A federal appeals court recently upheld misdemeanor convictions of two former executives of Acclarent Inc, a medical device manufacturer, for commercially distributing an adulterated and misbranded medical device by misleading the FDA regarding the intended use of the device. In United States v. Facteau (89 F.4th 1 (1st Cir. 2023)) the First Circuit Court of Appeals rejected the duo’s claims that their off-label promotion amounted to constitutionally protected commercial speech, a legal theory that has previously gained some traction following the 2012 Second Circuit Court of Appeals decision in United States v. Caronia.
Prosecutors alleged that former CEO William Facteau and former vice president of sales Patrick Fabian oversaw the launch of a medical device, the Relieva Stratus MicroFlow Spacer, or “Stratus.” The FDA cleared the Stratus under the 510(k) premarket notification pathway for uses “as a ‘spacer’ that would dispense a saline solution to the ethmoid sinuses and maintain an opening created by sinus surgery.” (United States v. Facteau at 13.) However, based upon internal working group documents, written marketing materials, written training materials, marketing practices, and even live demonstrations, the government claimed the company had no intention of using the Stratus to deliver saline post-surgery; its intent had always been to market the product for use to deliver Kenalog-40, a steroid more viscous than saline, directly into a patient’s sinuses for up to fourteen (14) days. When Acclarent tried to add an indication to Stratus’ approved use to allow for not only saline but “some ‘other therapeutic agent’ into the catheter to inflate the balloon” ( Id. at 17), FDA denied the request because the proposed changes were significant enough to require Acclarent to submit a new 510(k). After the rejection, Acclarent, under the direction of Facteau and Fabian, allegedly marketed the product almost exclusively for use to deliver Kenalog anyway. For example, the indictment alleged that Acclarent sales representatives were trained on how to use probing questions to invite inquiries from surgeons about using Stratus to administer Kenalog. The probing questions were viewed as soliciting off-label inquiries, which falls outside FDA’s safe-harbor policy that permits conversation about off-label use where those communications are unsolicited. (See FDA “Revised Draft Guidance for Industry: Distributing Scientific and Medical Publications on Unapproved New Uses—Recommended Practices (2014); FDA “Draft Guidance for Industry: Responding to Unsolicited Requests for Off-Label Information about Prescription Drugs and Medical Devices,” (2011).)
The executives were charged, inter alia, with ten counts of commercially distributing an adulterated device with intent to defraud and mislead, based upon (i) false and misleading labeling, (ii) inadequate directions for use, and (iii) failure to file a required premarket notification. After a thirty-day jury trial, the pair were convicted on all ten counts, though without intent to defraud or mislead, limiting the guilty verdicts to misdemeanors rather than felonies. The defendants appealed, in part, on the grounds that their convictions were based on truthful, non-misleading speech which infringed their First Amendment rights, relying on the Second Circuit’s holding in Caronia. The First Circuit found significant differences between Caronia and the instant matter, ultimately rejecting the defendant’s theory.
The 2nd Circuit’s Holding in Caronia
A former pharmaceutical sales representative for Orphan Medical, Alfred Caronia was responsible for promoting the company’s narcolepsy drug Xyrem. A whistleblower accused Caronia and a company speaker of making statements promoting off-label use of Xyrem. Caronia was charged with one count of conspiracy to introduce a misbranded drug into interstate commerce and one count of introducing a misbranded drug into interstate commerce. He was convicted by a jury on the conspiracy count but acquitted on the substantive misbranding count, and subsequently appealed the conspiracy conviction to the Second Circuit Court of Appeals.
