Monday, February 02, 2015

Pom squad at the DC Circuit

POM Wonderful, LLC v. Federal Trade Comm’n, No. 13-1060 (D.C. Cir. Jan. 30, 2015)
POM ran ads from 2003 to 2010 touting medical studies that supposedly showed that daily consumption of POM products could “treat, prevent, or reduce the risk of various ailments, including heart disease, prostate cancer, and erectile dysfunction.”  Unfortunately, “[m]any of those ads mischaracterized the scientific evidence concerning the health benefits of POM’s products with regard to those diseases.”  The FTC ordered POM to stop; the D.C. Circuit rejected most of POM’s challenges, except to the portion of the remedial order requiring two randomized clinical trials before making similar health claims.
NB: With Tom Goldstein on the brief, the court of appeals may not be the last stop for this case.  I don’t think there’s a split, but a Court eager to expand protection for commercial speech might nonetheless be interested.  I suspect that if cert were granted, though, the Court would find—as it did in Nike v. Kasky—that the prospect of destroying a huge part of the regulatory state by making it much easier to engage in false or misleading advertising was too unappetizing for a majority.
The court here concluded that there was no basis to set aside the FTC’s finding of false and misleading statements.  However, it did reverse the FTC’s blanket requirement of at least two randomized controlled studies as a precondition to any disease-related claim—which is either a very interesting constitutionalization of a remedial standard, or maybe not that important; only time will tell.
The products at issue include both pomegranate juice and dietary supplements, POMx Pills and POMx Liquid, which contain pomegranate extract in concentrated form. By 2010, POM’s owners (the Resnicks), POM, and POM’s integrated marketing agency Roll had spent more than $35 million on pomegranate-related medical research, sponsoring more than one hundred studies at forty-four different institutions. The claims at issue here dealt with heart disease, prostate cancer, and erectile dysfunction. 
Take heart disease: One POM-sponsored study involved ten patients in the treatment group and nine in the control, and thus couldn’t be “at all conclusive” in the words of one of POM’s own experts. A larger study followed 73 patients and found no statistically significant difference in the tested measure or any other heart-related measure.  A still larger study followed 289 patients and again found no statistically significant difference; POM initially delayed publication but eventually allowed it. The final report identified some subgroups that appeared to benefit, but this was post hoc massaging of the data (a classic way to claim otherwise absent significance) and posed an increased risk of false positives.  Plus, even for the subgroups, the change was 4-9% decrease in arterial thickness, substantially below the 30% reported by the tiny study. 
Even though the bigger studies were done by 2006, “a consumer reading POM’s promotional materials after 2006 would not have known of those studies or that they cast doubt on [the] prior findings.” For example, in 2007, POM published a newsletter claiming that “NEW RESEARCH OFFERS FURTHER PROOF OF THE HEART-HEALTHY BENEFITS OF POM WONDERFUL JUICE.” The newsletter claimed a “30% DECREASE IN ARTERIAL PLAQUE.” Always, POM was silent about the contrary studies.  The evidence went on like this, but I won’t.  POM’s studies had grave limitations and/or found no statistically significant benefits.
The full Commission, by a vote of four out of five, found that 36 of POM’s ads made false or misleading claims, though injunctive relief would be justified even if based solely on the 19 ads the ALJ found to be false or misleading.  One commissioner concurred, saying that she, like the ALJ, would have found a smaller number of POM ads to be false or misleading, but agreed that POM and related parties had violated the FTC Act.  The injunctive order barred the POM entities from representing that any food, drug, or dietary supplement “is effective in the diagnosis, cure, mitigation, treatment, or prevention of any disease” unless the representation is non-misleading and supported by “competent and reliable scientific evidence that, when considered in light of the entire body of relevant and reliable scientific evidence, is sufficient to substantiate that the representation is true.” For purposes of that order, the FTC defined such evidence as at least two properly conducted, randomized and controlled human clinical trials (RCTs) that yielded statistically significant results. They’d have to be double-blinded unless the POM defendants could show that blinding couldn’t be effectively implemented given the nature of the intervention.
