The battle waging between the Federal Trade Commission (FTC) and POM Wonderful, maker of the popular pomegranate juice drinks and supplements, continues to escalate—and many experts believe the outcome could have profound effects on the U.S. functional food and beverage and dietary supplement industries.
The brief recap of the situation is this: The FTC maintains that POM has grossly overstepped the legal line in the disease claims it is making for its products. On September 27, the agency filed an official administrative complaint against POM, charging the company with false and unsubstantiated claims that POM's products can prevent or treat heart disease, prostate cancer, and erectile dysfunction. "Any consumer who sees POM Wonderful products as a silver bullet against disease has been misled," said David Vladeck, director of the FTC's Bureau of Consumer Protection, in a statement. "When a company touts scientific research in its advertising, the research must squarely support the claims made. Contrary to POM Wonderful's advertising, the available scientific information does not prove that POM juice or POMx effectively treats or prevents these illnesses."
The FTC's complaint—which was filed against POM, its sister corporation Roll International Corp. and its principals Stewart Resnick, Lynda Resnick and Matthew Tupper—set forth a proposed order requiring Food and Drug Administration (FDA) pre-approval before POM Wonderful makes future claims that certain products prevent or treat serious diseases, "in order to provide clearer guidance for the company, facilitate POM Wonderful's compliance with the proposed order, and make it easier to enforce."
POM, of course, denies the agency's allegations and maintains that the FTC is infringing upon its First Amendment rights to free speech. In a demonstration of the passion with which it holds these views, the company filed its own preemptive lawsuit against the FTC on September 15, accusing the agency of setting new standards in recent consent decree settlements with Nestle Healthcare Nutrition and Iovate Health Sciences (makers of numerous dietary supplements, including the weight-loss product Hydroxycut) that impair POM's ability to do business by requiring government prescreening of ads.
As Loren Israelsen, executive director of the United Natural Products Alliance, told NewHope360.com, this legal battle is something everyone in the functional food and beverage and supplement industries needs to watch. "It is the biggest fight since Ali. vs. Frazier," Israelsen says. "I don't see either side caving in."
NewHope360.com spoke with Israelsen and other leading industry experts to gauge their views on what the outcome of this amped up battle could mean for POM Wonderful, government regulators, and other functional food and beverage companies.
Resnicks "go to the mat"
Several of the people NewHope360.com spoke to noted that one of the most interesting aspects of this case is the aggressiveness of POM's legal defense. Unlike Nestle and Iovate Health Sciences, the pomegranate company has refused to back down and accept the FTC's consent decree. Enabling the company's unwavering stance are POM's owners, Lynda and Stewart Resnick, who also own Fiji Water and the flower-delivery service Teleflora. "I would hope that the Resnick's go to the mat with the FTC on this," said John Grubb, a managing partner at the Sterling-Rice Group. "They certainly have the resources—and they have invested significantly in their own research."
It's not just the Resnick's deep pockets that are fueling this battle, though. Nestle and Iovate are both resource-rich—but in the case of Nestle, it's BOOST Kids Essentials Drink wasn't likely important enough for the company to justify waging a legal war with the FTC; and as for Iovate, the company is still trying to recover from the 2009 recall of its popular Hydroxycut weight-loss supplement and, thus, can't stomach any additional distractions. The Resnicks, on the other hand, seem motivated to "stand their ground and test the FTC's expanding authority," Israelsen said. "POM's owners are independently wealthy, and they are extremely good marketers."
Burden of proof is on POM
Steve Allen, former vice president of new business at food giant Nestlé, said he is not surprised by the recent actions of both POM and the FTC. Still, he feels the pomegranate company faces an uphill battle. "[I] would not bet against the agencies in a case like this," Allen said. "POM will have the burden of proof to show that its claims are supported by peer-reviewed, published, medical evidence. In particular the agency is likely to focus attention on claims connected to prostate cancer, where the published clinical evidence is limited."
As Allen noted, the FTC complaint specifically questioned POM's non-blinded, clinical trial that measured markers of prostate health. "The researchers who conducted this study wrote that the clinical significance of the markers is unknown and further, placebo-controlled trials are needed," Allen added. "A related question will be the need for confirmation of research results by scientists who are independently funded."
POM reports that it has spent some $34 million on research to "prove scientifically" that POM has antioxidant activity and acts as an antioxidant in the body. This is a lot of money for a company in the nutraceutical or functional food industry to invest in science, and many of the people NewHope360.com interviewed posed a similar question: Where's the research?
"If POM has the data to substantiate the claims it is making, I don't see why the company wouldn't have pursued working with the FDA to get a health claim," said Daniel Fabricant, vice president of global government and scientific affairs at the Natural Products Association. "I know that process takes a while. but you would think they would have started it if they had the data [to support a health claim]."
Science: An inconvenient truth?
