By John R. Fleder –

We have extensively written about the “Park Doctrine” (see, e.g., here and here)  In United States v. Park, 421 U.S. 658 (1975), the Supreme Court authorized the government to criminally prosecute individuals for violations of the FDCA even if a corporate official is unaware of the violation, if the individual was in a position of authority to prevent or correct the violation and did not do so.

The Park Doctrine is also referred to as the Responsible Corporate Officer Doctrine.  It has resulted in hundreds of criminal misdemeanor prosecutions of corporate officers, without allegations by the government that the defendant intended to violate the FDCA or even knew about the alleged violations.  However, these prosecutions largely disappeared many years ago when the Justice Department focused its resources on prosecuting individuals under the felony provision of the FDCA, which requires that the government prove that the defendant violated the FDCA with the intent to defraud or mislead.  Beginning in early 2010, FDA and DOJ made public statements indicating that the government intended to resurrect the Park Doctrine.

There have been some criminal prosecutions in recent years in which the government charged individuals with misdemeanor violations of the FDCA.  It seemed clear from the public record in those cases that the government believed that the companies which employed the individuals had engaged in felony conduct.  In contrast, we saw very few, if any, misdemeanor cases where the public record did not reflect that the government believed that at least one person at a company had engaged in felonious conduct.  However, a 2012 prosecution that has largely flown under the public radar screen suggests that the government may have indeed prosecuted someone even though there was no evidence that anyone involved in the case had committed a felony.

On February 10, 2012, the United States Attorney for the Northern District of Texas filed a two count criminal Information against Gary D. Osborn and his company, Apothécure, Inc.  United States v. Osborn, No. 3:12-cr-00047.  Apothécure was a compounding pharmacy and Mr. Osborn was its owner, president, pharmacist-in-charge, and sole director.  The Information alleged that Mr. Osborn was the person responsible for the business activities of Apothécure, including the oversight of employee training and the quality control of the drugs that were compounded.

The Information alleged that Apothécure sold vials of injectable colchicine to a medical center in Portland, Oregon, which provided the product to three patients who died in March 2007, after being administered the drug.  The government alleged that drugs from the shipment to Portland were in some instances super-potent and in other instances were sub-potent.

The Information alleged that Mr. Osborn by reason of his position at the company, had the responsibility to prevent the FDCA violations.  It also alleged that Mr. Osborn instructed employees as to how to perform their duties, including ensuring that pharmacists and pharmacy technicians were properly trained and supervised.  However, the Information contained no allegation that Mr. Osborn played any direct role in the shipments that the government alleged were illegal.  Nor did the Information contain any suggestion that FDA had ever provided a prior warning to either Apothécure or Mr. Osborn that they were violating the FDCA.

On April 24, 2012, the government filed a Factual Resume and a Plea Agreement.  The government alleged that Mr. Osborn was a responsible corporate officer of Apothécure.  It also alleged that he had the responsibility and authority to prevent the FDCA violations.  Yet again, the government did not allege that Mr. Osborn was directly involved in the FDCA violations or the death of the patients, or that he even knew about the violations before they occurred.  The parties agreed that the proper offense level under the U.S. Sentencing Guidelines was 4.  An offense level of 4 normally results in probation for a defendant with no prior convictions but the sentencing judge is authorized to impose a term of incarceration.  On October 3, 2012, the Court imposed a $100,000 fine on Mr. Osborn and placed him on probation.  He was not sentenced to serve any jail time.

The public record does not reflect all the pleadings and papers that the parties submitted to the court.  For example, the record does not include the presentence report applicable to Mr. Osborn.  Nor does it include the government’s actual sentencing recommendation.  These documents presumably would provide a more complete factual picture than one can glean from the public record.

It is impossible to determine from the public record if the government investigated Mr. Osborn for possible felony violations of the FDCA.  There is no indication that the government had any evidence that Mr. Osborn engaged in felonious conduct.  Nor is there any indication that Apothécure or anyone affiliated with the company engaged in felonious conduct or had ever received any prior warning from FDA before the shipment that allegedly caused the death of patients.

This public record suggests that Mr. Osborn was prosecuted under the Park Doctrine in the manner that the government brought criminal cases twenty to thirty years ago, but not often after that time.  The government believed that Mr. Osborn was “responsible” for patient deaths, although there is no indication that he personally had any involvement in those deaths.  Although most old school Park cases involved situations where FDA had previously warned individuals about violative conditions, there were a number of old cases where individuals were prosecuted where FDA believed that the defendant had caused deaths or serious injury even without a prior FDA warning.

The Osborn case certainly demonstrates the discretion that is afforded to the government in deciding the people to be prosecuted under the Park Doctrine.  For that reason, company executives in industries regulated by FDA are presented every day with decisions and actions that could result in the government choosing to criminally prosecute a person based on wholly undefined standards.  One can only hope that the government will exercise that discretion wisely and carefully to avoid situations where some individuals are prosecuted for doing the very same things as others who are not prosecuted.

By Larry K. Houck –

The Drug Enforcement Administration (“DEA”) published its long awaited notice of proposed rulemaking to implement the Secure and Responsible Drug Disposal Act of 2010 (“Disposal Act”).  77 Fed. Reg. 75,784 (Dec. 21, 2012).  Interested persons should submit electronic comments on or before February 19, 2013.  Written comments must be postmarked on or before that date.

Congress enacted the Disposal Act on October 12, 2010.  Prior to enactment, the Controlled Substances Act  (“CSA”) and DEA regulations provided few options to ultimate users (e.g., patients) who wanted to dispose of unused, unwanted, or expired controlled substances.  Individuals were limited to destroying the substances themselves, surrendering the drugs to law enforcement agencies or seeking assistance from the local DEA office.  These restrictions invariably led to increased potential diversion or misuse from drugs being thrown away in trash receptacles or accumulating in household medicine cabinets.

The Disposal Act and DEA’s proposed regulations seek to establish controlled substance diversion prevention parameters that will encourage public and private entities to develop methods for collecting and destroying controlled substances that are secure, convenient, and responsible.  A second goal is to decrease the amount of controlled substances released into the environment, especially into water and sewage systems.  DEA believes that the new regulations will reduce the supply of unused controlled substances in households thereby reducing the risk of diversion or harm.

The proposed regulations contain sweeping changes that reorganize and consolidate existing requirements for disposal of controlled substances, including the role of reverse distributors.   The proposed regulations also expand the entities to whom ultimate users may deliver unused, unwanted, or expired controlled substances for disposal, and the methods by which the controlled substances may be collected.  Authorized entities may voluntarily administer any of the authorized collection methods but are not required to do so.

Disposal by Ultimate Users.  DEA is proposing three voluntary disposal options for ultimate users: take-back events, mail-back programs and collection receptacles.  Individuals entitled to dispose of deceased patients’ property will also be authorized to dispose of the controlled substances by utilizing the three options.

