Caronia and the Limits of Paid Free Speech

A federal appeals court panel has overturned the conviction of Alfred Caronia, a former sales representative for Orphan Medical (now owned by Jazz Pharmaceuticals), who was accused of off-label promotion of the narcolepsy drug Xyrem.

In a split 2-1 decision, a Second Circuit appeals court panel ruled that Caronia’s conviction violated his First Amendment rights and that the federal government failed to prove his remarks were false.

A rehearing of the decision by the full U.S. Court of Appeals for the Second Circuit is very likely.

This case has been a decade in the making.  In 2002, Xyrem, a salt of the “date rape” drug GHB, was approved for cataplexy, the sudden loss of muscle tone associated with narcolepsy.

Xyrem was classified as a Schedule III drug with a black box warning that abuse of the drug could cause seizures, coma and death.  Diverted (nonprescription) use of Xyrem was punishable as a Schedule I drug violation.

In 2005, Alfred Caronia was hired by Orphan Medical as a sale representative and he, in turn, hired and paid psychiatrist and sleep-disorder expert Peter Gleason more than $100,000 a year to make off-label presentations to other doctors in order to market Xyrem for a wide variety of uses, including depression, weight loss, fatigue, insomnia, fibromyalgia, and bipolar disorder.

In March of 2006, after investigating an off-label marketing complaint filed in April 2005 under the False Claims Act, Dr. Gleason was arrested and handcuffed at a train station platform on Long Island.  The charge: promoting a drug for purposes other than those approved by the federal government.

In 2008, Alfred Caronia, the man who hired Gleason, was also prosecuted and convicted of off-label marketing.  His conviction was subsequently upheld by a lower court and, though his sentence was only one year of probation, 100 hours of community service, and a $25 special assessment, Caronia appealed his conviction to the Second Circuit. 

On appeal, Alfred Caronia argued that the government was prosecuting him solely for exercising his First Amendment rights, and that the government cannot prohibit or criminalize a drug manufacturer’s truthful and “non-misleading promotion of an FDA-approved drug to physicians for off-label use where such use is not itself illegal and others are permitted to engage in such speech.”

The split Second Circuit panel agreed, arguing, in essence, that because it is not illegal for a doctor to prescribe a drug off-label, or for an independent medical information web site to suggest a possible off-label use for a drug, it should not be illegal for a paid pharmaceutical representative to also make such representations, provided his or her statements are otherwise truthful. 

An important part of the Second Circuit’s panel decision was that “the government's theory of prosecution identified Caronia's speech alone as the proscribed conduct.” 

In short, no kickbacks were alleged by the government in winning the Caronia conviction, and the government’s theory of misbranding swung on the claim that Caronia's promotion of Xyrem for off-label use was "evidence of intent," or evidence that the "off-label uses were intended ones [ ] for which Xyrem's labeling failed to provide any directions."

The Second Circuit panel was careful to note that “off-label promotion that is false or misleading is not entitled to First Amendment protection” and that off-label promotion in violation of the Anti-Kickback Act was not protected.

Though the Caronia decision has created a lot of buzz in the False Claims Act arena, it should be noted that this is a split-decision by a single panel.  It remains to be seen whether this decision can survive review by the full U.S. Court of Appeals for the Second Circuit.  It should also be noted that most off-label marketing cases that are joined, settled, or prosecuted involve conduct beyond off-label marketing, such as kickbacks, inducements, and overt lies and misrepresentations about a drug’s safety and efficacy.