OTC Advertising - Food and Drug Law Institute

OTC Advertising: Federal
Trade Commission
Developments and Beyond
Diane C. McEnroe
Sidley Austin LLP
212-839-5621
[email protected]
Agenda
1.
2.
3.
4.
5.
6.
Overlay Between FDA and FTC
Labeling or Advertising?
Substantiation: Is the FTC Standard Shifting?
Dot Com Disclosure and Social Media
Testimonial Policy
Practice Pointers
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Overlay Between FDA and FTC:
Memorandum of Understanding
•
1971 “Memorandum of Understanding” (MOU) between the Federal
Trade Commission (FTC) and Food and Drug Administration (FDA)
delineated shared jurisdiction
 FDA will have jurisdiction over labeling of food, drugs, devices and
cosmetics, and over the advertisement of prescription drugs

FDA regulates advertising of restricted devices
 FTC will have primary responsibility for the regulation of the truth or
falsity of advertising of food, OTC drugs, devices and cosmetics
•
In practice, division between authority is not always clear.
 Communication between the agencies; some joint actions (H1N1)
 FDA may view advertising as evidence of intended use
 FDA continues to challenge inadequate directions for use
 Internet - common ground between the agencies
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FDA-FTC MOU
OTC Advertising
Rx Advertising
OTC Labeling
Rx Labeling
FTC Primary Jurisdiction
FDA Primary Jurisdiction
*Note that “advertising” and
“labeling” are not mutually
exclusive.
“In this connection we note the existence of a
liaison agreement between the two agencies, 36
Fed. Reg. 18,539 (1971), whereby the FTC defers to
the FDA when allegedly deceptive claims appear
on labeling for food, drugs or cosmetics.” BristolMyers Co. v. FTC, 738 F.2d 554, 559-60 (2d Cir.
1984) (emphasis added).
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FDA-FTC Cooperation
The agencies have a close working relationship and commonly issue joint
letters. See, e.g., Warning Letter to Flu and Cold Defense LLC (“the United
States Food and Drug Administration (FDA) and the United States Federal
Trade Commission (FTC) have reviewed your firm's marketing of your product
GermBullet on your websites.”)
“At the FDA, [we] collaborate with FTC on areas that overlap in terms of . . .
deception.” Bakul Patel, FDA Policy Advisor
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Labeling or Advertising?
• Labeling includes “all labels and other written, printed, or graphic matter
(1) upon any article or any of its containers or wrappers or (2) accompany
such article”
– Courts have permitted a broad interpretation of “accompany such article.” See
Kordel v. United States, 335 U.S. 345 (1948).
• Advertising typically includes paid for pieces in third party media, such as
magazines, periodicals and newspapers, and advertisements broadcast
through media such as radio and television
• Companies have historically drawn distinctions between advertising and
labeling, believing there is more flexibility in crafting marketing claims in
OTC product advertising
– Per FDA, labeling can not be false or misleading “in any particular”
• Claims drive product positioning and regulatory classification
– Per FTC, claims must be “adequately substantiated”; materiality comes into play
• No rigid classifications of claims: drug claims, structure/function claims, health claims
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Labeling or Advertising (cont’d)
• Distinction between labeling and advertising may not be as strong as it was
– FDA has extended its reach to include anything involved in informing the sales
transaction, including written material sold with a product
• Brochures, catalogs, mailings, FSIs
• Retail promotional materials
• Social media tools
• FTC has indicated it is clearly watching the food, supplement, cosmetic,
medical device and OTC industries
– Industry has seen the shift
– Importantly, standards for review and support may be more aligned
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Substantiation Required: “CARSE”
For example, for supplements, FTC & FDA had used the same standard,
“Competent & Reliable Scientific Evidence”
•
FDA: Guidance for Industry: Substantiation for Dietary Supplement Claims Made Under Section 403(r) (6) of
the Federal Food, Drug, and Cosmetic Act, December 2008
• To make a structure/function claim, FDA requires only “competent and reliable
scientific evidence,”
• “Competent and reliable scientific evidence” means “tests, analyses, research,
studies, or other evidence based on the expertise of professionals in the relevant
area, that has been conducted and evaluated in an objective manner by persons
qualified to do so, using procedures generally accepted in the profession to yield
accurate and reliable results.” Id.
•
FTC: Dietary Supplements: An Advertising Guide for Industry
• ”FTC has typically applied a substantiation standard of competent and reliable
scientific evidence.”
• CARSE is defined as “tests, analyses, research, studies, or other evidence based
on the expertise of professionals in the relevant area, that have been conducted
and evaluated in an objective manner by persons qualified to do so, using
procedures generally accepted in the profession to yield accurate and reliable
results."
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Substantiation: CARSE Was Flexible And Did
Not Require Randomized Controlled Trials
• Long-Standing FTC Guidance:
– Flexible standard: “The FTC’s substantiation standard is a flexible one
that depends on many factors.”
– Animal and in vitro studies: “[A]nimal and in vitro studies will also be
examined”
– Extrapolation: Appropriate “to extrapolate” from research even when
there “are significant discrepancies between the research conditions
and the real life use being promoted.”
Dietary Supplements: An Advertising Guide for Industry
• FDA Guidance
– RCTs not required for structure-function claims, and indeed “may not
always be possible, practical, or ethical.”
FDA, Guidance for Industry, December 2008
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FTC May Be Changing Standard?
• Guidance is still in effect
• No notice and comment rulemaking by FTC to change standard
• Nonetheless, through enforcement proceedings/ consent decrees,
FTC has taken a more restrictive approach
– Requiring drug level randomized placebo controlled clinical trial(s)
– Extended from OTC drug cases for superiority claims, to supplements (Iovate), foods
(Nestle, Dannon), cosmetics (Beirsdorf) and medical devices (AcneApps).
• Is the standard shifting or is FTC applying the standard in a new
way depending on claim
• Forcing industry to re-review claims and support, and attempt to
assess which claims may be held to a greater support standard
–
–
–
Risk /uncertainty with moving forward with claims
Costly to revise product claims without clear guidance
Field is not level; not all companies are paying attention
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Iovate, Nestlé, Dannon,
POM Wonderful, Beiersdorf
•
•
•
Iovate