DEA is proposing to continue to authorize federal, state, tribal, and local law enforcement agencies, independently or in partnership with private entities or community groups, to hold take-back events and administer mail-back programs.  DEA also proposes to permit manufacturers, distributors, reverse distributors, and retail pharmacies to obtain DEA authorization to receive controlled substances from ultimate users or long term care facilities for the purpose of destruction.  DEA registrant may become “collectors” and would be authorized to conduct mail-back programs.  However, mail-back programs must provide specific mail-back packages to the public at no cost or for a fee, and collectors conducting mail-back programs must utilize an on-site method of destruction.  Collectors must also comply with specific security and recordkeeping requirements. (new § 1317.50) 

The proposed regulations would authorize law enforcement agencies to maintain collection receptacles at that their physical location and would authorize collectors to maintain collection receptacles at their registered locations.  Retail pharmacies that are authorized collectors may maintain collection receptacles at long term care facilities (“LTCFs”).  LTCFs are permitted to dispose of controlled substances on behalf of ultimate users who reside or have resided at that LTCF only through a collection receptacle maintained by a retail pharmacy at that LTCF.

DEA also proposes to allow all controlled substances collected through take-back events, mail-back programs, and collection receptacles to be comingled with non-controlled substances. Collectors would be restricted from individually counting or inventorying controlled substances that they collect. 

Disposal by Registrants and Reverse Distributors.  DEA is proposing to delete 21 C.F.R. § 1307.21, the existing regulation on registrant disposal, and incorporate requirements on disposal procedures, recordkeeping and security in a new part 1317.  DEA proposes to modify existing DEA Form 41, “Registrants Inventory of Drugs Surrendered”,  for documenting the destruction of controlled substances among registrants and to account for registrant destruction of controlled substances collected from ultimate users and other non-registrants.

DEA is also proposing to revise regulations for reverse distributors.  Reverse distributors acquire controlled substances from other registrants and may also be authorized as collectors, so they accumulate greater quantities of controlled substances for destruction than other registrants.  DEA proposes to revise definitions related to reverse distribution and add new acquisition procedures, recordkeeping and security requirements.

DEA is proposing to delete the existing regulation on return and recall (21 C.F.R. § 1307.12) and incorporate requirements into a new part 1317.10.  The new regulations would clarify which registrants are authorized to handle returns and recalls and enhance recordkeeping and ordering requirements. 

Methods of Destruction.  DEA is proposing a “non-retrievable” standard of destruction for persons who destroy controlled substances.  DEA will not require a particular method of destruction, so long as the controlled substance is rendered “non-retrievable.”  This standard will allow public and private entities to develop a variety of destruction methods that are “secure, convenient, and responsible, consistent with preventing the diversion of such substances.”

We anticipate focusing on specific elements of DEA’s proposed rulemaking in future blog posts.

By Ricardo Carvajal –

Signaling potential movement on an issue that has bedeviled industry, FDA published a notice requesting comments “relevant to conducting a risk assessment to establish regulatory thresholds for major food allergens.”  Undeclared major food allergens continue to be one of the two principal causes of reportable food incidents, typically leading to Class I recalls.  As acknowledged in the notice, the “establishment of regulatory thresholds or action levels for major food allergens would help [FDA] determine whether, or what type of, enforcement action is appropriate when specific problems are identified.”

FDA’s notice suggests other ways that establishment of thresholds could be helpful (i.e., by helping to “establish a clear standard for evaluating claims in FALCPA petitions” for exemption from allergen declaration, and by helping industry “conduct allergen hazard analyses and develop standards for evaluating the effectiveness of allergen preventive controls” – actions that will be required under FSMA).  However, the most immediate and tangible benefits could be realized in the context of enforcement.  This point is more clearly recognized in FDA’s accompanying release (“If safe thresholds can be established, the FDA could more effectively determine the appropriate corrective action to unintentional allergen contamination issues…[and] better respond to situations where undeclared allergens are found in foods”).  The release also recognizes that the absence of thresholds might be unnecessarily constraining consumer choice. 

FDA’s notice hints at the “significant advances in both scientific tools and data resource related to food allergens” that have taken place in the six years since the agency’s Threshold Working Group issued a report summarizing its evaluation of approaches for establishing thresholds.  The agency evidently felt the time was ripe to ask for data that will support its conduct of a quantitative risk assessment.  The notice asks for comments (including data) on the following issues:

1. How should we define “an allergic response that poses a risk to human health?”
2. Which major food allergens are of greatest public health concern and what is the size of the at-risk population?
3. How should clinical dose distribution data be used when establishing regulatory thresholds for the major food allergens?
4. What approaches exist for using biological markers or other factors related to the severity of allergic responses in a threshold risk assessment?
5. What data and information exist on dietary exposure patterns for individuals on allergen avoidance diets?
6. What data or other information exist on current levels of exposure associated with the consumption of undeclared major food allergens in packaged foods?
7. What other information or data should we consider in establishing regulatory thresholds for major food allergens?

The scope of the above issues and the history of other risk assessments suggests that any risk assessment for establishing regulatory thresholds will take considerable time and effort to complete.  Given the high stakes, this initiative appears worthy of strong industry support.  Comments are due February 12.

By Jennifer D. Newberger & Jeffrey N. Gibbs –

A quick Google search of “dog trained to identify medical conditions” indicates that, around the world, dogs are already working with people to help sniff out certain medical conditions.  For example, in the United Kingdom an organization called “Medical Detection Dogs” works “to train specialist dogs to detect the odour of human disease.”  Those dogs have been trained to identify the odor associated with low blood sugar in diabetics, as well as to assist in conditions such as Addison’s disease, pain seizures, and narcolepsy.

On December 13, 2012, BMJ published an article titled “Using a dog’s superior olfactory sensitivity to identify Clostridium difficile in stools and patients: proof of principle study.”  This study took place in two hospitals in the Netherlands.  A two-year old beagle, Cliff, was trained to identify the smell of C difficile and tested on 300 patients (30 with C diff infection and 270 controls).  The dog, trained to sit or lie down when C diff was detected, was guided along the wards by its trainer, who was blinded to the participants’ infection status.  Cliff was able to correctly identify 25 of the 30 cases (sensitivity 83%,) and 265 of the 270 controls (specificity 98%).  This compares favorably with the diagnostic performance of some diagnostic kits.

Cliff’s success at detecting a highly transmissible and dangerous infection, and use of dogs to assist in caring for individuals with chronic conditions, potentially offers great promise for the management of many diseases.  The question arises, however, whether FDA would appreciate the potential of man’s best friend, and let dogs be dogs, or if it could, and would, stretch its authority to actually attempt to regulate dogs as medical devices when they are “intended” for such medical purposes.

