American Urological Corporation and several other companies have agreed to settle Federal Trade Commission charges that they lied about the effectiveness of products to treat
impotence. The FTC had alleged that David A. Brady and his companies marketed several products, including one called "Väegra®," as treatments for impotence. The FTC said Brady falsely advertised that the products had been developed by legitimate medical firms and that they had been proven effective in eliminating impotence in 68 to 94 percent of men.
As part of the settlement, Brady is required to post a $6 million performance bond for 10 years before marketing, offering for sale, or selling any impotence treatment product. In addition, he and the other defendants are barred from making unsubstantiated health-related claims about any food, dietary supplement, or drug.
"Lies masquerading as marketing strategies not only make for a lousy business practice, but also an illegal one," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "Illegally cashing in on the publicity and popularity surrounding a bona fide medical product is bad enough, but exploiting consumers who are desperate for a cure is even worse."
The FTC's complaint, filed in federal district court in August 1998, alleges that American Urological Corporation, based in Dallas, Texas, and several other companies used direct mail solicitations and fictitious company names to market a number of unapproved treatments for impotence under the product names "Alprostaglandin®," "The Celldenaphil-pc System," "Renak-pc," "Oral Phentalomil®," "Prosta-Gen©," "Testosterone-21," "Väegra®," "Urophil," and "VasoGenitine.."
While many of these products carried names that sounded like approved prescription medications, according to the FTC, defendants' products differed significantly from the prescription drugs. The other defendants include The Institute of Sexual Research, Inc., with an address in Grand Prairie, Texas; The Clinic of Natural Solutions, Inc., also with an address in Grand Prairie; Old Well Corporation (Texas), with an address in Grand Prairie, Texas; Old Well Corporation (North Carolina), and both the Institute of Sexual Research, Ltd., and Old Well Corporation, with addresses in Zebulon, North Carolina.
The settlement required the approval of the federal district court. It requires Brady to obtain a $6 million bond before promoting, offering for sale, and selling any impotence treatment product. It also requires him to post a $1 million performance bond for the first five years after the Order becomes final if he makes claims about the performance, safety, efficacy or health benefits of a food, dietary supplement, or drug other than a product to treat impotence. The performance bond would decrease after five years and be eliminated in the tenth year.
In addition, the settlement prohibits the defendants from misrepresenting that their products are sold by bona fide medical enterprises; their impotence treatment products eliminate impotence; their impotence treatment products have been scientifically proven to be effective in eliminating impotence; a trademark has been obtained from the United States Trademark Office (as represented by use of the trademark symbol); the U.S. Food and Drug Administration reviewed or approved a product or ingredient as effective or safe for treating any disease; any of the defendants' products contain ingredients that are not contained in the products; and any other fact material to a consumer's decision to purchase any of defendants' products.
Further, the defendants will be prohibited from misrepresenting the efficacy of any impotence product and the nature or extent of the scientific evidence concerning any impotence treatment product, and from making any claims about performance, safety, efficacy, or health benefits for any food, dietary supplement, or drug, including any impotence treatment product, unless they have competent and reliable scientific evidence to support the claims.
The settlement imposes an $18.5 million judgment on the defendants, which they will satisfy by giving up more than $2 million in frozen assets, and also prevents them from selling their customer lists. The frozen assets may be used to provide redress to consumers who bought the impotence treatment products.
Finally, the settlement contains various other recordkeeping requirements to assist the FTC in monitoring the defendants' compliance.
The Commission vote to authorize staff to file the final order for permanent injunction was 4-0. The final order was filed with in the U.S. District Court, Northern District of Georgia, Atlanta Division, and signed by the judge on April 29, 1999.
The FTC has published a consumer alert titled, "The Truth About Impotence Treatment Claims." This brochure offers tips on evaluating impotence claims you may want to believe, but shouldn't.
NOTE: This final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Final orders have the force of law when signed by the judge.
Copies of the brochure, as well as today's news release, are available from the FTC's web site at http://www.ftc.gov and copies of the settlement and other documents associated with this case are also available from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC Matter No. X980081)
(Civil Action No. 1:98-CV-2199 (JOF))