A federal appeals court's
decision to overturn the criminal conviction of a pharmaceutical salesman for
promoting off-label uses of an FDA-approved drug is, at least in the
short term, far less consequential than media coverage suggests. But it may
signal the agency and Congress will have to accept less FDA regulation of
The U.S. Court of Appeals for
the Second Circuit last week ruled in U.S. v. Caronia that the
government's prosecution of Alfred Caronia for statements he made while selling
Xyrem sodium oxybate to a physician violated his free speech rights under the
First Amendment to the U.S. Constitution.
But companies and individuals
who take the decision as a signal that the rules of the road have changed and
they are now free to promote off-label indications put themselves in great
legal and economic peril, attorneys who helped persuade the court to overturn
Caronia's conviction told BioCentury.
At the same time, the decision
by one of the country's most influential and respected courts to overturn a
criminal conviction on First Amendment grounds is persuasive evidence that, in
the long term, FDA will have to change some of the assumptions underpinning its
regulation of medical products.
FDA, which now has lost a
string of First Amendment cases, cannot forever hold on to the notion that it
is empowered to prohibit drug companies and their employees from saying things
that anyone else is free to say. Sooner or later, according to legal experts,
the agency will have to reconcile itself with the idea that industry has the
right to truthful, non-misleading speech.
While change is inevitable, the
pace of change is uncertain. It is also not clear who will shape that change -
FDA employees, judges, or members of Congress.
The Caronia story started in
2005 when Stephen Charno, a physician seeking to lighten his sentence for
healthcare fraud, agreed to cooperate with the Department of Justice by
soliciting information about off-label uses of pharmaceuticals and helping the
government prosecute the resulting cases.
Among other companies, Charno contacted Orphan Medical Inc.
about its narcolepsy product, Xyrem. Orphan was acquired by Jazz
Pharmaceuticals plc in April 2005.
Charno surreptitiously recorded
conversations with Caronia and Peter Gleason, a psychiatrist Orphan had hired
to promote Xyrem. Both Caronia and Gleason made statements about uses of Xyrem
that had been studied in clinical trials but were not approved.
DoJ separately prosecuted
Caronia, Gleason and Jazz for conspiring to introduce a misbranded drug into
Jazz settled, pleading guilty
in 2007 to one count of felony misbranding and agreeing to pay $20 million over
five years. Drug companies virtually always settle misbranding cases because a
conviction could lead to the company being excluded from participation in
federal healthcare programs such as Medicare.
Gleason pled guilty and was
sentenced to one year of probation and a $25 fine.
Caronia contested the case.
Federal prosecutors told a jury
in the U.S. District Court for the Eastern District of New York that Caronia's
statements to Charno were in themselves evidence of his guilt. The judge
supported this interpretation of the law in instructions to the jury.
Caronia was convicted in
November 2009 of conspiring to introduce a misbranded drug into interstate
commerce and sentenced to one year of probation, 100 hours of community service
and a $25 fine.
When Caronia appealed, the Washington
Legal Foundation (WLF), a non-profit free market-oriented advocacy and
litigation organization, agreed to defend him based on the theory that the
government's case constituted a violation of First Amendment rights to free
The Medical Information Working Group, an informal group of
major manufacturers of prescription drugs and medical devices, also submitted a
brief supporting Caronia. Working group members who signed on to the case
Ingelheim GmbH, Eli
Lilly and Co., GlaxoSmithKline
& Johnson, Novartis
Nordisk A/S, Pfizer
Inc. and Sanofi.
Last week's majority decision
by the Second Circuit panel slapped down FDA's and DoJ's long-standing
contention that the Food, Drug & Cosmetic Act (FDCA) makes it illegal for
drug companies and their employees to communicate about an off-label use.
Judges Denny Chin and Reena
Raggi wrote: "We construe the misbranding provisions of the FDCA as not
prohibiting and criminalizing the truthful off-label promotion of FDA-approved
The decision added: "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."
Judges Chin and Raggi stressed
the inconsistency between allowing physicians to prescribe drugs off-label and
barring companies from discussing such uses.
"As off-label drug use
itself is not prohibited, it does not follow that prohibiting the truthful
promotion of off-label drug usage by a particular class of speakers would
directly further the government's goals of preserving the efficacy and
integrity of the FDA's drug approval process and reducing patient exposure to
unsafe and ineffective drugs," they wrote.
The ruling goes further,
asserting it is in the public interest for drug companies to discuss off-label
uses with physicians. It states, "prohibiting off-label promotion by a
pharmaceutical manufacturer while simultaneously allowing off-label use 'paternalistically'
interferes with the ability of physicians and patients to receive potentially
relevant treatment information; such barriers to information about off-label
use could inhibit, to the public's detriment, informed and intelligent
While DoJ argued that it had
cited Caronia's speech as evidence of his intent to violate the law by
misbranding a drug, according to Chin and Raggi, the transcript of the trial
contradicts this assertion.
