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Policing your competitors

By Clarisse Douaud in Anaheim, 13-Mar-2007

Related topics: Regulation

Full disclosure, keeping your company's affairs in order and challenging competitors who aren't so judicious is one way of avoiding trouble with federal authorities or losses to your bottom line, said Expo West panelists.

United States Food & Drug Administration (FDA), Federal Trade Commission (FTC) and legal representatives spoke to attendees Friday on issues surrounding health claims and marketing. The speakers emphasized solid science and discouraged against reliance on testimonials in advertising.

However, even if a company does follow FDA/FTC guidance closely, it does not mean its competitors will. As such, according to the panelists, pursuing companies who don't abide by regulation may ensure dietary supplement companies do not lose out financially because they, themselves, do follow procedures.

"I really do recommend that you make sure you own house is clean before taking any of these action," said Ivan Wasserman, partner with Kelley Drye Collier Shannon.

After all, if a company denounces others it draws attention to itself and can instigate these companies launching similar challenges against them.

"We are going to federal court much more frequently," Michelle Rusk, senior staff attorney Advertising Practices with FTC. "That's a change over the last decade."

Legal action allows the FTC to make tougher remedies against company practices than before as well as to act more quickly.

The agency watches out for questionable marketing practices, which then lead it to investigate the science behind a product.

"What we often see is that the science doesn't match a company's product or its claims," said Rusk.

FTC looks for well-controlled double-blinded clinical trials and statistically significant results to back up the claims made in advertising.

And skirting science through testimonials will not keep federal authorities off your doorstep.

"If you can't say it in your ad, don't try to say it through testimonials," said Rusk. "Testimonials convey efficacy."

She repeatedly emphasized it is what consumers can interpret from an ad that matter most to the FTC. "Often ads have more than one interpretations so you really need to consider that."

Rusk suggested companies engage in consumer research if they have large ad campaigns, because they are responsible for implied claims as well.

In addition, qualifying ads with the caveat 'results may vary' is "not a fix in FTC's

view", said Rusk. She also advised marketers to disclose if they have paid their spokepersons.

Gary Coody, FDA national health fraud coordinator, gave dietary supplement companies some pointers for staying out of legal trouble: stay away from cure-alls, quick fixes and health claims to treat diseases.

If a company thinks another is making false claims, and therefore potentially misleading consumers towards its products, Wasserman recommended it start by voicing a demand to that company. This could come in the form of a phone call or letter.

Wasserman also said that if a company is going to make a threat such as giving a competitor a deadline to comply, it should follow through on this.

The second line of action is to alert FDA or FTC, particularly when consumer injury is apparent, he said.

"If you have contacts in Washington, you can make sure it gets to the right person," said Wasserman.

He suggested going directly to the media organizations where the competitor advertises, in the hopes of getting its advertising pulled, as well as using the services of the Better Business Bureau's National Advertising Division to target misleading advertising.

As a final measure, Wasserman said litigation can be used to get quicker action against a competitor. However, he reminded that these measures can signify war among companies and open the playing field for the competitor to bring down similar actions upon you.