July 20, 2009
by Justin J. Prochnow
The Internet continues to be the medium of choice for many companies to market and sell products to consumers. The ability to instantly reach potential customers across the country and around the world has allowed small and large companies alike to tout their products. However, the intense competition for the Internet consumer has also lead to increasingly aggressive and sometimes misleading claims, as well as the use of advanced computer technologies to attract customers. As marketers stretch the legal limits in making claims, FDA and other regulatory agencies are stepping up their efforts to police Internet activity.
The recent guilty plea by the owner of a dietary supplement company highlights FDAs continuing efforts to police fraud over the Internet, and also signifies regulators greater than ever awareness of sophisticated computer technologies used by companies to promote and sell products.
Following several years of investigation, which resulted in a 2008 indictment, Tony T. Pham pleaded guilty on July 2, 2009, to his role in a conspiracy to fraudulently market dietary supplements over the Internet through his company, Techmedica Health Inc. While the heart of FDAs investigation and indictment was the marketing of dietary supplement products that made illegal claims that the products could diagnose, treat, mitigate, cure or prevent diseases, the case is newsworthy due to the rather egregious methods used by Pham and his co-conspirators to perpetrate the fraud. In addition to the discovery that Pham and Techmedica had fabricated customers and physicians to use as endorsers for the products, FDA also uncovered Phams use of mirror image technology to direct FDA personnel to a sanitized version of the Web sites, while consumers were directed to Web sites that contained numerous illegal claims regarding the products. These revelations reinforce the idea that FDA is scrutinizing all forms of media, including the Internet, for illegal activity.
While Phams use of mirror image technology was an obvious attempt to circumvent FDAs inspection, the agency has also identified more mainstream technology, such as meta tags and domain names, as further evidence of intent to sell non-drug products as drugs. FDA deems Web sites that promote products and also allow consumers to purchase products directly to be labeling; thus, claims on such Web sites must comply with applicable regulations and laws in the same manner that claims made in other media must do so. In determining whether a product is properly marketed and sold, FDA looks to the intended use of the product. Increasingly, FDA is finding evidence of a companys intent in non-traditional means, including tools used to guide Internet traffic to a particular Web site, in addition to the standard media, such as product labels and labeling.
FDA has identified the use of meta tags as further evidence to support a companys intent to sell products for a particular purpose. Meta tags are information embedded into the code of a Web page that informs search engines what a Web site is about and can be used to direct traffic to it.
In recent warning letters, FDA has identified certain meta tags as further evidence to support the agencys determination that the company intended to sell a particular product based on its use or effectiveness for treating or preventing a disease or a disease condition. For example, FDA has issued warning letters for the use of meta tags such as high blood sugar, diabetes, arthritis or heart disease for a Web site promoting dietary supplement products. As another example, FDA has found evidence of intent to sell products as drugs in the use of meta tags such as skin cancer treatment or melanoma, when those meta tags directed consumers to a Web site promoting a skin cream product.
FDA has also identified certain domain names that include names of diseases or symptoms of diseases as supplemental evidence of intent to sell products as drugs. Domain names such as www.arthritis.bz, www.hemorrhoids.com and www.malaria.me.uk are all examples of domain names that FDA has identified in warning letters as further evidence in support of the agencys contentions that the true intent of the company was to sell products as drugs.
Often, search engine optimizers or other IT personnel select meta tags to mark Web sites, choose search terms to trigger advertisements, and create domain names to drive both direct navigation and search engine traffic to a Web site. While such consultants may be experts at increasing traffic counts to a Web site, they may have little knowledge of or appreciation for the legal consequences of their actions.
Activity on the Internet is being policed more rigorously than ever. With this persistent scrutiny of Internet activities by governmental agencies, industry companies that market online need to guide and review their efforts carefully. Companies should audit the practices of their IT consultants to ensure compliance with applicable laws and regulations. While the short-term gains to be had by implementing advanced Internet technologies to market products are appealing, the long term repercussions could be severe if such technologies are not used within the confines of the law.
Justin J. Prochnow is an attorney with the international law firm of Greenberg Traurig LLP .
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