Two recent developments in free-speech protection reflect a shifting environment for prosecutors investigating pharmaceutical and medical-device companies for potential off-label promotional activities. In December 2012, the Second Circuit held that the First Amendment protected a pharmaceutical sales representative’s truthful off-label promotional speech in United States v. Caronia, 703 F.3d 149 (2d Cir. 2012). And in March 2013, the defendant in United States v. Harkonen, 510 F. App'x. 633 (9th Cir. Mar. 4, 2013), petitioned the Supreme Court to overturn his wire-fraud conviction on the theory that statements contained in a press release describing the results of a clinical trial were protected by the First Amendment as scientific opinion.Prosecutors have generally downplayed the significance of Caronia, noting that the decision did not address the constitutionality of the government’s usual theory of liability—that a defendant’s off-label promotion is merely evidence of the drug’s intended use for unapproved indications. Nevertheless, as the Harkonen petition demonstrates, defendants are now sure to invoke the First Amendment in cases involving off-label and other allegedly improper promotional claims or activities. As a result, the government likely will be more selective in identifying cases for prosecution, pursuing those that involve allegations of fraud or false and misleading statements while passing on those based on truthful off-label speech.
Second Circuit: First Amendment Protects “Truthful” Off-Label Promotion
The Caronia case provides the background for the direction in which off-label investigations may be headed. Alfred Caronia was a sales representative for Orphan Medical, which manufactured and promoted Xyrem, a drug approved for the treatment of narcolepsy. The Department of Justice (DOJ) prosecuted Caronia for promoting Xyrem for non-approved, or off-label, uses. The DOJ based its prosecution on recorded statements that Caronia made to a doctor and charged him with two misdemeanors: (1) conspiring to misbrand Xyrem, and (2) misbranding Xyrem. The jury found Caronia guilty on the conspiracy charge, but the Second Circuit vacated the conviction.
In vacating the conviction, the Second Circuit concluded that the First Amendment protects the “truthful off-label promotion of FDA-approved prescription drugs.” 703 F.3d at 168. The Second Circuit issued its ruling after recognizing that Caronia engaged in off-label promotion. The decision thus distinguished truthful off-label promotion from the crime of misbranding and held that, at least in the Second Circuit, truthful off-label promotion, by itself, cannot be criminalized.
While the Caronia decision is a landmark case on the delicate balance between off-label promotion and First Amendment rights, it left many unanswered questions as to how off-label prosecutions will proceed. For instance, the majority noted that the First Amendment does not protect off-label promotion that is false or misleading. The government may thus shift its focus in off-label prosecutions to the veracity of the speech itself. But the question then becomes: What constitutes “truthful” promotion?
What Qualifies as “Truthful” Promotion?
This question is at the heart of the recent petition to the Supreme Court in United States v. Harkonen. Four years ago, a jury convicted Harkonen, the former CEO of pharmaceutical company InterMune, Inc., of wire fraud based on a press release he issued describing the clinical-trial results of one of his company’s drugs. The jury found that Harkonen knowingly participated in a scheme to defraud by misrepresenting the clinical study’s results in the press release. The Ninth Circuit upheld Harkonen’s conviction.
Harkonen’s petition to the Supreme Court raises the issue of when promotional speech may be considered false. He notes that the government did not challenge the accuracy of the data in his press release but only the conclusion he reached based on the data—that the drug demonstrated survival benefits in patients. Harkonen never asserts that this conclusion was categorically “true.” Instead, he maintains that its truth was at least “debatable” among the scientific community. He thus argues that his press release constituted a reasonable scientific opinion of the clinical trial results rather than a false statement that could support a fraud conviction. So, while Harkonen and Caronia involve different crimes—wire fraud and misbranding, respectively—both cases bring focus to the same issue: When is promotional speech truthful and protected by the First Amendment and when is it untruthful and unprotected?
How This Affects Future Off-Label-Promotion Investigations
Although it remains to be seen how the Supreme Court will handle Harkonen’s petition, it is clear that defendants in future prosecutions will seek protection under the First Amendment. In that sense, Caronia likely will lead to changes in how off-label investigations are handled. The most significant of these changes may be a marked shift in focus and selectivity by the government from whether the promotion was “off-label” to whether it was false or misleading.
To establish that promotional speech is misleading, the government also may rely more heavily on experts. The Ninth Circuit alluded to the importance of expert testimony in Harkonen by stating in a footnote: “Critically, Harkonen presented the evidence that most firmly supported his case for the first time at sentencing.” This likely was a reference to expert declarations that Harkonen sought to introduce to show a scientific basis for his conclusion. The Ninth Circuit could not consider the expert declarations, however, because Harkonen did not raise them before the jury.
Still, the Ninth Circuit’s footnote suggests that experts will play a key role in both the prosecution and defense of off-label-promotion investigations going forward. Expert opinions may aid courts that are examining the scientific validity of a company’s promotional statements. Similarly, an expert opinion on the veracity of a promotional statement may be a powerful tool when a company is sitting at the negotiating table with the prosecution. And the more a company examines the veracity of its promotional statements before those statements are made, the more a company may be able to derail an off-label investigation before it has a chance to build steam.
Keywords: criminal litigation, off-label promotion, misbranding, free speech
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