Legal: Shifting Perspective on Off-Label Promotion - Pharmaceutical Executive


Legal: Shifting Perspective on Off-Label Promotion
A recent court case points to the government's shifting perspective on how it prosecutes companies for promoting off-label. Instead of criminal charges, hefty corporate integrity agreements might be in store.

Pharmaceutical Executive

The federal government then initiated its own investigation. It alleged that Serono engaged in two ways in improper conduct aimed at creating a bigger market for Serostim. First, Serono attempted to promote Serostim for lipodystrophy, an unapproved use. Second, Serono attempted to expand the definition of AIDS wasting to include a loss of body cell mass (BCM), despite an absence of objective weight loss. Serono promoted this new wasting theory through use of bioelectrical-impedance-analysis (BIA) devices that purported to compute a person's BCM. Serono sales reps used the devices to perform BIA tests on patients, provided test results to physicians and patients, and in some instances, interpreted the test results for the purpose of diagnosing wasting and determining whether the patient needed Serostim.

In October 2005, Serono settled and pleaded guilty to two criminal conspiracy charges: conspiracy to introduce into interstate commerce adulterated medical devices (the BIA devices, which had not been FDA-approved for such use), with intent to defraud and mislead; and conspiracy to offer illegal remuneration to physicians to induce them to refer individuals to particular pharmacies to fill Serostim prescriptions, for which payments were made under state Medicaid programs. As part of the plea and settlement agreements, Serono agreed to pay $704 million in criminal fines and civil payments, and enter into a CIA with OIG.

Criminal vs. Civil Charges

While the government previously charged Pfizer with criminal misbranding violations under the FDCA, it did not charge Serono with any criminal misbranding violations, and Serono did not admit criminal liability with respect to such allegations. Although the government alleged in the civil settlement agreement that Serono had engaged in off-label promotion of Serostim, it entered into a side agreement with Serono, specifically declining criminal prosecution for, among other things, off-label promotion of the AIDS wasting drug.

The omission of criminal charges for off-label promotion of Serostim in Serono is somewhat surprising, because the government's earlier plea and settlement agreement with Pfizer sent a strong signal that it would bring criminal charges against companies engaged in off-label marketing practices. It raises the question as to whether the government's view of the scope of criminal liability for off-label marketing is changing.

Indeed, Serono clearly sends the message that civil consequences for off-label marketing will be severe for the pharma industry. The criminal fine of almost $137 million imposed in the Serono settlement pales in comparison to the civil portion of the settlement ($567 million), which was based on off-label marketing allegations. In addition, the Serono CIA is more onerous than Pfizer's in its application to off-label marketing practices.

Off-label marketing is likely to remain a focus of OIG's investigative efforts, and equally likely are future settlements and CIAs involving onerous off-label marketing restrictions and obligations. Even if the number of criminal misbranding prosecutions for off-label marketing decreases, it is likely that these practices will be deterred by the threat of enormous civil penalties and onerous CIAs.

Jack Cinquegrana is an attorney with Choate, Hall & Stewart in the firm's government enforcement and healthcare groups. He can be reached at

Diana K. Lloyd is an attorney with Choate, Hall & Stewart in the firm's government enforcement and healthcare groups. She can be reached at


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