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Second Circuit Invalidates FDA Regulation of Drug Advertising on First Amendment Grounds in Landmark Decision that Portends Far Reaching Effects

On Monday, December 3, 2012, in a 2-1 decision, the U.S. Court of Appeals for the Second Circuit ruled “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.”  See United States v. Caronia, — F.3d —, 2012 WL 5992141 (2d Cir. Dec. 3, 2012).  A copy of the opinion is available here.

That decision invalidates FDA’s decades long attempt to prevent drug company advertising outside the limited scope of approved indications.  It applies the Supreme Court’s First Amendment decision in Sorrell which some presume the start of a movement to heighten protection for commercial speech on par with political speech.  See Sorrell v. IMS Health, Inc., — U.S. —, 131 S.Ct. 2653 (2011).  Significantly, the Second Circuit applied heightened scrutiny under the First Amendment to the FDA’s regulation of drug advertising.  See id. at *27 (Livingston, Circuit Judge, dissenting) (“The majority’s decision today extends heightened scrutiny further than the Supreme Court ever has, and calls into question a fundamental regime of federal regulation that has existed for more than a century”).  The decision broadly expanded First Amendment protections to commercial speech, particularly in the context of FDA-regulated content.  We provide here a comprehensive discussion of the Caronia decision, including implications for regulated industry.

Those familiar with FDA drug regulation already appreciate the significance of this decision.  The FDA regulates drug products through a premarket drug approval process.  “Drugs” are defined under federal law as any product “intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals.”  See 21 U.S.C. § 321(g)(1) (emphasis added).  The intended use of a product governs.  Historically, Courts have allowed FDA to examine any relevant information, including consumer impression, when determining a product’s “intended use.”  Under the “intended use doctrine,” therefore, the FDA can conclude that a product is a “drug” based solely on promotional claims or, as in the Caronia case, statements made by an advertiser or promoter.  For example, orange juice is a drug if an advertiser claims that the product will cure cancer.

All “drugs” must be approved by the FDA.  Before Caronia, drug companies could not advertise drugs for intended uses or conditions that were not subject to FDA prior approval.  The system worked as follows.  A drug company would obtain FDA approval of a drug.  That company and its representatives could only promote the drug for the FDA-approved condition, for example, esophageal cancer.  If the company then promoted the drug for lymphoma, FDA would consider the product an “unapproved new drug” and “misbranded” for that indication.  To advertise for lymphoma, the drug company needed to submit a Supplemental New Drug Application (SNDA) for the new indication.

At more than one billion dollars per drug, FDA approval is a gambit played only by the world’s wealthiest state sponsored monopolies.  Supplemental NDA’s are also costly.  FDA requires proof that drugs are safe and effective.  Supplemental drug approvals are less expensive because safety data is usually established in the original drug application.  But because efficacy data must be independently developed for the new indication, supplemental approvals are still expensive.  In other words, if a company can advertise for off-label uses, it can avoid the approval process for new indications and save significant money.

Meanwhile, the FDA does not regulate the practice of medicine, only drugs and other articles in interstate commerce.  The FDA does not, for example, regulate how physicians use drugs with their individual patients.  Provided the physician receives a drug under a lawful FDA drug approval, the federal law does not (or should not) interfere with the physician’s medical judgment when using the drug.  In short, the physician can use an FDA approved drug for off-label uses.  In our example above, a physician can order the esophageal cancer drug, but use it to treat lymphoma.  That practice is not prohibited under the FDCA.

The Caronia decision addresses the gap between medical practice and regulated industry.  Alfred Caronia was convicted of conspiracy to introduce misbranded drugs into interstate commerce.  He was a Specialty Sales Consultant hired to promote the drug Xyrem, which was approved for narcolepsy and daytime sleepiness.  The FDA recorded Caronia promoting Xyrem for unapproved uses, including, Fibromyalgia, chronic fatigue syndrome, and chronic pain.  FDA prosecuted Caronia based on those statements alone.  This type of FDA enforcement was predictable.

