A Blow Against False Claims Act Liability For Off-Label Promotion

by Reed Smith
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Recently, we noted that one of the first decisions we wrote a post about had been affirmed by the Second Circuit.  Of the district court decision, we had penned “It is nice to see a judge with a proper understanding of how drug labels, FDA, and cockamamie theories about off-label marketing should fit together.  We would like to see more of the judges handling product liability cases with similar issues follow the lead of the judges handling FCA cases and dismiss complaints premised on nonsensical interpretations of labels and regulations.”  In discussing U.S. ex rel. Polansky v. Pfizer, Inc., No. 14-4774,  2016 U.S. App. Lexis 8974 (2d Cir. May 17, 2016), we could be lazy and swap in “a panel” for “a judge” in the preceding quote.  That would be true, but it would be incomplete.  A few weeks after the district court’s decision in Polansky, the Second Circuit decided U.S. v. Caronia, 703 F.3d 149 (2d Cir. 2012), where it vacated the conviction (conspiracy to sell a misbranded drug under 21 U.S.C. §§ 331(a) and 333(a)(1)) of a sales representative for promoting a prescription drug for off-label use.  Then, a few months before the Polansky appeal was argued, the Southern District of New York enjoined the FDA from prohibiting a manufacturer’s truthful off-label promotion concerning a (generic) prescription drug.  Next, a few months later, FDA reached a well-publicized settlement with that manufacturer, preserving that “Amarin may engage in truthful and non-misleading speech promoting the off-label use” of its drug without risking prosecution for misbranding.  While there are still decisions like Neurontin out there and many cases still seek to impose liability under the FCA or other statutes for truthful off-label promotion, the off-label landscape has clearly changed.

With that in mind, we turn back to Polansky.  For eight years and through multiple amended complaints, the plaintiff pursued a FCA claim that Pfizer’s promotion of Lipitor for use within the approved indications was actually off-label—and therefore allegedly led to false claims for Medicare and Medicaid reimbursement—because of references in the label to the National Cholesterol Education Program Guidelines.  We will be blunt—shocking to our readers, we know—this was always a dubious claim because any common sense reading of the label does not come close to supporting the contention that the Guidelines narrowed what was “on-label” compared to the five indications that were approved and described in the label.

The NCEP Guidelines, which came out of NIH and were expressly not intended to trump clinical judgment, set out an algorithm for recommendations for the general type of treatment (e.g., just lifestyle modifications) depending on risk categories derived from lab results and clinical history.  2016 U.S. App. Lexis 8974, **7-9.  The Indications section in the pre-Physician Labeling Rule label referenced the Guidelines in conjunction with stating that lipid-altering agents should be used only when response to diet and other lifestyle modifications “has been inadequate” and included a summary of the Guidelines. Id. at **10-11.  When PLR changes went into effect in 2009, the reference and summary were omitted, which suggested something about the relative importance of these references. Id. at *9.  Both before and after PLR, the Dosage section of the label had a cite to the Guidelines when stating, for one subcategory of patients, that “The starting does and maintenance doses of Lipitor should be individualized according to patient characteristics such as goal of therapy and response.” Id. at *11.

Putting the Guidelines and label in their proper perspective, the Second Circuit adopted the lower court’s analysis that the label left how to apply the recommendations in the Guidelines up to the clinical judgment of the prescriber and “Once the doctor’s clinical judgment is introduced as the determinative factor in the decision making process, it must be apparent that this data serves as a recommendation, not a limitation or prohibition.” Id. at *14.  Thus, there was no “off-label” defined by the references to the Guidelines.

That is the holding of the case and, like we said at the start, it does a good job of seeing nonsensical allegations for what they are.  There are dicta, though, that draws our attention.  The court is “skeptical” and “dubious” of basing FCA violations, though an implied certification theory, for this fact pattern—which we think applies to most off-label use:

The physician is permitted to issue off-label prescriptions; the patient follows the physician’s advice, and likely does not know whether the use is off-label; and the script does not inform the pharmacy at which the prescription will be filled whether the use is on label or off.

Id. at *17.  The strong language—again, just dicta—continues:

“The False Claims Act, even in its broadest application, was never intended to be used as a back-door regulatory regime to restrict practices that the relevant federal and state agencies have chosen not to prohibit through their regulatory authority.” Polansky II, 914 F. Supp. 2d at 266.  It is the FDA’s role to decide what ought to go into a label, and to say what the label means, and to regulate compliance.  We agree with Judge Cogan that there is an important distinction between marketing a drug for a purpose obviously not contemplated by the label (such as, with respect to Lipitor, “to promote hair growth or cure cancer”) and marketing a drug for its FDA-approved purpose to a patient population that is neither specified nor excluded in the label. Id. at 265.  An FCA relator alleging off-label marketing might be able to satisfy Rule 9(b) and surmount the impediment of implied certification in a case in which it would be obvious to anyone that the use promoted is one that is not approved; but this is emphatically not such a case.

