Pharmaceutical Advertising 2020 Comparisons

Last Updated March 03, 2020

Contributed By King & Spalding LLP

Law and Practice

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King & Spalding LLP has more than 1,100 lawyers in 21 offices and helps companies advance business interests in more than 160 countries. The firm’s FDA and life sciences practice plays a critical role within this context. With over 40 lawyers and professionals in the USA and Europe, the group counsels more than 200 large, mid-cap and start-up drug, biotech, medical device, food manufacturers, distributors, healthcare providers and technology ventures. The EU team focuses on EU and national (French, Belgian and German) issues associated with the legal requirements of pharmaceuticals/biologics, medical devices, cosmetic and food industries. Clients receive tremendous synergy from the interaction of the FDA/regulatory and healthcare teams with the product liability, government investigations, discovery, appellate, intellectual property, corporate and litigation teams. More than 300 lawyers and professionals in 16 areas devote all or a substantial portion of their practices to the life sciences industry.

There are multiple federal and state laws, government bodies and self-regulatory codes that govern or guide the marketing and advertising of pharmaceuticals in the United States.The Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) are the entities primarily responsible for oversight of pharmaceutical marketing. 

FDA’s Authority Over Prescription Drug Advertising and Promotion

The federal statute that grants the FDA broad authority over the advertising and promotion of prescription drugs is the Federal Food, Drug, and Cosmetic Act (FDCA). Under this authority, the FDA has issued extensive regulations. FDA regulations, found in Title 21 of the Code of Federal Regulations (CFR), outline the requirements for prescription drug advertising and promotion. The FDA has also issued a number of guidance documents that describe the agency's policy on specific regulatory issues related to prescription drug marketing. FDA advertising and promotion guidance documents are found on FDA’s website and are published in the Federal Register.

Within the FDA, the Office of Prescription Drug Promotion (OPDP) is charged with ensuring information contained in prescription drug advertising and promotion is truthful, balanced and not misleading. The OPDP engages in a variety of tasks to perform this responsibility, including among other things, providing written advisory comments to drug companies on proposed promotional materials, reviewing complaints about alleged violations, and sending Untitled or Warning Letters to notify firms of allegedly false or misleading promotional materials.

FTC’s Authority Over Promotion of OTC Drugs

The FTC Act (FTCA) authorises the FTC to prevent “unfair or deceptive acts or practices in or affecting commerce”, including the dissemination of false advertising for drugs. Because the FDCA and FTCA grant FDA and FTC overlapping authority, the two agencies signed a Memorandum of Understanding (MOU) in 1971, amended most recently in 1992. The MOU gives FDA primary jurisdiction to regulate the labelling of all drugs and the advertising of prescription drugs. The FTC, on the other hand, maintains primary authority over the advertising of non-prescription drugs (also known as over-the-counter (OTC) drugs); see 2.1 Definition of Advertising.

Other Sources of Oversight of Drug Promotion

Many states have consumer protection laws, both civil and criminal, that prohibit false or misleading advertising. For example, several states have adopted the Uniform Deceptive Trade Practices Act (UDTPA). California, in particular, has an “Unfair Competition Law” and a “False Advertising Law”. Unlike the FTCA and FDCA, most state false advertising and unfair competition laws allow consumers to bring suits, typically in the form of class action lawsuits.

Another source of oversight of drug promotion is private enforcement through the Lanham Act (15 USC 1125(a)). The Lanham Act allows competitors and other entities that have suffered commercial harm to sue for false or misleading advertising. Notably, the Lanham Act does not allow a private right of action by consumers.

Lastly, while not advertising laws themselves, promotional activities may also implicate the criminal Anti-Kickback Statute (42 USC 1320a-7b) and the Civil Money Penalties Statute (42 USC 1320a-7a), which broadly prohibit offering anything of value in return for the recipient purchasing, prescribing, referring, or using, or for recommending or arranging for others to purchase, prescribe, refer or use, any item or service that may be covered in whole or in part under a federal health care program (such as Medicare or Medicaid). Thus, a promotion that promises valuable benefits, including discounts or free items or services, may implicate the broad scope of these laws. While these laws also do not allow a private right of action by consumers, violations of the Anti-Kickback Statute may also result in violations of the civil False Claims Act (31 USC 3729). The False Claims Act addresses "false claims" made in an attempt to defraud the government, which can be based on unlawful promotion. It includes a whistle-blower provision that allows private citizens to bring claims on behalf of the United States and to be able to share in the government’s recoveries resulting from such claims.

Pharmaceutical advertising and promotion are subject to a number of voluntary guidelines issued by trade associations or medical professional associations. These guidelines address a variety of issues, ranging from funding continuing medical education, engaging physicians as speakers or consultants and giving gifts or items of value to physicians.

The primary distinction between FDA and FTC rules and those of self-regulatory bodies in the area of pharmaceutical marketing is that the FDA’s and FTC’s rules are enforced through law, providing authority to impose civil and/or criminal sanctions. Self-regulatory codes and professional guidelines establish standards of acceptable behaviour but, because they are voluntary, they have no legal authority behind them.

Of primary importance for pharmaceutical marketing is the voluntary code of conduct adopted by the pharmaceutical industry trade association, the Pharmaceutical Research and Manufacturers of America (PhRMA). The Code on Interactions with Healthcare Professionals (PhRMA Code) provides guidelines for pharmaceutical companies when interacting with healthcare professionals (HCPs). Though the code is voluntary, the US Department of Health and Human Services, Office of Inspector General (HHS OIG) endorsed its use in a 2003 guidance document saying compliance could “substantially reduce the risk of fraud and abuse”. Thus, many pharmaceutical companies adopt the code as company policy and a few states have made the code mandatory for pharmaceutical companies operating within their borders. PhRMA has also issued pharmaceutical advertising-specific codes, including the Direct to Consumer Advertising Principles and Principles on Responsible Sharing of Truthful and Non-Misleading Information.

Other third-party guidelines relevant to communications about pharmaceuticals include the Accreditation Council for Continuing Medical Education (ACCME) Guidelines and the American Medical Association (AMA) Guidelines.

In addition, the National Advertising Division (NAD), a non-judicial, advertising industry self-regulatory body, adjudicates advertising disputes brought by consumers, competitors, or the NAD itself. Because it is a self-regulatory body, NAD’s decisions are non-binding and do not represent a finding of violation of law. Rather, if the NAD recommends that an advertiser modify or cease distributing the advertisement at issue, the advertiser can voluntarily comply or appeal the decision to the National Advertising Review Board (NARB). If the advertiser does not comply with the NAD’s final decision, the NAD typically refers the advertiser to the relevant government agency (most commonly the FTC). Although the NAD has jurisdiction to hear challenges to prescription and OTC drug advertising, historically, NAD challenges in the pharmaceutical space have primarily targeted OTC drug advertising.

The FDA’s authority under the FDCA includes oversight of promotional labelling for all drugs and advertising for prescription drugs. Section 201(m) of the FDCA defines drug labelling as “all labels and other written, printed or graphic matter (1) upon any article or any of its containers or wrappers, or (2) accompanying such article”. Courts have defined “accompanying” broadly such that promotional labelling may include any promotional materials distributed by or on behalf of the manufacturer that bear a relationship to the product (eg, brochures, literature reprints, mailers, printed or digital sales aids, emails, slide decks, videos, websites and social media posts).

The FDCA does not define advertising; however, FDA regulations provide examples such as “advertisements in published journals, magazines, other periodicals, and newspapers, and advertisements broadcast through media such as radio, television, and telephone communication systems”.

FDA acknowledges the role that pharmaceutical manufacturers play in providing important health information to consumers and HCPs. To that end, FDA recognises certain limited categories of information about disease states and therapies that constitute neither labelling nor advertising and are, therefore, not subject to the requirements prescription drug promotion under the FDCA. That is, certain categories of information are non-promotional communications.

