Ahc Pharmacal, Inc

Text (OCR of the scan at left; may contain errors)

IN THE MATIER OF AHC PHARMACAL, INC., ET AI..

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SECS. 5 AND 12 OF THE FEDERAL TRADE COMMISSION ACT Aprl 28; 1980 Dockd C-3017. Complaint, Aprl 1980 Decis This consent order requires, among other things, a Miami, Fla. finn and its corporate president, engaged in the marketing and advertising of health relate products to cease disseminating advertisements which represent that the use of AHC Gel or any similar preparation, alone or as part of an acne control regimen, cures acne and results in a blemish-free skin; or that any such preparation is superior to other over-the-cunter acne products. Respondents are required to have a reasonable basis for advertising representations relating to product performance, efficay and results and prohibited from misrepresnting the extent or results of product testing. Respondents are further prohibited from disseminating advertisement.,; for acne products without first disseminating prescribed corrective advertising as specified in the order. Additionally, ad substantiation must be maintained for a period of three years. Appearances For the Commission: Steven Newbo.

For the respondents: Pro se.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it hy said Act, the Federal Trade Commission having reason to believe that AHC Pharmacal, Inc. (hereinafter "AHC Pharmacal"), a corporation, and James E. Fulton D. (hereinafter "Fulton ), as an individual and corporate officer hereinafter at times referred to as respondents, having violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. "AHC Pharmacal" is a corporation organized, existing end doing business under and by virtue of the laws of the State of florida with its office and principal place of business located at 1609 LW. 14th St., Miami, Florida.

PAR. 2. "Fulton" is an individual and corporate president of "AHC mrmacal." He formulates, directs and controls the acts and practices AHC Pharmacal " including the acts and practices described AHC PHARMACAL, INC., ET AL. 529 528 Complaint herein, and he is the principal beneficiary of the corporation s business. Fulton " business address is 1609 N.W. 14th St., Miami, Florida. PAR. 3. Respondent "AHC Pharmacal" is a privately held corporation which was organized and is maintained for the purpose of promoting and conducting the business interests of "Fulton. AHC Pharmacal" and "Fulton" have been and now are marketing and advertising health related products, including but not limited to a product variously known as AHC Gel, AHC Pharmacal's benzoyl peroxide gel medication and b.p. gcl medication (hereinafter "AHC Gel"), a product advertised for the treatment of acne. The respondents, in connection with the manufacture and marketing of said product, have disseminated published and distributed, and now disseminate, publish and distribute advertisements and promotional material for the purpose of promoting the sale of "AHC Gel" for human use. "AHC Gel" is marketed hy the respondents, both separately and as part of a program for the treatment of acne known as "Dr. Fulton s Acne Control Regimen (hereinafter "the Acne Control Regimen ). This product, "" advertised is a "drug" within the meaning of Section 12 of the Federal Trade Commission Act.

PAR. 4. In the course and conduct of their said businesses, the respondents have disseminated and caused the dissemination of certain advertisements concerning "AHC Gel" and "the Acne Control Regimen" through the United States mail and by various means in or affecting commerce, as Hcommerce" is defined in the Federal Trade Commission Act, including, but not limited to, the insertion of advertisements in magazines with national circulations, and advertisements in the form of a booklet, entitled "Acne: A Treatable Disease which was, and is, sent through the United States mail, for the purpose of inducing and which was likely to induce, directly or indirectly, the purchase of the product "AHC Gel " and have disseminated and caused the dissemination of advertisements concerning said product by various means, including but not limited to the aforesaid media, for the purpose of inducing and which are likely to induce, directly or indirectly, the purchase of said products in commerce. PAR. 5. Typical of the statements and representations in said advertisements disseminated as previously described, but not necessarily inclusive thereof, are the following:

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528 Complaint lQ)JT(G mff 1l1f CCNlE JFn1i COVIEn:

:er : that- offers young adults their jirst real . hope for clear cornpl xlon5.

lle_".rl d.I ,.t e" 11"r, p,yll1'''gl'orn(''81 ''';b.oIoLI .;, '0 x.ray \r"'m n lJllr.",olei hli"\ No\I1"'Q "",,,...(1 I became "Dr1m I(\lo9'S! In(!PI1 D . '" (I'OC,"""H\Iry \"'" ."..mpl '01",(1 8 lJ'P lor C"e 1IIIe' S" HI yP", oj f rcl1. I di'co...r..tlll 10P,(H d., ' 9 , 8 lapical meO'C..lion 11'81 hn '''VO!ut.o".,..O Lhe I'ulm..'"r ;. ""clconl'QIQIa,cne S,,,,,, 1973 , m,' Arn 'e n'p" "Qh""'I V""M 131"0" a"e 1'"'Nj ""' .,llho.,."", 01 .en" .u,, ,..,. """II"' o""'oyl pe,o"cj" m.",,,:;alo". lh ,...,n." ...' 85"". "10,,, P.' \'''f11 (..,e" thecY",e v."livi ,hO" O'.m.',e "Tpra .,,"1 , w"h." '9hl ..e..

