Off-Label Marketing of Drugs and Medical Devices

The FDA regulates commerce in medical devices and prescription drugs, approving drugs or devices for specified uses or treatments of particular medical conditions. Safety and efficacy are the touchstones for FDA approval. The package insert or product manual that physically accompanies the drug or device sets forth the FDA-approved uses for that product.

Although off-label promotion is not expressly prohibited by statute, the FDA views it as violating the prohibitions of the Food Drug and Cosmetic Act (FDCA) against 'misbranding' (introducing into commerce devices or drugs lacking adequate directions for use) or distributing 'unapproved new drugs.' See 21 U.S.C. ' 331. Under either theory, the main factual issue is whether the manufacturer is promoting an 'intended use' not approved by the FDA.

The government says it determines a manufacturer's intended use not just from its explicitly promotional pitches ' product labeling, advertisements, and sales representatives' statements to physicians ' but from the totality of the manufacturer's conduct, communications and circumstances surrounding distribution of the product. Any information disseminated by or on behalf of manufacturers can provide evidence of intended use. For example, the government looks at how a manufacturer influences the content of scientific and educational meetings that cover off-label topics, funds off-label research, disseminates journal articles concerning off-label findings, supports continuing medical education programs in off-label areas, uses consultants and advisory boards for scientific and marketing feedback, and develops public relations initiatives.

If the government or a whistleblower reads into this constellation of behavior an intended use that is not FDA-approved, then the manufacturer can expect a flurry of subpoenas, parallel civil and criminal investigations, employee and ex-employee interviews, and voluminous document production going back at least six years.

The False Claims Act

Besides the FDCA, the government has charged manufacturers under the False Claims Act, alleging that off-label marketing 'causes' physicians and providers to prescribe off label and thus to file claims for federal reimbursement that are 'false,' giving rise to treble damages and an $11,000 penalty per claim. Often the government considers charges of illegal kickbacks based on benefits (such as honoraria) received by providers. Manufacturers also may face piggyback private civil consumer fraud and products liability exposures. Under the threat of large financial penalties and even criminal prosecution and the potential of exclusion from federal programs, some manufacturers have agreed to huge settlements, deferred-prosecution agreements, and/or onerous corporate integrity agreements.

Criminal liability in off-label cases is not limited to corporations. FDCA violations can be charged either as felonies or misdemeanors. 21 U.S.C. ' 333(a)(1)-(2). A 'responsible corporate officer' (i.e., one at the time with the responsibility and authority either to prevent or promptly correct the alleged misconduct) may be convicted of a misdemeanor violation even without proof of knowledge or intent to cause misbranding ' a rare example in U.S. law of strict criminal liability. See United States v. Park, 421 U.S. 658 (1975). In the Purdue Frederick case, the company and its CEO, Chief Legal Officer and Medical Director entered guilty plea agreements, the corporation to a felony, and the individuals to a misdemeanor misbranding charge.

A Topsy-Turvy World of Off-Label Enforcement

The regulation of off-label promotion is asymmetrical. Although the government says it's a crime for manufacturers to promote off-label uses, providers like hospitals and physicians are completely free to use devices or prescribe drugs off label. See 21 U.S.C. ' 396; Buckman Co. v. Plaintiffs' Legal Committee, 531 U.S. 341, 350 (2001) (off-label usage of medical devices is not subject to FDA regulation). Thus, whether or not a statement about an off-label use is charged as a crime may depend on whether the speaker is an employee of the manufacturer, whether the manufacturer initiated the statement or responded to a question, or whether the audience is composed of doctors as opposed to, say, stockholders.

Moreover, as the government views the law, it does not necessarily matter if the off-label information being disseminated by the manufacturer is truthful, fair and balanced. See e.g., United States v. Caputo, 288 F. Supp. 2d 912, 920-23 (N.D. Ill. 2003), appeal pending ('the FDA's ability to evaluate the effectiveness of off-label uses' would be severely frustrated if manufacturers could 'engage in all forms of truthful, non-misleading promotion of off-label use').

Another anomaly is that many off-label uses of FDA-approved drugs are recommended in medical compendia and are reimbursable under the federal Medicare and Medicaid programs. Indeed, the FDA has long acknowledged both the value of off-label uses in medical treatment and the 'important role' that 'drug and device manufacturers have ' in legitimate scientific and educational discussions, including discussions of unapproved products and unapproved uses.' 59 Fed. Reg. 8798, 8803 (Mar. 19, 1987); 62 Fed. Reg. 64074, 64081 ((Dec. 3, 1997).

