High ethical standards in the supplement industry

Talking Points Memo and other media have been covering the many thousands of dollars in allegedly unreported gifts from dietary supplement industry executive Jonnie Williams to Virginia Governor Bob McDonnell and 2005 Republican gubernatorial candidate Jerry Kilgore.  Star Scientific, Williams' company, markets a product called "Anatabloc" for its supposed anti-inflammatory benefits.

Records maintained by The Virginia Public Access Project show that Star Scientific gave over $250,000 in campaign contributions in Virginia between 1999 and 2011. Much of that money went to McDonnell’s gubernatorial campaign and leadership PAC between 2009 and 2011. But the top recipient of Star Scientific donations during the 12 year period was actually Kilgore’s 2005 gubernatorial campaign. Star Scientific contributed $101,462 to the Kilgore campaign between 2002 and 2005. And Williams personally chipped in another $27,323. 

The FBI is investigating gifts from Jonnie Williams to McDonnell and members of his family in the growing scandal.

The Star Scientific website includes the usual supplement industry misdirection, hinting at medicinal effects while taking care not to state these claims in plain language.  For example, a news release hints at what disease Anatabloc's supposed anti-inflammatory properties could treat: "The company also reported positive results from a study conducted by researchers at the University of Virginia Medical School investigating the effects of anatabine in an animal model of idiopathic inflammatory bowel disease, ulcerative colitis."  If the company actually claimed to treat a medical condition or disease, FDA would require the company to prove safety and efficacy in human trials.  With mere hints, the company is not obliged to prove anything in human trials.  All of this is typical for supplement company websites.

The real gem of the Star Scientific website is the lovely "Code of Ethics."  It has delightfully specific warnings against seeking to influence government officials through gifts.

When working with government agencies and officials, we must know the regulations and policies governing our conduct. What is acceptable practice in the commercial market may violate strict rules and regulations in government interactions. In all our dealings with governments, our actions must comply with applicable laws and regulations. Do not offer or provide gifts, gratuities or political contributions or discuss employment opportunities with a government official. Even paying for a business meal is prohibited by some government policies. To prevent legal problems for ourselves or the Company, and because laws differ throughout the country, you should work closely with Star's General Counsel when dealing with the government.

Perhaps Jonnie Williams and other Star Scientific executives will pull this dusty old document out of the company files and give it a second read.

What business model lets a person represent a neighborhood?

First, consider this 1999 article in the New York Times, which quotes community activist and businessperson Majora Carter on the topic of a garbage transfer station that had been proposed for the South Bronx.  This 1999 argument pitted (on the one side) an African American-owned business and a clean-air environmental group in favor of the transfer station against (on the other side) community advocates concerned about pollution from the transfer station.

The opponents shouted down representatives of the garbage company, saying the area already handles more than its share of garbage. They also accused the South Bronx Clean Air Coalition, which traditionally has opposed such projects, of accepting money from the company in exchange for its support.

''You are accepting money from them and playing their community partner,'' Majora Carter, an official with the Point Community Development Corporation, shouted at members of the South Bronx Clean Air Coalition. ''This is obscene.'' ...

''I don't care if it's a minority owned business,'' Ms. Carter, of the Point, who is also black, yelled at Mr. Jones at the public meeting. ''I'm a businesswoman too. I would not sell out my brothers and sisters that way.''

Later, but only later, read the harsh article today about Majora Carter in the New York Times.  This article may be unfair to Carter.  Yet, perhaps, Carter may have been too harsh in her criticism of Robert Jones, 3rd, and the South Bronx Clean Air Coalition in 1999.

For me, the lesson is two-fold: (a) we should have very high expectations for the ethical standards of our public interest organizations and entrepreneurs, and yet (b) these expectations should not be so high as to be impossible for any thriving operation to satisfy in the real world. 

Just like for-profit organizations, public interest organizations need a viable business model.  They may aim for small local impacts with cobbled together funding, or they may aim for larger impact with more substantial funding.  In the latter case, they must be vigilant about conflicts of interest and transparent about funding sources, but being a businessperson is not itself a sign of corruption.  Notice that even in the 1999 article, Majora Carter always described herself as a businesswoman.

[I had been thinking about similar issues in this February post.]