By Sheryl Gay Stolberg
Reprinted from Wednesday, June 10, 1998
Section: National Desk

Here at the base of the Rocky Mountains, in a region that is the heart of the nation's herbal and vitamin industry, a stainless steel contraption was hard at work on a recent morning, spitting out clear plastic capsules at the rate of 90,000 an hour. Each contained precisely 600 milligrams of a fine, brick-colored powder that Federal health officials are trying to ban. The powder, a pulverized strain of rice fermented with red yeast, is imported from China, where it has been consumed for 2,000 years, as an herbal remedy (it is thought to improve blood flow) and a food (it spices up tofu and makes a tasty marinade for duck and pork.) Then five years ago, William McGlashan Jr., a young California venture capitalist, learned that scientists in Beijing were studying red yeast rice for another reason: it seemed to lower cholesterol.

Today, Pharmanex, Mr. McGlashan's company, sells the encapsulated red powder under the trade name Cholestin in 37,000 American stores, from health food outlets to the giant Wal-Mart chain. Mr. McGlashan calls Cholestin a dietary supplement. Officials at the Food and Drug Administration call it something else: an illegal, unapproved drug.

On June 15, in the gray stone Federal courthouse in Salt Lake City, United States District Judge Dale A. Kimball will be asked to determine who is correct. The case is being watched as a pivotal battle between the agency, which is chafing at a 1994 law that left it almost powerless to regulate vitamins and herbal products, and the dietary supplement industry, which has been growing wildly since the law was passed.

At issue is not whether Cholestin is dangerous; no one argues that it is. Rather, the agency contends that Cholestin has crossed the increasingly murky boundary that separates dietary supplements from drugs, because it contains an ingredient, lovastatin, that is the key component of a cholesterol-lowering drug. Pharmanex says the lovastatin occurs naturally in the rice and that Cholestin is more akin to a food than to a drug.

The outcome of the case could be reflected in the medicine and kitchen cabinets of millions of American consumers, including many doctors and scientists, who have come to believe that ginkgo, echinacea and St. John's Wort, among other natural remedies, are as important to good health as aspirin and antibiotics.

Aside from the turf battle between the supplement industry and regulators, the dispute raises crucial questions: Is there a distinction between these herbal products, which may contain naturally occurring chemicals as potent as those in any drug, and the drugs themselves? Must products like Cholestin be subjected to the rigorous testing that drugs undergo?

''You see more and more dietary supplements sold right next to over-the-counter drugs,'' said William B. Schultz, the F.D.A.'s deputy commissioner for policy. ''There is a risk that the line will blur."

Indeed, it is already blurry. ''Foods are medicines; medicines are foods,'' said Loren Israelson, executive director of the Utah Natural Products Alliance, a trade group based in Salt Lake City that represents 10 of the nation's biggest supplement manufacturers. ''If you drink coffee in the morning, why are you drinking coffee? You're looking for the caffeine, a stimulant. That same caffeine is sold over the counter as NoDoz. That's a drug when it's in a pill form, and it's a food when it's in coffee. Why is that?''

The Food and Drug Administration struggled with such questions for decades. But with the passage of the 1994 Dietary Supplement Health and Education Act, the law under which the Cholestin case will be decided, the agency's task grew even more vexing. The new law moved dietary supplements out of the underground and into the mainstream, giving manufacturers like Pharmanex the long-sought right to advertise the potential benefits of herbs, even if the evidence for those benefits was sketchy. Unless the F.D.A. can prove the product is unsafe, companies can say what they wish, so long as they do not claim their products can prevent, treat, or cure disease. Thus, Mr. McGlashan can advertise that Cholestin ''promotes healthy cholesterol,'' but not that it ''prevents heart attack or stroke.''
''For the first time,'' he said, ''we can educate the American consumer about what the product does. We don't have to rely on a person in a health food store to explain it.'' Since the law was passed, the agency has received about 2,300 notifications from manufacturers intending to make claims about their products, and has objected to about 150 of them. It has also proposed a rule that would restrict, but not eliminate, the manufacturer's ability to use the herbal stimulant ephedra, which has been linked to more than a dozen deaths nationwide. It has banned one ephedra-based product and it is now trying to ban Cholestin.

Agency officials say the 1994 law, restrictive though it is, gives them the authority to take Cholestin off the market, because it bars companies from bringing dietary supplements to market if they contain the same active ingredients as previously approved drugs. In passing the Dietary Supplement Health and Education Act, Mr. Schultz says, Congress did not intend for companies to skirt the drug-approval process by selling medicines under the guise of dietary supplements.

Lawyers for Pharmanex, however, contend that Cholestin falls squarely within the intent of the 1994 law. ''This product was specifically developed to be a dietary supplement,'' said Daniel Kracov, a company lawyer. ''What the F.D.A. objects to is the fact that this product has a drug substance in it, in their view. You may object to that, but our response is: If you don't have a safety issue, don't go after these products.''

