FTC Issues Final Consent Order for Nestle BOOST Health Claims

January 25,2011

The FederalTradeCommission (FTC), after issuing asettlement order in May 2010, has released its finalconsent order settling charges that a Nestle subsidiary made deceptive healthclaims on its children's health drink BOOSTKidEssentials. The subsidiary,NestleHealthCareNutrition, has been ordered to stopmaking claims that BOOSTcan reduce the risk of cold and flu, unless claims are pre-approvedby FDA, and stop makingclaims that BOOST willreduce children's sick-day absences and duration of diarrhea,unless claims are backed by two clinical human trials.

The settlement order—as well as a similar order issuedagainst supplement company IovateHealthSciences—sent shockwaves throughthe nutrition industry last summer, stirring up fears that all newhealth claims on products would require FDA pre-approval and twohuman clinical trials going forward.
The final order, issued on January 12, 2011 following a publiccomment period, is identical to the May settlement order, save fora broadened definition of "essentially equivalent product." Theissue of functional equivalency arises when a marketer must showthat an active ingredient in a finished product is unaffected byany secondary, inactive or even other active ingredients.

Attorney John Villafranco—who was lead counsel for Iovate inits FTC negotiations and whose Washington DC-based law firm,Kelley Drye & Warren,represented Nestle in its settlement—asserts that this finalorder does nothing to change the settlement reached this summer.However, it serves as a reminder to manufacturers and marketersthat FTC's language is becoming more specific when it comes toclaims substantiation. "Companies with a conservative approach tomarketing should consider these consent orders before taking aproduct to market," Villafranco told Nutrition Business Journal.

Similarly, attorney Ivan Wasserman, of Washington DC-based firmManatt, Phelps &Phillips, told NBJthat the "two clinical trials model is becoming the gold standardthat FTC may demand in order to settle cases going forward." Giventhe new language in the consent orders confirming two trials as abasis for reliable scientific evidence, "if FTC investigates yourcompany and decides your substantiation is inadequate, expect FTCto demand such language in a consent order as a condition ofsettlement," Wasserman said.

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But all hope is not lost for industry.

Both attorneys are quick to point out that the consent order doesnot constitute a new law or industry-wide mandate." FTC has beenclear that these specific restrictions are only applicable toNestle and Iovate; those who have signed these consent orders,"Wasserman said. Rather than trumpeting doom, these two casesessentially function to add further definition to FTC's conceptionof what constitutes good science.

Villafranco asserts that it is important to look back at the caseof LaneLabs vs. FTC, inwhich FTC took action against supplement manufacturer LaneLabs in 2007. FTC asserted that thecompany had violated a health claims-related consent orderpreviously issued in 2000. In August 2009, in a rare moment of FTCvulnerability, a district court judge ruled that under FTC's broaddefinition of reliable scientific evidence LaneLabs had providedenough substantiation for its product claims.

According to Villafranco, in light of the LaneLabs vs. FTC precedent, thesettlement orders issued this past summer and this final orderissued January 12 essentially give us "further insight into whatFTC considers competent and reliable science." Two randomized,double-blind, placebo-controlled, clinical human studies are notrequired for health claims substantiation on every finishedproduct—once again, these consent orders are specific toNestle and Iovate. But the Commission is certainly doing work toiron out a gold standard.

Villafranco offers a bit of advice for manufacturers and marketerstargeted by FTC. An October 2010 article written by Villafranco andtwo other associates at Kelley Drye & Warren argues that, "postLaneLabs, regardless of the specifics of a particular case, allcompanies facing FTC action or at risk of enforcement should beaware of the policy reasons and precedent in favor of maintainingthe broad and flexible competent and reliable scientific evidencestandard." Nestle can afford two human trials for its BOOST line, but not every company hasNestle's resources. "Although a company may ultimately choose toaccept certain, specific substantiation requirements as a part ofan individual settlement," the article concludes, "being aware ofrelevant policy considerations and law will improve the company'sbargaining power."

Related NBJ links:

FTC Raises the Bar for Claims Substantiation in Recent ConsentDecrees

Good Science, the Gift that Keeps on Giving

FTC and POM Wonderful Go Head-to-Head