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Cheerios First in FDA Firing Line. Who's Next?

Cereal Brand Finds Itself Treated Like a Drug Due to Its Cholesterol Message

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NEW YORK (AdAge.com) -- Cheerios are now drugs -- at least according to the FDA.

Yes, marketers, beware: The Democrats are back in charge, and the Food and Drug Administration is showing renewed bite under the Obama administration.

BOXED IN: General Mills' beloved brand may have to change messaging and packaging design -- at a cost of tens of millions.
BOXED IN: General Mills' beloved brand may have to change messaging and packaging design -- at a cost of tens of millions.
Last week's controversial warning letter from the FDA to General Mills -- which slapped the cereal maker for "serious violations" stemming from the claim that eating Cheerios can reduce cholesterol 4% to 6% in six weeks -- was more than just a signal. In fact, it was the proverbial warning shot fired across the bow.

The FDA letter essentially charges that the beloved brand that's often the first food on babies' high chairs is actually a drug, not a food, based on its claims backed by clinical studies. "Based on claims made on your product's label," the letter tells General Mills, "we have determined that your Cheerios Toasted Whole Grain Oat Cereal is promoted for conditions that cause it to be a drug because the product is intended for use in the prevention, mitigation and treatment of disease." And drugs are heavily regulated by the FDA.

"If I was talking to our members, I would say look once, look twice, look three times at your marketing ... because regulators sure are," said Dan Jaffe, exec VP-government regulations for the Association of National Advertisers.

Too late
The Cheerios dustup could threaten tens of millions of dollars Big G has spent on marketing in the past two years -- in fact, the brand's entire positioning during that time, which is based on its ability to reduce cholesterol. But even if the brand is forced to abandon that positioning, it may already be too ingrained to be forgotten. "They've gotten the message out already," said Lynn Dornblaser, director of consumer-package-goods insight at Mintel. She said it will take a lot of doing to convince consumers that whole grains are bad for them. Changes to packaging may capture consumer interest for a while, she said, but after that "it becomes wallpaper."

And public sentiment might be on Cheerios' side. "I think the FDA got it wrong on this one," said supermarket expert Phil Lempert. "To go after a major brand like Cheerios is [for the FDA to reap] headlines that say to everybody, 'We're doing our job.'"

But while Big G, which is working with the FDA on the issue, might escape serious damage, the ad industry as a whole may not under a newly aggressive FDA. Although some are reluctant to play politics -- "Relative to it being an aggressive new administration, that is untrue," said former FDA associate commissioner Peter Pitts -- the numbers don't lie.

The FDA's Division of Drug Advertising, Marketing and Communications sent 43 letters last year, including warning letters, untitled letters, compliance letters and site-inspection letters. It has sent 39 in the first four-and-a-half months of this year alone.

In the eight years of President George W. Bush's administration, 390 letters were sent out, according to the FDA's online database. In the last four years of President Bill Clinton's administration, 562 letters were sent.

Back to normal
"Look at the pattern," says Mark Senak, senior VP at Fleishman Hillard and author of the blog Eye on FDA. "The Bush administration just shut down government. ... Now there's been a change of administration, and, at least at FDA, you're seeing a return to work as usual."

FDA spokeswoman Karen Mahoney said one reason for the uptick in letters this year was that the 14 letters sent last month cited "violative promotional internet-sponsored links. DDMAC did an across-marketplace review of the promotional sponsored links for prescription drugs on the internet, and this resulted in the issuance of these 14 letters," she said.

Five ways to insulate your brand

1. Be aware of all government regulatory initiatives -- existing and pending.

2. Don't assume that long-running campaigns are immune.

3. Review all existing advertising and marketing with a critical eye.

4. If need be, invite an independent consultant to review your advertising.

5. Be compliant. The last thing you want is any adverse publicity, such as the media attention calling into question Cheerios' health claims, after it received an FDA warning letter last week.

But Ms. Mahoney added, "DDMAC is putting more resources into enforcement," thanks to a slight budget increase from last year that resulted in additional staffers added to the division.

If marketers think enforcement is being stepped up this year, they should wait until next year. President Barack Obama's 2010 budget calls for the FDA to receive $3.2 billion, the largest budget in the agency's history. The nearly 20% boost from its current budget would allow the FDA to hire more than 1,100 full-time employees.

"The general feeling of those watching the government, especially at the regulatory level, is that there just seems to be a great deal more activity across the board than we've seen for quite some time," Mr. Jaffe said.

Tough regulators
There is also some concern among food manufacturers and pharmaceutical companies about the FDA's new leadership. Margaret Hamburg, Mr. Obama's nominee as the new FDA commissioner, is expected to receive full Senate confirmation as soon as this month. Acting Commissioner Joshua Sharfstein would then become deputy commissioner. Ms. Hamburg is known to be tough on food; Mr. Sharfstein is considered tough on drugs -- and he's a former aide to Rep. Henry Waxman, D-Calif., a known opponent of pharmaceutical direct-to-consumer advertising.

"A lot of people in the industry think Josh is anti-industry, but I've gotten to know him well, and he's a fast learner and really listens," said Mr. Pitts, now a partner and director of global health care at public-relations firm Porter Novelli. "I'm pretty optimistic, all things considered. But I still think we'll see more letters because that was always a Waxman thing."

Attorney Wes Siegner, director at Washington-based law firm Hyman, Phelps & McNamara and one of the authors of fdalawblog.net, said the Cheerios warning letter is the start. "It's always noteworthy when any agency goes after the big players," Mr. Siegner said. "There's been very little enforcement, and there's no question some companies have taken advantage of that vacuum. The lack of enforcement gives you a lot of leeway, and you can get creative in advertising. There's no question that this letter will be exhibit one in trying to figure out: Where is the FDA headed on health claims? In that sense, it's clearly precedent-setting. I don't think anybody has any question we'll see more enforcement."

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Contributing: Emily Bryson York

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