Analysis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted an agreement, subject to final approval, to a proposed consent order from respondent Perrigo Company. ("Perrigo").

The proposed consent order has been placed on the public record for thirty (30) days for reception of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) days, the Commission will again review the agreement and the comments received and will decide whether it should withdraw from the agreement and take other appropriate action or make final the agreement's proposed order.

This matter concerns "Made in U.S.A." claims on packaging and labeling for Perrigo's aspirin, acetaminophen, and ibuprofen tablets sold at retail bearing private brand names. The Commission's complaint alleges that respondent misrepresented on packaging and labeling that certain of these products, manufactured for customers such as Kmart, Wal-Mart, Target, and Safeway, are all or virtually all made in the United States. According to the complaint, these products are actually made with significant foreign content. The products' active ingredients, bulk aspirin, acetaminophen, or ibuprofen compounds, that respondent processed into aspirin, acetaminophen, or ibuprofen tablets, are or were made outside the United States. The imported bulk compounds comprise a substantial percentage of total manufacturing costs and impart the crucial analgesic quality to the OTC products at issue. The Commission's complaint does not allege that all of Perrigo's private label aspirin, acetaminophen, and ibuprofen brands or products are mislabeled, but only that certain products have been improperly labeled.

The proposed consent order contains a provision that is designed to remedy the charges and to prevent the respondent from engaging in similar acts and practices in the future. Part I of the proposed order prohibits Perrigo from misrepresenting the extent to which any non-prescription drug product containing an analgesic is made in the United States. The order defines "analgesic" as an agent used to alleviate pain. The proposed order would allow Perrigo to represent that such products are made in the United States as long as all, or virtually all, of the ingredients or component parts of such products are made in the United States and all, or virtually all, of the labor in manufacturing such products is performed in the United States. The proposed order also would allow Perrigo to represent that a product containing imported active ingredient(s) is "Processed in the United States with Foreign Ingredients" when describing a product that has been "significantly processed" in the United States.

The draft order is effective on December 31, 2001, for OTC products containing an imported analgesic and on March 31, 2001, for all other OTC products containing an analgesic. These dates take into consideration the number of different products Perrigo produces and the time it will take to convert its stock without disrupting its supply of store brand goods to its retailer customers. Thus, the order is designed to end the mislabeling quickly while minimizing unnecessary burdens on Perrigo, its customers, and consumers of these products.

Part II of the proposed order requires the respondent to maintain materials relied upon in disseminating any representation covered by the order. Part III of the proposed order requires the respondent to distribute copies of the order to certain company officials and employees. Part IV of the proposed order requires the respondent to notify the Commission of any change in the corporation that may affect compliance obligations under the order. Part V of the proposed order requires the respondent to file one or more compliance reports. Part VI of the proposed order is a provision whereby the order, absent certain circumstances, terminates twenty years from the date of issuance.

The purpose of this analysis is to facilitate public comment on the proposed consent order. It is not intended to constitute an official interpretation of the agreement and proposed order or to modify in any way their terms.