In short, the dissemination of important scientific information about off-label uses in some contexts can get a manufacturer in trouble. Of course, potential defenses exist. They tend to center on the ambiguity of certain FDA regulations, the inconsistency between regulations and the FDCA, First Amendment protections for commercial speech, de facto safe harbors for continuing medical education (CME) and peer-reviewed journal distribution, and challenging causation under the False Claims Act. As noted above, many cases tend to settle without litigating these defenses. But see United States ex rel. Franklin v. Parke-Davis, 2003 U.S. Dist. Lexis 15754 (D. Mass. Aug. 22, 2003) (some causation defenses raised and rejected; case subsequently settled).

Policy Concerns

Off-label prescription of drugs and devices plays an important, sometimes life saving, role. In areas like oncology, pediatric illness and psychiatry, off-label use of some drugs actually swamps on-label use. Commentators attribute this to new discoveries changing the best-practice standard of care faster than the FDA can approve new drugs; patient demand when best practices fail to stem a disease; and the cost of getting FDA approval of new uses for old drugs ' an investment that is difficult to justify when patient populations are small, the targeted diseases are rare, or patent protection is about to lapse. See Tabarrok, A: Assessing the FDA Via the Anomaly of Off-Label Drug Prescribing, The Independent Review at 226 (Summer 2000). Thus, the government's use of civil and criminal prosecutions to deter off-label promotion raises a number of policy questions:

• Shouldn't the proper regulatory divide be whether information disseminated is truthful versus misleading, and not whether it's on-label versus off-label?
• What is the proper role of manufacturers in meeting the need for providers' access to truthful, useful, scientific and medical information about off-label uses?
• Will the government's prosecution policies retard manufacturer support for CME on off-label topics and research into off-label uses?
• Do off-label prohibitions run up against the right of commercial free speech under the First Amendment?
• Do the many government investigations of off-label use signal a need for more regulatory clarity and government communication with industry and less emphasis on criminal/civil prosecutions to regulate conduct?

Red Flags for Everyday Practice

Under current regulations, a manufacturer's express marketing and promotional activities must not tout an off-label use. Sales representatives who visit physicians, advertisements, and expressly promotional conferences with physicians should not affirmatively initiate communications about off-label uses.

Even activities which are not expressly categorized or budgeted as promotional, may'in the government's view'cross the line into forbidden off-label promotion. To reduce the risk of exposure, compliance audits of sales and marketing practices should keep in mind the following red flags cited by the government in various investigations:

• Whether the size of a company's sales force is proportional to its on-label market;
• Whether providers targeted for detailing by sales reps primarily treat the on-label disease;
• Whether the company's internal forecasts and business plans depend on 'growing' the off-label market;
• Whether medical literature disseminated about an off-label use is based on 'good science' and is not otherwise misleading, unfair or unbalanced;
• Whether studies with 'bad' results concerning off-label use are made publicly available alongside those supporting an off-label use;
• Whether the manufacturer actively prompts questions about off-label uses (even if the resulting answers are scientifically accurate);
• Whether CME seminars and conferences focus on off-label uses, and, if so, whether the content, faculty and/or number of CMEs are dictated by the manufacturer;
• Whether the manufacturer's 'marketing' budget is used to support ostensibly non-promotional events like CME and research involving off-label use;
• Whether the manufacturer conducts return-on-investment analyses (ROI) with respect to ostensibly non-promotional activities;
• Whether studies of off-label uses, particularly ones of limited scientific value, are supported, suggested or encouraged by the manufacturer or its sales representatives;
• Whether educational grants, invitations to conferences and other 'perks' are selectively distributed to high-volume off-label prescribers;
• Whether paid consultants and advisory boards are used merely as opportunities to educate (and perhaps reward with honoraria or exotic trips) opinion leaders about an off-label use; and
• Whether outside vendors are used to do that which the company could not do directly.

It remains to be seen whether policy concerns about off-label enforcement will be addressed by the executive or legislative branch. In the meantime, in-house counsel and compliances officers must continue to be alert to these potential exposures.

Ronald H. Levine ([email protected]), a member of the Editorial Board, is a partner at the Philadelphia-based law firm of Post & Schell, P.C., heading its White Collar Defense, Compliance and Risk Management Group. Levine was previously Chief of the Criminal Division of the U.S. Attorney's Office for the Eastern District of Pennsylvania. He has represented companies, executives and sales personnel in off-label investigations.

Policing the marketing of drugs and devices was once primarily the preserve of the Food and Drug Administration (FDA), which focused on misleading labels and outright quackery. No longer. Nowadays, many federal investigations, worked jointly by the FDA, Department of Justice (DOJ) and Health and Human Services (HHS), are fueled by the enormous financial recoveries that can be won from manufacturers accused of illegally promoting FDA-approved drugs or devices, bearing an FDA-approved label, for uses not approved by the FDA ('off-label' uses).

