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Brand Protection & Advertising

Stay ADvised: What's New This Week, June 25

By Marc Roth, Robert J. Driscoll, and Nancy J. Felsten
06.26.19
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California Attorney General Sues OxyContin Maker Purdue Pharma for Unlawful Marketing of Opioids

Yet another lawsuit has been filed in the quest to seek accountability for the opioid crisis sweeping the country. Earlier this month California Attorney General Xavier Becerra filed a complaint alleging that Purdue Pharma, the maker of the popular and lucrative pain medication OxyContin, as well as its former chairman Dr. Richard Sackler, who engaged in deceptive marketing of the opioid drug, violated unfair competition law, and created a public nuisance.

At its core, the complaint alleges that Purdue and Dr. Sackler created a public health crisis by the tactics they used in selling and marketing OxyContin. The suit, filed in California state court, joins more than 40 state lawsuits and over 2,000 local government lawsuits against Purdue relating to its sale of OxyContin and the company’s alleged role in fueling the current opioid epidemic.

In its complaint, California avers that Purdue and Dr. Sackler deceptively marketed OxyContin despite knowing that it was highly addictive, and profited considerably from sales of the drug, even as its widespread use ignited an opioid epidemic estimated to have caused hundreds of thousands of deaths and losses in the billions of dollars. According to the complaint, the opioid epidemic has caused over 30,000 nationwide deaths since 2015. Meanwhile, the number of opioid overdoses have quadrupled since 1999.

According to the complaint, Purdue falsely marketed OxyContin as a safe and effective treatment for chronic pain. For decades, it aggressively promoted the drug by claiming it was not addictive or subject to withdrawal symptoms. Using deceptive marketing campaigns that misrepresented the safety of OxyContin, Purdue’s sales reached $1.8 billion in 2017. Even after the company pled guilty in 2007 to a charge by the US Department of Justice of felony misbranding and agreed to pay hundreds of millions of dollars in damages, it continued to market and sell OxyContin and to misrepresent the drug’s risks. The complaint alleges that the combination of these misrepresentations and the aggressive sales tactics caused an epidemic of addiction to opioids that continues today.

“The opioid crisis is devastating our communities and killing our loved ones. Purdue Pharma and Dr. Sackler started the fire and then poured gasoline on the opioid crisis with practices that were irresponsible, unconscionable and unlawful,” stated Attorney General Becerra. “Purdue’s deliberate and deceptive marketing and sale of these drugs sacrificed the wellbeing of Californians for billions of dollars in profits and fueled an unprecedented national public health crisis. We will continue to hold accountable those who put profits over people.”

The complaint seeks damages and to enjoin defendants from making any false and misleading statements and engaging in unfair competition. It also seeks attorneys’ fees and costs.

This is not the first action Attorney General Becerra has taken in this area, according to the press release announcing the matter. Attorney General Becerra has pursued several courses of action in the fight against the opioid epidemic, including arresting a physician accused of prescribing opioids outside the range of treatment and maintaining a drug monitoring program.

Key Takeaways

As the fallout from the public health crisis of the opioid epidemic continues, litigation against those allegedly responsible for causing and exacerbating the crisis is heating up, as we previously covered here. Much of the litigation targets allegedly misleading marketing tactics by pharmaceutical companies. We will continue to monitor how courts handle the wave of litigation targeting Purdue and Dr. Sackler for its sales and marketing of OxyContin, and whether that will impact the marketing tactics of other pharmaceutical companies selling addictive drugs.

UK Institute Bans Advertisements Showing Harmful Gender Stereotypes

The next time British television viewers turn on the “telly,” they are not likely to see ads featuring mom cleaning the house while dad looks on, or other similar depictions that reinforce stereotypical gender roles that could cause “harm.” That’s due to a new rule that recently became effective under the UK Advertising Code banning ads that portray gender stereotypes. The rule was promulgated by the UK’s Committee of Advertising Practice (CAP), the organization responsible for writing the Advertising Codes.

