Corporate directors of pharmaceutical companies are going to be held to a higher standard than ever before. Now, directors will be forced to make public any concerns about off-label drug marketing. If they don’t, according to a U.S. Ninth Circuit Court of Appeals decision, they may be held legal liable. In other words, if a problem with a drug arises, and it can be proven that the director knew of the concerns but failed to reveal or report them, it can be assumed by the courts that the directors actually condoned the illegal activity.
Case in point: Allergan paid about $600 million in fines and settlements when it was revealed that Botox was marketed for off-label uses between 1997 and 2010. The drug was approved by the U.S. FDA for certain limited uses. However, Allergen apparently marketed Botox to treat pain and headaches, particularly debilitating migraine headaches. While a doctor has discretion when prescribing FDA approved pharmaceuticals, drug companies are not permitted to promote off-label uses.
Allergan, Inc. was forced to pay its shareholders because the stakeholder sued the company’s directors they believed knew about the improper off-label promotion of Botox. Specifically, the directors had to reimburse the corporation as part of a derivative suit. The Allergan case is only one of many that underscores how directors must take responsibility for the decisions they approve.
In its decision on the Allergan case, the Ninth Circuit wrote that the members of the board of directors knew, or should have known, about the illegal off-label marketing strategy and didn’t do anything to stop it. As such, they violated their duty to the corporation’s shareholders.
In this case, or any other similar case, if improper claims were submitted to Medicare Medicaid, a False Claim Act (FCA) case could also be brought against the drug manufacturer. If someone reported such an act, they could be compensated under the whistleblower statutes.
If you or someone you know is aware of wrongdoing against the government, you should speak with an experienced qui tam attorney who can determine if you have a bonafide whistleblower case. Contact Begelman & Orlow for a skilled review of your case.