FTC alleged Iovate made unsubstantiated claims for various dietary
supplements, including that the products could treat or prevent colds, allergies,
and other illnesses; could cause rapid consumer weight loss; and, were
homeopathic remedies

Consent issued July 29, 2010 included $5.5 million penalty
Nestlé HealthCare Nutrition (“Nestlé HCN”)

FTC alleged Nestlé HCN made unsubstantiated claims for its Boost Kid
Essentials probiotic drink that it could prevent upper respiratory tract
infections; could protect against colds and flu through strengthening the
immune system; and, could reduce school sick days

Consent issued July 18, 2010
Dannon

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FTC alleged Dannon made unsubstantiated claims for its Activia yogurt and
DanActive dairy drink (both probiotic products) to the effect that one daily
serving of Activia relieves irregularity and that DanActive helps people avoid
catching colds or flu
Iovate, Nestlé, Dannon,
POM Wonderful, Beiersdorf (Cont’d)
•
POM Wonderful
 FTC alleged that POM Wonderful made unsubstantiated claims that its juice
and supplements prevent/treat heart disease, prostate cancer, and erectile
dysfunction.
 May 2012 decision by an Administrative Law Judge that POM Wonderful deceptively advertised its
pomegranate juice and POMx supplements  rejected RCT requirement, retained CARSE standard
 January 2013, FTC Commission modified ALJ decision  required RCTs; broad fencing in relief
 Appeal pending in D.C. Circuit.
•
Beiersdorf
 FTC challenged a cosmetic cream for weight and fat loss
 Consent issued August 17, 2011 included $900,000 penalty
• AcneApp and Acne Pwner
– FTC challenged claims that colored lights emitted from smartphones on which
the apps were installed could treat acne
– Consent included fines and the new 2 clinical trials standard
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Reading Between the Lines:
Three Part Scheme
– Disease claims
– Specific health-related claims
– General Performance/Efficacy Claims
For consideration: How does fencing in relief apply – does it
extend beyond these standards to all?
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Specific Disease Claims
•
Claims that the product treats, cures, prevents, or reduces the risk
of a disease
 FTC might allege such claims arise from statements or materials found
on the advertiser’s website or on the website of other associated
entities
 Cold and flu (Iovate and Dannon); upper respiratory infections
(Nestle); Acne (AcneApp and Acne Pwner)
•
When relevant, all such claims must be “approved” by FDA either:
 Through an OTC drug monograph or an approved new drug
application (if the advertiser makes treatment/cure claims), and/or
 Under regulations promulgated pursuant to the Nutrition Labeling
and Education Act (if the advertiser makes disease risk reduction/
prevention claims)
•
Abandoning its independent judgment in this area, FTC now says
that if FDA would not permit such a claim in labeling the FTC will
not permit it in advertising
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Specific Health-Related Claims
•
Claims that the product provides specific health benefits short of
disease claims
 Weight-loss claims (as in Iovate)
 Reduced school sick days (as in Nestlé HCN)
•
May require newly-defined “competent and reliable scientific
evidence”?
 At least two adequate and well-controlled human clinical studies
 Conducted on the product (or an essentially equivalent product)

