Posted on: 10/5/2012
Ralph S. Tyler, Bruce R. Parker
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"Speech in aid of pharmaceutical marketing … is a form of expression protected by the Free Speech Clause of the First Amendment." Sorrell v. IMS Health, Inc., 131 S. Ct. 2653, 2659 (2011). That sentence, which appears prominently in the first paragraph of the Court's decision last Term in Sorrell, doomed a Vermont law restricting the sale of pharmacy records of individual doctors. The principles which underlie that sentence sweep more broadly than that, however, to cast a First Amendment shadow over a range of governmental regulatory activities, including those of FDA. This shadow may well have important implications for product liability tort litigation.
Various government regulations impact speech, sometimes compelling speech and sometimes prohibiting or restricting speech. Government compels speech when, for example, a statute or an agency rule requires warnings or disclosures on packages or other materials. Government limits or prohibits speech when, as in Sorrell, a statute restricts the sale of information or when a regulatory regime prohibits the off-label promotion of an approved drug.
Tobacco warnings and compelled speech
A current example of a regulation which compels speech is FDA's rule requiring cigarette companies to display graphic warnings on cigarette packages. In the Family Smoking and Prevention Act, Congress directed FDA to promulgate a rule mandating the display on cigarette packages of graphic images depicting the negative consequences of smoking. FDA did as it was told and developed a set of dramatic images. FDA then issued a rule mandating that these images, along with blunt textual warnings, occupy 50 percent of each cigarette package.
In response to FDA's rule, several tobacco companies filed suit, challenging the rule on First Amendment Free Speech as well as Administrative Procedure Act grounds. The United States District Court for the District of Columbia (Judge Leon) granted the companies' motion for a preliminary injunction. The court found that there was a substantial likelihood that the companies would prevail on their First Amendment claim. See R.J. Reynolds Tobacco Co. v. FDA, Civil Case No. 11-1482 (November 7, 2011). The government's appeal is pending.
As we await the outcome of the appeal in R.J. Reynolds, it is worth noting that there is other relevant precedent invalidating a regulatory regime which compels speech. In Entertainment Software Ass'n v. Blagojevich, 469 F.3d 641 (7th Cir. 2006), for example, a case upon which the district court in R.J. Reynolds relied, the court invalidated an Illinois statute which required electronic video game retailers to place large warning labels on video machines and to provide other written warnings about the content of the games.
Off-label drug promotion and prohibited speech
The government has been successful in recent years in recovering substantial sums of money from pharmaceutical companies through False Claims Act settlements arising from the companies' alleged "off-label promotion" of FDA approved drugs. These settlements include Merck ($950 million), Pfizer ($2.3 billion), and Glaxo, Smith Kline ($3 billion). The theory on which these cases are based needs to be examined using the lens of the First Amendment.
Only slightly oversimplified, the government's chain of logic in "off-label promotion false claim" cases is as follows: FDA approves a drug for certain specified uses (indications); those approved uses are stated on the drug's label; if a drug company makes factually true statements in generally distributed brochures or by its sales force about uses of the drug other than those which FDA has approved and as stated on the drug's label, such statements are impermissible off-label promotion of the drug; and if federal funds have been paid (through Medicare, for example) for these promoted non-approved uses, the government has received and paid "false claims" for which the government is entitled to civil penalties plus treble damages. 31 U.S.C. § 3729.
The critical point for First Amendment purposes is that the government's theory in these off-label false claims cases does not require that the companies' claims about a drug are false or misleading; rather, the government's theory allows a company to be held liable when, for example, the company's sales force promotes the fact that the drug has been used successfully in a clinical trial even if that statement is true so long as the clinical trial involves a non-FDA approved use of the drug. Under the government's theory, a company's right to speak about an FDA approved drug is limited to speech about the drug's approved uses/labeling.
The broad contours of First Amendment constraints on regulatory actions
The government may compel speech to protect consumers by requiring disclosure of "purely factual and uncontroversial information," Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985), "in order to dissipate the possibility of consumer confusion or deception." Id. (quotation omitted). See also Nat'l Elec. Mfrs. Ass'n v. Sorrell, 272 F.3d 104, 114-16 (2d Cir. 2001) (applying Zauderer rationale to uphold mandatory food labeling statute). However, even when the compelled speech satisfies this "purely factual" standard, "unjustified or unduly burdensome disclosure requirements might offend the First Amendment by chilling protected commercial speech." Zauderer, 471 U.S. at 651.
In preliminarily enjoining FDA's graphic tobacco warnings, the district court concluded that the warnings were not entitled to the more relaxed Zauderer level of scrutiny because, in the court's view, the warnings were not "purely factual and uncontroversial." The court thus subjected the warnings rule to "strict scrutiny." The district court concluded that FDA's tobacco warnings regulation could not withstand "strict scrutiny." Few laws can.
