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Regulating Pharmaceutical Marketing

November 10, 2014

In an industry as complex as pharmaceuticals, there is a lot of room for potential corporate misconduct. On behalf of the Food and Drug Administration (FDA), the Department of Justice (DOJ) frequently prosecutes major pharmaceutical companies for the way in which they market their drugs. Since 2004, there have been more than thirty settlements that resulted in corporations paying fines in the millions, if not billions, of dollars for criminally misbranding drugs under the Food, Drug, and Cosmetic Act (FDCA) and for defrauding the federal government under the False Claims Act (FCA). In tandem with US Attorneys’ Offices around the country, the Consumer Protection Branch of the DOJ, where I am interning this summer, handles the criminal aspects under the FDCA in these cases. Regulating and prosecuting pharmaceutical marketing is no easy challenge for the FDA, whose public health mission frequently clashes with the profit-driven world of Big Pharma. 

By Chris Doherty C’15

To begin the drug review process, pharmaceutical companies conduct extensive clinical trials on a drug. Then, they apply to the FDA for the drug’s approval by filing a new drug application that specifies its intended use, or label. If the FDA grants approval, it will only be for a narrow label where the company has demonstrated that the benefits of the new drug outweigh its risks, the FDA’s standard decision-making barometer. Pharmaceutical companies are then free to market and sell the drug to physicians according to the approved label.

However, physicians themselves often decide to prescribe drugs to patients for off-label purposes. This is quite typical—some research suggests that nearly 20% of all prescriptions are written off-label.[1] While this is acceptable and the drug may have proven efficacy in treating that off-label condition (perhaps the drug is undergoing the lengthy approval process), this kind of off-label use has two potentially negative consequences.

On the one hand, there are likely other drugs with approved labels for the condition, so the patient’s opportunity cost in trying the non-approved, off-label prescription is high if the off-label treatment is ineffective. Perhaps even more troubling, taking a drug off-label can be dangerous, leading time and time again to harmful health effects, such as increased risk of stroke or heart attack. If the FDA did or did not approve the drug for a specific condition, it was a decision made based on scientific evidence submitted by the pharmaceutical company about that drug at a particular dosage, for a particular patient population. Problems arise, therefore, when pharmaceutical companies themselves begin marketing drugs off-label to doctors in order to increase sales. Once again, the central tension is that the FDA regulates to promote public health, yet the pharmaceutical industry’s priority is profit.


"Prozac pills cropped" by Tom Varco - from Wikimedia CommonsThe seminal example of off-label marketing comes from Franklin v. Parke-Davis, a 2004 case involving the misbranding of Neurontin. Although the FDA only approved Neurontin as an adjunct therapy for epilepsy, Parke-Davis, a division of Warner-Lambert later acquired by Pfizer, decided to market Neurontin for off-label use. By 2002, after nearly 10 years on the market, 94% of Neurontin’s prescriptions were for off-label use.  One high-ranking sales manager at Parke-Davis was actually recorded saying, “We can’t wait for [physicians] to ask…. That’s where we need to be, holding their hand and whispering in their ear, Neurontin for pain, Neurontin for monotherapy, Neurontin for bipolar, Neurontin for everything.”[2] This flagrant misbranding ended with a settlement of $430 million and ushered in the era of large pharmaceutical settlements because of a new interpretation of the FCA, which allowed the government to recover payments made by Medicare for off-label prescribed drugs (in addition to the criminal fines paid for violating the FDCA).   

In the case of Neurontin, it was clear that the off-label claims were unsubstantiated, and hence the FDA and DOJ had an imperative to protect the at-risk patient population. Interestingly, however, a serious First Amendment challenge has arisen in recent years regarding off-label marketing. The thrust of such arguments rests on the interpretation of what is “truthful” information. No one would argue that pharmaceutical companies have the right to intentionally lie and misbrand a drug, but what determines the truthfulness of a statement when there is some data, however limited, to support it?

