With consumers increasingly focused on the health benefits of the foods and beverages they consume, and consumer-product companies aggressively looking to meet those demands, the January decision in the battle between POM Wonderful and the Federal Trade Commission could have huge implications for how companies advertise their products' health benefits in the future.
On January, 30, 2015, the U.S. Court of Appeals for the D.C. Circuit affirmed a prior ruling by the FTC that POM had falsely claimed that its pomegranate juice and dietary supplements could prevent, treat or reduce the risk of heart disease, prostate cancer and erectile dysfunction. While the ultimate decision against POM was a victory for the FTC, the victory was somewhat bittersweet, as the Court also struck down the FTC's effort to require that POM support any future disease-related claims with two randomized human clinical studies (RCTs), the so called "gold standard" for claim substantiation. It is this aspect of the decision that is likely to have the most significant impact on marketers as they struggle to determine what level of testing they will need in the future to support health claims for their products.
Background of the Case
The case dates back to 2010 when the FTC filed an administrative complaint against POM (after POM sued the FTC) alleging that POM's disease related claims were false and misleading. The advertising claimed that POM's products could reduce blood pressure and the risk of heart disease, slow the growth of prostate cancer and reduce erectile dysfunction. POM attempted to support these claims with studies that the FTC alleged to be inadequate either because they lacked an adequate control group, had an insufficient sample size, tested a biased population or yielded results that were not statistically significant. In some cases, the FTC alleged that the studies upon which POM relied were actually contradicted by larger studies that yielded different results.
In the first round of the battle, an Administrative Law Judge found that POM had failed to adequately substantiate its claims and issued an order prohibiting POM from making similar claims in the future without "competent and reliable scientific evidence." Both POM and the FTC appealed the ALJ's order. In fact, the FTC asked for an even more expansive order banning POM from making any disease-related claims without prior FDA approval. In Round 2, the full Commission affirmed the ALJ's findings that POM's ads were misleading and while the Commission declined to require FDA pre-approval of any-disease related claims, it did broaden the scope of the Consent Order to prohibit POM from making "any" disease-related claims for any food, drug or dietary supplement without two RCTs. It was this ruling that set the stage for Round 3 of the battle -- the Court of Appeals' case.
FTC Enforcement Trends
The FTC's insistence on full blown clinical studies to support health-related advertising claims is not a new development, but has been a hallmark of FTC enforcement activity for the last several years. Historically, the FTC has followed a somewhat fluid and flexible standard in determining the level of substantiation required to support advertising claims. For health and safety claims, the FTC has traditionally required "competent and reliable scientific evidence" which has generally been defined as tests, studies, research and analyses that experts in the relevant field believe would be adequate to support the claims in question. Based on this standard, marketers have often attempted to rely on third-party studies conducted on the ingredients in their products, expert opinions or historical research to support their claims.
Beginning around 2010, however, the FTC began sending a clear signal to the industry that nothing short of full blown clinical studies would likely be adequate to substantiate health related claims. In a series of settlements involving some well-known brands such as Nestle and Dannon, the FTC began requiring in its Consent Orders that the companies support specific disease-related claims in the future with at least two well-controlled RCTs. The FTC subsequently imposed either a one- or two-RCT requirement on other companies such as Sketchers, Reebok and L'Occitane to settle charges that these companies made false and misleading weight loss, toning and sculpting claims for their products. Unlike these other companies, however, POM refused to sign a Consent Order with a two-clinical study requirement and directly challenged the FTC's authority to require such studies.
The Court's Rejection of the FTC Standard
In its decision, the Court of Appeals ruled that the FTC could not categorically require two double-blind clinical studies to support "any" disease-related claims for any food, drug or dietary supplement. The Court ruled that such a requirement was much too broad and violated the First Amendment. The Court was particularly sympathetic to the costs of conducting such studies and was concerned that if marketers were required in all instances to support health claims with two clinical studies, marketers might shy away from touting the health benefits of their products which would deprive consumers of meaningful information about the health benefits of products that are otherwise safe.
While the court rejected the FTC's two-RCT standard, it did rule that for the specific types of disease claims that POM was making, it was appropriate to require at least one RCT.
Implications for Marketers
What does this decision mean for marketers? To answer that it is important to understand what the Court did and did not say. First, it is important to note that the Court was highly deferential to the FTC's determination as to whether POM's advertising claims were deceptive. The Court acknowledged -- as many other courts have in the past -- that the FTC is in the best position to determine whether ads are deceptive or misleading. Companies who are contemplating going to battle with the FTC should heed these words carefully as it explains why the FTC's success rate in litigation is so high.
Secondly, while the Court did say that the FTC cannot categorically require two RCTs for any disease-related claim, it did not say that two clinical studies could never be required. Therefore, marketers should not assume that having one clinical study will always be enough. If, for example, an advertiser claims that "studies prove" that their product provides a certain health benefit, the FTC is likely to require more than one study because the advertiser itself represented that there were multiple studies supporting the claim. Similarly, if there are other studies that contradict the results of the advertiser's study, one study is not likely to be sufficient.
Third, while the Court ruled that it was reasonable to require at least one clinical study to substantiate POM's disease related claims, it left open the question as to whether the same standard would apply to health related claims that are not tied to a specific disease. While the Court was silent on that issue, as a practical matter, given the current regulatory climate, the FTC is still likely to continue to require at least one clinical study for such claims.
Finally, for the many marketers out there who are wondering whether they can use disclaimers to avoid the need for clinical studies, beware. While both the FTC and the Court suggested that in some cases disclaimers might be appropriate, the disclaimers would have to pretty strongly disclose that there really is no conclusive proof for the claims being made, and even then, there is a high risk that the FTC would argue that the disclaimers are insufficient to overcome the net impression of the ad.
Looking to the Future
While the Court of Appeals decision is not likely to materially alter the FTC's current enforcement policy and rigorous substantiation standards, it is interesting to note that there does seem to be some dissention brewing within the Commission. Commissioner Maureen Ohlhausen has openly dissented in a number of cases to Consent Orders imposing broad RCT requirements for claim substantiation. Most recently, in a case brought by Health Discovery Corporation, the manufacturers of an app designed to detect moles and skin cancer, Ms. Ohlhausen wrote a strong dissent against the Consent Order's requirement for "rigorous, well accepted blinded human clinical tests to substantiate any claim that the app increases consumers' chances of detecting skin cancer in the early stages." The Commissioner characterized the Order as "another example of the Commission using an unduly expansive interpretation of advertising claims to justify imposing an inappropriately high substantiation requirement on a relatively safe product" and cautioned that "the Commission not subject such apps to overly stringent substantiation requirements."
With the likely explosion of health-related and fitness apps it will be interesting to see if the full Commission takes these warning to heart.
About the Author
Linda Goldstein is Partner and Chair of the Advertising, Marketing & Media Division at law firm Manatt, Phelps & Phillips. She also serves as Chair of the Brand Activation Association's Government Affairs Committee. Ms. Goldstein can be reached at firstname.lastname@example.org.