The rest of the order barred POM from misrepresenting the results of scientific studies in their ads and from making any claim about the “health benefits” of a food, drug, or dietary supplement unless the representation is non-misleading and supported by “competent and reliable scientific evidence.” But it didn’t require RCTs to support more general claims about health benefits.
Statutory claims first: “[t]he findings of the Commission as to the facts, if supported by evidence, shall be conclusive.” FTC Act § 5(c). This is basically the APA’s substantial evidence standard.  The FTC is often in a better position than courts to determine deceptiveness, since such a finding “rests so heavily on inference and pragmatic judgment.”  The FTC evaluates what claims are made in an ad; whether the claims are false, misleading, or unsubstantiated; and whether the claims were misleading—that last was not in dispute here.
Ads that merely convey efficacy have to be substantiated by a reasonable basis, determined by “the type of product,” “the type of claim,” “the benefit of a truthful claim,” “the ease of developing substantiation for the claim,” “the consequences of a false claim,” and “the amount of substantiation experts in the field would consider reasonable.” But for establishment claims, if the claim is specific, the “advertiser must possess the specific substantiation claimed.”  If the claims aren’t specific—claims like “medically proven” or images that “clearly suggest that the claim is based upon a foundation of scientific evidence”—the advertiser “must possess evidence sufficient to satisfy the relevant scientific community of the claim’s truth.”
There was no basis for setting aside the FTC’s “carefully considered findings of efficacy and establishment claims.”  The POM entities argued that the FTC interpreted POM’s claims too broadly by holding that if an ad truthfully references research connecting a food product to possible health benefits, it necessarily implies “the vastly broader claim that there is ‘clinical proof’ that the product treats, cures, or prevents a disease.” That’s not what the FTC did.  It clearly stated that not every reference to a test or study was necessarily an establishment claim. But the ads at issue here went beyond “merely describing specific research in sufficient detail to allow a consumer to judge its validity.” The ads referred to study results “in a way that suggests they are convincing evidence of efficacy,” drawing a “logical connection” between study results and disease effectiveness. “Moreover, they invoked medical symbols, referenced publication in medical journals, and described the substantial funds spent on medical research, fortifying the overall sense that the referenced clinical studies establish the claimed benefits.”  The court agreed with the FTC that when an ad represents that tens of millions of dollars have spent on research, that tends to reinforce the idea that the supporting research wasn’t just preliminary.
Nor was the FTC cherry-picking the record for aggressive ads.  There was no meaningful difference between earlier ads and more recent ads’ reliance on medical studies.  For example, in July 2010, less than three months before the FTC complaint, POM advertised that POMx was “backed by $34 million in medical research at the world’s leading universities” revealing “promising results for erectile, prostate and cardiovascular health.” It discussed the same old, tiny studies. The FTC concluded that “at least a significant minority of reasonable consumers” would construe the ad to claim that POM products could treat, prevent, or reduce the risk of erectile dysfunction, prostate cancer, and heart disease. The ad’s references to the described studies as “promising,” “initial” or “preliminary,” in context, were insufficient to neutralize the otherwise unequivocally positive claims of specific results. As the FTC held, the “use of one or two adjectives does not alter the net impression,” especially “when the chosen adjectives” (such as “promising”) “provide a positive spin on the studies rather than a substantive disclaimer.”
The FTC might’ve reached a different result if the ads had effective disclaimers, but they didn’t.  (The identified statement, “evidence in support of this claim is inconclusive,” is probably ineffective, by the way, but I can’t imagine that detains the DC Circuit much.)  Thus, the standard POM had to meet was “evidence sufficient to satisfy the relevant scientific community of the truth of their claims.”
