FDA Law Blog

Initial Decision in POM Wonderful Case - Each Side Can Claim Victory

By Riëtte van Laack –

On May 21, 2012, the FTC posted the 345-page Administrative Law Judge’s ("ALJ’s") Initial Decision in In the Matter of POM Wonderful LLC et al. ("POM") (FTC Docket No. 9344).  The ALJ upheld the FTC’s Complaint insofar as the FTC asserted that POM made deceptive claims in some (but not all) advertisements that its products (100% juice and POMs supplements) would treat, prevent, or reduce the risk of heart disease, prostate cancer, and erectile dysfunction because these claims were not supported by sufficient competent and reliable evidence.

However, the ALJ’s Order is a stunning rejection of the FTC’s theory that POM was legally required to have double-blind, randomized placebo-controlled clinical trials to make the claims that the FTC attacked.  The ALJ’s order would merely bar POM from making certain claims unless POM possesses competent and reliable scientific evidence to support the claim.  As clarified in the Initial Decision, however, this standard is not defined as double-blind, randomized, placebo-controlled clinical studies.  In fact, according to the ALJ:

[for health benefit] claims . . . made in connection with a food, or food-derived product that is safe, and that is not being offered as a substitute for medical treatment, double-blind, randomized, placebo-controlled clinical trials, such as those required by the Food and Drug Administration, are not required.  However, . . . claims that a food or food-derived product treats, prevents or reduces the risk of a disease, . . . competent and reliable evidence must include clinical studies, although not necessarily double-blind, randomized, placebo-controlled clinical trials, that are adequate to show that the product did treat, prevent, or reduce the risk of disease.

The ALJ also rejected the Commission’s attempt to require POM to get prior FDA approval for certain claims.  The ALJ held that the FTC’s proposed requirement that POM would be prohibited from making any disease claim in the future unless the claim had been approved or authorized by FDA “would constitute overreaching.”

Both the FTC Staff which prosecuted this case and POM can seek review of this decision by the five FTC Commissioners.  We expect that both parties will seek that review. We also expect that it will take many months before the FTC Commissioners rule on the appeals.

FTC to Advertisers: “Shape up your substantiation or tone down your claims”

By Jennifer M. Thomas & John R. Fleder - 

Last week, the Federal Trade Commission (“FTC”) announced a $40 million settlement with Skechers USA, Inc. (“Skechers” or “the Company”) to resolve charges that the Company made deceptive and unfounded claims that its Shape-up sneakers would help consumers lose weight, strengthen and tone their buttocks, legs, and abdominal muscles.  The FTC also claimed that Skechers made deceptive claims about its Resistance Runner, Toners, and Tone-ups shoes.  See Complaint 12- 16, Federal Trade Commission v. Skechers USA, Inc., No. 1:12-cv-01214 (N.D. Ohio May 16, 2012). 

Like the FTC’s similar settlement with Reebok in 2011, reported here, the Skechers settlement provides “compliance nuggets” that can help all advertisers better understand the FTC’s current policies and priorities.  Importantly, the settlement contains a definition of “adequate and well-controlled human clinical study” that likely represents the FTC’s current understanding of that phrase as applied to weight-loss studies:

a clinical study that is randomized, controlled (including but not limited to controlled for dietary intake if testing for weight loss or a reduction in body fat), blinded to the maximum extent practicable, uses an appropriate measurement tool or tools, and is conducted by persons qualified by training and experience to conduct and measure compliance with such a study.

Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief 3-4, No. 1:12-cv-01214 (N.D. Ohio May 16, 2012).

Further, the settlement reinforces the FTC’s prior view that even multiple clinical studies may not satisfy the substantiation standard unless (1) the study results correlate to claims; (2) the study design and data are reliable; and (3) the individual or entity conducting the study is independent of the advertiser.  The FTC claimed that Skechers characterized two of its Shape-ups studies as “independent case studies,” when in fact they were not independent because they were conducted by a chiropractor — Dr. Gautreau — who was a compensated endorser for Shape-ups, and was married to a Skechers senior vice president of marketing.  Complaint at 7.  The FTC’s complaint called into question the reliability of the studies conducted by Dr. Gautreau, alleging that of the four studies Skechers sponsored in support of its Shape-up claims, one lacked a control group, and data from a second were altered or incomplete such that some participants were falsely reported as having lost weight and/or reduced their body fat percentage when in fact they had gained weight and/or increased their body fat percentage.  Id. at 7-8.  The FTC also alleged that some of the second study’s participants were personally connected to the researchers.  Id.

