The next point is a subject which has been mentioned here this morning, and I will just mention it without going all over it again. The Commission combines the diverse functions of adjudication, and that is very important in determining whether the present policy as to court review should be continued or not. It is the complainant, it is the prosecutor, it is the jury, it is the judge, all rolled into one.

There is another matter I would like to comment upon that has a bearing upon this policy and a very real bearing as it applies to the Federal Trade Commission, and that is this: The Commission's adjudicating power has been greatly enlarged. It may be said, why do we disturb this practice which has gone on for a number of years, that has attained a position of respect by its antiquity? That is not the situation. When we determine whether this policy should be continued or not we must view this policy not in the light of 1914, when the Federal Trade Commission Act was passed, but in the light of 1938 and afterwards, when the Federal Trade Commission Act was substantially amended.

Just let me call your attention to two or three things on that score. Prior to 1938 the Federal Trade Commission orders could not be enforced except upon petition to the circuit courts of appeal. The Federal Trade Commission could enter an order to cease and desist and the respondent could ignore that order with impunity, for just as long as the Commission did not disturb him. The Commission had no way of enforcing it. The Commission had to file a petition with the circuit courts asking that the order be enforced by the court, and at that time the respondent might bring to the order any attack which he had. He did not have much, perhaps, but at that time he could bring what he had and he was not prejudiced by the delay.

That situation was radically changed in 1938 by a provision, an amendment to the act, whereby the cease-and-desist order now becomes final in a certain number of days after the entry of the order if you do not appeal, and if you do appeal then in a certain number of days after the conclusion of that.

That cease-and-desist order when it becomes final is what might be called self-executing. That is to say, if you violate it you are then subject to civil-penalty action for a forfeit of $5,000 for each violation of the order. The only question presented then is whether or not there has been a violation. At that time one cannot even inquire whether there was evidence to support it, regardless of how much evidence.

Now, I say that makes a very different situation in this act as we view it today.

There is another thing which should be borne in mind if we consider whether we are to continue the policy of the years in the light of 1938 amendments. Prior to 1938, the Commission's jurisdiction in the particulars that we are speaking of was to prevent unfair methods of competition in commerce.

That may have been a phrase of some expansion but it also had some limitations. The section was amended to provide that the Commission may prevent, or was empowered to prevent, unfair methods of competition in commerce and unfair or deceptive acts or practices. There are no limits to that expansion. You are not bound by competition. It is "unfair acts and practices" in commerce. Therefore,

the Commission's jurisdiction in which it has this freedom from review is a vastly larger thing than it was in 1914 when the act was first written.

And, as I shall discuss with you in just a moment, the Commission's jurisdiction was still more extended by enlarging its powers with respect to the advertisements of foods, drugs, cosmetics, and therapeutic devices. That leads into the other situation which I mentioned at the outset which so sorely needs the attention of Congress.

In 1938 there were passed two laws, one was the Federal Food, Drug, and Cosmetic Act and the other was the Lea Act, amending the Federal Trade Commission Act in the respect which I have just mentioned and also to enlarge its powers with respect to false advertising of these products.

When the food and drug bills were proposed in 1933 and over the years until 1938, they all included provisions dealing with the advertising, not only the composition and the labeling but also the advertising. The Federal Trade Commission took the position that it had exercised jurisdiction over the advertisements of foods, drugs, and cosmetics as a part of its jurisdiction to deal with unfair methods of competition. That was quite true, of course. It had so exercised jurisdiction. The Commission said that its jurisdiction in this respect should not be taken from it and given to the Food and Drug Administration, but if you were going to do anything its jurisdiction should be strengthened. That was the solution which came out of this very committee in 1938. The food and drug bill was stripped of its references to advertising and the Federal Trade Commission Act had several new sections added.

There was a section added which provided a criminal penalty for advertising which was dangerous to health in its falsity or which was willful. That power is to be exercised by prosecutions in the court. There was an injunction provision added to permit the Commission to seek an injunction in the courts against advertising which was dangerous in its falsity pending the outcome of the Commission's proceeding.

We do not need to take any time with the criminal phase and the injunction phase. The principal thing that was done was that a definition of false advertising was prescribed, and this bill seeks to amend that definition. It was intended, we thought, in 1938, that there was to be no conflict between the Food and Drug Act and the Federal Trade Commission Act in this respect. The reports from this committee certainly seem to indicate that, and I rather think that that is a presumption which we can indulge in, that this committee did not intend any conflict. And so, the definition of false advertising which was written into the Federal Trade Commission Act excluded labeling.

