Thursday, January 17, 2013

Pom part two: remedies, First Amendment, concurrences

Pom argued that the First Amendment protected its ads.  But Central Hudson gives commercial speech constitutional protection only when it’s not misleading.  To get around this, Pom argued that the FTC couldn’t determine that ads are “actually misleading” without extrinsic or empirical evidence of deception.  And, Pom continued, it couldn’t find ads “inherently misleading” if they stated accurate and verifiable facts.  Thus, at most, the FTC could require limited disclaimers as to “potentially misleading” ads, because Pom and the FTC just disagreed about the meaning of scientific evidence (or, you know, its presence).  (Despite the dumbness of Pom’s contention that literal truth can’t be inherently misleading, the doctrine here is indeed a mare’s nest, since the Supreme Court has tossed around actually/inherently/potentially misleading without saying much useful about what those terms ought to mean.)

No dice.  Precedent establishes that empirical or extrinsic evidence isn’t necessary for the Commission to determine that ads are actually misleading, based on its own expertise.  The ads claimed that Pom products had been proven to prevent/treat diseases.  This is not true.  That’s deceptive and actually misleading, as is failure to substantiate claims. Zauderer didn’t require empirical evidence; Kraft didn’t; and the FTC isn’t going to either, even when a claim is made by implication, as long as the claim is reasonably clear.  Misleading commercial speech is not protected by the First Amendment, full stop, no further Central Hudson analysis required.

Even so, the Commission addressed Pom’s argument that “an advertisement cannot be inherently misleading on its face when it states objectively accurate and verifiable facts.”  Not so.  Literally true statements can have misleading implications.  Language games with “inherently” don’t change that (or we’d just talk about “false” claims, not “misleading” ones as well).  Pom wanted the Commission to evaluate each element of an ad in isolation and find that no individual statement was itself false/misleading, but that wasn’t the law.  The cases Pom cited involved bans on simple truthful statements in professional advertising, such as bans on listing jurisdictions where an attorney was licensed or certifications s/he held.  But in those cases, the Court found, for example, that consumers could easily confirm the licensing or certification.  Pom argued that their claims were objectively accurate and verifiable: their products are high in antioxidants; they cited their studies; the results were published in peer-reviewed journals.

However, though many of the individual facts in the ads were verifiable, there were many omissions that consumers couldn’t verify independently.  As an example, consumers couldn’t verify that one of the five studies cited in the ads was rejected by the American Heart Association and the Journal of the American Medical Association because of research shortcomings, and was only accepted for publication without peer review. Nor could consumers verify that the results of a much larger, well-designed, well-controlled study were inconsistent with Pom’s arterial plaque claims because Pom suppressed publication of the negative results for a significant period.  Many of these representatiosn were qualitatively different from the verifiable statements in the professional advertising cases.

Pom’s fallback argument was that its ads were only potentially misleading under the terrible Pearson v. Shalala, 164 F.3d 650 (D.C. Cir. 1999), and couldn’t be “banned on the basis of a genuine dispute about the level or meaning of scientific evidence.”  The Commission didn’t read Pearson to prevent a finding that Pom’s claims were misleading for want of substantiation, even if that were based on a finding that the ads were potentially misleading.  Pearson involved a prospective ban on certain supplement claims; the DC Circuit (well-known for its expertise in marketing and consumer perception) concluded that sufficiently prominent disclaimers could avoid misleadingness.  By contrast, the Commission reviewed the ads that Pom actually ran.  Its disclosures and disclaimers were much less than “what the D.C. Circuit hypothesized would be sufficient to prevent health claims with disputed scientific support from being misleading.”

Commissioner Ohlhausen disagreed with regard to some ads that she thought had sufficiently qualifying language.  She would have required extrinsic evidence before finding them misleading.  If Pom had used Pearson disclaimers such as “the evidence in support of this claim is inconclusive,” the Commission would have considered the ad as a whole, including those disclaimers.  But without disclaimers, the ads were deceptive and misleading.  And a case-by-case approach differs from regulations that prohibit categories of speech or preapprove language.  Pom was simply being required to have adequate substantiation for the claims id did make.

