The U.S. Food and Drug Administration (“FDA”) requests that consumers report any issues they experience with FDA-regulated products so that the FDA can further protect the public health. But it isn’t always clear which products the FDA regulates and which products it doesn’t. Generally, the FDA regulates the following product categories: certain foods, drugs, biologics, medical devices, electronic products that give off radiation, cosmetics, veterinary products, and tobacco products. Within each category is a number of products subject to the FDA’s regulatory authority. A more detailed, though non-exhaustive, list of the products the FDA regulates can be found on the FDA’s website. According to the FDA, these products account for about one-fifth of annual spending by U.S. consumers.

FDA
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The FDA is committed to ensuring that the products it regulates are safe, effective, and correctly labeled. But the FDA does not pre-approve for safety and effectiveness all of the products it regulates before such products can be marketed and sold. For example, the FDA does pre-approve new drugs, biologics, and certain medical devices, but does not pre-approve cosmetics (with the exception of certain color additives) or dietary supplements (though a notification is required for those containing a new dietary ingredient). However, the FDA requires that cosmetics, dietary supplements, and other products be safe for their intended use and be properly labeled/advertised. Accordingly, for such products that the FDA does not pre-approve, the FDA still has regulatory authority to take action when a safety issue arises. With respect to tobacco products, the FDA does not regulate safety in the same way as with other products, as the FDA views tobacco use as a major threat to public health. Notably, last year, the FDA finalized a new rule extending its regulatory authority to all tobacco products, including e-cigarettes, and restricting youth access to such products.

As always, companies should ensure that they products they market and sell are safe for their intended use, are properly labeled, and are fairly advertised. One form of advertising that has caught the FDA’s attention is the phrase “FDA Approved.” The FDA’s recently-updated explanation on what it does and doesn’t approve (and under what circumstances) can be found on the FDA’s website. The FDA’s website also contains detailed information for companies that market and sell FDA-regulated products, including the ability to search for guidance documents that describe the FDA’s interpretation on various regulatory issues and the ability to submit questions regarding the FDA’s policies, regulations, and regulatory process.

Last week the FTC issued three letters closing three separate investigations of advertising practices by three different businesses. The letters are notable for the two common themes present in each. First, each investigation centered on allegedly unsupported “Made in the USA” claims, demonstrating the FTC’s continued vigilance on this issue–a point that has been the topic of past posts. Second, each investigation was closed without further action due to, at least in part, the advertisers’ willingness to cooperate and take remedial action to change is advertising practices.

Made in the USA Banner
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These investigations demonstrate that the FTC will continue to enforce its rules regarding “Made in the USA” claims. According to the FTC, a blanket, unqualified claim that a product is “Made in USA” is likely to suggest to consumers that the product was “all or virtually all” made in the United States. So the FTC will hold an advertiser to that standard. In fact, the FTC stated in its Enforcement Policy Statement on the matter (as we blogged about here) that if “a product is not all or virtually all made in the United States, any claim of U.S. origin should be adequately qualified to avoid consumer deception about the presence or amount of foreign content.” And as the recently closed enforcement investigations show, if some of your products are made in the USA, but some are not, the advertising should be clear as to which ones are made here and which ones are imported.

These now-closed investigations also demonstrate an important practical point in dealing with the FTC. In each of these investigations, the advertiser cooperated and agreed to take remedial action, including altering the advertising at issue, training employees regarding the proper and substantiated advertising claims, and taking steps to clear the marketplace of the prior claims. This demonstrates that cooperating with the FTC’s investigation and coming to an agreement on revised advertising could be the most effective route in dealing with an FTC investigation in some circumstances.

 

Made in the USA Banner
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In the last two months, the Federal Trade Commission (“FTC”) has reached two settlements related to complaints it initiated against companies regarding “Made in the USA” advertising claims.

First, in February, the FTC announced that it had reached a settlement with a Georgia-based water filtration systems company named iSpring Water Systems, LLC.  According to the FTC, iSpring advertised its water filtration systems on its website and through third parties as “Built in USA” (and other similar claims).  The FTC found such advertising false or misleading because the water filtration systems were either entirely imported or contained significant parts that had been imported, thus violating the FTC’s long-standing requirement that “all or virtually all” of the product be made in the USA in order to be advertised as such.  The settlement allows iSpring to make certain qualified claims, with a clear and conspicuous disclosure, but prohibits iSpring from advertising contrary to the FTC’s “all or virtually all” requirement.  More information regarding the settlement is available on the FTC’s blog.

Second, earlier this month, the FTC announced that it had reached a settlement with a Texas-based pulley company named Block Division, Inc.  According to the FTC, Block Division advertised its pulleys in various media using “Made in USA” text and graphics.  The FTC found such advertising misleading given that the pulleys had significant and essential parts that had been imported.  Further, some of the pulleys contained steel plates stamped as “Made in USA” before they were imported.  The settlement allows Block Division to make certain qualified claims, again with a clear and conspicuous disclosure, but prohibits Block Division from advertising contrary to the FTC’s “all or virtually all” requirement.  More information regarding the settlement is available on the FTC’s blog.

