Second Circuit’s Caronia Decision Striking Down On First Amendment Grounds The Criminal Conviction Of A Pharmaceutical Sales Representative For Off-Label Promotion Could Have Broad Implications

Jan 04, 2013

On December 3, 2012, the United States Court of Appeals for the Second Circuit vacated the conviction of Alfred Caronia (“Caronia”), who had been tried and convicted of participating in an unlawful conspiracy to introduce a misbranded drug into interstate commerce in violation of the U.S. Food, Drug and Cosmetic Act (the “FDCA”).1  In its 2-1 decision, the Second Circuit held that the government’s prosecution of Caronia for engaging in truthful promotion of an approved drug, albeit for off-label uses, violated Caronia’s right of free speech under the First Amendment.2  As discussed below, this decision could have far-reaching consequences on the ways in which pharmaceutical companies market and sell prescription drugs, as well as the government’s continued efforts to restrict off-label promotional practices.3

Factual Background

In March 2005, Caronia was hired by Orphan Medical, Inc. (“Orphan”) as a Special Sales Consultant to promote the prescription drug Xyrem.4  In July 2005, Caronia began participating in Orphan’s “speaker program” for Xyrem, which enlisted practicing physicians to promote the drug to other physicians.5  Several months later, a government cooperator posing as a physician interested in Xyrem recorded his conversations with Caronia and one of the physicians hired by Orphan as a promotional speaker (Dr. Peter Gleason).6  During these recorded conversations, Caronia and Gleason promoted Xyrem for unapproved or “off-label” indications and for use in unapproved patient populations.7  Caronia was subsequently charged with and convicted of participating in an unlawful conspiracy to introduce Xyrem into interstate commerce when Xyrem was “misbranded” within the meaning of the FDCA.8

Regulatory Framework

Before a prescription drug can be sold to consumers, it must be approved by the FDA for one or more intended uses.9  However, once a drug is approved by the FDA for a particular indication or intended use, it may be prescribed by physicians (and used by patients) for both the approved use(s), as well as any other indication the physician deems medically appropriate.10

While the FDCA does not specifically prohibit pharmaceutical companies from marketing FDA-approved drugs for unapproved or “off-label” use, it does prohibit “‘[t]he introduction or delivery for introduction into interstate commerce of any . . . drug . . . that is . . . misbranded.’”11  “A drug is misbranded [for purposes of the FDCA] if, inter alia, the drug’s labeling fails to bear ‘adequate directions for use’. . . which FDA regulations define as ‘directions under which the lay[person] can use a drug safely and for the purposes for which it is intended. . . .’”12  Pursuant to FDA regulations, a drug’s intended use is generally determined “by reference to ‘the objective intent of the persons legally responsible for the labeling of drugs.’”13

The Second Circuit’s Decision

On appeal, Caronia argued that his conviction should be overturned because he had not misrepresented the safety or efficacy of Xyrem, and the government could not, consistent with the First Amendment, prohibit him from truthfully promoting the drug.14  The government, on the other hand, argued that Caronia’s conviction did not implicate the First Amendment because Caronia was not prosecuted for engaging in protected speech.  Rather, the government asserted that Caronia’s promotional statements only served as evidence of the intent (or intended use) necessary to establish that “misbranding” had occurred.15  In reversing Caronia’s conviction, the Second Circuit rejected the government’s assertion that the First Amendment did not apply, holding that the government had in fact prosecuted Caronia for speech relating to off-label uses of Xyrem, and that the government had never sought to limit its use of evidence regarding such speech to the issue of intent.16

After determining that the First Amendment applied to the statements at issue, the Second Circuit then addressed whether the restrictions imposed on Caronia’s speech could withstand constitutional scrutiny under the four-part test established by the Supreme Court in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980).17  The Second Circuit determined that the first two prongs of Central Hudson were easily satisfied.  With regard to the first prong, the Second Circuit determined that the speech at issue (promoting off-label use) concerned a lawful activity (off-label use of approved drugs), and could therefore warrant First Amendment protection.18  With respect to the second prong, the Second Circuit determined that the government had a substantial interest in drug safety and public health, which could justify some form of restriction on the protected speech.19

The Second Circuit concluded, however, that the government could not satisfy the third and fourth prongs of the Central Hudson test.  With respect to Central Hudson’s third prong (the requirement that the regulation at issue directly advance the governmental interest asserted), the Second Circuit stated that: “[a]s 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.”20  Finally, with respect to the fourth prong of Central Hudson (the requirement that the regulation at issue be narrowly tailored to further the asserted governmental interest), the Second Circuit determined that “the government’s construction of the FDCA to impose a complete and criminal ban on off-label promotion by pharmaceutical manufacturers is more extensive than necessary to achieve the government’s substantial interests.”21  Accordingly, the Second Circuit vacated Caronia’s conviction, holding that:

we decline to adopt the government’s construction of the FDCA’s misbranding provisions to prohibit manufacturer promotion alone as it would unconstitutionally restrict free speech.  We construe the misbranding provisions of the FDCA as not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs.22