Governmental prohibitions of speech, including prohibiting a pharmaceutical company from making truthful statements about a drug, raise a separate set of constitutional objections. In Sorrel, the Supreme Court observed that "[f]acts, after all, are the beginning point for much of the speech that is most essential to advance human knowledge and to conduct human affairs." 131 S. Ct. at 2667. That observation is hard to square with the government's efforts to restrict speech in off-label promotion false claims cases where the allegedly offending promotional statements are factually true and not misleading.
U.S. v. Caronia, 576 F. Supp. 2d 385 (E.D.N.Y. 2008) (appeal pending), is a pre-Sorrell case in which the court gave serious consideration to the question of the constitutionality of the government's approach to off-label promotion cases. While the court in Caronia ultimately denied the defendant's First Amendment based motion to dismiss an indictment for violating the misbranding provisions of the Food, Drug, and Cosmetic Act, the court noted that "the constitutional issues raised in Caronia's motion are very much unsettled, not only in this circuit but nationwide." 576 F. Supp. 2d at 394. The appeal in Caronia will be decided in light of the Supreme Court's decision in Sorrell.
Given the enormous sums of money involved in pharmaceutical off-label false claim cases and the obvious seriousness with which the courts take First Amendment arguments, the question is why have these cases settled and not been litigated to determine the constitutionality of the government's approach? Certainly part of the answer to that question involves the unacceptably high reputational and business risks to a public company of being indicted. These risks create a powerful incentive to avoid indictment and settle. A closely related consideration similarly incentivizing avoiding indictment through settlement is the risk of disqualification from participation in federal health care programs (effectively the "death penalty") if convicted. See 42 U.S.C. § 1320a-7.
The Allergan company sought to thread this needle by bringing a declaratory judgment action to challenge on First Amendment grounds FDA's rules on off-label promotion. See Allergan v. USA, No. 09-1879 (D.D.C.). The parties in Allergan filed cross-dispositive motions in which the First Amendment arguments were briefed extensively; however, the case was dismissed as part of a larger overall settlement prior to the court's ruling on those motions.
Sorrell, R.J. Reynolds, Entertainment Software, Caronia, and Allergan individually and collectively reflect an increased awareness on the part of regulated entities of the constitutional implications of regulatory regimes and an increased willingness on the part of those entities to challenge those regimes on constitutional grounds. A number of the cases which have gone to judgment reflect growing judicial skepticism for the government's justifications for actions which adversely impact constitutionally protected speech.
Is tort law next?
The arguments developed in First Amendment cases have potential applicability to product liability cases involving allegations that a defendant pharmaceutical company unlawfully promoted the off-label use of a drug. Plaintiffs in these cases assert negligence claims and demands for punitive damages predicated on allegations that the plaintiff suffered injuries from off-label use of a drug as promoted by the defendant. The constitutional cloud which hangs over the government's right to restrict speech, see, e.g., Sorrell, may well extend to these private tort cases.
The argument would be that the requisite governmental action to implicate constitutional protections exists because the tort plaintiff's assertion that the defendant's off-label promotion is unlawful depends entirely on the web of federal statutes and regulations. But for those statutes and regulations, the plaintiff would have no basis for complaining about the defendant's truthful, non-misleading statements. If, however, the government cannot constitutionally prohibit the defendant from making truthful, non-misleading statements, then a private plaintiff should not be able to impose tort liability for the same constitutionally protected activity. The state regulates through its tort law and plaintiffs are invoking that state regulatory power to restrict speech when plaintiffs seek to impose liability and recover damages, including punitive damages, for off-label promotion of drugs and devices when that promotional activity involves truthful, non-misleading statements.
Defense counsel making these constitutional arguments should highlight the contradiction between the prohibition against off-label prohibition and the lawfulness of physicians' prescribing drugs off-label. See generally Caronia, 576 F. Supp. 2d at 393. Not only may a physician lawfully prescribe a drug off-label, but in certain situations such off-label use is the "medically recognized standard of care and therefore it is important for physicians to have access to accurate information about off-label uses." Id. at 393. The contradiction is that the manufacturer often has the most current information to provide physicians so that they may lawfully prescribe the drug, and yet the plaintiff's off-label claim seeks to severely restrict the manufacturer and its representatives from speaking truthfully about the off-label use of the drug.
As the law in this area continues to develop, defense counsel in product liability cases involving off-label promotion of drugs and devices should be mindful of the availability of constitutional defenses and, where appropriate, counsel should raise and preserve those defenses.
There is more to come on this entire topic. It is a virtual certainty that there will be future First Amendment challenges to federal and state regulatory statutes and rules. The cases to date suggest that a significant number of those challenges will prevail.
Ralph S. Tyler is a partner in Venable's Baltimore and Washington offices. His practice focuses on federal and state regulatory matters. Prior to joining Venable, he was Chief Counsel of the United States Food and Drug Administration. He may be contacted at RSTyler@Venable.com.
Bruce R. Parker is a partner in the Baltimore law firm of Venable, LLP and is a member of the DRI. His practice concentrates on products liability and toxic tort litigation, with particular emphasis on pharmaceuticals and medical devices.