Advertising and promotion

Regulation

Summarise the rules relating to advertising and promotion of medicinal products and medical devices, explaining when the provision of information will be treated as promotional. Do special rules apply to online advertising?

The Food and Drug Administration (FDA) has responsibility for regulating the labelling of drugs and devices, as well as the advertising of prescription drugs and restricted devices. In addition to formal regulations, there is also a large body of FDA guidance documents related to promotional labelling and advertising for drugs and devices. Under the Food, Drug, and Cosmetic Act (FDCA), regulations and related guidance, products can be deemed misbranded in a number of ways, including if the promotional materials are false or misleading in any regard, improperly minimise or omit risk information, or fail to include material information. Distribution of misbranded products is a prohibited act under the FDCA, and the FDA typically enforces regulatory requirements with respect to promotional labelling and advertising by issuing warning letters and untitled letters to companies.

The FDA has issued guidance on the application of the above principles in the context of the internet and social media regarding how risk information can be conveyed in character-limited social media platforms and how companies can seek to correct misinformation in social media. Finally, the pharmaceutical and medical device trade associations maintain codes of conduct relating to direct-to-consumer advertising.

Not all communications by manufacturers are subject to such restrictions and requirements. Communications that are not promotional in nature (eg, investor communications and bona fide scientific exchanges) are not within the FDA’s jurisdiction. However, certain communications, such as press releases, can be deemed promotional, depending on how they are utilised and the content thereof. Companies typically maintain review processes and compliance controls to delineate between such types of communications in a consistent and compliant manner.

Pursuant to the Memorandum of Understanding 225-71-8003 entered in 1971 between the FDA and the Federal Trade Commission (FTC), the FTC has primary responsibility for regulating the advertising of over-the-counter (OTC) drugs and non-restricted devices, among other products. Generally, under FTC statutes and regulations, advertising must be truthful and not misleading, and claims must be adequately substantiated.

Inducement

What regulations exist to discourage the provision of inducements to healthcare professionals to prescribe, sell, supply or recommend use of a particular medicinal product or medical device?

The primary authority governing such inducements in the United States is the federal Anti-Kickback Statute (AKS), which prohibits payments to providers that could influence the practice of medicine and prescribing. The AKS is a criminal intent-based statute, and it is administered by the Department of Health and Human Services Office of Inspector General and the Department of Justice. The AKS is a broad statute and its implementing regulations also contain specific safe harbours for certain arrangements. There are also advisory opinions that provide additional relevant interpretation and guidance related to the AKS. If an arrangement does not meet the requirements of a safe harbour, the arrangement will be evaluated based on the facts and circumstances to determine AKS risk and whether the arrangement is likely to violate the AKS. Thus, relationships with providers and institutions that submit claims to federal healthcare programmes need to be examined carefully, structured in accordance with the contours of the AKS and documented in written agreements.

Anti-kickback laws also exist on a state level and many state anti-kickback laws are similar to the AKS. However, certain state anti-kickback laws govern claims submitted to all payors as opposed to only federal health care programmes.

Reporting transfers of value

What requirements apply to recording and publishing details of transfers of value to healthcare professionals and organisations by companies marketing medicinal products or medical devices?

Congress passed the Physician Payments Sunshine Act (the Sunshine Act) as part of the Affordable Care Act in 2010 to increase transparency concerning the financial relationships between healthcare practitioners and manufacturers of reimbursable drugs, biologicals, medical devices and medical supplies (covered products). The Sunshine Act requires applicable manufacturers to annually disclose to the Centers for Medicare and Medicaid Services (CMS) any payments or other transfers of value to certain healthcare providers and healthcare facilities. In turn, CMS publishes this data on a publicly searchable Open Payments database. Manufacturers can be subject to financial penalties if they fail to report such payments.

Enforcers

Describe the bodies involved in monitoring and ensuring compliance with advertising controls for medicinal products and medical devices, distinguishing between any self-regulatory framework and control by the authorities.

The FDA maintains three centres for regulating drug, biological and medical device products:

  • the Center for Drug Evaluation and Research, which includes the Office of Prescription Drug Promotion regulating most drug and biological promotion;
  • the Center for Biologics Evaluation and Research, which includes the Advertising and Promotional Labeling Branch regulating the promotion of certain biological products, such as cell and gene therapies, blood products and vaccines; and
  • the Center for Devices and Radiological Health, which includes the Office of Product Evaluation and Quality overseeing the total product lifecycle of medical devices.