They wrote that the "government's
assertion now that it used Caronia's efforts to promote Xyrem for off-label use
only as evidence of intent is simply not true. Even if the government could
have used Caronia's speech as evidence of intent, the district court record clearly
shows that the government did not so limit its use of that evidence."
Chin and Raggi concluded that
the "government clearly prosecuted Caronia for his words - for his speech."
They noted the Supreme Court ruled in June 2011 in Sorrell v. IMS Health Inc.
that "speech in aid of pharmaceutical marketing" is "protected
by the Free Speech Clause of the First Amendment."
That case involved the use of
prescriber databases for marketing.
In a strongly worded dissent, a
third Second Circuit judge, Debra Ann Livingston, argued that Chin and Raggi
wrongly determined that the government's prosecution was entirely about speech.
Siding with the government, she concluded speech had been cited as evidence of
The FDCA, Livingston wrote,
defines drugs based on their intended uses. In vacating Caronia's conviction,
the majority decision "calls into question the very foundations of our
century-old system of drug regulation."
According to Livingston, "Xyrem
was 'misbranded' - and Caronia could be guilty of conspiring with others to
introduce it into interstate commerce in such a state - if the conduct and
statements of the persons legally responsible for labeling the drug (or the
conduct and statements of their representatives) demonstrated an objective
intent that Xyrem be used for off-label purposes."
Illustrating her disagreement
with Chin and Raggi's contention that Caronia had a First Amendment right to
discuss off-label uses for Xyrem, Livingston cited the movie Arsenic and Old
Lace. "There might be no law forbidding the consumption of arsenic.
But this would not endow Abby and Martha with a First Amendment right to offer
arsenic-laced wine to lonely old bachelors with the intent that they drink it,"
Livingston, along with reports in
The New York Times and other newspapers, dramatically exaggerated the
impact of the Caronia decision, attorneys who specialize in FDA law told
"The underlying principles
[articulated in the Second Circuit decision] are very, very important, and they
have been enshrined in a Court of Appeals decision for the first time. But this
case won't bring down the entire FDA regulatory scheme," said Coleen
Klasmeier, a former attorney at FDA. She heads the food, drug and medical
device regulatory practice at Sidley Austin LLP, and represented the Medical
Information Working Group in its brief supporting Caronia.
Although the Second Circuit
decision was a clear victory for drug companies that are chafing at
restrictions on communications about off-label uses - and that have been stung
by large settlements negotiated in criminal cases alleging off-label promotion -
the issues raised in the case are far from resolved.
"I think it will be a long time before we figure out the
true meaning of the case," said Mary Pendergast, a former FDA deputy
commissioner who now is president of Pendergast
"On the one hand, it could
mean the drug approval system we have isn't going to be as robust as it has
been in the past because it will be easier to sidestep FDA approval for
secondary uses," she told BioCentury. "That puts a burden on the
court system to police what companies are saying because it won't be up FDA to
"On the other hand,"
she added, "you have a well-reasoned dissent." If the Second Circuit
considers the case en banc, "it may take a step back and say that
although it isn't symmetrical that doctors can use a drug off-label but
companies can't promote it, it makes sense for overall drug regulation."
John Fleder of Hyman, Phelps
& McNamara told BioCentury he also advised a circumspect response.
If a biopharma company asked
him how to respond to the Caronia decision, the advice he would give is "take
a deep breath, this case is not over." Fleder was responsible for FDA
enforcement litigation while a director of DoJ's Office of Consumer Litigation.
He noted FDA and DoJ have
procedural options, including seeking an en banc hearing by the Second
Circuit or appealing the case to the Supreme Court.
Richard Samp, chief counsel of
WLF, thinks companies will not - and should not - change their marketing
practices based on the Caronia decision.
"This has never been about
what the law says; it is about what FDA says," Samp told BioCentury.
Regardless of the law, pragmatic biopharma executives will not be eager to test
their First Amendment rights in court, he said.
"If FDA sends you a
warning letter, the next day your stock is going to go down. What are you going
to do if you get that letter, hire [the constitutional lawyer] Floyd Abrams and
sue FDA?" Samp said. "No, this is just a letter, you can't sue."
Samp led litigation WLF filed
in the 1990s that resulted in a sweeping 1999 ruling by the U.S. District Court
for the District of Columbia that FDA's restrictions on dissemination of
information about off-label uses violated the First Amendment (see
BioCentury, Aug. 2, 1999).
Caronia "doesn't change anything from the victory we won
12 years ago, except it is the Second Circuit and that's a very prestigious
court," Samp said. "Companies thought in the past they had First
Amendment rights and the result has been they paid very large fines" as a
result of settlement agreements.
Klasmeier voiced a similar
message. She said her advice to biopharma clients is "you need to ratchet
up your level of compliance and scrutiny of compliance because it is after
something like this that people get complacent."
