When reimbursing for prescription medication, agencies like Medicare and Medicaid are only permitted to pay claims for drugs that are prescribed for their approved use. When a doctor or pharmaceutical company prescribes or promotes a drug for an unapproved use, subsequent invoices for reimbursement could trigger False Claims Act liability.
In today’s case, we look at a recent settlement between drug giant Merck and the Department of Justice involving unlawful marketing tactics for its top-selling conjunctivitis drug, AsaZite. [1. Department of Justice Press Release, “Manhattan U.S. Attorney Settles Civil Fraud Claims Against Inspire Pharmaceuticals, Inc. For Its Misleading Marketing Designed To Cause Prescriptions Of Azasite For Non-Fda Approved Uses.” June 17, 2015. http://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-settles-civil-fraud-claims-against-inspire-pharmaceuticals-inc] The $5.9 million settlement settles claims raised by a whistleblower. However, the amount of the whistleblower’s reward was not made publicly available at the time of the Department of Justice’s announcement.
Details of the claims against Merck
The concept of off-label marketing has been a hotly contested and highly debated issue within the healthcare industry, particularly in light of the False Claims Act. As explained above, off-label marketing occurs when a drug is promoted and prescribed to treat a condition not studied and approved by the FDA, thereby putting users in danger of unexpected and unknown side effects.
Proponents of off-label marketing argue that prohibiting the practice amounts to a violation of the First Amendment and a company’s right to free speech and advertising. However, in the eyes of the federal government, only approved uses are reimbursable and any attempt to seek repayment otherwise could be actionable.
Here, a former subsidiary of Merck known as Inspire is alleged to have promoted its ocular drug AzaSite for the treatment of a condition known as blepharitis, a condition which causes swelling and inflammation of the eyelids. However, AzaSite was studied and approved solely for the treatment of conjunctivitis (i.e., pink eye), which is a bacterial infection of the eye requiring antibiotics to treat.
According to the whistleblower – a former sales manager for Inspire – marketing AzaSite for the treatment of a non-bacterial infection was gratuitous, as blepharitis is commonly treated with home remedies, such as a warm compress or gentle cleansing. Nonetheless, the company aggressively marketed the drug as effective against the condition and made a substantial profit therefrom.
Forty-eight states participated in the settlement since state-processed Medicaid claims were also involved in the alleged misconduct. [2. Press Release, “A.G. Schneiderman Announces $6 Million Settlement With Illinois-Based Inspire Pharmaceuticals For Illegal Off Label Marketing.” June 18, 2015. http://www.ag.ny.gov/press-release/ag-schneiderman-announces-6-million-settlement-illinois-based-inspire-pharmaceuticals]
In a comment by Merck, it reiterated that it was “glad to put this behind us.” Connecticut attorney general Jack Conaway remarked, “Patients have a right to trust they are being prescribed properly tested and effective medicine….Pharmaceutical companies like Inspire will not be permitted to skirt FDA rules and regulations to make a profit at the expense of patients. These FDA rules are enforced to ensure patients are only prescribed drugs that are proven to benefit the patient.”[3. Press Release, “Attorney General Conway Announces Settlement with Inspire Pharmaceuticals.” June 18, 2015. http://kentucky.gov/Pages/Activity-Stream.aspx?viewMode=ViewDetailInNewPage&eventID=%7B74654A1D-6226-4C02-AFFD-07D128EE5A5C%7D&activityType=PressRelease]
Contact Berger & Montague, P.C. today
If you are aware of costly healthcare fraud at your place of employment or believe off-label marketing may be ongoing, please do not hesitate to contact Berger & Montague, P.C. right away.