FDLI MEMBER MAGAZINE | WWW.FDLI.ORG | MARCH/APRIL 2016

FOOD AND DRUG LAW INSTITUTE

IN THIS ISSUE

Advertising, Antitrust, Labeling, Biosimilars, Cybersecurity, First Amendment, Data Integrity, DQSA

2016 Annual Conference, May 5-6

Plus Interview with Mark McClellan Managing the Risks Embedded in Embedded : Five Things Every Manufacturer of FDA-Regulated Products Should Consider

By Raqiyyah Pippins and Vernessa Pollard

n an episode of a medical-themed network drama, a star Does this practice—commonly referred to as embedded athlete is rushed to the hospital with a broken arm. Test marketing—constitute and if so, to what extent Iresults show that the athlete is also suffering from several can the manufacturer of Drug A be held liable for the other conditions, including kidney failure, liver damage, fictionalized representation of its drug and its effects in this and hypogonadism. The lead character, who happens to TV show? be a brilliant doctor, questions the athlete’s steroid use. A marketer for a conventional food and beverage company Not believing the athlete’s denial of steroid use, the doctor works with a magazine publication to have an ad for a decides to treat the athlete’s hypogonadism with Brand branded cranberry juice product placed in an upcoming Drug A. Brand Drug A is mentioned four times during issue. e publisher mentions that one of its journalists will the episode. The manufacturer of Brand Drug A paid the also be writing an article on urinary tract infections and the network to integrate its product into the highly rated prime- marketer mentions the common use of cranberry juice as a time network drama, but did not review the final script. home remedy. e nal publication includes an article on

Raqiyyah Pippins is Counsel at Arnold Vernessa Pollard advises companies & Porter where she represents the food, on regulatory, compliance, enforcement, dietary supplements, drugs, cosmetics, and legislative matters involving and medical devices sector. She also pharmaceuticals, medical devices, counsels organizations facing advertising mobile health and health IT solutions and challenges, and defends companies in services, and software. government agency investigations of product marketing practices.

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urinary tract infections that mentions movies or other otherwise independent ensuring that the messages conveyed cranberry juice as an e ective home communications without any about the products are truthful and remedy. e next page includes an discussion of the product or its benets. non-misleading. While the rst advertisement for the company’s In contrast, product integration occurs priority applies equally to all consumer branded cranberry juice product. To when there is discussion of a branded products promoted through embedded what extent, if any, is the company product or product category in the marketing techniques, the second liable for any implied messages communication. priority introduces considerations that conveyed by the article that its product Advancements in technology (such are unique to manufacturers of FDA- can be used to relieve urinary tract as DVRs and streaming services) have regulated products, who must also infections? enabled consumers to avoid traditional avoid promoting their products for an While the standards governing most commercials. As a result, companies unapproved intended use. forms of advertising are generally are using embedding marketing ree federal agencies share understood by companies, the rules strategies to reach consumers. While jurisdiction over embedded marketing governing embedded marketing use of and product activity and thus should be considered strategies are more nebulous. is placement has been commonplace when developing a promotional article discusses relevant regulatory for decades, there has been a striking strategy involving consumer standards that manufacturers of FDA- increase in the use of integrated testimonials, , or regulated products should consider product messages in scripted television product integration—the Food & Drug before implementing embedded and movie programs. According to PQ Administration (FDA), the Federal marketing-centered promotional Media, television script integrations Communications Commission (FCC), strategies. accounted for more than two-thirds and the Federal Trade Commission of $6.01 billion spent on product (FTC). Each is discussed, in turn, 1 Embedded Marketing placement and integration in 2014. below. in the United States Investment in digital media integration is also growing exponentially, For the purposes of this article, Food & Drug increasing by 35.8% between 2013 and “embedding marketing” is the use Administration 2014.2 of or reference to a product, service, FDA is responsible for protecting the or trademark in a commercial public health by assuring the safety, communication by an otherwise Regulatory Response ecacy, and security of FDA-regulated independent third party in exchange to Embedded Marketing products.3 In light of this responsibility, for payment or similar consideration. Because the ultimate goal of these FDA has growing concerns about the It can take many forms, the most new marketing techniques is to accuracy of consumers’ understanding popular of which are celebrity capitalize on consumers’ attention of risk communications as well as endorsements, product placements, and identication with their favorite ensuring that companies comply and product integration. Generally, characters or programs, regulators with requirements applicable to celebrity testimonials involve payment are necessarily concerned about the the objective intended uses of their or an in-kind exchange between a potential for consumer . e products and do not promote their company and a celebrity to discuss potential blurring of lines between products for unapproved uses. FDA has the product, such as when a celebrity purely promotional or commercial conducted several consumer perception appears on a television news program messages and artistic, educational, studies over the past few years to to discuss a project or book and or informational speech touches assess consumer understanding of simultaneously extols the benets of upon two enforcement priorities for representations regarding prescription a particular product in an otherwise federal agencies: (1) ensuring that drugs,4 which have inuenced the independent journalistic forum. consumers are aware that content development of new Guidance for Product placement involves the use of is sponsored (i.e., they know that Industry regarding consumer-directed a product in television programming, they are being marketed to); and (2) materials. While most discuss