“A product that contains the identical ingredients, except for inactive
ingredients (e.g., inactive binders, flavors, preservatives, colors, fillers,
excipients) in the same form and dosage, and with the same route of
administration (e.g., orally, sublingually), as the covered product”
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Specific Health-Related Claims (Cont’d)
o
“Provided that the covered product may contain additional ingredients if
reliable scientific evidence generally accepted by experts in the field
demonstrates that the amount and combination of additional ingredients
is unlikely to impede or inhibit the effectiveness of the ingredients in the
essentially equivalent product”
o
Burden of proof that the product qualifies as essentially equivalent is on
the advertiser
 Conducted by different researchers, independently of each other

Conforming to acceptable designs and protocols

With results, considered together with the entire body of relevant and
reliable scientific evidence, sufficient to substantiate the truth of the
claim
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Other Claims
•
Claims of general health benefits, performance, or efficacy, or to
fencing-in relief
•
Utilizes the traditional FTC advertising substantiation framework
in relying upon the “competent and reliable scientific evidence”
test
•
Even here, however, two new wrinkles have been added:
 The quality and quantity of the evidence must be sufficient and based
upon standards generally accepted in the relevant scientific field
 Whatever evidence is produced is weighed against the entire body of
relevant evidence
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FTC Commission Split: Entire Commission
Does Not Believe RCTs Should Be Required
• FTC Commissioner Ohlhausen partial dissent in Sensa
– “Recently, however, Commission orders, including the ones in the matter of
GeneLink and foru International, seem to have adopted two RCTs as a standard
requirement for health- and disease-related claims for a wide array of products.
RCTs can be difficult to conduct and are often costly and time-consuming relative to
other types of testing, particularly for diseases that develop over a long period of
time or complex health conditions. Requiring RCTs may be appropriate in some
circumstances, such as where use of a product carries some significant risk, or where
the costs of conducting RCTs may be relatively low, such as for conditions whose
development or amelioration can be observed over a short time period. Thus, I am
willing to support the order requirement of two RCTs for short-term weight loss
claims in the Sensa, HCG Diet Direct, L’Occitane, and LeanSpa matters because such
studies can be conducted in a relatively short amount of time at a lower cost than for
many other health claims. My concern with GeneLink and foru International and the
series of similar orders is that they might be read to imply that two RCTs are
required to substantiate any health- or disease-related claims, even for relatively-safe
products. It seems likely that producers may forgo making such claims about these
kinds of products, even if they may otherwise be adequately supported by evidence
that does not comprise two RCTs.”
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Challenges to FTC’s Increased
Substantiation Requirement
• POM Wonderful
– Pending in D.C. Circuit. Pom’s arguments:
• First Amendment violation
– Restricts truthful non-misleading information
• Administrative Procedure Act violation
• FTC v. Garden of Life (contempt action)
– The FTC argued that a dietary supplement maker should be held in contempt
because it did not have randomized, double-blind, placebo-controlled clinical trials
of its product or an essentially equivalent product to substantiate its claims FTC v.
Garden of Life, 2012 U.S. Dist. LEXIS 74148 (S.D. Fla. May 23, 2012) (order denying
modification), 845 F. Supp. 2d 1328 (S.D. Fla. 2012) (contempt action) (affirmed in
relevant part by FTC v. Garden of Life, 516 Fed.Appx. 852 (11th Cir 2013).
– Ruling against the FTC, the district court held that the defendant had met the
definition of “competent and reliable scientific evidence” contained in the consent
decree, and refused to modify the decree to impose the more stringent definition.
• As the Court stated: “The fact that the FTC is no longer satisfied in 2012 with the definition
it agreed to during negotiations with GOL in 2006 does not constitute a significant change in
factual circumstances” to warrant a modification. Id
