On Monday, December 3, the United States Court of Appeals for the Second Circuit, in a 2-1 decision, reversed the conviction of a pharmaceutical sales representative for conspiring to introduce a mis-branded drug into interstate commerce solely on the basis of off-label promotion. United States v. Caronia, No. 09-5006-cr (2nd Cir., Dec. 3, 2012). Mr. Caronia was a pharmaceutical sales representative who allegedly promoted the drug Xyrem for “off-label uses.” Xyrem is approved for the treatment of narcolepsy in patients who experience cataplexy (a condition associated with weak or paralyzed muscles) or who suffer from excessive daytime sleepiness. The drug was subject to “black box” warning indicating that the drug’s safety and efficacy were not established in patients under 16 years of age, and that the drug had “very limited” experience among elderly patients. The evidence at trial indicated that the defendant had promoted the drug for unapproved indications, including muscle disorders and chronic pain, and for unapproved sub-populations, i.e., patients under age 16. A jury found him guilty of conspiring to introduce a mis-branded drug into interstate commerce, a misdemeanor. He was sentenced to one year of probation, 100 hours of community service, and a $25 special assessment.

Second Circuit Analysis

On appeal, the court majority began its analysis by noting that “[t]he FDCA and its accompanying regulations do not expressly prohibit the ‘promotion’ or ‘marketing’ of drugs for off-label use.” Instead, the regulations only establish that off-label promotional statements can constitute “evidence of an intended use of a drug that the FDA has not approved.” The court noted, however, that the FDA “has treated promotional speech as more than merely evidence of a drug’s intended use—it has construed the FDCA to prohibit promotional speech as misbranding itself.” The court rejected the FDA’s position, finding that under the principle of “constitutional avoidance,” it had to 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.” The majority also found that the prosecution impermissibly infringed upon the sale representative’s First Amendment free speech rights under the U.S. Constitution in two ways. First, the court held that the government had imposed “a presumptively invalid” content-based restriction that favors speech on approved uses over speech involving off-label uses even though off-label use by a physician is lawful. Second, the court concluded that the government had inappropriately placed speaker-based restrictions that prohibit pharmaceutical manufacturers from speaking while allowing others, such as physicians and academics, to speak freely about off-label uses. In reaching these conclusions, the panel relied heavily on the Supreme Court’s recent decision in Sorrell v. IMS Health, Inc., 131 S. Ct. 2653 (2011), in which the court held that “[s]peech in aid of pharmaceutical marketing … is a form of expression protected by … the First Amendment.” The government attempted to preserve the conviction by arguing that it had not prosecuted the defendant for promotional speech, but the court rejected this argument, citing numerous passages from the trial record indicating that the government had repeatedly told the jury that the defendant was guilty of conspiring to introduce a mis-branded drug into interstate commerce simply because of off-label promotion. The court also concluded that the jury instructions had improperly allowed the defendant to be convicted solely for off-label promotion.

Pharmaceutical and Medical Device Manufacturers Should Proceed with Caution

While the opinion appears to be a far-reaching repudiation of the FDA’s efforts to prohibit off-label promotion, pharmaceutical and medical device manufacturers may be wise to proceed cautiously. First, the impact of this decision is limited for now to the Second Circuit. Second, this is a panel decision,and the government could seek rehearing from the full Second Circuit. Likewise, the government could petition the Supreme Court to review the case. Finally, while it is one thing for a court to tell the government that it cannot throw a sales rep in jail for engaging in truthful commercial speech, it is another thing for a court to tell the government that there is nothing it can do to keep companies from ignoring the limits of their approved product labels. In fact, the court went out of its way to suggest that its decision might be limited to the context of criminal prosecution. For example, the court observed that the defendant’s “claim to First Amendment protection is more compelling than in Sorrell because this case involves a criminal regulatory scheme….” Likewise, the court concluded that “the government’s construction of the FDCA to impose a complete and criminal ban on off-label promotion is more extensive than necessary to achieve the government’s substantial interests” [Emphasis added.] It could be telling that the court went on to state, “Numerous, less speech-restrictive alternatives are available, as are non-criminal penalties.” Ultimately, the court summarized its holding as follows: “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.”

First Amendment Limits

Certainly, one should expect the government to take the position that the Caronia decision has no application outside the context of a criminal prosecution. On the other hand, Sorrell was not a criminal case, so there clearly are First Amendment limits on what the government can do to deter off-label promotion. It should also be noted that the Caronia court made clear, albeit in a footnote, that “off-label promotion that is false or misleading is not entitled to First Amendment protection.” In the case at bar, however, the government had not argued at trial or on appeal that the defendant’s promotional statements were false or misleading in any way. By contrast, in many of the major off-label cases that have been brought against manufacturers,the government has alleged that off-label promotional activity involved the dissemination of false or misleading information, such as the failure to correctly describe a drug’s safety and efficacy when used for an unapproved indication.

Caronia Decision Recognizes FDA Authority with Limitations

The Caronia decision could prove to be an important case in setting boundaries on how far the government can go to punish truthful commercial speech it would prefer not to have anybody hear. Clearly, the court majority felt that the government had overreached in attempting to criminalize speech that was not alleged to be false or misleading. On the other hand, nothing in the decision suggests that pharmaceutical and medical device manufacturers have a green light to engage in all manners of off-label promotion. Rather, the decision can still be viewed as upholding the FDA’s general authority to consider evidence of off-label promotion when determining a drug’s intended use, particularly in a non-criminal enforcement context.

This article was prepared by Frederick Robinson (frobinson@fulbright.com / +1 202 662 4534) of Fulbright’s Health Law Practice and and Julie Hardin (jhardin@fulbright.com / 1+ 713 651 5137) of Fulbright’s Pharmaceutical and Medical Devices Practice.