7th Annual National Pharmaceutical CongressNovember 9, 20067th Annual National Pharmaceutical CongressNovember 9, 2006

Off-Label Promotion: Risks, Controls Off-Label Promotion: Risks, Controls

and Assessmentand Assessment

John T. BentivoglioCo-Leader

FDA/Healthcare Group jbentivoglio@kslaw.com

202.626.5591

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Overview

• Basic FDA, Payment Rules

• The Role of the False Claims Act in Off-Label Promotion Cases

• Risk Areas and Red Flags

• Off-Label Promotion Controls

• Conducting An Off-Label Compliance Assessment

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FDA Rules on Promotion• Under the FDCA, new drugs cannot be distributed in interstate commerce

unless the sponsor demonstrates to the FDA that the drug is safe and effective for each of its intended uses. 21 USC Sec. 355(a) & (d).

• Though physicians may prescribe a drug for a use other than the one for which it is approved, the FDA prohibits drug manufacturers from marketing or promoting a drug for a use that the FDA has not approved. 21 USC Sec. 331(d), 355(a).

• In some contexts, dissemination of information on unapproved uses may be viewed by FDA as promotional labeling or advertising that fails to meet FDA regulatory requirements and therefore constitutes unlawful off-label promotion in violation of the FDCA.

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Overview of Reimbursement Rules

• Medicaid reimbursement is available only for “covered outpatient drugs,” i.e., drugs used for a “medically accepted indication.”42 USC Sec. 1396b(i)(10).

• A medically accepted indication includes: (1) an FDA-approved indication, and (2) certain other indications in specified drug compendia. Id. Sec. 1396r-8(k)(6), Sec. 1396r-8(g)(1)(B)(i).

• Medicaid reimbursement is not available for indications outside these two categories.

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Overview of the False Claims Act• The False Claims Act imposes liability upon any person who:

– “(1) knowingly presents, or causes to be presented, to … the United States Government … a false or fraudulent claim for payment or approval; [or] (2) knowingly makes or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government.” 31 USC Sec. 3729.

• While pharmaceutical manufacturers do not generally submit claims directly to the Federal government, they can be held liable under the FCA for “causing” a false claim to be submitted (e.g., by a physician).

• “Knowingly” is defined in the FCA to mean acting: (1) with actual knowledge, (2) in reckless disregard, or (3) deliberate ignorance of the truth or falsity of the claim.

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What’s the Link?

• DOJ has taken the position that the submission of an off-label prescription -- i.e., a not-covered outpatient drug -- for Medicaid reimbursement is a material misrepresentation made to obtain a government benefit and therefore constitutes a false claim under the FCA.

• Excerpt from DOJ Statement of Interest in the Parke-Davis (Neurontin Case):

“Parke-Davis’ illegal conduct caused the pharmacists to submit claims that as a result were (unknowingly) false and/or fraudulent representations that the supplies or products billed were procured in accordance with all laws and regulations governing Medicaid and thus eligible for reimbursement.”

U.S. Statement of Interest at 8Civ. No. 96-11651-PBS

May 23, 2003

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Risk Areas and Red Flags*

• Sales Force Activities

• Consultants and Speakers

• CME and Independent Medical Education Programs

• MSLs

• Statements to Payors– Reimbursement Support

– Submissions to Formulary Sponsors, Compendia

* Listing of activities does not mean or imply that these activities are necessarily unlawful or inappropriate

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Risk Areas and Red Flags -- Sales Force Activities

• Small market for approved use vs. large sales force

• Incentive compensation plans that include off-label sales

• Call plans that include HCPs not likely to prescribe on label

• Providing samples to HCPs not likely to prescribe on label

• Providing off-label information to sales reps for “background” purposes (particularly where other controls are lacking )

• Sales force involvement in non-promotional programs

• Preceptorships with HCPs not likely to prescribe on label

• Permitting sales reps to answer off-label questions, provide off-label information

• Special issues for device companies -- sales reps in operating room for off-label procedures, etc.

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Risk Areas and Red Flags -- Consultants

• Hiring of consultants not likely to use the product on label

• Hiring of more consultants than is reasonably necessary to meet legitimate business purpose

• Provision of excessive amounts of off-label information to consultants when compared to desired feedback/issues

• Failure to collect and use feedback from consultants for intended business purpose

• Tracking of ROI or similar analysis on “effectiveness” of consulting programs

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Risk Areas and Red Flags -- Speakers

• Training more speakers than reasonably necessary to achieve legitimate business purpose

• Providing more off-label information to speakers than necessary to train them for promotional presentations

• Targeting of invitees/HCPs not likely to prescribe on label

• “Planting” questions with attendees to raise off-label issues that will be discussed in front of other attendees

• Speaker programs with small number of attendees, peer-to-peer (or one-on-one) presentations

• Focus groups or other “informal” meetings/discussions led by an HCP paid by the manufacturer

