Spring 2013

Second Circuit Vacates Pharmaceutical Misbranding Conviction on Free Speech Grounds

Holland & Knight Newsletter
John L. Brownlee | Timothy Taylor | William F. Gould

After two years of deliberation, the U.S. Second Circuit Court of Appeals has finally issued its decision in United States v. Caronia, holding that the government cannot prosecute pharmaceutical manufacturers or their representatives solely for promoting a drug's off-label use. The 2-1 opinion, issued December 3, 2012, has fascinating implications for pharmaceutical manufacturers, their employees and the entire medical industry, and it will certainly give federal prosecutors pause before bringing similar cases.

The Caronia case represents the latest skirmish in the ongoing battle over the regulation of pharmaceutical industry speech. The Food, Drug and Cosmetic Act (FDCA) and its implementing regulations prohibit pharmaceutical manufacturers from introducing misbranded drugs into the marketplace. As defined by the FDCA, a drug is misbranded if directions for its intended use are not included on its label (a so-called "off-label" use). The government, however, has long held the disputed position that a manufacturer's intended use for a drug can be shown by its promotional speech or even, potentially, by merely supplying a drug with knowledge or notice that a doctor will be using it for an off-label purpose. The government's stance has come under constitutional attack in recent years, and the Caronia court repeatedly questioned, without deciding, the validity of its legal and constitutional underpinnings.

The court held, however, that the government went even further in the Caronia case, staking out an untenable third position. That position posited that truthful, nonmisleading speech promoting a drug's off-label use is itself prohibited — not as evidence of a drug's intended purpose, but simply as speech. According to the court, such an attack on speech qua speech cannot stand.

The Caronia case involved the prosecution of Orphan Medical, Inc. (now Jazz Pharmaceuticals plc), one of its sales representatives, and a doctor for allegedly misbranding the drug Xyrem(r). Federal agents recorded conversations in which the sales representative and the doctor promoted off-label uses of the drug to other doctors. Orphan and the doctor pled guilty, while the sales representative, Alfred Caronia, elected to stand trial. At trial, a jury found Caronia guilty of conspiracy to introduce a misbranded drug into interstate commerce. His appeal followed.

The Second Circuit vacated Caronia's conviction and remanded the case. Writing for the court, Judge Denny Chin held that the government had prosecuted Caronia for his speech alone. "Even assuming the government can offer evidence of a defendant's off-label promotion to prove a drug's intended use and, thus, mislabeling for that intended use, that is not what happened in this case ... . Rather, the government's theory of prosecution identified Caronia's speech alone as the proscribed conduct." The opinion thus leaves open the possibility that a prosecution may survive if it is premised on the idea that the promotion of an off-label use is evidence of an underlying intent to misbrand a drug.

Having held that the prosecution was directed at speech itself, the Second Circuit then turned to whether the prosecution could withstand scrutiny under the First Amendment. Applying the framework of Sorrell v. IMS Health, Inc., a 2011 U.S. Supreme Court decision holding that pharmaceutical manufacturers cannot be singly prohibited from using pharmaceutical-use data to market to consumers, the court held that the government's prosecution failed to meet the Constitution's requirement. The prosecution was not based on a broadly applicable prohibition, but rather targeted a specific kind of speech from a specific kind of speaker. Further, the prosecution did not materially advance the government's interests in promoting manufacturer applications for on-label drug uses, nor was it narrowly drawn to further those interests. In short, according to the court, the government failed to establish "a 'reasonable fit' among its interests in drug safety and public health, the lawfulness of off-label use, and its construction of the FDCA to prohibit off-label promotion."

Caronia is a victory both for the medical community and for free speech. The opinion clearly holds that a misbranding prosecution cannot be premised solely on a manufacturer's truthful, non-misleading speech promoting a drug's off-label use. However, the opinion carefully avoided the bigger question: whether a prosecution may still use truthful, non-misleading promotional speech as evidence of an intent to misbrand. Thus, manufacturers should still take caution — but now, at least, so should federal prosecutors.

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