Yesterday, the U.S. Court of Appeals for the Second Circuit in a 2-1 split vote overturned the misdemeanor conviction of a former Orphan Medical, Inc. (now Jazz Pharmaceuticals Inc.), sales representative who had been charged with "misbranding" under 21 U.S.C. § 331(a) and (a)(1). The sales representative, Alfred Caronia, and Dr. Peter Gleason (now deceased) had been charged with conspiring with Orphan to promote Xyrem, a powerful depressant known as the "date rape drug," for various off-label purposes. Although the trial record showed that Caronia and Gleason were caught on tape speaking to a physician (who was cooperating with the government) about various off-label uses, and even though Gleason and Orphan had pleaded guilty, Caronia fought the charges, arguing that his off-label promotion was truthful, accurate and not misleading and, therefore, was constitutionally protected free speech. While the trial court recognized that off-label promotion implicated speech, it denied Caronia's motion to dismiss and he was later convicted.
On appeal, Caronia continued to press his First Amendment argument. The government responded that Caronia's off-label speech was relevant only as "evidence" of Caronia's intent that Xyrem be used off-label and that the First Amendment does not proscribe the use of speech as evidence of criminal intent. Although the Second Circuit majority acknowledged that the FDA regulations don't criminalize off-label promotion per se, it ultimately concluded that Caronia's conviction rested entirely on his speech and that, under Sorrell v. IMS Health, 131 S. Ct. 2653 (2011) and Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of N.Y., 447 U.S. 557 (1980), the First Amendment required that his conviction be vacated. In arriving at its decision, the majority reasoned that because the FDA regulations effectively regulated "content" (favoring on-label speech and disfavoring off-label speech) and discriminated among speakers (penalizing manufacturers, but not physicians, academics and other speakers), it was required to apply "heightened scrutiny" to the regulations. Under the heightened scrutiny standard, the majority found that while the government had substantial interests in ensuring drug safety, public health, and the effectiveness and integrity of the FDA drug approval process, the FDA's off-label regulations neither directly advanced those interests nor were narrowly drawn to further the interests served. For example, the majority noted numerous examples of less restrictive regulations that could effectively advance the Government's interests, including "warning or disclaimer systems" that could alert physicians that the certain uses have not been FDA-approved.
The dissent took the government's view that what was at issue was Caronia's intent that Xyrem be used off-label and that Caronia's off-label speech could have been properly used as evidence of his intent to sell off-label without implicating the First Amendment and putting into question the FDA's well-established regulatory scheme. As the dissent noted in its first paragraph: "By holding, instead, that Caronia's conviction must be vacated – and on the theory that . . . he was in fact convicted for promoting a drug for unapproved uses, in supposed violation of the First Amendment – the majority calls into question the very foundations of our century-old system of drug regulation."
Given the significant implications of the Caronia decision in the area of qui tam false claims act litigation, particularly for pharmaceutical, medical device and other life science companies, as well as for the medical community, we anticipate further developments and will be monitoring those carefully.