Schering Corporation; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[Dkt. 9232]

Schering Corporation; Proposed Consent Agreement With Analysis To

Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair acts and practices and unfair methods of competition, this

consent agreement, accepted subject to final Commission approval, would

prohibit, among other things, a New Jersey manufacturer of the diet

product, Fibre Trim, from making any representation about the weight

loss benefits, nutrient content, or nutrient related health benefits of

any food, food supplement, or drug without competent and reliable

scientific evidence to substantiate the claim.

DATES: Comments must be received on or before October 17, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., NW., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Theodore Hoppock or Susan Cohn, FTC/S-4002, Washington, D.C. 20580.

(202) 326-3087 or 326-3053.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 3.25(f) of

the Commission's Rules of Practice (16 CFR 3.25(f)), notice is hereby

given that the following consent agreement containing a consent order

to cease and desist, having been filed with and accepted, subject to

final approval, by the Commission, has been placed on the public record

for a period of sixty (60) days. Public comment is invited. Such

comments or views will be considered by the Commission and will be

available for inspection and copying at its principal office in

accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of

Practice (16 CFR 4.9(b)(6)(ii)).

Agreement Containing Consent Order to Cease and Desist

In the Matter of Schering Corporation, a corporation. Docket No.

9232.

The agreement herein, by and between Schering Corporation, a

corporation, by its duly authorized officer, hereafter sometimes

referred to as respondent, and its attorney, and counsel for the

Federal Trade Commission, is entered into in accordance with the

Commission's Rule governing consent order procedures. In accordance

therewith the parties hereby agree that:

1. Respondent Schering Corporation is a corporation organized,

existing and doing business under and by virtue of the laws of the

State of New Jersey, with its office and principal place of business at

2000 Galloping Hill Road, Kenilworth, New Jersey, 07033.

2. Respondent has been served with a copy of the complaint issued

by the Federal Trade Commission charging it with violations of Sections

5(a) and 12 of the Federal Trade Commission Act, and has filed answers

to said complaint denying said charges.

3. Respondent admits all the jurisdictional facts set forth in the

Commission's complaint in this proceeding.

4. Respondent waives:

(a) Any further procedural steps;

(b) The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

(c) All rights to seek judicial review or otherwise to challenge or

contest the validity of the order entered pursuant to this agreement;

and

(d) Any claims under the Equal Access to Justice Act.

5. This agreement shall not become a part of the public record of

the proceeding unless and until it is accepted by the Commission. If

this agreement is accepted by the Commission, it will be placed on the

public record for a period of sixty (60) days and information in

respect thereto publicly released. The Commission thereafter may either

withdraw its acceptance of this agreement and so notify the respondent,

in which event it will take such action as it may consider appropriate,

or issue and serve its decision, in disposition of the proceeding.

6. This agreement is for settlement purposes only and does not

constitute an admission by respondent that the law has been violated as

alleged in the compliant issued by the Commission, or that the facts as

alleged in said compliant, other than jurisdictional facts, are true.

7. This agreement contemplates that, if it is accepted by the

Commission, and if such acceptance is not subsequently withdrawn by the

Commission pursuant to the provisions of Section 3.25(f) of the

Commission's Rules, the Commission may without further notice to

respondent, (1) issue its decision containing the following order to

cease and desist in disposition of the proceeding, and (2) make

information public in respect thereto. When so entered, the order to

cease and desist shall have the same force and effect and may be

altered, modified or set aside in the same manner and within the same

time provided by statute for other orders. The order shall become final

upon service. Delivery by the U.s. Postal Service of the decision

containing the agreed-to order to respondent's address as stated in

this agreement shall constitute service. Respondent waives any right it

might have to any other manner of service. The complaint may be used in

construing the terms of the order, and no agreement, understanding,

representation, or interpretation not contained in the order or in the

agreement may be used to vary or contradict the terms of the order.

8. Respondent has read the compliant and the order contemplated

hereby. It understands that once the order has been issued, it will be

required to file one or more compliance reports showing that it has

fully complied with the order. Respondent further understands that it

may be liable for civil penalties in the amount provided by law for

each violation of the order after it becomes final.

Order

I

It is ordered that respondent Schering Corporation, a corporation,

its successors and assigns, and its officers, agents, representatives,

and employees, directly or through any corporation, subsidiary,

division or other device, in connection with the advertising, labeling

packaging, offering for sale, sale or distribution of Fiber Trim or any

other food, food supplement or drug in or affecting commerce, as

``commerce'' is defined in the Federal Trade Commission Act, do

forthwith cease and desist from making any misrepresentation, directly

or by implication,

a. about the amount of fiber or any other nutrient or dietary

constituent contained in the product, whether described in quantitative

or qualitative terms; or

b. that the product is a high, rich, excellent or superior source

of fiber or any other nutrient or dietary constituent using those words

or words of similar meaning.

Provided that nothing in this Part shall prohibit any

representation as to the amount of fiber or any other nutrient or

dietary constituent in any product if such representation is

specifically permitted in labeling, for the serving size advertised or

promoted for such product, by regulations promulgated by the United

States Food and Drug Administration (FDA) pursuant to the Nutrition

Labeling and Education Act of 1990.

