FTC, NY AG Pursue Dietary Supplement Marketers for Allegedly Unsubstantiated Claims

On January 9, 2017, the Federal Trade Commission (“FTC”) and the New York State Attorney General (“NY AG”) charged the marketers of the dietary supplement Prevagen with making false and unsubstantiated claims about the product’s benefits. Prevagen’s marketers claimed the line of products improved memory and cognitive performance and was “clinically shown” to work.

FTC and the NY AG argue that the double-blind, placebo-controlled human clinical study on which the marketers relied did not find that Prevagen was effective on any measure of cognitive performance. Rather, several of the more-than-thirty post hoc analyses on subgroups within the study showed positive results. FTC and the NY AG allege: “Given the sheer number of comparisons run and the fact that they were post hoc, the few positive findings on isolated tasks for small subgroups of the study population do not provide reliable evidence of a treatment effect.”

FTC and the NY AG seek a permanent injunction to prevent future violations of the FTC Act and New York law, relief to redress consumer injury (including seeking refunds for consumers), civil penalties, and costs. FTC and the NY AG claim that Prevagen sales in the United States from 2007 through mid-2015, minus refunds, totaled $165 million. If the court ultimately finds for the government—or the parties settle—the penalties could be substantial.

There are a few interesting facets to this case. First, the claims at issue were carefully crafted. They do not appear to be disease claims that would make the product a drug under the Federal Food, Drug & Cosmetic Act; they seem to be proper structure/function claims. However, substantiation is required for structure/function claims and disease claims alike, and FTC believes it is lacking here.

Second, this action highlights regulators’ continued concern with cognitive claims and companies seen as preying on the elderly. Government supplement critics, like Senator McCaskill (Ranking Member of the Senate Special Committee on Aging), are sure to see the Prevagen suit as a step in the right direction. Senator McCaskill has previously opened inquiries into dietary supplement companies that allegedly targeted cognitively-impaired elderly consumers, stating: “People looking online for cures or treatment for Alzheimer’s Disease and dementia are at their most desperate—and it’s clear from what we’ve found that many of these [dietary supplement] products prey on that desperation.” Age-related cognitive claims are still red flags.

Third, it seems after two arguably misguided attempts to pursue dietary supplement companies on the state level, NY AG Schneiderman teamed up with a federal agency. In early 2015, NY AG Schneiderman alleged that many of the ingredients declared on major dietary supplement brands’ labels were not actually in the products. While this action ultimately achieved settlements and some reform, industry professionals claim the DNA barcode testing the NY AG used to test the supplements was not a valid test for these products. The products contained extracts, not intact plants. The extraction process often destroys plant DNA, so barcoding will not detect the plant’s DNA in an extract. It is likely the “missing” ingredients were actually in the product, but NY AG Schneiderman’s test was incapable of detecting them.

Later in 2015, NY AG Schneiderman sent cease-and-desist letters to companies selling the herbal ingredient “devil’s claw.” He alleged that these companies fraudulently elected to use a cheaper alternative (Harpagophytum zeyheri) to “genuine” devil’s claw (Harpagophytum procumbens). Industry pointed out, however, that the “cheaper alternative” is also known as “devil’s claw” and is equally effective as the more expensive ingredient. Many saw the action as a battle over semantics.

Now, the NY AG hitched his wagon to FTC. This could mean the NY AG’s office is looking for guidance on bringing these kinds of cases in the future, or simply that the interests of FTC and the NY AG aligned and they chose to prosecute the case together. Either way, NY AG Schneiderman’s office will surely continue to scrutinize the supplement industry.

If you have a dietary supplement or cosmetics company and have any questions about your responsibilities under the law, including label claims, substantiation, labeling requirements, advertising review, Good Manufacturing Practices, or anything else, give us a call anytime at 516-294-0300.