Tuesday, May 08, 2007

Off-Label Marketing Lands Drug Makers in Court

May 2007
Off-Label Marketing Lands Drug Makers in Court
By Julie Miller
Off-Label Marketing Lands Drug Makers in Court
Eli Lilly’s Zyprexa is FDA approved to treat schizophrenia, a mental disorder that affects less than 1 percent of the population. But in 2004 Zyprexa was the seventh-largest selling drug in the U.S., topping $4.4 billion in sales. This isn’t mathematical chicanery, but rather an equation missing one key factor—the overzealous marketing technique of promoting drugs for “off-label” uses.

“Off-label marketing can turn a $500 million drug into a $3 billion drug,” says Gerald Lawrence, shareholder and head of Lowey, Dannenberg, Bemporad, Selinger & Cohen’s Pennsylvania office. “And all of the sudden five out of six prescriptions are being written for uses that are not FDA approved. This is well and good until things go wrong.”

And for many of the nation’s leading pharmaceutical companies, things have gone wrong. On Feb. 26 Pennsylvania’s Department of Public Welfare and Department of Aging filed suit against Eli Lilly, AstraZeneca and Janssen Pharmaceutica, alleging widespread use of fraudulent sales practices for antipsychotic drugs, including Eli Lilly’s Zyprexa. The suit claims the state spent millions of dollars reimbursing Medicare providers for drugs prescribed for non FDA-approved uses and treating patients who experienced adverse side effects from those drugs.

Pennsylvania’s suit follows on the heels of four other states’ filings against the same companies, not to mention similar allegations pending in Canada. And by all estimates Pennsylvania won’t be the last state to target companies for their off-label sales practices.

Toxic Marketing

Under the FDA, a company must specify the intended use of its products in both its application to the FDA and on the labeling of the finished product. And while it is completely legal for doctors to prescribe drugs for off-label uses, the FDA strictly prohibits pharmaceutical companies from marketing any use of the product the agency hasn’t approved.

“Where the illegality comes in is manufacturers are barred from directly promoting off-label uses,” says Denise Houghton, member of Cozen O’Connor’s Philadelphia office. “But they are permitted to provide information if doctors have questions.”

According to the Pennsylvania suit, aggressive marketers overstepped this line by deliberately coaxing doctors into dispensing antipsychotic medications for non-approved uses, such as general mood disorders, attention deficit disorder (ADD) and even sleeplessness. The complaint adds that there are potentially hundreds, if not thousands, of state Medicaid and Program of All Inclusive Care for the Elderly (PACE) participants who took these medications and suffered serious side effects, including diabetes, pancreatitis, stroke, seizures and significant weight gain.

“Consider Zyprexa, which is a typical antipsychotic drug with a narrow FDA approved usage, and a marketer says, ‘Hey, let’s start giving it to the kids when they’re acting up,’” Lawrence cites as an example. “The next thing you know, your kid has put on 30 pounds in the first month and has developed diabetes.”

This hypothetical isn’t far off from some of Pennsylvania’s claims. The state says pharmaceutical salespeople pushed the drugs as cures for ADD in children and dementia symptoms and Alzheimer’s disease in the elderly—none of which are FDA-approved applications for the drugs. And if history repeats itself, there’s a chance these companies will settle big.

In May 2004, Warner-Lambert, a division of Pfizer, reached a whopping $430 million settlement with the DOJ concerning the company’s promotion of off-label uses for epilepsy drug Neurontin. And just last year InterMune agreed to a $36 million settlement with the DOJ over its immune disorder medication Actimmune (see “Off-label Trend”).

And even if Lilly survives the states’ suits, the company has already forked over more than $1 billion in personal injury claims to patients who took the drug for off-label purposes and developed serious disorders such as diabetes. The company also is facing a shareholder suit based on losses from Zyprexa, which is no longer the blockbuster drug it was in 2004. And while these figures seem like a billion reasons for marketers to shy away from pushing off-label prescriptions, there is little incentive for some companies at the end of the day.

“They may follow a ‘make-hay-while-the-sun shines’ logic,” Lawrence says.

“Take in the extra few billion before the backlash occurs and we will settle it out in litigation for a fraction of that over the course of several years.”

Healthy Advice

But if Pennsylvania and other government plaintiffs succeed in forcing Lilly, AstraZeneca and Janssen into multibillion-dollar settlements, that logic may be proved dead wrong.

Other companies can learn from the pharmaceutical industry’s mistakes. Experts advise in-house counsel to create strict guidelines and training for salespeople to be sure they know the difference between a zealous sales pitch and illegal conduct.

Even in companies that produce products that don’t carry the same dangers as improperly prescribed drugs, the legal department needs to be aware of what claims salespeople are making about the products’ capabilities. These drug cases serve as powerful reminders of how a marketing pitch can turn a successful product into a long-term liability.

“General counsel need to continue to ensure that the compliance obligations are understood by everyone in the organization,” advises Bruce D. Armon, a partner in Saul Ewing. “Compliance activities and procedures must remain part and parcel of the company’s everyday operations.”

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