper on corkboards!). Yikes! He had the metal spike right in his mouth! Imagine if he had swallowed that! I shudder just thinking about it.