On January 30, 2015, the US Court of Appeals for the DC Circuit issued its decision in POM Wonderful, LLC v. FTC.1 The court generally affirmed the Federal Trade Commission's (FTC or Commission) January 2013 findings that many of POM's advertisements made misleading or false claims about POM's pomegranate juice and supplement products. Notably, however, the court rejected the FTC's position that advertising claims about a product's effects on disease prevention and treatment always require at least two gold-standard "randomized and controlled human clinical trials" (RCTs). As explained below, the denial of the blanket requirement of two RCTs will have several important implications for advertisers.
The Commission's January 2013 Findings
In January 2013, the Commission upheld an Administrative Law Judge's (ALJ) decision that POM deceptively advertised its products and did not have adequate support for disease prevention and treatment claims. The POM advertisements at issue represented that the products treated or prevented heart disease, prostate cancer, and erectile dysfunction. The ALJ explained that the studies POM cited in its advertisements contained numerous perceived deficiencies, such as small sample sizes, lacks of control groups, and/or statistically insignificant results. Moreover, POM failed to disclose to consumers that, for some of the advertised claims, other studies had shown no effect on the studied diseases.
The Commission went beyond the ALJ's decision and found that POM made deceptive claims in 36 advertisements, and issued an injunction prohibiting POM from making any claim that a food, drug, or dietary supplement is "effective in diagnosis, cure, mitigation, treatment, or prevention of any disease," unless the claim is supported by two RCTs.
The DC Circuit Affirms the FTC's Conclusion that POM's Advertising Claims Were Deceptive, But Rejects the Two-Study Standard
On appeal, the DC Circuit affirmed the FTC's conclusion that POM's advertising claims were deceptive, but rejected the two RCT standard. The FTC took issue with POM's selective use of study results in its advertising. In particular, the Commission held that POM cherry-picked results from the most favorable studies and gave no indication that there had been contrary results reached in other studies.
Both on appeal and at the Commission POM argued that its claims actually were qualified health claims for which a two RCT standard was certainly inappropriate. The DC Circuit affirmed the Commission's rejection of this defense, finding that, although the ads referred to the studies as "preliminary" or "promising," the overall context of the ad conveyed a more positive spin to the studies rather than merely providing an objective disclaimer. Both the Commission and the DC Circuit suggested that a disclaimer such as "evidence in support of this claim is inconclusive" would have been a more effective, albeit less marketing friendly, disclaimer. However, this narrow approach as to what language sufficiently qualifies a health claim later was used against the Commission. The DC Circuit rejected the Commission's argument that the two RCT standard was not unduly burdensome because it only applied to "unqualified claims," finding only that claims using words like "inconclusive" or "additional research is necessary" likely would pass muster as unqualified.
With respect to the Commission's two-RCT requirement, POM argued that in certain situations, practical, ethical, and economic constraints and prohibitive cost burdens made it unfeasible to conduct RCTs on certain food products. The court was unpersuaded. Rather, the court emphasized that the need for RCTs is driven by the particular claim made, so "if the cost of an RCT proves prohibitive, petitioners can choose to specify a lower level of substantiation for their claims."
The court accepted the notion that RCTs likely would be necessary to support a disease reduction or treatment claim, but rejected the blanket requirement of two RCTs on several grounds. First, the court rejected the FTC's reliance on precedent and prior consent orders. Second, the court rejected the two-RCT standard based on aCentral Hudson-First Amendment commercial speech analysis.
More specifically, the FTC argued that precedent dictated the two-RCT standard, but the court found that the Commission's reliance on In re Thompson Medical Co.2 was misplaced. In Thompson Medical, two RCTs were warranted to substantiate claims involving the efficacy of over-the-counter painkillers, but the reasoning for this requirement depended on the specific nature of the product and the claims made. The FTC also argued that the two-RCT standard had been applied in previous consent orders.3 The court rejected the Commission's reliance on these as well because the consent orders were not litigated matters and the orders were limited to specific disease claims rather than all disease claims. Moreover, many other consent orders regarding disease claims only required "competent and reliable scientific evidence" rather than a rigid two-RCT standard to substantiate disease claims.
The court noted, however, that two RCTs may be required in some circumstances depending on the product and the specific claim made. For example, the FTC may require RCT substantiation as a forward-looking remedy to act as a corrective to past deceptive claims made without RCT substantiation, so long as the requirement of RCTs for future claims is "tightly tethered to the goal of preventing deception." While an RCT may be required, a blanket requirement for two RCTs is too broad under a Central Hudson commercial speech analysis. The FTC still bears the burden to demonstrate a "reasonable fit" between the means chosen and the government interest pursued. Indeed, the court underscored that:
It of course is true that, all else being equal, two RCTs would provide more reliable scientific evidence than one RCT, affording added assurance against misleading claims. It is equally true that three RCTs would provide more certainty than two, and four would yield more certainty still.
In light of this, the court held that prior precedent goes against the FTC's position advocating two RCTs, and, instead, demonstrates that "two-RCT remedial provisions are only selectively imposed in specific circumstances based on particular concerns." Regarding POM's advertisements, the court upheld the FTC's order requiring the disease claims to be substantiated by at least one RCT, but the blanket two-RCT requirement for all disease-related claims was held to be unjustified.
Key Takeaways for Advertisers
The DC Circuit's decision provides several lessons for advertisers:
- Courts generally will give deference to the FTC to interpret the claims made by advertisements. This deference includes FTC interpretations of qualifying language such as "promising" or "preliminary." In POM Wonderful, the FTC determined that these qualifiers did not sufficiently convey the limitations of the studies performed, and the court saw no reason to reject this decision. Instead the court noted that such disclaimers will have to use unambiguous terms, such as "inconclusive" or "more research needed."
- When making disease claims, an advertiser does not necessarily have to conduct two RCTs to substantiate its claims. Rather, the relevant analysis for the appropriateness of a disease claim is the "total body of the evidence." In some situations, even a clinical trial combined with observational research may be sufficient for a disease claim. Advertisers should consider the nature of the product and the specific advertising claims being made when determining what kind of testing will be necessary to substantiate the claims.
- Going forward, the FTC will not be able to mandate two-RCT substantiation in all situations, but its power to dictate other substantiation remedies has not been significantly diminished. For disease-related claims, advertisers should anticipate the need for RCT substantiation, or something very close to that. The cost of substantiation is lowered by the rejection of the two-RCT requirement, but claims must still be supported by competent and reliable scientific evidence at the time they are made. The FTC likely will take the DC Circuit's decision into consideration in its next enforcement actions. With the courts' giving great deference to the FTC's determinations, advertisers still need to weigh their claims carefully.