The question is not necessarily as far-fetched as it may seem at first glance.  Keep in mind that FDA currently regulates maggots and leeches as medical devices. If they fit under the statutory definition of a device, why couldn’t a dog that is trained and promoted for its ability to sniff out C diff?  While this might seem like a shaggy dog joke, it is both a potentially vexing FDA issue, and a great law school exam question. 

Let’s hope we never have to engage with FDA on this issue and, as they say, let sleeping dogs lie. 

By Riëtte van Laack –

District Judge Susan Nelson of the District of Minnesota recently concluded that FDA is best qualified and has been authorized by Congress to decide whether Milk Protein Concentrate (“MPC”) is a “proper, permitted ingredient in yogurt.” 

Earlier this year, on March 30, 2012, plaintiff Martin Taradejna filed a complaint alleging that the marketing of Yoplait Greek yogurt containing MPC violated several Minnesota consumer protection statutes, and failed to comply “with legal and regulatory rules” defining “yogurt.”  Specifically, Plaintiff alleged that the addition of MPC was not permitted under the standard of identity for yogurt.  Pointing to various publicly available statements and a proposed rule by FDA (see our prior post here), defendants General Mills and Yoplait USA argued that according to FDA yogurt may contain MPC.  Defendants filed a motion to dismiss arguing, among other things, that primary jurisdiction barred Taradejna’s claims.

As explained by the court, the primary jurisdiction doctrine “comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body.”  The Court concluded that the question whether MPC may be added to yogurt falls squarely within FDA’s jurisdiction and that the Agency is in the best position to resolve any ambiguities about the standard of identity for yogurt.  The Court further pointed to the multitude of “yogurt lawsuits” involving similar issues and the potential for inconsistent judicial rulings, and reasoned that leaving the decision to FDA would promote consistency and national uniformity in labeling.  Thus, the Court concluded that the reasons for applying the primary jurisdiction doctrine were present in the case, and dismissed the case without prejudice.

Hyman, Phelps & McNamara, P.C. is pleased to announce that Diane B. McColl has been elected to serve as the new President of the International Society of Regulatory Toxicology and Pharmacology (“ISRTP”).  ISRTP’s mission is to provide an open public forum for policy makers and scientists promoting sound toxicologic and pharmacologic science as a basis for regulation affecting human safety and health, and the environment.  Ms. McColl previously served as ISRTP’s Vice President.

Ms. McColl, who is both an attorney and a pharmacist, is also an elected member to the U.S. Pharmacopeial Convention’s Food Ingredients Expert Committee.  The committee received the 2012 USP Award for an Innovative Response to Public Health Challenges (see our previous post here).

By Larry K. Houck –

The Drug Enforcement Administration (“DEA”) published a notice of proposed rulemaking in the December 19th Federal Register (77 Fed. Reg. 75,075 (Dec. 19, 2012)) to place lorcaserin into schedule IV of the federal Controlled Substances Act (“CSA”).  Interested persons must submit electronic comments by January 18, 2012.  Written comments must be postmarked by the same date. 

Lorcaserin is a new chemical entity with central nervous system hallucinogenic properties that FDA approved on June 27, 2012 as an addition to a reduced-calorie diet and exercise for chronic weight management regimens.  Lorcaserin will be marketed under the trade name Belviq® and is approved under NDA No. 022529.

The proposed scheduling is based on a recommendation from the Department of Health and Human Services (“HHS”) and on an eight-factor analysis conducted by DEA.  Lorcaserin has not been marketed in the U.S. or any other country so there is no available information about actual abuse.  However, HHS found evidence that lorcaserin produces subjective effects in humans and animals similar to those produced by zolpidem, a schedule IV substance, and ketamine, a schedule III substance.  HHS concluded that the scope and significance of the lorcaserin’s abuse potential is similar to schedule IV substances and its marketing as a schedule IV substance, rather than as an uncontrolled or schedule V substance, will decrease its potential for abuse.  DEA determined that there is substantial evidence of the potential for abuse of lorcaserin and thereby proposes to control it as a schedule IV substance.

This proposed scheduling action illustrates how HHS and the DEA evaluate the abuse potential of a new compound where there is no actual abuse data.  In these cases, the agencies review the results of clinical studies to use as a barometer of the potential that drug abusers will seek the drug out once it is marketed.  In addition, both agencies compare the drug’s abuse potential to other currently scheduled drugs to determine the best “fit” for which schedule to classify the drug.

DEA’s placement of lorcaserin in schedule IV would subject manufacturers, distributors, dispensers such as pharmacies and physicians, importers, exporters, and anyone in possession of lorcaserin to the applicable provisions of the CSA and its implementing regulations, including administrative, civil and criminal sanctions.  DEA registration, recordkeeping and reporting, labeling and packaging, importation and exportation, security and disposal requirements for handlers of schedule IV substances would apply.

Hyman, Phelps & McNamara, P.C. Director David B. Clissold will be speaking at an upcoming Management Forum conference on myriad topics, including orphan drug exclusivity, FDA regulatory strategies, and advanced therapy products.  The conference, titled “EU and US Regulatory Issues for IP Professionals,” will take place on February 4-5, 2013 in Geneva.  A copy of the conference brochure is available here.

FDA Law Blog readers can receive a 20% discount off the registration price of the two-day conference.  To receive the discount, please contact Sarah Packham at sarah.packham@management-forum.co.uk and mention FDA Law Blog.  For more information and to register, visit the conference website.

By Kurt R. Karst –      

The Pharmaceutical Research and Manufacturers of America (“PhRMA”), the Biotechnology Industry Organization (“BIO”), and the Generic Pharmaceutical Association (“GPhA”) share some common ground.  All three of the trade groups oppose a Safe Drug Disposal Ordinance (see here and here [Item No. 69]) passed by the Alameda County, California Board of Supervisors on July 24, 2012, and that is slated to go into effect in July 2013.  In a recent Complaint filed in the U.S. District Court for the Northern District of California, PhRMA, BIO, and GPhA contend that the first-in-the-nation county ordinance is a per se violation of the Commerce Clause of the U.S. Constitution and violates 42 U.S.C. § 1983, which allows monetary relief to those whose constitutional rights have been violated by an actor acting under “color of any statute, ordinance, regulation, custom, or usage, of any State. . . .”  The trade groups are seeking declaratory and injunctive relief; specifically, a declaration that the ordinance violates the Commerce Clause, and an injunction prohibiting Alameda County and the County’s Department of Environmental Health from implementing the ordinance or seeking enforcement of its requirements. 

