Nbty, Inc.

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

IN THE MATTER OF NBTY, INC., NATURESMART LLC, AND REXALL SUNDOWN, INC.

CONSENT ORDER, ETC., INREGARD TO ALLEGED VIOLATIONS OF SEC. 5(A) AND SEC. 12 OF THE FEDERAL TRADE COMMISSION ACT Docket No. C-4318; File No. 102 3080 Filed March 22, 2011 — Decision March 22, 2011 This consent order relates to the advertising and promotion of the Disney/Marvel line of children’s multivitamin and mineral dietary supplements (“Vitamin Products”). According to the complaint, NBTY, Inc., NatureSmart LLC, and Rexall (collectively “Respondents”) misrepresented the amount of Omega-3 fatty acids contained in the Vitamin Products in their advertisements. The complaint also alleges that Respondents falsely represented that a daily serving of the Vitamin Products promoted healthy brain and eye development in children over two years of age. The consent order requires Respondents to pay $2,100,000 in consumer redress and prohibits Respondents from misrepresenting any ingredients or the amount of its ingredients. The order further prohibits Respondents from making any false or misleading representations in advertising about the health benefits, performance, or efficacy of any product, or from making representations regarding any products without competent and reliable scientific evidence. Participants For the Commission: Devin Domond, Heather Hippsley, and Andrew Wone.

For the Respondents: John Fledler, Hyman, Phelps & McNamara, P.C.

COMPLAINT The Federal Trade Commission, having reason to believe that NBTY, Inc., NatureSmart LLC, and Rexall Sundown, Inc. (collectively “respondents”) have violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges: VOLUME 151 Complaint 1. Respondent NBTY, Inc. (“NBTY”) is a _ Delaware corporation with its principal place of business at 2100 Smithtown Ave., Ronkonkoma, New York 11779.

2. Respondent NatureSmart LLC (‘“NatureSmart”) is a Colorado limited liability company with its principal place of business at 2100 Smithtown Ave., Ronkonkoma, New York 11779. Respondent NatureSmart is a wholly owned subsidiary of NBTY. 3. Respondent Rexall Sundown, Inc. (“Rexall Sundown’), also doing business as Sundown, Inc., is a Florida corporation with its principal place of business at 2100 Smithtown Ave., Ronkonkoma, New York 11779. Respondent Rexall Sundown is an indirectly wholly owned subsidiary of NBTY.

4. Respondent NBTY has manufactured and, together with Respondent NatureSmart, has advertised, marketed, distributed, or sold, throughout the United States, a children’s multivitamin and mineral chewable tablet product called Disney Princess Complete and the following children’s multivitamin and mineral gummy products: 1) Disney Princess Gummies; 2) Disney Pixar Cars Gummies; 3) Disney Winnie the Pooh Gummies; 4) Disney Tigger & Pooh Gummies; 5) Disney Pixar Finding Nemo Gummies; 6) Disney Pixar Wall-E Gummies; and 7) Disney Pixar Toy Story Gummies (the gummy vitamin products, collectively referred to as the “Disney Gummies”). According to the package directions for these products, they are intended for adults and children two years of age and older.

5. Respondent NBTY has manufactured and, together with Respondent Rexall Sundown, has advertised, marketed, distributed, or sold, throughout the United States, a children’s multivitamin and mineral chewable tablet product called Marvel Heroes Complete and a children’s multivitamin and mineral gummy product called Marvel Heroes Gummies. According to the package directions for these products, they are intended for adults and children two years of age and older.

NBTY, INC. 203 Complaint 6. Respondents have marketed the Disney Gummies and Marvel Heroes Gummies (collectively, the “Disney and Marvel Gummies’’) at a wide range of major retail stores, including, but not limited to, CVS Pharmacy, Wal-Mart, Target, Walgreens, Kroger, Kmart, Meyer, and Rite Aid. They have also marketed these products through online vendors, such as www.drugstore.com. 7. Respondents have marketed Disney Princess Complete and Marvel Heroes Complete tablets (collectively, the “Disney and Marvel Complete Tablets”) through various online vendors, such as www.drugstore.com.

8. The Disney and Marvel Gummies and the Disney and Marvel Complete Tablets (collectively, the “NBTY Products’) are either “foods” or “drugs” as defined in Section 15 of the FTC Act, 15 U.S.C. § 55.

