District Court Dismisses FTC Lawsuit Regarding Marketers of Prevagen; FTC Failed to Carry Burden

In January 2017, the Federal Trade Commission (FTC) and New York Attorney General (collectively, “Plaintiffs”) announced a lawsuit charging that Quincy Bioscience, related entities, and two individuals (collectively “Defendants”), the marketers of the dietary supplement Prevagen, made false and unsubstantiated claims that Prevagen improved memory.  Challenged claims included “Prevagen improves memory,” Prevagen “has been clinically shown to improve memory,” and the claim that “A landmark double-blind and placebo controlled trial demonstrated Prevagen improved short-term memory, learning, and delayed recall over 90 days.” Plaintiffs alleged that Defendants relied on a single study that failed to show that Prevagen works better that a placebo on any measure of cognition.

Defendants moved to dismiss the complaint on several grounds, including the argument that Plaintiffs’ Complaint failed to adequately allege that the advertising claims for Prevagen violate the FTC Act. On September 28, 2017, the District Court of the Southern District of New York granted the motion.

As described in the decision, Defendants claims were based on a clinical study that met the “gold standard,” i.e., a double blind, placebo controlled human clinical study using objective outcome measures using 218 subjects.” Plaintiffs did not take issue with the design of the study. However, they did take issue with the Defendants’ analyses of that study in support of its marketing claims. Namely, after the study failed to show a statistically significant improvement in the experimental group over the placebo group, Defendants conducted a “number” (more than 30) post hoc analyses of the results, looking at data for smaller subgroups. Doing so, they did find some statistically significant differences. These statistically significant results provided the basis for Defendants’ challenged marketing claims. Plaintiffs argued that this post hoc subgroup analysis did not constitute valid support for the claim because the post hoc analyses increased the probability of finding a significant improvement in a subgroup for one of the parameters. They argued that ‘[g]iven the sheer number of comparisons run and the fact that they were post hoc, the few positive findings on isolated tasks for small subgroups of the study population do not provide reliable evidence of a treatment effect.’ In other words, according to the Plaintiffs, the finding of a significant difference was merely the result of the number of analyses; if you throw a dice often enough, you will get the result you want.

The Court rejected Plaintiffs’ arguments, and concluded that their challenge to Defendants’ substantiation was theoretical. They had no evidence that the claim was not supported, but only showed there was a possibility that the study results did not support Defendants’ claims. This mere possibility rather than plausibility did not entitle Plaintiffs to relief.

Not surprising, FTC has not given much publicity to this loss. Plaintiffs may be considering whether to appeal the decision. We will be monitoring further developments.