The Alameda Safe Drug Disposal Ordinance reportedly traces its roots to a so-called “Extended Producer Responsibility” (“EPR”) policy framework adopted several years ago by CalRecycle (formerly the California Integrated Waste Management Board).  The Safe Drug Disposal Ordinance, like other EPR (or “manufacturer take-back”) ordinances and laws (see here) place the primary responsibility for end-of-life management of products on the manufacturers of the products.  There are several bills that have been introduced in various states to create EPR programs for myriad products, including electronics, batteries, sharps, and mercury thermostats (see here), as well as bills targeting pharmaceuticals in Maine (LD 821), Maryland (HB 648), New York (A04651 and A00211), Pennsylvania (HB 2466), and Washington (SB 5234 and HB 1370).  The general intent of drug take-back legislation is allegedly to prevent unintentional poisonings and the improper disposal of products into the water treatment system.  

The Alameda Safe Drug Disposal Ordinance requires “producers” of “covered drugs” to operate take-back programs after submitting a plan to the Department of Environmental Health by July 1, 2013.  Such operation includes the creation, administration, promotion, and payment of the program (including the payment of Alamada County’s costs to administer and enforce the ordinance).  A “covered drug” is defined in the ordinance generally to include “all drugs as defined in 21 U.S.C. § 321(g)(l) of the Federal Food, Drug and Cosmetic Act,” “including both brand name and Generic Drugs;” however, there are several exemptions, including exemptions for “nonprescription drugs,” vitamins, supplements, herbal remedies, cosmetics, soap, detergent, “household cleaning products,” biological products for which the producer already provides a take-back program, and certain “[p]et pesticide products.”  Every producer’s take-back program – which may be run by an individual producer or funded by a group of covered producers under a “product stewardship organization” – must accept and dispose of all covered drugs received, no matter who manufactured the drugs, unless excused from that comprehensive obligation by the Department of Environmental Health.  The collection, shipping, and destruction of collected items must comply with all state and federal laws.  A violation of the ordinance may result in a civil penalty up to $1,000 per day.

In their Complaint, PhRMA, BIO, and GPhA allege that the Alameda Safe Drug Disposal Ordinance is a per se violation of the Commerce Clause, and in particular, the dormant Commerce Clause, which is a doctrine is rooted in the fear that parochial governments might adopt regulations that advance their own interests at the nation’s expense, and therefore, must be declared unconstitutional and the Alameda County government enjoined from implementing it. According to the trade groups:

The Ordinance represents a per se violation of the Commerce Clause for three distinct reasons.  First, it directly regulates and burdens interstate commerce and its primary purpose and clear effect is to shift the costs of a local regulatory program directly onto interstate commerce and out-of-county consumers.  Second, the Ordinance discriminates against interstate commerce by targeting interstate commerce and products delivered from outside the County for burdens.  Finally, the Ordinance favors local interests by deliberately shifting costs away from local consumers and taxpayers and onto drug manufacturers and pharmaceutical consumers nationwide.

And even if the ordinance is not a per se infringement of the Commerce Clause it is still unconstitutional, say the trade groups, because “[i]ts burden on interstate commerce is inherently excessive because the County could accomplish all of the purported benefits of a take-back program without any interstate burden,” such as “by developing and conducting the take-back program through government officials paid by the local taxpayers or consumers served by the program.” 

If the Alameda Safe Drug Disposal Ordinance is permissible, then what’s to stop Alameda County (or perhaps other counties from around the nation for that matter) from requiring other interstate producers to implement similar programs?  For example, say the trade groups, Alameda County could “require interstate food producers to collect and dispose of all spoiled food or similar garbage.”  The bottom line, according to PhRMA, BIO and GPhA, is that “[l]ocalities would be authorized to get something for nothing, simply by free-riding on interstate commerce and transferring the financial burdens to out-of-state consumers.  Because such policies offend the dormant Commerce Clause at least as directly as a tariff, the Court should declare the Ordinance unconstitutional and permanently enjoin its implementation.”

A case management statement is due in the case by March 1, 2013, and a case management conference has been set for March 8, 2013 in San Francisco.

By Alexander Varond –

On December 14, FDA released a draft guidance document entitled “Enrichment Strategies for Clinical Trials to Support Approval of Human Drugs and Biological Products” (“Enrichment Guidance”).  The thirty-nine-page document was more than six years in the making and aims to provide “guidance to industry on enrichment strategies that can be used in clinical trials intended to support effectiveness and safety claims.”  It also “defines several types of enrichment strategies, provides examples of various potential clinical trial designs, and discusses potential regulatory considerations when using enrichment strategies in clinical trials.”  The Enrichment Guidance follows a June 21, 2012 article written by Bob Temple entitled “Enrichment Design Studies should Enhance Signals of Effectiveness” and is the product of years of research, papers, and presentations.  It is a welcome step towards providing sponsors with insight into FDA’s thinking regarding enrichment strategies and will serve as an important guide for future clinical design.

Bob Temple, in a recent article, stated that “[w]hile enrichment won’t save a drug that doesn’t work, it will help find one that will.”  Therefore, the draft guidance defines “enrichment” as “the prospective use of any patient characteristic to select a study population in which detection of a drug effect (if one is in fact present) is more likely than it would be in an unselected population.” 

Three types of enrichment strategies are discussed:

• Strategies to decrease heterogeneity (practical enrichment) which “include selecting patients with baseline measurement in a narrow range (decreased inter-patient variability) and excluding patients whose disease or symptoms improve spontaneously or whose measurements are highly variable (decreased intra-patient variability).”

• Prognostic enrichment strategies which include “choosing patients with a greater likelihood of having a disease-related endpoint event (for event-driven studies) [such as a MACE event] or substantial worsening in condition (for continuous measurement endpoints).”

• Predictive enrichment strategies which include “choosing patients more likely to respond to the drug treatment than other patients with the condition being treated.”  This can result in large effect size, a smaller study population, and a more favorable benefit-risk relationship for the subset population.  Selection of patients can be driven by factors including “a specific aspect of pathophysiology, past history of response, or a disease characteristic that is related in some manner to the study drug’s mechanism (e.g., genomic or proteomic factor).” 

FDA notes that enrichment strategies must be careful to avoid issues relating to the generalizability and applicability of study results.  Therefore, sponsors must consider whether potential enrichment strategies could be used in clinical practice and whether the treatment is useful in a population broader than the study population.  The Enrichment Guidance also points out that enrichment studies must abide by established principles of well-controlled studies, control bias, and conserve studywise type I error.  FDA also recommends that sponsors be explicit about enrichment designs in study protocols and reports and that they engage in early discussions with FDA on plans to use enrichment designs.

While FDA states that it is “very interested” in individualization of treatment and the efficiency of enrichment studies, it is also concerned that labeling adequately describe the studied population and do not overstate the benefit for the non-enrichment populations.  Therefore, sponsors must carefully consider whether enrichment marker-negative populations should be studied, realizing that the enrichment strategy can have important implications to the labeling the drug will receive.

