What’s making the FTC tick these days? Recent consent orders-not to mention POM’s lawsuit-have industry speculating.
When news broke at the end of September that the FTC had filed an administrative complaint against POM Wonderful over the company’s pomegranate health claims, not everyone was surprised-and possibly, not least, POM. POM itself triggered the alarm that something was up when, two weeks prior to being called out by the FTC, the brand preemptively sued the agency.
In its suit, POM is seeking a declaratory judgment that the FTC’s attempt to bring the company under order violates POM’s First Amendment rights.
The complaint points to recent FTC consent orders involving health claims made by Iovate Health Sciences and Nestlé. Those FTC orders, agreed to by the companies this summer, require Iovate and Nestlé to get clearance from FDA before making certain disease claims for their products: “Although FDA approval of health-related claims generally is not required for compliance with the FTC Act, in this case, the FTC determined that requiring FDA preapproval before the defendants make disease claims for dietary supplements and drugs will provide clearer guidance that will facilitate the defendants’ compliance with the FTC order and make the order easier to enforce.”
POM’s suit also alleges that in FTC’s Iovate and Nestlé orders, the agency enacted a new standard of substantiation for advertising claims that encroaches on FDA’s health-claims territory.
At the Council for Responsible Nutrition’s (CRN) annual conference this fall, speaker Michelle Rusk, a senior FTC staff attorney, stressed that the FTC has always required “competent and reliable scientific evidence.”
“For efficacy and safety claims that the dietary supplement industry makes in its advertising…what we require is that you have good-quality clinical tests that are done according to accepted norms in the scientific field,” she stated. “That’s always what we’ve required, and that’s still what we require.”
“Generally speaking, what we expect in the way of substantiation is well-controlled human clinical studies,” she continued. “There are cases where you have to look at the epidemiological evidence…but generally speaking, that’s what we’re requiring. And we want high-quality science-we want double blinding and control…and all the other parameters of good science.”
“The science needs to match up to your marketing,” she summarized. “So that really hasn’t changed.”
Instead, she said, what has changed is how specific the FTC is being when writing consent orders in terms of spelling out, up front, exactly what the agency expects companies under order to do going forward in order to be compliant.
“We’re making an effort to be more transparent about the type and amount of scientific evidence that’s required in the limited context of the order where we’re challenging specific claims or specific products,” Rusk explained. “Why are we doing that? We’re doing it to benefit both us as well as the companies we’re placing under order.”
The FTC believes it will have an easier time enforcing its orders in federal court if it can prove that companies have violated clear, pre-specified rules.
John Villafranco, a partner at Kelley Drye & Warren LLP, and also a CRN conference speaker, said that this effort by the FTC is likely a reaction to the Lane Labs lawsuit in 2007. In that case, a federal judge concluded that Lane Labs had substantially complied with a general order provision that required the company to have “competent and reliable” scientific evidence for health-related claims.
“Although that case was recently remanded by the Third Circuit Court of Appeals,” Villafranco said, “it is clear that the FTC has concluded that more-specific order provisions would have led to a different result in the first instance.”
And indeed, Rusk seemed to indicate this: “We don’t want to get into disputes about what we meant when we said [that we want better] scientific evidence. It is a new approach to our order; it’s not a new approach to our substantiation standard or how we work with FDA.”
But is that true?
Two Human Clinical Studies
In the Nestlé case, the FTC stated that Nestlé needed to provide, as competent and reliable scientific evidence to back any claims, “at least two adequate and well-controlled human clinical studies of the product, or of an essentially equivalent product, conducted by different researchers, independently of each other, that conform to acceptable designs and protocols and whose results, when considered in light of the entire body of relevant and reliable scientific evidence, are sufficient to substantiate that the representation is true.”
This has led industry to wonder whether two human clinical studies is now a tacit threshold that FTC is using when evaluating advertising claims.
“Those cases are interesting because they seem to change the standard for substantiation for dietary supplements,” said Todd Harrison, a partner at Venable LLP, and also a CRN speaker. “The general standard is still competent and reliable scientific evidence. However, if you’re going to make aggressive claims, as a matter of policing, the FTC in the future is probably going to hold you to stronger substantiation requirements. You’d better have two double-blind, placebo-controlled studies to show that your product does that.”
