The Wall Street Journal
With Web Site, Smart Ads And Supplier, One Man Scores on a `Stud Pill’ — Five Cops vs. 20,000 Products
EDINA, Minn. — Wayne Josephson dreamed of starting his own business, but he couldn’t figure out what to sell. Then he realized the answer was in the tiny white capsules in his kitchen cabinet.
Shortly after leaving his job at a Minneapolis securities firm last spring, the 49-year-old Mr. Josephson had begun taking androstenedione — the same substance that made headlines last year when baseball great Mark McGwire said he was using it. Mr. Josephson says it boosted his energy, built up his muscles and even increased his sex drive.
“I felt I’d found the fountain of youth,” he says. Even better, Mr. Josephson believed he had found the perfect product. He called it “The Stud Pill for Men.”
In October, he began selling the substance, previously marketed almost exclusively to the body-building crowd, as a dietary supplement for older men. He set up a Web site and issued a press release on financial news wires that described the supplement as a “safe,” “proven,” “FDA legal” substance that increases testosterone levels, “reverses male aging” and “burns fat, builds muscle, and boosts strength, energy and sex drive.”
In his first month of electronic commerce, he says, he sold 1,000 bottles, or $30,000 worth of pills. Two months later, he began peddling two more products: “The Passion Pill for Women,” a low dose of androstenedione that will “increase sexual desire and energy,” he says on his Web site; and “HerbalTrim,” a dietary supplement that he says promotes weight loss. None of his products have any side effects, his advertisements say. For the three, he says he now has combined sales of about 1,000 bottles a month — a figure that his supplier says tallies with the orders he has received — and projects total sales this year will reach $500,000.
Mr. Josephson’s knack for marketing is obvious, but he also has gotten a big boost, however unintentional, from legislation that has in effect sharply reduced the regulatory oversight of dietary supplements.
As a salesman, Mr. Josephson scores high. He found a product that ties in to two of last year’s media comets: Mr. McGwire and Viagra. He plugged into Internet commerce when it was heating up. And he pitched his line to a group he knows well: weary, middle-aged stock-market players.
He also happened to choose a type of product for which, since a 1994 law, there are scant requirements to substantiate claims and scant resources to police misdeeds. So anyone wondering whether the Stud Pill sounds too good to be true can’t rely on the government to sort out the facts.
Dietary supplements have never received as much government scrutiny as prescription medicines, which undergo a lengthy review before being cleared for marketing. But under the 1994 Dietary Supplement Health and Education Act, whose purpose was to make dietary supplements more widely and readily available, the oversight grew even more relaxed. Most dietary supplements can be sold without being reviewed in advance for safety or effectiveness by the Food and Drug Administration.
Still, there are some rules governing these supplements — rules that Mr. Josephson says he didn’t bother to find out about. He never hired a lawyer to learn about the regulations, he says, because he didn’t want to spend a lot of money starting the new business, and because he assumed his androstenedione supplier had taken care of all the legal requirements. But Mr. Josephson’s supplier, who declines to be identified by name, says he assumed that his own raw-materials supplier had taken care of regulatory matters.
Despite his “FDA legal” claim, Mr. Josephson acknowledges that he never notified any government regulator about his new business. He adds, however, “I certainly would want to comply with all the rules.”
The original FDA law of 1908 bars dietary-supplement companies from making false or misleading claims; the 1994 legislation forbids companies to imply that a product treats or prevents a disease. They can’t say, for instance, that a substance reduces the risk of prostate cancer, but they can say that a product helps keep the prostate working normally.
They must, however, submit those claims to the FDA, as well as safety data on any ingredients introduced in the U.S. after 1994. If the FDA finds there aren’t sufficient safety data, it can tell the company to stop marketing the product. Companies also are required to include on their labels a disclaimer saying that the FDA hasn’t evaluated their claims for the product.
Mr. Josephson’s products don’t include any disclaimers, and he hasn’t submitted any information to the FDA or gathered any data for the Federal Trade Commission. Companies must be able to substantiate claims if the FTC comes calling.
The agencies, for their part, haven’t contacted him — but that isn’t surprising. With an estimated 20,000 dietary supplements on the market in the U.S. and annual growth of 20%, the $15 billion industry is just too big for government regulators. The FDA has only five employees dedicated to handling dietary supplements. It usually learns of misleading statements from disgruntled customers or competitors.
“We have no systematic process in place” to scrutinize dietary-supplement companies, says Robert Moore, a senior regulatory scientist in the FDA’s Office of Special Nutritionals.
Since 1994, the FDA has taken about 100 actions against companies for violating dietary-supplement laws — in most cases, warning letters. Only a handful of companies have had their products seized by the agency. Neither the FDA nor the FTC would comment on the specifics of Mr. Josephson’s business.
Androstenedione, which was discovered by German chemists earlier this century, is chemically synthesized from plants such as wild yams. In the 1970s, German researchers determined its usefulness in enhancing athletic performance. It can be converted naturally in the body into testosterone, the hormone that contributes to energy, muscle strength and sex drive.
The substance was first sold in the U.S. in 1996, two years after the FDA began requiring safety data on new ingredients. But the FDA says it hasn’t received any safety information from companies selling androstenedione , of which people in the business say there are about 50.