One example of “non-promotional” information is disease awareness communications, which are communications disseminated to consumers or HCPs that discuss a particular disease or health condition, but do not mention any specific drug or make any representation or suggestion concerning a particular drug. A review of past FDA guidance and enforcement suggests that adhering to the following principles may help ensure that disease awareness communications do not cross the line into promotion or advertising:

  • discuss a disease or health condition only (ie, no express or implied discussion of a specific drug);
  • if consumer-directed, advise readers to “see your doctor” for possible diagnosis and/or treatment. If HCP-directed, encourage awareness of signs or provide information to assist in diagnosis of disease or condition;
  • do not name a particular product;
  • do not include any representation or suggestion about a particular product or communicate in way that is “perceptually similar” to a promotional communication (eg, do not use similar brand imagery, and brand slogans); and
  • do not display or distribute the disease awareness communication close in place or time to a promotional communication.

Like disease awareness, there are other limited categories of information that FDA has carved out as neither advertising nor labelling (ie, “non-promotional” communications). For additional examples, see 3.3 Provision of Information to Healthcare Professionals, 3.4 Provision of Information to Healthcare Institutions and 3.5 Publication of Compassionate Use Programmes.

Historically, FDA has asserted authority to regulate press releases in part on the basis that certain types of press releases fall into the category of promotional labelling or advertising. In general, FDA will expect any press release discussing a specific approved drug to comply with FDA regulatory requirements for promotional labelling, including being truthful and non-misleading, maintaining fair balance between the risks and benefits described in the press release and providing full disclosure of relevant contraindications, warnings, precautions and adverse events.

In the pre-approval context, press releases that claim safety or effectiveness for investigational drugs are likely to attract agency attention. In general, FDA expects press releases on investigational drugs (eg, announcing significant clinical study results or filing of a New Drug Application with FDA) to maintain non-promotional intent, tone, and context and avoid promotional product claims and commercial objectives. The press release should not be false or misleading in any respect, but truthfully and accurately present all material information. Press releases that make conclusory statements regarding the safety or efficacy of the investigational drug, mis-characterise study data, or fail to adequately disclose the investigational nature of the drug could be viewed be FDA as misbranding of an investigational drug under the FDCA.

There are also certain press releases that FDA is unlikely to view as promotional labelling, even if the press release mentions a product name. For example, it is unlikely that FDA would assert jurisdiction over press releases announcing the following type of information (assuming the press releases contain no drug promotional claims): new distributor of product, earnings releases that mention the company’s products by name but make no product claims, new leadership at the company, new contract manufacturer, information about patents, or new charitable initiative.

A comparative or superiority claim states or implies that one drug is “superior” or “better” to another. It is misleading to make an unsubstantiated or exaggerated comparative or superiority claim. Generally, the FDA requires that any comparative efficacy or safety claim be supported by adequate and well-controlled head-to-head studies or a large multi-centre trial. The FDA does not typically permit a claim of superior efficacy or safety that is based solely on the differences in the labelling of the drugs or a comparison of results from two different and independent studies. Comparative claims should be clinically relevant to patients and must not be false or misleading.

Promotion of an investigational new drug is prohibited under 21 CFR Section 312.7 (a): “A sponsor or investigator . . . shall not represent in a promotional context that an investigational new drug is safe or effective for the purposes for which it is under investigation or otherwise promote the drug”.  The FDA is primarily concerned that a drug not be promoted as safe and effective before investigations have been completed and the drug is approved.

Importantly, not all pre-approval (or even off-label) communications are prohibited. The FDA permits scientific exchange under Section 312.7(a), which also states that “[t]his provision is not intended to restrict the full exchange of scientific information concerning the drug, including dissemination of scientific findings in scientific or lay media”.  There are a range of permissible communications that qualify as scientific exchange (ie, non-promotional communications) under certain parameters, including scientific publications and presentations, support for independent scientific and medical education, responding to unsolicited requests for information, distributing scientific or medical publications on unapproved uses and/or risk information, listing information on clincaltrials.gov and communications with payors in advance of approval.

In longstanding FDA guidance, "Industry-Supported Scientific and Educational Activities (1997)", the FDA makes clear that it will not regulate industry-supported scientific activities that are independent of the influence and control of the supporting company. The guidance outlines a number of factors that FDA will consider in evaluating the independence of industry-sponsored scientific activities (including those that may discuss unapproved drugs or off-label uses of approved drugs). Examples of these factors include:

  • the control of content and selection of presenters;
  • the meaningfulness of the disclosure to the audience at the time of the presentation of the company’s funding of the program, any significant relationship between the program provider, presenter or moderator and the supporting company and whether any unapproved uses of drugs will be discussed; and
  • whether the intent of the program is free from commercial influence or bias, or biased toward a particular product.

In addition, it is common practice for pharmaceutical companies to host booths or exhibits at major medical meetings or scientific conferences in a designated “trade show/exhibit” area. Some companies sponsor multiple types of booths. Promotional booths – and all promotional materials displayed or distributed and discussions occurring in the booth – are subject to the requirements for the promotion of prescription drugs, including that they are consistent with label, truthful and non-misleading and adequately disclose risk information. In contrast, a medical information booth is non-promotional and may be staffed by company scientific or medical personnel who may discuss the company’s pharmaceutical pipeline and respond to questions about off-label use. At international conferences, a third booth may be offered only for non-US HCPs if there are any differences in the approved uses of the company’s drugs in the USA and other countries. Notably, the FDA focuses primarily on the messaging rather than the booth type and will object to violative promotional communications wherever they occur.

As noted in 3.1 Restrictions on Provision of Information on Unauthorised Medicines or Indications, the FDA strictly prohibits the promotion of investigational drugs. In addition, the FDA prohibits “off-label” promotion. More specifically, the FDA requires that all promotional communications for approved drugs include only information about the drug that is within the drug’s FDA-approved label (on-label) or is consistent with the label. Despite the broad prohibitions, the FDA has created the following two limited “safe harbours” through which manufacturers can distribute certain information to HCPs on off-label uses of approved drugs:

FDA Reprints Guidance – Permits Proactive Distribution of Off-Label Reprints to HCPs

Under the FDA’s 2014 revised draft guidance, "Distributing Scientific and Medical Publications on Unapproved New Uses — Recommended Practices", there is a pathway for distributing peer reviewed journal articles discussing “off-label” uses to HPCs. This is a limited exception and applies only to peer reviewed journal articles distributed in complete, unabridged form. Per the guidance, the reprints may not be used in promotion or incorporated into promotional materials. Reprints must be accompanied by disclosures and information outlined in the draft guidance. The draft guidance outlines a number of additional requirements that should be assessed on a case-by-case basis when evaluating a journal article for potential dissemination; see 5.4 Restrictions on Reprints of a Journal Articles. The draft guidance also creates a path for proactively distributing Clinical Practice Guidelines (CPG) and scientific and medical reference texts that include information on unapproved new uses of that manufacturer’s approved drugs.

FDA Unsolicited Requests Guidance – Reactive Distribution of Information on Off-Label Use

Under a 2011 draft guidance, "Responding to Unsolicited Requests for Off-Label Information About Prescription Drugs and Medical Devices", the FDA permits companies to respond to unsolicited questions or requests for information on unapproved uses of prescription drug products. The guidance outlines the FDA’s position and recommendations on:

  • distinguishing solicited versus unsolicited requests for off-label information;
  • distinguishing non-public versus public requests and responses;
  • responding to unsolicited requests made directly and privately; and
  • ensuring that all responses to unsolicited public requests — including those encountered through public electronic media (eg, YouTube, Twitter) — are communicated privately to individuals.

In 2018, the FDA issued a final guidance, "Drug and Device Manufacturer Communications with Payors, Formulary Committees, and other Similar Entities – Questions and Answers", creating a new safe harbour that expressly permits manufacturers to disseminate certain information about investigational drugs and unapproved uses of approved drugs to payors prior to approval. For clarity, the guidance offers several examples of payors, including the following types of healthcare institutions:

“public and private sector payors, formulary committees (eg, pharmacy and therapeutic committees), drug information centres, technology assessment committees, pharmacy benefit managers, third party administrators, and other multidisciplinary entities that, on behalf of health care organisations, review scientific and/or technology assessments to make drug or device selection or acquisition, formulary management, and/or coverage and reimbursement decisions on a population basis…”.

