United States: Update On Prosecution For Truthful Off-Label Promotion

Last Updated: October 15 2016
Article by Eric Alexander

We have been following issues related to the interplay of off-label use, manufacturer statements about off-label use, the First Amendment, and FDA enforcement for a long time.  (Like here,  here, and here, among many posts.)  The court battles that have garnered so much attention recently can be traced back to at least the 1990s, with the famed decision in Washington Legal Foundation v. Henney, 56 F. Supp. 2d 81, 85 (D.D.C. 1999), vacated as moot by 202 F.3d 331 (D.C. Cir. 2000).  There can be lots of talk about what FDA's policy is on what a manufacturer can and cannot say about unapproved uses for its drug or device.  Discussions about changing 21 C.F.R. § 201.128 (drugs) & 801.4 (devices) have dragged on for a while, even with the Amarin settlement and with other FDA statements suggesting that the regs do not reflect current policy.  FDA policy, of course, involves more than just a few sentences in a regulation or guidance document.  Particularly for a prohibition that has long been the crux of FDA enforcement—like warning letters and prosecutions—and has spawned or played a major role in subsidiary FCA, RICO, and product liability litigation, a decision to stop prohibiting truthful, non-misleading statements about unapproved uses for drugs and devices is not exactly the end of the story.  For one thing, criminal prosecutions that are based at least in part on manufacturer statements about unapproved uses are always on-going and U.S. cannot just hit the reset button in those cases.

We do not often post about decisions from, let alone briefs filed in, criminal cases brought pursuant to the FDCA.  That FDA enforcement sometimes results in prosecutions is something that comes up in our cases and posts, often in the context of preemption and primary jurisdiction—the FDA does not just have the authority to root out misbranded and adulterated medical products and fraud in connection with approval or post-approval reporting, but companies and individuals get prosecuted, so you should be comfortable respecting FDA's authority, Your Honor.  It also comes up sometimes when there has been a prosecution that resulted in an indictment, plea, conviction, or sentencing memorandum that the plaintiffs want to use as evidence of something—or for issue preclusion—in a separate case.  When it comes to prosecutions based at least in part on manufacturers or their representative making statements about unapproved uses, we have an opportunity to see what FDA's policy on off-label promotion really is these days and how it might affect behavior.  While we generally think manufacturers and their representatives try to follow applicable guidance documents, they definitely want to avoid being convicted.

Today, we take a look at two criminal prosecutions involving off-label promotion allegations, each of which has now been tried to a jury verdict.  In the first, the court denied all of the defendants' motions in limine before the case proceeded to a defense verdict at trial. See U.S. v. Vascular Solutions, Inc., No. SA-14-CR-926-RCL, 2016 U.S. Dist. LEXIS 133717 (W.D. Tex. Jan. 27, 2016).  That opinion showed up in our searches recently, well after the acquittal of the device manufacturer and its CEO produced its own fall out, including a letter from Senator Grassley—hardly a known industry champion—to DOJ about prosecutorial misconduct.  The Vascular Solutions defendants were charged with misbranding (and conspiracy to misbrand) of its Vari-Lase device.  This device was cleared—the opinion says "approved"—for treatment of varicose veins, specifically, per the indictment's allegations, superficial veins and not deeper perforator veins.  The U.S. contended that the company failed to seek an expanded indication and failed to provide revised labeling to account for the use of the device to treat perforator veins. Id. at *3.  Defendants filed various motions in limine based on the First Amendment and the definition of "intended use" in § 801.4.  We will discuss only two of them, particularly the government's position.  The government announced that it would not "use promotional speech to doctors to prove the intended use of the devices for perforator vein ablation" to avoid the "possibility that the misbranding offenses criminalize promotional speech." Id. at **6-7.  It planned, however, to use such promotional speech as an overt act in furtherance of a conspiracy.  The court agreed with the government that a lawful act, including constitutionally protected truthful commercial speech, could be used as an overt act. Id. at **7-8.

