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Complying with fragmented regulations regarding advertising claims

Marketing teams in pharmaceutical and health food companies have a tough job. Medicines and supplements are usually designed to enhance health, stave off illness, or maintain the general state of wellness of its users. But competition is fierce in this sector, and the market is arguably oversaturated with rival products from beauty brands, network marketing businesses, and even food manufacturers. The marketing department is therefore tasked with raising awareness of these products, promoting differentiating features, creating interest for their projects in the market, and ultimately persuading the consumer to buy their product instead of that from a rival, while complying with the applicable advertising law and sector-related regulations.

Unbelievable value

When competition is fierce, the marketing department will be tempted to apply strong messages to differentiate their brand—from directly comparing their product to that from a rival, employing the most popular influencers to promote their products, gaining endorsements –where possible - from medical professionals, or phrasing the benefits in a way that makes their target market believe in the superiority of their brand. They will crunch the numbers, and make projections based on previous sales data, market demand, and category insight.

It’s difficult to argue with robust data, but the rules around making claims related to pharmaceuticals and supplements are complex, regardless of the means of advertising. It may be easier to comply with rules in the countries in which they buy offline advertising, but with the pandemic moving many campaigns online, and with the proliferation of social media and photograph sharing, the business can no longer be confident that the content will not reach an audience in a country in which the rules are being breached.

For example, direct comparison between rival products are acceptable in some jurisdictions such as the US, while in the EU comparative advertising is accepted as long as it does not denigrate competitors’ trademarks or products. For social media campaigns, specific restrictions may apply for regulated sectors. For example, online campaigns in Italy for over-the-counter products must be authorized by the Italian Health Ministry guidelines and any comments or reactions from users to the sponsored post must be disabled. Breaching advertising rules in any country can have detrimental financial and reputational consequences.

While stocks last

Marketers might be forgiven for assuming the agencies they work with will provide the advice they need to comply with advertising rules around the world. Unfortunately, what is appropriate in one country may not be acceptable in another, and many agencies lack the expertise and knowledge of the rules globally. Sometimes, the legal department is last to find out about a marketing campaign, providing final sign-off on content, disclaimers, and claims around health benefits. Exaggerated, misleading or even false, advertising claims can cause reputational damage, along with reprimand (and fines) from advertising standards bodies, trading standards bodies, and other regulatory organisations and government authorities.

Safeguarding the company’s reputation and avoiding reprimand are only part of the consideration. Legal counsel may also need to protect the company from litigation against exaggerated claims. They are likely to tell the marketing department not to promise weight loss, increased health benefits, or miracle cures, as failure to “follow through” on the brand promise may spur litigation from disgruntled consumers as well as from competitors.

Everything must go

To avoid litigation, mitigate risk of reputational damage, and maintain harmony with internal teams, there are several steps the General Counsel could take:

  1. Educate the business, including the marketing team, on the legislative requirements for advertising claims;
  2. Choose the regulations from the strictest jurisdiction, and apply it to the marketing campaign (or use the more expensive route of tailoring content for each country);
  3. Specify the rules the marketing department needs to adhere to (e.g., specifying that influencers have to make it clear a product endorsement is an advertisement, or collect the evidence to substantiate the advertising claim);
  4. Establish internal processes for legal compliance checks of the marketing strategy as a whole as well as on each claim used in the advertising;
  5. Review the contracts in place with external marketing agencies, especially their level of professional indemnity, and put policies in place to safeguard the business;
  6. Work with the marketing team to encourage creativity that still complies.