Pharmaspective

A Quick Observation Regarding the FDA and the Caronia Decision…

By Kim C. Capone and Sarah M. Canberg

On December 3, 2012, the United States Court of Appeals for the Second Circuit handed down its decision in U.S. v. Caronia,  and ruled that the government cannot prosecute pharmaceutical manufacturers for speech promoting the lawful, off-label use of an FDA-approved drug.  Coincidently, the Food and Drug Administration (FDA) has not issued any Warning or Untitled Letters since the Caronia decision.  In 2012, the FDA issued twenty-eight enforcement letters.  The most recent was an Untitled Letter dated November 27, 2012, to Salix Pharmaceuticals, Inc. and Napo Pharmaceuticals, Inc. regarding its website and podcast for the investigational new drug, Crofelemer.

 

Although the Caronia decision only applies in three states, the FDA may have to change its approach regarding off-label marketing concerns.  In the past, it was enough for the FDA to allege in its letters that false or misleading speech was used to market drugs off-label.  Will the FDA now have to prove off-label marketing and make it clear that promotional statements were offered as evidence of intended use? 

 

The Wall Street Journal reported on January 23, 2013, that according to FDA officials, the government will not appeal the Caronia decision, and the FDA "does not believe that the Caronia decision will significantly affect the agency's enforcement of the drug misbranding provisions of the Food, Drug, and Cosmetic Act." In the meantime, should we expect FDA to issue guidance regarding off-label speech, issue new off-label speech regulations, or continue with business as usual? The next Warning or Untitled Letter from FDA may provide some guidance as to FDA’s position with regard to off-label speech.

 

Link: U.S. vs. Caronia decision

Vermont Attorney General’s Office Posts Final “Guide to Vermont’s Prescribed Products Gift Ban and Disclosure Law for 2013 Disclosures”

By Hiramella Deonarine and Danielle Burke

In an effort to help manufacturers comply with the requirements of Vermont's Prescribed Products Gift Ban and Disclosure Law (Law) and to provide additional guidance for expenditure reports due on April 1, 2014 (the 2013 calendar year), the Vermont Attorney General's Office (AG’s Office) has posted on its website the final “Guide to Vermont’s Prescribed Products Gift Ban and Disclosure Law for 2013 Disclosures” (Guide).  Additionally, the AG’s Office posted the 2013 Expenditures Disclosure Form for 2013, and the Samples Disclosure Form for 2013.

Pursuant to the Law, manufacturers of prescription drugs, biological products, and medical devices are required to disclose to the AG's Office the value, nature, purpose, and recipient of any allowable expenditure or permitted gift. Manufacturers are also required to submit samples disclosure reports that include the product, recipient, number of units, dosage, and other information for all samples provided to health care providers.

In addition to the Guide, the AG’s Office also released a memorandum entitled “Common Errors in Compliance with Vermont’s Prescribed Products Gift Ban and Disclosure Law That May Result in Enforcement Action” (Common Errors).  This memorandum lists common errors made by manufacturers in previous disclosure reports submitted to the AG’s Office.  The Common Errors memo states that the AG’s Office “expects to take enforcement action against manufacturers with unjustified, obviously and egregiously incomplete or incorrect submissions.”

To view a copy of the Guide, the forms, and the Common Errors memo, please see the links above or visit the Vermont AG’s Office’s website. 

Second Circuit: Truthful Off-label Promotion of Prescription Drugs is Protected by the First Amendment

By Laura C. Conway

On December 3, 2012, the United States Court of Appeals for the Second Circuit ruled that a pharmaceutical sales representative could not be convicted for truthful off-label promotional statements made to physicians about a drug that had been approved by the FDA for other uses.  United States v. Caronia, 09-5006-cr  (2d Cir. Dec. 3, 2012). 

 

Caronia was a sales representative who promoted Xyrem, a drug that was approved for two specific uses and carried a “black box warning.”  Caronia detailed physicians who might prescribe the product and helped establish a speakers program where the drug was discussed.   During the course of a government investigation, Cardonia was recorded promoting the drug for unapproved uses, including unapproved indications and unapproved subpopulations.  The government did not allege that the statements at issue were untruthful or misleading. 

