Advertising Legal & Compliance
Guidance
Guidance
FTC penalties can kill a healthcare business. That is why FTC and state law advertising compliance is a must from the start of any healthcare operation.
The Scope and Sweep of FTC’s Enforcement Powers
Our advertising and marketing compliance attorneys are highly skilled in Federal Trade Commission (FTC) and state law advertising issues. Advertising and marketing claims can plague a healthcare company with both liability and regulatory enforcement. The federal Trade Commission Act (FTCA) requires that all claims be truthful and non-misleading. With this one requirement, the FTCA sweeps everything into the FTC’s jurisdiction, including all public statements (online and offline) in its marketing materials about its services or products.
FTC can require that a company disgorge its unlawful profits; penalties can be in the millions.
One of the core requirements behind the FTC’s enforcement authority is that all claims be substantiated. As the FTC explains in the FTC Policy Statement Regarding Advertising Substantiation, the underlying requirement is that advertisers have a reasonable basis for advertising claims before they are disseminated. Failure to have a reasonable basis for the claims is an unfair and deceptive act or practice in violation of the FTCA.
This requirement severely limits the claims that can be made, independent of FDA concerns.
For claims involving healthcare services or products, those claims must be substantiated by competent and reliable evidence.
FTC explains that its investigative and law enforcement authority includes a civil penalty and an injunction against business practices.
Recent FTC enforcement actions and settlements have included:
- Aura Labs, for an Instant Blood Pressure app
- Withdrawal Ease and Recovery Ease, for “home opiate detox” products ($6.6 million judgment)
- Mars Petcare, for dog food, claims about extended dog lifespan
- NextGen Nutritionals, for claims that HCG could create weight loss of up to 80 pounds in 40 days
- CellMark Biopharma, for claiming that “CellAssure” could treat the side effects of cancer treatment
- Health Research Laboratories, for claims about treating Alzheimer’s and dementia
- Prevagen, for claims about treating memory loss
- Avrom Lasarow, for marketing a “mole detective” family of healthcare apps.
- Various companies make claims about preventing Zika.
The above are among the many actions the FTC has brought regarding health claims. As the FTC notes, any claims should be identified and reviewed before going to market. This is where FTC legal counsel can be invaluable. Once a healthcare company comes within the FTC’s enforcement cross-hairs, the FTC is likely to extract considerable enforcement authority, and the legal costs will probably escalate geometrically in responding.
Marketers need competent and reliable scientific evidence to support all health, safety, or efficacy claims their ads convey to consumers expressly or by implication. And they need it in hand before the ad is disseminated. For most disease-related representations – especially claims as serious as Zika prevention or risk reduction – that means well-controlled human clinical testing.
What FTC Looks For, In Evaluating Health Claims
In reviewing and evaluating health claims, the FTC applies a two-step process: (1) identify all express and implied claims that the ad conveys to consumers; and (2) assess the scientific evidence to see whether it is adequate to support the claims that are being made.
In assessing the implied claims, the FTC looks to the “net impression” conveyed by all elements of an ad, including the text, product name, and depictions. FTC also requires that disclosure of any necessary qualifying information be presented clearly and prominently so that it is actually noticed and understood by consumers.
FTC defines “competent and reliable scientific evidence” as:
tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.
According to the FTC, well-controlled clinical studies are the most reliable form of evidence, and that “replication of research results in an independently-conducted study adds to the weight of the evidence.”
Among other things, advertisements must ensure that necessary qualifying information is presented clearly and prominently (for example, disclosing if subjects in a trial engaged in regular exercise and followed a restricted-calorie diet as part of the study regimen, and clarifying that users should follow the same to expect similar results).
FTC does not guarantee that following its guidance will not result in enforcement action; instead, it encourages industry to avoid puffery and overstating results of studies that are not supported by the data, methods, and results.
Again, because of the breadth of the FTC’s review and the draconian nature of the FTC’s enforcement action and penalties, it is well worth having a healthcare lawyer who understands the FTC’s review of all advertising and marketing claims before making those claims public. That means legal counsel should conduct a thorough review of the website, social media sites, and other online and physical marketing materials before these materials are disseminated.
FTC Also Initiates Enforcement for Deceptive Endorsements & Testimonials
In addition to the above guidelines, the FTC also addresses claims based on consumer experiences or expert endorsements.
FTC does not allow such claims if they are deceptive or cannot be substantiated if made directly.
So, for example, FTC notes that “vague” disclaimers such as “results may vary” do not cure a deceptive claim.