9. Retail prices for the NBTY Products range from approximately $4.00 to $8.00 for a sixty-count bottle. 10. The acts and practices of respondents, as alleged herein, have been in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

11. Respondents have disseminated, or caused to be disseminated, advertisements for the NBTY Products, including, but not limited to, the attached Exhibits A through C. These advertisements contain the following statements and depictions, among others:

a. Print Advertisements: Text “with DHA*” in white font within a red starburst-shaped graphic appears above images of packages for various products. The asterisk refers to the following statement, which is situated at the bottom of these advertisements:

DHA is naturally found in the brain and the eyes. 100 mg promotes healthy brain and eye VOLUME 151 Complaint development. One serving provides 100 mcg of DHA.

(See, e.g., Exhibit A.) Product Packages and Labels for the Disney and Marvel Gummies: On the front panel is the text “with DHA*” in colored font within a graphic that corresponds to the theme of the children’s vitamin, such as a pink crystal heart for Disney Princess Gummies, an orange starfish for Disney Pixar Nemo Gummies, and a white spider web situated in front of an image of the Marvel Spider-Man super hero for Marvel Heroes Gummies. The asterisk refers to the following statement, which is displayed on the side panel of these packages: *DHA is naturally found in the brain and the eyes. 100 mg promotes healthy brain and eye development.** One serving provides 100 mcg of DHA.

(Exhibit B.) Product Packages and Labels for the Disney and Marvel Complete Tablets: On the front panel is the text “Plus DHA 100 mcg*” in colored font within a graphic that corresponds to the theme of the children’s vitamin, specifically, a pink crystal heart for Disney Princess Complete and a white spider web situated in front of an image of the Marvel Spider-Man super hero for Marvel Heroes Complete. The asterisk refers to the following statement, which is displayed on the side panel of these packages:

*DHA is naturally found in the brain and the eyes. 100 mg promotes healthy brain and eye development.** One tablet provides 100 mcg of DHA.

NBTY, INC. 205 Complaint (Exhibit C.) 12.A daily serving (1 tablet) of the Disney and Marvel Complete Tablets for children ages four years and older and a daily serving (2 gummies) of the Disney and Marvel Gummies contain 0.1 mg (100 mcg) of DHA (docosahexaenoic acid, a polyunsaturated Omega-3 fatty acid), which equals one thousandth of the 100 mg amount referred to in product advertising and packaging as promoting health benefits. The Disney and Marvel Complete Tablets contain 0.05 mg (50 mcg) of DHA per daily serving (‘4 tablet) for children two to four years of age, which equals five ten-thousandths of the 100 mg amount referred to in product advertising and packaging as promoting health benefits. 13. Through the means described in Paragraphs 11 and 12, respondents NBTY and NatureSmart have represented, expressly or by implication, that the Disney Gummies and Disney Princess Complete contain a significant amount of DHA. For example, they have represented, expressly or by implication, that these products contain an amount of DHA that is comparable to 100 mg of DHA. 14. Through the means described in Paragraphs 11 and 12, respondents NBTY and Rexall Sundown have represented, expressly or by implication, that Marvel Heroes Gummies and Marvel Heroes Complete contain a significant amount of DHA. For example, they have represented, expressly or by implication, that these products contain an amount of DHA that is comparable to 100 mg of DHA. 15. In truth and in fact, the NBTY Products contained neither a significant amount of DHA nor an amount comparable to 100 mg of DHA. Therefore, the representations set forth in Paragraphs 13 and 14 were false or misleading.

16. Through the means described in Paragraphs 11 and 12, respondents NBTY and NatureSmart have represented, expressly or by implication, that the DHA provided by a daily serving of Disney Princess Complete or the Disney Gummies promotes healthy brain and eye development in children two years of age and older. VOLUME 151 Complaint 17. Through the means described in Paragraphs 11 and 12, respondents NBTY and Rexall Sundown have represented, expressly or by implication, that the DHA provided by a daily serving of Marvel Heroes Complete or Marvel Heroes Gummies promotes healthy brain and eye development in children two years of age and older.

18. Through the means described in Paragraphs 11 and 12, respondents have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraphs 16 and 17 at the time the representations were made.

19. In truth and in fact, respondents did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraphs 16 and 17 at the time the representations were made. Therefore, the representation set forth in Paragraph 18 was false or misleading.

