FTC Takes Action to Protect Consumers from False Genetic Advertising Claims

600px-US-FederalTradeCommission-Seal.svgFor the past few years, discussions regarding the regulatory oversight of direct-to-consumer (DTC) genetic tests have focused heavily on one agency: the FDA. Attention has grown since 2010 when the FDA began hinting the agency would broadly regulate laboratory developed tests (LDTs) and has only intensified since the issuance of the infamous cease-and-desist letter issued to 23andMe in late 2013. Now 23andMe and the FDA are hitting the reset button to begin the long road to restore 23andMe’s Personal Genome Service® one condition or trait at a time (the company announced on June 20, 2014 that it has filed, and the FDA has accepted for review, its first 510(k) application for Bloom Syndrome). The personal genomics industry continues to wait anxiously for the FDA proposed rules on DTC genetic tests, which are on the FDA’s Draft Guidance “B-List” for FY2014 (i.e., DTC genetic tests are not among the FDA’s top priorities).

Perhaps it’s time another administrative agency is brought into the discussion. This year the Federal Trade Commission (FTC) has taken its first actions to protect consumers of genetic tests. The FTC has broad authority to protect consumers from unfair and deceptive trade practices (including false and misleading advertising claims) under Section 5(a) of the FTC Act, 15 U.S.C. 45(a)(1). The FTC also enforces posted corporate privacy policies. The FTC filed charges against two companies in January (Genelink, Inc. and its former subsidiary foru™ International Corporation) and filed charges against a third company in June (L’Oreal USA, Inc.) for “purported personalized genomics products.” The charges related to the marketing of nutrigenetic and dermagenetic products. The matters against the first two companies were resolved by settlement approved on May 12, 2014. The FTC announced a proposed settlement of the charges against L’Oreal on June 30, 2014.

A Brief Overview of How the FTC Works
The FTC has investigative and enforcement authority to protect consumers under the FTC Act. When the FTC has reason to believe that the FTC Act has been violated, it may initiate charges against a party. The party (called the “respondent”) may elect to settle the charges by entering into a consent agreement or consenting to a final order and waiver of judicial review or, alternatively, may contest the charges. When the charges are settled rather than challenged by the respondent, a proposed settlement agreement is put into a “decision and order” that is open for public comment for at least 30 days. After the public comment period has expired, the order is made final (sometimes with modification in response to the public comments) and becomes binding 60 days after it is served. The orders may include injunctive relief, including bans on the respondent engaging in certain practices. If the respondent contests the charges, an administrative law judge presides over a trial and makes an “initial decision.” A respondent may appeal the initial decision to the full Commission, which then issues a “final decision.” Final decisions may be appealed to the U.S. Court of Appeals and, ultimately, to the Supreme Court.

Advertising Genetic-Related Benefits
The Genelink and foru™ products at issue were LifeMap ME DNA Customized Supplements, GeneWize Nutritional Supplements, LifeMap ME DNA Customized Skin Repair Serum, and GeneWize Customized Skin Repair Serum. Genelink and foru™ had made claims that their nutritional products customized to the customer’s genotypes could “compensate for an individual’s genetic disadvantages” and act as “SNP boosts.” L’Oreal products at issue were Lancôme Génifique and L’Oréal Paris Youth Code skincare products. L’Oreal made claims that their cosmetics would “boost the activity of genes” for skin regeneration. The FTC complaint alleged the advertising claims and business practices of the three companies constituted “unfair or deceptive trade practices” and, therefore, were in violation of Section 5(a) of the FTC Act, 15 U.S.C. 45(a)(1).

Compliance with Posted Privacy Policies
In addition to the advertising problems, the FTC charged that Genelink and foru™ also engaged in unfair and deceptive trade practices regarding the execution of the companies’ posted privacy policies, by having failed to maintain adequate and reasonable data security for its customers’ personal information (including, e.g., genetic and financial information). Thus, the FTC charged the companies with violations of both Section 5(a) and Section 12 of the FTC Act, which specifically prohibits false ads likely to induce the purchase of food, drugs, devices, or cosmetics.

