$40 million judgement lodged against Hi Tech Pharmaceuticals executives

By Hank Schultz contact

- Last updated on GMT

$40 million judgement lodged against Hi Tech Pharmaceuticals executives
The legal troubles of Hi Tech Pharmaceutical CEO Jared Wheat continue to worsen with the unveiling of a judgement against him in federal court that has imposed sanctions of more than $40 million.

The ruling by US District Court judge Charles A. Pannell, Jr. comes in the resolution of a case dating back to 2008 in which Wheat and his co defendants, Stephen Smith, who was a vice president at company at the time, and Dr. Terrill Mark Wright, MD, a physician who provided expert medical advice, were served with an injunction by the Federal Trade Commission and then subsequently charged with violating that injunction.

Misleading claims made in face of injunction

FTC charged that Hi Tech was making false and misleading claims about four weight loss products: Fastin, Stimerex-ES, Benzedrine, and a reformulated version of Lipodrene.  The initial injunction dated to 2008, and the most recent ruling, which was made public on Oct. 10, 2017, related to a trial that took place in the US District Court of the Northern District of Georgia in April and May of this year.  The court ruled that Wheat and his co-defendants violated the injunction on making the false claims on the products from October 2010 through Dec. 2012.

FTC said Hi Tech was making unsubstantiated claims on the products which included:

  • “EXTREME WEIGHT LOSS GUARANTEED!
  • “Pharmaceutical grade dietary supplement indicated for weight loss in extremely overweight individuals”
  • “The strongest fat burner/energizer ever produced”
  • “Hardcore stimulant action for those who want their fat-burner to light them up all day as their pounds melt away!”

In the initial 2008 proceeding, FTC relied on the opinion of Dr. Louis Aronne, MD, who said that to substantiate the claims, Hi Tech should have had randomized controlled trials that were conducted using, “The recommended dosage involving an appropriate sample population in which reliable data on appropriate end points are collected over an appropriate period of time . . . conducted on the product itself.

In its defense, Hi Tech and Wheat made a variety of arguments, including citing free speech protections and an assertion that conducting RCTs is too expensive for a dietary supplement company to undertake, and such trials are not called for it all cases.  But the court noted that Wheat did reference an RCT in his marketing, but not the right one:

“Wheat purportedly relied upon the results from RCTs a competitor did of a product named Meltdown, a dietary supplement that has a different product formulation than each of the four Hi-Tech products at issue,​ Pannell wrote in his judgement.

Hi Tech’s own RCTs

In addition, the court noted that Hi Tech did conduct RCTs on two different formulations of the Fastin product, but said that referencing those results, conducted on formulations with different ingredients or with different concentrations of common ingredients, did not support claims made on the Fastin product itself or the other three products at issue.

“If the Hi-Tech defendants believed RCTs were not necessary to substantiate efficacy claims, as they claim, the court questions why they were done at all. Wheat testified in the 2014 proceedings that he had asked Dr. Jacobs [who was not further identified] to conduct the Fastin XR study because he “wanted to be able to make some real claims, some claims as to what the product does rather than generalities. . .. I wanted to make much more certain advertisements’,​ Pannell wrote.

“Yet, when the Hi-Tech defendants attempt to substantiate the claims for Fastin and the other three products, they point to RCTs of different products, containing different product ingredients, having different formulations, during a different time period. The court can only presume the Hi-Tech defendants chose not to commission RCTs of the four products at issue because of the concern that they might not receive the desired outcome necessary to corroborate the claims that they had made,​ Pannell’s opinion found.

Officials at Hi Tech Pharmaceuticals did not respond to a request for comment in time for the publication of this article.

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