20. The acts and practices of respondents as alleged in this complaint constitute unfair or deceptive acts or practices, and the making of false advertisements, in or affecting commerce in violation of Sections 5(a) and 12 of the Federal Trade Commission Act.

THEREFORE, the Federal Trade Commission, this twentysecond day of March, 2011, has issued this complaint against respondents.

By the Commission.

NBTY, INC. 207 Decision and Order 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 of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge the 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 complaint, a statement that the signing of the agreement is for settlement purposes only and does not constitute an admission by the respondents that the law has been violated as alleged in such complaint, or that any of the facts as alleged in such complaint, other than jurisdictional facts, are true, 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 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 thirty (30) days for the receipt and consideration of public comments, and having duly considered the comments received from interested persons, now in further conformity with the procedure described in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission hereby issues its complaint, makes the following jurisdictional findings, and issues the following order: 1. Respondent NBTY, Inc. is a Delaware corporation with its principal place of business located at 2100 Smithtown Ave., Ronkonkoma, New York 11779.

2. Respondent NatureSmart LLC is a Colorado limited VOLUME 151 Decision and Order liability company with its principal place of business at 2100 Smithtown Ave., Ronkonkoma, New York 11779. Respondent Rexall Sundown, Inc., also doing business as Sundown, Inc., is a Florida corporation with its principal place of business at 2100 Smithtown Ave., Ronkonkoma, New York 11779.

The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents and this proceeding is in the public interest. ORDER DEFINITIONS For purposes of this order, the following definitions shall apply: 1.

Unless otherwise specified, “respondents” means NBTY, Inc., NatureSmart LLC, and Rexall Sundown, Inc., also doing business as Sundown, Inc., and their successors and assigns, and their officers, and each of the above’s agents, servants, representatives, and employees. The “NBTY Products” means, collectively, the children’s multivitamin and mineral chewable tablet products manufactured, promoted, advertised, distributed, and sold by respondents under the names Disney Princess Complete and Marvel Heroes Complete and the following children’s multivitamin and mineral gummy products: Disney Princess Gummies; Disney Pixar Cars Gummies; Disney Winnie the Pooh Gummies; Disney Tigger & Pooh Gummies; Disney Pixar Finding Nemo Gummies; Disney Pixar Wall-E Gummies; Disney Pixar Toy Story Gummies; and Marvel Heroes Gummies.

“Commerce” means as defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

NBTY, INC. 209 Decision and Order “Product” means any good that is offered for sale, sold or distributed to the public by respondents, their successors and assigns, under any brand name of respondents, their successors and assigns, or under the brand name of any third party. “Product” also means any product sold or distributed to the public by third parties under any brand name of respondents, or under private labeling agreements with respondents, their successors and assigns. “Product” shall include, but not be limited to, the NBTY Products.

“Food” and “drug” mean as defined in Section 15 of the FTC Act, 15 U.S.C. § 55.

“DHA” means docosahexaenoic acid, a polyunsaturated Omega-3 fatty acid.

The term “including” in this order means “including without limitation.”

The terms “and” and “or” in this order shall be construed conjunctively or disjunctively as necessary, to make the applicable phrase or sentence inclusive rather than exclusive.

IT IS ORDERED that respondents, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any Product, in or affecting commerce, shall not misrepresent, expressly or by implication, including through the use of a product name, endorsement, depiction, or illustration, that such Product contains a specific ingredient or a specific numerical amount of any ingredient. VOLUME 151 Decision and Order I.

IT IS FURTHER ORDERED that respondents, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any Product, in or affecting commerce, shall not make, expressly or by implication, including through the use of a product name, endorsement, depiction, or illustration, any representation about the health benefits, performance, or efficacy of any Product, including, but not limited to, representations that DHA or any other substantially similar ingredient in such Product promotes brain or eye health, unless the representation is nonmisleading, and, at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence that is sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true. For purposes of this Part, competent and reliable scientific evidence means tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.

iI.

IT IS FURTHER ORDERED that nothing in this order shall prohibit respondents from making any representation for: A. Any drug that is permitted in labeling for such drug under any tentative or final standard promulgated by the Food and Drug Administration, or under any new drug application approved by the Food and Drug Administration; and NBTY, INC. 211 Decision and Order Any product that is specifically permitted in labeling for such product by regulations promulgated by the Food and Drug Administration pursuant to the Nutrition Labeling and Education Act of 1990.