Scientists are just beginning to do research on the effects of androstenedione. “There are no studies to show it’s safe or effective. That’s what we’re trying to find out,” says Conrad Earnest, an exercise physiologist in Newport Beach, Calif., who is currently studying how much androstenedione affects testosterone levels.
Dr. Karlis Ullis, an assistant clinical professor of sports medicine at the University of California’s Los Angeles campus, has given androstenedione and a related substance, androstenediol, to male patients trying to combat the effects of aging, but he limits his patients to a 100-milligram dose once or twice a week. If they want to take more, he requires that they undergo medical tests. “I want to know where this goes,” he says. Androstenedione could be a risk to the prostate gland, and if converted to estrogen, could make a man obese or have mood problems, he says. Some doctors worry that prolonged use of the compound could result in heart problems.
Mr. Josephson says he believes androstenedione is safe because of his personal experience, and because of his research, conducted by reading up on the substance over the Internet for a week. He recommends that men take one 100-mg. capsule each day.
“I know I’m offering a good product,” he says. “I have a clear conscience about it. I’ve done my research, so I know it won’t hurt anybody.”
For his HerbalTrim, he did less research on safety or efficacy. But it contains one substance for which the FDA has proposed specific restrictions: ephedra, which is also known as Ma Huang. The agency has proposed that products containing ephedra include warnings that the user should limit daily intake of ephedra to 24 milligrams and refrain from taking it for more than seven days. The FDA has received reports of more than 800 adverse reactions to ephedra, including stroke, heart attack and death.
“Interesting,” Mr. Josephson replies. He notes that the product has been on the market for six years and says each HerbalTrim pill contains 125 milligrams of Ma Huang, which he says is 8% ephedra — though he adds that it is difficult to say precisely how many milligrams of ephedra each pill contains. He also says he lost seven pounds while using HerbalTrim for three weeks, and that it didn’t cause him any ill effects.
Bryan Bresnahan, an insurance agent in Bellevue, Wash., is so happy with the Stud Pill that he has already ordered a second 90-day supply. He says the pill not only boosted his energy level and sex drive, but also helped him lose weight-dropping to 240 pounds from 260 in three months. As for side effects, Mr. Bresnahan says that during the first two weeks he felt “almost a little jittery,” like he was having too much caffeine.
Mr. Josephson’s current business is a long way from his previous career. A graduate of the Wharton School at the University of Pennsylvania, he worked on Wall Street for nearly 20 years. He spent time analyzing bonds at Moody’s Investors Service Inc., worked as an investment banker at Merrill Lynch & Co., and later joined Fitch Investors Service Inc., a credit-rating agency. There he devised a way to separate credit-card operations from other aspects of department stores’ businesses — an innovation that became the subject of an article in The Wall Street Journal in 1993.
He left New York for Minneapolis in 1996 in search of a slower-paced life with his family. Within two years, his securities company, Dain Bosworth, merged with another firm and offered him a buyout. He accepted, thinking he could finally create the business he had always wanted.
For months, he couldn’t figure out what to do. Then, he began to read about Mr. McGwire’s experience with androstenedione. In an Associated Press report last August, Mr. McGwire was quoted as saying, “Everything I’ve done is natural.”
Searching for information about the substance on the Internet, Mr. Josephson discovered that some health professionals recommended androstenedione to combat the testosterone drop in older men that is linked with loss of energy and sex drive. Mr. Josephson, who felt tired and was frustrated that he was having trouble staying in shape, decided to try it himself.
The day after he took his first pill, he says, he “jumped” out of bed, and felt years younger. Within days, he noticed that he wanted to exercise more and was less sore after his workouts. It occurred to him that he had found the focus for his new business. He became convinced that older men would clamor for the supplement if they understood its effects, and welcome the convenience of online ordering for a product that isn’t readily available in many health-food stores.
So, he began his venture into electronic commerce, calling his company AndroFit LLC. In his dimly lighted basement, with its concrete floors and cinder-block walls, he set up his computer on an old wooden table next to the furnace and not far from his NordicTrack machine. He found a supplier for androstenedione, had a Web page designed, and started putting out press releases on news wires. Wealthy, aging male stock traders who stare at these news wires all day would be intrigued by his Stud Pill ads, he thought, and readily pay $29 to buy 100 pills.
Within 10 minutes of putting out his first press release last October, Mr. Josephson got his first order. He sold 30 bottles the first day, 40 bottles the second and 50 bottles the third. He handles the packing and mailing, sometimes helped by his wife and children. Though sales have cooled a bit, he is still doing better than he expected.
But some of his claims, such as the pill’s being “FDA legal” and “safe,” remain questionable. Anne Maher, the FTC’s assistant director for advertising practices, says the agency has successfully brought cases against companies that claimed their supplements were safe and implied their product was approved by a government agency. She says any of Mr. Josephson’s advertising claims should be substantiated with scientific evidence.
The FDA says it has received no reports of adverse reactions to androstenedione , but it remains interested in the substance. Agency officials have been meeting with officials at the Drug Enforcement Administration to see whether it should be classified as a controlled substance and be prescribed only by doctors.
Mr. Josephson says it is unfortunate that androstenedione is “shrouded in negative controversy.” But he is delighted with the way his business is going and with the increased vigor he has felt since he started taking the supplement in August. “I’m going to take it for the rest of my life,” he says.