The Impact of Caronia Case: What Happens Next?
Last month, in a landmark ruling, the United States Court of Appeals for the Second Circuit in United States v. Caronia, vacated the criminal conviction of a pharmaceutical sales representative who was found guilty of conspiracy to introduce a misbranded drug, under the Food, Drug & Cosmetic Act (FDCA), because he spoke about off-label uses of a particular drug. The court held “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.”
In a client alert written by the law firm Arnold & Porter, LLP—which are the counsel representing Par Pharmaceutical in their similar First Amendment case—the FDA attorneys noted how the Second Circuit “applied the First Amendment analysis set forth in Sorrell v. IMS Health Inc., a case that Arnold & Porter handled at the trial and appellate stages, including the petition and merits phases in the U.S. Supreme Court.”
The Caronia court explained “that FDCA prosecutions premised on off-label promotion impermissibly discriminate against pharmaceutical companies based on the content of their speech. Anyone other than pharmaceutical companies, even individuals or entities outside the healthcare field, may freely discuss off-label uses of approved drugs. Yet, under the government’s theory of prosecution, the same speech becomes criminal when uttered by pharmaceutical companies – entities who arguably are the most knowledgeable about the drugs under discussion.”
“The Caronia court ruled that this restriction on the free flow of information not only fails to advance directly the government’s substantial interests in drug safety and public health, but also is far more restrictive of protected speech than necessary to achieve the government’s stated ends. Because the First Amendment bars the government from prohibiting pharmaceutical companies from engaging in truthful and non-misleading speech about off-label uses, the Second Circuit interpreted the FDCA not to prohibit this speech.
Arnold & Porter wrote that, “This landmark ruling calls into question the core prosecutorial theory used by the government to bring criminal enforcement actions for off-label promotion under FDA’s “intended use” regulations and may also limit the ability of the government and private plaintiffs to argue that off-label promotion leads to the submission of false claims.”
An article from Forbes maintained that Caronia decision 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.”
In addition to the Caronia decision, another First Amendment case recently had oral arguments in the U.S. Ninth Circuit Court of Appeals. Specifically, former InterMune Inc. Chief Executive W. Scott Harkonen is appealing a 2009 wire fraud conviction for a news release that trumpeted the purported survival benefits of Actimmune, made to treat fatal lung disease. His attorneys contend the conviction should be reversed because the release “expressed a scientific view” that is protected by First Amendment free-speech rights, the Wall Street Journal reported. Harkonen was also excluded by HHS-OIG, and is appealing that decision as well in the HHS Departmental Appeals Board (DAB).
The government, which indicted Dr. Harkonen in 2008, maintains in its brief that the First Amendment doesn't bar a “criminal prosecution of false statements with an intent to defraud" just because they "concern scientific matters.” “It is important to the FDA to preserve the notion that you can't sell a medicine for an unapproved purpose,” said Washington attorney Bert W. Rein of Wiley Rein, who has represented an opponent of FDA marketing rules. “That agency is so vested in its regulatory scheme that they will fight.” PhRMA filed an amicus brief on Dr. Harkonen's side, calling the case “an unprecedented prosecution of a pharmaceutical executive for expressing in a news release his scientific opinion about the development of a drug to treat disease.”
There has been a significant amount of speculation about the potential impact the Caronia decision will have on the Food and Drug Administration’s (FDA) ability to prosecute pharmaceutical companies for off-label promotion, and the subsequent affect this will have on the Department of Justice’s (DOJ) ability to recover large settlements and fines from companies. There is also speculation about how this case may affect Corporate Integrity Agreements (CIA) that companies are currently under or may be in negotiations for with the Office of the Inspector General (OIG) for the Department of Health and Human Services (HHS). In addition, decision may also render several guidance documents from the FDA and OIG moot. Accordingly, this article offers a collection, analysis and summary of various articles that have been written in the weeks following the Caronia decision.