The final guidance is the first time that FDA has expressly granted permission for such exchanges. As a result, communications disseminated in compliance with the guidance will not be considered violations of the prohibition on promotion of an investigational product in 21 CFR Section 312.7(a). The guidance lists the types of information about investigational drugs and unapproved uses of approved drugs that may be disseminated pre-approval to payors. Examples cited in the guidance include: information about the indication sought, anticipated timeline for FDA approval, pricing information, patient support programs, and patient utilisation projections. Results of clinical studies are also permitted if presented without characterisations or conclusions regarding safety or efficacy. All information provided must be “unbiased, factual, accurate and non-misleading” and must be accompanied by a clear statement of the drug’s investigational status and stage of development.

Compassionate use or “expanded access” programs establish a pathway for a patient with an immediately life-threatening condition or serious disease or condition to access an investigational drug when the treatment is unavailable in clinical trials and there are no other similar and sufficient therapy alternatives.

Under the 21st Century Cures Act, companies developing investigational drugs are required to publicly publish an expanded access policy on the company website and/or the Reagan-Udall Foundation’s Expanded Access Navigator website for the investigational drug. If a company is developing multiple investigational drugs, it can establish different expanded access policies for each of its investigational drugs and post these policies separately.

The published policy must include the following information:

  • contact information for the manufacturer or distributor;
  • the procedure for submitting requests;
  • the general criteria that the manufacturer or distributor uses to evaluate the requests;
  • the length of time anticipated to respond to the request; and
  • a hyperlink or other reference to the clinical trial record containing all the required information that must be submitted to ClinicalTrials.gov about expanded access availability for the drug.

As discussed in 3.1 Restrictions on Provisions of Information on Unauthorised Medicines or Indications, manufacturers must ensure that communications about their expanded access programs do not cross the line into promotion of an investigational drug by representing expressly or by implication that the investigational drug is safe or effective for the purposes for which it is under investigation.

Unlike many other countries, advertising to the general public, also commonly referred to as direct-to-consumer (DTC) advertising, is permitted in the United States. Companies may promote prescription drugs to the general public provided that the communication meets the following fundamental requirements:

  • On-label or Consistent with Label - Advertising and promotion of prescription drugs must adhere to or be consistent with the intended use for which the product is approved by the FDA. Such use is detailed in the FDA-approved labelling (often referred to the Prescribing Information) for the prescription drug. The labelling provides directions and information on how to use the product safely and effectively for the approved indication, including but not limited to the patient population, dosage and administration. Advertising and promotion that discusses use of the product that are not contained in or consistent with the FDA-approved labelling are regarded as unlawful “off-label” promotion.
  • Fair balance - The FDA regulations require prescription drug promotion and advertising to present a “fair balance” between product benefits and risks, ensuring that such information appears comparable in depth, detail and context. Promotional materials are misleading if they fail to present information about risks associated with a drug with a prominence and readability reasonably comparable with the presentation of information related to the effectiveness of the drug. Factors impacting prominence and readability include typography, layout, contrast, headlines, paragraphing, white space, and other techniques apt to achieve emphasis. Refer to the FDA’s May 2009 draft guidance, "Presenting Risk Information in Prescription Drug and Medical Device Promotion", for recommendations for accomplishing fair balance in advertising and promotion.
  • Adequately substantiated - Traditionally, all DTC advertising and promotional claims related to the safety and efficacy of a prescription drug have been required to be supported by substantial evidence or substantial clinical experience, which is the standard used by the FDA to evaluate and approve prescription drug products. Under guidance finalised in 2018, claims must be supported by at least scientifically appropriate and statistically sound evidence. 
  • Otherwise truthful and not misleading - If prescription drug advertising and promotion is false or misleading in any particular, it will be considered misbranded and subject to enforcement. Even if communications are on-label/consistent with label and adequately substantiated, communications must not be false or misleading for other reasons, including for example, the failure to include information necessary for consumers to accurately interpret the communication.

Although not a requirement, the FDA strongly recommends the use of consumer-friendly language in all consumer-directed advertising and promotion. Materials should avoid the use of technical language, scientific terms, and medical jargon, and instead be written in language designed to be understood by a broad target audience with various levels of literacy skills. The promotion of OTC drugs must also adhere to the product’s approved labelling or monograph, as applicable. In addition, such promotion must be truthful and not misleading, including that all advertising claims are substantiated by competent and reliable scientific evidence. The FTC maintains regulations and guidelines governing consumer advertising of OTC drugs to ensure that communications not deceptive or misleading.

Consumer-directed advertising and promotion that provides information about a prescription drug must contain the following core elements, as required by the FDCA and FDA regulations:

  • Proprietary and established names - The proprietary and established names are the brand (or trade) name and the generic name, respectively. The placement, size, prominence, and frequency of the proprietary and established names for prescription drugs are specified in FDA regulations, with additional recommendations in the FDA’s 2017 guidance, "Product Name Placement, Size, and Prominence in Promotional Labeling and Advertisements".
  • Quantitative composition - Advertising and promotion must include the formula showing quantitatively each ingredient of the advertised drug. Companies commonly include this information with the proprietary and established names as part of the product logo.
  • Brief Summary - Printed DTC advertisements must include information in “brief summary” that discloses each side effect, warning, precaution and contraindication. To fulfil this requirement, DTC consumer-directed print advertisements for prescription drugs commonly included the complete risk-related sections of the product’s Prescribing Information (PI). Further, to fulfil the adequate directions for use requirement for promotional labelling pieces, the full PI has traditionally been provided. In August 2015, FDA issued revised draft guidance, "Brief Summary and Adequate Directions for Use: Disclosing Risk Information in Consumer-Directed Print Advertisements and Promotional Labeling for Prescription Drugs", that provides recommendations for a “consumer brief summary” for printed promotional labelling and advertising. The guidance recommends that the consumer brief summary focus on the most important risk information rather than an exhaustive list of product-related risks, and present risk information in a way most likely to be understood by consumers. In addition, a copy of the full PI in consumer-directed promotional labelling is no longer recommended.
  • Major Statement - Advertisements broadcast through media such as television, radio, or telephone communications systems must disclose the product’s major risks in a clear, conspicuous, and neutral manner in either the audio or audio and visual parts of the presentation. This is referred to as the “major statement.” In addition, the advertisement must also present a brief summary or, alternatively, may make “adequate provision” for the dissemination of the PI to consumers. This is referred to as the adequate provision requirement. In August 1999, the FDA issued two guidance documents, "Consumer-Directed Broadcast Advertisements" and "Consumer-Directed Broadcast Advertisements - Questions and Answers", with recommendations for the satisfying requirements for the adequate provision through a toll-free telephone number, concurrent print ad in widely distributed publication, website, and/or consultation with an HCP.
  • Adverse Event Reporting Disclosure Statement - DTC advertisements must include the following statement printed in conspicuous text: “You are encouraged to report negative side effects of prescription drugs to the FDA. Visit www.fda.gov/medwatch, or call 1–800-FDA-1088”.

Reminder Labelling and Advertising

Communications that only identify the name of a prescription drug, and do not include any indications, dosage recommendations, or other representations about the product or suggest a use for the product, are considered “reminder” labelling and advertising, and are exempt from the general requirements listed above. Under FDA regulations, reminder labelling and advertising must be limited to only the proprietary and established names of the drug product. Additional optional information includes quantitative ingredient statements, dosage form, quantity of package contents, price, the name and address of the manufacturer, and price information. 

Importantly, reminder labelling and advertising is not permitted for a prescription drug with a boxed warning in its FDA-approved labelling.

