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Caronia decision shows the staying power of Sorrell v. IMS Health.
Don't bank just yet on putting your marketing muscle behind the safe and effective off-label uses of your FDA-approved drugs, or defending your next mass consumer class action on First Amendment grounds. But you can start giving those multi-billion dollar prospects some serious thought, because constitutional winds are blowing through the Code of Federal Regulations.
What got the storm brewing was a freshman state representative in Concord, NH, who, in May 2006, succeeded in persuading her colleagues to adopt the first law in the nation to stop pharmacies from selling information gleaned from prescriptions. Over time, this had become a very big business, since the information revealed the prescribing habits of doctors. Drug makers could use the information to guide their sales forces.
This legislator believed the information was driving up Medicare and Medicaid costs needlessly by helping pharma persuade doctors to prescribe the most expensive new medicines irrespective of their benefits, but she presented no research to determine whether this was so.
Data mining companies challenged the law on First Amendment grounds, arguing that mere fear of the truth cannot warrant its suppression, and that it was more likely that the information was improving health and safety than harming it. Sources talking to reporters, and pharmacies selling data to manufacturers, represent two examples of communicating information that could be used for important purposes; the First Amendment protects both.
Notwithstanding the challenge, Maine and Vermont passed similar laws and the data miners challenged them too.
Five years and many legal briefs later, the Supreme Court handed down Sorrell v. IMS Health in 2011, holding that Vermont's law (and by implication those of Maine and New Hampshire) did indeed violate the First Amendment, because the data it restricted was truthful, the state could not show its suppression prevented any harm, and the state had other means of keeping costs down without suppressing truthful speech.
Now the FDA is feeling the full force of that decision as it tries to defend its own truth-suppressing regime. In United States v. Caronia, the Second Circuit Court of Appeals relied on Sorrell in a 2-1 decision to invalidate the conviction of Alfred Caronia for conspiracy to introduce a misbranded drug into interstate commerce.
The result was all but mandated by Sorrell because Vermont and its supporters had argued that if Vermont's law could not stand, then neither could the FDA's off-label marketing ban. The argument was designed to scare the Supreme Court into upholding the Vermont law. It worked on just three of the nine justices. Justice Breyer, writing for himself and two others, warned in his dissent that "the same First Amendment standards that apply to Vermont here would apply to similar regulatory actions taken by other states or by the federal government acting, for example, through Food and Drug Administration (FDA) regulation."
Under Justice Breyer's view, the FDA can "control in detail just what a pharmaceutical firm can, and cannot, tell potential purchasers about its products." He added that "[i]f the court means to create constitutional barriers to regulatory rules that might affect the content of a commercial message, it has embarked upon an unprecedented task—a task that threatens significant judicial interference with widely accepted regulatory activity." The cited regulations were the FDA rules on off-label marketing.
Because Caronia challenged his conviction soon after Sorrell was decided, his lawyers had little work to do. They simply pointed to Justice Breyer's remarks forecasting invalidation of the FDA off-label rules.
But dissenting opinions are sometimes unreliable predictors of how the majority will rule in a different case. Dissenters often take the logic of the majority a step or two beyond where the majority would go. That might be the case here, because Caronia presents bad facts for defending the speech at issue. Indeed, the case might be regarded as presenting the worst facts imaginable for those hoping to dismantle the FDA's approach.
Caronia was marketing Xyrem, a powerful and fast-acting central nervous system depressant. It was approved by FDA to treat narcolepsy patients, but required a black box warning, the agency's most stern form of safety notification. Xyrem's active ingredient, gamma-hydroxybutryate (GHB), had acquired the infamous street names Grievous Bodily Harm, Liquid Ecstasy, and Georgia Home Boy due to its frequent use in rapes, and it had been federally classified as the "date rape" drug. Caronia's employer, Orphan Medical, Inc., had been acquired by Jazz Pharmaceuticals, a name suggesting that its products might have greater recreational than medicinal value.
To promote Xyrem, Caronia teamed with Peter C. Gleason, MD, a psychiatrist paid by Orphan to appear at its events for doctors. After the government secretly recorded Caronia and Gleason pitching Xyrem for off-label uses, a grand jury indicted Caronia, Gleason, and Orphan. Gleason and Orphan both pled guilty. Jazz agreed to settle, for $20 million, civil claims against it and criminal fines against Orphan. Gleason then committed suicide.
One of the few "good" facts in the case was that the government did not claim Caronia was trying to persuade doctors that Xyrem is a great icebreaker at frat parties. He asked them to consider it for insomnia, fibromyalgia, restless leg syndrome, and Parkinson's. The government argued Caronia was guilty only because the FDA had not approved those uses, not because the drug would be unsafe or ineffective for those uses or that this marketing was a subterfuge for the promotion of unsafe uses.
Neither the bad nor the good facts played much of a role in how the Second Circuit viewed the case. Judge Denny Chin, for the Caronia majority, ruled the conviction could not stand because the government had not shown how prohibiting manufacturers from promoting off-label uses would directly advance public safety or health given that physicians and academics lawfully can advocate those same uses. He also noted that the FDA could combat perceived ill effects of the promotion through its own warnings or requiring disclosures without restricting manufacturer speech.
Judge Chin also acknowledged the possibility that misbranding prosecutions still could be brought if the government relied on off-label promotion only as evidence of intent to misbrand rather than as a crime itself.
Judge Debra Ann Livingston dissented. She argued the FDA's regulations drive manufacturers to get FDA-approval for all new uses and that this itself prevents doctors from being duped by manufacturer claims that neither have been FDA reviewed nor approved.
Both judges applied a slippery First Amendment standard that gives judges a good deal of leeway to disagree, not the strict standard that ensures reporters cannot be gagged even when they have a story wrong or the story is expected to do much harm. The Supreme Court had used the same slippery standard in Sorrell to invalidate the Vermont law and ducked the broader question of whether the First Amendment requires the strict standard in all cases.
Caronia presents a case in which bad facts could push the Supreme Court in the FDA's favor if the slippery standard is used. If that happens, the Court finally may be forced to decide a question that has been long in the making—whether commercial speech warrants full First Amendment protection. Under strict scrutiny, speech is protected against regulation unless the regulation advances compelling interests and no other means are available to do so. Even a good deal of false speech is entitled to First Amendment protection under this standard.
Whether the Supreme Court would take this path is suggested by Justice Anthony Kennedy's opinion for the Sorrell majority. He wrote that 'a 'consumer's concern for the free flow of commercial speech often may be far keener than his concern for urgent political dialogue'...that reality has great relevance in the fields of medicine and public health, where information can save lives." He added, "The choice 'between the dangers of suppressing information, and the dangers of its misuse if it is freely available' is one that the First Amendment makes for us."
In the Caronia case, the government chose not to seek rehearing in the Second Circuit, and it now has through March 4, 2013 to decide whether to seek Supreme Court review. It would not be surprising if the government chooses to live with the lumps it got from the Second Circuit. It has a lot more to lose in the Supreme Court.
Thomas R. Julin, Jamie Z. Isani, and Patricia Acosta are lawyers in the Miami office of Hunton & Williams LLP. They designed and litigated the First Amendment challenge to the law invalidated by Sorrell v. IMS Health Inc.