US v. Caronia, One Year Later: FDA’s Position on Off-Label Promotion Remains the Same, But Changes are Looming

The Washington Legal Foundation (WLF) recently presented “US v. Caronia, One Year Later: The First Amendment and Federal Oversight of Off-Label Drug and Device ‘Promotion.'” When US v. Caronia came out in December 2012, we wrote that many stakeholders believed it would usher in greater First Amendment freedom with regards to off-label promotions. The government disagreed. Soon after the Caronia opinion, the Food and Drug Administration (FDA) announced that the ruling would not affect the agency’s enforcement. Coleen Klasmeier of Sidley Austin LLP, Jonathan Diesenhaus of Hogan Lovells US LLP, and Geoffrey Levitt of Pfizer, Inc., shared their beliefs that the FDA’s position is not sustainable. The panel brought their unique backgrounds to color the discussion of why the FDA’s current off-label scheme is misdirected and ripe for a change.

Background

In US v. Caronia, the Second Circuit overturned the conviction of a pharmaceutical sales representative who had promoted off-label uses of Xyrem, a prescription drug manufactured by Orphan Medical, Inc. 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.” 

According to the Caronia majority, convicting the representative for off-label marketing that was not untruthful or misleading would impinge the representative’s First Amendment rights. Importantly, however, the government did not allege fraudulent promotion. The Second Circuit even stated: “of course, off-label promotion that is false or misleading is not entitled to First Amendment protection.”

Shortly after the Second Circuit handed down its opinion, the FDA stated that it would not appeal the decision to the Supreme Court. Furthermore, the FDA announced that it did not believe that the Caronia decision would significantly affect the agency’s enforcement.

What looked like a major decision on FDA’s enforcement of off-label speech by a prominent appeals court turned out to be just a blip on the radar.

FDA’s Missed Opportunity to Modernize

Coleen Klasmeier believes the FDA erroneously interpreted Caronia to specifically minimize its impact, and confined the ruling to its “narrowest possible factual ground.” More egregiously, according to Klasmeier, the FDA missed its chance to keep up with the evolving healthcare landscape. “The healthcare delivery system has changed,” she says. There has been an “explosion of information sources available to patients” and the FDA missed a “much-needed, meaningful opportunity to consider the broad implications of the First Amendment principle.”

The FDA’s position on Caronia also fails to acknowledge the “huge disconnect” between the development of the doctrine in the courts and “the way prosecutors are making day-to-day decisions.” Klasmeier noted: “Most legal issues presented by the cases never get ventilated in court or any open legal forum.” Settlements “behind closed doors” do not bring “anything like the nuanced interpretation into settlement if there were more FDA lawyer involvement.”

Klasmeier likened the FDA’s treatment of the Caronia decision to their recent social media guidance:

In the weeks following Caronia, “FDA advanced a very wooden and expansive pro-regulatory interpretation of a particular rule and then dialed it back under the guise of enforcement discretion.” She notes: “That’s exactly what we saw the agency do in the social media draft guidance and it continues this proliferation of FDA’s putative exercises in enforcement discretion, which is really just a way of pushing a very aggressive interpretation of statutory and regulatory authority while depriving manufacturers of the ability to make any kind of particularized or concrete objection.” This is so because “as a practical matter there is nothing being regulated, even though the premise of enforcement discretion is that there is something to be enforced.”

After Caronia, Government looks for “Plus Factors”

Jonathan Diesenhaus spoke from the perspective of a former senior trial counsel in the Civil Division of the Department of Justice (DOJ), and a key developer of False Claims Act (FCA) theories “that opened the floodgates to the off-label promotion theory.”

Like Klasmeier, Diesenhaus believes Caronia has been transformed into a narrow decision: “A prosecutor elected to pursue A sales rep for speech alone.” The government charged “speech alone,” Diesenhaus stressed again, and he believes prosecutors “won’t make that mistake again.” They look for “speech plus conspiracy and other misconduct.” In his view, prosecutors will not pursue honest off-label conduct. Furthermore, the highly lucrative qui tam lawsuits only attach when there is a false claim.

