Epichouse, LLC (First Class Herbalist CBD); Analysis To Aid Public Comment, 86921-86925 [2020-29001]

Download as PDF Federal Register / Vol. 85, No. 251 / Thursday, December 31, 2020 / Notices non-automated checks, EPA staff can review and provide feedback notifications through ACE to the filer on what information is needed that has not been provided. Form Numbers: None. Respondents/Affected Entities: Pesticide importers, which includes many types of business entities ranging from Commercial and Institutional Building Construction (NAICS 236220) to Pesticide and Other Agricultural Chemical Manufacturing (NAICS 325300) and even Public Administration: Executive Offices (NAICS 921110). Other business and institutions that import pesticides include Agriculture, Forestry, Fishing and Hunting (Sector 11), Wholesale Trade, (Sector 42). Respondent’s obligation to respond: Mandatory (FIFRA sections 3 and 25; 40 CFR 152.25(f)). Estimated number of respondents: 92,133 (total). Frequency of response: On occasion. Total estimated burden: 40,880 hours (per year). Burden is defined at 5 CFR 1320.03(b). Total estimated cost: $ 2,753,522 (per year), includes $0 annualized capital or operation & maintenance costs. Changes in the estimates: There is an increase of 24,540 hours in the total estimated respondent burden compared with the ICR currently approved by OMB. This increase is due to an increase in the annual number of NOAs submitted. The new electronic system for submitting NOA filings, ACE, has contributed to the increase in the number of NOAs. The annual number of NOAs submitted to EPA increased from 38,000 for the previous ICR renewal to 92,133 for this ICR renewal. The average burden hours per response increased slightly from the previous ICR renewal of 0.43 hours to the current 0.44 per response. This change is an adjustment. Courtney Kerwin, Director, Regulatory Support Division. [FR Doc. 2020–29098 Filed 12–30–20; 8:45 am] BILLING CODE 6560–50–P FEDERAL TRADE COMMISSION khammond on DSKJM1Z7X2PROD with NOTICES [File No. 202 3094] Epichouse, LLC (First Class Herbalist CBD); Analysis To Aid Public Comment Federal Trade Commission. Proposed consent agreement; request for comment. AGENCY: ACTION: The consent agreement in this matter settles alleged violations of SUMMARY: VerDate Sep<11>2014 19:28 Dec 30, 2020 Jkt 253001 federal law prohibiting unfair or deceptive acts or practices. The attached Analysis to Aid Public Comment describes both the allegations in the complaint and the terms of the consent order—embodied in the consent agreement—that would settle these allegations. Comments must be received on or before February 1, 2021. ADDRESSES: Interested parties may file comments online or on paper by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Please write ‘‘Epichouse, LLC (First Class Herbalist LLC); File No. 202 3094’’ on your comment, and file your comment online at https:// www.regulations.gov by following the instructions on the web-based form. If you prefer to file your comment on paper, mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC–5610 (Annex D), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. FOR FURTHER INFORMATION CONTACT: Keith Fentonmiller (202–326–2775), Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing a consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained at https:// www.ftc.gov/news-events/commissionactions. You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before February 1, 2021. Write ‘‘Epichouse, LLC (First Class Herbalist LLC); File No. 202 3094’’ on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent DATES: PO 00000 Frm 00021 Fmt 4703 Sfmt 4703 86921 practicable, on the https:// www.regulations.gov website. Because of the public health emergency in response to the COVID–19 pandemic and the agency’s heightened security screening, postal mail addressed to the Commission will be subject to delay. We strongly encourage you to submit your comments online through the https://www.regulations.gov website. If you prefer to file your comment on paper, write ‘‘Epichouse, LLC (First Class Herbalist LLC); File No. 202 3094’’ on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC– 5610 (Annex D), Washington, DC 20580; or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. If possible, submit your paper comment to the Commission by courier or overnight service. Because your comment will be placed on the publicly accessible website at https://www.regulations.gov, you are solely responsible for making sure your comment does not include any sensitive or confidential information. In particular, your comment should not include sensitive personal information, such as your or anyone else’s Social Security number; date of birth; driver’s license number or other state identification number, or foreign country equivalent; passport number; financial account number; or credit or debit card number. You are also solely responsible for making sure your comment does not include sensitive health information, such as medical records or other individually identifiable health information. In addition, your comment should not include any ‘‘trade secret or any commercial or financial information which . . . is privileged or confidential’’—as provided by Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)— including in particular competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names. Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled ‘‘Confidential,’’ and must comply with FTC Rule 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual E:\FR\FM\31DEN1.SGM 31DEN1 86922 Federal Register / Vol. 85, No. 251 / Thursday, December 31, 2020 / Notices khammond on DSKJM1Z7X2PROD with NOTICES and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c). Your comment will be kept confidential only if the General Counsel grants your request in accordance with the law and the public interest. Once your comment has been posted on the https:// www.regulations.gov website—as legally required by FTC Rule 4.9(b)—we cannot redact or remove your comment from that website, unless you submit a confidentiality request that meets the requirements for such treatment under FTC Rule 4.9(c), and the General Counsel grants that request. Visit the FTC website at http:// www.ftc.gov to read this Notice and the news release describing the proposed settlement. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding, as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before February 1, 2021. For information on the Commission’s privacy policy, including routine uses permitted by the Privacy Act, see https://www.ftc.gov/ site-information/privacy-policy. Analysis of Proposed Consent Order To Aid Public Comment The Federal Trade Commission (‘‘FTC’’ or ‘‘Commission’’) has accepted, subject to final approval, an agreement containing a consent order with Epichouse, LLC (‘‘Epichouse’’), also doing business as First Class Herbalist CBD, Cobalt Serum, Cobalt Enhance, and Cobalt Cream, and John Le, individually and as an officer of Epichouse (collectively, ‘‘Respondents’’). The proposed consent order (‘‘order’’) has been placed on the public record for 30 days so that interested persons may submit comments. Comments received during this period will become part of the public record. After 30 days, the Commission will again review the order and the comments received, and will decide whether it should withdraw the order or make it final. This matter involves Respondents’ advertising for products containing cannabidiol (‘‘CBD Products’’), including First Class Herbalist CBD oil. The complaint alleges that Respondents violated Sections 5(a) and 12 of the FTC Act by disseminating false and unsubstantiated advertisements claiming that their CBD Products, among other things: Are safe for all users; treat pain better than prescription medicine like OxyContin; prevent and treat numerous serious health VerDate Sep<11>2014 19:28 Dec 30, 2020 Jkt 253001 conditions, including age-related cognitive decline, cancer, chronic pain, diabetes, heart disease, hypertension, and migraines; and are scientifically proven to improve many serious health conditions. The order includes injunctive relief that prohibits these alleged violations and fences in similar and related conduct. The product coverage would apply to any dietary supplement, drug, or food that Respondents sell or market, including CBD Products. Part I prohibits Respondents from making any representation about the efficacy of any covered product, including that such product: A. treats, alleviates, or cures agerelated cognitive decline, neurodegeneration, or prostate problems; B. prevents age-related cognitive decline, pain, hypertension, or migraines; C. treats, alleviates, or cures any disease, including but not limited to adult acne; Alzheimer’s disease; arthritis, autoimmune disorder; bipolar