Federal Trade Commission Et Al V. Quincy Bioscience Holding Company, Inc. Et Al

Case Background

On January 9, 2017, the Federal Trade Commission (FTC) and the People of the State of New York filed a consumer protection lawsuit against Quincy Bioscience Holding Company, Inc., Quincy Bioscience, LLC, Prevagen, Inc., Quincy Bioscience Manufacturing, LLC, Mark Underwood, and Michael Beaman (collectively, “Defendants”) for deceptive practices related to the marketing and sale of Prevagen, a memory supplement. The false advertising lawsuit sought injunctive relief, restitution, and penalties under the FTC Act and New York state law for false advertising and fraud.

The lawsuit was filed in the United States District Court, New York Southern (Foley Square), with Judge Louis L. Stanton presiding. [Case Number: 1:17cv124]

Cause

The Federal Trade Commission (FTC), an independent U.S. agency, enforces laws against false advertising and deceptive practices. It can file lawsuits in federal courts, seek injunctions, and secure remedies like refunds and recovery of illicit profits. Similarly, the New York Attorney General (NYAG) enforces state laws to combat fraudulent business practices, pursuing penalties and restitution for consumers.

The Defendants in this case include Quincy Bioscience Holding Company, Inc., and its subsidiaries, based in Madison, Wisconsin. Co-founders Mark Underwood and Michael Beaman oversaw the company’s operations, advertising, and research. Since 2007, they marketed Prevagen, a dietary supplement, nationwide, claiming it improved memory and brain health using jellyfish-derived protein. Despite citing clinical evidence, these claims faced significant scrutiny.

The FTC and NYAG alleged that the Defendants misled consumers through deceptive practices, operating as a unified enterprise. Their complaint seeks accountability for profiting from unsubstantiated claims. From 2007 to mid-2015, Prevagen generated $165 million in sales, reflecting the campaign’s reach.

The company promoted Prevagen as a solution for age-related memory issues, suggesting benefits like improved recall and focus. Users were advised to take the supplement daily for 30 to 90 days. The Madison Memory Study, involving 218 participants, evaluated Prevagen’s effects but yielded inconsistent results. Critics argue the study’s positive findings resulted from selective post-hoc analyses, increasing the likelihood of random errors.

Research shows that apoaequorin, Prevagen’s key ingredient, breaks down during digestion and cannot reach the brain, challenging its efficacy claims. Despite disclaimers stating the product is not FDA-evaluated or disease-specific, the company heavily relied on testimonials to promote its benefits. While some users report improvements, scientific evidence remains inconclusive. Consumers should consult healthcare professionals before using the supplement.

Damages

The Plaintiffs sought permanent injunctive relief, contract rescission or reformation, restitution, and the refund of paid monies. They also sought the disgorgement of ill-gotten funds and other equitable remedies. These actions stemmed from violations of Sections 5(a) and 12 of the FTC Act, related to the labeling, advertising, marketing, promotion, distribution, and sale of Prevagen, a dietary supplement claimed to improve memory.

Key Arguments and Proceedings

Legal Representation

  • Plaintiff(s): Federal Trade Commission | People of the State of New York by Letitia James, Attorney General of the State of New York
    • Counsel for Plaintiff(s): Andrew Wone | Annette Soberats | Christine DeLorme | Edward Glennon | Tiffany Mihee-Kwon Woo | Kathryn Ann Matuschak | Mary Florence Alestra | Noah Popp
  • Defendant(s): Quincy Bioscience Holding Company, Inc., a corporation| Quincy Bioscience, LLC, a limited liability company | Prevagen, Inc., a corporation  dba Sugar River Supplements | Quincy Bioscience Manufacturing, LLC, a limited liability company | Mark Underwood | Michael Beaman [Terminated: 07/17/2020]
    • Counsel for Defendant(s): Damon William Suden | Caitlin Hickey | Geoffrey White Castello, III | Glenn T. Graham | Jaclyn Marie Metzinger | John E. Villafranco | William Alfred Escobar | Michael B. de Leeuw | John B. Kelly | Matthew Lawrence Elkin | Robert Stephen Clark | Tamar Schwartz Wise

Claims

False or Unsubstantiated Efficacy Claims

The FTC alleged that the Defendants falsely claimed Prevagen could improve memory, reduce memory issues related to aging, and provide cognitive benefits like a sharper mind and clearer thinking. They promoted these benefits through national advertisements, suggesting users could experience results within 90 days. However, the FTC stated these claims were either false or lacked adequate scientific support, violating federal laws against deceptive practices.

