Drug and Medical Device Litigation Category

Today, America's health care system today has more capability to save and improve lives than at any prior point in human history. But the added costs of product liability lawsuits launched against drug and device manufacturers drives up the cost of care, inhibits medical research into areas that are litigation prone (like drugs or vaccines for pregnant women), and undermines the FDA’s ability to warn patients about real medical hazards as drug and device labels drown in dubious warnings that are only meant to deter litigation. MPT, in close cooperation with our sister center, the Center for Legal Policy, will explore the costly impact of our runaway litigation system on patient health, medical progress, and the time and cost it takes to bring new products to market.

The discovery of a new drug-resistant strain of gonorrhea - now being called a "superbug", should worry policymakers. This is only the latest (and certainly not the last) instance where antibiotic-resistant bacteria threaten public health. The last line of antibiotics that treat gonorrhea - cephalosporins - are beginning to fail worldwide (a recently developed antibiotic in this class ceftobiprole medocaril, however, has shown some efficacy against a methicillin-resistant staphylococcus aureus (MRSA) - though the FDA rejected approval in 2008). 

Among all drug classes, antibiotics are known to have among the lowest risk-adjusted net present value (NPV: the discounted future revenue minus discounted costs) - around $100 million; compare this to an estimated $300 million NPV for cancer drugs or $1.15 billion for drugs treating musculoskeletal conditions. In effect, this means that antibiotics fall fairly low on drug companies' lists of new projects. Though there are many reasons for antibiotics' poor value for companies, it is widely agreed upon that FDA clinical trial regulations (particularly as they affect antibiotic development) contribute significantly. 

Just like any other drug candidate, when a new drug application (NDA) is filed for an antibiotic, there needs to be supporting evidence demonstrating its safety, correct dosage, and efficacy using the FDA's 3-phase clinical trial approach. But antibiotics have to face yet another hurdle - traditionally, drugs are tested against a placebo to establish efficacy. However, when it comes to putting antibiotics through clinical trials (usually patients are signed up in a hospital setting) using a placebo in the control arm of the study presents an ethical dilemma of offering someone with a serious infection a simple placebo (more importantly, the point of a placebo is to verify that particular conditions won't clear up on their own - while simple upper respiratory infections very well might, it's hard to argue that a MRSA infection will). Because of this, antibiotics are put into what are known as "non-inferiority" trials; drug sponsors have to show that new antibiotics are - within a certain margin - no worse than existing treatments.

The problem here is twofold - first, the FDA's clinical trial designs require very large patient samples, and place restrictions on previous antibiotic use (the patient can't have taken another antibiotic within a certain time period before being entered into the trial). For antibiotics, which have very specialized markets (these markets tend to have higher than average mortality rates because they are usually in a hospital setting), large sample sizes are often unrealistic, and neither is the expectation of no prior antibiotic use (because patients are often given an antibiotic immediately when being admitted for an infection). Second, while the FDA has (thankfully) moved away from imposing pre-defined non-inferiority margins and has given investigators more discretion in doing so, the guidance is still relatively stringent and has not helped spur antibiotic development. In particular, the guidance still favors a "fixed margin" approach, where the non-inferiority margin is identified based on historical placebo trials (the alternative, the "synthesis" method is less conservative but more nuanced - it combines estimates for effect versus a comparator drug as well as versus a placebo). The preference for placebo-focused trials undoubtedly causes confusion when placebo trials are unavailable or impractical.

Besides the FDA regulations, other issues with antibiotics development are inherent to the market - antibiotics are short-term therapies, with a course of therapy typically lasting around a week. By contrast, cancer therapies can last for months, or statins for a lifetime, giving drugmakers a much longer time frame to recoup their costs and generate profits.

But is there really a pressing need for new antibiotics? Or is the drug-resistant strain of gonorrhea a one-off finding? A few statistics should answer this:

  • More Americans die from MRSA every year than from AIDS. 
  • Growing antibiotic resistance has led to doctors using old, highly toxic antibiotics like collistin, which may often kill the patient just as well as the infection.
  • The number of new antibacterial agents approved in the U.S. is at an all-time low.

The need for antibacterial drugs is undeniable. A growing number of pathogens are becoming resistant to all but the most toxic antibiotics in our armamentarium - many of these (like gonorrhea) used to be highly susceptible to available antibiotics but developed resistance over time. All is not doom and gloom however - the reauthorization, last year, of the Prescription Drug User Fee Act (PDUFA V) included a provision known as the GAIN Act. This established an additional five years of Hatch-Waxman exclusivity for antibiotic NDA-filers, resulting in a total of 10 years of market exclusivity with or without a patent. The law also gives antibiotics priority review and fast track status to reduce the review period and speed up the path from Phase I testing to NDA filing. While there may be marginal benefits for drugmakers, because the market exclusivity runs concurrently with patent life, the impact of an additional five years of Hatch-Waxman exclusivity is unlikely to be a game-changer.

Even more importantly, however, the law mandated that the FDA create a new pathway for approval of antibiotics. A specialized designation (with complete and thorough guidance) for antibiotics that simplified the development process and peeled back unnecessary regulations would be the best step that the FDA could take in helping spur antibiotic development. Since PDUFA V, the Infectious Diseases Society of America (IDSA) and the President's Council of Advisors on Science and Technology (PCAST) have proposed a "special population, limited medical use" pathway, which has received some FDA support. However, antibiotics approved under such a pathway would be very restricted to only the subpopulation for which trials establish an adequate benefit-risk ratio (though at the same time, this would hopefully make approval more predictable). Nevertheless, this seems to be a moot point for the time being, since no official draft guidance has been issued from the FDA, and the idea is still in the discussion stages with industry groups.

An adequate supply of antibiotics, and the ability to fend off ever-evolving bacteria is crucial to a future rife with chronic diseases and a generally "older" population. FDA regulations are hampering the ability of pharmaceutical companies to provide this supply. Policymakers should pressure the FDA to make good on its PDUFA obligations and to re-examine its antibiotic trial guidance. The limited use designation, when FDA takes action on it, may be valuable for the industry - a streamlined, focused pathway would help justify higher prices for antibacterial drugs, increasing the class's NPV for drugmakers. And while some may clamor about pharmaceutical companies profiteering from people's sickness, think of it this way - if we're willing to pay tens of thousands (even hundreds of thousands) of dollars for a cancer treatment that offers a few extra months of life, we should be willing to pay at least as much for an antibiotic that unquestionably saves a life.

The Wall Street Journal ran an interesting article yesterday about Nisha Gupta, a medical resident who accidentally poked herself with a needle while treating a patient. Unfortunately, that incident infected Dr. Gupta with hepatitis C and led her on a harrowing multi-decade path of liver transplantation, encephalopathy, and cancer. "We were all stressed out. I was going to die soon and I was prepared," she remembers.

