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Whistleblower still may pursue off-label marketing case, court says

A recent court decision gives the green light to a whistleblower to pursue a lawsuit involving off-label marketing, while other rulings have limited similar cases.

A recent decision by a federal court in California has helped clarify that whistleblowers can still stop harmful off-label marketing by pharma companies through “qui tam” lawsuits in certain instances despite recent court decisions that have limited enforcement of off-label marketing regulations in some situations based on concerns that the law can limit speech.

Off-label marketing generally refers to the practice of a company marketing a drug for a use not approved by the FDA. While individual doctors may prescribe drugs for off-label uses, the federal Food Drug and Cosmetic Act (“FDCA”) prohibits the companies that make those drugs from marketing them for off-label uses.

Cases brought by whistleblowers under the False Claims Act alleging unlawful off-label marketing by pharmaceutical companies have produced some of the largest recoveries under the False Claims Act (including qui tam lawsuits brought by Phillips & Cohen against GlaxoSmithKline and Pfizer).

In two controversial decisions, however, courts held that the FDCA could not be applied to prohibit truthful speech about the use of drugs, including off-label uses, on the grounds that such speech is protected by the First Amendment. (US v. Caronia in 2012 and Amarin v. FDA in 2015.) Following these decisions, it has been argued that FCA cases based on off-label marketing would face stiff challenges.

But in US ex rel. Brown v. Celgene Corp., a federal court in California showed one way in which Caronia and Amarin may have limited impact on False Claims Act cases.

In Celgene, the court held that a pharmaceutical company could be held liable under the False Claims Act for a systematic campaign to promote two of its drugs for off-label purposes. The cases limiting the FDCA did not impact this case, because, the court said, the whistleblower did not need to establish a violation of the FDCA to establish a violation of the False Claims Act.

The court held that under the regulations for Medicare’s prescription drug program, Medicare Part D, a drug is eligible for reimbursement only if it is prescribed for a “medically-accepted use,” that is, a use that is approved by the FDA or listed in certain drug compendia. If a prescription is for any other use, the drug is not eligible for reimbursement by Medicare, and seeking, or causing someone else to seek, payment for such a use can violate the False Claims Act.

In Celgene, the former Celgene employee who filed the qui tam lawsuit argued that the company, which does not submit claims for payment to the government, caused physicians to submit claims for payment for off-label uses of two of its drugs. The whistleblower, Beverly Brown, argued that Celgene’s promotion of those drugs for off-label purposes was a substantial factor in leading physicians to prescribe the drug for off-label uses.

Celgene argued that the case should not go to trial because the law restricted truthful speech. The court sided with Brown, holding that a reasonable jury could find that Celgene promoted its drugs for uses that were not medically accepted and not eligible for reimbursement by Medicare.

The government, which declined to intervene in Brown’s case, had submitted a “statement of interest” supporting Brown’s position that Medicare reimburses the costs of drugs only when they are prescribed for “medically-accepted uses.”

Additionally, the court found that Celgene could be liable under the FCA even though Medicare continued to pay for prescriptions for the drug even after Brown filed her qui tam lawsuit. Celgene argued that the filing of the lawsuit put the government on notice that some claims for payment were false.

The court reasoned that even if Medicare knew that some claims for the drugs may be false, it does not necessarily follow that the government made an informed decision to continue paying specific claims that it knew were false.

This decision, allowing Brown to continue to trial with her claims, provides important guidance on False Claims Act cases based on off-label marketing, as the debate over off-label marketing rules continues in the regulatory arena.

Just last month the pharmaceutical industry pushed back against a new FDA rule regarding a manufacturer’s obligations to include labeling about off-label uses if it intends to promote a drug for an unapproved use.

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