Both of these FTC actions and resulting settlements demonstrate that the FTC takes “Made in the USA” claims seriously and will enforce its requirements regarding such advertising.  A prior blog post outlines those requirements in more detail.

In April 2016, the FTC filed a Complaint against Dr. Joseph Mercola and his companies alleging that their indoor tanning system advertisements violated section 5(a) of the FTC Act, which prohibits unfair or deceptive practices in commerce, and section 12(a) of the FTC Act, which prohibits the dissemination of false advertisements in commerce for the purpose of inducing the purchase of foods, drugs, devices, services, or cosmetics.  According to the FTC, indoor tanning systems qualify as “devices” under the FTC Act.

tanning bed
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In its Complaint, the FTC alleged that the defendants disseminated a number of false, misleading, deceptive, and unsubstantiated advertisements on the Mercola.com website, in search engine advertising, in a YouTube video of Dr. Mercola himself, and via newsletters.  Such advertisements include:

  • Tanning with Mercola brand indoor tanning systems is safe;
  • Tanning with Mercola brand indoor tanning systems will not increase the risk of skin cancer as long as consumers top using the system when their skin is only the slightest shade of pink and not burned;
  • Tanning with Mercola brand indoor tanning systems does not increase the risk of skin cancer, including melanoma skin cancer;
  • Tanning with Mercola brand indoor tanning systems reduces the risk of skin cancer;
  • The FDA has endorsed the use of indoor tanning systems as safe;
  • Research proves that indoor tanning systems do not increase the risk of melanoma skin cancer;
  • Certain Mercola brand tanning systems will pull collagen back to the surface of the skin, increase elastin and other enzymes that support the skin, fill in lines and wrinkles, and reverse the appearance of aging;
  • Tanning with Mercola brand tanning systems provides various benefits to consumers, including increasing Vitamin D and providing Vitamin D-related health benefits; and
  • The Vitamin D Council recommends Mercola brand tanning systems (without disclosing that the defendants arranged for the Vitamin D Council to be compensated for its endorsement).

Today, the FTC announced that, as a result of a settlement agreement reached with Dr. Mercola and its companies, the FTC is mailing $2.59 million in refunds to more than 1,300 purchasers of Mercola indoor tanning systems. According to the FTC, the average refund check is $1,897.  Additionally, under the settlement agreement, the defendants are banned from selling indoor tanning systems in the future.

More information regarding the FTC’s views on indoor tanning advertising can be found on the FTC’s website and blog.  According to the FTC, no government agency recommends indoor tanning and the FDA requires indoor tanning equipment to contain signs warning users of the risk of cancer.  In addition, the FTC actively investigates false, misleading, and deceptive advertisements related to indoor tanning.

The FTC recently cracked down on Breathometer, Inc., the maker of an app-supported smartphone breathalyzer, for false and deceptive advertising.

The advertised purpose of the product is to keep people safe—to let someone know when he/she has had too many to drive, and provide an estimate on when sobriety will return.  The device, which connects to an app on a smartphone, allows the user to blow into it and receive a blood-alcohol content reading on their phone.  The accuracy of the reading, however, is in dispute – and it appears the advertisements may have overstated the accuracy of the BAC reading.

In its advertising, Breathometer touted “FDA registered, Law enforcement grade accuracy” and “‘police grade’ precision.”  The advertising went on to claim that the accuracy was proven by “government-lab grade testing.”  According to the FTC’s complaint, these claims were not supported, or outright false.  The FTC alleged that the product was not adequately tested for accuracy and that the company was aware that the device regularly understated users’ BAC – in other words, informing drunk people that they were sober to drive.

Now a settlement with the FTC has imposed strict restrictions on the conduct of the company and its founder going forward.  The company and its founder are prohibited from making claims regarding the accuracy of the product without the support of specifically outlined testing demonstrating it “meets the accuracy specifications set for evidential breath alcohol testers that have been approved by the Department of Transportation.”  In fact, without such testing support, the company cannot advertise that the product detects BAC at all, and is prohibited from “re-enabling the Breathometer app’s breathalyzer functions” which were previously shut down.

In addition, the company must give a full refund to everyone who bought the product – wiping out approximately $5.1 million in revenues.  The company is required to specifically notify its customers by email of their right to a refund, and post refund information on its website.

