Update March/April 2005
I appreciate this opportunity to comment on the role the First Amendment has—or, more accurately, has not—played in Department of Justice (DOJ) prosecutions undertaken in recent years. This commentary will focus on DOJ cases involving off-label uses of medical products, allegations of False Claims Act violations, DOJ’s announcement that it has over 500 drugs under investigation,1 and DOJ’s continued threats to prosecute more medical device companies.
Prosecutors have a problem when they begin to look at everyone as a criminal. Industry has a problem when management turns a blind eye to programs and /or payments that might be illegal or fails to put into place effective compliance programs. Prosecutors look at the world through a prism partially of their own making and partially constructed from the bad actors they encounter. Industry must acknowledge that the vision of corporate managers can be clouded by the pressures of pleasing executive management and shareholders who want them to get the most out of their corporate assets. As such, companies must be diligent in policing themselves.
This commentary, however, focuses on prosecutors and the recent prosecutions in the pharmaceutical and medical device sectors. There are four issues that need to be discussed “straight-up” with prosecutors and that may add an industry viewpoint not covered in the WLF correspondence above.
Illegal Off-Label “Promotion” v. Lawful “Dissemination” and “Communication
DOJ purports to grasp the important distinction between off-label “promotion” and constitutionally-protected “dissemination” and “communication” activities regarding off-label uses. “Dissemination” occurs when manufacturers lawfully and appropriately distribute information about offlabel uses of their products, following the spirit—if not the letter—of section 401 of the Food and Drug Administration Modernization Act of 1997 (FDAMA) and/or the now-famous Washington Legal Foundation case and other First Amendment cases. Lawful and appropriate “communication” about off-label uses happens in many ways, such as providing information about clinical trials on new unapproved uses contained in a manufacturer’s “research” and/or “investor” website section, sponsoring continuing medical education (CME) programs underwritten by a manufacturer, the provision by a manufacturer of grants for physician-initiated clinical trials, a manufacturer’s sponsorship of research publications, conducting marketing focus panels or assembling consultants, etc.
It is difﬁ cult for companies to comprehend the point at which an activity crosses the line from lawful dissemination/communication to illegal promotion. Some prosecutors acknowledge that many of these activities are perfectly permissible, if done lawfully and appropriately. Their position, however, is that when a company engages in “collateral” conduct that is illegal promotion, the illegal collateral conduct can taint the whole. In this way otherwise legal dissemination/communication becomes one part of the totality of the illegal conduct, i.e. off-label promotion.
Disseminating and communicating off-label information is lawful. This is precisely the issue: much of what is transpiring in the world of off-label uses is lawful, but the Ofﬁ ce of the Inspector General (OIG) and DOJ characterize it as illegal. It is lawful for physicians to use products off-label in the practice of medicine. It is lawful for pharmaceutical and medical device companies to ﬁ nancially support physician-initiated clinical trials on off-label uses. It is lawful to ﬁ nancially support CME. It is lawful for companies to disseminate information about off-label uses appropriately. It is lawful to consult with physicians about potential offlabel uses. In many cases, reimbursement for off-label uses is sanctioned by the Centers for Medicare and Medicaid Services (CMS).
The problem for companies is discerning where the line of demarcation is between what is lawful and what is illegal. Some federal prosecutors have taken the position that even if off-label dissemination is lawful, reimbursement obtained by a physician from the federal government may be illegal; they view the company as complicit in the ultimate illegal activity even if the company did nothing other than disseminate or communicate the information lawfully. The prosecutor’s theory for criminal responsibility says that, if the company “caused” or “induced” the off-label prescription, even through lawful dissemination/communication, then any reimbursement sought is illegal and the company is both civilly and criminally liable.
In this scenario, activity that is protected by the First Amendment and the judiciary, allowed by Congress in FDAMA, and tolerated by the Food and Drug Administration (FDA) has become fodder for federal prosecution. How are companies to proceed when they know they cannot promote off-label uses of products, but they cannot know how to lawfully disseminate and communicate information so as to avoid liability and legal actions?
Unless the OIG and DOJ concede this fact publicly, they will continue to perpetuate uncertainty and fear among regulated industries. Also, “conceding” this fact does not mean accepting it intellectually in an academic debate from the podium and then prosecuting everything in sight when they get back to the ofﬁ ce. This kind of “Jekyll-and-Hyde” approach is bad policy with bad effects, not the least of which is that it chills off-label dissemination and communication.
