In a split decision raising significant questions for ongoing investigations, company practices, and future prosecutions, the United States Court of Appeals for the Second Circuit vacated a pharmaceutical sales representative’s conviction after concluding that his off-label promotion was constitutionally protected speech. The government had prosecuted the sales representative for conspiring to introduce a misbranded drug into interstate commerce in violation of the Federal Food, Drug, and Cosmetic Act (FDCA), and the government’s case to the jury focused on recorded conversations in which the sales representative engaged in speech about unapproved uses of an approved drug (also called off-label promotion). The appeals court held that the FDCA’s misbranding provisions do not criminalize the simple promotion of a drug for off-label use because such a construction of the statute would run afoul of the First Amendment.

This case, United States v. Caronia, demonstrates the continued march of the First Amendment in protecting speech that occurs in the context of pharmaceutical marketing. It follows the Supreme Court’s 2011 decision applying First Amendment protections to pharmaceutical marketing in Sorrell v. IMS Health, Inc.1 And this issue was argued again this week in the Ninth Circuit in United States v. Harkonen.2 The Caronia and Harkonen decisions will directly affect criminal prosecutions premised on off-label promotion, and they are certain to be a subject of considerable discussion in pending enforcement actions, False Claims Act litigation, and any agency guidance documents. We urge caution, however. While the court’s analysis of the application of First Amendment protections to off-label promotion and the FDCA’s misbranding provisions is important, it is also important for companies to recognize that the decision is a fairly narrow one. Companies should proceed cautiously in implementing any day-to-day changes in marketing practices or promotional policies, especially until any further appellate review has run its course.

What did the Second Circuit decide?

The Second Circuit vacated a pharmaceutical sales rep’s conviction for conspiracy to introduce a misbranded drug into interstate commerce. Alfred Caronia, the sales rep, argued that he was convicted for his speech in promoting the off-label use of an approved drug in violation of the First Amendment. The Second Circuit agreed.

Facts: Caronia, a sales rep, promoted the drug Xyrem for a number of off-label uses, including in some recorded conversations. During his criminal trial, the government’s theory was that he violated the FDCA’s misbranding violation by engaging in off-label promotion. The majority opinion emphasizes that the government prosecuted Caronia solely for his off-label promotion, including by extensively quoting the government’s repeated assertion that Caronia was guilty because he “conspired to promote and market Xyrem for off-label uses.”3 The majority opinion also emphasizes that the district court told the jury that it could return a guilty verdict based solely on Caronia’s promotional speech.4  

Statutory and regulatory background: As the court recognized, the FDCA and its accompanying regulations do not expressly prohibit “promotion” or “marketing” of drugs for off-label use. Rather, FDA has considered a pharmaceutical company’s marketing of an approved drug for an unapproved use to render the drug “misbranded.” The FDCA specifies that a drug is “misbranded” if, among other things, its labeling lacks “adequate directions for use.” And by FDA regulation, a drug lacks adequate directions for use if there are not directions that allow a layperson to “use a drug safely and for the purposes for which it was intended.” FDA regulations go on to define a drug’s intended use by reference to “the objective intent of the persons responsible for the labeling of drugs” and indicate that “oral or written statements by such persons or their representatives” are one of the ways of demonstrating that objective intent.

Holding: “We construe the misbranding provisions of the FDCA as not prohibiting and criminalizing the truthful off-label promotion of FDA approved prescription drugs. Our conclusion is limited to FDA-approved drugs for which off-label use is not prohibited, and we do not hold, of course, that the FDA cannot regulate the marketing of prescription drugs. We conclude simply that the government cannot prosecute pharmaceutical manufacturers and their representatives under the FDCA for speech promoting the lawful, off-label use of an FDA-approved drug.”5

Analysis: In a detailed and thorough analysis, the Second Circuit explained its conclusion that the FDCA’s misbranding provision does not reach pharmaceutical manufacturer or sales rep’s truthful promotion of off-label drug uses. The court interpreted the FDCA in this manner under the doctrine of constitutional avoidance—meaning that it adopted a narrower statutory construction to avoid holding that the FDCA’s misbranding provision unconstitutionally abridges the First Amendment.

