Abbott Laboratories

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IN THE MATTER OF ABBOTT LABORATORIES CONSENT ORDER, ETC., INREGARD TO ALLEGED VIOLATION OF SECS. 5 AND 12 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3442. Complaint, June 24, 1993--Decision, June 24, 1993 This consent order prohibits, among other things, an IIlinois-based marketer of very-low-calorie diet programs (rapid weight loss, modified fasting diets of 800 or fewer calories per day) from making false or unsubstantiated claims about health risks, weight loss, or weight loss maintenance; and requires certain disclosures in conjunction with safety and weight loss maintenance claims.

Appearances For the Commission: Brinley H. Williams and David V. Plottner. For the respondent: Katherine M. Grundin, in-house counsel, Abbott Park, IL.

COMPLAINT The Federal Trade Commission, having reason to believe that Abbott Laboratories, a corporation (hereinafter “respondent"), has violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, alleges: PARAGRAPH 1. Respondent Abbott Laboratories is an Illinois corporation, with its offices and principal place of business at One Abbott Park Road, Abbott Park, Illinois. PAR. 2. Respondent is engaged, and has been engaged, in the sale and offering for sale of the physician-supervised New Direction Weight Control System (hereinafter News 1 12 2 3 6 1492 2534 220 42 96.640320 Direction) very-lowcalorie diet (“VLCD”) programs and related nutritional products to the public through cooperating physicians, hospitals and clinics. ABBOTT LABORATORIES 587 586 Complaint VLCDs are rapid weight-loss, modified fasting diets of 800 calories or less per day requiring medical supervision. The New Direction VLCD diet programs provide 800 or fewer calories per day. The New Direction diet programs include foods within the meaning of Section 12 of the Federal Trade Commission Act, 15 U.S.C. 52. PAR. 3. Respondent has created advertisements and provided camera-ready advertising copy to participating physicians, hospitals and clinics for placement in various periodicals that are in general circulation to the public to promote its New Direction diet programs to prospective patients. Respondent further advertises its New Direction diet programs to the public by means of brochures and pamphlets that it provides to participating physicians, hospitals and clinics to give to patients and prospective patients. Typical of respondent's advertising and promotional materials, but not necessarily all-inclusive thereof, are the advertisements attached hereto as Exhibits A through H.

PAR. 4. The acts and practices of respondent alleged in this complaint are, and have been, in or affecting commerce, as com-4 1 3 3 3 0 588 1679 1116 38 -1 5 1 3 3 3 1 588 1679 134 33 91.588028 merce is defined in the Federal Trade Commission Act. PAR. 5. Respondent's advertising and promotional materials contain the following statements.

(A) The Safety Claims (1) The NEW DIRECTION System is safe: Metabolic and clinical tests have proven NEW DIRECTION Nutritional Beverage to be safe and effective for rapid weight loss. [Exhibit A.] (2) Using a very-low-calorie beverage, lose weight quickly and safely in a hospital-based program operated by our medical staff. [Exhibit B.] (3) It's a hospital-based, medically supervised program of rapid, safe weight loss and complete education to help you keep the weight off. [Exhibit C, p. 2.] (4) Rapid, safe weight loss, using New Direction Nutritional Beverage, which provides 100% of the US RDA for vitamins, minerals and protein. [Exhibit C, p. 2.] (5) With NEW DIRECTION, losing weight is medically supervised, safe and long-lasting. Break the cycle. And head ina NEW DIRECTION. [Exhibit F.] (B) The Maintenance Claims Complaint 116 F.T.C.