disorder; cancer; pain, including neuropathic pain, pain from spinal cord injuries, and pain from diseases like arthritis; colitis; Crohn’s disease; depression; diabetes; endocrine disorders; heart disease; high blood pressure; migraines; multiple sclerosis; obesity; Parkinson’s disease; psoriasis; rheumatism; strokes; or schizophrenia; D. replaces the need for prescription painkillers like oxycontin; or E. is safe for all consumers, unless the representation is non-misleading, including that, at the time such representation is made, they possess and rely upon competent and reliable scientific evidence that substantiates that the representation is true. For purposes of Part I, competent and reliable scientific evidence must consist of human clinical testing of the covered product, or of an essentially equivalent product, that is sufficient in quality and quantity based on standards generally accepted by experts in the relevant disease, condition, or function to which the representation relates, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true. Such testing must be: (1) Randomized, double-blind, and placebo-controlled; and (2) conducted by researchers qualified by training and experience to conduct such testing. Part II prohibits Respondents from making any representation, other than representations covered under Part I, about the health benefits, performance, efficacy, safety, or side effects of any covered product, unless the PO 00000 Frm 00022 Fmt 4703 Sfmt 4703 representation is non-misleading, and, at the time of making such representation, they possess and rely upon competent and reliable scientific evidence that is sufficient in quality and quantity based on standards generally accepted by experts in the relevant disease, condition, or function to which the representation relates, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true. For purposes of Part II, ‘‘competent and reliable scientific evidence’’ means tests, analyses, research, or studies that (1) have been conducted and evaluated in an objective manner by experts in the relevant disease, condition, or function to which the representation relates; (2) that are generally accepted by such experts to yield accurate and reliable results; and (3) that are randomized, double-blind, and placebo-controlled human clinical testing of the covered product, or of an essentially equivalent product, when such experts would generally require such human clinical testing to substantiate that the representation is true. Part III requires that, with regard to any human clinical test or study (‘‘test’’) upon which Respondents rely to substantiate any claim covered by the order, Respondents must secure and preserve all underlying or supporting data and documents generally accepted by experts in the field as relevant to an assessment of a test. Part IV prohibits Respondents from misrepresenting the existence, contents, validity, results, conclusions, or interpretations of any test, study, or other research or that any benefit of any covered product is scientifically or clinically proven. Part V provides Respondents a safe harbor for making claims approved by the Food and Drug Administration (‘‘FDA’’). Parts VI and VII require Respondents to pay the Commission $30,000.00 and describes the procedures and legal rights related that payment. Part VIII requires Respondents to send email notices to consumers who purchased First Class Herbalist Relief CBD oil informing them about the settlement. Part IX requires Respondents to submit an acknowledgement of receipt of the order; serve the order on certain individuals, including all officers or directors of any business Respondents control and employees having managerial responsibilities for conduct related to the subject matter of the order; and obtain acknowledgements from each individual or entity to which E:\FR\FM\31DEN1.SGM 31DEN1 Federal Register / Vol. 85, No. 251 / Thursday, December 31, 2020 / Notices Respondents have delivered a copy of the order. Part X requires Respondents to file compliance reports with the Commission and to notify the Commission of bankruptcy filings or changes in corporate structure that might affect compliance obligations. Part XI contains recordkeeping requirements for accounting records, personnel records, consumer correspondence, advertising and marketing materials, and claim substantiation, as well as all records necessary to demonstrate compliance or non-compliance with the order. Part XII contains other requirements related to the Commission’s monitoring of Respondents’ order compliance. Part XIII provides the effective dates of the order, including that, with exceptions, the order will terminate in 20 years. The purpose of this analysis is to facilitate public comment on the order, and it is not intended to constitute an official interpretation of the complaint or order, or to modify the order’s terms in any way. By direction of the Commission. April J. Tabor, Acting Secretary. Statement of Commissioner Rohit Chopra 1 khammond on DSKJM1Z7X2PROD with NOTICES Summary • When companies lie about the effectiveness of their treatments for serious conditions, this harms patients and diverts sales away from firms that tell the truth. • Congress gave the FTC a new authority to crack down on abuses in the opioid treatment industry, but the agency has not prioritized this issue. This should change. • The FTC can increase its effectiveness when it comes to health claims by shifting resources away from small businesses and by deploying the unused Penalty Offense Authority. Today, the Federal Trade Commission is taking action against several outfits regarding their outlandish—and unlawful—claims about cannabidiol (CBD). While CBD is currently the subject of considerable scientific research, there is no evidence yet that CBD can treat or cure cancer, Alzheimer’s, or other serious diseases. Baseless claims give patients false hope, 1 In the Matter of EasyButter, LLC et al., Comm’n File No. 2023047; In the Matter of Reef Industries, Inc. et al., Comm’n File No. 2023064; In the Mater of Steves Distributing, LLC et al., Comm’n File No. 2023065; In the Matter of CBD Meds, Inc. et al., Comm’n File No. 2023080; In the Matter of Epichouse, LLC et al., Comm’n File No. 2023094; In the Matter of Bionatrol Health, LLC et al., Comm’n File No. 2023114. VerDate Sep<11>2014 19:28 Dec 30, 2020 Jkt 253001 improperly increase or divert their medical spending, and undermine ‘‘a competitor’s ability to compete’’ on honest attributes.2 I support these actions and congratulate those who made them a reality. Going forward, however, the FTC will need to refocus its efforts on health claims by targeting abuses in the substance use disorder treatment industry, shifting attention toward large businesses, and making more effective use of the FTC’s Penalty Offense Authority. First, COVID–19 and the resulting economic and social distress are fueling new concerns about substance use disorders. In particular, there are signs that the pandemic is leading to greater dependence on opioids.3 It is critical that the FTC take steps to prevent exploitation of patients seeking treatment for substance use disorders. I am particularly concerned about abusive practices in the for-profit opioid treatment industry, and believe this should be a high priority. This industry has grown exponentially by profiting off those suffering from addiction. Many of these outfits use lead generators to steer Americans into high-cost, subpar treatment centers, and some even hire intermediaries—so-called ‘‘body brokers’’—who collect kickbacks from this harmful practice.4 More than two years ago, Congress passed the SUPPORT for Patients and Communities Act. Among other provisions, the Act authorized the Commission to seek civil penalties, restitution, damages, and other relief against outfits that engage in misconduct related to substance use 2 In re Pfizer, Inc., 81 F.T.C. 23, 62 (1972). e.g., Jon Kamp & Arian Campo-Flores, The Opioid Crisis, Already Serious, Has Intensified During Coronavirus Pandemic, WALL STREET J. (Sept. 8, 2020), https://www.wsj.com/articles/theopioid-crisis-already-serious-has-intensified-duringcoronavirus-pandemic-11599557401; Issue brief: Reports of increases in opioid- and other drugrelated overdose and other concerns during COVID pandemic, American Medical Association (last updated on Oct. 31, 2020), https://www.amaassn.org/delivering-care/opioids/covid-19-may-beworsening-opioid-crisis-states-can-take-action. 