IN FOCUS monday, march 20, 2006 WHITE-COLLAR CRIME Crackdown on ‘off-label’ pitches Pharmaceutical companies have been penalized for pushing their products for unapproved uses.

Evista, which has been approved off-label promotion. These cases further By Robert Brady, Meredith Manning for the treatment of osteoporosis in highlight the fact that the DOJ is strongly and Peter Spivack SPECIAL TO THE NATIONAL LAW JOURNAL post-menopausal women. Signaling DOJ scrutinizing practices in pharmaceutical,

IN A MAJOR SHIFT OF enforcement strategy, control over the settlement, the consent biotech and medical-device companies the U.S. Department of Justice (DOJ) has decree mirrors the content of corporate- that traditionally have not been firmly taken control of the enforcement integrity agreements generally investigated by the FDA. against pharmaceutical, biotechnology drafted by and enforced by Health care companies’ and medical-device manufacturers. Both the inspector general of Problems arise promotional activities continue “Main Justice” in Washington and various the Department of Health from off-label to be a major focus of DOJ U.S. attorney offices around the country and Human Services. U.S. enforcement actions. In now enforce against these companies v. Eli Lilly and Co., No. claims for 2004, Inc. entered into through the Food, Drug and Cosmetic Act IP05-CR-0206-01-B/F (S.D. Medicaid a $430 million settlement (FDCA), the Anti-Kickback Statute Ind. Dec. 21, 2005). with the DOJ to settle and the . The DOJ has On Oct. 17, 2005, the repayment. charges that it had illegally signaled—via its most recent settlements DOJ announced that the promoted its anti-epileptic over the course of two months—how Swiss company Serono S.A., along with its drug, Neurontin, for an array of its enforcement will change the way U.S. subsidiaries, would plead to two unapproved uses, including pain and companies promote and market therapeutic felonies and pay $704 million to settle bipolar disorder. The charges arose out of a products in the future. criminal and civil charges related to qui tam, or , lawsuit brought On Dec. 21, 2005, the DOJ announced the marketing of its AIDS-wasting drug, under the federal civil False Claims Act that Eli Lilly and Co. had agreed to plead Serostim. This represents the largest (FCA) by a former employee who painted guilty to a single misdemeanor count settlement to date for promoting a Food a picture of a “comprehensive scheme” and pay $36 million to settle criminal and Drug Administration (FDA)-approved devised by the company to promote charges and civil allegations related to product outside its approved indications, Neurontin for off-label uses. U.S. ex rel. the company’s marketing of its drug or “off-label” promotion. U.S. v. Serono Franklin v. Parke-Davis, No. 96-11651-PBS Laboratories Inc., No. 05d CR 10282-RCL (D. Mass. filed Aug. 22, 1996; settlement Robert Brady, Meredith Manning and (D. Mass. Oct. 12, 2005). agreement May 13, 2004). Peter Spivack are partners at Hogan & Both cases demonstrate that the DOJ The FCA authorizes a private citizen Hartson in Washington. Brady held several continues to expand the nature and extent to bring an action on behalf of the leadership positions at the FDA. They of company conduct it will investigate, government for violations of specific can be reached, respectively, at rpbrady and that it will pursue those investigations statutes. The Neurontin case stands for @hhlaw.com, [email protected] and vigorously. The settlements also reveal the novel proposition that a company’s [email protected]. Associates Stephanie some clues regarding when the DOJ off-label promotion is a violation of Solomon and Alison Stanton assisted in the decides to seek felony charges v. mis- the FCA if the promotion results in preparation of this article. demeanor charges against a company for submission of an off-label claim for THE NATIONAL LAW JOURNAL MONDAY, MARCH 20, 2006 reimbursement to a federal health care Serono Labs pleaded guilty to two to settle liabilities relating to payments program. The Neurontin case may have felony counts: conspiracy to distribute an made by state Medicaid and federal health established a new standard that it need unapproved and adulterated medical care programs for Serostim during the time only be “reasonably foreseeable” that a device; and conspiracy to pay illegal of the illegal conduct. The government company’s conduct will result in a remuneration to health care providers agreed to allow Serono-owned companies false Medicaid claim. to induce referrals to other than Serono Labs to continue receiving The Neurontin case pharmacies for Serostim— reimbursement under federal health care also demonstrates that a A disgruntled payment for which was made programs. The government released