Financial Effects of Off-Label Marketing

Prescription drug advertisements are increasingly prevalent in our society. Since federal regulations on prescription drug marketing were eased in 1997, more drugs are marketed through different media outlets. Known as direct-to-consumer advertising, or DTC, pharmaceutical companies spend $4 billion annually on advertising. The Nielsen Company estimates an average of 80 drug advertisements each day on American television. Whether they are television or radio commercials, print advertisements, or sales calls, drug marketing has come under increased scrutiny by the federal government because of off-label marketing. It has also led to more than a dozen lawsuits over the last seven years, with nearly $3 billion in fines, penalties and settlement costs.

What Is Off-Label Marketing?

Off-label marketing is the practice of promoting medicines for use outside of their indicated purpose as approved by the FDA. For example, when a drug approved for pain maintenance is promoted for its benefits in treating heart disease, it is being marketed for purposes that do not appear on its package description; hence, off its “label”. The FDA has a duty to protect consumers from potentially dangerous medicines and strict regulations govern the manner in which they are marketed. FDA rules prohibit the direct marketing of drugs that were not studied for a specific purpose or approved by the Administration.

However, doctors are allowed to prescribe a medicine for an off-label use if, in their professional judgment, they believe the drug is safe and beneficial to the patient. As such, pharmaceutical companies have targeted physicians to promote off-label uses for drugs that have no specific definition under FDA regulations. Instead of simply sending mailers and other literature to doctors, drug manufacturers began to sponsor continuing education seminars, conduct independent trials and publish journal articles touting the successes of off-label use.

The Food and Drug Administration Modernization Act

The Food and Drug Administration Modernization Act (FDAMA) required drug manufacturers to follow certain conditions in order to promote unapproved uses of approved drugs to doctors and other health care entities. While the Act became inapplicable after 2006, the FDA published recommendations in 2009 to set forth guidelines on how off-label uses may be advertised to physicians. In essence, the guidelines allow literature that is complete, accurate and not misleading. The recommendations are non-binding, and they do not require manufacturers to seek prior FDA approval before distribution.

Physicians suggest that the FDA is taking a different stance on off-label marketing by shifting the burden of responsibly studying unapproved uses to drug manufacturers. They note that marketing restrictions have been successfully challenged as infringements of free speech and that private lawsuits are gaining more traction as deterrents to improper marketing.

Current Status of Off-Label Marketing

While the FDA still cites manufacturers for inappropriate marketing efforts, it is now asking physicians to help in curbing the swath of advertising violations. Currently, the FDA has only a few dozen staffers to review hundreds of television pharmaceutical advertisements, brochures, and presentations. Nonetheless, private lawsuits appear to affect pharmaceutical companies’ approach to off-label marketing.

Through whistleblowers and qui-tam lawsuits, drug manufacturers are seeing more fines for False Claims Act violations and other fraud-based claims. In 2004, Parke-Davis paid $430 million to the U.S. Justice Department over claims that they were illegally promoting Neurontin for off-label uses. In September 2009, Pfizer also paid $2.3 billion to settle a number of off-label marketing claims which included its marketing of Neurontin. In April, AstraZeneca Pharmaceuticals paid $520 million to resolve claims that Seroquel, its anti-psychotic drug, was illegally marketed.

While off-label marketing potentially leads to innovations in clinical practice, it also has the potential wide-spread harm. For answers to questions about off-label marketing and the financial implications for whistleblowers reporting False Claims Act violations, contact an attorney.