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Laws governing businesses may be subject to interpretation. Due to vagaries in the law, certain businesses—such as manufacturers of nutritional supplements—face higher levels of risk. The businesses, and the people that work in those businesses, may have high levels of liability.
Business owners should know that agencies may modify guidelines at any time. Companies bear the responsibility of staying on top of changes. Their knowledge of the industry, and their training, may help corporate leaders avoid serious consequences that follow for people that do not comply with the changes.
The FDA pays close attention to companies operating in the industry of nutritional supplements. A 2019 article in Men’s Health pointed to a report in Journal of Adolescent Health, noting that roughly 1,000 people under the age of 25 reported medical issues linked to supplement use between 2005 and 2015.
Food and Drug Administration records revealed that 40 percent of these patients experienced severe health events, such as hospital visits or disability with 166 hospitalizations and 22 deaths linked to supplements. And that’s only in young adults.
A separate study noted that injuries linked to supplements are rising fast, jumping from just 7 percent of all drug-induced liver injuries in 2004 to about 20 percent in 2014. As a result, the FDA feels pressured to take more aggressive action when it comes to monitoring the performance of companies that manufacture nutritional supplements. A recent case targeted the manufacturer of Selective Androgen Receptor Modulators (SARMs). That company that sold SARMs advertised on national television, representing that SARMs would mimic the effects of testosterone and other anabolic steroids. When the FDA disagreed, an investigation followed.
USP Labs, located in Dallas, Texas, manufactured several highly popular workout and weight loss vitamins and supplements. The company generated approximately $400 million dollars in revenue between the years 2008 and 2013. The company had a big slice of a market that generated more than $46 billion in sales of nutritional supplements. Bodybuilders and general fitness buffs really loved the products that USP Labs manufactured. People could buy the protein powder and other supplements at GNC stores, Vitamin Shoppe, and on Amazon. Their highly effective marketing program touted products online, and in many workout and weight loss magazines.
When USP Labs introduced its products to the bodybuilding world, they touted the products as being the best natural, non-steroid, non-prohormone anabolic product money could buy. The company promoted the products as revolutionary insofar that a consumer could get the desired results of massive growth without taking steroids.
USP Labs claimed to have mastered the trick of creating “a highly anabolic product without suppressing the body’s own natural production of testosterone.”
That’s important because once someone takes steroids or prohormones and then stops, the person needs to take something to bring the natural systems back online because what’s being taken actually shuts them down.
According to in-house studies from USP Labs, users could expect to start feeling the results from the products around week three. Then, according to the company, the person would start hitting personal bests and feeling a difference in muscle strength and growth.
Competition in the industry led the company to perpetually search for the next miracle ingredient. That search focused heavily on ongoing research and development with Chinese manufacturers. If the company found an ingredient they believed to be promising, the company quickly rushed into production. It did not test the safety of the new product sufficiently.
Problems began cropping up in 2013. Some users of products that USP Labs manufactured began experiencing Liver issues. In fact, the CDC identified 97 people with acute non-viral hepatitis. The CDC suspected that the liver deterioration related to the use of OxyElite, a top-selling USP Labs brand. Several patients died.
The Food and Drug Administration warned USP Labs about the rise in reports of liver failure related to their products in 2012. Despite the warning, the company originally claimed they must have been caused by counterfeit versions of its supplements.
The FDA additionally warned the company that the FDA believed the company’s ingredients were synthetically derived and therefore a chemical, as opposed to an all-natural ingredient, as the company claimed.
Subsequently, the FDA sent the company another ominous letter. The company acknowledged that the products it manufactured and sold caused problems. In 2013, the company agreed to take the problematic products off the market. Management, however, only made slight reformulations to products and labelling. The company hoped to lessen the risk of liver damage while retaining the products’ touted efficacy.
The FDA regulates all prescription and non-prescription drugs in the United States. Historically, the agency has treated dietary supplements more like special foods. Because the FDA does not consider supplements “drugs,” the agency does not require manufacturers to go through the same strict safety precautions as drug manufacturers. All prescription drugs go through rigorous trials and testing before consumers can access them. With dietary supplements, those safety precautions do not exist. Under the Dietary Supplement Health and Education Act of 1994, the government considers supplements safe until they’re proven unsafe.
No requirements exist for supplement manufacturers to test new ingredients or supplements in clinical trials. Those tests may reduce risks and potential interactions with drugs or other substances. The same goes for side effects and interactions with other drugs. The FDA can only stop a company from making a dietary supplement once it proves that the product poses a significant risk to the health of Americans.
USP Labs essentially continued the sale of its products from and after two warnings from the FDA. In 2015, a grand jury returned an indictment of USP Labs, a contract manufacturer with whom it had a relationship, and six executives that worked in both companies. The criminal charge for a white-collar crime brought 11 separate counts, including charges of criminal conspiracy, fraud, and other malfeasance.
As a result of the indictment, federal agents raided the company’s offices. Authorities seized computers, records, cell phones, luxury cars, investment real estate. The Court froze individual and corporate bank accounts.
USP Labs’ CEO Jacob Geissler and its president, Jonathan Doyle, mounted a defense to the criminal charges for years. Later, they both pleaded guilty to the white-collar crime of conspiracy to introduce misbranded food into interstate commerce. A judge sentenced the men in October 2020. Geissler and Doyle received prison sentences of five and two years, respectively. Several other sentences remain pending at the time of this Case Study and one person received a deferred prosecution in exchange for cooperation. The individuals and companies involved in the fraud paid over $60 million in fines and forfeitures.
Companies falling under the auspices of a government agency must exercise caution. There’s a fine interpretive line between something considered a chemical or a supplement. Fighting an unfavorable interpretation, whether civilly or criminally, can lead to high costs. How a company stays on top of and adheres to federal and guidelines can critically impact a company and the individuals working for the company.
It’s good corporate practice for companies to prioritize product safety. USP Labs and its principals faced product liability and wrongful death lawsuits from cases brought by several private attorneys in addition to criminal sanctions. All too often, corporate executives are so highly focused on making money that they forget about the steps required to retain that money, let alone concern themselves with potential impairment in people’s lives. Quick action by USP Labs may have retarded corporate profits, but I’m sure that the principals now wish that’s the course of action they had taken.
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