The FTC then found POM’s claims deceptive due to inadequate substantiation.  The court of appeals held that this finding was supported by substantial evidence, mindful of the FTC’s special expertise in determining the necessary substantiation.  For both efficacy and non-specific establishment claims, the FTC found that experts in the relevant fields would require one or more RCTs to establish a causal relationship between a food and the treatment, prevention, or reduction of risk” of heart disease, prostate cancer, or erectile dysfunction.  The FTC emphasized a distinction between “generalized nutritional and health benefit claims” and “the specific disease treatment and prevention claims at issue in this case.”  Also, lesser substantiation might suffice for “claims that do not assert a causal relationship,” unlike POM’s ads, e.g., “POM Wonderful Pomegranate Juice . . . can help prevent premature aging, heart disease, stroke, Alzheimer’s, even cancer” and “Eight ounces a day is enough to keep your heart pumping.”
POM’s studies weren’t RCTs.  And their selective touting of ostensibly favorable studies constituted misleading omissions of material facts.  The FTC further found that POM was aware of the misrepresentations and the weaknesses in the studies.
POM challenged the FTC’s factual finding that experts in the relevant fields require RCTs to support claims about the disease-related benefits of POM’s products. That finding was supported by substantial record evidence. The FTC explained the need for a control group, random assignment of subjects, and double-blinding.  POM argued that some FTC experts admitted that RCTs aren’t always necessary to substantiate health benefit claims for foods and nutrients, but that contention took the statements out of context.  One acknowledged making recommendations about diet and exercise even without RCTs, but said that making a recommendation based on the “best available evidence” is “not the same as stating that a causal link has been established.”  Another acknowledged that “well-conducted, well-executed observational research is very important” for evaluating foods and nutrients, but he emphasized that a causal link between a food or nutrient and a reduction in disease risk “cannot be proven from an observational [i.e., non-RCT] study.” Yet POM did claim a causal link.  POM’s own experts offered other views about the need for RCT’s, but it’s not the court’s job to make its own appraisal of the testimony. 
POM argued that RCTs would be too onerous.  Practically, it’s difficult/impossible to “blind” a fruit.  But that doesn’t apply to the supplements—two of three of the challenged products—and several of the juice studies were double-blinded and placebo-controlled by using a beverage with “similar color and energy content” as pomegranate juice.  Also, the FTC required double-blinding only “when feasible,” acknowledging that, “in some instances . . . it may not be possible to conduct blinded clinical trials of food products.” Ethically, POM said it was “impossible to create a zero intake group for nutrients in an ethical manner—doctors cannot, for example, ethically deprive a control group of patients of all Vitamin C for a decade to determine whether Vitamin C helps prevent cancer.” But many ads made claims about the short-term benefits of consuming POM products.  Plus, there was “no reason to believe that it would be unethical to create a zero intake group for pomegranate juice.” RCTs could be costly, though the court commented that POM somehow sponsored dozens of studies, including RCTs.  But if RCTs were prohibitively costly, POM could choose to specify a lower level of substantiation with an effective disclaimer.  The need for RCTs was Pom’s own choice based on its ad claims.
Next, POM argued that the FTC’s substantiation standard amounted to a new legal rule, in violation of APA notice and comment requirements.  (Actually, the requirements for the FTC can be more onerous.) Nope: it “is well settled that an agency ‘is not precluded from announcing new principles in an adjudicative proceeding,’” and that “‘the choice between rulemaking and adjudication lies in the first instance within the agency’s discretion.’”  Moreover, the FTC’s decision wasn’t a major substantive legal addition to its substantiation standards.  It was consistent with FTC precedent for scientific establishment claims, and the FTC had required RCTs in other contexts. 
