Transcript Crestor: No Truth in Advertising? AztraZeneca, the maker

Legalities and Ethics in Advertising
Now that you know how to
influence the public through advertising,
what will you do with that power?
SOURCE: http://www.poznaklaw.com/articles/falsead.htm
POZNAK LAW FIRM LTD.
Two Conflicting Forces
in the Constitution
 First Amendment: Freedom of Speech
grants us the right of free speech, protects all forms of communication, including advertising
(referred to by lawyers as "commercial speech").
 Power to Regulate Commerce
- Federal government has the power to regulate interstate commerce (via the Constitution).
- Most state constitutions grant the State the power to regulate commerce conducted solely
within the state.
- In addition, Congress enacted the Federal Trade Commission (FTC) Act, which states that
false advertising is a form of unfair and deceptive commerce (and allows the FTC to enforce
laws regarding advertising), and the Lanham Act, which allows private parties to bring law suits
against advertisers.
FTC Has Broad Authority
to Regulate Advertising
 “False Advertising” includes:
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1) Advertisements that are in fact untrue.
Example: Listerine used to claim it was a remedy for colds and sore throats. Not true.
Example: Crestor saying the FDA has determined that the medication poses no safety concerns.
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2) advertisements that make representations that the advertiser has no reasonable
basis to believe, even if the representations turn out to be true (therefore, research
must be on hand to support any claims). Example: If you say a breast enhancement pill will
increase most women’s breast size by two cups, and you have no research to support that, then
you are generating “false advertising,” even if the statement is TRUE.
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3) advertisements that are misleading even if they are true. Example: An Anacin ad
implied that Anacin was more effective than aspirin, when in fact, Anacin is aspirin. The
statement it made was true, but the implication was misleading.
FTC Has the Power to:
 Bar advertising
(e.g., many breast enhancement / penis enlargement products).
 Order corrective ads
(e.g., Phillip Morris)
 Order a "fencing in." This enables the FTC to bar misleading ads with respect
to a particular product and across all of a business's other unrelated product lines. For
example, if product A is being promoted by false advertisement, products B and C might
also be perceived as beneficial by association and therefore ads for B and C can be barred
as well.
Lanham Act
To establish a violation under the Lanham Act, consumers and competitors must prove the following:
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(1) the advertiser made false statements of fact about its product;
(2) the false advertisements actually deceived or had the capacity to deceive a substantial
segment of the target population;
(3) the deception was material;
(4) the falsely advertised product was sold in interstate commerce; and
(5) the party bringing the lawsuit (known as the "plaintiff") was injured as a result of the
deception.

NOTE: Actual loss is not required to show an injury. All that is needed is a reasonable basis for
the belief that the plaintiff is likely to be damaged as a result of the advertising.
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Competitors keep a sharp eye out for “false advertising” because it’s an easy way to knock out
their competition. As a result, the advertising field has a high degree of self-regulation.
State Statutes
In addition to the FTC Act and the Lanham Act, which are federal statutes, most states, including
Illinois, also have laws proscribing false advertising. Illinois is one of many states that has
enacted the Uniform Deceptive Trade Practices Act. Under the Act, a "deceptive trade practice"
includes the following:

Palming off occurs when an advertiser creates the impression that its goods or services are
those that are furnished by a competitor. Example: you set up a hamburger stand that looked
like a McDonalds restaurant.

Misrepresentation occurs when an advertiser makes false or misleading claims about its
goods or services, as under the FTC Act and the Lanham Act.
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Product disparagement occurs when an advertiser intentionally makes false or misleading
negative remarks about competing goods or services, causing its competitor to lose sales.
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Bait-and-switch advertising occurs when the advertised goods or services are withdrawn
from the market and substitute goods or services are instead offered for sale.
How Can You
Protect Yourself Legally?
If you are in the business of preparing marketing or advertising
campaigns, you might want to get your client to guarantee
that the information he or she provides is true, so that you
will not be liable for information the client provides you.
Standard Agency Practices
 Agency’s Job is to Get Info From the Client
Agencies are generally not interested in manufacturing untruthful or even misleading
information. It’s too risky. And clients are not usually interested in putting themselves at risk
by publicly making false claims. (Of course, there are always exceptions.) An adept creative
team can easily sell products without resorting to law-breaking.
Otherwise, they won’t be in business long.
 Agencies Usually Limit Their Client Lists
- They usually avoid pornography, often avoid political advertising, and generally don’t want to
be associated with businesses that will jeopardize their credibility with their other clients.
- Agencies, like law firms, are ethically bound to not take on competing clients.
Or, if even
slight conflict of interest is possible, the agency will ask the clients involved if there will be a
problem (example: Ogilvy and Mather represented both Volkswagen and Rolls Royce).
CASE STUDY:
Breast Enhancement Claims Inflated, FTC Charges
Promoters Must Pay $3 Million
from ConsumerAffairs.com
http://consumeraffairs.com/news03/wellquest.html
July 10, 2003
Infomercial marketers Wellquest International, Inc. and Tony Hoffman
Productions, Inc. have agreed to settle federal charges that they made false and
unsubstantiated claims for three products - Bloussant, sold for breast
enhancement; EnerX, sold for men's virility, and D-Snore, sold to relieve snoring in violation of the FTC Act.
"Marketers must have rigorous scientific substantiation for the claims they make,"
said Howard Beales, Director of the FTC's Bureau of Consumer Protection. "In this
case, the claims were inflated, but the science just wasn't there."
According to the complaint, the defendants' ads state that Bloussant stimulates
breast cells to regenerate the growth process, thereby increasing breast size by two
cups in most women. The FTC alleges that these claims are unsubstantiated.
Additionally, it alleges that the defendants falsely claimed that Bloussant is
clinically proven to increase bust size in the majority of women, and is clinically
proven to be safe.
Bloussant was heavily marketed in magazines, such as Mademoiselle, Elle, and
Allure, in monthly direct mailers, and through infomercials that ran on 30 major
cable stations and numerous broadcast stations, as well as on the Internet.
Consumers responding to these advertisements were directed to call a toll-free
telephone number, where the telemarketers often reiterated the challenged claims.
Bloussant cost $220 for a two-month supply and $574 for an eight-month supply.
CASE STUDY:
Crestor
AztraZeneca, the maker of the cholesterol-lowering drug Crestor, has been
accused of false advertising. According to the Food and Drug Administration
(FDA), the drug company has printed misleading claims about Crestor's
safety that state:
A medication can be more effective and just as safe" -- this statement plays
down the risks involved in taking a 40 mg dose of Crestor
The FDA has confidence in the safety and efficacy of Crestor" -- this
statement is not only misleading, but it suggest that the FDA does not feel the
drug poses any safety concerns
The drug company's faulty advertisement, which ran in national and regional
publications, also quoted a statement that was "supposedly" taken directly
from the FDA's Web site. The statement read: "The scientists at the FDA who
are responsible for the approval and ongoing review of Crestor have publicly
confirmed that Crestor is safe and effective, and that the concerns that have
been raised have no medical or scientific basis."
Legalities Aside,
What About Your Personal Ethics?
 This can be a tougher question.
If it’s not illegal to manipulate people, use scare tactics, build desire for things
many people can’t afford, make the public feel inferior if they’re not thin enough,
not rich enough, etc., etc., where do you personally “draw the line”?
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- What are you willing and unwilling to do in advertising?
- How can you avoid putting yourself in compromising situations?
- How might advertising skills be used in positive ways?
QUESTIONS?