GNC’s Case with the U.S. Government

GNC Holdings, Inc. (NYSE:GNC) has agreed to pay $2.25 million to avoid federal prosecution over its alleged sale of illegal dietary supplements. But, the company had disclosed no misconduct as part of the agreement. A senior Justice Department official addressed 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.

According to news source Reuters, 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 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. 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.”

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.

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