Devices & Diagnostics

DOJ official: “Everyone is doing it” no excuse for off-label promotion

Last year, the federal government collected $1.45 billion in settlement from pharmaceutical and medical device […]

Last year, the federal government collected $1.45 billion in settlement from pharmaceutical and medical device companies, and the most common charge of alleged misconduct was off-label promotion, according to law firm Skadden.

On Wednesday, a Department of Justice official told an audience of medical device lawyers in Minneapolis that illegal off-label promotion can land executives in prison. (Doctors can use medical devices and pharmaceuticals off-label — in areas of the human body or to treat conditions for which the product is not approved — but companies are legally prohibited from promoting such use.)

“If someone is coloring outside the lines … consequences can be drastic,” said Gerald Wilhelm, an assistant U.S. attorney from the District of Minnesota. “Everybody in the industry is doing it is not a defense.”

He added that previously companies charged with off-label promotion or other kinds of fraud would simply pay the fine taking it as a cost of doing business and not alter policies or behavior. But that has led federal prosecutors to begin to more widely apply a provision in the law that emanated from a 1975 Supreme Court case where the chief executive of a food company was held responsible for rodent infestation of a warehouse.

Wilhelm pointed to the Synthes case — where the company continued to perform unapproved clinical trial of a bone growth cement even after a person died, leading to executives getting prison terms — as an example of where company executives faced the music.

In the language of the federal government, even a misdemeanor conviction can lead to a year’s imprisonment, explained Daniel Scott, partner at Kelley, Wolter & Scott.

Wilhelm said the majority of cases — whether alleging illegal off-label promotion, false claims, kickbacks or Medicare fraud — emerge from the so-called qui tam lawsuits where an individual brings a lawsuit and assists in a prosecution in return for sharing in the penalty money if the prosecution is successful.

More often than not, these are disgruntled employees, Wilhelm said, adding half jokingly that the “best way to stay out of court is not by a great lawyer, but by a great HR department” that keeps employees happy.

Scott and Wilhelm were speaking at an event organized by LifeScience Alley, a Minnesota trade association, to keep its members updated on the trends in fraud prosecution.

 

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