Jordan, McGrath, Case & Taylor; Proposed Consent Agreement with Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 962-3053]

Jordan, McGrath, Case & Taylor; 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 or deceptive acts or practices and unfair methods of

competition, this consent agreement, accepted subject to final

Commission approval, would prohibit, among other things, the New York

City-based advertising agency from making advertising claims regarding

the efficacy, safety, benefits, or performance of any over-the-counter

internal analgesics unless they have competent and reliable scientific

evidence supporting the claims. The consent agreement settles

allegations stemming from Jordan, McGrath's advertising campaign for

Doan's pills, an over-the-counter back-pain relief medication marketed

by Ciba-Geigy Corporation.

DATES: Comments must be received on or before September 9, 1996.

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

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

FOR FURTHER INFORMATION CONTACT: Joel Winston, Federal Trade

Commission, S-4002, 6th and Pennsylvania Ave. NW., Washington, DC

20580. (202) 326-3153; Loren Thompson, Federal Trade Commission, S-

4002, 6th and Pennsylvania Ave. NW., Washington, DC 20580. (202) 326-

2049.

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

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), 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

The Federal Trade Commission, having initiated an investigation of

certain acts and practices of Jordan, McGrath, Case & Taylor, Inc., a

corporation (hereinafter sometimes referred to as ``proposed

respondent''), and it now appearing that proposed respondent is willing

to enter into an agreement containing an order to cease and desist from

the use of the acts and practices being investigated,

It is hereby agreed by and between Jordan, McGrath, Case & Taylor,

Inc., by its duly authorized officer, and counsel for the Federal Trade

Commission that:

1. Proposed respondent Jordan, McGrath, Case & Taylor, Inc., is a

corporation organized, existing, and doing business under and by virtue

of the laws of the State of New York with its office and principal

place of business at 445 Park Avenue, New York, New York 10022.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft complaint.

3. Proposed 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; and

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

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

4. This agreement shall not become 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, together with the draft of

complaint contemplated thereby, 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 proposed respondent, in which event it

will take such action as it may consider appropriate, or issue and

serve its complaint (in such form as the circumstances may require) and

decision, in disposition of this proceeding.

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

constitute an admission by proposed respondent that the law has been

violated as alleged in the draft of complaint, or that the facts as

alleged in the draft complaint, other than the jurisdictional facts,

are true.

6. 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 Sec. 2.34 of the Commission's

Rules, the Commission may, without further notice to proposed

respondent: (1) issue its complaint corresponding in form and substance

with the draft complaint and 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 complaint and

decision containing the agreed-to order to proposed respondent's

address as stated in this agreement shall constitute service. Proposed

respondent waives any rights it may 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.

7. Proposed respondent has read the proposed complaint and order

contemplated hereby. Proposed respondent understands that once the

order has been issued, it will be required to file one or more

compliance reports showing that it has fully

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complied with the order. Proposed 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

For purposes of this Order:

1. ``Doan's'' shall mean any over-the-counter internal analgesic

drug, as ``drug'' is defined in the Federal Trade Commission Act,

bearing the Doan's brand name, including, but not limited to, Regular

Strength Doan's analgesic, Extra Strength Doan's analgesic, and Extra

Strength Doan's P.M. analgesic.

2. ``Competent and reliable scientific evidence'' shall mean tests,

analyses, research, studies, or other evidence based on the expertise

of professionals in the relevant area, that has been conducted and

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

procedures generally accepted in the profession to yield accurate and

reliable results.

I

It is ordered that respondent Jordan, McGrath, Case & Taylor, Inc.,

a corporation, its successors and assigns, and its officers, agents,

representatives and employees, directly or through any partnership,

corporation, subsidiary, division or other device, in connection with

the advertising, promotion, offering for sale, sale, or distribution of

Doan's or any other over-the-counter analgesic drug, in or affecting

commerce, as ``drug'' and ``commerce'' are defined in the Federal Trade

Commission Act, do forthwith cease and desist from making any

representation, in any manner, directly or by implication, that such

product is more effective than other over-the-counter analgesic drugs

for relieving back pain or any other particular kind of pain, unless,

at the time of making such representation, respondent possesses and

relies upon competent and reliable scientific evidence that

substantiates the representation. For purposes of Part I of this order,

``competent and reliable scientific evidence'' shall include at least

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

conform to acceptable designs and protocols and are conducted by

different persons, each of whom is qualified by training and experience

to conduct such studies, independently of each other.

II

It is further ordered that respondent Jordan, McGrath, Case &

Taylor, Inc., a corporation, its successors and assigns, and its

officers, agents, representatives and employees, directly or through

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

connection with the advertising, promotion, offering for sale, sale, or

distribution of Doan's or any other over-the-counter internal analgesic

drug, in or affecting commerce, as ``drug'' and ``commerce'' are

defined in the Federal Trade Commission Act, do forthwith cease and

desist from making any representation, in any manner, directly or by

implication, regarding such product's efficacy, safety, benefits, or

performance, unless, at the time of making such representation,

respondent possesses and relies upon competent and reliable scientific

evidence that substantiates the representation.

