Update Nov Dec 2013 - (Page 9)

Enforcement damages by arguing that marketing violates federal law. The regulatory scheme controlling the marketing of nutraceutical products is far from clear. Authority is shared between the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC), but the explosion of social media and e-commerce into the marketplace has created many unanswered questions about the respective scope of their authority. The lack of clear guidance not only leaves companies vulnerable to enforcement action by both FDA and FTC, but the lack of brightline federal standards may embolden an aggressive plaintiffs' bar to file class-actions, complicate potential preemption defenses and make it easier for plaintiffs to argue a violation of federal law. A. Regulatory Authority of FDA vs. FTC - Dangers of Overlap and Falling Through the Cracks FDA and FTC operate under a liaison agreement under which FTC possesses primary enforcement responsibility for advertising, while FDA has primary enforcement responsibility over labeling and packaging. However, the line between the two, however, is often blurred. For example, FDA has stated that in certain circumstances information about FDA-regulated products disseminated over the internet can be considered labeling, particularly when consumers can purchase the product directly from the website. Additionally, some courts have interpreted "labeling" to include any visual, audio, or other material that bears a strong contextual relationship to the product and is distributed at the point of sale. While the agencies have published guidance regarding the intersection FDLI of authority between FDA and FTC, it not only fails to address all of the areas of uncertainty, but has quickly become outdated by rapidly changing trends in health food development, promotion and methods of communication. In recent years, methods of purchasing nutraceuticals have grown to include infomercials, websites, and even cell phone apps. There are new vehicles for marketing, such as blogs and social media (e.g., Twitter and Facebook.). This social media and internet boom has amplified the confusion over what is labeling and what is advertising. One example of the blurred line involves Phusion Products LLC, makers of Four Loko, a caffeinated alcoholic beverage allegedly linked to injuries and deaths. Both FDA and FTC sent warning letters to Phusion Products on Nov. 17, 2010 stemming from the same alleged acts. Moreover, in 2011, FTC required packaging and label changes for Four Loko drinks regarding the per-can alcohol volume, even though FDA has primary enforcement over labeling and packaging. There are multiple similar instances of FDA sending warning letters to dietary supplement companies concerning claims made on websites, which most would consider advertising within the purview of FTC. The recent case of Wilson v. Frito-Lay North America Inc., involved claims that Frito-Lay's statements about its snack products - including the description "all-natural" -- violated the Food Drug and Cosmetic Act and were civilly actionable under California law. In this context, the court considered whether company websites identified on product labeling themselves constitute "labeling." Specifically, the court addressed whether the statement "Visit our website @ fritolay.com" printed on a bag of chips transformed every statement on that Frito Lay website into labeling. Without discussing FTC's authority in the area, the Court concluded it did not because none of the website language explained or supplemented the product, and because consumers were not told the website would inform them of the details of the products' nutritional facts. But the very fact that the court entertained the argument that referring consumers to a website could turn statements on that website into labeling highlights the confusion in this area, and should raise concerns among nutraceutical manufacturers. B. Missing in Action - Regulatory Guidance for Marketing by Social Media Both FTC and FDA have treated social media as advertising, and FTC has touched on the issue in its guidance. Despite requests, FDA has yet to release guidance about marketing via social media, opting instead to address the issue on a case-by-case basis. It has long been a matter of speculation whether a company "liking" statements about its product on Facebook or "re-tweeting" those statements on Twitter might be construed as an endorsement of the content subject to federal regulation. FDA apparently thinks the answer is "yes," although in the context of a product FDA considered to be a drug rather than a nutraceutical. FDA issued a warning letter to AMARC, a dietary supplement company, for "liking" an unapproved claim regarding its product, PolyMVA, on Facebook. The November/December 2013 Update 9

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Update Nov Dec 2013