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Not peer-reviewed?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.

Mannatech : Extreme Caution Advised

William T. Jarvis, Ph.D.

Mannatech, a multilevel marketing health products firm, is promoting itself as a "nutraceutical frontrunner." "Nutraceutical" is a marketing term for foods alleged to favorably alter the structure or function of the body beyond what normal foods can accomplish. The company's lead product, Manapol, is simply aloe vera juice. Mannatech promoters acknowledge that many counterfeit products emerged during past aloe vera fads, but they claim that this juice is the real thing.

It is generally acknowledged that breaking off a leaf from a living aloe vera plant and applying the juice to a burn is an excellent first aid measure. Aloe vera juice is also used in burn wards to soothe, protect and moisten wounds. The problem with marketing the juice is that it doesn't keep well. Processing inactivates the ingredient that produces the desired effects. So, many aloe vera products contain processed juice that has lost the plant's helpful properties.

According to Mannatech's literature, aloe vera expert Ivan Danhof, PhD, MD, warned aloe promoters about making claims, and on the instability of beta-1,4-mannan molecules. Mannatech says that the "future of aloe vera belongs to those who have the ability to stabilize and standardize (emphasis added) this labile polysaccharide," and that Manapol is the "only commercially processed aloe vera product capable of achieving and make the claim for standardizing betamannans."

Mannatech has a licensing agreement with Carrington Laboratories, an aloe processor that has a jaded history on Wall Street in connection with its product Carrisyn. Carrisyn was said to have an Investigational New Drug (IND) permit from the FDA as a topical gel for treating bedsores. Carrington also announced that it had filed for patents in 43 countries for Carrisyn and that the drug might be useful for AIDS. AIDS is a buzzword that sends stocks flying. However, the FDA denied that it had issued an IND forCarrisyn. It had only assigned a number to Carrington's IND application. All of this produced quite a stink among investment watchdogs, which was detailed in two reports in Barron's [1,2].

NCRHI believes that extreme caution is advised on Mannatech. Mannatech's President Caster has a checkered history. In 1991, his Eagle Shield Inc. claimed its Electracat device would repel insects and other pests by emitting high-frequency vibrations. The Texas Attorney General disagreed. "The device is a hoax and stands on the same scientific footing as a perpetual motion machine," said Assistant Attorney General William Goodman, who won a permanent injunction against Caster and Eagle Shield in Travis County District Court. Caster agreed to stop selling the Electracat, to not make unsupported scientific claims about any other product, and to pay $125,000 in investigative costs. Two years earlier, Caster and Eagle Shield were accused of deceiving consumers by claiming their Eagle Shield Radiant Barrier was a scientific breakthrough in home insulation and would provide significant savings in energy costs. The Texas Attorney General got a court order banning such claims after arguing the product had been available for more than 40 years and that the energy-saving claims were false. Caster and the company agreed not to make more false statements, and Eagle Shield filed for Chapter 11 bankruptcy protection. Caster co-founded Mannatech in 1993.

Mannatech tells consumers scientific studies show its nutritional supplements are safe, promote good health and are even covered by a health insurance plan. Investors have been given another story. In documents for its initial public stock sale in February, 1999, Mannatech told potential buyers it doesn't know whether its products were safe, or even if they worked. Yet Stephen Boyd, a physician who is Mannatech's international medical director, praises its supplements in a recorded message for prospective customers. He says the products facilitate the body's ability to heal itself and are "inherently non-toxic." Coppell, Texas-based Mannatech warned in the share-sale prospectus, however, that there is no assurance its products, "even when used as directed, will have the effects intended, or will not have harmful side effects."

"Why are they telling consumers one thing and investors another?" asked Stephen Barrett, M.D, chairman of Quackwatch Inc., a not-for-profit organization that monitors healthcare fraud. "A company has a responsibility to determine its products are safe and effective before it sells them." Company executives declined to comment about the products, which are sold through more than 400,000 independent agents in the United States and in Australia. In its IPO filing, Mannatech cautioned investors that its MVP product, marketed for weight control, contains ephedrine, a substance the FDA has linked to heart attacks, strokes and death. There are no warnings in the company's literature for consumers about MVP. The FDA, which has received more than 800 reports of adverse events associated with ephedrine, has proposed banning its sale for weight control.

While Mannatech says it has an eight-member scientific team, its monthly magazine recently said there are no double-blind, placebo-controlled studies of the type used by drug companies establishing that its products work. It said it that between 1995 and 1997, it spent about $667,000 (0.25% of sales) on research. The company offers consumers insurance called MannaCare that reimburses up to 50% of the cost of its supplements. It also provides full medical, dental and vision coverage for premiums of up to $9,120 annually. The insurance is offered through U.S. Alliance, a Crofton, Maryland, insurer that said it's unlicensed in the state. "There wasn't an insurer they met with in the last three years that would reimburse" for Mannatech products, said Walter Nieves, president of U.S. Alliance. "That's why they came to me." Nieves said he doesn't need a license because his plan is exempt from state regulation.  Continue To Full Article