The U.S. Court of Appeals for the D.C. Circuit last Friday largely upheld the Federal Trade Commission’s (“FTC”) ruling that POM Wonderful, Inc. violated the Federal Trade Commission Act by making unwarranted disease-prevention claims for its pomegranate juice products. But the ruling is far from the sweeping endorsement of FTC advertising-control measures that the Commission might have been hoping for. 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 (“RCTs”). To the contrary, the appeals court made clear medical studies that do not meet RCT standards may nonetheless have considerable value, and that the FTC’s regulation of advertising is subject to strict First Amendment limitations. The decision suggests that courts may be very reluctant to uphold the FTC’s application of RCT standards to claims that a product promotes general health and nutrition, as distinct from claims that a product is effective in preventing or curing specific diseases.
POM’s ads were an easy target for the FTC. The ads touted POM’s products as effective in preventing a variety of diseases/conditions, including cardiovascular disease, prostate cancer, and erectile dysfunction (“ED”). Yet they failed to mention numerous shortcomings in the medical studies on which the disease-prevention claims were based—including that the studies’ findings were directly contradicted by other, larger clinical studies. Indeed, the D.C. Circuit held that it would have concluded that the ads were deceptive even had it chosen to apply a de novo standard of review to the FTC’s findings. (Because the case was on appeal from an FTC administrative proceeding, the D.C. Circuit reviewed those findings under a far more deferential “substantial evidence” standard.)
Under FTC regulations, the Commission deems an ad to be false and misleading unless the advertiser has a “reasonable basis” for its claims. An important factor in determining whether a “reasonable basis” exists is “the amount of substantiation experts in the field would consider reasonable.” It is generally agreed that medical experts require a relatively high level of evidence in order to accept that a product is effective in treating or preventing a disease. Indeed, a product making disease-related claims is usually classified as a “drug” and may not legally be marketed without pre-approval from the Food and Drug Administration (“FDA”). FDA will not grant pre-approval unless, among other things, the manufacturer submits two RCTs—randomized and well-controlled human clinical studies with pre-determined, valid end points and which are double-blinded (i.e., neither doctors nor participants know which participants are receiving the product being tested and which are receiving a placebo). While FDA is authorized to grant exceptions (so that labels for food and dietary supplements can include disease claims without being re-classified as drugs and thus being made subject to the strict drug-approval regime), it has granted exceptions quite sparingly.
In exercising its independent authority to monitor advertising claims by food and dietary supplement manufacturers, the FTC has increasingly adopted FDA’s drug-approval standards; that is, an advertiser will be deemed not to possess a reasonable basis for disease claims in the absence of RCT studies. In particular, that was the Commission’s conclusion with respect to POM’s cardiovascular, prostate cancer, and ED claims, after conducting lengthy administrative proceedings. The FTC could easily have found against POM on the basis of POM’s misleading descriptions of existing clinical studies alone; indeed, that was the basis of the Administrative Law Judge’s finding that POM had engaged in deceptive advertising in violation of the FTC Act. The Commission went considerably further, however; it held that under no circumstances could the studies provide POM with a reasonable basis for its disease claims because they were not RCT studies. While conceding the remote possibility that POM could have included disclaimers that would have cured the deception, the Commission concluded that disclaimers would have been inadequate unless they stated, in essence, that the studies were worthless and proved nothing.
The D.C. Circuit deferred to the FTC and upheld (under a “substantial evidence” standard of review) the FTC’s factual finding that experts would not rely on non-RCT studies to conclude that a product was effective in preventing or treating the three diseases/conditions in question—and thus that POM lacked a “substantial basis” for its claims. The FTC will undoubtedly point to that portion of the appeals court’s decision in support of its continuing efforts to demand that virtually all health-related claims must be supported by RCT testing; indeed, its immediate response to the decision was to proclaim a great victory.
