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Government seeks to limit First Amendment application to False Claims Act under Caronia

Posted: March 28, 2015

Off-label prescriptions are common among physicians, occurring between 15 percent and 50 percent of the time for any given drug.  However, under the False Claims Act (“FCA”), a non-healthcare provider can violate the FCA by engaging in off-label marketing that causes or induces physicians to prescribe drugs for non-FDA approved uses to patients using Medicare, Medicaid or other government programs.  

In 2012, however, in U.S. v. Caronia, the Second Circuit ruled that off-label promotion by an individual may be constitutionally-protected commercial speech if it is truthful and non-misleading.  In Caronia, a pharmaceutical company employee who organized speaker programs was convicted of conspiring to distribute a misbranded drug in interstate commerce.  The drug was approved for treating adults up to age 65 for certain conditions associated with narcolepsy.  However, the drug also demonstrated effectiveness for other indications, which were not approved by the FDA.  Caronia was recorded advising physicians that the drug could also be used to treat a variety of off-label conditions and that it was effective in an increased age demographic.  Subsequently, the Government brought criminal charges against Caronia for marketing a misbranded drug in violation of the Food, Drug and Cosmetic Act and for conspiring to market a misbranded drug, arising from the off-label promotion.  After evidence demonstrated the truthfulness of Caronia’s statements, the court held that the statements were protected commercial speech. 

To overcome this broad First Amendment protection established in Caronia, the Government now frequently pleads that off-label marketing was either false or misleading.  In an attempt to further distance itself from Caronia, the Government filed a Statement of Interest late last year seeking to completely bar the First Amendment protections as applied to the FCA in U.S. ex rel. Cestra, et al. v. Cephalon, Inc.  In Cestra, the defendant filed a motion to dismiss, arguing, among other things, that its alleged off-label promotion with regard to FCA violations was protected speech under the First Amendment pursuant to Caronia.  In its Statement of Interest, the Government argued that an off-label promotion FCA case does not implicate the free speech concerns because under the FCA it is “irrelevant whether a party causes the submission of a false claim by words, by conduct, or by a combination of both.”  In other words, even though speech is the means by which the false claim is submitted, the First Amendment is not applicable.  The Government also seeks to limit the First Amendment defense to criminal prosecutions and eliminate it from the civil actions where the Government has recovered billions of dollars for off-label promotion of pharmaceutical products. 

The U.S. District Court for the Southern District of New York  has not yet ruled on the motion to dismiss in the Cestra case and it is unclear whether the court will address the issues raised in the Government’s Statement of Interest relating to FCA claims.  If the court finds the speech at issue false and misleading, the First Amendment concerns will be moot.  No other courts have directly addressed the application of the First Amendment to the FCA.  However, should the Government’s position be accepted, it will undoubtedly diminish the impact of the Caronia case.  If the court rejects the Government’s argument, it will be more difficult for the Government to establish FCA liability for the off-label promotion of pharmaceutical products and medical devices.  Many times such promotion is supported by studies establishing the efficacy and safety of such use – even without FDA approval.  In such cases, it may be difficult for the Government to prove that the commercial speech is false and misleading.  Saul Ewing will continue to monitor updates on this topic.