Hot War Over Herbal Remedies

Dietary supplements are in drugmakers' crosshairs

When the Food & Drug Administration ruled on May 20 that the dietary supplement Cholestin should be reclassified as a drug, the decision was a major blow to its maker, Pharmanex Inc. Booming sales of the cholesterol-lowering diet supplement had been a big part of the Simi Valley (Calif.) company's growth. The reclassification means Pharmanex will either have to stop selling the product altogether or go through the lengthy process of getting it approved by the FDA.

But 3,000 miles away, executives at Merck & Co. in Whitehouse Station, N.J., were celebrating. Indeed, Merck lobbied heavily for Cholestin to be reclassified, but the FDA says that wasn't a factor. "Our decision was based on the law," says William B. Schultz, FDA deputy commissioner of policy.

Why did Merck, a $24 billion global giant, lash out at a company with less than $50 million in sales that sells a concoction made from red yeast grown on rice in China? Cholestin contains mevinolin, a compound identical to lovastatin, the key ingredient in Merck's cholesterol-reducing drug, Mevacor. Merck says Pharmanex was simply selling a slightly different version of its drug without going through the government approval process. And the FDA agreed. Under the FDA decision, Pharmanex can't import the raw material used in the product. Pharmanex is fighting the move in a federal district court in Utah.

Pharmanex co-founder William E. McGlashan Jr. doesn't dispute that Cholestin has mevinolin. But he says it is just one of many natural compounds in the product--and he contends that Merck's real concern about Cholestin is that it would compete directly with an over-the-counter version of Mevacor that Merck has been considering. Such a product would be a clear rival to Cholestin. "It's a commercial move to protect their turf," he says. A Merck spokesman says the company has done some preliminary research on creating an over-the-counter version of Mevacor, but no decision has been made.

"BLOODY WAR." Certainly, Merck is on the defensive in the $4 billion market for cholesterol-reducing drugs. Since Warner-Lambert Co.'s Lipitor hit 15 months ago, Merck's Zocor and Mevacor have lost market share: Lipitor lowers cholesterol more than competing products at the same dose. Merck is fighting back with aggressive sales pitches, pointing out that studies show Zocor prevents heart attacks and saves lives in patients with high cholesterol and heart disease. "It's a bloody war," says Myron Holubiak, general manager of the Plymouth Group, the consulting arm of health research firm IMS Health Inc.

And it could soon grow more intense. On May 27, a Merck study was published showing that lovastatin reduced the risk of heart attacks in patients with average cholesterol levels.

Merck wants to make sure consumers will buy a drug rather than an herbal remedy. But such nostrums are soaring as baby boomers seek preventive treatments. According to market-research firm Packaged Facts, sales of vitamins, supplements, and minerals in the U.S. should nearly double, from $6.5 billion in 1996 to $12.3 billion in 2001.

While Merck fights, some rivals are jumping in. Swiss giant Novartis test-marketed its own natural product for reducing cholesterol in 1997 and this year invested $3 million in Bionutrics Inc., which makes evolvE, a cholesterol-lowering supplement. Johnson & Johnson hopes to hit the market by early 1999 with products based on a cholesterol-reducing ingredient called stanol ester, which it licensed from Raisio Group PLC of Finland.

Whatever the fate of Cholestin, diet supplements will remain hot commodities. That means Merck and other big players will have to decide whether to try to beat them or join them.