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Risk Areas and Red Flags -- CME andIME Programs

• Sales force involvement in submission, review, and approval of

CME/IME funding

• Marketing involvement in CME/IME funding

• Lack of controls ensuring independence of CME/IME programs from

manufacturer

• CME/IME funding to specialty societies, patient groups

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Risk Areas and Red Flags -- MSLs

• Placement of function in and/or reporting relationships to commercial executives

• Incentive compensation similar to field sales force

• Affirmative call plans

• Close alignment with activities of sales representatives (e.g., ride alongs)

• Job descriptions and/or performance evaluations not consistent with non-promotional roles (e.g., metrics for time in field)

• Participation in promotional programs (e.g., speaker programs)

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Risk Areas, Red Flags -- Other Areas

• Phase IV funding activities (i.e., support for off-label studies)

• Reimbursement support/patient assistance activities

• Submissions/communications to formulary sponsors, compendia

• Interactions with patient advocacy/support groups, patients

• Internet activities– Web sites– Chat rooms– Blogs

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Risk Areas, Red Flags -- Miscellaneous

• DOJ rarely builds a case based on a single activity or event, particularly with respect to off-label promotion

• Prosecutors will look at a body of evidence -- marketing plans, call notes, emails, compensation plans, witness interviews -- when deciding whether to take enforcement action

• Targeting of non-promotional programs based on HCP prescribing practices

• Off-label promotion for claims that have been -- and rejected -- by the FDA appear to trigger heightened scrutiny

• Off-label promotion involving false/misleading information, particularly where it could lead to patient harm/safety issues, also likely to trigger heightened scrutiny

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Potential Controls -- Sales Force

• Review call plans to reduce/eliminate calls on HCPs unlikely to prescribe on

label

• Back out off-label prescriptions from calculation of incentive compensation

• Strict and clear rules on what sales reps can/can’t say in response to off-label

questions

• Limit amount of “background” material (i.e., not intended to be used with

physicians) provided to sales reps

• Limit sales rep activities in non-promotional programs

• Watermark/seal off-label materials that are to be distributed by sales reps

• DMs are key to achieving compliance goals

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Potential Controls -- Consultants, Speakers

• Require and review annual plans for use of consultants, speakers• Develop clear guidelines for use of consultants, speakers• Build in compliance safeguards (including monitoring and/or duty to

report compliance problems) in contracts with vendors supporting such activities; consider financial penalties for non-compliant programs

• Establish minimum number of programs all speaker trainees must do; establish a tracking system to ensure compliance

• Require sales reps to attend promotional meetings -- and require sales reps to report non-compliance (and sanction sales reps that fail to adequately police such programs)

• Periodically audit consultant meetings, speaker programs

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Potential Controls -- CME, IME Funding

• Establish clear rules/procedures to ensure independence of CME/IME programs– Program Content– Faculty– Invitees– Enduring materials

• Limit/eliminate sales force involvement in CME/IME programs

• Prohibit CME, IME funding to individual HCPs, HCP practices, or non-profit groups closely affiliated with HCPs

• Focus heightened attention on funding to specialty societies, patient groups (particularly for programs aimed at developing treatment guidelines)

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Potential Controls -- MSLs

• Reporting relationships and supervision should be outside sales and marketing• Compensation should be consistent with non-promotional position• Job description and performance goals/metrics should be consistent with non-

promotional program• Limit interactions with sales force• Carefully review affirmative call plans, time-in-field plans• Policies should address specific issues:

– Ride alongs– Distribution of off-label information– Responding to unsolicited requests– Review of funding requests (IME, Phase IV)

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Monitoring and Assessment

• Identify key products with potential off-label uses– Pay particular attention to off-label indications that were considered but rejected by FDA– Include products in the pipeline for risks of pre-approval promotion

• Review policies and procedures to ensure they adequately address current risks– Assess whether entire package of policies/procedures is adequate to control risk given

product portfolio, etc.

• Assess whether the field believes management is sending “mixed messages” on off-label promotion

• Review internal and external sources for red flags– Hotline calls– Exit interviews or HR proceedings– Warning Letters– Competitor complaints

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Monitoring and Assessment (cont’d)

• Review incentive compensation plans

• Review performance plans

• Don’t limit monitoring/assessment to specific activities -- where possible, look at

activities in context (e.g., linkage between marketing plans, product sales goals,

call plans)

• Periodically audit specific programs– All documents for a specific consulting meeting

• Call notes and field contact reports are still providing a treasure trove of evidence

to investigators/prosecutors

• Auditing/monitoring that doesn’t include review of emails is unlikely to give

accurate picture of current activities

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Fine Print

These slides and accompanying discussion provide a general

overview of legal and regulatory issues. They are not intended

to be, and should not be relied upon, as legal advice.

The views expressed herein are those of the author and not those

of King & Spalding LLP and/or any of its clients.