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Legal Review: FTC Doubles Down on Substantiation

17 Sep, 2010 By: Jeffrey D. Knowles, Venable LLP’s Advertising, Gary D. Hailey Response


The Federal Trade Commission (FTC) says that advertisers must have a “reasonable basis” for objective advertising claims. But two new consent orders reinforce something we’ve known for a long time: that the Monday-morning quarterbacks at the FTC really expect you to have more than just a “reasonable basis” to support your claims. Perhaps “beyond a reasonable doubt” is a more accurate description of what the FTC wants.

Those of us who keep a close eye on what the FTC is up to started hearing rumors months ago that the agency was going to up the ante when it came to substantiation requirements in advertising orders involving health-related claims. Those rumors recently became reality when the FTC announced consents with Iovate Health Sciences USA and Nestle HealthCare Nutrition.

The most obvious difference between the two orders is a matter of what Woody Guthrie once called the “do-re-mi”: Iovate ponied up $5.5 million to settle with the FTC, while Nestle — whose parent is the world’s largest food and nutrition company, with sales of over $100 billion in 2009 — didn’t have to pay a penny.

One area of consistency between the two orders is how many scientific studies these companies will be required to have to substantiate certain claims for dietary supplements in the future.

Just more than 20 years ago, in a case involving permanent hair-removal claims that a tweezer-type epilator removed hair permanently, the Commission split right down the middle on the question of whether such claims had to be substantiated by at least two well-controlled clinical tests or whether one scientific study was enough. The Iovate order makes it clear that the FTC doesn’t see one study as an option any more for future weight-loss claims by this company — it requires “at least two adequate and well-controlled human clinical studies.”

In addition, those two studies will have to have been performed on the product in question — or “an essentially equivalent product” (defined as “a product that contains the same ingredients, except for inactive ingredients, in the same form and dosage”) — and must have been conducted “by different researchers, independently of each other.”

And even if the company has two studies that meet those standards, the FTC will look at them in the context of “the entire body of relevant and reliable scientific evidence.” So Iovate will have to worry about everyone else’s studies as well.

There are two other provisions in the Iovate order that have troubling implications for supplement and over-the-counter (OTC) drug marketers — especially those that advertise homeopathic products.

First, Iovate allegedly claimed that its products prevented or reduced the risk of colds and flu, and provided relief from allergies. The Iovate order prohibits such claims unless they have been approved by the Food and Drug Administration (FDA) — either in an OTC drug monograph or through a new drug application.

In other words, it doesn’t matter how much substantiation Iovate has for such claims: Without a stamp of approval from the FDA, it can’t make cold or flu claims. (Oddly, the Nestle order — which also alleges unsubstantiated claims for cold and flu prevention — does not contain this requirement.)

The FTC’s press release admits that FDA approval of health-related claims generally is not required for compliance with the FTC Act, but that this provision was included here because “the FTC determined that requiring FDA pre-approval before the defendants make disease claims for dietary supplements and drugs will provide clearer guidance … and make the order easier to enforce.” But this begs the question of why the FTC is applying FDA law instead of just requiring that any future claims are truthful and substantiated.

Second, Iovate was accused of misrepresenting that one of its allergy-relief products was homeopathic when, in fact, it did not meet the standards to qualify as a homeopathic product. But the provision discussed above contains no exception for legitimate homeopathic products.

Therefore, it appears that even if Iovate’s product is a true homeopathic drug, Iovate can not make allergy-prevention claims for it unless it is included in an FDA monograph or an approved new drug — which simply isn’t the way homeopathic drugs are handled by the FDA.

Gary D. Hailey and Jeffrey D. Knowles are partners at Washington, D.C.-based Venable. They specialize in advertising and marketing law and can be reached at (202) 344-4000.


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