Some would argue in support of the pharmaceutical companies’ right to promote off-label because it is “truthful” if they have data from clinical trials to substantiate it, even if this data is not rigorous enough to pass FDA approval. Others, however, believe that it is too risky to promote a drug for any purpose that has not been subject to the full FDA approval process, even if the off-label prescription has become common medical practice or significant data exists to support the claim. Assuming the off-label claim had passed this “truthfulness” test, the pharmaceutical companies’ then might argue that if the doctor’s speech to his patient about off-label uses is protected by the free speech clause, why does the same not hold true for the sales representative in discussion with the physician?

Following the Supreme Court’s trend toward increased First Amendment guarantees for commercial speech in general, the Second Circuit Court of Appeals decided in 2012’s United States v. Caronia that the government could not prosecute “for speech promoting the lawful, off-label use of an FDA-approved drug.”[3] At decision time, this was heralded as a landmark case. However, these types of cases have continued in recent years.  For instance, Johnson & Johnson agreed to a $2.2 billion settlement this past November for the misbranding of Risperdal. Initially approved to treat schizophrenia, the drug was aggressively marketed for the treatment of elderly dementia patients for a myriad of non-approved conditions.[4]

Make no mistake, the pharmaceutical industry is booming despite the frequent high profile settlements: according to a report by Health Care for Americans Now, the 11 largest firms took in $711 billion profit over the ten year period ending in 2012.[5] Given the industry’s notoriously high profit margins, the settlement sums agreed upon in off-label marketing cases may mean very little to these corporations. Although billion dollar settlements may make for eye-popping headlines, a simple comparison of each of the major American pharmaceutical companies’ most recent settlement costs for off-label marketing and their 2013 revenue demonstrates just how small of a cost these cases are as a proportion of their income. The settlements are barely visible.[6] [7]

The FDA seems to recognize that its own off-label marketing guidelines are ambiguous and conflict with recent case law like Caronia. Accordingly, the FDA has announced plans to issue revised rules on the kind of off-label information that pharmaceutical companies can share with physicians as well as a new protocol for dealing with questions by physicians about that information.[8] No matter whether these guidelines result in a more industry-friendly approach to off-label marketing regulation, a decades worth of cases demonstrate the need for the FDA and DOJ to continue working together to ensure the safety of patients across America.

                                  

Please Note: The opinions expressed herein represent those of the author and do not reflect any official position or opinion of the organization(s) mentioned. 


[1] Stephanie Greene. “FDA Prohibitions on Off-Label Marketing Do Not Violate Drug Manufacturers’ First Amendment Rights.” University of Pennsylvania Law Review. http://www.pennlawreview.com/debates/index.php?id=50

[2] “Drug Giant Accused of False Claims.” NBC News. 7/11/2003. http://www.nbcnews.com/id/3079883/ns/dateline_nbc/#.U9Wpz4BdXDM

[3] United States v. Caronia, United States Court of Appeals for the Second Circuit. http://www.ca2.uscourts.gov/decisions/isysquery/6e05321e-de76-483d-b98f-d2a77324337d/1/doc/09-5006_complete_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/6e05321e-de76-483d-b98f-d2a77324337d/1/hilite/

[4] “Johnson & Johnson to Pay More Than $2.2 Billion to Resolve Criminal and Civil Investigations.” U.S. Department of Justice. 11/4/2013.  http://www.justice.gov/opa/pr/2013/November/13-ag-1170.html

[5] “Big Pharma Pockets $177 Billion in Profits by Price-Gouging Taxpayers and Seniors.” Health Care for America Now.  4/8/2013. http://healthcareforamericanow.org/2013/04/08/pharma-711-billion-profits-price-gouging-seniors/

[6] Settlement costs from United States Department of Justice press releases http://www.justice.gov/opa/

[7] Revenue from United States Securities and Exchange Commission http://www.sec.gov/edgar.shtml#.U_tWfoCwLpg

[8] Dennis Brady. “FDA has free-speech, safety issues to weigh in review of ‘off-label’ drug marketing rules.” The Washington Post. 7/9/2014. http://www.washingtonpost.com/national/health-science/2014/07/09/3708dd6a-fbc4-11e3-8176-f2c941cf35f1_story.html

 

 

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