An American health supplement company has put in place disciplinary procedures for any of its distributors found to be misleading buyers, and the Health Ministry says it will keep an eye on them.

Ambrotose, developed by Texas-based Mannatech, is allegedly being sold by some distributors as a therapy for HIV, cystic fibrosis, cancer, arthritis, down's syndrome and a host of other illnesses.

Sold for about $300 a month, Ambrotose is actually made from eight sugars, aloe vera and vegetable extracts.

Concern about the claims prompted Health Ministry Medsafe compliance team leader Peter Pratt to meet company representatives yesterday.

"Mannatech have put in place strict procedures for how their product should be advertised and distributed with their distributors, and disciplinary procedures for any distributor who breaks those rules and advertises using therapeutic claims," Mr Pratt said today.

"If I find any distributors making therapeutic claims, I will report them to the company for disciplinary action and follow them up with possible prosecution under the Medicines Act, just to make good and sure."

He said the company had made it clear the product was intended as a health supplement, not a medicine.

Ambrotose is being sold in New Zealand in a pyramid-type scheme in which distributors hold parties at private houses where they sell the product.

Mr Pratt said it was unlikely it could be found at health food shops unless the owner of the store was a distributor of the product and had permission from Mannatech to sell it that way.

He said recent publicity would have alerted the public to the sugar pill. The way the product was sold had led to the unfounded claims being made.

"People get a distributorship and then have to sell it to friends and neighbours," he said.

"That's why some people think they can make extra sales by approaching cystic fibrosis people, or Cancer Society people and making all these therapeutic claims and preying on the vulnerable.

"Obviously that is not acceptable."

He hoped the penalties that could be imposed on wayward distributors would deter future offences.

An individual distributor could be fined $20,000 or serve six months in jail, and a company could be fined $100,000.

The misleading claims have also been criticised by the Direct Selling Association, the Aids Foundation, the Medical Association, nutritionists, the Consumers' Institute and the Commerce Commission.