Clinical-stage pharmaceutical, biotechnology and medical device companies need to generate “buzz” in order to attract investments to fund the costly clinical studies required for marketing approval.

But FDA regulations prohibit companies from promoting an investigational drug or device and securities regulations forbid them from making untrue statements or omitting material facts. Therefore, clinical-stage companies must excite investors while avoiding (i) express or implied claims of safety or efficacy, (ii) untrue statements or (iii) misleading omissions. Violations of FDA regulations and securities regulations can result in lawsuits, FDA response, fines, injunctions, consent decrees and criminal actions.

To help manage such risks, clinical-stage companies should have legal counsel review materials provided to investors as well as public statements (including companies’ websites), presentations and publications about pipeline products and clinical trial results. Additionally, companies should implement an appropriate compliance program, policies, trainings and monitoring (more on this in a later post). At the very least, all company personnel should be familiar with the laws and regulations discussed in this series of posts.

Know What Regulations Apply

Generally, communications targeting the public, physicians or patients will be governed by FDA regulations; communications primarily targeting investors or potential investors will be governed by securities regulations; and communications targeting both sets of recipients will be governed by both FDA and securities regulations (I’ll talk about securities regulations in my next post).

Below are common examples of communications that will fall under FDA regulations:

FDA Regulations (Patient- or Physician-Targeted Communications):

• clinical trial recruitment materials
• scientific/medical presentations at conferences
• scientific or medical publications

Both FDA and Securities Regulations (Public, Patient, Physician or Investor Communications):

• company website
• social media statements by company or company employees
• social medial pages by company or company employees
• press releases
• press interviews
• email alerts
• product advertisements
• product endorsements, including patient or physician testimonials or statements made by paid speakers (including consultants, social media influencers and authors)

FDA Regulations

The FDA is concerned with companies “promoting” investigational drugs or devices before they are shown to be safe and effective. The FDA has interpreted “promote” and “promotional context” very broadly. Virtually any public communication about an investigational drug or device could be viewed by the FDA as an unlawful “promotion” if the statement:

• implies the drug or device is safe or can be used to diagnose, treat or cure a medical condition;
• implies the drug or device is better, safer, cheaper or more effective than an alternative drug or device;
• implies the drug or device will, or is likely to, receive FDA approval or clearance;
• implies the drug or device might have indications other than those that are the subject of the applicable clinical study;
• omits or downplays information about risks; or
• is otherwise false or misleading.

 Put another way, any statement about a clinical-stage drug or device should usually:

• conspicuously state that the drug or device:
  • is investigational or experimental;requires additional studies to make any definitive conclusions about safety or efficacy and;is not approved by the FDA.
• convey clinical study information in a factual manner, which ideally includes the indication, basic design of the study, phase of the study, statistical powering of the study, statistically significant and relevant results and risk/safety information;
• avoid comparisons with other drugs or devices;
• make no assertion as to whether FDA approval or clearance will or is likely to occur; and
• avoid physician or patient testimonials without first consulting with legal counsel.

Securities Regulations

In my next post regarding securities law, I’ll discuss how the SEC regulates public statements. In part three, I’ll explain when strategy supports compliance with securities regulations but not FDA regulations, and provide examples of statements that comply with either securities regulations or with FDA regulations, but not both, and examples that comply with both. Stay tuned…

Author: Robb C. Giddings