Side Effects: State Anti-Fraud Statutes, Off-Label Marketing, and the Solvable Challenge of Causation
53 Pages Posted: 7 Oct 2014 Last revised: 2 Dec 2016
Date Written: October 6, 2014
While the American public remains preoccupied with the lurching implementation of the Affordable Care Act, the regulation of pharmaceutical companies for their off-label marketing and promotion of drugs is a regulatory environment within the health industry that seems to be in wild flux. Following the Second Circuit’s decision in U.S. v. Caronia, commentators and providers seem unclear about the future of federal regulation in this area, with the FDA seeking to minimize the opinion, and pharmaceutical companies celebrating its impact. Much of the understandably spirited reaction to the Caronia case has omitted a discussion of the relevant and applicable state-law remedies at the disposal of state attorneys general that seek to punish and prevent the off-label marketing of pharmaceutical drugs. Of particular import, the years-long saga of allegations surrounding Johnson & Johnson (and its subsidiary, Janssen) and its allegedly off-label marketing of the powerful antipsychotic drug, Risperdal, have illustrated the potential of fraud-based state regulation of off-label marketing. Indeed, when an Arkansas jury imposed a $1.2 billion judgment against the pharmaceutical giant, all took pause, and — even though the jury verdict was ultimately overturned — it illustrated the potential for wide liability at the state level for pharmaceutical companies following allegedly deceptive marketing practices.
Besides opening the potential for more state lawsuits in this area, this added attention has also exhibited the still largely unsettled and confusing analysis that occurs when courts review allegations that off-label marketing “caused” a physician to write a prescription and harmed the state Medicaid programs. The courts’ conceptions of causation in these cases seem to rely on a view of the physician as impenetrably independent — flying in the face of social science research, the financial success of off-label marketing, and day-to-day pressures on the physicians imposed by the modern administration of health care delivery. Courts cling to these views to the detriment of these states’ Medicaid programs, and indeed, to the benefit of pharmaceutical companies allegedly engaged in off-label marketing. As a result, the causation question has imposed a substantial roadblock to liability at the state level.
Presenting alternative conceptions of causation and evidence to dispute the independence of physicians, this piece advocates the application of well-worn causation principles to these cases, borrowed primarily from federal courts and the common law of torts to make the argument that states can regulate off-label marketing using these remedial anti-fraud statutes. Ultimately, this piece seeks to unhinge state litigation from the outmoded view of impenetrable physician independence and open up a viable alternative regulatory path in an attempt to prevent the overwhelmingly lucrative practice of deceptive off-label marketing.
Keywords: health law, fraud and abuse, causation, tort law, health care finance
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