FDLI March/April 2016 UPDATE 5 Advertising

prescription drugs, such as Guidance extent to which a company can be of FDA’s study on Disease Information for Industry, Brief Summary and held responsible for a message that a in Branded Promotional Materials and Adequate Directions for Use: Disclosing consumer takes away from two distinct should provide helpful insight into Risk Information in Consumer-Directed health-related communications that how FDA will approach embedded Print Advertisements and Promotional are displayed in the same publication marketing strategies involving FDA- Labeling for Prescription Drugs, they or program and assist the agency with regulated products. provide helpful insight regarding how updating its 2004 Dra Guidance for Risk communications are another FDA would treat embedded marketing Industry, “‘Help-Seeking’ and Other key priority for FDA and the agency techniques involving any FDA- Disease Awareness Communications has made clear that it expects regulated product. by or on Behalf of Drug and Device companies to provide truthful and For example, in a 2012 submission Firms.” In the 2004 Dra Guidance, balanced information about the for O ce of Management and Budget FDA took the position that disease risks associated with FDA-regulated (OMB) Review of an experimental awareness communications were products, regardless of the platform. study regarding disease information outside the scope of FDA’s regulatory For example, in its June 2014 Guidance in branded promotional material, FDA jurisdiction and would not be treated for Industry, Internet/Social Media hinted that it has concerns regarding as advertising or labeling unless (1) the Platforms with Character Space the messages conveyed when an FDA- communication was combined with Limitations—Presenting Risk and regulated product is placed in close reminder advertising or labeling or (2) Benet Information for Prescription proximity to content discussing disease was in some other way “determined Drugs and Medical Device, FDA states that are also associated with to, by implication, identify a particular reminded companies that “[w]hen symptoms for which the product is not drug or device” in a manner communicating benet information approved for use in the United States. that caused FDA to consider the about its product, a rm should ensure In pertinent part, FDA noted: communication labeling or advertising. that benet information is accurate When broad disease information In pertinent part, the dra guidance and non-misleading. In doing so, accompanies or is included in an document included a discussion of the rm should also reveal material ad for a specic drug, consumers instances where “supposed disease facts about the use of its product, may mistakenly assume that the awareness information” could be such as limitations to an indication drug will address all of the potential regulated as advertising or labeling on the relevant patient population.” consequences of the condition and warned that FDA was leery of FDA then cautioned that “[i]f the mentioned in the ad by making disease awareness communications rm concludes the adequate benet inferences that go beyond what is that were so “linked together” with or and risk information, as well as other explicitly stated in an advertisement. “perceptually similar” to otherwise required information, cannot all be For example the mention of diabetic distinct promotional material that communicated within the same tweet, retinopathy in an advertisement for consumers perceive them to be then the rm should reconsider using a drug that lowers blood glucose “one complete promotional piece,” Twitter for the intended promotional may lead consumers to infer that including in television programming. message [for the product].” ese the drug will prevent diabetic In December 2015, FDA withdrew this principles should be kept in mind retinopathy, even if no direct claim. 2004 Dra Guidance for Industry, as when considering how to convey risk e advertisement may imply well as dozens of other dra guidances, and other safety-related information in broader indications for the promoted due in part to “new information, embedded marketing strategies. drug than are warranted, leading scientic developments, and emerging consumers to infer eectiveness of technologies” that caused the guidance Federal Trade Commission the drug beyond the indication for to become outdated.6 Subsequent Companies interested in embedded which it was approved.5 guidance regarding “help-seeking” marketing should also consider the e study is expected to both further and “disease awareness” information principles outlined by the FTC in inform FDA’s position regarding the is expected to account for the results its Guides Concerning the Use of

