Truth, Falsity, and Fraud: Off-Label Drug Settlements and the Future of the Civil False Claims Act

Joan H. Krause The pharmaceutical industry may be losing the battle of public opinion, but it has won important victories in the war over First Amendment commercial speech. In December 2012, the Second Circuit held in United States v. Caronia that the misbranding provisions of the Food, Drug, and Cosmetic Act could not prohibit a sales representative’s truthful statements promoting off-label uses of his company’s products. At the same time, a parallel area of pharmaceutical litigation has curiously remained almost untouched: Civil False Claims Act (FCA) settlements based on allegations that manufacturers caused false claims to be submitted by promoting their drugs off-label. Yet logic suggests that if manufacturers have a First Amendment right to discuss off-label drug uses, claims submitted when drugs are prescribed for those uses should not be considered false. This inconsistency is problematic and likely unsustainable. If manufacturers are emboldened by Caronia to challenge off-label FCA suits, the focus likely will be on the truth of the company’s statements. Despite its name, however, FCA is unsuited to addressing disputes over medical and scientific data. To maintain the integrity of this key anti-fraud enforcement tool, it is crucial to separate the truth of the claims for payment from the truth of the manufacturer’s underlying scientific statements. Because Medicare and Medicaid coverage determinations rely heavily on FDA approval, however, those issues are inextricably intertwined. This article explores why off-label promotion has been treated inconsistently in these contexts, and how this trend highlights the limitations of the FCA as a panacea for health care fraud.