The FTC’s Rusk, however, was careful to emphasize that the FTC’s new approach pertains only to companies under order, on a case-by-case basis. “I want to make very clear that this provision applies in the limited case to the specific challenge claims and the specific products covered in the order.”
“We have not said that it’s a blanket approach, that you’re always going to require FDA approval,” she said. “If we come to a case where two clinical studies aren’t the appropriate standard, then that provision of our order will be different.”
Still, while the FTC may say that its standards haven’t changed, some in the industry are heeding these recent orders as a possible regulatory barometer going forward.
“As a legal matter, the FTC is right when it asserts that the new order provisions apply only to the companies under order. But that misses what I believe is the more important point: Has the bar been raised at the Bureau of Consumer Protection? Absolutely, without a doubt,” says Villafranco.
“You can expect the FTC to take that line, and understandably so, that the law has not changed,” adds Loren Israelsen, executive director of the United Natural Products Alliance (UNPA). In late September, UNPA held its “Advertiser Beware” seminar, which discussed how companies can properly navigate the claims world in light of tightening regulations from the FTC, FDA, and the National Advertising Division/Council of Better Business Bureaus.
“The FTC is saying, what we’re doing is flipping on the high-def signal here, trying to make these orders clearer, crisper, more specific, and detailed,” Israelsen continues. “In my personal view, if you look at what it is the FTC really wants to do is to put a major constrictor band around Section 6 of DSHEA that we rely on as a fundamental foundation for structure-function claims.”
Ingredient Suppliers, Too
“It’s not anything new for the FTC to look at ingredient suppliers, manufacturers, and retailers,” says Devon Domond, an FTC attorney who spoke at October’s SupplySide West show. “Anyone who puts into the market false or unsubstantiated representations can be held liable, and the FTC is looking at them equally.”
“It doesn’t matter if you advertise directly to consumers or to trade customers,” she said. “Advertising is still advertising.”
Meaning that a marketer will not be able to use the excuse that it believed its ingredient supplier’s faulty claims to be true. “There are no more excuses,” says Duffy MacKay, ND, CRN’s vice president of scientific and regulatory affairs and a SupplySide West speaker.
Also, adds MacKay, “I’m assuming that many ingredient suppliers feel their exposure is so low because they’re not out there [placing ads] on television, and they’re not in [consumer] magazines. So I think suppliers get this impression that they’re off the FTC’s radar…and that’s not the case.”
While the FTC’s intentions do have industry nervous, all agree that one way stricter FTC scrutiny could help industry is by weeding out bad actors.
“For those who follow the rules in advertising, the benefit is leveling the playing field,” said MacKay. “Nothing hurts an advertiser more than investing its valuable resources in science and good people who know the regulatory structure and how to follow the rules-and then seeing its competitor simply lift its nose to the rules and do whatever it wants.”
Embria Health Sciences (Ankeny, IA) is one company that’s worked hard to ensure that its immune-health ingredient, EpiCor, is backed by good-quality science. At SupplySide West this year, the company was recognized for its efforts with a Scientific Excellence Award.
Cheryl Sturm, Embria’s director of marketing, agreed that the marketing game for ingredient suppliers has changed-and that is a good thing.
“It’s a real shift in how manufacturers are looking at ingredients today,” she says. “Ten years ago, you introduced something new, and that’s basically all you needed to do. A marketer would ask, what do you have that I can add to my product so I can slap a “New and Improved” or “New Ingredient” claim on the label. And now, we’ve seen a real shift over to manufacturers looking for ingredients that really do have strong science behind them. It is just not worth the risk of what’s happening within the regulatory climate today to do anything other than that.”
She continued, “For us at Embria, we feel that it’s ‘game on’ [against bad-acting companies] because we could have done some things cheaper and faster, and done them to a much lesser extent than we did, but then we wouldn’t have won that award. We feel very comfortable that we can substantiate the claims that we have. For us, [increased regulatory policing] is a good thing. I hope FDA and the FTC come knocking on as many doors as they can, because there are still some folks out there that need to clean up a little bit.”
The Road Ahead
So, back to POM. Does the company have a leg to stand on in its suit against the FTC? “This is going to be a big fight, and likely a loser for POM,” said Villafranco. He said in his 20 years of practicing law in this area, “I’ve never seen a case like this succeed. That’s not to say that it couldn’t. POM is represented by capable lawyers, and strange things happen, but I would say that it’s an uphill battle.”
