1. Updates from FTC on Regulation of OTC Product Promotion
Speakers:
Gregory W. Fortsch, Senior Attorney, Division of Advertising Practices, Bureau of Consumer Protection, FTC
Jonathan Cohn, Partner, Sidley Austin
Ivan Wasserman, Partner, Manatt, Phelps & Phillips, LLP
Moderated by David Vladeck, Professor of Law, Georgetown University Law Center

2. Federal Trade Commission Update -- Over-the-Counter (OTC) Product Promotion
The Food and Drug Law Institute
Advertising & Promotion Conference
Breakout Session
Washington, D.C,
October 2, 2014
Gregory W. Fortsch
Attorney
Division of Advertising Practices
Bureau of Consumer Protection
U.S. Federal Trade Commission

3. My comments today reflect my own views
My comments today reflect my own views. They do not necessarily reflect the views of the Federal Trade Commission, any individual Commissioner, or any other person.

4. The FTC Act (15 U.S.C. § 41 et seq.)
The statute that governs advertising and marketing of most products and services in the U.S. is the Federal Trade Commission Act (“FTC Act”).

5. The FTC Act (15 U.S.C. § 41 et seq.)
Section 5 of FTC Act: prohibits unfair or deceptive acts or practices
Section 12: prohibits any “false advertisement” likely to induce the purchase of foods, drugs, devices, services, or cosmetics that is “misleading in a material respect”

6. FTC/FDA Coordination on OTC Drugs
Overlapping statutory authority
Memorandum of Understanding (1971)
FDA → prescription drug advertising
FTC → OTC drug advertising, excluding labeling
Agencies coordinate closely on food and dietary supplement policy issues

7. FTC/FDA Coordination on OTC Drugs
FTC legal framework/approach differs from FDA:
Primarily a law enforcement agency, not a health agency
No pre-market approval process, unlike FDA’s pre-dissemination clearance
No regulatory distinction between product categories
No regulatory distinction between health, disease, and structure/function claims

8. FTC/FDA Coordination on OTC Drugs
Complementary, consistent actions
Avoid duplication
Defer to FDA on content, purity, safety, and efficacy

9. FTC Substantiation Doctrine
Under Pfizer (1972), advertiser needs a “reasonable basis” for express and implied objective claims before ad runs
Two types of advertising claims:
Efficacy claims, such as “This pill makes you lose 10 pounds in 2 weeks.
Establishment claims, such as “This pill is clinically proven to make you lose 10 pounds in 2 weeks.”
“Tests Prove . . .”
“Doctors Recommend . . .”
“Studies Show . . .”

10. Substantiation for “Establishment” Claims
When an advertisement represents that the claim is supported by a certain amount or level of substantiation, the advertiser must possess at least that level of support for the claim.
These claims are either true or false.
The required substantiation is evidence acceptable to the relevant scientific community to demonstrate that claims are true.

11. Substantiation for “Efficacy” Claims
Under the FTC’s Substantiation Doctrine (Thompson Medical (1984)), the amount and type of required substantiation depends on:
Type of product (e.g., does it involve health or safety?)
Type of claim (e.g., is it a “credence” good?)
Benefits of truthful claim versus the cost/feasibility of developing substantiation
Consequences of a false claim
What evidence do experts in the field expect?

12. Substantiation for Health Claims
Claims related to health and safety generally must be supported by
“Competent and reliable
scientific evidence”

13. Competent and Reliable Scientific Evidence
A rigorous but flexible standard
Question of fact to be determined in each case. Always claims-driven (net impression)
Often, experts in the field will say that randomized, well-controlled trials are necessary to substantiate a claim that a product treats or prevents a disease.
Experts also may require a clinical study for non-disease claims that a product will affect the structure or function of the human body. For example, “Fish oil improves memory.”
Rely on nutrition and science expertise of FDA

14. Enforcement Considerations
Is FTC action in the public interest?
Is a claim likely to be challenged by a competitor under the Lanham Act?
Has the NAD reviewed the claim? If NAD refers the ad to us, we give it a close look.