That was her prognosis then, but Dr. Gupta is alive today, thanks to a drug that isn't commercially available. Dr. Gupta, through her physician, contacted Bristol-Myers Squibb to acquire compassionate use--really "expanded access"--doses of BMS's daclatasvir, while daclatasvir was still in early clinical trials. The BMS drug worked miracles and there is no longer a trace of the hepatitis C virus in her body.

Interestingly, Dr. Gupta had first contacted Merck and Vertex to obtain expanded access doses of boceprevir and telaprevir, but both companies were worried that their unapproved drugs would interact with the other drugs the woman was taking. "As a company, and a physician, we were taught not to do harm. We thought we would do harm," Vertex's chief medical director, Dr. Robert Kauffman explained.

We have been told for decades that without the FDA to protect us, drug companies would sell us all manner of dangerous and ineffective drugs. Yet here is a gravely ill patient begging two drug companies to let her try their hepatitis C drugs before she dies, and they refrain. Does that make sense? Yes it does. Drug companies are run by people, often physicians, who want to help patients, not hurt them. Executives and employees alike hold their heads high when they consider their progress in the war against disease. Drug companies make money when they successfully treat medical conditions and they risk going out of business if they don't, or even worse, if they hurt patients. Just look at the Vioxx fiasco, the army of lawyers that took on cases, and Merck's near brush with corporate death. Vioxx was a misstep that Merck hopes to never repeat and Merck didn't need a government agency, such as the FDA, to state the obvious.

Anyone who thinks that established, reputable pharmaceutical companies would foist dangerous products on the American public absent the FDA hasn't studied the situation very carefully. Pharmaceutical companies clearly understand the situation. It's time policy makers joined them.

Over the weekend, Paul Howard wrote about a National Journal article lamenting that pharmaceutical companies keep promoting their products for off-label uses -- that is, "uses the Food and Drug Administration hasn't blessed." Paul did a solid job debunking the article's primary claim: that regulatory officials and the Department of Justice are woefully out-gunned and have too few tools at their disposal to prevent companies from repeatedly engaging in fraudulent behavior.

The fact of the matter is that prosecutors have a sledgehammer at their disposal -- an enforcement tool that has made many a hardened corporate executive cry uncle when they should be fighting the charges in court. After all, much of what these companies are doing is either not illegal or is protected by the First Amendment or both. But the government's charges almost never have to be proven in a court of law because a mere indictment on fraud allegations would be sufficient to destroy most drug companies. It's time we started reining in these misleading, and potentially fraudulent, allegations of fraud.

Under federal anti-fraud laws, merely being indicted for fraudulent behavior permits government programs to exclude, suspend, or "debar" corporations from doing business with the federal government. As I've written before, because Medicare, Medicaid, and the VA health programs pay for a sizeable chunk of all US health spending -- including vast amounts of the pharmaceuticals administered in a hospital setting -- debarment from federal health programs would be tantamount to a corporate death sentence. "It is thus not surprising," notes Ropes & Gray attorney Joan McPhee, "that virtually all rational corporations ... conclude, as a business matter, that they cannot incur the risks associated with taking an indictment and going to trial, even when, in the corporation's assessment and that of its seasoned counsel, the threatened case is without factual or legal merit."

Far from having a limited ability to prosecute this allegedly illegal activity, the Department of Justice can exact billion dollar penalties from the pharmaceutical industry without ever having to prove the allegations in court. No guilty verdict is necessary to trigger debarment, which means that prosecutors can leverage this power and the vagueness of federal regulations to force defendants to settle out of court.

What is especially galling, though, is that the news media have so willingly bought in to the government's allegations of fraud. Indeed, the National Journal article is just one of many recent news reports cheerleading for the government's new "tough on fraud" campaign (see here and here, for example).

Now, to be sure, there is plenty of genuine fraud in the Medicare and Medicaid programs. And when multinational corporate giants agree to settle out of court and pay billion dollar plus fines, it's easy to suspect that something shady must have been going on. But the infractions most of these firms are being charged with do not include fraud or consumer misrepresentation or any other claim that the firms misrepresented the truth about their products.

The so-called crime that the drug companies are committing is, as the National Journal puts it, promoting their products "for uses the Food and Drug Administration hasn't blessed." But, as federal judge Royce Lamberth explained in his decision in a seminal off-label promotion case, "In asserting that any and all scientific claims about the safety, effectiveness, contraindications, side effects, and the like regarding prescription drugs are presumptively untruthful or misleading until the FDA has had the opportunity to evaluate them, FDA exaggerates its overall place in the universe" (Washington Legal Foundation v. Friedman, 13 F.Supp.2d 51, 68 (D.D.C. 2000)). Promotion of off-label uses could include untruthful or misleading statements, just as promotion of on-label uses could. But promoting a drug or medical device for an off-label use is not inherently untruthful or misleading.

Technically speaking, companies prosecuted for off-label promotion are charged with introducing a "misbranded" article into interstate commerce. And that might sound like fraud or some other form of misrepresentation -- and the government certainly wants you to believe that it is. But the misbranding in question doesn't have to be untruthful or misleading in any way. It's not even related to what is actually printed on the product's label. It occurs, according to the FDA, solely for the reason that the manufacturer's spoken or written recommendation that the drug be prescribed for an off-label use suggests an "intended" purpose for which "adequate directions for use" are not printed on the label. But, of course, the manufacturer is legally barred from printing "adequate directions" for an off-label use on the product's label because that too would constitute the introduction of a "misbranded" article into interstate commerce.

The logic here is circular. Under the FDA's interpretation of the Food, Drug and Cosmetic Act, drug manufacturers are forbidden from mentioning the fact that certain off-label uses have been shown to be safe and effective because they are also forbidden from supplying physicians and patients information about the appropriate way to use drugs for off-label indications in a safe and effective way.

Got it? If not, you could certainly be forgiven for being a little confused. Even many legal experts have difficulty figuring out what is and is not lawful.

During oral arguments last year in a drug sales representative's appeal of his off-label promotion conviction, a panel of Second Circuit Court of Appeals judges seemed inclined to agree that the FDA rules are unclear, ambiguous, and overbroad. At one point, a DOJ attorney tried to explain that off-label promotion "is not a crime" per se, but is merely evidence of the manufacturer's intent to "introduce a misbranded drug into commerce," which is illegal. But the only way the drug was "misbranded" was the sales rep's claim that it was safe and effective for two off-label uses. The judges had difficulty following DOJ's argument and questioned why such speech should be considered criminal.

The U.S. Supreme Court has held on several occasions, most recently in June of 2011, that truthful speech used in pharmaceutical marketing is entitled to the same level of First Amendment protection as other commercial speech. The U.S. District Court for the District of Columbia held some of the FDA's off-label promotion rules unconstitutional in a case that was reversed on appeal when the FDA acknowledged that some off-label speech is protected by the First Amendment. And a recent decision on a related issue by the Seventh Circuit Court of Appeals suggested in non-binding dicta that the FDA's off-label speech restrictions are likely to be "unconstitutional in at least some applications."