 

Caronia was convicted in the trial court for conspiracy to introduce or deliver misbranded drugs into interstate commerce, in violation of the Food, Drug and Cosmetic Act (FDCA).  The Second Circuit vacated this conviction.  The government, according to the court, incorrectly argued that off-label promotion alone constitutes “misbranding.”  The court found that the FDCA does not expressly prohibit the promotion of drugs for off-label use, but noted that promotional statements could constitute proof of an intent to use a drug in a manner that the FDA had not approved and was inconsistent with the label, which would be actionable under the FDCA. 

 

The court concluded that the government prosecuted Caronia not for his intent to sell misbranded drugs based on his statements regarding the drug’s off-label uses, which does not implicate the First Amendment, but rather for the act alone of making statements about off-label uses for the drug, which does implicate the First Amendment.  The court held that the First Amendment protects this type of commercial speech and that the government could not overcome the heightened scrutiny applicable to such commercial speech.  The court looked to the United States Supreme Court’s recent decision, Sorrell v. IMS Health, in which the Court held that “[s]peech in aid of pharmaceutical marketing . . . is a form of expression protected by the Free Speech Clause of the First Amendment."  131 S. Ct. 2653, 2659 (2011).   

 

In reaching its decision, the Second Circuit reasoned that the statements were truthful; the FDCA does not expressly prohibit the promotion of drugs for off-label use; physicians are permitted to prescribe the drug for unapproved uses, and persons other than pharmaceutical companies and their sales representatives may advise physicians of off-label uses of drugs that the FDA had approved for other uses.  The court interpreted the misbranding provisions of the FDCA as “not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs” and concluded that “the government cannot prosecute pharmaceutical manufacturers and their representatives under the FDCA for speech promoting the lawful, off-label use of an FDA-approved drug.” 

 

The court noted that its decision was limited to FDA-approved drugs for which off-labels uses are permitted and that the FDA is authorized to regulate prescription drug marketing.  In addition, the court made clear that off-label promotion that is false or misleading is not protected by the First Amendment. 

 

            One of the three judges on the panel dissented from the decision and issued a lengthy opinion arguing that Caronia’s conviction should have been upheld.  In this dissent, the court disagreed with the majority’s interpretation of the government’s position and contended that Caronia was prosecuted because his speech revealed an intent to sell the drug for a use that was inconsistent with the drug’s label, not for the speech itself.  As such, the court noted, the First Amendment did not apply and did not protect Caronia’s statements.  Even if the First Amendment did apply, the dissent stated, the FDCA’s misbranding provision precludes promotion of off-label uses and passes constitutional muster.  The dissent argued that the majority opinion serves as a disincentive to pharmaceutical manufacturers to go through the premarket drug approval process and undercuts the purpose of the FDCA and the FDA to ensure the safety and efficacy of drugs before they are marketed.    

 

The Caronia decision is not binding on trial courts outside of the Second Circuit and likely is not the last word on this subject.  We anticipate a request for further review by the full panel of the Second Circuit or review by the United States Supreme Court.  Until the United States Supreme Court reviews the decision, off-label promotion is subject to prosecution outside of the Second Circuit.  In addition, both in and out of the Second Circuit, off-label promotion by sales representatives remains potentially actionable because, among other things, the government could argue that it is evidence of an intent to sell a misbranded drug.

Full Text of Decision: United States v. Caronia, 09-5006-cr  (2d Cir. Dec. 3, 2012)

Update: Massachusetts Bureau of Health Care Safety and Quality Requests Approval of Final Regulations to Implement Changes to the Pharmaceutical and Medical Device Manufacturer Conduct Law

On September 19, 2012, the Massachusetts Department of Public Health (Department) posted emergency regulations to immediately implement recent changes to Massachusetts’ Pharmaceutical and Medical Device Manufacturer Conduct Law [Mass. Gen. Laws Ch. 111N] (Law). The Law requires the Department to “adopt a standard marketing code of conduct for all pharmaceutical or medical device manufacturing companies that employ a person to sell or market prescription drugs or medical devices in the commonwealth.” Recent changes to the law permits pharmaceutical and medical device manufacturers to provide “modest meals and refreshments in connection with non-CME educational presentations for the purpose of educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information.” The presentation must occur “in a venue and manner conducive to informational communication.” Additionally, pharmaceutical and medical device manufacturing companies who provide these meals must file quarterly reports detailing all non-CME educational presentations in which they provide such meals or refreshments. The emergency regulations are set to expire on December 19, 2012.

