False Advertising: Changing Your Business To Meet Market Needs During The COVID-19 Pandemic

From severe shortages in medical masks and ventilation equipment worldwide to the curious “toilet paper desert” in America,  COVID-19 is creating temporary and long-term disruptions in the availability of both highly specialized and everyday products.  Some companies are adapting their businesses to meet these market demands.  This includes expanding offerings, like delivering beer and wine with restaurant meals in states, or repurposing ingredients and redesigning new products, like creating hand sanitizers instead of liquor.    

In expanding services or products, one critical area to be aware of is how they are marketed and advertised.  Even during a pandemic, to help prevent consumer confusion, which could lead to government or private enforcement actions, companies need to consider various important compliance obligations, including but not limited to:  

• Assessing whether a product qualifies as a drug, dietary supplement, or medical device before going to market to determine requirements regulated by the Food & Drug Administration (“FDA”)
• Confirming that any claims made about products are adequately substantiated
• Ensuring that labeling and advertising of products is truthful and not misleading
• Verifying that product labels contain the required information and necessary disclaimers
• Determining whether the product infringes any copyright, trademark, or patents
• Monitoring any social media marketing or “influencer” activity for compliance with the Federal Trade Commission’s (“FTC”) guidelines
• Testing for product safety before going to market

If a product purports to have health benefits, additional care must be taken.   The FTC, as well as the FDA, has begun policing alleged cures and treatments relating to the COVID-19, jointly issuing warning letters to companies claiming to effectively treat COVID-19 or more generally improve the immune system.  According to the FDA and FTC, the targeted companies failed to adhere to the types of claims they are permitted to make based on the FDA’s and FTC’s applicable regulations.

There are generally three types of claims recognized by the FDA: structure-function claims, health claims, and well-being claims.  Distinctively, health claims are typically reserved for drugs only, while structure-function claims and well-being claims are permissible for both drugs and dietary supplements.  Structure-function claims generally describe the role of a nutrient or dietary ingredient intended to affect the normal structure of the human body or how it may effect part of the human body.  The most popular example is "calcium builds strong bones."  By contrast, disease-related claims, which the FDA also refers to as “health claims,” concern the relationship between a food, drug, or dietary supplement and reducing the risk of a disease or health-related condition.  An example of such a claim would be a product that touts it relieves lung cavity congestion caused by pneumonia.  A "health claim" by definition has two key components: (1) a substance (whether a food, food component, or dietary ingredient) and (2) a disease or health-related condition.  A statement lacking either one of these components does not meet the regulatory definition of a health claim.  Even within health claims, there are different types: qualified and authorized, both of which should be supported by competent and reliable scientific evidence.  The FDA must approve health claims before a regulated product can be sold to the public.   Last, well-being claims, i.e., claims about nutrient deficiency (e.g., Vitamin C supplement) or that describe the effect of a product on general well-being (e.g., boost energy) are allowed for dietary supplements without advance FDA approval.

As the FDA acknowledges, “it may not be possible to always draw a bright line between structure/function and disease claims. You should look at the objective evidence in your labeling to assess whether a claim explicitly or implicitly is a disease claim.”  Simple verbiage can also connote whether a product claim is a structure-function claim, i.e. “support” or “maintain,” while other terms can signal a product is a drug, i.e. “cure” or “treat.”  Other considerations are whether a claim is express (by words) or implied (by imagery/packaging), both of which are interpreted by regulators under the “reasonable consumer” standard and must be substantiated.  We can help navigate these distinctions and ensure compliance with other applicable FDA and FTC laws that may impact you.

While the COVID-19 crisis is a fluid situation, the FDA is quickly responding to the changing environment.  Most recently, it created a proposed temporary policy for the preparation of hand-sanitizers to increase production across companies that are not licensed or registered as drug manufacturers.  To the extent you are joining the community with innovative products and services to assist the COVID-19 situation, we are here to help service your needs. Seyfarth remains operational during these times and is closely watching this situation around the clock.  Seyfarth is prepared to protect your interests, support your ingenuity, help you mitigate risks and liabilities, and keep you informed regarding the latest implications related to the COVID-19 crisis. Visit our Resource Center for more information.