In Defense of the Pfizer Factors

40 Pages Posted: 19 Jun 2012  

Howard Beales

George Washington University - School of Business

Timothy J. Muris

George Mason University School of Law

Robert Pitofsky

Georgetown University Law Center

Date Written: May 2012

Abstract

Since the Federal Trade Commission’s 1972 Pfizer decision, advertisers have been required to possess and rely on a “reasonable basis” for product claims. From its inception, the requirement was a flexible one, taking into account the costs and benefits of requiring additional substantiating evidence. In particular, the Commission has considered the relative costs of possible errors in setting the level of evidence, evaluating both the costs of mistakenly allowing false claims and the costs of mistakenly prohibiting truthful claims. In contrast to the FTC, the FDA applies a less flexible standard, often requiring elaborate scientific evidence before even non-drug products can make claims about health and nutrition benefits. In a notable clash between these conflicting approaches, the FTC, joined by the National Cancer Institute, overcame the FDA’s objections to Kellogg’s 1984 claims that diets high in fiber could reduce the risks of cancer. Despite previous bipartisan application of the substantiation doctrine, the current FTC is replacing its flexible standard with stringent evidentiary standards similar to those required for new drugs. This approach threatens to deny consumers the benefits of information that enhances the performance of product markets.

Keywords: acai berry products, Advertising Substantiation Policy Statement, Better Business Bureau, cancer, cereal, dietary supplements, education, false, fiber, Firestone, First Amendment, Food Drug Administration, free speech, George Stigler, labeling, Lanham Act, NCI, nutrition, public comment

JEL Classification: I18, K23, L65, L66, Q18

Suggested Citation

Beales, Howard and Muris, Timothy J. and Pitofsky, Robert, In Defense of the Pfizer Factors (May 2012). George Mason Law & Economics Research Paper No. 12-49. Available at SSRN: https://ssrn.com/abstract=2087776 or http://dx.doi.org/10.2139/ssrn.2087776

Howard Beales

George Washington University - School of Business ( email )

Washington, DC 20052
United States

Timothy J. Muris (Contact Author)

George Mason University School of Law ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8050 (Phone)
703-993-8088 (Fax)

Robert Pitofsky

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

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