4 For example, recent reporting describes the ‘‘Florida Shuffle,’’ where treatment facilities pay brokers to recruit patients through 12-step meetings, conferences, hotlines, and online groups, leading to serious harm. See German Lopez, She wanted addiction treatment. She ended up in the relapse capital of America, VOX (Mar. 2, 2020), https:// www.vox.com/policy-and-politics/2020/3/2/ 21156327/florida-shuffle-drug-rehab-addictiontreatment-bri-jayne. See also Letter from Commissioner Chopra to Congress on Deceptive Marketing Practices in the Opioid Addiction Treatment Industry (July 28, 2018), https:// www.ftc.gov/public-statements/2018/07/lettercommissioner-chopra-congress-deceptivemarketing-practices-opioid (calling on the FTC to do more to tackle this problem). 3 See, PO 00000 Frm 00023 Fmt 4703 Sfmt 4703 86923 disorder treatment.5 The Commission is well positioned to help shut down these abuses, ensure they are not profitable, and hold predatory actors and their enablers to account.6 Unfortunately, the Commission has brought zero cases under this new authority. While I have supported actions like this one that challenge baseless CBD claims, as well as previous actions charging that pain relief devices and similar products were sold deceptively,7 I am concerned that we have largely ignored Congressional concerns about unlawful opioid treatment practices. I urge my fellow Commissioners to change course on our enforcement priorities, especially given our limited resources. Second, the FTC should focus more of its enforcement efforts on larger firms rather than small businesses. Today’s actions focus on very small players, some of which are defunct. While I appreciate that small businesses can also harm honest competitors and families, they are often judgment-proof, making it unlikely victims will see any relief.8 I am confident that FTC staff can successfully challenge powerful, wellfinanced defendants that break the law. Finally, the Commission should reduce the prevalence of unlawful health claims by triggering civil penalties under the FTC’s Penalty Offense Authority.9 Under the Penalty Offense Authority, firms that engage in conduct they know has been previously condemned by the Commission can face civil penalties, in addition to the relief that we typically seek.10 For example, 5 Public Law. 115–271 §§ 8021–8023 (codified in 15 U.S.C. 45d). The Act also allows the Commission to prosecute deceptive marketing of opioid treatment products. Notably, a number of respondents in this sweep are alleged to have made claims that CBD could replace OxyContin. 6 Given public reports regarding private equity rollups of smaller opioid treatment facilities, the Commission can also examine whether anticompetitive M&A strategies are leading to further patient harm. See Statement of Commissioner Rohit Chopra Regarding Private Equity Roll-ups and the Hart-Scott-Rodino Annual Report to Congress, Comm’n File No. P110014 (July 8, 2020), https://www.ftc.gov/public-statements/ 2020/07/statement-commissioner-rohit-chopraregarding-private-equity-roll-ups-hart. 7 Press Release, Fed. Trade Comm’n, Marketers of Pain Relief Device Settle FTC False Advertising Complaint (Mar. 4, 2020), https://www.ftc.gov/ news-events/press-releases/2020/03/marketerspain-relief-device-settle-ftc-false-advertising. 8 In one of these matters, the respondents are paying nothing. 9 15 U.S.C. 45(m)(1)(b). 10 See Rohit Chopra & Samuel A.A. Levine, The Case for Resurrecting the FTC Act’s Penalty Offense Authority (Oct. 29, 2020), https://papers.ssrn.com/ sol3/papers.cfm?abstract_id=3721256. Particularly given challenges to the FTC’s 13(b) authority, incorporating a penalty offense strategy can E:\FR\FM\31DEN1.SGM Continued 31DEN1 86924 Federal Register / Vol. 85, No. 251 / Thursday, December 31, 2020 / Notices the Commission routinely issues warning letters to businesses regarding unsubstantiated health claims. Future warning letters can be more effective if they include penalty offense notifications. The Commission has repeatedly found that objective claims require a reasonable basis,11 and apprising firms of these findings—along with a warning that noncompliance can result in penalties—makes it significantly more likely they will come into compliance voluntarily. In fact, when the Commission employed this strategy four decades ago, it reportedly resulted in a ‘‘high level of voluntary compliance achieved quickly and at a low cost.’’ 12 Going forward, we should pursue this strategy. I thank everyone who made today’s actions possible, and look forward to future efforts that address emerging harms using the full range of our tools and authorities.13 khammond on DSKJM1Z7X2PROD with NOTICES Concurring Statement of Commissioner Christine S. Wilson Today the Commission announces six settlements with marketers of cannabidiol (CBD) products resolving allegations that they made false, misleading, and/or unsubstantiated express disease claims for their products. I support these cases because safeguard the Commission’s ability to seek strong remedies against lawbreakers. 11 This requirement was first established in the Commission’s 1972 Pfizer decision, and it has been affirmed repeatedly. Pfizer, Inc., supra note 2 (finding that ‘‘[f]airness to the consumer, as well as fairness to competitors’’ compels the conclusion that affirmative claims require a reasonable basis); In re Thompson Medical Co., 104 F.T.C. 648, 813 (1984) (collecting cases), aff’d, 791 F.2d 189 (DC Cir. 1986). Appended to Thompson Medical was the Commission’s Policy Statement Regarding Advertising Substantiation, which states that ‘‘a firm’s 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.’’ Id. at 839. This standard continues to govern the Commission’s approach to substantiation, as recently reaffirmed in the Commission’s final order against POM Wonderful. In re POM Wonderful LLC et al., 155 F.T.C. 1, 6 (2013). 12 Commissioner Bailey made this observation in the context of opposing industry efforts to repeal this authority, an authority she described as an ‘‘extremely effective and efficient way to enforce the law.’’ Testimony of Commissioner Patricia P. Bailey Before the Subcomm. on Com., Tourism and Transp. of the Comm. on Energy and Com. of the H.R. Concerning the 1982 Reauthorization of the Fed. Trade Comm’n, at 11 (Apr. 1, 1982), https:// www.ftc.gov/system/files/documents/public_ statements/693551/19820401_bailey_testimony_ before_the_subcorrmittee_on_commerce_ subcommittee_on_commerce_touri.pdf. 13 My colleague, Commissioner Christine S. Wilson, has issued a statement in this matter. I agree that the Commission should not prioritize close-call substantiation cases, especially those involving small businesses. VerDate Sep<11>2014 19:28 Dec 30, 2020 Jkt 253001 accurate and complete information about products contributes to the efficient functioning of the market and facilitates informed consumer decisionmaking. In contrast, deceptive or false claims inhibit informed decisionmaking and may cause economic injury to consumers. The Commission’s complaints in these matters allege that the marketers claimed their products could treat, prevent, or cure diseases or serious medical conditions, including cancer, heart disease, Alzheimer’s, diabetes, and Parkinson’s disease, and that scientific research or clinical studies supported these claims. In fact, according to the Commission’s complaints, the proposed respondents did not conduct scientific research on the efficacy of their products to treat these diseases or conditions. In addition, the complaints allege that some of the proposed respondents claimed that their products could be taken in lieu of prescription medication. The Commission has been working with the FDA, and on its own, to combat false and unsubstantiated claims for CBD products, including through warning letters 1 and a law enforcement action.2 Here, where consumers may have foregone proven measures to address serious diseases and the marketers have made virtually no effort to possess and rely on scientific evidence to support their strong, express disease claims, as we allege in our complaint, I agree that law enforcement is appropriate. The Commission’s proposed consent orders in these matters require respondents to possess and rely on competent and reliable evidence, defined as randomized, double-blind, placebo-controlled human clinical trials 1 Press Release, FTC and FDA Warn Florida Company Marketing CBD Products about Claims Related to Treating Autism, ADHD, Parkinson’s, Alzheimer’s, and Other Medical Conditions, Oct. 22, 2019, available at https://www.ftc.gov/newsevents/press-releases/2019/10/ftc-fda-warn-floridacompany-marketing-cbd-productsabout-claims; Press Release, FTC Sends Warning Letters to Companies Advertising Their CBD-Infused Products as Treatmentsfor Serious Diseases, Including Cancer, Alzheimer’s, and Multiple Sclerosis, Sept. 10, 2019, available at https://www.ftc.gov/newsevents/press-releases/2019/09/ftc-sends-warningletters-companies-advertising-their-cbdinfused; Press Release, FTC Joins FDA in Sending Warning Letters to Companies Advertising and Selling Products Containing Cannabidiol (CBD) Claiming to Treat Alzheimer’s, Cancer, and Other Diseases, Apr. 2, 2019, available at https://www.ftc.gov/newsevents/press-releases/2019/04/ftc-joins-fda-sendingwarning-letters-companiesadvertising. 