Pom brought a new Fifth Amendment due process challenge, claiming that the Commission was retroactively requiring a new evidentiary standard.  But the general rule on substantiation is well established, and how that applies to health claims has also been detailed before.  Given that what counts as substantiation is always fact-based depending on what’s competent and reliable scientific evidence for the claims at issue, there was no due process problem.

The Commission decided to ignore the four media interviews challenged by Complaint Counsel: appearances by Mrs. Resnick on The Martha Stewart Show and The Early Show, sharing recipes and marketing ideas related in part to POM; a magazine interview with Mrs. Resnick in Newsweek,in part promoting the sale of her book about the POM business; and a television interview with Mr. Tupper on FOX Business discussing the current relevance of the pomegranate and pomegranate juice.  The ALJ found that they weren’t ads, but the Commission didn’t adopt that ruling.  The FTC’s jurisdiction covers deceptive commercial speech, not just ads—the FTC’s not NAD.  Instead, there just wasn’t enough evidence of the circumstances surrounding the interviews to determine whether they were commercial speech (which would require an analysis of the content, including whether it referred to a specific product or product attributes; the means used to publish the speech, including whether it was paid for; and the speaker’s economic motivation/whether the interviewer or the interviewee controlled the questions).  Given the numerous other deceptive claims made by Pom, the Commission exercised its discretion to avoid basing liability on those media interviews.

Pom then argued that no cease and desist order was warranted because it stopped running the ads at issue, and because it adopted a new review process in 2006 that got rid of most of the offending claims.  The Commission disagreed.  Relevant considerations are “(1) the seriousness and deliberateness of the violation; (2) the ease with which the violative claim may be transferred to other products; and (3) whether the respondent has a history of prior violations.”  The strength of one factor can outweigh weaknesses in others.  Here, though Pom had no history of violations, they were serious and deliberate, and the type of health claims could be easily transferred to the Pom entities’ other products.  Pom made numerous unsupported claims about serious and even life-threatening diseases.  It did so with gusto and awareness of the weakness of its claims, including inconsistency between its claims and the results of some of its later (better) studies.  And the Pom entities “could use similar marketing techniques to make disease claims about other food products, including the other food products Respondents currently sell.”

Given the ready transferability of the technique, and the fact that the Pom entities had already sponsored research with an eye toward making health claims for other products they sell such as Wonderful Pistachios and FIJI Water, the Commission imposed a fencing-in provision, applying its order to the challenged Pom products along with any other food, drug, or dietary supplements sold by Pom and the related entities identified by the FTC. 

Moreover, the order required at least two RCTs before Pom could make “any representation regarding a product’s effectiveness in the diagnosis, treatment, or prevention of any disease.”  The Commission specified that two RCTs would be required, consistent with FTC precedent and with expert testimony about the need for consistent results in independently replicated studies.  Even with a RCT, results from any one study may be due to chance or may not be generalizable due to the uniqueness of the study sample.  Separately, Pom had a demonstrated propensity to misrepresent research in its favor.  Pom engaged in “a deliberate and consistent course of conduct – no mere isolated incident or mistake.”  A two RCT requirement would constrain its ability to repeat this misrepresentation.  The Commission declined to require FDA preapproval; the need for a clear standard to which to hold Pom was adequately met by the two-RCT requirement.  In a footnote, the Commission stated that it didn’t foreclose FDA preapproval as an appropriate remedy in another case.

The two-RCT requirement only applied to disease prevention, risk reduction, and treatment claims. Other health-related claims would require competent and reliable scientific evidence, sufficient in quality and quantity when considered in the light of the entire body of relevant and reliable scientific evidence, to substantiate them.

Commissioner Ohlhausen would only have required one RCT, on the theory that requiring two wasn’t reasonably related to the violations at issue “because a second study would not cure any particular statistical or methodological problems” [have some xkcd!] and because the requirement could chill consumer access to potentially useful information about an admittedly safe product, raising First Amendment concerns.  Following Pearson, commercial speech doctrine prefers disclosure over suppression.

