FTC and Bayer Head for a Show-DownOctober 28, 2014
By Jennifer M. Thomas –
Around this time last month, we wrote about the government’s motion for an order to show cause in United States v. Bayer, and the potential lessons to be gleaned from that case. Bayer entered into a consent decree with the FTC in 2007, which prohibited the company from making any representation about the benefits, performance, or efficacy of a dietary supplement without “competent and reliable scientific evidence” to substantiate such claim. The current proceedings arise from FTC’s assertion that Bayer lacks such substantiation for its representations about its probiotic product Phillips’ Colon Health. Now it is time to briefly update our readers, as the saga of Bayer continues.
Since we last wrote, Bayer filed its response to the government’s motion for an order to show cause why Bayer should not be held in contempt, and was joined by two potential amicus curiae in opposition to the government – the Council for Responsible Nutrition (“CRN”) and the Natural Products Association (“NPA”). On October 10th, the government replied to Bayer, and subsequently responded to CRN’s and NPA’s requests for leave to participate as amici (see here and here). Last week, on October 23rd, the court granted FTC’s motion for an order to show cause, but granted leave for CRN and NPA to appear as amicus curiae in the case.
The Court took no position on whether Bayer had actually violated the Order. However, it did indicate that it would consider Bayer’s primary arguments with regard to the legality of the standard for “competent and reliable scientific evidence” asserted by FTC. These arguments were echoed by CRN and NPA, and contend in sum that (1) the standard put forth by FTC is contrary to DSHEA, (2) the inflexibity of the proposed substantiation standard is inconsistent with FTC law and past practice, and (3) the standard would be tantamount to subjecting Bayer to a drug-like substantiation requirement. CRN and NPA also argued that the standard for “competent and reliable scientific evidence” put forth by FTC – namely, two randomized controlled clinical trials on the product itself – would have dire consequences for the dietary supplement industry and for consumers, and that FTC should not be permitted to change the law applicable to dietary supplements through contempt proceedings.
The government strongly contested the implication that the standard it asserted in Bayer would be an industry-wide one, asserting that “this matter is only about determining whether Bayer possessed and relied upon competent and reliable scientific evidence, based on the expertise of professionals in the relevant area . . . not about the government trying to establish a new, one-size-fits-all, approach to all dietary supplement claims . . . .” Gov’t Resp. to NPA at 7-8. But it seems the Court was not sufficiently convinced by FTC’s assurances, and in granting CRN and NPA’s motions for leave to participate as amici Judge Linares noted that
[b]oth trade associations have submitted thorough and informative briefs, which are of assistance to the Court, particularly in considering the implications of the ultimate outcome of this dispute on the entire dietary supplement industry.
Order at 3.
The Court has not yet addressed one of the arguments raised in Bayer’s response that we at HPM found of particular interest. Specifically, Bayer argued that the consent decree is not sufficiently “clear and unambiguous” with respect to the standard for “competent and reliable scientific evidence,” and thus that provision cannot provide the basis for a finding of contempt. If Bayer were to succeed in this argument, it could certainly affect the degree to which FTC is willing to negotiate regarding a specific, versus a more general, substantiation standard in consent decrees going forward.
Of note is the fact that Bayer’s response did not seek to counter FTC’s substantiation expert, Dr. Loren Laine, with a comparable expert to opine that Bayer’s substantiation constituted “competent and reliable scientific evidence.” Whether this factored into the court’s determination that FTC had “made a sufficient showing at this juncture to support its application for an Order to Show Cause” (Order at 1), is not clear. However, we expect that the company may well engage such an expert going forward, despite the fact that the burden of proving contempt, by clear and convincing evidence, remains on FTC.
A status conference in U.S. v. Bayer was on October 28, and another is scheduled for March 18, 2015. The significance of a relatively lengthy period of time before the next status conference is not clear, although it could indicate either that the parties are in negotiations to settle the case, or that there will be discovery in the interim.