After the WLF decision in 1999,
she noted, "everyone started celebrating, and just after that we had
massive off-label settlements."
Even if Caronia
withstands legal challenges, Klasmeier predicted DoJ will continue to extract
large settlements from biopharma companies.
She noted such cases frequently
involve admissions of kickbacks, antitrust violations or fraud.
"The government has good
arguments on its side," Samp said. "These settlements are invariably 'off-label
plus,' e.g., the fees you paid to docs were really kickbacks, the statements
you made talked about off-label use and failed to include appropriate disclaimers."
From FDA's perspective, "there
are a hundred ways you could take the Second Circuit decision and explain it
away and continue to do things the way you have been doing them," he said.
Not a tsunami
For starters, FDA and DoJ may
simply conclude they lost the Caronia case because it was poorly argued, and
the agency may respond not by changing its policies but rather by adopting
smarter legal tactics, according to Klasmeier, Samp and Peter Barton Hutt, who
is senior counsel at Covington & Burling LLP and a former FDA chief
"This is not some tsunami
that is going to sweep away all of FDA regulation of off-label use," Hutt
said. "Both the majority and dissent indicated that if FDA had litigated
the case right, they might have won."
FDA and DoJ "made a
terrible mistake in continually saying any off-label speech is per se
illegal; that leads right into the First Amendment," he said.
Hutt predicted FDA and DoJ will
find a way to live with the Second Circuit's ruling and are unlikely to take Caronia
to the Supreme Court. "If I were chief counsel, I would not go
anywhere near the Supreme Court" with this case, he said.
Instead, Hutt said, he would
read it in a "very narrow way" and revise how he enforced the law.
The Supreme Court is
extraordinarily hospitable to the First Amendment and inhospitable to
restrictions on the First Amendment," he noted.
All three Second Circuit judges
also left open the possibility that systematic "off-label promotion - not
a single discussion by a single employee - would signal a new intended use for
the drug, which in turn requires adequate directions for use, and the failure
to have those adequate directions for use is misbranding," Hutt added.
Whether that interpretation
would survive a First Amendment challenge "is the billion dollar question,"
and the Caronia case doesn't answer it, he said.
While Caronia isn't a
green light to promote off-label uses, it is nonetheless an important
milestone, Hutt and other FDA attorneys told BioCentury.
"This is the ninth
straight case FDA has lost involving the First Amendment," Hutt said. "The
agency should worry about its credibility in the courts. You don't want to get
yourself in a position where you lose, lose, lose."
FDA could shrug off its latest
loss, but it shouldn't, Klasmeier said.
"When is FDA going to wake
up and smell the coffee and wrestle with all the First Amendment problems it
has across all its areas?" she said. "FDA has never won a First
Amendment case; it has managed to extradite itself from some, but it has never
Daniel Kracov, a partner and
head of the FDA practice at Arnold & Porter LLP, agreed.
"FDA has tried to hold a
line that is increasingly untenable for the last several years and it is now
glaringly obvious," he told BioCentury. "FDA will have to
adapt to Sorrell and the Supreme Court's interpretation of the First
Amendment. They can't say 'you are a pharma company, and we are going to treat
your speech entirely differently.'"
Kracov cited FDA's December
2011 guidance on responding to unsolicited requests for off-label information
as an example of a policy that should be re-worked.
The guidance, he said, requires
a doctor who works for a pharma company to refrain from answering questions
about off-label uses in front of an audience of other doctors. According to
FDA, he said, the doctor must address those questions with individual doctors
In the long run, FDA will not
be able "keep pharma companies from saying things that anyone else can
say," Kracov predicted.
Klasmeier also thinks FDA
should undertake a thorough analysis of its legal obligations and of its role
in regulating medical products.
"Now is a really good time
for FDA to think deep thoughts about how to make the current regulatory scheme
more contemporary," Klasmeier told BioCentury. She suggested FDA should "stop
thinking of itself as a censor and start thinking of itself more as a curator
Inc. (NYSE:AGN), Irvine, Calif.
Inc. (NASDAQ:AMGN), Thousand Oaks, Calif.
Ingelheim GmbH, Ingelheim, Germany
Lilly and Co. (NYSE:LLY), Indianapolis, Ind.
plc (LSE:GSK; NYSE:GSK), London, U.K.
Pharmaceuticals plc (NASDAQ:JAZZ), Dublin, Ireland
& Johnson (NYSE:JNJ), New Brunswick, N.J.
AG (NYSE:NVS; SIX:NOVN), Basel, Switzerland
Nordisk A/S (CSE:NVO; NYSE:NVO), Bagsvaerd, Denmark
Consulting, Washington, D.C.
Inc. (NYSE:PFE), New York, N.Y.
(Euronext:SAN; NYSE:SNY), Paris, France
Food and Drug Administration (FDA), Silver Spring, Md.
Legal Foundation (WLF), Washington, D.C.