Pharmaceutical Fraud: Off Label Marketing, Kickbacks, and False Claims Act Liability

Pharmaceutical companies have produced some of the largest False Claims Act settlements in history, and enforcement in this area continues at a significant pace. The conduct at the center of these cases follows patterns that have repeated across the industry for decades: drugs promoted for uses the FDA has not approved, kickback payments disguised as speaker fees or consulting arrangements, and prescriptions billed to Medicare and Medicaid that should not have been covered.

Employees with direct knowledge of these practices have initiated many of the most significant recoveries.

What is off label marketing and why does it violate the False Claims Act

The FDA approves drugs for specific indications based on clinical evidence that the drug is safe and effective for those uses. Once approved, a manufacturer is prohibited from promoting the drug for uses outside those approved indications. Physicians may lawfully prescribe a drug off label in their own clinical judgment, but the manufacturer cannot market it for that purpose.

Potential False Claims Act liability arises at the point of payment. Medicare and Medicaid generally do not reimburse prescriptions for off label uses unless the use appears in a recognized drug compendium. When a pharmaceutical company markets a drug for an unapproved use, that marketing causes physicians to prescribe the drug for that use, and those prescriptions are submitted to a federal healthcare program for payment, each reimbursed prescription may constitute a false claim.

The company’s conduct can cause false claims to be submitted even if the company itself never submits a claim directly to the government.

Kickbacks to physicians as a form of pharmaceutical fraud

Off label promotion is frequently accompanied by, or sometimes replaced with, kickback arrangements in which pharmaceutical companies pay physicians to prescribe their drugs. These payments are often structured to appear legitimate, such as speaking fees for promotional programs, honoraria for educational events, consulting agreements, or meals and travel tied to supposed professional activities.

When the compensation is not tied to genuine educational or clinical value, and when the effect is to reward or induce prescribing of the company’s products, the arrangement may violate the Anti-Kickback Statute and give rise to False Claims Act liability.

In April 2025, Gilead Sciences agreed to pay $202 million to resolve allegations that it operated a nationwide kickback scheme to increase sales of its HIV medications. The government alleged that between 2011 and 2017, Gilead paid 548 healthcare providers more than $23.7 million in honoraria, meals, and travel expenses through its HIV Speaker Program, and that these payments were designed to reward and induce prescriptions rather than serve genuine educational purposes.

The case was initiated in 2016 by Dr. Paul Bellman, a New York physician specializing in HIV treatment, who filed a qui tam complaint under the False Claims Act.

One month earlier, a federal judge in New Jersey ruled that Janssen Products, a subsidiary of Johnson & Johnson, must pay more than $1.6 billion for illegally promoting its HIV drugs Prezista and Intelence for off label uses. The jury verdict in that case, in which the government declined to intervene and the relators pursued the case on their own, was described by the DOJ as one of the largest damages verdicts ever rendered in a False Claims Act case.

In January 2025, Pfizer paid nearly $60 million to resolve allegations that its subsidiary Biohaven violated the Anti-Kickback Statute and False Claims Act by providing speaker honoraria and lavish meals to physicians to induce prescriptions of its migraine medication.

Who recognizes pharmaceutical fraud

Pharmaceutical fraud of this type is typically not visible to the government from the outside. The people with the best visibility are often those inside the company: sales representatives who are instructed to promote drugs for unapproved indications, medical science liaisons who observe the disconnect between what is communicated to physicians and what the clinical evidence supports, compliance officers who identify violations that are not being corrected, and marketing staff who help design programs that cross the line between education and inducement.

The Gilead case also shows how a physician on the receiving end of these programs can become a whistleblower. Dr. Bellman observed how the company’s conduct was affecting prescribing patterns among his colleagues, documented the pattern, and brought it to the government’s attention nearly nine years before the case settled.

The False Claims Act protects pharmaceutical whistleblowers

A whistleblower who initiates a pharmaceutical fraud case under the False Claims Act is protected from retaliation by an employer for engaging in protected whistleblower activity. Whistleblowers may also receive a portion of the government’s recovery under the statute.

Cases where the government declines to intervene may still proceed. The Johnson & Johnson verdict demonstrates that relators who pursue declined cases can still obtain major judgments. A whistleblower attorney can evaluate the strength of a potential case and advise whether to proceed with or without government intervention.

Speak to a whistleblower attorney at Keller Grover

If you have knowledge of off label marketing, physician kickbacks, or other fraudulent conduct at a pharmaceutical company or in connection with drug prescribing, the attorneys at Keller Grover can help you evaluate your options under the False Claims Act.

Contact our legal team today for a free, confidential consultation.