Finally, with this settlement the FTC continues a pattern of focusing on weight-loss claims and imposing a high standard for substantiation on marketers who make such claims.  Under the terms of its FTC settlement, if Skechers chooses to make weight-loss claims in the future the Company will need two adequate and well-controlled human clinical studies, conducted by different researchers independently of each other, to substantiate those claims.  Stipulated Final Judgment at 5-6.  Only one adequate and controlled human clinical study is required for strengthening claims, but it must be at least six weeks in duration.  Id.   

Kidvid Flashbacks? FTC Considers Curtailing Proposed Voluntary Principles for Marketing Food to Children

By Cassandra A. Soltis –

Earlier this year, we reported on the Interagency Working Group’s (“IWG’s”) proposed voluntary principles for marketing food to children.  The IWG includes representatives from the Federal Trade Commission (“FTC”), the Centers for Disease Control and Prevention, the Food and Drug Administration, and the United States Department of Agriculture (“USDA”).  As a result of comments the IWG received from stakeholders, it now appears that the proposed voluntary principles will be significantly modified. 

In recent testimony before the House Energy and Commerce Committee’s Subcommittee on Health and Subcommittee on Commerce, Manufacturing, and Trade, the FTC’s David Vladeck, Director of the Bureau of Consumer Protection, stated that consumer and public health advocates “strongly supported the proposal as one that would significantly improve the nutritional profile of foods marketed to children.”  In contrast, the “common theme of industry . . . was that the proposal was simply unworkable and should be withdrawn.”  However, the Council of Better Business Bureau’s Children’s Food and Beverage Advertising Initiative ("CFBAI"), which currently has 17 member companies, did submit its own nutrition principles to the IWG for consideration. 

The “anticipated revisions” to the voluntary principles are apparently intended to “address industry’s concerns” and overlap somewhat with the CFBAI’s nutrition standards.  Some of the changes include revising the marketing activities that fall within the scope of children’s media to those “used most extensively to specifically target children ages 2 to 11,” which would exclude adolescents ages 12 to 17, except for certain in-school marketing activities.  In addition, the criteria for determining whether marketing is directed to children would be modified so that they “are flexible enough to be neither over-inclusive – covering marketing to a general or family audience – nor under-inclusive – leaving out marketing that is clearly targeted to children.”

So why the change of heart?  Perhaps the FTC is having flashbacks from its unsuccessful “Kidvid” rulemaking, in which the Commission’s efforts to ban certain television advertisements directed to children ultimately resulted in Congress passing a law withdrawing the FTC’s authority to regulate advertising to children as unfair.  (The FTC retains the authority to take action against deceptive advertising to children, however.)  In addition, Congress allowed the FTC’s funding to lapse, which caused the agency to temporarily shut down.  (An FTC article provides an excellent overview of the Kidvid matter.)

The proposed revisions described in Mr. Vladeck’s testimony “are recommendations contemplated by the Working Group and have not yet been formally approved by the member agencies.”  The Commission will vote on the IWG’s report, provide it to the Department of Health and Human Services and USDA for final approval, and then submit it to Congress as directed in the accompanying statement to the 2009 Omnibus Appropriations Act.

FTC: Reebok Settlement Provides “Compliance Nuggets”

By Cassandra A. Soltis –

Last week, the Federal Trade Commission (“FTC”) announced a settlement with Reebok International Ltd. (“Reebok” or “the Company”) for charges that the Company disseminated false and misleading advertisements for its EasyTone and RunTone shoes.  The FTC’s Complaint alleged, among other things, that Reebok falsely claimed the EasyTone and RunTone shoes “will tone and strengthen the legs and the butt more than” walking and running in typical walking and running shoes.  Complaint at 9-10, Federal Trade Commission v. Reebok Int’l Ltd., No. 1:11-cv-02046-DCN (N.D. Ohio Sept. 28, 2011).  The Complaint also alleged that Reebok falsely advertised that laboratory tests showed that EasyTone shoes “improve muscle tone and strength by 28% in the gluteus maximus, 11% in the hamstrings, and 11% in the calves.”  Id. at 9.

