Hi-Tech Pharmaceuticals Wins $40 Million Appeal Against FTC
NORCROSS, Ga., May 7, 2015 /PRNewswire/ -- Hi-Tech Pharmaceuticals was successful in their appeal against the FTC to overturn a $40 million verdict wrongfully handed down last year for not having double-blind placebo tests to substantiate advertising. A federal appeals court threw out a judge's ruling that required Hi-Tech and its CEO, Jared Wheat, to pay $40 million for making claims such as fat burner and general structure/function claims allowed by the FDA. In wiping out the judgment, the 11th Circuit Court of Appeals granted Hi-Tech Pharmaceuticals Inc. a rare win in a civil court battle with the Federal Trade Commission. The $40 million FTC verdict -- one of the largest obtained by the FTC against a supplement manufacturer -- until the appeals court ruling has caused concern amongst the industry that the FTC was trying to force this double-blind, placebo clinical trial standard on the entire supplement industry. The FTC has been trying to change the law through consent decrees and threats of massive judgments of 100% of revenue if a firm like Hi-Tech challenges them in court. This type of punitive sanction is not for consumer redress but for padding the government's coffers.
The 11th circuit ruled that the federal judge didn't let Hi-Tech present the evidence they had to support their weight loss claims, including "several expert declaration that the representations were substantiated by 'competent and reliable scientific evidence,'" according to the Eleventh Circuit. The judge ruled early on in the litigation that Hi-Tech did not have double-blind, placebo trials to substantiate its advertising claims like "metabolic aid or thermogenic" and -- only a Pharmaceutical Phase 1 clinical trial would do -- which is estimated at more than $200 million for a weight loss product.
"This is a clean slate for the company," said Atlanta King & Spalding attorney Merritt E. McAlister, who argued the case for Hi-Tech. The 11th Circuit Court of Appeals decision was the latest twist in a case in which the FTC has sought to penalize Wheat and Hi-Tech for making general representations about their weight-loss products that are either puffery or structure/function claims allowable under FDA dietary supplement laws. Bayer Corp. has found itself in a heated battle with FTC as well over advertising claims for its Phillips' Colon Health probiotic supplement product. The industry has a keen interest in the outcome of the Hi-Tech and Bayer cases because the industry's long-standing reliance on a flexible advertising substantiation standard articulated by FTC could be adversely impacted.
FTC previously stated, there is no fixed formula for the number or type of studies required, nor is there guidance on specific parameters for studies including sample size or study duration. However, FTC has recently tried to redefined its position on "competent and reliable scientific evidence" through a series of consent decrees with dietary supplement companies like Iovate Health Sciences U.S.A. where they agreed that weight loss claims for Iovate must be substantiated by competent and reliable scientific evidence in the form of at least two randomized, double blind, placebo-controlled clinical trials (RCTs) that have been conducted by "different research independently of each other" and are consistent with the totality of evidence available. This goes against their own published advertising guidelines and decades of case law. Hi-Tech continues to oppose the government's view, asserting that not only are its claims substantiated by competent and reliable scientific evidence, but FTC also seeks to impose an erroneous substantiation standard for dietary supplements.
Enforcement of the more rigid standard by FTC against Bayer has drawn considerable backlash from the dietary supplement industry. Industry trade groups such as the Council for Responsible Nutrition (CRN) and Natural Products Association (NPA) who voiced their displeasure with FTC's imposition of a drug-based level of evidence standard for non-pharmaceutical products. CRN stated it was deeply troubled by the FTC's recent action against Bayer, and filed an Amicus Brief arguing that by specifically requiring multiple RCTs in humans, FTC is invoking "a rigid standard for the substantiation of non-disease claims made about dietary supplements that is a significant departure from the current well-established, consistent and flexible federal regulatory regime, upon which the entire dietary supplement industry has long relied." NPA also voiced its displeasure with FTC's actions against Bayer in its own Amicus Brief, noting, "there is no legal basis at present for the government to require one or multiple RCTs as the only accepted form of evidence for claim substantiation."
Hi-Tech also is disappointed with news media organizations like MSNBC who only tell one side of a story. On September 4, 2014, the news organization MSNBC irresponsibly and inaccurately reported that Hi-Tech Pharmaceuticals, Inc. (Hi-Tech) engaged in false advertising. It is Hi-Tech's position that these recent, highly reckless, false allegations are an attempt by the media to only tell one side of the story. Now that the 11th circuit has ruled -- Hi-Tech has only gotten scarce coverage versus the media frenzy that went on during all the sensationalism garnered by the media's quest to paint a negative picture of Hi-Tech.
