Capitol Comments: New Substantiation Standards from FTC?

By Todd Harrison | September 1, 2010

The recent Nestle and Iovate settlements could change what it takes to support product claims.

The FTC in its position of overseeing advertising claims shocked the natural products industry on July 14, 2010 when it announced settlements with Nestlé Healthcare Nutrition, Inc. (“Nestle”) and Iovate Health Sciences USA, Inc. (“Iovate”). Surprisingly, the settlements stated that certain claims regarding their dietary supplement products must be supported by at least two well-designed clinical studies. More specifically, they described the competent and reliable scientific evidence standard as:
“At least two adequate and well-controlled human clinical studies of the product, or of an essentially equivalent product, conducted by different researchers, independently of each other, that conform to acceptable designs and protocols and whose results, when considered in light of the entire body of relevant and reliable scientific evidence, are sufficient to substantiate that the representation is true.”
These two settlements have been met with suspicion by industry out of concern that FTC is attempting to change the standard for substantiating claims to one that is more rigorous.
To offer a historical perspective, FTC generally has not required “at least” two clinical studies as substantiation for health-related claims. Instead, it has imposed a more flexible standard, allowing for a broader range of scientific literature as adequate substantiation (i.e., tests, analyses, research, studies or other evidence). Further, it never set a minimum quantity of supporting materials (aside from the obvious requirement that a marketer have at least one supporting piece).
Consent Decrees
Although the consent orders require certain claims be supported by at least two clinical studies, these orders were also very narrowly tailored. Specifically, the two-well controlled clinical trials requirement is limited in scope—they do not apply to all efficacy and performance claims; rather, the general FTC standard of competent and reliable scientific evidence applies to a broader range of efficacy and performance claims made by the companies.
Nestle entered into a consent decree with FTC settling the agency’s allegations that the food and nutrition company made deceptive claims about the health benefits of its Boost Kid Essentials children’s beverage. Nestle allegedly made claims that the product: prevents upper respiratory tract infections; reduces the duration of acute diarrhea; protects against colds and flu by strengthening the immune system; and reduces absences from daycare and school due to illness.
While the Nestle order requires at least two studies as substantiation for claims regarding reduction of the duration of acute diarrhea and reduction of daycare or school absences due to illnesses, it imposes the traditional “competent and reliable scientific evidence” standard, not the “two-study minimum” standard, with respect to all other claims about the health benefits, performance or efficacy of a nutritional drink—except for claims that a product can reduce the risk of upper respiratory infections.
Similarly, whereas the Iovate consent order requires at least two studies to support weight loss claims, it imposes the normal “competent and reliable scientific evidence” standard for all other health-related claims, except illness treatment and prevention claims.
In view of the disparate substantiation standards imposed by the orders, the heightened “two-study minimum” standard for certain claims simply indicates that FTC was particularly concerned about those claims and decided it wanted to hold these two companies’ feet to the fire, as those claims were the principal focus of the FTC’s complaints against the marketers. The catch-all provision in the orders imposing the usual FTC substantiation standard for other health-related claims signifies that FTC has not yet modified its substantiation policy concerning dietary supplement claims and other health-related representations. Indeed, both companies have a full line of health-related products that are not affected by the higher standard. 
Moreover, other provisions in the orders further indicate FTC is not shifting its substantiation policy and, instead, is simply imposing heightened standards for certain claims as a policing measure. Specifically, both consent orders require the marketers to comply with FDA labeling and/or drug clearance requirements. The Nestle order prohibits the marketer from claiming that a nutritional drink prevents or reduces the risk of upper respiratory tract infections unless the representation is permitted under FDA regulations. With regard to the Iovate order, the company is prohibited from making claims that a product can prevent or treat colds, flu or other illnesses unless the claim is non-misleading and the product is an FDA-approved drug.
The FTC press releases announcing the orders both note that FDA approval of health claims is generally not required to comply with the FTC Act, but that requiring FDA approval before the marketers make certain disease treatment and/or prevention claims will provide the marketers with clear guidance as to compliance with the FTC Act, and renders the orders easier to enforce.
This reflects the FTC’s objective of policing certain marketing practices that were of particular concern to the FTC by subjecting the marketers to unusually high standards with respect to such practices. Just as FDA pre-approval is not required for compliance with the FTC Act, having at least two supporting studies is not required to substantiate a health claim. The requirements in the Nestle and Iovate consent orders are simply preventative and enforcement measures designed to discourage repeat offenses.
FTC May Be In Violation of the First Amendment
While there is little doubt FTC would prefer a substantiation standard requiring at least two-well controlled clinical studies on the product or a substantially similar product, the agency’s ability to impose such a requirement is vulnerable to challenge on the grounds that it infringes upon First Amendment free speech rights. Indeed, whether FTC could actually get such injunctive relief from a court based on the heightened substantiation standard remains questionable, as the Supreme Court’s commercial speech jurisprudence has established that the First Amendment favors disclosure over outright suppression, especially where disclosure can correct potentially misleading representations.
In other words, if FTC raises the typical substantiation standard for health claims to require at least two supporting studies, imposing the strengthened standard would likely violate the First Amendment. Outright prohibition of health claims that are not supported by at least two scientific studies would be analogous to FDA’s attempted prohibition of an advertiser’s health claims in the seminal case Pearson v. Shalala, in which the District of Columbia Court of Appeals held that FDA’s ban violated the First Amendment.
In that case, the advertiser sought FDA approval of four specific health claims regarding a dietary supplement’s ability to reduce the risk of a particular disease. After reviewing the scientific literature submitted to the agency in support of the claims, FDA determined the literature was inconclusive and did not give rise to “significant scientific agreement,” which is the substantiation standard for health claims under FDA regulations.
In response, the advertiser argued that the ban was unreasonable because any potentially misleading message could be cured by a disclaimer regarding the inconclusiveness of the available scientific evidence. The court agreed, observing that the First Amendment favors curative disclosures over outright suppression, and that banning the claims at issue was not a reasonable means of advancing the government’s consumer protection objectives. 
An FTC policy of barring all health-related claims unless they are supported by at least two studies may not withstand a First Amendment challenge on the basis that such a requirement is not a reasonable means of protecting consumers, given that scientific literature other than studies can provide adequate support for health claims; the minimum threshold of two studies is an unduly stringent standard; and, in general, less restrictive means of achieving the FTC’s consumer protection goals exist.
For the Future
There is a practical aspect to the Nestle and Iovate settlements that cannot be ignored. If a marketer has been making aggressive marketing claims, there is little doubt FTC will attempt to require this heightened standard to be part of any consent decree it negotiates with the marketer. Thus, the marketer will have to make a business decision to either agree to narrowly tailored language or to litigate.
In deciding whether to litigate, the marketer will need to consider the breadth of third-party scientific literature it has to support its advertising claims, the cost of litigation and the potential cost if it loses. The latter could be particularly damaging because the court could order full consumer redress instead of paying a substantially smaller sum if the marketer had agreed to a consent decree with FTC. In this case, the agency fully understands it’s a business decision and is betting the marketer will settle. Accordingly, expect more FTC consent decrees in the future like those involving Nestle and Iovate.

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