OTC drug marketing legal checklist: 5 legal strategy steps

For an OTC drug marketing legal checklist, 5 legal strategy steps can propel you to market. 

OTC drug marketing legal checklist: The short version

Review ingredients, claims, label, register, substantiate.

Rinse and repeat.

Our product rocks!

Andy’s Acne-Removing Aromatherapy rocks.

Andy has a lot of venture backing as his Silicon Valley -based uncle is willing to seed fund the venture and bring in his golfing buddies. Andy is unsure whether to get FDA counsel at the outset, or wait until he is funded. He would rather go to the dentist than pay lawyers.

He fired his securities lawyer so he could save money and do it himself with all the investor questionnaires and what-have-you.  He knew he was promising a lot in the business plan he gave his uncle to disseminate at the golfing outing, but he had promised his uncle he would be lean and mean and he hadn’t dropped out of an Ivy league college and become a fruitarian for nothing!

(We take some poetic license to dramatize the facts.  Andy’s uncle actually has several attorneys but no background in the health and wellness industry.)

There’s a not-so-secret sauce to Andy’s formula and that is Ingredient X (let’s call it X).  Andy uses twice the amount of Ingredient X as his competitor, although he dilutes the ingredient in more alcohol. Andy believes his product is superior because of it has more Ingredient X even though the concentration of Ingredient X overall is lower.

Anyway, his marketing person has created a campaign around the theme of “superior acne removal.”  A sub-theme is: “Get clearer, faster.”  Andy is going to promote this theme through advertising recently allowed to be beamed into virtual reality headsets.

Andy’s Higher Self speaks

Andy’s future self comes to him in the form of his Higher Self in meditation, and shows him what will happen if he puts the product out to market in its current state.

(The ghost of his future also shows him the securities law violations he has committed and the penalties he will pay….)

Any is guided to hire FDA counsel at the outset, so that he can understand whether he has a dietary supplement, cosmetic, medical device, or drug.

Andy sees that when he says he has an aromatherapy product, what he has is not a cosmetic, but an OTC drug.

Andy is shown several blog posts, including:

He realizes that he also needs to substantiate his claims.

OTC drug marketing legal checklist: The longer version

Here are 5 steps Andy should take once that he has seen the Ghosts of Regulatory Issues Past, Present & Future:

Monograph compliance—ingredients. Review both active and non-active ingredients for compliance with the OTC drug monograph. If the ingredients (or formulation) are outside the monograph, or, if they have a synergistic effect beyond the monograph, FDA may regulate the product as a “new drug” and require a new drug application.

FDA states:

Once a final monograph is implemented, companies can make and market an OTC product without the need for FDA pre-approval. These monographs define the safety, effectiveness, and labeling of all marketing OTC active ingredients.

New products that conform to a final monograph may be marketed without further FDA review. Those that do not conform must be reviewed by the New Drug Application process. A drug company may also petition to change a final monograph to include additional ingredients or to modify labeling.

Review claims. Claims must be: (1) truthful and non-misleading, and (2) substantiated.

In general, claims must be supported by competent and reliable evidence.

Though there are different FTC standards for different types of claims.

For example, for a comparative efficacy claim, FTC requires 2 or more independently conducted, well-controlled clinical studies to establish absolute or comparative analgesic efficacy (FTC, In the Matter of American Home Products Corp (1981)).

Andy may need toxicology data if there are safety questions.

Review label and Drugs Facts panel for compliance. Review FDA’s guidance, Small Entity Compliance Guide: Drug Facts, active ingredients, purposes, uses, warnings, directions, other information, inactive ingredients.

Manufacturer Registration and GMPs: The manufacturer must be FDA-registered and product must be listed; Andy must get NDC numbers.

Private labeling agreement review: If private labeling is involved, review the agreement for private labeling – indemnities, allocation of risks, responses to FDA investigation (typical for new facility), who handles GMPs.

Some Key Points

Here are some key points Andy should keep in mind during his initial FDA and FTC review:

  • Under FDA law, he can’t make claims outside the monograph.
  • Under FDA and FTC law, his claims must be substantiated (i.e., supported by competent and reliable evidence).
  • His competitors may sue him for claims of “superiority” or for comparative claims against their products.  Also, he has to be careful about over-exaggerating the marketing for his product.  For example, even though he may twice as much of Ingredient X, if the product is half as dilute, it may not make a difference.  Andy has to prove any superior efficacy.
  • He needs to be careful about claims that could trigger regulatory enforcement, such as: ““breakthrough,” “scientifically proven,” “endorsed by a medical organization,” “scientifically proven,” or “all natural.”

Also, besides FDA and FTC law, there are may sources of liability exposure under state law.  These include:

  • unfair competition
  • false and misleading advertising
  • fraudulent concealment
  • unfair and deceptive business practices
  • unjust enrichment
  • breach of warranties

Legal counsel vs. a dental visit

When Andy goes to his dentist, he’ll get a free toothbrush and some floss. This won’t help him with the cavities he already has, though.

If he seeks legal counsel early enough in the process, he won’t need a legal root canal later on. It’s better to hear theories of liability from a lawyer as remote possibilities in a quantum future, along one possible timeline, than to see them inserted in a complaint later.

Andy has the power to choose his best timeline.

If he can get all the information he needs from a Spirit guide or robotic algorithm, more power to him.  If he wants to consult our law firm, even better.

If Andy truly decides to model his uncle, who is successful in unrelated businesses, he’ll realize his greatest assets include his trusted advisors. They are more substantial than ghosts, and they’ll navigate him through the regulatory swamps to launch his product to market. The good ones will work with his best business instincts and inform him so he can make careful choices consistent with his plans for growth.

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