The new rule, passed in December 2018, provides that “[Advertisements] must not include gender stereotypes that are likely to cause harm, or serious or widespread offence.” Following a six-month adjustment period, the rule has now gone into effect, according to a statement issued by the Advertising Standards Authority (ASA), the UK’s independent regulator of the Advertising Codes. The change applies equally to broadcast and non-broadcast media.

The new rule forbids depictions of harmful gender stereotypes. Examples of the types of scenarios which are problematic are ads depicting a man or woman unable to complete a task due to their gender, an ad showing a woman solely responsible for cleaning the house while a man looks on, ads that imply that a person who does not have the stereotypically ideal physical appearance is unsuccessful because of it, and ads that emphasize stereotypically gendered personality traits.

“Our evidence shows how harmful gender stereotypes in ads can contribute to inequality in society, with costs for all of us. Put simply, we found that some portrayals in ads can, over time, play a part in limiting people’s potential. It’s in the interests of women and men, our economy and society that advertisers steer clear of these outdated portrayals, and we’re pleased with how the industry has already begun to respond,” said Guy Parker, Chief Executive of the Advertising Standards Authority.

The rule does not ban all gendered depictions but rather seeks to “identify specific harms that should be prevented.” For example, the rule does not bar ads showing a woman shopping, ads for gendered products, and ads showing gender stereotypes to challenge their negative effects. In fact, despite some pressure to strengthen the rule by requiring progressive depictions of adults and children, CAP did not take up such proposals as they may infringe on freedom of expression, according to CAP.

This ban on gendered advertising resulted from the ASA’s review and report on gender stereotypes in UK advertising, which found that gender stereotypes in advertising reinforce stereotypes in society which in turn cause “unequal gender outcomes in public and private aspects of people‘s lives; outcomes, which are increasingly acknowledged to be detrimental to individuals, the economy and society in general.” The ASA initiated the report after a series of British ads that depicted highly stereotypical views of women caused a public outcry against what many saw as harmful and outdated stereotypes.

Following a 12-month period the regulator will conduct a review of the law to ensure that it is having the desired effect and update its guidance accordingly.

Key Takeaways

The issue of gender stereotyping in advertising is perhaps as old as modern advertising itself. Some American nonprofit organizations have campaigned against gendered stereotyping in ads for years, but such concerns have not meaningfully impacted regulation thus far. With the new rule, the UK joins several other countries that have enacted legislation limiting or prohibiting gender stereotypes in advertisement. Given legal and regulatory differences between the U.S. and Europe, it is unlikely that such a ban would pass in here, but it will be interesting to see if this new rule will have any impact on the industry’s self-regulation and on the ads that advertising companies produce.

FTC Cracks Down on Companies Falsely Claiming Compliance With International Privacy Agreements

The Federal Trade Commission is cracking down on companies falsely claiming to be participants in certain international privacy agreements. The agency has stepped up its enforcement of the EU-U.S. Privacy Shield, the related Swiss-U.S. Privacy Shield frameworks, and other privacy frameworks, according to a recent FTC press release.

The Privacy Shield program “provides a method for companies to transfer personal data to the United States from the EU in a way that is consistent with EU law,” and particularly with the General Data Protection Regulation (GDPR). The Department of Commerce administers the frameworks and the FTC, together with European Union (EU) privacy authorities, enforces the commitments companies make when they join the Privacy Shield program.

In its first recent enforcement matter, the FTC filed a complaint against a company accused of falsely claiming to be a participant in the Privacy Shield framework.
Although SecurTest initiated an application with the U.S. Department of Commerce to join Privacy Shield in September 2017, it did not complete the steps required to join and was never certified, according to the complaint. The FTC’s proposed settlement bars SecurTest from misrepresenting that it is part of the Privacy Shield framework or any other such government-sponsored privacy program.

In separate actions to enforce privacy frameworks, the agency also sent warning letters to 13 different companies that had claimed to be participating in the U.S.-EU Safe Harbor and the U.S.-Swiss Safe Harbor framework, privacy programs which are no longer valid and were replaced by the current Privacy Shield. The letters urge the companies to remove the false assertions about the privacy programs from their websites, privacy policies and all other public documents, within 30 days or face appropriate action by the FTC.

