DOJ's Enforcement of Off-Label Marketing Prohibition
Drug and device companies have a lot to worry about these days. Not only have they been targeted for FCPA enforcement actions, but they continue to be investigated and prosecuted by the Justice Department and HHS/FDA for “off-label” marketing of their products.
DOJ has collected significant fines against companies, convicted individual officers, and employed aggressive policies to charge senior managers who have no knowledge of the illegal activity. DOJ relies on the “responsible corporate officer” doctrine to charge individual officers with misdemeanor offenses despite their lack of involvement in any criminal activity. DOJ’s actions are a poster child for policymakers who argue against “overcriminalization” of our society.
Since 2001, pharmaceutical companies have paid approximately $10 billion and medical device companies have paid $1 billion in fines. Companies plead guilty to a criminal violation in three-quarters of the cases. One-third of those were felony pleas and two-thirds were misdemeanor pleas.
Historically, off-label issue was regulatory matter handled by FDA through warning letters and administrative sanctions.The landscape changed when US Justice Department became involved and focused on criminal and civil fraud prosecutions which lead to huge fines and settlements. The large recoveries became a policy justification for such prosecutions. The government knows that the complexity of the issue makes it difficult for companies to defend themselves at criminal trials.
The policy basis for the prosecutions raises difficult issues. An applicant for FDA approvalof a new drug or device must demonstrate that the drug/device is safe and effective for intended use. The drug/device must contain labeling reflecting approved uses. Some (if not many) off-label uses of drugs and medical devices are safe and effective. The FDA has authority to make sure drug labeling and advertising is truthful and not misleading. DOJ and the FDA have taken the position that off-label marketing of drugs or devices for unapproved uses is “misbranding” of drugs or devices since labeling does not include non-approved uses.
But the policy suffers from a fundamental flaw. It is overbroad. Doctors are permitted to prescribe drugs or device for off-label indications. Drug companies and device manufacturers are prohibited from “promoting” off-label uses of drugs. As a result, doctors and patients cannot get complete access to information about drugs and devices. This is a clear example of over-regulation of commercial speech – manufacturers are prohibited from educating doctors and patients about the possible benefits of off-label uses. However, DOJ and the FDA have argued that the prohibition preserves the incentive for drug and device companies to seek regulatory approvals of any intended use of a drug and device and prevent companies from “gaming” the system by seeking approval of a limited intended use with the intent to market unapproved uses of the drug or device.
The FDA’s overbroad prohibition may be subject to First Amendment challenge, especially in light of the Supreme Court’s decision last term in Sorrell v. IMS Health Inc. Indeed, the First Circuit Court of Appeals has asked for supplemental briefing on that very issue in its review of a criminal conviction in US v. Caronia. The court’s decision may be the first real examination of the policy tension underlying DOJ’s off-label enforcement program.