Interactions between pharmaceutical companies and patients and/or patient organisations are permitted in the United States, subject to the variety of limitations discussed in this chapter, for example, companies may engage in disease awareness communications targeting consumers; see 2.2 Difference Between Information and Advertising. For product-related advertising and promotion, communications must be on-label/consistent with label, fair balanced, adequately substantiated and not otherwise false or misleading; see 4.1 Main Restrictions on Advertising to the General Public and 4.2 Information Contained in Advertising to the General Public. In addition, interactions must not implicate the Anti-Kickback Statute by inducing patient organisations or patients to recommend or use the advertised product; see 8 Inducement/Anti-bribery and 9Gifts, Hospitality, Congresses and Related Payments.

Companies may also communicate with patients and patient organisations, such as patient advocacy groups, in a non-promotional manner to respond to unsolicited requests for information (see 3.3 Provisions of Information to Healthcare Professionals) or provide information about clinical studies for recruitment purposes. 

In addition to the above considerations, companies interacting with patients must abide by applicable federal and state privacy laws and avoid providing advice for the diagnosis, treatment, care or prognosis of an individual, which would be regarded as unlawfully engaging in the practice of medicine.

Rules for the advertising and promotion of prescription drugs to HCPs are generally the same as those that apply to the advertising and promotion to consumers, with a few notable differences. The following highlights the basic requirements for advertising and promotion directed at HCPs. The first four requirements are identical to requirements for consumer-directed promotion:

  • on-label or consistent with label;
  • fair balance;
  • adequately substantiated; 
  • otherwise truthful and not misleading; and
  • adequate directions for use.

Adequate directions for use is defined as directions under which the layman can use a drug safely and for the purposes for which it is intended. Prescription drugs are exempt from this requirement under certain conditions. Specifically, promotional labelling about a drug’s use must include “adequate information for such use, which includes “relevant warnings, hazards, contraindications, side effects, and precautions, under which practitioners licensed by law to administer the drug can use the drug safely and for the purposes for which it is intended, including all conditions for which it is advertised or represented . . .” The regulations also require that such information is provided in the same “language and emphasis” as the FDA-required labelling. In general, these requirements are met by providing a copy of the full FDA-approved labelling (ie, Package Insert or Prescribing Information) with promotional labelling materials directed to HCPs.

Advertising and promotion targeting HCPs must also contain some of the same core elements as consumer-directed advertising and promotion, including proprietary and established names and quantitative composition. Importantly, unlike consumer-directed advertising, a “brief summary” for professional advertisements should follow the FDA’s traditional approach, which includes reprinting the complete risk-related sections of the PI with the ad. 

Promotion and Advertising to Payors

Under the FDCA, the promotion of prescription drugs to payors may include healthcare economic information (HCEI) related to a product’s indication, provided that it is supported by competent and reliable scientific evidence. This is a different evidentiary standard than substantial evidence and “scientifically appropriate and statistically sound” evidence that are required to support on-label and consistent with label promotional claims. The pathway to promote HCEI to payors grants some flexibility from the standard approach, but is still subject to other rules of prescription drug promotion. Refer to the FDA’s 2018 guidance, "Drug and Device Manufacturer Communications with Payors, Formulary Committees, and other Similar Entities – Questions and Answers", for details on providing HCEI to payor audiences.

As described in prior sections, promotional communications for prescription drugs must include only information about the drug that is either within the drug’s FDA-approved label (on-label) or not included in the FDA-approved label, but consistent with the label (CFL). In 2018, FDA issued final guidance, "Medical Product Communications That Are Consistent With the FDA-Required Labeling — Questions and Answers" (CFL Guidance), clarifying when it will consider information to be CFL.

A 3-factor test is used to determine whether product-related information is CFL. If a product communication fails any of the three factors, it is not considered CFL and risks being off-label.

  • How does the information in the communication compare to the information in the FDA-approved label? – If the answer to any of the below four questions is yes, the information is not CFL:
    1. Indication – Does the information relate to a different indication than the one(s) reflected in the drug’s FDA-approved label?
    2. Patient Population – Does the information represent or suggest use of the drug in a patient population outside the approved patient population in the drug’s FDA-approved label?
    3. Limitations and Directions for Handling/Use – Does the information represent or suggest use of the drug in a manner that conflicts with the limitations of use or directions for handling, preparing, and/or using the drug in the drug’s FDA-approved label?
    4. Dosing or Use Regimen/Administration – Does the information represent or suggest use of the drug in a manner that conflicts with the recommended dosage or use regimen, route of administration, or strength(s) (if applicable) set forth in the drug’s FDA-approved label?
  • Does the information suggest or represent use of the drug in a manner that could increase the potential for harm to health relative to the information reflected in the drug’s FDA-approved label?
  • Do the directions for use in the FDA-approved label enable the product to be safely and effectively used under the conditions represented/suggested in the communication?

In order to be distributed as CFL, any data, studies or analyses that meet all three of the above factors must also be truthful and non-misleading. The information must have adequate evidentiary support (ie, meet the evidentiary standard of “scientifically appropriate and statistically sound” (SASS)), be factually accurate, and be presented with appropriate context, including disclosure of any limitations of the data, analyses and conclusions. The CFL Guidance includes examples and explanations of several categories of communications that may be considered CFL, including certain communications about comparisons, adverse reactions, onset of action, long-term safety or efficacy, patient subgroups, information on patient compliance or adherence and patient perceptions, convenience, and mechanism of action. 

As noted above, all promotional communications should be truthful and not misleading and be on-label or CFL. Often, a combination product is approved so that the labelling will include details about each of the individual products that comprise the combination product. In such cases, promotional communications would be able to reference on-label statements about each element of the product. If the FDA-approved labelling does not include details of both elements of a combination product, or if the company is seeking to make other statements that are not included in the labelling, the company should evaluate the information under the CFL Guidance and consider potential off-label risks; see 5.2 Reference to Data Not Included in the Summary of Product Characteristics.

Companies may provide reprints of journal articles to HCPs subject to certain restrictions. If the reprint is on-label or CFL, the company may use the reprint in a promotional manner, subject to the basic requirements for advertising and promotion directed at HPCs. If the reprint discusses an unapproved use of the product (ie, off-label), then a company may consider distributing the reprint under FDA’s established safe harbour for off-label reprints.

The FDA has issued three guidance documents about the distribution of reprints: a final guidance from 2009 entitled "Good Reprint Practices for the Distribution of Medical Journal Articles and Medical or Scientific Reference Publications on Unapproved New Uses of Approved Drugs and Approved or Cleared Medical Devices"; a draft guidance from February 2004 entitled "Distributing Scientific and Medical Publications on Unapproved New Uses — Recommended Practices (hereinafter "Off-Label Reprints Guidance"); and a draft guidance from June 2014 entitled "Distributing Scientific and Medical Publications on Risk Information for Approved Prescription Drugs and Biological Products — Recommended Practices" (hereinafter "Risk Information Reprints Guidance"). 

Off-Label Reprints Guidance

The Off-Label Reprints Guidance provides recommendations for the distribution of three different types of publications: scientific or medical journal articles, scientific or medical reference texts, and clinical practice guidelines. Each type of publication is subject to specific recommendations to ensure that distribution is appropriate.

Generally, off-label reprints should not be false or misleading and should not pose a significant risk to public health. The source of the publication should be considered. FDA guidance advises that reprints should not be from sources such as letters to the editor, special supplements funded by manufacturer, or abstracts. Additionally, reprints should be provided in a complete and unabridged format, without alteration. Distribution of an off-label reprint should be accompanied by disclosures about the distributing company; the company’s product mentioned in the piece; financial disclosures/conflicts of interest of reprint authors, including nature and amount of such interest; source of funding of the study, if applicable; that the reprint discusses off-label uses of the company’s product; and all significant risks or safety concerns associated with the off-label use discussed in the reprint. Additionally, the reprint should be accompanied by a copy of the product’s Prescribing Information.