With regard to predictive enrichment, the question of whether non-marker patients can benefit is critical.  FDA and sponsors must, therefore, consider the amount of information available on the marker-negative population, both before and after approval, risk-benefit for multiple groups, and whether the treatment is a critical advance for the enriched group such that “it would be generally unreasonable to delay approval for the enriched group, even if few data on the group without the enrichment factor were available and even if some off-label use were anticipated despite appropriate labeling.” 

Importantly, FDA has signaled that many treatments will likely be required to show data on marker-negative population including risks to the marker-negative population, the relative size of the marker-negative population compared to the marker-positive population, and the likelihood of off-label usage in the marker-negative population.  Therefore, FDA could require additional premarketing or postmarketing studies on these marker-negative populations.

FDA puts the Enrichment Guidance into perspective by concluding that, despite a number of concerns and limitations, it “is prepared to approve drugs studied primarily or even solely in enriched populations.”

By Ricardo Carvajal –

FDA announced that it executed a Food Safety Systems Recognition Arrangement ("RA") with its counterpart in New Zealand, the Ministry for Primary Indsutries ("PMI").  The RA is the culmination of an assessment that began in 2010 and included both paper and on-site reviews.  Based on that assessment, the two regulatory authorities “decided that their respective food safety regulatory systems provide for a comparable degree of food safety assurance” – the first such decision for FDA.  A principal consequence of that decision is stated in the RA as follows: 

This systems recognition decision allows for a more efficient and effective use of resources. This includes reductions in the type and frequency of further reviews of each other’s regulatory systems, the type and frequency of border checks when foods are offered for entry into their respective countries, and the level and type of verification activities expected by the Participant’s importers and exporters of food and feed products from either country.

It’s not yet clear how this language will be given effect, but the advantages for manufacturers, exporters, and importers in both countries could be significant – particularly in the absence of a viable third party certification alternative.  In a recent GAO report (see our prior post here), FDA defended its preference for RA’s over the more narrowly tailored comparability assessments recommended by GAO.  Now FDA can claim to have an RA under its belt.

By Kurt R. Karst –      

Excitement over the U.S. Supreme Court’s recent decision to hear Federal Trade Commission v. Watson Pharmaceuticals, Inc. (Docket No. 12-416), a drug patent settlement agreement (a.k.a. “reverse payment” or “pay-for-delay agreement”) case involving ANDROGEL (testosterone gel) (see our previous post here), and anticipation that the Court might still decide to grant certiorari in Merck & Co., Inc. v. Louisiana Wholesale Drug Company, Inc. (Docket Nos. 12-245) and Upsher-Smith Laboratories, Inc. v. Louisiana Wholesale Drug Company, Inc. (Docket No. 12-265) concerning K-DUR (potassium chloride), seems to have largely crowded out the news of another decision on the topic of drug patent settlement agreements from the U.S. District Court for the District of New Jersey.  The New Jersey District Court resides in the Third Circuit.  In July 2012, the U.S. Court of Appeals for the Third Circuit rejected in In re K-Dur Antitrust Litig., 686 F.3d 197 (3d Cir. 2012), the so-called “scope of the patent test” when considering whether drug patent settlement agreements involving cash payments and early entry dates violate the antitrust laws, and instead applied a “quick look rule of reason” analysis.  Under that analysis, “the finder of fact must treat any payment from a patent holder to a generic patent challenger who agrees to delay entry into the market as prima facie evidence of an unreasonable restraint of trade, which could be rebutted by showing that the payment (1) was for a purpose other than delayed entry or (2) offers some pro-competitive benefit.”

As we previously reported, the New Jersey case was brought against GlaxoSmithKline (“GSK”) and Teva Pharmaceutical Industries Ltd. and Teva Pharmaceuticals USA, Inc. (jointly, “Teva”) by direct purchasers of certain anti-epileptic drug products containing the active ingredient lamotrigine and marketed by GSK as LAMICTAL.  The direct purchaser plaintiffs allege that GSK and Teva violated Sections 1 and 2 of the Sherman Act when they entered into an agreement providing, among other thing, that GSK would not market an authorized generic version of Lamictal Tablets and Lamictal Chewables, and that such agreement was well beyond the exclusionary scope of a now-expired patent listed in the Orange Book for GSK’s lamotrigine drug products and constitutes a naked market allocation agreement.  GSK and Teva each filed a Motion to Dismiss the case (see here and here) arguing that there was no reverse payment, but only a negotiated early entry date for marketing the generic LAMICTAL drug products.  The Federal Trade Commission (“FTC”), whose motion to file an amicus brief in the case was granted, took the position that a branded drug company’s commitment, as part of a drug patent settlement agreement, not to launch an authorized generic to compete with a generic version of the product approved under an ANDA – a “no-AG” agreement – constitutes a “payment” under the Third Circuit’s K-Dur decision.

In an unpublished decision handed down just one day before the U.S. Supreme Court decided to hear the ANDROGEL drug patent settlement agreement case, Senior District Judge William H. Walls granted GSK’s and Teva’s Motions to Dismiss the case on the basis that a drug patent settlement agreement based on negotiated entry dates is not subject to antitrust scrutiny.  Judge Walls’ decision turned on the interpretation of what constitutes a “payment” under the Third Circuit’s K-Dur decision.  “The Court finds that the term ‘reverse payment’ is not sufficiently broad to encompass any benefit that may fall to Teva in a negotiated settlement.  The Third Circuit’s K-Dur opinion is directed towards settlements when a generic manufacturer is paid off with money, which is not the case here,” wrote Judge Walls.  His opinion went on to discuss four separates bases supporting his decision, including that “a careful reading of K-Dur shows that the Third Circuit contemplates a cash payment when it uses the term ‘reverse payment,’” the lack of any case in which a drug patent settlement agreement without a cash payment was subject to antitrust scrutiny, and that the lamotrigine agreement actually created generic competition sooner than otherwise would have occurred had Teva not challenged GSK’s patent.

The lamotrigine case is the second case in which the FTC has expressed concern that a “no-AG” agreement constitutes a “payment” under the Third Circuit’s K-Dur decision.  In August, the FTC sought leave to file an amicus brief in private antitrust litigation pending in the U.S. District Court for the District of New Jersey before Judge Joel A. Pisano concerning Wyeth Pharmaceuticals Inc.’s anti-depressant drug EFFEXOR XR (venlafaxine HCl) Extended-release Tablets.  Judge Pisano denied the FTC’s motion for leave to file its  amicus brief.  The case has been stayed pending the conclusion of the proceedings in the U.S. Supreme Court in In re K-Dur Antitrust Litig. 

