01/17/2014 // Justice News Flash: Featured Column // Kathleen Scanlan // (press release)
In recent media reports, 2013 is being called the Year of the Whistleblower – driven by a certain American taking sanctuary in Russia. However, 2013 was important in the whistleblower world for reasons unrelated to Mr. Snowden: it marked the tenth year of government recovery in the battle against off-label marketing of pharmaceutical products paid for by government healthcare programs.
Off-label marketing fraud cases have involved systematic manipulation of the regulatory scheme governing pharma products and treatment of patients by doctors to maximize profits for the drugmakers. On the one hand, the Food and Drug Administration approves drugs, biologics and medical devices as safe and effective for specified uses. Once the product has been ‘approved’ for that use, the manufacturer may market that product for the approved use. According to the FDA, if a company markets for a different use and engages in interstate commerce for that unapproved use, the drug is “misbranded.” In addition, the Centers for Medicare & Medicaid Services (which oversees which products are paid for by government healthcare programs) require that drug advertising “must be truthful, not misleading, and limited to approved uses.” A company may not sell a misbranded product and Medicare and Medicaid will not buy misbranded products. On the other hand, nothing prohibits a doctor from prescribing an approved product for an un-approved use if the doctor determines it is beneficial in the treatment of the patient. Between these two poles lies an ocean of potential revenue.
Perhaps not surprising, the pull to tap that potential revenue made off-label marketing an industry norm over the last 30-40 years, and massive frauds on the government healthcare programs paying for the products was the result. Pharma’s improper promotion of its products has taken many forms, from brochures touting bogus therapies, to kickbacks to pharmacies, and speaking fees to doctors. The common theme, however, was increased prescriptions meant increases in profits.
The first False Claims Act case involving off label marketing of a drug (Neurontin) was filed in 1996. Pfizer agreed to pay $430 million in civil fines and criminal penalties in that case in 2004. In 2012, GSK paid $3 billion to resolve allegations of off-label marketing of its products. GSK and Pfizer are joined by a long lineup of companies —from AstraZeneca to Novo Nordisk—that has settled FCA suits related to the promotion of drugs for “off-label” uses. Most recently, Johnson & Johnson announced it would pay $2.2 billion in penalties to resolve federal charges to resolve allegations of encouraging doctors to give an anti-psychotic drug to patients with non-psychotic dementia. It previously settled similar claims with several states.
The monetary recovery is impressive. However, the profits these companies bank before coughing some of it back starts to make settlements look like a cost of doing business. That’s why GlaxoSmithKline‘s 2013-ending announcement that it will no longer pay doctors to promote its products and will no longer tie sales representatives’ compensation to the number of prescriptions written is newsworthy. While it sounds like GSK is formally announcing it will adhere to the law, it is the first major pharmaceutical company to do so. Will others follow? Perhaps, just perhaps, a new decade is dawning. The employees on the inside of these companies are the ones who will be able to tell us. If the tide has not shifted – and it’s business as usual, they will be the whistleblowers of the future.
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