First, Mit Spears, General Counsel for the Pharmaceutical Research and Manufacturers of America (PhRMA), wrote an editorial—oddly enough in the typically anti-industry Milwaukee Journal Sentinel—applauding the Caronia decision. He asserted that while critics believe the “2nd Circuit’s decision will undermine the integrity of the FDA’s regulatory processes and leave patients exposed to potentially unsafe products,” “Nothing could be further from the truth.”
Instead, he maintained that, “The 2nd Circuit's decision protects only truthful and non-misleading speech. By encouraging regulators to focus on the truthfulness of these communications as opposed to searching for promotional intent behind a company's communication, we can develop clear standards that will reduce regulatory uncertainty and better ensure that physicians receive information critical to protecting patient health and improving health outcomes.”
Accordingly, the PhRMA General Counsel welcomed the opportunity to work “constructively with the FDA to develop a regulatory paradigm that protects its critical mission and fosters the provision of truthful and non-misleading communications.” He noted that “as we move into a new health care environment where controlling costs and employing the best possible therapies are paramount, it is even more important to ensure that communications between biopharmaceutical companies and healthcare professionals are robust and timely.”
“One of the things this decision does is to switch the burden of proof,” Alan Bennett, partner at the law firm Ropes & Gray, and a former attorney in FDA’s Office of the General Counsel, to the PharmExecBlog. “It’s very easy to say something is off-label. This decision certainly maintains, as it should, that FDA has the authority to go after false or misleading speech. But I think it switches the burden of proof, so that FDA has to show that something is false or misleading rather than simply off-label.”
The decision, however, “does not prevent government regulators from prosecuting other types of misbranding, such as the failure to present fair and balanced information in advertisements, for example,” but if the decision stands – and Bennett says it’s too early to tell how this decision will shake out – it puts an end to the “blanket rule that says: off-label speech is a violation and by itself creates misbranding.”
The decision “should lead, I hope, to a thoughtful reassessment about the way the regulatory system [for pharmaceuticals] works,” says Bennett. “I do think there’s some information out there that’s outside of the technical four corners of the label that would be useful for physicians to have, and companies have the means to disseminate that information, as long as it’s truthful and not misleading.”
Indeed, under the “existing rules of the FDA, using comparative effectiveness research (CER) in marketing materials is most often illegal for companies,” says John Kamp, executive director of the Coalition for Healthcare Communication, and a First Amendment advocate, due to the fact that CER is compiled after a drug and its label hit the market. “But it is not illegal for anyone else to use economic studies against companies.” Bennett offered the example of treatment guidelines, which are “developed independently of companies, sometimes by government…and to say that everybody else can talk about that information, and that it’s good information, but that the company itself can’t talk about it, that doesn’t seem like a great system.”
Assuming the decision stands, and “drug labels lose their status as preeminent deciders of what in fact is true in relation to a prescribed medicine,” the blog post asked: “How might regulators – and pharmaceutical companies – agree on what constitutes the truth?” “My guess is, the safest way for the FDA to assess truth would be to begin using the Federal Trade Commission (FTC) standard,” says Kamp. “It’s safe, because it has been litigated under the First Amendment for 40 years.”
The FTC’s jurisdiction extends to over-the-counter (OTC) products, and the test it applies to assess whether speech is misleading is “quite a strict one,” says Lee Peeler, president and CEO of the National Advertising Review Council, and the FTC’s former deputy director of the Bureau of Consumer Protection. “If you conduct a test and find that [commercial speech] is misleading to 20 percent or more of the [targeted] consumers, then that has been held to be actionable under the FTC Act.”
Further, under the FTC Act, “speech is, per se, misleading if you don’t have competent, reliable scientific evidence supporting the claims that you’re making,” said Peeler. “You can’t go out and say things in advertisements – for laundry detergent, diapers, OTC drugs, whatever – unless you have good strong viable data showing that the claim as the consumer perceives it, is true.”
Manufacturers and regulators, however, will likely disagree on what constitutes legitimate, or at least reliable, scientific data. Peeler said FTC “has a multi-pronged test that it uses to evaluate” the veracity of scientific data. “One of the key pieces of the test is that the data be of a quality and type that experts in the field would consider to be reliable,” said Peeler. “In a number of recent cases in the food and dietary supplement area, FTC has required two well-controlled clinical studies for any claims about the effectiveness of a product on the structure and function of the human body.”