Defendant Matthew Tupper challenged the finding of individual liability as to him. He became POM’s COO in 2003 and served as its president 2005-2011. He argued that he shouldn’t be individually liable because Lynda Resnick, one of POM’s founders, had the final say on ads. That’s not the standard for individual liability.  Direct participation in the deceptive practices, or authority to control them, is the standard.  Tupper participated directly in meetings about advertising concepts and content, reviewed and edited ad copy, managed the day- to-day affairs of POM’s marketing team, and possessed hiring and firing authority over the head of POM’s marketing department. Even assuming that “authority to control” was a prerequisite for individual liability under the FTC Act, the court would therefore still affirm.  Nor did the FTC have to show knowledge of misleadingness—that’s only for equitable monetary relief, not injunctive relief.  When no restitution or monetary penalties are sought, the FTCA imposes strict liability. 
Tupper also argued that he voluntarily retired from POM, but that doesn’t mean injunctive relief was improper.  An injunction might be unnecessary if someone hasn’t shown a propensity to violate the law and nothing in the record suggested the possibility of further violations, but the FTC found that the POM entities, including Tupper, had a demonstrated propensity for misrepresentation and engaged in a deliberate, consistent course of conduct.  Plus, there was no assurance that Tupper wouldn’t return to POM or join another company that markets food products or dietary supplements.
Now, on to the First Amendment. Misleading advertising can be entirely banned.  POM said the court should review the FTC’s finding of misleadingness de novo, citing Bose Corp. v. Consumers Union of U.S., 466 U.S. 485 (1984).  DC Circuit precedent established that the factual finding of deceptiveness was reviewed under the ordinary (and deferential) substantial-evidence standard, even in the First Amendment context. Also, the court of appeals would reach the same conclusion even if it were to exercise de novo review, “at least with respect to the nineteen ads determined misleading by the administrative law judge and held by the Commission to form a sufficient basis for its liability determination and remedial order.”  (That could be a certworthiness problem, I think.)
Injunctive relief: Part III of the order barred  representations about a product’s general health benefits “unless the representation is non- misleading” and backed by “competent and reliable scientific evidence that is sufficient in quality and quantity” to “substantiate that the representation is true.” For that part, “competent and reliable evidence” meant studies that are “generally accepted in the profession to yield accurate and reliable results.”
Part I, however, governed claims about the treatment or prevention of “any disease.” The baseline that claims must be non-misleading and supported by “competent and reliable scientific evidence” was there, but for Part I purposes that last term was more narrowly defined as at least two RCTs yielding statistically significant results, double-blinded where feasible. The FTC clarified that this requirement applied only to unqualified representations, not effectively qualified disease claims.  But claims characterizing a study’s results as “preliminary” or “initial”—“even if describing a gold-standard RCT yielding results with an extremely high degree of statistical significance”—would fail to count as adequately qualified and thus would be prohibited. Instead, such an ad would need a disclaimer “unambiguously” saying that the evidence is “inconclusive” or that “additional research is necessary,” “even if the ad is substantiated by a well-designed RCT that experts uniformly consider to be conclusive, and regardless of the amount and quality of additional supporting evidence other than RCTs.”
The FTC agreed that the remedial order should be examined under Central Hudson. Obviously, the government’s interest in the accuracy of commercial information in the market is substantial. Central Hudson requires a restriction to directly advance the government’s interest and be no more extensive than necessary to serve that interest.  To the extent that there was a general RCT-substantiation requirement for disease claims—not requiring any particular number of RCTs—the order satisfied Central Hudson.
The RCT standard was the mirror of the FTC’s upheld liability finding: POM’s claims were misleading because they were unsubstantiated by RCTs.  Thus, a RCT requirement was “perfectly commensurate” with liability for past misleadingness.  Sure, POM only made claims about three specific diseases, but the broad scope of the order (covering any disease) was justified by POM’s “demonstrated propensity to make deceptive representations about the health benefits of their products, and also by the expert testimony supporting the necessity of RCTs to establish causation for disease-related claims generally.”
