D.C. Circuit upholds FTC's corrective advertising order

From warningletters.com, Thompson Publishing Group

The U.S. Court of Appeals for the D.C. Circuit has upheld a 1999 order by the Federal Trade Commission (FTC) that required the maker of Doan's Pills to mount an $8 million corrective advertising campaign and alter its packaging to remedy consumer misperceptions that the product is superior to other over-the-counter (OTC) pain relievers for the treatment of backaches. Last year's order was the first time in 25 years that the FTC required a company to run corrective ads in an adjudicated case, and is the first time that it has mandated new packaging information.

The FTC's order requires all ads and packaging for Doan's Pills to display for one year the following statement: "Although Doan's is an effective pain reliever, there is no evidence that Doan's is more effective than other pain relievers for back pain." The order excludes radio and television ads of 15 seconds or less and requires the product's manufacturer, Novartis Corp., to spend $8 million on corrective ads—the average spent annually during the eight-year campaign featuring the disputed claims.

In upholding the FTC's order, the D.C. Circuit ruled that the administrative record supports the commission's finding that Novartis' ads contained deceptive health claims. Although conceding that the "evidence is thin and somewhat fragmentary," the appellate court also found that the record demonstrates that the FTC was justified in ordering corrective advertising because Novartis' ads created a false belief in the public's mind that likely would linger even after the company stopped running the ads.

The court rejected Novartis' argument that the FTC's order would restrict the company's free speech, ruling that corrective advertising directly advances the government's interest of preventing misleading and deceptive advertising—a central tenet of a 1980 U.S. Supreme Court decision that set forth the standards applicable to governmental restriction of commercial speech (Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447 U.S. 557).

In a statement, FTC chairman Robert Pitofsky said: "It is important for advertisers to know that it is not enough just to discontinue a deceptive ad, and that they can be held responsible for the lingering misimpressions created by deceptive advertising." Pitofsky also noted that the appellate decision "reaffirms the FTC's long-standing authority to order advertisers to correct [consumers'] misimpressions in appropriate cases."

Novartis did not return calls for comment.

Case History
This case stems from a June 1996 FTC complaint against Novartis alleging that the company's ads for Doan's Pills were false and deceptive because they included unsubstantiated superiority claims. The FTC charged that there was no evidence that Novartis' product was more effective than other OTC analgesics at relieving back pain.

In ruling for the FTC, an administrative law judge (ALJ) ordered Novartis to cease making superiority claims that are not supported by reliable scientific evidence that includes two well-controlled clinical trials. However, the ALJ rejected the FTC's request for corrective advertising, citing a study showing that consumer beliefs derived from ads linger for no more than six months after the ads are discontinued. Both parties appealed the ALJ's ruling and, in May 1999, the commission overturned the ALJ's rejection of corrective ads, noting that "contrary to the ALJ's suggestion, corrective advertising is not a drastic remedy."

The FTC's opinion states that corrective advertising is warranted when an allegedly false ad has "substantially created or reinforced a misbelief" and "the misbelief is likely to linger into the future." In support of its decision to order corrective advertising, the FTC found that the Doan's Pill ads in question were: "(1) very salient to consumers (because superior efficacy is among the primary considerations for a consumer in selecting a back pain remedy), (2) clearly and consistently conveyed in the challenged ads, and (3) an integral part of an eight-year campaign."

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