As many companies continue to struggle in the face of the coronavirus (“COVID-19”) pandemic, some of them can add increased regulatory scrutiny to their list of stressors. Over the last couple of months, the United States Federal Trade Commission and the Food and Drug Administration have issued over 100 warning letters to companies making allegedly unsupported claims that their products or therapies can prevent, treat, or cure COVID-19.
On May 7, the FTC announced it issued 45 new warning letters, in addition to three previous sets, to companies “making unsubstantiated claims that their products and therapies can treat or prevent COVID-19.” In these letters, the FTC stated that the companies’ claims are not supported by reliable scientific evidence and, therefore, violate the Federal Trade Commission Act, 15 U.S.C. 41 et seq. The FTC advised the companies to stop making such marketing claims and gave them 48 hours to notify the agency about the specific actions that the companies have taken to cease and desist. The FTC warned that failure to comply could lead to further legal action.
It appears that the FTC’s words are not hollow. There has been at least one instance in which the FTC filed a lawsuit against a company for failing to comply with requirements in a warning letter. In the case, the company allegedly marketed some of its products as a treatment or cure for COVID-19 and cancer. On April 28, the company and the FTC reached a deal in which the company agreed to an injunctive order and to cease such advertising.
In addition, the FTC is holding Voice over Internet Protocol service providers and multi-level marketing companies accountable for aiding or facilitating the companies described above through telemarketing, or other methods. Thus, companies focused exclusively on marketing should also carefully evaluate content when it is related to COVID-19.
Finally, the FDA has issued over 40 warning letters since March 6, some in conjunction with the FTC, also targeting companies that claim their products can prevent, treat, mitigate, diagnose, or cure COVID-19. In many instances, the FDA is targeting products as allegedly unapproved new drugs and misbranded drugs marketed in violation of the Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 352, 355(a). In each case, the FDA gave these companies 48 hours to notify its COVID-19 Task Force about the steps they took to comply and threatened further legal action for failure to immediately correct the cited violations.
We are unaware of instances in which the FDA has initiated further legal action based on these warning letters. But the FDA (through the Department of Justice) has successfully sued companies for failure to adhere to similar requests in the past. See, e.g. U.S. v. Innovative Biodefense, Inc., et al., Case No. SA CV 18-0996-DOC(JDEx) (C.D. Cal. May 4, 2020) (upholding injunctive relief against defendants for their “repeated and continuing violations of the [Food, Drug, and Cosmetic Act], despite receiving notice on multiple occasions from FDA … that they are unlawfully introducing unapproved new drugs into interstate commerce” and marketing them as effective against diseases such as MRSA, norovirus, H1N1, and Ebola).
Given the scale of the pandemic and government efforts to protect consumers, the examples described above suggest that federal agencies are taking more aggressive action than they otherwise would in a non-COVID-19 situation. Companies should keep in mind that there is no proven cure or vaccine for COVID-19. As such, companies that market their products as a prevention, treatment, or cure for COVID-19, or any incurable disease, are advised to carefully avoid such claims.