Asked what does or should constitute – or better yet define – truthful versus misleading or false speech in the context of off-label discussions, PhRMA’s EVP and general counsel Mit Spears issued the following statement: “Federal jurisprudence provides a rich body of precedent, drawn from cases arising under the Lanham Act, FTC Act and a host of other statutory and regulatory regimes, that balances the rights of companies to engage in commercial speech with the consumer’s right to receive accurate and truthful information. As always, PhRMA stands ready to work with FDA to make sure that both patients and health care professionals receive timely and accurate information about medicines, which will improve health outcomes and protect patients.”
The FDA Law Blog predicted that “industry can expect to see even closer review of criminal charges to ensure there is strong evidence that a company lied about the safety or efficacy of a drug or device, or made mistakes and/or incomplete statements about the product at issue.” They noted, however, that it “is unlikely that we will see prosecutors bringing criminal charges against companies, and companies willing to pay money, in cases in which there is strong scientific support for an unapproved use of a product, absent clear evidence that there also were false or misleading statements.”
The Next Step for The Department of Justice
In an article from Forbes, the author asserted that despite the Caronia opinion, “off-label pharma prosecutions won’t be silenced.” In fact, she asserted that the decision should not “slow the Justice Department’s off-label investigations and pending settlements, such as the multi-billion-dollar one against Johnson & Johnson for the alleged off-label marketing of Risperdal and other drugs for uses that the Food and Drug Administration hasn’t approved.” The predictions, however, should be taken with a grain of salt given that the attorney writing the article represented several of the whistleblowers involved in the Caronia case, as well as several other whistleblowers in the Amgen, GSK, and Pfizer settlements.
The author noted how the court’s opinion indicated that off-label promotional statements may be evidence of the manufacturer’s “intended use” for a drug, and thus support prosecution for “misbranding” violations under the FDCA. Misbranding under the FDCA is couched in terms of whether the drug’s label is adequate for its “intended use.”
The author argued that while J&J’s case may not be affected by the decision, what will be different about the J&J case and other future off-label cases “is the vocabulary used in describing the violations.” Expect to hear the term “misbranding” being emphasized more than “off-label,” and “intended use” replacing “promotion” in supporting the misbranding charges brought by the government.
“This shift in vocabulary is already evident in the DOJ’s recent press releases announcing misbranding (née off-label) settlements,” the article explained. DOJ chose its words carefully in its post-Caronia announcement of the Amgen settlement on Dec. 19, explaining that “it is illegal for drug companies to introduce into the marketplace drugs that the company intends will be used ‘off-label,’ i.e., for uses or at doses not approved by the FDA.”
In comparison, DOJ’s pre-Caronia announcement of GlaxoSmithKline’s $3 billion settlement described the basis of illegality somewhat differently: “Promotion by the manufacturer of other [unapproved] uses – known as ‘off-label uses’ – renders the product ‘misbranded.’
Another article explained that if the Caronia opinion stands, “the inevitable outcome should be a guidance document from FDA that lays out the parameters of a true First Amendment “safe harbor,” i.e., one in which truthful, accurate and non-misleading off-label speech under certain circumstances will not be used as evidence in a misbranding prosecution.” However, such guidance is “a long way off.”
The article, authored by Jose P. Sierra, at attorney at Fish & Richardson PC, noted how even though the court held for the first time that truthful off-label speech is protected under the First Amendment both the majority and dissent wre in agreement on one important point: “the Feds have a substantial (maybe even compelling) interest in ensuring that manufacturers don’t evade the the FDA drug approval process and seek FDA approval for new indications.”
Sierra pointed out that “the majority didn’t reject the Government’s argument that it could use truthful off-label speech as evidence of intent to sell off-label — it merely held that such speech can’t be the only evidence of such intent — and offered no protection for off-label speech that isn’t truthful, accurate and non-misleading.”
