United States: Ninth Circuit's "Harkonen" Decision Does Not Undermine Recent Second Circuit Precedent Establishing That Truthful Promotion Of Approved Drugs For Off-Label Use Is Protected By The First Amendment

Last Updated: April 6 2013
Article by Martin Seidel, Jason Jurgens, Brian T. McGovern and Ryan J. Andreoli

Most Read Contributor in United States, December 2018

On March 4, 2013, the United States Court of Appeals for the Ninth Circuit affirmed the conviction of W. Scott Harkonen ("Harkonen"), who had been tried and convicted of wire fraud for issuing a fraudulent press release regarding the results of a clinical trial.1 In its unanimous, unpublished decision, the Ninth Circuit held that the jury's finding that Harkonen had engaged in fraudulent speech was supported by sufficient evidence, and therefore the press release at issue was not protected by the First Amendment. Since the Ninth Circuit found that Harkonen's statements were false and misleading, it was not required to and did not address the Second Circuit's recent decision in United States v. Caronia, 703 F.3d 149 (2d Cir. 2012), where the court held that the government's prosecution of a pharmaceutical sales representative for truthful promotion of an approved drug for off-label uses violated the First Amendment.2 Thus, the Harkonen decision does not appear to undermine Caronia or provide support for the government's position prior to Caronia that off-label promotion (even when truthful) constitutes misbranding for purposes of the U.S. Food, Drug and Cosmetic Act (the "FDCA").

Factual Background

The evidence introduced at Harkonen's trial demonstrated that he served as the Chief Executive Officer of InterMune, Inc. (a California-based pharmaceutical company) from 1998 until at least June 3, 2003.3 In 2000, InterMune purchased the rights to the drug Actimmune, which at that point in time had been approved by the U.S. Food and Drug Administration (the "FDA") for "chronic granulomatous disease and severe, malignant osteopetrosis."4 After a small Austrian clinical trial demonstrated that Actimmune might be used to treat another condition, idiopathic pulmonary fibrosis ("IPF"), InterMune "launched its own, much more ambitious study of Actimmune's efficacy in treating IPF."5 However, when InterMune's Senior Director of Biostatistics received the results of this trial (the "GIPF-001 trial"), "it was immediately apparent that the study had missed its primary endpoint as well as all ten of the secondary endpoints."6 InterMune nonetheless issued a press release (which Harkonen largely controlled) touting the results of the GIPF-001 trial (the "Press Release").7 That Press Release was headlined "InterMune announces Phase III data demonstrating survival benefit of Actimmune in IPF," and stated, among other things, that Actimmune had demonstrated "a significant survival benefit" in certain patient populations.8 Harkonen was subsequently charged with and convicted of one count of wire fraud for making false statements about Actimmune in the Press Release.9 The district court denied Harkonen's post-trial motions, finding, among other things, that "the jury could have concluded that the press release, as a whole, was false or fraudulent."10

The Ninth Circuit's Decision

On appeal, the Ninth Circuit stated that "[t]he First Amendment does not protect fraudulent speech . . . so the core constitutional issue in Harkonen's case is whether the facts the jury found establish that the Press Release was fraudulent."11 The Ninth Circuit then concluded that the jury's findings that "the Press Release was misleading, that Harkonen knew it was misleading, and that Harkonen had the specific intent to defraud," were all supported by "sufficient evidence," and therefore affirmed Harkonen's conviction.12 In reaching this conclusion, the Ninth Circuit relied upon (among other things) evidence that: (i) "Harkonen himself was 'very apologetic' about the Press Release's misleading nature"; (ii) "Harkonen prevented [InterMune's] clinical personnel from viewing the Press Release prior to its publication"; and (iii) "Harkonen stated that he would 'cut that data and slice it until he got the kinds of results he was looking for.'"13 The Ninth Circuit also specifically rejected Harkonen's argument that he was "engaging in a genuine scientific debate," stating that "genuine debates of any sort are, by definition, not fraudulent."14

The Second Circuit's Caronia Decision

On December 3, 2012 (just three months before Harkonen was decided), the Second Circuit vacated the conviction of Alfred Caronia ("Caronia"), who had been tried and convicted of participating in an unlawful conspiracy to introduce a misbranded drug into interstate commerce in violation of the FDCA.15 At trial, the government introduced evidence demonstrating that Caronia and a physician hired by Caronia's employer to serve as a "promotional speaker" had made statements to a government cooperator in which they promoted the prescription drug Xyrem for unapproved or "off-label" indications.16 Caronia was subsequently charged with and convicted of participating in an unlawful conspiracy to introduce Xyrem into interstate commerce when Xyrem was "misbranded" within the meaning of the FDCA.17 On appeal, the Second Circuit vacated Caronia's conviction, stating that:

we decline to adopt the government's construction of the FDCA's misbranding provisions to prohibit manufacturer promotion alone as it would unconstitutionally restrict free speech. We construe the misbranding provisions of the FDCA as not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs.18

The Second Circuit, however, was careful to limit the scope of its decision, stating that: "we do not hold, of course, that the FDA cannot regulate the marketing of prescription drugs. 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."19

The Current Landscape For Off-Label Promotion

While the Caronia decision provides a powerful defense for both pharmaceutical companies and their employees in misbranding and related cases (including civil False Claims Act matters), the Harkonen decision makes clear that the promotion of approved drugs for off-label uses is only protected by the First Amendment where the promotional statements are truthful. As the Ninth Circuit stated in Harkonen, "the First Amendment does not protect fraudulent speech."20

Life science companies and their employees should also be aware that the FDA has reportedly stated in recent months that it "'does not believe that the Caronia decision will significantly affect the agency's enforcement of the drug misbranding provisions of the [FDCA].'"21 Thus, it appears that the government intends to construe the Caronia decision as narrowly as possible, and to continue prosecuting life science companies and their employees for off-label promotion.22 While recent statements by the U.S. Attorney for the Eastern District of Pennsylvania suggest that the government may focus its future efforts on prosecuting off-label cases involving actual fraud, the government has not ruled out prosecuting life science companies where the promotional statements at issue are truthful.23 We therefore reiterate that life science companies must remain as vigilant as ever in their compliance efforts.


