FDA Marketing Regulations

1
FDA Marketing Regulations

• David Baumer
• Fall, 2006

2
FDA Summary of PDMA (Source 1), 1987

• Amends the FDCA of 1938
• Permits only U.S. manufacturers to reimport their
  drugs, except for emergencies
  
• Prohibits selling, purchasing, or trading
  prescription drug samples or coupons
  
• Prohibits selling etc. of prescription drugs that
  were donated or supplied at a reduced price to a
  charitable organization
  
• Permits the distribution of samples only to
  practitioners licensed to prescribe such drugs

3
FDA Summary of PDMA, 1987

• Requires distribution of drug samples only upon
  written request by physicians with proper
  documentation
  
• Requires unauthorized distributors to inform
  wholesale customers of all previous sales of the
  product before it is sold to them
  
• Drug company must maintain for the public a list
  of all authorized distributors of record
  
• Directs Sec. of HHS to issue guidelines for
  licensing persons to make wholesale distributions
  of interstate commerce of prescription drugs
  

4
FDA Summary of PDMA, 1987

• Obviously, the PDMA is designed to curb marketing
  abuses
  
• Where considerations other than medical affect
  doctors decisions as to what drugs to prescribe
  
• During the 1980s free samples were sometimes
  sold by recipient doctors or hospitals
  
• Also of concern were counterfeit drugs
• Authenticity of drugs could be established
  through licensing of wholesale distributors and
  
• documentation (paper trails) from manufacturer to
  retailer

5
FDA Report to Congress, 2001

• In spite of the PDMA, there were significant
  concerns about how drugs were marketed
  
• A major report to Congress took place in 2001
  (Source 2)
  
• Increasingly the focus is upon verifying the
  authenticity (or pedigree) of drugs
  
• Since 1988 a wholesale drug diversion submarket
  had developed

6
FDA Report to Congress, 2001

• The PDMA requires States to license wholesale
  distributors of prescription drugs
  
• Unauthorized wholesale distributors must provide
  a paper trail to purchasers
  
• Prohibits sales of prescription drugs that have
  been purchased by a hospital or other health care
  entity,
  
• or that have been donated or supplied at a
  reduced price to the charitable organization
  

7
FDA Report to Congress, 2001

• The PDMA was passed in 1987 and yet but there are
  still debates about the rules to implement the Act

8
Government Enforcement Efforts Against Drug
Companies (3)

• Fraud by pharma companies is combated by the
  Office of Inspector General (OIG) of the Dept. of
  HHS
  
• Among the important issues are
• Compliance the 1997 Food and Drug Administration
  Modernization Act (FDAMA)
  
• Whether pharma companies are completing their
  post study requirements in a timely manner
  
• Direct to consumer advertising
• FDA oversight of off-label drug uses
• Compliance with mandatory reporting requirements
  for adverse events involving medical devices
  
• Huge fines for violations of various drug
  distribution laws continue to be issued
  

9
Government Enforcement Efforts Against Drug
Companies

• There are three main statutes that have been used
  against pharma companies for illegal marketing
  
• Medicare and Medicaid Anti-Kickback Statute
• Civil False Claims Act
• Prescription Drug Market Act (PDMA) of 1987

10
The Anti-Kickback Statute

• Prohibits intentionally offering remuneration to
  induce business payable to a federal healthcare
  program
  
• In addition to fines and other penalties, the
  def. could be barred from Medicare and Medicaid
  programs
  
• The intent element has been watered down by the
  courtsknowledge is sufficient
  
• Among the factors the courts look at in deciding
  whether the intent element has been satisfied
  is
  
• Does the arrangement have the potential to
  interfere with clinical decision-making?

11
The Anti-Kickback Statute

• Factors used to determine if the def. engaged in
  knowing and willful conduct
  
• Does the practice have the potential to increase
  costs to federal healthcare programs,
  beneficiaries, or enrollees
  
• Does the practice have the potential to increase
  the risk of over or under use
  
• Note that the OIG has elucidated a large (22)
  number of safe harbors

12
The Anti-Kickback Statute

• Needless to say the rules regarding kickbacks are
  quite complicated
  
• Compliance with a safe harbor is not necessary

13
False Claims Act (FCA)

• FCA makes a person liable for a civil sanction
  if
  
• The def. knowingly makes, uses etc. a false
  record to secure a payment on the false claim
  
• Or conspires to defraud the govt.
• The knowledge requirement of the FCA is even
  broader than of the Anti-Kickback Statute
  
• The FCA has bounty hunter and whistleblower
  provisions
  
• Bounty hunters are entitled to 15 to 30 of the
  recovery
  
• For egregious cases damages can be tripled

14
Prescription Drug Marketing Act

• Passed to address marketing practices that
• Resulted in diversion of drugs into a grey
  market
  
• Among the questionable marketing practices are
• Distribution of free samples, the use of coupons
  redeemable at no or low cost
  
• Sales of deeply discounted drugs to hospitals or
  other healthcare facilities
  
• Prevention of mislabeled, adulterated, or
  counterfeit drugs
  
• Sales of drug samples is punishable at up to 10
  years in jail

15
Prescription Drug Marketing Act

• This act prohibits resale of any drug that was
  previously purchased by a healthcare entity
  
