Last week, the Federal Trade Commission (“FTC”) announced settlement with two marketers of bed bug and head lice products. The settlement prohibits the use of allegedly deceptive advertising claims and requires Food and Drug Administration (“FDA”) pre-approval for treatment claims about head lice. While the settlement terms only apply to the two marketers of cedar oil-based remedies, it raises questions about the agency’s willingness to impose this pre-approval requirement in other scenarios. If the FDA pre-approval requirement signals a new trend by the FTC, it may place a costly burden on advertisers and delay products from hitting the market.
Under the FTC Act, an advertiser need only possess competent and reliable scientific evidence to make a health-related advertising claim. Traditionally, the FTC determines what qualifies as competent and reliable scientific evidence by applying a set of factors examining, among other things, the consequences of a false claim, the benefits of a truthful claim, and the amount of substantiation experts in the field believe is reasonable. The recent settlement steps away from that fact-specific substantiation inquiry by imposing a bright-line FDA pre-approval requirement.
This settlement is not the first time that the FTC has considered imposing an FDA pre-approval requirement on health-related advertising claims. Earlier this year, the Commission explicitly declined to adopt an FDA pre-approval requirement in the POM Wonderful litigation. Although the recent settlement adopted the requirement, it exposed a splintered decision by the FTC Commissioners.
All three statements issued by the Commissioners in the recent settlement highlighted the FDA pre-approval issue. Chairwoman Ramirez and Commissioner Brill concluded that FDA pre-approval was warranted based on the facts in this case, and in particular, because of the economic and health consequences of a false claim regarding head lice. Commissioner Wright agreed that FDA pre-approval was warranted under the facts of this case, but issued a separate statement noting that FDA pre-approval provisions should “play a very limited role in FTC orders and that the conditions under which they are appropriate are fairly narrow.” Finally, Commissioner Ohlhausen issued a dissenting opinion noting that she disagreed with the FDA pre-approval provision in this settlement and feared that “[s]ome may interpret the adoption of this provision in these settlements as a policy shift that ties the Commission’s substantiation requirements to the standards imposed by the FDA, which could potentially chill health-related claims and deprive consumers of useful information.”
Given the limited scope of the settlement and the fractured decision, it is too soon to tell if the settlement indicates a new trend. But if it does, advertisers will face an additional hurdle before making treatment claims.