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May 03, 2023 - Announcements, Healthcare, Litigation, Regulatory, United States, FDA

FTC Issues Notice of Penalty Offenses on Substantiation of Product Claims

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On April 13, 2023, the Federal Trade Commission (FTC) sent approximately 670 notices of penalty offenses to various companies involved in the marketing of OTC drugs, homeopathic products, dietary supplements, and functional foods, placing them on notice that they could incur significant civil penalties if they fail to adequately substantiate product claims. The cover letters suggest that the recipients consult FTC staff’s recently issued Health Products Compliance Guidance. The letter to the recipient companies also provides a copy of a previously approved notice of penalty offenses regarding the use of endorsement and testimonials. Notices of penalty offenses allow the agency to seek civil penalties up to $50,120 per violation against companies that engage in conduct they know has been found unlawful in a previous FTC administrative order. The FTC warned that it will not hesitate to use its authority to target violators with large civil penalties. Companies receiving this warning from the FTC include companies that sell cosmetics, personal care products, food, drugs, devices, and dietary supplements.

The FTC requires that companies substantiate product claims with reliable evidence. The Notice of Penalty Offenses Concerning Substantiation of Product Claims stated that the following acts or practices in the advertising and promotion of products are deceptive or unfair and unlawful under Section 5(a)(1) of the Federal Trade Commission Act:

  • Making an objective product claim without having a reasonable basis at the time the claim is made consisting of competent and reliable evidence;
  • Making a claim regarding the health benefits or safety of a product without having as substantiation competent and reliable scientific evidence that has been conducted and evaluated in an objective manner by qualified persons, and that is generally accepted in the profession;
  • Representing expressly or implicitly that a product is effective in the cure, mitigation, or treatment of any serious disease (e.g., heart disease, cancer, arthritis, erectile dysfunction) without having and relying on at least one human clinical trial that (1) is randomized, (2) is well controlled, (3) is double-blinded (unless demonstrated that blinding cannot be effectively implemented given the nature of the intervention), (4) is conducted by persons qualified by training and experience to conduct such studies, (5) measures disease end points or validated surrogate markers, and (6) yields statistically significant result;
  • Misrepresenting the level of type of substantiation for a claim; and
  • Representing that a product claim has been scientifically or clinically proven unless, at the time of representation, the advertiser possesses and relies upon evidence sufficient to satisfy the relevant scientific community of the claim’s truth.

The initial distribution of the notice is limited to those companies making health claims or those likely to make health claims considering their product types. However, the FTC stressed that the notice is not limited to health claims and will apply to any entity making claims about the efficacy or performance of its products. While it does not suggest a company has engaged in deceptive or unfair conduct, inclusion on the list demonstrates at the very least that the FTC is aware of the company and the company’s products.

Morrison Foerster’s regulatory and class action litigation teams work seamlessly to advise clients on compliance and product claims. Please contact the authors if you have questions.