Finally, the FTC sent warning letters to two companies falsely claiming to be participants in the Asia-Pacific Economic Cooperation (APEC) Cross-Border Privacy Rules (CBPR) system, a privacy initiative created to enhance consumer data protection involving APEC member countries. Companies that wish to be members of APEC must be certified by a third party which “must review and certify that the company is compliant with the CBPR program requirements.” The FTC warned these companies, urging them to remove all mention of a connection to these programs from their websites and other publications.

Key Takeaways

These enforcement actions and warnings demonstrate that the FTC is taking seriously its commitment to ensure that companies do not misrepresent their privacy practices. Whereas the agency has historically directed its focus on companies’ that are misrepresenting their data collection or use and sharing practices, here its concerns lie with misrepresentations made regarding compliance with foreign laws and cross-border transfers of information. These cases stand as a reminder for all web site operators to review their privacy policies in order to ensure that they accurately reflect the site’s data practices, including not referencing outdated privacy frameworks and not misrepresenting compliance with current ones.

On Appeal, the NARB Recommends Chattem Discontinue Some Advertising Claims, Approves Others

Following an appeal by Chattem Inc., a panel of the National Advertising Review Board (NARB) has recommended that the company discontinue certain advertising claims about its mouthwash and lozenge products, while approving other claims—partially reversing and partially upholding the earlier recommendations of the National Advertising Division (NAD), the investigative arm of the advertising industry’s self-regulating system.

The present matter began when a competitor of healthcare product manufacturer Chattem initiated a review before the NAD of certain of the company’s advertising claims about its toothpaste, mouthwash, lozenges and spray products. The NAD invalidated certain of the advertiser’s claims at issue. Chattem then appealed NAD’s recommendations about its mouthwash and lozenge products to the NARB.

On appeal, the NARB upheld some of Chattem’s claims and recommended others be discontinued. The first issue in the appeal pertained to claims Chattem made while promoting its ACT Dry Mouth Lozenges. The NARB agreed with the NAD that Chattem’s claim that its product is “uniquely formulated to stimulate saliva flow” is not supported, noting that the record shows no evidence to support such a claim of uniqueness. Chattem agreed to withdraw reference to “uniquely.”

However, the NARB did not share the NAD’s opinion that Chattem’s claims that its lozenges “are uniquely formulated to stimulate saliva flow” and “soothe and moisturize” conveyed to consumers that its products provide benefits in excess of readily available products on the market and were unsupported. Here, NARB noted that “the necessary support for these claims (except for the word “uniquely”) was provided by a consensus in the medical field that lozenges help address dry mouth symptoms.”

Chattem had also advertised that its mouthwash provided “immediate” and “long-lasting” relief. The NAD had concluded that these claims were not supported by data from Chattem’s clinical study, and recommended they be discontinued. The NARB agreed with that determination with respect to the “long lasting” claim only. However, it disagreed with the NAD’s recommendation that the claims of “immediate” be discontinued, siding with Chattem based on the fact that the company’s ingredient analysis shows that mouthwash does indeed provide immediate relief.

On the issues raised in the cross-appeal, the NARB sided with Chattem as well. The NAD had found Chattem’s claims that its mouthwash “relieve[s] dry mouth symptoms by moisturizing and lubricating dry oral tissue,” supported. The NARB agreed with the NAD, noting that Chattem’s ingredient analysis supports these claims.

Following the appeal, Chattem committed to honoring the NARB’s recommendations.

Key Takeaways

This matter illustrates that by appealing to the NARB, companies may save certain advertising claims from unfavorable recommendations handed down by the NAD. It also highlights the fine line that often exists between a claim that the NARB or the NAD recommends be discontinued and one that is approved. In fact, the same claim may be upheld for different reasons. For example, in this case the NARB and the NAB both upheld the claim that ACT Mouthwash “relieve[s] dry mouth symptoms by moisturizing and lubricating dry oral tissue,” but for different reasons.

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