By Todd Hobbs, Judge K.K. Legett Fellow at Washington Legal Foundation and a rising third-year student at Texas Tech University School of Law

2nd CircuitIn May, the United States Court of Appeals for the Second Circuit upheld the dismissal of a qui tam lawsuit in U.S. ex rel. Polansky v. Pfizer, Inc.  Polansky, a former Pfizer Medical Director, brought suit under the federal False Claims Act (FCA) on behalf of the U.S. government. He alleged that Pfizer submitted a false claim for Medicare payment by illegally marketing its product for an off-label use.  The Second Circuit held that the complaint at issue failed to allege any off-label promotion and affirmed the district court’s dismissal on that basis.  Federal appeals courts have not considered many FCA lawsuits related to off-label marketing allegations, making the Polansky result worth closer review.

In Polansky, the qui tam relator alleged that Pfizer violated the FCA by improperly marketing Lipitor, a statin drug that lowers cholesterol levels in patients.  Polansky argued that Lipitor was only approved for use when a patient’s risk factors and cholesterol levels fell within a framework outlined in the National Cholesterol Education Program (NCEP) Guidelines, and that any use by a patient outside that framework was unapproved and off label.

The court identified two prohibitions against off-label promotion of FDA-approved prescription drugs: 1) if the off-label marketing is false or misleading; or 2) if the off-label marketing shows that a drug is intended for such off-label use and is therefore misbranded.

The court emphasized that once FDA approves a drug, it can be prescribed by doctors for both approved and unapproved uses.  However, a drug producer cannot actively market these unapproved, off-label treatment options.  Significantly, doctors in this case only prescribed Lipitor for a wider group of patients with high cholesterol; they were not prescribing it to treat a different condition.

In analyzing Polansky’s off-label claims, the Second Circuit considered whether Lipitor’s label required compliance with the NCEP Guidelines and whether any promotion outside those Guidelines should be considered off label.  The court believed the NCEP Guidelines were merely informational rather than mandatory limitations.  The court held the Guidelines were not incorporated into Lipitor’s label, and that promotions outside of those Guidelines did not constitute off-label marketing as a matter of law.

In addition to the plaintiff’s failure to allege unlawful off-label marketing, his complaint suffered from procedural flaws.  The Second Circuit pointed to Polansky’s pleadings and highlighted their failure to offer the required level of specificity.  He did not produce the names of any doctors, any specific records, or proof of any fraud.  Hence, the complaint failed to plausibly allege any false claims under Federal Rule of Civil Procedure 9(b).

Polansky made a faulty assumption in alleging that any of the participants in the relevant transactions would have knowingly or impliedly certified that any prescription for Lipitor was for an on-label use.  The Second Circuit was thus doubtful that the defendant caused a false claim to be submitted.  The court distinguished between “marketing a drug for a purpose obviously not contemplated by the label” and “marketing a drug for its FDA-approved purpose to a patient population that is neither specified nor excluded in the label.”

Finally, the court emphasized that the FCA is not a replacement for the FDA’s regulatory authority:

 The False Claims Act, even in its broadest application, was never intended to be used as a back-door regulatory regime to restrict practices that the relevant federal and state agencies have chosen not to prohibit through their regulatory authority.  It is the FDA’s role to decide what ought to go into a label, and to say what the label means, and to regulate compliance.

Polansky v. Pfizer is a win for pharmaceutical companies; and hopefully it will lead to broader relief across the pharmaceutical industry.  Although this Second Circuit ruling only applies in New York, Connecticut, and Vermont, it is very possible that the line of reasoning applied here could influence other courts facing similar off label cases in the future.

Between 2004 and 2014, pharmaceutical companies facing debarment settled over 30 FCA cases involving off-label promotion allegations, with recoveries ranging from $345 million to $3 billion.  If a company or its products are debarred, the company cannot receive government reimbursements, even for legitimate products and services.  Since the government is the largest payer of healthcare costs, debarment ordinarily means losing the company’s largest customer.

With such high stakes, it’s no wonder pharmaceutical companies feel pressure to settle FCA cases.  And it’s a small wonder that Pfizer did not fold.  A majority of such cases do settle early in the process.  Given the risks it faced, Pfizer deserves credit for staying the course and seeing this case through the appeal process.  Perhaps its vindication will embolden other companies to do the same.