Similarly, overstating the qualifications of an expert can be considered deceptive and misleading. For example, referring to someone as a “leading clinician in joint health” is deceptive if the expert has not conducted sufficient trials to support this endorsement. In addition, the expert’s connection to the company affects the “weight and credibility” of the endorsement. Even if the expert is adequately qualified, his or her position with the company must be disclosed.
FTC also cautions against misleading consumer endorsements: FTC states that an advertisement employing endorsements by one or more consumers about the performance of an advertised product or service will be interpreted as representing that the product or service is effective for the purpose depicted in the advertisement.
According to the FTC, the advertiser must possess and rely upon adequate substantiation, including, when appropriate, competent and reliable scientific evidence, to support such claims made through endorsements in the same manner the advertiser would be required to do if it had made the representation directly, i.e., without using endorsements. Consumer endorsements themselves are not competent and reliable scientific evidence.
FTC guidance gives detailed examples of consumer endorsements that could be considered misleading. Because so many healthcare companies rely heavily on consumer testimonials and expert endorsements, it is essential to have legal counsel review these for potential FTC exposure.
Healthcare Products Especially under FTC Scrutiny
Be sure to seek experienced FTC and advertising and marketing legal counsel, whether you are marketing:
Cosmetics
Dietary Supplements
Medical Devices
Mobile Medical Apps
Telemedicine
And in general, any healthcare service or product
FTC coordinates enforcement with other federal agencies, including the FDA and the state Attorney General (AG), particularly where the product or the claims represent a high risk to the consumer.
For example, in its post about the FTC enforcement action against Aura Labs (an App developer under pressure for deceptive health claims), the FTC notes:
The lifeblood of health claims is substantiation. The consequence of inaccurate measurements of blood pressure or other key health stats can be – quite literally – as serious as a heart attack. That’s why companies must have solid science to support all health claims, express and implied.
FTC is correct. Health claims often are the lifeblood of the success for a healthcare startup, particularly, and the lifeblood of those claims is substantiation. When your business operates online, consult with experienced FTC and state advertising and marketing compliance counsel. We help structure your business at the outset, provide regulatory compliance advice to ensure that you are meeting relevant legal standards, and advise on implementing corrective action for your business to achieve greater compliance.
FAQ
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Our Firm doesn’t quite “quotes” or answer “how much does it cost.” Through long experience, we’ve found that the answer is pretty much meaningless. Some lawyers and law firms give quotes, but if you read the accompanying disclaimer, you’ll see that the disclaimer basically says that you can’t depend on the quote for anything. In our long experience, “how much it costs” depends on a lot of variables, including:
- What the client is asking for
- What the client really needs
- What the client doesn’t know they don’t know
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- How complicated the problem really turns out to be
- How much client will want to do on their own
- Whether we can find some elegantly simple solutions to sub-parts of the puzzle
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In many cases, we might think a project is very complex but then as dig in, we can make executive decisions and recommendations that save the client dozens of hours of lawyer time and tens of thousands of dollars. This happens a lot with our clients. In other cases, the client might think the problem is simple but as we start to review it, the puzzle is much larger; sometimes the client throws in extra facts and complications at the last minute, and that will increase the expense and work; sometimes we’ll give the client “homework” so they can DIY a piece, taking it outside the need for lawyer time.
One thing we do is get our clients frequently on the phone. We find that the Legal Strategy Session often cuts through the fog. Where we need to do a chunk of written legal work, we’ll do so and let you know that’s what we think is needed. Where we can be more efficient with a call, we’ll tell you that as well.
Many clients come us after having wasted tens of thousands of dollars with other lawyers. Read our testimonials. We’re here to provide a lot more value than the retainer—our business model and Firm policy is to provide at least 3-5 times the value back to you. That’s our model and we’re sticking to it. We’re not trying to sell you on a “cheap retainer” or promise of discounts. We’re here to solve a big hairy problem and get you where you need to go, as efficiently and productively as we can.
Typically, assessing feasibility involves legal and strategic advice, which we provide in the 45-minute consult, in a way that is appropriate to the time we have together there.
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Work with us and find out how efficient and engaged we are with your business. We like to work with clients for life. It is a deep and trusting relationship.
Michael’s bio is online here. He has written books on healthcare law and policy, taught healthcarelaw as a faculty member at Harvard Medical School, garnered NIH and other medical research grants, and published over 100 articles in legal and medical journals. Michael speaks all over the world on healthcare topics.