IV.

IT IS FURTHER ORDERED that within five (5) days from the date of service of this order, respondents, jointly and severally, shall pay to the Commission by electronic funds transfer the sum of two million, one hundred thousand dollars ($2,100,000) in accordance with instructions provided by the Commission. A.

In the event of default on any obligation to make payment under this order, interest, computed pursuant to 28 U.S.C. § 1961(a), shall accrue from the date of default to the date of payment. In the event such default continues for ten (10) calendar days beyond the date that payment is due, the entire amount shall immediately become due and payable. Respondents shall be jointly and severally liable for all payments required by this Subpart and any interest on such payments. All funds paid to the Commission pursuant to this order shall be deposited into an account administered by the Commission or its agents to be used for equitable relief, including, but not limited to, consumer redress, including restitution, and any attendant expenses for the administration of such equitable relief. In the event that direct redress to consumers (which shall be the first priority for dispersing the funds set forth above) is wholly or partially impracticable or funds remain after the redress to consumers is completed, the Commission may apply any remaining funds for such other equitable relief (including consumer information remedies) as it determines to be reasonably related to respondents’ practices alleged in the complaint. Any funds not used for such equitable relief shall be deposited in the United VOLUME 151 Decision and Order States Treasury as disgorgement. Respondents shall have no right to challenge the Commission’s choice of remedies under this Part. Respondents shall be notified as to how the funds are distributed, but shall have no right to contest the manner of distribution chosen by the Commission. No portion of any payment under this Part herein shall be deemed a payment of any fine, penalty, or punitive assessment.

C. Respondents relinquish all dominion, control, and title to the funds paid pursuant to this Part to the fullest extent permitted by law. Respondents shall make no claim to or demand for the return of the funds, directly or indirectly, through counsel or otherwise. In the event of bankruptcy of any respondent, respondents acknowledge that the funds paid are not part of the debtor’s estate, nor does the estate have any claim or interest therein. D. Respondents agree that the facts as alleged in the complaint filed in this action shall be taken as true without further proof in any bankruptcy case or subsequent civil litigation pursued by the Commission to enforce its rights to any payment under this Part, including, but not limited to, a nondischargeability complaint in any bankruptcy case.

E. Proceedings instituted under this Part are in addition to, and not in lieu of, any other civil or criminal remedies that may be provided by law, including any other proceedings the Commission may initiate to enforce this order.

V.

IT IS FURTHER ORDERED that respondents, and their successors and assigns, shall, for five (5) years after the last date of dissemination of any representation covered by this order, maintain and upon reasonable notice make available to the Federal Trade Commission for inspection and copying: NBTY, INC. 213 Decision and Order A. All advertisements and promotional materials containing the representation;

B. All materials that were relied upon in disseminating the representation; and C. All tests, reports, studies, surveys, demonstrations, or other evidence in their possession or control that contradict, qualify, or call into question the representation, or the basis relied upon for the representation, including complaints and_ other communications with consumers or with governmental or consumer protection organizations. VI.

IT IS FURTHER ORDERED that respondents, and their successors and assigns, shall deliver a copy of this order to all current and future principals, officers, directors, and other employees having more than a de minimis responsibility with respect to the subject matter of this order, and shall secure from each such person a signed and dated statement acknowledging receipt of the order. Respondents shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities.

VIL.

IT IS FURTHER ORDERED that each respondent, and its successors and assigns, shall notify the Commission at least thirty (30) days prior to any change in the corporation that may affect compliance obligations arising under this order, including, but not limited to, dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this order; the proposed filing or filing of a bankruptcy petition; or a change in the corporate VOLUME 151 Decision and Order name or address. Provided, however, that, with respect to any proposed change in the corporation about which respondents learn less than thirty (30) days prior to the date such action is to take place, each respondent, and its successors and assigns, shall notify the Commission as soon as is practicable after obtaining such knowledge. For the purposes of this order, respondents shall, unless otherwise directed by the Commission’s authorized representatives, send by overnight courier or U.S. Postal Express Mail all reports and notifications to the Commission that are required by this order to: Associate Director for Enforcement Bureau of Consumer Protection Federal Trade Commission 600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580 RE: In the Matter of NBTY, et al., FTC File No. 102 Provided that, in lieu of overnight courier, respondents may send such reports or notifications by first-class mail, but only if respondents contemporaneously send an electronic version of such report or notification to the Commission at [email protected]. VIII.

