Managing Physician-Company Conflict of Interest

DRUG AND MEDICAL DEVICE The Emerging Legal Regime Managing Physician-Company By David L. Ferrera Conflict of Interest and Dawn M. Curry The need to justify Pharmaceutical and medical device companies cannot medical care as cost- exist without physicians to prescribe their products. But effective raises concerns what happens when an intermediary becomes a collabora- about how physician- tor? The law of conflict of interest as it affects drug and medical device companies and physicians panies, and new claims in civil product company relationships spans multiple practice areas that clients liability litigation that call into question and counsel alike should understand to physicians’ roles in clinical research, in may affect approvals of ensure a uniform approach to business and dispensing medical advice, and in pro- litigation decisions. viding treatment to patients. As the legal certain drugs and devices. Disclosure of the close connections framework unfolds, physicians and drug between the pharmaceutical and medi- and medical device companies can expect cal device industries and physicians has to face heightened scrutiny and increased spurred growing federal and state level risks of civil and criminal legal actions. backlashes against such relationships. Actions by Congress, the U.S. Department Federal Government Enforcement of Justice, several state legislatures and Federal prosecutors have become much attorneys general, and civil courts have more aggressive in employing a number of all contributed to a new legal framework legal tools and in casting an ever wider net governing financial relationships between to punish and deter perceived corruption physicians and drug and medical device among physicians and pharmaceutical and companies. medical device companies. This aggres- This framework increasingly empha- sion comes amid escalating concerns over sizes complete disclosure of all ties between whether and how relationships between doctors and manufacturers of drugs and companies and physicians compromise a medical devices, aggressive government doctor’s ability to render clinical care, con- enforcement against improper relation- duct impartial research, and impart unbi- ships between physicians and these com- ased advice to peers. ■ David L. Ferrera and Dawn M. Curry are partners in the Boston office of Nutter, McClennen & Fish LLP. Mr. Ferrera is chair of the firm’s product liability litigation practice group, and has a particular focus on pharmaceutical and medical device litigation. Ms. Curry is a member of the firm’s government investigations and white collar defense and its product liability litigation practice groups, and represents pharmaceutical and medical device companies in a variety of contexts. Both are members of DRI. The authors gratefully acknowl- edge Katy A. O’Leary, an associate at the firm, who assisted in the research and preparation of this article. © 2011 DRI. All rights reserved. For The Defense ■ August 2011 ■ 29 DRUG AND MEDICAL DEVICE Within the last decade, prosecutors have and lucrative consulting arrangements It is estimated that that approximately actively pursued pharmaceutical and med- without requiring significant work prod- 20 percent of all prescriptions that doc- ical device companies for alleged kickback uct in return, and unrestricted educational tors write are for off- label use. As a result, and off-label promotional activities. Not grants. Many of these practices had become federal health and legal officials are fully satisfied with the many millions of the industry standard by the late 1990s. increasingly interested in how financial dollars paid by these companies to settle The government’s efforts in the area relationships between drug makers and these actions, prosecutors have attempted to of kickbacks have resulted in staggering physicians may impact physician off- label hold individuals accountable for such activ- fines and settlements borne by a number prescribing practices. ities with expanding government resources. of companies, including TAP Pharmaceu- tical for $875 million, Serono for $705 mil- Actions Against Individual Doctors lion, AstraZeneca for $355 million, and More recently, the federal government has Schering- Plough for $350 million. shown a greater willingness to target doc- Federal health and legal The U.S. Department of Justice (DOJ) tors in fraud cases. As Michael J. Sulli- has also used means other than prosecu- van, former United States Attorney for officials are increasingly tions to hold pharmaceutical and medi- Massachusetts, observed, “The strategy cal device companies responsible for their of looking at the companies alone was interested in how financial actions. In the wake of an investigation into not completely