Whatever the outcome, Dr. David A. Kessler, the former Commissioner of Food and Drugs, says the agency's action will hardly make a dent in the rampant proliferation of herbal remedies that he says are ineffective at best and unsafe at worst. ''Just walk into your pharmacy; it's out of control,'' said Dr. Kessler, who waged a bitter, unsuccessful battle against the 1994 law as commissioner. ''Efficacy is now defined as what sells off the shelves. The agency is powerless.''

While the law was a disaster for regulators, it was a windfall for makers of dietary supplements and vitamins. After the act was adopted, annual sales of dietary supplements in the United States skyrocketed, jumping to nearly $12 billion last year from more than $8 billion in 1994, according to the Nutrition Business Journal, a trade publication.

So furious has the growth been that one analyst, Matthew Patsky of the Boston-based investment-banking firm of Adams, Harkness & Hill, said some of the biggest pharmaceutical companies were planning to sell their own herbal products. That worries Mr. Schultz, the F.D.A. deputy commissioner for policy. ''If companies that would have tested their products and sold them as drugs are now going to not test them and sell them as dietary supplements,'' he said, ''then we have lost information about the safety and efficacy of those products.''

Among the law's beneficiaries was Mr. McGlashan, a 34-year-old Stanford University business school graduate who studied Chinese history. With the aging of baby boomers, Mr. McGlashan saw a growing demand for natural medicines the Chinese have used for centuries. Mr. McGlashan says he had a vision for his business; he wanted to apply ''pharmaceutical rigors'' to the dietary supplement industry, using research to persuade consumers that Eastern therapies worked. In early 1994, he met Michael Chang, a former pharmaceutical industry researcher who had set up a plant to produce herbal medicines in Huzhou, China, near Shanghai. Dr. Chang scoured Chinese research for promising herbal products, identifying 5,000; the list was narrowed to 30. By early 1995, Pharmanex was born, with headquarters in Simi Valley, Calif. Red yeast rice, called hong qu, was one its most promising projects. ''We know hong qu has been used for centuries, but we don't know why it lowers cholesterol,'' Dr. Chang said. ''We need to find out.''

The 1994 law, Mr. McGlashan said, made it worth investing in science. The company introduced Cholestin at the end of 1996, after nearly three years of study. Most recently, Pharmanex enlisted Dr. David Heber, director of the Center for Human Nutrition at the University of California at Los Angeles, to study the effects of Cholestin in adults with moderately elevated cholesterol. The study, financed by Pharmanex, compared the cholesterol levels of 42 adults who took 2.5 grams of Cholestin every day for three months with the levels in 41 adults who were given placebos. Dr. Heber said the total cholesterol counts of those who took the supplement dropped, on average, from 250 to 210.

Dr. Heber dismisses the contention that red yeast rice is a drug; instead he calls it ''a functional food.'' The same cholesterol-lowering ingredient in lovastatin, he notes, occurs in even higher concentrations in oyster mushrooms, commonly used in Asian cooking. And nobody, he said, is trying to ban mushrooms. However, Dr. Richard A. Friedman, director of psychopharmacology at New York Hospital-Cornell Medical Center, contends the current distinction between dietary supplements and drugs is based on semantics, not biology, and that both should be carefully regulated.

''If there is a biologically active component in the supplement, to say it is not a drug is illogical because it will have a similar effect,'' he said. Companies like Pharmanex, he added, ''want to be able to implant the idea in the public that the drug is medically beneficial'' without the rigorous research. That kind of science, Mr. McGlashan admits, would cost far too much for a small company like his. Yet with a decent body of research behind Cholestin, he said, he at one time envisioned himself becoming the F.D.A.'s model for good behavior.

Instead, he received a visit from F.D.A. investigators last year; the agency had received complaints that Cholestin contained lovastatin, both from a pharmacist and from Merck and Company, which makes Mevacor, the cholesterol-lowering drug, known generically as lovastatin. Shortly thereafter, Federal authorities impounded ten tons of red yeast rice. Then on May 20, the F.D.A. notified Mr. McGlashan that it considered Cholestin illegal, a move that led the company to ask for a hearing before Judge Kimball.

''This case is going to determine the extent to which companies can imitate prescription drugs,'' said Mr. Schultz of the F.D.A., ''and avoid the approval process.'' But Mr. McGlashan contends that the dispute is an economic one. Cholestin, he said, is intended for use by people who are too healthy for Mevacor. Merck, he contends, is trying to push Cholestin off the shelves -- a charge denied by Jan Weiner, a company spokeswoman.

While the court case is pending, Mr. McGlashan said, sales of Cholestin are booming. Even his mother called, he said, asking, ''how am I supposed to get my Cholestin?'' For now, Mr. McGlashan has no answer. Standing outside the low-pressure room where the encapsulating machine was spinning, a lab coat covering his royal blue shirt and Hermes tie, he looked a little
wistful. The fine red powder being packed into the capsules, he said, was the last of his supply.