This is a follow-up to our post late last year on the Second Circuit decision in US v. Caronia, which overturned a defendant’s off-label marketing conviction on First Amendment grounds (see our December 10, 2012 post, “Second Circuit Overturns Off-Label Marketing Conviction On First Amendment Grounds”). In United States v. Harkonen, the Ninth Circuit rejected the defendant’s First Amendment argument, and affirmed wire fraud convictions.
Here is a little background on the case. W. Scott Harkonen was the CEO of InterMune. InterMune manufactured a drug, Actimmune, which was approve for treatment of chronic granulomatous disease (CGD) and severe, malignant osteopetrosis. Harkonen was accused of causing InterMune to issue a press release which was false and misleading regarding Actimmune’s efficacy in treating idiopathic pulmonary fibrosis (IPF), for which it was not approved. A jury convicted him of mail and wire fraud, but acquitted him of FDCA misbranding charges.
On appeal, Harkonen argued that the press release was protected speech under the First Amendment. The Ninth Circuit rejected Harkonen’s argument. The Court applied a two-step analysis: (1) “deferring to the jury’s findings . . . we ask whether the evidence supports the verdict; and (2) if it does, we determine whether the facts, as found by the jury, establish the core constitutional facts.” The Court explained that because under United States v. Alvarez (132 S.Ct. 2537, 2544 (2012) “[t]he First Amendment does not protect fraudulent speech,” “the core constitutional issue” was “whether the facts the jury found establish that the Press Release was fraudulent.”
The Ninth Circuit found that there was sufficient evidence to find that the press release in question was fraudulent, and was thus not protected by the First Amendment. Because Harkonen was convicted of wire fraud and not misbranding, the Ninth Circuit did not have occasion to revisit the Second Circuit’s decision in United States v. Caronia. However, since the government chose not to appeal Caronia, it might be fair to ask in light of Harkonen whether in future prosecutions the government will strain to find ways to include mail and wire fraud offenses in pharma investigations and thus avoid Caronia’s effect altogether.