March 30, 2015 / 12:20 PM / 5 years ago

GNC Holdings settles herbal supplements dispute with NY Attorney General

(Reuters) - GNC Holdings Inc said it restored certain herbal supplements to its stores in New York after reaching an agreement with the state’s attorney general that its products complied with the Food and Drug Administration’s guidelines.

GNC also agreed to adopt testing standards for herbal supplements that exceed FDA requirements, a first in the United States, Attorney General Eric Schneiderman said in a statement.

The end of a dispute that started on Feb. 2 sent the company’s shares up as much as 8 percent to a 52-week high of $49.65 on the New York Stock Exchange on Monday.

The company did not have to pay any monetary damages, just implement reforms, Elizabeth DeBold, a spokeswoman for the Attorney General’s office said.

GNC was one of four retailers that halted sales of certain supplements after being subpoenaed by Schneiderman as DNA tests failed to detect plant materials that the companies claimed were a part of their supplements.

Both internal and independent third-party tests had proved that GNC’s “products are safe, pure, properly labeled and in full compliance with all regulatory requirements”, the company said in a statement on Monday.

GNC had said earlier that tests showed its products contained all herbal extracts listed on labels, and on Monday the company said it had restarted selling its Herbal Plus products.

A study commissioned by the Attorney General to determine the presence or absence of the DNA of certain plants in some herbal supplements also found GNC’s products were within prescribed FDA guidelines, Schneiderman’s statement said.

GNC will start DNA barcoding within 18 months to confirm the authenticity of all plants used as sources for its herbal supplements prior to processing, Schneiderman said.

The company would test for allergen contamination pre and post production and had also agreed to prominently disclose in its stores and on its website if a supplement product was derived from whole herbs or extracts, Schneiderman said.

Herbal Plus is part of GNC’s vitamins, minerals and herbal supplements business, which accounts for almost 40 percent of its U.S. retail revenue.

The investigation into the supplements sold by Walgreens Boots Alliance Inc, Wal-Mart Stores Inc and Target Corp was ongoing, DeBold said.

Walgreens was reviewing the matter and intends to continue cooperating with the Attorney General’s office, spokesperson James Graham said.

Wal-Mart and Target were not available for comment.

Reporting by Sruthi Ramakrishnan in Bengaluru and Karen Freifeld in New York; Editing by Savio D'Souza

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