The definition read like this, and it is section 15 (a) of the act

The term "false advertisement" means an advertisement, other than labeling, which is misleading in a material respect; and in determining whether any advertisement is misleading, there shall be taken into account (among other things) not only representations made or suggested by statement, word, design, device, sound, or any combination thereof, but also the extent to which the advertisement fails to reveal facts material in the light of such representations or material with respect to consequences which may result from the use of the commodity to which the advertisement relates under the conditions prescribed in said advertisement, or under such conditions as are customary or usual.

There is a little more to the definition than that, but that is all that is involved here and that is necessary to the discussion.

Now, any advertisement of these four products, foods, drugs, devices, or cosmetics which are false as so defined are declared to be unfair acts and practices in commerce and subject to the Commission's administrative procedure under section 5. The result has been that we have two agencies dealing with the same subject matter. When that subject matter appears in the labeling we are in the courts under the Food and Drug Act, and when it appears in the advertising we are in the Federal Trade Commission under the Federal Trade Commission procedures. If that were all there was to this, the situation would not be as serious. That has certain disturbing factors, because, for one thing, we are running into questions of res adjudicata between these two agencies. We have the Food and Drug Administration proceeding in the courts and the courts being estopped by a Federal Trade Commission order in the same circumstances (U. S. v. Willard Tablet Co., 141 Fed. (2) 141, C. C. A. 7).

The more serious aspect, however, is that the Commission has proceeded to deal with the labeling of these products, so that we have the Commission and the Food and Drug Administration both dealing with the labeling. They have done that largely through a general clause in section 15 (a) which this bill proposes to strike out. That is the clause which reads

material with respect to consequences which may result from the use of the commodity to which the advertisement relates under the conditions prescribed in said advertisement or under such conditions as are customary or usual.

Now, that provision or that clause which this bill proposes to strike out has been used by the Commission as though it were a requirement for warnings of a directional nature in the advertisements. I submit to you that this section 15 (a) was for the purpose of encompassing an advertisement which may be false by virtue of its affirmative statements or by virtue of its omissions; that you could walk all the way around it to see whether it was false by its silence or whether it was false by its expression or both. I submit to you that this section when it was written was never intended to be authority for the Commission to proceed to require either warnings in the advertisements or warnings in the labeling.

Here is the way the thing is working: When I say "warnings" let me make it clear-it should not be confused-I am not speaking of cases in which there may be a dangerous drug. I am not speaking of some warning which flags the drug as being per se dangerous. I am speaking of, and the Commission has been dealing with, warnings which are of a directional nature; warnings that the product should not be used excessively, that the product should be used in given circumstances, that the product should not be used in stated pathological conditions.

Now, the Food and Drug Act does deal with that subject and the act deals with it expressly. Section 502 (f) of the Federal Food, Drug and Cosmetic Act has a particular provision for that. It is:

A drug shall be deemed to be misbranded unless its labeling bears (1) adequate directions for use; and (2) such adequate warnings against use in those pathological conditions or by children where its use may be dangerous to health, or against unsafe dosage or methods or duration of administration or application, in such manner and form, as are necessary for the protection of the users.

Mr. Chairman, that is an express requirement of the Food and Drug Act. There is no comparable provision in the Federal Trade Commission Act. But under the guise of regulating advertising, the Commission has presumed to insist upon the nature and the language of the warnings which must appear upon the packages of these products on the penalty that if one does not put it on the package as the Commission wants it he must put it in the advertising. So, indirectly the Commission has exercised and does exercise control over the labeling.

If

Now, Congress is the only place where this can be straightened out. This is where it started. This is where the two acts came from. Now, the fact is that the situation exists. There is no question about that. I was looking here a moment ago at some stipulations and orders. you were under the impression that they deal with dangerous drugs, arsenic and poisons, and so forth, you would be under a misapprehen- · sion. These orders deal with such things as headache and cold remedies, nose drops, tonics, ointments, laxatives. The laxative warnings are something such as this:

There is potential danger in its use in cases when abdominal pain (stomachache, cramps, colic) nausea, vomiting (stomach sickness), or other symptoms of appendicitis are present, and that frequent or continued use of this preparation may result in dependence on laxatives.

