Since the Neurontin® settlement in 2004, there have been at least 12 federal False Claims settlements that have focused in whole or in part on off-label promotion of drugs. And while there are only a few state settlements of off-label allegations, it is already clear that the states are going to have a big impact. The federal Corporate Integrity Agreements (CIAs) that are part of the federal settlements require companies to adopt policies to control various aspects of promotional conduct, but they provide little guidance regarding the necessary content of the specific policies. To establish the parameters of lawful conduct, companies need to turn to the facts of individual settlements and U.S. Food and Drug Administration (FDA) and U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) guidance, which in many cases is quite limited and quite out of date.

With regard to some areas, the lack of clear guidance is not a major problem, but in others it represents a serious hurdle because companies must define the parameters of appropriate conduct in areas of “clear ambiguity,” for instance, what really are the parameters of the FDA’s “scientific exchange”? Now, however, coming from state settlements is some clarity surrounding the parameters under various FDA-regulated activities. One wonders why states are doing this as opposed to relevant federal officials (who should be a stronger voice for the public health aspects of these policies as compared to law enforcement). These settlements, nonetheless, provide useful insight because they are beginning to flesh out acceptable boundaries of conduct, at least in the eyes of state regulators.

First we identify from the Cephalon CIA1 some fundamentally new and important changes to the promotional provisions of standard CIAs. Then we review the developing state standards set forth in the Merck settlement in Oregon2 and the Eli Lilly settlement in Illinois. 3 In addition, we will highlight certain key provisions and discuss their potential implications.


On September 29, 2008, Cephalon reached a $425 million global settlement involving both criminal and civil allegations with the U.S. Department of Justice (DOJ) and the AGs of 14 states and the District of Columbia to resolve investigations regarding promotional practices. The resulting CIA between Cephalon and the OIG includes many provisions that are typical of past CIAs, but there are several new elements.

Public Disclosure of Physician Payments

Cephalon agrees to publicly disclose payments to physicians on a national scale — something to date only required by a handful of state governments and in one deferred prosecution agreement by a medical device company in the District of New Jersey. Senator Grassley (R-IA) has signaled congressional interest in disclosure of payments to physicians with proposed legislation.4 In Phase I, by January 31, 2010, Cephalon must post payments to physicians for service as a speaker, for participating in speaker training, or for serving as a consultant. Phase II begins March 31, 2011, and requires Cephalon to post all payments to physicians. Cephalon also agrees to report “direct and indirect” payments. (Cephalon at 27-29).

Board of Directors/Senior Management Personal Responsibility

Cephalon agrees that its directors and senior managers (broadly defined) will annually certify to its compliance with the provisions of the settlement. The board of directors must adopt a resolution that it has made a reasonable inquiry into the operation of the Compliance Program and based on that inquiry, the board has concluded that Cephalon has implemented an effective Compliance Program to meet federal health care program requirements, FDA requirements, and the obligations of the CIA. Individual board members must sign a statement that he or she agrees with the resolution. Senior managers must certify to their understanding of and compliance with federal health care program requirements, FDA requirements, and the obligations of the CIA as those requirements relate to the functional area under the manager’s supervision. This Sarbanes-Oxleylike approach seems calculated to assure that the settlement is not treated as a cost of doing business by the corporation with no individual liability, but rather is intended to create a significant change in corporate culture and behavior for which senior individuals will be held accountable. (Cephalon at 5-6, 35-36).

Health Care Professional Letter

Finally, Cephalon agrees to mail to all of its customers notice of the settlement — a “dear health care professional” letter outlining its corporate wrongdoing and advising health care professionals how to self-report violations. (Cephalon at 26).


Since Neurontin®, the off-label promotion portions of the 12 CIAs largely are the same with incremental changes. The focus on certain areas such as call lists and incentive compensation have expanded in recent settlements with the Cephalon provisions the most comprehensive. Cephalon also adds several major new provisions. The obligation to disclose physician payments is part of an inevitable trend toward comprehensive and full disclosure of these activities. The combination of these settlements, now and in the future, voluntary efforts by companies, and state laws may make the Grassley bill largely unnecessary. The board of directors and senior management certifications may be the most significant new provision. It will require vigilant and ongoing compliance activities once an agreement is reached with the government and these personal resolutions/certifications could carry significant personal consequences if not fulfilled.


