Canada: Take Two Pills And Call Your Lawyer In The Morning: Consumers Allege They Were Misled By The Makers Of COLD-FX

Last Updated: April 13 2016
Article by Jennifer McKenzie and Catherine Lovrics

The makers of COLD-FX might be feeling a little under the weather after appearing in the BC Superior Court to further respond to allegations that untrue representations and omissions induced consumers to purchase the drug product that was ineffective and therefore "worthless" if taken in accordance with the representations.   

The claim against Valeant Pharmaceuticals, and its subsidiary, Afexa Life Sciences, was started in 2012 by a Vancouver Island resident Don Harrison over advertising saying that COLD-FX provided "immediate relief of cold and flu" if taken over a three-day period at the first sign of cold or flu symptoms. A study showed that the product provides no such short term relief. Rather, patients experienced a therapeutic effect only after taking the product daily for at least two months, and six months in the case of seniors. Harrison alleges that the companies continued to "knowingly or recklessly" promote COLD-FX as a short term remedy despite evidence to the contrary. A similar action has been commenced in Saskatchewan.

COLD-FX is a top-selling natural health product in Canada, with sales topping nearly $120-million as recently as 2011, according to a November 15, 2015 Globe and Mail article, "Why COLD-FX is too good to be true". As part of one COLD-FX natural health product license, Health Canada has approved a number of claims for COLD-FX, including that the product:

Helps reduce the frequency, severity and duration of cold and flu symptoms by boosting the immune system. ...Provides further reduction of cold and flu symptoms when taken with a flu shot... Clinically proven to reduce the frequency, severity and duration of cold and flu symptoms in individuals over 65 by boosting the immune system. ... helps reduce overall symptoms of sore throat, runny nose, sneezing, nasal congestion, malaise, fever, headache, hoarseness, ear-aches and cough.

The plaintiff in the BC action is seeking class certification so that anyone who bought COLD-FX for the short-term relief of cold and flu symptoms will be able to apply for a refund. The companies have denied that allegations and are contesting the application for class-action certification.

The BC Supreme Court has previously refused to certify a proposed consumer class action concerning misleading advertising. In Clark v Energy Brands Inc., 2014 BCSC 1891, the plaintiff alleged that Energy Brands Inc. and Coca-Cola Ltd., systemically misrepresented bottled beverages beginning with the trademark VITAMINWATER, and the description that the beverages are "nutrient enhanced water beverage", and misled consumers to believe the products were healthy beverages with a minimal amount of sugar. The Court refused to certify a class stating that the plaintiff had not met the requirements of the main requirement of the BC Class Proceedings Act, namely, whether "the claims of the class members raise common issues, whether or not those common issues predominate over issues affecting only individual members". The Court stated:

However, in my view whether the labelling and marketing of the product has actually misled a consumer is an inherently individualistic and fact-based question. [¶120]

There is of course, no evidence that all consumers were misled, at all times, in respect of each and every consumer transaction in question. No such evidence would be possible. Yet the relief sought by the plaintiff in the context of the plaintiff's arguments for potential remedies would practically amount to such a conclusion. Otherwise there would be no utility in the declaration sought. [¶125]

The COLD-FX class action also follows another recent class action launched against Boiron Inc. on behalf of consumers who purchased Oscillococcinum or Oscillo, a homeopathic product marketed to treat the flu. The class action claimed that the product was falsely marketed with respect to the efficacy of the product and the presence of an ingredient – that consumers were misled into purchasing a product that was no more effective than a placebo sugar pill, with ingredients that are not medically effective, and diluted to the degree of being not present in the final product. The class was not certified by the Superior Court of Quebec, and a motion to dismiss the appeal was denied. The Superior Court found that the petitioner did not demonstrate a prima facie case of false representations. The Court found that Boiron represents that the product relieves flu symptoms, and not that it prevents, cures or fights the flu, or even that it does so with an active ingredient.  Further, the evidence did not demonstrate the product is nothing more than a placebo. In fact, the expert opinion filed by the petitioner acknowledged an ability of the product to relieve flu-like symptoms "slightly better" than a placebo. Further, evidence filed with the Natural Health Products Directorate of Health Canada in the process of obtaining a license for the product included a randomized placebo-controlled study.  The petitioner argued that the efficacy of the product should be assessed on the basis of clinical rather than statistical evidence, the latter "which seems to satisfy Health Canada". 

The COLD-FX and the Oscillo Boiron cases raise the question of how to reconcile allegations of false and misleading representations against the fact that the products were licensed by the Natural Health Products Directorate.   Will a product license absolve the license holder from liability for false and misleading representations? Will the following comments by the Supreme Court of Canada in another class action case be applied to licensed products?

[C]ompliance with statutory obligations is not always determinative of the issue of civil fault ... [C]are must be taken . . .  not to conflate the notion of civil fault and the violation of a statutory norm, whether in a commercial setting or elsewhere ... [J]ust because a failure to discharge a statutory obligation leads to a demonstration of fault in all but the most exceptional cases, it does not follow that a civil fault is absolved where there is no such failure.

The claimed misrepresentations in the COLD-FX case relate largely to how quickly COLD-FX takes effect ("immediate relief ...", "at the first sign of symptoms for optimal results", "stops colds & flu in their tracks"). The plaintiff claims "at no time has COLD-FX been permitted by Health Canada to make (such) representations."  Interestingly, several COLD-FX licensed products are branded "COLD-FX First Signs", with approved recommended use including "Take at first signs of cold to help reduce the frequency of colds and flus." These products contain additional ingredients to ginseng (panax quinquefolius).

The COLD-FX and the Oscillo Boiron cases are also interesting to Canadians given that our punishing winters mean these products are likely found on the shelves of many medicine cabinets. Beyond that, the cases are noteworthy given the attempt at class certification to address advertising claims that consumers believe are misleading.  For a few years now, we have heard from our US counterparts that that risk of misleading advertising is not just regulator or competitor action, but by consumers acting as a class. Although class actions have not been prevalent in Canada, this may mark the beginning of a trend, and a significant change to the risk to companies when they make product claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Jennifer McKenzie
Catherine Lovrics
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