Industry Roundup: SEC Fines MJN, Criminal Charge For Herbals Seller, Decree Closes Aspen Supplement Marketer

FCPA violations cost Mead Johnson $12M; decree closes Aspen supplement marketer; equity funding for SmartyPants; homeopathic online retailer warned; ForeverGreen launches strong; and more news in brief.

FCPA violations cost Mead Johnson $12M

Mead Johnson Nutrition Co. settles Securities and Exchange Commission charges concerning bribery of health care professionals in China to help drive infant formula sales, two years after China fined the firm in a price-fixing investigation. According to an SEC July 28 statement, Mead Johnson consented to an agency order on violations of the Foreign Corrupt Practices Act, without admitting or denying the findings, and agreed to pay $7.77 million disgorgement, $1.26 million in prejudgment interest and a $3 million penalty. SEC said MJN employees from 2008 to 2013 directed paying “distributor allowance” funds in cash and other incentives to hospitals in China to recommend the firm’s products and provide contact information for marketing its infant formula directly to patients. The Glenview, Ill.-based firm said its payment to SEC is in line with an expense provision it disclosed in an SEC filing earlier in 2015 related to the investigation. MJN also noted it is “taking a number of positive steps to bolster its compliance program, function and processes.” MJN paid a $33 million fine in 2013 as one of six infant formula manufacturers China’s trade regulators accused of price fixing and antimonopoly practices (Also see "China Tightens Infant Formula Industry Oversight, Levels Playing Field" - Pink Sheet, 3 Feb, 2014.).

Criminal contempt charge against herbals seller

A Montana herbal supplement seller faces a criminal contempt charge as the Department of Justice alleges the online retailer continued to sell products with claims of curing diseases despite court orders to stop in 2010 and 2013. DoJ on July 29 said Toby McAdam, owner of Risingsun Health, violated the 2013 order civil contempt complaint, which included an $80,000 fine, by failing to close his online sales sites and a promotional Facebook for his products. In the complaint, DoJ says McAdam agreed to close his business until FDA authorized him to return to business but has operated without the agency’s authorization (Also see "In Brief: Torrent buys Elder, studies supporting claims must be relevant, common ingredient names on labels, enzyme supplement guidance" - Pink Sheet, 23 Dec, 2013.).

Consent decree closes Aspen supplement marketer

A dietary supplement firm initially warned in 2012 about good manufacturing practices violations agrees to a consent decree and to cease operations after failing to respond to multiple chances FDA offered to become compliant while continuing to make and market Aspen brand and other nutritionals. The Department of Justice on Aug. 1 filed a complaint in U.S. District Court for the Eastern District of Wisconsin against the owners of Atrium Inc., Aspen Group Inc., and Nutri-Pak of Wisconsin Inc., all of Wautoma, Wis., seeking approval of the decree. DoJ said the firms agreed to settle the litigation and to a permanent injunction that requires them to have FDA approval that their manufacturing operations are compliant before re-starting production. The firms’ violations reflected problems FDA commonly has found since beginning supplement GMP inspections, including failing to conduct appropriate recordkeeping, ingredient testing and labeling practices (Also see "Dirty Deeds: Supplement GMP Inspections Still Spotting Hygiene Violations" - Pink Sheet, 26 Nov, 2012.).

SmartyPants gets private equity lift

Private equity firm North Castle Partners invests in SmartyPants Vitamins, which also receives a co-investment from CircleUp Growth Fund. The investment amount was not disclosed. North Capital has knowledge in mass market and online distribution and invested in seven other nutritional market firms, including Naked Juice Co. and Curves International/Jenny Craig, before partnering with SmartyPants, which markets the Good Gummy vitamin line, according to a July 27 release (Also see "QHC study" - Pink Sheet, 22 May, 2006.).

Homeopathy site warned

Ratis LLC’shomeopathystore.com website sells Rx homeopathics Influenzinum 9C and Influenzinum & Thymuline Combo immune building products without prescriptions, FDA says in a July 9 warning letter to the Baltimore firm. Though Influenzinum products are recognized in the Homeopathic Pharmaceopeia of the U.S., FDA regulations do not exempt homeopathic drugs from any of the requirements related to adulteration, labeling, misbranding or approval, the agency said. Claims in question, featured on the firm’s website, suggest Influenzinum 9C can “prevent the flu” and users can “avoid vaccinations.” FDA says the firm makes false or misleading claims because its products lack adequate descriptions of risks, warnings and contraindications.