The Judgment provides, in pertinent part, that Reebok may not advertise or otherwise represent through “use of a product name, endorsement, depiction, or illustration” footwear and apparel purporting to improve muscle tone and strength “unless the representation is non-misleading and, at the time of making such representation, [Reebok] possesses and relies upon competent and reliable scientific evidence that substantiates that the representation is true.”  Judgment at 5 (emphasis added).  The Judgment explains that “competent and reliable scientific evidence shall consist of at least one Adequate and Well-Controlled Human Clinical Study . . . that conforms to acceptable designs and protocols, the result of which, when considered in light of the entire body of relevant and reliable scientific evidence, is sufficient to substantiate that the representation is true.”  Id. at 5-6.  The Judgment includes what appears to be a new definition of “Adequate and Well-Controlled Human Clinical Study,” defining it as “a clinical study that is randomized, controlled, blinded to the maximum extent practicable, of at least six weeks duration, uses an appropriate measurement tool or tools . . . and is conducted by persons qualified by training and experience to conduct and measure compliance with such a study.”  Id. at 4.  We will have to wait and see whether this language will be used in future cases.       

Although the Judgment applies only to Reebok, it contains, as the FTC indicated, “compliance nuggets” that may be relevant to other advertisers.  Of note is the Complaint’s description of the women in the television and Internet advertisements:  “[t]hese advertisements frequently display women who are very toned, scantily-clad, and sometimes nude,” and “on screen . . . [was a] toned woman wearing a tank top and very short shorts.”  Complaint at 5 (emphases added).  In addition, the Complaint explains that after the model claims the shoes will “help make your legs and butt look great,” the camera “zooms to [the] woman’s backside” multiple times.  Id. at 5-6.  These notations, along with the Judgment enjoining misrepresentations made through “depiction” or “illustration,” suggest that advertisers should be careful to not implicitly overpromise product results by using models demonstrating results that most consumers will never achieve.  See also FTC, “How’s That Workout Working Out?  Tips on Buying Fitness Gear” (cautioning consumers to question whether the ”six-pack[s]” of the “chiseled models in the ads” are a “result of the product they’re peddling – or months in the gym and years of healthy habits”). 

In addition, the Judgment’s definition of “Adequate and Well-Controlled Human Clinical Study” is a reminder that there is no “one size fits all” study design to support product claims.  The Judgment indicates that to substantiate the types of claims Reebok made for its shoes, the duration of a clinical study must be “at least six weeks” and use “appropriate measurement tool[s].”  Judgment at 4.  Accordingly, advertisers should be sure to use appropriate experts – that is, persons “qualified by training and experience to conduct and measure” the effectiveness of the product at issue – to design studies having a proper duration and using suitable measuring tools to yield reliable results.  Id. at 4. 

Reebok has agreed to pay $25 million in consumer refunds to settle the FTC’s charges.  The court approved the Judgment on September 29, 2011.

Congressional Leaders Request FDA to Exclude Grocery Stores from Menu Labeling Requirements

By Cassandra A. Soltis –

In response to the Food and Drug Administration’s (“FDA’s”) proposed rule on nutrition labeling of standard menu items in restaurants and similar retail food establishments, members of the U.S. Senate and House of Representatives have requested that FDA exclude grocery stores from the menu labeling requirements.  The proposed rule (see our previous post here) would require menu labeling at retail food establishments if they sell restaurant or restaurant-type food and if their primary business activity is the “sale of food” (i.e., including packaged foods) to consumers.  76 Fed. Reg. 19,192, 19,196 (Apr. 6, 2011).  FDA indicated that it would generally expect grocery stores, such as those that prepare and sell restaurant-type food on the premises, to be subject to the menu labeling regulation.  Id. at 19,198. 

However, letters (here and here) from both the Senate and House of Representatives request FDA to follow “Congressional intent” and adopt FDA’s alternative definition of “restaurant or similar retail food establishment,” which would essentially exclude grocery stores from menu labeling.  Under the alternative definition, “restaurant or similar retail food establishment” would mean a retail establishment “where the sale of restaurant or restaurant-type food – as opposed to food in general – is the primary business activity of that establishment.”  Id. 