Myriad Laws Are Confusing and Complex
It is difﬁ cult to consider the myriad laws that converge in this arena, including: FDA’s advertising and promotional regulations; the Anti-Kickback Statute; the False Claims Act; the Medicaid Rebate Statute, CMS-promulgated rules and regulations; codes of conduct issued by the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Advanced Medical Technology Association (AdvaMed); American Medical Association (AMA) ethical guidelines on gifts and medical education; Accreditation Counsel for Continuing Medical Education (ACCME) Standards for Commercial Support of Medical Education; and related state laws and regulations.
Even after analyzing all of the societal expectations embodied in various laws and codes, it still may be unclear whether an organization should proceed with a given promotional program, consulting agreement, customer service or beneﬁ t (e.g., providing reimbursement advice/service, physician ﬁ nders, web templates, practice development seminars, or the like), grant for a physician-sponsored clinical study, or CME program, etc.
For example, an off-label dissemination program may be lawful under FDA’s advertising and promotional regulations, but Anti-Kickback Statute implications must be considered. Rarely does a promotional program meet every attribute of the OIG’s published anti-kickback “safe harbors,” yet the proposed program might meet three-out-of-four of those criteria. It also might meet the “spirit” of the safe harbor, and thus be very “clean” (i.e., of no perceived interest to prosecutors). In those cases, a client legitimately might choose to proceed with the program even in the face of some uncertainty. In addition, however, the potential application of the False Claims Act must be considered. In practice, the OIG/DOJ has said that there may be independent liability—even if the dissemination of off-label information was lawful—because a company “caused” or “induced” government reimbursement for an unapproved use of a product.
Society Needs Off-Label Uses
“Off-label use” often is associated with “unsafe use,” and nothing could be further from the truth. Off-label use of a product—by deﬁ nition—begins with a product that has been approved as safe and effective and for which there is labeling. The off-label use is a reasoned and logical extension of that product’s known attributes.
What prosecutors often fail to recognize is that it is just as bad to deprive patients of safe and effective products used offlabel as it is to expose them to unsafe or ineffective products. The difference between those two positions is “risk.” We do not always have perfect knowledge of how products will work when good doctors—with good intentions and sound medical and scientiﬁ c judgment—embark on an off-label use. Most medical advances occur incrementally through the off-label use of products; if we crush off-label use, we stiﬂ e the development of medical and scientiﬁ c knowledge. This should not be overlooked, especially when politicians, the media, and prosecutors skew the concept of off-label use to stir emotions (e.g., as in the Vioxx® and Celebrex® situations).
The problem that companies confront is that almost all products are used off-label by physicians, whether a company has been a catalyst for that activity or not; this leaves the company in a position to address the off-label use and its potential for revenue. Most companies do keep patients in mind and want to take the higher, responsible road; when they know physicians are using their products off-label, they need to act responsibly. Often this means commencing a clinical trial program on those off-label uses, but clinical trials often are not immediately feasible. So, companies look for other ways to develop and share information with the medical community. Providing grants for physician-initiated clinical trials is much less expensive than company-sponsored investigational new drug application (IND) or investigational device exemption (IDE) trials.
Companies often seek lawful ways to share information with physicians about safety issues that arise from the off-label use of their product. Most often the safety issue is not in a large percentage of the population. Companies know they cannot warn or train physicians about safer ways to use a product being used off-label because FDA may deem that off-label promotion. FDA is hesitant to allow a company to afﬁ rmatively warn or train physicians about a safety issue involving an off-label use because it may indirectly reinforce the off-label use. Under the existing regulatory regime, if it involves an off-label use, FDA may require the company to send a “Dear Doctor” letter or “Safety Alert.” Often this is an overbroad remedy. The seriousness of these forms of communication unnecessarily scares physicians and may stop all of the safe off-label use to get at the small percentage of unsafe off-label use. A company would rather ﬁ nd less alarming ways of sharing such information. As a result, companies often conduct mailings without the alarming titles suggested above and/or they sponsor medical education, off-label dissemination, and other programs to elevate knowledge of the responsible use of these products.
Will the “Evolution” in Prosecution Severely Cripple Our Healthcare Industry?
Today, it is difﬁ cult to counsel companies in the promotional arena. In the “old” days, concern focused on the claims companies made about products. Then, the Anti-Kickback Statute, rightfully, caused industry and government to crack down on some bad practices in which business effectively was “bought.” The False Claims Act addition to the mix would not be so detrimental if it were not carried to such extremes. There seems to be no end to the OIG/DOJ interpretational “stretch” of that statute, although it could be argued that these actions are losing credibility, as they seem motivated more by individual gain (e.g., political, career) and government revenue enhancement rather than ensuring compliance with the true intent of the law.