 

On November 21, 2012, the Massachusetts Bureau of Health Care Safety and Quality submitted a request to the Public Health Council to approve final regulations to implement recent changes to the Law. The final regulations permit pharmaceutical or medical device manufacturing companies to provide or pay for modest meals in the health care practitioner’s office or hospital setting in connection with informational or educational meetings or presentations. Companies may also provide or pay for modest meals outside of the health care practitioner’s office or hospital setting, provided that the meal is “for the purpose of educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information.” Please note that the regulations state that “appropriate uses” may not include the promotion of off-label uses of prescription drugs or medical devices.

 

The final regulations define “modest meals and refreshments” as “food and/or drinks provided by or paid for by a pharmaceutical or medical device manufacturing company or agent to a health care practitioner that, as judged by local standards, are similar to what a health care practitioner might purchase when dining at his or her own expense.”

 

In addition, echoing the amended law, the final regulations also require that the quarterly reports include:

 

• The location of the non-CME presentation;
• A description of any pharmaceutical products, medical devices, or other products discussed;
• The total amount spent on the presentation;
• The estimated cost per participant, including meals, refreshments, and other items of economic value provided; and
• Any other information as determined necessary by the Commissioner.

 

Further, the final regulations clarify that companies will need to register annually and submit a $2,000 annual registration fee .

 

Although the final regulations require companies to continue submitting annual disclosure reports to the Department, companies are not required to disclose information that has been disclosed to a federal agency pursuant to federal law. 

Massachusetts Department of Public Health Issues Emergency Regulations to Implement Recent Changes to the Pharmaceutical and Medical Device Manufacturer Conduct Law

On July 1, 2012, portions of Massachusetts House Bill 4200 (HB 4200) became effective. HB 4200 amended Massachusetts’ Pharmaceutical and Medical Device Manufacturer Conduct Law (Law), which requires the Department of Public Health to “adopt a standard marketing code of conduct for all pharmaceutical or medical device manufacturing companies that employ a person to sell or market prescription drugs or medical devices in the commonwealth.”

HB 4200 amended the Law to allow pharmaceutical and medical device manufacturers to provide “modest meals and refreshments in connection with non-CME educational presentations for the purpose of educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information.” The presentation must occur “in a venue and manner conducive to informational communication.” Additionally, pharmaceutical and medical device manufacturing companies who provide these meals must file quarterly reports detailing all non-CME educational presentations in which they provide such meals or refreshments.

On September 19, 2012, the Massachusetts Department of Public Health (Department) posted emergency regulations to implement the changes in HB 4200. The regulations state that a pharmaceutical or medical device manufacturing company may provide or pay for modest meals that are in the health care practitioner’s office or hospital setting in connection with informational or educational meetings or presentations. Companies may also provide or pay for modest meals outside of the health care practitioner’s office or hospital setting, provided that the meal is “for the purpose of educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information.” Please note that the regulations state that “appropriate uses” may not include the promotion of off-label uses of prescription drugs or medical devices.

The regulations define “modest meals and refreshments” as “food and/or drinks provided by or paid for by a pharmaceutical or medical device manufacturing company or agent to a health care practitioner that, as judged by local standards, are similar to what a health care practitioner might purchase when dining at his or her own expense.”

In addition, echoing the amended law, the emergency regulations also state that the quarterly reports must include:

•    The location of the non-CME presentation;
•    A description of any pharmaceutical products, medical devices, or other products discussed;
•    The total amount spent on the presentation; and
•    The estimated cost per participant, including meals, refreshments, and other items of economic value provided.

Further, the regulations explain that companies will no longer be required to submit annual disclosure reports after the 2013 submission for sales and marketing activities occurring in 2012. In addition, the annual disclosure report fee of $2,000 will not be required after July 1, 2012.

The emergency regulations are effective September 19, 2012. There will be a public hearing held on October 19, 2012, to discuss the regulations.