In response to the Caronia holding, Sierra noted that Par Pharmaceutical—who is in ongoing litigation over a similar First Amendment claim regarding off-label speech—filed “yet another stay with the D.C. District Court.” Although Caronia has almost certainly strengthened Par’s negotiating hand, Sierra noted that “if the parties settle, we may never learn how much the Government gave up as a result of the constitutional challenges”—as was the case a few years ago when Allergan filed a First Amendment suit, but agreed to drop it as part of its $600 million settlement with the Government.
“It would indeed be disappointing if the Government settles quietly with Par, confines Caronia to the boundaries of the Second Circuit, and conducts business as usual — betting that most companies either won’t file a First Amendment challenge or will just use the First Amendment as leverage to get a better deal,” Sierra wrote.
One option that many FDA lawyers predict is that the Government will not appeal the Caronia decision and risk a worse ruling from the Supreme Court. But until the government makes clear its position, Sierra maintained that “most manufacturers will continue to institute policies, practices and controls that steer clear of the Government’s reach.”
Ultimately, Sierra maintained that the government “should accept the Caronia decision and use it to draft a guidance document that would provide manufacturers with a meaningful First Amendment safe harbor — unlike the widely (and rightfully) criticized guidance document on “Responding to Unsolicited Requests for Off-Label Information” it issued a year ago. Such a “guidance document could start with the simple proposition that accurate, truthful and non-misleading off-label speech that is reviewed and approved by a manufacturer’s ‘promotional materials review committee’ for accuracy, truthfulness and fair balance will not be used as evidence of intent to distribute/sell off-label, especially where the off-label use is medically accepted (as evidenced by inclusion in recognized medical compendia) and reimbursed by Medicare, Medicaid and/or other federal healthcare programs.”
Off-Label, Not Off-Limits: The Need for a Safe Harbor
In another article published by the Manhattan Institute, Paul Howard and James Copeland asserted that in light of the Caronia decision, “FDA needs to rethink its off-label speech regulations, which have become overly broad and unnecessarily opaque.” Specifically, the authors call on FDA to adopt a “safe harbor” to allow drug companies to communicate truthful information about off-label drug use to physicians in order “to improve medical research and public health by increasing learning about what happens after drugs are licensed and making the best use of pharmaceuticals on the market.”
The big problem, from a public health perspective, “is that doctors often lack adequate information about off-label drug use because those best-positioned to inform them about the benefits and risks associated with such uses—the drug manufacturers themselves—are effectively precluded from doing so by the FDA.” FDA “is all for a robust exchange of scientific information between a drug or device company and the research and patient community,” and has even recognized that companies often have the most up-to-date information on a drug’s risks and benefits. However, FDA draws a line: companies can “share only ‘scientific’ information, not ‘promotional’ information.”
The line between promotion and scientific, however, can be “blurry” and “ignores the fact that much information about a product's potential uses (both from a safety and an efficacy perspective) evolves when patients and physicians experiment with FDA-approved medicines outside of the constructs of clinical trials and science journals.” For instance, companies must tell patients and doctors about safety issues related to off-label uses when it learns about them.
But FDA won’t let companies talk about the efficacy of off-label drug use because that would be “promotional.” For example, FDA would not let Allergan warn doctors that a commonly used dose of its cosmetic drug Botox, used off-label for juvenile cerebral palsy, was likely too high for that patient class, because it would have implied that the lower dose was safe and effective—a judgment that the FDA didn’t want to endorse. Instead, the FDA would allow only a much more generalized—and potentially less effective—warning regarding all juvenile uses.
The 1997 FDA Modernization Act (FDAMA), and implementing regulations, authorized companies to communicate scientific information on their medicines by distributing independent articles from medical journals. However, since companies sponsor “the lion’s share of all drug research, much of the relevant literature will be disqualified by the FDA’s rules. Even those articles that make the cut may be months or years behind the latest research and may touch only a small fraction of what a company may know about the off-label uses of its products.”
In addition, individuals attending scientific conferences who ask companies about off-label uses cannot receive an answer in a room full of other individuals—even when the answer would interest everyone in the room. Instead, the researcher will tell you to wait for a sidebar and then convey the information to you one-on-one because if “the researcher communicates to the broader audience, the government might deem that promotional.”
