COVID-19 and Healthcare Product Marketing under the Competition Act and Food and Drugs Act

May 7, 2020

With the global COVID-19 pandemic on everyone’s mind, many Canadians are looking to the marketplace for products that can protect them and their families from illness. However, manufacturers and sellers of healthcare products and services must be careful not to make false or misleading claims about the benefits of their offerings. As a result of the crisis, Canadian regulators have clearly signalled their intention to prioritize the enforcement of existing deceptive marketing and health product advertising law where the novel coronavirus is concerned.

Specifically, as discussed below, the Competition Bureau (Bureau) and Health Canada have warned businesses that they will seek out and take necessary action in response to potentially deceptive or unauthorized sales practices in order to protect Canadians during this time.

Deceptive Marketing Practices under the Competition Act

The Bureau is the independent federal law enforcement agency that enforces the Competition Act, including its deceptive marketing provisions. The Competition Act contains both civil and criminal prohibitions against deceptive marketing practices, including the making of a representation to the public that is false or misleading in a material respect and the making of a representation that contains a statement, warranty or guarantee of the performance, efficacy or length of life of a product that is not based on an adequate and proper test. Violations of these provisions can lead to monetary penalties or even imprisonment. These provisions have not changed as a result of the current crisis, but healthcare products and services have become a key enforcement priority.

In assessing whether a representation may be false or misleading in a material respect and the interpretation of a performance claim, the Bureau considers the general impression that is likely conveyed by the representation from the perspective of the consumer. In the context of the COVID-19 pandemic, the Bureau has adopted the assumption that consumers are very fearful and eager to protect themselves, meaning that the general impression is that of an inexperienced and vulnerable person rather than an expert. The vulnerability of the consumer under these circumstances may also be treated as an aggravating factor when the Bureau seeks fines or considers whether it is appropriate to refer a case for potential criminal prosecution.

Where a representation includes a performance claim, the onus is on the person making the representation to prove that the representation is based on an adequate and proper test. No alternatives to an actual test, including experience from consumer use, anecdotal experience, technical books, studies of similar products or the seller’s sincere belief, are sufficient. Also, the test must be completed before the representation is made; a subsequent test is not adequate. Further, the test itself must reflect a rigorous and appropriate methodology that tests the general impression conveyed by any representation to the public under the circumstances of actual use. The Bureau also takes the position that where safety is involved, such as in the context of health performance claims, the standard for an adequate test is even higher than normal.

Since the pandemic began, the Bureau has made the enforcement of these provisions as they relate to healthcare products and services a key priority. In late March, the Bureau released a series of statements warning businesses against making potentially false or misleading claims that their products and services can prevent the disease or protect against the virus, and has formed an internal working group to proactively identify potentially misleading claims on web sites and social media. On April 16, the Bureau advised media that it had issued 17 compliance warnings in respect of misleading claims related to COVID-19, of which 11 were resolved on a voluntary basis after businesses pulled the products or advertisements and the others remained outstanding. The Bureau has also advised consumers to be alert for potentially deceptive marketing and to report anything suspicious using an online complaint form on the Bureau’s web site, which will help them to identify problematic advertisements. Finally, the Bureau is working with domestic and international partners – including Health Canada – where necessary in order to ensure complaints are resolved in a rapid and coordinated fashion.

To date, the Bureau has focussed its enforcement efforts on claims made in respect of natural products (including herbal, vegetable-based and bee-related products), UV and air purification products and personal protective equipment (such as masks and hand sanitizers). It is worth bearing in mind that the Bureau’s interest in such products is not limited to claims related to the product’s purported ability to prevent, treat or cure COVID-19, but also extends to failures to meet advertised product specifications, non-delivery of products, products that appear to be priced in Canadian dollars but are in fact priced in U.S. dollars and various forms of frauds and scams.

As noted above, the Competition Act’s deceptive marketing rules are not new, and they apply to all types of products. However, in the COVID-19 context, healthcare products and services will be subject to a higher degree of enforcement attention and scrutiny, and providers of such products and services should exercise additional caution in their advertising and other public representations.