IT IS FURTHER ORDERED that respondents, and their successors and assigns, each shall, within sixty (60) days after service of this order, and, upon reasonable notice, 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 they have complied with this order. Within ten (10) days of receipt of written notice from a representative of the Commission, respondents shall submit additional true and accurate written reports. IX.

This order will terminate on March 22, 2031, 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 NBTY, INC. 215 Analysis to Aid Public Comment 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 had never been 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. By the Commission.

ANALYSIS OF PROPOSED CONSENT ORDER TO AID PUBLIC COMMENT The Federal Trade Commission (“FTC” or “Commission’’) has accepted, subject to final approval, an agreement containing a consent order from NBTY, Inc., NatureSmart LLC, and Rexall Sundown, Inc. (collectively, “Respondents”). VOLUME 151 Analysis to Aid Public Comment The proposed consent order has been placed on the public record for thirty (30) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement and take appropriate action or make final the agreement’s proposed order. This matter involves the advertising and promotion of the following products in Respondents’ Disney/Marvel line of children’s multivitamin and mineral dietary supplements: 1) Disney Princess Complete; 2) Disney Princess Gummies; 3) Disney Pixar Cars Gummies; 4) Disney Winnie the Pooh Gummies; 5) Disney Tigger & Pooh Gummies; 6) Disney Pixar Finding Nemo Gummies; 7) Disney Pixar Wall-E Gummies; 8) Disney Pixar Toy Story Gummies; 9) Marvel Heroes Complete; and 10) Marvel Heroes Gummies (collectively, the “NBTY Products”). According to the FTC complaint, Respondents represented, in advertisements, that the NBTY Products contained a significant amount of DHA (docosahexaenoic acid, a polyunsaturated Omega-3 fatty acid) or an amount comparable to 100 mg of DHA. The complaint alleges that this claim is false or misleading because, in fact, a daily serving of the NBTY products only contained either 0.1 mg of DHA (which is one thousandth of 100 mg) or 0.05 mg of DHA (which is five ten-thousandths of 100 mg). The Commission also charges that Respondents represented that the DHA provided by a daily serving of the NBTY Products promoted healthy brain and eye development in children two years of age and older. The FTC alleges that this claim is false or misleading because Respondents failed to have evidence to substantiate it.

The proposed consent order contains provisions designed to prevent Respondents from engaging in similar acts and practices in the future. Part I of the proposed order prohibits Respondents from NBTY, INC. 217 Analysis to Aid Public Comment misrepresenting that any product contains a specific ingredient or specific numerical amount of any ingredient. Part Il of the proposed order prohibits Respondents from making any representations in advertising for any product about the health benefits, performance, or efficacy of the product, unless the representation is true and non-misleading. In addition, Respondents must possess competent and reliable scientific evidence sufficient in quality and quantity, when considered in light of the entire body of relevant and reliable scientific evidence, to support such claims as true.

Part II of the proposed order states that the order does not prohibit Respondents from making representations for any drug that are permitted in labeling for that drug under any tentative or final standard promulgated by the FDA, or under any new drug application approved by the FDA. This part of the proposed order also states that the order does not prohibit Respondents from making representations for any product that are specifically permitted in labeling for that product by regulations issued by the FDA under the Nutrition Labeling and Education Act of 1990. Part IV of the proposed order requires Respondents to pay two million, one hundred thousand dollars ($2,100,000) to the Commission to be used for equitable relief, including restitution, consumer redress, and any attendant expenses for the administration of such equitable relief.

Parts V through VIII of the proposed order require Respondents to keep copies of relevant advertisements and materials substantiating claims made in the advertisements; to provide copies of the order to certain personnel; to notify the Commission of changes in corporate structure that might affect compliance obligations under the order; and to file compliance reports with the Commission. Part IX provides that the order will terminate after twenty (20) years, with certain exceptions. VOLUME 151 Analysis to Aid Public Comment 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 their terms in any way.

UNIVERSAL HEALTH SERVICES, INC. 219 Complaint