Although we are only one month into May, it has been a tough month for the pharmaceutical industry and those of us who are still looking to see if either the Second Circuit in U.S. v Caronia or the D.C. District Court in Par Pharmaceutical v. U.S. et al., will shed any light on whether manuafacturers have a First Amendment right to discuss a product’s unapproved uses with healthcare professionals.
First, on May 7th, the U.S. Department of Justice announced that Abbott Laboratories had agreed to plead guilty to a drug misbranding charge (a misdemeanor) and pay $700 million in criminal fines and forfeitures, another $800 million in civil settlements to the Federal Government and various states, and another $100 million in civil payments to 49 states and the District of Columbia for a total global settlement of $1.6 billion. The settlement — the second largest of its kind — stemmed from allegations that from 1998 through 2008 Abbott had promoted Depakote (a bi-polar, anti-seizure and migraine drug) for off-label uses that included schizophrenia, aggression in elderly dementia patients, anxiety and depression. The settlement also covers allegations that Abbott paid kickbacks to long-term care pharmacy providers and physicians to get them to promote or prescribe Depakote. In addition, Abbott agreed to a five-year corporate integrity agreement that leaves the Company subject to exclusion from federal health care programs (like Medicare and Medicaid) for any material breach of the agreement. The settlement also resolves four whistleblower lawsuits that had been brought in federal court in Virginia; the whistleblowers appear to be geting $84 million from the settlement.
Second, and far worse from an industry perspective, was last week’s news out of D.C. in the Par litigation. On May 1st Par and the Government filed a Joint Motion to Stay the litigation and any rulings the Court would have issued on the Government’s motion to dismiss the suit and/or Par’s motion for limited discovery, which you can read about in more detail here and here. As the Joint Motion makes clear, Par has been seeking to settle the Government’s parallel criminal and civil investigations of Par’s promotional activities related to Megace-ES since December, 2010. When Par was unable to reason with the Government, it filed suit in October, proving once again that the best defense is a good offense. When the Government made the tactical blunder of buttressing its motion to dismiss Par’s suit with a Declaration from Dr. Rachel Sherman from the FDA, Par countered with a stinging series of briefs in support of its motion for limited discovery that must have sent the Government reeling.
To underscore its point that it had every intention of ”going to the mattresses” on Dr. Sherman’s assertion that Par has nothing to fear by engaging in approved on-label speech, Par hammered the Government in its reply brief with specific statements various officials made that categorically contradicted Dr. Sherman’s assertion. Specifically, Par pointed out the following: 1) on September 2, 2010, officials from the U.S. Attorney’s Office in New Jersey stated that on-label messaging of Megace-ES “did not absolve Par of wrongdoing if communicated to physicians who had prescribed the drug off-label;” 2) on June 21, 2011, various officials declared that on-label speech that takes place in a setting where off-label use occurs “is not protected by the First Amendment and, if Par believed otherwise, the issue would need to be litigated [with one senior DOJ official indicating] that the Government’s view regarding the constitutionality of its position would not change unless and until a court told them otherwise;” and 3) on September 20, 2011, various officials from the DOJ Civil Fraud Section (in the presence of HHS-OIG and U.S. Attorney’s Office representatives) “characterized the presence of Par sales representatives in long-term care facilities as inherently constituting off-label promotion . . . .” (emphasis added). Realizing that Par had not only accepted its challenge of ”litigat[ing]” the issue, but was more than willing to play hardball, the Government now finds itself in negotiations in which it was apparently unwilling to engage prior to October 14, 2011 – the date Par filed suit.
While Par will most likely get some vindication in being able to settle with the Government on terms that will be far more favorable than would have been the case in the absence of its suit, there is no doubt in this writer’s mind that the Government is and continues to be the big winner. Whatever high dollar figure the Government had in mind (and ends up surrendering) before Par filed its suit, will be more than offset by the millions of dollars — no, check that, billions of dollars — that the Feds will continue to recoup from industry, as they have just done in the Abbott case. While the facts in Par are very different from the facts in Abbott, the industry, the First Amendment and the public will most likely lose a unique opportunity to have this very important issue addressed and vetted by the courts. Let’s hope the Second Circuit decides the Caronia case on the merits before we learn of any other surprises.