Risk Information Reprints Guidance

Under separate guidance, FDA permits the distribution of reprints about new risk information that may refute, mitigate, or refine risk information in the FDA-approved labelling. The reprint should meet the standards presented in the Risk Information Reprints Guidance, including publication in an independent, peer-reviewed journal. The study or analysis should meet applicable study design and methodology standards to warrant consideration in evaluating the implications of a product’s risks. Further, the study or analysis should also be at least as persuasive as the data sources that support the existing risk assessment of causality, severity, and/or incidence of the adverse reaction as found in the product’s approved labelling. Additionally, the conclusions of the study or analysis should give enough weight to and be a fair characterisation of all relevant information available in the safety database.

The FDA also requires that the risk information reprint be transmitted with clear and conspicuous disclosures about the critical findings, study design, and significant methodologic or other confines of the study or analysis that may limit the persuasiveness or scope of findings; study limitations; the information that is not consistent with risk information in the approved labelling; that the FDA has not reviewed the data; and any financial interests or conflicts of interest between the study author(s) and the company.

Medical Science Liaisons (MSLs) are often used to help support other scientific initiatives, such identifying and recruiting potential sites and investigators for company-sponsored studies, scientific and medical advisory boards, and internal training and education; their primary responsibility is scientific engagement and education with HCPs, focusing on specific therapeutic areas, disease states and/or products in support of their company’s product pipeline and portfolio.

In general, an MSL may engage HCPs proactively or reactively consistent with the FDA’s policy on off-label communications; see , 3.4 Provision of Information to Healthcare Institutions and 3.5 Publication of Compassionate Use Programmes. Specifically, MSLs may proactively discuss with HCPs therapeutic areas and disease states generally, as well as approved uses of approved products, such as new uses or new risk information. Proactive discussions of investigational drugs or unapproved uses of approved drugs are generally not regarded as permissible activities for MSLs, as these proactive communications can be perceived as pre-approval or off-label promotion.

A significant role and responsibility of MSLs is reactive interactions with HCPs, in which an MSL responds to unsolicited requests for scientific or medical information; see 3.3 Provision of Information to Healthcare Professionals.

Importantly, the role and responsibilities of an MSL are neither commercial, nor promotional. It is critical that MSLs, and Medical Affairs as a whole, have clear and distinct roles from sales and marketing functions. Further, the activities of Medical Affairs and MSLs should not be influenced by sales or marketing personnel. The separation between functions is critical to preserving the legitimacy of scientific exchange and ensuring that it is not tainted by or converted into promotional activities.

In general, there is no requirement for prior notification or authorisation for prescription drug advertising and promotion; however, there are limited exceptions. The FDA requires prior approval or clearance in certain situations such as accelerated approval, DTC television ads, and under certain circumstances. For example, companies whose ads have violated FDA or FTC standards in the past may be asked to pre-clear their ads in the future. 

Importantly, companies always have the option to voluntarily submit any proposed promotional labelling or advertising to FDA for advisory review. Under this process, a company may benefit from FDA’s input on whether promotional and advertising materials are accurate, balanced, and non-misleading before finalising and disseminating the materials.

Accelerated Approval

For products submitted and approved under accelerated approval, an applicant must submit to the FDA, within 120 days following marketing approval, copies of all promotional labelling and advertising that are intended for dissemination or publication. These pieces must be submitted for FDA consideration during the pre-approval review period. After 120 days following marketing approval, the applicant must continue to submit promotional materials to FDA at least 30 days prior to the intended time of initial dissemination or publication of the promotional labelling or advertising.

DTC TV Ad Pre-Dissemination Review

Under the FDCA, FDA may require the submission of any TV advertisement for a prescription drug for review not later than 45 days before the broadcast. In 2012 draft guidance, titled "Direct-to-Consumer Television Advertisements — FDAAA DTC Television Ad Pre-Dissemination Review Program", FDA articulated its recommendations that companies submit their TV ads for pre-dissemination review. 

Before finalising and releasing a TV ad, it is expected that companies will revise the TV ad, as appropriate, based on FDA review comments. FDA does not expect a sponsor to resubmit its draft TV ad for another review as long as the revisions respond to FDA’s comments and there are no new claims, themes, or concepts.

2253 Submission

FDA’s post-marketing reporting regulations require pharmaceutical companies to submit prescription drug promotional labelling and advertising materials to OPDP before or at the time of first use, which is the initial dissemination of the promotional labelling or initial publication or broadcast of the advertisement for a prescription drug product. This submission must be made with a completed Form FDA 2253 and include a copy of the promotional labelling or advertising material and the product’s current FDA-approved labelling (ie, Prescribing Information). The submission does not require FDA’s approval or clearance; however, the failure to submit advertising and promotion is a violation of FDA regulations.

FDA regulations governing current Good Manufacturing Practices (cGMP) require strict controls over labelling issued for use in drug product labelling operations. Although this regulation is typically applied to FDA-approved labelling (ie, Prescribing Information), it should also be used for the development of promotional labelling. 

Controls over promotional labelling and advertising, including their review, approval, issuance, and management, are critical to ensuring compliance with applicable laws and guidelines. It is a best practice to adopt internal policies and standard operating procedures (SOP) for managing the review, approval and use of promotional labelling and advertising. Typically, this is a cross-functional activity that includes representatives from legal, regulatory, medical and compliance departments within the company.

In general, FDA’s standard advertising and promotion rules apply for advertising and promotion on the Internet and social media.

For website promotion, FDA expects prescription drug websites to include Important Safety Information (ISI) on the same screen as efficacy information, to provide a prominent link to the full prescribing information, to distinguish sites intended for US audiences and international audiences, to ensure that all claims, images, and graphics are CFL, and to avoid links to off-label information. The FDA requires companies to submit the website’s content via FDA Form 2253 at the time of first posting.  For interactive website content, website content should be submitted at the time of first posting and then updated monthly. Refer to the FDA’s 2014 draft guidance, "Fulfilling Regulatory Requirements for Postmarketing Submissions of Interactive Promotional Media", for further information about 2253 submissions.

Separately, the FTC has published several guides governing disclosures on the Internet and social media, including ".com Disclosures: How to Make Effective Disclosures in Digital Advertising" (2013) and "Disclosures 101 for Social Media Influencers" (2019) that are helpful in evaluating Internet and social media communications about prescription and OTC drugs. 

FDA permits advertising and promotion of prescription drugs on social media. Generally, FDA has not imposed any special restrictions or guidelines for using social media for drug promotion. Rather, FDA’s standard advertising and promotion rules apply, regardless of the social media platform being used.

FDA has issued a few guidance documents relevant to use of social media for prescription pharmaceutical promotion. In June 2014, FDA issued a draft guidance outlining specific rules regarding use of social media platforms with limited characters and space: "Internet/Social Media Platforms with Character Space Limitations – Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices". The guidance applies to promotional communications that include benefit information about specific drug products on Internet or social media platforms with character limitations. (eg, Twitter, online paid search links). FDA’s long-standing rules for fair balance and risk disclosure apply to character-limited communications about a drug’s benefits. FDA regulations must be met for all device types; for example, when the Tweet or other communication can be viewed both on both a desktop and a mobile device.

FDA’s guidance makes clear that Twitter and other character-limited communications will not be appropriate for all drugs. If there are not enough characters to adequately communicate risk information for a particular drug, then character-limited communications may not be a “viable promotional tool” for that drug. It may be particularly difficult to use Twitter and other character-limited communications for drugs with complex indications or extensive serious risks. 

In 2014, FDA also issued two other social media draft guidance documents. The first, "Internet/Social Media Platforms: Correcting Independent Third-Party Misinformation about Prescription Drugs and Medical Devices" (June 2014), describes how companies can address incorrect information posted about their products on social media or the internet by third parties unaffiliated with the company. The second, "Fulfilling Regulatory Requirements for Postmarketing Submissions of Interactive Promotional Media" (January 2014), outlines FDA’s expectations for when firms will be held responsible for social media content, including user generated comments (UGC), and how to submit interactive social media content via Form FDA 2253.

