Life Science Compliance Update

March 30, 2017

Bristol-Myers Squibb Settles Off-Label Promotion Case for $19.5 Million

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Late last year, Bristol-Myers Squibb (BMS) settled with the government to resolve allegations that spanned several states that it improperly promoted a schizophrenia treatment for uses not approved by the United States Food and Drug Administration (FDA).

The agreement, with a whopping forty-two states (including California, New York, and Texas) and the District of Columbia, focuses on charges that BMS promoted Abilify (an anti-psychotic drug) for use in children and elderly patients with dementia and Alzheimer’s disease. The FDA approved Abilify in 2002 for treating schizophrenic adults. Since then, it has since approved various forms of the drug for other uses. When the alleged improper marketing occurred, such uses were not approved by the FDA. In 2006, Abilify received a “black box” warning stating that it could increase the risk of death for dementia patients.

The states further alleged that BMS misrepresented risks that the drug posed to patients, such as weight gain and metabolic side effects, violating consumer protection laws.

The agreement prohibits BMS from promoting Abilify for off-label use, making false or misleading claims about it, paying health care providers for merely attending a promotional event for the drug, using medical education grants to promote the drug and rewarding health care providers with grants based on prescribing habits, among other restrictions.

“Drug companies should not market their drug for off-label uses or make claims that are not supported by scientific evidence,” New York Attorney General Eric T. Schneiderman said.  “Consumers must be able to rely on their doctor’s advice for medication without having to worry about drug companies manipulating their advertising to promote their products at the expense of patients.” 

“We allege that Bristol-Myers Squibb improperly marketed this drug to encourage prescriptions to children and seniors and misled the public about its safety for those populations,” said Massachusetts Attorney General Maura Healey. “Companies cannot use deceptive practices and unfair marketing to increase their sales at the expense of patients’ health and well-being.”

The settlement allows each state to receive hundreds of thousands of dollars, with some getting over $1 million. For example, New York will receive $788,774, Texas will rake in $1 million from the settlement and California will come away with $1.3 million. The only eight states that were not part of the settlement, and therefore will receive no part of the settlement funds, were Alaska, Idaho, Mississippi, New Mexico, South Carolina, Utah, Virginia, and Wyoming.

The settlement will finally lay to rest over a decade of allegations about Abilify marketing. In 2015, a United States judge tossed federal court claims that BMS and its Abilify partner, Otsuka, paid kickbacks to boost prescriptions of the drug. Similar to this state settlement, that whistleblower suit cited promotions to pediatric psychiatrists as evidence of off-label marketing. At the time, the judge allowed the whistleblowers to pursue claims that BMS fired them to retaliate for their off-label accusations.

This settlement follows a 2007 settlement at the federal level, where the company agreed to pay $515 million to settle an off-label investigation involving Abilify, along with other drugs.

BMS notes that it has not marketed the drug since 2013 and did not admit to any wrongdoing and denied all allegations against it. 

Medical Devices & False Claims – Shire’s Settlement Is One for the History Books

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We have seen many large False Claims and Anti Kickback settlements with pharmaceutical companies and the prescriptions they manufacture. Now, a medical device company has gotten into difficulty for many of the same types of violative activities. This article provides an overview of the allegations and the settlement.

In early January 2017, the United States Department of Justice (“DOJ”) announced the largest False Claims Act recovery by the United States in a kickback case involving a medical device company.40 The $350 million agreement with Shire Pharmaceuticals LLC (and other subsidiaries of Shire plc) settles federal and state False Claims Act allegations that Shire and Advanced BioHealing (a company acquired by Shire in 2011 that has since been divested) employed kickbacks and other unlawful methods to induce clinics and physicians to use – or overuse – “Dermagraft,” an FDA-approved bioengineered human skin substitute used in treating diabetic skin ulcers.

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March 29, 2017

Chicago Releases Draft Rules on Industry Representative Licensure

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In a city where crime rates are sky-high and illegal drugs are easily picked up on the street, on November 16, 2016, the City of Chicago passed an ordinance that, effective July 1, 2017, requires pharmaceutical sales representatives to become licensed before they can promote prescription drugs to health care providers within city limits. 

Mayor Rahm Emanuel states that the new licensing requirement is part of a larger series of efforts by the city to combat heroin and opioid addiction. However, the law will impose significant new burdens on any pharmaceutical manufacturer with sales representatives who call on health care providers in Chicago.

The draft rules for this ordinance were released on March 17, 2017.

These recently-released draft rules provide additional detail regarding the licensure requirements as well as other associated education and disclosure requirements with which pharmaceutical representatives will be expected to comply beginning in July of this year.

To obtain their initial licensure as a pharmaceutical representative, applicants must complete an online course, for which proof of completion must be submitted. The cost of the initial license will run each representative $750. Then, to maintain the license, representatives must complete a minimum of five hours of continuing professional education every year thereafter. 

Approved providers for continuing professional education can be found on the city’s website. Making this burden even more onerous, continuing education provided by pharmaceutical manufacturers to their employees will not be accepted as fulfilling the requirement, unless the manufacturer previously applied for, and received, approval. A licensed representative who does not meet these continuing education requirements may face substantial penalties, including suspension or revocation of the license, inclusion in a public list of representatives whose licenses have been revoked, and/or a fine between $1,000 and $3,000 per day of violation.

In addition to the professional education requirement, pharmaceutical representatives will also be required to track and report certain sales information on an annual basis or upon request by the Commissioner of Public Health. This information must include: a list of the health care professionals who were contacted, the location and duration of each contact, the pharmaceuticals that were promoted, and whether product samples or any other compensation was offered in exchange for the contact.

For applicants who receive initial licensure, the time period for the data that must be collected and reported shall cover an 11-month period, starting on the first day of licensure and exactly ending one month before its expiration. For representatives with a renewed license, the data shall cover a 12-month period that will begin one month before the license renewal and will end one more before its expiration.  If the Commissioner of Public Health requests the information at any other time, the request will designate the time period the submission must cover, and it will be due within 30 days of the request.

A pharmaceutical representative who is found to have violated any provision of the Ordinance or these rules will be subject to suspension or revocation of licensure and/or a fine of $1,000 to $3,000 per day of violation. Inexplicably, once a license is revoked, it cannot be reinstated for a period of two years from the date of revocation.

These new requirements will place a significant burden on pharmaceutical manufacturers and their sales representatives who work in Chicago. Late last year, in an attempt to prevent the ordinance from going into effect, a coalition of sixteen pharmaceutical companies, along with organizations such as the Illinois Chamber of Commerce, the Illinois Manufacturer’s Association, the Epilepsy Foundation of Greater Chicago, and the Pharmaceutical Research and Manufacturers of America, wrote a letter to the City Council of Chicago expressing its concerns. The group noted, “[t]hese proposed reporting requirements are unnecessary and duplicating, creating an unnecessary tax on one of the most important sectors of our economy.”

The public is invited to submit any comments it may have on the proposed rules by April 2, 2017. readers are encouraged to send in comments, especially those local to the Chicago area to submit their comments about these regulations. The pharmaceutical industry is one of the most regulated industries in the country as it is.  The FDA requires reps to distribute REMS information on drugs that their company provides.  It is not clear how tracking the office visits and amount of time spent with healthcare providers by pharmaceutical reps is in the public interest.

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