(1) Learn to stay slimmer for life: We'll help you learn to eat, think and exercise differently to keep extra weight off. [Exhibit B.] (2) It's a hospital-based, medically supervised program of rapid, safe weight loss and complete education to help you keep the weight off. [Exhibit C, p. 2.] (3) It's the one weight control system with everything you need to lose weight for life. It begins with medically supervised, safe, rapid weight loss and nutrition education. [Exhibit D.] (4) Lose weight quickly, safely, and permanently. [Exhibit E.] (5) ... proven technique for lifelong weight loss. [Exhibit G.] (6) You name the diet-I've tried it. They all start out the same. First come the promises-the enthusiasm-the hunger-finally: the panic! And I gain back everything I've lost. How can I take control? Head ina NEW DIRECTION. After do-it-yourself diets you gain back all the weight you lost. But the NEW DIRECTION Weight Loss Program is different. [Exhibit F.] (7) Our NEW DIRECTION program has physicians, psychologists and dietitians working with you right here at our hospital, to take weight off and keep it off. [Exhibit F.] (8) Diets, diets, diets. Everyone's got a diet. There's the grapefruit diet-the Malibu diet-the lose-while-you-snooze-diet. But whatever I lose, I always gain right back. Isn't there a way to keep the weight off? Head ina NEW DIRECTION. Fad diets might take weight off, but they can't keep it off. The NEW DIRECTION Weight Loss Program is different. {Exhibit H.] (9) NEW DIRECTION is a total, step-by-step medical program that works with your mind as well as your body. Psychologists, physicians and dietitians counsel with you right here at our hospital to help you develop new habits for lasting weight control... . [Exhibit H.] PAR. 6. By and through the use of the statements referred to in paragraph five(A), above, and others of similar import and meaning not specifically set forth herein, respondent represents and has represented, directly or by implication, that the New Direction diet programs are safe. Respondent has failed to disclose that physician supervision is required to minimize the potential risk to patients of the development of health complications on very-low-calorie diets. In view of the representation that the New Direction program is safe, the disclosure as to the requirement for medical supervision is necessary. Therefore, in light of respondent's failure to disclose, said representation was and is misleading. ABBOTT LABORATORIES 589 586 Complaint PAR. 7. By and through the use of the statements referred to in paragraph five(B), above, and others of similar import and meaning not specifically set forth herein, respondent represents and has represented, directly or by implication, that: (A) The New Direction diet programs are successful long-term or permanent treatments for obesity; and (B) The typical New Direction patient is successful in maintaining achieved weight loss.

PAR. 8. By and through the statements and representations referred to in paragraphs five(B) and seven, above, respondent represents and has represented, directly or by implication, that at the time respondent made those representations, respondent possessed and relied upon a reasonable basis for those representations. PAR. 9. In truth and in fact, at the time respondent made the statements and representations referred to in paragraphs five(B) and seven, above, respondent did not possess and rely upon a reasonable basis for those representations. Therefore, the representation set forth in paragraph eight was and is false and misleading. PAR. 10. The dissemination of the aforesaid false and misleading representations constituted, and now constitutes, unfair or deceptive acts or practices in or affecting commerce, and false advertisements, in violation of Sections 5(a) and 12 of the Federal Trade Commission Act, 15 U.S.C. 45(a) and 52. Complaint 116 F.T.C.

EXHIBIT A perating efficiencies ‘and’ mortally. with ry approach that — Sand. no surprise costs. cludes nutrition education. behavior modfication-and exercise for lifeiong weight out «weighing: the’ evidence, We've put more control. yer is fexible and’ simple to run. + + into the NEW: DIRECTION System. SO your - The New DIRECTION System is backed hospital Can g get by more than 50 years.of experience: It : » was developed by Ross Laboratories — 3 a division of Abbott Laboratories — a leader in nutrition and health care.

The NEW DIRECTION System is safe:

Metabolic and clinical tests lore our of i it.

1] Beverage | “& Manual | [would hike more information about:

the New DIRECTION System for Lasting Weight Cortrei. _ Name ————— Tine direction system ‘2! asurd wec™ Hesputar Cas Seep Maite New Dire T:GN Center D438 Ross Laboratarces 625 Clevelana Avenue Columbus. Oho orcalt i6l4y 22 $1949 Rows Laonratones BuLsasG

orecticn.