But any such claims of victory are decidedly premature. Perhaps most importantly, the POM decision was limited to disease claims; the court explicitly noted that it was not addressing whether the RCT standard should apply to claims that a product promotes general health and nutrition and that are silent with respect to specific diseases. In numerous recent cases, the FTC has asserted that the RCT standard should also apply to general health claims, but thus far federal courts have not endorsed the commission’s position. Importantly, it simply is not true that most experts, in determining whether a food or dietary supplement “is good for you,” will only rely on human clinical studies that meet the rigorous RCT standards. The D.C. Circuit made clear that, in the absence of such evidence regarding experts’ views, manufacturers should not be required to limit general health claims to those supported by RCT studies.
Furthermore, the sole reason that the D.C. Circuit deferred to the FTC’s factual findings in this instance was that the FTC conducted lengthy administrative proceedings before ruling against POM. Of course, such proceedings are extremely resource-intensive, so the Commission would much prefer to proceed by filing federal court complaints against advertisers making unsubstantiated claims (and encourage advertisers to quickly capitulate). But in situations where the FTC sues without the benefit of an administrative proceeding, the Commission cannot invoke the substantial evidence standard; rather, it bears the burden of demonstrating by a preponderance of the evidence that experts in the field would not consider the advertiser’s substantiation to be reasonable.
Finally, the D.C. Circuit made clear that all FTC efforts to regulate advertising are subject to strict First Amendment limitations. In particular, the court said that before the FTC can impose restrictions on future advertising, it must demonstrate that the restrictions are narrowly tailored to accomplish the government’s interest in preventing misleading advertising. Thus, although the Court upheld the FTC’s determination that POM’s advertising was not sufficiently substantiated, it overturned the FTC’s order prohibiting POM from making future disease-related claims in the absence of two RCT studies. It held that the two-study requirement was not narrowly tailored because the FTC failed to demonstrate that one RCT study would be insufficient. The court explained that the First Amendment bars the government from adopting “a myopic interest in pursuing scientific certitude to the exclusion of all else, regardless of the consequences.” It stated, for example, that overly strict substantiation requirements might result in consumers being denied “useful truthful information with a demonstrated capacity to treat or prevent serious disease.”
A test of the FTC’s increasingly strict substantiation requirements with respect to general health and nutrition claims is shaping up in federal court in New Jersey. FTC is telling manufacturers of probiotics—microorganisms that have been recognized for more than 100 years as providing health benefits, such as supporting a healthy digestive system—that they may not claim that their products “promote overall digestive health” or that they “help defend against occasional constipation, diarrhea, gas and bloating.” While numerous studies support the general health benefits of probiotics, the FTC contends that the studies provide insufficient substantiation because none are RCT studies. One manufacturer, Bayer Corp., refused to surrender to FTC demands that it stop making general health benefit claims, and it now finds itself the subject of an FTC contempt proceeding in federal district court in New Jersey.
The POM Wonderful decision suggests that the FTC will have significant difficulty succeeding in the New Jersey proceedings. The appeals court decision indicates that the FTC can prevail only if it can demonstrate by a preponderance of the evidence that experts on the digestive system are unconvinced by the 100 years of studies supporting the efficacy of probiotics in digestive health. The FTC’s ability to make such a showing will need to overcome the widely accepted understanding that, in light of reduced safety concerns, there is less reason to apply a skeptical eye to studies supporting a product’s general health benefits (such as those relied on by probiotics manufacturers) than to studies supporting a claim that a product is effective in preventing or curing specific diseases.
Indeed, if the FTC’s current view of general health claims were to prevail, very few dietary supplement manufacturers would be permitted to continue marketing their products. Virtually none of the studies relied on by dietary supplement manufacturers—even studies regarding the health benefits of vitamins—meet the RCT standards. The POM Wonderful decision—by emphasizing that the FTC is subject to First Amendment constraints and that restrictions on advertising, even advertising that is potentially misleading, are constitutionally objectionable unless narrowly tailored—will make it that much more difficult for the FTC to persuade the federal courts to uphold a substantiation standard that would have such sweeping effects. A substantiation standard that would prevent consumers from hearing virtually all information about the general health benefits of dietary supplements, even information that has been well-accepted for generations, is unlikely to be viewed by the courts as narrowly tailored.
Also published by Forbes.com at WLF’s contributor site