1. Off-Label Marketing vs. Off-Label Prescribing
The Food and Drug Administration (“FDA”) requires that drugs be proven to be safe and effective for a particular use before they can be marketed. The FDA’s approval is always limited to use or uses for which the manufacturer has submitted evidence of safety and efficacy. For example, if a drug was not tested in children, approval is limited to use by adults.
However, the FDA regulates manufacturers, not doctors or hospitals. Thus, a doctor may legally prescribe a particular drug for a use other than that for which it was approved. However, a drug manufacturer may not promote the use of its products for any use other than that for which it is approved.
2. Medicare Fraud and Medicaid Fraud False Claim Cases
Generally speaking, Medicare and Medicaid do not reimburse for prescriptions caused by off-label marketing. However, Medicare and Medicaid often have no way of knowing which prescriptions were caused by off-label marketing. Thus, when a manufacturer causes an off-label prescription to be written, Medicare and Medicaid often pay for the prescription because they are unaware that it was caused by illegal marketing.
That said, the Department of Justice and the Courts, have recognized that a manufacturer’s promotion of a drug for an off-label purpose amounts to an inducement to doctors, hospitals, or pharmacies to submit a fraudulent claim to the government for reimbursement. Because the False Claims Act (“FCA”) explicitly holds liable a party that causes another to submit a fraudulent claim, see 31 U.S.C. 3729(a)(1)(A), many actions against drug manufacturers premised on improper marketing have been successful. Because drug manufacturers typically operate throughout the United States, these cases frequently involve very large amount of money. Several have settled for hundreds of millions, and even billions, of dollars.
3. False Claims and Freedom of Speech
In United States v. Caronia, the Second Circuit Court of Appeals recently ruled that the First Amendment’s guarantee of freedom of speech mandates that a drug manufacturers’ representative may not be held criminally liable for providing truthful information about a drug, even if it relates to an unapproved use. Significantly, Caronia was charged only with improper promotion, and there were no allegations that his actions constituted a fraud on the Untied States.
This ruling should not have any significant effect on qui tam cases under the Federal and State False Claims Acts. Under these whistleblower laws, causing a physician to write a prescription for an off-label purpose makes the prescription non-reimbursable, and thus a “false” claim, whether or not the off-label marketing was truthful.
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