April 2013 Volume 9 Number 8

What Effect Will United States v. Caronia Have On Civil Off-Label Cases?

By Veronica B. Nannis, Joseph, Greenwald & Laake, P.A., Greenbelt, Maryland

AuthorThe Caronia Decision

Temporary shock waves shook the healthcare bar on December 3, 2012 when the Court of Appeals for the Second Circuit issued an opinion overturning a conviction for off-label promotion in United States v. Caronia.1 Alfred Caronia was a pharmaceutical sales representative who was convicted of misdemeanor conspiracy related to the off-label promotion of Xyrem for purposes not approved by the Food and Drug Administration (“FDA”). Many in the healthcare realm had tracked the case since Caronia’s 2009 conviction because his defense hinged on not-yet proven First Amendment grounds. In a 2-1 decision, the Second Circuit agreed with Caronia’s free speech argument, holding 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.”2 The opinion may affect criminal enforcement and the FDA’s regulatory prowess – at least in the Second Circuit – but it does not represent a paradigm shift for civil False Claim Act (“FCA”) healthcare cases.

After the initial flurry around Caronia subsides, it is not likely to have a significant impact on most off-label FCA cases. One simple reason is that recent off-label settlements have been widely touted by the Department of Justice and the record recoveries have been far too great to be thwarted by this one decision:

  • April 27, 2010, AstraZeneca agreed to pay $520 million and entered into a corporate integrity agreement to settle civil off-label claims related to the marketing of Seroquel.3
  • September 1, 2010, Allergan pled guilty to misbranding and agreed to pay $600 million to settle civil and criminal liability related to the off-label promotion of Botox®.4
  • June 9, 2011, UCB SA pled guilty to misbranding, agreed to pay $34 million and entered into a corporate integrity agreement to resolve civil and criminal liability related to the off-label promotion of Keppra.5
  • June 10 2011, Novo Nordisk agreed to pay $25 million and entered into a corporate integrity agreement to resolve claims related to the off-label promotion of Novoseven.6
  • May 7, 2012, Abbott Labs pled guilty to misbranding, agreed to pay $1.5 billion and entered into a corporate integrity agreement to resolve criminal and civil claims related to the off-label promotion of Depakote.7
  • March 5, 2013, Par Pharmaceuticals pled guilty and agreed to pay $45 million to resolve civil and criminal allegations related to the off-label marketing and misbranding of Megace ES.8

The Decision Is Not Likely To Sideline Civil Off-Label Cases

All of these settlements were triggered by whistleblowers filing under the FCA. Just this small sampling of multi-million dollar recoveries all but compels the conclusion that by itself, Caronia is not likely to change the lucrative world of big off-label FCA cases. The rewards are simply too great. However, a subtle shift in language has already appeared post-Caronia in the Government’s press releases. Whereas pre-Caronia releases tended to only mention off-label marketing or promotion when discussing the civil recoveries, post-Caronia releases (e.g., Pfizer in December and Par in March) have included references to “misbranding” as well. This subtle, but significant, inclusion perhaps telegraphs that the Government does not currently view Caronia as much of a threat to its successful FCA off-label cases.

Another reason why Caronia is not the death knell for civil off-label cases is that the best cases have always involved fundamentally different allegations from those in Caronia, namely misbranding or false and misleading off-label promotion. As emphasized by the Court, the FDCA does not “prohibit or criminalize off-label promotion.”9 However, it does prohibit “misbranding.”10 Caronia does nothing to undermine the strength of misbranding cases. It affirms them. While misbranding was not at issue there, the Court still recognized that “the government has repeatedly prosecuted — and obtained convictions against — pharmaceutical companies and their representatives for misbranding based on their off-label promotion.”11 Moreover, although Caronia did not involve allegations of false and misleading promotion, the Court still paused to note that “of course, off-label promotion that is false or misleading is not entitled to First Amendment protection.”12

Therefore, instead of changing the civil off-label playing field, the decision should simply serve to reinforce already-existing best practices on both sides of the “V.”

The Defense

On the defense side, long before Caronia, experienced counsel staunchly defended off-label cases using multiple tools, including free speech.13 While many were already invoking the First Amendment before Caronia, there should be little doubt that all defendants in off-label cases now will add the free speech arrow to their quiver of defenses. These arguments have been common and at times compelling in the past. And, now that the Caronia Court has provided a detailed roadmap for defendants in off-label cases to follow, this defense may be even more successful now. There also is no doubt that savvy defense counsel will try to stretch Caronia far beyond its four corners, outside the criminal context and past the boundaries of the Second Circuit.


For their part, the relators’ bar should be prepared to thoughtfully rebut expected Caronia-type attacks in all off-label cases. They must also be aware of and cautioned by the discussion in Caronia that prohibiting off-label promotion while simultaneously allowing physician off-label use “ paternalistically interferes with the ability of physicians and patients to receive potentially relevant treatment information[.]”14 It was the combined punch of the court’s desire to protect “informed and intelligent treatment decisions” and the fact that the FDCA does not prohibit promotion of drugs for off-label use that knocked out Caronia’s conviction. For relators’ counsel, the decision should serve as a reminder that the hallmarks of strong off-label cases are misbranding or false and misleading promotion.

The Government

To the surprise of some commentators who thought appeal was inevitable, the Government let the Caronia decision stand unchallenged. In a shrewdly strategic move, it passed on a rehearing and declined to file a Petition for Writ of Certiorari to the Supreme Court15 by the March 4th deadline. Presumably, the FDA, with the Department of Justice, decided that it was too much to risk affirmance in the Supreme Court and a much farther application of Caronia than the boundaries of the Second Circuit. For the time being, Caronia is likely to enjoy a limited reign in Second Circuit criminal enforcement cases only.

