Nutrition Business Journal

This year’s NBJ Summit will feature a dinner speech titled, “Industry Turbulence—Buckle Up,” and it seems safe to bet that this presentation by United Natural Products Alliance Executive Director Loren Israelsen will include discussion of the recent re-appointment of Michael Taylor to the U.S. Food and Drug Administration (FDA). Taylor, who served as the FDA’s deputy commissioner for policy from 1991 to 1994, was recently named as a senior advisor to FDA Commissioner Margaret Hamburg. As Israelsen is likely to explain to NBJ Summit attendees, Taylor has a long, but not necessarily positive, history with the U.S. dietary supplement industry and the Dietary Supplement Health and Education Act (DSHEA) of 1994. According to Israelsen, Taylor’s appointment “signals the return of some tough experience and very anti-DSHEA leaders at FDA.”

In his new role at FDA, Taylor will oversee planning and implementation of food safety reform. Some natural & organic industry leaders and activists are also concerned about Taylor’s appointment because of his previous post at Monsanto, a major developer of genetically engineered crops and the company in the crosshairs of the anti-GMO movement, as Natural Foods Merchandiser reported on July 16. “We’re not happy to hear the news of Michael Taylor getting the (job), not only because of his well-known GMO revolving door issues that don’t please us at all, but also, we have some differences of opinion in terms of government and food inspection,” Patty Lovera of Food & Water Watch, a non-profit consumer organization, told NFM.

This and other recent events are likely to provide for some extremely interesting and lively discussion at this year’s NBJ Summit. Check the NBJ blog later this week for updates and highlights from this year’s sold-out event, which starts today and runs through Friday, July 24, at the St. Regis Resort in Dana Point, California.

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Joint-related products represent the most popular supplements for dogs and horses, and yet a new analysis from ConsumerLab.com found that many of these products may not be providing the benefits they could or, worse yet, may actually be harmful to the four-legged creatures who consume them. At least that’s the story, as reported by the Associated Press, that began showing up in newspapers and on news Websites around the United States on July 9, 2009. Although they haven’t disputed the findings from ConsumerLab’s most recent test of animal joint supplements, some in the industry remain frustrated with how the media, particularly the Associated Press, has reported on this and other supplement-related stories in recent months—and they want to set the record straight.

“The [July 9 Associated Press] article is an example of how the industry has been portrayed very unfairly by selecting specific snippets of conversations which support a preconceived premise that is both incomplete and very misleading given the efforts of the majority of the industry,” Bill Bookout, president of the National Animal Supplement Council, told Nutrition Business Journal.

In ConsumerLab’s test, four of the six joint supplements for animals analyzed by the independent, for-profit testing agency lacked the amounts of glucosamine or chondroitin indicated on their labels or contained lead, most likely due to glucosamine sourcing. ConsumerLab also released the results from its most recent test of human joint supplements, which found that five out of the 21 brands tested did not contain the promised amount of chondroitin or failed other quality measures.

In her July 10 story, the Associated Press’s medical writer Marilynn Marchione quoted Mark Blumenthal, founder and executive director of the American Botanical Council (ABC), as saying that quality problems have been associated with supplements, although many companies do a good job. Blumenthal was also quoted as saying that dogs and cats are unable to give their subjective assessments of a supplement’s efficacy, and that owners want to believe that the supplements they pay for are having beneficial effects on their pets.

“These statements were pulled from an approximately 45-minute phone interview that Marchione conducted with Blumenthal on June 24, and many topics of that conversation and qualifications that Blumenthal provided were not included,” ABC wrote in a July 10 advisory to its members about Marchione’s article. “For instance, Blumenthal discussed several companies that are conducting legitimate research on the benefits of supplements on companion animals (dogs, cats, horses), but these were not mentioned in the article.” Marchione has written other Associated Press articles in recent weeks that have been critical of—and many in the industry say have been biased against—dietary supplements.

In its own test of animal supplements conducted in April, NASC found that 28% of the 87 brands tested did not contain what was claimed on their labels. NASC uses this information to help its members with quality control—which is a top priority for NASC and its members, which represent about 90% of the animal supplement companies operating in the United States today.

