1. Action Items: Monitoring Off-Label Promotion Do’s and Don’t’s
Medical Device Regulatory, Reimbursement and Compliance Congress
March 29, 2007

2. Panel Stephen C. Payne, Partner, Sidley Austin Washington, DC
Jeffrey K. Shapiro, Partner, Hogan & Hartson
Tracy Mastro, Director, Huron Consulting Washington, DC (Moderator)

3. Recap
Since 1991, there have been only 10 DOJ settlements with medical device companies that have exceeded $10 million.
The total amount of those settlements is $450 million.
Most (and largest) settlements in the last five years have been with the pharmaceutical industry.

4. Recap (cont’d)
There is a “substantial” pending inventory of False Claims Act cases involving pharmaceutical products, many related to issues of:
Off-label promotions
Pricing
Anti-kickback Statute violations
These investigations and prosecutions will continue and “will likely be joined by allegations involving devices.”

5. Recap (cont’d)
Most of the government’s leads for investigations come from one of three sources:
Whistleblowers
Anonymous sources (e.g., competitors)
Audits

6. Recap (cont’d) The message:
The medical device industry is subject to the same rules as the pharmaceutical industry.
There is much to be learned from the experiences of the pharmaceutical industry, especially regarding the areas in which the government has focused its investigations (e.g., off-label promotions, financial relationships with physicians)
The device industry should expect to experience increased scrutiny and government investigations.

7. Examples of Recent Enforcement Activities
Sofamor Danek/Medtronic settled with the DOJ for $40 million to settle charges that it paid kickbacks to doctors to induce them to use the company’s spinal products.
Allegations of sham consulting and royalty agreements, and lavish trips
It also entered into a 5-year Corporate Integrity Agreement (CIA) with the HHS Office of Inspector General (OIG).

8. Examples of Recent Enforcement Activities (cont’d)
InterMune was charged with illegal promotion and marketing activities related to its drug Actimmune and alleged violation of the False Claims Act. As a result, InterMune has:
Agreed to pay $37 million to resolve criminal charges and civil liability,
Entered into a deferred prosecution agreement with DOJ, and
Entered into a 5-year CIA with the OIG.

9. Examples of Recent Enforcement Activities (cont’d)
DOJ investigation into several major orthopedic companies related to their sales & marketing practices and their consulting/financial arrangements with physicians
FDA meetings with manufacturers of biliary (bile duct) stents to discuss its concerns that their devices have been promoted for off-label uses in blood vessels.
Subpoenas issued by DOJ to:
Cardiovascular companies (sales & marketing, consulting relationships)
Orthopedic companies (possible antitrust issues)

10. Regulatory Enforcement Activities for 2007
Medical device companies will continue to be subject to federal and state fraud investigations that will most likely focus on:
Sales & Marketing activities
Consulting/financial relationships with physicians
Educational grants
Off-label promotion

11. What do we mean by “Off-Label” Promotion?
Involves claims regarding use(s) of a medical device that have not been cleared by the FDA via a pre-market notification (510(k)) or a pre-market approval notification (PMA). This includes:
Promotion outside cleared indications (e.g., modifies the intended use(s) of the device)
Web site promotions
Manufacturer-funded educational activities

12. FDA and Off-Label Promotion
FDA regulatory authority extends to the labeling of medical devices and drugs.
FDA authority does not extend to the practice of off- label use or prescribing of products by physicians.
The focus of FDA regulatory efforts towards off-label use has been on manufacturers’ product promotion.
Device manufacturers may receive an untitled letter that addresses alleged off-label promotion violations (less serious than those addressed in Warning Letters)
The Agency has taken action against manufacturers of products used for unapproved purposes.

13. Industry and Off-Label Promotion
It is appropriate for a physician to utilize a device for a use that is not approved by the FDA.
It is not appropriate (or lawful) for a manufacturer to promote a device for an off-label purpose.
Examples:
Targeting physicians who do not treat patients for the intended use of the device
Compensating sales representatives based on marketing for non-approved uses of a device

14. Session Objective
What are the issues and priorities firms need to consider as they monitor and audit their promotional activities?

15. Discussion