Key Compliance Issues to Keep an Eye On in 2015: Off-Label Marketing and Sunshine Act Reporting


As we near the midpoint of 2015, pharmaceutical and medical device manufacturers should take some time to review their compliance policies and related implementation strategies to help protect against potential liability.  This article addresses two compliance issues that should be near the top of every compliance officer’s checklist: (1) off-label marketing and (2) Sunshine Act reporting.

Off-Label Marketing Regulations Are Under a Spotlight In All Three Branches of Government

There have already been significant developments this year with respect to the FDA’s regulations related to manufacturers’ off-label marketing of pharmaceuticals and medical devices.  First, the FDA announced a plan to hold a public meeting this summer (date still to be determined) to discuss the relevant regulations and to address industry concerns about the Constitutional implications of restricting a manufacturer’s ability to speak truthfully about its products. Subsequently, just last month, Amarin Pharma, Inc. filed a federal lawsuit in New York challenging the FDA’s off-label marketing regulations as violating the company’s First Amendment right to free speech.  Both of these significant events come on the heels of a Congressional bill known as 21st Century Cures, which (a) is intended to help make the research and development process more efficient and patient-focused, and (b) includes language that would force the FDA to reconsider, and likely ease, its off-label marketing regulations.

Whenever all three branches of government focus on the same issue, as is happening now with respect to off-label marketing, it seems likely that significant developments could be on the horizon.  However, industry members should be cautious not to jump the gun, and should maintain their focus on complying with existing regulations.

In short, and as many readers are likely well-aware, manufacturers of drugs and medical devices may only transmit information about off-label uses of their products to physicians and health care professionals in narrowly- and specifically-defined ways.  First, manufacturers may, under certain circumstances, distribute unabridged reprints of medical or scientific journal articles and reference publications discussing off-label uses of their products.  Second, manufacturers may respond truthfully to unsolicited inquiries about such off-label uses.  Notably, the FDA is currently reviewing comments it received on a Draft Guidance Document that is intended to clarify its position on the distribution of scientific and medical publications on off-label uses.

In order to minimize the risk of liability for off-label marketing, there are many important steps that a manufacturer should keep in mind, including:

  • Having a straightforward, clearly-defined policy for off-label marketing that can be easily accessed by employees.
  • Conducting regular training—including periodic refreshers—for key employees such as marketing staff and sales reps.
  • Designating a specific person or team to be responsible for off-label marketing issues, separate and distinct from the marketing and sales departments.
  • Ensuring that the off-label marketing team is responsible for collecting and disseminating off-label data and information.
  • Making off-label data and information inaccessible to marketing and sales departments.
  • Monitoring company websites for impermissible off-label marketing.
  • Incorporating off-label marketing rules in the company’s social media policy (e.g., prohibition on “liking” “sharing” or “tweeting” information related to off-label uses).

Sunshine Act Reporting Remains an Important Compliance Issue

Although the Sunshine Act is not currently gaining as much national attention as off-label marketing, its reporting requirements should still be on the radar of all drug and medical device manufacturers.  The Sunshine Act, which was implemented in 2013, requires applicable manufacturers to submit annual reports to the Centers for Medicare and Medicaid Services’ Open Payments system, detailing payments and other transfers of value that it made to physicians and teaching hospitals in the preceding calendar year.  For 2015, the reporting threshold is $10.21, meaning that any transfers less than $10.21 are excluded unless the total value of the company’s annual payments to all physicians and teaching hospitals (in the aggregate) exceeds $102.07, in which case all payments (even those under $10.21) would need to be reported.

The Act’s implementing regulations, which appear in the Federal Register at 42 CFR Parts 402 and 403, define the categories of reportable payments quite broadly.  They include, among others: consulting fees; honoraria; gifts; food & beverages; entertainment; travel & lodging; research; charitable contributions; royalties; grants; ownership or investment interests; and speaking at a continuing medical education program. There are also specific exclusions, including, among others, short-term loans, product samples and educational materials that will directly benefit patients.

Since the Sunshine Act is still relatively new, there have not been many changes to the initial regulations.  There have, however, been a few changes which industry members should understand.  These changes will become effective in 2016.  First, under the initial regulations, certain indirect payments to qualifying speakers could be excluded if they related to compensation for speaking at an accredited Continuing Medical Education program and the manufacturer did not directly pay or select the speaker.  The revised rule provides that those types of payments must now be reported if the manufacturer knows or finds out the identity of the speaker during the reporting year.  Second, manufacturers of covered devices will need to report the marketed name of any device related to a reported payment.  Finally, with respect to reports of ownership interests, manufacturers will be asked to report stocks, stock options, or any other form of ownership as distinct categories.

In light of the low reporting threshold and the wide variety of reportable categories, the required recordkeeping duties can be quite onerous for applicable manufacturers.  Below are a few suggestions for ensuring an effective Sunshine Act compliance policy:

  • Incorporate Sunshine Act requirements into all facets of the company’s compliance policy in a clear and straightforward manner.
  • Conduct training on Sunshine Act requirements for relevant employees, including sales reps and compliance executives.
  • Create recordkeeping forms for the collection of necessary information, which should be distributed to relevant employees and completed contemporaneously with each payment.
  • Consider requiring pre-approval for certain reportable payments (i.e., those above a certain monetary threshold; those for a particularly-sensitive purpose, etc.)
  • Develop a system for submitting payment reports to a central “Sunshine Act team” on a rolling basis.
  • Review payment reports and conduct necessary follow-up as soon as possible – don’t wait for the end of the year!
  • Maintain organized records that can be easily retrieved.