The FDA has also issued a number of enforcement letters for violative drug promotion on social media, including Facebook, Instagram and YouTube. The majority of these letters have cited companies for failing to adequately disclose risk information. Notably, in a 2014 Warning Letter to Zarbee’s, the FDA focused on the issue of Facebook “likes”. In that letter, the company’s Facebook page included independent UGC discussing unapproved uses of the company’s product, to which the company replied or “liked”. This letter illustrates the potential for companies to be held responsible for UGC if they endorse those statements by “liking”, “sharing”, or positively commenting on them.

There is no requirement to include access restrictions on pharmaceutical promotional websites intended for HCPs; however, although not required, it is common practice in the industry to include an interstitial page (eg, pop-up webpage) asking each viewer to confirm they are an HCP before accessing a website intended for an HCP audience.

It is common practice in the USA for pharmaceutical companies to develop disease awareness websites, social media pages, or online advertising directed to consumers. In general, the same rules that apply to traditional forms of disease awareness communications apply to online disease awareness content.

In a 2010 Warning Letter, the FDA cited Novartis Pharmaceuticals for two unbranded, disease awareness websites. The letter alleged that the company used the unbranded websites, GIST Alliance and CML Alliance, to promote its oncology drug, Gleevec. The websites included citations naming Gleevec in the referenced publication and a link to the Gleevec website. The FDA also asserted that both unbranded sites were “perceptually similar” to the branded Gleevec site with similar colour schemes and layout, thus creating implied product promotion.

The Anti-Kickback Statute (AKS) (42 USC 1320a-7b) prohibits individuals and entities from knowingly and wilfully soliciting, receiving, offering or paying any remuneration (directly or indirectly, overtly or covertly, in cash or in kind), in order to induce the provision of a good or service that is reimbursable under a federal health care program, including Medicare and Medicaid. The scope of the AKS is broad and applies to any individual or entity (including manufacturers, healthcare providers and organisations, and lay persons) that provides remuneration, as well as any type of individual or entity (including manufacturers, healthcare providers and organisations, and lay persons) that receives remuneration. In addition, by its terms, the AKS ascribes liability to parties on both sides of an impermissible “kickback” transaction, and courts have broadly interpreted the AKS to cover any arrangement where even one purpose of a payment (or other transfer of value), though not its sole or primary purpose, is to provide value for the referral of goods or services reimbursed by Medicare or Medicaid.   

“Remuneration” includes anything of value and there is no de minimis exception. Remuneration includes gifts, payments, and other things typically thought of as benefits, but also broadly includes price reductions (such as discounts or rebates) and free or below cost products and services. 

The Department of Health and Human Services’ Office of Inspector General (OIG) has promulgated final “safe harbour” regulations specifying certain types of arrangements/remuneration that will not be considered to contravene the AKS. The safe harbours include, among others, protection for certain discounts/rebates, warranties and services arrangements. If an arrangement falls squarely within one of the safe harbours, meaning that it would satisfy all the criteria of a safe harbour, it will be immune from criminal prosecution and civil exclusion under the AKS. Significantly, failure to fall within any safe harbour does not necessarily mean that the payment arrangement violates the AKS, but arrangements falling outside a safe harbour, as a legal matter, present risk, and in many instances may be more likely to be scrutinised by enforcement authorities as running afoul of the kickback prohibition. There are both criminal and civil penalties for violating the AKS. 

Various states have also enacted similar illegal remuneration statutes that apply to inducements related to health care items and services (including drugs) reimbursed by private insurance, not just those reimbursed by a federal or state health care program. In some instances, the state statutes provide that any arrangement falling within a federal safe harbour will be immune from scrutiny under the state statutes. This is a matter of state law and must be reviewed on a state-by-state basis.

Similar to the AKS, the Civil Monetary Penalties (CMP) provisions of the Social Security Act (42 USC 1320a-7a) prohibit the offering or provision of inducements to federal healthcare program beneficiaries and impose monetary penalties on entities that offer or transfer remuneration to such a beneficiary, when they know or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of items or services paid for by certain government programs. 

A few distinctions from the AKS are notable. First, the CMP law prohibits inducements only to Medicare and state healthcare program beneficiaries (Medicaid), not all federal healthcare program beneficiaries, like the AKS. Second, OIG has emphasised that the CMP Law may have indirect application (ie, the law is triggered if the person providing the remuneration knows or should know that it is likely to induce the beneficiary to order the item or service from a particular provider, practitioner, or supplier). Thus, an entity like a pharmaceutical manufacturer, which is not a provider, practitioner, or supplier, could nonetheless implicate the statute if it offered or gave remuneration to a beneficiary that it believed would be likely to induce the beneficiary to order an item or service from a particular provider, practitioner, or supplier (eg, to choose a particular physician or pharmacy).

Because the AKS is a criminal statute and the penalties for violating both this criminal law and the related civil statutes, such as the CMP law, can be severe (including potentially leading to exclusion from participation in, and the ability to sell to HCPs and patients seeking insurance coverage from, federal healthcare programs, there is a strong benefit to self-regulation. Companies self-regulate through various means and methods.

First, the OIG issues compliance guidance for pharmaceutical manufacturers to, in part, provide notice about activities that are likely to violate the AKS or CMP law in a manner that could warrant prosecution by US authorities. Companies self-regulate by developing internal policies and procedures that establish compliant practices and require auditing and monitoring of activities to ensure compliance. Second, the PhRMA Code sets forth voluntary guidelines for companies in an attempt to stake out industry positions on common activities that should not be deemed to violate the AKS or CMP law. Companies voluntarily adopt the PhRMA Code and/or incorporate its provisions into their own policies and procedures. Finally, companies can adopt self-reporting protocols, consistent with guidelines from OIG and the US Department of Justice, to self-report internally identified wrongdoing. Addressing potential fraud and anti-corruption via internal policy and procedure, or by self-reporting to US authorities, can significantly help to mitigate potential allegations and/or penalties in the event of wrongdoing.

The PhRMA Code expressly prohibits gifts that are intended for the personal benefit of HPCs, including practice-related items of de minimis value, such as pens, pads, mugs, etc. Under the PhRMA Code, only items that “advance disease or treatment education” may be furnished without charge to HCPs. Notwithstanding the above, the PhRMA Code allows for manufacturers to pay for or reimburse meals or travel expenses for HPCs in limited situations. 

Modest meals (including light snacks and drinks) generally are permissible under the PhRMA Code only in the following situations: when they are provided in conjunction with an “informational presentation or discussion conducted by company representatives or their immediate managers working in field sales” in the offices of the HPC, in conjunction with an HPC’s travel or meetings for provision of consulting, training or speaking services on behalf of the manufacturer pursuant to a written agreement, or in conjunction with an HPC’s attendance at a speaking or training event of the manufacturer. In each situation above, the Code designates that the meals should be modest, occasional, without attendance of spouses or guests, in a location that is conducive to educational or business content, subordinate in time and focus to the presentation, service or training at issue, and eaten on the premises (no take-out). To ensure that meals are modest and occasional, many companies impose limits on the value of individual meals and/or meals per day; however, neither the PhRMA Code, nor any law expressly prescribes any particular monetary limit as defining what is “modest” or “reasonable”.

Similarly, covering or paying for “reasonable” travel expenses also is generally permissible under the PhRAMA Code when they are in conjunction with an HPC’s travel for meetings or services involving provision of consulting, training or speaking services on behalf of the manufacturer pursuant to a written agreement. Travel expenses should not be covered for personal expenses or for individuals travelling with the HPC.

As discussed, the Anti-Kickback Statute (AKS)(42 USC 1320a-7b) prohibits individuals and entities from knowingly and wilfully soliciting, receiving, offering or paying any remuneration (directly or indirectly, overtly or covertly, in cash or in kind), in order to induce the provision of a good or service that is reimbursable under a federal health care program, including Medicare and Medicaid. In addition, various states have also enacted similar illegal remuneration statutes that apply to inducements related to health care items and services (including drugs) reimbursed by private insurance, not just those reimbursed by a federal or state health care program. 