15. Current FTC Law Enforcement Activities
OTC Homeopathic Products
Filed a comment with FDA about their regulatory framework for products
Held a Workshop in September 2015
Solace International
Topical cream for moles, skin tags, and wart removal
FDA sent warning letter; FTC got an order with fencing-in relief and redress

16. Current FTC Law Enforcement Activities
Gray Hair cases
Supplements aimed at reversing/preventing the formation of gray hair - two cases settled and a third is in litigation
Made unfounded claims that their supplements could prevent or reverse gray hair
Melanoma App
Deceptively claiming their mobile apps could detect symptoms of melanoma, even in its early stages

17. Current FTC Law Enforcement Activities
POM Wonderful
D.C. Circuit affirmed the Commission’s decision finding the company and its past president liable for advertisements promoting POM juice for the treatment or prevention of heart disease, prostate cancer, and erectile dysfunction
The court also upheld that Commission’s order except to the extent that it required 2 randomized controlled clinical studies for the disease claims in the case

18. Current FTC Law Enforcement Activities
L’Occitane
Settlement prohibited claims for substantial weight or fat loss or substantial reduction in body size
Also required 2 randomized controlled trials for weight loss claims, and competent and reliable evidence for cellulite claims
$450,000 monetary relief

19. Current FTC Law Enforcement Activities
L’Oreal
Challenged advertising claims about gene targeting mechanism and about scientific studies
Settlement required competent and reliable evidence for gene claims and prohibited misrepresentations about tests or studies

20. Current FTC Law Enforcement Activities
Derma Doctor
Challenged advertising claims about gene targeting mechanism and about scientific studies
Settlement required competent and reliable evidence for gene claims, and prohibited misrepresentations about tests or studies

21. Current FTC Law Enforcement Activities
CVS Advanced Eye Health Product
Sent counsel for CVS closing letter in March 2015
Does not mean a violation did not occur, but decided to close since sales were low and claims voluntarily removed by company

22. FTC Orders Going Forward
For companies that are under order:
weight loss cases
ban facially false claims
for unsubstantiated weight loss claims, at least 2 RCTs of product or “essentially equivalent” product
cases of fraudulent or unethical scientific conduct may require 2 RCTs of the product or an “essentially equivalent” product
for all other health cases with causal claims of a health benefit
generally, “human clinical testing” (randomized, double-blind, placebo controlled) of the product or “essentially equivalent” product
although no set number of RCTs, experts might expect multiple RCTs
will look at the quality of the RCT evidence and how it relates to the entire body of relevant and reliable scientific evidence
Must preserve documents and data that experts would need to assess the RCT later

23. Gregory W. Fortsch, Esq.
Division of Advertising Practices
Bureau of Consumer Protection
U.S. Federal Trade Commission
(202)

24. FDLI’s Advertising and Promotion Conference October 2, 2015
Jonathan F. Cohn
Sidley Austin LLP
FTC’s Failed Attempt To Raise Standard For Dietary Supplement Advertising
FDLI’s Advertising and Promotion Conference
October 2, 2015

25. Outline Regulatory Background FTC’s Attempt to Raise Standard
United States v. Bayer
Lessons Learned

26. I. Regulatory Background:
Dietary Supplement Health & Education Act of 1994 (DSHEA), Pub. L. No , sec 8, (codified at 21 U.S.C. § 350(b).
Enacted to ensure that supplements can be marketed without meeting the stringent requirements imposed on drugs:
No pre-approval required
Randomized, placebo-controlled, double-blind clinical trials not required
Substantiation Standard:
“truthful and not misleading”
21 U.S.C. § 343(r)(6)(B)

27. Regulatory Background: Structure-Function v. Disease Claims
“describe[] the role of a nutrient or dietary ingredient intended to affect the structure or function in humans,” 21 U.S.C. § 343(r)(6)(A)
“not claim[ed] to diagnose, mitigate, treat, cure, or prevent a specific disease or class of diseases,” 21 U.S.C. § 343(r)(6)

28. Regulatory Background: FTC Guidance
“CARSE”
“‘Competent and reliable scientific evidence’ means 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.”

29. Regulatory Background: FTC Guidance
“There is no fixed formula for the number or type of studies required . . .” (p. 9).
“There is no set protocol for how to conduct research that will be acceptable under the FTC substantiation doctrine.” (p. 12).
“The FTC’s standard for evaluating substantiation is sufficiently flexible to ensure that consumers have access to information about emerging areas of science” (p. 8).

