Two recent NAD Decisions provide some insights into NAD's view of its own jurisdiction and its tools for addressing recalcitrant advertisers.
In a challenge filed by biotechnology company Vertex Pharmaceuticals, NAD looked at claims made by its competitor Maze Therapeutics. Each company is currently developing treatments for APOL1-Mediated Kidney Disease ("AMKD") and both companies' treatments are in the clinical trial stage of development. The advertiser disseminated claims comparing the efficacy of its small-molecule compound treatment of AMKD to that of Inaxaplin, Vertex's drug candidate for AMKD, in webinars, investor presentations, press releases, posters, and public filings. The claims are highly technical, and include statements like "Inaxplin 45 mg QD [is] projected to achieve <50% uACR."
Vertex challenged these claims, arguing that they are based on mouse model studies, studies directly contradicted by data from Vertex's human clinical trials. Maze, however, declined to participate in the NAD challenge, arguing that its claims are accurate, that it does not currently sell any product, and that it does not advertise the treatment. NAD, "disappointed" that Maze decided not to participate, "since the subject of the challenge—clinical efficacy—is one frequently addressed through self-regulatory review" referred Maze to "the appropriate regulatory authorities." (Case Report #7500)
In a second case, initiated by NAD itself, NAD challenged online claims made by Primally Pure for its Primally Pure Sun Cream, including claims that it is a better and safer alternative to toxin-containing conventional sunscreens that can have adverse health effects. However, the advertiser did not respond to NAD's inquiry.Accordingly, NAD referred the matter to the FTC, and to the platforms on which Primally Pure's advertising appeared and where NAD has a reporting relationship. (Case Report # 7493)
Let's unpack these seemingly straightforward referrals a bit.
First, implicit in the Maze decision, is the determination that Maze's statements about its treatment constituted "advertising" for purposes of NAD's jurisdiction. This is true notwithstanding the fact that the claims themselves were highly technical, clearly not directed to the general public, and appeared in materials like public filings and investor presentations.However, NAD's implicit determination that these claims were "advertising" is not surprising given earlier decisions, such as this. NAD will rarely find that it doesn't have jurisdiction unless what one of the exceptions to jurisdiction enumerated list in Section 2.1.C(1) of the Procedures clearly applies.
Second, NAD can and will look at highly complex technical and clinical data, with help from outside experts, if needed. Telling NAD that it's not experienced or smart enough to handle a matter is not an argument that will get an advertiser far. Take a look at how this advertiser fared. (Maze, at least, didn't make that argument.)
Third, even if NAD does not make a substantive determination about the advertising in question, it apparently can and will make a referral not only to relevant government agency but to the platforms where the advertising appears. If NAD hasn't made a substantive finding, it's not entirely clear to me what it will tell the platforms other than that the advertiser didn't respond to NAD's inquiry (like it does when it refers advertisers to the FTC), and it's not entirely clear what the platforms will do with a referral of this type. But it can't be good for an advertiser to be brought to the attention of the platforms for (potentially) false advertising. While certain advertisers (rightly or wrongly) may be feeling more brazen about taking their chances at the FTC in the current climate, getting kicked off a platform may not be a risk they want to assume. NAD's reporting relationship with certain platforms ideally will work to encourage participation in the NAD process and, potentially, help get bad claims out of market.
And, finally, even non-substantive NAD decisions have important lessons for advertisers and their marketing counsel!
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