Bookout was also quoted in Marchione’s July 9 article, and he said NASC is working on a response now. As Bookout said he explained to Marchione, there are many challenges associated with supplement testing and it is important to understand that “testing is simply a snapshot in time.” This information was not included in the Associated Press article, nor were any details about the programs and initiatives NASC has put in place to help safeguard the quality of animal supplement products.

Unlike human supplements, animal supplements do not fall under the regulatory umbrella of the Dietary Supplement Health and Education Act (DSHEA), and therefore animal supplement companies are not required to adhere to the new Good Manufacturing Practice (GMP) rules created for human dietary supplements. To help ensure animal supplement quality and create a system for self regulation within the animal supplement industry, NASC established its own GMP quality standards to which each of its approximately 100 member companies must adhere. The NASC is also focused on certifying raw material providers as quality suppliers to the animal supplement industry as an added effort to ensure quality. “You cannot have a quality outcome without starting with quality ingredients,” Bookout said.

Such efforts are crucial to the future of the animal supplement industry, because, as Todd Henderson, DVM, president and founder of supplement manufacturer Nutramax Laboratories, told NBJ, quality problems can arise on both the animal and human sides of the supplement business—and these can be very problematic for the companies involved and the industry at large. According to Henderson, Nutramax Lab’s Cosequin brand, which was launched in the early 1990s as the first glucosamine/chondroitin combination product line for animals, was included in and passed ConsumerLab’s analysis of animal joint supplements.

Nutramax Labs is not a member of NASC, but Henderson said the company is dedicated to quality and science. In fact, according to Henderson, an inspection by the U.S. Food and Drug Administration showed that Nutramax Lab’s manufacturing facility operates at the level of pharmaceutical GMPs, which go beyond the requirements established for human supplement manufacturers under DSHEA and for animal supplement manufacturers under NASC’s member rules.

This commitment to quality is helping the company maintain double-digit growth for its animal supplement products, even in the current recession, Henderson said. “The economy has affected everyone, but it has affected science-based, quality products less because the consumer realizes that there is value to the quality and safety and effects that they see from these products.”

NBJ’s August issue will be devoted to the U.S. animal nutrition industry and will include features about the current regulatory status of animal supplements and the work of NASC and others to safeguard the quality of the industry’s products. To order a copy of the issue, subscribe to NBJ or download a free 32-page sample issue, go to www.nutritionbusinessjournal.com.

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I returned to work from a nice holiday weekend yesterday to find a press release from the U.S. Department of Justice proving that some people are, well, just plain stupid.

The person in question is Tony T. Pham, owner of the dietary supplement company Techmedica Health Inc. in Grand Rapids, Michigan. The press release was announcing that Pham had pleaded guilty in federal court on July 6 to fraudulently marketing supplements via the Internet with illegal claims that the products could prevent, treat or cure diabetes, irritable bowel syndrome and a handful of other diseases. In addition to forfeiting to the government the nearly $12 million he made from selling the supplements in 2005 and 2006, Pham could end up in federal prison for 25 years without parole and be forced to pay another $500,000 in fines.

As part of his guilty plea, Pham admitted that he participated in a conspiracy to buy and sell unapproved new drugs and misbranded drugs over the Internet. The products involved were marketed as Diabeticine (later renamed Diamaxol, and also known as Glucolex), Digestrol (also known as Digesticine), Uricinex (also known as Uricaid), Cholestasys Rx (later renamed Cholestasys), Hyperexol and Prolipamy.

But Pham didn’t only make illegal claims. He also used stock photographs to create fraudulent customer identities to tout the effectiveness of Techmedica’s supplement products via its Websites. A fictitious doctor and nurse were also conjured up—both using the same picture on different Websites—to promote and endorse the products.