Proposed Legislation in Massachusetts Allowing Pharmaceutical and Medical Device Manufacturers to Provide Modest Meals to Practitioners Has Been Sent to the Governor (Updated)

Last week, the Massachusetts Senate and House of Representatives both passed House Bill 4200. Currently, Massachusetts’s Pharmaceutical and Medical Device Manufacturer Conduct Law, requires the Department of Public Health to “adopt a standard marketing code of conduct for all pharmaceutical or medical device manufacturing companies that employ a person to sell or market prescription drugs or medical devices in the commonwealth.”  This section of the law also specifies certain activities that the adopted marketing code of conduct shall not allow, including the provision of certain meals to health care practitioners and direct payment for meals at a CME event, scientific or educational conference, or professional meeting.  

 

HB 4200 would amend this section of the Law, and allow the adopted marketing code of conduct to permit pharmaceutical and medical device manufacturers to provide “modest meals and refreshments in connection with non-CME educational presentations for the purpose of educating and informing health care practitioners about the benefits, risks and appropriate uses of prescription drugs or medical devices, disease states or other scientific information.”  The presentation must occur “in a venue and manner conducive to informational communication.”  Additionally, pharmaceutical and medical device manufacturers who provide these meals must file quarterly reports detailing all non-CME educational presentations in which they provide such meals or refreshments.

 

HB 4200 has been sent to the Governor of Massachusetts for consideration.

Update: On July 8, 2012, the Governor of Massachusetts signed HB 4200. According to HB 4200, the amendments to the portion of the law discussed in this post became efffective on July 1, 2012.

 

U.S. Supreme Court Declares Pharmaceutical Sales Representatives Exempt From Overtime Under the Fair Labor Standards Act

On Monday, June 18, 2012, the United States Supreme Court handed the pharmaceutical industry a long-overdue victory on the issue of whether pharmaceutical sales representatives or detailers ("sales reps") are covered by the "outside sales" exemption under the Federal Fair Labor Standards Act ("FLSA"). Putting an end to a split between the circuits and years of uncertainty, the Supreme Court held that sales reps are exempt from the overtime provisions of the FLSA. In other words, sales reps are not entitled to overtime compensation.

 

In November 2011, the Supreme Court agreed to review the decision of the United States Court of Appeals for the Ninth Circuit in Christopher v. Smithkline Beechman Corp., 635 F.3d 383 (9th Cir. 2011). This decision directly conflicted with the previous decision of the United States Court of Appeals for the Second Circuit in In re Novartis Wage & Hour Litigation, 611 F.3d 141 (2d Cir. 2010). In two drastically different opinions, the two circuit courts came to opposite conclusions on the question of whether sales reps fell within the outside sales exemption. The Second Circuit concluded that sales reps did not "make sales" and, therefore, were not exempt from overtime requirements. The Ninth Circuit held thatsales reps did in fact "make sales" in the only way possible given the highly regulated industry in which they were employed.

 

After declining to grant certiorari to review the decision of the Second Circuit, the Court agreed to review the Ninth Circuit's decision in Christopher. In agreeing to review the case, the Court was presented with two questions: (1) whether deference is owed to the Secretary of the Department of Labor's interpretation of the FLSA's outside sales exemption and related regulations; and (2) whether the FLSA's outside sales exemption applies to pharmaceutical sales reps. After answering the first question in the negative, the Court quickly moved to the second question. In doing so, it undertook a detailed analysis of both the text of the FLSA and the duly promulgated regulations of the Department of Labor.

 

Throughout its decision, and beginning with the very first page, the Court's majority in this 5-4 decision took a decidedly pro-employer stance on this issue. It noted that Congress's intent in enacting the FLSA in 1938 was to promote the goal of "protect[ing] all covered workers from substandard wages and oppressive working hours." 567 U.S. ___ (2012) (citing Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 739 (1981); 29 U.S.C. § 202(a)). It then clearly confirmed that sales reps are not forced to accept substandard wages or work oppressive hours and, thus, are "hardly the kind of employees that the FLSA was intended to protect." The Court noted that the petitioners in the case each earned an average of more than $70,000 per year and spent between 10 and 20 hours outside normal business hours each week performing work related to his or her assigned portfolio of drugs in an assigned sales territory. The Court was not convinced that these employees needed protection under the statute.