1 See United States v. Harkonen, Nos. 11-10209, -10242, 2013 WL 782354, at *1 (9th Cir. Mar. 4, 2013).

2 The authors have previously written about the Caronia decision and its potential impact on the government's efforts to restrict off-label promotion. See Martin L. Seidel, et al., Second Circuit's Caronia Decision Could Significantly Change Life Science Companies' Exposure for Off-Label Promotion, 25 Health Law. 39 (Feb. 2013).

3 Due to the abbreviated nature of the Ninth Circuit's unpublished opinion in Harkonen, the facts described herein are derived from the decision of the U.S. District Court for the Northern District of California on Harkonen's post-trial motion to dismiss the indictment, for acquittal or a new trial. See United States v. Harkonen, No. C 08-00164 MHP, 2010 WL 2985257, at *1 (N.D. Cal. July 27, 2010).

4 Id.

5 Id.

6 Id. at *7.

7 Id. at *9.

8 Id.

9 Id. at *1. Significantly, Harkonen was also charged with one count of felony misbranding under the FDCA, but the jury acquitted him on that charge. Id. at *2.

10 Id. at *10. Prior to trial, the district court had denied Harkonen's motion to dismiss the indictment on First Amendment grounds because "according to the indictment, the speech at issue was not 'First Amendment-protected as pure scientific speech or ideas.'" Id. at *15 (citation omitted).

11 Harkonen, 2013 WL 782354, at *1 (citation omitted).

12 Id. at *2.

13 Id. at **1, 2 (citation omitted). Significantly, the Ninth Circuit noted that Harkonen did not present the evidence that "most firmly supported his case" until sentencing. Id. at *2 n.2. Thus, the court determined that it could not reverse the jury's verdict "based on evidence it never considered." Id.

14 Id. at *3.

15 Caronia, 703 F.3d at 152.

16 Id. at 155-56.

17 Id. at 157-59. As explained in our prior article regarding the Caronia decision, "the Second Circuit noted that while the FDCA does not specifically prohibit off-label promotion, the FDA has taken the position that off-label promotion constitutes 'misbranding.'" 25 Health Law. at 39 n.13 (citing Caronia, 703 F.3d at 154-55).

18 Caronia, 703 F.3d at 168 (emphasis added).

19 Id. at 169. The Second Circuit also stated that: "[o]f course, off-label promotion that is false or misleading is not entitled to First Amendment protection." Id. at 166.

20 2013 WL 782354, at *1. Despite the Ninth Circuit's conclusion that there was sufficient evidence of fraud to justify Harkonen's conviction, Harkonen may seek rehearing and/or review by the U.S. Supreme Court on the ground that his statements are protected by the First Amendment under Caronia. The Caronia decision was not issued until after briefing on Harkonen's appeal was completed, so Harkonen did not have the benefit of the Second Circuit's decision in drafting his appellate briefs. Accordingly, life science companies and their employees should closely monitor any further developments in the Harkonen case.

21 See Krista Carver, Caronia Update: Government Does Not Appeal Significant Second Circuit Decision, Inside Medical Devices (Jan. 24, 2013), available at http://www.insidemedicaldevices.com/2013/01/24/caronia-update-government-does-not-appeal-significant-second-circuit-decision/ (quoting statement attributed to the FDA in Alaina Busch, FDA Won't Ask SCOTUS to Review Caronia, Continues Off-Label Enforcement, FDA Week (Jan. 25, 2013), available at https://healthpolicynewsstand.com/index.php?option=com_ppv&id=2422537&Itemid=0); see also Cameron Ayers, FDA: Government Will Not Challenge Second Circuit Decision on Caronia, Sees No Threat to Enforcement, Thompson's FDA Compliance Expert (Jan. 24, 2013), available at http://prod-admin1.tmg.atex.cniweb.net:8080/preview/www/2.3427/2.3465/1.328148 (reporting that the FDA distributed a two paragraph email on January 23, 2013 in which it stated that it would not seek further review of the Caronia decision).

22 As explained in our prior article, the Caronia decision was "the first decision from a federal circuit court of appeals to directly address the constitutionality of the government's efforts to restrict off-label promotion of prescription drugs." 25 Health Law. at 40. "While Caronia is binding precedent within the Second Circuit, it would not be binding on the other circuit courts of appeals if they are called upon to address the same or similar issues." Id. Thus, the government may attempt "to evade Caronia by bringing all actions seeking to impose criminal or civil liability for misbranding based on off-label promotion in district courts outside of the Second Circuit." Id.

23 See David Sell, Philly U.S. Attorney: Caronia Court Decision Won't Impact Pharma Prosecutions (Locally, For Now), Philadelphia Inquirer, Feb. 12, 2013, available at http://www.philly.com/philly/blogs/phillypharma/Philly-US-Attorney-says-court-decision-wont-impact-drug-prosecutions-for-now.html (reporting that the U.S. Attorney for the Eastern District of Pennsylvania recently stated that following Caronia, "his prosecutors will continue to focus on finding evidence [of] misbranding, which remains illegal, and the more commonly understood term – lying").

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