Such actions were sure to draw the attention of the U.S. Food and Drug Administration (FDA), but Techmedica attempted to prevent that from happening through the use of what is called mirror image technology. According to the Department of Justice press release, this technology assured that when each of [Techmedica’s] Websites was accessed from an FDA network computer, they displayed a “sanitized” version of the Website containing medical claims that attempted to comply with the federal Food, Drug and Cosmetic Act. However, when each of these Websites was accessed from a computer whose IP address could not be traced to the FDA, they displayed claims that the dietary supplements could cure, mitigate, treat and prevent diseases.

A sentencing hearing for Pham will be scheduled after the completion of a pre-sentence investigation by the United States Probation Office. In addition to the conspiracy, Pham pleaded guilty to one count of wire fraud related to payments in the form of a wire transfers to a bank account.

By all accounts, Pham and his company could certainly be described as one of the most rotten apples threatening to spoil the entire U.S. dietary supplement industry. Also, it looks as if this guy did just about everything necessary to ensure that the government would prosecute him for his actions. Still, his current dilemma should serve as a cautionary tale for other supplement companies that think they will never be caught by the FDA when they make illegal claims to sell their supplement products or do something else to cross the legal line. As Loren Israelsen, executive director of the United Natural Products Alliance, told Nutrition Business Journal earlier this year, the likelihood of such companies being caught is, thank goodness, rising. “Over the past 15 years, the people in our industry have been used to an eviscerated FDA that had lost funding, money, prestige and had just been gutted out. Those days are over,” Israelsen said. “This is the new FDA. They have money, manpower and mandate.”

NBJ subscribers can read more about supplement regulation in our 2009 U.S. Nutrition Industry Overview issue, which publishes this month. To order a copy of the issue, subscribe to NBJ or download a free 32-page sample issue, go to www.nutritionbusinessjournal.com.

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The long-term viability of Scottsdale-based Matrixx Initiatives could be in doubt as company officials work to mitigate consumer fears about the safety of its Zicam homeopathic cold remedies in the wake of an FDA warning letter that the company received on June 16. In the letter addressed to Acting President, CFO and COO William J. Hemelt, the FDA identified two products, Zicam Cold Remedy Nasal Gel and Zicam Cold Remedy Swabs, as potentially harmful products that could cause the temporary or permanent loss of smell, a condition also known as anosmia. The company has voluntarily taken both products off the market based on the warning from the FDA.

The full implications of the product withdrawal are still unclear, as Matrixx scrambles to address the concerns of consumers, media, FDA and now the Securities and Exchange Commission (SEC), which has launched an informal inquiry into the product withdrawal. Company officials, while insisting that the FDA’s actions are unwarranted, have initially estimated the costs of a recall to be around $10 million, Hemelt said on a June 18 media conference call. However, those costs could rise significantly if retailers refuse to carry Matrixx Initiatives’ other products. The combined sales of the two products in question represent 40% of the company’s 2009 net sales, according to company financial releases. In addition, the FDA will require the company to file a New Drug Application (NDA) for approval on its zinc gluconicum products, which is a process that requires significant funding. The immediate costs the company faces don’t factor in potential losses due to brand damage or pending litigation, both of which could ultimately contribute to the company’s demise.

Matrixx paid $12 million in 2006 to settle 340 lawsuits brought by consumers who complained of smell problems after using Zicam products. In addition, the FDA claims that the company had knowledge of 800 additional cases of consumer adverse events that were not reported to the FDA. The company claims it did not feel the number of complaints were more than would be expected of the general population and acted on the advice of counsel in not reporting the events.

“The key issue is who knew what and when,” Loren Israelsen, executive director of the United Natural Products Alliance (UNPA), told NBJ. “What is a serious adverse event, and in this case, is the loss of smell a serious adverse event? As I read the statute, I would say it is. The intriguing question is: What did Zicam’s counsel advise them?” In a conference call with reporters on June 17, Hemelt classified the company’s product liability insurance as being “very limited.”

In addition to the up-front costs associated with a potential product recall and the down-the-road costs associated with litigation, the company’s biggest challenge will be to control the scope of the damage to the brand. “Consumers tend to assume the worst and that the rest of the product line suffers from the same consumer perceptions,” Israelsen told NBJ. The company is bracing for a downturn in sales. It had initially forecasted revenue growth of 5% for its fiscal 2010 year, but those projections have been withdrawn.

