Thompson Medical Co., Inc. v. F.T.C., 85-1047

• Decision Date: 27 May 1986
• Docket Number: No. 85-1047,85-1047
• Parties: , 54 USLW 2656, 1986-1 Trade Cases 67,103 THOMPSON MEDICAL COMPANY, INC., Petitioner, v. FEDERAL TRADE COMMISSION, Respondent.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 189

791 F.2d 189

253 U.S.App.D.C. 18, 54 USLW 2656, 1986-1

Trade Cases 67,103

THOMPSON MEDICAL COMPANY, INC., Petitioner, v. FEDERAL TRADE COMMISSION, Respondent.

No. 85-1047.

United States Court of Appeals, District of Columbia Circuit.

Argued Feb. 6, 1986.

Decided May 27, 1986.

Patricia Hatry, New York City, with whom Jeffrey C. Katz, New York City, was on the brief, for petitioner.

Melvin H. Orlans, Atty., F.T.C., with whom Ernest J. Isenstadt, Asst. Gen. Counsel, F.T.C., Washington, D.C., was on the brief, for respondent.

Before ROBINSON, Chief Judge, and MIKVA and GINSBURG, Circuit Judges.

Opinion for the Court filed by Circuit Judge MIKVA.

MIKVA, Circuit Judge:

This case concerns a complaint brought by the Federal Trade Commission ("FTC" or "Commission") against petitioner Thompson Medical Company under Secs. 5 and 12 of the FTC Act. 15 U.S.C. Secs. 45 & 52. The complaint alleged and the Commission found that Thompson's advertising for Aspercreme, a topical analgesic, was false and misleading, and constituted an unfair and deceptive practice. The Commission ordered Thompson to refrain from making unsubstantiated claims that Aspercreme is effective and to disclose in the product's labeling and advertising that it does not contain aspirin. Thompson challenges the FTC's order as arbitrary and capricious, contrary to public policy, unsupported by substantial evidence, and discordant with applicable Commission precedent. We find that the Commission's order and decision are supported by the law and the facts, and therefore affirm the FTC.

BACKGROUND

Petitioner sells an over-the-counter ("OTC") analgesic (pain reliever) known as Aspercreme. Aspercreme is supposed to help arthritis victims and others who seek relief from minor aches and pains. As the name suggests, Aspercreme is a cream meant to be rubbed on the area where an analgesic effect is desired. Despite its name, however, Aspercreme contains no aspirin (acetyl salicylic acid). Rather, Aspercreme's active ingredient is trolamine salicylate (sometimes referred to as TEA/S or TEAS), a chemical relation of aspirin.

Even though Aspercreme contains no aspirin, Thompson's advertising strongly suggested that Aspercreme and aspirin were somehow related. One television advertisement used by Thompson, for example, contained the following monologue:

When you suffer from arthritis, imagine putting the strong relief of aspirin right where you hurt. Aspercreme is an odorless rub which concentrates the relief of aspirin. When you take regular aspirin, it goes throughout your body like this. But, in seconds, Aspercreme starts concentrating all the temporary relief of two aspirin directly at the point of minor arthritis pain.... [Voice over:] Aspercreme. The strong relief of aspirin right where you hurt.

Complaint counsel's exhibit B, In re Thompson Medical Co., Inc., 104 F.T.C. 648, 653 (1984). In this and similar ads, the announcer is shown holding aspirin tablets at the beginning of her monologue; as she speaks the aspirin is replaced by a tube of Aspercreme.

In February of 1981, the FTC issued an administrative complaint against Thompson. Thompson was charged with having violated sections 5 and 12 of the FTC Act. 15 U.S.C. Secs. 45 and 52. These actions prohibit "unfair or deceptive acts or practices in commerce" and "disseminat[ing] ... any false advertisement ... for the purpose of inducing ... the purchase ... of ... drugs." Specifically, Thompson was charged with having made unsupported claims that Aspercreme was effective for the relief of arthritic pain, having falsely represented that this efficacy had been scientifically established, and having falsely represented that Aspercreme contained aspirin. See Initial Decision by Hyun, Administrative Law Judge, In re Thompson Medical Co., Inc., 104 F.T.C. 648, 660, 660-61 (June 24, 1983) ("Thompson Initial Decision"). The FTC complaint was heard before an administrative law judge (ALJ). After compiling a record in excess of 6500 pages, he issued a 127-page opinion finding Thompson liable. See Thompson Initial Decision. The matter was appealed to the Federal Trade Commission. The FTC engaged in extensive review of the ALJ's decision and entered a 56-page opinion of its own, affirming the ALJ's decision and entering a final order against Thompson. See In re Thompson Medical Co., Inc., 104 F.T.C. 648, 786 (Opinion) 842 (Order) (1984) ("Thompson Opinion" and "Order").