Caronia turned against FDA.  For the first time, a Court of Appeals dramatically restricted FDA’s ability to reach off-label promotions.  Therefore, under Caronia, a drug company can now directly advertise unapproved or “off-label” uses to physicians.  As long as the drug is approved and saleable for one indication, drug companies and their agents can now advertise for all uses, provided, of course, that the off label benefits of use are represented truthfully.  The Court explained, “[a]s off-label drug use itself is not prohibited, it does not follow that prohibiting the truthful promotion of off-label drug usage by a particular class of speakers would directly further the government’s goals of preserving the efficacy and integrity of the FDA’s drug approval process and reducing patient exposure to unsafe and ineffective drugs.”  See id. at *13 (citing Sorrell, 131 S. Ct. at 2668-69).  The Court also explained that “prohibiting off-label promotion by a pharmaceutical manufacturer while simultaneously allowing off-label use ‘paternalistically’ interferes with the ability of physicians and patients to receive potentially relevant treatment information; such barriers to information about off-label use could inhibit, to the public’s detriment, informed and intelligent treatment decisions.”  Id.

We discuss the significance of this decision below.  Because Caronia would dramatically impact the FDA’s drug approval process and FDA’s regulation of drugs generally, we expect FDA will appeal the decision further.  We also expect the Supreme Court, or the Second Circuit sitting en banc (as a full court), may overrule certain aspects of this decision.  Nonetheless, if Caronia reaches the Supreme Court, the high court would have a prime opportunity to further its commercial speech analysis in Sorrell and, perhaps, increase First Amendment protection for commercial speech generally.

Implications going forward:

As stated above, the FDA will appeal the Caronia decision.  The agency may request review by the full court sitting en banc, proceed to the Supreme Court through a petition for certiorari, or both.  For now the Second Circuit remanded the case to the district court for further proceedings.  The trial court will conclude proceedings and from there FDA will consider its options.  Because the decision blows open the FDA’s traditional enforcement scheme, we expect further judicial review.

If upheld, Caronia does have far-reaching implications.  It extends heightened First Amendment protection to pharmaceutical advertising, and permits companies to market off-label uses.  In a scathing dissent, Circuit Judge Debra Ann Livingston claimed that the majority’s opinion would “invalidate the very definitions of ‘drug’ and ‘device’ that undergird the entire FDCA.”  Id. at *24.  That is a hasty conclusion, however, because the FDA must still approve the drug for some indication, thus passing on its safety and efficacy in the first instance.

Pharmaceutical companies need drug approval for two reasons:  (1) to lawfully sell drugs and; (2) to advertise their products.  Under Caronia, only one drug approval is necessary.  Once the product is “lawful” for sale, all truthful representations about uses not approved by FDA are allowed.  Circuit Judge Livingston addressed that point in her dissent:

Indeed, even if FDA had not approved Xyrem for any medical uses at all, Caronia could presumably have sold Xyrem as an industrial solvent if it happened to be excellent at removing grease and grime…  It remains the case, however, that the simple fact that one is generally allowed to sell something does not imbue one with a constitutional right to sell it for any intended purpose…  Under the majority’s reasoning, then, any substance that may be legally sold for some purpose may be promoted by its manufacturer for any purpose—so long as the manufacturer’s statements are merely unsubstantiated, rather than demonstrably false or misleading.  But this reasoning would invalidate the very definitions of “drug” and “device” that undergird the entire FDCA.”

Id. at 23-24.  The practical consequences are apparent.  A drug approved for weight loss may not be effective for arthritis; nevertheless physicians are lawfully permitted to use approved drugs for unapproved indications, and that leads to evidence of efficacy for those uses independent of the FDA’s processes.  Consequently, publication of truthful off-label uses is in line with the principles of the First Amendment and with physician experience in using the drugs.  Caronia would allow companies to advertise for that purpose without FDA prior approval.  But FDA is not without recourse.  Caronia simply requires that FDA react to misleading speech, rather than categorically ban claims that have not been vetted through FDA’s approval process.

Would Caronia apply beyond pharmaceutical sales?  And will it stand on appeal? 

As explained in more detail below, the decision strongly supports heightened First Amendment scrutiny in commercial speech cases under the FDCA.  On further appeal, that doctrine may stand even if the ultimate outcome is reversed.  That prospect is encouraging and could serve as a bellwether for future First Amendment jurisprudence.  For instance, a stronger First Amendment standard would constrict the FDA’s ability to regulate dietary supplement health claims.

