Last week a federal appeals court made a ruling that chips away at a fundamental aspect of the FDA's gatekeeping function with new drugs. The court tossed a conviction of a drug sales representative who was promoting drugs for uses the FDA had not approved. Two of the three judges on the panel said such restriction was a violation of the drug rep’s first amendment rights.

“Off-label” use of drugs is not illegal—doctors often prescribe a medication for a purpose other than what is specifically approved by the FDA. But pharmaceutical companies are prohibited by law to advertise or market them for such “customized” purposes. Because doctors understand the individual needs of their patient, they are in a unique position to know when off-label use might be appropriate—sometimes, such treatment is part of the art of medicine.

Big Pharma appreciates this art not because it’s creative and useful, but because it sells product.

A story in the New York Times said the court’s ruling “could have broad ramifications for the pharmaceutical industry.”

No kidding. Many companies have suffered huge financial penalties when they got caught and punished for off-label promotion. As we wrote in July, GlaxoSmithKline agreed to fork over $3 billion for promoting the antidepressant Paxil for treating depression in children and adolescents despite reports of increased suicidal tendencies among teens who took the drug. It promoted Wellbutrin, also an antidepressant, for weight loss, substance addiction, attention deficit hyperactivity disorder (ADHD) and sexual dysfunction. Then, the sales reps’ description of it as “the happy, horny, skinny pill” was deemed illegal. Now, it’s a free-speech issue.

Another company, Johnson & Johnson, settled a consumer fraud problem for $181 million after it fudged the marketing of Risperdal, an antipsychotic drug.

John R. Fleder, an attorney who formerly represented the FDA, told The Times, “Most if not all of these cases have been based on a central premise: that it is unlawful for a company and one of its employees to be promoting a drug or a medical device off-label. And this decision hits at the heart of the government’s theory.”

This case involved Alfred Caronia, a former sales rep for Orphan Medical, later acquired by Jazz Pharmaceutical, and the drug Xyrem, which had been approved for narcolepsy, a sleeping disorder whose victims experience uncontrollable attacks of deep, if brief, sleep. Caronia allegedly promoted it to doctors as a treatment for insomnia, fibromyalgia (chronic musculoskeletal pain and fatigue) and other conditions. In 2005, The Times reports, he was taped discussing such uses with a doctor who was a government informant. He was convicted by a jury in 2008.

He appealed on the basis that his First Amendment rights were restricted illegally.

At least one of the appellate judges retained her wits. Dissenting Judge Debra Ann Livingston vigorously argued, according to The Times, that by tossing Caronia’s conviction “the majority calls into question the very foundations of our century-old system of drug regulation,” she said. “[If drug companies] were allowed to promote FDA-approved drugs for nonapproved uses, they would have little incentive to seek FDA approval for those uses.”

Gerald Masoudi, a former counsel of the FDA, tried to split the difference between a truthful discussion of off-label drug uses and a misleading or false discussion. He told The Times that anyone except pharmaceutical companies could discuss off-label uses, and that the ruling is significant “because it’s going to make FDA, 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.”

This isn’t over until it’s over, which might not be until the government decides whether to request a rehearing before a full panel of judges, and after that, it could land in the lap of the U.S. Supreme Court.

The only saving grace at the moment, as noted in The Times’ story, is that because the ruling applies only within the Court of Appeals for the Second Circuit in New York, pharmaceutical companies that sell their wares far and wide won’t be making wholesale changes to their marketing policies. More likely is that the FDA will chill on the pursuit of similar cases until resolution.