Drug Misbranding Redefined

United States v. Caronia

Alfred Caronia was a salesman for Orphan Medical Inc., selling Xyrem, a central nervous system depressant. The drug was approved for use in treating narcolepsy (excessive sleepiness, often unexpected and sudden) and cataplexy (a condition involving weak or paralyzed muscles). In pursuit of sales, Caronia set up speaker programs in which doctors spoke to other medical professionals about the uses and benefits of Xyrem. He was caught on tape telling a doctor who was to speak at one of these events ' Dr. Stephen Charno, who was cooperating with the government ' that the drug could be employed to treat muscle disorders, Fibromyalgia and chronic pain, although though the FDA had not approved Xyrem's use for these conditions. He instructed Dr. Charno to discuss with the other health care providers “diagnosis codes” that they could use in order to get the medication covered by patients' insurance.

Caronia was convicted of conspiracy to commit an offense under 18 U.S.C. '371(a) (conspiracy to commit an offense or to defraud the United States) and the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. ' 331(a) (misbranding of a drug product). He had not been charged with lying or misleading anyone, only with employing speech that was prohibited by federal law.

Caronia appealed his conviction to the Second Circuit, which heard arguments in 2010. But the court withheld its final decision until late 2012 because of a decision issued after argument by the U.S. Supreme Court in 2011, Sorrell v. IMS Health, 131 S.Ct. 2653 (2011). In Sorrell, the Court said that speech “in aid of pharmaceutical marketing ' is a form of expression protected by the ' First Amendment,” the restriction of which must be subjected to heightened scrutiny because it imposes content- and speaker-based speech restrictions. In light of Sorrell, the Second Circuit asked for additional submissions from the Caronia litigants.

In overturning Alfred Caronia's conviction, the Second Circuit followed Sorrell and applied heightened scrutiny to the constitutional question presented, yet concluded that, even had the less rigorous rational-basis test been applied, Caronia's conviction could not stand. Circuit Court Judge Denny Chin wrote, “We decline the government's invitation to construe the FDCA's misbranding provisions to criminalize the simple promotion of a drug's off-label use by pharmaceutical manufacturers and their representatives because such a construction ' and a conviction obtained under the government's application of the FDCA ' would run afoul of the First Amendment.” In essence, because the activity the speech encouraged ' doctors' prescription of FDA-approved drugs for purposes not approved by the FDA ' was lawful, restriction of such speech (when truthful) by one group ' pharmaceuticals manufacturers and their representatives ' must be narrowly tailored to meet an important government interest.

The court agreed with the government that its interest in promoting public safety was indeed an important one. The sticking point for the court was the means by which the government sought to ensure that safety: restriction on certain types of speech by certain people and entities. Did these restrictions put a stop to the dissemination of harmful information? No, said the court. “[P]rohibiting 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,” wrote Judge Chin. “Such barriers to information could inhibit, to the public's detriment, informed and intelligent treatment decisions.” Also telling was the fact that the FDCA allows pharmaceuticals manufacturers to distribute off-label use information through scientific journals. “The government's construction of the FDCA essentially legalizes the outcome ' off-label use ' but prohibits the free flow of information that would inform that outcome,” stated the court. “If the government's objective is to shepherd physicians to prescribe drugs only on-label, criminalizing manufacturer promotion of off-label use while permitting others to promote such use to physicians is an indirect and questionable means to achieve that goal.”

The Implications

Does the Caronia decision mean that the federal government will stop criminally prosecuting manufacturers and their sales forces for promoting off-label use of FDA-approved pharmaceutical products? Certainly, fraudulent or unsupported manufacturer claims will remain fodder for enforcement actions, even in the Second Circuit. But until the issues presented in Caronia ' in which there were no allegations of misrepresentation ' are finally settled, the Second Circuit will undoubtedly be the DOJ's least popular forum of choice. There, at least, the government will need to prove some falsehood or misrepresentation has been perpetrated to get a conviction in criminal cases like these.

