Norton Rose Fulbright - Consumer Products Blog: DC Circuit Court puts limits on FTC’s advertising substantiation requirementsOn January 30, 2015, a three-judge panel of the US Court of Appeals for the District of Columbia reversed an FTC order that would have required POM Wonderful to substantiate various health-relating advertising claims with two randomized, well-controlled human clinical trials (“RCTs”).  POM Wonderful, LLC v. FTC.

The DC Circuit’s ruling is the latest development in a long-running dispute between the FTC and POM Wonderful concerning POM’s advertising for its pomegranate juice products.

In 2010, the FTC sued POM alleging it had made false and unsubstantiated claims that daily consumption of its products could treat, prevent, or reduce the risk of various ailments, including heart disease, prostate cancer, and erectile dysfunction.

The FTC has long required advertisers wishing to make an “efficacy claim” related to health and safety to possess “competent and reliable scientific evidence” (“CARSE”) to substantiate their claims. The FTC has defined “competent and reliable scientific evidence” to mean:

tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that have 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

After a 12-month trial spanning from 2011 through 2012, the FTC’s chief administrative law judge (“ALJ”) initially concluded that POM lacked sufficient evidence to substantiate its advertising claims and ordered POM to cease and desist from making further claims about the health benefits of its products unless supported by CARSE. However, the ALJ did not require POM to conduct RCTs in order to meet this standard.

On appeal to the full Commission, the FTC not only voted unanimously to affirm the ALJ’s decision, but also broadened the scope of the injunction against POM to bar it from representing that its products treat or prevent any disease unless the claim is supported by at least two RCTs demonstrating statistically significant results.

This order was consistent with a number of other recent FTC orders requiring, e.g., manufacturers of weight loss products and products to reduce the duration of diarrhea in children, to present evidence in the form of two RCTs before making claims relating to the products’ efficacy. These orders have been subject to criticism by some who contend that holding food and supplement companies to “pharmaceutical-grade standards” will stifle research in these industries.

While the DC Circuit affirmed the FTC’s finding that many of POM’s ads contained false or misleading claims, it rejected the portion of the FTC’s order imposing “an across-the-board, two-RCT substantiation requirement for any future disease-related claims by petitioners.”

The court stressed that the FTC had “fail[ed] to demonstrate how such a rigid remedial rule bears the requisite ‘reasonable fit’ with the interest in preventing deceptive speech.” Significantly, the court acknowledged another of the chief arguments advanced by critics of the FTC’s “two RCTs” rule, namely that the rule would deprive consumers of potentially useful information:

Requiring additional RCTs without adequate justification exacts considerable costs, and not just in terms of the substantial resources often necessary to design and conduct a properly randomized and controlled human clinical trial.

If there is a categorical bar against claims about the disease-related benefits of a food product or dietary supplement in the absence of two RCTs, consumers may be denied useful, truthful information about products with a demonstrated capacity to treat or prevent serious disease.

Even though the Court reversed the Commission’s order requiring two RCTs, it found the order valid to the extent it required substantiation by one RTC, in part because POM’s past deceptive conduct warranted such a remedy. It also suggested that under certain circumstances, the FTC might be justified in imposing a two-RCT-substantiation requirement.

At a minimum, the ruling suggests that the FTC’s ability to impose increasingly strict substantiation requirements on advertisers may be vulnerable to challenge. Moreover, because at least two FTC commissioners (J. Wright and M. Ohlhausen) have expressed concern about “adopting a one-size-fits-all approach to substantiation,” the FTC’s inclination to impose such standards in future cases bears watching.