The FTC affirmed the ALJ's finding "that Thompson lacked reliable and credible information constituting a reasonable basis for the efficacy claims it made for Aspercreme." Thompson Opinion at 787-88, 821-28. The Commission found that Thompson had represented that Aspercreme was more effective than aspirin, and that Thompson had represented that Aspercreme's effectiveness had been scientifically substantiated. The Commission also found that Thompson had falsely represented that Aspercreme contained aspirin. It found that the alleged misrepresentations were material, and that they were likely to mislead consumers. The Commission also determined that Thompson's false and deceptive advertising had been deliberate. Id. at 791-839.

The FTC issued a final order against Thompson that prohibited the company from using the name Aspercreme unless its advertising and packaging made clear that Aspercreme does not contain aspirin. See Order, 104 F.T.C. 842, part I.A. The Commission also prohibited Thompson from representing that Aspercreme "involves a new scientific principle" when it has "been available for purchase in the United States A. Representing that [Aspercreme] is effective for the relief of minor pain and other symptoms of any musculoskeletal disorder....

as an [OTC] drug for more than one year," id., part I.B., and from misrepresenting either the ingredients of Aspercreme or the results of any tests or studies of Aspercreme. Id., parts I.C. & D. In the part of its order that has engendered the most controversy, the FTC ordered Thompson to refrain from

B. Representing that [Aspercreme] is as fast or faster than, or is as effective as, or more effective than any other drug or device in the relief of minor pain and other symptoms of any musculoskeletal disorder ...; unless at the time of ... such representation, [Thompson] possesses and relies upon a reasonable basis for such representation consisting of competent and reliable scientific or medical evidence.

Order, part II.

The FTC's Order went on to provide that "competent and reliable scientific evidence shall include at least two adequate and well-controlled, double-blinded clinical studies...." Id.

DISCUSSION

Thompson mounts a tripartite attack on the Commission's decision and order. Thompson first argues that the Commission was not acting in the public interest when it undertook to review Thompson's advertising. Thompson supports this contention by asserting that the Food and Drug Administration's ongoing review of OTC drugs preempts the FTC's jurisdiction here. Thompson next argues that the "reasonable basis" standard imposed by the Commission was improper. Thompson insists that requiring two clinical studies before Aspercreme can be advertised as effective is onerous and unwarranted. Finally, Thompson attacks the Commission's decision to require the company to make clear to consumers that Aspercreme does not contain aspirin. We take up these challenges in turn.

A. The Public Interest

Thompson argues that the FTC proceeding here was not in the public interest and was therefore improper under the FTC Act. See 15 U.S.C. Sec. 45(b) (FTC may bring complaint "if it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public"). (Thompson does not make the statutory basis of its argument clear, but we presume that Thompson's argument turns on the FTC Act rather than generalized principles of fairness or equity.) Thompson claims that the FTC proceeding was not in the public interest because the Food and Drug Administration (FDA) is entrusted by law with authority to evaluate and regulate all over-the-counter medicine, and is currently engaged in a review of such drugs. See Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Sec. 301 et seq.; 21 C.F.R. part 330. Thompson asserts that the FDA should be allowed exclusive regulatory authority over the marketing and labelling of OTC drugs while its review is pending. The argument is without merit. The FDA proceedings referred to by Thompson began in 1962. It strains credulity to argue that even the most blatantly false or deceptive advertising of OTC drugs must be allowed so long as the FDA is evaluating the efficacy of those drugs.

We find no evidence in the regulatory scheme that Congress has fashioned for over-the-counter medications that the FTC is indefinitely barred from all regulatory authority over drug advertising while the FDA conducts its comprehensive review of drug safety. Nowhere in the case law or in the FTC's grant of authority is there even a hint that the FTC's jurisdiction is so constricted. To the contrary, the cases recognize that ours is an age of overlapping and concurring regulatory jurisdiction. See Federal Trade Commission v. Texaco, Inc., 555 F.2d 862, 881 (D.C.Cir.), cert. denied, 431 U.S. 974, 97 S.Ct. 2940, 53 L.Ed.2d 1072 (1977) ("this is an era of overlapping agency jurisdiction under different statutory mandates"). In an analogous context the Supreme Court held that the The FTC has substantial expertise in evaluating claims of drugs' absolute and comparative efficacy, and in assessing whether advertisements are misleading or deceptive. See, e.g., Warner-Lambert Co. v. Federal Trade Commission, 562 F.2d 749, 753-56 (D.C.Cir.1977), cert. denied, 435 U.S. 950, 98 S.Ct. 1576, 55 L.Ed.2d 800 (1978); American Home Products Corp. v. Federal Trade Commission, 695 F.2d 681, 691-93 (3d Cir.1982). We see no reason why the FTC should not be allowed to exercise that...