The states have taken a more aggressive enforcement stance in the area of off-label promotion by pharmaceutical companies in 2008. Merck ($58 million) and Eli Lilly ($62 million) have settled civil claims of off-label promotion with a collection of states’ Attorneys General under the states’ consumer protection statutes. The terms of these settlements focus on curbing alleged off-label promotion behaviors similar to those that have been the subject of previous settlements between the pharmaceutical industry and the federal government. Of note, while federal CIAs extend for a term of five years, the obligations in the Lilly settlement run for six years and the requirements of the Merck settlement are effective for a range of seven to 10 years. Also, some provisions in the state settlements are product specific while others apply to the settling companies across their operations. These cases show that the states are stepping in to establish rules in the absence of clear federal rules and guidance on key elements including:

Continuing Medical Education (CME) 

  • Disclosures 

− Lilly must disclose all of its grants, including CME grants, regarding Zyprexa® on its online grants registry. (Lilly at 14; Lilly is already doing this).

− Contracts with CME providers must require the providers to disclose to CME audiences any financial relationships between Lilly and the CME faculty or speakers. (Lilly at 15; already in Accreditation Council for Continuing Medical Education (ACCME)/FDA guidance). 

− Merck must require promotional speakers to disclose their relationships with the company to any CME provider or CME audience to whom they may present if the product the speaker promoted for Merck is in the same therapeutic category as the subject of the CME program. This applies for 12 months after the last promotional service to Merck is rendered. (Merck at 8; NEW, in part — this is the first time a company is required to ensure that its promotional speakers make this disclosure at all CME events, regardless of whether the activity is sponsored by them).

  • Operations

− The Grants Office of Lilly must manage the approval of all CME funding requests without the involvement of sales and marketing. (Lilly at 14; consistent with OIG Guidance).

− Lilly shall not suggest, control, or attempt to influence selection of the specific title, content, speakers, or audience for CME, consistent with ACCME guidelines. (Lilly at 15; this will be key as the ACCME guidelines change to a state of no contact between commercial supporters and providers).

− Merck shall comply with the ACCME Standards for Commercial Support. (Merck at 8; this will be key as the ACCME guidelines evolve further over the next year).

− Lilly cannot fund the repetition or re-distribution of a program it knows promotes Zyprexa® for off-label uses. (Lilly at 15; NEW, in part — FDA guidelines currently identify the frequency of activity as a factor in determining whether it is independent education).

− Merck is prohibited from funding CME if the company knows that a speaker at the CME has been a promotional speaker in the past 12 months at a Merck-sponsored event related to the class of drugs to be discussed in the CME. (Merck at 8; NEW, but ACCME has proposed a similar requirement for CME providers).

Analysis – CME

Prosecutors expect pharmaceutical companies to disclose any connections between a CME presenter and the sponsoring company. The Lilly and Merck settlements take different approaches to require certain disclosures. Disclosure policies aimed at meeting the governments’ expectations should address how recently and how often a potential speaker engaged in promotional activities for the sponsoring company. A particularly uncertain provision is the prohibition on repetitive support if a speaker is “prone to” off-label use. Does this mean that any fair and balanced presentation of off-label information triggers this prohibition or only those that are not so and deemed promotional?

Companies will have to continue to conform their CME activity to ACCME standards as they relate to both commercial supporters and providers, and those standards appear to be shifting toward prohibiting contact between companies and CME providers and speakers. ACCME standards have evolved substantially over the last 18 months. Currently, ACCME is considering several important proposals made this summer, including prohibiting accredited providers from receiving requests for proposals or internal grant criteria from commercial interests and from using speakers or faculty who are also paid to create or present promotional materials on behalf of commercial interests.

Medical Information 

  •  Medical Letters/Medical References 

−Medical personnel must have ultimate responsibility for developing the medical content of all Medical Letters and Medical References. Additional approvals may be provided by regulatory and legal. Sales and marketing cannot be involved in the development of medical content. (Lilly at 9; generally understood, but not previously stated explicitly).

− Materials must include clinically relevant information to provide scientific balance, must be unbiased and non-promotional, and must be distinguishable from other promotional materials. (Lilly at 9; similar to the FDA’s unsolicited request informal policy5).

− Sales representatives are prohibited from distributing Medical Letters or Medical References. (Lilly at 10; NEW).

  • Unsolicited Requests for Off-Label Information

− The company must inform requestors of the drug’s FDA-approved indication(s) and/or dosage. (Lilly at 10; NEW).

− Only medical personnel may respond in writing to requests for off-label information. (Lilly at 11; NEW – some companies allow sales representatives to respond in writing, e.g., scripts or slide presentations, to unsolicited requests under carefully controlled circumstances).

− Nonmedical personnel may respond orally to requests for off-label information only by noting the presence or absence of published studies concerning the off-label topic or acknowledging whether the topic is an area of research and offering to ask that medical personnel follow-up with the requestor. (Lilly at 11; NEW).