While Hi-Tech to this point has taken the high road and tried diligently to wait and let this case be tried in the courthouse and the appeals court, Jared Wheat and the company can simply no longer sit back and let the government's ongoing media blitz go without at least a minimal response. It is Hi-Tech's resounding stance that the slanderous, sensationalized statements made by FTC prosecutors, which continue to be maliciously repeated in the media, have been submitted with complete disregard for the truth. Further, that these statements were designed to tarnish Hi-Tech's reputation in the industry in order to cripple the company's financial resources needed for a righteous defense. Hi-Tech and Jared Wheat cannot sit back, while being skewered by the FTC through the media, and not respond in some fashion. This response, of necessity, has been limited, but fairness dictates that at least part of Hi-Tech's side of the story be presented.
Hi-Tech states that it shall remain steadfast in defending its good name and reputation and will aggressively continue to fight any similar vindictive and overzealous prosecution in the future if they ever arise. Hi-Tech stands behind the safety and efficacy of its products and has maintained an extremely favorable working relationship with the FDA, its lawyers, and the Department of Justice (DOJ) in Washington over the past several years. When Hi-Tech and the FDA agreed to disagree over the issue of ephedra in 2004-2006 or DMAA in 2013, Hi-Tech and FDA litigated in a professional manner without malice or utter disregard for due process. When FTC prosecutors litigated against Hi-Tech they did so in a mean-spirited way with the purpose to put Hi-Tech and its employees out of business.
Every batch of Hi-Tech's products are subject to up to 20 tests for safety and purity. Contrary to the FTC's inaccurate description of Hi-Tech, Hi-Tech is an established and well-respected manufacturer and distributor of dietary supplements. "Innocent Until Proven Guilty" -- While this statement is enshrined in various government law books, we can easily see that even the government agencies like the FTC do not follow this practice. In the end, the statements "innocent until proven guilty" remains a farce -- a lie that the FTC tells the public to make its prosecutions appear "just". However, "Justice without due process is no justice at all." Apart from the fact that no due process was needed by the FTC to hold Hi-Tech CEO, Jared Wheat, and Senior Vice President, Steve Smith, imprisoned for 63 days for using the terms "thermogenic" and "fat burner" to market its products. Now that the 11th Circuit has found the FTC's stance and the Judge's ruling an abuse of discretion, how do Hi-Tech's executives get their times back? Which brings Hi-Tech to its criticism of mob justice, which incidentally is also its criticism of the FTC's version of justice, that no one from the mob is ready to take private responsibility for the wrongs done to Hi-Tech's reputation or loss of liberty for its executives.
Hi-Tech is asking the public not to judge a book by its cover, especially when that cover is a one-sided presentation, and to be mindful that everyone is innocent until proven guilty. Hi-Tech has suffered irreparable harm due to these "rush to judgment," twisted allegations, which the government has designed to "poison the well," and Hi-Tech will continue to suffer irreparable harm until the media gives Hi-Tech equal "air time" after it has been vindicated not by some technicality, but by an abuse of discretion on the part of the FTC and the Court.
The 11th circuit ruled "A district court abuses its discretion if it applies an incorrect legal standard, applies the law in an unreasonable or incorrect manner, follows improper procedures in making a determination, or makes findings of fact that are clearly erroneous." The district court abused its discretion when it held Hi-Tech and its executives in contempt. Hi-Tech is happy to put this chapter of its corporate history behind us and continue to provide our consumers the dietary supplements they want and help them achieve their health goals.
About Hi-Tech Pharmaceuticals
Hi-Tech Pharmaceuticals (https://www.hitechpharma.com/) is a leading global dietary supplement manufacturer that develops, manufactures and distributes supplements and over-the-counter (OTC) and prescription pharmaceuticals, and other nutritional products. Hi-Tech Pharmaceuticals is one of the world's leading branded and "private label" dietary supplement companies and generic pharmaceutical companies, providing products to customers throughout the world. The company maintains one of the industry's broadest and highest quality product portfolios, which is regularly bolstered by an innovative and robust product pipeline. The company ranks among the top dietary supplement companies and generic pharmaceutical companies in several markets around the world and has among the largest capacity of U.S.-based manufacturers.
Hi-Tech Pharmaceuticals has impressive capabilities to supply the global demand of pharmaceuticals. On an annual basis, Hi-Tech Pharmaceuticals can manufacture 35 billion tablets and 10 billion capsules. Hi-Tech Pharmaceuticals can also package 500 million bottles, 250 million blister packs, and 150 million pacquettes. Hi-Tech Pharmaceuticals is an enormously successful company that creates, manufactures and sells high-quality products sold by the large, major retailers across the United States. These retailers include: GNC, Rite Aid, Albertson's, CVS, Hannaford, Cardinal Health, McKesson, Mclain, Harmon Stores, Winn-Dixie, Fred Meyer, Osco Drugs, Supervalu, Roundy's, Sav-On Drugs, Meijer, Fruth Pharmacy, Kinney Drug, Kinray, A&P, Kmart, Amazon.com, and over 5,000 independent drug stores, as well as in more than 80,000 convenience stores throughout the United States.
SOURCE Hi-Tech Pharmaceuticals, Inc.