Presentation by DuVal & Associates at Medtech Conference 2016. Participants: Mark DuVal, JD, President & CEO – DuVal & Associates Howard Root, CEO – Vascular Solutions Powered by: Healthegy For more healthcare innovation Visit us at Healthegy.com

1. Is off-label promotion lawful
after the Howard
Root/Vascular Solutions and
other cases?
For: Medtech Investing
Conference
Minneapolis, MN
June 1, 2016
Copyright © 2016 DuVal & Associates, P.A. All rights reserved.

2. We’ve fought this battle a long time…
From 2004
From 2005

3. And we are
still at it…
2011

4. 2014

5. 2015

6. 2016

7. The games played…

8. The Government
brags about
their ROI…

9. Hot off the press—May 26, 2016
Congressman Upton and Pitts
The Congressional letter cites the
Caronia, Amarin, Pacira and Howard
Root/Vascular Solutions cases as
examples

10. Agenda
• A little bit about the Howard Root case
• Some extraordinary takeaways from the
case
• The similarities to our other clients
• Introduction to Howard Root
• Questions

11. A little bit about the
Howard Root case
“The VARI-LASE Bright Tip kit
(and Console) is indicated for
the treatment of varicose veins
and varicosities associated
with the Great Saphenous
Vein, and for the treatment of
incompetence and reflux of
superficial veins in the lower
extremity.”

12. A little bit about the
Howard Root case
• The company sold a “Short Kit”—a shorter
version of the Vari-Lase procedure
• The case turned upon an analysis of an FDA
guidance document entitled “General/Specific
Intended Use”
• And FDA’s Modification Guidance—was this
modification (shortening) a “major” change to
the intended use statement and did it
“significantly” affect safety or effectiveness?
• Bottom line: Was it on or off-label used in the
perforator vein?

13. Some extraordinary takeaways
from the case
• The defense rested after the prosecution's
case

14. Some extraordinary takeaways
from the case
• The defense rested after the prosecution's
case
• The government’s theory on conduct versus
speech did not fly--again

15. The government’s theory on conduct
versus speech did not fly--again
• Government believes it can prosecute truthful
speech about off-label uses because there is
no approval for that use (adulteration and
misbranding)—courts have not agreed
• Government created a new theory—it’s
actually prosecuting conduct not truthful off-
label speech

16. The government’s theory on conduct
versus speech did not fly--again
Rather than promotional speech to doctors, the United States will rely on the
following conduct to prove the intended use of the devices:
1. Defendants’ decision to launch a special kit designed specifically for perforator
veins in response to a competitive threat (establishing intended use before any
speech to a doctor even occurred);
2. their manufacture of that kit with perforator-specific modifications
(manufacturing process for a device is not speech);
3. their application to the FDA for clearance to market that use (an FDA
notification is a legal act and does not contain any speech to doctors);
4. their investment in a clinical trial for the purpose of gaining that clearance (no
promotional communication to doctors occurred as part of this trial);
5. their decision to launch the product without clearance while adding new,
deficient directions for perforator use to the labeling (Defendants do not argue
that such instructions are protected speech);
6. their efforts to defraud the United States by concealing and lying about their
perforator sales activity (fraud-based crime not protected);4

17. The government’s theory on conduct
versus speech did not fly--again
Rather than promotional speech to doctors, the United States will rely on the
following conduct to prove the intended use of the devices:
1. Defendants’ decision to launch a special kit designed specifically for perforator
veins in response to a competitive threat (establishing intended use before any
speech to a doctor even occurred);
2. their manufacture of that kit with perforator-specific modifications
(manufacturing process for a device is not speech);
3. their application to the FDA for clearance to market that use (an FDA
notification is a legal act and does not contain any speech to doctors);
4. their investment in a clinical trial for the purpose of gaining that clearance (no
promotional communication to doctors occurred as part of this trial);
5. their decision to launch the product without clearance while adding new,
deficient directions for perforator use to the labeling (Defendants do not argue
that such instructions are protected speech);
6. their efforts to defraud the United States by concealing and lying about their
perforator sales activity (fraud-based crime not protected);4
But none of the “conduct”
really becomes actionable
until there is
speech/communication
made to the world outside
the company to effectuate
the conduct

18. The government’s theory on conduct
versus speech did not fly--again
Judge Lamberth (the judge in this case) once
opined, that the regulation of marketing and
promotional activities is regulation of “conduct”
only “to the extent that moving one’s lips is
‘conduct,’ or to the extent that affixing a stamp
and distributing information through the mails
is ‘conduct.’”

