06 December 2005
Key Points:
Care must be taken with advertising in the pharmaceutical market, particularly comparative advertising.
Advertising in the pharmaceutical market is intensely competitive and heavily regulated. Understandably, companies want to present data which demonstrates the superiority of their product over those of competitors. This leads to advertising in a variety of forms including diagrams, graphs, tables and simple statements pointing to the differences between products. While such promotion, termed "comparative advertising", may be powerful and persuasive, it is important that companies recognise that, legally speaking, it can be a particularly dangerous form of promotion.
The law of comparative advertising
Section 52 of the Trade Practices Act 1974 (Cth) ("TPA") prohibits a corporation from engaging in conduct that is misleading or deceptive or likely to mislead or deceive. One of the most obvious applications of this section is in the area of advertising and promotion. If advertising is capable of misleading or deceiving its intended audience, it is likely to be viewed by the court as a breach of section 52, irrespective of whether it was intended to mislead or whether anyone has in fact been misled.
Nevertheless, the law takes a robust view of advertising, making allowances for the fact that most people expect advertisers to be enthusiastic in promoting the virtues of their products. However, this forbearance toward advertising puff does not apply to comparative advertisements. While the comparative promotion of a product is certainly not an inherently disreputable form of conduct[1], it is recognised that errors in comparative advertising are more likely to mislead than other forms of promotion. In the eyes of the law, inaccurate comparisons are inherently likely to mislead and unfair comparisons may, simply because they are unfair, be misleading. Accordingly, courts approach comparative material on the basis that it contains representations of fact which are either true or false and will not excuse inaccuracies or exaggerations on the basis that they are mere puff.
As a result, it is vital that companies take special care when using comparative advertising. As Justice Heerey observed in Gillette Australia Pty Ltd v Energizer Australia Pty Ltd [2002] FCAFC 223, "the more actual comparisons that are used, the more potential there is for error...so advertisers have to be careful."
The special problems associated with comparative advertising are recognised by both the Therapeutic Goods Advertising Code and the Medicines Australia Code of Conduct, both of which contain specific provisions which impose specific requirements for comparative advertising.[2] For example, the Therapeutic Goods Advertising Code requires that comparative advertisements be "balanced", "factual" and "reflect the body of scientific evidence".
Breaches of the Trade Practices Act or the relevant industry code may have serious consequences. At worst, a company in breach of section 52 is liable for any loss or damage suffered by a person or other company as a result of that breach, including a competitor's loss of profit. A court may order an injunction to restrain the breach, which in real terms can have the effect of stopping the promotion in its tracks at substantial cost to the company selling the product. Proceedings for breach of the Therapeutic Goods Advertising Code or the Medicines Australia Code of Conduct may also result in serious consequences, including fines and orders that promotions be withdrawn and corrections published.
Rules of thumb for comparative advertising
Given the special difficulties associated with comparative advertising, any promotion which involves statements (express or implied) about a competitor's product must be approached with particular care. What follows are some rules of thumb which, if followed, will minimise the risk of a comparative advertisement breaching the law or the relevant industry code. These rules are deliberately conservative - breaking them will not automatically mean that your advertising is misleading.
General principles to follow
Companies engaging in comparative advertising have a heavy responsibility to ensure that their comparisons are accurate. Advertisers can only compare a particular aspect of their product with the same aspect of a competitor's product. In other words, accuracy requires comparing like with like.
Any claim that one product is better than another must be substantiated by science, which must be available to demonstrate the accuracy of the comparative statements at the time they are made (not at some stage after the advertisement is published). Further, the tests must provide a proper foundation for the claims made. This has significant practical implications for the pharmaceutical market. For example:
(a) Medical science cannot be inaccurately used to excite and exploit fears and emotions in consumers to the disadvantage of a competitor's product. That is, a promoter cannot exaggerate a risk to consumers' health while suggesting that its product, unlike others, can provide protection against that risk.
(b) Where medical studies which form the basis of comparisons are conducted with different populations, methodology or other relevant variables, there is a risk that the comparisons will be found to be misleading. Comparisons in advertising should be based on studies which are, as far as possible, directly comparable. If a blanket claim to clinical advantage is being made between two particular products, it must be supported by an actual comparative clinical study of the two products.
(c) Alternatively, if differences in the studies limit the accuracy or usefulness of the comparison then those limitations should be raised in the advertisement. There are also additional risks associated with reliance upon results from trials using animals or on statements about the interpretation of data drawn from editorials or secondary publications. These should be used with care.
Companies cannot rely solely on the approval of product information by regulatory bodies as a basis for proving the accuracy of a comparative claim. For example, the fact that the TGA has approved product information included within promotional material, while relevant, is not decisive in determining whether the advertisement is misleading or deceptive.
While the law does not specifically require that comparative advertisements refer to all of the criteria by reference to which goods might be compared, omissions or half-truths may very well make a comparison unfair. As a general rule, a promoter must include information that the intended audience would reasonably expect the promoter to disclose. If vital information is omitted, vagueness in an advertisement will not be sufficient to prevent a breach of section 52 of the TPA.
It cannot be said with confidence that a disclaimer, in whatever form, will save a comparative advertisement from being found to be misleading or deceptive. However, for less complex comparative statements certain disclaimers, such as those noting that a comparison is based on the promoter's belief rather than scientific testing, may render a comparative advertisement acceptable. If disclaimers are used, care must be taken to ensure they are sufficiently prominent. The law takes a realistic view of people's tendency not to read the small print.
In considering whether a comparative advertisement is misleading, the law will have regard to the knowledge and understanding of the intended audience, in particular the 'ordinary' or 'reasonable' member of the class of prospective purchasers. It is, therefore, important to consider the audience for the comparative promotion and to adapt the language and level of detail according to whether the promotion is directed at (and will be read by) the general public, general practitioners or a group of specialists.
There is a greater risk that the public will be misled if an inaccurate comparison relates to an inexpensive product. This is because less independent thought and research will be applied in making the decision. Clearly then, while care should be taken with all comparative statements, a comparative statement in relation to a product available on supermarket shelves may have a greater potential to mislead than a statement in relation to a product used by specialists only after careful consideration of the individual patient.
The law considers the comparative advertisement in its entirety, as well as its whole context. It is important to consider not just whether the comparisons in an advertisement are technically correct, but also whether the impression or implications created by the advertisement are correct. If the overall message of an advertisement is misleading, fine print or careful analysis are unlikely to save it. Further, the way in which a pharmaceutical company salesperson represents a product verbally to a medical practitioner may protect against the effect of a potentially misleading visual aid or, alternatively, render misleading a visual aid which is on its face correct.
Following the rules of thumb will lessen the risk of an advertisement breaching the law or an industry code. However, they are not a substitute for specific legal advice, and a company should consider obtaining such advice wherever there is any uncertainty as to the legality of a comparative promotion. It is much cheaper to take advice and make changes at the beginning of a campaign than to suspend and withdraw the whole campaign because of a concern about misleading content.
[1] Gillette Australia Pty Ltd v Energizer Australia Pty Ltd (2002) 193 ALR 629 ("Gillette")
[2] Clause 4(5), Therapeutic Goods Advertising Code 2005; Paragraph 1.7, Medicines Australia Code of Conduct (Edition 14)
For further information, please contact Greg Williams.