II

It is further ordered that respondent, its successors and assigns,

and its officers, agents, representatives, and employees, directly or

through any corporation, subsidiary, division or other device, in

connection with the advertising, labeling, packaging, offering for

sale, sale or distribution of any food, food supplement or drug in or

affecting commerce, as ``commerce'' is defined in the Federal Trade

Commission Act, do forthwith cease and desist from making any

representation, directly or by implication,

a. regarding the actual or comparative amount of fiber or the

type(s) of fiber, or the actual or comparative amount of any other

nutrient or dietary constituent in the product;

b. that the product provides any appetite suppressant, weight loss,

weight control, or weight maintenance benefit; or

c. that the product provides any health benefit associated with the

intake of fiber, or any other nutrient or dietary constitutent

unless, at the time that it makes such representation, respondent

possesses and relies upon competent and reliable scientific evidence

that substantiates the representation. For purposes of this Order,

``competent and reliable scientific evidence'' shall mean those tests,

analyses, research, studies, or other evidence conducted and evaluated

in an objective manner by persons qualified to do so, using procedures

generally accepted by others in the profession or science to yield

accurate and reliable results.

Provided that, for purposes of any representation covered by

subpart (b) of this Part that a fiber supplement or any other food

supplement or drug is an effective appetite suppressant or that it

effectuates weight loss, weight control, or weight maintenance through

reduction in appetite or any other physiological mechanism, ``competent

and reliable scientific evidence'' shall mean at least two adequate and

well-controlled, double-blinded clinical studies that conform to

acceptable designs and protocols and are conducted by different

persons, independently of each other. Such persons shall be qualified

by training and experience to conduct such studies.

Provided further that nothing in this order shall prohibit

respondent from making any representation for any drug that is

permitted in labeling for any such drug under any tentative final or

final standard promulgated by the Food and Drug Administration, or

under any new drug application approved by the Food and Drug

Administration.

Provided further that nothing in subparts (a) or (c) of this Part

shall prohibit respondent from making any representation for any

product that is specifically permitted in labeling for such product by

regulations promulgated by the FDA pursuant to the Nutrition Labeling

and Education Act of 1990.

III

It is further ordered that respondent, its successors and assigns,

and its officers, agents, representatives, and employees, directly or

through any corporation, subsidiary, division or other device, in

connection with the advertising, labeling, packaging, offering for

sale, sale or distribution of any food, food supplement or drug in or

affecting commerce, as ``commerce'' is defined in the Federal Trade

Commission Act, shall, whenever a product's fiber content is described

in advertising or labeling, directed or by implication, in quantitative

or qualitative terms, disclose clearly and prominently in immediate

proximity to such description the number of grams of dietary fiber

contained per serving of the product.

Provided that is such fiber content descriptor is a term defined by

regulations promulgated by the FDA pursuant to the Nutrition Labeling

and Education Act of 1990, compliance with said regulations will be

deemed compliance with Part III of this Order.

IV

It is further ordered that, for three (3) years from the date that

the representation is last disseminated, respondent shall maintain and

upon request make available to the Federal Trade Commission for

inspection and copying:

1. All materials that were relied upon to substantiate any

representation covered by this Order; and

2. All test reports, studies, surveys, demonstrations or other

evidence in respondent's possession or control, or of which it has

knowledge, that contradict, qualify, or call into question such

representation or the basis upon which respondent relied for such

representation.

V

It is further ordered that respondent shall notify the Commission

at least thirty (30) days prior to any proposed change in the corporate

respondent such as dissolution, assignment, or sale resulting in the

emergence of a successor corporation, the creation or dissolution of

subsidiaries, or any other change in the corporation which may affect

compliance obligations arising out of this Order.

VI

It is further ordered that respondent shall, within thirty (30)

days after service of this Order, distribute a copy of this Order to

each of its operating divisions responsible for the preparation or

placement of advertisements, promotional materials, product labels, or

other such sales materials covered by this Order.

VII

It is further ordered that respondent shall, within sixty (60) days

after service of this Order and at such other times as the Commission

may require, file with the Commission a report, in writing, setting

forth in detail the manner and form in which it has complied or intends

to comply with this Order.

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement to a

proposed consent order from Schering Corporation.

The proposed consent order has been placed on the public record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and the comments received and will decide whether it should

withdraw from the agreement and take other appropriate action or make

final the agreement's proposed order.

This matter concerns advertising and promotional practices related

to the sale of Fibre Trim, a fiber containing tablet, that were

disseminated between 1985 and 1991. These advertisements and

promotional materials were disseminated in magazines, newspapers,

television, radio, direct mail correspondence and in-store displays.

