The FTC requires that healthcare advertisements be substantiated with "competent and reliable scientific evidence." What constitutes such evidence, however, is hotly debated. Not surprisingly, the FTC's position is that healthcare claims should be substantiated with fairly rigorous testing. Last month, though, a Florida district court handed the FTC a setback and ruled that a provider of dietary supplements may simply rely on a supplier's representation and an outside expert's review of published studies.
In 2006, the FTC settled with Garden of Life, Inc. (GOL), having accused it of making unsubstantiated representations that their products could treat a range of serious diseases and making false claims of clinical proof. The settlement forbade GOL from making (1) unsubstantiated representations and (2) misrepresentations about any test or study. Similar to many, if not all, FTC settlements, the settlement with GOL provided that GOL will not be in violation if "at the time the representation (was) made," GOL possessed and relied upon "competent and reliable scientific evidence that substantiates the representation." The settlement defined "competent and reliable scientific evidence" as "tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results."
In September 2011, the FTC brought the instant case alleging that GOL violated the settlement by making (1) false claims that certain of its products contained "no soy allergens"; (2) baseless claims that certain of its products possessed "brain-boosting powers" and other benefits for children; and (3) unfounded claims that some of its products were superior to other calcium supplements and falsely representing that this claim was backed by human clinical studies. Late last month, the court ruled for GOL on all counts.
With respect to GOL's claim that its products did not contain "soy allergens," the FTC alleged that GOL never possessed the requisite evidence to substantiate the claim and, in fact, there was evidence that soy was actually present in these products. GOL argued that it does not manufacture the products at issue and based its claim on allergen statements received from its manufacturers.
The court sided with GOL, finding that the allergen statements that GOL obtained from its manufacturers fell within the category of "other evidence'' that qualifies as competent and reliable scientific evidence. The court based its decision in large part on the fact that the allergen statements were prepared by qualified manufacturers whose interest in their accuracy is at least equal to GOL's, "because a manufacturer could expose itself to significant liability if it failed to disclose allergens contained within its products." Although the FTC pointed out that one of the allergen statements actually revealed that soy or its derivatives may be present, GOL clarified the matter with the manufacturer and obtained assurance that soy was not used in the manufacture of the products that GOL procured. The manufacturer also informed GOL that, in any event, the manufacturer's "proprietary fermentation process used to produce the ingredients would consume and destroy any residual soy." The court held that this assurance, from a high-level executive, was sufficient to qualify as "competent and reliable scientific evidence."
The FTC also took issue with GOL's claims that one of its products "boosts brain development," "boosts cognitive function," "supports or boosts mental focus," "is important for eye development," and "supports positive mood and behavior." The FTC brought its own expert to demonstrate the false nature of these claims and further argued that GOL never conducted any tests of its own to substantiate the claims. GOL argued that it had retained its own expert to review published studies regarding the benefits of the vitamins used in GOL's supplement that would support the claims, and the expert wrote a memorandum in which he evaluated the efficacy of GOL's claims. The court held that such reliance was sufficient substantiation.
Finally, the FTC argued that GOL violated the settlement by making superiority claims with respect to its calcium and Grow Bone System products, even though no study ever compared the effects of the Grow Bone System with any other calcium supplement. In ruling for GOL, the court first held that the settlement did not explicitly enjoin comparative advertisement. As such, interpreting the settlement "to prohibit GOL from making comparisons between its products and a competitor's products would be an unenforceable provision" because an injunction must be specifically tailored to remedy specific harms shown and not just an admonishment to "obey the law." The court further held that any comparative claim would be substantiated because GOL's expert "reviewed ten human studies which demonstrated the utility of calcium, particularly calcium carbonate, in supporting bone health." Interestingly, in response to the FTC's claim that GOL was relying on a "fatally flawed . . . . study," the court held that the settlement "does not require the 'test or study' GOL uses to be reliable or performed in a certain manner." Because its expert reviewed the available scientific literature and determined that GOL had substantiation for its claims, its obligations under the settlement were satisfied.
Conclusion
The significance of the decision is twofold. First, it supports the view that reliance on outside support for the claim, such as a manufacturer's statement as to the contents of its products and an outside expert's review of existing scientific literature, can be sufficient substantiation for a healthcare claim. Independent clinical studies undertaken by the company itself are not necessarily required to support an advertising claim.
Second, the decision is likely to further complicate the dynamics of settlement with the FTC when an investigation into the substantiation for a company's claim has been undertaken. In recent settlements, the FTC has begun to more clearly define what constitutes "competent and reliable scientific evidence," often requiring two well-controlled, double-blind clinical studies. Decisions such as this are likely to increase the FTC's resolve to explicitly require such substantiation in the settlement, which would increase companies' compliance burden and impact their decision whether to settle or litigate against the FTC.
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