The Food and Drug Administration (FDA) authorizes the marketing of drugs only for uses that the manufacturer has demonstrated to be safe and effective.  However, the FDA does not regulate medical practice, so physicians may prescribe drugs in ways that deviate from the uses specified in the FDA-approved drug label and marketing authorization, a practice referred to as off-label prescribing.  This practice includes prescribing for a different therapeutic purpose, using a different dose or a different duration of use, using a different mode of administration than the one indicated on the label, and prescribing the drug for patients in a different age cohort or gender than the population on which it was tested.

Off-label prescribing makes clinical sense only in exceptional circumstances. If reasonable evidence suggests that the benefit of off-label use will outweigh the risks, that declining to treat the condition poses even greater dangers than the off-label prescription does, and that there is no adequate alternative therapy, then off-label prescribing can benefit patients. However, physicians prescribe off-label much more frequently than is justifiable: seventy percent of off-label uses lack significant scientific support.  They risk harming their patients without producing therapeutic benefit.

Physicians value the right to prescribe off-label.  Insurers that reimburse such prescriptions make it feasible for patients to purchase the drugs.  But it is the pharmaceutical firms’ incentive to increase sales that drives this practice.  More sales increases profits, whether the drugs are used as approved or off-label, so manufacturers have powerful incentives to promote off-label use and none to discourage it.  Their strategies to promote off-label use are often legal and recent court decisions have made it even easier for them by expanding the scope of activities deemed to be commercial speech protected by the First Amendment.  But manufacturers also have incentives to engage in illegal promotion when the expected revenue exceeds any penalties.

Unmanaged off-label drug use compromises sound medical practice and undermines the FDA’s mission of protecting patients by regulating the drug market.  Yet public policy fails to track, evaluate, or oversee off-label drug use. Typical reform proposals, such as increased sanctions for illegal off-label promotion, might reduce unjustified off-label use, but addressing the source of the problem would require the following steps.  Prescriptions must be tracked to identify and oversee off-label prescribing.  Reimbursement rules must change so that manufacturers cannot profit from off-label sales.  Manufacturers must pay for independent evaluation of off-label uses when off-label sales pass a critical threshold.

Track Off-label Prescriptions

The United States does not require physicians to record the purposes for which they prescribe drugs.  To identify off-label drug use and manage its causes and consequences, physicians should be required to indicate on each prescription the purpose for which the drug is prescribed, recording the patient’s principal diagnostic and symptom codes, gender, and age.  We can ensure compliance by conditioning physician and patient reimbursement on reporting this information.

This prescribing data would identify the therapeutic goals of off-label uses and the affected populations.  Researchers could then obtain anonymized data from treating physicians to evaluate the safety and effectiveness of these uses.  The data would also reveal when doctors use drugs off-label despite evidence of minimal benefit, of high risk, or of safe and effective alternative therapies.  It would reveal when there was a need to sponsor drug education regarding particular drugs or medical problems.  Identifying drugs frequently prescribed off-label or rapid increases in off-label sales would also alert the FDA to investigate whether a manufacturer was promoting drugs off-label.

Eliminate Manufacturer Incentives To Encourage Off-label Uses

Manufacturers track sales, know which physicians prescribe their drugs, and can sometimes infer the therapeutic purposes and whether the usage is off-label.  They are strategically situated to market drugs both for FDA-approved and off-label uses.  Yet, prohibitions on illegal off-label marketing are ineffective because off-label sales are in the drug firms’ economic interests, monitoring compliance is too difficult, and the fines are too small given that off-label sales can generate billions of dollars in profits.  It would be more effective to change the drug firms’ economic incentives through new payment rules.  Manufacturers will cease promoting and will even discourage off-label prescribing when it increases their costs but not their profits.

It might not be the manufacturer’s fault that a physician prescribes a drug off-label, but the FDA grants market exclusivity for new drugs — with resulting monopoly profits — only for approved uses.  Allowing firms to earn monopoly profits from off-label prescribing as well undermines the whole point of FDA regulation of drug marketing.

Therefore, when a drug is prescribed for off-label uses, we should reimburse the manufacturer only for the marginal cost of producing it.  Implementing this policy would require having a government authority verify the manufacturer’s production costs, based on data submitted by the manufacturer.  The Medicare program, which requires hospitals to report cost data to determine reimbursement rates, provides a working model of how to do this.

However, manufacturers generally sell drugs in bulk to wholesalers or institutional intermediaries and do not know at the time of sale how much will be prescribed off-label.  Consequently, in order to reduce their income from off-label sales, it will be necessary to adjust their compensation after the prescription is filled.  Manufacturers should be required to deposit their excess payments into a government-supervised fund dedicated to the evaluation of off-label drug use and to programs to promote drug safety.

Evaluate Off-label Drug Use And Warn About Its Risks

When a drug’s off-label sales exceed a significant threshold, it makes sense to systematically evaluate the safety and efficacy of these unapproved uses.  Manufacturers already have to monitor the safety of drugs that have received marketing approval and report adverse medical events that come to their attention.  (See 21 C.FR. §310.303, §314.80, §314.98, §317.70(c)(6)(iii)(A))  Requiring that they finance studies of off-label drug uses is a logical extension of those obligations.  The evaluation could be funded by moneys generated from the proposed clawback of off-label sales revenues.  Until that reform is adopted, however, we should assess a charge on manufactures to finance the evaluation of their drugs prescribed off-label and to publicize the findings.

The National Institutes of Health should select and oversee independent researchers to evaluate a drug’s off-label use.  Initial evaluation should include analysis of anonymized data from patients prescribed the drug off-label.  Follow-up studies should consist of clinical trials, the results of which the FDA would use to decide whether or not to approve marketing the drug for the new use.  If these clinical trials do not convince the FDA to expand its marketing authorization, then the agency should be required to publicize the inefficacy and risks of the drug’s off-label uses.

The combination of strong economic incentives for firms to sell drugs off-label and the lack of controls on how physicians prescribe drugs is a recipe — nay, a prescription — for trouble.  We should track off-label prescribing, remove economic incentives to sell off-label, and evaluate the safety and effectiveness off-label uses to ensure sound medical practice and promote public health.

Note 1.  These ideas are developed at greater length in M.A. Rodwin, “Rooting out Institutional Corruption to Manage Inappropriate Off-label Drug Use.”

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