In 2003, a Massachusetts federal court held that the False Claims Act could be used to reach pharmaceutical companies that promote their drugs to healthcare providers for non-FDA approved uses. According to the court, these “off-label promotions” trigger False Claims Act liability because they cause healthcare providers to prescribe drugs for uses that are not reimbursable by government healthcare programs. Over the next decade, this theory of False Claims Act liability was successfully used by relators and the government to recover nearly ten billion dollars from the pharmaceutical industry.
In recent years, however, there have only been a handful of successful False Claims Act cases involving off-label pharmaceutical promotions. In fact, in the past four years, there have only been five False Claims Act settlements alleging off-label promotions, and most of these recoveries have included alleged Anti-kickback Statute violations. So what happened?
Most False Claims Act experts point to Caronia, a December 2012 Second Circuit Court of Appeals decision, in which the court vacated the criminal conviction of a pharmaceutical sales representative, who was convicted of conspiring to distribute misbranded drugs in interstate commerce, in violation of the Food, Drug & Cosmetic Act. This conviction was based, in part, on the sales representative allegedly telling physicians that his assigned drug could be used to treat various off-label uses. In vacating the conviction, the Second Circuit held that it was unconstitutional to impose criminal liability for truthful, off-label promotion of a drug.
While Caronia was not a civil False Claims Act case, this lone court decision seemed to cause some people within the government to shy away from civil False Claims Act cases involving off-label pharmaceutical promotions. Moreover, with defense law firms touting Caronia as “one of the most significant rulings concerning First Amendment protection for a pharmaceutical manufacturer’s off-label promotion of an otherwise approved drug,” some would-be whistleblowers were deterred from even contacting qui tam attorneys. In short, in the wake of Caronia, the government became less receptive to off-label marketing cases and whistleblowers stopped stepping forward.
However, lost in the confusion of Caronia was the bedrock argument that the First Amendment does not protect misleading pharmaceutical promotions. Furthermore, when misleading promotions cause healthcare providers to submit off-label claims to the government, False Claims Act liability still clearly applies.
For example, a pharmaceutical manufacturer promotes its cancer drug to healthcare providers using knowingly inflated survival data. The providers are so impressed by the survival data that they start prescribing the drug for all of their patients, including for patient populations not benefiting from the drug. In this scenario, the False Claims Act can be used to recover the money spent on the prescription drugs submitted for reimbursement which were prescribed to patients that did not benefit from the drug.