Lane Labs FTC Settlement To Fund National Cancer Institute Study

Lane Labs has been ordered by the Federal Trade Commission to contribute $450,000 to fund a National Cancer Institute clinical study on the effects of shark cartilage supplementation on cancer as part of a $1 mil. settlement of charges it made unsubstantiated cancer claims for its dietary supplements.

The BeneFin and SkinAnswer marketer and its president, Andrew Lane, also must pay $550,000 directly to FTC for consumer redress, according to a stipulated order filed in a Newark, N.J. federal court June 28. FTC initiated the legal action Dec. 8 aiming to stop the company from making what the commission terms "unsubstantiated claims about the efficacy" of the two products (¹ (Also see "Lane Labs BeneFin Is Unapproved Drug - FDA Complaint" - Pink Sheet, 20 Dec, 1999.)).

Lane's father, William Lane, PhD, president of Cartilage Consultants, was cited in a separate settlement. Cartilage Consultants manages promotions for Lane Labs. The elder Lane and his company are not responsible for any portion of the penalty. Both agreements are tentative pending court approval.

In addition to Lane Labs' cash payments, the companies are enjoined from marketing BeneFin or SkinAnswer with cancer claims, or any products that make any unsubstantiated claims. The defendants do not stipulate to any charges that they violated any law.

In addition to alleging the companies made claims without scientific backing, the commission made several specific accusations. According to FTC, the companies willfully misled consumers to believe the products carried FDA approval and misrepresented the depth of clinical support proving efficacy.

FTC also says Lane Labs drew Web users to the firm's site by programming "metatags" that would cause it to appear in Internet search results for terms such as "cancer treatment" and "cancer survivor."

Although the commission voted 5-0 in favor of the settlement, Commissioner Orson Swindle took exception to the clause directing Lane Labs to fund an NCI study on its products. "The commission is permitting Lane Labs to use some of the proceeds from its deceptive efficacy claims to pay for clinical trials that it was legally obligated to conduct before it ever made its efficacy claims," Swindle notes.

Moreover, "the provision would effectively allow an advertiser that abused consumers to use the proceeds of its abuse to pay for a study that it should have paid for itself," he maintains.

While conceding "spending money on cancer research promotes the public health," Swindle suggests that aspect of the settlement is inappropriate because "Lane Labs will receive a significant economic benefit" from the NCI clinical trial the company had agreed to fund prior to entering into the consent agreement.

In early 1999, the company entered into an agreement with the National Institutes of Health to study the effect of its shark cartilage in lung cancer patients (² (Also see "NCI Phase III Trial On Shark Cartilage May Begin Recruitment Summer/Fall" - Pink Sheet, 1 Mar, 1999.)).

The Lane Labs settlement specifically forbids the company or the younger Lane to "receive...any funds or other assets" derived from shark cartilage sales for the trial or reclaim any portion of the $450,000 if the study is cancelled.

In response to Swindle, FTC Chairman Robert Pitofsky and Commissioner Mozelle Thompson say "we appreciate the concerns raised by our colleague...[but] given the importance of evaluating shark cartilage as a therapy, we think the public interest is best served by the approach taken here."

The settlement brings to a close nearly three years of FDA, FTC and Justice Department investigations into Lane Labs' and Cartilage Consultants' marketing of Benefin powders and tablets and SkinAnswer lotion as cancer treatments. Lane's trouble began with an FDA warning letter Sept. 24, 1997 regarding promotions organized by William Lane.

House Government Reform Committee Chairman Dan Burton (R-Ind.) recently came to the company's defense. He criticized FDA for taking the company to court, saying the agency squelched innovation by prosecuting firms in the midst of clinical research (³ (Also see "Lane Labs USA" - Pink Sheet, 10 Apr, 2000.)).

The FTC action is one of seven initiated under the commission's "Operation Cure.All" Internet health claims enforcement program kicked off last year. Recent targets include companies making claims to treat or prevent arthritis, cancer, HIV/AIDS, colds and allergies and attention deficit hyperactivity disorder (⁴ (Also see "FTC Focuses On Dietary Supplement/Online Advertising In 1999" - Pink Sheet, 6 Mar, 2000.)).