Caronia’s Implications For Off-Label Promotion

Since the Caronia decision was issued on December 3, 2012, numerous legal commentators have expressed their views on how the decision will affect pharmaceutical companies’ future marketing practices, as well as the government’s future efforts to restrict off-label promotion.23  However, it is important to recognize the limitations that the Second Circuit placed on its own decision.  In that regard, the Second Circuit expressly stated that: 

[o]ur conclusion is limited to FDA-approved drugs for which off-label use is not prohibited, and we do not hold, of course, that the FDA cannot regulate the marketing of prescription drugs.  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.24

Thus, while this decision provides a powerful defense for both pharmaceutical companies and their employees in misbranding and related cases, including civil False Claims Act matters, it is clear that Caronia only applies to truthful, non-misleading promotion of FDA-approved drugs for off-label uses.  The holding of Caronia should not in any way limit the government’s ability to prosecute pharmaceutical companies and/or their representatives for, among other things: (i) marketing drugs which have not yet received FDA approval for any use; or (ii) false or misleading statements regarding approved drugs (including in connection with promoting such drugs for off-label uses).

It is also important to note that the Second Circuit’s decision in Caronia is the first decision from a federal circuit court of appeals to directly address the constitutionality of the government’s efforts to restrict off-label promotion of prescription drugs.  While Caronia is binding precedent within the Second Circuit, it would not be binding on the other circuit courts of appeals if they are called upon to address the same or similar issues.25  Thus, the Caronia decision could result in the government attempting to evade Caronia by bringing all actions seeking to impose criminal or civil liability for misbranding based on off-label promotion in district courts outside of the Second Circuit (i.e., forum shopping).26  In addition, the government may petition the U.S. Supreme Court for certiorari, which could (and likely would) delay the ultimate resolution of the Caronia case. 

In light of this uncertainty, and the continued potential for aggressive off-label enforcement efforts, life science companies that engage in the promotion of FDA approved drugs should not alter their compliance efforts.  In fact, the Caronia decision may increase the risk that company employees take their compliance obligations less seriously and thereby expose their companies to greater enforcement risk.  Thus, companies must remain as vigilant as ever in their compliance efforts.  Nonetheless, Caronia is clearly an important decision for life science companies and their employees, and they should closely monitor any further developments, including in the courts and by regulators and the Department of Justice.

1  United States v. Caronia, No. 09-5006-cr, 2012 WL 5992141, at *1 (2d Cir. Dec. 3, 2012). 

2  Id.  The majority opinion in Caronia was written by Judge Denny Chin and was joined by Judge Reena Raggi.  Judge Debra Ann Livingston dissented in a separate opinion in which she asserted that the restriction imposed by the government on Caronia’s speech (even assuming, which Judge Livingston disputed, that the government had prosecuted Caronia for his speech) was constitutional.  Id. at *26.

3  In recent years, many of the largest pharmaceutical companies in the world have entered into settlements with the government to resolve claims of criminal and/or civil wrongdoing in connection with off-label promotion of prescription drugs.  These settlements have collectively required the pharmaceutical industry to pay billions of dollars in fines and penalties to resolve the government’s claims. 

4  Orphan was subsequently acquired by Jazz Pharmaceuticals.  Id. at *3.

5  Id. at *4.  Xyrem is a “powerful central nervous system depressant,” which at the time of Caronia’s alleged misconduct had been approved by the U.S. Food and Drug Administration (the “FDA”) solely to treat narcolepsy patients for cataplexy (a condition associated with weak or paralyzed muscles).  Id. at *3.  Soon thereafter, Xyrem was approved by the FDA to treat narcolepsy parties with excessive daytime sleepiness.  Id. 

6  Id. at *4.

7  Id. at **4-5.  The government never asserted that Caronia’s statements about Xyrem were false or misleading.  Id. at *13 n.11.  Rather, the government’s claims were based entirely on the theory that Caronia had promoted (or participated in promoting) Xyrem for unapproved uses and/or patient populations.  Id. at *9.

8  Id. at **5, 7.  Prior to trial, Caronia moved to dismiss the charges against him on the ground that the FDCA provisions at issue impermissibly and unconstitutionally restricted his First Amendment right to free speech.  Id. at *6.  The district court denied that motion, and the case proceeded to trial.  Id.  Orphan and Gleason were also charged under the misbranding provisions of the FDCA, and both pled guilty.  Id.