A request for rehearing en banc could be in the offing, and it is possible that the issue will eventually end up before the Supreme Court. However, it is by no means a foregone conclusion that the DOJ will go this route. The Second Circuit decision is a departure from those of courts in other circuits, which have sided with prosecutors in these types of cases, so the DOJ may not be anxious to press the issue at the high-court level. Regardless, the decision will certainly be cited in other jurisdictions as an argument that a manufacturer's rep's mere act of disseminating truthful information on off-label drug use is not, in itself, evidence of criminal misbranding.

If Caronia stands, the U.S. drug market may become a lot less regulated than it has been. Pharmaceuticals manufacturers may have less incentive to go through the arduous process for obtaining FDA approval of a new use for a drug they already have on the market. Of course, having FDA approval is a great marketing tool, but sometimes the costs of seeking approval for each possible use are prohibitive, particularly if the subset of consumers who might benefit from the un-approved use is not large enough to justify the expense. As mentioned, the federal government will still be able to go successfully prosecute manufacturers and their representatives that promote off-label drug use, but only if their promotional tools are false or misleading. This change in the burden of proof will involve some complicated questions in the pharmaceuticals realm, including the most elementary one: What level of scientific backing will suffice to permit a drug company legitimately to promote its product off-label?

The cornerstone of many U.S. Food and Drug Administration (FDA) enforcement actions against pharmaceuticals manufacturers in recent years has been the charge that they and their represetatives have “misbranded” their pharmaceutical products by promoting them for uses not approved by the FDA. The Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. ' 331(a), prohibits misbranding of a drug product, yet does not define promotion of off-label drug prescription or use as such “misbranding.” It is federal enforcement agents who came up with the argument that off-label promotion of a pharmaceutical product equaled “misbranding,” and that argument has been very successful.

Although doctors have always been permitted to prescribe medications for uses not officially endorsed by the FDA, manufacturers and their salespeople who actively encouraged such conduct could find themselves the subjects of federal civil and criminal actions. And the consequences are not insignificant. Huge fines have been imposed and settlements obtained, including the October 2012 fine assessed against Abbott Laboratories for marketing Depakote as a treatment for schizophrenics and dementia patients, even though those uses are not FDA-approved. Abbot was ordered to pay what the Department of Justice (DOJ) described as the “second-largest criminal fine for a single drug.” That fine was $500 million, plus a forfeiture of nearly $200 million; this in addition to payment to the Virginia Medicaid Fraud Control Unit of $1.5 million, and an $800 million settlement with federal and state governments for causing false claims to be filed with those entities.

Now, the U.S. Court of Appeals for the Second Circuit has thrown the concept of criminal liability for misbranding by means of off-label-use promotion into turmoil. The case, United States v. Caronia, 2012 U.S. App. LEXIS 24831 (2d Cir. 12/2/12), is causing a lot of buzz.

United States v. Caronia

Alfred Caronia was a salesman for Orphan Medical Inc., selling Xyrem, a central nervous system depressant. The drug was approved for use in treating narcolepsy (excessive sleepiness, often unexpected and sudden) and cataplexy (a condition involving weak or paralyzed muscles). In pursuit of sales, Caronia set up speaker programs in which doctors spoke to other medical professionals about the uses and benefits of Xyrem. He was caught on tape telling a doctor who was to speak at one of these events ' Dr. Stephen Charno, who was cooperating with the government ' that the drug could be employed to treat muscle disorders, Fibromyalgia and chronic pain, although though the FDA had not approved Xyrem's use for these conditions. He instructed Dr. Charno to discuss with the other health care providers “diagnosis codes” that they could use in order to get the medication covered by patients' insurance.

Caronia was convicted of conspiracy to commit an offense under 18 U.S.C. '371(a) (conspiracy to commit an offense or to defraud the United States) and the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. ' 331(a) (misbranding of a drug product). He had not been charged with lying or misleading anyone, only with employing speech that was prohibited by federal law.

