In a case that could have broad ramifications for the
pharmaceutical industry, a federal appeals court on Monday threw out the
conviction of a sales representative who sold a drug for uses not approved by
the
Food
and Drug Administration. The judges said that the ban on so-called off-label
marketing violated the representative’s freedom of speech.
The 2-to-1 decision by a three-judge panel of the
Court of Appeals for the Second Circuit in Manhattan addresses a long-running
and costly issue for the industry, which has paid billions of dollars in
penalties to the federal government in recent years after being accused of
marketing blockbuster drugs for off-label uses.
In July, for example, the British drug maker
GlaxoSmithKline
agreed
to pay $3 billion in fines, in part for promoting antidepressants and other
drugs for unapproved uses; a month later,
Johnson
& Johnson announced that its pharmaceutical unit had reached a $181
million consumer fraud settlement with 36 states and the District of Columbia
over its marketing of Risperdal, an antipsychotic drug.
“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,” said John R. Fleder, a
director at the law firm Hyman, Phelps & McNamara who represented the F.D.A.
while working at the Justice Department. “And this decision hits at the heart of
the government’s theory.”
The ruling, in
United
States v. Caronia, involved the conviction of Alfred Caronia, a former sales
representative for Orphan Medical, which was later acquired by Jazz
Pharmaceutical. Mr. Caronia was selling Xyrem, a drug approved for excessive
daytime sleepiness, known as narcolepsy. He was accused of promoting it to
doctors as a treatment for insomnia, fibromyalgia and other conditions. He
became the target of a federal investigation in 2005 and was caught on an
audiotape discussing the unapproved uses of the drug with a doctor who was a
government informant. He was convicted by a jury in 2008.
Mr. Caronia appealed the conviction, arguing that his
right to free speech under the First Amendment was being illegally restricted.
The appellate court decision applies only to the Second Circuit, which comprises
New York, Connecticut and Vermont, but some lawyers said that the government was
likely to appeal and that the case could find its way to the Supreme Court.
Under the Food, Drug and Cosmetic Act, which gives the
F.D.A. the authority to regulate drugs, selling a “misbranded drug,” or one that
is intended to be used for purposes not listed in the label, is illegal.
Doctors, on the other hand, are free to prescribe a drug for any use. The agency
has argued that off-label promotion of drugs is evidence that a sales
representative or company intended to sell misbranded drugs.
In its decision, the court said this view violated the
First Amendment and cited as precedent a 2011 Supreme Court decision,
Sorrell
vs. IMS Health. In that case, the high court, citing freedom of speech,
overturned a Vermont law restricting pharmaceutical companies from using
prescription data for marketing purposes.
“The government clearly prosecuted Caronia for his
words — for his speech,” the majority wrote, concluding later “the government
cannot prosecute pharmaceutical manufacturers and their representatives under
the F.D.C.A. for speech promoting the lawful, off-label use of an
F.D.A.-approved drug.”
The lone dissenting judge, Judge Debra Ann Livingston,
vigorously disagreed, arguing that by throwing out Mr. Caronia’s conviction “the
majority calls into question the very foundations of our century-old system of
drug regulation.” She argued that if drug companies “were allowed to promote
F.D.A.-approved drugs for nonapproved uses, they would have little incentive to
seek F.D.A. approval for those uses.”
Gerald Masoudi, a former chief counsel of the F.D.A.,
said the ruling made a distinction between truthful discussion of off-label uses
of drugs, many of which are considered legitimate by the medical community, and
those that are misleading or false. He noted that “anyone on the planet” could
discuss off-label uses of drugs, except for pharmaceutical companies.
“It’s very significant,” he said, “because it’s going
to make F.D.A., 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.”
In a statement, the trade group for the pharmaceutical
industry, Pharmaceutical Research and Manufacturers of America, said it was
pleased with the ruling.
“PhRMA believes that truthful and nonmisleading
communication between biopharmaceutical companies and health care professionals
is good for patients, because it facilitates the exchange of up-to-date and
scientifically accurate information about new treatments,” the statement said.
A spokeswoman for the F.D.A. said the agency did not
comment on active litigation.
Lawyers said the government would most likely ask for
a rehearing before the circuit court’s full panel of judges and after that, it
could be taken up by the Supreme Court.
Because pharmaceutical companies market their drugs
nationally and the ruling applies only within the Second Circuit, the ruling is
not likely to lead drug makers to change their marketing policies. Rather, some
said, the F.D.A. will be unlikely to pursue convictions in similar cases until
the legal issues are resolved.
