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The Costs of the GNC Agreement with the New York Attorney General

GNC says the price of the extra tests aren’t much, but industry experts say the pact may cost the supplement industry a great deal.

What remains after March’s bombshell agreement between GNC and New York State Attorney General Eric Schneiderman regarding new testing procedures of the chain’s botanical supplements? Many unanswered questions.

Among them: Why the focus on DNA barcode testing, which is just one analytical method used on botanicals?

“It needs to be seen within the context of being another tool in the toolbox," said Mark Blumenthal, executive director of the American Botanical Council (ABC). “To employ DNA barcode technology as the sole determinant of a plant material’s identity, and then base legal or regulatory action on that sole determination, can be inadequate and, in some cases, irresponsible."

Does the power given Schneiderman—under this agreement, GNC will provide semiannual reports regarding the ingredients in its GNC Herbal Plus product line—set a bad precedent?

One possibility, said Steve Mister, president and CEO of the Council for Responsible Nutrition (CEO), is “States’ attorneys general can play FDA and impose requirements on companies in addition to what FDA already requires. … It is disheartening that companies would have to then placate an attorney general instead of putting the resources toward those things that really drive the quality of the products and assure consumer safety." 

Industry attorney Marc Ullman of Ullman, Shapiro, & Ullman LLP is blunt. “It’s horrific," he said. Schneiderman’s actions aren’t based on improving products, Ullman believes, but advancing his career.

Mister and CRN staffers met with members of Schneiderman’s team on Thursday, April 16, in New York. CRN expressed its concerns over extremely inconsistent test results from the supplements procured from GNC and three other retailers—Target, Walgreens and Walmart.

“They didn’t seem to be terribly concerned about the fact that the tests are inconsistent," Mister said, “because they got what they wanted, which was a lot of media attention for the attorney general out of this investigation."

The recently formed Organic & Natural Health Association met with staff members from Schneiderman’s office and the office of Connecticut Attorney General George Jepsen in New York on April 15. The staff members “made it clear they were surprised everybody believes this is about testing rather than … the quality of the supply chain," said Todd Harrison, Organic & Natural’s president and a partner at the law firm Venable LLP.

Organic & Natural said it intended to file a citizen petition, requesting that FDA subject manufacturers of raw materials to FDA’s cGMPs (current good manufacturing practices). Karen Howard, executive director and CEO of Organic & Natural, said the staff members in the meeting appeared to support such a petition.

Can Schneiderman, or any attorney general, evaluate this kind of data?

“I am not a lawyer, but I am confident that they do not study analytical chemistry in law school," quipped Élan Sudberg, CEO of Alkemist Labs, which provides botanical identification services. Blumenthal said it appears the New York Attorney General didn’t hire consultants “who are knowledgeable in this field."

He explained: “Otherwise, the initial report that was released on February 3 would not have relied solely on DNA barcoding from a laboratory at a small university [Clarkson University] that, to the best of our current knowledge, has no prior history of research or publication in the analysis of a) any plant material, or b) plant material that has been processed to a finished consumer product, like a dietary supplement."

One of the foremost botanical researchers was right in the Attorney General’s midst, but was never contacted by anyone from Schneiderman’s team. Edward Kennelly, Ph.D., is a phytochemical expert from Lehman College in the Bronx and the City University of New York (CUNY), as well as the New York Botanical Gardens. He has worked for and with FDA/CFSAN (Center for Food Safety and Applied Nutrition) as well as the U.S. Pharmacopoeia (USP), and he studied under the renowned pharmacognosist Normal Farnsworth at University of Illinois, Chicago. He told INSIDER he would have been happy to assist the Attorney’s General office with its testing of herbal finished products, especially since CUNY is a state-sponsored institution that has the appropriate expertise and equipment. 

“Regarding testing methods, I would have pointed him to the book by Kurt Reynertson, ‘Botanicals: Methods and Techniques for Quality & Authenticity,’ and offered my experience in conducting chemical analysis on a complex range of products that are sold as dietary supplements," Kennelly said, noting DNA fingerprinting is a tremendously powerful procedure, as long as the product has DNA that has not been compromised due to the processing/extraction of the botanical in question.  “[Liquid chromatography-mass spectrometry] is the method I use, but sample preparation and method development are not trivial, and can be very time consuming."