19. Some extraordinary takeaways
from the case
• The defense rested after the prosecution's
case
• The government’s theory on conduct versus
speech did not fly--again
• The jury instructions recognize off-label
promotion for the first time

20. The jury instructions recognize off-
label promotion for the first time
The government actually acquiesced to this unbelievable
jury instruction (emphasis added in bold and italics):
“Doctors may use medical devices that have been approved or
cleared for one use for a different use that has not been cleared
or approved by the FDA. This is often to as unapproved use or
off-label use. This is not illegal. It is also not a crime for a device
company or its representatives to give doctors wholly truthful
and non-misleading information about the unapproved use of
a device. If you find that VSI's promotional speech to doctors
was solely truthful and not misleading, then you must find the
Defendants not guilty of the misbranding offense.”

21. Some extraordinary takeaways
from the case
• The defense rested after the prosecution's
case
• The government’s theory on conduct versus
speech did not fly--again
• The jury instructions recognize off-label
promotion for the first time
• The government’s witnesses established the
use was (or could be) on-label

22. The government’s witnesses established
the use was (or could be) on-label
Cross-examination of FDA Branch Chief Neil Ogden:
Q. [Vascular defense counsel] All right. And if we go to the third page, so this is the new indications
for use statement that was cleared by FDA, correct?
A. [Neil Ogden, FDA] Yes.
Q. And if we look at the first part, it refers to the ablation of soft tissue, correct?
A. Yes.
Q. And you'd agree that the veins are soft tissue, correct?
A. Yes.
Q. The great saphenous vein is made up of soft tissue?
A. Yes.
Q. Correct? The short saphenous vein is made up of soft tissue,
correct?
A. Yes.
Q. Perforator veins are made up of soft tissue?
A. Yes.
Q. And tributary veins are made up of soft tissue, correct?
A. Yes.
Q. The second part of this clearance refers to varicose veins, correct?
A. Yes.

23. The government’s witnesses established
the use was (or could be) on-label
Cross-examination of FDA Branch Chief Neil Ogden(continued):
Q. The great saphenous vein can be varicose, correct?
A. Yes.
Q. The short saphenous vein can be varicose, correct?
A. Yes.
Q. Perforator veins can be varicose, correct?
A. Yes.
Q. Tributary veins can be varicose, correct?
A. Yes.
Q. And this clearance has been in place since March 26th, 2008, correct?
A. Correct. But nowhere in the indication for use does it say "perforator or tributary veins."
Q. You'd agree with me that perforator and tributary veins can be varicose, right, Mr. Ogden?
A. Yes.
Q. And the clearance says "varicose veins," correct?
A. Correct.

24. Some extraordinary takeaways
from the case
• The defense rested after the prosecution's case
• The government’s theory on conduct versus
speech did not fly--again
• The jury instructions recognize off-label
promotion for the first time
• The government’s witnesses established the use
was (or could be) on-label
• This is the same parsing of words FDA uses today
in 510(k) labeling negotiations--FDA is fond of
clearing devices that purport to be used for
everything, but can be promoted for nothing

25. The similarities to our
other clients

26. Copyright © 2011 DuVal & Associates, P.A.
All rights reserved.
26
Off-Label
Off-Label
On-Label
Uses/Indications
General Intended Use

27. General Intended Use
FDA agrees that general use
includes
specific use/indications
FDA does not agree
that general use
includes specific
use/indications
General
promotion
acceptable
-- no
limitations
FDA position
remains
unknown
Can conduct
lawful
and appropriate
off-label
dissemination and
communication
activities
Decision
to be
aggressive
in
promotion
Decision
to be
conservative
in
promotion
General
promotion
unacceptable
The similarities to our other clients

28. Three “Buckets” of Information Flow
Promotion of on-label information
Dissemination of medical/scientific information
Communication of on and off-label information

29. Four Three “Buckets” of Information
Flow??
Promotion of on-label information
Dissemination of medical/scientific information
Communication of on and off-label information
Promotion of off-label information???

