Reference no: EM131473537

Question: NOVARTIS CORP. v. FTC, 223 F.3D 783 (D.C. CIR. 2000)

FACTS Ciba-Geigy Corporation purchased the Doan's analgesic pain reliever brand in 1987. Ciba's consumer perception research indicated that its target market- back pain sufferers likely to use over-the-counter pain relievers-rated Doan's below its competitors in relieving back pain. From 1988 to 1996, first Ciba and then Novartis Corporation, its successor, engaged in a $55 million ad campaign that stressed that Doan's had a special efficacy in relieving back pain. Ciba/Novartis had no substantiation for claiming the product was superior to other over-the-counter analgesics in relieving back pain. DECISION After the FTC took action, the advertising agency entered into a consent order with the FTC regarding its role in the ad campaign, agreeing to have scientific evidence to support claims regarding the efficacy, safety, benefits, or performance of any overthe-counter analgesic it advertised. The charges against Novartis were heard in an administrative hearing before an ALJ, who found the company liable for deceptive advertising.

However, the ALJ declined to order corrective advertising, finding that the third element of the Warner-Lambert test (i.e., that the belief survives even once the deceptive advertising ceases) had not been met. In reaching this determination, the ALJ relied upon Novartis' evidence showing low 24- and 72-hour recall regarding the superiority claim and the fact that the ad campaign had been much shorter than the multi-decade Listerine campaign. On appeal, the FTC ordered the company to carry the statement "Although Doan's is an effective pain reliever, there is no evidence that Doan's is more effective than other pain relievers for back pain" on all packaging and advertising materials for one year, excluding radio and television ads of less than 15 seconds, until it had expended on corrective advertising an amount equal to the average spent annually during the eight years of the advertising campaign. Novartis Corp. then appealed to the U.S. Court of Appeals, arguing that the advertisements were not "deceptive" because the claim made was not material. Novartis also argued that there was no evidence that consumers had actually relied upon the claims and that the FTC's action infringed on its First Amendment right to commercial speech. The Court of Appeals rejected all of Novartis' claims and upheld the FTC's findings.