However, the Caronia majority limited its holding to off-label promotions of approved drugs:  “Our conclusion is limited to FDA-approved drugs for which off-label use is not prohibited, and we do not hold, of course, that the FDA cannot regulate the marketing of prescription drugs.”  Caronia, 2012 WL 5992141, at *15.  Dietary supplement companies should therefore temper expectations.  The decision is strong on First Amendment grounds.  But dietary supplements are not “approved” drugs under the FDCA and, so, the Caronia holding may not apply.

More importantly, the majority took pains to preserve the FDA’s intended use doctrine.  Id. at *8 (“even assuming that the government can offer evidence of a defendant’s off-label promotion to prove a drug’s intended use and, thus, mislabeling for that intended use, that is not what happened in this case.”).  The Court’s rationale here (including its explanation in footnote 10) was somewhat tortured.  But FDA can still use commercial speech as evidence of intended use.  As long as FDA retains that power, other Circuits have held that FDA can act.  See, e.g, Whitaker v. Thompson, 353 F.3d 947, 953 (D.C. Cir. 2004).

Those points notwithstanding, the Caronia decision says that FDA cannot censor or prohibit truthful speech when the regulated product is lawfully in the market.  The decision also says that FDA cannot label speech “false” or “misleading” simply because FDA has not deemed the speech true.  See Caronia, 2012 WL 5992141, at *14 (“While some off-label information could certainly be misleading or unhelpful, this case does not involve false or misleading promotion.  Moreover, in the fields of medicine and public health, where information can save lives, it only furthers the public interest to ensure that decisions about the use of prescription drugs, including off-label usage, are intelligent and well-informed”).  The same rational could apply to dietary supplements, medical devices, and even cosmetics.  If a physician can lawfully purchase and use dietary supplements in patient care, then, under Caronia, manufacturers are protected by the First Amendment when they inform those physicians of so-called “off-label” or unapproved uses.  In her dissenting opinion, Circuit Judge Livingston was particularly concerned that the decision would extend beyond FDA regulated “drugs.”

Because Caronia is presently an outlier, the FDA is unlikely to cease enforcement activity, particularly in other Circuits, and companies are unlikely to alter their business tactics until the case is final and unappealable.

First Amendment Jurisprudence:

Purely on First Amendment grounds, Caronia is a significant commercial speech victory for three reasons.  First, the Court applied heightened scrutiny under the First Amendment in a commercial speech case, certainly a more searching standard of review than in past Central Hudson commercial speech cases.  Second, the Court necessarily held that FDA cannot label speech “false” or “misleading” simply because FDA had not deemed the speech truthful to the agency’s satisfaction.  Finally, the Court required FDA to supply empirical evidence showing that other less-speech restrictive alternatives would not adequately further the government’s interests.  We briefly discuss these points below.

After the Supreme Court suggested in Sorrell that commercial speech could be subject to heightened scrutiny, federal courts generally refused to follow.  See Sorrell v. IMS Health, Inc., — U.S. —, 131 S.Ct. 2653 (2011); Yeager v. AT & T Mobility, LLC., CIV. S-07-2517 KJM, 2011 WL 3847178 (E.D. Cal. Aug. 30, 2011) (holding that Sorrell did not eviscerate the boundaries of commercial versus individual speech); Ashley Furniture Industries, Inc. v. U.S., 818 F.Supp. 2d 1355, 1366 (Ct. Int’l Trade 2012) (rejecting argument that Sorrell extended the “strictest First Amendment protection” to commercial speech); Standard Furniture Mfg. Co., Inc. v. United States, 823 F. Supp. 2d 1327, 1334 (Ct. Int’l Trade 2012).  That changed in Caronia.  The Second Circuit based its holding on an analysis of Sorrell, and used that decision to extend heightened First Amendment protection to commercial speech.

