American Home Products Corporation, a Delaware Corporation v. Federal Trade Commission

695 F.2d 681
CourtCourt of Appeals for the Third Circuit
DecidedJanuary 4, 1983
Docket81-2920
StatusPublished
Cited by50 cases

This text of 695 F.2d 681 (American Home Products Corporation, a Delaware Corporation v. Federal Trade Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Home Products Corporation, a Delaware Corporation v. Federal Trade Commission, 695 F.2d 681 (3d Cir. 1983).

Opinion

*683 OPINION OF THE COURT

ADAMS, Circuit Judge.

Before us is a petition for review of an Order entered by the Federal Trade Commission (“Commission”) against American Home Products (“AHP”). The Order requires that AHP cease and desist various deceptive advertisements for a number of its drug products, including Anacin and Arthritis Pain Formula (APF). AHP does not take issue with all of the findings of deceptiveness on which the Order is based. It argues nonetheless that some of these findings are not supported by substantial evidence, and that, whether or not the findings are adequately supported, certain aspects of the Order remain unjustified. We uphold the Commission’s findings, and accordingly will affirm the core of its Order. We agree, however, with some of AHP’s objections to the Order’s vagueness and breadth, and therefore will direct that the Order be modified accordingly.

I. Background

The petition for review represents the most recent stage of a proceeding that was initiated by an administrative complaint filed almost ten years ago. Issued on February 23, 1973, the complaint alleged that AHP, in its advertisements for Anacin and APF, had engaged in unfair or deceptive acts in violation 15 U.S.C. §§ 45 and 52 (sections 5 and 12 of the Federal Trade Commission Act). 1 That same day, the Commission filed similar complaints against Bristol-Myers Company, manufacturer of Bufferin and Excedrin, and Sterling Drug Inc., manufacturer of Bayer Aspirin. These other cases are currently pending on appeal in the Commission, and are not before the Court at this time.

Anacin is a non-prescription analgesic that is composed of two active ingredients, aspirin (400 milligrams) and caffeine (32.5 milligrams). There is no contention here that caffeine, either in itself or in conjunetion with aspirin, is an analgesic. Thus, Anacin’s sole pain-killing component is aspirin. See App. 303. An “ordinary” aspirin tablet contains 325 milligrams of aspirin. The recommended dosage of Anacin is one or two tablets. APF, also a non-prescription analgesic, contains “micronized” aspirin (486 milligrams) — that is, it is an aspirin tablet formulated with small aspirin particles — along with two antacids.

The complaint charged, among other things, that AHP’s advertisements had falsely claimed that Anacin has a unique pain-killing formula that has been conclusively proven to be superior in effectiveness to all other non-prescription analgesics, and that Anacin is a tension reliever. Another of the complaint’s accusations was that the petitioner misrepresented that APF is superior to competing products in that it causes less frequent side effects. AHP’s answer, filed May 29, 1973, denied any violation of the Federal Trade Commission Act. The petitioner’s position was that it did not make the advertising claims which the complaint accused it of making, and that any claims it did make were truthful.

15 U.S.C. § 45(a)(1) declares unlawful “[ujnfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce .. .. ” Under 15 U.S.C. § 52(a), it is unlawful to disseminate “any false advertisement ... [b]y any means, for the purpose of inducing, or which is likely to induce, directly or indirectly, the purchase in or having an effect upon commerce of food, drugs, devices, or cosmetics.” 15 U.S.C. § 52(b) makes such dissemination of false advertisements an “unfair or deceptive act or practice” under section 45, thereby triggering the various enforcement and review provisions of section 45. “False advertisement,” as defined by 15 U.S.C. § 55(a)(1), is a broadly inclusive term. It encompasses not merely advertisements that are literally untrue, but also materially misleading ad *684 vertisements — even where it is only the failure to reveal material facts that renders the advertisement misleading. 2

Extensive hearings were conducted in connection with the complaint against AHP. On September 1, 1978, the Administrative Law Judge (“ALJ”) issued an Initial Decision and Order (App. 85-344), meticulously reviewing the record evidence and resolving most issues in favor of the complaint counsel. On cross-appeals the Commission, in an Order and Opinion issued September 9, 1981, upheld the ALJ in almost all respects (App. 345-426). The ALJ’s findings of fact and conclusions of law were adopted except to the extent inconsistent with the Commission’s opinion. App. 346. Whereas the ALJ found AHP’s practices “unfair and deceptive,” the Commission chose to speak only in terms of deception. Both the ALJ and the Commission focused on the capacity of AHP’s advertisements to mislead, and, as the Commission remarked in denying rehearing, the difference in approach was “more of form than of substance.” App. 430.

The Commission’s Order has several sections. 3 Although the Commission’s findings related solely to Anacin and APF, some portions of the Order were directed to other products as well. Part I of the order applied to Anacin, APF, and “any other nonprescription internal analgesic product” of AHP’s. In 1(A) — the “establishment” provision — the Commission demanded that when AHP represents that the superior freedom from side effects or superior effectiveness of one of these products to any other products has been “established or proven,” AHP must be able to support this representation with at least two well-controlled clinical investigations. 1(B) of the Order — the “substantial question” provision — takes 1(A) a step further, and, in effect, imposes the 1(A) support requirements on AHP whenever its advertisements claim superior effectiveness or freedom from side effects, even when those advertisements do not overtly claim that this superiority has been established or proven. 4 If AHP cannot provide two or more well-controlled clinical studies to support its superiority claims, it is prohibited from making such claims in an unequivocal manner. It is allowed, however, to assert superiority, provided it discloses that the superiority is open to substantial question.

Part II of the Order applies to all of AHP’s non-prescription drug products, not merely the non-prescription internal analgesics. 11(A) prohibits AHP from representing that a product contains an unusual or special ingredient when the actual ingredient is commonly used in other non-prescription drugs intended for the same uses.

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695 F.2d 681, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-home-products-corporation-a-delaware-corporation-v-federal-trade-ca3-1983.