EXHIBIT A ABBOTT LABORATORIES 591 586 Complaint EXHIBIT B direction.

system for lasting weight control ® For adults with at least 30 pounds to lose. e Using a very-low-calorie beverage, lose weight quickly and safely in a hospital-based program operated by our medical staff.

e Learn to stay slinumer for life: We'll help you learn to eat, think and exercise differently to keep extra weight off. fy \ e Head in a new direction: Call today for a free orientation session. | ' 1 wen eetlbastedal appa Bei aerate Complaint EXHIBIT C - PAGE 1 OF 5 C3442 B1l41111 “[fsau have mor, 2 wire ready to + in AuW vou -$0 pounds fur muhe sume fits cM ING e\ Jneut + New D1 EXHIBIT C — Page J of ABBOTT LABORATORIES 593 586 Complaint EXHIBIT C - PAGE 2 OF 5 17 ra It's a hospital-based. mec What 1S supervised program oF Lo Noy: weight loss and complete ine Ne W. tion to help you PY off. It emphasizes | Direction: control sathe:

‘alone. Altera System? Pe Ciihe cians. registered di nurses. behavior specialists — wer each phase Screening @ Thorough medica:

@ Cares and nuint psvcholo:

@ Possibly a 1, . Reducing Beverage.

of the US R minerals anc 2 @ Careful mi medical siaii EXHBIT C — Page 2c t Complaint EXHIBIT C - PAGE 3 oF 5 ™ Weekly educational and support sessions ®@ Nutntion education. behavior modification and changes in evervday activity habits to help you avoid regaining weight @ Structured exercise program encouraged Adaptng = @ Gradual rerum to eating regular foods § Practicing new food. eating and exercise habits W Weekly educauon-support sessions ® Medical monitoring by hospital “essionals Sustaining W Eating a balanced ciet of regular foods @ Weekly education-support! sessions ™ Fine-tuning new eat g ang exercise habits W Indivicual professional hep.

if necessary How long is the program? i Ll6F.T.C.

Many people lose 6 to 10 po the first week and 3 10 6 pounce:

the second week. much o water, During the Red MOSt participants lose 2 to + pounds per week, most oF result. People with } will have iow and people with high direct suc.

in weight-bearing aa POURS Depending on how much -s vou need ta lose. the Rex Phase may lasi 3 to 6m _ kes 3 weens fz} longer. Adapt We ask participants to Sustaining sessions ter.

6 months — preferab}v 2 vear— to sete into habits that weight off.

EXHIBIT C — Page 3 of § How much does tt cost? as no ABBOTT LABORATORIES Complaint EXHIBIT C - PAGE 4 OF 5 The cost of Screening depends on what your hospital charges for a complete physical exam with EKG, blood tests and urinalysis.

Screening also includes interviews with the behaviorist and dietitian.

After vou enroll, fees are base on the phase vou are in and are billed weekly or monthly. Total cost depends on how much weight you need to lose and how quickly you meet the goals vou set for yourseli.

Compare the cost of the program with what you spead aow for food, medical care for weightrelated conditions and higher-risk health insurance. When you deduct food costs (during Recucing) and anv reimbursement you may receive from your health insurance.

the net cost of (he program may be small.

If vou have a weight-retfatec health condition. insurance may pay for part or all of Screening ane medical monitoring anc some other costs. too. Much of each insurance claim form is filled out What if [ have Changes I'll control? by the New Direction computer.

often resulting in quicker reimbursement.

Since we are part of a hospital system, help is just moments 34 Many probiems can be solvec ir.

weekly education-suppcri sessions. For those that can’t the professional staff is availacis for individual counseling. And remember. we ask for av 6-month commitinent (0 ine and overcome difficult srooiem:

for lasting weight coniza! EXHIBIT C — Page 4 of £ Complaint EXHIBIT C - PAGE 5 OF 5 “The New Direction Ssstem offers ivus 2oproach to al. [tis not an intensive. set ¢ wetgbt loss and a quick Av or am cass any “It works. with sour Aeip.

