Late last week, the Attorneys General of 43 states announced that they reached a $19.5 million dollar agreement with Bristol-Myers Squibb Company to settle allegations that the company engaged in deceptive trade practices with respect to the marketing of a drug intended for treating schizophrenia.
Specifically, the Attorneys General alleged that BMS made false and/or misleading representations that minimized or misrepresented the risks associated with its drug, Abilify and that it overstated certain clinical findings concerning the long term efficacy of the drug for stabilization and maintenance in bipolar disorder, without disclosing the study’s limitations. The Attorneys General also alleged that the company promoted the use of the drug in children and the elderly to treat conditions for which the drug is not approved. This action by the states follows a settlement between BMS and the federal Department of Justice in 2007 resolving similar charges. BMS did not admit any wrongdoing and has denied the allegations against it.
Although this case is notable for the sheer number of states that were involved, it is significant as part of an ongoing trend by state and federal enforcement agencies to reign in what is seen as economic fraud and overreaching by pharmaceutical and medical device companies to the detriment of American consumers. The Illinois Attorney General positioned the settlement, for example, as “another example of a big pharmaceutical company ignoring serious health concerns to boost its profits.”
This case is only the most recent in a long line of cases brought by the federal and state governments concerning off-label and allegedly deceptive promotion of prescription drugs and medical devices. On November 7, 2016, the US Department of Justice announced that Pennsylvania-based medical device manufacturer Biocompatibles Inc., a subsidiary of BTG plc, pleaded guilty to misbranding its embolic device LC Bead and would pay more than $36 million to resolve criminal and civil liability arising out of its illegal off-label promotion of the device. In that case, the company had marketed the device as a drug-delivery device or “drug-eluting” bead, despite having assured FDA in a civil settlement in 2005 that it would cease doing so. Other major companies have also recently entered into substantial federal and state settlements related to alleged improper marketing of FDA-regulated products; last year, for example, Amgen Inc. agreed to pay $71 million to settle allegations by 48 state attorneys general that it improperly marketed two drugs (Enbrel and Aranesp), after pleading guilty in 2012 to a federal criminal charge related to similar allegations and paying $762 million in criminal penalties and civil settlements.
We expect to see continued enforcement activity in this area, at both the state and federal level, notwithstanding a “business friendly” incoming President who has indicated an eagerness to cut back on business regulations and a record number of states under the leadership of Republican governors. President-elect Trump has, for example, promised to drive down the cost of medicines, according to a transcript of an interview posted on Time magazine’s website. In our view, continued aggressive activity targetting pharmaceutical and medical device companies will fit easily into current populist agendas.
Further, even if government enforcement in this area declines, whistleblower suits by private citizens are likely to continue. Celgene Corp. is currently fighting a whistleblower’s $40 billion False Claims Act suit over off-label promotion of cancer drugs Thalomid and Revlimid.