7th Annual National Pharmaceutical Congress November 9, 2006

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7th Annual National Pharmaceutical
CongressNovember 9, 2006

• Off-Label Promotion Risks, Controls and
  Assessment

John T. Bentivoglio Co-Leader FDA/Healthcare
Group jbentivoglio_at_kslaw.com 202.626.5591
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Overview

• Basic FDA, Payment Rules
• The Role of the False Claims Act in Off-Label
  Promotion Cases
• Risk Areas and Red Flags
• Off-Label Promotion Controls
• Conducting An Off-Label Compliance Assessment

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FDA Rules on Promotion

• Under the FDCA, new drugs cannot be distributed
  in interstate commerce unless the sponsor
  demonstrates to the FDA that the drug is safe and
  effective for each of its intended uses. 21 USC
  Sec. 355(a) (d).
• Though physicians may prescribe a drug for a use
  other than the one for which it is approved, the
  FDA prohibits drug manufacturers from marketing
  or promoting a drug for a use that the FDA has
  not approved. 21 USC Sec. 331(d), 355(a).
• In some contexts, dissemination of information on
  unapproved uses may be viewed by FDA as
  promotional labeling or advertising that fails to
  meet FDA regulatory requirements and therefore
  constitutes unlawful off-label promotion in
  violation of the FDCA.

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Overview of Reimbursement Rules

• Medicaid reimbursement is available only for
  covered outpatient drugs, i.e., drugs used for
  a medically accepted indication.42 USC Sec.
  1396b(i)(10).
• A medically accepted indication includes (1) an
  FDA-approved indication, and (2) certain other
  indications in specified drug compendia. Id.
  Sec. 1396r-8(k)(6), Sec. 1396r-8(g)(1)(B)(i).
• Medicaid reimbursement is not available for
  indications outside these two categories.

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Overview of the False Claims Act

• The False Claims Act imposes liability upon any
  person who
• (1) knowingly presents, or causes to be
  presented, to the United States Government a
  false or fraudulent claim for payment or
  approval or (2) knowingly makes or causes to
  be made or used, a false record or statement to
  get a false or fraudulent claim paid or approved
  by the Government. 31 USC Sec. 3729.
• While pharmaceutical manufacturers do not
  generally submit claims directly to the Federal
  government, they can be held liable under the FCA
  for causing a false claim to be submitted
  (e.g., by a physician).
• Knowingly is defined in the FCA to mean acting
  (1) with actual knowledge, (2) in reckless
  disregard, or (3) deliberate ignorance of the
  truth or falsity of the claim.

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Whats the Link?

• DOJ has taken the position that the submission of
  an off-label prescription -- i.e., a not-covered
  outpatient drug -- for Medicaid reimbursement is
  a material misrepresentation made to obtain a
  government benefit and therefore constitutes a
  false claim under the FCA.
• Excerpt from DOJ Statement of Interest in the
  Parke-Davis (Neurontin Case)
• Parke-Davis illegal conduct caused the
  pharmacists to submit claims that as a result
  were (unknowingly) false and/or fraudulent
  representations that the supplies or products
  billed were procured in accordance with all laws
  and regulations governing Medicaid and thus
  eligible for reimbursement.
• U.S. Statement of Interest at 8
• Civ. No. 96-11651-PBS
• May 23, 2003

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Risk Areas and Red Flags

• Sales Force Activities
• Consultants and Speakers
• CME and Independent Medical Education Programs
• MSLs
• Statements to Payors
• Reimbursement Support
• Submissions to Formulary Sponsors, Compendia
• Listing of activities does not mean or imply
  that these activities are necessarily unlawful or
  inappropriate

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Risk Areas and Red Flags -- Sales Force
Activities

• Small market for approved use vs. large sales
  force
• Incentive compensation plans that include
  off-label sales
• Call plans that include HCPs not likely to
  prescribe on label
• Providing samples to HCPs not likely to prescribe
  on label
• Providing off-label information to sales reps for
  background purposes (particularly where other
  controls are lacking )
• Sales force involvement in non-promotional
  programs
• Preceptorships with HCPs not likely to prescribe
  on label
• Permitting sales reps to answer off-label
  questions, provide off-label information
• Special issues for device companies -- sales reps
  in operating room for off-label procedures, etc.

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Risk Areas and Red Flags -- Consultants

• Hiring of consultants not likely to use the
  product on label
• Hiring of more consultants than is reasonably
  necessary to meet legitimate business purpose
• Provision of excessive amounts of off-label
  information to consultants when compared to
  desired feedback/issues
• Failure to collect and use feedback from
  consultants for intended business purpose
• Tracking of ROI or similar analysis on
  effectiveness of consulting programs

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Risk Areas and Red Flags -- Speakers

• Training more speakers than reasonably necessary
  to achieve legitimate business purpose
• Providing more off-label information to speakers
  than necessary to train them for promotional
  presentations
• Targeting of invitees/HCPs not likely to
  prescribe on label
• Planting questions with attendees to raise
  off-label issues that will be discussed in front
  of other attendees
• Speaker programs with small number of attendees,
  peer-to-peer (or one-on-one) presentations
• Focus groups or other informal
  meetings/discussions led by an HCP paid by the
  manufacturer

