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D.C. Circuit: FTC’s Two RCT Requirement Violates the First Amendment

On January 30, 2015, the Circuit Court of Appeals for the District of Columbia entered its decision in the case of POM Wonderful, LLC (“POM”) v. Federal Trade Commission (“FTC”), No. 13-1060.  In that decision, the D.C. Circuit upheld the FTC’s findings that POM violated the Federal Trade Commission Act (“FTCA”) by misleading consumers through POM’s advertising.  Of importance to the entire regulated class, the court held that the FTC’s requirement that POM have at least two randomized and controlled human clinical trials (“RCTs”) before claiming a causal relationship between the consumption of POM products and the treatment or prevention of any disease violated POM’s first amendment right to disseminate truthful commercial speech.  That holding applies well established First Amendment precedent that forbids the government from preventing the dissemination of truthful commercial speech.

In 2010, the FTC filed an administrative complaint contending that POM made false, misleading, and unsubstantiated representations in violation of the FTCA regarding the effects of POM products on heart disease, prostate cancer, and erectile dysfunction.  After administrative proceedings, the Commission, the same governmental body that decided to bring charges against POM, ultimately held that POM violated the FTCA by making misleading and inadequately supported claims about the health benefits of POM products.  Importantly, the Commission barred POM from running future advertisements asserting that their products treat or prevent any disease unless armed with at least two RCTs demonstrating statistically significant results of such causal connection.  While the court upheld most of the Commission’s ruling, the court found “inadequate justification … for the Commission’s blanket requirement of at least two [RCTs] as a precondition to any disease-related claim.”

The Commission found, and the D.C. Circuit Court upheld, that POM made both efficacy and establishment claims.  Efficacy claims are those claims which suggest that a product works as advertised, i.e. that a product prevents against cancer.  In contrast, an establishment claims suggests that a product’s effectiveness or superiority has been scientifically established, i.e. that scientific testing proves that the product prevents cancer.  The court accepted the Commission’s standard that, in making both efficacy and establishment claims, a party must possess evidence which experts in the relevant field would deem to be sufficient to make such claims.  The Commission found that experts in the relevant fields require one or more RCTs in order 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 D.C. Circuit agreed with the Commission’s holding that, because POM violated the FTCA, POM must possess at least one RCT before making a future claim that a causal relationship exists between a food and the treatment, prevention, or reduction of risk of a disease or health-related condition.  As the court explained, that “forward-looking remedy is perfectly commensurate with the Commission’s assessment of liability for petitioner’s past conduct: if past claims were deceptive in the absence of RCT substantiation, requiring RCTs for future claims is tightly tethered to the goal of preventing deception.”  Because POM possessed no RCTs, the court upheld the Commission’s finding that POM violated the FTCA by making claims that suggested a causal relationship between the POM products and the treatment, prevention, or reduction of risk of heart disease, prostate cancer, or erectile dysfunction.

POM additionally argued that the FTC violated the First Amendment by requiring two RCTs establishing a causal connection between the product and the treatment or prevention of any disease before making a health or disease-related claim.  As the two RCT requirement acts as restriction on commercial speech, the court analyzed POM’s challenge under the intermediate scrutiny test first articulated by the Supreme Court in Central HudsonSee Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557 (1980).  The Central Hudson test requires the government, when attempting to restrict commercial speech, to prove that the interest it asserts in regulating the commercial speech is substantial, that the means the government uses to regulate the speech directly advance the governmental interest asserted, and that those means are no more extensive than necessary to serve that interest.

Here, the D.C. Circuit Court held that the FTC violated the First Amendment by imposing a “blanket” requirement that all disease and health-related claims be substantiated by two RCTS.  The court explained that “the Commission fail[ed to] adequately [] justify a categorical floor of two RCTs for any and all disease claims.”  The court further reasoned that the Commission’s two RCT requirement may result in the consumer being “denied useful, truthful information about products with a demonstrated capacity to treat or prevent serious disease.”

That holding furthers well established First Amendment precedent holding that parties have a First Amendment right to disseminate truthful commercial information.  See Pearson v. Shalala, 164 F.3d 650 (D.C. Cir. 1999); Edenfield v. Fane, 507 U.S. 761 (1993).  In essence, the court in POM held that the government cannot prevent a company from disclosing truthful information.  Here, the court found that one RCT could, in at least some circumstances, provide sufficient evidence of a causal link between a product and disease or health related effects.  In other words, one RCT can be sufficient to prove the truthfulness of a disease or health-related claim.  Therefore, FTC’s blanket requirement of two RCTs would, at least in some circumstances, prevent consumers from receiving truthful information as substantiated by one RCT.  Indeed, the court explained that, where one RCT and other research establish proof of a supplement’s benefits for disease prevention, “there would be a substantial interest in assuring that consumers gain awareness of the dietary supplement’s benefits and the supporting medical research.”  The court went so far as to say that in that situation, the government cannot even require any disclaimer that the evidence is “inconclusive.”

To the benefit of entrepreneurs, the effects of the POM holding will be far reaching.  The government will continue to be forbidden from preventing parties from disclosing truthful commercial speech in advertisements or on labels.  So long as a company has competent and reliable evidence—as defined by experts in the relevant field—a company can make truthful claims about the causal link between a product and a disease or health-related condition.

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