United States: FDA Settles Exparel Marketing Lawsuit, Signaling Change For Off-Label FCA Cases

Last summer, we reported on the U.S. District Court for the Southern District of New York's significant decision in Amarin Pharma, Inc. et al. v. Food and Drug Administration, et al., holding that a drug company may engage in "truthful and non-misleading speech" about off-label uses of an approved drug without the threat of a misbranding action under the Federal Food, Drug, and Cosmetic Act. As we reported, the holding, which narrows the scope of prohibited speech under U.S. Food and Drug Administration (FDA) regulations, has the potential to significantly curtail False Claims Act (FCA) off-label cases. These cases proceed on a theory that, through prohibited marketing, a company caused false claims to be submitted to government health care programs for non-FDA-approved uses. By narrowing the scope of prohibited speech regarding off-label uses, Amarin and its progeny may foreclose FCA cases based on truthful and non-misleading marketing about off-label uses of a drug.

In an indication of Amarin's influence, on December 15, 2015, the FDA settled a lawsuit filed against it in September by Pacira Pharmaceuticals in the Southern District of New York, which challenged restrictions the FDA placed on the marketing of the post-surgery pain drug Exparel. (Pacira Pharmaceuticals, Inc. et al. v. United States Food and Drug Administration et al., 15-cv-07055 (SDNY)). Though the settlement is a favorable resolution for Pacira, it demonstrates that FDA marketing regulations are in a great state of flux. This uncertainty leaves companies at risk of FCA claims for off-label marketing if not deemed "truthful and non-misleading," or if other courts do not follow the Southern District of New York's approach outlined in Amarin.

The FDA originally approved Exparel in 2011 for "administration into the surgical site to produce postsurgical analgesia." Pacira marketed Exparel to physicians for administration into various surgical sites for postsurgical pain control. However, the FDA warned Pacira in a September 2014 letter that the drug was indicated only for treatment of pain following bunionectomies and hemorrhoidectomies, the surgeries studied in clinical trials. Pacira sued, seeking declaratory and injunctive relief under the First Amendment, Fifth Amendment, and Administrative Procedure Act that Exparel was indicated for other post-surgery pain treatment. After the suit was filed, the FDA withdrew the warning letter, leading to settlement of the lawsuit on December 15, 2015.

Under the settlement agreement, the FDA has agreed to drop restrictions on the marketing of Exparel, and Exparel's label will be updated to say the drug is indicated for the treatment of pain at any surgical site. Significantly, the FDA agreed in the settlement that the approval for post-surgical analgesia for surgeries other than those studied in clinical trials dates back to the drug's 2011 approval. This retroactive approval will bar FCA cases based on the theory that marketing for surgeries other than bunionectomies and hemorrhoidectomies was off-label and prohibited.

FCA enforcement in off-label cases has been a huge source of FCA recoveries prior to Amarin. In FY2014, for example, the U.S. Department of Justice (DOJ) recovered over $2.2 billion in FCA actions against pharmaceutical and medical device companies stemming from off-label promotion. However, Amarin and similar cases may significantly reduce the magnitude of FCA recoveries based on off-label use theories. In the DOJ's recent report for FY2015 though, claims involving the pharmaceutical industry accounted for $96 million in settlements and judgments, most of these claims related to alleged inaccurate price reporting under the Medicaid Drug Rebate Program and prohibited kickbacks to physicians to prescribe drugs, not improper marketing. In other words, the DOJ's recovery on off-label use theories was significantly lower in 2015 than 2014.

Though the FDA has attempted to limit the implications of the Pacira settlement, stating that the resolution "is specific to the parties involved," the settlement is another indication that the FDA's prohibition of off-label marketing, and the resulting potential FCA liability, are at risk. Nevertheless, companies must continue to scrutinize marketing to ensure that statements are truthful and not misleading.  Statements that are too narrowly crafted may be deemed factually incomplete and therefore misleading.  Because of the huge potential for recovery in any successful FCA case against a pharmaceutical company, we anticipate that relators will continue to think creatively and look for any vulnerability in off-label marketing until there is further guidance beyond Amarin and the Pacira settlement.

FDA Settles Exparel Marketing Lawsuit, Signaling Change For Off-Label FCA Cases

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