Court Upholds Executive’s Conviction Stemming from Off-Label Drug Promotion


The U.S. Court of Appeals for the Ninth Circuit has upheld the wire fraud and misbranding convictions and sentence of InterMune Inc. founder W. Scott Harkonen. United States v. Harkonen, No. 11-10209 (9th Cir. March 4, 2013). That decision, while based on different circumstances than the landmark decision by the Second Circuit in Caronia (which we have written about in this story,, creates further tension between lawful promotional marketing and criminal off-label practices.

Harkonen was indicted in 2008 on charges of wire fraud and misbranding under the Food, Drug, and Cosmetic Act (“FDCA”) for creating and disseminating a press release that promoted off-label uses for the drug Actimmune. A federal jury in September 2009 found him guilty of wire fraud for the press release but acquitted him of misbranding under the FDCA. Harkonen was sentenced in April 2011 to three years’ probation and was ordered to pay a $20,000 fine. The government had sought a $1 million fine and 10 years’ imprisonment. He subsequently appealed to the Ninth Circuit.

Harkonen was the first chief executive officer tried for off-label promotion. He argued on appeal that a scientific debate over whether a given treatment causes a particular effect is speech protected by the First Amendment and falls outside the scope of the mail and wire fraud laws. The Ninth Circuit dismissed this characterization as an assertion of innocence. “[G]enuine debates of any sort are, by definition, not fraudulent. Here, a jury found, beyond a reasonable doubt, that Harkonen issued the Press Release with the specific intent to defraud, and that finding is supported by the evidence presented at trial.” The Court also rejected Harkonen’s due process argument as “essentially a redressing” of his First Amendment claim.

Harkonen’s counsel has stated publicly that he will ask the Ninth Circuit for en banc review.

On the surface, the Ninth Circuit’s decision does not appear to raise any complicated freedom of speech issues. The First Amendment does not protect from prosecution harmful, dangerous or fraudulent speech. However, the mail and wire fraud statutes give prosecutors wide latitude to investigate and prosecute disfavored speech. The term “to defraud” in the statutes includes any sort of “dishonest method or scheme” and any “trick, deceit, chicane or overreaching.” And, according to the Ninth Circuit in Harkonen, statements are fraudulent if “misleading or deceptive” and need not be “literally false.”

The line between lawful promotion and misleading or deceptive statements is not always bright. Pharmaceutical and medical device manufacturers will want to stand clear of the gray area in between to ensure that their promotional efforts receive the protection afforded to truthful commercial speech by the Second Circuit in Caronia and the Supreme Court in Sorrell v. IMS Health, 131 S.Ct. 2653 (2011). In short, strong compliance policies and programs to ensure truthful promotional statements have never been more important.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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