Relinquishment of Inappropriate Off-Label Uses: The Effect of the False Claims Act

Abstract

Off-label drug prescription—the prescription of drugs for unapproved uses—relies on physicians to distinguish appropriate uses of drugs from inappropriate uses, based on available scientific evidence. In practice, however, information regarding the appropriateness of off-label uses is often sparse or ambiguous. Pharmaceutical companies are sued under the False Claims Act (FCA) for off-label promotion; these suits often reveal information regarding the appropriateness of the off-label use. This paper examines whether FCA suits can serve as a source of such information and spur relinquishment of inappropriate off-label uses. This paper first estimates the average effect of multiple FCA settlements on prescriptions and finds that FCA settlement leads to significant relinquishment of off-label uses. This paper then conducts a case study of one focal FCA case to identify heterogeneity in relinquishment by payer and information source. The results suggest that legal incentives may lead to increased heterogeneity in relinquishment by payer and that relinquishment seems more affected by FCA suit than by publication of new scientific information. These results suggest that FCA suits can help to spread information regarding appropriateness of off-label uses and call into question some of the expectations underlying current off-label regulation.

Keywords: off-label, False Claims Act, relinquishment

JEL Classification: K13, K32