Opinion

Alison Frankel

Why U.S. is forgoing appeal of landmark 2nd Circuit off-label ruling

By Alison Frankel
January 24, 2013

On Wednesday, the Food and Drug Administration announced that the government has decided not to seek review of a landmark 2012 ruling by the 2nd Circuit Court of Appeals in U.S. v. Caronia. As you probably recall, a split 2nd Circuit panel held in December that the First Amendment protects truthful speech about the off-label use of FDA-approved products, finding that the misbranding provisions of the Food, Drug and Cosmetic Act do not prohibit off-label marketing, as long as it’s not misleading. Wednesday’s announcement by the FDA means that in New York, Connecticut and Vermont, pharmaceutical and medical device makers can give physicians information about their products that they can’t discuss in other states without risking prosecution.

That disparity would have been a good reason for the government to seek en banc or U.S. Supreme Court review of the 2nd Circuit panel’s Caronia ruling, said Jeffrey Senger of Sidley Austin, a former deputy chief counsel of the FDA. Senger told me Thursday that the Justice Department, which litigates on behalf of the FDA, undoubtedly considered whether it had a responsibility to ask the entire 2nd Circuit or the Supreme Court to clarify what pharma companies can and cannot say about their products. (Former healthcare fraud prosecutor Michael Loucks, now at Skadden, Arps, Slate, Meagher & Flom, told me the same thing when the Caronia ruling came down last month. “There’s a downside to the pharmaceutical industry and to society if the Justice Department shies away from further review,” Loucks said. “It’s not helpful to drug or device companies to have a lack of clarity. It’s also not helpful to the Justice Department.”)

But there was also a downside for the government in pursuing the Caronia appeal — especially because the Supreme Court made it clear in a 2010 case called Sorrell v. IMS Health that pharma marketing is “a form of expression protected by the Free Speech Clause of the First Amendment.” Sorrell involved a Vermont law restricting the sale of pharmacy prescription records, not off-label marketing. Nevertheless, the ruling is considered a good indicator of the justices’ likely view of the issues in Caronia. And losing at the Supreme Court would extend Caronia’s reasoning beyond the confines of the 2nd Circuit, which is just what the Justice Department doesn’t want. “I think the government had a very substantial risk of losing at the Supreme Court if they had appealed,” said Senger, who added that the decision to forgo an appeal did not surprise him.

Just filing a petition for certiorari would have sent a message the Justice Department wants to avoid, Senger said. Cert petitions typically urge the justices to review cases because of their national significance. That would undermine the government’s depiction of Caronia as a narrow decision that will not affect its prosecution of off-label marketing cases. Indeed, the FDA statement on the decision not to appeal the 2nd Circuit ruling said that the FDA does not believe Caronia will “significantly affect the agency’s enforcement of the drug misbranding provisions” of the Food, Drug and Cosmetic Act.

Senger said the Justice Department can work around Caronia by charging off-label marketing defendants with making false and misleading statements, which are not protected by the First Amendment. Whistle-blower lawyers have told me that it’s rare for the Justice Department to bring cases based only on truthful statements about off-label drug efficacy, so restricting prosecution to false marketing may not hinder the government.

And besides, Caronia won’t be the Justice Department’s last crack at the issue of limits on off-label marketing. Only days after the 2nd Circuit issued the Caronia decision, the 9th Circuit heard another First Amendment challenge to an off-label marketing conviction, this one by former InterMune CEO Scott Harkonen, who was prosecuted for approving a supposedly misleading press release about a pulmonary drug produced by the company. Unlike Caronia, the Harkonen case involves allegations of false statements, which could make it a more attractive vehicle, from the Justice Department’s perspective, for the Supreme Court.

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