Kennelly, who has found as much as one-third of black cohosh products do not meet label claim, noted while there are many high-quality products on the market, there are clearly a significant number that are adulterated. “I applaud the AG for trying to look at so many different botanical supplements, but this is also a tremendous challenge, scientifically." 

“Where are we now?" mused veteran industry consultant Suzanne Shelton. “Likely to see legislation introduced calling for more stringent regulation, but without the funding to enact. We will see a ton of class action lawsuits. Perhaps more state attorneys general will jump into the pool. Either way, we’re right to be fearful for our livelihoods."

And what is GNC’s take on the situation? “Implementing these measures will have a small impact from a financial point of view, but a very significant impact from the standpoint of consumer confidence in both GNC and the overall industry," a GNC spokesperson told INSIDER. “We don’t expect there to be any broad impact on costs to consumers."

At press time, the New York Attorney General’s office had not replied to questions INSIDER had submitted via email.

What can be done? It depends. “With all this adversity, if the industry can galvanize themselves, they can actually show that they have quality products," said John Travis, senior research scientist at NSF International.

Frank Jaksch, co-founder and CEO of ChromaDex, which provides analytical testing services and GMP consulting, sees GNC’s agreement with Schneiderman as “a catalyst for change.

“Every time something happens, the industry wants to fight or rebut," he said. “Maybe it is time to consider a different tactic, as whatever is being done now does not seem to be working. I am not saying that I support the NY AG’s actions, but perhaps it might [be] better to join him, and try and figure out a way to compromise."

George Pontiakos, president and CEO of botanicals supplier BI Nutraceuticals, said the agreement validates the supplement industry’s five-year shift toward quality. However, “I’ve never seen an industry that enables such under-sophistication in their purchasing model," Pontiakos said. Too many providers and contract manufacturers “are strictly driven by price. And when you’re driven by price, you’re beholden to price reduction." He added, “The only component and metric that matters is total cost of ownership—and that includes the quality cost."

Sophistication must extend beyond the lab. “How much of the industry really belongs to an organization like ours?" said Daniel Fabricant, Ph.D., CEO and executive director of the Natural Products Association (NPA). “Furthermore, how many repeatedly give to PACs [political action committees]? How many repeatedly give to advocacy campaigns? It’s not high, I can tell you.

“We have to play politics the way other industries do," he explained. “While we know in our heart of hearts we’re not the same as petroleum per se and seal poachers, we’re certainly going to be compared to those industries by our critics. We’ve got to operate in those same ways." That said, the natural products industry should be giving money to organizations and the political process, including campaigns. “If we’re not active on the campaign trail—and it costs dollars to be active on the campaign trail—how are they going to listen to our story?" Fabricant said.

“That’s how every other industry in [Washington, D.C.] plays it," he added. “If you’re not at the table, you’re on the menu."

NPA acknowledged that it, too, met with Schneiderman, but did not elaborate on the meeting’s discussion.

Mister calls the agreement “a watershed moment." Companies, he said, must stop looking at “smaller events"—for example, a company spiking a supplement with prescription drugs—as unusual. They add up.

“What we are seeing as the media coverage of this plays out is that those kinds of episodes make it all too easy for the media to then believe something like this," Mister said. “Because we haven’t addressed those outliers giving the industry a black eye time and time again, when something like this comes along, and we know the AG is wrong in the way they’re approaching it, it’s hard to convince the media he’s wrong."

Sudberg appreciates “the increased awareness, discussion, and concern over quality control" that’s arisen from GNC’s agreement. However, he wishes “an epic ordeal" wasn’t required to move toward total industry compliance.

“Usually, an ingredient is tainted, a recall is performed and testing increases," Sudberg said. “The noise goes away, and we learn from and get better from the experience. This is an unfortunate and industry-tarnishing event, and while those still standing will stand taller—just as the rising tide lifts all ships—the lowered industry consumer confidence hurts us all."

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