Provided, however, that it shall be a defense hereunder that the

respondent neither knew nor had reason to know of an inadequacy of

substantiation for the representation.

III

Nothing in this order shall prohibit respondent from making any

representation for any drug that is permitted in labeling for 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.

IV

It is further ordered that for a period of five (5) years after the

last date of dissemination of any representation covered by this order,

respondent, or its successors and assigns, shall maintain and upon

request make available to the Federal Trade Commission for inspection

and copying:

A. All materials that were relied upon in disseminating such

representation; and

B. All tests, reports, studies, surveys, demonstrations or other

evidence in its possession or control that contradict, qualify, or call

into question such representation, or the basis relied upon for such

representation, including complaints from consumers.

V

It is further ordered that respondent shall:

A. Within thirty (30) days from the date of entry of this order,

provide a copy of this order to each of its current principals,

officers, directors and managers, and to all personnel, agents, and

representatives having sales, advertising, or policy responsibility

with respect to the subject matter of this order; and

B. For a period of ten (10) years from the date of entry of this

order, provide a copy of this order to each of its future principals,

officers, directors, and managers, and to all personnel, agents, and

representatives having sales, advertising, or policy responsibility

with respect to the subject matter of this order who are associated

with them or any subsidiary, successor, or assign, within three (3)

days after the person assumes his or her position.

VI

It is further ordered that respondent shall notify the Commission

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

structure, including, but not limited to, dissolution, assignment, or

sale resulting in the emergence of a successor corporation, the

creation or dissolution of subsidiaries or affiliates, or any other

corporate change that may affect compliance obligations arising out of

this order.

VII

It is further ordered that this order will terminate twenty (20)

years from the date of its issuance, or twenty (20) years from the most

recent date that the United States or the Federal Trade Commission

files a complaint (with or without an accompanying consent decree) in

federal court alleging any violation of the order, whichever comes

later; provided, however, that the filing of such a complaint will not

affect the duration of:

A. Any part in this order that terminates in less than twenty (20)

years;

B. This order's application to any respondent that is not named as

a defendant in such complaint; and

C. This order if such complaint is filed after the order has

terminated pursuant to this Part.

Provided further, that if such complaint is dismissed or a federal

court rules that the respondent did not violate any provision of the

order, and the dismissal or ruling is either not appealed or upheld on

appeal, then the order will terminate according to this Part as though

the complaint was never filed, except that the order will not terminate

between the date such complaint is filed and the later of the deadline

for appealing such dismissal or ruling and the date such dismissal or

ruling is upheld on appeal.

VIII

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

from the date of entry of this order, and at such other times as the

Federal Trade

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

setting forth in detail the manner and form in which it has complied

with this order.

Analysis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted an agreement to a consent

order from Jordan, McGrath, Case & Taylor, Inc. (``Jordan, McGrath''),

an advertising agency.

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 or make final the agreement's proposed

order.

This matter concerns Doan's, an analgesic for which Jordan, McGrath

created and disseminated advertisements. The Commission's proposed

complaint alleges that the respondent represented without a reasonable

basis in its advertisements that Doan's analgesic products are more

effective than other analgesics, including Bayer, Advil, Tylenol, and

Aleve, for relieving back pain. The complaint alleges that respondent

knew or should have known that the representation lacked a reasonable

basis.

The proposed consent order contains provisions designed to prevent

the respondent from engaging in similar acts and practices in the

future. Part I of the proposed order prohibits respondent from making

any representation that Doan's or any other over-the-counter analgesic

drug is more effective than any other such drug for relieving back pain

or any other particular kind of pain, unless it possesses competent and

reliable scientific evidence, consisting of at least two adequate and

well-controlled, double-blinded clinical studies, that substantiates

the representation.

Part II of the proposed order prohibits respondent from making any

representation about the efficacy, safety, benefits, or performance of

any over-the-counter internal analgesic drug, unless it possesses

competent and reliable scientific evidence that substantiates the

representation. This Part further provides that it shall be a defense

under this Part that respondent neither knew nor had reason to know of

an inadequacy of substantiation for a representation.

Part III of the order is a safe harbor provision allowing

representations for any drug that are permitted in the labeling for

that drug under any tentative final or final standard promulgated by

the Food and Drug Administration (``FDA'') or by an approved new drug

application.

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

obligation to maintain records, distribute the order to current and

future officers and employees, notify the Commission of changes in

corporate structure, and file compliance reports with the Commission.

Part VIII provides that the order will terminate after twenty years

under certain circumstances.

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

proposed order, and it is not intended to constitute an official

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

way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 96-17466 Filed 7-8-96; 8:45 am]

BILLING CODE 6750-01-P