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Article: January 2019: Off-Label Promotion After Caronia: Proceed with Caution

January 01, 2019
Business Litigation Reports

The United States Food and Drug Administration (“FDA”) has long taken the view that promoting drugs for non–FDA-approved uses—otherwise known as off-label marketing—can be proof of misbranding, a criminal offense. False or misleading advertising of a drug is by definition a form of misbranding under the Federal Food, Drug, and Cosmetic Act. 21 U.S.C. § 352(q)(1). Truthful, non-misleading off-label promotion can also be proof of misbranding, the FDA has argued, if it demonstrates that a drug is being sold for an unapproved intended use – another form of statutory misbranding. 21 U.S.C. § 352(f ) (1); 21 C.F.R. §§ 201.5. (Because the law concerning off-label marketing is virtually the same for drugs and devices we use those words interchangeably in this article.)

Recent legal developments have called into question the FDA’s long-standing position that truthful, non-misleading off-label promotion can be proof of misbranding. In 2012, the Second Circuit construed the misbranding statute not to criminalize truthful, non-misleading off-label speech “because such a construction … would run afoul of the First Amendment.” United States v. Caronia, 703 F.3d 149, 162 (2d Cir. 2012). The Justice Department did not petition for rehearing or a writ of certiorari, perhaps in the hope that future courts would read Caronia narrowly. Those hopes seemed dashed when, just three years later, a New York district court judge held that the government could not treat truthful, non-misleading off-label promotion as “the act upon which an action for misbranding is based.” Amarin Pharma, Inc. v. FDA, 119 F. Supp. 3d 196, 226 (S.D.N.Y. 2015). The government did not appeal.

President Donald Trump’s election appears likely to give pharmaceutical companies even more protection. Most expect his two Supreme Court appointees, Justices Neil Gorsuch and Brett Kavanaugh, to uphold the Second Circuit’s reasoning in Caronia if the issue ever arises. What is more, the new FDA head Scott Gottlieb has, as a private citizen, written extensively in favor of permitting off-label promotion. Consequently, many have predicted that courts will no longer tolerate off-label marketing prosecutions, and the federal government will not bring them.

The truth is not so simple. Prosecutors have in some cases persuaded courts to read the First Amendment protections in Caronia and Amarin narrowly. In other cases, they have argued that the challenged off-label speech is false or misleading and therefore not protected at all. Meanwhile, the FDA’s guidance for companies has not undergone material change, and pharmaceutical companies have continued to pay tens of millions of dollars in fines as part of plea agreements and False Claims Act (“FCA”) settlements. All in all, pharma companies still need to be as careful as ever when engaging in off-label speech.

Based on our experience, we present below some instructive background and practice pointers that we hope will be useful in managing litigation risks from off-label speech.

Limits of the First Amendment

First Amendment protections are at their height when a misbranding case rests solely on off-label speech. Caronia vacated the defendant’s conviction because the trial record showed that the prosecution had treated the “speech itself” as “the proscribed conduct,” 703 F.3d at 161, and the government had not argued that the speech was false or misleading. In Amarin, too, the pharma company’s “conduct consist[ed] solely of truthful and non-misleading speech.” 119 F. Supp. 3d at 198.

But neither case offered much guidance about the admissibility of truthful, non-misleading statements in misbranding cases that are not based on those statements alone. Nor did either case help explain when off-label statements qualify as truthful and non-misleading. As a result, prosecutors have continued to offer off-label speech as evidence of misbranding in post-Caronia enforcement actions.