“Ironically, patients, doctors, insurers, and government researchers are free to say whatever they want about off-label uses—even to the point of saying that generic X is a better off-label treatment than branded drug Y—but the company isn't allowed to enter into that debate or dialogue. In practice, companies face a minefield without a map.”
“Companies such as Par Pharmaceuticals are even worried about talking to doctors about on-label indications, such as AIDS-associated wasting for one of their drugs, because so many doctors use the drug off-label for cancer. Just explaining the drug’s ability to stimulate appetite to a doctor who also treated cancer patients might, in itself, be evidence of the company's ‘intent’ to misbrand the drug and set the company up for government civil or criminal action.”
The most serious consequence of FDA’s onerous limitations on off-label drug promotion, amplified by the heavy hand of federal criminal law, is “the regime’s adverse impact on public health.” The authors maintained that “limiting companies’ ability to communicate with doctors about new advances in medicine serves patients poorly.” The American Medical Association (AMA) has called for streamlining the process for adding new indications to a drug's FDA-approved label, which would ameliorate the economic calculus that leads companies to forgo the multiyear, exceptionally expensive “supplemental new drug application” process for gaining a new label indication under current FDA guidelines.
While streamlining may take years, the authors suggest scientific knowledge be captured and disseminated through a “safe harbor” on off-label drug use and promotion that recognizes that patients and physicians are collaborators in developing information on when a drug works (or doesn't work), and for whom. Under such a safe harbor, “FDA would give companies the ability to communicate truthful science-based off-label information about their products to the physician community.”
However, companies would also be required to share comprehensive data on safety and efficacy for off-label uses with researchers, regulators, and insurers, who can then mine the information to rapidly validate emerging uses for established therapies. Instead of calling them off-label uses, they could be referred to as “emerging uses” the authors suggest.
The physician community is highly trained and sophisticated, and a supplemental warning accompanying such information—emphasizing that the use in question is not FDA-approved and that safety and efficacy information is still emerging from additional research—should enable physicians to evaluate the information with due skepticism.
Ideally, FDA would couple the safe harbor with a streamlined FDA system for adding (or removing) new label indications, including information for specific subpopulations of patients. This would provide a valuable tool for researchers and patients looking for objective information on new treatments as well as repurpose older medicines for new uses.
In the end, the authors assert that FDA “needs to allow those with the greatest knowledge of—and greatest incentive to disseminate information about—medical advances to communicate with prescribing physicians.” They noted that “Americans should be concerned that they may not get the medicines they need because their physicians are unaware of new medical applications that may help them, due to the heavy hand of federal criminal law discouraging truthful speech.”
Ultimately, “We shouldn't be telling companies to shut up when what they have to say can save lives—a message that Congress and the FDA should embrace.”
Future Legal Status of Caronia
As explained by the FDA Law Blog, the government has a few options for handling the Second Circuit’s decision. The government could petition the Second Circuit for a rehearing, or a rehearing en banc, or both. Rehearing is generally disfavored, and will not be ordered unless “en banc consideration is necessary to secure or maintain uniformity of the court’s decisions; or . . . the proceeding involves a question of exceptional importance.” Should the government proceed with a rehearing, it must file its petition within 14 days after the entry of judgment, which occurred on December 3, 2012. Therefore, the deadline for this petition is December 17, 2013.
Alternatively, the government may petition for writ of certiorari to the United States Supreme Court. A writ of certiorari is not a matter of right, but of judicial discretion, and the Court may consider granting certiorari if a “Circuit Court decision conflicts with that of another Circuit Court on the same ‘important matter.’”
The petition must be filed with the Supreme Court clerk within 90 days of entry of the judgment. Therefore, if no petition for rehearing or rehearing en banc is filed, the government must file a writ of certiorari by March 4, 2013. If the government petitions for a rehearing and/or en banc, then the time to file a writ of certiorari is 90 days from the date of the denial of the rehearing. Even if the Supreme Court grants review, it may dispose of the case by summary affirmance or reversal, or by simply vacating the judgment below and remanding for further proceedings.