As the court stated: “under the principle of constitutional avoidance, . . . we construe the FDCA as not criminalizing the simple promotion of a drug’s off-label use because such a construction would raise First Amendment concerns. Because we conclude from the record in this case that the government prosecuted Caronia for mere off-label promotion and the district court instructed the jury that it could convict on that theory, we vacate the judgment of conviction.”6  

In its First Amendment analysis, the Second Circuit tracked the Supreme Court’s First Amendment analysis in Sorrell v. IMS Health, Inc.,7  which was also a case involving speech restrictions on pharmaceutical marketing. The Second Circuit first concluded that the government’s construction of the FDCA misbranding provision imposed content- and speaker-based restrictions on speech that are subject to heightened scrutiny. The government’s construction imposed a content-based restriction because it distinguished between speech about government-approved uses of the drug and speech about off-label uses of the drug. The government’s construction imposed a speaker-based restriction because it targeted one kind of speaker—pharmaceutical companies—while allowing others to speak freely about off-label use of a drug. Because of the content- and speaker-based restrictions, a heightened standard of scrutiny applied.

The court next concluded that the government failed to show that its construction was consistent with the First Amendment under heightened scrutiny. The court applied the Supreme Court’s four-prong Central Hudson8 test for commercial speech restrictions, which is the same test the Supreme Court applied to the speech restriction on pharmaceutical marketing in Sorrell. Although promoting off-label drug use concerns lawful activity (thereby satisfying prong one) and the government has a substantial interest in drug safety and public health (thereby satisfying prong two), the government’s construction did not directly advance the government’s interests and was not narrowly drawn (thereby failing prongs three and four). 

In assessing prongs three and four, the court was clearly troubled by the fact that once a drug is FDA approved, doctors can prescribe it for both approved and off-label uses: “As off-label drug use is not itself prohibited, it does not follow that prohibiting the truthful promotion of off-label drug usage by a particular class of speakers would directly further the government’s goals of preserving the efficacy and integrity of the FDA’s drug approval process and reducing patient exposure to unsafe and ineffective drugs.”9 The government’s position, the court emphasized, would “interfere with the ability of physicians and patients to receive potentially relevant information”—especially since FDA itself acknowledges that “‘public health can be served when health care professionals receive truthful and non-misleading scientific and medical information on unapproved uses’ of approved drugs.”10 The court walked through a litany of suggestions for how the government could more directly and narrowly address concerns about off-label drug use and maintaining the integrity of the FDA approval process.

Having concluded that the governments interests could be served equally as well by more limited and targeted restrictions on speech, the court held that the government failed to sustain its burden under the First Amendment. The court accordingly construed the FDCA’s misbranding provision as not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs.

What are the key limitations of this decision?

The Second Circuit’s opinion contains a number of limitations that are very important for clients to understand. These limitations significantly narrow the reach of its holding.

1. This decision is only about whether the FDCA criminalizes off-label promotional speech itself

The court repeatedly emphasized that the only question here was whether the FDCA criminalized “simple” or “mere” off-label promotion, stressing that Caronia was prosecuted “only for promoting an FDA-approved drug for off-label use.”11 As it explained, “the government’s theory of prosecution identified Caronia's speech alone as the proscribed conduct.”12 The court drew a distinction between off-label promotional speech itself—which was the only conduct the government placed at issue in Caronia’s case—and the use of such speech as evidence of the “intended use” of a drug—i.e., as evidence that off-label uses were intended ones for which the drug’s labeling failed to provide adequate directions.

The court specifically stated that “off-label promotional statements could thus presumably constitute evidence of an intended use of a drug that the FDA has not approved.”13 This decision, therefore, does not address whether and the extent to which the government could use off-label promotion as evidence in another case to show that a company’s intended uses differed from the approved intended uses and that the label did not contain adequate directions for the actual intended uses.14

2. This decision covers only truthful off-label promotion

The court made clear that it was only talking about off-label promotion that was truthful—not off-label promotion that could be portrayed as false or misleading. In this case, the government did not contend that the promotion was false or misleading, and the court made clear that false or misleading off-label promotion is not entitled to First Amendment protection. Companies, therefore, need to continue to evaluate their activities on a regular basis to ensure that their marketing practices are truthful and not false and misleading in any particular circumstance. Because FDA’s regulation defining misleading promotional claims was not at issue in the case, it will be important to assess proposed speech against that standard.

Does this mean the government can no longer charge anyone with or prosecute anyone for misbranding based on off-label promotion of drugs in the Second Circuit (NY, Connecticut, and Vermont)?

Not exactly. Under this decision, the government cannot charge anyone or prosecute anyone for misbranding based solely on the theory that a defendant engaged in off-label promotion. The court left for another case, however, the question whether the government could prove misbranding by using evidence of off-label promotion to show that a company’s intended uses were off-label ones, which would render its label inadequate for those uses and the drug misbranded.

Does this decision apply to off-label promotion of devices too?

Depending on the facts, this decision could apply to a device case.

Does this decision apply just to sales rep’s speech or to company’s speech as well?