Unfortunately, so few constitutional challenges to the FDA's off-label speech ban ever make it to court because an indictment, what attorney Joan McPhee calls the "admission ticket" to the courtroom, would be a catastrophe for any drug firm. That Second Circuit case, Caronia v. United States, is now being watched so closely because it is so rare for these prosecutions to end up in court. Alfred Caronia, the sale representative in question, decided to fight, even though his employer, Orphan Medical, folded at the thought of an indictment.

This "debarment trap" is patently unfair, as companies are forced to choose between the Scylla and Charybdis of a multi-billion dollar fine or the loss of many billions of dollars in sales without having defrauded or otherwise harmed anyone. Worse still, prosecutors and the Department of Health and Human Services are free to mete out either punishment without ever being subject to the oversight of an independent court, essentially stripping manufacturers of basic due process rights. It is no stretch to think that prosecutors who use the threat of debarment to force a settlement are engaging in unethical behavior. And it is long past time that we did something about it.

The simplest solution would be for the FDA to bring its rules on off-label speech into compliance with the First Amendment in a clear and concise way, so that the rules reflect the fact that much of this type of speech is constitutionally protected and so it becomes possible for manufacturers to know what is and is not illegal. That would only solve the problem as it relates to off-label speech, however, leaving drug manufacturers and many others in the heath care industry subject to the whims of aggressive and unfettered prosecutors for other reasonable conduct. Thus, real reform must rein in the ability of prosecutors to use the threat of debarment for the purpose of avoiding judicial oversight. I've been looking into ways in which this might be done, and I hope to explore some proposed solutions in future posts.

The U.S. Court of Appeals for the Third Circuit handed down a decision on Monday holding that reverse payment - or so-called "pay to delay" - patent settlement agreements between innovator and generic drug manufacturers may constitute antitrust violations. (The New York Times and Pharmalot offer their views at the links.) That decision sets up a Circuit split that now seems ripe for Supreme Court review, as the Federal Circuit, Second Circuit, and Eleventh Circuit appeals courts have previously ruled that, in most cases, these settlement agreements are not anticompetitive.

To review, current law provides incentives for generic producers to challenge potentially weak drug patents in court. But when faced with the uncertainty of patent litigation, brand manufacturers sometimes offer to settle the lawsuits by paying the challengers to drop the litigation. The patents remain in place that way. But as part of the settlements, the brand manufacturers usually agree to let the generics on the market a few years before the patents in question expire.

The Third Circuit case involves the use of a patented extended-release formula for coating otherwise unpatented potassium chloride drugs. In 1995, two different generic manufacturers (Upsher-Smith Laboratories and ESI Lederle) submitted generic approval applications with the FDA claiming that their formulations did not infringe the patent held by Schering-Plough. Schering sued, alleging that the generic products did in fact infringe. And shortly before the federal district court was set to issue an opinion, the parties settled. Schering paid Upsher $60 million for various things, including an agreement to drop the suit, and it paid ESI Lederle $15 million.

The Federal Trade Commission hates these deals (see here and here) and calls them anti-competitive because successful patent challenges would get generics to market sooner still. That assumes, however, that all or even most such challenges would succeed, a point I address below. Since 2003, federal law has required that any such settlement must be reported to the FTC for antitrust review. And the agency has challenged dozens of these cases in court, almost invariably losing.

In an interesting turn of events, both the FTC and several private plaintiffs (mostly drug wholesalers and retailers) filed separate antitrust challenges to the same Schering-Upsher and Schering-ESI settlements, alleging the identical violations. The FTC case was brought in the Eleventh Circuit; the private plaintiffs filed in the Third Circuit. The Eleventh Circuit ruled in 2005 that the agreement was not anticompetitive, and the Supreme Court refused the FTC's request to hear an appeal (In 2011, the high court also refused to hear an FTC appeal from a loss in a different case.). But organizing the class action in the Third Circuit took a bit longer, so that court has only now issued its opinion.

In the FTC's view, the mere fact that a brand manufacturer paid a generic company to drop litigation should be viewed as evidence that the patent was probably invalid. And the Third Circuit seems to have bought that argument hook, line, and sinker. The court cites two studies (one conducted by the FTC) finding that generic manufacturers prevail in over 70 percent of these patent challenges.

Both conclusions have serious problems, though. For example, the FTC figure combines many dissimilar cases, and the methodology for calculating the figure is never revealed. The second study, conducted by RBC Capital Markets, concluded that generics win 76 percent of cases "when you take into account patent settlements and cases that were dropped". That, of course, presumes the truth of the matter in question: that the generic would have won if there was no settlement. When you count only the cases examined in the RBC study that actually resulted in a court decision, the generic challengers lost a bit over half of the time. And in a slightly older study published in the Michigan Law Review, the generic won only 42 percent of cases.

Thus, prior to reaching a settlement, it is not at all clear whether the patent holder or the generic challenger would prevail. That's why, in six cases decided by the Federal Circuit (here), Second Circuit (here and here), and Eleventh Circuit (here, here and here) Courts of Appeals, federal judges concluded that "a court must judge the antitrust implications of a reverse payment settlement as of the time that the settlement was executed," to quote the Eleventh Circuit in a decision handed down in April of this year.

The mere fact that a patent granted by the U.S. Patent Office might actually be invalid does not mean that a brand manufacturer's decision to settle should be seen, ipso facto, as anticompetitive. Indeed, the Supreme Court long ago held that, even though the PTO does err on occasion, and many granted patents are later found to be invalid or far narrower than their holders imagine, patent holders are entitled to presume that their patents are valid until a court finds otherwise. Thus, federal courts have repeatedly concluded that reverse payment agreements should not automatically be suspect, but are only illegal in certain circumstances.

What's more, as U.S. Seventh Circuit Judge Richard Posner wrote in a 2003 district court decision (it's a long story why a circuit judge was hearing a district court case), these settlement should often be seen as PRO-competitive, not anticompetitive, because the patent holder generally agrees to let the generic product come to market several years before the patent would expire. (In the Schering case, the agreements gave permission for the generic drugs to be sold a full five years before the patent expiration.) In that regard, given what is known at the time of the settlement, these agreements actually tend to accelerate the introduction of generics, not delay them.

Moreover, Posner wrote that U.S. courts, including the Supreme Court, have long believed that out-of-court settlements are an appropriate way for parties to resolve litigation, and "a ban on reverse-payment settlements would reduce the incentive to challenge patents by reducing the challenger's settlement options." He therefore argued that it was the proposed ban on settlements, not the settlements themselves, "that might well be thought anticompetitive."

