By Mike Montemarano, Associate Editor10.02.23
This year, FTC issued a Notice of Penalty Offense to hundreds of companies, and substantially updated advertising guidance for the supplements industry.
The U.S. Federal Trade Commission (FTC) has been active this year with a heightened focus on marketing and health claims. In January the agency updated its Compliance Guidance for Marketing Health Products. Then in April it sent notice of penalty offenses to hundreds of brands warning of potential fines if they can’t support product claims with sufficient evidence.
In response a group stakeholders have pushed back to understand how the commission might utilize notices of penalty offenses in court, whether these documents have any legal standing, and how FTC guidance relates to competent and reliable scientific evidence (CARSE) for health claims.
The petition was supported by the American Herbal Products Association (AHPA), Natural Products Association (NPA), United Natural Products Alliance (UNPA), and other trade organizations that represent consumer healthcare segments.
The notice sent by FTC warned companies that if they failed to substantiate marketing claims, the commission may seek civil penalties of up to $50,120 for each violation if a company doesn’t “adequately substantiate their product claims” without competent and reliable scientific evidence (CARSE).
FTC is limited in its capacity to seek civil penalties, but notably, a 2021 Supreme Court Case led to a decision that FTC can seek penalties from companies that were already given notice of a violation.
Petitioners argued, however, that the notices sent in April hold no legal standing for a few reasons. Firstly, they contradict the longstanding regulatory guidance on substantiating claims given to the industry, both by FTC and by the Dietary Supplement Health and Education Act (DSHEA).
Secondly, each notice fails to establish that a company can reasonably know what marketing violation it committed. Finally, the notice’s vague, unclear, and contrary regulatory guidance would violate due process by failing to give companies fair notice of what portion of their conduct was prohibited, the petitioners argued.
“According to FTC, one of the most effective ways the agency eliminates false or misleading information from the marketplace is by sending letters to companies it feels may be violating the FTC act,” said Carolyn Hermann, CHPA’s deputy general counsel, who noted that other notices have been sent en masse to a range of companies such as an instance in which FTC targeted marketing related to the COVID-19 pandemic.
Hermann said the notices “attempt to impose a substantiation standard prohibited by DSHEA and inconsistent with long-standing FDA and FTC guidance. While the commission’s viewpoint is not new or surprising, what is surprising is to see FTC take its stance one step further by placing hundreds of companies on notice through standardless form letters that fail to provide any basis for imposing the civil penalties they threaten.”
When asked about advice for how companies that have received a notice should proceed, Hermann said that while companies may conduct legal and regulatory reviews of claims and substantiation procedures, the notices they received have no legal effect and are “merely threatening companies for engaging in permissible and truthful promotion of products.”
The revisions are the first substantial update to a guidance originally issued in 1998. The updated guidance outlines FTC’s distinct authority over health-related product claims, and how the commission intends to work in liaison with FDA.
Notably, FTC reported that it makes no bright-line distinctions between product categories or claims. Therefore, it reported in the guidance that “structure/function claim” provisions in DSHEA don’t apply to the uniform way FTC enforces proof in marketing.
Unlike FDA, FTC said it focuses on what a consumer can reasonably be expected to understand, rather than the marketer’s intent. And while FDA doesn’t address implied claims, FTC has the authority to issue violations for these claims, such as the case example it gave of using medical images such as people dressed in lab coats to imply that a product was scientifically proven to work.
CRN requested that the commission provide clarity or further guidance on some key points of its guidance update. It also expressed concern that FTC is seeking to impose stringent new advertising requirements more like the standards to which pharmaceutical products are held.
The first guidance component CRN took issue with was the fact that no regulation explicitly requires a company to possess randomized, controlled clinical studies before making so-called “health benefit” (i.e., structure/function) claims for dietary supplements or food. FTC’s guidance, according to CRN, directly contradicts the framework of DSHEA which helps to distinguish foods and supplements from drug products.