30. II. FTC Attempt To Raise Standard
Entered into consent decrees with language and definition identical to FTC Guidance (CARSE)
Lost cases under this standard
David Vladeck: “Our experience in bringing enforcement and contempt actions in federal courts suggests that we need to take steps to make our standard injunctive language more exact” 1 2 3

31. FTC Strong-Arms Higher Standard Through Consent Decrees

32. Two Failed Attempts To Raise Standard Through Litigation
FTC v. Garden of Life,
845 F. Supp. 2d 1328, 1335 (S.D. Fla. 2012), aff’d in part and vacated in part, 516 F. App’x 852 (11th Cir. 2013)
When a consent decree speaks only of “competent and reliable scientific evidence,” the government cannot redefine it through expert testimony and “require [the] court to read additional requirements into the Consent Decree.”
Basic Research v. FTC,
No. 2:09-cv-0779 at (D. Utah Nov. 25, 2014)
By demanding “gold standard” clinical trials, which “exceed the requirements of the [consent decree],” the government failed the “expectation of reasonableness.”

33. III. United States v. Bayer
Process
I Multi-Year Investigation
II. Refusal To Settle
III. FTC Referral to DOJ
IV. Contempt Motion (seeking hundreds of millions of dollars)
V Expedited Discovery (Bilateral, now)
VI. Bench Trial (focused largely on expert testimony)
Based on “novel and unlawful” standard

34. US v. Bayer: Background
“‘Competent and reliable scientific evidence’ means 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.”
Bayer Consent Decree
FTC Guidance

35. “To Promote Overall Digestive Health”
“Helps Defend Against Occasional:
Constipation
Diarrhea
Gas and Bloating”
“This product is not intended to diagnose, treat, cure, or prevent any disease”

36. Government’s Position In Litigation
DSHEA is irrelevant
FDA regulations and guidance are irrelevant
Structure-function category is irrelevant
Refused to concede that FTC Guidance and consent decree were identical
Single expert can decide standard for industry

37. Evidence At Trial

38. Government Expert Testimony Conflicted With FTC Guidance
Government Experts
FTC Guidance
Specific eight-part protocol
“[N]o set protocol”
“Highest quality” and “Level 1” RCT
“[S]ufficiently flexible to ensure access to information about emerging areas of science.”
No animal or in vitro
“Animal and in vitro will also be examined”
Same 3-strain product
May use “similar formulation”
Same population
May “extrapolate”

39. Government Failed to Inform Expert of Laws & Regulations
Law & Regulation
Not Informed
FTC Guidance
“I actually did not rely on it or look at it when I made my original report.”
Dietary Supplement Law
“[I] had not heard of the statute” at “the time that [I] provided [my] report in September, 2014”
FDA Regulations
“did not review or consider [] FDA regulations in any way to the extent they might have been relevant”
Structure/Function Rules
“I had not been informed by the FTC or DOJ about structure function claims related to this, no.”

40. Government “Expert” Lacked Necessary Expertise
Q: You are not an expert in probiotics, we can agree on that, can’t we?
A: Yes.
Q: You do not hold yourself out as an expert on dietary supplements?
A: That is correct.
Does not regularly use probiotics in clinical practice.

41. Dr. Fennerty Bayer’s Experts Dr. Merenstein
Familiar with and understands scientific literature on probiotics
Familiar with hundreds of probiotic studies before being retained.
Has recommended probiotics to thousands of patients
Has recommended probiotics to thousands of patients for over 20 years
Dr. Merenstein
Leading expert in probiotics. Lead investigator on 8 probiotic trials Member of ISAPP Expert Consensus Panel
Dr. Fennerty
Conducts research on probiotics and gut microbiome

42. Bayer’s Expert Testimony
1. Overwhelming “competent and reliable scientific evidence” for Bayer’s claims
2. Experts do not expect drug-level randomized controlled-clinical trials

43. Court’s Opinion Denied Government’s contempt motion
No violation of court order
Rejected attempt to raise the standard
No damages, penalties, or fines
Reasoning, currently under seal

44. IV. Lessons Learned Put government to its proof: Try more cases
Discovery against government
Rely on strong experts (before and during litigation)
Scientific substantiation
Industry can win

45. UPDATE FROM FTC ON REGULATION OF OTC PRODUCT PROMOTION
FDLI’s Advertising and Promotion Conference
October 2, 2015
Ivan Wasserman
Manatt ,Phelps & Phillips

49. Gregory W. Fortsch: Attorney, Division of Advertising Practices
Richard L. Cleland: Assistant Director, Division of Advertising Practices
Michelle Rusk: Senior Staff Attorney, Division of Advertising Practices

50. * Special Rules?
* Many ways to prove “effectiveness”?
* Disclaimers?
* Traditional Use?
* Experts in the field?

53. UPDATE FROM FTC ON REGULATION OF OTC PRODUCT PROMOTION
FDLI’s Advertising and Promotion Conference
October 2, 2015
Ivan Wasserman
Manatt , Phelps & Phillips

54. Questions? ? ? ?