Multi-Level marketing is often used in the dietary supplement and cosmetics industry. Sellers become a Multi “level” marketer because they market and distribute a certain product through a chain of individuals, such as with HerbaLife and Young Living. While the MLM model may be a useful tool for companies to market products quickly and efficiently, regulations pertaining to advertising and marketing, such as those enforced by the FDA and FTC still apply.

Prompted by recent events, like the actions taken against HerbaLife International, the FTC Guidance aims to provide a better understanding of the FTC’s expectation for the MLM businesses and the responsibilities that these companies have when it comes to marketing their products. In particular, one of the main components the Guidance addresses is how MLMs should establish compliance programs aimed at ensuring the companies maintain oversight into the sales activities of their teams. These compliance programs should include constant supervision of the distributors of the product, to confirm that they are abiding by the applicable policies and procedures, specifically those associated with claims, sales validation, and other consumer protection-oriented policies.

This new Guidance equips businesses with FTC’s current thinking on what is in conformity with the FTC Act. To ensure businesses are complying with the rules and regulation put forth by the FTC, it is important for businesses to reexamine their practices and to create compliance programs or revise existing programs for compliance with the FTC Act and FTC MLM Guidance.

Should you need assistance with developing a plan for compliance with FTC’s MLM policies or have questions about marketing laws and regulations, please contact us at contact@sglawfl.com.

Based on evidence collected from its investigation, the DOJ’s motion alleged Bayer should be held in civil contempt for violating the 2007 consent decree concerning the requirement that Bayer substantiates its dietary supplement claims with scientific evidence. Specifically, the motion alleged that Bayer wrongfully made claims that PCH supports digestive health, and the product would help alleviate constipation, diarrhea, and gas and bloating without specific randomized, double-blind, placebo-controlled trials to prove that PCH offers these health benefits. In short, the Government’s position, like we have seen time and time again from the FTC, is that the Company must have conducted human studies in order to make the arguably dietary supplement-type claims.

In defense of the motion, Bayer produced as evidence a substantial amount of public domain and proprietary scientific evidence in support of its claims regarding PCH’s effectiveness in fostering digestive health. Further, Bayer argued the DOJ’s reliance on Bayer’s lack of substantiation of its product claims exceeded legislative intent for how dietary supplements should be regulated under the Dietary Supplement Health and Education Act (DSHEA). Thus, Bayer countnered the type of evidence required to substantiate claims under the DSHEA was not Laine-Level randomized clinical trials. In other words, Bayer argued that dietary supplements do not need the requisite level of substantiation that would be necessary for the approval of a drug under federal law. Accordingly, Bayer argued it only needed to conduct a periodic review of the literature since Bayer’s structure function claims were not implied disease claims and that the appropriate scientific substantiation standard for structure-function claims does not require Laine-Level randomized clinical trials.

The main takeaway from this is that for dietary supplement manufacturers making structure/function claims, courts may be willing to interpret this a less rigorous evidentiary burden when it comes to claims substantiation, as opposed to more highly regulated products. Additionally, and somewhat more controversially, this decision has been interpreted by some to signal that digestive health structure/function claims are more expansive than originally thought, potentially including constipation, diarrhea, gas and bloating.

Navigating the web of regulations governing claims regarding dietary supplements can be a daunting task. If you have any questions about FDA regulations or how they relate to the marketing of dietary supplements, please contact us at contact@sglawfl.com.

Because several products promoted on the website are not generally recognized as safe and effective for eradicating the Ebola virus, the FDA considers them new drugs under §505(a) of the Federal Food, Drug, and Cosmetic Act. Under this act, a drug may not be introduced or delivered for introduction into interstate commerce unless the FDA has determined it is safe for consumers.

The FDA also alleges the products promoted by Dr. Laibow are misbranded under §502(f)(1) of the Federal Food, Drug, and Cosmetic Act. These products are considered misbranded because they are offered for conditions that cannot be self-diagnosed or treated by someone who is not a medical professional. As a result, there is no way to provide adequate instructions for using the products safely and for their intended use.  The Warning Letter gives Dr. Laibow 15 working days to submit a list of steps taken to correct these violations.

The FTC alleges Dr. Laibow violated the FTC Act by making product claims without reliable scientific evidence. Under the FTC Act, it is unlawful to claim that a product can treat, prevent, or cure disease in humans unless there is competent and reliable scientific evidence to support those claims. The FTC advised Dr. Laibow to carefully review all claims and ensure there is scientific evidence to support them. Dr. Laibow has 15 working days to respond to the FTC’s concerns.

Although a FDA Warning Letter constitutes an informal action on the part of the FDA, it is a sign that a formal enforcement action may happen if a company does not address the alleged deficiencies. This is why it is so important to take these warnings seriously. The FDA often targets companies making claims related to highly publicized outbreaks. Since the Ebola outbreak made the news, the Agency has also sent FDA warning letters to Young Living Essential Oils and doTERRA Essential Oil because their independent consultants allegedly promoted essential oils as an effective treatment for the Ebola virus.