The Third Circuit Court of Appeals rejected all of these arguments, and it agreed with the FTC and the private plaintiffs that an issued patent should not be entitled to a presumption of validity. Curiously, though, the Third Circuit also argued that it should not matter whether the patent in question was valid or not. All that mattered was the fact that the patent holder paid a challenger to postpone manufacturing a drug (regardless of whether the patent holder did or did not have the legal right to use the patent to do exactly that).

Decisions of various Circuit Courts are not binding on other Circuits, but they are seen as persuasive authority. So, in order to explain away the prior decisions by the Second, Eleventh, and Federal Circuits, the Third Circuit trotted out two decisions from the D.C. Circuit Court of Appeals in which that court held that settlements in which the generic agreed to postpone commercialization were found anticompetitive. But in those cases, the settlements did not resolve the underlying patent disputes, making them entirely unlike the case in question.

In the end, the Third Circuit's decision in this case is a house of cards built on faulty assumptions, circular logic, and inappropriate analogues. The only bright spot is the fact that, by establishing a circuit split (a condition in which two or more Circuit Courts of Appeals have adopted contradictory rules), the Supreme Court may well finally agree to take an appeal in order to settle the matter once and for all.

Given the overwhelming weight of evidence that these settlements are not typically anticompetitive, and the fact that nearly every Circuit Court of Appeals to hear such cases has found them to be lawful in most circumstances, one would expect the Supreme Court to validate the practice. That surely will not end the FTC's vendetta against reverse payment settlements. But it may well put an end to much costly and unnecessary litigation.

Via The New York Times, an Associated Press article reported yesterday that GlaxoSmithKline has agreed to pay a record $3 billion in fines to settle various criminal and civil charges associated with 10 of the company's drugs -- making this the largest such settlement in history. (The Times has its own article in today's paper.)

From several sources, including the AP article, Pharmalot, the Justice Department's complaint, and other government materials, we see that the bulk of the settlement was for promoting Paxil, Wellbutrin, Advair, Lamictal, and Zofran for off-label uses. But the company also allegedly failed to report safety problems associated with its diabetes drug Avandia. It allegedly overcharged Medicaid for some drugs by reporting false "best prices" and underpaying rebates owed under the Medicaid Drug Rebate Program. And the company allegedly paid illegal kickbacks "including cash payments disguised as consulting fees, expensive meals, weekend boondoggles, and lavish entertainment to prescribers and other health care professionals to induce them to prescribe and recommend GSK's drugs."

Some of these allegations are, to be sure, troubling. If it's true, for example, that GSK failed to report safety data to FDA and/or submitted false pricing information to Medicaid, then the prosecution on those counts would appear to be fully justified. But as I've written before, promoting drugs for off-label uses when there is evidence of safety and efficacy for those uses should not only be legal, it is also constitutionally protected speech. (I'll stipulate that I don't know whether that evidence exists for the uses in question, but prosecutors in these cases don't ever bother trying to discern whether such evidence does or does not exist.) In those situations, off-label promotion also tends to redound to the benefit of patients by providing prescribers with useful information about treatment options.

What makes off-label promotion prosecutions especially egregious is the government's attitude that a drug claim cannot possibly be true unless the FDA has said it is. In announcing the settlement, Deputy Attorney General James Cole said that, "Today's multi-billion dollar settlement is unprecedented in both size and scope. It underscores the Administration's firm commitment to protecting the American people and holding accountable those who commit health care fraud." Note that the "fraud" Cole was referring to was the off-label promotion.

And the news media, whom you might expect to be defenders of free speech, buy this argument hook, line, and sinker. In what is ostensibly a straight news article, the AP goes so far as to claim that, "This is the latest in a string of settlements related to drug companies putting profits ahead of patients." In reality, it's more like the mainstream media putting its anti-corporate animus ahead of patients and any semblance of fairness.

In his seminal WLF v. Friedman opinion holding unconstitutional the FDA's ban on the dissemination of medical journal articles discussing off-label uses, federal Judge Royce Lamberth dispensed with this argument by revealing it for the absurdity that it is: "In asserting that any and all scientific claims about the safety, effectiveness, contraindications, side effects, and the like regarding prescription drugs are presumptively untruthful or misleading until the FDA has had the opportunity to evaluate them, FDA exaggerates its overall place in the universe" (Washington Legal Foundation v. Friedman, 13 F.Supp.2d 51, 68 (D.D.C. 2000), emphasis added).

The view that a statement must be fraudulent if the government has not approved it is both narrow-minded and dangerous. Fortunately, in the WLF case, FDA was taken to task so soundly that government attorneys had to change their strategy on appeal and acknowledge that manufacturer communication about off-label uses was not ipso facto illegal. Henceforth, the attorneys claimed, prosecutors would only treat off-label speech as one piece of evidence supporting a charge that the company "mis-branded" a drug. In practice, though, off-label speech is almost invariably treated as illegal per se.

That said, GSK acknowledged that some of its sales representatives did promote various drugs for off-label uses, but the company continues to dispute "many allegations and legal conclusions" regarding its behavior. So, why would it cop a plea and agree to the now-record penalty?

As I pointed out in a post back in March, "the federal government has a tool at its disposal that makes an out of court settlement almost guaranteed: the potential exclusion of any of the company's products from Medicare and other federal health programs. Federal anti-fraud laws permit government programs to exclude, suspend, or 'debar' corporations that have merely been accused in an indictment of fraudulent behavior from doing business with the federal government. No guilty verdict is necessary."

Given how big a portion of health care spending is controlled by government, Ropes & Gray attorney Joan McPhee, explains "that virtually all rational corporations ... conclude, as a business matter, that they cannot incur the risks associated with taking an indictment and going to trial, even when, in the corporation's assessment and that of its seasoned counsel, the threatened case is without factual or legal merit."

Government prosecutors leverage this power and the vagueness of federal regulations to force defendants to settle out of court, routinely securing payments from the firms of hundreds of millions, or even billions, of dollars. And it seems that prosecutors are using the threat of debarment to their increasing advantage by rolling together more and more unrelated counts (such as the charge the GSK failed to report certain safety data to the FDA) in order to get drug makers to settle those charges as well.

This "debarment trap" is unfair, and it strips those caught in its web of basic due process rights. In few other areas of law are Americans willing to tolerate the punishment of individuals before any evidence of wrong-doing is produced in court. It is reminiscent of the Red Queen's demand in Alice and Wonderland: "Sentence first -- verdict afterwards." Yet this charade of justice persists largely because few Americans even know it occurs.

I've written for years about the harms to patients that result from FDA's prosecution persecution of off-label speech. But I am increasingly coming to the conclusion that the threat of debarment represents an even bigger threat to the well-being of Americans -- not just patients, but all of us.

Anyone who cares about due process principles and procedural fairness should be made aware that these fundamental rights are being jeopardized by out-of-control federal prosecutors and a set of poorly written anti-fraud laws. It is essential that we begin to reform these laws that effectively strip due process protections from businesses and individuals who now face real criminal punishment with little real opportunity to defend themselves in court.

