False Claims Act applied to violating FDA regulations prohibiting marketing for off-label uses.

The False Claims Act is applied to pharmaceutical manufacturers accused of violating FDA regulations prohibiting marketing of pharmaceuticals for off-label uses.

Enacted in 1863 in response to unscrupulous profiteering during the Civil War, the False Claims Act (FCA) is a primary tool of the government to fight fraud. The FCA lets private citizens or the U.S. Attorney General bring suit on behalf of the government for fraud. The private individual reporting the fraud incident to the government, the relator, may receive between 15-30% of the amounts recovered through successful prosecution of the case.

The FCA imposes triple damage liability on a party who knowingly submits false records to the federal government for payment, such as through Medicare and Medicaid receipts. The FCA also makes it illegal to make a false statement which leads another party to make a false claim which is subsequently paid or approved by the federal government.

In the context of off-label promotion, a company may be held liable under the FDCA and the FCA if the company markets a product for an unapproved use. The FCA allows the government or private citizens to prosecute drug companies who market a drug for a use not indicated on the product‘s label. FCA claims do not depend on the marketing to be false or for drug companies to submit claims to the federal government. It is legal for physicians to prescribe products for uses not indicated on the product‘s label and it is legal for providers to submit claims to the federal government for products prescribed off-label. However, it is illegal for companies to encourage physicians and prescribers to engage in these activities. This prohibition holds regardless of the truthfulness of the drug company‘s speech. A determination of off-label promotion is made based on the label in effect at the time of the speech. Therefore, a drug company may still be liable for off-label promotion of a drug if the FDA subsequently approves a product‘s use and amends the label.

The nexus between off-label promotion and violation of the FCA is difficult to see. The government and relators have argued that off-label promotion of a drug causes the submission of false or fraudulent claims under the US False Claims Act. As drug companies engaged in off-label promotion do not submit any claims to the government and as drug companies do not sell drugs to the government, it is difficult to see how off-label promotion to physicians results in the submission of false claims to the government. The theory is that off-label promotion influences physicians to prescribe the target drug more than otherwise, and that this increase usage is passed on to the government through prescriptions filled by patients. This is because at least some of these patient prescriptions are likely to be covered through government subsidies. Therefore, the drug companies use physicians as a means to create costs incurred by the government. However, off-label promotion is not dissemination of false information about a drug. It is merely providing scientific information to physicians, supporting the use of the drug for non-FDA approved use. So, what part of this chain of events is fraudulent? As physicians may legally engage in off-label prescribing, and In light of the Second Circuit's holding that off-label speech without more is not unlawful, the viability of this theory of False Claims Act liability is subject to serious question.[1]

Leslie Tar, Esq., LLM*

*Florida Health Law Attorneys, Florida Medical Board Defense Attorneys, Florida Medical License Defense Attorneys

* Office location in Port Charlotte, Florida with service to Sarasota, Ft Myers, Naples, Tampa, Orlando, Vero Beach, West Palm Beach, Boca Raton, Ft Lauderdale, Miami, Gainesville, Tallahassee, Pensacola and throughout Florida and nationally.

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[1] United States v. Caronia, No. 09-5006-cr, 2012 WL 5992141, -- F.3d -- (2d Cir. Dec. 3, 2012).