Epichouse, LLC (First Class Herbalist CBD); Analysis To Aid Public Comment, 86921-86925 [2020-29001]
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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
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[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:
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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:
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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
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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 https://
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
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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
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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
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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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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.
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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,
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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
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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
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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
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.
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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 https://
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]
=======================================================================
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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 https://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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\
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\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.
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\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.
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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