The letter from Senate members explained that “the plain language of the statute” indicates that grocery stores were not intended to be covered by the menu labeling law.  In addition, the letter stated that requiring such information on foods served in grocery stores “would place a disproportionate cost on grocery store chains . . . because grocery store chains lack the menu standardization of restaurant chains.”  The Senate members also cited to FDA budget constraints and costs passed on to consumers as reasons for adopting the alternative definition. 

The House members noted that “[h]istorically, labeling regulations, such as for nutrition panels, food safety, ingredient, and country-of-origin labeling have been applied differently between supermarkets and restaurants” and that “[t]hese are key reasons why none of the states or municipalities that have enacted menu labeling laws have applied them to supermarkets.”  The House members “urge[d] FDA to adopt the agency’s own alternative to limit restaurant menu labeling regulations to establishments that primarily sell restaurant foods.” 

Joint Citizen Petition Asks FDA for Clarity on Off-Label Use Manufacturer-Communications

By Dara Katcher Levy -

On July 5, 2011, seven pharmaceutical companies submitted a joint Citizen Petition requesting that FDA clarify its policies for industry about four distinct types of manufacturer-communications that often deal with off-label information - Manufacturer Responses to Unsolicited Requests; "Scientific Exchange"; Interactions with Formulary Committees, Payors, and Similar Entities; and Dissemination of Third-Party Clinical Practice Guidelines. 

The first three types of communications have been addressed by FDA over the years, with FDA acknowledging, conceptually, that these communications are permissible and recognizing certain mechanisms for dissemination as appropriate.  The Citizen Petition is requesting that FDA further clarify and formalize its policies in these areas through rule-making.  The fourth area, Dissemination of Third-Party Clinical Practice Guidelines, has been a subject of much debate within industry.  Although several DDMAC Warning and Untitled Letters have confirmed that promotional claims based on such Guidelines may be inappropriate, it is unclear whether these Guidelines can currently be disseminated in their original published state pursuant to FDA's Guidance on Good Reprint Practices.      

As part of the request, the Citizen Petition makes clear that notice and comment rule-making is strongly preferred over FDA issuance of guidance documents.  And as the Pink Sheet notes, although rule-making, and not guidance, is requested, there is hope that FDA will respond as the issues raised in the Citizen Petition are likely issues for which FDA, at least internally, already has policy and can better iterate its position.  Some in the industry speculate that this Citizen Petition may help even if (or especially if) FDA takes no action on it - to the extent the government attempts to take enforcement action against a company on the basis of a communication subject to the Citizen Petition, it is possible that FDA's failure to clarify its position can be used as part of its defense.

Consumer Agrees to FTC Order for False Testimonial in Infomercial

By Cassandra A. Soltis –

For the first time ever, the Federal Trade Commission (“FTC”) took action against a consumer for misrepresenting in a testimonial the amount of money she made by purchasing and using a wealth-building program marketed by Russell Dalbey, CEO and founder of “Winning in the Cash Flow Business.”  The FTC’s complaint, which was filed jointly with Colorado Attorney General John W. Suthers, charged Dalbey, Marsha Kellogg, and others with misleading consumers about how much money they could make using the program.

In the complaint, the FTC alleged that, in one of the program’s infomercials, Marsha Kellogg, a consumer who provided a testimonial regarding her experience with the program, falsely claimed she earned $79,975.01 from one promissory note transaction and that her total earnings amounted to over $134,000.  However, according to the complaint, Kellogg actually made $50,000 less than what she claimed.  The complaint also alleged that Kellogg “participated in, assisted in, or facilitated some of the acts or practices set forth in” the complaint.     

The order against Kellogg prohibits her from making future misrepresentations, such as failing to disclose material connections, “including where an individual or entity provides the testimonialist with compensation, access to promissory note leads not generally made available to non-testimonialists, and reimbursement of money paid for materials, workshops, seminars, boot camps, programs, or services.”  It also requires that Kellogg cooperate with the FTC and the Colorado Attorney General’s Office in their action against Dalbey and others. 