Sunscreen
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Earlier this month, the Federal Trade Commission (“FTC”) issued a decision against California Naturel, Inc. related to its advertising of “all natural” sunscreen on both its website and the product packaging itself. On its website, California Naturel was not only advertising its sunscreen as “all natural” but was describing the sunscreen as containing “only the purest, most luxurious and effective ingredients found in nature.” The FTC found that this advertising conveyed that California Naturel’s sunscreen contains only ingredients that are found in nature.  But because California Naturel admitted that eight percent of its sunscreen formula consists of a synthetic ingredient, the FTC determined that California Naturel’s advertising constituted false and misleading advertising and that such advertising is likely to materially impact consumers’ purchasing decisions.

In response to California Naturel’s arguments, the FTC decided that the product’s ingredient list and the disclaimer on California Naturel’s website were insufficient to cure the deceptive advertising. With respect to the ingredient list, the FTC noted that the synthetic ingredient was buried within a list of over 30 ingredients and that nothing identified the ingredient at issue as synthetic. With respect to the website disclaimer, the FTC found that it was not prevalent enough given its location at the bottom of the website—particularly in contrast to the prevalence of the “all natural” advertising elsewhere on the website and on the product packaging itself.

Under its authority to issue a remedy for false and misleading advertising, the FTC issued an order prohibiting California Naturel from advertising its products as “all natural” or making other similar representations. More information about the FTC’s decision against California Naturel can be found here.

Ever been skeptical of symptom relief claims made by medicine made of things like crushed bees or poison ivy?  It seems you are not alone–the FTC is skeptical too, and a recent FTC announcement may leave marketers scrambling to change the claims made on homeopathic drugs.

Homeopathy, dating to the 1700s, is based on the theory that disease symptoms can be treated by minute doses of substances that produce similar symptoms when provided in larger doses to healthy people.  While many people believe in these remedies, the efficacy claims for these products are generally not supported by modern scientific methods and are generally not accepted by modern medical experts.

Last week, the FTC released an Enforcement Policy Statement on Marketing Claims for OTC Homeopathic Drugs.  In the statement, the FTC provided specific guidelines for marketing the efficacy of homeopathic remedies.  The FTC acknowledged it has historically not pursued many enforcement actions against homeopathic marketers, but stressed that the same rules apply to marketing homeopathic drugs as other health-related products, and indicated its lax enforcement may be a thing of the past.

Copyright: <a href='//www.123rf.com/profile_kerdkanno'>kerdkanno / 123RF Stock Photo</a>Generally, an advertiser is required to have adequate substantiation for any claim, but the substantiation that qualifies as “adequate” is more demanding for health-related claims.  For health-related claims, an advertiser must have “competent and reliable scientific evidence” to support the claim.  And for claims that a product can treat or prevent a disease or its symptoms, the FTC has required support in the form of well-designed human clinical testing.  This is a real problem for homeopathic drugs—most have absolutely no scientific support for their treatment claims (let alone the human clinical testing required).

So what is a marketer to do – how can you identify what the homeopathic drug supposedly treats without saying (expressly or implicitly) that it is effective at doing so?  After all, for the vast majority of homeopathic drugs, the case for efficacy is based solely on traditional homeopathic theories and there are no valid studies using current scientific methods showing the product’s efficacy.  So just making a treatment claim could violate the regulations.  The answer according to the FTC: disclaimer, disclaimer, disclaimer.

The FTC is recommending that homeopathic drug marketing include disclaimers that consist of at least two components: (1) a statement that there is no scientific evidence that the product works and (2) a statement that the treatment claims are based only on theories of homeopathy from the 1700s that are not accepted by most modern medical experts.  And it is not enough to put these disclaimers in the fine print.  As stated by the FTC any disclaimer “should stand out and be in close proximity to the efficacy message; to be effective, it may actually need to be incorporated into the efficacy message.”  The FTC also warns against marketers attempting to spin this into a positive; says the FTC: “Marketers should not undercut such qualifications with additional positive statements or consumer endorsements reinforcing a product’s efficacy.”

The FTC’s new guidance helps define clear rules and puts marketers on notice of the pitfalls of marketing homeopathic products.  If in doubt about whether a advertising message is misleading, consider consulting an attorney and obtaining consumer surveys to ensure the advertisement is clear and not misleading.

The Food and Drug Administration recently invited public comment on an updated definition of what constitutes a “healthy” food.  An updated definition is not merely fodder for food policy gurus.  This will have a very real impact on advertisers and consumers alike because the new standard will set the stage for what brands will label and advertise as “healthy.”

What is “healthy” under the current definition—which reflects decades old views on nutrition—may no longer be “healthy” after the FDA’s final determination. Perhaps that is a good thing.  Take, for example, that some sugary breakfast cereals and pastries could be considered “healthy” under the current guidelines—which focus on overall fat content rather than sugar content—but things like fresh avocados and nuts are not considered “healthy” because of their fat content.

