The FTC and the Web

By Alvin J. Lorman, Association Counsel
March 1, 2017

The recent claim by the Federal Trade Commission (FTC) that its policy statement on marketing of homeopathic drugs applies to labels and labeling as well as advertising has caused many to ask about the legal boundaries of the FTC’s jurisdiction. When you think of the FTC, you think of advertising, right?

Well, the answer is yes and no. The Federal Trade Commission Act (FTCA) is older than the Federal Food, Drug, and Cosmetic Act (FDCA). Section 5 of the FTC, enacted in 1914, prohibits, among other things, “unfair or deceptive acts or practices in or affecting commerce….” In March, 1938, Section 12 was added to prohibit, among other things, false advertising involving drugs. When the Federal Food, Drug, and Cosmetic Act was enacted in June of that year, it seemed to be limited to labels and labeling. It is unlikely that anyone stopped to consider the interplay between the two statutes.

Curiously, neither the FDCA nor the FTCA contain a definition of advertising. FDA created a regulatory definition when it issued rules concerning prescription drug advertising (“Advertisements subject to section 502(n) of the act include advertisements in published journals, magazines, other periodicals, and newspapers, and advertisements broadcast through media such as radio, television, and telephone communication systems”), 21 C.F.R. 202.1(l). The FTCA contains no definition of advertising, although it does contain a definition of “false advertising,” 15 U.S.C. 55(a)(1), which focuses entirely on what makes an advertisement “false.”

Any potential conflict between the two agencies has been largely defused by a memorandum of understanding (MOU) between the two that gives FDA primary jurisdiction over OTC drug labels and the FTC primary jurisdiction over OTC drug advertising. The MOU specifically provides that, “In the absence of express agreement between the two agencies to the contrary, the Food and Drug Administration will exercise primary jurisdiction over all matters regulating the labeling of . . . drugs . . . .”

Today, there are ways to market products that did not exist when either statute was enacted. The Web, for example, is now a crucial marketing tool for most, if not all, marketers. Is a website labeling subject to FDA jurisdiction or is it advertising subject to FTC jurisdiction? The answer is yes. The Web clearly contains the elements of labels and labeling that FDA has traditionally regulated. It also contains the elements of advertising that the FTC has traditionally regulated. The only safe conclusion is that the Web is both labeling and advertising. This should surprise no one. While FDA had no jurisdiction over OTC drug advertising (whatever that is), it has always maintained that an advertisement can misbrand a drug by, for example, suggesting uses not on the label (and so lacking adequate directions for use). So while FDA can’t regulate the advertisement as such, it can deem your product illegal because of what the ad says. The FTC has long claimed jurisdiction over claims made on the Internet, whether they be marketing or advertising claims. The FTCA and the FDCA both prohibit essentially similar conduct: not telling the truth to consumers.

Clearly, someone who makes false claims on their website won’t find much comfort in jurisdictional issues between the FDA and the FTC. Issues can arise where the two agencies impose different requirements. The FTC’s recent guidance on marketing of homeopathic drugs potentially creates such an issue. The FDA requires marketers of OTC homeopathic drugs to include an indication on the label. The FTC claims that there is no competent and reliable scientific evidence to support most of those indications so the products in are in violation of the FTCA unless they bear an appropriate disclaimer.

The AAHP has been urging members to use a disclaimer on advertising and labeling for several years. While the FTC does not believe that the AAHP disclaimer provides sufficient information to consumers, the Association does not disagree with the FTC position that marketing materials for these products should bear an appropriate disclaimer. The devil is in the details, of course. So until a new disclaimer is adopted by the AAHP, members should continue to use the existing disclaimer on all of their marketing materials.