It applies to both, with the same limitation on how much leverage a defendant can get out of it. A prosecutor will need to pursue a theory that off-label promotion is evidence of an intended use that is not adequately covered by the product’s labeling.

Will other courts have to follow this decision?

Only district courts within the Second Circuit will have to follow this decision. Other courts around the country will have to decide whether to agree or disagree with the Second Circuit’s decision. In addition, future cases are likely to test whether and to what extent the government can use off-label speech as evidence of motive or intent. In Wisconsin v. Mitchell, the Supreme Court held that “the First Amendment . . . does not prohibit the evidentiary use of speech to establish the elements of a crime or to prove motive or intent.”15 Both the majority and dissenting opinions discuss Mitchell and debate how its holding affects the use of off-label promotional speech to prove a misbranding violation.

What is the likelihood that the decision will be reviewed by the entire en banc Second Circuit or by the Supreme Court?

The government has 14 days to decide whether to petition for rehearing or rehearing en banc. If it does not seek en banc review, the government has 90 days to decide whether to seek certiorari review. (If it seeks panel rehearing or en banc review, it has 90 days from any denial of a petition for rehearing or en banc review to file a petition for certiorari.)

Judge Livingston wrote a forceful 30 page dissent arguing that the majority opinion “calls into question a fundamental regime of federal regulation that has existed for more than a century.”16 A dissent like this increases the odds of some sort of further review either by the Second Circuit or by the Supreme Court.

Should a company wait to change its practices until any further appellate review is complete?

Companies may want to be cautious about taking any action until there is more certainty about whether the Second Circuit itself or the Supreme Court will review the decision. This is a brand new decision, crafted by the majority to address the narrow situation in which the government’s prosecution for misbranding was based solely on speech.

Should a company limit any changes to its off-label promotion practice to New York, Connecticut, and Vermont?

Companies should keep in mind that this decision is only binding law in three states: New York, Connecticut, and Vermont. While other courts may decide to follow suit, they may also agree with Judge Livingston’s dissent.

In addition, companies need to pay attention to the narrowness of the decision: the court did not do away entirely with the possibility of misbranding convictions flowing from off-label promotion; it merely held that a conviction cannot be based solely on off-label speech alone. The government must instead, at a minimum, prove that the company’s intended uses differs from the approved use and that the company’s label does not contain adequate directions for those intended uses. And in seeking to prove those facts, the court left open an opportunity for the government to rely on evidence about off-label promotion, including evidence that the statements were false or misleading. As discussed below, we believe it is premature to take steps to change promotional practices now.

What are the implications for ongoing enforcement activities?

Companies should anticipate that the government will read the Second Circuit’s decision narrowly and that the government will argue that off-label promotion is evidence of intended uses beyond the scope of a product’s labeling. The government is likely to argue that speech has always been admissible to prove motive and intent and that it is in this context as well. Companies should also anticipate more push back from the government in pending and future investigations as to when off-label promotion is truthful and when it is false and misleading in one respect or another—such as being unsubstantiated, omitting details, or failing to present a balanced picture.

In any ongoing government investigation in which a company has not yet finalized an agreement accepting the government’s pre-Caronia construction of the FDCA’s misbranding provisions, a company may want to consider whether any agreement should be revised to reflect the Second Circuit’s construction of the statute. In addition, companies involved in cases under the federal civil False Claims Act, or any state counterpart, involving allegations of off-label promotion should consider whether and how Caronia affects the viability of any complaint allegations.

What are the implications for the day-to-day activities of a company?

At this time, we believe that making immediate changes to marketing activities to incorporate truthful off-label messages is premature—particularly given that the ruling directly addresses only criminal misbranding prosecutions under the FDCA. In the coming weeks and months, there may be further activity in the Caronia case or in the Harkonen case in the Ninth Circuit that could inform companies’ decisions. The Second Circuit’s decision does not address numerous other legal theories upon which prosecutors may still find companies liable for off-label promotion, including introducing an unapproved new drug, civil enforcement, and False Claims Act prosecutions.

There are, however, a few areas in which responsible companies can presently evaluate the potential impact of Caronia:

  • Can truthful speech be incorporated into particular marketing messages in a way that avoids being misleading (i.e., does it reveal material facts, stop short of causing a false claim, and accurately report robust data?)?
  • Will certain company promotional activities (e.g., training of company personnel, development of written promotional materials) that might accompany truthful off-label statements remove any protections potentially provided by Caronia?
  • Can Caronia inform company policies with regard to:
    • “Scientific exchange” by medical personnel;
    • Dissemination of reprints under the final FDA guidance;
    • Dissemination of information under the holding of the Washington Legal Foundation (WLF) case; and
    • Scope of appropriate disease awareness information under FDA’s draft guidance?