2 Press Release, FTC Order Stops the Marketer of ‘‘Thrive’’ Supplement from Making Baseless Claims It Can Treat, Prevent, or Reduce the Risks from COVID–19, July 10, 2020, available at https:// www.ftc.gov/newsevents/press-releases/2020/07/ftcorder-stops-marketer-thrive-supplement-makingbaseless-claims. PO 00000 Frm 00024 Fmt 4703 Sfmt 4703 to support disease and other serious health claims for these types of products in the future.3 Although I support this requirement in these cases, for these types of claims, I caution that the Commission should impose this stringent substantiation requirement sparingly. Credible science supports the use of CBD products to treat certain conditions—specifically, the FDA has approved a drug containing CBD as an active ingredient to treat rare, severe forms of epilepsy.4 And I understand that many research studies are currently seeking to determine whether there are other scientifically valid and safe uses of this ingredient. I agree with my predecessors who have stated that the Commission should be careful to avoid imposing an unduly high standard of substantiation that risks denying consumers truthful, useful information, may diminish incentives to conduct research, and could chill manufacturer incentives to introduce new products to the market.5 And I agree with the observation of my colleague Commissioner Chopra in his statement that ‘‘[b]aseless claims give patients false hope, improperly increase or divert their medical spending, and undermine ‘a competitor’s ability to 3 See, e.g., Part I of Proposed Order, In the Matter of Bionatrol Health, LLC, et. al. (Dec. 2020). 4 See FDA Press Release, FDA approves first drug comprised of an active ingredient derived from marijuana to treat rare, severe forms of epilepsy (June 25, 2018), available at: https://www.fda.gov/ news-events/press-announcements/fda-approvesfirst-drug-comprised-active-ingredient-derivedmarijuana-treat-rare-severe-forms. 5 See, e.g., Statement of Commissioner Maureen K. Ohlhausen, In the Matter of Health Discovery Corporation and FTC v. Avrom Boris Lasarow, et al. (Feb. 2015), https://www.ftc.gov/public-statements/ 2015/02/dissenting-statement-commissionermaureen-k-ohlhausen-matter-health; Statement of Commissioner Joshua D. Wright, FTC v. Kevin Wright; HCG Platinum, LLC; and Right Way Nutrition, LLC (Dec. 2014), https://www.ftc.gov/ public-statements/2014/12/statementcommissioner-joshua-d-wright-federal-tradecommission-v-kevin; Statement of Commissioner Joshua D. Wright, In the Matter of GeneLink, Inc., and foru International Corporation (January 2014), https://www.ftc.gov/public-statements/2014/01/ statement-commissioner-joshua-d-wright-mattergenelink-inc-foru; Statement of Commissioner Maureen K. Ohlhausen Dissenting in Part and Concurring in Part, In the Matter of GeneLink, Inc. and foru International Corporation (January 2014), https://www.ftc.gov/public-statements/2014/01/ statement-commissioner-maureen-k-ohlhausendissenting-part-concurring-part; Dissenting Statement of Commissioner Maureen K. Ohlhausen, FTC v. Springtech 77376, et al. (July 2013), https:// www.ftc.gov/public-statements/2013/07/dissentingstatement-commissioner-maureen-k-ohlhausen; see also J. Howard Beales, III and Timothy J. Muris, In Defense of the Pfizer Factors, George Mason Law & Economics Research Paper No. 12–49 (May 2012), available at: https://papers.ssrn.com/sol3/ papers.cfm?abstract_id=2087776. E:\FR\FM\31DEN1.SGM 31DEN1 Federal Register / Vol. 85, No. 251 / Thursday, December 31, 2020 / Notices compete’ on honest attributes.’’ 6 Although I support these cases, I hope that the Commission’s actions here, which challenge wholly unsubstantiated disease claims, do not discourage research into the potential legitimate benefits of CBD and a wide array of other products. In addition, going forward, I urge the Commission to focus our scarce resources on marketers that make strong, express claims about diseases and serious health issues with little to no scientific support and engage in deceptive practices that cause substantial consumer injury. [FR Doc. 2020–29001 Filed 12–30–20; 8:45 am] BILLING CODE 6750–01–P FEDERAL TRADE COMMISSION [File No. 202 3080] CBD Meds, Inc.; Analysis To Aid Public Comment Federal Trade Commission. Proposed consent agreement; request for comment. AGENCY: ACTION: The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices. The attached Analysis to Aid Public Comment describes both the allegations in the complaint and the terms of the consent order—embodied in the consent agreement—that would settle these allegations. DATES: Comments must be received on or before February 1, 2021. ADDRESSES: Interested parties may file comments online or on paper by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Please write ‘‘CBD Meds, Inc.; File No. 202 3080’’ on your comment, and file your comment online at https:// www.regulations.gov by following the instructions on the web-based form. If you prefer to file your comment on paper, mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC–5610 (Annex D), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. FOR FURTHER INFORMATION CONTACT: Barbara Chun (310–824–4312), Bureau khammond on DSKJM1Z7X2PROD with NOTICES SUMMARY: 6 See Statement of Commissioner Rohit Chopra Regarding the Cannabidiol (CBD) Enforcement Actions (Dec. 17, 2020). VerDate Sep<11>2014 19:28 Dec 30, 2020 Jkt 253001 of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing a consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained at https:// www.ftc.gov/news-events/commissionactions. You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before February 1, 2021. Write ‘‘CBD Meds, Inc.; File No. 202 3080’’ on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the https:// www.regulations.gov website. Because of the public health emergency in response to the COVID–19 pandemic and the agency’s heightened security screening, postal mail addressed to the Commission will be subject to delay. We strongly encourage you to submit your comments online through the https://www.regulations.gov website. If you prefer to file your comment on paper, write ‘‘CBD Meds, Inc.; File No. 202 3080’’ on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC–5610 (Annex D), Washington, DC 20580; or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. If possible, submit your paper comment to the Commission by courier or overnight service. Because your comment will be placed on the publicly accessible website at https://www.regulations.gov, you are solely responsible for making sure your comment does not include any sensitive or confidential information. In particular, your comment should not include sensitive personal information, such as your or anyone else’s Social PO 00000 Frm 00025 Fmt 4703 Sfmt 4703 86925 Security number; date of birth; driver’s license number or other state identification number, or foreign country equivalent; passport number; financial account number; or credit or debit card number. You are also solely responsible for making sure your comment does not include sensitive health information, such as medical records or other individually identifiable health information. In addition, your comment should not include any ‘‘trade secret or any commercial or financial information which . . . is privileged or confidential’’—as provided by Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)— including in particular competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names. Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled ‘‘Confidential,’’ and must comply with FTC Rule 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c). Your comment will be kept confidential only if the General Counsel grants your request in accordance with the law and the public interest. Once your comment has been posted on the https:// www.regulations.gov website—as legally required by FTC Rule 4.9(b)—we cannot redact or remove your comment from that website, unless you submit a confidentiality request that meets the requirements for such treatment under FTC Rule 4.9(c), and the General Counsel grants that request. Visit the FTC website at http:// www.ftc.gov to read this Notice and the news release describing the proposed settlement. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding, as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before February 1, 2021. For information on the Commission’s privacy policy, including routine uses permitted by the Privacy Act, see https://www.ftc.gov/ site-information/privacy-policy. Analysis of Proposed Consent Order To Aid Public Comment The Federal Trade Commission (‘‘FTC’’ or ‘‘Commission’’) has accepted, subject to final approval, an agreement E:\FR\FM\31DEN1.SGM 31DEN1

