Mannatech Exposed in Wall Street Journal

The practices of Mannatech distributors were the focus of a detailed article in this morning's Wall Street Journal by Suzanne Sataline.

The Issue: Some consumers are using Mannatech nutritional supplements to seek relief from serious medical problems.

The Background: The company's free-lance salespeople sometimes suggest product uses that go well beyond recommendations on their labels.

What's Next: The Texas attorney general is scrutinizing the company, which also faces a class-action lawsuit from shareholders.

Dietary supplements like those sold by Mannatech are, in general, short on science and heavy on hype, anecdote, and testimonial. (Recall my earlier post where Nobel Laureate, Gunter Blobel, felt that his science was being misrepresented by the company.).

Some researchers says they doubt that [Mannatech's] Ambrotose offers any health benefits. Hudson Freeze, who studies complex carbohydrates as a professor of glycobiology at the Burnham Institute for Medical Research in La Jolla, Calif., contends the body can't digest Ambrotose because humans lack the enzymes necessary to break down the plant fibers it contains into simple sugars.

Mannatech has said it has completed a study that shows the body can break down glyconutrients, and that it is slated for publication in the Journal of Alternative and Complementary Medicine. The journal's managing editor, Barbara Nell Perrin, says it will publish an abstract of the study that will not be peer-reviewed.

Not peer-reviewed? Why? Even the Journal of Alternative and Complementary Medicine is a peer-reviewed journal. But, I digress.

So, while the company itself may be in line with the 1994 Dietary Supplement Health and Education Act in not claiming disease treatment indications for their products, some of their distributors do not appear to be playing by the rule book.

When doctors found a tumor in Angie McHenry's bowel in the spring of 2006, they told her that her cervical cancer had become terminal. But her uncle, Stephan Huffman, gave her some hope.

Mr. Huffman, a retired high-school teacher, is a sales associate for Mannatech Inc., a publicly traded company that markets vitamins and nutritional supplements. He and his wife persuaded Ms. McHenry to swallow, each day, 32 Mannatech tablets and six scoopfuls of the company's Ambrotose, a derivative of aloe vera and larch-tree bark.

"He said it would knock the cancer away," recalled Ms. McHenry, a Coldwater, Ohio, mother of three, in an interview last month. "I would go into full remission. He said he had seen proof in other people."

As you might suspect, the expensive "glyconutrients" Mr. Huffman sold to his niece had little effect on her cancer. She passed away on April 20.

Why this article is in the WSJ is because Mannatech has been public for the last eight years and shareholders have brought action against the company because such practices were in part responsible for the stock price tanking in 2005:

After reports about the company's sales tactics caused its stock to drop in 2005, shareholders filed lawsuits in state and federal courts. Several have been consolidated as a federal class-action in Dallas federal court. It alleges that executives knew about and ignored improper health claims by employees and salespeople, and that [Mannatech Chairman and CEO] Mr. Caster overruled recommendations by the company's regulatory-compliance committee to discipline big sellers who made such claims.

Mr. Caster says the company has fined some associates as much as $25,000, and has terminated some for making improper claims. "Does something like this ever get away from us?" he says. "Well, of course. Those are the types of things that we're out there looking for, and that we'll catch." He says the company intends to vigorously defend itself in the litigation.

It is interesting that the market, and not the distortion of science, has caused the company to take action against renegade sales associates. This article reminded me that dietary supplements and multilevel marketing is big business. "Multilevel marketers accounted for $4.4 billion of $22 billion in sales of dietary supplements in 2006, says Grant Ferrier, editor ofNutrition Business Journal."

If questionable sales practices hit the bottom line, look for action by the company to ward off any legal action or otherwise bad publicity.

Too late for this article, though.