FTC v. POM WONDERFUL: An UpdateMarch 5, 2012
After the Federal Trade Commission (“FTC”) entered consent orders against Nestle and Iovate (see here), prohibiting future claims for respondents’ food and dietary supplements unless they are supported by two well-controlled clinical studies, the industry has been uncertain about the FTC's substantiation standard and a shift in the FTC's policy. We previously reported that on September 13, 2010, POM Wonderful LLC (“POM”) filed a complaint in court against the FTC, alleging that the FTC was applying a new and legally unwarranted substantiation standard to POM's claims. POM also challenged that the FTC could not requires that the FDA approve certain health- related claims for a food or dietary supplement, even if the claims are supported by two well-controlled clinical studies. This requirement for approval by FDA was apparently first included in the recent consent order that the FTC entered against Nestle.
Shortly after POM sued the FTC, the FTC turned around and sued POM, charging it with false and misleading advertising. The FTC filed this action in its own "court", seeking an order from the FTC that POM should be prohibited from violating the FTC Act. The FTC contends that POM’s claims that its products prevent, reduce the risk of, or treat heart disease, high blood pressure, prostate cancer, and erectile dysfunction (“ED”) are not supported by competent and reliable evidence. The FTC filed a proposed cease and desist order that, among other things, included a requirement for FDA approval of certain claims.
Over the past six or so months, the case was tried before an FTC Administrative Law Judge (“ALJ”). All parties were given the opportunity to present witnesses, including experts, and documents with regard to the FTC's allegations in the case.
On January 11, 2012, the parties filed their respective post-trial briefs. On February 7, 2012, they filed their respective reply briefs. The voluminous briefing materials are available here.
Based on the record generated during the FTC trial, POM maintains that no cease and desist order is warranted. It also contends that for claims for foods and dietary supplements, the substantiation standard is not two randomized placebo controlled studies (“RCTs”), and that the FTC does not have the authority to require FDA approval before POM makes claims. We believe that this case will be the first time that the prior FDA approval issue has been litigated.
The FTC defines an establishment claim as an express or clearly implied statement that the advertising claim is supported by scientific or medical studies. According to the FTC, establishment claims related to health benefits require RCTs. In response to the oft-voiced position that substantiation of claims for foods does not require RCTs because RCTs are impractical, impossible, unethical, too costly, etc., the FTC asserts that it does not matter whether a claim is for a food, a dietary supplement, a cosmetic or a drug. The FTC contends that the nature of the claim, not the nature of the product is central to the “deception” analysis. The FTC further asserts that unqualified efficacy claims (i.e., claims that a product provides health benefits without a representation that the claim is supported by scientifically or clinically proven) also require RCTs.
Although under the FTC Act a claim is deceptive only if it is likely to mislead consumers acting reasonably under the circumstances, in a material respect, the FTC asserts in this case that it need not prove the materiality element of the FTC Act because there is a rebuttable presumption that advertising is material if it involves health related efficacy information important to the consumers. As you can probably imagine, POM hotly disputes the FTC's position regarding materiality.
With regard to the FTC’s proposed cease and desist order, POM has raised a number of challenges, including arguments that the proposed Order would violate the First Amendment. According to the FTC, the proposed pre-approval requirement does not constitute an imposition of an unlawful prior restraint. Whether the FTC may prohibit truthful claims, even if such claims do not meet the approval of another agency such as FDA, remains to be seen when this case is finally resolved.
Closing arguments before the FTC's ALJ are set for March 6, 2012, at 1:00 PM.