For example, Warner-Lambert pleaded guilty, paid $430 million, and entered into a 'Corporate Integrity Agreement' to resolve civil and criminal charges over off-label promotion of the drug Neurontin^'. Other reported settlements relate at least in part to off-label allegations: Genentech ($50 million); Lilly ($36 million); Serono ($704 million); Schering-Plough ($435 million); Intermune ($36 million) and, more recently, Purdue Frederick ($470 million).

The Statutory Framework

The FDA regulates commerce in medical devices and prescription drugs, approving drugs or devices for specified uses or treatments of particular medical conditions. Safety and efficacy are the touchstones for FDA approval. The package insert or product manual that physically accompanies the drug or device sets forth the FDA-approved uses for that product.

Although off-label promotion is not expressly prohibited by statute, the FDA views it as violating the prohibitions of the Food Drug and Cosmetic Act (FDCA) against 'misbranding' (introducing into commerce devices or drugs lacking adequate directions for use) or distributing 'unapproved new drugs.' See 21 U.S.C. ' 331. Under either theory, the main factual issue is whether the manufacturer is promoting an 'intended use' not approved by the FDA.

The government says it determines a manufacturer's intended use not just from its explicitly promotional pitches ' product labeling, advertisements, and sales representatives' statements to physicians ' but from the totality of the manufacturer's conduct, communications and circumstances surrounding distribution of the product. Any information disseminated by or on behalf of manufacturers can provide evidence of intended use. For example, the government looks at how a manufacturer influences the content of scientific and educational meetings that cover off-label topics, funds off-label research, disseminates journal articles concerning off-label findings, supports continuing medical education programs in off-label areas, uses consultants and advisory boards for scientific and marketing feedback, and develops public relations initiatives.

If the government or a whistleblower reads into this constellation of behavior an intended use that is not FDA-approved, then the manufacturer can expect a flurry of subpoenas, parallel civil and criminal investigations, employee and ex-employee interviews, and voluminous document production going back at least six years.

The False Claims Act

Besides the FDCA, the government has charged manufacturers under the False Claims Act, alleging that off-label marketing 'causes' physicians and providers to prescribe off label and thus to file claims for federal reimbursement that are 'false,' giving rise to treble damages and an $11,000 penalty per claim. Often the government considers charges of illegal kickbacks based on benefits (such as honoraria) received by providers. Manufacturers also may face piggyback private civil consumer fraud and products liability exposures. Under the threat of large financial penalties and even criminal prosecution and the potential of exclusion from federal programs, some manufacturers have agreed to huge settlements, deferred-prosecution agreements, and/or onerous corporate integrity agreements.

Criminal liability in off-label cases is not limited to corporations. FDCA violations can be charged either as felonies or misdemeanors. 21 U.S.C. ' 333(a)(1)-(2). A 'responsible corporate officer' (i.e., one at the time with the responsibility and authority either to prevent or promptly correct the alleged misconduct) may be convicted of a misdemeanor violation even without proof of knowledge or intent to cause misbranding ' a rare example in U.S. law of strict criminal liability. See United States v. Park , 421 U.S. 658 (1975). In the Purdue Frederick case, the company and its CEO, Chief Legal Officer and Medical Director entered guilty plea agreements, the corporation to a felony, and the individuals to a misdemeanor misbranding charge.

A Topsy-Turvy World of Off-Label Enforcement

The regulation of off-label promotion is asymmetrical. Although the government says it's a crime for manufacturers to promote off-label uses, providers like hospitals and physicians are completely free to use devices or prescribe drugs off label. See 21 U.S.C. ' 396; Buckman Co. v. Plaintiffs' Legal Committee , 531 U.S. 341, 350 (2001) (off-label usage of medical devices is not subject to FDA regulation). Thus, whether or not a statement about an off-label use is charged as a crime may depend on whether the speaker is an employee of the manufacturer, whether the manufacturer initiated the statement or responded to a question, or whether the audience is composed of doctors as opposed to, say, stockholders.

Moreover, as the government views the law, it does not necessarily matter if the off-label information being disseminated by the manufacturer is truthful, fair and balanced. See e.g., United States v. Caputo , 288 F. Supp. 2d 912, 920-23 (N.D. Ill. 2003), appeal pending ('the FDA's ability to evaluate the effectiveness of off-label uses' would be severely frustrated if manufacturers could 'engage in all forms of truthful, non-misleading promotion of off-label use').

