Category: Litigation
Privately Held Medical Device and Drug Companies Face Unique Sunshine Act Challenges
As widely reported, the Centers for Medicare and Medicaid Services (“CMS”) recently issued regulations implementing the Sunshine Act provisions of the Affordable Care Act. These regulations require medical device and pharmaceutical companies to submit annual reports to CMS describing all payments and “transfers of value” to physicians and teaching hospitals. Companies must begin to collect data on August 1, 2013, and the first annual report will be due on March 31, 2014. CMS will post the reports on a public website.
Less discussed is the additional reporting duty imposed on privately held drug and device companies. Privately held companies must also report information about each shareholder/owner who is either a physician or who has a physician as an immediate family member. The new regulation defines “immediate family member” broadly to include spouse, parent, child, sibling, stepparent, stepchild, stepsibiling, grandparent, grandchild, and … Read More »
Ninth Circuit Affirms Conviction and Sentence in InterMune Pharmaceutical Marketing Fraud Case
On March 4, 2013, the Ninth Circuit affirmed the conviction and sentence of InterMune founder Scott Harkonen based upon a fraudulent press release that misrepresented the results of a clinical trial in the off-label use of the drug Actimmune to treat the fatal lung disease idiopathic pulmonary fibrosis (IPF). A jury convicted Mr. Harkonen of wire fraud based upon the press release, and the district court sentenced him to three years’ probation and a $20,000 fine. (He also was excluded from participating in federal health care programs for five years, and has challenged that determination with a lawsuit of his own).
Giving great deference to the jury verdict, the Court of Appeals (in an unpublished opinion) rejected Harkonen’s First Amendment challenge to his conviction, finding that there were sufficient facts to support the jury’s findings that the press release misrepresented the … Read More »
2013 Should Bring Clarity to Analysis of Settlements of Pharmaceutical Patent Litigation
The Federal Trade Commission (FTC) recently filed a brief with the U.S. Supreme Court in a case that promises to bring some clarity to the analysis of settlements of pharmaceutical patent litigation. Under the Hatch-Waxman Act, a generic drug manufacturer can file an application with the Food and Drug Administration (FDA) stating that a pioneer manufacturer’s patent is invalid or that its generic drug does not infringe the patent. By statute, such an application is a technical act of patent infringement, permitting the pioneer manufacturer to file patent litigation. Some of these patent infringement suits are resolved by settlements that include a payment by the pioneer manufacturer to the generic manufacturer, which agrees to refrain from producing its generic drug for a specified period. The FTC refers to these settlement agreements as “reverse payment agreements” or “pay-to-delay” agreements.[1]
The legality of … Read More »
UPDATE: Second Circuit Rejects Government’s Off-Label Enforcement Approach
UPDATE TO EARLIER POST:
On Wednesday, January 23, Food and Drug Administration officials said the government will not appeal the decision in the United States v. Caronia, No. 09-5006-cr (2d Cir. Dec. 3, 2012). The FDA decided against asking the court to rehear the case, and will not appeal to the Supreme Court. The FDA stated that it “does not believe that the Caronia decision will significantly affect the agency’s enforcement of the drug misbranding provisions of the Food, Drug & Cosmetic Act.”
Read Jesse Witten’s recent post on this case here.
Second Circuit Rejects Government’s Off-Label Enforcement Approach
Last week’s decision in the off-label promotion case, United States v. Caronia, No. 09-5006-cr (2d Cir. Dec. 3, 2012), is an important blow to the Government’s off-label promotion efforts. In a 2–1 decision, the Court squarely rejected the simplistic theory that the Food, Drug and Cosmetic Act (“FDCA”) imposes a blanket prohibition against off-label promotion by pharmaceutical and device manufacturers, but it does leave open the door to future prosecutions that rely in part on off-label promotion.