And how carefully should industry be watching further FTC actions as cues on what to expect going forward? “I would say that we should exercise the level of attention that a cat gives to mouse hole,” says Israelsen. “It is really consequential to a business if you end up with a new-generation consent order. It changes how you do business.”
He continues, “If you look at the energy of the staff within the FTC, their sense of mission and purpose, they really are serious about making a difference with respect to dietary supplements. The FTC sees the dark side of our industry all the time. Like any other cop, they just tend to see the bad part of the neighborhood. It does color their worldview, understandably. Thus, it’s all the more important that we try to show them what the best of industry is doing.”
Also in this article:NAD Update
Representatives from the National Advertising Division (NAD) of the Council of Better Business Bureaus were on hand to speak at the Council for Responsible Nutrition’s (CRN) annual conference and SupplySide West. The representatives updated attendees on how the division is helping the dietary supplements industry self-regulate.
Three years ago, CRN began providing a series of grants to NAD with the provision that NAD devote the funds exclusively to examining unsubstantiated dietary supplement advertising. CRN and NAD report that to date, thanks to their partnership, NAD has been able to review nearly 100 dietary supplement advertising cases.
Speakers highlighted the differences between the NAD and FTC processes. Upon scouring the industry, if NAD comes across a claim it believes is unsubstantiated, it can advise the company to amend the claim. Unlike the FTC process, however, adherence to NAD’s advice is voluntary.
Companies generally choose to work with NAD, said Mark Levine, a senior NAD attorney and a SupplySide West presenter. “We’ve been getting 100% compliance and participation in our cases, which is incredible, because it’s a voluntary process.”
Most times, he said, a company is grateful that NAD has pointed out questionable claims so that it can fix them before the issue makes its way to the FTC, where the process is much more serious and burdensome-and litigious. Those who initially ignore NAD’s recommendations often end up complying once they realize NAD may kick the case up to the FTC, added Levine.
“It’s more like going to the principal’s office,” said CRN conference speaker C. Lee Peeler, Esq., president and CEO of the National Advertising Review Council, a sister to the NAD.
“There’s no extensive discovery. We’re not reading all of your e-mails. We just look at your claims and decide whether they’re substantiated,” he added.
Notably, Levine added, companies often raise red flags to NAD about their competitors’ claims.
What are some ways in which companies run into trouble? Questionable or borrowed science, certainly, said Levine.
Quantifiable claims, such as “burns fat in six hours,” can also be problematic, he said, unless there is solid science to support those numbers.
Other infractions include “fairy dusting” or “window dressing” by putting an insufficient amount of active ingredient in a product while still taking full advantage of the ingredient’s efficacy claims.
“You need to use the same dose that’s used in [that ingredient’s] research,” said CRN’s Duffy MacKay.
Also in this issue:FTC Versus POM
The FTC’s administrative complaint against POM alleges that the company made disease claims for its pomegranate juice that are not supported by substantial science.
The FTC complaint points out specifically what the agency believes are holes in POM’s science. For one, the agency alleged that the brand’s heart-disease claims (including causes a “30% decrease in arterial plaque”) are not supported by studies that show heart-disease benefits. It also chastised POM over prostate-health claims that drinking POM slowed the development of prostate-specific antigens. The FTC stated that among other problems, the studies were not blinded nor controlled. For POM’s erectile-dysfunction claims (“40% as effective as Viagra”), the FTC stated that the company’s study in fact showed no significant effect over placebo. Other questionable claims? The phrase “Cheat Death,” advertised on POM billboards.
“Any consumer who sees POM Wonderful products as a silver bullet against disease has been misled,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection.
POM claims that it has spent up to $35 million on clinical studies on its product, although evidence points to the fact that many of those studies were done on small subject groups over short time periods.
The FTC’s administrative complaint was issued following a warning letter that FDA sent to POM in February, which also objected to POM’s health claims.
As for POM, it continues to strongly defend its position, claiming that the FTC “is wasting taxpayer resources to persecute the pomegranate.” (Also, the FTC complaint didn’t stop the company from forging ahead with its first-ever television ad campaign in October. The creative, attention-getting ads made none of the questionable health claims mentioned above.)