Experts Predict Increased Marketing Scrutiny for Devicemakers

Devicemakers should be on the lookout for increased FDA enforcement of promotion regulations, according to attorneys from Arent Fox.

Some of the biggest healthcare fraud prosecutors in the field have been speaking publicly about impending device investigations, Linda Baumann said, speaking at an FDAnews audioconference. Since November 2006, there have been numerous warnings from prosecutors about device investigations, including off-label issues, she said, adding that approximately half of all uses of drug-eluting stents in 2004 and 2005 were off-label.

“It’s only a matter of time before the medical device industry sees almost the same amount of scrutiny in the context of enforcement as we’re seeing now in pharmaceuticals,” James Ravitz added.

Approval Claims

One area where devicemakers should exercise more caution is approval claims, he advised. It is common for device companies to claim that products are “FDA-approved” when they are in fact cleared under the premarket notification (510(k)) process, Ravitz said. Approval can only be granted for a premarket approval application, he said. A recent warning letter to Eidam Diagnostics cited the firm for claiming the FDA “approved” its thermographic systems, when in fact the devices were cleared for use by a 510(k).

Baumann pointed to a case where NuMED and its president pleaded guilty to distributing cardiac stents without premarket approval by the FDA. The company had to pay a criminal fine of $2.3 million and an additional $2.3 million to Johns Hopkins to fund a clinical trial. If the FDA approves the stent, the defendants must furnish it to providers for five years at no charge.

Another danger for devicemakers is that most off-label promotion cases come with “companion causes of action,” particularly in the case of healthcare fraud, Ravitz said. “Some may believe that off-label promotion automatically gives rise to an anti-kickback concern,” Ravitz said.
 
Baumann agreed that manufacturers should be aware of the opportunity for “me-too” litigation. This can include federal and state fraud claims, attorney general consumer fraud cases, class actions on consumer fraud, product liability and securities theories, she said.

“It’s almost always not just a question of off-label promotion, there are kickbacks and all kinds of other improprieties going on that caught the government’s attention,” she said.

Labeling Regulations

Labeling can also be a tricky area for devicemakers because it applies to materials that are not necessarily provided with a product, Ravitz said. Labeling refers to anything that “accompanies” the product, which is interpreted broadly and can include television or radio broadcasts, websites and other promotional materials.

Some manufacturers think that if information doesn’t physically accompany a product then it isn’t labeling, “but that’s not the case,” Ravitz said. An area of increased focus will likely be company and product websites, he added.

In addition, devices cleared with broad indications for use cannot necessarily be lawfully promoted for a specific indication that generally falls within the broader indication, he said.

To avoid these problem areas, device firms can take proactive steps to comply with promotion regulations, the lawyers said. This can include conducting routine audits of marketing, promotional and advertising material. Baumann advised companies to review all promotional material prior to publication and ensure that any off-label promotion issues are addressed in internal compliance manuals. She also suggested companies encourage internal reporting to prevent the development of whistleblowers.

Baumann listed potential “red flags” that companies can watch for when conducting internal evaluations, including:

• Percentage of off-label prescriptions compared with on-label;
• Small market for on-label use versus large sales force;
• Financial incentives specifically for off-label sales;
• Conference impact on physician off-label prescribing practices;
• Failure to disclose funding for articles, speeches and research;
• Involving medical liaisons in sales efforts;
• High product cost;
• Health consequences of off-label use;
• Cold calls to off-label specialists; and
• Company sales strategies and budgets regarding off-label uses.

Devicemakers should also monitor government enforcement activities. Precedent from recent enforcement cases should dictate how a device company structures its compliance program, Ravitz said.

An important part of this compliance program is to discipline violators of promotion regulations and record these actions, he said.

“One of the first questions the [Office of Inspector General] or any government investigator is likely to ask you if they come in is ‘show me the records of the fines and penalties you’ve imposed on the people that caused the problem,’” he said.

Baumann added that despite the measures companies can take to protect themselves, “there is a very large gray area where it’s hard to know which side of the line you’re on. The best advice I can give is not to get too close to that line.” — April Astor