Burdens of Scientific Proof to Substantiate Claims of Genetic-Related Benefits
In the matters involving Genelink and foruTM, the FTC commissioners were split (3-1), with Commissioner Ohlhausen specifically dissenting from the decision and order on the basis that it set an “unduly high standard…to substantiate any disease-related claim” and that that unduly high standard “may, in many instances, prevent useful information from reaching consumers in the marketplace and ultimately make consumers worse off.” The decision and order prohibited the companies from claiming its products “will treat, prevent, mitigate, or reduce the risk of any disease – by modulating the effect of genes, or based on a consumer’s customized genetic assessment – unless the claim is true and supported by at least two adequate and well-controlled studies.” The order defined an adequate and well-controlled study as:

“a human clinical study that: is randomized and adequately controlled; utilizes valid end points generally recognized by experts in the relevant disease field; yields statistically significant between-group results; and is conducted by persons qualified by training and experience to conduct such a study. Such study shall be double-blind and placebo-controlled…”

The order specified that if the companies claim a product is effective for persons with a particular genetic variation or SNP (i.e., a single nucleotide polymorphism), then the studies “shall be conducted on human subjects with such genetic variation or SNP.”

The FTC considered and rejected concerns raised by the Council for Responsible Nutrition that its proposed orders against Genelink and foru™ created a de facto two random clinical trial standard on any health-related advertising claims made by the food and diet industry and by the Natural Products Association that setting such an industry standard requires the issuance of formal guidance.

The FTC Chairwoman Edith Ramirez and Commissioner Julie Brill explained, “In this and other recent enforcement actions, the Commission has consistently adhered to its longstanding view that the proper level of substantiation for establishing liability is a case-specific factual determination as to what constitutes competent and reliable scientific evidence for the advertising claims at issue.” They further explained that the two randomized clinical trials per claim was not necessary for assessing liability against Genelink and foru™ but, rather, was included in the injunctive order as an appropriate “fencing-in” provision to prevent the two companies from repeating the alleged unlawful conduct.

Commissioner Wright stated that the FTC “inevitably faces a tradeoff between deterring deceptive advertising and preserving the benefits to competition and consumers” and encouraged the FTC to “explore more fully whether the articulation and scope of injunctive relief in these and similar settlements strikes the right balance.” According to Commissioner Wright, “[t]he optimal amount and type of evidence to substantiate a future claim will vary from case to case.”

In the more recent decision and order with L’Oreal, the FTC defined “Competent and reliable scientific evidence” as “evidence, consisting of tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.” Unlike the earlier order against Genelink and foru™, the FTC did not mandate that L’Oreal have at least two random clinical trials to substantiate each of its claims. L’Oreal is simply enjoined from advertising that its skincare products affect genes until it has “competent and reliable scientific evidence.” The “fencing in” provision of the L’Oreal order extends this requirement to any gene-related claims for all L’Oreal’s cosmetics, not just its skincare. The decision and order will be open for public comment for 30 days.

What does this mean for other companies?
The FTC seems content to protect consumers from false or misleading advertising by determining, on a case-by-case basis, what level of scientific proof is necessary to substantiate each gene-related claim. In January, FTC Chairwoman Ramirez and Commissioner Brill explained in their separate statement, “…to the extent other marketers look to our orders for signals as to the type of backing required for disease treatment claims, we prefer that they understand that serious claims like those made by respondents [Genelink and foru™] must have hard science behind them.” Additionally they made clear that when claims are made in reliance upon emerging science the claims should be qualified accordingly. “Properly qualified claims are lawful and permissible.” Companies offering nutrigenetic and dermagenetic products have three options to stay out of trouble with the FTC: avoid referencing gene-related benefits altogether, insert (at a minimum) caveats to any gene-related claims, or (ideally) provide substantial scientific evidence to support any gene-related claims made.