FDA Declines to Appeal Big Drug-Marketing Setback in Second Circuit
By David Stout | January 25, 2013 8:20 pm

The Food and Drug Administration has decided not to appeal a serious setback involving “off-label” promotion of drugs, prompting speculation that the agency doesn’t want to risk a far greater defeat, one that could weaken its entire approach to drug regulation.

The setback was dealt last month by a panel from the United States Court of Appeals for the Second Circuit, which overturned the conviction of Alfred Caronia, a drug company representative who worked in Queens and Long Island. Caronia had been convicted in October 2008 on a misdemeanor charge that he made comments to a doctor about the anti-narcolepsy drug Xyrem and in so doing crossed a line by discussing various uses of the drug that had not been approved by the FDA.

Doctors are free to prescribe drugs in any manner they see fit. But drug companies and their sales representatives are not supposed to discuss such “off-label” use of drugs, even if, as in Caronia’s case, they are not making false statements about the drugs at issue.

The Second Circuit panel ruled 2-1 in Caronia’s favor, concluding basically that the defendant’s First Amendment free speech rights had been violated. One portion of the opinion declares that the government’s interpretation of the Federal Food, Drug and Cosmetic Act was illogical in that it “essentially legalizes the outcome — off-label use — but prohibits the free flow of information that would inform that outcome.”

But since the dissent was a spirited one, the FDA and Justice Department – which litigates on behalf of the FDA — might have been expected to appeal to the entire Second Circuit, or perhaps to the Supreme Court.  Since the agency did not appeal, the Second Circuit decision stands, although it applies only in New York, Connecticut and Vermont — and that may be exactly the point, some court-watchers believe.

Why would the government be content with one set of rules in three states and a different set in the rest of the country? Possibly because, as the dissenter in the Caronia case opined, the majority ruling “calls into question the very foundations of our century-old system of drug regulation,” and government lawyers fear the prospect of the highest court in the land upholding the Second Circuit.

The FDA issued a statement saying it “does not believe that the decision will significantly affect the agency’s enforcement of the drug misbranding provision of the Food, Drug & Cosmetic Act. The decision does not strike down any provisions of the FD&C Act or its implementing regulations, nor does it find a conflict between the act’s misbranding provisions and the First Amendment or call into question the validity of the act’s drug approval framework.”

After Caronia was convicted in the Eastern District of New York, he was sentenced to a year’s probation, ordered to perform 100 hours of community service and levied a “special assessment” of $25. So his case is not one in which a person’s life and liberty are at stake. What’s at stake may be the regulatory foundation alluded to above, and not incidentally millions of dollars in penalties the government collects  for violations related to drug marketing.

The government’s dilemma in the Caronia case was neatly framed by Alison Frankel of Thomson Reuters. As former health-fraud prosecutor Michael Loucks, now at Skadden Arps, told her: “There’s a downside to the pharmaceutical industry and to society if the Justice Department shies away from further review. It’s not helpful to drug or device companies to have a lack of clarity. It’s also not helpful to the Justice Department.”

Jeffrey Senger of Sidley Austin, a former deputy chief counsel at the FDA, told Frankel the agency’s decision to forgo further appeals was not surprising. “I think the government had a very substantial risk of losing at the Supreme Court if they had appealed,” he said.

Frankel noted that in a 2010 Vermont case the Supreme Court found that pharmaceutical marketing is a form of protected free speech.  That case involved pharmacy-prescription records rather than off-label marketing, so it and the Caronia case are not exactly parallel. But perhaps the Vermont result alarmed government lawyers anyhow.

For the moment, there does not appear to be a ruling from another federal circuit clashing with the Second Circuit decision in Caronia. Should such a conflict occur, the Supreme Court might indeed resolve it. But for now, the Caronia ruling applies just to New York, Connecticut and Vermont — quarantined, as it were.


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