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2nd Circuit decision throws FDA’s drug misbranding cases into question

In U.S. v. Caronia, the court vacated the conviction of a pharmaceutical sales rep for off-label but truthful promotion, contending it violated his First Amendment rights

The Food and Drug Administration (FDA) has been aggressive in pursuing drug companies and their sales personnel that promoted drugs for off-label uses, or uses that the FDA has not approved.

Both criminal and civil False Claims Act cases have paid off for the government, often lucratively. The record $3 billion penalty that GlaxoSmithKline agreed to pay in July 2012—the largest health care fraud settlement in U.S. history—came in a case that centered on the government’s claims that the drug company promoted several drugs for off-label uses, rendering the products misbranded and thus illegal under the Food, Drug and Cosmetic Act (FDCA). Just months before that, Abbott Laboratories Inc. paid $1.5 billion to resolve criminal and civil charges related to off-label promotion.

In December, the 2nd Circuit called into question the legal underpinnings of many such drug misbranding cases when it vacated the conviction of pharmaceutical sales rep Alfred Caronia for off-label but truthful promotion, contending it violated his First Amendment rights. 

While the decision is a sure blow to the FDA, it may not be the death knell for off-label enforcement. 

U.S. v. Caronia marks the first time a federal appeals court has reached such a conclusion, and if it survives appeals, the 2nd Circuit’s reasoning could threaten a centerpiece of the FDA’s enforcement regime. But that’s a big if, experts say. In addition, the opinion leaves room for the FDA to continue to pursue cases involving false and misleading speech.

“It does reaffirm that certain speech in this area, even if off-label, is protected by the First Amendment,” says Tom Lee, a partner at Dechert. “Companies need to be very, very careful in how they use this. It’s not clear this is the final word on this, and promotional strategy shouldn’t change based on one case, which is likely to get appellate review.”

Free Speech Finding

Caronia was an employee of Orphan Medical Inc. (now Jazz Pharmaceuticals) when a doctor recorded him promoting the drug Xyrem for uses unapproved by the FDA. After a trial at the U.S. District Court for the Eastern District of New York, a jury in 2008 found Caronia guilty of conspiracy to introduce a misbranded drug into interstate commerce.

The FDCA prohibits misbranding, or “the introduction or delivery for introduction into interstate commerce of” a misbranded drug. Judge Denny Chin’s opinion for the 2-1 majority of the 2nd Circuit noted that while the FDCA does not expressly prohibit the marketing of drugs for off-label use, the FDA has concluded in draft guidance that an “approved drug marketed for an unapproved use (whether in labeling or not) is misbranded because the labeling of such drug does not include ‘adequate directions for use.’” The FDA has thus “construed the FDCA to prohibit promotional speech as misbranding itself,” Chin wrote.

However, applying the FDCA’s misbranding provisions to manufacturer promotion alone would unconstitutionally restrict free speech, the majority concluded. And, it said, the record showed the government prosecuted Caronia for his speech, and the district court instructed the jury that they could convict on that theory.

“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,” Chin wrote.

False and Misleading

Lee notes that if the 2nd Circuit’s conclusion stands, companies will still have to stay in that safe harbor and ensure that any off-label promotion is limited to safe and effective uses of the drug in question.

A footnote in the majority’s opinion emphasizes, “Of course, off-label promotion that is false and misleading is not entitled to First Amendment protection. … [A] defendant may be prosecuted for untruthfully promoting the off-label use of an FDA-approved drug.” The government’s case against Caronia did not argue that the promotion in question was false or misleading, neither at trial nor on appeal.

Caronia gives some potential leeway for companies in providing off-label information with respect to responding to requests for that information or to questions about off-label use,” Lee says, “but given that it’s restricted to truthful speech, people need to be very, very careful about what they say.”

It is another possibility that in light of Caronia the FDA will focus on cases in which it can prove the speech related to off-label use was false and misleading.

FDA Alternatives

The 2nd Circuit’s majority analyzed the facts in Caronia using a four-part test that the Supreme Court established in 1980 in Central Hudson Gas & Electric Corp. v. Public Service Commission, which courts use to determine whether the First Amendment protects commercial speech. The last prong of the test says the regulation in question must be “narrowly drawn” and no more extensive than necessary to serve the interest.

The majority concluded that the complete ban on off-label promotion “is more extensive than necessary to achieve the government’s substantial interests.” The alternative possibilities, it says, “are numerous indeed.”

The opinion proposes several alternatives for the government to regulate off-label use that do not present excessive restrictions on speech. The government has said in a Caronia brief that such alternatives were not administrable, feasible or otherwise effective; the majority counters that such assertions are unsupported.

“What the FDA is going to do is a fascinating question, and they might wait until they have a clearer legal mandate,” says Kate Greenwood, a research fellow and lecturer for Seton Hall School of Law’s Center for Health & Pharmaceutical Law & Policy. “The extent to which the government has to try things and see if they work is sort of an open question. In the past, courts have been more deferential to the policy-making arms of the government. … The majority [in Caronia] says it’s the government’s burden to show [alternatives] wouldn’t work.”

The dissent in Caronia by Judge Debra Ann Livingston walks through the majority’s alternatives and contends that prohibiting off-label promotion is the least restrictive way of advancing the government’s interests.

“And,” she added, “because a product’s very definition as a ‘drug’ depends upon its intended use (which is often established by the manufacturer’s speech), it is unclear why the majority’s less-restrictive-alternatives analysis is not equally applicable to the FDCA’s entire scheme of drug regulation.”

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