James R. Ravitz, Amy Swift06.12.06
Challenging Competitive Claims—You Have Options
James R. Ravitz, Amy Swift
Arent Fox PLLC
James R. Ravitz Amy Swift |
Consequently, companies are taking great efforts to show that their product is in fact different than a predicate device. For example, claims like “PERFORMS BETTER,” “WORKS FASTER” and other types of superiority or product performance claims are commonly found in promotional material. Because these claims fall outside the traditional “off-label”-type claim, they often go unnoticed by FDA. What can companies do to challenge a marketing claim that is not really an “off-label” claim? This article explores several options.
The Agency “Rat” Letter
The Federal Food, Drug and Cosmetic Act gives the FDA regulatory authority over medical device labeling. While the scope of what is included within the definition of “labeling” has sometimes been subject to debate, in the context of medical devices, labeling includes statements that appear on and accompany a device, such as a product insert. Labeling may also include certain advertisements, such as print and broadcast advertisements.
Companies that believe a competitor’s advertising claim is unlawful can write letters to the FDA notifying the agency of a potentially false claim—ie, the “rat” letter. In most cases, the FDA will not conduct full investigations or initiate enforcement unless the claim in question truly presents an off-label concern, such as promising to treat a disease that is beyond the legally permitted indications for use.
Competitive claims, including those that tout performance superiority, are claims that FDA is not likely to be interested in pursuing. After all, the Agency has a limited enforcement budget. It is these claims, however, that device companies find to be the most irritating and damaging to product sales.
Many companies are not aware that the Federal Trade Commission (FTC) also has regulatory authority over medical device advertising. Under the Federal Trade Commission Act, the FTC is charged with ensuring that advertising (other than labeling) of foods, drugs, medical devices and cosmetics is not deceptive or misleading.
Pursuant to FTC regulations, advertisers must possess adequate substantiation, or “competent and reliable” evidence, for all product claims. In determining what constitutes competent and reliable evidence, the FTC will consider the amount of substantiation that experts in the field would agree to be reasonable proof. When reviewing product performance claims, the FTC often requires clinical studies or scientific evidence as support for those claims. The FTC, because its mandate is different than FDA’s, is more likely to investigate medical device product claims that are false rather than “off-label” per se.
The FTC routinely initiates actions against companies that promote medical products. For example, in 1995, the FTC charged Dahlberg, Inc. with making false and unsubstantiated claims for its Miracle-Ear “Clarifier” in violation of a 1976 FTC order. Under a proposed settlement with the FTC, Dahlberg agreed to pay a
$2.75 million civil penalty. Similarly, in 2001, the FTC undertook enforcement actions against marketers and manufacturers of rapid HIV tests. In one case, the FTC settled with Chembio Diagnostic Systems, Inc. and Alfa Scientific Designs, Inc. after charging these companies with making false and misleading representations regarding the accuracy of their HIV tests.
The penalties that FTC can impose on a company that engages in false and misleading advertising could include cease-and-desist orders, civil penalties, consumer redress and corrective advertising and disclosures. Monetary damages for the notifying company are not authorized by statute. Because the FTC Act is a consumer protection statute, the FTC typically will consider pursuing investigations against activities that affect the public.
Lanham Act
Filing a lawsuit under the Lanham Act also is an increasingly popular course of action for companies that are impacted by competitors’ false and misleading advertising claims. To succeed in a Lanham Act lawsuit, a plaintiff generally must establish (1) a false or misleading statement of fact about a product; (2) that statement deceived, or had the capacity to deceive, a substantial segment of potential consumers; (3) the deception is material, or likely to influence the consumer’s purchasing decision; (4) the product is in interstate commerce; and (5) the challenger has been, or is likely to be, injured as a result of the statement at issue.
Pharmaceutical companies frequently file Lanham Act lawsuits against their competitors because of false and deceptive advertising claims. For example, Procter & Gamble and Sanofi Aventis, which co-market the osteoarthritis drug Actonel, recently filed a lawsuit against Roche Pharmaceuti-cals and GlaxoSmithKline (GSK) in federal district court regarding Boniva, an osteoporosis medication. The lawsuit alleges that Roche’s and GSK’s advertising falsely claimed that the drug (1) had been proven to decrease the risk of non-spinal (non-vertebral) fractures and (2) demonstrated efficacy against non-spinal fractures comparable to other bisphosphonates, such as Actonel.
Last September, a US district court ordered Merix Pharmaceuticals, the maker of the RELEEV cold sore remedy, to change its advertising and packaging. GSK, the manufacturer of a competing cold sore product, had alleged that the claims and packaging for RELEEV were materially false and misleading.
Litigation, of course, can be lengthy and expensive. From a practical standpoint, not all companies have the resources to initiate a Lanham Act suit, but the stakes are high. Plaintiffs can obtain substantial monetary damages—including treble damages, attorneys’ fees and court costs—if successful.
Industry Self-Regulation
The National Advertising Division (NAD) of the Council of Better Business Bureaus is the advertising industry’s self-regulatory forum that reviews advertising claims to determine whether they are lawful. The NAD follows the FTC’s standard of review: advertising claims must be truthful and not misleading. The standard of evidence that the NAD requires is also the same as the FTC—all claims must be substantiated by competent and reliable evidence. A company can file a complaint with the NAD to challenge a competitor’s advertising.
The NAD is increasingly faced with challenges for medical product advertising. For example, last March, the NAD recommended that Bayer HealthCare discontinue or modify a television commercial for its “Rapid Headache Relief Aspirin” product based on a challenge by McNeil-PPC, Inc., the maker of Tylenol products. The challenged advertising compared the Bayer product with Tylenol, using a voiceover to explain that Bayer’s Rapid Headache Relief was “proven to release medicine…five times faster than…Tylenol Gels.” The NAD concluded that the evidence failed to support this claim.
Similarly, last January, Johnson & Johnson challenged Pfizer, Inc.’s broadcast advertising for its Maximum Strength Zantac 150. The NAD recommended that Pfizer discontinue or modify its advertising claims because the evidence on record failed to support the implied message that Zantac 150 worked almost immediately.
Challenging a competitor’s advertising at the NAD is less expensive and much quicker than litigation, generally providing a response within 60 business days of initiation of a challenge. There are, however, disadvantages with pursuing an NAD complaint as opposed to filing a lawsuit in federal court. Participants do not have subpoena power or the ability to depose, the judicial rules of evidence do not apply and an NAD decision is not legally binding on the participants or on a court of law.
The NAD will publish its decisions, which are sometimes reported by mainstream or industry directed media outlets. If a competitor does not follow an NAD decision, the NAD may refer the matter to the FTC. The FTC holds the NAD and its decision making process in high regard, and the FTC has initiated investigations based on the NAD's recommendations.
In summary, many options exist for ensuring that there is a level playing field for advertising medical devices. Deciding on the appropriate strategy for challenging a competitor’s marketing claims should be carefully weighed.