The Commission's complaint, issued on September 22, 1989, alleged

that Schering's advertisements and promotional materials represented

that: (1) Fibre Trim is an effective appetite suppressant, weight loss,

weight control or weight maintenance product; (2) Fibre Trim provides

the health benefits associated with a fiber-rich diet or a high intake

of dietary fiber from food; (3) Fibre Trim is a high fiber supplement;

(4) the recommended daily dosage of Fibre Trim provides most of a

person's daily requirements of dietary fiber; and (5) the recommended

dosage of Fibre Trim provides about 2.35 grams of dietary fiber per

serving or about seven grams of dietary fiber per day. The complaint

alleged that Schering did not have a reasonable basis for these

representations, and that the latter three representations were false.

The complaint allegations were tried before an Administrative Law

Judge (ALJ) between January 22 and March 29, 1991. In an opinion dated

September 16, 1991, the ALJ upheld the first, second and fifth

allegations described above. With respect to the third allegation, the

ALJ ruled that Schering's claim that Fibre Trim is a high fiber

supplement was false as to the product's weight maintenance dosage, but

true as to its weight loss dosage. The ALJ rejected the fourth

allegation described above. The ALJ's decision was appealed to the

Commission. Subsequently, the parties agreed to the proposed consent

order and the appeal was withdrawn from adjudication.

The proposed consent order contains provisions which are designed

to remedy the advertising violations charged and to prevent Schering

from engaging in similar acts and practices in the future. Part I of

the proposed order prohibits Schering from misrepresenting the amount

of fiber or any other nutrient or dietary constituent in Fibre Trim or

any other food, food supplement or drug product. Part I also prohibits

the misrepresentation of such products as being high, rich, excellent

or superior sources of fiber or any other nutrient or dietary

constituent. Part I also contains a safe harbor stating that it does

not prohibit any representation as to the amount of fiber or any other

nutrient or dietary constituent in any product if that representation

is specifically permitted in labeling, for the serving size being

advertised, by regulations promulgated by the United States Food and

Drug Administration (FDA) pursuant to the Nutrition Labeling and

Education Act of 1990 (NLEA). The Commission's recently adopted

Enforcement Policy Statement on Food Advertising (May 1994) (Food

Policy Statement) provides additional guidance on what may constitute a

misrepresentation of nutrient content.

Part II of the proposed consent order requires Schering to rely

upon competent and reliable scientific evidence if it makes claims for

any food, food supplement or drug product regarding the product's (1)

Fiber content or type or the amount or content of any other nutrient or

dietary constituent; (2) provision of any health benefit associated

with the intake of fiber or any other nutrient or dietary constituent;

or (3) provision of any appetite suppressant, weight loss, weight

control or weight maintenance benefit. Part II requires that Schering

possess and rely on tests, analyses, research, studies, or other

evidence conducted and evaluated in an objective manner by persons

qualified to do so, using procedures generally accepted by others in

the profession or science to yield accurate and reliable results in

making the first two categories of claims. For the third (weight loss-

related) category of claims, Schering is required to rely upon at least

two adequate and well-controlled, double-blinded clinical studies that

conform to acceptable designs and protocols and are conducted

independently by different persons qualified by training and experience

to conduct such studies.

Part II also contains two safe harbor provisions. First, the

proposed order does not prohibit any claims for drugs that are

permitted in labeling under an FDA tentative final or final standard,

or under an approved new drug application. Second, the proposed order

does not prohibit any nutrient content or health benefit claims covered

by Part II that are specifically permitted in labeling by FDA

regulations under the NLEA.

Part III requires Schering, when making a fiber content claim for

any food, food supplement or drug product, to disclose, clearly,

prominently and in close proximity to that claim, the number of grams

of dietary fiber contained per serving of the product. If the

description of the fiber content of such a product is a term defined by

FDA regulations issued pursuant to the NLEA (e.g., ``high fiber''),

then compliance with those regulations constitutes compliance with Part

III and no additional disclosure of the amount of dietary fiber is

required under Part III.

The litigation and the negotiation of the settlement of this case

occurred prior to the Commission's issuance of its Food Policy

Statement. Depending on the nature of the fiber content claim, the

disclosure requirement in Part III may not be identical to the

provisions of the Commission's Food Policy Statement. For example, Part

III covers comparative fiber claims (e.g., ``25% more fiber'') for

which the Food Policy Statement likely would require additional

disclosures, such as the basis for comparison. Part III of the proposed

consent order does not explicitly require those additional disclosures.

However, the prohibition on misrepresentations of fiber content in Part

I of the proposed order and Part II's requirement that such claims be

substantiated would require such disclosures as are necessary to

prevent a claim from being misleading. Thus, unless such claims

adequately adhere to the guidance of the Food Policy Statement, they

likely would violate Parts I and II of the proposed order.

Parts IV, V, VI and VII of the proposed order relate to Schering's

obligation to maintain records, distribute the order to its operating

divisions responsible for advertising activities, notify the Commission

of changes in business or corporate structure and file compliance

reports with the Commission.

The purpose of this analysis is to facilitate public comment on the

proposed order. It is not intended to constitute an official

interpretation of the agreement and proposed order or to modify in any

way its terms.

C. Landis Plummer,

Acting Secretary.

[FR Doc. 94-20022 Filed 8-15-94; 8:45 am]

BILLING CODE 6750-01-M