Under these laws, there are no express protections for remuneration in the form of gifts, free samples, sponsorships of scientific meetings, sponsorship of cultural, sporting, or other non-scientific events, grants or donations, or free or below-cost services, even when the value may be de minimis. Because many of these are common forms of business within the pharmaceutical industry (and others), the PhRMA Code when these types of arrangements should be viewed as permissible and not subject to prosecution under the AKS. The PhRMA Code provides some level of protections for certain common arrangements and is in addition to specific regulatory safe harbour protections for certain other types of common forms of remunerative arrangements, such as discounts and rebates and service arrangements with healthcare professionals. Although it has been reviewed and generally accepted by federal enforcement agencies, the PhRMA Code is not law or regulation. Thus, activities expressly condoned by the PhRMA Code, while not immune from prosecution, are less likely to be pursued by federal authorities, while activities prohibited by the Code pose significant risks under the AKS.

Under the PhRMA Code, it is “appropriate to provide product samples for patient use in accordance with the Prescription Drug Marketing Act” (PDMA). The PDMA generally permits a manufacturer to provide samples directly to a licensed healthcare practitioner or institution that requests the samples, signs for or formally acknowledges receipt of the samples, agrees to legally prescribe and dispense the samples, and does not resell the samples or bill patients or insurance for them. The purpose of facilitating samples generally should be to ensure that patients and HPCs can reasonably evaluate whether a particular drug will be effective and without compromising side effects for a particular patient. Thus, notwithstanding the PhRMA Code and PDMA, samples should not be used as gifts or improper inducements for HCPs to prescribe a particular product.

Pursuant to the PhRMA Code, a manufacturer may provide financial support to third parties hosting scientific or educational conferences or meetings, including those for continuing medical education (CME). The Code specifically provides that “a company should develop objective criteria for making CME grant [or support] decisions to ensure that the program funded by the company is a bona fide educational program and that the financial support is not an inducement to prescribe or recommend a particular medicine or course of treatment”. Accordingly, the manufacturer generally should not play a role in the determination of content, the selection of speakers/presenters, the compensation for speakers/presenters, or in determining the attendees. To avoid the appearance of impropriety, the location of the meeting being sponsored should be conducive to scientific exchange and education and not at a resort location.

The PhRMA Code expressly prohibits the sponsorship or support of attendance at or participation in cultural, sports or other non-scientific events by HCPs. 

Grants or donations to HCPs or institutions, whether monetary grants/donations or through provision in-kind, generally fall within the broad definition of “remuneration” under the AKS. While it is not the policy of federal or state agencies to prosecute bona fide charitable donations and altruistic grants, and altruistic giving is encouraged to support worthy causes through various incentives, including tax deductions, these arrangements can raise serious issues under the AKS if any purpose of the funding is related to generating business from the recipient or individuals involved with the recipient. There are no protections for grants or donations under the statutory exceptions or regulatory safe harbours to the AKS. Accordingly, manufacturers should be mindful of the following with respect to their grants and donations:

  • A grant or donation should be made only to charitable or non-profit organisations that would use the funding in accordance with their charitable/non-profit mission.
  • No purpose of the grant or donation should be to influence clinical or purchasing decision-making or to otherwise generate business for the manufacturer. To help to demonstrate this, some manufacturers take steps such as:
    1. funding grants and donations from non-sales and marketing budgets;
    2. removing sales and marketing personnel from any decision-making about the payment of grants and donations (eg, using a Grants Committee made up of non-commercial personnel);
    3. removing sales and marketing personnel from any interactions with respect to grants or donations (eg, requiring that grant/donation requests come through a web portal from requestors, rather than through field personnel);
    4. establishing a charter or mission that defines the reasons and basis for the company’s giving;
    5. establishing a fixed budget from which grants and donations would be paid;
    6. ensuring that granted and donated funds and products are used for the charitable or non-profit purposes for which they were requested;
    7. issuing grants and donations on a first-requested, first-funded basis;
    8. carefully documenting each grant and donation, including its intended purpose;
    9. applying appropriate tax treatment to grants and donations; and
    10. ensuring that there is no “return on investment” analysis with respect to grants or donations.

While none of the above steps individually or collectively are express protections, these are the types of steps that can be used to help companies establish the bona fides of their altruistic giving efforts. 

Discounts and rebates to HPCs are protected from violation of the AKS if the meet all of the requirements of the statutory exception (42 USC 1320a-7b(b)(3)(A)) or regulatory safe harbour (42 CFR 1001.952(h)). In general, to meet one of these protections, a discount or rebate must:

  • be a reduction in the amount a buyer is charged for an item or service based on an arms-length transaction;
  • be disclosed to the purchaser in advance of any purchase being made and not paid prior to the purchase being made (ie, no up-front rebates or “pre-bates”); 
  • not be paid in cash or cash equivalents (except for rebates paid by check);
  • not be for the purpose of inducing the purchase of a different good or service, unless both items/services are reimbursed by the same federal healthcare program using the same payment methodology and the discount is fully disclosed to federal programs;
  • not be in exchange or payment for services;
  • not result in the sale being made at a (net) price that is below the manufacturer’s cost for manufacturing, marketing and distributing the product(s); and
  • be structured to provide the price reduction to the buyer within a year from the purchase of the product to which it relates.

In addition, the manufacturer must clearly inform the buyer of its obligations under the safe harbour to report the discount to federal agencies, as required, and must refrain from doing anything that would impede the buyer from meeting its reporting obligations.

In order to receive AKS protection under the personal services and management contracts safe harbour (42 CFR 1001.952(d)), compensation for a services arrangement must meet all of the specific regulatory requirements, including having a written agreement that expressly defines the services to be provided for a term of at least one year, the contracted services are commercially reasonable in the absence of other business or referrals generated between the parties, the total compensation over the term of the agreement is fixed in advance (ie, a flat fee) and consistent with fair market value for the services, and the services do not involve any other violation of law. Most services arrangements with HCPs fail at least one of these requirements – most often that the total compensation be fixed in advance. Accordingly, the PhRMA Code provides additional guidance to help to try to protect arrangements that cannot meet safe harbour protections. Pursuant to the PhRMA Code, it is “appropriate for consultants who provide advisory services to be offered reasonable compensation for those services . . . based on fair market value”.  The PhRMA Code identifies certain factors that support the “existence of a bona fide consulting arrangement” including that:

  • a written contract specifies the nature of the consulting services to be provided and the basis for payment of those services;
  • a legitimate need for the consulting services has been clearly identified in advance of requesting the services and entering into arrangements with the prospective consultants;
  • the criteria for selecting consultants are directly related to the identified purpose and the persons responsible for selecting the consultants have the expertise necessary to evaluate whether the particular HCPs meet those criteria;
  • the number of HCPs retained is not greater than the number reasonably necessary to achieve the identified purpose;
  • the retaining company maintains records concerning, and makes appropriate use of, the services provided by consultants; and
  • the venue and circumstances of any meeting with consultants are conducive to the consulting services and activities related to the services are the primary focus of the meeting.

The provision of services without charge by a manufacturer to an HCP may result in in-kind “remuneration” that implicates the broad scope of the AKS.  If the services do result in remuneration to an HCP, such remuneration would neither be protected by either a statutory exception or regulatory safe harbour to the AKS, nor by the PhRMA Code. In analysing whether or not services may constitute remuneration, a manufacturer should consider whether the services intended purely for the reasonable and expected support of the manufacturer’s product for a patient, might instead be intended to take the place of internal services or efforts that the HCP would ordinarily be expected to provide and their own cost and expense. The former types of arrangements arguably would not result in remuneration under the AKS, while the latter may implicate the broad scope of the statute.