Agencies

[Federal Register Volume 85, Number 251 (Thursday, December 31, 2020)]
[Notices]
[Pages 86921-86925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29001]


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FEDERAL TRADE COMMISSION

[File No. 202 3094]


Epichouse, LLC (First Class Herbalist CBD); Analysis To Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices. The attached Analysis to Aid Public Comment describes both 
the allegations in the complaint and the terms of the consent order--
embodied in the consent agreement--that would settle these allegations.

DATES: Comments must be received on or before February 1, 2021.

ADDRESSES: Interested parties may file comments online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write ``Epichouse, LLC 
(First Class Herbalist LLC); File No. 202 3094'' on your comment, and 
file your comment online at https://www.regulations.gov by following 
the instructions on the web-based form. If you prefer to file your 
comment on paper, mail your comment to the following address: Federal 
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, 
Suite CC-5610 (Annex D), Washington, DC 20580, or deliver your comment 
to the following address: Federal Trade Commission, Office of the 
Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 
5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Keith Fentonmiller (202-326-2775), 
Bureau of Consumer Protection, Federal Trade Commission, 600 
Pennsylvania Avenue NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing a consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
at https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before February 1, 
2021. Write ``Epichouse, LLC (First Class Herbalist LLC); File No. 202 
3094'' on your comment. Your comment--including your name and your 
state--will be placed on the public record of this proceeding, 
including, to the extent practicable, on the https://www.regulations.gov website.
    Because of the public health emergency in response to the COVID-19 
pandemic and the agency's heightened security screening, postal mail 
addressed to the Commission will be subject to delay. We strongly 
encourage you to submit your comments online through the https://www.regulations.gov website.
    If you prefer to file your comment on paper, write ``Epichouse, LLC 
(First Class Herbalist LLC); File No. 202 3094'' on your comment and on 
the envelope, and mail your comment to the following address: Federal 
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, 
Suite CC-5610 (Annex D), Washington, DC 20580; or deliver your comment 
to the following address: Federal Trade Commission, Office of the 
Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 
5610 (Annex D), Washington, DC 20024. If possible, submit your paper 
comment to the Commission by courier or overnight service.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include sensitive 
personal information, such as your or anyone else's Social Security 
number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure your comment does not include 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 
16 CFR 4.10(a)(2)--including in particular competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual

[[Page 86922]]

