December 7, 2016 / 5:15 PM / 8 months ago

GNC settles dietary supplements case with U.S. government

A GNC store is seen in Westminster, Colorado October 22, 2015.Rick Wilking

WASHINGTON (Reuters) - GNC Holdings Inc, the largest global dietary supplement retailer, has agreed to pay $2.25 million to avoid federal prosecution over its alleged sale of illegal dietary supplements, the U.S. Department of Justice said on Wednesday.

GNC admitted no wrongdoing as part of the agreement. But a senior Justice Department official hailed it as "a significant step forward in reforming an industry rife with alarming practices."

“Unlawful dietary supplements are an important enforcement priority,” Benjamin C. Mizer, the department's principal deputy assistant attorney general, said in a statement.

The non-prosecution agreement, under which GNC will reform some practices, stems from allegations that it sold a misbranded supplement in 2013 called OxyElite Pro Advanced Formula, made by Dallas-based USP Labs.

USP Labs was indicted in November 2015 in a federal court in Dallas on charges that it engaged in a conspiracy to import ingredients from China using false certificates of analysis and false labeling, according to the Justice Department.

The case against the company has not yet gone to trial. But it was accused of falsely claiming its dietary supplements contained natural plant extracts when they actually contained synthetic stimulants made in China, the department said.

In a statement, GNC said it was pleased to have resolved the misbranded supplements matter with the government and had removed certain USP Labs products from the shelves of its stores "years ago."

The agreement with the government affirmed that GNC was in "full compliance" with the Federal Food, Drug and Cosmetic Act, the company said, adding that USP had provided "false assurances" about its products.

As part of the non-prosecution agreement, GNC vowed to suspend the sale of any products the Food and Drug Administration (FDA) has issued a public warning about. It also agreed to create lists of acceptable and unacceptable ingredients for use in supplements, conduct more due diligence on its vendors, and help establish an industry-wide quality seal program.

Wednesday's case was investigated by a number of federal offices, including the FDA's Office of Criminal Investigations (OCI).

Although the government identified problems with supplements sold by GNC, a separate probe conducted last year by the OCI into supplements sold at major retailers uncovered no evidence of wrongdoing.

In that probe, agents conducted undercover purchases of supplements at GNC, the Vitamin Shoppe and Vitamin World.

All of the supplements, including some made by USP Labs, came back with a clean bill of health from the FDA's labs, according to records reviewed by Reuters.

Reporting by Sarah N. Lynch Editing by W Simon and Tom Brown

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