Further, there is no regulation requiring that claims must apply to finished products and not just ingredients, despite the guidance suggesting otherwise, CRN said. Another concern is that FTC’s guidance update also calls into question which individuals can be considered scientific experts on a topic related to a health claim.
The new guidance appears to impose a requirement that only experts in a specific disease or condition could opine or support structure/function claims. For example, only a cardiologist would be able to opine on a claim about heart health, while nutritionists, pharmacologists, or other researchers might not be able to, CRN said.
Despite these concerns, CRN is optimistic that FTC’s intent behind the guidance wasn’t to establish a new standard that departs from the one set by DSHEA.
According to Megan Olsen, general counsel and senior vice president at CRN, the association doesn’t believe FTC can impose a more stringent standard of substantiation than what is outlined in DSHEA, based on court precedent. And discussions with Christine Delorme, an attorney at FTC’s Division of Advertising Practices specializing in health-related claims, at CRN’s Legal, Regulatory, and Compliance Forum in June make it clear that FTC is primarily concerned about disease claims.
“In these discussions, Christine reinforced that you need to look at the guidance in that context,” Olsen said. “When you look at the types of claims foods and dietary supplements can legally make, those are distinct from disease claims, and we remain confident that the standard remains flexible around competent and reliable scientific evidence. That’s why we wrote our petition. We want FTC to formally recognize this in the guidance, which would be visible for those who weren’t present to hear the clarifications Christine made in June and again a few weeks ago.”
Ultimately, CRN’s petition aims to keep dialogue open with FTC, Olsen said. While, procedurally, the guidance didn’t require a public comment period prior to its publication, Olsen said it was a missed opportunity for FTC to gather important industry feedback.
“We haven’t made any decisions,” on what next steps CRN will take depending on how FTC responds to its petition, “because we’re hopeful based on statements made over the summer that given more time, we’ll be able to update the guidance based on those discussions,” Olsen said. “We’re hopeful about the tone FTC has taken about structure/function claims, and claims about general wellbeing.”
“There are many structure/function claims supported by strong evidence that wasn’t derived from an RCT, and for many claims related to general wellbeing, RCTs aren’t always the most appropriate form of scientific evidence. So the issue is that FTC made many broad statements without reassuring that there can be more or less flexibility depending on what type of claim the marketer is making.”
After FTC sought penalties from Bayer in a landmark 2015 case, a decision was reached that dietary supplements are subject to different substantiation requirements than the standard RCTs required for drug marketing.
structure/function claims, which are distinct to foods and supplements, must simply be truthful and not misleading, the case confirmed. Similarly, in 2006, a court rejected FTC’s allegations that Garden of Life made misleading claims about four products, which helped to establish a working consensus of what constitutes CARSE.
“There’s also the Pfizer factors, which is an important framework of factors FTC is supposed to look at when assessing a claim, such as the nature of the claim, the benefits of a truthful claim, the risks of a misleading claim, and more. With that framework against that of DSHEA, it’s clear that supplement marketing standards are very different than drug standards, so we encourage members to look at the guidance in this context. Even in cases where courts have found that RCTs are needed for a claim, they were looking at disease claims or very strong cause-and-effect claims.”
In the coming months and years, taking into account both the notice of penalty offenses and FTC’s updated guidance, companies in the nutraceuticals market can benefit by taking the opportunity to review their own substantiation, Olsen said.
“FTC is scrutinizing dietary supplements and health claims, which isn’t new, but is a good reminder to take the support for your claims seriously,” she said. “Substantiate your substantiation; know why you’ve chosen the particular type of scientific evidence you’re using, why the experts you’ve chosen are suitable, and don’t look at your scientific evidence in a vacuum. The well-established standard for CARSE still stands, regardless of all the noise around FTC guidance and notices.”
The U.S. Federal Trade Commission (FTC) has been active this year with a heightened focus on marketing and health claims. In January the agency updated its Compliance Guidance for Marketing Health Products. Then in April it sent notice of penalty offenses to hundreds of brands warning of potential fines if they can’t support product claims with sufficient evidence.