By Carmelina G. Allis –

Earlier this month, the IRS published final regulations and interim guidance on the excise tax imposed on the sale of certain medical devices intended for human use pursuant to the Health Care and Education Reconciliation Act of 2010 and the Patient Protection and Affordable Care Act (see our previous post here, and additional guidance from the IRS here).  But while the regulations have been finalized, it appears that there is growing support to delay and/or repeal the tax, which goes into effect on January 1, 2013.

Device industry advocates claim that the tax will stifle innovation and adversely affect middle-class jobs.  They are pushing Congress to clear legislation that would abolish the tax before the end of the year.  An outright repeal of the tax before the end of the year appears difficult, but there is talk about the possibility that the Democrat-led Senate will agree to delay the tax (see here).

In the U.S. House, Rep. Erick Paulsen already sponsored a repeal measure (H.R. 436).  Rep. Paulsen’s bill passed the House in June, but was stalled by the Senate.  However, it appears that he is obtaining bipartisan support in his efforts against the medical device tax.

This week, 18 Senate Democrats sent a letter to Senate Majority Leader Harry Reid asking to delay the tax.  An overall poor economy and lack of guidance for compliance with the tax provisions were cited in the letter as reasons for delaying enactment of the tax.  The Democrats also cited the importance of the medical device industry to U.S. exports, high-tech manufacturing jobs, and small businesses – three areas that would be adversely affected by the tax.

By Etan Yeshua –

Manufacturers of foods, drugs and cosmetics might possibly be able to label their products as “Carcinogen-Free” with federal approval.  In November, Rep. Theodore Deutch (D-FL) and Rep. Sue Myrick (R-NC) introduced the "Carcinogen-Free Label Act of 2012" (H.R. 6601), which would require FDA, the Department of Agriculture (“USDA”), the Environmental Protection Agency (“EPA”), and the Consumer Product Safety Commission (“CPSC”) to develop a “Carcinogen-Free” label that manufacturers may affix to products that do not contain any known or probable carcinogens.  Any product that is regulated by FDA, USDA, EPA, or CPSC (and that is intended for individual or residential use) would be eligible to bear the label upon approval of an application submitted by the manufacturer for the specific product, and each agency or department would be required to post on its website the names of all products for which the label has been approved.  Rep. Deutch described the program as “100 percent voluntary” and maintained that the bill’s confidentiality provisions “would protect manufacturers’ hard-earned intellectual property.” 

Under the program outlined in the bill, a manufacturer wishing to affix the label to a product would submit an application (including a sample of the product and a list of all substances “contained within” it) to one of the four participating regulatory bodies.  Approval of an application would require that the product not contain any carcinogens and that the applicant demonstrate a plan to comply with manufacturing, storage, and transportation guidance which the regulatory bodies would be required to publish as part of the program.  The application would include a fee, calculated by each regulatory body, such that the estimated revenue for all “Carcinogen-Free” label application fees would be equal to the estimated cost of running the program.  The bill also calls for random testing of products for which applications have been submitted and random audits of the facilities in which they are manufactured.  The maximum penalty for unauthorized use of the label would be $100,000.

All information submitted with the application would “be treated as trade secrets or confidential information.”  The agency or department would be prohibited from making the information public without the applicant’s consent and from using the information for any purpose other than review of the application.

The bill defines “carcinogen” by adopting two lists of substances compiled by other Federal programs, but broadens the scope of the definition beyond simply the substances contained within the product.  An approvable product must not contain any substance listed in the National Toxicology Program Report on Carcinogens (“NTP Report”) as known, or reasonably anticipated, to be a human carcinogen, or in EPA’s Integrated Risk Information System (“IRIS”) as carcinogenic or likely to be carcinogenic to humans.  In addition, the product may not contain a non-carcinogenic substance that “displays carcinogenicity” when it interacts with other substances in the product or with substance exposed to the product by its intended use.  Thus, for example, hair straighteners (see our previous post here) that do not contain formaldehyde but that do contain methylene glycol would likely be ineligible for the label: although methylene glycol is not listed as a human carcinogen, when heated to straighten hair the chemical releases formaldehyde, which is listed in the NTP Report.

The bill does not address state-mandated carcinogen labeling, such as California’s Proposition 65, thus raising the possibility of putting both manufacturers and consumers in an unfortunate position.  Proposition 65 requires manufacturers to include a warning on products sold in California that contain any chemical that is considered by the State to be toxic.  Therefore, if a product sold in California contains a substance that is included in California’s list but not in the NTP or EPA lists, consumers may soon be faced with a label that reads “Carcinogen-Free: This product does not contain known or likely carcinogens that increase your risk of cancer,” as well as “WARNING: This product contains chemicals known to the State of California to cause cancer….”

H.R. 6601 has been referred to the House Agriculture Subcommittee on Nutrition and Horticulture.  With only days remaining in the 112th Congress, however, it seems unlikely that the bill will gain any traction.

As we promised in an earlier post, we provide here a deeper analysis of the Second Circuit’s holding in United States v. Caronia and the context in which it should be viewed by industry.

Since the 2004 Warner-Lambert settlement, the federal government has investigated hundreds of companies for promotion of approved products for unapproved uses, commonly known as “off-label promotion.”  Many of the publicly known investigations have been fueled by whistleblowers who file qui tam suits under the federal False Claims Act ("FCA") in hopes of gaining a share of the government’s recovery.  These civil suits rely on an underlying violation of the Federal Food, Drug, and Cosmetic Act ("FDCA") to support the theory that certain claims for reimbursement from federal programs were false.  The government also has litigated a number of criminal prosecutions of companies and individuals for their alleged off-label promotion.  In light of the Second Circuit’s statement about the Agency’s wrongful criminalization of this type of conduct, we address below whether Caronia is likely to curtail future enforcement efforts by the government.

I.     Legal Framework

Much to the surprise of many companies, the term “off-label promotion” is not found anywhere in the FDCA.  FDA’s authority to regulate off-label promotion draws from the FDCA prohibitions against introducing an “unapproved new drug” or a “misbranded” drug into interstate commerce.  21 U.S.C. §§ 331(a), (d).  If a company promotes a drug for a use that is not embodied in the FDA-approved labeling, then it can be deemed a “new drug” because it is not generally recognized as safe and effective “for use under the conditions prescribed, recommended, or suggested in the labeling thereof.”   21 U.S.C. § 321(p).  This definition of “new drug” requires that the new intended use be evident in the “labeling” of the product.  The definition of “labeling” is quite broad.  It includes “all labels and other written, printed, or graphic matter . . . accompanying such article,” 21 U.S.C. § 321(m), and could include brochures, leaflets, letters, and arguably websites.  Under this “unapproved new drug” theory, the off-label claims must be contained in the labeling, i.e., the company’s written promotional materials. 

