On September 18, 2019, the FTC prevailed in its long-waged battle against Hi-Tech Pharmaceuticals. In a per curiam opinion, the Eleventh Circuit affirmed the district court’s decision, holding the defendants in contempt for violating the court’s prior order, which enjoined the defendants from making certain claims about health products without “competent and reliable scientific evidence.” Fed. Trade Comm’n v. Nat’l Urological Grp., Inc., No. 17-15695, 2019 WL 4463503, at *1 (11th Cir. Sept. 18, 2019). The Eleventh Circuit also upheld a $40 million sanction for the defendants’ violation of the order. The case provides a good example of how the FTC views substantiation for dietary supplement claims and the consequences of lacking that substantiation.

In its ruling, the Eleventh Circuit affirmed the district court’s stringent interpretation of “competent and reliable scientific evidence” to mean randomized controlled trials (“RCTs”) because the defendants had fair (and repeated) notice for nearly a decade that the FTC and the district court interpreted “competent and reliable scientific evidence” to mean RCTs.

The Eleventh Circuit ruled in favor of the FTC for two main reasons. The Eleventh Circuit first held that the defendants waived their objections to the clarity of the injunction enjoining them from making certain advertising claims. Specifically, the defendants did not object that the phrase “competent and reliable scientific evidence” was unduly ambiguous when the order was being proposed to the court. Furthermore, the defendants could not show that the district court clearly erred when it found that they lacked “competent and reliable scientific evidence.”

The Eleventh Circuit’s ruling stands in contrast to two other cases involving dietary supplements where the FTC failed in its efforts to have the defendants found in contempt. In United States v. Bayer Corp., CV 07-01(JLL), 2015 WL 5822595 (D.N.J. Sept. 24, 2015), the District of New Jersey held that RCTs are not the sole type of evidence that can constitute “competent and reliable scientific evidence” to substantiate the defendant’s specific claims. In that case, the Consent Decree that bound the defendant did not define “competent and reliable scientific evidence” as RCTs, and the government had not otherwise provided notice to the defendant that it would be held to an RCT-level standard of “competent and reliable scientific evidence.” Similarly, in F.T.C. v. Garden of Life, Inc., 516 Fed. Appx. 852, 856 (11th Cir. 2013), the Eleventh Circuit rejected the FTC’s contention that the phrase “competent and reliable scientific evidence” meant RCTs because the FTC provided the defendant with no prior notice of its interpretation of the phrase.

Outside of the dietary supplement context, Nat’l Urological Grp. also stands in contrast to the Eleventh Circuit’s opinion in LabMD, Inc. v. Fed. Trade Comm’n, 894 F.3d 1221, 1236–37 (11th Cir. 2018) where the FTC’s cease and desist order issued to a medical laboratory was “insufficiently specific” to address the laboratory’s unfair trade practice arising out of its failure to protect sensitive consumer information on its computer network. The order was “insufficiently specific” because it required a complete overhaul of the laboratory’s data security program without instructing how such an overhaul was to be accomplished. Moreover, the cease and desist order commanded LabMD to overhaul and replace its data-security program to meet an “indeterminable standard of reasonableness.”

The facts of Fed. Trade Comm’n v. Nat’l Urological Grp., Inc. are in stark contrast to the above. As the district court highlighted, unlike in Bayer, before the injunctions were entered, the court made extensive findings of fact surrounding the defendants’ advertising practices. Additionally, in the nine years after the summary judgment order and injunctions were entered, the FTC repeatedly told defendants that RCTs were required. Finally, and arguably most important, the FTC alleged that the RCT standard applied before the FTC moved for summary judgment. LabMD is inapplicable for the same reasons, namely that in Nat’l Urological Grp. the defendants were explicitly notified that RCTs were needed.

In recent years, FTC orders involving dietary supplements have generally specified that competent and reliable scientific evidence requires at least one RCT. Further, the defendants in National Urological had ample notice, and internal documents acknowledging, that RCTs were required. The consequence for ignoring all of this for the defendants here was $40 million. This serves as a good lesson to pay attention.