and legal basis for the request, and must identify the specific 
portions of the comment to be withheld from the public record. See FTC 
Rule 4.9(c). Your comment will be kept confidential only if the General 
Counsel grants your request in accordance with the law and the public 
interest. Once your comment has been posted on the https://www.regulations.gov website--as legally required by FTC Rule 4.9(b)--we 
cannot redact or remove your comment from that website, unless you 
submit a confidentiality request that meets the requirements for such 
treatment under FTC Rule 4.9(c), and the General Counsel grants that 
request.
    Visit the FTC website at http://www.ftc.gov to read this Notice and 
the news release describing the proposed settlement. The FTC Act and 
other laws that the Commission administers permit the collection of 
public comments to consider and use in this proceeding, as appropriate. 
The Commission will consider all timely and responsive public comments 
that it receives on or before February 1, 2021. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``FTC'' or ``Commission'') has 
accepted, subject to final approval, an agreement containing a consent 
order with Epichouse, LLC (``Epichouse''), also doing business as First 
Class Herbalist CBD, Cobalt Serum, Cobalt Enhance, and Cobalt Cream, 
and John Le, individually and as an officer of Epichouse (collectively, 
``Respondents'').
    The proposed consent order (``order'') has been placed on the 
public record for 30 days so that interested persons may submit 
comments. Comments received during this period will become part of the 
public record. After 30 days, the Commission will again review the 
order and the comments received, and will decide whether it should 
withdraw the order or make it final.
    This matter involves Respondents' advertising for products 
containing cannabidiol (``CBD Products''), including First Class 
Herbalist CBD oil. The complaint alleges that Respondents violated 
Sections 5(a) and 12 of the FTC Act by disseminating false and 
unsubstantiated advertisements claiming that their CBD Products, among 
other things: Are safe for all users; treat pain better than 
prescription medicine like OxyContin; prevent and treat numerous 
serious health conditions, including age-related cognitive decline, 
cancer, chronic pain, diabetes, heart disease, hypertension, and 
migraines; and are scientifically proven to improve many serious health 
conditions.
    The order includes injunctive relief that prohibits these alleged 
violations and fences in similar and related conduct. The product 
coverage would apply to any dietary supplement, drug, or food that 
Respondents sell or market, including CBD Products.
    Part I prohibits Respondents from making any representation about 
the efficacy of any covered product, including that such product:
    A. treats, alleviates, or cures age-related cognitive decline, 
neurodegeneration, or prostate problems;
    B. prevents age-related cognitive decline, pain, hypertension, or 
migraines;
    C. treats, alleviates, or cures any disease, including but not 
limited to adult acne; Alzheimer's disease; arthritis, autoimmune 
disorder; bipolar disorder; cancer; pain, including neuropathic pain, 
pain from spinal cord injuries, and pain from diseases like arthritis; 
colitis; Crohn's disease; depression; diabetes; endocrine disorders; 
heart disease; high blood pressure; migraines; multiple sclerosis; 
obesity; Parkinson's disease; psoriasis; rheumatism; strokes; or 
schizophrenia;
    D. replaces the need for prescription painkillers like oxycontin; 
or
    E. is safe for all consumers, unless the representation is non-
misleading, including that, at the time such representation is made, 
they possess and rely upon competent and reliable scientific evidence 
that substantiates that the representation is true.
    For purposes of Part I, competent and reliable scientific evidence 
must consist of human clinical testing of the covered product, or of an 
essentially equivalent product, that is sufficient in quality and 
quantity based on standards generally accepted by experts in the 
relevant disease, condition, or function to which the representation 
relates, when considered in light of the entire body of relevant and 
reliable scientific evidence, to substantiate that the representation 
is true. Such testing must be: (1) Randomized, double-blind, and 
placebo-controlled; and (2) conducted by researchers qualified by 
training and experience to conduct such testing.
    Part II prohibits Respondents from making any representation, other 
than representations covered under Part I, about the health benefits, 
performance, efficacy, safety, or side effects of any covered product, 
unless the representation is non-misleading, and, at the time of making 
such representation, they possess and rely upon competent and reliable 
scientific evidence that is sufficient in quality and quantity based on 
standards generally accepted by experts in the relevant disease, 
condition, or function to which the representation relates, when 
considered in light of the entire body of relevant and reliable 
scientific evidence, to substantiate that the representation is true.
    For purposes of Part II, ``competent and reliable scientific 
evidence'' means tests, analyses, research, or studies that (1) have 
been conducted and evaluated in an objective manner by experts in the 
relevant disease, condition, or function to which the representation 
relates; (2) that are generally accepted by such experts to yield 
accurate and reliable results; and (3) that are randomized, double-
blind, and placebo-controlled human clinical testing of the covered 
product, or of an essentially equivalent product, when such experts 
would generally require such human clinical testing to substantiate 
that the representation is true.
    Part III requires that, with regard to any human clinical test or 
study (``test'') upon which Respondents rely to substantiate any claim 
covered by the order, Respondents must secure and preserve all 
underlying or supporting data and documents generally accepted by 
experts in the field as relevant to an assessment of a test.
    Part IV prohibits Respondents from misrepresenting the existence, 
contents, validity, results, conclusions, or interpretations of any 
test, study, or other research or that any benefit of any covered 
product is scientifically or clinically proven.
    Part V provides Respondents a safe harbor for making claims 
approved by the Food and Drug Administration (``FDA'').
    Parts VI and VII require Respondents to pay the Commission 
$30,000.00 and describes the procedures and legal rights related that 
payment.
    Part VIII requires Respondents to send email notices to consumers 
who purchased First Class Herbalist Relief CBD oil informing them about 
the settlement. Part IX requires Respondents to submit an 
acknowledgement of receipt of the order; serve the order on certain 
individuals, including all officers or directors of any business 
Respondents control and employees having managerial responsibilities 
for conduct related to the subject matter of the order; and obtain 
acknowledgements from each individual or entity to which

[[Page 86923]]

Respondents have delivered a copy of the order.
    Part X requires Respondents to file compliance reports with the 
Commission and to notify the Commission of bankruptcy filings or 
changes in corporate structure that might affect compliance 
obligations. Part XI contains recordkeeping requirements for accounting 
records, personnel records, consumer correspondence, advertising and 
marketing materials, and claim substantiation, as well as all records 
necessary to demonstrate compliance or non-compliance with the order. 
Part XII contains other requirements related to the Commission's 
monitoring of Respondents' order compliance. Part XIII provides the 
effective dates of the order, including that, with exceptions, the 
order will terminate in 20 years.
    The purpose of this analysis is to facilitate public comment on the 
order, and it is not intended to constitute an official interpretation 
of the complaint or order, or to modify the order's terms in any way.

    By direction of the Commission.
April J. Tabor,
Acting Secretary.

Statement of Commissioner Rohit Chopra \1\
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    \1\ In the Matter of EasyButter, LLC et al., Comm'n File No. 
2023047; In the Matter of Reef Industries, Inc. et al., Comm'n File 
No. 2023064; In the Mater of Steves Distributing, LLC et al., Comm'n 
File No. 2023065; In the Matter of CBD Meds, Inc. et al., Comm'n 
File No. 2023080; In the Matter of Epichouse, LLC et al., Comm'n 
File No. 2023094; In the Matter of Bionatrol Health, LLC et al., 
Comm'n File No. 2023114.
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Summary

     When companies lie about the effectiveness of their 
treatments for serious conditions, this harms patients and diverts 
sales away from firms that tell the truth.
     Congress gave the FTC a new authority to crack down on 
abuses in the opioid treatment industry, but the agency has not 
prioritized this issue. This should change.
     The FTC can increase its effectiveness when it comes to 
health claims by shifting resources away from small businesses and by 
deploying the unused Penalty Offense Authority.
    Today, the Federal Trade Commission is taking action against 
several outfits regarding their outlandish--and unlawful--claims about 
cannabidiol (CBD). While CBD is currently the subject of considerable 
scientific research, there is no evidence yet that CBD can treat or 
cure cancer, Alzheimer's, or other serious diseases. Baseless claims 
give patients false hope, improperly increase or divert their medical 
spending, and undermine ``a competitor's ability to compete'' on honest 
attributes.\2\
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    \2\ In re Pfizer, Inc., 81 F.T.C. 23, 62 (1972).
---------------------------------------------------------------------------