The federal Physician Payments Sunshine Act (Sunshine Act) and its implementing regulations require certain pharmaceutical and biologic manufacturers to annually report to the Centers for Medicare and Medicaid Services (CMS) payments or transfers of value provided directly or indirectly to covered recipients during the previous calendar year. Until recently, “covered recipients” was defined to include US physicians and teaching hospitals; however, the Sunshine Act and its implementing regulations were recently amended to expand the list of covered recipients to also include physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anaesthetists and certified nurse midwives, effective for data collection beginning 1 January 2021, for reports due 31 March 2022. For each direct or indirect payment or other transfer of value subject to reporting, the manufacturer must report to CMS certain details regarding the payment, including but not limited to the name of the recipient, the date of the payment, and the nature of the payment (eg, consulting fee, food, grant, etc). 

In addition to the federal reporting requirements, several states, including Connecticut, the District of Columbia, Massachusetts, Minnesota, and Vermont, also require manufacturers to track and annually report certain information about payments or transfers of value they provide to HCPs and healthcare organisations in the respective state. The specific transparency requirements vary from state-to-state.   

The federal Sunshine Act requirements apply to foreign companies if the entity “operates in the United States” and meets the definition of an “applicable manufacturer.” Determination of how transparency laws apply to entities based outside the United States should be conducted on a case-by-case basis considering the entity as well as the subsidiaries of the entity. Some state laws mirror the federal Sunshine Act law requirements and other state laws are less clear but generally apply to manufacturers providing transfers of value to HCPs licensed by the state. 

As a general matter, the federal Sunshine Act and state transparency laws do not apply to companies that do not yet have marketed products. 

See 1.1 Laws and Self-Regulatory Codes for information on regulatory and enforcement bodies for pharmaceutical advertising and promotion.

Both the Department of Justice (DOJ) and the Department of Health and Human Services Office of Inspector General (OIG) have authority to enforce the Anti-Kickback Statute and the False Claims Act. DOJ has jurisdiction over both criminal and civil enforcement actions; OIG has authority with respect to civil actions. State Attorney’s General may take enforcement actions under similar state laws.

In most instances, FDA enforcement against false or misleading promotion and advertising begins with an enforcement letter. Such letters are issued by the FDA’s Office of Prescription Drug Promotion (OPDP) as Warning Letters or Untitled Letters, signaling the seriousness of the alleged violations. When companies continue to engage in violative pharmaceutical promotion and advertising, the FDA and FTC can initiate enforcement proceedings in federal court to enjoin the behaviour and seek penalties.

Beyond FDA and FTC, competitors and consumers may also seek to challenge false and misleading promotion and advertising. The FDCA and FTCA do not provide a right of action to competitors or consumers; however, challenges may be made through the submission of complaints to FDA and/or FTC to prompt the agencies to act. In addition, competitors and/or consumers may seek to directly challenge advertising through state and/or other federal laws.

There are two primary ways in which companies can bring claims against competitors. Under the Lanham Act, companies can bring claims in court for “false and misleading” advertising or labelling claims made by competitors. The standing of the claimant is based on the idea that a company’s business is harmed when a competitor engages in unfair advertising practices. In addition, a company can challenge a competitor’s false and misleading advertising before the National Advertising Division (NAD) of the Better Business Bureau (BBB). This is a voluntary process and is not enforceable under law. In an NAD challenge, the advertiser, rather than the challenger, bears the burden of demonstrating that advertising claims are not false or misleading.

Penalties for unlawful pharmaceutical marketing and advertising vary depending on the statute used to challenge the activity. If the FDA’s enforcement letters do not yield voluntary corrective action by a company, then the FDA might pursue enforcement in federal courts, seeking injunctions or seizures. In the most extreme cases, FDA may team up with DOJ to bring criminal charges. Misdemeanor convictions of “misbranding” a drug can result in a fine of USD1,000 and a year in prison. A felony conviction could result in a USD10,000 fine and three years in prison. Unlawful pharmaceutical marketing and advertising can also lead to liability under the False Claims Act.

The FTC may conduct investigations through a civil investigative demand (CID). FTC may then issue a complaint through its administrative enforcement process. An advertiser may agree to settle the charges and sign a consent agreement, agreeing to cease and desist from the violative advertising and waiving any right to judicial review. If the advertiser disputes FTC’s charges, the complaint will be heard and determined by an FTC Administrative Law Judge (ALJ) in a trial-type proceeding, with an opportunity to appeal the ALJ’s decision.

In a typical challenge under the Lanham Act, the court may award injunctive and/or monetary remedies. Monetary damages are based on lost profits or loss of goodwill due to the false advertising, or to reimburse costs of corrective advertising. In extraordinary cases and in some jurisdictions, courts may also consider granting a preliminary injunction, disgorgement of profits, treble damages, and/or an award of attorney fees.

Criminal sanctions under the Anti-Kickback Statute include a fine not to exceed USD50,000 or imprisonment up to five years or both, for each offense. In addition, monetary penalties for each offense may be increased up to $500,000 for organisations; see 18 USC Section 3571. Civil penalties include fines of up to USD50,000 for each violation, and monetary damages up to three times the amount paid for referrals and/or exclusion from the Medicare program; see 42 USC Section 1320a-7(b)(7). Further, pursuant to changes made under the Patient Protection and Affordable Care Act, any claims submitted to Medicare or Medicaid as a result of an illegal kickback now automatically constitute false or fraudulent claims under the federal False Claims Act; see 31 USC Section 3729. Accordingly, a violation of the AKS, even if the underlying service or item was appropriately billed to a government health care program, is a per se violation of the False Claims Act. Penalties for violating the False Claims Act can be civil and/or criminal. Under the civil False Claims Act, the statute provides for a penalty of between USD5,000 and USD10,000 per false claim and triple the amount of the damage to the government. The criminal False Claims Act (18 USC Section 287) can be enforced with imprisonment and/or criminal fines.

The relationship between the FDA, FTC, companies, and courts have been discussed. Regulatory authorities such as the FDA and FTC may pursue enforcement against unlawful advertising and promotion in federal court, while state enforcement occurs in state court. Self-regulation through the NAD is a voluntary process. Although NAD decisions are not binding in court; some cases may be referred to the FTC for potential enforcement. Of note, the NAD will not hear challenges based on claims that are the subject of pending litigation.

Based on OPDP enforcement letters issued in 2019, the FDA is focused on consumer-directed promotion across a range of advertising and promotional media, including websites, television, videos, and print. Consistent with enforcement letters over decades, the most cited violation continues to be false or misleading presentation of risk information; however, there appears to be a renewed focus on false or misleading efficacy claims. Last year, the FDA also continued its regular scrutiny of and enforcement against pre-approval promotion of investigational drugs. All of the above types of violations remain likely targets in 2020 and coming years. In addition, the presentation of risk information in DTC television ads is expected to become a new focus, as the FDA is scheduled to publish a final rule on the major statement this year.

For both the FDA and FTC, physician and celebrity spokespeople and influencer marketing are key focus areas for both prescription and OTC drugs. In recent years, the FTC issued educational and warning letters to influencers for failure to disclose their relationships to sponsoring companies, as well as a new guide on influencer marketing, signaling its ongoing focus on influencer activities. More recently, the FDA and FTC announced new initiatives to evaluate approaches for endorsements, including potential updates to FTC guides as well as research focused on transparency regarding the relationship between the sponsoring company and spokesperson, including disclosure of payments.

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King & Spalding LLP has more than 1,100 lawyers in 21 offices and helps companies advance business interests in more than 160 countries. The firm’s FDA and life sciences practice plays a critical role within this context. With over 40 lawyers and professionals in the USA and Europe, the group counsels more than 200 large, mid-cap and start-up drug, biotech, medical device, food manufacturers, distributors, healthcare providers and technology ventures. The EU team focuses on EU and national (French, Belgian and German) issues associated with the legal requirements of pharmaceuticals/biologics, medical devices, cosmetic and food industries. Clients receive tremendous synergy from the interaction of the FDA/regulatory and healthcare teams with the product liability, government investigations, discovery, appellate, intellectual property, corporate and litigation teams. More than 300 lawyers and professionals in 16 areas devote all or a substantial portion of their practices to the life sciences industry.