False Proof Claims

The Defendants also advertised Prevagen as “clinically shown” to improve memory and cognitive function. They highlighted supposed clinical studies that backed their claims, particularly improvements within 90 days. The FTC argued these representations were misleading and not supported by valid or reliable evidence. This, according to the FTC, constituted false advertising under the law.

Violations of New York State Law

The New York Attorney General accused the Defendants of repeated fraudulent and illegal conduct. They claimed Prevagen’s advertising misrepresented its effectiveness and clinical validation. These actions, the NYAG alleged, violated state laws prohibiting deceptive business practices and false advertising. The Defendants’ claims, which included memory improvement and cognitive benefits, were either false or unsubstantiated at the time they were made.

Consumer Injury

Both the FTC and NYAG highlighted significant consumer harm caused by these deceptive practices. Many consumers purchased Prevagen expecting memory and cognitive benefits that were not delivered. The agencies argued that the Defendants were unjustly enriched through these misleading claims. Without intervention, they warned, the Defendants might continue to harm consumers and undermine public trust.

Claims against Michael Beaman were dismissed on July 24, 2019.

Defense

Defendants denied the allegations of false advertising and misleading claims. They presented affirmative defenses against the claims made in the Complaint. First, they asserted that the Complaint should be dismissed due to a failure to state a valid claim for relief and a lack of personal jurisdiction over Mark Underwood in New York. They also argued that the doctrines of laches and waiver barred the claims, and any alleged consumer harm could be addressed adequately through damages.

Defendants claimed that the FTC lacked the authority to file the Complaint due to an invalid quorum of Commissioners at the time of filing. They further contended that the challenged advertising claims were protected commercial speech under the First Amendment, making them immune from regulation. Additionally, they argued that the relief sought by the Plaintiffs was overly broad and improperly restricted consumers’ access to valuable information about Prevagen’s benefits, contrary to the public interest.

Defendants maintained that their marketing practices were conducted in good faith and that consumers received the benefits they expected from Prevagen. They stated that their claims about Prevagen were substantiated by reliable scientific evidence accepted within the medical community. Moreover, they argued that any remaining claims fell under the primary jurisdiction of the FDA and that they fully complied with all relevant federal and state laws.

Lastly, Defendants contended that the alleged conduct occurred outside New York and therefore did not violate New York’s General Business Law. They reserved the right to assert additional defenses as more evidence became available during the case. These defenses collectively sought to challenge the Plaintiffs’ claims on procedural, substantive, and jurisdictional grounds.

Jury Verdict

At trial, the Plaintiffs contested eight statements made by the Defendants in promoting Prevagen. These statements included claims that Prevagen improves memory, is clinically shown to improve memory, improves memory within 90 days, and is clinically shown to improve memory within 90 days. The Defendants also claimed that Prevagen reduces memory problems associated with aging, is clinically shown to reduce such problems, and provides cognitive benefits like healthy brain function, a sharper mind, and clearer thinking.

On March 11, 2024, the jury concluded that none of these statements were supported by reliable scientific evidence. Additionally, it found that two of the claims, regarding memory problems related to aging, were materially misleading. The jury determined that these statements had the capacity to deceive consumers.

However, there was no evidence to suggest that Prevagen or the challenged statements caused harm or economic injury. No damages were claimed or proven. Ultimately, the jury cleared all statements except the two related to aging memory problems of being materially misleading.

On November 18, 2024, Judge Louis L. Stanton issued a judgment requiring the Defendants to immediately remove all challenged statements, and any similar ones, from all forms of Prevagen promotion. The Defendants were also ordered to stop using these statements in any marketing or promotional materials for Prevagen. Additionally, the Defendants’ staff had to be clearly informed that no challenged statement could be made regarding Prevagen’s performance, or in any situation where it could influence consumers.

Court Documents:

Available for purchase upon request