Off-Label & Misleading Marketing Of Pharmaceuticals

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.

REAL PEOPLE making real change Meet Some of our Heroes

Kathleen Hawkins

Dignity Health
$37 million

Kathleen Hawkins, RN MSN, had been employed by Defendant, Catholic Healthcare West (CHW) for approximately 6 years when she decided she had had enough of trying to change the hospital system from within.

CHW, a California not-for-profit corporation that operated hospitals in California, Arizona, and Nevada, was at the time the eighth largest hospital system in the nation and the largest not-for-profit hospital provider in California.

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Joe Strom

Johnson & Johnson
$184 Million

Joe Strom contacted us in 2005. We were very grateful that he did. We immediately formed an all-star legal team and a process to stop a very harmful pharmaceutical marketing strategy. It was this process we set into motion that ultimately returned hundreds of millions of dollars to the U.S. Treasury, and a portion of that, very well-deserved, into Joe’s bank account.

Joe told us a very troubling story about the off-label promotion of a pharmaceutical drug for patients who already suffered from chronic heart failure.

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Bruce A. Moilan Sr.

$27 Million

Bruce Moilan was a seasoned hospital systems expert by the time he contacted our Firm. At the time he decided to file his qui tam lawsuit, he was employed by South Texas Health System as a System Director for Materials Management. In this position, he oversaw $24 million in annual purchases of supplies and equipment and helped determine budget, reduction and cost analysis throughout the contract bidding and negotiations process. His job was to insure proper implementation for purchasing, receiving and management of inventory, for McAllen Hospitals, L.P.

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“I collaborated with Nolan, Auerbach and White on a broad variety of cases where whistleblowers stepped forward to disclose tactics employed by large companies to influence physicians' medical decision-making in patient care. They provide ample resources to not only optimize their client cases, but in doing so consistently leverage best medical evidence to further patient safety and resource utilization.”

— Fred Polsky M.D., Former Medical Director, CMS Zone 7 Integrity Contractor

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