Prosecutors can pursue their theories with a zeal and creativity that seems to border on blood thirst. Evidence of this may be seen in the enormous ﬁ nes the government has collected, the number of new civil and criminal investigators and prosecutors the government has hired, and the recent announcement of 500 new drugs under investigation.
The Government Is Not Always Right
• The First Amendment cases. Industry understands DOJ’s role in eliminating fraud and waste in the healthcare system; prosecutions must be pursued to create the deterrent effect. One negative outcome of rampant enforcement, however, is the chilling of many lawful commercial behaviors. While prosecutors often are quite conﬁ dent of their positions, judges and juries often do not agree with them. For example, FDA had for years effectively chilled much First Amendment protected speech through administrative ﬁ at, but recently has lost repeatedly in the courts on First Amendment commercial free speech issues.
• The TAP case. In the TAP criminal prosecutions, eight defendants were acquitted and the government’s legal theories rejected by the judge and jury. In fact, after the acquittals came in, the trial judge later decided to revisit the guilty plea of one criminal defendant who had entered her plea before the jury handed down the acquittals. This case was not about off-label promotion, but it stands for the proposition that the government is not always right. The TAP jury rejected some of the government’s novel legal theories and refused to convict ordinary people who daily had tried to make sense out of a morass of government regulation and guidance.
• The Augustine Medical case. In the Augustine Medical case, DOJ argued that the company had promoted its 510(k)-cleared medical device for off-label uses, i.e., efﬁ cacy claims of wound healing, resulting in inappropriate reimbursement for those uses. The court reviewed the product labeling set forth in FDA’s 510(k) clearance letter to Augustine and CMS’ convoluted coverage policies. The court found that the company’s actions were not relevant to the charges of reimbursement fraud set forth in the indictment. The prosecutors in the Augustine case accepted misdemeanor pleas in lieu of felony pleas or guilty verdicts from all but two of the defendants (the reimbursement consultant and the company)—a smart move for the prosecutors because it precluded jury acquittal on the felony charges. It is important to note that, while FDA was called to testify by the DOJ, it did not join in the case to allege that the off-label promotion resulted in the product being adulterated and misbranded.
The Government Takes Pride in Civil Settlements
In defense of its enforcement actions, the government is quick to note the large civil settlements with Pﬁ zer/WarnerLambert, Schering-Plough, AstraZeneca, TAP, and many others. The reason these companies settle, however, has as much to do with the uncertainty of the law as applied as it does with real and potential consequences to the companies. First, stock prices of companies under OIG and/or DOJ investigation are affected enormously; decisionmakers often are pressured to quantify and eliminate that uncertainty by paying a ﬁ ne. Second, if companies lose a civil case, they face being debarred from doing business with the federal government, and possibly state governments as well. Third, because the False Claims Act is a civil statute the burden of proof is much lower than in a criminal case. Fourth, in settlements, companies try to get the criminal issues dismissed along with civil issues, for corporate peace of mind and ﬁ nality. Even TAP-like acquittals could prove to be Pyrrhic victories.
Additional Checks and Balances in the System
Prosecutors have seemingly unfettered discretion to create novel theories and commence prosecution. DOJ’s retort may be that there are many checks and balances in their system to select the cases that will be ﬁ led, but those checks and balances are all within DOJ itself, as the agency is selfpolicing (except when the courts periodically do it for them). DOJ’s dialogue should include the impact that prosecutions have on society at large (i.e., the micro- and macro-consequences for patients and industry).
DOJ currently is pursuing prosecutions on off-label uses of products under the False Claims Act. Is prosecution appropriate if the only conduct in question is lawful dissemination of off-label information? Is it a good thing if the medical community’s practice of medicine—including physicians’ widespread and legitimate practice of off-label use of products—is being interfered with by nonmedically-trained prosecutors whose allegiance is not to individual patients, but to the more abstract “healthcare system”?
The enormity of the ﬁ nancial settlements in such cases is cause for much concern. Can the affected industries withstand the onslaught of civil and criminal settlements, which precipitate other state cases as well as private sector suits? Unlike product liability suits, in which the risk is spread and shared by insurance funds, these cases take proﬁ ts right from companies’ bottom lines. In the long term, the situation is not sustainable and will affect the competitiveness—and even the survival—of many U.S. companies. In this regard, WLF raises important policy questions.
It is necessary and important to question and challenge these types of prosecutions in the face of other societallyexpressed intent to allow off-label uses of products (e.g., in FDAMA, in FDA guidance documents, and in CMS policies). Prosecutors have no license to undermine statutory and regulatory pronouncements in their pursuit of off-label use cases. Ultimately, who will review the appropriateness and weigh the value of such prosecutions? We need different checks and balances, perhaps, but we should not expect these from DOJ without outside intervention. FDLI