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Namely, says attorney Erica Stump, the FTC’s requirements for establishing health-related claims is moot.
May 15, 2015
Here’s a huge victory for dietary supplement companies: the Eleventh Circuit has rejected the FTC’s position that two randomized clinical trials are required to support claims in advertising, reversing a $40 million contempt award against Hi-Tech Pharmaceuticals and its CEO and vice president.
The Federal Trade Commission (FTC) has responsibility for claims in advertising of dietary supplements. The FTC's truth-in-advertising law requires substantiation of claims with “competent and reliable scientific evidence.”
The FTC’s 1972 decision in the Pfizer case established the baseline requirements for substantiation (Pfizer Inc., 81 F.T.C. 23, 86 (1972)) In that decision, the FTC held that an advertiser must have a “reasonable basis” for making objective claims—in other words “substantiation.” The FTC identified various factors used to determine the amount of substantiation necessary to constitute a reasonable basis for a particular claim: (1) the type and specificity of the claim made—e.g., safety, efficacy, dietary, health, medical; (2) the type of product— e.g. food, drug, potentially hazardous consumer product, other consumer product; (3) the possible consequences of a false claim—e.g., personal injury, property damage; (4) the degree of reliance by consumers on the claims; [and] (5) the type, and accessibility, of evidence adequate to form a reasonable basis for making the particular claims.
In 1983, the FTC memorialized the reasonable basis standard in its Advertising Substantiation Policy Statement. The Policy Statement made clear that the standard was intended to be flexible. (Policy Statement Regarding Advertising Substantiation Program, 104 F.T.C. 648, 839, 840 (1984), aff’d, 791 F.2d 189 (D.C. Cir. 1986)) The FTC defined reasonable basis for health and safety claims to be “competent and reliable scientific evidence.”
The FTC set forth a new standard for health-related claims, i.e., dietary supplements requiring two consent decrees (Iovate and Nestle) defining “competent and reliable scientific evidence” to be two double-blind, placebo-controlled clinical studies or randomized clinical trials (“RCT”) on the product at issue. In July 2010, Iovate entered into a settlement and consent decree with the FTC over claims made on their weight loss supplements. In that settlement, Iovate agreed that it would have two adequate and well-controlled human clinical studies for its weight loss claim as its “competent and reliable scientific evidence,” which was a new and more rigorous requirement by the FTC.
The decision can be found at https://www.ftc.gov/sites/default/files/documents/cases/2010/07/100729iovatestip.pdf.
The Iovate Consent Decree was followed by a similar settlement and consent decree with the FTC entered into by Nestle in January 2011 regarding its children’s Boost product. The FTC defined “competent and reliable scientific evidence” as two adequate and well-controlled human clinical studies of the product. That decision can be found here (https://www.ftc.gov/sites/default/files/documents/cases/2011/01/110118nestledo.pdf). Since these two consent decrees, the FTC has consistently taken the position that claims on dietary supplement products must be substantiated by two randomized clinical trials.
More recently, in 2010, the FTC filed an administrative complaint charging that POM Wonderful had been making false, misleading, and unsubstantiated representations in violation of the FTC Act. POM (http://finance.yahoo.com/news/10-things-401-k-plans-212007790.htmlonderful) filed a declaratory judgment action against the FTC, alleging that it had been asked to sign a consent order containing the new substantiation language, but that the new requirements violate its First and Fifth Amendment rights, as well as the FTC’s own procedural requirements (POM Wonderful v. FTC, Civ. No 1:10-CV-01539 (D.D.C. 2010)).
Although the POM Wonderful case related to disease claims, the substantiation language is at issue. The FTC ruled that POM Wonderful violated the FTC Act by making unwarranted disease-prevention claims for its pomegranate juice product. The U.S. Court of Appeals for the D.C. Circuit largely upheld the ruling. However, that ruling did not fully endorse the FTC’s requirement of two randomized RCTs. In particular, the ruling provides little, if any, support for the FTC’s recent assertions that food and dietary supplement manufacturers are largely barred from including health-related claims on product labels unless their claims are supported by randomized and controlled human clinical trials.
Most recently, the tides have finally changed in the recent ruling by the Eleventh Circuit rejecting the FTC’s requirement of two RCTs to support health-related claims on products. On May 5, the Eleventh Circuit rejected the position that Hi-Tech Pharmaceuticals, Inc. a Georgia dietary supplement company, must have two randomized clinical trials to support its advertising claims made for its weight loss products. (FTC v. National Urological Group, Inc., 11th Circuit Court of Appeals, 1:04-cv-03294-CAP)
By way of background in the Hi-Tech case, the District Court would not allow expert evidence to be presented, ruling that only two RCTs would suffice and that the doctrine of collateral estoppel prevented the expert evidence from being presented. The case originally dates back to a 2004 lawsuit brought by the FTC against Hi-Tech regarding its Fastin, Lipodrene, Benzedrine and Stimerex-ES weight loss products. The District Court issued a permanent injunction in 2008, wherein Hi-Tech and its principals were not to claim that certain products were based on scientific evidence.
When Hi-Tech appeared to make a similar claim later in the proceedings in 2013, the District Court would not allow Hi-Tech to present evidence that it claimed showed scientific support, including “an expert’s declaration that the representations were substantiated by ‘competent and reliable scientific evidence.” The District Court ruled that the evidence was collaterally estopped from being presented in 2013. Because they were unable to present any scientific evidence in its defense, Hi-Tech and CEO Jared Wheat and senior vice president Stephen Smith were found in contempt. The Court issued a $40 million contempt order against Hi-Tech and Mr. Wheat and Mr. Smith. The decision was appealed to the Eleventh Circuit Court of Appeals, where the three-judge panel reversed the contempt order on the basis that the doctrine of collateral estoppel had been incorrectly applied and rejecting the FTC’s requirement of 2 RCTs.
The Hi-Tech decision is a tremendous victory for the dietary supplement industry. The requirement of 2 RCTs has been rejected and the correct and well-established “competent and reliable scientific evidence” standard applies. All dietary supplement companies should follow Hi-Tech’s strategy and fight for what it believes in, which, in this case, resulted in applying the correct standard of law.
Erica W. Stump is an intellectual property (IP) and dietary supplement regulatory compliance attorney. Her practice focuses on the legal challenges that face dietary supplement and food companies, including trademark and trade dress infringement, false advertising, counterfeiting, unfair competition and patent infringement.
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