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Risk Areas and Red Flags -- CME andIME Programs

• Sales force involvement in submission, review,
  and approval of CME/IME funding
• Marketing involvement in CME/IME funding
• Lack of controls ensuring independence of CME/IME
  programs from manufacturer
• CME/IME funding to specialty societies, patient
  groups

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Risk Areas and Red Flags -- MSLs

• Placement of function in and/or reporting
  relationships to commercial executives
• Incentive compensation similar to field sales
  force
• Affirmative call plans
• Close alignment with activities of sales
  representatives (e.g., ride alongs)
• Job descriptions and/or performance evaluations
  not consistent with non-promotional roles (e.g.,
  metrics for time in field)
• Participation in promotional programs (e.g.,
  speaker programs)

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Risk Areas, Red Flags -- Other Areas

• Phase IV funding activities (i.e., support for
  off-label studies)
• Reimbursement support/patient assistance
  activities
• Submissions/communications to formulary sponsors,
  compendia
• Interactions with patient advocacy/support
  groups, patients
• Internet activities
• Web sites
• Chat rooms
• Blogs

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Risk Areas, Red Flags -- Miscellaneous

• DOJ rarely builds a case based on a single
  activity or event, particularly with respect to
  off-label promotion
• Prosecutors will look at a body of evidence --
  marketing plans, call notes, emails, compensation
  plans, witness interviews -- when deciding
  whether to take enforcement action
• Targeting of non-promotional programs based on
  HCP prescribing practices
• Off-label promotion for claims that have been --
  and rejected -- by the FDA appear to trigger
  heightened scrutiny
• Off-label promotion involving false/misleading
  information, particularly where it could lead to
  patient harm/safety issues, also likely to
  trigger heightened scrutiny

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Potential Controls -- Sales Force

• Review call plans to reduce/eliminate calls on
  HCPs unlikely to prescribe on label
• Back out off-label prescriptions from calculation
  of incentive compensation
• Strict and clear rules on what sales reps
  can/cant say in response to off-label questions
• Limit amount of background material (i.e., not
  intended to be used with physicians) provided to
  sales reps
• Limit sales rep activities in non-promotional
  programs
• Watermark/seal off-label materials that are to be
  distributed by sales reps
• DMs are key to achieving compliance goals

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Potential Controls -- Consultants, Speakers

• Require and review annual plans for use of
  consultants, speakers
• Develop clear guidelines for use of consultants,
  speakers
• Build in compliance safeguards (including
  monitoring and/or duty to report compliance
  problems) in contracts with vendors supporting
  such activities consider financial penalties for
  non-compliant programs
• Establish minimum number of programs all speaker
  trainees must do establish a tracking system to
  ensure compliance
• Require sales reps to attend promotional meetings
  -- and require sales reps to report
  non-compliance (and sanction sales reps that fail
  to adequately police such programs)
• Periodically audit consultant meetings, speaker
  programs

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Potential Controls -- CME, IME Funding

• Establish clear rules/procedures to ensure
  independence of CME/IME programs
• Program Content
• Faculty
• Invitees
• Enduring materials
• Limit/eliminate sales force involvement in
  CME/IME programs
• Prohibit CME, IME funding to individual HCPs, HCP
  practices, or non-profit groups closely
  affiliated with HCPs
• Focus heightened attention on funding to
  specialty societies, patient groups (particularly
  for programs aimed at developing treatment
  guidelines)

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Potential Controls -- MSLs

• Reporting relationships and supervision should be
  outside sales and marketing
• Compensation should be consistent with
  non-promotional position
• Job description and performance goals/metrics
  should be consistent with non-promotional program
• Limit interactions with sales force
• Carefully review affirmative call plans,
  time-in-field plans
• Policies should address specific issues
• Ride alongs
• Distribution of off-label information
• Responding to unsolicited requests
• Review of funding requests (IME, Phase IV)

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Monitoring and Assessment

• Identify key products with potential off-label
  uses
• Pay particular attention to off-label indications
  that were considered but rejected by FDA
• Include products in the pipeline for risks of
  pre-approval promotion
• Review policies and procedures to ensure they
  adequately address current risks
• Assess whether entire package of
  policies/procedures is adequate to control risk
  given product portfolio, etc.
• Assess whether the field believes management is
  sending mixed messages on off-label promotion
• Review internal and external sources for red
  flags
• Hotline calls
• Exit interviews or HR proceedings
• Warning Letters
• Competitor complaints

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Monitoring and Assessment (contd)

• Review incentive compensation plans
• Review performance plans
• Dont limit monitoring/assessment to specific
  activities -- where possible, look at activities
  in context (e.g., linkage between marketing
  plans, product sales goals, call plans)
• Periodically audit specific programs
• All documents for a specific consulting meeting
• Call notes and field contact reports are still
  providing a treasure trove of evidence to
  investigators/prosecutors
• Auditing/monitoring that doesnt include review
  of emails is unlikely to give accurate picture of
  current activities

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Fine Print

• These slides and accompanying discussion provide
  a general overview of legal and regulatory
  issues. They are not intended to be, and should
  not be relied upon, as legal advice.
• The views expressed herein are those of the
  author and not those of King Spalding LLP
  and/or any of its clients.