FTC to Begin Challenging OTC Homeopathic Drug Advertising Claims (US) | Practical Law

FTC to Begin Challenging OTC Homeopathic Drug Advertising Claims (US) | Practical Law

The Federal Trade Commission (FTC) has announced that it will begin requiring over-the-counter (OTC) homeopathic drugs to comply with the FTC Act's prohibition of deceptive advertising. The decision is a shift from previous policy, under which the FTC rarely challenged misleading claims for homeopathic drugs that the Food and Drug Administration (FDA) has allowed to be marketed as OTC. The statement also provides guidance to manufacturers and distributors regarding marketing for OTC homeopathic products.

FTC to Begin Challenging OTC Homeopathic Drug Advertising Claims (US)

Practical Law Legal Update w-004-7171 (Approx. 4 pages)

FTC to Begin Challenging OTC Homeopathic Drug Advertising Claims (US)

by Practical Law Commercial Transactions
Law stated as of 25 Nov 2016 • USA (National/Federal)
The Federal Trade Commission (FTC) has announced that it will begin requiring over-the-counter (OTC) homeopathic drugs to comply with the FTC Act's prohibition of deceptive advertising. The decision is a shift from previous policy, under which the FTC rarely challenged misleading claims for homeopathic drugs that the Food and Drug Administration (FDA) has allowed to be marketed as OTC. The statement also provides guidance to manufacturers and distributors regarding marketing for OTC homeopathic products.
On November 15, 2016, the Federal Trade Commission (FTC) issued a new enforcement policy statement on marketing claims for over-the-counter (OTC) homeopathic drugs. The statement marks a significant policy shift for the FTC, which has rarely challenged misleading claims for homeopathic drugs that the Food and Drug Administration (FDA) has allowed to be marketed as OTC.
In 1988, the FDA issued a Compliance Policy Guide that permitted marketers to distribute OTC certain homeopathic products without demonstrating their effectiveness. Though the FTC Act has never exempted homeopathic products from the general requirement that objective product claims be truthful and substantiated, until now, the FTC has rarely challenged homeopathic products for misleading claims since it established the Pfizer factors in 1972 (see Practice Note, Substantiation of Advertising Claims: Determine What Is Needed to Support the Claim).
The FTC decided to issue the policy statement following the recent increase in marketing of OTC homeopathic drugs. On September 21, 2015, the FTC re-examined its regulation of homeopathic product marketing in a one-day public workshop. The staff report on the workshop concluded that most OTC homeopathic drugs lack adequate substantiation for their efficacy claims. With the new enforcement policy, the FTC intends to ensure that marketers of OTC homeopathic drugs do one of the following:
  • Adequately substantiate their efficacy claims.
  • Effectively communicate both that:
    • there is no scientific evidence that the product works, and
    • the product's claims are based only on theories of homeopathy from the 1700s that are not accepted by most modern medical experts.
The FTC's policy statement notes that disclaimers must fully comply with the requirements. To ensure compliance with the FTC Act, marketers should:
  • Make certain disclosures stand out and be either:
    • placed in close proximity to the efficacy claim, or
    • incorporated into the efficacy claim if necessary.
  • Not undercut clarifying disclosures with additional positive statements or consumer endorsements that reinforce the efficacy claim.
  • Develop evidence, such as consumer surveys, to show that consumers are not being deceived by efficacy claims.
For more guidance on substantiation of advertising claims under the FTC Act, see Practice Notes, FTC Enforcement of Advertising Claims and Substantiation of Advertising Claims.