The Next Enforcement Wave – Off-Label Marketing of Medical Devices
By Thomas S. Crane, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C., Boston, MA and Washington, DC

Summary by Rachel V. Rose, Stetson University College of Law, Class of 2010

The general corporate culture of pharmaceutical and medical device manufacturers has led to an increase in government and whistleblower claims under the False Claims Act (FCA) against these manufacturers for off-label marketing practices. Fueled by the dichotomy between restrictive off-label marketing rules and the freedom physicians have to practice medicine, the off-label enforcement cases are prime target areas for enforcement actions. For the physician, the choice to use a particular drug or device in an off-label manner is often clinically appropriate and important for the patient’s care.

The products of both pharmaceutical and medical device manufacturers must undergo an FDA approval process before it can be marketed. The product, if approved, is indicated for a specific use, which also may include the patient population. These indications become part of the labeling and using the approved product for any purpose outside of that specified on the label or package insert is considered an “off-label” use. The tension between the freedom of medical practice and the FDA marketing regulations creates an opportunity in the market place where off-label uses can represent a majority of revenue for a particular product to the manufacturer. Thus, the manufacturer has an incentive to side-step the restrictive off label marketing rules in order to recognize a greater profit.

Over the past decade, the pharmaceutical industry experienced a tsunami of fraud and abuse enforcement activity of off-label pharma cases. While the article gives seven examples to date, the most significant example is Eli Lilly and Company. On January 15, 2009, the company agreed to pay over $1.4 billion in criminal and civil penalties stemming from allegations that the antipsychotic drug, Zyprexa, had been promoted for off-label purposes between September 1999 and at least November 2003. The $515 million criminal fine is the largest criminal fine the Department of Justice has ever imposed on a corporation.

Just as the pharmaceutical industry’s marketing practices received heightened scrutiny from the Department of Justice, the medical device industry is poised for similar treatment. In fact, a member of the United States Attorney’s Office commented that, “an area of increasing health care fraud focus is…sale of medical devices for ‘off-label’ or ‘unapproved uses.’” Another hurdle facing the medical device industry is that government enforcers perceive the device industry lagging behind the pharmaceutical industry in improving its compliance practices. Perhaps the rapid changes in technology and the 510(k) process that enables similar devices to be brought to market more quickly are reasons for more lax compliance practices in the medical device industry.

But, there may be other reasons medical device manufacturers employ more off-label marketing techniques. Medical device innovation is highly physician driven. Because of the industry’s dependence on this innovation, it is tempting for device manufacturers not to divorce themselves from such activity. Since the physicians often receive significant remuneration, the incentives of the companies and the physicians are aligned.

A popular approach by the government in pursuing a non-pharmaceutical FCA case is the “scheme to defraud” technique. Basically, if Medicare is paying significantly more out for a certain procedure/device than it otherwise would have paid but for the scheme, the government can allege the scheme is intended to defraud the government. The article mentioned six instances where the government used this technique, including Stryker’s 2008 disclosure that it had received subpoenas from the DOJ criminal division related to the off-label promotion of OP-1 and Clastrux.

In sum, enforcement of off-label marketing of medical devices is poised to follow the path set forth by the pharmaceutical industry. It will be interesting to watch how manufacturers respond to important questions in the competitive marketing world entrenched with rapidly changing technology and the need to balance regulatory and consumer interests.

For more information on off-label marketing of medical devices, see Volume 21, Number 4, April 2009 of The Health Lawyer. [Members Only PDF].

Rachel V. Rose is a 2L at Stetson University College of Law where she is an editor of the Journal on International Aging Law and Policy. She holds an MBA from Vanderbilt University and a BA from The Pennsylvania State University. Prior to attending law school, Rachel worked on Capitol Hill and in the pharmaceutical and medical device industries. She is interested in pursuing a career in healthcare law and policy.