successful in terms of our the financial relationships of five orthope- objective to deter health care fraud.” The relationships between drug dic device manufacturers with orthope- steep $2.3 billion fine paid by Pfizer repre- dic surgeons, the DOJ executed deferred sents less than three weeks of that compa- makers and physicians prosecution agreements with four of the ny’s sales. As a result, federal prosecutors companies, and the DOJ executed a non- and health officials have started to focus on may impact physician off- prosecution agreement with the fifth. The the “demand” side, stepping up investiga- agreements resulted in financial settle- tions of doctors, especially surgeons. label prescribing practices. ments amounting to $310 million, federal For a doctor, the repercussions of a crim- oversight of the companies for an 18-month inal conviction and a civil judgment could period, and full, public disclosure by the be severe, including prison time, hefty The federal government has prosecuted in- companies of the names and amounts that fines, a lost medical license, and exclusion dividual physicians and, more often, phar- they paid to physicians. from health care programs. As Lewis Mor- maceutical and device company employees, Off-label marketing is another area of ris, the chief counsel to the inspector gen- more recently based solely on an employ- growing scrutiny. In 2009, federal pros- eral of the U.S. Department of Health and ee’s status as a “responsible corporate offi- ecutors scored record fines in the area of Human Services, recently stated, “What we cer” under the Park doctrine. off- label promotion, including $1.4 billion need to do is make examples of a couple of from Eli Lilly to settle federal criminal doctors so that their colleagues see that this Actions Against Drug and charges that it illegally marketed Zyprexa, isn’t worth it.” Medical Device Companies and $2.3 billion from Pfizer to settle ille- A total of five physicians received con- The antikickback statute, 42 U.S.C. gal marketing charges in connection with victions and sentences in connection with §1320a-7b(b), makes it a criminal offense its pain reliever Bextra. The Pfizer settle- the TAP Pharmaceutical investigation. The to offer, pay, solicit, or receive knowingly ment is the largest health care fraud set- government charged four of the five doc- or willingly any remuneration to induce tlement and the largest criminal fine of tors early in the investigation, and they use of products or services reimbursed any kind. In 2010, this trend continued, as pleaded guilty soon afterward. They were by any federal health care program. In Allergan pled guilty to criminal and civil sentenced to probation in exchange for its first few decades of operation, federal allegations of illegal, off- label promotion cooperating and assisting with the inves- prosecutors confined application of the of Botox and paid $600 million in fines. In tigation. The fifth physician was indicted antikickback statute largely to situations addition, Novartis agreed to pay $422 mil- on the day that the company announced involving explicit schemes to increase phy- lion to settle criminal and civil claims in its settlement agreement with the govern- sician prescriptions of certain drugs or connection with alleged off- label promo- ment. He pleaded guilty three years later referrals. These prosecutions primarily tion of Trileptal and five other drugs. In and was sentenced to two years probation, targeted drug and medical device compa- what U.S. Attorney General Eric Holder the first six months of which he would nies while—despite the statute’s broad lan- called a “historic settlement,” AstraZeneca serve in home confinement with electronic guage—largely immunizing doctors. agreed to pay $520 million to settle claims monitoring. The doctor was also ordered to Over the past decade, the federal gov- that the company illegally marketed Sero- pay fines and restitution. ernment has targeted an array of prac- quel, a popular antipsychotic drug. This is In 2010, Dr. Scott Reuben, a once well- tices employed by drug and medical device the largest amount paid by a pharmaceu- respected anesthesiologist from Massa- manufacturers, including lavishing physi- tical company to settle civil- only charges chusetts, was sentenced to six months in cians with expensive lunches, exotic trips, involving off- label promotion. jail followed by three years of supervised 30 ■ For The Defense ■ August 2011 release, along with fines and restitution, potential exclusion from Medicare, Medic- charges relating to allegations that Purdue after pleading guilty to health care fraud. aid, and all other federal health programs. employees illegally promoted OxyContin. An investigation had revealed that more The government has

Load more