The POM/FTC Court of Appeals Decision: What Did POM Win?

On Jan. 30, 2015, the U.S. Court of Appeals for the District of Columbia Circuit announced its ruling on the appeal of POM Wonderful from an order of the Federal Trade Commission (FTC). Almost immediately, a statement was issued by FTC Chairwoman Edith Ramirez calling the decision a "victory" for consumers.

The appeal concerned an administrative decision by FTC issued in May 2012 that found various advertisements and promotional materials distributed by POM—which displayed claims related to the consumption of the company's products for a reduced risk or treatment of heart disease, prostate cancer and erectile dysfunction—were false or misleading because the company did not possess or rely upon a reasonable basis for substantiating the claims.   

The decision indicated by 2010, POM had spent more than USD $35 million on pomegranate related medical research, so certainly there was some science. Unfortunately, merely spending the money was not enough. 

According to the decision, POM sponsored a relatively small human clinical heart study in 2004, which it featured in advertising, without mentioning two larger studies it conducted in 2005 and 2006 that had contrary findings.

POM's human clinical study on prostate cancer patients was conducted on post treatment patients and included no control group. Thus, while the patients showed positive results, there was no way to determine whether such results were the result of the pomegranate or the expected results from the patients treatments—"POM, however, made no mention of the limitations of the … study in its public statements," according to court documents .    

Finally, the erectile dysfunction study based its results on a "global assessment questionnaire," which is a one-question test that was not a validated measure, while another questionnaire, the International Index of Erectile Function—a validated tool with statistical reliability—yielded negative results that POM did not mention.

For these reasons, among others that are fully explained in the decision, FTC found the advertisements made false or misleading claims, and this finding was affirmed on appeal.

What is interesting to industry in the decision is the discussion of POM's First Amendment challenges to the Commission's injunctive order. Generally, an FTC decree will include what are referred to as "fencing in" provisions. These are provisions that act as an injunction and control how the party can conduct business for the life of the decree, which is usually 20 years.

Recently, there has been much industry discussion of FTC decrees requiring randomized and controlled human clinical trials (RCTs) in order to substantiate future claims made by the party entering into the decree. RCTs are considered a "higher" standard of substantiation than what is normally required under the FTC Act.

As a general principle, the FTC Act requires objective health benefit claims be substantiated with competent and reliable scientific evidence. Evidence consists of tests, analyses, research or studies conducted and evaluated in an objective manner by qualified persons, and that are generally accepted in the profession to yield accurate and reliable results. These results must also be sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true. Under this standard, an RCT could qualify as substantiation, but it is not necessarily required.

Of course, if an advertiser makes an "establishment" claim, such as "Clinically proven to …," then the advertiser must possess that level of stated scientific evidence.

Parties to consent decrees, which are entered into voluntarily with FTC to resolve an investigation or lawsuit, may decide to agree to a higher level of substantiation for various reasons specific to resolving the FTC matter (perhaps, a lower financial penalty). Certainly, FTC prefers decrees with higher levels of specific substantiation requirements because they are easier to enforce over the more general standard required by the act. But, it is still a voluntary decision and does not change the level of substantiation generally required under the FTC act.

In the POM case, which was not a consent decree, but rather ordered by FTC, there were two "fencing in" provisions. The first, as stated in the court's decision, prohibits POM as a "baseline requirement … applicable to all of petitioners’ ads" from making representations about a product’s general health benefits “unless the representation is non-misleading" and backed by “competent and reliable scientific evidence that is sufficient in quality and quantity" to “substantiate that the representation is true" (decision page 35). This is the basic general standard of substantiation required under the FTC Act.

The second "fencing in" provision imposes heightened requirements in the specific context of claims about the treatment or prevention of any disease (including, but not limited to, heart disease, prostate cancer and erectile dysfunction). Not only must such claims by POM meet the standard set forth above, they must also be substantiated by “at least two randomized and controlled human clinical trials (RCTs)" that “yield statistically significant results" and are “double-blinded" whenever feasible.

On a side note, anyone familiar with FDA requirements for foods and dietary supplements should be asking how POM can make such disease-related claims for pomegranate foods and dietary supplements, unless such claims have been approved by FDA. But that is a side issue, as FTC does not enforce the structure/function vs. disease provisions under the Food and Drug Act.

The court found, using what is referred to as the Central Hudson factors [447 U.S. 557 (1980)], which is the leading Supreme Court decision on commercial free speech, that "requiring RCT substantiation as a forward-looking remedy is perfectly commensurate with the Commission’s assessment of liability for petitioners’ past conduct: if past claims were deceptive in the absence of RCT substantiation, requiring RCTs for future claims is tightly tethered to the goal of preventing deception … the injunctive order’s requirement of some RCT substantiation for disease claims directly advances, and is not more extensive than necessary to serve, the interest in preventing misleading commercial speech."

The court took issue, however, with the requirement that POM have two RCTs for every disease claim.  While the Court noted that two RCTs were better than one, and that three would provide even more certainty, there were other factors to consider, and one RCT was sufficient in this case.

