POM Wonderful, LLC is treading where no food or beverage company has treaded before, at least not in recent memory.
Bets are on that the company will soon be asking a U.S. Court of Appeals (likely the D.C. Circuit) to stay, and eventually overturn, a Federal Trade Commission (FTC) decision directing the company to stop claiming that its pomegranate juice and supplement pills can treat, prevent, or reduce the risk of ailments ranging from heart disease to erectile dysfunction. According to the FTC, such claims can’t be made until POM has conducted two, well-controlled, randomized, double-blind, statistically valid, clinical tests on human subjects demonstrating that the claims are true.
In its defense, POM states: “With this ruling, the FTC is taking the unprecedented step of holding food companies like POM Wonderful to the same standards as pharmaceuticals . . . By holding health food companies to pharmaceutical research standards and ‘implying’ disease treatment claims that are not being made, the FTC is going to stifle research across the entire food industry. Consumers will be denied access to emerging science on the potential health benefits of fruits and vegetables. This would be a giant step backward in the campaign to get Americans to eat healthier.”
The FTC’s Final Order, while imposing a substantiation standard that is strict, is not unprecedented. The Agency relies on prior federal court decisions upholding FTC orders, such as In re Thompson Med. Co., 104 F.T.C. 648, 788 (1984), aff’d, 791 F.2d 189 (D.C. Cir. 1986). In that case, the Commission determined well-controlled clinical tests were required as a reasonable basis for efficacy claims regarding a topical analgesic. Thompson Med. Co., 104 F.T.C. at 826.
The Commission also emphasizes it is not applying a pharmaceutical standard to food claims (although Thompson Medical involved an OTC drug product). FTC states that U.S. Food and Drug Administration (FDA) regulations for drugs “require multiple phases of clinical trials that collectively represent different – and considerably greater – substantiation” than the two studies required in this case.
While the FTC’s Final Order only applies to POM at this point, the company raised the stakes for all food and supplement advertisers by saying it will ask the U.S. Court of Appeals to overrule the FTC on First Amendment and other grounds. If the Court of Appeals hears the case, its decision may extend well beyond POM and set standards for all food and beverage advertisers. Whether that is a good or a bad thing depends on how a food company markets its products, who it competes with, and whether its Board and CEO favor a playing field leveled by federal regulators, a free market resembling the Wild West, or something in between.
How did POM put the food industry in this position? As noted, this is not the first time FTC demanded that claims be backed by two well-controlled clinical studies. In 2010, Nestlé agreed to that requirement by entering into a cease and desist order with FTC regarding advertising for BOOST Kids Essentials Drink in the Matter of Nestlé HealthCare Nutrition, Inc. The company agreed, inter alia, to stop claiming that BOOST would reduce children’s sick-day absences from school and the duration of acute diarrhea, unless it could back up those claims with two well-designed human clinical trials.
Nestlé, the largest food company in the world, made a decision that fighting the FTC was simply not worth it in terms of litigation costs and bad publicity.
POM, in contrast, is a privately owned company, run by its founders who are “true believers” in the health benefits of their products and who apparently thrive on taking on the Feds. When it became publicly known the FTC was investigating POM advertising, the company first sued the Agency before the FTC filed its complaint against the company. When POM lost at the trial level, the company ran ads in the New York Times and other publications claiming it won the case and quoted the administrative law judge’s findings out of context.
As a litigant, it takes tenacity, commitment, and perseverance to obtain a ground-breaking First Amendment decision to strike down regulatory restrictions on commercial speech. Such was the case in Pearson v. Shalala, where the FDA attempted to ban various labeling statements for dietary supplements under its pre-market authority to authorize health claims. The U.S. Court of Appeals for the D.C. Circuit found the Agency’s pre-market approval regulations for supplements to be unconstitutional and told FDA to consider permitting health claims for dietary supplements based on preliminary scientific evidence if prominent disclosures on the label would prevent consumers from being misled, id. at 659.
POM’s ads did not contain the type of disclosures that the Court in Pearson said could prevent deception, but the “let’s take on the Feds” approach of both POM and Pearson have similarities. In Pearson, a principled commitment led to a Court of Appeals decision giving the dietary supplement industry, and eventually the food industry, unprecedented new freedom to make health claims. That was 1999.
The FTC has now said enough is enough – POM’s claims are, inter alia, “actually misleading,” and therefore, under the Supreme Court’s decision in Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, are not deserving of any First Amendment protection. Moreover, the agency notes that unlike the FDA, the FTC has no regulations requiring pre-approval of health claims in food advertising before they may be used in the marketplace. Rather, the FTC challenged an ongoing ad campaign as false, and after a full trial on the merits, included a “fencing-in” provision in its Final Order prohibiting only POM, not other food advertisers, from making health claims, unless they are backed up by two well-controlled clinical studies.
By bringing the case to the U.S. Court of Appeals, POM will be putting all of its cards on the table. But other food and supplement advertisers will have to live with the results — and right now the outcome is anyone’s guess.