Id. at **18-19 (citations in original).

This follows more dicta in the form of a discussion of Caronia but not Amarin. After noting Caronia’s recognition of the ability of doctors to prescribe approved drugs for unapproved uses and that there can be “public value from unapproved or off-label drug use,” the court stated that “pharmaceutical manufacturers are generally prohibited from promoting off-label uses of their products if the off-label marketing is false or misleading, or if it evidences that a drug is intended for such off-label use and is therefore ‘misbranded.’” Id. at *4.  A footnote follows that repeats Caronia’s holding that the First Amendment precludes criminalizing promotion of off-label use that is not false or misleading.  The footnote then says that Caronia left open whether such promotion could still be improper if the “promotion speech provides evidence that a drug is intended for a use that is not included on a drug’s FDA-approved label,” citing an FDA regulation that requires “adequate labeling  . . . which accords with such other uses” when the manufacturer should expect off-label use.  (Are you still following us on our detour through the cites in a footnote?)  This regulation is about ensuring adequate warnings and instructions for foreseeable use, not about prohibiting any version of truthful promotion about off-label use.  But the First Amendment protections accepted in Caronia and Amarin would not protect much if criminal prosecution or quasi-criminal FCA cases could be based on the amorphous intent that a drug be used off-label rather than the content of the speech.

Let us carry this out a bit further with the basic facts of Polansky to see if liability makes sense in a post-Caronia world where truthful off-label promotion is protected speech.  First, assume that there are patients who within one of the approved indications for Lipitor but were not within the Guideline’s general recommendation for pharmacotherapy—like maybe someone with a bad lipid profile who had never tried to improve it with diet and exercise.  Second, assume that the manufacturer had studies showing the drug was effective for the approved indications—as it would have needed to get them approved—and could truthfully represent these studies in its promotion of the drug.  Third, consider that either a) the interplay between the Guideline’s general recommendations for pharmacotherapy and the approved indications in the label did not come in marketing or b) the marketing accurately reflected the findings of the studies as they related to patients within and without the Guideline’s general recommendations for pharmacotherapy.  Fourth, assume that that the company knew that it was providing truthful information so that physicians could prescribe the drug to patients who were within one of the approved indications for Lipitor but may or may not have been within the Guideline’s general recommendation for pharmacotherapy.  Putting it together, there has been truthful promotion concerning the drug, what it was approved for, and what science says about its safe and effective use, but with the knowledge that its truthful promotion might result in prescriptions being written to patients who were not within the Guideline’s general recommendation for pharmacotherapy (but were within one or more of the approved indications).  That does not sound like a situation where any liability should attach, let alone treble damages and statutory fines (to say nothing of possible exclusion from reimbursement).

It seems to us that there are two types of off-label promotion that would be problematic.  The first involves misrepresentation of the safety and/or efficacy of the drug when used in an off-label manner—that is, beyond an approved indication or contrary to a labeled contraindication.  To be clear, we think it would be problematic to make misrepresentations of the safety and/or efficacy of the drug when used in an on-label manner.  With causation—tough for a prescription drug, dodgy use of statistic notwithstanding—there might be False Claims Act Liability for this whether or not the use was off-label.  Maybe it would be worse if the representations were directly contrary to the label, but that is a broader issue.  “Sure it is contraindicated in patients with acute liver disease, but the Hornswaggle study showed it was safe in that population” and “the Hornswaggle study shows twice the rate of improvement in LDL as is described in the label” are both pretty bad if false.  The second involves a misrepresentation about whether a particular use is on-label or off-label.  Not only is a drug considered misbranded if its approval is misrepresented—although maybe not if the scope of the labeled contraindications are—but there are reasons to believe a misrepresentation that FDA has determined the drug is safe and effective for a particular use will carry some weight.  This also might satisfy the FCA requirements of falsity and causation.  Absent a direct misrepresentation about safety and efficacy or an indirect misrepresentation about safety and efficacy by implying a different FDA decision than has been made, we have a hard time seeing why FCA liability should even attach to off-label promotion.  That should not be different if the drug company intended to provide truthful information about the scope of the approved indications and the science for and against unapproved indication, but did so with the knowledge that some off-label scripts would probably be written as a result of providing this truthful and non-misleading information to physicians who asked for it.  In other words, intent should not matter in the absence of falsity.

Now, we are all for judicial restraint.  We preach it regularly in the context of Erie predictions of expansions of state law, among other contexts.  The Polansky court was certainly right to decide the issues it needed to decide to affirm the decision below and be clear that it was not going to address other issues.  We think, however, that False Claims Act liability for promotion of off-label use, given the First Amendment, must be predicated on something that is actually false, not on truthful and non-misleading statements that are made with the knowledge that doctors may prescribe the drug off-label to some patients as an exercise of their medical judgment.

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Reed Smith
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