The Second Circuit recently breathed life back into a lawsuit about the adequacy of data used to support cognitive enhancement claims. Specifically, the court vacated a previous Southern District of New York dismissal of an FTC complaint alleging that Quincy Bioscience advertised the memory supplement “Prevagen” without a reasonable basis for its claims.
As previously covered here and here, Quincy represented that Prevagen improved memory and that scientific evidence – in the form of a double-blind controlled trial – proved such efficacy claims.
According to Hinch Newman FTC defense lawyer Richard B. Newman, in 2017 the Federal Trade Commission and the New York Attorney General initiated legal action, alleging that Quincy did not have a reasonable basis for its claims. Quincy sought dismissal, in part, by relying on its scientific study.
While the lower court ruled in the FTC’s favor, holding that “no statistically significant results were observed for the study population as a whole on any of the cognitive tasks,” the defendant argued that the study included positive and reliable subgroup data. The court ultimately dismissed the FTC’s complaint, stating that the FTC challenge to the study “never proceed[ed] beyond the theoretical” because the complaint only showed that there were “possibilities that the study’s results do not support its conclusion.”
The FTC appealed. In doing so, it argued that Quincy’s data was cherry-picked and unreliable.
The Second Circuit ruled, “The FTC has stated a plausible claim that Quincy’s representations about Prevagen are contradicted by the results of Quincy’s clinical trial and are thus materially deceptive in violation of the FTC Act.” In doing so, the court opined that the study “failed to show a statistically significant improvement in the treatment group over the placebo group on any of the nine computerized cognitive tasks.”
Quincy “developed and marketed a suite of dietary supplements under the brand Prevagen and claimed in advertisements and marketing materials (1) that the supplements improve memory and provide other cognitive benefits, (2) that these effects are clinically proven, and (3) that the products’ active ingredient ‘supplements’ brain proteins that are lost with age. The FTC and the
State of New York alleged that Quincy conducted a randomized, double-blind, placebo-controlled study that contradicted these representations. The study showed no statistically significant improvement in the memory and cognition of participants taking Prevagen over participants taking a placebo. According to the FTC’s Complaint, Quincy subsequently ‘conducted more than 30 post hoc analyses of the results’ of the study, and ‘the vast majority of these post hoc comparisons failed to show statistical significance.’ The FTC further alleges that while the study showed a ‘few positive findings on isolated tasks for small groups of the study population,’ these findings did not ‘provide reliable evidence of a treatment effect.’”
“The FTC has stated a plausible claim that Quincy’s representations about Prevagen are contradicted by the results of Quincy’s clinical trial and are thus materially deceptive in violation of the FTC Act and New York General Business Law. For example, the FTC’s Complaint quotes Quincy’s broad claim that in a clinical study ‘Prevagen improved memory for most subjects within 90 days.’ Yet the Complaint alleges that Quincy’s clinical study of Prevagen ‘failed to show a statistically significant improvement in the treatment group over the placebo group on any of the nine computerized cognitive tasks.’ Taking these allegations as true, not only has the FTC adequately alleged that Quincy’s study undermines its representations that ‘the majority of people’ experience cognitive improvement from taking Prevagen, but the FTC has also stated a claim that Quincy’s representations that this cognitive improvement is clinically supported are deceptive.”
Consult with an experienced FTC defense lawyer if you are interested in this topic or if you are the subject of an FTC CID or litigation matter. Advertisers must possess the level of proof claimed in the ad where an advertisement represents that a particular claim has been scientifically established. Statistical significance is but one factor that marketers must assess when it comes to claim substantiation.
FTC policy regarding advertising substantiation provides, without limitation, that advertisers and ad agencies have a reasonable basis for advertising claims before they are disseminated. The FTC vigorously enforces the requirement that advertisers substantiate express and implied claims, however conveyed, that make objective assertions about the item or service advertised. The failure to possess and rely upon a reasonable basis for objective claims constitutes an unfair and deceptive act or practice in violation of Section 5 of the Federal Trade Commission Act.
The reasonable basis doctrine requires that firms have substantiation before disseminating a claim. Those lacking a reasonable basis before an ad is disseminated are subject to prosecution. On limited occasion and for narrow purposes, the FTC will consider post-claim evidence to evaluate the truth of a claim.
However, subsequent evidence of truthfulness will not absolve marketers of liability for failing to possess prior substantiation for a claim. Additionally, in evaluating the adequacy of prior substantiation, the Commission will consider only post-claim substantiation that sheds light on pre-existing substantiation. Thus, advertisers will not be allowed to create entirely new substantiation simply because their prior substantiation was inadequate.
Richard B. Newman is an Internet advertising attorney at Hinch Newman LLP. Follow him on Twitter @ FTCLawDefense.
Informational purposes only. Not legal advice.
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