In Caronia, the Department of Justice obtained the conviction of Alfred Caronia, a pharmaceutical sales representative, for conspiracy to introduce a misbranded drug into interstate commerce. The FDA prohibits the introduction into interstate commerce of a misbranded drug (or device). 31 U.S.C. § 331(a). A drug is misbranded if, among other ways, its labeling fails to contain “adequate directions for use,” 21 U.S.C. § 352(f), … Read More »
Whistleblower Lawsuit Against Drug Maker Fails Because “Off-Guideline” Marketing Does Not Constitute “Off-Label” Marketing
In welcome news for the pharmaceutical industry, the U.S. District Court for the Eastern District of New York, in United States ex rel. Polansky v. Pfizer, Inc., 2012 U.S. Dist. LEXIS 163557 (E.D.N.Y. Nov. 15, 2012), issued a decision distinguishing between unlawful “off-label” marketing and lawfully marketing a drug for use outside of recommended guidelines. By way of background, the Food and Drug Administration approves “labels” (which, in some cases, may be lengthy and more akin to pamphlets or brochures) that must accompany prescription medications. A label states the purposes for which a medication has been determined to be safe and effective, and pharmaceutical companies are prohibited from promoting or marketing the medication for other “off-label” uses.
Since early 2004, Pfizer, Inc. has been defending a qui tam action that its former Director of Outcomes Management Strategies, Dr. Jesse Polansky, filed under … Read More »
DOJ and SEC Issue Long-Awaited Resource Guide to the Foreign Corrupt Practices Act
On November 14, 2012, the Department of Justice and the Securities and Exchange Commission published their much anticipated Resource Guide to the U.S. Foreign Corrupt Practices Act.1 There is little new in the Guide to clarify the circumstances under which the government will charge companies or individuals with FCPA violations. Instead, the Guide reiterates previous government pronouncements that the FCPA should be construed broadly, and cites its own charging decisions as “authority” for what the statute proscribes. Basically, the Guide is a comprehensive compilation of “authority” formerly found only in various Government press releases, settlement agreements and guilty pleas. Thus, the guidance is somewhat of a disappointment for the experienced FCPA practitioner and for companies that already have robust compliance programs. In a few areas – notably in its discussion of gifts, travel and entertainment – the Guide does offer … Read More »
Pharmaceutical Industry Executives Face Enforcement Risks Under The Responsible Corporate Officer Doctrine
The recent decision of the D.C. Circuit in Friedman v. Sebelius, No. 11-5028 (D.C. Cir. July 27, 2012), demonstrates the enforcement risk to pharmaceutical and medical device industry executives under the “responsible corporate officer” (RCO) doctrine. Under the RCO doctrine, officers, managers and in-house counsel employed by life sciences companies could face misdemeanor criminal liability and exclusion from Medicare and other federal health programs, even if they were not personally involved in wrongdoing. Indeed, an executive can be liable under the RCO doctrine even if they did not know that their organization had engaged in wrongdoing, so long as the executive should have known of the organization misconduct by virtue of the executive’s position within the organization.
The RCO doctrine originated in United States v. Dotterweich, 320 U.S. 277 (1943), in which the Supreme Court upheld the misdemeanor conviction of the president of a … Read More »
Thoughts on the D.C. Pharmaceutical Detailer’s License Requirement
The District of Columbia regulates many activities that go unregulated in other jurisdictions. One example relevant to pharmaceutical companies is the requirement that in D.C., detailers must obtain a license before they may speak in person with a physician, nurse or other health professional. Pharmaceutical detailers also must undergo 15 hours of continuing education every two years and must keep records of their interactions with licensed health professionals or their employees.
The District of Columbia requires that individuals obtain a license from the D.C. Board of Pharmacy in order to engage in the practice of “pharmaceutical detailing” in D.C. See D.C. Code § 3-1207.41; 17 DCMR § 8300.1. A person is engaged in pharmaceutical detailing if, acting as a representative of a pharmaceutical manufacturer or labeler, he or she communicates in-person with a licensed health professional or a representative of a licensed … Read More »
Massachusetts Amends Its Drug and Device Marketing Law
On July 8, Governor Deval Patrick signed a bill amending the Massachusetts law regulating marketing activities by pharmaceutical and device manufacturers, one of the strictest state laws in the country.
The law previously barred pharmaceutical and device manufacturers from providing meals to health care practitioners outside the practitioner’s office or hospital setting. See 111N Mass. Gen. Laws § 2. The amendment will now permit pharmaceutical and device manufacturers to provide modest meals and refreshments outside of the practitioner’s office or hospital setting, if the meal or refreshment is furnished with a non-CME educational presentation for the purpose of providing bona fide medical information, and the meal is furnished in a venue and manner conducive to communicating information. The amendment directs the Massachusetts Department of Public Health to promulgate regulations to define “modest meals and refreshments.” Pharmaceutical and device companies, however, will … Read More »