In response a group stakeholders have pushed back to understand how the commission might utilize notices of penalty offenses in court, whether these documents have any legal standing, and how FTC guidance relates to competent and reliable scientific evidence (CARSE) for health claims.
Trade Groups Unify Against FTC’s Warning
In September, several trade associations supported a Citizen Petition filed by the Consumer Healthcare Products Association (CHPA) which requested that FTC withdraw the notices sent to nearly 700 companies in the over-the-counter, dietary supplement, functional foods/beverages, and homeopathic products industries.The petition was supported by the American Herbal Products Association (AHPA), Natural Products Association (NPA), United Natural Products Alliance (UNPA), and other trade organizations that represent consumer healthcare segments.
The notice sent by FTC warned companies that if they failed to substantiate marketing claims, the commission may seek civil penalties of up to $50,120 for each violation if a company doesn’t “adequately substantiate their product claims” without competent and reliable scientific evidence (CARSE).
FTC is limited in its capacity to seek civil penalties, but notably, a 2021 Supreme Court Case led to a decision that FTC can seek penalties from companies that were already given notice of a violation.
Petitioners argued, however, that the notices sent in April hold no legal standing for a few reasons. Firstly, they contradict the longstanding regulatory guidance on substantiating claims given to the industry, both by FTC and by the Dietary Supplement Health and Education Act (DSHEA).
Secondly, each notice fails to establish that a company can reasonably know what marketing violation it committed. Finally, the notice’s vague, unclear, and contrary regulatory guidance would violate due process by failing to give companies fair notice of what portion of their conduct was prohibited, the petitioners argued.
“According to FTC, one of the most effective ways the agency eliminates false or misleading information from the marketplace is by sending letters to companies it feels may be violating the FTC act,” said Carolyn Hermann, CHPA’s deputy general counsel, who noted that other notices have been sent en masse to a range of companies such as an instance in which FTC targeted marketing related to the COVID-19 pandemic.
Hermann said the notices “attempt to impose a substantiation standard prohibited by DSHEA and inconsistent with long-standing FDA and FTC guidance. While the commission’s viewpoint is not new or surprising, what is surprising is to see FTC take its stance one step further by placing hundreds of companies on notice through standardless form letters that fail to provide any basis for imposing the civil penalties they threaten.”
When asked about advice for how companies that have received a notice should proceed, Hermann said that while companies may conduct legal and regulatory reviews of claims and substantiation procedures, the notices they received have no legal effect and are “merely threatening companies for engaging in permissible and truthful promotion of products.”
CRN Seeks A More Open Dialogue on FTC’s Guidance
Shortly following CHPA’s Citizen Petition, the Council for Responsible Nutrition (CRN) submitted its own Citizen Petition, not in response to the notice that FTC issued but in response to the revisions it made to its Health Products Compliance Guidance.The revisions are the first substantial update to a guidance originally issued in 1998. The updated guidance outlines FTC’s distinct authority over health-related product claims, and how the commission intends to work in liaison with FDA.
Notably, FTC reported that it makes no bright-line distinctions between product categories or claims. Therefore, it reported in the guidance that “structure/function claim” provisions in DSHEA don’t apply to the uniform way FTC enforces proof in marketing.
Unlike FDA, FTC said it focuses on what a consumer can reasonably be expected to understand, rather than the marketer’s intent. And while FDA doesn’t address implied claims, FTC has the authority to issue violations for these claims, such as the case example it gave of using medical images such as people dressed in lab coats to imply that a product was scientifically proven to work.
CRN requested that the commission provide clarity or further guidance on some key points of its guidance update. It also expressed concern that FTC is seeking to impose stringent new advertising requirements more like the standards to which pharmaceutical products are held.
The first guidance component CRN took issue with was the fact that no regulation explicitly requires a company to possess randomized, controlled clinical studies before making so-called “health benefit” (i.e., structure/function) claims for dietary supplements or food. FTC’s guidance, according to CRN, directly contradicts the framework of DSHEA which helps to distinguish foods and supplements from drug products.
