Punishing Pharmaceutical Companies for Unlawful Promotion of Approved Drugs: Why the False Claims Act is the Wrong Rx
This Faculty Working Paper has been updated and posted within the Georgetown Law Faculty Publications series in the Scholarly Commons. It is currently available at http://scholarship.law.georgetown.edu/facpub/439/
This article criticizes the shift in focus from correction and compliance to punishment of pharmaceutical companies allegedly violating the Food, Drug, & Cosmetic Act (FD&C Act) prohibitions on unlawful drug promotion. Traditionally, the Food and Drug Administration (FDA) has addressed unlawful promotional activities under the misbranding and new drug provisions of the FD&C Act. Recently though, the Justice Department (DOJ) has expanded the purview of the False Claims Act to include the same allegedly unlawful behavior on the theory that unlawful promotion “induces” physicians to prescribe drugs that result in the filing of false claims for reimbursement. Unchecked and unchallenged, the DOJ has negotiated criminal and civil settlements with individual pharmaceutical companies ranging from just under ten to hundreds of millions of dollars. In part, companies settle these cases to avoid the potential loss of revenue associated with the exclusion regime administered by the U.S. Department of Health and Human Services, under which companies risk losing the right to participate in federal health care programs. Even more disturbing, these settlements allow DOJ to circumvent judicial review of its enforcement approach, preventing any type of accountability for its legal theories or procedures. This article discusses the traditional enforcement methods employed by the FDA as well as the more recent DOJ prosecutions under the False Claims Act. Although it concludes that the FD&C Act should provide the sole means for prosecuting unlawful drug promotion, it also suggests that when prosecuting pharmaceutical companies under either Act, the government must avoid the temptation to mine companies for large settlements in lieu of developing a more coherent and responsible enforcement strategy.