• Most of these drugs were purchased at deeply
  discounted prices
  
• Drug wholesalers are required, prior to
  distributing any prescription drug,
  
• To provide the purchaser with a statement of
  origin identifying all prior sales of the drug
  
• These provisions do not apply to drug
  manufacturers and authorized distributors
  
• This provision is supposed to foster a paper
  trail
  
• The FDA has not instituted the paper trail, or
  pedigree, requirements because of protests from
  secondary wholesalers. Some states have gone
  ahead anyway with pedigree requirements

16
Prescription Drug Marketing Act

• Other provisions of the PDMA include
• Purchase or sale of prescription drug coupons
  redeemable for free or low-cost prescription
  drugs
  
• Wholesale distribution of prescription drugs
  interstate without a state license
  
• Reimportation of prescription drugs by anyone
  other than the manufacturer

17
Govt. Enforcement Actions against Drug Companies

• A number of pharma companies have been the target
  of govt. actions
  
• TAP sells a prostate cancer drug called Lupron
• TAP had to pay the govt. 875 million
• TAP allegedly inflated the price the govt. would
  reimburse it for Lupron through Medicare
  
• and also for allegedly violating the
  Anti-Kickback statute and the Fraud Claims Act
  (FCA)
  
• TAP offered to sell Lupron to physicians much
  lower than physicians were being compensated for
  the drug by Medicare
  
• TAP was able to escape being excluded from
  Medicare and Medicaid programs by signing a
  Corporate Integrity Agreement

18
Govt. Enforcement Actions against Drug Companies

• Pfizer/Warner-Lambert
• The anti-epilepsy drug Neurontin was the subject
  of a govt. settlement
  
• PWL was accused of promoting off-label use of the
  drug
  
• PWL had to pay 430 million in the settlement
• Again, in lieu of being excluded from Medicare
  etc. PWL agreed to a Corporate Integrity
  Agreement for 5 yrs.

19
Govt. Enforcement Actions against Drug Companies

• Schering-Plough sells the anti-allergy drug,
  Claritin
  
• SP was required to report its best prices to the
  fed. govt. and to pay rebates to Medicaid
  
• Due to competition from Allegra with various
  large managed care customers, SP lowered its
  prices but did not pay the rebates to Medicaid
  
• The settlement required SP to pay more than 345
  million in criminal and civil fines

20
Govt. Enforcement Actions against Drug Companies

• GlaxoSmithKline sells Paxil which is an
  anti-depressant
  
• GSK allegedly failed to disclose information
  related to safety and effectiveness
  
• Again it was alleged that Paxil was being
  promoted for off-label uses
  
• When information about Paxil was requested, GSK
  only included favorable information.
  
• Part of the settlement included a requirement to
  release the results of all clinical trials

21
Increased Govt. Scrutiny

• Pharmaceutical companies are big targets for
  politicians and prosecutors
  
• The authors recommend
• Written compliance programs
• All personnel must receive vigorous regulatory
  compliance training
  
• Companies should have internal crisis
  communication strategy

22
Compliance Plan

• The culpability of pharma companies may depend on
  the extent to which they implement a Compliance
  Plan
  
• An effective Compliance and Ethics Program
  requires
  
• Due diligence to prevent and deter criminal
  conduct
  
• Promote an organizational culture that encourages
  ethical conduct
  
• The program must be reasonably designed to detect
  criminal conduct

23
Compliance Plan

• Compliance programs have become increasingly
  specific in involving management in
  responsibility for criminal actions of
  subordinates
• Among the characteristics of compliance plans
  are
  
• Standards and procedures that reasonably capable
  of reducing the likelihood of violations of law
  
• Upper level management should be involved
• Substantial Authority Personnel should not
  include those who failed a due diligence test in
  the past (something bad occurred under their
  watch)
• On-going training and dissemination of standards
  and procedures

24
Compliance Plan

• Compliance Plan
• Enhanced obligations for monitoring and auditing
  to ensure the compliance plan is being followed
  
• Internal auditing reporting systems and
• Providing for anonymity or confidentiality
• Consistent Promotion and Enforcement of
  Compliance Program
  
• Really involves an obligation of employees to
  report suspected violations of other employees
  
• If criminal behavior is detected the business
  must do what is necessary to prevent a
  reoccurrence
  

25
Compliance Plan

• A focus should be on sales and marketing staff
• Risk areas include
• Discounts to purchasers, rebates and coupons,
  product support services, educational and
  research grants, relationships with physicians,
  gifts to those who refer or purchase, formulary
  relationships, switching arrangements, consulting
  payments, compensation of sales representatives,
  price calculations, and drug samples

26
Crisis Management Plan

• When the govt. launches an investigation, the
  company should be prepared
  
• Employees who are contacted by govt.
  investigators should be told that they have to a
  legal counsel and informed generally of their
  legal rights
• A well crafted crisis management plan can reduce
  the adverse impact of govt. investigation