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FDA and FTC Continue to Trace and Fight Fraud Related to COVID-19

We have been blogging about the various actions that numerous government agencies were taking to combat COVID-19 fraud (see here and here). These agencies and their respective law enforcement efforts have yet to slow down and appear to have accelerated as greater coordination begins to take root. As of May 29, 2020, the U.S. Food and Drug Administration (FDA) has issued 64 warning letters to companies making claims about a product alleged to be a COVID cure, treatment, or preventative product, while the U.S. Federal Trade Commission (FTC) had issued many, many more than that. In some cases, these warning letters are joint letters that come from both government agencies, which is never a good sign. The FTC in particular is making announcements on a regular basis about large batches of warning letters being issued, such as this one from May 21 highlighting that 50 more marketers of fraudulent COVID-19 products had received such a missive from the FTC. 

The warning letters are being sent not only to domestic companies but also to international companies making unsubstantiated claims about treating or preventing COVID-19. In addition, FDA reported in an enforcement update it provided on May 7, 2020 that it had “intercepted and investigated a case of mislabeled COVID-19 ‘treatment kits’ offered for import” that ultimately led to an international law enforcement effort and “the [U.S.] Department of Justice to bring a criminal complaint against a British man who sought to profit from this pandemic and jeopardize public health.” Upon failing to be responsive or taking the corrective action set forth in a warning letter, some companies have been quickly taken to federal court to receive court-issued injunctions. We expect to see more court actions such as these as the unprecedented public health crisis continues.

It is notable that many of the FDA’s and the FTC’s warning letters have been issued to companies involved in selling products, such as essential oils, cannabidiol (CBD) products, hand sanitizers, and homeopathic drugs, which can easily be bought from the comfort of home and immediately shipped to the end user. This easy consumer access has incentivized both agencies to react quickly to prevent or halt fraudulent advertising and purchases on social media platforms and various websites. These agencies are aware of the urgency of their enforcement efforts, since many consumers are laser-focused on COVID-19 and looking for ways to treat or prevent it while isolated under stay-at-home orders. And although none of the FDA warning letters to date have involved diagnostic or antibody tests or medical device products, the agency’s May 7 enforcement update mentioned previously did note that “as part of the FDA’s Operation Quack Hack, in just a few short weeks, the agency has discovered hundreds of such products including fraudulent drugs, testing kits and personal protective equipment (PPE) sold online with unproven claims. … FDA has sent hundreds of abuse complaints to domain name registrars and internet marketplaces, who in most instances, have voluntarily removed the identified postings.” However, it seems inevitable that distributors of such illegitimate PPE and test kit products will end up on the receiving end of warning letters or even prosecutions at some point if the current trends continue.

Interestingly, the four joint FDA/FTC letters issued on May 26, 2020, specifically call out that the companies in question each participated in the Amazon Associates program and that “as an Amazon associate, [the company] earn[s] commissions by promoting the sale of [their respective products] with claims on [the company’s] website representing or implying that the products can mitigate, prevent, treat, diagnose, or cure COVID-19.” To our knowledge, these letters represent the first time FDA has mentioned this kind of marketing arrangement in one of its warning or untitled letters.

Similarly, as many consumers are constantly near their phones awaiting fresh news about COVID-19, the FTC has also issued robocall warning letters in an effort to prevent companies from “assisting and facilitating” illegal telemarketing calls related to COVID-19-related services or products. There has also been at least one warning letter sent to the marketer of an alleged COVID-19 vaccine product that both FDA and FTC signed onto on May 21, 2020, and tellingly, this letter only cited claims made for the alleged product on Facebook and LinkedIn and should remind everyone that traditional advertising is not the only thing that will come to the government’s attention.  

This type of oversight and enforcement is likely to continue for years, especially if the number of consumer complaints about fraudulent COVID-19-related products do not substantially decrease. The FDA and FTC both encourage consumers to continue reporting this type of misbehavior by companies to protect and promote the nation’s public health. There has been an overwhelming amount of information and news circulating during this pandemic, as Americans search for answers amidst the uncertainty the virus has created.  For now, at least one thing is certain: the government is not slowing down enforcement efforts related to COVID-19 fraud.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume X, Number 153


About this Author

Kristen A. Marotta Associate  Hospitals & Health Systems Physician Organizations

Kristen focuses her practice on health care transactions, regulatory matters, and general contracting. Her experience includes counseling clients on both investing in and exiting from the health care space, drafting compliance plans and policies, facilitating deals and conducting due diligence to assess risk, addressing employment issues for health care entities, and assisting companies with formation and reorganization.

Prior to joining Mintz, Kristen was an associate...

Joanna Hawana, Mintz Levin, FDA Lawyer, Clinical Trials & Research Consumer Product Safety FDA Regulatory Health Care Compliance, Fraud & Abuse, and Regulatory Counseling Health Care Transactional Due Diligence
Of Counsel

Joanne counsels global clients on regulatory and distribution-related considerations to bringing a new FDA-regulated product to market and how to ensure continued compliance after a product is commercialized. She also advises on the business impact of new US federal and state actions that affect those regulated products, such as drugs, foods, cosmetics, electronic nicotine delivery systems, and medical devices, including in vitro diagnostics, lab tests, and mobile medical applications. In recent years she has been advising clients in different industries regarding FDA’s approaches to precision medicine and the impact of the agency’s policies on product development and marketing plans.  

Her strategic counseling and compliance support work reaches into all aspects of FDA-regulated companies’ operations, including:

  • Determining regulatory status of novel products like mobile health systems and point-of-care diagnostics;
  • Pre-market and post-market requirements for various regulated products;
  • Restrictions on advertising and sampling, including for controlled substances;
  • State licensing schemes for prescription drug manufacturers and distributors;
  • Federal track-and-trace obligations for all members of the prescription drug supply chain, from manufacturers to pharmacies;
  • Compliance with drug compounding regulations, both State and Federal;
  • Review and approval of various types of policies and procedures for facilities that manufacture or distribute regulated products;
  • Advising on clients’ written submissions to FDA requests for comments or rulemaking activities, and in some cases preparing those submissions on behalf of private companies or patient advocacy groups;
  • Requirements for importing and exporting regulated products; and
  • Food safety and labeling advice for human and animal food, including dietary supplements and “functional foods,” as well as alcoholic beverage products.

Joanne frequently works with clients to develop and implement their responses to common FDA actions, such as warning letters and inspectional reports (the “Form 483”). She has also been involved in advising and helping clients respond to Federal Trade Commission investigations related to product advertising and requests for substantiation of certain promotional claims.

Joanne also assists the Mintz corporate team by performing regulatory due diligence as part of potential mergers and acquisitions that involve regulated companies, and she often works in conjunction with the Firm’s intellectual property attorneys to ensure that patent and regulatory activities are strategically aligned.  She has developed a distinctive relationship with Mintz attorneys who negotiate royalty monetization transactions and works closely with them in developing the terms for these unique transactions. Although the day-to-day work for clients may be different, the common thread that she enjoys most is helping companies (both start-up and established) bring their products to market – without heightened risks of enforcement actions as a result of non-compliance with sometimes-opaque regulatory requirements.