GNC plunges after Oregon says unapproved drugs in supplement

[SAN FRANCISCO] GNC Holdings Inc, the chain of health and wellness stores, plummeted as much as 21 per cent after Oregon sued the company, claiming it sold supplements made with illegal ingredients.

Ellen Rosenblum, the state's attorney general, said on Thursday the company's nutritional and dietary supplements were laced with unapproved drugs. One is picamilon, a Russian prescription medicine for neurological conditions, and the other is BMPEA, which was first synthesized in the 1930s as a replacement for amphetamines and never studied in humans, according to the state's complaint.

GNC in March reached an agreement with New York Attorney General Eric Schneiderman on its Herbal Plus products, pledging to more stringently test its supplements and follow US Food and Drug Administration manufacturing recommendations. Mr Schneiderman's probe, which was also focused on retailers including Wal-Mart Stores Inc, Walgreens and Target Corp, sought information about the origins of ingredients in supplements and the health benefits described on labels.

"The claims made by the Oregon attorney general are without merit and GNC intends to vigorously defend against these allegations," GNC said in a statement. "In response to FDA statements regarding the regulatory status of BMPEA and picamilon, GNC promptly took action to remove from sale all products containing those ingredients."

STOCK TUMBLED

GNC tumbled as low as US$31.94 in New York after news of the lawsuit, and trading was briefly halted. After trading in New York was halted a second time, GNC closed down 14 per cent at US$34.50.

GNC has more than 8,000 stores in 50 countries and bills itself as the world's largest health retailer. The chain, based in Pittsburgh, sells vitamins, supplements and sports nutrition products.

The FDA regulates dietary supplements, though not as strictly as it does drugs. While new medicines require FDA approval based on extensive clinical trial data shared with the agency, dietary supplement firms don't need FDA clearance. Instead, companies vouch for the safety of dietary supplements and whether the products do what they say they will, and they don't have to share information with the FDA on how they make their determinations.

The rules require dietary supplement firms to evaluate the purity, strength and composition of their products and the FDA can consider a pill adulterated if it doesn't contain the ingredients listed or is contaminated.

'ADULTERATED' SUPPLEMENTS

While GNC's manufacturing arm does not make products that contain picamilon or BMPEA, the company's stores have sold supplements "adulterated" with the drugs obtained from vendors, according to Oregon's complaint.

Despite knowing since at least May 2007 that picamilon isn't a legal dietary ingredient in the US, GNC sold thousands of units of products containing the substance in Oregon and continued selling them even after receiving a warning in June, Mr Rosenblum alleged.

AN FDA study in 2013 found that 43 per cent of supplements labeled as containing acacia rigidula were "spiked" with BMPEA, which is banned for use by athletes by the World Anti-Doping Agency, according to the complaint. Even after a news report about the FDA study raised "significant concern" among GNC executives, the company was selling products that tested positive for BMPEA until as recently as May, the state attorney general said.

"It is scary to know that certain products sold by GNC contain an ingredient that is not even labeled - let alone approved in the US," Mr Rosenblum said in a statement. "When Oregonians buy a dietary supplement, they deserve to know that the ingredients in the products are safe and comply with the law."

BLOOMBERG