This order should prompt advertisers to review the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, particularly the sections on consumer endorsements and the disclosure of material connections, and the FTC guide Dot Com Disclosures: Information About Online Advertising.  (The FTC is currently seeking comment on the latter guide to determine whether an update is necessary.  Comments are due by August 10, 2011.)  Advertisers should also pay careful attention to how endorsements are provided in the world of online marketing, including blogs, Twitter, and Facebook.  Finally, consumers should be aware that they are not immune from liability for false claims made in their endorsements if they are paid or receive some form of compensation from the advertiser. 

Our Hearts are A-Twitter: Come Learn About Social Media Issues at the FDLI Annual Meeting

Hyman, Phelps & McNamara's Jeffrey N. Wasserstein (co-founder of the FDA Law Blog) will be moderating a panel on social media and therapeutic products at the FDLI Annual Meeting, April 5-6, 2011, at the Ronald Reagan International Trade Center, in Washington, DC.  The panel will discuss current and future regulatory issues with using social media tools to market therapeutic products. With expected guidance coming this year from FDA, now is the time to become current with the issues. Companies with therapeutic products should also look to the Federal Trade Commission ("FTC") for guidance and potential enforcement actions.  Speakers include Glenn Byrd, MBA, RAC, of MedImmune, LLC (formerly of CBER's Advertising and Promotional Labeling Branch), Stacey Ferguson, an attorney with the Federal Trade Commission, Division of Advertising Practices, Bureau of Consumer Protection, and Jeffrey Senger, former Deputy Chief Counsel and Acting Chief Counsel of FDA, now at Sidley Austin LLP.  The full conference agenda and sign-up information can be found at: http://www.fdli.org/conf/annual/11/agenda.html.

California Insurance Commissioner Intervenes in Qui Tam Lawsuit Alleging Pharma Company paid Physicians as “Runners and Cappers”

By Nisha P. Shah & Alan M. Kirschenbaum –

In an unusual step, the State of California’s Department of Insurance intervened in a qui tam lawsuit brought against Bristol-Myers Squibb (“BMS”) by three former employees, including a former member of the L.A. Lakers.  In The People ex rel. Wilson v. Bristol-Myers Squibb, Inc., the employees claim that BMS paid kickbacks to physicians and pharmacists to increase prescriptions and dispensing of the company’s drugs.  The complaint alleges that BMS caused the submission to private insurers of fraudulent claims that were induced by payments of these kickbacks, in violation of the state’s Penal Code and Insurance Code.

BMS allegedly paid kickbacks to physicians who were high prescribers of the company’s drugs as well as physicians on formulary committees and physician practice groups.  Kickbacks described in the complaint included gifts, liquor, gift cards, entertainment and sporting event tickets, participation in two L.A. Lakers “Dream Camps”, high-end dinners, trips to resorts, and cash payments disguised as grants and fees for preceptorships, consulting, advisory boards, and speaker bureaus.  BMS also allegedly provided gift cards and meals to pharmacists to induce them to fill prescriptions with BMS products rather than generic equivalents.  The plaintiffs and the Department of Insurance are seeking monetary penalties and the disgorgement of millions of dollars in profits stemming from the kickbacks, plus treble damages.   

Kickback allegations against pharmaceutical companies have become commonplace in recent years, but the cases have generally been brought under antikickback and false claims laws applicable to federal and state health care programs.  What is unusual here is that the claims are brought under state insurance fraud laws with the participation of the state Insurance Commissioner, and they are based on allegations that private insurance plans – not government programs – have been defrauded.  According to the complaint, BMS caused false claims to be submitted to insurance policies in violation of Cal. Penal Code Section 550.  The plaintiffs also make creative use of California’s runners and cappers statute, Cal. Ins. Code § 1871.7, which prohibits the knowing employment of “runners, cappers, steerers … to procure clients or patients … to perform or obtain services or benefits under a contract of insurance or that will be the basis for a claim against an insured individual or his or her insurer.”  BMS allegedly violated this law by “employing” physicians by paying them kickbacks in order to “procure clients or patients . . . to obtain services or benefits” under an insurance contract, and by employing sales representatives to give kickbacks to physicians to generate prescriptions that would be paid by private insurers.  We may see other states follow California’s lead in using state insurance laws – especially those authorizing whistleblower suits – as a prosecutorial weapon against drug manufacturers.