Yet another major pharmaceutical company is now being persecuted prosecuted for off-label promotion. This time it's Johnson & Johnson, being pursued over allegations that the company illegally promoted its antipsychotic drug Risperdal for unapproved uses. As The Wall Street Journal reports, though, settlement negotiations have hit a snag.

Federal prosecutors in Philadelphia reached a tentative agreement under which J&J would pay a whopping $1 billion in fines. But Justice Department officials in Washington rejected the deal and are now seeking an even higher payment. According to the Journal:

"The Justice Department prosecutors are seeking a settlement of around $1.4 billion, the sum that Eli Lilly & Co. agreed to in 2009 to resolve allegations it had improperly promoted its antipsychotic drug Zyprexa, according to one of the people familiar with the matter. Yet J&J officials have resisted paying that amount.

"An outright rejection of a deal is unusual, according to Shelley Slade, a former Justice Department health-care fraud lawyer who now represents whistleblowers suing drug makers. Ordinarily, prosecutors in a U.S. Attorney's Office work with counterparts in Washington, D.C., to find mutually agreeable terms, Ms. Slade said."

As with many of these off-label promotion cases, the allegations are broad ranging and appear to include a mix of ethical and unethical behavior - ranging from the promotion of Risperdal to treat pediatric patients with attention-deficit disorder prior to 2006 when the drug was approved for that use to the payment of kickbacks to pharmacies to push Risperdal over alternative drugs. And the company is being pursued not only by the feds, but also by several state attorneys general.

But, while J&J thought its position in the state lawsuits was strong enough to fight in court, the federal government has a tool at its disposal that makes an out of court settlement almost guaranteed: the potential exclusion of any of the company's products from Medicare and other federal health programs. Federal anti-fraud laws permit government programs to exclude, suspend, or "debar" corporations that have merely been accused in an indictment of fraudulent behavior from doing business with the federal government. No guilty verdict is necessary.

As you can imagine, with the federal government picking up the tab for more than a quarter of all US health spending, exclusion from federal health programs would be tantamount to a corporate death sentence. "It is thus not surprising," notes Ropes & Gray attorney Joan McPhee, "that virtually all rational corporations ... conclude, as a business matter, that they cannot incur the risks associated with taking an indictment and going to trial, even when, in the corporation's assessment and that of its seasoned counsel, the threatened case is without factual or legal merit."

Because I have argued in both the popular and scholarly press that much (though not all) off-label promotion is protected by the First Amendment, I have been asked repeatedly why few defendants have challenged the off-label promotion ban in court. In part, it is because the high profile cases brought against drug firms often include allegations other than constitutionally defensible speech - such as the kickback allegations in this case. The flip-side of that is that the Food and Drug Administration and Department of Justice have been very good at selecting the cases they pursue, so as not to set up clean constitutional questions. And, when backed into a corner, the FDA and DOJ have been able to dispense with problematic cases before a clear ruling that the off-label promotion ban is unconstitutional (see my descriptions of the WLF and Allergan cases in this paper, for examples).

But arguably the most important reason why more of these cases don't make it to court is the fact that an indictment, what McPhee calls the "admission ticket" to the courtroom, all by itself spells potential doom for a drug firm. "[W]hile there are strong legal and constitutional defenses to the government's attempted criminalization of truthful, nonmisleading off-label dissemination, there is no available avenue for targeted corporations to gain access to a judge or jury without risking corporate death."

So, J&J may believe that the Justice Department's demand for a $1.4 billion settlement is wholly unwarranted. But I'd be willing to bet they eventually take that deal.

Who should be liable when a patient is injured by a generic drug? That's an interesting question, since by law, a generic drug must be bioequivalent to and carry the identical labeling as the original brand name drug. So, if the injury arose from the drug's original design or labeling, how can you hold the generic manufacturer accountable?

[Last summer]About a year and a half ago, the U.S. Supreme Court held in a case called Pliva v. Mensing that negligent failure to warn tort actions against generic drug manufacturers were preempted by the Food, Drug and Cosmetic Act. Because generic manufacturers are obligated to use labeling identical to the FDA-approved labeling for the innovator, or branded, product, they can't be sued for failing to include warnings about certain risks if those warnings do not appear on the innovator's label.

It would seem to be common sense that you shouldn't be able to sue someone for not doing something they were legally forbidden from doing. But litigation-happy tort lawyers have been trying to find a way do it anyway. Even more troubling is the fact that four Justices of the Supreme Court seem to agree with that view. After all, their reasoning went, [Update: the generic manufacturers could have ask the FDA to initiate a labeling change in the expectation that FDA would pressure the innovator to agree to the change. "If the FDA agreed that a label change was required, it could have asked, and indeed pressured, the brand-name manufacturer to change its label." Justice Sotomayor's dissent, joined by three other Justices, argued the law should "require the Manufacturers to show that the FDA would not have approved a proposed label change."] [Update: An earlier decision from the U.S. Eighth Circuit Court of Appeals went so far as to argue that,] if the generics manufacturers don't want to be sued, they can just stop making generic drugs. In the view of those four dissenters [judges], if a patient is injured, then by golly there should always be somebody to sue. Well, based on the outcome of a handful of cases now making their way through the courts, it appears that there is -- at least in a handful of jurisdictions.

In a case called Conte v. Wyeth, a California Intermediate Appellate Court in San Francisco held that, since plaintiffs can't sue a generic manufacturer for negligent failure to warn, then they should be able to sue the innovator manufacturer who had some control over the contested labeling -- even if the patient didn't take the innovator's product, and even if the innovator is no longer manufacturing the off-patent drug and therefore no longer keeping its labeling up to date.

The California Supreme Court refused to review the case, which means it hasn't been implemented state-wide but is good law (that is, "good" in the sense of "valid," not "good" in the sense of "good") in the First Judicial District of California. [Update: There is apparently some dispute regarding the extent to which California trial courts are bound by California intermediate appellate court decisions. I'm no expert in California procedure, so I'll concede it's possible that not all courts in the First Judicial District would have to treat this decision as binding precedent.] Not long after Conte was decided, the U.S. District Court for the District of Vermont became the first federal court to agree with the Conte decision, in a case called Kellogg v. Wyeth. Following the rationale of Conte, the federal court held that it was "reasonably foreseeable" that physicians would continue relying on a brand manufacturer's approved labeling even after the innovator ceased making the drug. Thus, innovators have a duty of care to ensure up-to-date labeling for ... well, pretty much forever.