 

Taking it a step further, the Court remarked that "it would be challenging, to say the least, for pharmaceutical companies to compensate [sales reps] for overtime going forward without significantly changing the nature of that position." Added to the challenge is the sheer number of sales reps employed across the country. Apparently concerned with the impact on the industry, the Court noted that the position has existed in the pharmaceutical industry in substantially its current form since at least the 1950s and, in recent years, the industry has employed more than 90,000 sales reps nationwide. The impact on the industry if it were required to monitor hours worked and compensate sales reps for overtime pursuant to the FLSA would have a devastating effect on the industry.

 

In a refreshing turn of events for employers across the country, not just in the pharmaceutical industry, the Court took a very practical approach to determining whether a sales rep is an "employee employed in the capacity of outside salesman." See 29 U.S.C. 213. On an issue that clearly could have gone either way (and had done so before different courts), the Court rejected the petitioner's argument that only pharmacies actually "make sales." It noted that such an argument was "formalistic" and inconsistent with the "realistic" approach that the exemption was meant to reflect.

 

Given the recent, and continuing, onslaught of FLSA individual and collective action lawsuits, employers across the country are hopeful that this decision forecasts a more "realistic" and employer-friendly approach by courts to these types of cases. At least for the pharmaceutical industry, the forecast is clear -- the uncertainty as to sales reps is over.

 

Kerri A. Wright, Esq.

Counsel

Porzio, Bromberg & Newman P.C.

PhRMA to FDA: Draft Guidance on Advertising Violates the Right to Free Speech

In March 2012, the Food and Drug Administration (FDA) solicited comments for its newly issued draft guidance for industry entitled “Direct-to-Consumer Television Advertisements – FDAAA DTC Television Ad Pre-Dissemination Review Program.” Among other things, the draft guidance requires pre-dissemination review of:

 

1. Initial TV ads for any prescription drug or for a new or expanded approved indication;
2. All TV ads for prescription drugs subject to a Risk Evaluation and Mitigation Strategy (REMS); and
3. TV ads for Schedule II controlled substances.

 

On May 14, 2012, Pharmaceutical Research and Manufacturers of America (PhRMA) submitted a comment letter to the FDA.  In its letter, PhRMA states that the mandatory requirement of review prior to broadcast is “overbroad, unduly burdensome, and lacking in narrow, objective, and definite standards.”  According to PhRMA, FDA “is proposing to implement and enforce prior restraint of valuable, constitutionally protected commercial speech.”  PhRMA recommends that the FDA  undertake “notice and comment rulemaking in a tailored, risk-based approach that conforms with the Supreme Court’s directive that ‘the First Amendment mandates that speech restrictions be narrowly drawn.’”

 

While the main focus of PhRMA’s comment letter is on the First Amendment’s protection of free speech, PhRMA also discusses the public health value of DTC communications for enhancing public health by conveying information about healthcare treatments to millions of Americans.  In addition, PhRMA argues that FDA has not offered evidence to support the need for pre-dissemination review of DTC television advertisements.  PhRMA notes that since 2008, “FDA has issued only four warning or untitled letters alleging regulatory violations with respect to DTC television advertisements, despite the fact that hundreds (perhaps thousands) of such ads have been disseminated during that time period.”

 

Since the proposed guidance makes a substantive change in its regulatory practices, PhRMA contends that FDA should, if at all, implement a formal rulemaking process rather than issuing Guidance for Industry. 

Click here  for a copy of the draft guidance.

Click here for a copy of the PhRMA comment letter.

Vermont Attorney General’s Office Releases the “Prescribed Product Disclosures: Report of Vermont Attorney General William H. Sorrell for Fiscal Year 2011”

Vermont’s Prescribed Product Disclosure Law requires manufacturers of prescribed products to annually disclose to the Vermont Attorney General’s Office the value, nature, purpose, and recipient of any allowable expenditure or permitted gift by October 1, 2011. This law also requires Vermont’s Attorney General to annually report on the disclosures. In accordance with this requirement, Vermont’s  AG’s Office recently released the “Prescribed Product Disclosures: Report of Vermont Attorney General William H. Sorrell for Fiscal Year 2011.” The Report includes payments or expenditures made to health care providers during Fiscal Year 2011 (July 1, 2010 - June 30, 2011) that relate to prescription drugs, biological products and medical devices. According to the Report, 154 pharmaceutical, biologic, and medical device manufacturers reported spending approximately $5.6 million in Vermont in allowable expenditures or permitted gifts in Fiscal Year 2011.