Copyright: dole / 123RF Stock Photo
Copyright: dole / 123RF Stock Photo

The FDA’s new guidance will likely force many brands to rethink and retool how they advertise their previously “healthy” (but suddenly not “healthy” anymore) products. On the flip side, the new definition could well breathe new life into a languishing product or push emerging products to even greater market prowess that will be suddenly considered “healthy” by the FDA.  According to the FDA, many consumers make their purchasing decisions in 3-5 seconds.  So, by that data, most folks are not loitering in the florescent lights of a big box supermarket comparing nutrition tables.  While the details may not be a focus to consumers, a big catchy label clearly stating that something is “healthy,” could make the difference between buying Brand X or Brand Y.

Perhaps most importantly, brand owners and the public will have a say on the final definition of “healthy.” The FDA is currently seeking input on a variety of questions about what “healthy” should mean – both from a nutrition standpoint and from a consumer’s understanding standpoint.  The public comment period opened on September 28, 2016, and comments can be submitted through the FDA’s website.

One likely result is that companies will get sued by its competitors. Such a lawsuit will cost money to defend, cause a distraction to the company, and has the potential to embarrass the company with consumers.

Another potential result is more troubling – an enforcement action by the FTC. Such actions, like competitor lawsuits, are expensive to defend, cause distraction, and have the added problem of communicating to consumers that the government thinks the company is making false statements.

A recent FTC enforcement action decision reinforces the necessity for companies to validate the advertising claims made about their products, particularly if such claims relate to health benefits.

In May 2015, the FTC filed a lawsuit against COORGA Nutraceuticals Corporation and its owner claiming that the Defendants violated the law in claiming that their “Grey Defense” dietary supplements reversed or prevented gray hair. The United States District Court for the District of Wyoming recently granted summary judgment in favor of the FTC, issued an injunction against the company and its owner, and asked the Defendants to pay nearly $400,000.

COORGA marketed Grey Defense to consumers as not only a product that could stop, reverse and prevent the natural graying of hair, but also that it was scientifically proven to do so. The Court found that the COORGA did not have the required scientific evidence to support such claims.  In addition to finding that the company was liable, the Court also found the owner liable because he controlled COORGA’s advertising.  The Court took COORGA’s owner to task for “arrogantly” relying on internet research to validate the company’s claims.  The Court found that this conduct constituted “reckless indifference” and issued an injunction against the company relating to advertising claims across a broad range of products in addition to finding Defendants liable for $391,335.

As this and other FTC enforcement cases make clear, a company must ensure that if it makes scientific claims about its products that it has the testing to back up those claims.

The FTC has long required that if an advertiser makes a specific, verifiable claim, the advertiser needs to have adequate substantiation for the claim before it is made. One of the more interesting and recognizable examples of this rule came on December 1, 2015, when the FTC announced a proposed settlement with Tommie Copper for its claims that its products—copper-infused compression clothing—relieve pain.  Tommie Copper’s advertisements claimed that its copper-infused compression clothing provides pain relief from a number of conditions.  In fact, the company proclaimed that its products provide pain relief comparable to, or better than, drugs or surgery.  For example, its infomercials featured Montel Williams declaring “Tommie Copper truly is pain relief without a pill.”  The advertisements also claimed relief from chronic pain and pain caused by multiple sclerosis, arthritis, and fibromyalgia, relying on some purported customer testimonials.

Copyright: dolgachov / 123RF Stock Photo (Not actually Tommie Copper apparel)

But, based on the 2015 proposed settlement, it appears that Tommie Copper did not have much support for these lofty claims.

The settlement, which will cost Tommie Copper at least $1.35 million, served as a reminder that before making any advertising claim, the advertiser must have adequate substantiation for the claim.  And the bar is higher for medical claims.  As the proposed settlement explains, before the company can make health-related claims related to chronic or severe pain, diseases, drugs, and surgery, it must have “competent and reliable scientific evidence” to support the claims.  FTC v. Tommie Copper, Inc., 7:15-cv-09304-VB, Dkt. 4-1 (S.D.N.Y. Dec. 1, 2015).

The proposed settlement specifically defined “competent and reliable scientific evidence” as “human clinical testing . . . based on standards generally accepted by relevant medical experts” that is “(1) randomized, double-blind, and placebo-controlled; and (2) . . . conducted by researchers qualified by training and experience to conduct such testing.”  Id.  The proposed settlement also prohibits the use of other health-related claims without substantiation from tests, analysis, research, or studies conducted by qualified persons in a manner that is generally accepted in the profession to be accurate and reliable. Id. The monetary judgment in the proposed settlement is a whopping $86.8 million, although Tommie Copper need only pay $1.35 million now.  The remainder of the judgment is suspended based on, among other things, the company’s representations regarding its finances.

Though the facts and circumstances of every advertisement will determine what amount and type of substantiation is required, this settlement shows the FTC will require “competent and reliable scientific evidence” when making health-related claims to consumers.