Drug and device marketing, however, is often conducted through oral communications between a company’s sales and marketing team and healthcare providers.  Therefore, the government may not have evidence sufficient to support an unapproved new drug charge.  Instead, the government proceeds under a convoluted misbranding charge, called the “backdoor new drug” charge, to support its civil and criminal cases.  Under this theory, a drug is misbranded for failing to bear adequate directions for its intended uses.  21 U.S.C. § 352(f)(1).  FDA relies on an exemption contained in the regulations precluding prescription drugs from ever meeting this requirement, 21 C.F.R. § 201.5, and then uses the oral promotional statements of the company’s sales representatives as evidence of the company’s intended use.  21 C.F.R. § 201.128. 

The use of speech to support a “backdoor new drug” charge has withstood earlier First Amendment challenges.  For example, in Whitaker v. Thompson, 353 F.3d 947 (D.C. Cir. 2004), the plaintiff argued that he had a First Amendment right to label his product with a disease claim, even though FDA had not reviewed and approved the claim.  The D.C. Circuit determined that the “use of speech to infer intent, which in turn renders an otherwise permissible act unlawful, is constitutionally valid.”  Id. at 953.  In fact, it ruled the First Amendment allows “the evidentiary use of speech to establish the elements of a crime or to prove motive or intent.”  Id. 

The government justifies its crackdown on off-label promotion on the ground that it is protecting the integrity of FDA’s drug approval process.  The notion is that a manufacturer might seek approval of a new product for only a narrow (and easily approvable) claim, and once the drug is approved, the sky would be the limit for the company to make other claims that would lead to larger sales.  This perception, however, ignores other reasons why a manufacturer would not illegally off-label promote, such as litigation commenced under states’ product liability laws for ineffective products and the resulting reputational harm from such lawsuits.

FDA has made clear that it does not intend to go after all promotional statements.  For example, it recognizes that truthful and non-misleading speech about an approved use of an approved drug does not by itself establish a new intended use of the drug.  See Declaration of Rachel E. Sherman, submitted in support of Defendant’s Memorandum in Support of Motion to Dismiss, in Par v. United States, No. 1:11-cv-1820, ¶ 14 (D.D.C. Jan. 11, 2012).  “While manufacturer speech is always a relevant factor in determining intended use, in the absence of other evidence that an unapproved use is intended, a drug manufacturer that engages in truthful and non-misleading speech about an approved use is not placing itself in violation of the FDCA.”  Defendant’s Memorandum in Par, at 27.

FDA also recognizes the value of manufacturers providing off-label information in certain contexts.  It has drafted guidance documents describing parameters under which a manufacturer can disseminate reprints of peer-reviewed scientific literature, sponsor educational programs, and respond to unsolicited requests for off-label information.  FDA states that if a manufacturer meets the factors contained in the guidance, the Agency will not use the activity as evidence that the company created a new intended use for the product.

II.     United States v. Caronia

On November 30, 2009, a jury found Alfred Caronia guilty of misdemeanor conspiracy to introduce misbranded drugs into interstate commerce.  His conviction was based on off-label statements he made while employed as a pharmaceutical sales representative for Orphan Medical, Inc. (“Orphan”).  Specifically, Caronia verbally promoted the drug Xyrem, a central nervous system depressant approved only for the treatment of certain categories of narcolepsy patients, to treat a variety of other conditions including insomnia, fibromyalgia, and Parkinson’s.  He also promoted Xyrem for use in an unapproved patient population – individuals under the age of 16.

The government began its investigation of Orphan in 2005, when former Orphan saleswoman Shelley Lauterbach filed a qui tam suit against the company.  During the course of the investigation, Caronia was recorded on two occasions discussing off-label uses of Xyrem.  On both occasions, Caronia was recorded speaking alongside Dr. Peter Gleason, a doctor that Caronia had engaged to participate in “speaker programs” intended to educate other physicians about Xyrem.  Caronia and Dr. Gleason discussed off-label uses for Xyrem with Dr. Jeffrey Charo, an undercover informant for the government.  In 2006, the government filed charges against Orphan, Dr. Gleason, Caronia, as well as David Tucker (a former Orphan sales manager) for conspiring to promote Xyrem for off-label uses, and thereby introduce a misbranded drug into interstate commerce.

In March 2007, David Tucker pleaded guilty to a single felony misbranding charge.  In July 2007, Orphan pleaded guilty to felony charges, and its parent company, Jazz Pharmaceuticals, Inc., agreed to pay $20 million and enter into a Corporate Integrity Agreement to resolve both criminal and civil charges.  In August 2008, Dr. Gleason also pleaded guilty to criminal misbranding charges. 

Caronia, however, did not plead guilty and filed a motion to dismiss his case based inter alia on First Amendment grounds.  The District Court denied his motion, but noted that the allegations against Caronia included First Amendment-protected speech.  Nevertheless, the District Court concluded that the government’s interpretation of the FDCA was constitutional under the commercial speech doctrine because it did not limit speech more than was necessary to achieve the government’ objectives.  On appeal of Caronia’s criminal conviction, the Second Circuit disagreed.

The Second Circuit first clarified that the government did, in fact, prosecute Caronia for “mere off-label promotion.”  Slip op. at 26.  The court’s opinion details the government’s statements to that effect, as well as the jury instructions that reflected a focus on the off-label promotion rather than promotion as evidence of the intended use of Xyrem.  The court next concluded that strict scrutiny should apply to the government’s interpretation of the FDCA misbranding provisions to prohibit and criminalize off-label promotion.  According to the court, the government’s position was speaker-based:  many individuals (physicians, researchers, etc.) were permitted to access off-label information and make off-label statements, while others (pharmaceutical companies and sales representatives) were not.   It also was content-based because it restricted off-label promotion while permitting favored on-label promotion.  The court determined that Caronia’s prosecution failed to pass strict scrutiny.

The court went further.  Even assuming that off-label promotion triggered only intermediate scrutiny under the Central Hudson test, the Second Circuit found that Caronia’s prosecution would not pass this lower threshold.   First, the off-label speech in question concerned lawful activity and was not false or misleading.  Second, while the government’s interests in drug safety and the public health were substantial, its construction of the FDCA to prohibit off-label promotion did not directly advance those interests.  Third, because physicians can prescribe and patients can receive drugs off-label, even if pharmaceutical manufacturers could not promote drugs for such uses, prohibition of truthful promotion did not directly further the government’s goals: “the government’s prohibition of off-label promotion by pharmaceutical manufacturers ‘provides only ineffective or remote support for the government’s purpose.’”  Id. at 47.

Finally, the court determined that the government’s interpretation of the FDCA – a “complete and criminal ban on off-label promotion by pharmaceutical manufacturers” – was not narrowly drawn to protect its interests.  The court construed “the misbranding provisions of the FDCA as not prohibiting and criminalizing the truthful off-label promotion of FDA-approved prescription drugs.”  The court cited several less-restrictive methods the government could have used to protect its interests instead, such as developing a warning or disclaimer system, and concluded “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.”  Id. at 51.