However, within the Circuit, the opinion may embolden some companies to push the edges of off-label promotion, feeling protected under the First Amendment’s bigger umbrella in New York, Connecticut and Vermont. That would be short-sighted, though, given the age of far-reaching technology in which we live and the expansive reach of the Commerce Clause. Defendants will not be able to limit their conduct so as to guarantee exclusive review in the Second Circuit. Moreover, it is not clear how the Government will proceed with these cases outside the Second Circuit. Guessing wrong is quite a risky proposition for would-be defendants.

For now, it is safe to assume that those post-Caronia criminal prosecutions that are brought in the Second Circuit will have compelling evidence of false and misleading conduct to sustain the Government’s burden. It can also be assumed that those cases that do not pass the Government’s rigorous post-Caronia review will not be prosecuted, or, at least not in the Second Circuit. The Government has many venue options in prosecutions for criminal misbranding.16 Caronia has no doubt provided another factor for the Government to consider when contemplating the time-honored tradition of forum shopping. The Government is yet to make known its post-Caronia enforcement plans. Eyes should be open in the coming months to see whether Caronia is limiting Second Circuit prosecutions only, or whether it changes enforcement nationwide.

Veronica Nannis is a litigator with over10 years experience whose practice focuses on healthcare, including the representation of relators in healthcare fraud cases brought under the False Claims Act. She is a partner and the litigation practice group manager at Joseph, Greenwald & Laake, P.A., a full-service, mid-size law firm in suburban Maryland. www.jgllaw.com.

1United States v. Caronia , 703 F.3d 149 (2d Cir. 2012).

Id. at 169 (emphasis supplied).


Press Release, United States Department of Justice, Pharmaceutical Giant AstraZeneca to Pay $520 Million for Off-label Drug Marketing (Apr. 27, 2010), available at http://www.justice.gov/opa/pr/2010/April/10-civ-487.html.


Press Release, United States Department of Justice, Allergan Agrees to Plead Guilty and Pay $600 Million to Resolve Allegations of Off-Label Promotion of Botox® (Sept. 1, 2010), available at http://www.justice.gov/opa/pr/2010/September/10-civ-988.html. Disclosure: The author’s law firm was involved in the civil aspect of this case representing one of the three whistleblowers.


Press Release, United States Department of Justice, U.S. Subsidiary of Belgian Pharmaceutical Manufacturer Pleads Guilty to Off-Label Promotion; Company to Pay More Than $34 Million (June 9, 2011), available at http://www.justice.gov/opa/pr/2011/June/11-civ-751.html.


Press Release, United States Department of Justice, Danish Pharmaceutical Novo Nordisk to Pay $25 Million to Resolve Allegations of Off-Label Promotion of Novoseven (June 10, 2011), available at http://www.justice.gov/opa/pr/2011/June/11-civ-764.html.


Press Release, United States Department of Justice, Abbott Labs to Pay $1.5 Billion to Resolve Criminal & Civil Investigations of Off-label Promotion of Depakote (May 7, 2012), available at http://www.justice.gov/opa/pr/2012/May/12-civ-585.html.


Press Release, United States Department of Justice, Par Pharmaceuticals Pleads Guilty and Agrees to Pay $45 Million to Resolve Civil and Criminal Allegations Related to Off-Label Marketing (March 5, 2013), available at http://www.justice.gov/opa/pr/2013/March/13-civ-270.html.

9Caronia , 703 F.3d at 160.

Or, “[t]he introduction or delivery for introduction into interstate commerce of any ... drug ... that is ... misbranded.” 21 U.S.C. § 331(a) (2006).

11Caronia , 703 F.3d at 154.
12Id. at 166 n. 10 (citing Cent. Hudson Gas & Elec. Corp. v. Public Serv. Comm'n , 447 U.S. 557, 566 (1980)).
13See, e.g., United States v. Caputo , 288 F. Supp. 2d 912 (N.D. Ill. 2003) (Defendant unsuccessfully arguing that FDA prohibitions on manufacturer off-label promotion violated the First Amendment); United States v. Higgins, 2011 U.S. Dist. LEXIS 140343 (E.D. Pa. 2011) (Court rejecting convicted defendant’s argument that “it would be unlawful to enhance [his] sentence based on what is protected First Amendment expression"); Mississippi ex rel. Hood v. AstraZeneca Pharms., LP , 744 F. Supp. 2d 590, 599 (N.D. Miss. 2010) (the defendants in this FCA case arguing that jurisdiction existed because the Complaint raised federal questions including “whether regulation of Defendants' speech (i.e., its alleged improper promotion of Seroquel) implicates the First Amendment”); United States v. Harkonen, 2009 U.S. Dist. LEXIS 47255, 37-38 (N.D. Cal. 2009) (Court denying the defendant's motion to dismiss the misbranding indictment on First Amendment grounds).
14Id. at 179 (internal quotations omitted).
15Many observers speculate that the Supreme Court was likely to affirm Caronia if given the chance in light of its free speech analysis in Sorrell v. IMS Health, Inc ., 131 S.Ct. 2653 (2011).

Food and Drug Act, Subchapter III, Prohibited Acts and Penalties, §§ 331-337a (“There is extraterritorial jurisdiction over any violation of this chapter relating to any article regulated under this chapter if such article was intended for import into the United States or if any act in furtherance of the violation was committed in the United States.”).

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