Court Rules that FTC’s Substantiation Requirements Are Applicable to Claims for Medical FoodsMarch 12, 2014
By Riëtte van Laack –
Defendants Wellness Support Network, and co-owners Robert and Robyn Held, marketed two diabetes products – Diabetic Pack and Insulin Resistance – as medical foods. In 2005 and 2006, FDA issued two Warning letters to them (here and here), claiming the products were marketed as unapproved drugs. In 2007, the FTC sent them a Civil Investigative Demand. This culminated in a lawsuit filed by the FTC against them in 2010.
The FTC alleged that the Defendants’ promotion of “medical food” products intended to treat diabetes was deceptive and unsubstantiated. According to the FTC, the Defendants marketed their products as clinically proven natural solutions for blood glucose control and diabetes. Allegedly, the Defendants’ website posted “dramatic claims” of effectiveness, including “new diabetes break-through,” reduces the effect of diabetes, “money back guarantee,” a clinically proven solution with a 90% success rate and “no side effects guaranteed,” and various testimonials.
On February 20, 2014, the U.S. District Court for the Northern District of California granted the FTC’s motion for summary judgment on liability, redress, and injunctive relief, and denied the defendants’ cross-motions.
The Court had previously rejected the Defendants’ argument that the products as medical foods were not subject to the FTC requirements. The Court held that FDA regulations concerning medical foods were irrelevant to the FTC’s determination as to the validity of the advertising claims. Medical foods are subject to the same standard as other products, i.e., whether the advertising claims are truthful and not misleading.
The Court’s recent decision also rejected Defendants’ First Amendment claims, ruling that the right of free speech does not extend to false, deceptive, or misleading commercial advertising. The Court held that Defendants’ claims were false because the Defendants did not perform clinical studies and did not test the actual product; instead the Court ruled that the Defendants based their claims on information about certain of the products’ ingredients collected on the internet.
The Court found that the Company and the individual defendants were jointly liable, because both individuals were at least recklessly indifferent to the falsity of the material representations. Robert Held founded and co-ran the Company and formulated the products based on his research on the internet. Although there was no evidence that Robyn Held had been involved in the formulation of the products, or was involved in determining the accuracy of the claims, the Court deemed her liable based on the evidence that she played a significant role in running the Company of which she was a co-owner, was extensively involved in the development of advertising claims, knew that Robert had no relevant formal scientific or medical training, and knew that the products have never been clinically tested.
The Court ordered restitution of almost 2.2 million dollars based on the Defendants’ net revenue minus refunds. It also imposed a broad injunction against the Defendants for a twenty-year period. The Defendants are barred from making certain claims related to diabetes, metabolic syndrome, blood glucose levels, and insulin unless the claims are supported by at least two randomized, double-blind, placebo controlled clinical studies, conducted by different researchers, independently of each other, and results, considered in light of the entire body of relevant and reliable scientific evidence, are sufficient to substantiate that the representations are true. Other claims are barred unless they are supported by “competent and reliable evidence.”
It is unknown whether the Defendants will appeal the decision.