“TP suu're regas 3 dul time, money ane effort into a te deo call sour New Direction Aespital for more infarmacen.”

BCSS Laecaa-sses I= ‘Tr you're ready...”

itMler vou, MUSA EXHIBIT C — Page 5 of 5 ABBOTT LABORATORIES 597 586 Complaint EXHIBIT D ——— C3442 1ev =—— Bl41ll1l cIrecion.

NOTE: Use this prepared newspaper ad sick fo MPa ig’ § rolumr ae space Free orientaticn session £000) 000-0000 Hoesosai (ogo anc accress go here.

io e—— direction.

prvi for arung erst st 100s.

EXHIBIT D Complaint 116 F.T.C.

EXHIBIT E C3442 B1l41111 Lose weight quickly, y afely, and permanently Feel good about you! If you have 40 lbs. or more to lose and are serious about losing weight, has the weight loss program for you.

New Direction combines rapid weight loss with ~) counseiing and classes on nutrition and exercise for permanent weight loss. Participants are under the care of a physician, a psychologist, nurses, registered dietitian, and exercise physiologists.

fora free information session, and Head ina New Direction EXHS.T E ABBOTT LABORATORIES 599 586 Complaint EXHIBIT F Booth-read radio The following are two 60-second radio commercial commercial scripts scripts, entitled Diet Vet and Diet Man. #1-DietVet WOMAN: You name the diet-I've tried it. They all start out the same. First come the promises-the enthusiasm-the hunger-finally: the panic! And I gain back everything I've lost. How can I take control? ANN?*: Head in a NEW DIRECTION. After do-it-yourself diets you gain back all the weight you lost. But the NEW DIRECTION Weight Loss Program is different.

WOMAN: | That's what they all say.

ANN: Our NEW DIRECTION program has physicians, psychologists and dietitians working with you right here at our hospital, to take weight off and keep it off.

WOMAN: _I won't gain it back? ANN: With NEW DIRECTION, losing weight is medically supervised, safe and long-lasting. Break the cycle. And head in a NEW DIRECTION.

WOMAN: NEW DIRECTION is different. I'm losing weight. I'm keeping it off. I'm holding my own.

ANN: The NEW DIRECTION Weight Loss Program. Only at (NAME OF HOSPITAL). Call 000-0000. That's 000-0000. ©1987 ROSS LABORATORIES * ANN=Announcer Advertising Manual Complaint 116 F.T.C.

EXHIBIT G What Have You Got To Lose? If you’re more than 30 pounds over Tuesday, January 13 your recommended weight, you’ve 7:00 p.m. got a lot to lose. The New Direction Weight Management Program is Hospital medically supervised and safe. Come Speaker-Nutritionist and learn more about this proven Free of Charge. technique for lifelong weight loss. Call for registration or information EXHIBIT H #2 DietMan MAN: Diets, diets, diets. Everyone's got a diet. There's the grapefruit dietthe Malibu diet-the lose-while-you-snooze diet. But whatever I lose, I always gain right back. Isn't there a way to keep the weight off? ANN*: Head ina NEW DIRECTION. Fad diets might take weight off, but they can't keep it off. The NEW DIRECTION Weight Loss Program is different.

MAN: Oh, sure it is.

ANN: NEW DIRECTION is a total step-by-step medical program that works with your mind as well as your body. Psychologists, physicians and dietitians counsel with you right here at our hospital to help you develop new habits for lasting weight control. MAN: I won't gain the weight back? ANN: With NEW DIRECTION, losing weight can be for life. Break the cycle. And head ina NEW DIRECTION.

MAN: NEW DIRECTION is different. I'm losing weight. I'm keeping it off. I'm in control.