Some courts have allowed prosecutors to use truthful, non-misleading speech as evidence of a drug’s intended use. In United States v. Facteau, for example, the court instructed the jury that it could not convict for misbranding “based solely on truthful, non-misleading” off-label promotion, but such statements could “constitute evidence of an intended use.” Jury Instructions at 26, 27, United States v. Facteau, No. 1:15-cr-10076 (D. Mass. July 15, 2016). The Second Circuit may have also endorsed this interpretation of Caronia in a 2016 opinion. See U.S. ex rel. Polansky v. Pfizer, Inc., 822 F.3d 613, 615 n.2 (2d Cir. 2016). The prosecution in the Facteau case relied on a combination of circumstantial evidence and arguably truthful, non-misleading speech to prove that the defendants misbranded a medical device by selling it for an unapproved intended use. The government in that case offered as circumstantial evidence: that the device was not actually designed or tested for its approved use; that there was no clinical data showing it actually worked for its approved used; that the company knew doctors were not willing to use it for its approved use; and that the company gave its sales force no tools to sell the device for its approved use. It also offered speech evidence in the form of: internal and external company emails acknowledging that the device did not seem to serve its on-label use; a conference call by the company’s CEO to sales personnel describing the device’s off-label uses; physician presentations about off-label use of the device at a company-sponsored medical conference; and marketing materials that arguably highlighted the device’s off-label uses.

To be sure, not all courts may accept the limited view of First Amendment protection for off-label speech advocated by the government in Facteau and other cases. A federal court in Texas recently instructed the jury that it could not consider any truthful, non-misleading promotional speech as evidence of intended use. Final Jury Instructions at 12, United States v. Vascular Solutions, Inc., No. 5:14-cr-00926 (W.D. Tex. Feb. 25, 2016) (“VSI”). But this case might prove the odd one out, as the government agreed to this instruction; the court never held that it was necessary. And prosecutors might prove less accommodating in future cases.

The government also has tried to avoid First Amendment limitations on off-label marketing prosecutions by seeking to expand the universe of off-label statements that qualify as “misleading.” Consider three recent examples. The Facteau prosecutors cited statements by salespeople attesting that off-label uses of the device were safe and effective while omitting that the studies behind those statements had limited sample sizes and mixed results. Similarly, in United States v. Aegerion Pharms. Inc., Case No. 17-cv-10288 (D. Mass), the defendant company was accused of training its sales staff to be purposefully vague about the drug’s limited intended use without expressly lying, so that doctors would mistakenly prescribe it for off-label use. Aegerion pleaded guilty. Finally, the VSI indictment alleged that the defendants promoted a device’s off-label use without mentioning potential safety problems.

A recent FDA guidance document provides even more insight into the government’s expansive definition of “misleading” speech. It states that promotional statements are misleading if they:

  • omit “material” facts about the drug or device, including risk information;
  • “lack appropriate evidentiary support”; or
  • overstate the results from clinical trials.

FDA, Medical Product Communications That Are Consistent with the FDA-Required Labeling—Questions and Answers 11–15 (June 2018). According to the FDA, marketing material might be misleading if it publicizes a study’s results while neglecting to mention (1) the study’s sample size; (2) its failure to test for a false positive rate; or (3) other findings that are inconsistent with the study. Even indirect misdirection—like implying a statistically rigorous conclusion where none exists by publicizing p-values for a defective study—may also be considered misleading by the government.

In short, Caronia and Amarin did not spell the end of off-label marketing prosecutions, as many commentators and practitioners thought they would. DOJ and FDA so far have successfully limited the reach of those decisions by defining “misleading” speech broadly and by arguing that even truthful, non-misleading speech can constitute evidence of misbranding as opposed to the act of misbranding itself. The upshot is that companies facing off-label marketing actions should still use every strategy available to avoid a finding that they misbranded a drug.

Strategies for Fighting Misbranding Actions

Defendants can make a variety of arguments at the pleading stage to dismiss or at least narrow government claims. These include:

  • Attacks on the legal definition of “intended use” as unconstitutionally vague. The definition, which appears in the Code of Federal Regulations, states that “intended use” is the “objective intent of the persons legally responsible for the labeling of drugs” and lists a number of ways in which that “objective intent” may be “shown” without ever defining the somewhat enigmatic expression “objective intent.” 21 C.F.R. §§ 201.128, 801.4,
  • Motions to strike from the charging document – and exclude as evidence – statements about off-label uses by company personnel that were never intended for the ears of potential customers (g., internal company emails, diary entries, boardroom conversations, etc.).
  • Motions to strike from the charging document – and exclude as evidence – all statements about off-label uses that were truthful and non-misleading.