It is still too early in the case to draw any broad conclusions on how firms can work to prevent disruptions in business such as this; however, companies should be vigilant and err on the side of caution when it comes to adverse event reporting. “Companies should be investigating, getting advice and making some tough decisions as to whether they ought to act on these things,” Israelsen said.

Matrixx maintains it has done nothing wrong and will work with the FDA to reach a favorable outcome in the case. “Matrixx Initiatives stands behind the science of its products and its belief that there is no causal link between its Zicam Cold Remedy intranasal gel products and anosmia,” said Hemelt in a company release. Matrixx’s price per share has fallen 73% in 7 days, with a trading price hovering slightly above $5 on June 22. U.S. consumers spent $795 million on homeopathic remedies in 2008, according to NBJ estimates.

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A study published June 16 in the Annals of Internal Medicine showing the cholesterol-lowering benefits of red yeast rice triggered a cascade of news stories in the popular press—a welcome change from all of the negative headlines published over the last month about dietary supplements being unregulated, ineffective and, in some cases, dangerous.

In the study, researchers followed 62 patients who had tried taking prescription statins to lower their cholesterol but had to stop because the medications caused severe muscle pain, a common side effect of statins. All of the patients received nutrition and exercise counseling and half also received 1,800 mg of red yeast rice supplements every day. After 12 weeks, those taking the supplements saw their LDL or “bad cholesterol” drop by a significant 27%. Those who did not take the red yeast rice supplements experienced a 6% drop in LDL.

“I was pleasantly surprised with the degree of LDL lowering,” Daniel Rader, MD, a lipid specialist at the University of Pennsylvania School of Medicine and an author of the study told ABC News. “I have to confess, I did not expect this degree of LDL lowering. And there were many fewer side effects than expected.”

The news was not all positive for the supplement industry, however. In nearly every story that was published about the red yeast rice study, reporters erroneously stated that supplements are not regulated. Several stories also used the research to talk about the quality problems that have surfaced for red yeast rice and to issue warnings about supplement use. As a case in point, here’s what CNN reported:

In 2008, the supplement-industry watchdog group ConsumerLab.com analyzed 10 brands of capsules whose labels advertised 600 milligrams of red yeast rice. When the products were tested in a lab, however, they were found to contain wildly different amounts of lovastatin and other compounds. “There was a 100-fold difference from the lowest to the highest,” says ConsumerLab.com president Tod Cooperman. An unexpectedly large dose of lovastatin could cause serious side effects and could interact with other drugs.

The uncertain lovastatin content of red yeast rice products have led to a long-running dispute between the manufacturers of the pills and the federal government. A decade ago, the FDA successfully sought to regulate a red yeast rice extract known as Cholestin, claiming that the lovastatin it contained made it an unapproved statin rather than a supplement.

Any red yeast product containing more than trace amounts of lovastatin can also be regulated (and effectively banned) by the FDA, but red yeast rice products containing monacolin K have remained on the market. And though the FDA does continues to monitor the industry—in 2007, the agency warned three manufacturers that their red yeast rice products were unapproved drugs—the woolly marketplace for supplements should make consumers wary.

“I would never, under any circumstances, suggest that someone take red yeast rice,” says Dr. [Paul[ Phillips [a cardiologist who runs a clinic for statin-related muscle complications at Scripps Mercy Hospital in San Diego]. “It’s not controlled, it’s not safe, and it hasn’t been approved by the FDA in such a way that it’s formulated to be consistent.”

Such a statement is just one more reason why supplement quality and adherence to the FDA’s supplement GMPs (which go into effect for mid-size companies next week) are of the upmost importance. As Keri Marshall, medical director for Gaia Herbs, told Nutrition Business Journal recently: “GMPs will make the good companies stand out and will identify the outliers that are putting bad products on the market. They are also a great example of how the supplement industry is, in fact, regulated.”

According to NBJ research, U.S. consumer sales of red yeast rice grew 6% to $20 million in 2008. More than half of sales—$11 million—were rung up in natural & specialty retailers.

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