But, if the Amarin settlement memorialized FDA's policy on off-label use, then was the use of this promotional speech to prove conspiracy consistent with FDA's policy?  If it was not, then that would be a problem.  The settlement's language included that "truthful and non-misleading speech promoting the off-label use of [the product] may not form the basis of a prosecution for misbranding."  It is true that it does not say "may not form the basis of a prosecution for conspiracy to misbrand," but that seems like a bogus distinction.  The U.S. position on how it would use a truthful, non-misleading statement about an off-label use—that is, commercial speech protected by the First Amendment—seems to be that it can make such a statement a central part of its prosecution for misbranding as long as there is also a conspiracy count and the jury is informed that the statement is not to be taken as proof that the product was intended to be used for the off-label use.  This sort of nod-and-a-wink approach is like telling a civil jury that there is no count for punitive damages to punish the defendant for its egregiously bad conduct.  Just as this would be an improper incitement to award inflated actual damages, the government's approach in Vascular Solutions seems to invite punishing protected speech through a different route.

The second motion that caught our eye relates to the interplay between the first and last sentences of § 801.4:

The words "intended uses" or words of similar import . . . refer to the objective intent of the persons legally responsible for the labeling of the devices.

* * *

But if a manufacturer knows, or has knowledge of facts that would give him notice that a device introduced into interstate commerce by him is to be used for conditions, purposes, or uses other than the ones for which he offers it, he is required to provide adequate labeling for such a device which accords with such other uses to which the article is to be put.

As discussed in many prior posts, this "knowledge" sentence is problematic because off-label use of drugs and devices is prevalent and often standard of care, the scope of approved indications cannot be changed unilaterally or quickly, there is no obligation to discourage off-label use per se, and there is a distinction that even FDA has recognized between knowledge of off-label use and promotion of it (truthful and non-misleading or otherwise). Defendants moved to preclude evidence concerning "knowledge of how the Vari-Lase device would be used," which they contended related to "subjective intent" only.  The court rejected this, focusing generally on how internal statements can show objective intent and a twenty year old case saying the last sentence of § 801.4 imposes requirements on manufacturers. Id. at **10-12.  What is missing, though, is the government's position.  A few months before the ruling, FDA put in the Federal Register that "the Agency does not regard a firm as intending an unapproved new use for an approved or cleared medical product based solely on that firm's knowledge that such product was being prescribed or used by doctors for such use," clarified that this applied to drugs and devices too, and stated that it was amending §§201.128 and 801.4 along these lines.  Seems like a bit of a disconnect.

This disconnect has continued in our second case, U.S. v. Facteau, Crim. No. 15-10076-ADB (D. Mass.), which was tried to a jury verdict in June.  The jury convicted the two executives from a device manufacturer of ten misdemeanor counts of misbranding and acquitted them of all counts of fraud related to statements about an off-label use.  We do not have any court opinion to discuss yet, just two of the briefs filed in connection with the defendants' post-trial motion.  For our purposes, the two important issues presented in that motion are whether protected truthful statements about off-label uses are still being criminalized and whether § 801.4 and the rest of the regulatory scheme is too vague and ambiguous to allow for a conviction consistent with due process.  Arguments on both of these, including a detailed history of the fights over what is improper off-label promotion and a cite to one of our posts—Bexis almost blushed—are set out in an excellent amicus brief from an industry group that has been a player in this area for a decade.  We will recommend it to you without repeating its content.  Instead, we will highlight a few things from the government's brief.

The government took the position that the defendants were not convicted based on speech at all.  The court had, after all, given a long instruction on the issue, presented below as in the government's brief:

It is not illegal in and of itself for a device manufacturer to provide truthful, not misleading information about an off-label use. The FDCA does not prohibit or criminalize truthful, not misleading off-label promotion. You may not convict a Defendant of a crime based solely on truthful, non-misleading statements promoting an FDA-cleared or approved device, even if the use being promoted is not a cleared or approved use. . . .

The indictment in this case does not charge any defendant with the crime of promoting a device off-label, because that is not itself a crime. Rather, the FDCA crimes charged are conspiring to introduce, and causing the introduction of, devices into interstate commerce that were adulterated or misbranded. Although you may not convict a Defendant of a crime based solely on truthful, non-misleading statements regarding off-label use, even truthful statements about an off-label use can be considered as evidence. To put it another way, to convict, there must be a criminal act. Truthful, non-misleading speech cannot be a criminal act in and of itself, but it can be evidence and therefore used by you to determine whether the government has proved each element of each offense beyond a reasonable doubt, including the element of intent . . .

Off-label promotional statements can constitute evidence of an intended use, although truthful, non-misleading speech alone cannot be the basis for a criminal conviction. Neither the First Amendment nor any other law, however, protects false or misleading speech.

