Second Circuit Holds that Criminal Penalties for Pharmaceutical Sales Representative’s Off-Label Promotion Violate the First Amendment

by Orrick, Herrington & Sutcliffe LLP
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[author: Robin Linsenmayer]

On December 3, 2012, the United States Court of Appeals for the Second Circuit issued an opinion that stands to transform the regulatory landscape in which pharmaceutical and medical device companies operate.  In recent years, the government has initiated a multitude of criminal investigations – often resulting in convictions – based on the alleged off-label promotion of drugs and medical devices by manufacturers and their sales representatives, in violation of the Federal Food, Drug and Cosmetic Act (“FDCA”).  In a decision that calls the government’s initiative into question, a split panel of the Second Circuit vacated the conviction of a sales representative at Jazz Pharmaceuticals, Alfred Caronia, on the ground that Caronia’s off-label promotion of the drug Xyrem constituted speech protected by the First Amendment. 

The Second Circuit Opinion

The opinion, titled United States v. Alfred Caronia, rests primarily on the Court’s conclusion that criminalizing Caronia’s off-label promotion of Xyrem did not withstand the heightened constitutional scrutiny applicable to government restrictions on speech.  The Court found that the prohibition on truthful off-label promotional speech did not reduce patient exposure to unsafe or ineffective drugs, nor did it otherwise further the government’s interest in drug safety and health.  Instead, the Court determined, restrictions on off-label promotion could be expected to “interfere[] with the ability of physicians and patients to receive potentially relevant treatment information,” and that “such barriers to information about off-label use could inhibit, to the public’s detriment, informed and intelligent treatment decisions.” 

To support its conclusions, the Court cited, among other things, the Food and Drug Administration’s (“FDA”) “safe harbor” provision, permitting drug manufacturers to disseminate off-label information through scientific journals.  Implicit in the safe harbor provision, the Court found, is the FDA’s recognition that “‘public health can be served when health care professionals receive truthful and non-misleading scientific and medical information on unapproved uses’ of approved drugs.”

Because restrictions on off-label promotion did not further any articulated government interest, the Court found the prosecution to violate Caronia’s First Amendment rights, and held that “the government cannot prosecute manufacturers and their representatives under the FDCA for speech promoting the lawful, off-label use of an FDA-approved drug.”

Impact for Manufacturers and Sales Representatives

The Second Circuit’s opinion is poised to significantly change the landscape for companies and individuals involved in the promotion of pharmaceuticals and medical devices.  If upheld through the appellate process, the decision will have a profound impact on current government investigations and prosecutions for off-label promotion, and may lead to significant revisions in corporate compliance programs.

However, notwithstanding this favorable decision, manufacturers and sales representatives should not jump just yet to revise policies governing off-label promotional activities.  The case will most likely face a lengthy appellate process, and the decision may not be final for quite some time.  The panel’s decision was met with a strong dissent from Judge Livingston, and it is impossible to predict how the opinion will fare after the appellate process is complete.  Furthermore, the decision is limited to the Second Circuit, and it remains unclear whether other circuits will follow.  In the meantime, manufacturers may remain cautiously optimistic that change is afoot.

The text of the opinion, United States v. Caronia, No. 09-5006-cr, 2012 WL 5992141, -- F.3d -- (2d Cir. Dec. 3, 2012), can be found here.

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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