Archive for the ‘FTC’ Category

While it is more common to read about fines, consent decrees, and recalls, if you make unlawful claims and engage in other illegal activity you may be prosecuted criminally. Recently, two marketers of dietary supplements received prison sentences in addition to the 11.9 million dollar judgment that was levied against them, for making illegal claims that the products they sold could prevent, treat or cure various diseases. Tony Pham, who operated Techmedica Health Inc, and Charles Thao of Nutrapha Research LLC pleaded guilty to conspiring to violate the Food, Drug and Cosmetic Act and to commit wire fraud, mail fraud, and money laundering. Additionally, both men are accused of using computer technology to hide their illegal websites by using “mirror image technology” to cause alternative websites with “sanitized” claims to be displayed whenever they were visited by someone with an FDA ISP address. While clever, the only people they’ll be able to brag to now will be their fellow inmates. Pham will serve three years in prison without parole and Thao was sentenced to eight years and one month without parole.

For additional information on this story, click the link below: http://www.fda.gov/ICECI/CriminalInvestigations/ucm234904.htm

Claims about probiotics helping the digestive system and protecting immunity have been around for decades.  However, 2 recent regulatory actions, one involving the FTC and Nestle and the other a warning letter sent from a California District Attorney, show that probiotic claims beyond those traditionally recognized might bring about greater scrutiny.  If you are marketing a probiotic product be careful about extrapolating those general claims to ones such as preventing illness and other health claims.

Two recent settlements with the FTC in addition to a NAD review of another company’s advertisement shows that no longer can one rely on inexpensive in vitro, animal tests. Further third party clinical trials or small pilot studies on one’s own products are also risky unless they are rigorous and directly related to the ingredients and the amounts of those ingredients in the product.  Recently the FTC entered into consent agreements with Iovate and Nestle products.  Those orders required the products in question to have 2 double blind placebo controlled studies for the products.  While the FTC stated that these standards only applied to the particular claims and products in the settlement and that the definition of “reliable scientific evidence” is “flexible”, using some old animal or in vitro studies to support your claims will no longer be sufficient.  The NAD or National Advertising Division of the Better Business Bureau said this specifically as it pertained to MuscleMeds advertising for its Armatest product.  Bottom line, you need rigorous scientific support for your claims.  We recommend retaining third party scientific experts to help you conduct that search and analyze your claims and to do so before you being marketing your product and before the regulators come knocking on your door.

The Federal Trade Commission’s first probiotic claims case has concluded with Nestle HealthCare Nutrition agreeing to drop claims that its children’s drink, BOOST Kid Essentials, could reduce illness-related absences from school or daycare. In the first of what is shaping up to be several investigations centered on probiotic products, FTC concentrated on whether claims about BOOST’s immunity protection were backed by results from clinical studies.

FTC feels that the studies Nestle relied on to prove their case could not adequately link reduced absences to the alleged immunity-boosting properties of their product, citing issues such as the original cause of the absences and how that was related to the outcome.
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In a House and Senate conference of the Wall Street Reform Bill and Consumer Protection Act, conferees ultimately decided not to include the broad rulemaking authority granted to the Federal Trade Commission (FTC) in the House version of the bill advocated by Congressman Henry Waxman (D-CA). This is a huge win for the nutritional supplement industry, as the rulemaking authority that would have been bestowed on FTC could have had a dramatic impact on industry, allowing the Agency to issue Rules under the Administrative Procedures Act that directly and significantly affect advertising. Currently FTC primarily “makes law” through enforcement of existing law. Getting this proposal removed from the final legislation was achieved through the help of overwhelming grassroots support in the form of messages from constituents to their representatives, and a combined effort of industry trade organizations including NPA and AHPA educating consumers and lobbying Capital Hill. I am proud to say that I personally spent a day on the Hill meeting with Representatives and U.S. Senators from New York and California, educating them on the issues and advocating on behalf of industry.

Making claims that a dietary supplement product can treat, cure or prevent a disease; making claims that are not substantiated or even worse, claiming that clinical studies have been performed when in fact, they have not, can result in substantial forfeiture of assets and federal criminal charges. The supplement industry is familiar with FDA and FTC oversight of dietary supplement claims resulting in consent decrees and civil penalties for violations of federal regulations. But what companies are not as familiar with are FDA’s enforcement powers to launch criminal investigations which are prosecuted by the United States Attorney’s office. Below is a recent example of the kinds of penalties that not only companies but individuals can be subject to for making false claims about supplement products. CMG works with our clients to review their label and advertising claims for compliance with federal laws and regulations, to help prevent or avoid this kind of situation from occurring:

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