    I support these actions and congratulate those who made them a 
reality. Going forward, however, the FTC will need to refocus its 
efforts on health claims by targeting abuses in the substance use 
disorder treatment industry, shifting attention toward large 
businesses, and making more effective use of the FTC's Penalty Offense 
Authority.
    First, COVID-19 and the resulting economic and social distress are 
fueling new concerns about substance use disorders. In particular, 
there are signs that the pandemic is leading to greater dependence on 
opioids.\3\ It is critical that the FTC take steps to prevent 
exploitation of patients seeking treatment for substance use disorders.
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    \3\ See, e.g., Jon Kamp & Arian Campo-Flores, The Opioid Crisis, 
Already Serious, Has Intensified During Coronavirus Pandemic, WALL 
STREET J. (Sept. 8, 2020), https://www.wsj.com/articles/the-opioid-crisis-already-serious-has-intensified-during-coronavirus-pandemic-11599557401; Issue brief: Reports of increases in opioid- and other 
drug-related overdose and other concerns during COVID pandemic, 
American Medical Association (last updated on Oct. 31, 2020), 
https://www.ama-assn.org/delivering-care/opioids/covid-19-may-be-worsening-opioid-crisis-states-can-take-action.
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    I am particularly concerned about abusive practices in the for-
profit opioid treatment industry, and believe this should be a high 
priority. This industry has grown exponentially by profiting off those 
suffering from addiction. Many of these outfits use lead generators to 
steer Americans into high-cost, subpar treatment centers, and some even 
hire intermediaries--so-called ``body brokers''--who collect kickbacks 
from this harmful practice.\4\
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    \4\ For example, recent reporting describes the ``Florida 
Shuffle,'' where treatment facilities pay brokers to recruit 
patients through 12-step meetings, conferences, hotlines, and online 
groups, leading to serious harm. See German Lopez, She wanted 
addiction treatment. She ended up in the relapse capital of America, 
VOX (Mar. 2, 2020), https://www.vox.com/policy-and-politics/2020/3/2/21156327/florida-shuffle-drug-rehab-addiction-treatment-bri-jayne. 
See also Letter from Commissioner Chopra to Congress on Deceptive 
Marketing Practices in the Opioid Addiction Treatment Industry (July 
28, 2018), https://www.ftc.gov/public-statements/2018/07/letter-commissioner-chopra-congress-deceptive-marketing-practices-opioid 
(calling on the FTC to do more to tackle this problem).
---------------------------------------------------------------------------

    More than two years ago, Congress passed the SUPPORT for Patients 
and Communities Act. Among other provisions, the Act authorized the 
Commission to seek civil penalties, restitution, damages, and other 
relief against outfits that engage in misconduct related to substance 
use disorder treatment.\5\ The Commission is well positioned to help 
shut down these abuses, ensure they are not profitable, and hold 
predatory actors and their enablers to account.\6\
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    \5\ Public Law. 115-271 Sec. Sec.  8021-8023 (codified in 15 
U.S.C. 45d). The Act also allows the Commission to prosecute 
deceptive marketing of opioid treatment products. Notably, a number 
of respondents in this sweep are alleged to have made claims that 
CBD could replace OxyContin.
    \6\ Given public reports regarding private equity rollups of 
smaller opioid treatment facilities, the Commission can also examine 
whether anticompetitive M&A strategies are leading to further 
patient harm. See Statement of Commissioner Rohit Chopra Regarding 
Private Equity Roll-ups and the Hart-Scott-Rodino Annual Report to 
Congress, Comm'n File No. P110014 (July 8, 2020), https://www.ftc.gov/public-statements/2020/07/statement-commissioner-rohit-chopra-regarding-private-equity-roll-ups-hart.
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    Unfortunately, the Commission has brought zero cases under this new 
authority. While I have supported actions like this one that challenge 
baseless CBD claims, as well as previous actions charging that pain 
relief devices and similar products were sold deceptively,\7\ I am 
concerned that we have largely ignored Congressional concerns about 
unlawful opioid treatment practices. I urge my fellow Commissioners to 
change course on our enforcement priorities, especially given our 
limited resources.
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    \7\ Press Release, Fed. Trade Comm'n, Marketers of Pain Relief 
Device Settle FTC False Advertising Complaint (Mar. 4, 2020), 
https://www.ftc.gov/news-events/press-releases/2020/03/marketers-pain-relief-device-settle-ftc-false-advertising.
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    Second, the FTC should focus more of its enforcement efforts on 
larger firms rather than small businesses. Today's actions focus on 
very small players, some of which are defunct. While I appreciate that 
small businesses can also harm honest competitors and families, they 
are often judgment-proof, making it unlikely victims will see any 
relief.\8\ I am confident that FTC staff can successfully challenge 
powerful, well-financed defendants that break the law.
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    \8\ In one of these matters, the respondents are paying nothing.
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    Finally, the Commission should reduce the prevalence of unlawful 
health claims by triggering civil penalties under the FTC's Penalty 
Offense Authority.\9\ Under the Penalty Offense Authority, firms that 
engage in conduct they know has been previously condemned by the 
Commission can face civil penalties, in addition to the relief that we 
typically seek.\10\ For example,

[[Page 86924]]

the Commission routinely issues warning letters to businesses regarding 
unsubstantiated health claims. Future warning letters can be more 
effective if they include penalty offense notifications.
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    \9\ 15 U.S.C. 45(m)(1)(b).
    \10\ See Rohit Chopra & Samuel A.A. Levine, The Case for 
Resurrecting the FTC Act's Penalty Offense Authority (Oct. 29, 
2020), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3721256. 
Particularly given challenges to the FTC's 13(b) authority, 
incorporating a penalty offense strategy can safeguard the 
Commission's ability to seek strong remedies against lawbreakers.
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    The Commission has repeatedly found that objective claims require a 
reasonable basis,\11\ and apprising firms of these findings--along with 
a warning that noncompliance can result in penalties--makes it 
significantly more likely they will come into compliance voluntarily. 
In fact, when the Commission employed this strategy four decades ago, 
it reportedly resulted in a ``high level of voluntary compliance 
achieved quickly and at a low cost.'' \12\ Going forward, we should 
pursue this strategy.
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    \11\ This requirement was first established in the Commission's 
1972 Pfizer decision, and it has been affirmed repeatedly. Pfizer, 
Inc., supra note 2 (finding that ``[f]airness to the consumer, as 
well as fairness to competitors'' compels the conclusion that 
affirmative claims require a reasonable basis); In re Thompson 
Medical Co., 104 F.T.C. 648, 813 (1984) (collecting cases), aff'd, 
791 F.2d 189 (DC Cir. 1986). Appended to Thompson Medical was the 
Commission's Policy Statement Regarding Advertising Substantiation, 
which states that ``a firm's 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.'' Id. at 839. This standard continues to 
govern the Commission's approach to substantiation, as recently 
reaffirmed in the Commission's final order against POM Wonderful. In 
re POM Wonderful LLC et al., 155 F.T.C. 1, 6 (2013).
    \12\ Commissioner Bailey made this observation in the context of 
opposing industry efforts to repeal this authority, an authority she 
described as an ``extremely effective and efficient way to enforce 
the law.'' Testimony of Commissioner Patricia P. Bailey Before the 
Subcomm. on Com., Tourism and Transp. of the Comm. on Energy and 
Com. of the H.R. Concerning the 1982 Reauthorization of the Fed. 
Trade Comm'n, at 11 (Apr. 1, 1982), https://www.ftc.gov/system/files/documents/public_statements/693551/19820401_bailey_testimony_before_the_subcorrmittee_on_commerce_subcommittee_on_commerce_touri.pdf.
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    I thank everyone who made today's actions possible, and look 
forward to future efforts that address emerging harms using the full 
range of our tools and authorities.\13\
---------------------------------------------------------------------------

    \13\ My colleague, Commissioner Christine S. Wilson, has issued 
a statement in this matter. I agree that the Commission should not 
prioritize close-call substantiation cases, especially those 
involving small businesses.
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Concurring Statement of Commissioner Christine S. Wilson

