United States: "US v. Caronia": A Rift In Prosecution Of Off-Label Promotion?

A recent decision by the Second Circuit Court of Appeals is being hailed as a potential "game-changing" defeat for federal prosecutors in their pursuit of criminal indictments and civil False Claims Act cases predicated upon the "off-label" promotion and marketing of FDA-approved pharmaceutical drugs and medical devices. But before pharmaceutical and medical device manufacturers rely too heavily on this supposed "game-changer" in crafting their compliance efforts, a healthy dose of caution may be in order given the government's likely efforts to minimize its impact.

In United States v. Caronia, No. 09-5006-cr (Dec. 3, 2012), the Second Circuit overturned the conviction of a pharmaceutical representative for one misdemeanor count of "conspiracy to introduce a misbranded drug into interstate commerce" in violation of 21 U.S.C. §§ 331(a) and 333(a)(1) on the grounds that the conviction violated the First Amendment. The court determined that the First Amendment protected the defendant's speech promoting "off label" uses of the drug Xyrem, and that the government sought to prosecute the defendant solely on the basis of his speech. The government, however, likely will continue to pursue enforcement actions concerning promotion of off-label uses, and companies should tread cautiously, as the law is not yet settled concerning these actions.

Factual Background

The Second Circuit's decision overturns the 2009 conviction of Alfred Caronia, a "Specialty Sales Consultant" for Orphan Medical, Inc. (now known as Jazz Pharmaceutical). In 2005, Orphan tasked Mr. Caronia with promoting Xyrem, a drug approved by the FDA "to treat narcolepsy patients with excessive daytime sleepiness." (p. 12). Mr. Caronia established "speaker programs" to promote the drug, which featured paid physicians speaking to other physicians concerning the drug's usage.

At trial, the government introduced two recordings of Mr. Caronia promoting "the use of Xyrem in unapproved indications" to physicians posing as prospective customers. (pp. 14-15). On the basis of those recordings, a jury convicted Mr. Caronia of one misdemeanor count of "conspiracy to introduce a misbranded drug into interstate commerce."

The Caronia Decision

The government charged Mr. Caronia with violating provisions of the Federal Food, Drug and Cosmetic Act that prohibit "misbranding," or "[t]he introduction or delivery for introduction into interstate commerce of any . . . misbranded" drug. 21 U.S.C. § 331(a). The Second Circuit parsed this language and concluded that the statute applied only to the actual "misbranding" or "conspiracy to misbrand" an FDA-approved drug, and did "not expressly prohibit or criminalize off-label promotion" because "criminalizing the simple promotion of a drug's off-label use . . . would raise First Amendment concerns." (p. 26). The court also noted that the statute referred to the term "promotion" of off-label drug uses only as an example of "evidence of a drug's intended use." (Id.). Here, however, the government had not introduced Mr. Caronia's "promotion" of the off-label uses of Xyrem as "evidence of intended use," but rather "clearly prosecuted [him] for his words -- for his speech." (p. 31).

That prosecution of Mr. Caronia "for his speech," however, ran afoul of the First Amendment. The Second Circuit relied extensively on the Supreme Court's decision in Sorrell v. IMS Health, Inc., 131 S. Ct. 2653 (2011). In Sorrell, the plaintiffs argued that a Vermont statute precluding use of "prescriber-identifying information" for marketing purposes violated their First Amendment rights to free speech. Id. at 2661. The Supreme Court agreed, finding that "[s]peech in aid of pharmaceutical marketing . . . is a form of expression protected by the Free Speech Clause of the First Amendment." Id. at 2659.

In Sorrell, the Court found that "content-based and, in practice, viewpoint-discriminatory" speech restrictions are nearly always impermissible. 131 S. Ct. at 2667. The Second Circuit determined that the government's interpretation of the statute that formed the basis for Mr. Caronia's conviction was both content- and speaker-based, and therefore barred by the First Amendment. The court noted that the government's position permitted "speech about the government-approved use of drugs," but prohibited speech regarding "uses not approved by the government." (p. 40). Further, the government's construction criminalized only "promotion" speech by "pharmaceutical manufacturers -- while allowing others to speak without restriction." (Id.).

The Second Circuit found that the government's interpretation failed an even lesser standard of review because it did not "directly advance the government's interests" and was not "narrowly drawn." (pp. 43-50).

Is Caronia An Omen of Things to Come? Or an Outlier?

The Caronia decision certainly will be welcomed by pharmaceutical and medical device manufacturers seeking to promote off-label uses of their products. And, surely, this decision, from one of the most active Circuits in the country, may mark an important turning point in the development of the rules and regulations surrounding off-label promotion. However, it is not yet known whether other courts will follow the Second Circuit's lead. The government is likely to request that the Second Circuit review the decision en banc (meaning that all of the Second Circuit judges review the three-judge panel's decision) and ask the Supreme Court to weigh in on the issue. "Until the government's appeals run their course or other Circuits weigh in on this issue, companies are well-advised to continue to closely monitor their sales practices," said Sean Cenawood, an SNR Denton partner and the former Chief of the Civil Frauds Unit in the U.S. Attorney's Office for the Southern District of New York.

Indeed, on December 6, just 3 days after the Caronia decision was released, the Ninth Circuit heard argument in United States v. Harkonen, No. 11-10209, a case in which a jury convicted a medical executive of wire fraud on the basis of a single press release proclaiming a medical study successful. "Should the Ninth Circuit join the Second Circuit in finding truthful off-label marketing protected speech under the First Amendment, it may auger a trend that will ultimately weaken or wholly remove a significant weapon in the government enforcement arsenal and open a whole slew of opportunities for pharmaceutical and medical device manufacturers," Cenawood said.

Further, it is unlikely that government activity in this realm will cease altogether. The government will continue to prosecute statements regarding off-label uses if those statements are not true or are misleading. Even the Coronia decision noted that "off-label promotion that is false or misleading is not entitled to First Amendment protection." (p. 42 n.11).

"Given that the government perceives this, in part, as a high priority public safety issue and these cases involve enormous amounts of money," Cenawood said, "we can expect the government will not go gently into that good night."

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