1. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Exploring the Nature of Scrutiny Surrounding Off-Label Information December 6, 2011 Presented by David Restaino, Esq.

2. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Scrutiny of Off-Label Promotion  A quick history lesson  Enforcement “waves”  Government methodology … and what we can learn from it  Grey areas of off-label promotion

3. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Background  False Claims Act (31 U.S.C. §§ 3729 to 3733)  Anti-kickback law (42 U.S.C. § 1320a-7b)  Federal Food Drug and Cosmetic Act (21 U.S.C. § 301 et seq.)  Prescription Drug Marketing Act (21 U.S.C. § 331 et seq.)  HHS Office of Inspector General guidance documents  Accreditation Council for Continuing Medical Education (ACCME) policies and guidelines  PhRMA Code (code of conduct for sales representatives)  AdvaMed Code of Ethics on Interactions with Health Care Professionals  State law

4. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild False Claims Act  Knowingly presenting a false or fraudulent claim for payment - Liability for a civil penalty calculated on a per-claim basis - Plus three times the damages sustained by the government  Broadly defines “knowing” - A knowing violation includes illegal acts for products that are reimbursed by a federal health care program  “Relators” can sue on behalf of the government

5. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Other Statutes  Anti-kickback law - Illegal to offer to pay to induce a person to purchase or order any item or service for which payment may be made under a federal health care program, or recommend purchasing or ordering such an item or service - A person need not have actual knowledge of the statue or a specific intent to violate it - Violations are “federal healthcare fraud offenses” - Punishable by prison terms, fines, civil penalties … and exclusion from participation in federal health care programs  Federal Food Drug and Cosmetic Act (FDCA) - Illegal to introduce a misbranded drug into interstate commerce - False or misleading labels, or inadequate warnings or directions, constitute misbranding, and this includes marketing a drug for an unapproved use - Can distribute off-label use information in response to certain unsolicited requests (21 U.S.C. §§ 360aaa - 360aaa6)

6. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Other Statutes  Prescription Drug Marketing Act - Amended FDCA to:  Ensure prescription drugs are safe and effective  Avoid risk from, e.g., misbranded drugs - Violations lead to civil and/or criminal consequences

7. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Policies and Guidance  HHS OIG - Compliance Program for Pharmaceutical Manufacturers (68 Fed. Reg. 23731 (May 5, 2003))  Elements of an effective compliance program  Specific risk areas for manufacturers - Encourages “hotline” reporting when sales representatives promote off-label uses - Regulatory safe harbors  May shield remuneration paid by pharma companies  FDA’s “Good Reprint Practices” Guidance for Industry (Jan. 2009)  Pharmaceutical Research and Manufacturers of America Code on Interactions with Healthcare Professionals (PhRMA Code)  ACCME - Standards to ensure independence of CME activities - Disclosure of financial relationships / conflicts of interest

8. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Enforcement Waves in the Past Decade  2006 - OIG recovers $1.6 billion and excludes over 3,400 people  2007 - OIG reports that 14% of nursing home residents receive antipsychotic drugs … and 83% of Medicare claims for those drugs are for off-label conditions  2010 - HHS and DOJ announce $4 billion recovered in FY 2010 in health care fraud and prevention efforts - Numerous off-label promotion settlements in excess of $10 million  2011 - Manufacturer pleads guilty to misdemeanor under FDCA and pays $85 MM criminal fine for intending an off-label use for a heart failure drug; civil case under FCA is still pending - Executives personally pay > $30 MM; but they appeal 12-year exclusion  Oral argument on exclusion set for 12-6-2011  Whistleblower cases on the rise - FCA “qui tam” actions - SEC whistleblower bounty

9. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild “This Just In …”  $950 million over drug marketing - $321 criminal fine; misdemeanor guilty plea; $226 million to settle federal civil claims and another $202 million to state Medicaid agencies  Corporate officials sent to jail & fined - Unapproved testing of bone-cement product; 3 people dead; alleged failure to report and alleged lies during FDA audit  Medical device manufacturer pays $2.39 million - Illegal kickbacks to induce physicians’ use - Discovered by whistleblower qui tam action  Manufacturer pays $600 million to resolve criminal and civil allegations for off-label uses, and pleads guilty to misdemeanor  Manufacturer pays $3 billion to settle civil and criminal charges that include off-label marketing  DOJ / HHS Health Care Fraud Prevention and Enforcement Action Team (HEAT); state partners  Increased use of “untitled letters” in 2011

10. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Recent Areas of Government Investigation  Schemes uncovered by the United States include: - Misbranded drugs  One defendant allegedly went so far as to have its employees work overtime to ship misbranded drugs soon after receiving a government warning letter - Promoting off-label drug uses - Illegal kickbacks

11. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Specific Areas of Scrutiny  E-mails  Inspections and Audits  Whistleblower claims  Payments to physicians  Competitors  S.E.C. disclosure statements  Regulators review Internet, TV, radio

12. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild More Areas of Scrutiny  Sales staff targeting physicians who prescribe for off-label uses  Medicaid rebate manipulation  Labels and Promotional materials  Scientific meetings  Responsible corporate officials, including in- house counsel  Fines / penalties and exclusion  Medical device labeling

13. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Settling with the Government  Admit wrongdoing  “Deferred prosecution agreement,” often for two years  Discharge executives and personnel  Exclusion from federal health care programs  LARGE payment  “Corporate Integrity Agreement” - A corporate compliance and governance program

14. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Corporate Integrity Agreements  Code of conduct, written policies  Appointing a compliance officer and a compliance committee  Mandatory training  Compliance accountability enforced via performance evaluations  Constant interaction between compliance staff and sales & marketing personnel  Internal audits plus independent review  Establishing an internal disclosure program

15. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Other Litigation Concerns  Claims asserted by states  Investor lawsuits regarding stock losses  Civil suits / class actions - Failure to warn actions brought under state law

16. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Grey Areas of Off-Label Promotion  First Amendment right to free speech  Social media  Government interpretation of improper promotion and safe harbors - “Unsolicited” requests for information - Kickbacks - Compensating pharmacists for services - Specific reimbursement coding for a drug - Manipulating prices or rebates - Fair market value  Advice of counsel and negating “intent” under the FCA  Electronic discovery  “Whistleblowers”

17. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild First Amendment Right to Speech  Sorrell case (131 S.Ct. 2653 (2011)) - Not an off-label case - Vermont’s Prescription Confidentiality Law of 2007 required doctors’ consent for the purchase of doctor prescribing records, from data mining companies, to reveal prescribing histories - Supreme Court strikes down the law - “The statute... disfavors marketing, that is, speech with a particular content. More than that, the statute disfavors specific speakers, namely pharmaceutical manufacturers.... The law on its face burdens disfavored speech by disfavored speakers”

18. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild First Amendment Right to Speech  Caronia case (576 F.Supp.2d 385 (E.D.N.Y. 2008)) - Pharma sales rep criminally charged with misbranding for promoting off-label usage - Does the rep have a right to truthful speech about off-label uses? - Court below said “no” - Appeal to Second Circuit Court of Appeals is pending; time extended to address impact of Sorrell

19. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild First Amendment  Par Pharmaceutical case (U.S. District Court for the District of Columbia) - Par files suit October 14, 2011 - Sues FDA and HHS to challenge regulations and citing unconstitutional action under First Amendment - Seeks declaratory and injunctive relief to bar the criminalization of truthful speech about off-label uses - Par cites to medical data showing legitimacy of off- label uses, as determined by independent medical personnel

20. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Social Media  Defining “social media” - Twitter, Facebook, YouTube, websites, blogs  Lack of FDA guidance - Guidelines promised, 74 Fed. Reg. 48083 (September 21, 2009) - Comment period long-since expired  Grey areas - Use of web-links - Erroneous information - Unsolicited requests - Mobile “apps” - Which communications can be charged to a manufacturer?

21. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Petition for FDA Action  Filed July 2011 by 7 medical product mfrs.  Requests FDA action to clarify dissemination of info regarding new uses of marketed drugs & medical devices: - Seeks binding rules, rather than “guidance” re: manufacturer responses to unsolicited requests - Requests clarity re: scientific exchange “safe harbor” and parity between drugs and medical devices - Recommends FDA approval of interactions with formulary committees, payors and others about investigational products and off-label uses - Asks for formal ruling about manufacturer circulation of clinical practice guidelines to third-parties, re: patient care, even if concerning off-label uses

22. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Other Open Questions  Patient postings  Correcting misinformation  Advice of counsel - May 2011 dismissal of indictment against counsel in alleged off-label marketing case  Crime-fraud exception  E-discovery  Whistleblowers

23. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Compliance Issues  Compliance program and business code of conduct / standard operating procedures  Training program  Product labeling  Grant proposals  Promotional materials, and drafts  Conference presentations  Circulating journal articles

24. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Compliance Efforts  Look to corporate integrity agreements as a model  Start with basics  Then create a written-yet-dynamic compliance program  Use data to identify problems and priorities  Choose the appropriate management system to tackle priorities  Implement – and test – the design to ensure its continuing viability  Seeking out information and immediately deal with adverse results

25. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Create Compliance Assets  Leadership  Metrics and data collection  Identify target areas  Establish priorities and pilot programs  Educate and train  Create incentives  Audit, and audit the auditors

26. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Asset Management  Delegate and coordinate  Manage existing policies  Anticipate new issues, and plan  Track results (% compliance)  Communicate results  Enforcement and punishment  Self-reporting

27. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild What Can We Expect  More whistleblowers  More scrutiny from the government  More fraud and abuse charges  More penalties and exclusion  More jail time for owners, officers & managers  More deferred prosecution agreements and corporate integrity agreements  More guidelines and more rules

28. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Looking Forward …  Deferred prosecution and corporate integrity agreements will create a “new normal”  Smaller manufacturers will have to keep up with larger, more sophisticated corporate compliance programs  Other thoughts ….

29. Regulatory Off-Label Communications Conference © 2011 Fox Rothschild Contact Information David Restaino, Esq. 609.895.6701 drestaino@foxrothschild.com