ANN: The NEW DIRECTION Weight Loss Program. Only at (NAME OF HOSPITAL). Call 000-0000. That's 000-0000. ©1987 ROSS LABORATORIES * ANN=Announcer Adveritsing Manual ABBOTT LABORATORIES 601 586 Decision and Order DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft of complaint which the Cleveland Regional Office proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act; and The respondent, its attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission's Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondent has violated the said Act, and that Complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such Agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order: 1. Respondent Abbott Laboratories is an Illinois corporation, with its offices and principal place of business at One Abbott Park Road, Abbott Park, Illinois.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

Decision and Order 116 F.T.C.

ORDER DEFINITITIONS (1) For purposes of this order, competent5 1 4 1 1 8 1548 825 74 36 96.973419 ands 1 4 1 1 9 1634 826 148 35 96.519470 reliable5 1 4 1 1 10 1795 827 175 45 97.008591 scientific4 1 4 1 2 0 648 881 1322 49 -1 5 1 4 1 2 1 648 881 188 34 95.925354 evidence means those tests, analyses, research, studies, surveys or other evidence conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the relevant profession or science to yield accurate and reliable results.

(2) Very-low-calories 1 4 2 1 3 1182 1175 91 34 88.525040 diet or VLCD means any dietary regimen that provides 800 calories per day (K cal/day) or less. I.

It is ordered, That respondent Abbott Laboratories, a corporation, its successors and assigns, officers, representatives, agents and employees, directly or through any corporation, subsidiary, division or other device in connection with the advertising, promotion, offering for sale or sale of any weight loss or weight control product, program or service, in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

(A) Making any representation, directly or by implication, regarding the safety of any very-low-calorie diet (‘“WLCD”’) program, unless respondent clearly and prominently discloses, in close proximity to any ‘such representation, that physician monitoring is required to minimize the potential for health risks, or otherwise misrepresenting any health risk of the program. (B) Misrepresenting the likelihood that patients of respondent's diet program(s) will regain all or any portion of lost weight. (C) Making any representation, directly or by implication, about the success of patients on any diet program in achieving or maintaining weight loss or weight control unless, at the time of making such representation, respondent possesses and relies upon a ABBOTT LABORATORIES 603 586 Decision and Order reasonable basis consisting of competent and reliable scientific evidence substantiating the representation; provided, however, that for any representation that:

(1) Any weight loss achieved or maintained through any diet program is typical or representative of all or any subset of patients using the program, said evidence shall, at a minimum, be based on a representative sample of:

(a) All patients who have entered the program, where the representation relates to such persons; or (b) All patients who have completed a particular phase of the program or the entire program, where the representation only relates to such persons; and (2) Any weight loss is maintained long-term, said evidence shall, at a minimum, be based upon the experience of patients who were followed for a period of at least two years after completion of respondent's program (including any periods of participation in active maintenance); and (3) Any weight loss is maintained permanently, said evidence shall, at a minimum, be based upon the experience of patients who were followed for a period of time after completing the program that is either:

(a) Generally recognized by experts in the field of treating obesity as being of sufficient length to constitute a reasonable basis for predicting that weight loss will be permanent; or (b) Demonstrated by competent and reliable survey evidence as being of sufficient duration to permit such a prediction. (D) Representing, directly or by implication, that any patients of any diet program have successfully maintained weight loss, unless respondent discloses, clearly and prominently and in close proximity to such representation:

Decision and Order 116 F.T.C.