30. White boarding the possibilities for all
promotion, dissemination and
communications

31. Howard Root, President & CEO,
Vascular Solutions

32. Questions?

33. Slides not covered in presentation

34. What are the government’s
general expectations for
compliance?

35. What are the government’s general
expectations for compliance??
Seven elements:
• Implementing written policies and
procedures;
• Designating a compliance officer
and compliance committee;
• Conducting effective training and
education;
• Developing effective lines of
communication;
• Conducting internal monitoring and
auditing;
• Enforcing standards through well-
publicized disciplinary guidelines; and
• Responding promptly to detected
problems and undertaking corrective
action.

36. Implementing written policies and
procedures
• Overarching Code on Interactions With Health Care
Professionals
• AdvaMed and PhRMA Codes—voluntary but set
standard
• Subsidiary SOPS/Work Instructions—address specific
areas of risk
– e.g., promotional review process; gifts; pricing, discounts,
rebates and off-invoice price concessions; off-label-
dissemination; co-marketing/referral marketing; grants for
CME and physician-initiated trials; provision of
reimbursement information; product evaluations/
samples/free goods; travel & expense policies; etc.

37. Designating a compliance officer (CO)
and compliance committee
• Pin the rose on someone’s lapel
– Smaller organizations do not have to a full time position
– Larger organizations (or complex sales and marketing
organizations) need a full time person
– Sometimes outside counsel assists playing a virtual role
• Be cautious who you select—a very important position
– An over-bearing, overly risk averse compliance officer can
paralyze the organization commercially—and difficult to remove
– In small/medium-sized organization may be better to start with
part time/split position to test the person

38. Designating a compliance officer (CO)
and compliance committee
• Think through reporting very carefully
– DOJ/OIG does not want CO to report to the General Counsel—
does not want the Attorney-Client Privilege to apply
– Do not be bound by this position
• Many variables—must be tailored to the organization
and personalities, but if they change CO reporting may
have to change, e.g.,
– Direct report to CEO
– Direct report to Board
– Direct report to GC; dotted line to CEO
– Direct report to CFO or COO; dotted line to CEO
• Composition of Compliance Committee—sales and
marketing ad hoc/non-voting or minority vote

39. Conducting effective training and
education
• Educate on the law and train on policies
• Understand and identify pressure points for
organization and where corners can get cut—address
them out in the open
• Must become routine/part of culture
• CEO and senior sales and marketing management must
value training and education by scheduling time for it
– Allot time for plenty of Q&A and interaction
• Consider testing
• This venue truly creates a culture of compliance

40. Developing effective lines of
communication
• Access to supervisors and/or the Compliance
Officer (CO)
• Hotlines and other forms of communication
– Often a third party rent-a-service
– Must be anonymous
– Goes to CO and/or to Compliance Committee, but
identities redacted for Committee members
• Keep a detailed log

41. Conducting internal monitoring and
auditing
• Avoid full blown audits, consider “assessments” or “reviews”
– Reviewers must be experienced and know where to look for information
and how to extract it
• Many interviews of many disciplines is most effective
– Can circle back if inconsistencies found or questions raised
• Must review documents as well—websites, consulting agreements,
royalty agreements, Sunshine Act compliance, etc.
• You will be amazed at what you can learn about your own
organization
• Consider upfront to whom the report will be issued (and an oral
report given) and whether it will be Attorney-Client Privileged and
Work Product
– Consider numbering the reports and maintaining a numbered log of
report owners
– Oral report can be more abbreviated and avoid highly sensitive topics

42. Enforcing standards through well-
publicized disciplinary guidelines
• Deal with offenders
• This really sets the tone for how serious
compliance is taken—walk the talk
• Highly successful sales representatives can
challenge a small to medium-sized
organization
• Travel & expense policy and reports are a
mechanism to detect issues

43. Responding to Detected Problems
and Developing Corrective Action
Initiatives and Government Reporting
• Must respond to individual violators swiftly
and justly
• Also must consider corrective action plans
• The compliance assessment should produce a
prioritized list of actions for follow-up
• Self-reporting to government (under the Yates
memorandum) is a complicated issue