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In a Milestone Ruling, Court Reverses Conviction Involving Off-Label Promotion

On December 3, 2012, the United States Court of Appeals for the Second Circuit issued a long-awaited ruling in United States v. Caronia, a case involving off-label promotion.  In a 2-1, 82-page decision that involves a vigorous dissent, the Court vacated the criminal conviction of Alfred Caronia, a former pharmaceutical sales representative.  The sales representative was convicted for promoting the drug Xyrem for a use that had not been FDA-approved.  The government did not contest at trial the truthfulness of the comments to the doctor.  Though it was, and is, lawful and common for doctors to prescribe medication “off-label.”

The Court ruled that “we construe the FDCA as not criminalizing the simple promotion of a drug’s off-label use because such a construction would raise First Amendment concerns.”  The Court concluded that the record  demonstrated that the government had prosecuted Mr. Caronia for “mere off-label promotion.”  Slip Op. at 26.

The Court explained that FDA’s construction of the FDCA legalizes the outcome of off-label use by doctors, but “prohibits the free flow of information that would inform that outcome.”  The Second Circuit concluded that “the government’s prohibition of off-label promotion by pharmaceutical companies ‘provides only ineffective or remote support for the government’s purpose.’”  Slip Op. at 47.

The Court also ruled that it construes “the misbranding provisions of the FDCA as not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs.”  In addition the Court ruled “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.”  Slip. Op. at 51.

Caronia is a noteworthy ruling that will have wide implications for the FDA and drug companies.  Because making any promotional statement regarding the off-label use of a drug constituted, at the very least, a criminal misdemeanor offense, pharmaceutical companies spent millions of dollars annually on compliance and training programs to deter and detect off-label promotion by sales representatives.  Companies spent billions more to settle allegations of off-label promotion with the government.  One recent study showed that pharmaceutical companies paid $10.2 billion in civil and criminal fines between November 2010 and July 2012, mostly relating to off-label promotion allegations.

The court in Caronia made clear that the government can no longer prohibit and criminalize “truthful off-label promotion of FDA-approved prescription drugs.”  This seemingly eliminates the distinction between misdemeanor and felony misbranding for pharmaceutical drugs: both now require proof that off-label promotional statements are either “false or misleading” or made with “an intent to defraud or mislead.”

Legal contests based on similar arguments are certain to arise in other circuits, and the Department of Justice will have to evaluate its position on future off-label prosecutions.  DOJ may seek and be granted rehearing, especially since the Caronia decision was accompanied by a vigorous dissent, and the Second Circuit’s decision may ultimately be reviewed by the Supreme Court.

Clearly, this is a very noteworthy ruling that will have wide implications for the FDA and the companies and individuals regulated by FDA.

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