Kantha Shelke, PhD, principal of the food research firm Corvus Blue, said that she believes science has actually become an inconvenient truth for POM. "Scientific evidence-based analysis seems to be getting in the way of POM's marketing copy, [which states that] 'pomegranate juice will help you cheat death,'" said Shelke, noting that POM does not have evidence to support that the antioxidants in pomegranate prevent mortality in healthy people or patients with various diseases. In fact, added Shelke, an extensive Cochrane review shows that scientific research fails to show that antioxidant supplements prevent mortality in healthy or unhealthy people.
"It appears that POM's marketers recognize how inconvenient science continues to be," Shelke said. "Perhaps, that's why they are not suing that they have science on their side but that their health claims, supported or not, are protected by the First Amendment."
For Kim Stewart, POM's marketing presents an all too familiar scenario whereby a good product, with good but early science, gets a little ahead of itself. "The current regulatory atmosphere does not allow for any embellishment, especially when diseases are mentioned," Stewart said. "Only products with FDA-approved health claims can get close to making an inkling of a disease claim—there is no way to get around this—no way, no how, so don't go there. This is a hard lesson for many food manufacturers to understand, regardless of the First Amendment."
As the NPA's Fabricant and others see it, POM did make some claims that go a bit above and beyond what companies are allowed to say under the letter of the law. "That is a bit concerning," Fabricant said. "I hope folks don't feel they can go out and make drug claims and then sue their way out of it. That is not a good place to be for the industry."
Should industry back POM?
According to Israelsen, the dietary supplement and functional food and beverage industries will be forced to decide if they will back POM on this one. "This is maybe the biggest [legal case] we have seen in a decade," Israelsen said. "Industry must determine whether POM's advertising is the high ground we want to collectively defend."
Peter Leighton, a principal at Natural Discoveries LLC, is one long-time industry executive who believes that POM is doing the right thing and should be supported. "Our industry has been the target of much malign, some of it warranted, but we are caught in a catch-22: We are subject to pharmaceutical level standards, although we are not marketing therapeutics; and when we do provide scientific data supporting health benefits, we cannot communicate it because we are not marketing therapeutics," Leighton said.
The nutrition industry has been awaiting a financially and scientifically solid company that can—and will—stand up to the FTC and FDA and challenge this illogic, Leighton added. "The outcome should be a recognition of the health benefits of nutritional components and the ability to communicate to consumers accurate scientific support, including disease prevention and wellness characteristics. The evidentiary baseline should not be the same as pharmaceuticals, considering that the therapeutic claim is different and, most importantly, that the consumer risk is minimal, if it exists at all."
Leighton advocates nutrition industry organizations join "coordinated forces" with POM in legal challenges to the current system. "A major PR campaign should succinctly and directly communicate with the American consumers how they are being ill served by the current system," he said. "POM should be praised and supported for their desire to right a faulty system, for the road they will pave is one that will benefit our industry and consumers."
A long time coming
But others see things a bit differently. James Tonkin, president of HealthyBrand Builders, a functional beverage consulting firm, feels this case has been a long time in the making. Furthermore, Tonkin said that he supports an outcome that will protect the "unsuspecting and plausibly uninformed masses" from claims that are overstated or fabricated in the name of sales and marketing. "Although the Resnicks state emphatically that they have lots of scientific support to make the antioxidant and other health claims about pomegranates and their POM Wonderful concoctions, they have clearly stepped over the line," Tonkin said. "The government needs to slap the hand of all brand marketers that flagrantly defy government standards of commentary [and] market hyperbole [in their] label claims."
"The government feels that they have a claim against POM; and frankly, I have felt that way for a long time," added Tonkin, who emphasized that he is not trying to single out POM, but include them. "Consumers must have confidence in the brand marketer's messaging, such that they can believe a product will do what it says it will do."
A bellwether case for industry
Greg Horn, former CEO of GNC and Garden of Life, said he feels the POM-FTC battle will be a "bellwether case" for the functional food and beverage category.
"It is especially significant to note that the FTC does not seem to be going after the relatively mild claims made in POM's television ads, but statements made by its owners on television shows and other venues outside traditional advertising," Horn added. In its complaint, the FTC cited an appearance by Lynda Resnick on Martha Stewart's TV program during which she said men should drink eight ounces of her product every day to ward off prostate cancer.
"The FTC case will certainly help to define the limits of claims for products that have some science, but may not be proven to the level of pharmaceuticals," Horn said. "If POM should win their case—and they certainly seem willing to take it all the way—it will cause a re-evaluation of the scope of powers vested in the FTC."
When will we know the outcome?
So just how long before this fight plays itself out? According to Israelsen, the answer is a long time. "This will take a while—and then it will take a while longer," he said. "Whatever the initial court decision is, whoever loses will likely appeal; and whoever loses the appeal, will likely appeal."
All the way through this battle, POM's popularity and the high-profile nature of the case are expected to trigger significant media attention, which could significantly impact consumer perceptions of POM and other functional products. In addition, the FTC is expected to be building up a pipeline of similar cases against other functional food and beverage and supplement companies.
"Next to DSHEA [Dietary Supplement Health and Education Act], this will rank as a top three event over the last 20 years for the nutritional products industry," Israelsen said. "It will take a little while for momentum to pick up, but the snowball has been tossed off the mountain and it has avalanche potential."