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Endorsements and Testimonials in recommended that advertisements in considering whether a product Advertising (Endorsement Guide),7 newspapers having the same format integration strategy may require and Enforcement Policy Statement on and appearance as regular news disclosure that the content has been Deceptively Formatted Advertising articles be clearly and conspicuously sponsored. (Enforcement Policy).8 As a consumer labeled as advertisements.9 And, Notably, FTC has been careful to protection agency, FTC has two beginning in the 1980s, FTC brought distinguish product placement from enforcement priorities that are numerous cases alleging that television product integration and consumer related to embedded marketing: (1) and radio that appeared testimonials. FTC sta has expressed ensuring that the product claims to be independent programming the opinion that, under the FTC Act, are substantiated; and (2) ensuring were deceptive because they failed product placement (that is, merely consumers are aware that content to disclose to consumers that they showing products or in third- is sponsored. Taken together, these were paid advertisements.10 e party entertainment or news content— two documents can help a company Enforcement Policy Statement on as distinguished from sponsored to keep in mind FTC’s enforcement Deceptively Formatted Advertising, content or disguised commercials) priorities when considering embedded which was published in December does not require a disclosure that marketing strategies. 2015, summarizes the fundamental the placement was paid-for by the e FTC Endorsement Guide principles behind FTC’s approach to advertiser.11 Instead, FTC generally can provide a prudent approach ensuring that marketing strategies reserves enforcement action for for reviewing proposed scripts and that inuence consumer-directed instances where statements, claims, other content intended for use in content are understood by consumers or opinions are conveyed about the embedded advertising campaigns. to contain sponsored content and product (and the representations were Generally, the “Enforcement Guides” extends the principles to “native paid for by the advertiser).12 remind advertisers that: (1) an advertising,” which FTC denes as endorser cannot be used to make content that bears a similarity to the Federal Communications a claim that a company could not news, feature articles, product reviews, Commission make itself; and (2) any material entertainment, and other material that Any manufacturer considering connections between an advertiser surrounds it online. embedded marketing in television- and a company (that are not obvious) According to the Policy Statement, or radio-based communications must be disclosed. It is reasonable to an advertiser would need to disclose should ensure that the distributor is expect FTC to apply similar standards its sponsorship of content as an complying with FCC’s Sponsorship to product integration strategies in advertisement if, when considered as Identication rules codied at 47 which paid actors or journalists make a whole, even a signicant minority CFR § 73.1212. ese longstanding representations about a product or a of reasonable consumers would not rules require broadcast and cable product category in a television show recognize it as advertising. Relevant providers to disclose that content or other communication. factors include the sponsored content’s in a communication is sponsored FTC’s Enforcement Policy Statement appearance, its similarity to non- at the beginning and end of the on Deceptively Formatted Advertising advertising content appearing in communication. reminds advertisers of the agency’s the same media, and consumer’s In 2008, FCC solicited comments commitment to ensuring that expectations as to how content is on the relationship between consumers know when content that presented in various media. If the the Commission’s sponsorship promotes a product or service has been advertisement is targeted to a specic identication rules and increasing “sponsored.” FTC has a long history audience, FTC will consider the industry reliance on embedded of regulating forms of advertising advertisement from the perspective advertising techniques, due in large that consumers may not recognize of a reasonable member of the part to a led by the consumer as advertising. Before the Internet, targeted group. is is an important group Commercial Alert, which argued in a 1968 advisory opinion, FTC consideration to keep in mind when that FCC’s sponsorship identication

