Any MD can prescribe any (non-opiate) drug for any indication. But the drug companies are prohibited from doing what you say: telling docs about usages they haven't proven in trials. Sometimes the sales rep will drop off a scientific paper (often funded by the drug company) about some other use of the drug -- enforcement in this area is uneven.
If they do want to advertise new uses they need to do new trials. And though existing trial data can also be used, if the dosage regime is different or, say the patient pool tox risks are different (perhaps the new indication is less serious than the orphan one) whole new tox studies may be needed. Which seems fair.
That's not authorized, that's called "off label promotion" and it is severly punished when discovered. Also, doctors who use a non-approved drug for another indication can be tracked and investigated as well if needed (conflict of interests). Reimbursment also works only in certain conditions and may not apply if you use the drug outside of its allowed/approved indications.
However, as you point out, insurance companies in practice have a say. Also if the usage is implausible and there's an adverse event I think there could be a malpractice issues so those insurance companies also have an impact.
This is US law I'm talking about BTw.