    Today the Commission announces six settlements with marketers of 
cannabidiol (CBD) products resolving allegations that they made false, 
misleading, and/or unsubstantiated express disease claims for their 
products. I support these cases because accurate and complete 
information about products contributes to the efficient functioning of 
the market and facilitates informed consumer decision-making. In 
contrast, deceptive or false claims inhibit informed decision-making 
and may cause economic injury to consumers.
    The Commission's complaints in these matters allege that the 
marketers claimed their products could treat, prevent, or cure diseases 
or serious medical conditions, including cancer, heart disease, 
Alzheimer's, diabetes, and Parkinson's disease, and that scientific 
research or clinical studies supported these claims. In fact, according 
to the Commission's complaints, the proposed respondents did not 
conduct scientific research on the efficacy of their products to treat 
these diseases or conditions. In addition, the complaints allege that 
some of the proposed respondents claimed that their products could be 
taken in lieu of prescription medication. The Commission has been 
working with the FDA, and on its own, to combat false and 
unsubstantiated claims for CBD products, including through warning 
letters \1\ and a law enforcement action.\2\ Here, where consumers may 
have foregone proven measures to address serious diseases and the 
marketers have made virtually no effort to possess and rely on 
scientific evidence to support their strong, express disease claims, as 
we allege in our complaint, I agree that law enforcement is 
appropriate.
---------------------------------------------------------------------------

    \1\ Press Release, FTC and FDA Warn Florida Company Marketing 
CBD Products about Claims Related to Treating Autism, ADHD, 
Parkinson's, Alzheimer's, and Other Medical Conditions, Oct. 22, 
2019, available at https://www.ftc.gov/news-events/press-releases/2019/10/ftc-fda-warn-florida-company-marketing-cbd-productsabout-claims; Press Release, FTC Sends Warning Letters to Companies 
Advertising Their CBD-Infused Products as Treatmentsfor Serious 
Diseases, Including Cancer, Alzheimer's, and Multiple Sclerosis, 
Sept. 10, 2019, available at https://www.ftc.gov/news-events/press-releases/2019/09/ftc-sends-warning-letters-companies-advertising-their-cbdinfused; Press Release, FTC Joins FDA in Sending Warning 
Letters to Companies Advertising and Selling Products Containing 
Cannabidiol (CBD) Claiming to Treat Alzheimer's, Cancer, and Other 
Diseases, Apr. 2, 2019, available at https://www.ftc.gov/news-events/press-releases/2019/04/ftc-joins-fda-sending-warning-letters-companiesadvertising.
    \2\ Press Release, FTC Order Stops the Marketer of ``Thrive'' 
Supplement from Making Baseless Claims It Can Treat, Prevent, or 
Reduce the Risks from COVID-19, July 10, 2020, available at https://www.ftc.gov/newsevents/press-releases/2020/07/ftc-order-stops-marketer-thrive-supplement-making-baseless-claims.
---------------------------------------------------------------------------

    The Commission's proposed consent orders in these matters require 
respondents to possess and rely on competent and reliable evidence, 
defined as randomized, double-blind, placebo-controlled human clinical 
trials to support disease and other serious health claims for these 
types of products in the future.\3\ Although I support this requirement 
in these cases, for these types of claims, I caution that the 
Commission should impose this stringent substantiation requirement 
sparingly. Credible science supports the use of CBD products to treat 
certain conditions--specifically, the FDA has approved a drug 
containing CBD as an active ingredient to treat rare, severe forms of 
epilepsy.\4\ And I understand that many research studies are currently 
seeking to determine whether there are other scientifically valid and 
safe uses of this ingredient.
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    \3\ See, e.g., Part I of Proposed Order, In the Matter of 
Bionatrol Health, LLC, et. al. (Dec. 2020).
    \4\ See FDA Press Release, FDA approves first drug comprised of 
an active ingredient derived from marijuana to treat rare, severe 
forms of epilepsy (June 25, 2018), available at: https://www.fda.gov/news-events/press-announcements/fda-approves-first-drug-comprised-active-ingredient-derived-marijuana-treat-rare-severe-forms.
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    I agree with my predecessors who have stated that the Commission 
should be careful to avoid imposing an unduly high standard of 
substantiation that risks denying consumers truthful, useful 
information, may diminish incentives to conduct research, and could 
chill manufacturer incentives to introduce new products to the 
market.\5\ And I agree with the observation of my colleague 
Commissioner Chopra in his statement that ``[b]aseless claims give 
patients false hope, improperly increase or divert their medical 
spending, and undermine `a competitor's ability to

[[Page 86925]]

compete' on honest attributes.'' \6\ Although I support these cases, I 
hope that the Commission's actions here, which challenge wholly 
unsubstantiated disease claims, do not discourage research into the 
potential legitimate benefits of CBD and a wide array of other 
products. In addition, going forward, I urge the Commission to focus 
our scarce resources on marketers that make strong, express claims 
about diseases and serious health issues with little to no scientific 
support and engage in deceptive practices that cause substantial 
consumer injury.
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    \5\ See, e.g., Statement of Commissioner Maureen K. Ohlhausen, 
In the Matter of Health Discovery Corporation and FTC v. Avrom Boris 
Lasarow, et al. (Feb. 2015), https://www.ftc.gov/public-statements/2015/02/dissenting-statement-commissioner-maureen-k-ohlhausen-matter-health; Statement of Commissioner Joshua D. Wright, FTC v. 
Kevin Wright; HCG Platinum, LLC; and Right Way Nutrition, LLC (Dec. 
2014), https://www.ftc.gov/public-statements/2014/12/statement-commissioner-joshua-d-wright-federal-trade-commission-v-kevin; 
Statement of Commissioner Joshua D. Wright, In the Matter of 
GeneLink, Inc., and foru International Corporation (January 2014), 
https://www.ftc.gov/public-statements/2014/01/statement-commissioner-joshua-d-wright-matter-genelink-inc-foru; Statement of 
Commissioner Maureen K. Ohlhausen Dissenting in Part and Concurring 
in Part, In the Matter of GeneLink, Inc. and foru International 
Corporation (January 2014), https://www.ftc.gov/public-statements/2014/01/statement-commissioner-maureen-k-ohlhausen-dissenting-part-concurring-part; Dissenting Statement of Commissioner Maureen K. 
Ohlhausen, FTC v. Springtech 77376, et al. (July 2013), https://www.ftc.gov/public-statements/2013/07/dissenting-statement-commissioner-maureen-k-ohlhausen; see also J. Howard Beales, III and 
Timothy J. Muris, In Defense of the Pfizer Factors, George Mason Law 
& Economics Research Paper No. 12-49 (May 2012), available at: 
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2087776.
    \6\ See Statement of Commissioner Rohit Chopra Regarding the 
Cannabidiol (CBD) Enforcement Actions (Dec. 17, 2020).

[FR Doc. 2020-29001 Filed 12-30-20; 8:45 am]
BILLING CODE 6750-01-P