If you have any questions about complying with the Federal Food, Drug, and Cosmetic Act, or you have received a FDA warning letter, contact us at contact@sglawfl.com to discuss your concerns with counsel.

Marketers of the diabetes products Insulin Resistance and Diabetic Pack, Wellness Support Network (“the Company”), attempted to market their products as medical foods. However, both the FTC and FDA took issue with the Company’s statements in advertising and targeted the Company in connection with the marketing of these products. In particular, in September 2005 and October 2006, the FDA issued two separate warning letters to the co-owners of Wellness Support Network, Robert and Robyn Held, warning the Company that their products, as advertised, were deemed unapproved drugs by the FDA. When the Helds did not stop marketing their products, the FTC then stepped in and ultimately filed a complaint for permanent injunction in federal court, arguing that the Company’s advertising claims pertaining to diabetes were deceptive, in that the representations made about the products were false and/or were not supported by the requisite level of substantiation when made.

In sum, both the FDA and FTC were involved in the issuance of this Warning Letter, highlighting the overlapping jurisdiction of the FDA and FTC with respect to product claims, and the importance of considering the requirements of both agencies in this context. The responsibilities of each agency are outlined in a Memorandum of Understanding, found here. Where, the FDA has primary responsibility for regulating the labeling of food, drugs, devices, and cosmetics, the FTC has primary responsibility for regulating the advertising for these types of products. Accordingly, compliance with both regulatory authorities is essential. For more information about compliance with both FDA and FTC regulations, please contact us at: contact@sglawfl.com.

According to the text of the Warning Letter, the FDA targeted the Company, Flu & Cold Defense, along with its managing member Todd Whidden, for marketing the “Germ Bullet” as an unapproved new drug in violation of the Federal Food, Drug, and Cosmetic Act (“FDCA”). Flu & Cold Defense makes claims on its website, as well as in a recent press release, promoting its nasal inhaler as a remedy for the cold and flu viruses. Pursuant to the FDCA, products that are intended to be used in the diagnosis, cure, treatment or prevention of a disease or condition are considered drugs. 21 U.S.C. § 321(g). Unless the drug is generally recognized as safe and effective for its intended use, however, an application must be submitted to the FDA for approval before it can be marketed to consumers. The “GermBullet” has not yet been presented to the FDA for approval.

Additionally, the FDA notes in the Warning Letter that the “GermBullet” is misbranded pursuant to the FDCA because its labeling both fails to include adequate directions for its intended use and makes false and misleading claims. In particular, the Company’s website falsely states that an FDA recognized virology lab independently confirmed that the product has the potential capability to kill cold and flu viruses.

Finally, under the Federal Trade Commission Act, enforced by the FTC, it is unlawful to advertise that a product can prevent, treat, or cure human disease unless the advertisement is substantiated by competent and reliable scientific evidence indicating that the claims are true at the time they are made.

In all, both the FDA and FTC were involved in the issuance of this Warning Letter, highlighting the overlapping jurisdiction of the FDA and FTC with respect to product claims, and the importance of considering the requirements of both agencies in this context. The responsibilities of each agency are outlined in a Memorandum of Understanding, found here. The FDA has primary responsibility for regulating the labeling of food, drugs, devices, and cosmetics while the FTC has primary responsibility for regulating the advertising of food, over-the-counter drugs, non-restricted devices, and cosmetics.

The FDA and FTC frequently work together in situations where the same or similar claims are made in both labeling and advertising or when printed material, most often claims made on the internet, can be considered both labeling and advertising. Joint warning letters are rare, however, with the first only being issued in 2009.

For more information about compliance with both FDA and FTC regulations, please contact us at: contact@sglawfl.com.

Although the FTC is largely heralding the ALJ’s order as a victory, it appears that POM Wonderful and the industry generally, may be the ultimate victors. In response to the FTC’s efforts to forbid POM from making disease claims (those claims that a product can cure or treat a disease or condition) without two well-controlled clinical trials to support the claims, the ALJ found that this heightened degree of substantiation is not appropriate. Rather, the ALJ found that a single standard applied for substantiation of disease claims and health claims (those claims suggesting a relationship between a product and a disease or condition). According to the ALJ’s finding the level of substantiation necessary to support disease and health claims is “competent and reliable scientific evidence,” meaning that which is:

sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true.

Despite arguing that clinical studies are necessary to support disease claims throughout the case, the ALJ refused to accept this construction of “competent and reliable scientific evidence.” Interestingly, the rejected standard has been applied in recent years to a number of companies targeted by the FTC. See the Nestlé Healthcare Nutrition, Inc. and The Dannon Company, Inc. Consent Orders. However, because these companies consensually, albeit begrudgingly, entered into binding settlements with the FTC, the question remained whether this standard would be applied when put to the test by the courts. Because the FTC is not likely to give up so quickly, it is expected that this ruling will be put to the test again, this time on appeal.