9  Id. at *1.

10 Id.

11 Id. at *2 (quoting 21 U.S.C. § 331(a)) (alterations in original). 

12 Id. (quoting 21 U.S.C. § 352(f); 21 C.F.R. § 201.5(a)).

13 Id. (quoting 21 C.F.R. § 201.128).  In Caronia, the Second Circuit noted that while the FDCA does not specifically prohibit off-label promotion, the FDA has taken the position that off-label promotion constitutes “misbranding.”  Id. at *3 (reciting the FDA’s position that “[a]n approved drug that is marketed for an unapproved use (whether in labeling or not) is misbranded because the labeling of such drug does not include ‘adequate directions for use’”) (quoting FDA, Draft Guidance, Good Reprint Practices for the Distribution of Medical Journal Articles & Medical or Scientific Reference Publications on Unapproved New Uses of Approved Drugs & Approved or Cleared Medical Devices 2-3 (2009)).  In addition, the government has repeatedly (and successfully) prosecuted pharmaceutical companies for misbranding based on off-label promotion.  Caronia, 2012 WL 5992141, at **2-3 .

14 Id. at *8. 

15 Id.

16 Id. at **9-10.  In reaching its conclusion that Caronia’s statements regarding off-label uses of Xyrem were protected by the First Amendment, the Second Circuit relied heavily on the U.S. Supreme Court’s recent decision in Sorrell v. IMS Health, Inc., 131 S. Ct. 2653 (2011), where the Supreme Court held 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.

17 Caronia, 2012 WL 5992141, at **11-15.  The Second Circuit determined, consistent with the Supreme Court’s decision in Sorrell, that a “heightened” level of scrutiny was appropriate because “[t]he government’s construction of the FDCA’s misbranding provisions to prohibit and criminalize the promotion of off-label drug use by pharmaceutical manufacturers is content- and speaker-based. . . .”  Id. at *12.  Like the Supreme Court in Sorrell, the Second Circuit was not required to determine the particular level of “heightened” scrutiny to be applied in such circumstances, because it concluded that “the government cannot justify a criminal prohibition of off-label promotion even under Central Hudson’s less rigorous intermediate test.”  Id.

18 Id. at *13. 

19 Id.

20 Id. at *13.

21 Id. at *14.  The Second Circuit stated that “[n]umerous, less speech-restrictive alternatives are available, as are non-criminal penalties,” and then went on to list some of those alternatives.  Id.

22 Id.

23 See, e.g., Katie Thomas, Ruling Is Victory for Drug Companies in Promoting Medicine for Other Uses, N.Y. Times, Dec. 3, 2012, (quoting a former chief counsel of the F.D.A. as stating that Caronia is “‘very significant . . . because it’s going to make F.D.A., in its promotion cases, focus on the kinds of speech that are more likely to harm consumers, such as false or misleading marketing versus something that is not approved’”); Alison Frankel, Seismic Fallout from Ruling on Drug Marketing & Free Speech?, Thomson Reuters News & Insight, Dec. 4, 2012, (quoting an attorney who submitted an amicus brief to the Second Circuit in the Caronia case as stating that the decision “‘guts the FDA’s regulatory regime’ and erects ‘an absolute roadblock’ [to] ‘the FDA’s grotesquely aggressive approach’ to off-label marketing prosecution”).

24 Caronia, 2012 WL 5992141, at *14.

25 As noted above, Judge Livingston wrote a dissenting opinion in Caronia in which she vehemently disagreed with virtually every aspect of the majority’s constitutional analysis.  In particular, Judge Livingston asserted that “[t]he majority’s decision today extends heightened scrutiny further than the Supreme Court ever has, and calls into question a fundamental regime of federal regulation that has existed for more than a century.”  Id. at *27.  Judge Livingston also noted the potential impact the majority’s decision could have on the government’s ability to regulate activity and prosecute individuals for conduct in other contexts involving truthful speech, such as insider trading schemes and antitrust conspiracies.  Id. at *21 n.5.  If another circuit court (or the U.S. Supreme Court) is called upon to evaluate the constitutionality of the government’s efforts to curb off-label promotion, it could adopt Judge Livingston’s reasoning in Caronia, and find that those restrictions survive constitutional scrutiny.

26 On December 12, 2012, less than ten (10) days after the Caronia decision was issued, the U.S. Attorney for the District of Massachusetts and the Department of Justice filed a complaint in the U.S. District Court for the District of Massachusetts (i.e., outside of the Second Circuit) alleging that the pharmaceutical company Wyeth LLC had violated the FDCA by misbranding the drug Protonix during the time period from February 2000 through June 2001.  While the complaint in that action asserted that certain of Wyeth’s promotional materials for Protonix were misleading, the primary theory asserted in the complaint was that Wyeth misbranded Protonix by promoting the drug for off-label use.  See Complaint ¶ 30, United States v. Wyeth LLC, No. 12-cv-12308 (D. Mass. filed Dec. 12, 2012), ECF No. 1 (“As Wyeth knew and understood, Wyeth did not seek or obtain approval from the FDA for the use of Protonix tablets for symptomatic GERD, and Wyeth’s promotion for that condition misbranded the drug”).  The same day the complaint was filed in the Wyeth action, the Department of Justice announced that Pfizer, which acquired Wyeth in 2009, had entered into a settlement to resolve the action for $55 million.  See DOJ Press Release, Pfizer Agrees to Pay $55 Million for Illegally Promoting Protonix for Off-Label Use (Dec. 12, 2012),



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