Courts have largely rejected these arguments so far, but that might change if, as many anticipate, the federal bench becomes increasingly libertarian and protective of free speech.

Defendants have even more options for fighting misbranding charges at trial. Among the most successful strategies has been turning the tables on the FDA. In VSI, for example, an FDA witness was forced to admit that FDA letters clearing a device for its on-label use could be interpreted as covering the alleged off-label use as well. The government tried to rebut that argument by pointing to VSI’s repeated, failed attempts to obtain express FDA clearance for the off-label use, but the defendants characterized those attempts as unnecessary precautionary measures on their part. They were acquitted. In Facteau, the defendants argued they had no intent to defraud the FDA despite knowing their device was being used entirely off-label because they communicated frequently with FDA about their desire to clear the device for the off-label use and FDA knew doctors were using it off-label. That was enough for them to beat felony misbranding and adulteration charges, albeit not the misdemeanor versions of those crimes.

To avoid the stigma and risk of indictment, a company can seek to enjoin the FDA from prosecuting it for particular off-label statements. Thatwas the strategy in Amarin. The FDA threatened Amarin with prosecution if it made several truthful statements about a study showing potential off-label uses for a drug. Amarin sued, and the court enjoined the government from prosecuting Amarin for those statements. The FDA later agreed, as part of a consent decree, to respect Amarin’s right to engage in truthful, non-misleading off-label marketing for the drug at issue, and to set up a process to pre-clear Amarin’s marketing statements. Pacira Pharmaceuticals also sued preemptively to protect marketing statements that, it claimed, tracked its on-label use; the FDA settled before the court could decide the case.

This approach is no panacea. A company cannot preemptively sue unless it has a concrete and imminent fear of FDA enforcement action. Amarin met this standard because the FDA had threatened prosecution ten days before it sued, and the court found that threat credible because of the government’s many recent misbranding prosecutions. Pacira also predicated its suit on a contemporaneous FDA warning letter. Without similar threats, pharma and device companies might have trouble obtaining injunctions for lack of standing.

The company also might lose on the merits. The Amarin Court greenlighted most of the proposed off-label statements, but the FDA had already conceded that those statements were mostly true and non-misleading. The parties disputed the precise wording of just three statements. The court split the baby, siding with each party on one sentence apiece and drafting its own compromise language for the third. Yet even then, the court emphasized that Amarin had to ensure that its statements remained accurate if new data became available. As a result, companies that try to emulate Amarin’s strategy may purchase, for all their legal costs, only a partial, temporary victory. And perhaps not even that if the court defers to the FDA’s judgment.

Managing Litigation Risk

The Trump administration announced this year that it will focus healthcare fraud enforcement resources on companies that make false or misleading off-label statements, harm patients, or pay kickbacks to doctors. These types of cases seldom implicate free speech and therefore should insulate the government from First Amendment objections. The Department of Justice has recently taken aim at companies that flout their drugs’ Risk Evaluation and Mitigation Strategy requirements. Both Aegerion and Novo Nordisk admitted to such infractions in 2017. The former paid $40 million in fines, the latter $58 million.

But pharma companies that do not fit this profile should not assume they are in the clear. Enforcement priorities can change before statutes of limitations run out. And as discussed above, whether an off-label statement is “misleading” is often in the eye of the beholder. Besides, the federal government is not the only potential adversary. Anyone can bring a qui tam action under the FCA. Insurance companies have also sued pharma companies for off-label marketing under the Racketeer Influenced Corrupt Organizations Act (“RICO”). And because RICO and the FCA offer the prospect of treble damages, lawyers have plenty reason to bring even longshot claims under both statutes. Put another way, even pharma companies that think they have done nothing wrong can face real legal risks.

Quinn Emanuel is well equipped to help its clients defend against allegations of off-label marketing, payment of illegal kickbacks, and product defects. Our government investigations and healthcare litigation teams have substantial experience in these areas, including in many of the cases cited in this article. More than 130 of our litigators, moreover, hold degrees in the hard sciences, and more than 20 are former prosecutors. And of course, no firm can match our unparalleled trial expertise.