There's a New Sheriff in Town for Disputed Medical-Ad Claims

(MoneyWatch)  Drug and medical device manufacturers now have an alternative to the FDA when they want to complain about misleading ads by their rivals. A recent decision from the National Advertising Division of the Council of Better Business Bureaus, an advertising watchdog, settled a dispute between two surgical suture makers, Covidien (COV) and Johnson & Johnson (JNJ)'s Ethicon unit.

While the ruling itself delved into the obscurata of whose sutures were riskiest, the broader consequence is that companies advertising medical products -- who previously had to take their disputes to the FDA -- can now fight their advertising battles the same way as Coca-Cola, Procter & Gamble and companies that make those strange exercise machines seen on late-night TV. (For the record, NAD ordered Covidien to stop running ads that said, "Why take the risk with Ethicon's Plus line of sutures?" because there was no evidence that Ethicon's sutures were any riskier.)

Under the old scheme, companies making prescription products would complain to the FDA, which might issue a warning letter asking the offending company to stop the ads -- usually months later. The FDA is famously understaffed when it comes to monitoring medical advertising.

At NAD, by contrast, companies and their challengers are asked to assemble their own teams of lawyers to fight it out in front of a panel of experts within 60 days. Decisions are based on common-sense notions of what ordinary viewers or readers would understand from an ad, not the minutae of FDA law or the Lanham Act (which controls deceptive advertising). Companies get quick, cheap decisions, and the FTC monitors recalcitrant offenders.

The NAD has been edging toward extending its jurisdiction to medical advertising for several years. It has handled several cases involving over-the-counter medicines. Recently, it ordered McNeil Consumer -- another unit of J&J -- to change a claim that allergy medicine Zyrtec offered "faster" relief than Claritin, a Merck (MRK) brand. And it has previously tackled two device cases featuring small companies, Wright Medical and Intercure. This is one of the first cases in which two major medical corporations fought out their differences in NAD.

NAD review may be a voluntary process, but the organization carries a big stick -- companies that fail to cooperate with its reviews are referred to the FTC. As NAD is staffed by former FTC lawyers, the implication is that such referrals go to the top of FTC's inbox.

Whether drug and device companies --- whose lawyers are used to courts and the FDA taking months or even years to resolve disputes -- will feel comfortable in the fast-and-loose atmosphere of NAD is another matter. They may have to get used to it if NAD, which reviews ads on its own as well as hearing challenges from companies, feels it now has the expertise to get into medical issues.

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