Rx Compliance Enforcement Is Moving Away From “FDA” Cases, Sheehan Says

CAMBRIDGE, Mass.-Due to FDA's diminishing influence over the direction of pharmaceutical regulatory enforcement, a comprehensive understanding of the compliance concerns for drug products should focus on existing case law to understand the dynamics of the enforcement landscape, New York Medicaid Inspector General James Sheehan said.

"Most [Department of Justice] pharmaceutical cases do not originate with the FDA and that's more and more true every year," the former associate U.S. attorney said during the recent FDA Regulatory and Compliance Symposium. "Historically an awful lot of FDA cases came from the FDA. For a variety of reasons, in the last 10 years the FDA is no longer the primary source for FDA cases. ... So the FDA's control over that prosecutive docket is a lot less than it used to be."

FDA's current regulatory compliance priorities, which include drug compounding, unapproved drugs and off-label promotion, focus on protecting the integrity of the drug approval process, Department of Health and Human Services General Counsel Daniel Meron said at the regulatory and compliance conference.

FDA has sent several warning letters to compounding pharmacies in recent years, but the agency's authority on the matter is currently in question pending the outcome of ongoing litigation (¹ (Also see "CMS May Take Lead In Federal Compounding Oversight After Court Ruling" - Pink Sheet, 11 Sep, 2006.), p. 25).

FDA also issued a Compliance Policy Guide outlining its risk-based enforcement strategy for unapproved drugs in 2006 and has since taken action against ergotamine and quinine products among others (² (Also see "FDA Crackdown On Unapproved Drugs Has Incentives For Voluntary Submissions" - Pink Sheet, 12 Jun, 2006.), p. 10).

"Although many off-label investigations are led by the Department of Justice, FDA continues to have an important role to play," Meron added, citing a settlement related to Lilly's off-label promotion of Evista (raloxifene) following an investigation by FDA's Office of Criminal Investigation.

An emerging focus of FDA's compliance agenda could be on "requirements relating to post-approval review," Meron added. The drug safety bill pending in Congress would give FDA stronger enforcement authority to require postmarketing trials. "It wouldn't surprise me, even if the legislation is not passed, if you see a little more focus as part of that dialogue on exercising powers we already believe we have."

In addition to the erosion of FDA's influence in determining the cases DoJ pursues, the federal enforcement agenda has evolved to the point that violation of FDA statute does not alone typically meet the necessary criteria for prosecution, Sheehan said.

Looking only at straightforward "FDA" cases "would miss most of what the Department of Justice does in this space. Because what has happened ... is an expansion beyond that simple adulteration, misbranding, failure to report adverse events to a whole host of other areas in which there is a misbranding component, but the primary focus is on fraud."

DoJ looks for a fraud component in potential enforcement actions because in fraud cases, evidence of harm can be demonstrated. "In a pure misbranding case, the defense will argue that the evidence that people were killed as a result of this misuse of the drug is not relevant because either you broke the rule or you didn't, and it's prejudicial. ... So in a pure misbranding or adulteration or off-label promotion case that is FDA-driven, the fraud piece makes it much more appealing to prosecutors and to juries."

"The cases that are compelling are not just a violation of the rule but bad consequences," Sheehan said. Also, fraud cases allow prosecutors to pursue more severe sentences for violators in a legal framework they are more accustomed to than FDA regulation.

In addition, private counsels are "not able to bring cases based upon misbranding and adulteration. They have to have a fraud theory. So they will spend five years developing a fraud theory that they proceed with, and then they end up handing us a box of documents and a series of witness statements from the company. So it pushes the process toward fraud," he noted.

FDA's influence over the enforcement of its regulations may be eroding further with the decentralization of enforcement activities.

"We're not just talking about federal criminal enforcement anymore. We're starting to see state attorneys general and private counsel retained by the states very active in what historically might look like traditional FDA cases involving misbranding, adulteration and off-label marketing," Sheehan said.

"The resources that are there to be devoted to this area are going to grow in the next few years," he added.

"There are task forces within the Medicaid fraud control units and with the National Association of Attorneys General looking specifically at these issues. And there are private counsel out there ... who are reaching out to specific states and being hired by specific states to do pharmaceutical litigation which has an adulteration and misbranding component, a pricing component and a fraud component."

Non-federal enforcement could become increasingly significant over the next few years as the current federal administration comes to a close while qui tam suits increase at the state level following the implementation of whistleblower statutes in several states after passage of the Deficit Reduction Act (³ (Also see "Senate Medicaid Reform Bill Could Mean More Whistleblowers At State Level" - Pink Sheet, 12 Dec, 2005.), p. 24).

In addition, "CMS just added 31 people to oversee the Medicaid program ... and has given very strict requirements to every state. It's going to be auditing those requirements. So you're going to see a lot more interest in Medicaid," Sheehan predicted.

Prosecutors are interested in bringing a variety of fraud cases based on deceptions of FDA and payers.

Fraud against FDA is an issue that will become increasingly prominent, Sheehan suggested. "What is the impact of the fraud on the FDA? A lot depends on what the FDA says. Were they defrauded? Were they fooled? And over the last few years I think there's a lot more sympathetic ear within the FDA on that issue than there may have been in the past."

"The other thing is that the people asking the questions were from the Department of Justice. ... Now a lot of the questions are being asked by the states and being asked by the private counsel and being asked in a way that is more aggressive. If we look at clinical trials and say what is the evidence? How good is the evidence? How effective were the drug companies in policing what was going on in their clinical trials?"

"How reliable are the findings of your principle investigators when their ability to get the next assignment depends upon the number of people they recruited and the results they report? This is not an issue the FDA has looked at all that much. My expectation is that ... we're going to see more efforts to look at that in the next few years," Sheehan said.

Fraud against FDA that impacts payers is another source of cases. These issues include how a company reveals information post-approval, Sheehan said, and whether FDA would have permitted the same kind of marketing had it been aware of the new information.

Finally, Sheehan described several types of fraud that directly affect payer programs. Without fraud, would payers have purchased the drug? Or was the product worth less than the purchaser thought?

The straight FDA issue is whether a drug was approved or continued to be marketed because of fraud. This requires "a very high burden of proof because you have to get the FDA to say 'if we had known these facts, we would have acted more quickly,' which is very hard if you are a regulator to say that and to know it," Sheehan said. "But if the issue is what is the quality or value of the product, [it is] a lot easier. ... Then but for false or misleading off-label promotion, doctors would not have used this product with our patients."

"What we're seeing is the investigator goes out and knocks on the door of a doctor and says, 'Here is the information we have about drug X. This particular drug company had that information five years ago. I see that you wrote this drug for 20 patients or 100 patients that you have. Had you known these facts five years ago, would you have written this drug for these off-label indications?' In my experience, there is a significant number of doctors who will say 'No I would not have.' So now there is a theory of fraud - reliance on fraudulent representations by the company."

Other fraud that is on prosecutors' radar includes providing false or misleading information to compendia, pharmacy benefit managers and published journals as well as kickbacks to physicians and other referral sources.

- Brian Marson ([email protected])