Healthcare Advertising: Understanding the FTC’s Role and Regulations

Health Update

Keeping patients well informed is a core principle of American healthcare policy, and advertising plays an important role in getting important information out to the public. The laundry list of side effect warnings featured in pharmaceutical ads—which typically account for two-thirds of healthcare marketing expenditures—is the result of the Food and Drug Administration’s (FDA) regulatory authority over the pharmaceutical industry.

Promotional activities by other healthcare stakeholders—such as hospitals, health systems and clinics—often fall outside of the FDA’s jurisdiction and are subject to the general advertising rules and regulations enforced by the Federal Trade Commission (FTC). Healthcare marketing expenditures outside of the pharmaceutical industry have seen extraordinary growth in recent years. For example, hospital expenditures rose 40% between 2011 and 2015. It is incumbent on healthcare advertisers to become familiar with the FTC’s marketing standards.

For a long time, the FTC has valued the role that advertising plays in disseminating important information. For example, former FTC Commissioner Mary Azcuenaga once remarked, “I see both advertising and the regulation of advertising in a more positive light, as a means of improving the ability of consumers to make informed purchasing choices.”

The basis of the FTC’s regulation of advertising lies in the Federal Trade Commission Act’s prohibition of unfair and deceptive acts or practices. (It should be noted that most states have adopted what are known as “Little FTC Acts,” which are typically enforced by state attorneys general. Most states follow the principles and interpretations set out by the FTC, so the discussion that follows will stay focused on FTC authority.)

The Three-Part Standard for Determining Deceptive Practices

The FTC’s advertising enforcement centers on deceptive, rather than unfair, practices. The FTC has established a three-part standard for the determination of a deceptive practice:

  • The representation must mislead or be likely to mislead the consumer;
  • The consumer’s interpretation must be reasonable under the circumstances; and
  • The misleading misrepresentation, omission or practice must be material.

The FTC also has set out additional guidelines regarding substantiation of claims and consumer endorsements, which are particularly relevant to healthcare marketing.

The Importance of Substantiating Claims

As one would expect, much of healthcare marketing involves claims regarding health treatments, covering everything from emergency room (ER) wait times to survival rates for specific conditions. The FTC has made it clear that before disseminating an advertisement, the advertiser must substantiate all claims—express and implied—that the ad conveys to reasonable consumers.

Accordingly, an advertisement regarding ER wait times would require substantiation as to the claim being made. For example, if a static billboard ad references “shortest wait times,” then, before the ad is put up, documentation must be available that identifies the relevant geographic area that the ER serves, demonstrates comparable wait times at competing ERs, and provides evidence supporting the claim that the specific ER being advertised has shorter average waiting periods. If the comparison is to a national standard for certain types of trauma or conditions, such as heart attacks or strokes, then that qualification needs to be made in the ad itself.

Similarly, a healthcare provider advertising treatment results must be able to substantiate any claims. Comparison claims to regional or national averages must be clearly communicated. Further, advertisers should not make claims regarding success rates if there is some statistical anomaly behind the data. For example, if a national average for a cure rate is 50% but the advertising facility has a 75% cure rate, clinical staff should be consulted to ensure that there is nothing abnormal in that facility’s population pool that caused the better result.

Care must always be taken in any type of healthcare marketing to be mindful of the prospective patient’s understanding of the ad. If a person suffering from a specific condition sees an ad demonstrating a much higher success rate than a national norm, he or she will naturally assume that the increased success is a result of the facility, not an aberration in the patient pool or number of cases treated.

A Guide to Patient Endorsements

Just as treatment claims must be substantiated as typical, patient endorsements also must reflect typical outcomes. The FTC has stated that patient endorsements must speak to the kind of result that the average patient would reasonably expect to experience. If the endorsement does not present the typical result, then the advertisement must disclose what the typical result would be.

It is important to note that “results not typical” is an insufficient disclaimer. The FTC expects an advertiser to disclose the actual typical result in the advertisement. Again, the key concern is to avoid creating the false impression in the mind of a prospective patient that the result advertised is what the person viewing the ad is likely to achieve.

Ads for healthcare providers should focus on highlighting the ability of that facility to spot patients who would be suitable for certain treatments. The claim should not promise that the result will be typical for all patients, but that the analysis—the facility staff’s determination of a patient’s suitability for treatment—will be typical for all patients.

FTC Law and Digital Advertising

It is estimated that about half of all hospital marketing is distributed through digital advertising. FTC law is no less applicable in the digital sphere than in traditional media.

The FTC has issued specific guidance for digital marketing. The most important standard for marketers to be aware of is that if the necessary disclaimers can’t be fit into the digital medium, then the ad probably should not be run. For example, influencer marketing is fast proving one of the most effective ways to advertise in the digital arena. When an endorsement is being made for pay, that fact must be disclosed. (An exception can take place if the circumstances of the ad are such that a reasonable person would know that the person making the endorsement was clearly compensated.) Disclosures can be difficult in the reduced footprint of digital spaces, such as Twitter; nevertheless, the required disclosures must be made, or the ad should not be run.

Digital marketing allows for “just-in-time” advertisements to be made. Location-targeted promotion allows ads to be shown at the right place and right time, based on tracking the user’s location. An example of location-targeted advertising in the healthcare arena can be seen in marketing by pro-life advocacy groups to people visiting abortion clinics. The Massachusetts attorney general has made an effort to limit location-targeted pro-life ads. The powerful attributes of digital marketing require sensitive handling to avoid what is artfully known as “the creep factor.” Healthcare providers must be mindful to provide timely and accurate information while not appearing to be tracking and exploiting sensitive information regarding a patient’s location.

Conclusion

Massive changes in the healthcare industry in recent years have created the impetus for hospitals and other facilities to advertise, while in the past they might have relied mainly on referrals from doctors. With a growing policy push for consumers to take an active role in healthcare choices, healthcare entities, such as hospitals, are in a position to gain new patients through effective marketing campaigns. Broad promotional efforts allow hospitals to draw on larger patient pools from across regions, the nation or even the globe. By using marketing to become known as a go-to facility, a hospital also can increase the likelihood that it will be included in health insurance networks.

Regardless of the economic issues confronting providers, advertising is an essential means of creating an informed patient pool, and no information is more important to get before consumers than issues related to their health. Healthcare providers should be mindful that as they continue to expand their marketing efforts, however, they must abide by the time-honored marketing standards of the FTC.