Unless this tort theory is struck down, and soon, it could very well metastasize throughout the country's state and federal courts, giving manufacturers and investors yet another reason to give up on innovation in the medical products space. Fortunately, both the U.S. District Court for the Middle District of Florida and the U.S. Sixth Circuit Court of Appeals have since rejected the Conte/Kellogg foreseeability theory, which presages an eventual Circuit Court split that would have to be resolved by the Supreme Court. And, at a more localized level, Jim Beck at the Drug and Device Law blog may have stumbled onto a way to rein in Conte based on an old California Supreme Court decision [from January 2011].

Yet, while it may indeed be possible to keep what Beck calls this "omniforeseeability" theory from spreading, these cases nevertheless raise a very important question: Who exactly should be responsible for ensuring that a drug's label is maintained in a post-patent, multiple-producer environment? In many cases, such as the one presented in Conte and Kellogg, the innovator manufacturer isn't producing the drug any longer. But none of the generic manufacturers has the legal power to change the label. That poses a real problem that merits a real solution. And its one of things that I'll be thinking through over the coming months and years.

The announcement of a $950 million settlement between Merck and the FDA for off-label promotion and false statements about risks for heart attacks and strokes should come as little surprise to anyone, particularly given the upcoming $3 billion dollar settlement by GlaxoSmithKline publicized in early November (and other recent large settlements). Unfortunately, drug companies do not seem too keen on avoiding behavior that results in massive financial penalties for illegal activities.

But wait! Aren't companies doing more and more to stay compliant these days? Haven't corporate integrity agreements included stricter and more detailed requirements? While Merck's settlement dates back to incidents occurring prior to the 2004 withdrawal of Vioxx from the market, the question still remains: Why then are these companies willing to risk massive fines for something that can be done as a normal part of business? My firm outlines specific guidance on this in our article "The Need for Compliance as Business Strategy."

Last week Merck & Co. agreed to pay $950 million to settle government allegations that it illegally promoted Vioxx (rofecoxib). Merck voluntarily removed Vioxx from the market in 2004, but it is still resolving legal claims.

Vioxx was approved in 1999 for the treatment of pain. In 2002, the FDA added a claim for rheumatoid arthritis (RA). However, the Justice Department claims that Merck promoted Vioxx for RA prior to 2002, which would mean Merck violated the FDA's off-label promotion rules.

Never mind that the FDA later agreed that Vioxx was safe and effective for RA and this assessment was based on a Phase III clinical trial of 1,100 RA patients. Is it any wonder that Vioxx was used off-label for RA when it had been approved for acute pain, osteoarthritis, dysmenorrhea, and migraine and was also shown to work in RA? This is a clear example of evidence-based medicine--there's no snake oil being sold here.

Let's examine a hypothetical snake oil situation and see just how unlikely it is. What if Merck had promoted Vioxx for something crazy, like breast cancer?

Step 1, Merck sales representatives call on oncologists and recommend that they try Vioxx for breast cancer patients. These physicians would say, "You're kidding, right? What data do you have? What's the mechanism of action? Is this a joke? What other doctors have used it that way and can I talk to them?" To this, the Merck sales reps would have no good response.

Step 2, an oncologist makes a huge mistake and prescribes Vioxx for breast cancer anyway.

Who needs a Super Committee? It seems the Food and Drug Administration has a plan to close the budget deficit all on it's own. Yesterday, the agency announced it had reached an agreement with Merck to pay $950 million in order to settle criminal and civil charges that the company illegally promoted Vioxx for off-label uses and for misrepresenting the drug's risks. That comes on the heels of a $3 billion settlement by GlaxoSmithKline earlier this month.

Now, with all due respect to the memory of Everett Dirksen, a billion here and a billion there isn't even real money in this day and age. But with Pfizer, Eli Lilly, AstraZeneca, GSK, and now Merck all having paid at least half a billion dollars in fines for off-label promotion in the past three years, it seems as though the FDA is on a one-agency revenue raising mission. And if that happens to also put a beat down on the pharmaceutical industry, I'm sure there are folks in the agency who feel that's all well and good too.

"Well, wait a second there!" you might be tempted to say. Doesn't the FDA have good reason to ban off-label promotion? After all, those ARE uses that the agency has never certified as safe and effective.

The problem is that FDA bans not just false or misleading claims about an off-label use's safety and efficacy. That is, it's not just preventing snake oil salesmen from peddling quick fixes that don't work. The agency bans all promotion of off-label uses, even if those uses have been proven to be safe and effective in clinical trials. Even if those uses are considered to be the standard of care for a given ailment. And even if a physician could be liable for malpractice for not administering a drug off-label.

In a 1998 court case, the FDA argued in federal court that off-label promotion was inherently false or misleading because physicians would never be able to tell whether there was sufficient evidence supporting the safety and efficacy of a given drug use unless the agency approved that use. The judge laughed off the claim by writing that the "FDA exaggerates its overall place in the universe." After all, the court continued,

"the FDA does not question a physician's evaluative skills when an article about an off-label use appears among a group of articles in the New England Journal of Medicine, or when one physician refers a peer physician to a published article he recently perused, or even when a physician requests a reprint from a manufacturer. Why the ability of a doctor to critically evaluate scientific findings depends upon how the article got into the physician's hands . . . is unclear to this court."

Both Paul Howard and Charles Hooper have commented recently on the $3 billion payment that Glaxo was forced to cough up to settle charges of off-label promotion. I'm not familiar with the specifics of the Glaxo case, but I thought I'd add my two cents on the constitutionality issue that Paul and Charles raise.

It is true there are good reasons to believe that FDA's prohibition on off-label promotion is unconstitutionally over-broad. The U.S. Seventh Circuit Court of Appeals suggested in one recent case that the off-label promotion ban was "unconstitutional in at least some applications." But unlike Prof. Ralph Hall, I'm not optimistic about the U.S. v. Caronia case now being decided by the Second Circuit.

For one thing, Caronia presents what we lawyers would call "bad facts." Drug sales rep Alfred Caronia was prosecuted for participating in a face-to-face sales meeting in which Caronia's colleague told a physician about various off-label uses, but did not supply any scientific research supporting the safety and efficacy of those uses. Although we First Amendment purists might argue that even this kind of speech ought to be permitted, it's not a stretch for federal courts to justify restrictions on that kind of off-label promotion given current commercial speech case law.

Federal judges are more willing to find First Amendment protection when the speech involves distribution of published research findings or discussions of on-going research at scientific conferences. But in the Caronia case, a federal trial court judge has already held that a ban on the kind of promotion at issue could be justified because "some control over the off-label promotion of manufacturers does appear essential to maintaining the integrity of the FDA's new drug approval process." So, it's entirely plausible that the Second Circuit could agree that the off-label promotion ban is "unconstitutional in at least some applications" but constitutional as applied to Alfred Caronia.

In addition, the Caronia case also presents a couple of purely procedural issues that might permit the Second Circuit to reverse Caronia's conviction without having to reach the merits of the constitutional question. As it turns out, the FDA has been fairly successful in avoiding unambiguous court decisions on the First Amendment question, as it did in an earlier case litigated by the Washington Legal Foundation.

