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July 2011

False Claims Act Cases Based on Off-Label Promotion Expected to Increase with the Healthcare Act and the Bad Ad Program

San Francisco attorneys Kai Peters and Jack McCowan, members of the Drug & Medical Device Practice Group, published an article in the July 2011 issue of the IADC’s Defense Counsel Journal titled “What Every Pharmaceutical And Medical Device Company Should Know: False Claims Act Cases Based On Off-Label Promotion Promise To Increase With The Healthcare Act And The Bad Ad Program.”

The article analyzes the increased use of the False Claims Act (FCA), both by the federal government and in Qui Tam actions, as a weapon against off-label advertising and promotion of prescription drugs and medical devices.  In the last two years alone, a number of such lawsuits initiated by the federal government and private parties have resulted in billions of dollars of settlements. 

In the past, the Food Drug and Cosmetic Act (FDCA) has been the traditional vehicle by which the off-label promotions of prescription drug and medical device products have been policed, and has provided a predictable statutory rubric by which a manufacturer could properly understand and assess its potential liability for any alleged off-label advertising and promotion and related compliance efforts.  However, more recently, an increasing number of FCA actions, predicated on the off-label promotion of drugs and medical devices, have been filed against manufacturers, giving rise to new concerns about the potential liability of companies that have engaged in purportedly violative advertising or promotion of their products.

The basic premise for such claims, which may be brought by the federal government or by private parties, is that manufacturers who have knowingly engaged in the off-label promotion of their prescription drug or medical device products, and which have received payments from Medicare or Medicaid as a result of such off-label promotion, have committed a fraud upon the government and are accordingly punishable under the FCA. Plaintiffs’ attorneys have capitalized on this increasingly developed area of the law, and have begun to file similar claims based on the Qui Tam provisions of the FCA (as “relators”), or have sought to represent those whistleblowers who, by statute, are entitled to significant percentages of the civil damages awarded to the federal government in these actions.

Please click here to read the article.

Kai Peters