Guilty Plea In VMG Steroid Case Weighs On Firm, Not DSHEA Critics

A high-profile FDA criminal investigation into the maker of so-called supplements containing steroids ends with a guilty plea, a hefty fine and a probationary monitoring period for the firm.

The case against VMG Global, doing business as American Cellular Labs, may prove the criminal justice system works against such unscrupulous firms, but likely will not prevent supplement industry critics from continuing calls for pre-market regulation, experts say.

Pacifica, Calif.-based VMG received a warning letter from FDA in July 2009 regarding its bodybuilding products including TREN-Xtreme and Estro Xtreme (¹ (Also see "FDA Warning Draws Solid Line Between Steroid Products And Supplements" - Pink Sheet, 3 Aug, 2009.)). The agency said the products were unapproved and misbranded new drugs, and paired the warning with a consumer alert.

An FDA spokeswoman said the Office of Criminal Investigations had been looking into VMG "long before the warning letter was issued." Criminal search warrants also were executed prior to the letter, she added.

Such a long lead time between the start of an investigation and public action demonstrates why OCI is not the ideal vehicle for regulating steroid-tainted supplements, attorney Peter Spivack maintains.

"It's hard to regulate by criminal enforcement. It's a blunt instrument," said Spivack, a partner with Hogan & Hartson in Washington.

"It's a process that takes much more time than proactive legislation in terms of addressing problems."

For that reason, Spivack predicted calls for amending the Dietary Supplement Health and Education Act will not diminish, and could even be bolstered by lengthy criminal proceedings.

While the supplement industry and DSHEA have advocates in Congress, some lawmakers have shown an inclination to add regulatory hurdles.

At a Senate Judiciary subcommittee hearing in 2009 to examine steroids masquerading as supplements, Sen. Arlen Specter, D-Pa., suggested pre-market clearance of certain products may warrant a closer look (² (Also see "Specter Spares Supplements, Hammers DEA Over Illegal Steroid Products" - Pink Sheet, 5 Oct, 2009.)).

Natural Products Association executive Daniel Fabricant, who testified before the subpanel, said in an interview it would probably take many cases against many firms like VMG to show the system works.

"But I don't think that diminishes the significance of this in any capacity, and it's certainly valuable for really making the reasonable argument" that supplements are regulated sufficiently, said Fabricant, NPA's VP of scientific and regulatory affairs.

Plea Means Business

VMG's plea ³ agreement, entered into Jan. 20 in the U.S. District Court for the Northern District of California in San Jose, demonstrates what a firm must do to go straight after being caught hawking steroids as supplements.

The agreement notes the firm sold more than 200,000 bottles of TREN-Xtreme between January 2005 and July 2009, generating about $4.9 million in gross revenue. VMG is directed to destroy any remaining violative product not already seized.

In addition to a $500,000 fine, VMG must pay for the monitoring and testing of its products by a third-party lab for five years. The lab will forward the test results to FDA, per the plea agreement.

Ed Wyszumiala of NSF International, which is cited in the agreement as a possible independent testing organization to be used, said such an arrangement would be a first for the nonprofit group, but could aid FDA's strategic oversight of troubled firms.

Wyszumiala, general manager of NSF's dietary supplement programs, said the third-party testing arrangement would "definitely open up traceability" of the company's supply chain, in case steroids continue appearing in its finished products.

Ann Arbor, Mich.-based NSF tests products for steroids and offers a certification program to identify banned substances in supplements taken by professional athletes (⁴ (Also see "Growing Sport Nutritionals Sales Requires Reaching Beyond Athletic Arenas" - Pink Sheet, 6 Jul, 2009.)).

- Dan Schiff ( ⁵ [email protected] )