In that case, the federal District Court for the District of Columbia held that the off-label promotion ban was unconstitutional as applied to the distribution of peer reviewed medical journal articles. But the FDA changed its interpretation of the statute when it appealed to the DC Circuit, as I discuss in this article, thereby mooting the constitutional question and rendering the district court's decision invalid.

Similarly, after the biotech company Allergan sued in October 2009 for a declaratory judgment that the FDA's off-label promotion ban was "unconstitutional and inconsistent with the Food, Drug and Cosmetics Act," the FDA initiated a criminal case against Allergan for illegal off-label promotion. When Allergan settled in September 2010, it was forced to drop the constitutional challenge as a condition of the settlement.

Last month, however, yet another drug firm, Par Pharmaceutical, filed an almost identical action seeking a declaratory judgment that certain forms of off-label promotion were indeed protected by the First Amendment. With some luck, that case will actually be fully litigated, and we'll finally get a clean decision on the constitutionality of FDA's off-label promotion ban.

You can read more about my own thoughts on the constitutionality question here.

You would think these ten simple words are clear enough: "Congress shall make no law...abridging the freedom of speech..." Apparently not. Congress did, of course, pass a law prohibiting pharmaceutical companies from promoting off-label uses for drugs and put the FDA in charge of that enforcement. Never mind that off-label prescribing is widespread, legal, and helps American patients. Never mind that Congress itself, Medicare, the Department of Veterans Affairs, the National Cancer Institute, and the National Institute of Health actively encourage off-label prescribing.

A drug's "label" is the drug's FDA-approved prescribing information--the package insert. Any approved use is considered on-label, while any use not listed on the insert is considered off-label, even though the off-label use may effectively treat a medical condition and reflect the best medical practices. Although the FDA tolerates off-label usage, it forbids companies from promoting such uses. Promotion is really just communication and communication is speech. So the FDA is in direct violation of the First Amendment. Something has to give.

This is not some academic issue, as pharmaceutical companies have been pressed into paying almost $12 billion in fines over the last decade. In fact, just today GlaxoSmithKline announced that it settled its case for a whopping $3 billion.

In other news today, pharmaceutical companies are mounting a concerted legal effort to overthrow or weaken this and similar rules. Their case got a boost this summer when the U.S. Supreme Court cited the First Amendment in striking down a related Vermont law. In its decision, the court wrote that speech used in drug marketing is a form of expression protected by the Free Speech Clause of the First Amendment. It's good that someone is actually reading the Constitution.

A Federal Trade Commission report on so-called pay-to-delay drug patent settlements that was released this month has given new life to congressional efforts to ban the deals in which brand manufacturers pay potential generic competitors to drop patent challenges. A CBO analysis suggested that a ban could save federal health programs $2.68 billion over 10 years by getting cheaper generics to market sooner. And Democrats are pushing the deficit reduction super committee to include the ban in its proposals. In practice, though, a ban could actually delay the introduction of more generic drugs than it would accelerate, resulting in higher drug prices.

Current law provides incentives for generic producers to challenge potentially weak drug patents in court. But when faced with the uncertainty of patent litigation, brand manufacturers sometimes offer to settle the lawsuits by paying the challengers to drop the litigation. The patents remain in place that way. But as part of the settlements, the brand manufacturers usually agree to let the generics on the market a few years before the patents in question expire.

The FTC hates these deals and calls them anti-competitive because successful patent challenges would get generics to market sooner still. But that assumes that the majority of patent challenges would actually succeed, which isn't borne out by the data. Just over half of the drug patent cases that make it all the way to a court decision fail. And there is no evidence that settled cases would have been more likely to result in patent invalidation.

The FTC already has authority under existing antitrust laws to block patent settlements where evidence indicates consumers would be harmed by higher prices. But the agency loses many of those cases because the evidence isn't on their side. And, in the handful of cases where the FTC succeeded in blocking a settlement and forcing the litigation to go forward, courts more often upheld the patents than ruled them invalid.

As it turns out, settlements almost always result in a generic product reaching the market before the patent's expiration -- something a ban could not deliver. So, banning settlements altogether and forcing these cases into court would prolong the amount of time the typical brand drug enjoys a monopoly with no generic competition. That's why federal courts have so far refused the FTC's pleas to make these settlements per se illegal. In one decision, U.S. Seventh Circuit Judge Richard Posner wrote that "a ban on reverse-payment settlements would reduce the incentive to challenge patents by reducing the challenger's settlement options." He suggested that it was the proposed ban, not settlements, "that might well be thought anticompetitive."

Collusion between competing firms in any industry often raises red flags that suggest anticompetitive, anti-consumer behavior. But at least in these pay-to-delay cases, cooperation among brand and generic firms does seem to promote overall consumer welfare.

Thanks to Paul Howard for pointing me toward "The Long Term Bullish Case for Pharma," published back in August by biotech VC Bruce Booth.

Booth outlines three solid arguments for bullishness: First, it's a rich world--growing richer, at least in many countries--and rich people want more medicine; second, people are living longer, and the longer we live, the more we consume medicine; and third, drugs are a relative bargain--despite well-publicized episodes of pharmaceutical sticker shock, a pill is usually cheaper than a stay in the hospital.

Good reasons all, but we might immediately note: These three conditions have been in place in the recent past, and yet as we all know, the pipeline of new drugs and devices has been drying up over the last two decades. Indeed, Pharma companies are laying off, and spinning off, their researchers. So what evidence can we point to that tells us that the drying-up/downsizing trend will reverse itself any time soon? Or at all?

One answer, of course, is that things move in cycles. Another answer is that a bad trend can't go on forever, because if it's a bad trend, well, people will intervene to stop the downwardness, and even reverse it--that's another way of saying that things move in cycles.

But of course, things don't always move in cycles--sometimes they "move," if that's the right word, in troughs. That is, there's little or no upward movement at all. In economic terms, we can recognize troughs in the form of "liquidity traps," as seen in the US in the 30s, or in Japan over the last two decades--and maybe in the US, now, too.

In scientific terms, we can think of "punctuated equilibrium," as another kind of trough. Punctuated equilibrium, of course, holds that progress--in the scientific and technological realm as well as in nature--is not a steady upward curve, but rather, a step-like progression, if we're lucky. As an example of punctuated technological equilibrium, we can note, for example, that commercial aviation has shown little increase in jet speed in five decades; indeed, if one factors in the now defunct-Concorde, jetliners move slower today than they did 35 years ago. So we can never know for sure when we are on the horizontal part of the step, or how long we will be stuck on the flatline.

And in historical terms, we can think of the Dark Ages in Europe; more recently, other civilizations have faced similar long troughs of stagnation and even decline, e.g. China, India, and the Arab world. One needn't be Spengler to realize that civilizational advancement is not a given.