Another anomaly is that many off-label uses of FDA-approved drugs are recommended in medical compendia and are reimbursable under the federal Medicare and Medicaid programs. Indeed, the FDA has long acknowledged both the value of off-label uses in medical treatment and the 'important role' that 'drug and device manufacturers have ' in legitimate scientific and educational discussions, including discussions of unapproved products and unapproved uses.' 59 Fed. Reg. 8798, 8803 (Mar. 19, 1987); 62 Fed. Reg. 64074, 64081 ((Dec. 3, 1997).

In short, the dissemination of important scientific information about off-label uses in some contexts can get a manufacturer in trouble. Of course, potential defenses exist. They tend to center on the ambiguity of certain FDA regulations, the inconsistency between regulations and the FDCA, First Amendment protections for commercial speech, de facto safe harbors for continuing medical education (CME) and peer-reviewed journal distribution, and challenging causation under the False Claims Act. As noted above, many cases tend to settle without litigating these defenses. But see United States ex rel. Franklin v. Parke-Davis, 2003 U.S. Dist. Lexis 15754 (D. Mass. Aug. 22, 2003) (some causation defenses raised and rejected; case subsequently settled).

Policy Concerns

Off-label prescription of drugs and devices plays an important, sometimes life saving, role. In areas like oncology, pediatric illness and psychiatry, off-label use of some drugs actually swamps on-label use. Commentators attribute this to new discoveries changing the best-practice standard of care faster than the FDA can approve new drugs; patient demand when best practices fail to stem a disease; and the cost of getting FDA approval of new uses for old drugs ' an investment that is difficult to justify when patient populations are small, the targeted diseases are rare, or patent protection is about to lapse. See Tabarrok, A: Assessing the FDA Via the Anomaly of Off-Label Drug Prescribing, The Independent Review at 226 (Summer 2000). Thus, the government's use of civil and criminal prosecutions to deter off-label promotion raises a number of policy questions:

• Shouldn't the proper regulatory divide be whether information disseminated is truthful versus misleading, and not whether it's on-label versus off-label?
• What is the proper role of manufacturers in meeting the need for providers' access to truthful, useful, scientific and medical information about off-label uses?
• Will the government's prosecution policies retard manufacturer support for CME on off-label topics and research into off-label uses?
• Do off-label prohibitions run up against the right of commercial free speech under the First Amendment?
• Do the many government investigations of off-label use signal a need for more regulatory clarity and government communication with industry and less emphasis on criminal/civil prosecutions to regulate conduct?

Red Flags for Everyday Practice

Under current regulations, a manufacturer's express marketing and promotional activities must not tout an off-label use. Sales representatives who visit physicians, advertisements, and expressly promotional conferences with physicians should not affirmatively initiate communications about off-label uses.

Even activities which are not expressly categorized or budgeted as promotional, may'in the government's view'cross the line into forbidden off-label promotion. To reduce the risk of exposure, compliance audits of sales and marketing practices should keep in mind the following red flags cited by the government in various investigations:

• Whether the size of a company's sales force is proportional to its on-label market;
• Whether providers targeted for detailing by sales reps primarily treat the on-label disease;
• Whether the company's internal forecasts and business plans depend on 'growing' the off-label market;
• Whether medical literature disseminated about an off-label use is based on 'good science' and is not otherwise misleading, unfair or unbalanced;
• Whether studies with 'bad' results concerning off-label use are made publicly available alongside those supporting an off-label use;
• Whether the manufacturer actively prompts questions about off-label uses (even if the resulting answers are scientifically accurate);
• Whether CME seminars and conferences focus on off-label uses, and, if so, whether the content, faculty and/or number of CMEs are dictated by the manufacturer;
• Whether the manufacturer's 'marketing' budget is used to support ostensibly non-promotional events like CME and research involving off-label use;
• Whether the manufacturer conducts return-on-investment analyses (ROI) with respect to ostensibly non-promotional activities;
• Whether studies of off-label uses, particularly ones of limited scientific value, are supported, suggested or encouraged by the manufacturer or its sales representatives;
• Whether educational grants, invitations to conferences and other 'perks' are selectively distributed to high-volume off-label prescribers;
• Whether paid consultants and advisory boards are used merely as opportunities to educate (and perhaps reward with honoraria or exotic trips) opinion leaders about an off-label use; and
• Whether outside vendors are used to do that which the company could not do directly.

It remains to be seen whether policy concerns about off-label enforcement will be addressed by the executive or legislative branch. In the meantime, in-house counsel and compliances officers must continue to be alert to these potential exposures.

Ronald H. Levine ([email protected]), a member of the Editorial Board, is a partner at the Philadelphia-based law firm of Post & Schell, P.C., heading its White Collar Defense, Compliance and Risk Management Group. Levine was previously Chief of the Criminal Division of the U.S. Attorney's Office for the Eastern District of Pennsylvania. He has represented companies, executives and sales personnel in off-label investigations.