Caronia appealed his conviction to the Second Circuit, which heard arguments in 2010. But the court withheld its final decision until late 2012 because of a decision issued after argument by the U.S. Supreme Court in 2011, Sorrell v. IMS Health , 131 S.Ct. 2653 (2011). In Sorrell, the Court said that speech “in aid of pharmaceutical marketing ' is a form of expression protected by the ' First Amendment,” the restriction of which must be subjected to heightened scrutiny because it imposes content- and speaker-based speech restrictions. In light of Sorrell, the Second Circuit asked for additional submissions from the Caronia litigants.

In overturning Alfred Caronia's conviction, the Second Circuit followed Sorrell and applied heightened scrutiny to the constitutional question presented, yet concluded that, even had the less rigorous rational-basis test been applied, Caronia's conviction could not stand. Circuit Court Judge Denny Chin wrote, “We decline the government's invitation to construe the FDCA's misbranding provisions to criminalize the simple promotion of a drug's off-label use by pharmaceutical manufacturers and their representatives because such a construction ' and a conviction obtained under the government's application of the FDCA ' would run afoul of the First Amendment.” In essence, because the activity the speech encouraged ' doctors' prescription of FDA-approved drugs for purposes not approved by the FDA ' was lawful, restriction of such speech (when truthful) by one group ' pharmaceuticals manufacturers and their representatives ' must be narrowly tailored to meet an important government interest.

The court agreed with the government that its interest in promoting public safety was indeed an important one. The sticking point for the court was the means by which the government sought to ensure that safety: restriction on certain types of speech by certain people and entities. Did these restrictions put a stop to the dissemination of harmful information? No, said the court. “[P]rohibiting 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,” wrote Judge Chin. “Such barriers to information could inhibit, to the public's detriment, informed and intelligent treatment decisions.” Also telling was the fact that the FDCA allows pharmaceuticals manufacturers to distribute off-label use information through scientific journals. “The government's construction of the FDCA essentially legalizes the outcome ' off-label use ' but prohibits the free flow of information that would inform that outcome,” stated the court. “If the government's objective is to shepherd physicians to prescribe drugs only on-label, criminalizing manufacturer promotion of off-label use while permitting others to promote such use to physicians is an indirect and questionable means to achieve that goal.”

The Implications

Does the Caronia decision mean that the federal government will stop criminally prosecuting manufacturers and their sales forces for promoting off-label use of FDA-approved pharmaceutical products? Certainly, fraudulent or unsupported manufacturer claims will remain fodder for enforcement actions, even in the Second Circuit. But until the issues presented in Caronia ' in which there were no allegations of misrepresentation ' are finally settled, the Second Circuit will undoubtedly be the DOJ's least popular forum of choice. There, at least, the government will need to prove some falsehood or misrepresentation has been perpetrated to get a conviction in criminal cases like these.

A request for rehearing en banc could be in the offing, and it is possible that the issue will eventually end up before the Supreme Court. However, it is by no means a foregone conclusion that the DOJ will go this route. The Second Circuit decision is a departure from those of courts in other circuits, which have sided with prosecutors in these types of cases, so the DOJ may not be anxious to press the issue at the high-court level. Regardless, the decision will certainly be cited in other jurisdictions as an argument that a manufacturer's rep's mere act of disseminating truthful information on off-label drug use is not, in itself, evidence of criminal misbranding.

If Caronia stands, the U.S. drug market may become a lot less regulated than it has been. Pharmaceuticals manufacturers may have less incentive to go through the arduous process for obtaining FDA approval of a new use for a drug they already have on the market. Of course, having FDA approval is a great marketing tool, but sometimes the costs of seeking approval for each possible use are prohibitive, particularly if the subset of consumers who might benefit from the un-approved use is not large enough to justify the expense. As mentioned, the federal government will still be able to go successfully prosecute manufacturers and their representatives that promote off-label drug use, but only if their promotional tools are false or misleading. This change in the burden of proof will involve some complicated questions in the pharmaceuticals realm, including the most elementary one: What level of scientific backing will suffice to permit a drug company legitimately to promote its product off-label?