− Under most circumstances, only medical personnel may disseminate reprints containing off-label information. Nonmedical personnel may disseminate these materials only in the event of an extraordinary circumstance in which there is a medical necessity to have them disseminate a reprint directly to a health care professional, and the President of Lilly USA must give approval in such a circumstance and notify the signatory AGs. (Lilly at 12; NEW).

Analysis – Medical Information

Medical communications pose a compliance challenge given the increasing demand by health care providers for information. In Lilly there is an explicit reference to the need for additional review of non-promotional medical communications by regulatory and legal — essentially a non-promotional review committee. Company policies and procedures should prevent improper influence by sales and marketing by restricting the personnel authorized to engage in the development and dissemination of medical communications. Companies must carefully consider what role, if any, sale representatives can or should play in disseminating medical communications, especially reprints. Federal guidance in these areas is scant.

The states have stepped in with specific organizational requirements aimed at addressing these issues, but the state requirements are not always consistent with FDA guidance. For instance, the Lilly settlement prohibits sales representatives from disseminating reprints while the FDA Draft Guidance released nine months earlier specifically contemplates distribution of reprints by sales representatives.6 The FDA has never explicitly prohibited sales representatives from responding to unsolicited questions, but the terms in Lilly make it clear that the states want to severely limit sales representatives’ role in responding to unsolicited questions.

Also, the definitions in Lilly of “off-label” and “reprints containing off-label information” clash with the FDA’s historical interpretation and guidance. The Lilly settlement defines “off-label” narrowly as “a use not consistent with the indications section of the Zyprexa® Labeling approved by the FDA at the time information regarding such use was communicated.” Past FDA enforcement for off-label promotion has included information beyond the labeled indication, such as unapproved dosage regimens. Where Lilly gives a broad definition for reprints appropriate for dissemination, “articles or reprints from peer reviewed journal or reference publication,” the FDA Draft Guidance requires that reprints “should address adequate and well-controlled clinical investigations that are considered scientifically sound by experts with scientific training and experience to evaluate the safety or effectiveness of the drug or device.” These inconsistencies will force companies to carefully evaluate their policies and procedures.

Clinical Trial Database

− Lilly must register clinical trials and submit results as required by FDAAA,7 as well as registering Lilly-sponsored Phase II-IV Zyprexa® clinical trials beginning after July 1, 2005, and posting results of Lilly-sponsored Phase II-IV Zyprexa® clinical trials completed after July 1, 2004. (Lilly at 17-18; NEW).

− Merck must register clinical trials and submit results as required by FDAAA, as well as submitting clinical trial results of FDA-approved Merck products that were initiated after July 1, 2005, as soon as practicable to the clinical trials database. (Merck at 4-5; NEW).


Both state settlements require the companies to submit a backlog of studies to the federal Clinical Trials Database. This differs from federal requirements that apply to studies ongoing or initiated after December 30, 2007 — 90 days after FDAAA became effective.

Advertising and Promotion Practices 

  • Data Presentation

− Merck and Lilly are prohibited from promoting their products in any of the following false and misleading ways, taken from federal prescription drug advertising regulations:

• Presenting favorable information or conclusions from a study that is inadequate in design, scope, or conduct to furnish significant support for such information or conclusions (see 21 C.F.R. § 202.1(e)(7)(i));

• Using statistical analyses and techniques on a retrospective basis to discover and cite findings not soundly supported by the study, or to suggest scientific validity and rigor for data from studies the design or protocol of which are not amenable to formal statistical evaluations (see 21 C.F.R. § 202.1(e)(7)(iii));

• Presenting information from a study in a way that implies that the study represents a larger or more general experience with the drug than it actually does (see 21 C.F.R.§ 202.1(e)(6)(v));

• Using statistics on numbers of patients, or counts of favorable results or side effects, derived from pooling data from various insignificant or dissimilar studies in a way that suggests either that such statistics are valid if they are not or that they are derived from large and significant studies supporting favorable conclusions when such is not the case (see 21 C.F.R. § 202.1(e)(6)(xiv)); and

• Using the concept of statistical significance to support a claim that has not been demonstrated to have clinical significance or validity, or fails to reveal the range of variations around the quoted average results. (see 21 C.F.R. § 202.1(e)(7)(ii)) (Lilly at 18; Merck at 6-8).

− Merck is also required to accurately reflect the methodology used to conduct a clinical trial. (Merck at 6-7; NEW). 

  • Patient Profiles

− When presenting patient profiles/types based on selected symptoms of the FDA-approved indications in promotions for Zyprexa®, Lilly must include a clear and conspicuous statement of the FDA approved indications in the same spread or slide. (Lilly at 8; NEW). 

