Amazon’s sketchy health products could hurt its big pharmacy ambitions

Amazon is hawking dubious health products, including some that have been criticized by regulators and may even be illegal.

Current health offerings, replete with literal “snake oil,”a term that refers to fake medical products, could stymie the online retailer’s reported plans to disrupt the neighborhood pharmacy.

These products include dietary supplements claiming to help with opiate withdrawal and relieve pain, although it’s illegal to market supplements as treatments or cures. And, until recently, Amazon AMZN, -0.44% sold at least one medical device without Food and Drug Administration oversight and products the FDA has explicitly warned against.

Amazon may have plans to expand into more-regulated areas of health care, such as pharmaceutical drugs, medical devices and medical supplies.

But without a major change, Amazon could encounter regulatory scrutiny or risk having a credibility problem, experts told MarketWatch.

“Honestly, if Amazon wants to get into this business they should clean up their own house first,” said Nicodemo Fiorentino, a pharmaceutical and medical device regulatory expert, adding that consumers “do not understand the complexities of drugs and devices” and could be misled by offerings.

Read: Is Amazon getting into the pharmacy business? This is what you need to know

Concerns about “dangerously misleading” health products being sold on Amazon have been raised before, including in a report from the U.K. newspaper the Sun last year that charged the online retailer was “peddling bogus miracle cancer cures.” A subsequent report by Vox found that those products were also available in the U.S. — and many are still available to this day.

Amazon also sold — until MarketWatch brought it to the company’s attention — at least one medical device that didn’t appear to be registered with the FDA, a transcutaneous electrical nerve stimulation unit, which is used to relieve pain, and ear candles, which the FDA has warned about.

In some cases, devices sold by Amazon improperly include the FDA logo or falsely claim to have FDA approval.

On its website, Amazon says “all listings and products must comply with all laws and regulations” and states that sellers not authorized to sell regulated medical products can’t sell them. Amazon policy also says that supplements can’t be sold “that claim to cure, mitigate, treat or prevent diseases in humans.”

But it’s unclear what Amazon, which removed certain listings after MarketWatch brought them to its attention, is doing to enforce that.

In fact, “ear candles” — which Amazon explicitly lists as prohibited on its website — can be easily found on the retailer’s website. (Ear candles are touted as a way to clear ear wax buildup and relieve various symptoms, but the FDA has warned they can cause serious injuries and that no scientific evidence supports their claims.)

While the ear candle listing sent to Amazon by MarketWatch was taken down, other examples remain on Amazon’s website. Other listings, including of several supplements claiming to help with opiate withdrawal, have also been taken down since Friday.

“Sellers are required to comply with all laws and regulations, as well as Amazon’s policies, and may lose their selling privileges if they fail to do so,” Amazon said in a statement. “We monitor the products sold on our website for product safety concerns and, when appropriate, we remove products, reach out to sellers, manufacturers and government agencies for additional information or take other actions.

“If customers have concerns about items they’ve purchased, we encourage them to contact our Customer Service directly so we can investigate and take appropriate action.”

Related: Amazon is pressuring drug stocks without lifting a finger

After products sold on Amazon were sent to the online retailer by MarketWatch over the weekend, two were taken down by Monday. Listings of several supplements claiming to help with opiate withdrawal have also been taken down.

Amazon’s current offerings pose a clear problem for consumers, who may believe that Amazon’s health products are appropriately vetted.

But is also opens Amazon up to risks, including possible action by the FDA, which regulates medical devices and can remove dietary supplements from the market.

The FDA said in a statement that it is “aware that online shopping sites may be selling medical devices that are unapproved or not cleared by the FDA, and we investigate violations and pursue appropriate action with the firms involved.”

See: The FDA is cracking down on controversial supplement kratom

“As part of our mission to protect public health, the FDA has an active surveillance program to monitor for the marketing and sale of unapproved medical devices,” the statement said. “Many of these online shopping sites have implemented procedures to prohibit such activity, but we have a policy of not commenting on specific cases under investigation.”

Disciplinary actions or health care fraud could prevent the licensing and accreditation needed for a potential expansion, “unless that’s all been resolved,” said Carmen Catizone, executive director of the National Association of Boards of Pharmacy. The NABP represents state government agencies that regulate pharmaceutical drugs and medical devices and accredits organizations that want to sell them.

Related: Drug stocks drop after report that Amazon has obtained pharmacy licenses

Could, for example, selling products not cleared by the FDA qualify?

Yes, Catizone said, “and that could factor into getting a license or registration.”

The government has stepped in before in a similar area. In 2011, Google GOOGL, -0.03%  reached a $500 million settlement with the Department of Justice over ads placed by online Canadian pharmacies to target U.S. consumers.

“The Department of Justice will continue to hold accountable companies who in their bid for profits violate federal law and put at risk the health and safety of American consumers,” then-Deputy Attorney General James Cole said at the time.

There are also many examples of the FDA and the Federal Trade Commission cracking down on nutritional supplements that make grandiose claims, including FDA warning letters and actions brought by the FTC against manufacturers claiming their products alleviate opiate withdrawal, ensure weight loss, relieve joint pain and reverse grey hair.

According to the FTC, when making a complaint it considers what parties are most responsible for deceptive advertising. The FTC says that when it comes to nutritional supplements, it can’t recall making a complaint against a platform through which a manufacturer is selling. Moreover, a section of the Communications Decency Act exempts websites when content is posted by a third party.

That defense — that Amazon is merely a platform — could also shield it from other scrutiny. But there are numerous instances in which Amazon fulfills questionable products offered by third parties. An ad for a supplement that claims to help with opiate withdrawal is the first response to a search for “opiate” on Amazon.

Searching for “opiate” on Amazon reveals a sponsored ad for a supplement that claims to help with opiate withdrawal. It is illegal for supplements to be marketed as treatments or cures, and the Federal Trade Commission has previously brought an action against a company making a similar claim.

Amazon “has not had the cleanest supply chain so far,” said Darshan Kulkarni, a pharmacist and attorney at the Kulkarni Law Firm. But a dirty supply chain “gets very quickly eviscerated when you’re dealing with regulated products like drugs and devices.”

Kicking products off Amazon’s website could affect its product margins, because customers may no longer see it as a one-stop shop, said Kulkarni, who noted he holds Amazon stock.

But if Amazon expands into medical devices, pharmaceutical drugs or medical supplies, “they’re going to go from serving customers, which they’re very good at, to serving agencies… and that may end up impacting how they do business,” he said. “When you’re serving two masters, one is probably going to end up being unhappy.”

Amazon shares have gained 50% in 2017, while the S&P 500 has gained 15% and the Dow Jones Industrial Average has gained about 19%.

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