But requiring two RCTs was a trial too far.  (If you are from the FDA and you are reading this, you should be sweating.) While Central Hudson isn’t a least restrictive means standard, the FTC still had to show a reasonable fit between its means and its interest. The FTC failed to justify a categorical floor of two RCTs.  All else being equal, two would be better than one; but likewise three would be better than two.  And “[r]equiring additional RCTs without adequate justification exacts considerable costs, and not just in terms of the substantial resources often necessary.”  If two RCTs are required, “consumers may be denied useful, truthful information about products with a demonstrated capacity to treat or prevent serious disease.” That would be contrary to the objectives of the commercial speech doctrine.
Suppose, for example, there was a “large-scale, perfectly designed and conducted RCT” showing a significant reduction in risk for a particular disease, “demonstrated to a very high degree of statistical certainty … so much so that experts in the relevant field universally regard the study as conclusively establishing clinical proof of the supplement’s benefits for disease prevention. Perhaps, moreover, a wealth of medical research and evidence apart from RCTs—e.g., observational studies—reinforces the results of the blue-ribbon RCT.”  In that case, there’d be a substantial interest in informing consumers, without any misleading qualifiers that the evidence was inconclusive.  So, apparently the burden is on the FTC to show that this magical study does not exist. Query how much better off advertisers are if they have to figure out on their own which claims require replicated RCTs and which don’t.
Even the FDA has held that “[a] single large, well conducted and controlled clinical trial could provide sufficient evidence to establish a substance/disease relationship, provided that there is a supporting body of evidence from observational or mechanistic studies.” U.S. Food & Drug Admin., Guidance for Industry: Significant Scientific Agreement in the Review of Claims for Conventional Foods and Dietary Supplements 5 (Dec. 1999), 1999 WL 33935287 (withdrawn 2009).  The FTC’s two-RCT requirement “brooks no exception for those circumstances.”  But the FTC has elsewhere told industry that, “[i]n most situations, the quality of studies will be more important than quantity.” U.S. Fed. Trade Comm’n, Dietary Supplements: An Advertising Guide for Industry 10 (Apr. 2001).
The FTC failed to show how such a rigid remedial rule had the requisite “reasonable fit” with the interest in preventing deceptive speech.  The argument that a two-RCT requirement was consistent with precedent didn’t make it fit this new set of facts.  True, the “FTC has usually required two well-controlled clinical tests” before certain “non-specific establishment claim[s] may be made.” But all the cited cases involved establishment claims about the comparative efficacy of over-the-counter analgesics, and reflected extensive consideration of the specific circumstances of such products, especially the subjective nature of pain sensitivity.  The FDA, as well as the medical/scientific community, required replication for clinical tests involving analgesic drugs. But that shows a history of requiring two RCTs only in “narrow circumstances based on particularized concerns.”  Consent orders have also varied on the quantum of evidence, depending on circumstance.
The FTC noted some expert testimony recognizing a need for independent replication, due to the possibility that a single RCT’s results may be due to chance or a unique sample.  But “insofar as the results of any particular RCT may be suspect due to deficiencies in the sample or trial, the baseline requirement for health-related claims independently bars any representations unless supported by ‘competent and reliable scientific evidence that . . . is sufficient to substantiate that the representation is true.’ That in turn requires that a study be “generally accepted in the profession to yield accurate and reliable results.”  Plus, the FTC’s experts themselves thought that one RCT could suffice for the prostate cancer and erectile dysfunction claims at issue.
Finally, the FTC appealed to POM’s demonstrated propensity to misrepresent the strength and outcomes of studies. But every party subject to a final FTC order has been found to have advertised unlawfully; the FTC didn’t explain how two RCTs were linked to the particular history of POM’s wrongdoing.  The rest of the order requiring sufficient scientific evidence could address that. Two RCTs might be justified in another case, but not here (even for heart disease, where the experts did testify that two would be required? Or can the FTC argue that later?).  So the order was modified to require at least one RCT before making disease claims.

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