Decade Old Device Off-Label Marketing Case Ends with Manufacturer Win

By on April 26, 2016
Posted In Uncategorized

On April 7, a Texas jury handed a victory to Abbott Laboratories in a 10-year False Claims Act litigation battle with the relator concerning the off-label use of its products by physicians.  This is the latest in several cases over the past few years that cast doubt on the viability of an off-label marketing theory to form the basis of an FCA action.

In this case, the complaint was filed by a former Guidant Endovascular Solutions sales representative in 2006, which was the same year Abbott purchased Guidant.  The relator alleged that Guidant caused the submission of false claims to Medicare for biliary stents that were FDA-approved for use in bile duct procedures.  The relator claimed that Guidant impermissibly marketed these stents to physicians for use in non-coronary vascular procedures, which rendered claims to Medicare for such procedures false and not eligible for payment.  Abbott countered relator’s claims with evidence that it was common practice in the medical community to use biliary stents in non-coronary vascular procedures and that Medicare knew for years that physicians were using stents in this manner and continued to pay the claims.  The government declined to intervene in 2010, and as is increasingly the case, the relator continued to pursue the allegations.  In an interesting twist, the AARP Foundation joined the lawsuit in 2010 in support of the relator.

Abbott won the argument before a jury, and since juries don’t explain their reasoning, it is difficult to apply this case to others.  Abbott introduced evidence of other Medicare contractors local coverage determinations that permitted coverage of the procedures based on the standards of practice in the area, which forced the relator to not pursue claims in jurisdictions covered by those contractors.  The court’s jury instructions informed the jury how to apply Medicare’s “reasonable and necessary” coverage rule, specifically noting that “[t]he FDA’s definition of ‘approved’ is not binding on CMS, its contractors, or Medicare, and does not limit Medicare’s discretion to cover any reasonable and necessary medical care.”

The intersection between FDA-approved uses, off-label marketing and Medicare coverage can be a complicated one.  As a general matter, Medicare will cover off-label uses that are consistent with generally accepted medical practice.  Physicians frequently use devices to treat conditions that are off-label on the basis of published medical research and the physician’s own experience using the device.  But, as the drug and device industry know well, the government has pursued manufacturers for allegedly improperly promoting off-label uses, exacting significant financial settlements from various companies.  This trend has been on the decline in recent years, beginning with the 2012 Caronia decision in the Second Circuit vacating a sales representative’s conviction of misbranding charges under the Food Drug and Cosmetic Act on free speech grounds.   Unfortunately for Abbott, it incurred the costs and time spent defending itself for 10 years, including the very rare event of a jury trial in an FCA case, to get to this victory.

Tony Maida
Tony Maida counsels health care and life sciences clients on government investigations, regulatory compliance and compliance program development. Having served as a government official, Tony has extensive experience in health care fraud and abuse and compliance issues, including the federal and state Anti-Kickback and Stark Laws and Medicare and Medicaid coverage and payment rules. He represents clients in False Claims Act (FCA) qui tam matters, government audits, civil monetary penalty and exclusion investigations, and Centers for Medicare and Medicaid Services (CMS) suspension, and revocation actions, negotiating and implementing corporate integrity agreements, and making government self-disclosures. Read Tony Maida's full bio.