III.     Potential Next Steps in Caronia

Under the Federal Rules of Appellate Procedure, the government has a few options for handling the Second Circuit’s decision.  Of course the government could do nothing, and let the Caronia decision stand as law in the Second Circuit. 

The government also could petition the Second Circuit for a rehearing, or a rehearing en banc, or both.  See Fed. R. App. P. 35 – 35.1, 40.  Rehearing is generally disfavored, and will not be ordered unless “en banc consideration is necessary to secure or maintain uniformity of the court’s decisions; or . . . the proceeding involves a question of exceptional importance.”  Id. at Rule 35.  Should the government proceed with a rehearing, it must file its petition within 14 days after the entry of judgment, which occurred on December 3, 2012.  Therefore, the deadline for this petition is December 17, 2013. 

Alternatively, the government may petition for writ of certiorari to the United States Supreme Court.  A writ of certiorari is not a matter of right, but of judicial discretion, and the Court may consider granting certiorari if a “Circuit Court decision conflicts with that of another Circuit Court on the same ‘important matter.’”  S. Ct. Rule 10.  The petition must be filed with the Supreme Court clerk within 90 days of entry of the judgment.  S. Ct. Rule 13.  Therefore, if no petition for rehearing or rehearing en banc is filed, the government must file a writ of certiorari by March 4, 2013.  If the government petitions for a rehearing and/or en banc, then the time to file a writ of certiorari is 90 days from the date of the denial of the rehearing.  Even if the Supreme Court grants review, it may dispose of the case by summary affirmance or reversal, or by simply vacating the judgment below and remanding for further proceedings.

There is no circuit split that would make likely the Supreme Court’s granting of the writ.  The government may claim that the D.C. Circuit’s opinion in Whitaker v. Thompson creates a split of opinions.  Whitaker, however, was not a criminal prosecution like Caronia, and the Second Circuit went to great pains to highlight that Caronia did not involve a situation in which the government used speech as evidence of establishing intended use. 

Although oral argument was heard on December 6, 2012, in the Ninth Circuit in another high-profile off-label case, United States v. Harkonen, the former CEO of InterMune was convicted of wire fraud, not the FDCA misbranding charge at issue in Caronia (see our previous posts here and here).  While Harkonen’s defense team consistently has attempted to raise the First Amendment issue throughout trial and on appeal, the Ninth Circuit is likely to remain silent on the issue due to the allegations by the government of the false or misleading nature of Harkonen’s statements. 

The decision to seek rehearing en banc and/or seek Supreme Court review is made by the Solicitor General of the United States, not FDA.  If FDA seeks further review of the decision, we expect that the Solicitor General will surely require FDA to demonstrate why it cannot live with this ruling.

IV.     Potential Impacts on Enforcement Activity

Assuming the Caronia decision stands, can industry expect any changes in FDA’s enforcement focus?   The federal government frequently touts the multi-million dollars it has recovered in settlements for off-label promotion cases.  It would be premature to believe that the government would give up easily on these high-profile and lucrative recoveries, and we certainly do not expect the case to have any effect on relators, who will continue to bring off-label promotion allegations to the attention of the government.  But the Second Circuit’s holding represents an unmistakable setback for the government from continuing business as usual.

Even though the FDCA allows for strict liability prosecution, criminal charges have generally been brought against manufacturers and their agents only in cases involving intentionally false or misleading statements.  These selective prosecutions may have been due to prescient prosecutors who recognized the potential First Amendment implications of these cases, or simply an effort to enhance the jury appeal of a case.  With Caronia, industry can expect to see even closer review of criminal charges to ensure there is strong evidence that a company lied about the safety or efficacy of a drug or device, or made mistakes and/or incomplete statements about the product at issue.  It is unlikely that we will see prosecutors bringing criminal charges against companies, and companies willing to pay money, in cases in which there is strong scientific support for an unapproved use of a product, absent clear evidence that there also were false or misleading statements.  

Indeed one of the key factors the government considers in deciding to pursue a criminal off-label case is whether the company had previously sought, and FDA had explicitly denied, the use that the company is allegedly promoting.  In such cases, the government generally views the company’s conduct as a direct attack on FDA’s drug approval process, and has been more inclined to prosecute the company criminally.  But in light of Caronia, and other FDA guidance, there is a strong argument that the company should be allowed to provide truthful and non-misleading information that may have developed since FDA’s original review of the unapproved use without fear of criminal prosecution. 

We wonder if we will see FDA shift its focus to the “unapproved new drug” charge to support off-label promotion cases against pharmaceutical manufacturers.  Note that there is no analogous “new device” definition contained in the FDCA. This shift would require evidence of labeling containing the drug’s new intended use.  Companies should continue to scrutinize promotional materials to be sure they do not contain false or misleading claims.

Companies also should be wary that FDA may use knowledge of a drug’s intended use as independent evidence to support a misbranding charge.  21 C.F.R. §§ 201.128, 801.4.  Under its regulations, FDA requires manufacturers to provide adequate labeling for a product that the company knows is being used off-label, even if there is no active promotion by the manufacturer.  This requirement has been rarely enforced, but we are aware of a recent Warning Letter in which it was cited to require changes to a product’s labeling.  After Caronia, FDA may look to creative ways, such as this, to curtail off-label promotion without using the manufacturer’s speech.

It is important to note that the holding from Caronia is only the law of the Second Circuit, which covers Connecticut, New York, and Vermont.  Given the broad reach of the Commerce Clause, it is difficult to imagine that any FDA-regulated industry can claim that it is not subject to jurisdiction outside the Second Circuit.  Indeed the U.S. Attorney’s Office in Boston is the most active prosecutor of off-label promotion cases, but only a handful of the companies it has prosecuted have been headquartered in its district.  

The Caronia decision also may have some bearing on the federal False Claims Act, and its state counterparts.  In this context, there arguably has always been a requirement that the government demonstrate that the claim involves falsity – thus the name “false claim” – used to obtain fraudulent reimbursement from a federal healthcare program.  Caronia makes clear that if promotional statements about a product are true and scientifically supported, FDA cannot prohibit this truthful, non-misleading speech.  Therefore it follows that neither can a sister agency of FDA use that same speech to recover hundreds of millions of dollars.  Thus we expect companies to challenge the government and relators on their burden to prove that the claim is actually false.  This may affect future False Claims Act settlements, which have been some of the government’s most sizable.

Although Caronia has made some waves, the tide has far from turned.  Industry remains exposed to substantial risk if it exercises its First Amendment right to free speech by promoting off-label.  Now seems like a ripe opportunity for FDA to provide further clarification to industry on how it will proceed in its enforcement actions after Caronia.