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D.C. Court of Appeals Strikes Down FTC’s Blanket ‘2-Clinical-Study’ Substantiation Requirement

10 Feb, 2015 By: Linda A. Goldstein


On Jan. 30, the U.S. Court of Appeals for the District of Columbia Circuit issued its long-awaited opinion in POM Wonderful LLC v. Federal Trade Commission. The case has been closely watched and the outcome widely anticipated by the direct response community because it involved a direct challenge by POM to the FTC’s position that all disease related claims must be supported by at least two Randomized Clinical Trials (RCTs). While the decision was largely a victory for the FTC, it was also a significant victory for POM in ways that may have enormous implications for companies advertising health benefit claims in the future.

The court generally agreed with the FTC that the specific disease related claims made by POM – i.e., that its products would treat or reduce the risk of heart disease, cancer and erectile dysfunction – were not properly substantiated and were false and misleading. The court also ruled that the First Amendment does not protect misleading commercial speech.

Importantly, however, the court rejected the FTC’s categorical requirement that all disease-related claims must be supported by at least two RCTs and determined that POM’s claims should have been supported by at least one RCT. In rejecting the Commission’s across-the-board two-RCT standard, the court found that the Commission had failed to meet its burden of showing a “reasonable fit” between the remedy and the government interest at issue, which the U.S. Supreme Court required in a 1980 case, Central Hudson Gas & Elec. Corp. v. Pub. Serv. Commission. The court held that while two RCTs would certainly be more reliable scientific evidence than one, the FTC failed to justify that the increased scientific certainty afforded by this requirement outweighs the consequences.

The FTC had argued that the two-RCT requirement was justified given POM’s demonstrated propensity to make deceptive claims regarding health and diseases. However, the court held that the two-RCT requirement was unduly burdensome to address this government interest.

Importantly, the court recognized that requiring two RCTs is expensive and that “if there is a categorical bar against claims about the disease-related benefits of a food product or dietary supplement in the absence of two RCTs, consumers may be denied useful, truthful information about products with a demonstrated capacity to treat or prevent serious disease. That would subvert rather than promote the objectives of the commercial speech doctrine.”

Furthermore, the court noted that the two-RCT requirement was overly restrictive because it prohibited POM from making any disease-related claim, absent the completion of two RCTs, regardless of how compelling the study and other medical research. Finally, the court stated that not only is the requirement of two RCTs arbitrary, it also contradicts prior policy statements by the Commission, which provide that “in most situations, the quality of studies will be more important than quantity.”

How is this decision likely to impact FTC enforcement and what level of substantiation is the FTC likely to require of marketers in the future? It is important to keep in mind that the court did not foreclose the possibility that two RCTs might be required in some cases – it simply held that the Commission had failed in this case to adequately justify an across-the-board two-RCT requirement for all disease claims made by POM.

While the FTC will likely craft its consent orders more narrowly in the future, and marketers will certainly have a more compelling argument that the FTC should consider other studies and scientific evidence when evaluating claims, it is likely that the FTC will continue to require at least one RCT for all disease related claims. And depending on the nature of the claim and the adequacy of the testing, it is possible that the FTC may still require more. Even where an RCT is presented, the FTC will consider factors such as the size of the sample, the magnitude of the results, and whether there are any contradictory studies.

As the direct response community is well aware, the FTC’s has vigilantly targeted heath and weight-loss claims and has been requiring that such claims be supported by at least one well-controlled clinical study conducted on the product itself that meets the highest levels of scrutiny. None of that is likely to change in light of this decision.

Linda A. Goldstein is chair and of the Advertising, Marketing and Media division of Manatt Phelps & Phillips LLP, based in the firm’s New York office. She can be reached at lgoldstein@manatt.com.
 


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