, MU"!Dr1L"'3Iely, d,"'c'C."O"IYI'''.'.'.'Y"".lIpocH't_o- of lho,e that really "..d h '" a""llo'llo 'eM" I"" m"". ..e".. ." ,,.,, I ' A'p . i oil,,"9'"'''' '"I.\p ho, -... ab"lll fl..." p'(1 '..m ",,(1 .' J coni\(IO,"lly (1",'1".,,,,,..,, t,y O. lh..-,"u"I.., ar" '..mpoJ'"s..n h.'. p ""'elo,""d ",,'V. tl"' ACHE: CONlf!OL REGIMEN 11 y,,. Are q'''en Ihl' DPf""r\UI1r1V In r Hh you. 'hI'.C, . ",lr '''' ",,'IV "''' . ,n mo,1 , lirr" Ihe ton- ,. I " . C'i;"n \In,1erco,,'cal a"!' ..I" \C Ihp 1X ,to""V af: rram W"" 1h: fHOll,"m ,1 OY.'1 . fit;l.lod..y If)10f01' 'h al, 1, . a(".. - ,,.! 10 ,..'ng t,nc"nl'O'I' ol ',y Acn.. " Ilh c O" doo' '."'10 Mw '''M'D '''Y O"O,",. . "I' "" ;, r m.C""'''''A..;n'.o""o".o""o,-",:o Be/ore almenl jfIJdJ;j) tf How Dr. Fulton s regimen" works . fJ r lie no 10 g,n.IOe. . J._. f/ . lien. " .1"Qo.d '"'''' ".-n "' r- N",m.II , DD. okl" c."" .'. -' u ,"."..." . u; ,Y; " I :.e': o ."dw.. ed.w. I ' fi81't dele I," J I . AHC PHARMAC" , INC. 1J51 N w. 16!11 SI :J I "jJ , Florrda JJ' , I "c: F'.. .,o1 - eO"'f',.16 1""9,.""'1 ", 0' ''''''" I lmn'clio 1".' ""CN(CO"7IIOlfHG. ",kil.k..d, bl.c'k " "I rN . wbic!'co"ld ' lul.., I! 'fip.'m' .fil.c."'n\l ....1'pu". '. I '-' I -;""".., lk H,e ...".c. 01 'h. ... I ""' : -.-....Go --... " c:01" I ; Spot'" '''.pl l L.' P"P".I'O tI mo.! o.o,-lh.'ro,, NI "' .,._O_ 1...1 1,.,, n,H r "'- :O :;v u 0,1 r ' tho 'ud.e :;;P . f"elo, b.. S119S (wl"Cr, ,ne!,,""" po.I.9" II .1'010 tU.rodl."," - .. i . Dt FuUon, I p' IICfi8w.er;""UOI fI.9,m . "tl".l!y P w.. '" c- ""cachp'a9,,,m)...o.- c ....eo.. Into \he M'""&ndl'.." !he \I I '" 0 el'eprobl.m ," Iwo I,.L.' .. - - I - 1(,llllho .. c_ C, n.' b.e'8'" I".I !ko U!""'fid .ct l.rol. WI1ft""109\1,nQ,"d\lCOp,oc.... ""IAlon\! :1 fledvc.. Ill. eok..;" ,"; callo. \k". d .d '''fiQ' J! - !Q(' delu"nQup.( e..e!""p.e''on..01 . . I 1H( flISUl1, II DDpO,""filry fio'" uIOI. 10' 1 8 .cn. "c"""- Ut- 'ul'..,., 10 !.nd .1t"' I,O ; ._n "' - . .:... :::.: impo.m.nl i -=- ,;.:ot J :'':':' Complaint 95 F.

