Douglas Kalman, PhD09.01.10
As many people know, the current administration is vastly different than the last one in how regulations are enforced, interpreted and perhaps on some level, created. In general, FTC regulates the marketing of products within the U.S. In other words, how a product is advertised—what is said about the product directly, indirectly or otherwise—falls under the authority of FTC. The point of this month’s column is to examine two recent FTC Consent Decrees—Nestle and Iovate—within the realm of research.
According to FTC, Nestle’s product Boost Kid Essentials deceptively claims that it prevents upper respiratory tract infections in children, protects against colds and flu by strengthening the immune system, and reduces absences from daycare or school due to illness. The FTC held that this basic premise made the nutritional beverage a drug.
Nestle has agreed to stop making the following claims: “Boost Kid Essentials will reduce the risk of colds, flu, and other upper respiratory tract infections.” Nestle further agreed with FTC that it will no longer make these types of claims without prior approval by FDA. Did you know that FDA approval of a health claim or product claim is not needed nor required by law?
This is a first in the world of FTC consent decrees. Nestle via the FTC ruling believes the requirement to obtain FDA review (i.e., pre-approval) will facilitate better compliance with their settlement.
Interestingly enough, Nestle also has agreed to stop claiming that the drink can reduce children’s sick-day absences and the duration of acute diarrhea in children up to age 13, unless the claims are true and backed by at least two well-designed human clinical studies. So, if Nestle sponsors or obtains two well-designed, adequately powered human studies (presumably in the age of the intended claim/user of the product), then it can go back to making the claim. What this really means is that two human studies will be needed to support product claims. While this may raise the low-cost barrier to the dietary supplement market, it is not cost burdensome to obtain two or more well-designed human clinical trials.
Iovate, another FTC consent decree recipient, markets brands such as Muscletech, Six-Star, and others. The following products recently caught the attention of the FTC: Accelis, nanoSLIM, Cold MD, Germ MD and Allergy MD. Iovate, and the corporate structure that appears to run it, agreed to pay $5.5 million to settle charges it falsely advertised that its supplements could help consumers lose weight and treat or prevent colds and other illnesses. Iovate allegedly generated between $45 and $50 million in sales on the products of issue.
Iovate also agreed it would not represent that its weight loss products work unless it had specific evidence supporting the claim. Iovate and FTC also agreed that at least two well-controlled human clinical studies would be needed to support weight loss or rapid weight loss claims. This settlement also specifically mentions, just like the Nestle consent decree, the FDA pre-approval requirement.
From a financial view, the cost of doing research versus gross generated is almost nothing. Consider this: Iovate generated nearly $50 million in sales for the products in question and settled with FTC for $5.5 million (plus legal costs). Two studies per product probably could have been conducted for $200,000 or less per product (or about $1 million for the products cited). In other words, Iovate potentially could have saved $4-6 million with the types of studies FTC has indicated are necessary for claims support. Added cost savings could have also come from U.S. and/or Canadian tax credits/breaks for R&D.
The important lesson to be learned here is that the cost of research is ALWAYS lower than the cost of legal assistance needed after one receives a query from FDA, FTC or both, as well as any type of legal query (e.g., civil, state, federal, etc.).