Further, there is no regulation requiring that claims must apply to finished products and not just ingredients, despite the guidance suggesting otherwise, CRN said. Another concern is that FTC’s guidance update also calls into question which individuals can be considered scientific experts on a topic related to a health claim.
The new guidance appears to impose a requirement that only experts in a specific disease or condition could opine or support structure/function claims. For example, only a cardiologist would be able to opine on a claim about heart health, while nutritionists, pharmacologists, or other researchers might not be able to, CRN said.
Despite these concerns, CRN is optimistic that FTC’s intent behind the guidance wasn’t to establish a new standard that departs from the one set by DSHEA.
According to Megan Olsen, general counsel and senior vice president at CRN, the association doesn’t believe FTC can impose a more stringent standard of substantiation than what is outlined in DSHEA, based on court precedent. And discussions with Christine Delorme, an attorney at FTC’s Division of Advertising Practices specializing in health-related claims, at CRN’s Legal, Regulatory, and Compliance Forum in June make it clear that FTC is primarily concerned about disease claims.
“In these discussions, Christine reinforced that you need to look at the guidance in that context,” Olsen said. “When you look at the types of claims foods and dietary supplements can legally make, those are distinct from disease claims, and we remain confident that the standard remains flexible around competent and reliable scientific evidence. That’s why we wrote our petition. We want FTC to formally recognize this in the guidance, which would be visible for those who weren’t present to hear the clarifications Christine made in June and again a few weeks ago.”
Ultimately, CRN’s petition aims to keep dialogue open with FTC, Olsen said. While, procedurally, the guidance didn’t require a public comment period prior to its publication, Olsen said it was a missed opportunity for FTC to gather important industry feedback.
“We haven’t made any decisions,” on what next steps CRN will take depending on how FTC responds to its petition, “because we’re hopeful based on statements made over the summer that given more time, we’ll be able to update the guidance based on those discussions,” Olsen said. “We’re hopeful about the tone FTC has taken about structure/function claims, and claims about general wellbeing.”
“There are many structure/function claims supported by strong evidence that wasn’t derived from an RCT, and for many claims related to general wellbeing, RCTs aren’t always the most appropriate form of scientific evidence. So the issue is that FTC made many broad statements without reassuring that there can be more or less flexibility depending on what type of claim the marketer is making.”
Flexibility Has Always Been Precedent
Olsen noted that a flexible standard of substantiation for dietary supplement claims, rather than a fixed formula, is supported by plenty of legal precedent.After FTC sought penalties from Bayer in a landmark 2015 case, a decision was reached that dietary supplements are subject to different substantiation requirements than the standard RCTs required for drug marketing.
structure/function claims, which are distinct to foods and supplements, must simply be truthful and not misleading, the case confirmed. Similarly, in 2006, a court rejected FTC’s allegations that Garden of Life made misleading claims about four products, which helped to establish a working consensus of what constitutes CARSE.
“There’s also the Pfizer factors, which is an important framework of factors FTC is supposed to look at when assessing a claim, such as the nature of the claim, the benefits of a truthful claim, the risks of a misleading claim, and more. With that framework against that of DSHEA, it’s clear that supplement marketing standards are very different than drug standards, so we encourage members to look at the guidance in this context. Even in cases where courts have found that RCTs are needed for a claim, they were looking at disease claims or very strong cause-and-effect claims.”
In the coming months and years, taking into account both the notice of penalty offenses and FTC’s updated guidance, companies in the nutraceuticals market can benefit by taking the opportunity to review their own substantiation, Olsen said.
“FTC is scrutinizing dietary supplements and health claims, which isn’t new, but is a good reminder to take the support for your claims seriously,” she said. “Substantiate your substantiation; know why you’ve chosen the particular type of scientific evidence you’re using, why the experts you’ve chosen are suitable, and don’t look at your scientific evidence in a vacuum. The well-established standard for CARSE still stands, regardless of all the noise around FTC guidance and notices.”