Additional RCTs without adequate justification are costly. Moreover, the court basically stated consumer interests would not be benefited by having to wait to perform a second RCT; "consumers may be denied useful, truthful information about products with a demonstrated capacity to treat or prevent serious disease. That would subvert rather than promote the objectives of the commercial speech doctrine."  What about the situation where experts agree that a single large well-designed and conducted RCT demonstrates results with a high degree of statistical certainty, "conclusively establishing clinical proof" of a product's efficacy? The FTC order did not allow for such an occurrence. Interestingly, the court cites FTC against itself:

The two-RCT requirement in the Commission’s order brooks no exception for those circumstances. No matter how robust the results of a completed RCT, and no matter how compelling a battery of supporting research, the order would always bar any disease-related claims unless petitioners clear the magic line of two RCTs. The Commission has elsewhere explained to industry advertisers that, “[i]n most situations, the quality of studies will be more important than quantity," (U.S. Fed. Trade Comm’n, Dietary Supplements: An Advertising Guide for Industry 10 (Apr. 2001).The blanket, two-RCT substantiation requirement at issue here is out of step with that understanding. Discussing FTC's own decision on appeal, the court further stated:

In the liability portion of its opinion, the Commission went to great lengths to explain why RCTs, rather than less demanding studies, are required to substantiate the sorts of causal claims petitioners asserted in the past. But the Commission stressed that it “need not, and does not, reach the question of the number of RCTs needed to substantiate the claims made," (FTC Op. at 3). The Commission, nonetheless, imposed a categorical, two-RCT substantiation requirement in the remedial portion of its opinion.

FTC's justification for requiring POM to have two RCTs was that FTC has required two RCTs in other cases involving disease claims. But, as the court noted, those cases from 30 years ago "involved a highly specific type of representation: establishment claims about the comparative efficacy of over-the-counter analgesics … And the decision came after extended analysis of considerations specific to that context" (decision page 41). Specifically, that the testing involved the subjective nature of pain sensitivity and comparisons of alternative treatments and that FDA panels on analgesics generally require replication of the results for analgesic trials. Thus, the court concluded, FTC only imposed a two-RCT requirement in narrow circumstances, and recent FTC action does not demonstrate otherwise.

Interestingly, when asked at oral argument to identify recent two-RCT remedial orders, FTC "produced a handful of examples … most of the examples are consent orders—entered without litigation or explanation of the Commission’s reasoning—providing little insight into why two RCTs would be required to prevent a claim from being misleading," (including consent decrees against L’Occitane Inc., Dannon Co. Inc., and Nestle Healthcare Nutrition Inc.). Two other examples only impose a two-RCT requirement for a limited subset of claims.

The court further noted, other than those examples:

Several orders over the past decade require only “competent and reliable scientific evidence"—not necessarily RCTs, let alone two RCTs—to substantiate disease claims akin to those made by petitioners [citing decrees against Tropicana Prods. Inc., Unither Pharma Inc.]. And in other recent orders, the Commission has imposed a one-RCT remedy [citing FTC v. Reebok Int’l Ltd.]. Indeed, in Removatron the Commission itself modified an ALJ’s initial order to require one RCT rather than two. 111 F.T.C. at 206. In short, the Commission’s precedents suggest that two-RCT remedial provisions are only selectively imposed in specific circumstances based on particular concerns.

FTC also argued about the need for consistent results in independently replicated studies and that one expert had testified the results of a single RCT “may be due to chance or may not be generalizable due to the uniqueness of the study sample." The Court addressed this argument by noting that the basic underlying substantiation requirement of “competent and reliable scientific evidence" requires that any RCT relied upon be “generally accepted in the profession to yield accurate and reliable results."

The court also noted that FTC's own experts testified two RCTs were not always required: “experts testified that two RCTs are necessary to substantiate the heart disease claims at issue, while the prostate cancer and ED claims can be substantiated with at least one RCT." The Commission nonetheless imposed a categorical, two-RCT requirement for all disease claims, regardless of the quality of any single RCT or the strength of other medical evidence."

The final justification put forward by FTC for the two RCT requirement was that the POM defendants “have a demonstrated propensity to misrepresent to their advantage the strength and outcomes of scientific research" and “have engaged in a deliberate and consistent course of conduct" (decision page 44, quoting from FTC decision page 51). But the court noted the obvious, "by definition, every party subjected to a final FTC order has been found to have engaged in some unlawful advertising practice. The Commission does not explain how the two-RCT requirement is reasonably linked to the particular history of petitioners’ wrongdoing" (decision page 44).

It is hopeful that this decision will help to convince FTC that requiring two RCTs for substantiation of objective health-related claims should only be imposed necessary as required by the specific circumstances of the matter. Perhaps, we are seeing this already. In the HCG Platinum Final Order issued on Dec. 11, 2014, (advertising and marketing claims for weight-loss products containing human chorionic gonadotropin), FTC imposed a two-RCT requirement (according to a case on FTC’s website)

However, in a concurring statement found on FTC’s website, Commissioner Ohlhausen stated:

Consistent with my votes in GeneLink and foru International and other cases, my support for this settlement does not indicate my support for two RCTs as a general standard or other Food and Drug Administration pre-approval requirements to substantiate health- and disease-related claims for food or other relatively-safe products. As I have noted previously, “If we demand too high a level of substantiation in pursuit of certainty, we risk losing the benefits to consumers of having access to information about emerging areas of science and the corresponding pressure on firms to compete on the health features of their products."

In his statement, found on FTC’s website, Commissioner Wright stated:

I write today to reiterate my view that consent orders in these and other cases involving deceptive advertising should not define the “competent and reliable scientific evidence" required to substantiate claims covered under the terms of the settlement agreement by reference to a fixed number of randomized, clinical trials (RCTs). Put simply, a rigid, static, numerical count of RCTs is a poor and unreliable proxy for an accurate measurement of the overall quality and quantity of evidence available to potentially substantiate claims … A rigid standard establishing a fixed number of RCTs in each case cannot account for the significant variance in quality across RCTs, and thus it runs the risk of over deterring truthful claims that do not meet this standard.

The bottom line—make certain that your advertising is truthful, non-misleading, and supported by competent and reliable science as required under the FTC Act. 

Steven Shapiro is a partner in New York-based Ullman, Shapiro & Ullman. His practice focuses on the dietary supplement/natural products industry with a particular emphasis on FDA and FTC compliance issues including labels, labeling and advertising claims.