D.C. Circuit’s POM Wonderful Decision Calls Into Question The FTC’s Imposition Of A Two-Study Requirement
On Jan. 30, 2015, the U.S. Court of Appeals for the D.C. Circuit affirmed the FTC’s ruling that POM Wonderful made false and misleading advertising claims that its pomegranate juice products were effective in fighting various diseases. POM Wonderful v. FTC, No. 13-1060 (D.C. Cir. Jan. 30, 2015). Of particular note to advertisers is the portion of the FTC’s decision that the court did not uphold—the requirement that POM Wonderful support any future claims of disease-related benefits with two clinical trials.
The FTC filed an administrative complaint against POM in 2010, charging POM with violating the FTC ACT by running ads containing lines such as “Amaze your cardiologist,” “Drink to prostate health,” and “Cheat Death.” POM cited to numerous studies it had sponsored regarding the effects of pomegranate juice on various health conditions. Some of the studies found health benefits for pomegranate juice, while others did not; furthermore, one study that POM relied on lacked a control group, while another produced results that were not statistically significant. An administrative law judge found that POM’s substantiation did not adequately support its claims, and ordered POM to cease making misleading and inadequately-supported health claims for its products. POM Wonderful LLC, No. 9344, Initial Decision of ALJ (U.S. Fed. Trade Comm’n May 17, 2012). On appeal, the full Commission affirmed, and broadened the ALJ’s order, requiring POM to support any future disease-related claims with “competent and reliable scientific evidence,” which it defined as “at least two randomized and controlled human clinical trials.” POM Wonderful LLC, No. 9344, Final Order at 2 (U.S. Fed. Trade Comm'n Jan. 10, 2013) (emphasis added).
This was not the first time that the FTC had issued an order containing a two-study requirement; two dietary supplement cases in 2010 (one ending in a consent order, the other in a stipulated final judgment and order) surprised the industry (and other advertisers) by imposing a two-study requirement. Stipulated Final J. and Order for Permanent Inj. and Other Equitable Relief, FTC v. Iovate Health Scis. USA, Inc., No. 10-cv-587 (W.D.N.Y. July 29, 2010); Agreement Containing Consent Order, In the Matter of Nestlé HealthCare Nutrition, Inc., No. 092-3087 (F.T.C. July 14, 2010). Indeed, POM was among those objecting to the two-study rule. Just two weeks before the FTC filed administrative complaint against POM, POM brought a declaratory judgment action in 2010 in the District Court for the District of District Columbia, claiming that the FTC’s “new rule” requiring two randomly-controlled human clinical trials (“RCTs”) for disease claims for food and beverage products exceeded the FTC’s authority. The district court declined to exercise jurisdiction over the case, and the FTC’s complaint against POM went forward.
After the full Commission’s decision in 2013, POM petitioned the D.C. Circuit for review, arguing that the FTC’s decision violated the First Amendment, the FTC Act, and the Administrative Procedure Act. The appellate court agreed with the FTC that the ads made specific efficacy claims that the POM Wonderful products treated, prevented, or reduced the risk of various health conditions, and that these claims were not substantiated. The court disagreed with POM’s contention that the FTC had adopted a new rule without following notice-and-comment requirements, finding that the FTC was entitled to make decisions by adjudication rather than rulemaking. The court also rejected POM’s First Amendment defense because there is no First Amendment protection for deceptive or misleading speech.
The court modified only one aspect of the decision: the requirement that POM substantiate any future disease-related claims with two RCTs. The court held that the FTC had failed to justify “a categorical floor of two RCTs for any and all disease claims.” The two-study rule was too rigid, and did not bear a “reasonable fit” with the goal of preventing false disease-related benefit claims, as required under the Central Hudson test for commercial speech restrictions under the First Amendment:
Requiring additional RCTs without adequate justification exacts considerable costs, and not just in terms of the substantial resources often necessary to design and conduct a properly randomized and controlled human clinical trial. If there is a categorical bar against claims about the disease-related benefits of a food product or dietary supplement in the absence of two RCTs, 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.
POM Wonderful v. FTC, No. 13-1060 (D.C. Cir. Jan. 30, 2015). The court held that the FTC could require at least one RCT, and emphasized that it was not barring the FTC from imposing a two-study requirement in all circumstances, but merely holding that the FTC had failed to justify that requirement in this instance.
FTC Chairwoman Edith Ramirez issued a statement calling the decision “a victory for consumers” and emphasizing that it was in keeping with established law regarding substantiation of claims to treat health conditions. Chairwoman Ramirez did not comment on the court’s holding as to the two study requirement, which the FTC has included in consent orders since Iovate and Nestlé, including its settlement with Skechers in 2012 over toning shoes, and its settlement with four weight-loss product manufacturers in “Operation Failed Resolution” in 2014. The D.C. Circuit’s decision may cause the FTC to be more cautious in applying a two-study requirement in future orders. However, advertisers should not assume that we have heard the last of the two-study requirement, or that one RCT will always be sufficient substantiation.