In addition, it is permissible to respond to unsolicited requests for information about FDA-regulated medical products by providing truthful, balanced, non-misleading, and non-promotional scientific or medical information that is responsive to the specific request, even if responding to the request requires a manufacturer to provide information on unapproved or uncleared indications or conditions of use. Under these circumstances, such responses may not be considered as evidence of a new or different "intended use."

Gov't brief at 3-4 (ellipses in original). We do not have a problem with most of this, which is a far cry from what FDA would have urged a few years ago.  The part that confuses us that "truthful, non-misleading speech . . . can be used by you to determine whether the government has proved each element of each offense beyond a reasonable doubt, including the element of intent . . ." Id. at 3 (ellipsis in original).  A completely accurate and enlightening statement about the risks, benefits, and off-label nature of a particular use proposed by a physician can be evidence that the defendant intended that the device be marketed for a use different than what FDA cleared?  Consistent with the First Amendment protections recognized in Caronia and Amarin?

The government's theory in Facteau was that the indication proposed in the 510(k)—accepted by FDA according to its standards and reflected in the product's labeling—was a sham and the defendants intended that the product would be used only for other indications.  Under this theory, even the most well-supported discussion of an off-label use in response to an unsolicited inquiry would suggest that the defendants sold the device for uses other than those for which it was cleared.  The government argued that:

Distribution of the Stratus for the intended purpose of drug delivery, without FDA clearance or approval for that use, was a crime independent of any promotional claims. Any truthful, non-misleading promotional speech was evidence of that crime, but not itself the criminal act . . . . A reasonable juror could have found Defendants guilty based on evidence showing that the Status did not work for its cleared use.

Id. at 4.  We are experiencing some cognitive dissonance over this argument.  First, and this would require a little more space than we are willing to devote to explain how it connects to the off-label promotion issues, we do not see how the government's position could be that the device was not effective for the indication for which it was cleared.  That is, unless there was an allegation from FDA that it was defrauded in connection with the evaluation of the device, which was not made for the device in Facteau from what we can tell.  Second, we do not see how every truthful, non-misleading statement about the off-label use of drug delivery was "evidence of that crime [or misbranding]."  We can come up with promotional statements about the official indication that could suggest misbranding and we can come up with misleading statements about the off-label use that suggest misbranding, but we have a hard time seeing non-misleading statements about off-label use as showing misbranding.  In fact, the government contended that there was evidence presented of false and misleading statements about the risks and benefits of the device for both the cleared indication and off-label uses and that the acquittal on fraud claims did not prohibit the jury from relying on these statements in convicting on misbranding.

Still, the government contended that defendants were "not charged with any speech crime," making the First Amendment irrelevant here. Id. at 13.  The manufacturer's "conduct in putting on the market a product that was never intended for its approved use and instead intended solely for an unapproved use was unlawful and thus speech in furtherance of that crime is simply not protected." Id. The government cited two cases as support, but each involved products without approvals/clearances.  The device in Facteau had a clearance, so the manufacturer was allowed to make truthful, non-misleading statements about it, including its off-label uses.  Taking the position that the First Amendment does not protect truthful, non-misleading promotional statements as long as the Government also contends there was misbranding does not sound consonant with the Amarin settlement.

The government also offered a long defense of § 801.4's definition of "intended use" definition as clear and justified in response to due process arguments.  This was most noteworthy to us by what it left out.  There was no mention of the pending revision of § 801.4, or public statements relating to it.  There was a long defense of broad FDA policies like requiring devices be approved/cleared, prohibiting and prosecuting misbranding, and having some definition of "intended use."  There was no attempt, however, to justify the "knowledge" provision of § 801.4.  It was quoted once (p. 31) and there was a statement saying courts consider knowledge of an unapproved use as evidence of intended use (p. 32).  Of the cases cited with the statement that related to knowledge, the most recent was 1994.  So, it seems like the government's position in Facteau does not reflect FDA's current, or even recent, position.  Our look at Vascular Solutions and Facteau hardly represents a survey of the government's position in on-going prosecutions that involve statements about off-label uses of devices, but we certainly did not see a consistent and coherent FDA policy on these issues—consistent with Amarin—being advanced by the government.  We wonder whether the government lawyers on these cases are not sufficiently in touch with FDA to understand its current policy or whether FDA does not yet have a clear policy on this issues that it can share with the government lawyers.  Neither is acceptable.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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