Well, as I tell you, that is a matter of direction which this committee took care of in the Food and Drug Act and which the Food and Drug Administration takes care of on every drug that is sold in interstate commerce. And the Federal Food and Drug Administration is a highly competent Federal agency, diligent in the enforcement of its statute.

Now, as I said to you the situation does exist. It is going on. The courts have held that the Commission does have jurisdiction over the labeling of these products. That has been held in several cases, I will give you a citation of two or three of them. One of them is the Fresh Groum Preserves Corp. v. Federal Trade Commission (125 Fed. (2d), 917, C. C. A. (2d), 1942). Another is Rigaud v. Federal Trade Commission (125 Fed. (2d) 590). Another is Charles of the Ritz Distribution Corp. v. Federal Trade Commission (143 Fed. (2d) 676).

The Federal Trade Commission is under the impression apparently that it has this power because it is exercising it. I would like to read you a quotation from one of the Commission's own briefs. They say that the limitation written into section 15 (a) was not intended to deprive them of jurisdiction over the labeling. The Commission's brief (pp. 27-39) in Dearborn Supply Co. against the Federal Trade Commission in the Seventh Circuit, said this:

The contention that the Commission has no jurisdiction over labeling is based on the provision of section 15 of the Federal Trade Commission Act, which, for the purposes of sections 12, 13, and 14, excludes "labeling" from the statute's definition of a "false advertisement" of foods, drugs, and cosmetics. This exclusion, we think, was intended to apply only in proceedings under sections 13 and 14 of the statute, to enjoin or criminally prosecute the dissemination of false advertisements in violation of section 12, and was not intended as a limitation upon the Commission's jurisdiction to suppress false labeling by an administrative order to cease and desist. [Italics mine.]

I call your attention to that. They say this inclusion was intended to apply only in proceedings under sections 13 and 14, the criminal and injunction proceedings, although section 16 says "for the purposes

of sections 12, 13, and 14," this definition of false advertisement shall exclude labeling.

Mr. Chairman, I am not sure that this bill and the amendments which it proposes at this point are sufficient to overcome all of the difficulty that is existing. I will say this, that it will go a long ways toward overcoming it, because by taking out the reference to warnings, you will remove the only shred of authority for an excursion into the field of therapeutics on every advertising case which a study of warnings involves.

It is one thing to say whether an advertisement is false or misleading. That may involve therapeutics to an extent, yes, but you cannot possibly deal with the indications for using a drug and the contraindications without getting deep into the field of therapeutics. And as soon as you do then you are in a field which the other agency of Government has been in for years under the comprehensive Federal Food, Drug, and Cosmetic Act.

I would like to refer to the last amendment to this bill:

Sec. 19. Food, drugs, devices, and cosmetics shall be exempt from the provisions of this act to the extent of the application or the extension thereto of the Federal Food, Drug, and Cosmetic Act, approved June 25, 1938, as amended.

It seems to me that would take foods, drugs, and cosmetics out from under the Federal Trade Commission Act insofar as the Food and Drug Act applies to them. That ought to take them out in every respect except on the simple advertising question which I believe this committee originally intended was what the Commission should have and all that the Commission should have. I submit to you that it is an appropriate thing to exempt these products from this act when they are subject to a dominant comprehensive act. That is in keeping with the policy which the Congress has held for years, and this committee in particular, and a policy which is expressed in the Federal Trade Commission Act itself.

For instance, the packers are not subject to the Commission Act, and the Civil Aeronautics Act which was recently passed takes those subject to that act out from under the Federal Trade Commission Act. The simple logic of it is that if Congress has seen fit to impose a full and comprehensive pattern of regulation for the food, drug, and cosmetic industries under one act with one body enforcing it, it ought not empower or tolerate another agency of the Government shopping over the same territory.

Mr. RABIN. Let me ask you, do you say that the Food, Drug, and Cosmetic Act confers jurisdiction over false advertising aside from labeling?

Mr. HOGE. No, sir; it does not.

Mr. RABIN. If this were enacted, would it take away the jurisdiction of the Federal Trade Commission with respect to false advertising for foods, drugs, and cosmetics ?

Mr. HOGE. No, sir; it would not, because, you see, the Food, Drug, and Cosmetic Act does not deal with false advertising.

Mr. RABIN. But it would merely take the labeling provision out? Mr. HOGE. Yes, sir; it would take the labeling provisions completely away from the jurisdiction of the Federal Trade Commission as far as these four products are concerned.