Off-Label Marketing Qui Tam Cases

A burgeoning area of Medicaid/Medicare health-care fraud is the off-label marketing of prescription drugs by manufacturers. The Federal Food and Drug Administration (“FDA”) must approve all prescription drugs sold in the United States. Upon application, the FDA reviews a proposed drug’s safety and efficacy. The FDA will then approve that drug for a particular indication. Once approved for that indication, the manufacturers must market the drug for only that use.

Problems arise when the cost of the drug far exceeds the market demand. The low demand may be due to the low occurrence of the disorder in the population. Drug companies will attempt to expand the market for their product by marketing it as a treatment for disorders that are more common or by marketing higher dosages than indicated. The bottom line is always the same—money. Some unscrupulous drug companies will throw caution to the wind in order to recoup the tremendous amount of money spent on research and development. However, if a governmental Medicaid or Medicare program pays for these non-approved uses, a false claim may arise.

The dissemination of information on off-label uses must meet certain requirements. A manufacturer may disseminate information concerning the safety, effectiveness, or benefit of a use not described in the approved labeling only if: (1) there is an application filed pursuant to 21U.S.C. § 355; (2) the information meets the requirements of 21 U.S.C. § 360aaa-1; (3) the information is not derived from clinical research conducted by another manufacturer or permission has been given to use such information; (4) the manufacturer has, within sixty days before dissemination, submitted to the Secretary (A) a copy of the information to be disseminated and (B) any clinical trial information relating to the safety or effectiveness of the new use; (5) the manufacturer has complied with section 360aaa-3 of this title; and (6) along with the information on the new use to be disseminated, the manufacturer includes a statement disclosing (A)(i) that the use is not approved, (ii) that the information is being disseminated at the manufacturer’s expense, (iii) the names of the authors who have received compensation from the manufacturer, (iv) the official labeling for the drug, (v) a statement that there are products or treatments that have been approved for the use, (vi) identification of any person that provided funding for the research, and (B) a bibliography of other articles that have been published about the use of the drug.

Failing that, the drug is misbranded. Although physicians are free to prescribe a drug for an off-label use, the FDA prohibits distribution of “misbranded” drugs, including drugs that have been distributed while accompanied by literature urging doctors to use the drugs in non-approved ways. Whether a drug is FDA-approved for a particular use, or dose, will largely determine whether a prescription for that drug will be reimbursable under the Medicaid program. Reimbursement by Medicaid, with only one rare exception, is prohibited if the drug is not being used for a medically-accepted indication. A medically-accepted indication is one that is approved under the Food, Drug and Cosmetic Act, or its use supported by approved compendia.

Additionally, the FDA has published a guidance document that sets forth twelve nonexclusive factors that the FDA will consider in evaluating manufacturers’ Continuing Medical Education (“CME”) activities and determining the independence of those activities. The factors are: (1) the degree of control the manufacturer has in the content of the presentation and the selection of moderators; (2) the extent to which the manufacturer has disclosed its financial relationship with the presentation; (3) the focus of the program; (4) the relationship between the CME provider and the supporting company; (5) the extent of provider involvement in sales or marketing; (6) the provider’s failure to meet standards of scientific rigor; (7) the number of repeat presentations of the same material; (8) whether invitations or mailing lists were generated by the sales or marketing department; (9) the opportunity for meaningful discussion; (10) whether the information was disseminated after the initial program; (11) the extent of promotional activities at the event; and (12) any complaints raised by the provider, presenters, or attendees regarding attempts by the supporting company to influence the content.

As stated above, under the Food, Drug and Cosmetic Act, new pharmaceutical drugs cannot be distributed in interstate commerce unless the sponsor of the drug demonstrates, to the satisfaction of the FDA, that the drug is safe and effective for each of its intended uses. Once a drug is approved for a particular use, however, the FDA does not prevent doctors from prescribing the drug for uses that are different than those approved by the FDA. Allowing physicians to prescribe drugs for such “off-label” usage “is an accepted and necessary corollary of the FDA’s mission to regulate [pharmaceuticals] without directly interfering with the practice of medicine.”

Though physicians may prescribe drugs for off-label usage, the FDA prohibits drug manufacturers from marketing or promoting a drug for a use that the FDA has not approved. A manufacturer illegally “misbrands” a drug if the drug’s labeling includes information about its unapproved uses. If the manufacturer intends to promote the drug for new uses, in addition to those already approved, the materials on off-label uses must meet certain stringent requirements, and the manufacturer must resubmit the drug to the FDA testing and approval process.

For example, assume a drug manufacturer “ABC Pharmaceuticals Inc.,” obtained a FDA indication for the use of X-CREAM to treat a rare skin disorder. Even though that market is very small, ABC must promote X-CREAM for the treatment of only that skin disorder. If a physician wanted to prescribe X-CREAM for the treatment of a very common allergic reaction, then he is free to do so. However, ABC may not freely promote X-CREAM as a treatment for the allergic reaction, because that is not what it is indicated to treat by the FDA. If in conversations with drug representatives, the physician first asks about alternative uses for X-CREAM, then ABC may, under the above conditions, briefly discuss other studies. However, the studies that ABC uses must meet the above requirements. The same is true in a CME setting. ABC must meet the above requirements, or it may only promote X-CREAM for the treatment of the skin disorder—regardless of how high the development cost or how small the skin disorder market.

Whether a drug is FDA-approved for a particular use will largely determine whether a prescription for that use of the drug will be reimbursed under the Medicaid program. Reimbursement under Medicaid is, in most circumstances, available only for covered outpatient drugs. Covered outpatient drugs do not include drugs that are used for a medical indication which is not a medically accepted indication. A medically accepted indication includes a use which is approved under the Federal Food Drug and Cosmetic Act or which is included in specified drug compendia, i.e., American Hospital Formulary Service Drug Information, United States Pharmacopeia-Drug Information, the DRUGDEX Information System, and American Medical Association Drug Evaluations, and the peer-reviewed medical literature. Thus, unless a particular off-label use for a drug is included in one of the identified drug compendia, a prescription for the off-label use of that drug is not eligible for reimbursement under Medicaid.

For more information and case citations, please see “Federal False Claims Act and Qui TamLitigation,” published by Law Journal Press (2010).

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You should be aware that qui tam claims are subject to a Statute of Limitations. The area of limitations periods is complex. There are also first to file rules, public disclosure bars, original source issues, and varying limitations in pursuing retaliation claims. If you wish to pursue your claims, you should promptly seek the opinion of an attorney regarding the merits of your qui tam claim and the applicable statute of limitations.