By Chuck Strouse
By Chris Joseph
By Chris Joseph
By Allie Conti
By Kyle Swenson
By Allie Conti
By Chris Joseph
By Kyle Swenson
Rexall denies that it or its distributors engage in any violation of government rules. Glenn Gold, RSI's vice president of marketing, recently suggested that if there are problems, they are caused by distributors acting on their own. "We monitor our distributors very, very closely to make sure that people who are not complying with the way we want them to do business do not stay in our distributor force," he said.
South Florida medical leaders share the AMA's concern that selling medically unproven products to patients in doctors' offices could erode public trust in physicians. Mathis Becker, a Plantation cardiovascular surgeon who is president-elect of the Florida Medical Association, says he hopes that the Florida Board of Medicine prohibits the practice. "Unfortunately," he says, "there are always going to be some doctors looking for new ways to make money."
Inside its gleaming, 141,000-square-foot headquarters and manufacturing facility in Boca Raton, Rexall Sundown, the nation's largest seller of vitamins and other dietary supplements, churns out about one billion tablets, capsules, and soft-gel products per month. It employs 1300 people at the plant and its warehouse and distribution center in Deerfield Beach.
Rexall Sundown launched RSI in 1990 to take advantage of the burgeoning interest in multilevel marketing (MLM) and gain an edge over rivals in the fiercely competitive $8.9 billion nutritional-supplement industry. RSI's Gold said that having people sell these products to their relatives and friends is more effective than retailing them in stores, where consumers have dozens of brands from which to choose. RSI has mushroomed into a major division of Rexall Sundown, accounting for almost 30 percent of the company's revenue last year.
Proponents argue that network marketing is the wave of the future in retail selling because it cuts down on administrative costs like warehousing, inventory, and advertising. More than seven million Americans currently serve as distributors for hundreds of network-marketing firms, estimates Robert FitzPatrick, who cowrote False Profits (1997), a book that criticizes MLMs. But total sales are only about $10 billion a year -- which works out to less than $1500 per distributor.
In its required 10K disclosure report to the U.S. Securities and Exchange Commission last year, Rexall Sundown claimed that 100,000 active distributors, mostly in the U.S., were selling RSI's 150 vitamin, herbal, homeopathic, personal care, and water filtration products. Next week, about 10,000 distributors are expected to attend the company's semiannual corporate conference in Orlando. If past conferences are any guide, attendees will hear star distributors deliver revival-style testimonials about how they became millionaires through RSI.
But FitzPatrick warns that people considering signing up need to take a closer look. "Dietary supplements and MLMs fit together well because both embrace magical thinking," he says. "You can make extraordinary promises without delivering. If someone takes a lot of vitaminC and still gets a cold, he usually doesn't say that the vitaminC failed. MLMs work the same way. People don't look at how many hours they'll have to work, how many people they'll have to contact, or how much money they'll really make."
And those who believe that Rexall Showcase is the same company that ran the once-ubiquitous corner pharmacies also need to think again. New Times asked Gold whether it wasn't misleading for RSI's distributors and promotional audiotapes to claim -- as did one distributor in Gold's presence at a recent meeting -- that the company has operated pharmacies since 1903 and still has thousands of stores. "I never said that I can't answer that," he stammered. "The trademark Rexall continues on. The trademark stands for integrity, honesty, and value. We continue to promote that today, just as it was promoted 75 years ago."
The new AMA ethics rules certainly don't help RSI's case. The guidelines, although not legally binding, allow physicians to distribute the company's products only if they make no profit on them. And physicians are not supposed to sell a product for which the benefits have not been scientifically demonstrated. They are discouraged from selling products that are similar to retail-store products offering comparable health benefits. And to amplify its disapproval, the AMA also prohibits doctors from selling products that are exclusively available through physicians' offices. Physicians also must fully disclose to patients the nature of their financial interests in selling the products.
While Rexall opposes the AMA's adoption of this policy, Gold argued that the practices of RSI's doctor-distributors are perfectly consistent with the AMA stance. "If anything, [the AMA rule] reaffirms the way we do business and makes people proud to be part of Rexall Showcase," he said.
That's hard to figure. Contrary to the AMA policy, solid scientific support for the supposed benefits of many of Rexall's products does not exist. And doctors would be hard-pressed to argue that patients couldn't get comparable products at the supermarket.
RSI's position is that extensive research backs its health-benefit claims regarding the ingredients in its products and that clinical trials on specific combinations of ingredients are now under way. The company claims that evidence is particularly strong for Bios Life 2, a fiber supplement it touts as "patented" for reducing cholesterol. (Actually, the patent simply means that the product formulation is unique, not that it's been proven medically effective in lowering cholesterol.) Indeed, there is good evidence in major medical journals that various types of water-soluble fiber do reduce cholesterol. And many studies in these journals show that the antioxidants contained in products sold by Rexall and many other supplement companies protect against cancer and cardiovascular disease.