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FTC Dot Com Disclosure Guidance
• Disclosures must be “clear and conspicuous”
– Defined in recent consent decrees specific to each advertising medium
– For example, “in a noticeable type, size, and location, using language
and syntax comprehensible to an ordinary consumer.” See Apple Inc.
(2014)
– “Three P’s” of disclosures: Prominence, Placement, Proximity
• FTC recently announced increased efforts to enforce the FTCA in
cyberspace (“deception is unlawful no matter what the medium”)
– But FTC recognizes unique considerations in online advertising,
including space-constrained screens and social media platforms
– Unlike FDA’s recent draft guidance for Rx drugs, FTC permits some
flexibility in providing appropriate disclosures in online advertising
• Recent FTC industry sweep to apply disclosure requirements to
traditional advertising media (e.g., print), not just online forums
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Caution on Social Media
• FDA and FTC are both monitoring social media closely
– FDA is currently reviewing social media for all regulated products to
promote agency goals; recent Rx guidance; nothing specific to OTC yet
– The plain language of FTC rules and guidances apply to claims made
online: “Deception is unlawful no matter what medium.” com
Disclosures: How to Make Effective Disclosures in Digital Advertising,
March 2013
• FDA Warning Letters have specifically mentioned Twitter,
Facebook, Tumblr, YouTube, and other social media sites in
enforcement actions
• Social media communications by manufacturers can qualify as
labeling or advertising (or possibly create new intended use)
– Facts play a role - can product be purchased from the site, is the website
provided on product labeling, who pays for the site
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Types of Claims: Testimonials And Expert
Endorsements
• General Rule: cannot make claims either through consumer or
expert endorsements that, if made directly by the company,
would be deceptive or could not be substantiated
• Endorsement or testimonial must reflect typical consumer
experience
– Endorsement relating to the experience of one or more consumers on
key attribute of the product will likely imply that the endorser’s
experience is representative of what consumers will generally achieve
– Disclaimers such as “results not typical” or “these testimonials are
based on the experience of a few people and you are not likely to have
similar results” will not generally counteract misleading nature of ad
– FTC takes into account evidence of the typical consumer experience
• Advertisers may be held liable for statements made by
bloggers or linked websites
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Practice Pointers
• Identify claims and type of claims
• Does FDA require preapproval or have an established standard?
• Early on, accumulate and review substantiation - develop and
maintain a supporting file
– Review through meaningful internal clearance process; involve R&D,
Legal, Regulatory, Medical
– Consider outside expert support
– Consider conducting a copy test
– Other companies making the claim does not equal support
• Cautions:
– If in doubt, do not make the claim
– Strive to be as clear as possible; challenge to claim is costly.
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Practice Pointers
•
•
•
•
•
Is there relevant FDA or FTC enforcement?
Do any relevant FTC government decrees apply to proposed claim?
Once cleared, any additional labeling required?
Once cleared, any additional regulatory obligations?
Ongoing: continue to monitor scientific evidence
– Periodically review claims support file
– Modify claims if needed; claims may become obsolete or inaccurate, but
also may be strengthened
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Conclusion
•
The FTC continues to ratchet up its advertising enforcement in
general
 More such cases thought to be in the pipeline
 Joint enforcement with FDA also increasing
•
Best practices entail greater care in reviewing proposed new claims
well in advance of dissemination, and as appropriate, revising
existing claims and/or bolstering substantiation in hand for them
 Costs of even a successfully defended FTC inquiry can be staggering
 Much more cost effective to assess prospective claims early when they
may be modified relatively easily if needed
 Marketing under a consent decree requires layers of process
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