Herbs May Hurt You or Your Portfolio

The aisles of stores like Whole Foods Market (Nasdaq: WFMI  ) , Longs Drug Stores (NYSE: LDG  ) , and Safeway (NYSE: SWY  ) are lined with them. You've probably taken some yourself. You also might think they do some good. Yet to date, clinical trials have not been very positive for them. In fact, many of them can counteract the effects of traditional prescription medicine. I'm talking about that wide range of products known as dietary supplements, or herbs. And they may be dangerous not only to you, but to your stock portfolio. Here's why.

Back in 2002, Dr. Benjamin Ansell, associate professor of medicine and co-director of the UCLA Medical Center's cholesterol, hypertension, and atherosclerosis management program, walked into a store that specialized in dietary supplements. He discussed his entire experience in The New York Times, and everything he says (registration required) is still relevant today. To summarize, he found a clueless teenage clerk suggesting herbs whose manufacturers made vague claims; herbs that were not regulated by the FDA, might increase various health risks, and had never been proven to work in clinical trials.

And yet, people spend billions of dollars every year on these things. The psychology is easy to understand: We want a cure-all. We want something to pop that will fix our X, Y, or Z. Never mind that Saint-John's-wort can counteract the effects of antidepressants, that goldenseal can interfere with hypertensive control, or that Indonesian wombat poo-poo extract can cause large warts to appear on your nose (well, I made that up, but you get the point).

Current legislation requires the Food and Drug Administration to prove that a "supplement" is harmful before it can be removed from the market. In stark contrast, medicine approved by the agency must satisfy many safety and efficacy requirements before it can be sold. How ironic that Vioxx, which has helped 99.7% of patients, gets pulled because of a few deaths, yet unregulated supplements get to stay on the market and nobody knows how many people they have harmed. For that, you can thank the herbal lobby.

Clinical trials are finally being conducted on a lot of these supplements at places like NIH and Sloan-Kettering. Maybe not today, and maybe not next week, but one day soon, those who conduct these trials might announce just how unsafe these supplements can be (do an Internet search and you'll find people who say so already), stories might just pop up about people dying from them, and a partial or wholesale ban could well come crashing down on the entire business. In fairness, clinical trials may well find the contrary: a definitive medical benefit, ushering increased sales and profits onto an already well-established niche.

If the first of the two options comes to fruition, companies like those mentioned, along with Rite Aid (NYSE: RAD  ) , CVS (NYSE: CVS  ) , Walgreen (NYSE: WAL  ) , and Kroger (NYSE: KG  ) , would suddenly feel the pain of lost revenue.

Again, the possibility exists that the exact opposite might well be the case, leading to increased prosperity as a wider group embraces remedies of this sort. The wisest move would be to make sure these companies have a financially healthy blend of nutritious vitamins and minerals, er, a well-diversified revenue stream.

For more painful revelations, see:

Fool contributor Lawrence Meyers owns none of the stocks mentioned herein and takes raw garlic to clear his sinuses when he has a cold.

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