Serono disgruntled former employee former by Medicaid. The charging from civil claims related to the Serostim can pose a substantial threat employee can document describes the basis promotional conduct. to a company. According to for these charges. Serono entered a corporate integrity published reports, there are impose a Count one charged that agreement (CIA) obligating the company upwards of 200 pending qui substantial through use of unapproved to establish a comprehensive compliance tam cases involving allegations diagnostic software (a device program and develop policies and of off-label promotion by threat. under the FDCA), Serono procedures spanning a variety of topics. health care companies. launched a campaign to The Serono CIA is similar to one in convince prescribers that “body cell place between the government and Small sales not immune mass”—rather than weight loss, which Pfizer as a result of the Neurontin case, Additionally, it is not necessarily the the company had used as the clinical but there are some notable differences. size of the market for a particular endpoint in its clinical investigations First, the Serono CIA has a heightened product that puts a company at risk of supporting approval of the drug—was the focus on the funding and conduct of DOJ investigation. For example, Novo true measure of AIDS wasting. Around medical education programs. Second, Nordisk A/S recorded only $2.6 million in the time of Serostim’s approval, protease Serono is obligated to implement policies sales of an insulin product for the first inhibitors also were approved by the relating to compensation to ensure that nine months of 2005, but it recently FDA. These drugs dramatically reduced financial incentives do not encourage announced receipt of a subpoena from the the number of patients suffering from improper promotional, sales and U.S. attorney for the Eastern District of AIDS wasting, and thus, the demand marketing practices. Finally, the Serono New York requesting documents related for Serostim. By “redefining AIDS CIA prohibits medical information to that product’s marketing and promotion. wasting,” the government asserted, the staff from responding to requests for Thus, health care companies in markets company aimed to artificially expand off-label information unless the request of all sizes need to be wary of the current the Serostim market. is made in writing. enforcement environment. Count two asserted that, to further In its case, Lilly agreed to plead guilty The Serono case arose from three boost lagging sales, the company initiated and to pay $36 million in connection with qui tam actions filed by former sales what it called a “6m-6 Day Plan” through its illegal promotion of its pharmaceutical representatives against the company for which representatives were instructed drug Evista. In pleading guilty to a false Medicaid claims. The complaints to offer financial incentives to high misdemeanor count of misbranding alleged that Serono sales representatives prescribers to meet a targeted sales Evista, the Indianapolis-based company used a bioelectrical impedance analysis increase of $6 million within six days. agreed to pay a $6 million criminal (BIA) test to “measure” patients’ body Physicians were offered all-expense-paid fine and forfeit to the government an mass wasting and manipulated the BIA trips to the International Conference additional sum of $6 million. In addition, readings to suggest that patients without on Nutrition and HIV Infection in Lilly agreed to settle civil FDCA AIDS wasting be prescribed Serostim. Cannes in exchange for the increased liabilities by entering into a consent The also alleged that prescribing of Serostim. decree and disgorging $24 million. Serono offered prescribers trips to Cannes, Serono’s criminal penalties for these France, in exchange for writing a certain violations totaled $137 million. A better deal for Lilly number of prescriptions for Serostim Under a civil settlement agreement, The government alleged that the first within a set period of time. Serono will pay more than $560 million year’s sales of Evista in the THE NATIONAL LAW JOURNAL MONDAY, MARCH 20, 2006 were disappointing compared to Lilly’s doctors on their sales routes to promote and provide it to the government. original forecast. In October 1998, the the drug for an unapproved use. company reduced the forecast of Evista’s ■ Organizing a “market research summit” The DOJ is watching first year’s sales in the United States during which Evista was discussed with The Serono settlement confirms that from $401 million to $120 million, and physicians for unapproved uses, including the DOJ will vigorously prosecute an internal business plan noted a reducing the risk of breast cancer. anti-kickback cases. In fact, the presence “disappointing