Antitrust Law Daily Wrap Up, TOP STORY—D.C. Cir.: POM Wonderful must support disease-related claims with one clinical trial, (Feb 2, 2015)

By Jeffrey May, J.D.

The FTC properly concluded that a series of ads touting the benefits of POM Wonderful, LLC's pomegranate-based products were deceptive, the U.S. Court of Appeals in Washington, D.C. has ruled. However, the appellate court modified the Commission's injunction requiring marketers of these products to substantiate claims that POM products treat, prevent, or reduce disease with two randomized, controlled, human clinical trials (RCTs) (POM Wonderful, LLC v. FTC, January 30, 2015, Srinivasan, S.).

At the outset, the court concluded that it saw no basis for setting aside the Commission’s conclusion that many of POM’s ads made misleading or false claims about POM products such as POM Wonderful 100% Pomegranate Juice and POMx supplements. In January 2013, the Commission issued an opinion affirming an administrative law judge's finding of liability under the FTC Act. While the ALJ found that 19 of POM’s advertisements and promotional materials contained implied claims that POM products treat, prevent, or reduce the risk of heart disease, prostate cancer, or erectile dysfunction and that those claims were unsubstantiated, the majority of the commissioners found that 36 of POM’s ads and promotional items made false or misleading claims.

Because POM did not dispute the materiality of its disease-related claims, the court focused on the Commission’s determination that the ads conveyed efficacy and establishment claims and that those claims were false, misleading, or unsubstantiated. The Commission had determined that 36 ads conveyed efficacy claims asserting that POM products treat, prevent, or reduce the risk of heart disease, prostate cancer, or erectile dysfunction and that 34 of those ads also conveyed establishment claims representing that clinical studies substantiate the efficacy of POM products in treating, preventing, or reducing the risk of the same ailments.

An efficacy claim suggests that a product successfully performs the advertised function or yields the advertised benefit, but includes no suggestion of scientific proof of the product’s effectiveness, the court explained. An establishment claim, by contrast, suggests that a product’s effectiveness or superiority has been scientifically established.

The distinction between efficacy claims and establishment claims was relevant to the Commission’s inquiry into the falsity, deceptive nature, or substantiation of an advertiser’s claim. If an ad conveys an efficacy claim, the advertiser must possess a “reasonable basis” for the claim. For an establishment claim, the FTC considers whether the advertiser possesses the specific substantiation claimed or what evidence would in fact establish such a claim in the relevant scientific community.

According to the court, the Commission properly found POM’s’ efficacy and establishment claims to be deceptive due to inadequate substantiation. The Commission had examined the studies put forth by POM to substantiate the ads and concluded that the studies failed to qualify as RCTs of the kind that could afford adequate substantiation. The court acknowledged that RCTs might be costly, but it noted that an advertiser can always assert a health-related claim backed by medical evidence falling short of an RCT if it includes an effective disclaimer disclosing the limitations of the supporting research.

Administrative Procedure Act violation. The court rejected POM's argument that the substantiation standard applied by the Commission to POM’s establishment and efficacy claims amounted to a new legal rule adopted in violation of the Administrative Procedure Act’s notice-and-comment requirements for rulemaking. The Commission did not amend a regulation. Instead, it "validly proceeded by adjudication," according to the court.

Remedy. The court took issue with the Commission's remedial order, which imposed an across-the-board, two-RCT substantiation requirement for any future disease-related claims by POM and the other respondents. There was inadequate justification for the Commission’s blanket requirement of at least two such studies, in the court's view. Thus, the Commission's order was to be modified to require petitioners to possess at least one RCT before making disease-related claims.

FTC reaction. In a statement released on January 30, FTC Chairwoman Edith Ramirez called the decision a victory for consumers. “It is in keeping with established law that advertisers who market products for serious health conditions must have rigorous science to back up those claims,” said Ramirez. “The court specifically recognized that this applies to food and dietary supplement marketers such as POM. It also held that requiring a randomized, well-controlled human clinical study for future disease benefit claims is an appropriate remedy based on POM’s conduct,” she added.

The case is No. 13-1060.

Attorneys: Thomas C. Goldstein (Goldstein & Russell, P.C.) for POM Wonderful, LLC. Jonathan E. Nuechterlein for FTC.

Companies: POM Wonderful, LLC; Roll Global LLC.

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