 

These centres issue guidance documents, investigate complaints, conduct surveillance on promotional activities (eg, at scientific meetings and on social media platforms), review materials when submission is required and pursue enforcement when appropriate.

The FTC’s Division of Advertising Practices has a primary role with respect to the advertising of OTC drug products and non-restricted medical devices.

While the primary trade associations in this area – such as the Pharmaceutical Research and Manufacturers of America (for the pharmaceutical industry) and the Advanced Medical Technology Association (for the medical device industry) – maintain various compliance codes, they do not adjudicate promotional disputes. The National Advertising Division of the BBB National Programs maintains such mechanisms, but it is largely focused on consumer product claims.

Sanctions

What are the possible financial or other sanctions for breach of advertising and promotional controls for medicinal products or medical devices?

A product that is promoted or advertised in a false or misleading manner is considered misbranded and, as such, is in violation of the FDCA. If the FDA observes improper promotional activities, the FDA may provide the responsible entity or individual with an untitled letter or warning letter to provide them with an opportunity to voluntarily correct the violations. Failure to respond or take adequate corrective actions can result in the FDA taking enforcement action against the entity or the individual, or both, such as by seeking a court-ordered injunction, ordering a product seizure (carried out by US marshals), or bringing a civil regulatory or criminal enforcement action. Marketing FDA-regulated products in a violative manner can also result in liability under statutes such as the False Claims Act due to inducement of claims for government payment.

Sale and supply

Regulation

Are there special rules governing the dispensing or sale of particular types of medicinal products or medical devices?

Under certain circumstances, the Food and Drug Administration (FDA) may impose specific restrictions on the sale, distribution or use of a specific drug or device. For drug products with known or potential serious risks, the FDA may require as a condition of approval or distribution that the manufacturer implements risk evaluation and mitigation strategies (REMS). Most REMS include a communication requirement on the specific safety risks that the REMS is intended to mitigate and some include additional restrictions or requirements that healthcare practitioners must follow before prescribing or dispensing a drug to a patient (known as Elements to Assure Safe Use).

For practitioners who wish to dispense drugs that are also regulated by the Drug Enforcement Administration (DEA) as controlled substances, they must first obtain a DEA registration for each principal place of business or professional practice where controlled substances are dispensed. Medical devices may also be made subject to certain dispensing or sale restrictions, or conditions of use, as part of the pre-market approval order.

Online supply

What laws and guidelines govern online dispensing, sale and supply of medicinal products and medical devices?

Over-the-counter drugs and devices may be sold online directly to end users. Prescription drugs and devices require a prescription from a licensed healthcare practitioner. Online orders are not exempt from this requirement.

Various federal and state laws apply to online pharmacies and suppliers. This includes associated telemedicine functions, such as a federal prohibition on the prescribing of controlled substances online (although the DEA has made some exceptions while the covid-19 pandemic is ongoing) and a wide array of rules at the state level relating to valid prescriptions, licensing, practice of pharmacy, reciprocity among jurisdictions and other areas.

Pricing and reimbursement

What are the controls imposed on pricing of medicines and medical devices and reimbursement by national social security systems that are applicable to manufacturers, distributors and pharmacists?

In the United States, for most products, device and biopharma manufacturers establish a list price on their own and, from that price, public and private payers receive discounts through contracts. These discounts are both mandatory (in government programmes) and voluntary (for placement on the formulary).

While there are complex systems governing issues such as providing best price and rebates on pricing in certain government programmes, and government programmes may consider data in coverage and reimbursement decisions, many such programmes are obligated to pay for all covered drugs while controlling use through formulary reviews, tiering, required price concessions and other mechanisms. Many use a comparative effectiveness assessment process that is decentralised and conducted by the insurer. Various formulary and other mechanisms are used to control use accordingly. Patients are asked to pay a portion of their prescription costs, including deductibles and co-insurance ranging to up to 40 per cent of the drug’s listed price. Value-based agreements where payment varies positively with better health outcomes or lower costs, which may also include risk sharing for costs, have grown as a result of incentives in the Affordable Care Act in particular as well as private market demand to demonstrate value and control cost. The Inflation Reduction Act of 2022 allows the federal government to set the price for drugs in the Medicare programme and creates a financial penalty for increasing the list price of a drug above the rate of consumer inflation.