The Role of Health Canada and the Food and Drugs Act Framework

Health Canada also protects Canadians from deceptive healthcare product claims, both by preventing the unauthorized sale of health products and by ensuring that claims made in respect of such products are accurate. Like the Competition Bureau, Health Canada has clearly signalled that it is taking urgent measures to protect consumers from illegal, false or misleading advertising of products claiming to mitigate, prevent, treat, diagnose, or cure COVID-19, and will make the enforcement of any such unauthorized or deceptive advertising a key priority.

Under the Food and Drugs Act framework, any substance or device that is manufactured, sold or represented for use in diagnosing, treating, mitigating or preventing a disease or its symptoms must be authorized for a particular purpose before it can be sold. This includes prescription and over-the-counter drugs, medical devices and natural health products, as well as other products that are legal to sell for non-therapeutic use if accompanied by therapeutic claims. For example, a claim that a certain food, cosmetic or device can be of value in preventing or treating COVID-19 or any other disease is not permitted. Further, any claims made in connection with the sale of an authorized product must be consistent with the terms of the authorization. For example, a product containing echinacea that has been authorized under the natural health product framework for sale as a traditional herbal medicine for the relief of sore throat cannot be marketed for sale as an immune system enhancement that can help prevent COVID-19. Similarly, a cosmetic hand soap that is not licensed for therapeutic use should not be advertised as effective in preventing the spread of the coronavirus. To obtain authorization, evidence of appropriate testing that demonstrates the product’s safety and efficacy for a particular purpose must be adduced to Health Canada. Although several sanitizers and personal protective equipment products are authorized for general preventative use, there are currently no health products that are specifically authorized to prevent, mitigate, treat or cure COVID-19.

In response to the crisis, Health Canada has initiated an expedited interim expedited review process intended to facilitate access to therapeutic products including disinfectants, hand sanitizers, personal protective equipment, and testing swabs that may not fully meet current regulatory requirements (for example, with respect to bilingual labelling requirements) or are authorized in comparable jurisdictions outside Canada. Approval for such products is not automatic, but applications may be submitted through a separate channel and will be processed on an expedited basis. For more information on this expedited process, please refer to our earlier post here.

In addition to the prohibitions against the sale of health products without authorization or for non-authorized uses, the Food and Drugs Act also separately provides that health products must not be labelled, sold or advertised in a manner that is false, misleading or deceptive or is likely to create an erroneous impression regarding the character, value, quantity, composition, merit or safety of the product. Healthcare product advertising must give a clear and accurate impression that is consistent with the terms of the product’s authorization, including with respect to the product’s indication or recommended use. Where depicted or described, product performance claims – including with respect to efficacy, must reflect the results that can be obtained from product use accurately and without exaggeration. Further, the Food and Drugs Act contains certain restrictions relating to advertising made to the general public that may affect the permissible target audience for any advertising. Any suggestion or implication that a product can prevent, mitigate, treat or cure COVID-19 is likely to be inappropriate at this time. Pre-clearance agencies such as the Pharmaceutical Advertising Advisory Board (PAAB) and Ad Standards can review proposed advertising before it is released to the public in order to help ensure all relevant rules and guidance is observed.

When Health Canada becomes aware of unauthorized or non-compliant sale or advertising, it can pursue a variety of responses, ranging from a request that the activity be terminated or corrected to compulsory recalls, fines or even prosecution.

Conclusion

The manufacturers, distributors and resellers of healthcare products all have important roles to play in developing the products that will be used in the fight against COVID-19 and ensuring that such products are brought to market and to the awareness of consumers. However, it is important to ensure that any representations to the public are accurate, properly substantiated and authorized, in order to avoid the risk of reputational damage, fines or even imprisonment.

Businesses engaged in the manufacture or sale of healthcare products are encouraged to make use of expedited authorization processes and pre-clearance mechanisms, where available, and to seek the advice of counsel if necessary, to avoid inadvertently making representations to the public in respect of healthcare products that may attract the newly-heightened scrutiny of the Bureau or Health Canada

DISCLAIMER: This publication is intended to convey general information about legal issues and developments as of the indicated date. It does not constitute legal advice and must not be treated or relied on as such. Please read our full disclaimer at www.stikeman.com/legal-notice.

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