The Second Circuit's December 3, 2012 decision in United States v. Caronia, No. 09-5006-CR, could cause a sea change in the growing number of prosecutions brought by the government to prevent the off-label promotion of drugs by pharmaceutical companies and their employees. In a long-awaited decision, the Second Circuit ruled that the government cannot prosecute pharmaceutical manufacturers and their representatives under the Food Drug and Cosmetic Act (FDCA) for speech promoting the lawful, off-label use of a drug approved by the Food and Drug Administration (FDA). The Court vacated the conviction of Alfred Caronia, a pharmaceutical representative of Orphan Medical, Inc. (now known as Jazz Pharmaceutical), who the government maintained promoted the off-label use of the drug Xyrem, a drug used to treat narcolepsy. The case is a landmark decision, and only three days after the ruling, a convicted former InterMune Inc. executive's attorney argued before a Ninth Circuit panel that the First Amendment protected his client's promotion of a drug for an unapproved use.


Over the last decade, the government has recovered billions of dollars from pharmaceutical companies after accusing them of promoting their drugs for off-label uses. Included in this figure is one of the largest settlements of all time by Glaxo SmithKline in 2011 for $3 billion for, among other things, its off-label promotion of several drugs. Pharmaceutical companies, however, have continued to question the propriety of such prosecutions given that there is an inherent inconsistency in allowing physicians to prescribe drugs for off-label uses while simultaneously prohibiting drug companies, which are most knowledgeable about their own drugs, from counseling doctors about the drug's off-label treatment qualities, dosing regimen and adverse effects.

Although there is no statute that explicitly criminalizes off-label drug promotion, prosecutors have brought cases against pharmaceutical companies for off-label promotion under statutes like the FDCA that prohibit the promotion of "misbranded" or "new unapproved drugs." Under the FDCA, a drug is misbranded if its labeling is "false or misleading" or if its labeling does not contain "adequate directions for use." The Second Circuit in Caronia, however, "decline[d] to adopt the government's construction of the FDCA's misbranding provision to prohibit manufacturer promotion alone as it would unconstitutionally restrict free speech."


After the federal government launched an investigation focusing on the off-label promotion of Xyrem in the spring of 2005, Caronia was captured on tape promoting the drug for off-label uses and patients under age sixteen, an unapproved Xyrem subpopulation. Subsequently, Caronia was indicted, tried and ultimately convicted of conspiring to introduce a misbranded drug into interstate commerce in violation of the FDCA's misbranding provisions.

Caronia appealed to the Second Circuit, arguing that the interpretation of the misbranding provisions of the FDCA as prohibiting his off-label promotional statements unconstitutionally restricted his right to free speech under the First Amendment. In response, the government claimed that the First Amendment was not implicated at all because Caronia's promotional statements were not the basis for the conviction but merely served as proof of Xyrem's intended off-label use, for which there were not adequate directions. The Second Circuit ruled that the government's position was unpersuasive reasoning that at trial the government had made repeated assertions throughout summation and rebuttal that Caronia was guilty because he conspired to promote and market Xyrem for off-label use, but the government never had mentioned the promotional statements were evidence of intent. Furthermore, the district court instructed the jury that it could convict on that theory, and thus, the record demonstrated that the government prosecuted Caronia for mere off-label promotion. The Court held that based on the Supreme Court's holding in Sorrell v. IMS Health, Inc., 131 S.Ct. 2653 (2011), "[s]peech in aid of pharmaceutical marketing . . . is a form of expression protected by the Free Speech Clause of the First Amendment."

Having held that the First Amendment was implicated, the Second Circuit then determined whether Caronia's conviction under the FDCA violated the First Amendment, looking to Sorrell, which had been decided subsequent to Caronia's trial, for further guidance. In Sorrell, the Supreme Court held that the Vermont Prescription Confidentiality Law, which prohibited pharmaceutical companies from using prescriber-identifying information for marketing purposes, violated the First Amendment. As in Sorrell, the Second Circuit held that the government regulation of Caronia's speech in this case was both content- and speaker-based, because it distinguished between speech about government-approved uses of drugs and off-label uses of drugs and targeted one kind of speaker, pharmaceutical manufacturers, while allowing others to speak without restriction. Because the regulation was both content- and speaker-based, it was subject to heightened scrutiny under the First Amendment.

The Second Circuit further held that the regulation did not survive this heightened scrutiny under the test outlined in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980), because prohibiting the truthful promotion of off-label drug usage by a particular class of speaker did not directly advance the government's interest in regulating the off-label use of pharmaceuticals, particularly where physicians could prescribe, and patients could use, the drugs for off-label purposes. The Court held that actually permitting the protected speech furthered "the public interest to ensure that decisions about the use of prescription drugs, including off-label usage, are intelligent and well -informed." Furthermore, the Court held that the regulation was not narrowly drawn to serve the government's interest and that there were numerous, less speech-restrictive alternatives available. Without more than conclusory arguments to the contrary, the government could not show that the alternatives were less effective than its proposed construction of the FDCA to criminalize the simple promotion of a drug's off-label use by pharmaceutical manufacturers, which the Court held ran afoul of the First Amendment.


While the Caronia case marks a significant victory for pharmaceutical companies, the battle is not over because further appeals are almost certain. Therefore, drug companies would be wise to refrain from making any drastic changes to their promotional practices at the current time. At least one judge, Judge Livingston, issued a vehement dissent and warned that the majority's decision "calls into question the very foundations of our century-old system of drug regulation." Where this issue may end up is yet to be determined, but for pharmaceutical companies, at least, the Second Court decision is a step in the right direction.