Commissioner Rosch concurred, though he thought the majority took the “safest” route in its discussion of the expert testimony and the Pfizer factors rather than the most sensible one.  It was unnecessary for the Commission to rely so heavily on the opinions of paid experts.  He would have decided that the net impression from the ads included claims about the level of substantiation Pom possessed, conveyed both expressly and by implication. These claims were false.  The Commission’s own common sense and expertise can determine whether false substantiation claims are conveyed, without extrinsic evidence.  “[W]hen an advertiser represents in its ad that there is a particular level of support for a claim, the absence of that support makes the claim false.”

Commissioner Rosch agreed that if Pom’s ads just made health claims, standing alone, they couldn’t be challenged as false or deceptive.  But they didn’t stand alone.  Sometimes they were linked to treatment/prevention claims for heart disease or prostate cancer, either explicitly or implicitly, creating a false net impression that “the highest possible level of substantiation exists for the POM product being advertised.”  Implicit claims were made by “liberally quoting physicians, by equating POM with POMx (which is depicted as a prescription drug), or by depicting POM itself as a medicine,” as well as by “describing POM as a life insurance supplement or a healthcare plan.”  The Commissioner didn’t consider erectile dysfunction to be as serious as heart disease or prostate cancer, so linking Pom with treatment/prevention of ED standing alone didn’t create a net impression that these claims were supported by the highest level of substantiation.  But there was no error in requiring such substantiation, since establishment claims are binding on advertisers who make them, and Pom did make such claims.

Commissioner Ohlhausen’s concurrence disagreed with the majority about certain ads, which she read as making claims only about the “general effects of the POM products on the continued healthy functioning of the body,” not about diseases.  The majority found disease claims implied without extrinsic evidence.  She worried that too easily finding implied disease or establishment claims, withouth extrinsic evidnece, would “undermine an important balance that is struck in the regulation of food, supplement, and drug advertising under the FTC Act and other federal laws”—that is, the distinction between structure/function claims and disease claims. 

She also thought that the majority conflated disease treatment claims with prevention/risk reduction claims, including by finding implied prevention claims for ads describing studies of subjects already suffering from prostate cancer or ED. “Because it seems unlikely that a consumer would assume that any food or food product that lowers the risk of disease is also a viable treatment for that disease, I disagree with the majority’s conclusions that such claims are facially present in certain exhibits.”  Likewise, she didn’t think that consumers would assume that treatments for existing cancer or heart disease would prevent the onset of those conditions.  Also, she thought the use of qualifiers such as “small study,” “initial scientific research,” and “promising,” “hopeful” or “encouraging” results didn’t make establishment claims.  Sure, Pom referred to millions of dollars spent on research, but it was referring mostly to how much it spent showing the amount of antioxidants in the Pom products and the general effects of antioxidants on the human body; extrinsic evidence was needed to show that consumers would think it meant more than that. (I think this all really ignores the forest for the trees, given these ads.) 

The majority’s ruling blurred the boundaries between structure/function and disease claims, creating an FTC/FDA inconsistency.  “[I]t is difficult to imagine any structure/function claims that POM could associate with its products in the marketplace without such claims being interpreted, under the FTC precedent set in this case, as disease-related claims…. [W]e should be careful not to interpret claims so broadly that we undermine distinctions between types of claims, and the substantiation appropriate to them, that Congress and our sister agency have found important to the public’s health and wellbeing.”  [The FDA has not actually so concluded; it’s just been told by Congress and the DC Circuit to pretend that there’s a difference to consumers for its regulatory purposes.  I applaud the majority of the Commission for focusing on its consumer protection mission; if consumers aren’t in fact distinguishing so-called structure/function claims focusing on the absence of specific diseases from disease prevention/treatment claims, as the studies I’ve seen show they aren’t, then they can be deceived by supposed structure/function claims that implicitly or by necessary implication serve as disease claims.]

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