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rules were inadequate to address to work closely with retailers, messages conveyed about the embedded advertising techniques.13 publications, and media companies company’s product by the content as According to FCC, it undertook the to discuss placement of material if it were made by the company. As a proceeding “in order to consider the (oen without the knowledge of the result, it is advisable for a company complex questions involved with the company’s legal department). At to create a list of “permissible” practice of embedded advertising, times these discussions can extend representations about the product that and to examine ways the Commission to other content tangentially related can be used in an embedded marketing can advance the statutory goal… to the product (or product category) strategy to help ensure that the nal of ensuring that that the public is that, while authored by another party, promotional material complies with informed of the sources of program would be placed near an ad for the any regulatory standards governing sponsorship while concurrently company’s product. If the marketer what the company could say about the balancing the First Amendment and or another agent of the company in product. e company may also want artistic rights of programmers.”14 any way inuences the content, the to include a list of “impermissible” FCC also requested comment on a product manufacturer could be held representations to help ensure that proposed rule change to make the responsible for the truthfulness and the nal content does not include current disclosure requirement more accuracy of any reasonable messages representations that would concern obvious to the consumer by requiring about its product that a consumer federal regulators (i.e., representations that the sponsorship identi cation derives from the content. Both FDA that promote the product for an announcements (1) have lettering and FTC consider a company to be unapproved intended use or convey of a particular size; and (2) air for a responsible for all messages reasonably unsubstantiated performance claims). particular amount of time,15 similar to conveyed about the company’s product the prominence requirements applied in a communication that is owned, Consider the Risk Information and, More Importantly, How to Convey It to political advertisements.16 controlled, created, inuenced, or When developing the list of ere has been no further action by armatively adopted or endorsed by “permissible” and “impermissible” FCC on this issue since 2008. (or on behalf) of company. statements, a company will also want To mitigate risk of liability for to consider whether there is any risk unintended messages conveyed by What Does This Mean information that must be included an embedded marketing campaign, for FDA-Regulated in a communication to ensure that companies may want to institute a Companies? the communication presents a fair protocol that requires marketing teams As noted above, federal agencies and balanced portrayal of the risks disclose to counsel whether an agent are monitoring emerging trends and bene ts associated with the of the company had any inuence in marketing strategies and are product. For example, consumer over articles, script language, or other increasingly concerned about healthcare product and conventional content presented in close proximity to consumer understanding of embedded food manufacturers may want to a reference to the company’s product marketing techniques. With this in consider safety concerns associated and, in the event of inuence, take mind, it would be prudent for any with consumption of the products. steps to ensure that the company’s company that intends to invest in an For example, in light of concerns legal department has an opportunity embedding for an about combining caeine and alcohol, to review the content before it is FDA-regulated product to take the a company considering using an disseminated to consumers. following steps to mitigate the risk for embedded marketing strategy for the company: Develop Guidelines on Permissible its caeinated beverage may want to and Impermissible Representations include in its guidance prohibitions Confirm the Relationship Between for the Marketing Team on promoting use of the product in the Company and Content Providers As noted above, if a company has conjunction with alcohol. Simply It is very common for a product inuence or control over content, put, embedding marketing strategies manufacturer’s marketing department FDA and FTC will treat any implied should be accompanied by guidance