Caronia focused on speech, but Diesenhaus stated that the government now pursues cases that pair speech issues with other types of misconduct—”plus factors”— that may point to a companies’ decision to promote off-label use. Prosecutors “use circumstantial evidence to pile eggs to show a course of fraudulent dealings,” Diesenhaus stated. Government press releases on off-label cases are illuminating in this regard, because they always speak to the fraud and alleged kickback relationship involved.

However, Diesenhaus believes that the government will always have an improper relationship “plus factor” to turn to. “Commissioned sales, in the eyes of the government, create an opportunity for fraud,” he states. The government believes monetary incentives discourage reps from “open and honest communication with physicians.” He notes that most government actions, including Corporate Integrity Agreements, focus on trying to “rid industry of the incentive compensation.”

It will be interesting to see whether GlaxoSmithKline’s decision to abandon prescription sales targets and incentive pay will lead other companies to act the same. If so, what would the enforcement landscape become?

Caronia Removes the Liability for Sales Reps

Diesenhaus states that Caronia does change the legal landscape for sales representatives. A drug rep whose only conduct is speech—and whose speech is not directly false—will not be prosecuted even if the speech is off-label.

In Diesenhaus’ view, this leaves two other actors exposed: the corporation and the executives, “who face risks that the rep doesn’t face” after Caronia. Diesenhaus stated: “As the world looks for individuals to be held responsible for large fraud schemes, the push is going to get bigger for senior executives to be prosecuted under strict liability.” This is potentially very worrisome because sales reps are unsupervised “99% of the time.”

Reps will not be prosecuted for their speech, yet control much of the company’s destiny regarding industry-physician relationships.

FDA Position on Off-Label Evidence is Overly Limiting and Unclear

Geoffrey Levitt of Pfizer agrees with Klasmeier that the FDA limits important First Amendment speech. The FDA prohibits companies from speaking to any uses of their drugs that do not fall within loosely defined safe harbors. They require compliance with the “substantial evidence doctrine,” which requires two adequate and well-controlled clinical studies. This rigid view denies other types of evidence a company may have to support an off-label use, such as “observational studies, post-hoc studies, meta-analysis, or comparative effectiveness data.”

“The logic of Caronia…is that truthful and non-misleading speech should not be prohibited,” Levitt stated. However, “the FDA headed in the opposite direction and seems to be doubling down on rejection of these other types of data.” The FDA opinion, then, is that “we do not trust observational studies, post-hoc, and comparative analyses.”

Off-label cases dealing with fraud necessarily revolve around a concrete definition of a “false statement.” Coleen Klasmeier believes that in the scientific sphere, regulation should offer more breathing. “Right now the FDA picks a moment in time where the government wins because someone states the minority rule…Scientific conversation should is not amenable to one conversation.”

Levitt thinks a less rigid standard is appropriate given the First Amendment and, more importantly, public health concerns. He wants messages about medicines to be communicated truthfully with appropriate substantiation and disclaimers.

When Will FDA Expand its View on Promotion?

Klasmeier believes the most promising case for First Amendment off-label promotion rights revolves around the “asymmetry problem” within comparative effective research (CER). The future of healthcare treatment involves collaborations and sharing of information. However, right now “out of all the participants in the healthcare arena, manufacturers are uniquely disabled from commenting on CER issues because the regulations prohibit them from doing so.”

The presenters pondered “potentially the most appealing manifestation” where it would be hard for FDA to prosecute off-label speech. The case would be where a major drug store chain or pharmacy benefit organization comes out with analyses that purport to show that a manufacturer’s drug is less safe than a competitor, and the manufacturer has observational data, meta-data, and other data to refute that, but the manufacturer’s data does not rise to the substantial evidence standard. Thus, the manufacturer would be unable to us it. The panel note that this may be grounds for overturning the substantial evidence 

Right now there exists a paradox where anyone can talk about the efficacy of a drug’s off-label use, except for the manufacturer—the actor with the most information about that drug. With the insights of the Caronia discussion in mind, it will be interesting to see both the FDA’s and the courts’ willingness to reconsider the off-label arena.