Today, it certainly would appear that the domestic forces that have conspired against medical progress in recent decades--including, but no limited to, the usual suspects, namely, trial lawyers and regulators--have their foot firmly on the neck of medical progress and have no intention of letting go. And with apologies to Newton, we can say that a foot at rest tends to remain at rest.

Moreover, mindful of the historical truism that all great historical events have multiple causes, we should also say that other forces stand in sturdy opposition to Pharma bullishness. One such is the static-analysis fiscalist mindset that dominates Washington, which holds that money saved on "healthcare" in the short run is all that matters, ignoring the larger costs of such "savings" to society as a whole. And another negative force is the strange but enduring alliance between libertarians and greens that leaves our politics with a sense of fatalism, even nihilism, about even the idea of advancement stemming from public-private enterprises. NASA has been one victim of this libertarian-green alliance; the medical industrial complex has been another. Until someone figures out how to obviate even the most streamlined FDA, as well as widespread clinical trials and legal liability, medicine will always be a res publica--a public thing. So the libertarian dream of totally privatized medicine is just that--a dream. And in that case, it will be necessary to focus on reinventing the public-sector role in medicine.

In the meantime, in the real world, when will this wide-array phalanx of opposition to medical progress disappear in the US? Good question. Whoever can answer that question will, indeed, also have the answer to the question of when the Pharma bull market starts.

Of course, we should note that while these doleful conditions apply to the US, and also to Europe, there's no law that says that the rest of the world must be so shortsighted. Indeed, the ROW--most obviously, the rising countries of Asia--might well conclude that the self-strangulation of the Pharma sector is one more bad idea not to import from the West.

So the Pharma bulls could be running soon, somewhere.

Alex Tabarrok's vision of a "Consumer Reports" FDA depends on the widespread use of biomarkers and diagnostics - not just in the labs of pharmaceutical and biotech companies, but in your doctor's office or local pharmacy. Widespread consumer access to those tests - and confidence on what the tests are telling us - is still several years away.

What's slowing the field down?

On the industry side companies are investing heavily in using biomarkers to help guide new drug development, and are clearly shifting to an R&D strategy built around personalized medicines, but so far (outside of cancer treatments) those investments haven't found their way into many drug labels or companion diagnostics.

A 2010 report from the Tufts Center for the Study of Drug Discovery noted that while many companies are submitting data for the FDA's program for Voluntary Exploratory/Genomic Data Submissions, they also said that "they cannot use pharmacogenomic data in an approval package due to a variety of regulatory concerns."

The Medical Progress Today blog provides a forum for economists, scientists, and policy experts to explore the scientific, regulatory, and market frameworks that will best support 21st century medical innovation.  We will focus especially on the U.S. Food and Drug Administration, the agency responsible for overseeing the nearly half-trillion dollar drug and medical device markets in the United States.

The blog will range widely in terms of topics and POV.  But, at its heart, MPT is about harnassing the power of science, market incentives, and (prudent) regulation to create the kind of health care system that we all want - more effective, efficient, and affordable.

We live in a time of breathtaking advances in the capacity to treat--and cure--illness. The translation of the human genome and an explosion of information from new sciences like metabolomics and proteomics have given researchers powerful new tools for understanding, treating and (eventually) curing deadly diseases like cancer and Alzheimer's. The old medical paradigm treated illnesses symptomatically with one-size-fits all medicines; the new paradigm will analyze disease at its molecular roots and to develop personalized therapies that match a patient's own unique biochemistry.

The question is not whether personalized medicine will become a reality, but when. Innovation is currently struggling in the face of regulatory, reimbursement, and insurance frameworks built around public health assumptions that fit the middle of the last century, rather than the first decades of the 21st century.

Turning personalized medicine from an aspiration into a reality will require regulators, companies, and researchers to breakdown binary regulatory frameworks; develop collaborative approaches to rapidly validate new technological standards; and embrace clinical tools that allow patients and physicians to become full partners in the innovation process.

Through both this blog site and the original essays it will commission, MPT will provide a forum to explore the most current ideas--and emerging challenges--in the field of personalized medicine.

We hope that you will find MPT a vital and provocative resource for building a health care system ready to embrace the full potential of personalized medicine and sustain U.S. leadership in biomedical innovation.

The U.S. government is stepping up its use of the so-called "responsible corporate officer doctrine" to hold pharmaceutical company executives personally and criminally responsible for violations of FDA laws. (Here is one example.) This enforcement approach doesn't require the executives to be personally responsible for an offense or even to be aware that an offense was committed. As we know, all Americans are supposed to be innocent until proven guilty, which requires prosecutors to prove criminal intent and criminal behavior. With the responsible corporate officer doctrine, prosecutors simply need to prove that a law was broken somewhere in the company and it follows that the executive(s) at the top of the organization are guilty.

One conviction is worse than merely a fine and jail time; it can mean the end of that executive's career because the government is also trying to ban convicted individuals from doing business with Medicaid and Medicare. No drug company can afford to forego those segments of its business and therefore no drug company would ever hire such an employee. Welcome to "one strike and you are out."

Sometimes the violation might be due to bad luck if, for instance, a raw ingredient is later found to be tainted. Perhaps most amazing, however, is that some of the FDA's rules--violations of which can end an executive's career--actually harm patients. These supposed "crimes" actually have clear beneficiaries.

Consider off-label prescribing. Off-label prescribing is a legal and common way for physicians to provide the best medicines for their patients. When a new medicine is approved by the FDA, it is approved for a particular disease or diseases. Usage for these disease(s) is called on-label prescribing. If the disease isn't listed on the product's package insert, that prescribing is called off-label.

Off-label prescribing is legal, widely practiced, and is actively encouraged by Congress, the National Institute for Health, Medicare, the Veterans Administration, and the National Cancer Institute. However, the company that markets that medicine can't encourage off-label prescribing in any manner whatsoever because the FDA considers such promotion illegal. The prescribing itself is legal; it is the communication that is illegal. This prohibition on communication for legitimate medical conditions does real harm to real people, to say nothing of the harm to our First Amendment rights.

Consider the following case. A pharmaceutical sales representative reads a peer-reviewed science journal article that recommends an off-label use of the company's product. This enterprising sales rep then gives a reprint of that article to an interested doctor and that doctor prescribes the drug for that condition. The cost of the drug is reimbursed by insurance companies and Medicare. Patients get better. The doctor receives kudos. The federal government then sues the drug company and the top executives, forcing them to pay fines and serve prison time. When they are later released, they are unable to find any employment in the pharmaceutical industry. Why? Because one of their employees was trying to help patients and physicians.

Pharmaceutical companies are energetically trying to find better ways to help patients and physicians--that's their whole business model. Treating company executives as criminals with a "one strike and you are out" doctrine won't help a single patient fight breast cancer or Parkinson's disease.

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