The split court held that Caronia’s conviction was based solely on “truthful off-label promotional statements,” and found that Caronia’s conviction had no basis in the law, explaining that the Food, Drug and Cosmetics Act (FDCA) does not expressly prohibit off-label promotion but prohibits “misbranding,” of a drug which fails to bear “adequate directions for use.” (21 U.S.C. §§ 331(a) & 352(f)). “[A]dequate directions for use” are those which permit “the lay[person][to] use a drug safely and for the purposes for which it is intended.” (21 C.F.R. § 201.5.) Critically, and central to Fabian and Facteau’s theory on appeal, the court held that while the FDCA arguably allows for off-label promotional statements to serve as evidence of intent to distribute product without providing adequate directions for use, the FDCA does not expressly prohibit off-label promotion itself, and any prohibition against off-label promotion would likely run afoul of the First Amendment. Because the majority interpreted Caronia’s conviction as based solely on off-label promotional statements, rather than the statements being used as evidence of intended use, his conduct was not prohibited by the FDCA. Following in-depth constitutional analysis, the majority concluded a total ban on truthful and non-misleading off-label promotion would violate the First Amendment, creating a potentially potent constitutional defense for companies and individuals charged with off-label promotion.
The First Amendment Arguments on Appeal in Facteau
Defendant Facteau claimed that the lower court erred in its jury instructions when it permitted the jury to consider truthful, non-misleading promotional speech as evidence of the intended use of the Stratus device. Facteau argued that “using promotional speech as evidence of intended use in effect criminalizes that speech,” and allowing speech outside the FDA safe harbor which “shields certain non-promotional speech from evidentiary use imposes an impermissible content-based burden on ‘disfavored’…off-label promotional statements.” (Id. at 22). The Court of Appeals rejected both arguments, distinguishing the facts in the instant matter from Caronia and rejecting the latter argument as forfeited as it was not raised at trial. With respect to the evidentiary argument, the Appellate Court clearly distinguished the facts from Caronia, noting that FDA relied on a wide array of evidence in Facteau to establish how the defendants actually intended Stratus to be used (in contrast to the reported intended use in the 510(k) filing), versus the FDA seeking to punish Caronia for the content of his commercial speech. “It is not the case, as it was in Caronia, that the government set out to punish appellants for what they said about the product; rather, what appellants said about Stratus simply shed light on how they intended it to be used.” (Id. at 24). The Appellate Court also noted that the jury rejected one misbranding theory regarding the lack of adequate directions for use, and instead found the defendants guilty of misbranding for failure to obtain proper regulatory clearance, which was intricately linked with appellants’ speech. Further, the fact that Facteau and Fabian were executives responsible for overseeing product design and regulatory strategy, in addition to marketing strategy, was distinct from Caronia’s role as a salesperson, “whose sole job function was to make promotional statements about the product.” (Id.)
Intended Use is Not Limited to External Promotion
Fabian further argued FDA’s allegations that Stratus served a use other than the “intended use” for which it was approved should only consider “external promotional conduct” rather than internal communications, responses to physician inquiries, or scientific information shared in academic and educational settings. Fabian argued that the jury instructions should have been based upon the definition of intended use at 21 CFR §801.4, and should “limit the focus to external marketing and promotions statements,” because under the regulation, “the objective intent of the manufacturer…may be shown by labeling claims, advertising matter, or oral or written statements by [manufacturers] or their representatives….” The Appellate Court disagreed that “objective intent” should be limited to promotional materials, holding “‘objective intent’ simply means that there must be ‘outward expressions’ of such intent and not merely ‘unexpressed thoughts’ within the mind of an individual,” and noting that there was no indication in the regulation that oral and written “statements must be directed to persons outside the company.” (Id. at 31). The Appellate Court cited numerous previous holdings that courts are “free to look to all relevant sources in order to ascertain…intended use,” rejecting Fabian’s attempt to redefine intended use, and similarly rejected the argument that “intended use” is unconstitutionally vague. (Id. at 32)
Facteau can easily be distinguished from Caronia, and medical device and pharmaceutical executives should take notice of the limits of a potential First Amendment defense. Where speech is considered evidence of alleged wrongdoing, as opposed to the alleged wrongdoing itself, commercial off-label speech can be used to determine whether a product is adulterated or misbranded. Internal and external communications are both fair game for prosecutors, and while physicians may continue to prescribe or use products off-label, promoting off-label usage may render the product misbranded and the manufacturer and its executives vulnerable to prosecution.
Please contact the authors regarding any questions related to proper marketing and promotion of drugs or devices.