Last month, the U.S. Federal Trade Commission (FTC) issued a final ruling in a case involving POM Wonderful LLC, determining that certain ads for its juice products made misleading claims about the drink’s health benefits. This case has implications beyond the immediate effects on the company involved. The decision will affect a wide swath of the food and beverage industries by further tightening the criteria that will be required to sustain claims that a given product treats a disease. The FTC said that the claims in the instant case must be backed by two randomized, controlled clinical trials. These are essentially the same criteria employed by Food and Drug Administration (FDA) in assessing new drugs.
The FTC has taken the position that its standards for substantiation for health claims regarding foods and beverages are nowhere near as rigorous as those employed by pharmaceuticals. The FTC noted that the requirement for clinical trials is only applicable if a manufacturer makes disease claims, and would not be applicable to structure-function claims.
While literally true, the reality is that proprietary and non-proprietary research findings are leading more and companies toward disease claims. In response, the FTC has become more vigorous in pursuing such claims, taking the position that an advertiser must meet an effective standard of proof that is analogous to that used in the process for the approval of new drugs. The FTC has drawn a line in the sand that will impose serious limitations and expensive, time-consuming and difficult constraints on the ability of food manufacturers to communicate to consumers positive research developments about their products.
This campaign began in 2009, soon after the Obama Administration took office. At that time, the FDA warned General Mills, the manufacturer of Cheerios breakfast cereal that it could not make the claim that the cereal helps lowers cholesterol. General Mills responded by changing the labels on its product boxes. A year later, in September 2010, the FTC sued POM over the advertisements in question. During the intervening period, the FTC acted to halt advertising campaigns by athletic shoe manufacturers claiming weight loss.
The general consensus among many in industry is that David Vladeck, Head of the Office of Consumer Affairs at FTC, is focusing intently on claims made by manufacturers of foods, beverages, and dietary supplements. It is clear since he took office in 2009 that achieving the standard of proof required by the FTC for a wide variety of advertising has become more difficult and challenging.
Some companies complain that the standards discount solid research and abridge their right to communicate with their consumers. Many are confused by what they believe are conflicting standards employed by the FDA for labeling and the FTC for advertising, with the accompanying concern that the FTC is driving enforcement based on a predisposition to believe that most claims are fundamentally flawed or unsupported. If the present trend continues, it is probable that some manufacturer will ultimately take a challenge to federal court, perhaps on First Amendment grounds.
What are your thoughts on the impact the FTC ruling will have on the rest of the food industry? How do you think this issue will be resolved?
Akin Gump Strauss Hauer & Feld LLP