In Caronia, while the Court proceeded through the conventional Central Hudson test, the ultimate analysis was ostensibly something more.  Take the Court’s analysis of whether FDA’s regulation was “narrowly tailored” to the government’s interest.  The majority listed a number of less speech-restrictive alternatives that FDA could have employed.  Id. at *14.  As the dissent explained, some of those measures are likely impractical or ineffective.  But the majority was satisfied with the mere existence of theoretical alternatives.  In that way, the analysis more closely resembled heightened scrutiny, wherein the Court asks whether available alternatives were the least restrictive of the bunch.  In short, following the tone of Sorrell, the Caronia analysis looks like Central Hudson with teeth.

To be sure, the Court’s analysis began with an assessment of Sorrell and examined the FDCA as a content-based restriction:  “the government’s construction of the FDCA’s misbranding provisions to prohibit and criminalize off-label promotion is content- and speaker-based, and subject to heightened scrutiny under Sorrell.”  Id. at *13 (emphasis added).  The Court proceeded through the Central Hudson analysis and examined whether the government’s regulation was “narrowly drawn to further interests served.”  Id. at *14.  What followed, however, was heightened scrutiny:

If the government is concerned that off-label promotion may mislead physicians, it could guide physicians and patients in differentiating between misleading and false promotion, exaggerations and embellishments, and truthful or non-misleading information.  The government could develop its warning or disclaimer systems, or develop safety tiers within the off-label market, to distinguish between drugs.  The government could require pharmaceutical manufacturers to list all applicable or intended indications when they first apply for FDA approval, enabling physicans, the government, and patients to track a drug’s development.  To minimize off-label use, or manufacturer evasion of the approval process for such use, the government could create other limits, including ceilings or caps on off-label prescriptions.  The FDA could further remind physicians and manufacturers of, and even perhaps further regulate, the legal liability surrounding off-label promotion and treatment decisions.

Id. at *14.  The Court was more interested in possible alternatives than an assessment of whether those alternatives were plausible.  In her dissent, Judge Livingston explained:

“The majority has chosen to apply heightened scrutiny to this case, though we have not done so in other cases involving the use of speech as evidence of intent…  The majority’s decision today extends heightened scrutiny further than the Supreme Court ever has, and calls into question a fundamental regime of federal regulation that has existed for more than a century.”

Id. at 27.

The Court also required evidentiary support for FDA’s conclusion that less speech-restrictive alternatives were infeasible or ineffective.  In other words, FDA had the burden to prove that those other alternatives would not function:

The government contends that these alternative means of reducing patient exposure to unsafe, untested drugs and maintaining the integrity of the FDA-approval process are “indefensible,” because they are not administrable, feasible, or otherwise effective.  In the absence of any support, such conclusory assertions are insufficient to sustain the government’s burden of demonstrating that the proposed alternatives are less effective than its proposed construction of the FDCA in furthering the government interests identified.

Id. at *14 (emphasis added).  That holding contrasts with recent district court precedent concerning health claims for dietary supplements.  See, e.g., Alliance for Natural Health U.S. v. Sebelius, 786 F.Supp. 2d 1 (D.D.C. 2011); Fleminger, Inc. v. U.S. Dept. of Health and Human Services, 854 F.Supp. 2d 192 (D. Conn. 20120.  In fact, the holding supports prior precedent that required FDA to justify speech restrictions with empirical evidence.  See Pearson v. Shalala, 164 F.3d 650 (D.C. Cir. 1999); Whitaker v. Thompson, 248 F.Supp. 2d 1 (D.D.C. 2002).  Accordingly, if upheld, the Caronia case extends that doctrine, particularly in FDA-related First Amendment litigation.  The decision would thus become an invaluable aid in litigation against all manner of FDA censorship.


For supporters of the First Amendment, U.S. v. Caronia is a delightful read.  The decision could strengthen other First Amendment challenges in the FDCA context.  But when applied to off-label drug promotions, the panel’s approach may prove difficult and, so, the Supreme Court (or Second Circuit sitting en banc) could reverse in whole or part.  Moreover, if FDA relies on its “intended use” doctrine exclusively in enforcement actions, the Caronia decision could be distinguishable, making the holding a pyrrhic victory for drug promoters.  See id. at *8 (“[e]ven assuming the government can offer evidence of a defendant’s off-label promotion to prove a drug’s intended use and, thus, mislabeling for that intended use, that is not what happened in this case”).

For now, the decision was remanded to the district court.  It is an extraordinary case that we will all watch closely.

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