ForeverGreen Worldwide launches strong

Direct marketer ForeverGreen Worldwide Corp. announces it sold more than $1 million in orders for Ketopia in the first 12 days of launching the three-product regimen promoted to help balance the body’s metabolic state. In a July 30 release, the Pleasant Grove, Utah, firm says the response exceeded its expectations and it is kicking off a marketing tour touting the benefits of the products, eyeing growth outside North America. ForeverGreen says Ketopia products are formulated to help users achieve ketosis, a natural metabolic state in which the body burns fat for energy rather than carbohydrates. Products include KetonX, a drink that “shifts the body into a state of nutritional ketosis within hours,” Dough Bites, a cookie dough snack high in fiber and prebiotics to act as a “phantom” carb and FIXX, a chocolate meal replacement shake that imparts energy. A 10-day pack of the regimen retails for $149.95 on the brand’s website.

Bulu Box distributes NeuEnergy

NeutriSci International Inc. enters a retail and sampling program with e-commerce vitamin and supplement firm Bulu Box to distribute 50,000 units of its NeuEnergy energy drink products to health and wellness members. The Vancouver firm on July 27 said Bulu subscribers who receive NeuEnergy “will be incentivized to share their thoughts and spread the word about NeuEnergy's ability to deliver enhanced focus and mental clarity, with no sugar, no calories and no crash associated with typical energy drinks.”

Probiotic to help with ulcerative colitis

A survey of 607 adults with ulcerative colitis found that 78% feel the condition interferes with their life and 43% identified it as extremely or very problematic, but 69% say they do not know what to look for when choosing a probiotic, although probiotics can help treat the disease, Sigma-Tau Pharmaceuticals Inc. said July 29. Highlighting the results of the Harris Poll conducted in April, the company offers its VSL#3 probiotic as an addition to traditional therapies, saying the product, available in pills, capsules and powders, helps maintain remission in patients with mild to moderate forms of the disease. VSL#3 products retail on the brand’s website for between $53 and $88 each.

Nutraceutical eyes acquisitions

Nutritional supplement marketer Nutraceutical International Corp.seeks to acquire niche companies that fill gaps in its existing product line, a “key component” of its long-term growth, the Park City, Utah, firm said July 30. The marketer of vitamins and nutritional and supplement brands including Nature’s Life, Solaray, Organix South and LifeTime, reported net sales for its fiscal 2015 third quarter dipped 2.2% to $54.4 million. The company is struggling to keep its presence in small and medium-sized health food stores as larger natural food market chains stores continue to expand across the country, it said. Net income advanced 12.5% to reach $4.5 million in the April-June period, according to Nutraceutical.

Viactiv reaches out to teens

The maker of Viactiv calcium supplement chews teams up with cheerleading and dance team education firm Varsity Spirit to educate young women on calcium intake’s importance for bone health later in life. Viactiv Holdings LLC on July 28 said the partnership is intended to encourage girls to take more calcium, since most young girls do not meet the recommended 1,300 mg daily intake. The Greenwich, Conn., firm said in addition to the campaign, Viactiv is appearing in full-page ads and editorial features in American Cheerleader magazine.

Vitamin Shoppe general counsel

Multi-channel retailer and contract manufacturer [Vitamin Shoppe Inc.] names David Kastin senior VP, general counsel and corporate secretary effective Aug. 17. The North Bergen, N.J.-based firm on July 28 said Kastin has worked for Toys “R” Us and several New York law firms including Bryan Cave LLP.

HempLife focuses on crop quality

Ubiquitech Software Inc. offers exclusively non-industrial purpose grown hemp oil products through its online store HempLife Today because of the quality control and potential superior health benefits that only hemp grown for health purposes can provide, the firm said July 28. Public demand for non-psychoactive phyto-cannabinoids rich in cannabidiol fueled the decision, the Ubiquitech said.

Loud Cannabis sounds off on Google snub

Green Exchange Inc. wants attention on Google’s removal of its Loud Cannabis application connecting marijuana growers to patients. In a July 30 release with excerpts of media coverage, the firm highlights Google’s recent yanking of the app after its debut and argues the removal represents a double standard since the online giant offers marijuana dispensary locator apps Weedmaps and Leafly. The Green Exchange reported its removal from Google in July after it received a “best new marijuana app” designation from a cannabis market media award entity that it suspects may have stimulated Google’s scrutiny (Also see "Industry Roundup: Capsugel Expands, NAD On Lactation Claims, FitLife Kaniwa Extraction" - Pink Sheet, 27 Jul, 2015.).

Hemp Inc. adds marketing head

Hemp Inc. hires Robert Hughes as VP of sales and marketing to spearhead a national and international marketing campaign as the company prepares to sell finished products and acquire assets. The Las Vegas firm, which focuses primarily on industrial hemp – including seeds and milk for nutritional food, on July 31 said it also initiated a one-for-10 reverse split to raise the price of its shares and reduce the number in the market.