PAR. 6. Through the use of said advertisements and others referred to in Paragraphs Four and Five, respondents represented, and now represent, directly or by implication that use of "AHC Gel " either alone or as part of "the Acne Control Regimen " wil cure acne regardless of the severity of the condition. PAR. 7. In truth and in fact, use of "AHC Gel " either alone or as part of "the Acne Control Regimen " wil not cure acne. Therefore, the advertisements referred to in Paragraphs Four and Five were and are misleading in material respects and constituted, and now constitute false advertisements, and the statement and representation set forth in Paragraph Five was, and is false, misleading and deceptive. PAR. 8. Furthermore, through the use of the advertisements referred to in Paragraphs Four and Five, respondents represented, and now represent that:

a. Use of "AHC Gel " either alone or as part of "the Acne Control Regimen " by persons with acne will result in skin free of pimples blackheads, whiteheads, other acne blemishes, and scarring. b. Use of "AHC Gel " either alone or as part of "the Acne Control Regimen " by persons with acne wil help control pimples, blackheads whiteheads, other acne blemishes, and scarring, regardless of the severity of the disease.

c. "AHC Gel " either alone or as part of "the Acne Control Regimen " is superior to all other over-the-counter acne preparations for the treatment of acne, including but not limited to other benzoyl peroxide products.

PAR. 9. In truth and in fact there existed at the time of the first dissemination of the representations referred to in Paragraph Eight no reasonable basis for the making of these representations, in that respondents lacked competent and reliable scientific evidence to support said representations. Therefore, the making and dissemination of said representations as alleged constituted, and now constitute unfair or deceptive acts or practices in or affecting commerce, PAR. 10. In the course and conduct its aforesaid business, and at all times mentioned herein, the respondents have been, and now are, in substantial competition in or affecting commerce with corporations firms and individuals representing or engaged in the over-the-counter and prescription drug industries.

PAR. 11. The use by respondents of the aforesaid unfair or deceptive representations and the dissemination of the aforesaid false advertisements has had, and now has, the capacity and tendency to mislead members of the consuming public into the erroneous and mistaken belief that said representations were and are true. AHC PHARMACAL, INC., ET AL.

528 Decision and Order PAR. 12. The aforesaid acts and practices of respondents, as herein alleged, including the dissemination of the aforesaid false advertisements, were and are all to the prejudice and injury of the public and of respondents' competitors, and constituted, and now constitute, unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, in violation of Sections 5 and 12 of the Federal Trade Commission Act. DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the bureau proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violations of the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of such agreement is for settlement purposes only and does not constitute an admission by respondents 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 respondents have 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 AHC Pharmacal, Inc. is a corporation organized existing and doing business under and by virtue of the laws of the State of Florida with its office and principal place of business located at 1609 N.W. 14th St., Miami, Florida.

2. Respondent James E. Fulton, M.D. is an individual and corporate officer of AHC Pharmacal, Inc. and maintains an office at I609 N. 14th St., Miami, Florida.

3. The Federal Trade Commission has jurisdiction of the subject Decision and Order 95 F.

matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered That respondents AHC Pharmacal, Inc., a corporation and James E. Fulton, individually and as a corporate officer, their successors and assigns, either jointly or individually, and the corporate respondent' s officers, agents, representatives, and employees, directly or through any corporation, division or other device, in connection with the advertising, offering for sale, sale or distribution of all products do forthwith cease and desist from:

A. Disseminating or causing the dissemination of any advertisements by means of the United States mail or by any means in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, which directly or indirectly: 1. Represents that use of a product variously known as AHC Gel AHC Pharmacal's benzoyl peroxide gel medication and b.p. gel medication (hereinafter "AHC Gel") either alone or as part of "Dr. ulton s Acne Control Regimen" (hereinafter "the Acne Control Regimen ) or any other acne product or regimen wil cure acne or any skin condition associated with acne, 2. Misrepresents the extent to which any product has been tested or the results of any such test(s).

B. Disseminating or causing the dissemination of any advertisement by means of the United States mail or by any means in or affecting commerce, as Ijcommerce" is defined in the Federal Trade Commission Act, which directly or indirectly: 1. Represents that use of "AHC Gel", either alone or as part of "the Acne Control Regimen, or use of any other acne product or regimen by persons with acne, wil result in skin free of pimples, blackheads whiteheads, other acne blemishes, or scarring; 2. Represents that "AHC Gel", either alone or as part of "the Acne Control Regimen, or any other acne product or regimen, is superior to other over-the-counter acne preparations for the treatment of acne including but not limited to other benzoyl peroxide products unless, at the time of each dissemination of such representation(s) respondents possess and rely upon competent and reliable scientific or medical evidence as a reasonable basis for such representation(s). Competent and reliable scientific or medical evidence" shall be ._, . . ... .. , ...u ,-u. LU. 528 Decision and Ordcr defined as evidence in the form of at least two well-controlled doubleblind clinical studies which are conducted by different persons independently of each other. Such persons shall be dermatologists who are qualified by scientific training and experience to treat acne and conduct the aforementioned studies.

