FTC restrains unsubstantiated coronavirus claims

Federal Trade Comm’n v. Golden Sunrise Nutraceutical, Inc., 2020
WL 4501968, No. 1:20-cv-01060-DAD-SKO (E.D. Cal. Aug. 5, 2020) 

Dealing with coronavirus-related claims, the court grants a
TRO against defendants, including Tieu (president and CEO of the corporate
defendants) and Meis (medical director/board member of one corporate
defendant). Tieu was also indicted based on the same underlying conduct, and
his pretrial release required him, among other things, to cease representing
any Golden Sunrise product as having been approved or having proven itself to
the FDA and to cease representing that his product has been approved or
recognized by any government entity as preventing, treating, or curing COVID-19. 

The alleged conduct predates the pandemic. “Since at least
2016, defendants have promoted and sold a variety of products labeled as
dietary supplements,” claiming numerous health benefits for them, “including
treatment of serious diseases.” Defendants’ homepage stated that their “plans
of care” “are intended to treat, modify, reverse, or cure a Serious or
Life-threatening disease or condition; and real-world evidence indicates that
the G.S. Nutraceutical treatments have potential to address unmet medical needs
for such disease or condition.” Defendants also claimed that the FDA had
reviewed and accepted their products, e.g., claiming that one product “was the
first dietary supplement in the United States to be approved as a prescription
medicine and also for the indication to treat Serious or Life-threatening
conditions. It qualified for both of these under the Regenerative Medicine
Advance Therapy (RMAT). This designation acknowledges not only the
effectiveness of these herbs, usually only associated with pharmaceutical
drugs, but also [that they] caus[e] no side effects, a quality of dietary

The FTC argued that, in fact, defendants’ products lack any
FDA approval, as RMATs or otherwise. The dietary supplements allegedly consist
almost entirely of common herbs and spices (e.g., olive leaf extract, yarrow
extract, turmeric extract, cayenne extract, and eucalyptus extract). 

“In March 2020, defendants began marketing their Emergency
D-Virus treatment plan as a cure for COVID-19.” After the FTC issued a warning
letter, defendants removed express references to COVID-19, instead using terms
such as “the virus,” “viral,” or “the viral pandemic.” (OK, that’s just

The complaint alleged violation of sections 5(a) and 12 of
the FTCA (reminder that the latter covers false advertising of food, drugs,
devices, services, or cosmetics): (I) false and unsubstantiated disease claims
pertaining to COVID-19; (II) false and unsubstantiated claims pertaining to
cancer; (III) false and unsubstantiated disease claims pertaining to Parkinson’s
Disease; and (IV) false claims about the use for which the FDA cleared Golden
Sunrise products. The FTC sought and received a TRO on I and IV, requesting
that defendants be temporarily restrained from further violations of the FTCA
as alleged in the complaint, as well as related measures such as an order
restraining them from destroying or disposing of business records or clinical
tests or studies and requiring them to provide a copy of the order to their
employees and affiliates. 

The court found that the requested relief was within its
authority to grant ancillary relief. Defendant Meis argued that he resigned as
medical director two days after the suit was filed and requested that defendants
remove website references to him in that capacity. He argued that he was no
longer a primary participant and couldn’t control defendants’ advertising. But
the court accepted the FTC’s argument that it had no information that he’d
actually stopped participating; he hadn’t met the stringent test for showing
that the action was moot due to voluntary cessation.

Since the FTCA authorizes injunctive relief, irreparable
harm was presumed, and the only thing to do was to weigh the equities and
consider the likelihood of success on the merits. 

As for likely success: uh, yes. Replacing the express
COVID-19 claims with claims about “the virus,” “the virus epidemic,” and “the
viral pandemic” still “implied” that the product was an effective treatment for
COVID-19. [I don’t think those are implications, but then again it doesn’t
matter much for the FTC.] The FTC argued that defendants lacked a reasonable
basis for their claims, and that the standard for substantiating these
particular claims should be very high. The court agreed. The relevant factors
for the appropriate amount of substantiation: “(1) the product involved; (2)
the type of claim; (3) the benefits of a truthful claim; (4) the ease of
developing substantiation for the claim; (5) the consequences of a false claim;
and (6) the amount of substantiation experts in the field would agree is
reasonable.” Medical claims require competent scientific or medical tests or
studies, and “a false claim could result not only in consumers not seeking
proper medical care but also in their not adhering to social and safety norms
regarding mask wearing, social distancing, and other activities designed, as
effectively as possible, to keep not only themselves but also others safe from
the COVID-19 virus.” Experts agree that controlled, scientific trials are required
to substantiate these claims (the court makes no reference to the opinions of
nonexperts like the President and his trade advisor), and that no such trials

And these claims were material; express claims are presumed material,
and implied claims about health/safety are also material. 

The court also found likely success on the FDA-related
misrepresentations.  “[B]ecause these
representations are inherently about the legitimate effectiveness of
defendants’ products … to cure or treat COVID-19,” the same high degree of
substantiation was required, and the same materiality was present.

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