  • Direct-to-Consumer (DTC) Advertising

− Merck agrees to delay DTC advertising for any product indicated for pain relief if the Director of the Center for Drug Evaluation (CDER) recommends such a delay in writing. This provision remains in effect for a period of 10 years. (Merck at 6; NEW).

− Merck also agrees to submit all new DTC advertisements for any Merck product to the FDA for pre-review, to wait to run the advertisements until the FDA responds, and to modify advertising consistent with the FDA’s comments. This provision remains in effect for a period of seven (7) years. (Merck at 6; NEW, although pre-submission is consistent with voluntary Pharmaceutical Research and Manufacturers of America (PhRMA) DTC Guiding Principles8).

  • Sampling

− Samples may be distributed only to clinical practices with patients consistent with the product’s current labeling. (Lilly at 17; NEW).

Analysis – Advertising and Promotion Practices

Companies frequently segment patient groups and create patient profiles based on defining characteristics of each group consistent with the approved labeling. Regarding sampling, some companies do respond in appropriate ways to requests for samples from health care providers without considering the requestor’s specialty or practice as long as the company did nothing to prompt such requests. Under Lilly, there is no such thing as a lawful sample of Zyprexa® to a health care professional whose practice is not “consistent with the product’s current labeling.” These are significant changes that require companies to reevaluate their policies and procedures in both areas. It is also the kind of “policy” that unfortunately does not consider the public health consequences or the clear intrusion on the practice of medicine.

Disclosure of Payments to Physicians

− Lilly must make disclosures of payments to U.S. based consultants (non-Lilly health care professionals engaged to advise regarding marketing and promotion of Zyprexa®) and promotional speakers for Zyprexa® in excess of $100 each year to the states’ AGs. For each individual paid, Lilly must disclose:

• total compensation from Lilly;

• total number of speaker events paid for by Lilly;

• the state the individual gave Lilly for contact purposes; and

• the state(s) where the speaker gave promotional presentations. (Lilly at 16).

Analysis – Disclosure of Payments to Physicians

The disclosure requirements in Lilly are far less public than those in Cephalon and various state disclosure laws, which require posting of payments to physicians on a Web site. The Grassley bill would require companies to submit payments to physicians to the Secretary of Health and Human Services, who would subsequently make the information available to the public on a Web site. Lilly merely requires that the company submit reports of payments to physicians to the states’ AGs and does not explicitly address whether the AGs can make the information available to the public.

Data Safety Monitoring Boards (DSMB)

− The Merck state settlement creates detailed conflict-of-interest and disclosure requirements for any external DSMB. In addition to specific financial restrictions, all members of a DSMB must complete a “competing interest” form covering consulting or speaking arrangements with Merck, career involvement in the product under study, participation in the trial or involvement in issues of trial procedures, investment in competing products, and involvement in publication. (Merck at 9) (New, but consistent with principles from FDA guidance9).

Analysis – DSMB

Merck is the first instance of the government setting detailed standards for external DSMBs. In many ways, the requirements for DSMB members mirror the intense congressional interest in conflicts of interest for FDA Advisory Committee members, as evidenced by the new Title VII - Conflict of Interest in FDAAA. States are taking conflict of interest to the next level by establishing standards for participation in DSMBs. While there is an FDA Guidance in existence there is no mention of these new requirements. Authorship − All individuals named as authors on company-sponsored manuscripts must have made substantial contributions to the conception or design, acquisition of data, or analysis and interpretation of data; must have been involved in drafting or critically revising the article; and must have final approval rights of the version to be published. (Merck at 10) (NEW, but consistent with ICMJE requirements for authorship10).


Health care compliance policies are in a constant state of change toward more comprehensive, detailed standards. Industry standards, such as the PhRMA and ACCME codes, impact such policies and themselves are in a continual state of change as well. The principal government players — DOJ, HHS OIG, FDA, and state AGs and regulators — all contribute to the evolving body of knowledge needed to be current with compliance standards. Obviously, federal laws and regulations (substantive, not interpretative) are the preeminent source of standards unless, of course, the area of law is not preempted. This means that in those situations state laws must also be assessed. Next comes federal guidances of all sorts and their state counterparts. Also of significance are federal and state standards set through specific settlements. All of these sources of information must be evaluated in terms of what “must” and “may” be in a particular policy. It does not mean that companies which are not parties to the settlement must automatically change policies with every new settlement. But, all companies must carefully monitor the changing landscape and use caution in exercising reasonable business judgment when establishing policies.