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documents that help the company to develop policies to identify products Agency Information Collection proactively avoid the development of for which embedded marketing should Activities; Submission for Oce of Management and Budget Review; promotional materials that a regulator not be used. ey should also develop Comment Request; Experimental would consider to present safety risks policies for reviewing and evaluating Study: Disease Information in Branded to consumers. third-party use of branded products in Promotional Material, 77 Fed. Reg. 37502 (Jun. 20, 2012). See also, FDA non-promotional broadcast media. e Oce of Prescription Drug Promotion Consider Limitations on Embedded policy should address, among other Research, available at http://www. Marketing Strategies for Certain things, the circumstances in which the fda.gov/AboutFDA/CentersOces/ Products OceofMedicalProductsandTobacco/ company might deem it appropriate or Proactive use of embedded CDER/ucm090276.htm#completed. necessary to correct misinformation 5. Guidance for Industry, Consumer- marketing for prescription drug about its product in third-party media. Directed Broadcast Advertisements. products or restricted medical devices 6. FDA, Withdrawal of Dra Guidance may present greater regulatory risks When in Doubt, Disclose Material Documents Published Before December 31, 2015, 80 Fed. Reg. 26059 and legal challenges for marketers Connections (May 6, 2015) (noting “[m]any of these than other FDA-regulated products. Finally, some forms of embedded dra guidances were not nalized Even in scripted television programs marketing are obvious to consumers— most o en because of higher priorities and resource issues. However, over or movies, marketers may have limited e.g., prominent display of a branded the years, because of new information, control over how the product is cola while an actor is on screen. Others scientic developments, and emerging represented. Changes to scripts, sets, are not. If there is any chance that technologies, a number of dra guidances have become outdated and adlibbing by performers and changes a consumer may not immediately therefore, should be withdrawn”). in artistic direction o en occur during recognize that your company 7. 16 C.F.R. Part 255, available at https:// production. ese issues mean that sponsored the content, disclose the www. c.gov/policy/federal-register- the potential for o-label promotion connection. Ensuring that consumers notices/guides-concerning-use- endorsements-and-testimonials- or the omission or minimization of know that there is a material advertising-16. required risk information is always connection between an advertiser and 8. Available at https://www. c.gov/ present. e possible consequences content is a priority for FTC. system/les/documents/public_ of this for companies with products statements/896923/151222 Taken together, these ve steps can deceptiveenforcement.pdf. that are reimbursed by Federal help companies navigate the regulatory 9. Enforcement Policy Statement, at 3. Healthcare Programs are potentially mineelds that can be embedded in 10. Id. at 4. 11. Letter To Commercial Alert Applying signicant in light of recent False embedded marketing. FDLI Commission Policy To Determine Claims Act settlements based on On A Case-By-Case Basis Whether o-label marketing theories. For e authors would like to thank Particular Advertising Formats Such As Product Placements Are this reason, it appears that most Danielle Pinque for her research Deceptive, available at https://www. prescription drug and restricted device assistance while working as a summer c.gov/system/les/documents/ manufacturers conspicuously avoid associate at Arnold & Porter. advisory_opinions/letter-commercial- embedded marketing. However, this alert-applying-commission-policy- determine-case-case-basis-whether- has not stopped third parties from 1. PQ Media Update (June 2015), particular/050210productplacemen. featuring branded drugs and devices available at http://www.pqmedia.com/ pdf. in the plot lines or sets of top-rated about-press-20150615.html. 12. Id. 2. Id. movies and television shows. In some 13. See Sponsorship Identication Rules 3. FDA, What We Do, available at http:// and Embedded Advertising, 73 Fed. instances the producers notify the www.fda.gov/AboutFDA/WhatWeDo/. Reg. 43194 (July 24, 2008). manufacturer and may provide an 4. See, e.g., FDA Risk Communication 14. Id. opportunity for script approval or Reports, available at http:// 15. Id. www.fda.gov/AboutFDA/ 16. Id. review. In most cases, however, they ReportsManualsForms/Reports/ do not. Companies should therefore ucm268041.htm. See also, FDA,

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