(1) The following information:

(a) The average percentage of weight loss maintained by those patients;

(b) The duration over which the weight loss was maintained, measured from the date that patients ended the active weight loss phase of the program; provided, however, that if any portion of the time period covered includes participation in respondent's maintenance program(s) that follows active weight loss, such fact must also be disclosed; and (c) If the patient population referred to is not representative of the general patient population for that program, the proportion of the total patient population in respondent's programs that those patients represent, expressed in terms of a percentage or actual numbers of patients, or the statement, News 1 4 3 5 6 1288 1416 183 35 95.950661 Directions 1 4 3 5 7 1487 1417 123 35 96.600311 makes5 1 4 3 5 8 1626 1428 47 24 96.640129 no5 1 4 3 5 9 1688 1417 108 35 95.407768 claims 1 4 3 5 10 1812 1417 71 35 96.775200 that5 1 4 3 5 11 1899 1417 68 35 96.535568 this4 1 4 3 6 0 650 1474 1317 47 -1 5 1 4 3 6 1 650 1475 127 42 93.294273 [these]5 1 4 3 6 2 800 1474 156 43 92.706291 result[s]5 1 4 3 6 3 980 1474 29 35 96.937767 is5 1 4 3 6 4 1034 1475 86 42 96.834755 [are]5 1 4 3 6 5 1143 1475 277 45 96.666801 representatives 1 4 3 6 6 1441 1475 42 35 96.569489 of5 1 4 3 6 7 1501 1476 45 34 96.742470 all5 1 4 3 6 8 1568 1476 151 45 96.343773 patients5 1 4 3 6 9 1741 1476 35 34 96.489746 in5 1 4 3 6 10 1798 1476 58 35 96.439255 thes 1 4 3 6 11 1876 1476 91 34 96.861389 New4 1 4 3 7 0 647 1533 483 45 -1 5 1 4 3 7 1 647 1533 184 34 92.818306 Directions 1 4 3 7 2 847 1533 196 45 89.143745 program; and (2) The statement:

For5 1 5 1 2 2 822 1775 106 34 96.565041 many5 1 5 1 2 3 943 1764 141 40 96.565041 dieters,5 1 5 1 2 4 1102 1764 133 45 96.305397 weights 1 5 1 2 5 1250 1764 73 35 96.296288 loss5 1 5 1 2 6 1339 1764 30 35 93.012169 is5 1 5 1 2 7 1386 1765 232 44 86.533257 temporary; provided, however, that respondent shall not represent, directly or by implication, that the above-quoted statement does not apply to dieters in respondent's diet program.

II.

It is further ordered, That respondent shall notify the Commission at least thirty (30) days prior to the effective date of any proposed change in the corporate respondent, such as dissolution, assignment or sale resulting in the emergence of a successor corporation(s), the creation or dissolution of subsidiaries, the filing of a bankruptcy petition or any other change in the corporation(s) that may affect compliance obligations arising out of this order. ABBOTT LABORATORIES 605 586 Decision and Order Il.

It is further ordered, That respondent shall maintain for a period of three (3) years after the date on which the representation was last made, and make available to the Federal Trade Commission staff upon request for inspection and copying, all materials possessed and relied upon to substantiate any claim or representation covered by this order, and all test reports, studies, surveys or information in its possession or control and which, to its knowledge, contradict, qualify or call into question any such claim or representation. IV.

It is further ordered, That respondent and its successors or assigns shall forthwith distribute a copy of this order to each of its officers, agents, representatives, independent contractors and employees, including participating hospitals or clinics, that are engaged in the preparation and placement of advertisements or promotional materials, who communicate with patients or prospective patients, or who have any responsibilities with respect to the subject matter of this order; and, for a period of ten (10) years from the date of entry of this order, distribute same to all of respondent's future officers, agents, representatives, independent contractors and employees having said responsibilities. Provided, however, that nothing in this order shall obligate respondent with respect to advertising or promotional materials of participating physicians, hospitals and clinics that are neither owned, operated nor controlled by respondent when said advertising is not prepared, approved or placed by respondent.

V.

It is further ordered, That respondent and its successors and assigns shall, within sixty (60) days after service of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this order. Commissioner Owen dissenting with respect to the numerical disclosure requirements for short radio and television advertisements.

Complaint 116 F.T.C.