For The Defense

On December 3, 2012, the Second Circuit Court of Appeals issued its long-awaited opinion in United States v. Caronia, 703 F.3d 149 (2d Cir. Dec. 3, 2012). In this landmark decision, over a forceful dissent, a two-judge majority reversed the conviction of a former pharmaceutical sales representative for off-label promotion on First Amendment grounds. The Second Circuit declined to take on the constitutionality of the Food, Drug and Cosmetic Act’s ("FDCA") mislabeling provisions because it did not interpret the Act to expressly prohibit or criminalize off-label promotion. Nevertheless, the court concluded 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."Id. at 169.1

Here is what happened:

In 2008, following a jury trial, Alfred Caronia, a pharmaceutical sales representative working for Orphan Medical (now Jazz Pharmaceuticals), was found guilty of conspiracy to introduce a misbranded drug into interstate commerce. Caronia was caught on tape talking with physicians about various off-label uses for Xyrem, a drug approved to treat adult patients with narcolepsy who experience cataplexy. Caronia was sentenced to one year of probation, 100 hours of community service, and a $25 special assessment.

The FDCA prohibits the distribution of a misbranded product, which includes a product bearing a label that fails to communicate "adequate directions for use." 21 U.S.C. § 352(f). The regulations define adequate directions for use as "directions under which a lay person can use a drug safely and for the purpose for which it was intended."Id. § 201.5. Intended use is determined based upon the objective intent of persons legally responsible for labeling.Id. § 201.128. The regulations contemplate that statements by a company or its representatives can serve as proof of a drug’s intended use. Although the FDCA does not contain a provision expressly prohibiting off-label promotion, the government has treated promotional speech as more than just evidence of a drug’s intended use. The government "has construed the FDCA to prohibit promotional speech as misbranding itself,"Caronia, 703 F.3d at 155, the consequences of which are criminal.

In Caronia, the government’s interpretation of the FDCA was rejected. Caronia appealed his conviction, arguing that he was convicted for his speech in violation of the First Amendment. The leading question posed by the majority was whether Caronia was convicted for conspiracy to misbrand Xyrem because he engaged in off-label promotion, in other words, for his speech?  Or, as the government argued on appeal, was his speech used as evidence to show intended uses for which Xyrem’s labeling failed to provide adequate directions?  Only the former would implicate the First Amendment.

Based upon the trial record, the majority concluded that "the proscribed conduct for which Caronia was prosecuted was precisely his speech in aid of pharmaceutical marketing."Id. at 162. Next the Second Circuit considered whether the government’s prosecution of Caronia was constitutionally permissible.

The government’s interpretation of the FDCA’s misbranding provisions was deemed to be both content-based (because it distinguished between favored speech and disfavored speech on the basis of the ideas and views expressed) and speaker-based (because it targeted one kind of speaker—pharmaceutical manufacturers—while permitting others such as physicians and academics to speak/promote without restriction). Therefore, the court stated that the government’s construction of the misbranding provisions of the FDCA was subject to heighted scrutiny. However, just as the Supreme Court did in Sorrell v. IMS Health, Inc., 131 S. Ct. 2653, 2659 (2011), the Second Circuit proceeded to invalidate the FDA’s off-label promotion restriction under the less strict Central Hudson2 commercial speech test.

The first two elements of Central Hudson were easily satisfied: "promoting off-label drug use concerns lawful activity (off-label drug use), and the promotion of off-label drug use is not in and of itself false or misleading." Caronia, 703 F.3d at 165-66. Importantly, the court was careful to clarify that its decision applied to truthful claims. In a footnote (n.11), the court stated that off-label promotion that is false or misleading is not entitled to First Amendment protection. In other words, in order to avoid constitutional review, the government must show that the promotion is false or misleading.

The third and fourth elements of the Central Hudson test, which require that the regulation advance the government’s interests and be narrowly drawn, failed to pass muster. The court was not convinced that prohibiting off-label promotion by manufacturers and their agents directly advances the government’s interests in patient safety and in preserving the efficacy and integrity of the FDA’s drug approval process. The court rationalized that, as "off-label drug use itself is not 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."Id. at 166. It further stated, "prohibiting off-label promotion by a pharmaceutical manufacturer while simultaneously allowing off-label use paternalistically interferes with the ability of physicians and patients to receive potentially relevant treatment information; such barriers to information about off-label use could inhibit, to the public’s detriment, informed and intelligent treatment decisions."  Id. The court acknowledged that some off-label information could be misleading or unhelpful, but that was not the case here. Moreover, the court concluded that the "the government’s construction of the FDCA to impose a complete and criminal ban on off-label promotion by pharmaceutical manufacturers is more extensive than necessary to achieve the government’s substantial interests."Id. at 167.

In a strong dissent, Circuit Judge Debra Ann Livingston disagreed that the government prosecuted Caronia for his speech. Instead, she argued, the government properly used Caronia’s promotional speech to demonstrate an objective intent that the drug be used for a purpose other than the use for which the drug was approved by the FDA. To emphasize her point, Judge Livingston argued, "Abby and Martha [do not have] a First Amendment right to offer arsenic-laced wine to lonely old bachelors with the intent that they drink it. …And any statements Abby or Martha made suggesting their intent—even if all of the statements were truthful and not misleading—would not be barred from evidence by the First Amendment…" Caronia, 703 F.3d at 175 (dissent). According to the dissent, "the majority calls into question the very foundations of our century-old system of drug regulation."Id. at 169.

Although the much-debatedCaronia decision throws the whole off-label marketing compliance regime into question, the government is not backing down. In remarks made on January 29, 2013, Maame Ewusi-Mensah Frimpong, Deputy Assistant Attorney General for the Department of Justice’s Consumer Protection Branch, stated that, "[i]n the area of misbranding, when companies make promotional claims that are not truthful and balanced, or when they do not disclose all relevant safety information to FDA and doctors, they place patients at great risk of harm because neither doctors nor patients can make informed choices about their drugs." Therefore, companies "making representations regarding safety and placing patients at an unacceptably high risk of harm in service to the bottom line…will likely continue to see this as a theme of our [FDCA] prosecutions." In short, the government will be taking an especially hard look whenever there are misrepresentations of safety."

In taking this "hard look," the government will have at its disposal, as we have written, the strict liability criminal provisions of the FDCA and the concomitant "Responsible Corporate Officer" doctrine, making this area of the criminal law treacherous for corporate employees and officers, including in-house lawyers, who are directly and even tangentially involved in the marketing of drugs and medical devices.