To view a full copy of the Report, CLICK HERE.

 

Democrats Set Sights on Medical Device Safety Regulation

“Forewarned, forearmed; to be prepared is half the victory.” - Miguel de Cervantes

Ink-like clouds suffused over our nation’s capitol as a murder of crows converges upon fresh carrion. As the atramentous nebulae congealed over the Hill, the icy, soul-sucking breath of regulators chilled the device industry like Harry Potter’s tormenting dementors. Yes, my friends, Congress is coming and it has medical devices locked in the cross-hairs.

There is no subtlety as the portents blaze like neon along a moonless desert highway. In 2011 there were four congressional subcommittee hearings on the FDA’s regulation of medical devices. Unsatisfied with their colleagues on the other side of the aisle, Democrats, led by Henry Waxman (D-CA) as ranking member of the Committee on Energy and Commerce (“ the Committee”), have been advocating increased regulation of medical devices. In an October 12, 2011 letter to Fred Upton (R-MI), Chairman of the Committee, Joseph Pitts (R-PA), Chairman of the Subcommittee on Health, and Cliff Stearns (R-FL), Chairman of the Subcommittee on Oversight and Investigation, Waxman and colleagues Frank Pallone (D-NJ), Diana DeGette (D-CO) and John Dingell (D-MI) urged the Committee to hold hearings on device safety in conjunction with the impending reauthorization of the medical device user fee program. The letter detailed safety concerns with brain stents and metal-on-metal hip implants. Waxman et al. contended that the hearings held in 2011 focused on delays in approval and overregulation while ignoring serious health concerns. You can read the full text at http://democrats.energycommerce.house.gov/index.php?q=news/energy-and-commerce-democratic-leadership-calls-for-further-examination-of-fda-medical-device-r

A second letter was sent on January 20, 2012 by Waxman, DeGette, and Dingell renewing their prior request for hearings. This communication detailed concerns over the “Lap Band” gastric band and urogynecologic surgical mesh. The authors concluded by requesting the Committee hold hearings to determine “whether FDA device regulation has been ineffective in protecting the public from dangerous medical devices” and urging the Committee to obtain documents in regard to the Lap Band and surgical mesh. Waxman again tied this review into the reauthorization of the Medical Device User Fee Act noting that “we [Congress] need to understand the safety of devices on the market, the tactics device manufacturers and others use to market these devices, and the extent to which these tactics may increase risks.” Full text of letter at http://democrats.energycommerce.house.gov/index.php?q=news/democratic-committee-leaders-call-on-committee-republicans-to-hold-hearings-on-dangerous-medica

If you remain doubtful that Democrats are setting up device safety as an election year issue, then you likely missed President Obama’s State of the Union Address. Buried deep in the President’s remarks, it inconspicuously passed in a heartbeat. But it was there and worthy of repeating:

“We’ve all paid the price for lenders who sold mortgages to people who couldn’t afford them, and buyers who knew they couldn’t afford them. That’s why we need smart regulations to prevent irresponsible behavior. Rules to prevent financial fraud, or toxic dumping, or faulty medical devices, don’t destroy the free market. They make the free market work better.” President Barack Obama’s third state of the union address to Congress, January 24, 2012.

It was there. Just four days after Representative Waxman’s second letter to the Committee, the President slipped device safety regulation into the State of the Union. There can be no doubt that democrats are setting this up for an election year showdown. Although the President’s remarks are couched in terms of safety, Waxman specifically tied safety into marketing tactics. There is certainly evidence that impending regulation will not simply address safety in the approval process but will further impose stricter regulatory oversight of device marketing.

You have been forewarned. In the immortal words of Rubeus Hagrid, “It's changing out there. ... There's a storm coming, Harry. And we all best be ready when she does.”