United States: Ninth Circuit Holds No Scienter Required For Misbranding Of Drugs

We don't write a lot on criminal cases, but published opinions in the Ninth Circuit involving the Food Drug and Cosmetic Act always catch our eye. In United States v. Marschall, No. 22-30048, 2023 WL 6135771 (9th Cir. Sept. 20, 2023) (to be published in F.4th), the Ninth Circuit held last week that some felony convictions for shipping misbranded drugs do not require proof of scienter, i.e., that the defendant knew that the drugs he or she shipped were misbranded. Felony convictions are a big deal, and felony convictions without proof of intent or even knowledge are an even bigger deal.

In our universe of drug and device litigation, you might ask, Why do we care? We care because the FDCA provision at issue is 21 U.S.C. § 331, which prohibits (among other things) the introduction into interstate commerce any drug that is adulterated or misbranded. In addition to criminal enforcement, the Act also provides for civil enforcement of Section 331, and the government's view of "misbranded" drugs can be awfully broad. The FDA's prohibition on off-label promotion, for example, is based purportedly on Section 331, on the theory that a drug promoted for one, unapproved purpose is "misbranded" because its label describes another.

So we read the Marschall case and its treatment of misbranding with some interest. The defendant was a "naturopathic doctor" (which is new to us, but apparently is a licensed professional who treats patients using mainly natural remedies) who had a prior misdemeanor conviction for selling misbranded drugs. Id. at *2. That is a key fact, because when he did it again, the government was able to charge him with a felony under a provision of FDCA reserved for recidivists. (By the way, although not material to the analysis, the doctor was convicted of selling a "Dynamic Duo" of substances with no active pharmaceutical ingredients, to help prevent, among other things, COVID-19. Why is it always something about COVID-19?).

There are two ways to commit a misbranding felony. One is to violate Section 331 "with the intent to defraud or mislead"—a formulation of scienter that we all recognize from law school. The second is to violate Section 331 with a prior conviction. 21 U.S.C. § 333(a)(2). The latter is where the government got the defendant in Marschall.

The upshot is that the recidivist clause of Section 333(a)(2) does not expressly include the element of scienter, and the Ninth Circuit was unwilling to imply one. Sure, there is a longstanding presumption that criminal laws intend to require that a defendant has a culpable state of mind. But the government rebutted that presumption here. First, the statute defines the recidivist version of the misbranding felony by reference to a prior offense that does not itself require scienter, which is allowed for "statutes that regulate potentially harmful or injurious items." In other words,

Marschall, at *7. The recidivist provision ups the ante to a felony, but nothing about the provision adds a scienter requirement to a base offense that lacks a scienter requirement in the first place. Id.

Second, as a matter of statutory construction, Congress worded differently the two clauses that define the two ways to commit a misbranding felony. The fact that Congress expressly included scienter ("with the intent to defraud or mislead") in one clause "strongly confirms" that the other provision—the recidivist provision—does not include a comparable requirement. Id. The Ninth Circuit further observed that someone who already has a misbranding conviction has actual knowledge of the statutory prohibition. That led the court to conclude (somewhat questionably in our humble view) that "a prior criminal conviction under § 333 effectively serves as a functional substitute for a scienter requirement." Id. at *8. The Ninth Circuit disposed of due process concerns with similar reasoning: A person with a prior conviction of the same offense has ample notice of his potential jeopardy. Id. at *9.

We have no opinion on whether this naturopathic physician got a raw deal here. The FDA's investigation revealed no evidence that anyone was harmed, and the facts suggest that he was up front with at least some purchasers (including the FDA's undercover agent) that the FDA did not believe in any of his products. But laws prohibiting the sale of adulterated or misbranded drugs are vital, and the government's burden in enforcing them appears to be a little different from what you might expect.

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