Last Updated Jun 1, 2010 4:30 PM EDT
Despite recent disturbing findings by government investigators about dietary-supplement manufacturers -- whose products are wildly over-promoted, rarely tested for safety, and sometimes contaminated with potentially dangerous chemicals -- the sector is likely to continue on its merry unregulated way. That's because supplement makers are shrewd lobbyists who've bought some of the best protection around for their legal right to sell questionable products.
An investigation by the Government Accountability Office (GAO) revealed a Wild West of snake-oilish health claims, among them that garlic prevents diabetes and ginseng cures cancer. The GAO also found trace amounts of contaminants such as lead in many of the supplements it examined.
The GAO presented those findings at a Senate hearing earlier this week, just one day after Sens. Tom Harkin (D-Iowa) and Orrin Hatch (R-Utah) introduced a bill that give the FDA $20 million to enforce and strengthen the Dietary Supplement Health and Education Act (DSHEA) -- a controversial 1994 law that has so many loopholes it essentially gives supplement makers a green light to make outrageous marketing claims and adopt a lax attitude towards safety.
Pharmaceutical companies aggressively market their products and often fall down when it comes to safety, too -- witness the recent travails of J&J. But at least the FDA has plenty of authority to assert control over errant drugmakers. That's not really the case when it comes to supplements.
Any debate over supplements always makes for great theater, and the recent hearings were no exception. The proceedings started with a review of the GAO's investigation, which included sending undercover spies -- posing as elderly customers -- to supplement stores and Web sites. A video showed supplement marketers hawking products as cures for diseases such as Alzheimer's. That's illegal, even under the loosey-goosey provisions of DSHEA.
Nevertheless, DSHEA is largely responsible for the industry's ability to rake in $25 billion a year on supplements. The law leaves it up to supplement makers to determine whether their products are safe and the marketing claims they're making are backed up by adequate evidence. Furthermore, the law gives the FDA precious little ability to crack down on supplement manufacturers that make questionable products or claims. Hatch and Harkin co-sponsored the original bill, so it's not surprising that they're recommending less drastic changes to DSHEA than other legislators have put on the table. Sen. John McCain (R-Ariz.), for example, introduced a bill in February that would require supplement makers to disclose details about the ingredients they use.
Legislative efforts to repeal or somehow amend DSHEA bubble up every couple of years, but never seem to go anywhere. A look inside the industry's intense lobbying machine provides a hint as to why that is. In 2009, for example, an outfit called the Coalition to Preserve DSHEA spent $135,000 on lobbying activities, according to the Center for Public Integrity. The coalition pitches itself as an organization whose main goal is to support consumers' rights to choose "safe, effective and affordable" supplements, its Web site says. Yet the coalition's two main sponsors are supplement giant Herbalife (HLF) and New Hope Natural Media, which produces events and publications for the supplements industry.
Harkin and Hatch may get some traction in a food safety bill that could hit the Senate floor in coming weeks. That bill may include provisions requiring supplement makers to register with the federal government, and allowing the FDA more freedom to recall products it believes to be unsafe. That may be better than the excuse-for-a-law known as DSHEA, but it will still give supplement makers the freedom to operate largely off the radar of the folks who are supposed to be looking out for patients' safety.
The lesson for managers is if you have a wildly popular product, either make sure you're not selling snake oil -- or buy some friends in high places so you never have to account for it.