Caveat Vendor

FTC Finds POM Not So Wonderful

February 01, 2013

M. Lily Woodland

In a much anticipated decision, the Federal Trade Commission issued a final order earlier this month in the long-running case against POM Wonderful LLC, Roll Global LLC, Stewart Resnick, Lynda Rae Resnick and Matthew Tupper (collectively, “POM”) regarding advertising for its pomegranate juice products, including POM Wonderful Juice, POMx Pills and POMx Liquid (the “POM Products”).

What caught the FTC’s attention were claims for the POM Products that the FTC alleged represented that the POM Products treat, prevent or reduce the risk of heart disease, prostate cancer and erectile dysfunction (“ED”) – all claims that the FTC said were unsubstantiated. The FTC’s complaint further alleged that POM represented that such benefits were clinically demonstrated when, in fact, they were not.

The Administrative Law Judge (“ALJ”) found some of the challenged ads to be unsupported but also declined to adopt FTC’s suggested substantiation standards. Neither side walked away happy with the decision, and both sides appealed to the full Commission. The key issues on appeal – and the two points followed closely by industry and attorneys alike – were how the FTC would address the proper substantiation standard for the types of claims at issue in the case and whether it would affirm the ALJ’s direction that POM obtain prior approval by FDA for any future disease claims made POM.

The Commission’s Order largely upheld the ALJ’s conclusion, finding an even larger number of POM’s ads (36 of 43, rather than just 19) were unsubstantiated.

The Order also provides ample food for thought for those beyond POM, which hold lessons for other advertisers developing health-related claims.

• First, the Commission noted that an “establishment” claim – a claim that something is “proven” – can be inferred even in the absence of words such as “proven”, based on a number of factors, including use of medical imagery and statements related to the overall amount of money spent on “medical” research (ranging from $20 to $50 million). The Commission also agreed with the ALJ’s determination that use of adjectives like “preliminary,” “promising,” “encouraging” or “hopeful,” did not alter the net impression that clinical studies supported the claims, particularly when the chosen adjectives put a positive spin on the results rather than provide a substantive disclosure. The Commission further noted that the specificity of a representation (e.g., 30% plaque reduction) can contribute to the overall impression that the claim is supported by clinical evidence. (Interestingly, Commissioner Ohlhausen disagreed with some of these assessments, noting in her concurring statement that she would require extrinsic evidence before reaching such a conclusion in situations where the description of a study was qualified with terms like “small study” or “initial scientific research.”)

• The Commission also agreed with the ALJ’s conclusion that use of terms like “may” or “can” in the context of claims related to health benefits or disease prevention does not modify or limit the message being conveyed. Rather, the opposite may be true, in that the use of the qualifying language may build trust with the reader, making her more inclined to believe in the validity of the findings being described.

• The Commission concluded that claims that POM’s products treat, prevent or reduce the risk of disease require well-designed, well-conducted, double-blind, randomized controlled clinical trials.

• Other than affirming its “competent and reliable scientific evidence” standard, the Commission declined to address the level of substantiation needed for other unspecified health claims involving food products, because, in its view, POM was not making those types of claims.

• At the same time, the Commission declined to require prior FDA approval for POM’s claims.

• Finally, the Commission dismissed POM’s claims that these requirements violate its rights under the First and Fifth Amendments. The Commission noted that there is no First Amendment protection afforded to false or misleading speech and rejected the notion that requiring clinical trials is a departure from previously articulated substantiation standards.

Much has been said (and written) in the past two years about the level of substantiation required by FTC for various types of claims. Indeed, some commentators have questioned whether FTC has employed a new or different standard in recent consent orders in which it has prohibited certain claims without FDA approval or two adequate and well-controlled human clinical trials. (Indeed, POM sued FTC in the U.S. District Court for the District of Columbia, alleging – as it did here – that the standard articulated in those consent orders (and applied to POM) was an unlawful departure from past practice and unconstitutional. That case was dismissed in light of the pending administrative action.)

The Commission’s decision not to opine on the appropriate standard for general health benefit claims was a disappointment to many who were hoping for greater clarity in this area. Nevertheless, the Commission’s evident determination to construe these sorts of claims broadly and to hold them to rigorous scrutiny should serve as warning to other advertisers. If there was any doubt, there can be no longer: this is not your father’s FTC. The Obama Administration’s FTC, now entering its fifth year, is as active a Commission as many can remember.

POM has 60 days to appeal the Commission’s decision. We expect that there will be an appeal and will keep blog readers posted on further developments.