C, Disseminating or causing the dissemination of any advertisement by means of the United States mail or by any means in or affecting commerce commerce" is defined in the Federal Trade Commission Act, which directly or indirectly makes representations referring or relating to the performance or efficacy of any product or refers or relates to any characteristic, property or result of the use of any product, unless, at the time of each dissemination of such representation(s) respondents possess and rely upon a reasonable basis for such representation(s).

It is further ordered That within sixty (60) days of the acceptance of this order, respondents shall cease and desist from disseminating or causing the dissemination of advertisements for "AHC Gel" the Acne Control Regimen, and/or any other acne product or regimen, unless respondents first disseminate corrective advertisements for the Acne Control Regimen (including AHC Gel) in Sunday newspaper supplements and on radio.

A. All such Sunday newspaper supplement corrective advertisements shall clearly and conspicuously disclose, in the headline with boldface type no smaller than 48 points (one-half inch) in height, that no product can cure acne." Nothing in the headline, or any part of the advertisement, shall in any way obscure or contradict the clear meaning of the disclosure. Furthermore, no language in said advertisement shall appear in a type size equal to or larger than the headline type size.

Said Sunday newspaper supplement corrective advertisements shall be disseminated in the following cities: Boston, MA; Atlanta, GA; Cleveland, OH; Philadelphia, P A; Pittsburgh, P A; and San Francisco CA. Respondents may substitute cities of reasonable demographic and geographic similarity, provided that said cities are substituted on a one-for-one basis. Said corrective advertisements shall be run at least one full-page advertisement per month for a time period of three consecutive months, provided that said advertisements shall not he disseminated during the months of June, July, or August. Respondents may elect to run two half-page corrective advertisements in the place of each and every full-page corrective advertise- Decision and Order 95 F.

ment to satisfy their corrective advertising obligations under this part of the order. Provided, Iwwe'ver that all such corrective advertisements must be run in different weekly issues of the aforementioned newspaper supplements for any given locale, and other requirements of this order (e. headline type size, dissemination schedule, etc.) are fully complied with.

B. All corrective advertisements which are required for dissemination by radio shall be at least thirty seconds in duration and shall begin with the unobscured announcement that "no product can cure acne, Nothing else in the advertisement shall in any way obscure contradict the clear meaning of this statement. Said radio corrective advertisements shall be disseminated as non-consecutive spots over major radio stations (as defined below) in the following urban areas: Chicago, II.; Los Angeles, CA; Miami, FL. Said radio corrective advertisements shall be disseminated at least twice each month during the same three months as the Sunday newspaper supplement corrcctive advertisements, referred to in HA, are disseminated, For purposes of this order a "major radio station" shall he defined as a radio station which (a) has a broadcast power of at least 6 00 watts horizontal and 6 000 watts vertical, and (b) is described in its own promotional materials as being targeted at teenagers or young adult audiences and/or primarily playing rock, disco or contemporary hit music, C. The obligation to run corrective advertisements shall not in any way alleviate other order obligations. Furthermore, such advertisements shall not represent, directly or indirectly, that the Federal Trade Commission approves, recommends or in any manner endorses the advertised product or product's advertising. It is jurtfwr ordered That respondents shall forthwith distribute a copy of this order to each of their operating divisions. It is jurtfwr ordered That each respondent 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. It is jurtfwr ordered That such respondent shall, within sixty (60) days after this order becomes final, and annually thereafter for three (3) years, file with the Commission a report, in writing, signed by AHC PHARMACAL, INC., ET AL. 537 528 Decision and Order respondent, setting forth in detail the manner and form of its compliance with this order.

It is further ordered That each respondent shall maintain files and records of all substantiation related to the requirements of Parts IE and IC of this order for a period of three (3) years after the dissemination of any advertisement which relates to that portion of the order. Additionally, such materials shall he made available to the Federal Trade Commission or its staff within fifteen (I5) days of a written request for such materials.

324-97\ 81- 35: QL3 538 FEDERAL TRADE- C01\MISSION DECISIONS Complaint 95 F.