In November, we reported on the Food and Drug Administration’s (“FDA”) decision to collect feedback regarding whether drug and device manufacturers should be allowed to promote their products for uses outside of their FDA-approved treatments (i.e., “off-label”). See article. As we previously reported, the FDA’s decision to hold a public hearing on the issue marked a significant shift in the agency’s enforcement regime that had prohibited off-label advertising since the mid-1960s. Id. Recently, Arizona became the first state to pass legislation advancing the issue one step further by sanctioning the “truthful promotion of an off-label use of a drug, biological product or device.” See Arizona HB 2382. The practical impact of Arizona’s new “Free Speech in Medicine Act,” however, remains uncertain.
The Goldwater Institute was fundamental in advocating for Arizona’s HB 2382, ultimately introduced by Rep. Phil Lovas. Indeed, the impetus behind the new law is closely related to other Goldwater Institute-led resolutions such as “right-to-try” laws, which given terminally ill patients greater access to experimental drugs that are not yet fully approved by the FDA. See article. Similar to those laws, a main goal of HB 2382 is to de-regulate the flow of information between pharmaceutical manufacturers and doctors. Significantly, the law does not yet allow for manufacturers to advertise such off-label uses directly to the public.
HB 2382 is comprised of five main sections. Section A affirmatively permits the truthful promotion of an off-label use. Section B explains that health care insurers and other third-party payors are not required to provide coverage for the cost of any off-label uses. Notably, Sections C – E disallow enforcement actions against those engaging in truthful promotion of off-label uses as follows:
- Section C: prohibits state employees or agents from prosecuting those engaging in truthful promotion of off-label uses.
- Section D: prohibits the Arizona State Board of Pharmacy, Arizona Medical Board, Arizona Board of Osteopathic Examiners in Medicine and Surgery and the Department of Health Services from revoking, failing to renew or taking other enforcement actions against the license of a pharmaceutical manufacturer or its representative, a health care institution or a physician for the same.
- Section E: prohibits the state and its political subdivisions from using personnel or financial resources to enforce or cooperate with the federal government’s attempt to enforce or prosecute pharmaceutical manufacturers or its representatives for engaging in truthful promotion of an off-label use.
Such enforcement actions now prohibited in Arizona are a hallmark of FDA regulation in the pharmaceutical industry. Such off-label promotion “has been the subject of significant health care fraud enforcement efforts by the United States Department of Justice and the States’ attorney general using the Federal False Claim Act.” See Medicare/Medicaid Fact Sheet. Prosecution pursuant to the False Claims Act permits penalties up to three times the amount of damages plus additional penalties per false claim. Thus, pharmaceutical manufacturers charged with such off-label promotion often enter into settlements with the government for significant sums of money. For example, in 2011, an Irish pharmaceutical company agreed to pay $102 million to resolve civil allegations under the False Claims act related to the company’s promotion of its drug for a variety of uses not federal-approved. See DOJ Press Release.
The actual impact of Arizona’s new legislation aimed at de-regulating—and de-criminalizing—truthful off-label promotion may be limited. While the state law effectively removed state penalties, the FDA still dictates off-label promotion and has the authority to prosecute non-compliance under federal law. Moreover, as a practical matter, most large pharmaceutical manufacturers operate across jurisdictions. Faced with the potential for significant liability, many will likely continue to operate within the constraints of federal law and the laws of the other 49 states where such off-label promotion is still prohibited.
Arizona lawmakers, and the Goldwater Institute, hope the new Arizona law will signal a public desire to shift FDA policy regarding truthful off-label promotion and encourage the Agency to relax existing restrictions between manufacturers and doctors. We will continue to monitor whether other states choose to follow Arizona’s example to encourage the FDA to move towards permitting the truthful promotion of off-label uses. Also, stayed tuned for future posts regarding the federal preemption implications of Arizona’s HB 2382.