year versus original forecast.” ■ Creating and distributing to sales of the kickback element in the Serono Thus, according to the DOJ, Lilly sought representatives an “Evista Best Practices” case appears to be the major differentiation to broaden the market for Evista by videotape, in which a sales representative in the conduct alleged in the Serono and promoting it for unapproved uses. states that “Evista truly is the best drug Lilly charging documents. Lilly’s strategic marketing plans and for the prevention of all these diseases,” From the perspective of compliance with promotion touted Evista as effective in referring to osteoporosis, breast cancer the FDCA, both cases demonstrate that preventing and reducing the risk of and cardiovascular disease. the DOJ will not only prosecute promotion diseases for which the drug’s labeling The complaint for permanent injunction of unapproved drugs (or promotion of lacked adequate directions for use. Lilly’s alleges that Lilly used additional tactics, approved drugs for unapproved uses), but will Evista brand team and sales representatives including organizing “consultant meetings” thoroughly examine marketing efforts such promoted Evista for the prevention and for physicians at which unapproved uses for as Serono’s efforts to alter a diagnostic reduction in risk of breast cancer even Evista were discussed. method to convince physicians to use a after the FDA rejected Lilly’s proposed The consent decree imposes a broad drug in a wider patient population and Lilly’s labeling that Evista reduced “the frequency range of obligations on Lilly, similar to a promotional activities couched as “market of newly diagnosed breast cancer” in those CIA, including implementing effective research.” The cases also signal that the DOJ taking Evista compared to placebo. Lilly training and supervision of its marketing continues to closely scrutinize those activities also promoted Evista for the reduction and sales staff for Evista, and ensuring that considered “nonpromotional”—such as of cardiovascular disease. any future off-label marketing conduct is support for medical education and responses Although not charged in the information, detected and corrected. Lilly agreed to be to unsolicited requests for information. A it is notable that a federal court granted permanently enjoined from promoting component of any post-approval advertising AstraZeneca PLC a preliminary injunction Evista for any unapproved use. Lilly also promotion compliance program should be against Lilly in 1999 under the Lanham agreed to use an independent review a thorough corporate understanding of Act to block the firm from promoting a organization to assess and evaluate its the labeling negotiations between the breast cancer claim for Evista. Zeneca Inc. policies and procedures for promoting company and FDA. v. Lilly & Co., No. 99 Civ. 1452 (S.D.N.Y. Evista and for complying with the consent Finally, the Serono case is the first known July 19, 1999). AstraZeneca’s Nolvadex decree. Unlike the Serono CIA, however, instance of the DOJ asking a company to (tamoxifen) is approved for reducing most of the obligations under the consent evaluate or assess incentive compensation. the risk of breast cancer. decree are limited to the promotion of a The Lilly case is the first in which the The information alleges much of the single drug, Evista. DOJ has addressed market research as a same conduct that AstraZeneca raised in its Importantly, the consent decree potential promotional tool. Both settlements Lanham Act suit—that Lilly used a number obligates Lilly to submit to the government demonstrate that the DOJ continues to of tactics, including: all market research conducted by or for the learn about the methods companies use ■ One-on-one sales pitches to Evista brand team or Lilly Market Research to promote drugs, biologics and medical physicians by sales representatives to measure physician recall of marketing devices, and that it will continue to apply promoting off-label uses for Evista. Sales messages by Lilly sales representative for that knowledge to other companies. NLJ representatives were trained how to Evista, along with any summaries, reports or This article is reprinted with permission from the prompt questions by doctors on presentations of such data. The consent March 20, 2006 edition of THE NATIONAL LAW unapproved uses. decree obligates the company to obtain JOURNAL. © 2006 ALM Properties, Inc. All rights reserved. Further duplication without permission ■ Encouraging sales representatives quarterly information on the interaction is prohibited. For information, contact ALM Reprint Department at 800-888-8300 x6111 or visit to send unsolicited medical letters to between their sales reps and physicians almreprints.com. #005-03-06-0008