Government Files Statement of Interest Distinguishing <i>Caronia</i> in Off-Label Promotion False Claims Act Case

Government Files Statement of Interest Distinguishing Caronia in Off-Label Promotion False Claims Act Case

On November 7, the U.S. Attorney's Office for the Southern District of New York filed a statement of interest in United States ex rel. Matthew Cestra, et al. v. Cephalon, Inc., et al., 10 Civ. 6457 (SHS) (S.D.N.Y.), in connection with a motion by the defendant pharmaceutical company to dismiss, based in part on the Second Circuit's decision in United States v. Caronia, 703 F.3d 149 (2d Cir. 2012).[1] The Government submitted its Statement of Interest "to advise the Court of its position that the Second Circuit's recent decision in [Caronia] does not preclude a cause of action under the False Claims Act based on a manufacturer's off-label marketing of a prescription drug causing the submission of false claims to federal health care programs."[2] The Statement of Interest is the first time the Government has set forth in writing its position in the Second Circuit on the applicability of Caronia to an off-label case under the False Claims Act ("FCA").[3]


The Relator, who was formerly employed as a senior level manager by Cephalon, alleged that the company promoted two of its drugs, Treanda® and Fentora®, for off-label uses.[4] According to the second amended complaint, originally filed on June 24, Treanda® was approved by the FDA only for "second-line" treatment of indolent non-Hodgkin's lymphoma ("iNHL"), which is treatment for patients whose cancer has progressed after use of another chemotherapy regimen.[5] Relator alleged that Cephalon improperly marketed the drug for first-line treatment of iNHL.[6] In addition, Relator alleged that Fentora®, an opiod approved to treat breakthrough cancer pain, was promoted by Cephalon for use to relieve pain not related to cancer.[7] Relator alleged that the off-label promotion caused false claims to be submitted under federal health care programs, including Medicare and Medicaid.[8] The United States did not intervene in the case.

On July 31, Cephalon moved to dismiss the second amended complaint on the ground, among others, that the off-label promotion alleged by Relator was protected commercial speech under the First Amendment.[9] Cephalon cited Caronia for the proposition that "the simple promotion of a drug's off-label use by pharmaceutical manufacturers and their representatives is protected by the First Amendment."[10]


Alfred Caronia was a sales representative for Orphan Medical, Inc., which sold Xyrem®, a drug approved by the FDA for treating narcolepsy in certain adults.[12] Caronia was allegedly tape-recorded at speaker programs promoting Xyrem® for unapproved uses including insomnia, fibromyalgia, excessive sleepiness, restless leg syndrome, and Parkinson's disease.[13] Following a trial, he was convicted of conspiring to introduce a misbranded drug into interstate commerce in violation of the Food, Drug & Cosmetic Act ("FDCA"), 18 U.S.C. § 371 and 21 U.S.C. § 331(a).[14]

On appeal, Caronia's conviction was vacated by the Second Circuit.[15] In so doing, the court stated, "[w]e conclude simply 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."[16] The court, in reaching this decision, noted, "[w]hile the government and the FDA have construed the FDCA's misbranding provisions to prohibit off-label promotion by pharmaceutical manufacturers … as we have observed, the FDCA itself does not expressly prohibit or criminalize off-label promotion."[17] Thus, the court took issue with the Government's interpretation of the FDCA—that the FDCA's misbranding provisions "criminalize the simple promotion of a drug's off-label use by pharmaceutical manufacturers and their representatives"—finding that "such a construction—and a conviction obtained under the government's application of the FDCA—would run afoul of the First Amendment."[18]

The Government's Statement of Interest

In its Statement of Interest, the Government argues that, unlike in Caronia, the claims in Cephalon do not implicate the First Amendment.[19] According to the Government, Caronia is inapposite because "the FCA does not prohibit off-label promotion of prescription drugs; rather, the FCA prohibits conduct that causes the submission of false claims to the Government for payment."[20] The Government maintains that First Amendment issues do not arise "in the context of an FCA claim, such as this one, where a defendant causes others to submit false claims for payment to the Government for non-reimbursable prescription drugs."[21]

The Government maintains that "[f]or FCA cases predicated on off-label drug marketing, the central question is whether the defendant's marketing caused the submission of the claims, i.e., claims for off-label uses that are not covered or reimbursable by federal health care programs.[22] In the case of cancer drugs like Treanda®, the Government states, "medically accepted indications include those listed on the FDA-approved label and may also include certain off-label indications supported by a citation in an approved drug compendium if certain other conditions are met."[23] "However, when a manufacturer engages in the marketing of drugs for indications that are not FDA approved for that drug or not otherwise supported by a compendium listing, its conduct may cause false non-covered claims to be submitted to federal health care programs, and liability under the FCA may lie."[24] Thus, the Government concludes, "the False Claims Act does not on its face create liability for off-label promotion of a drug. Instead the FCA prohibits conduct that knowingly causes the submission of false claims, such as claims for treatments that are not 'reasonable and necessary.'"[25]

According to the Government, the "FCA does not prohibit speech; rather it is a remedy for actions that cause the submission of a false claim for payment to the Government."[26] The Government states that "as a statutory matter, it is irrelevant whether a party causes the submission of a false claim by words, by conduct, or by a combination of both."[27]

The Government argues that "the fact that a person can knowingly cause the submission of false claims through speech does not suddenly transform this prohibited activity (false claim) into protected speech."[28] Citing Jews for Jesus, Inc. v. Jewish Community Relations Council of N.Y., Inc., 968 F.2d 286, 295-96 (2d Cir. 1992), itself quoting Giboney v. Empire Storage & Ice, Co., 336 U.S. 490, 502 (1949), the Government observes that "'[i]t has never been deemed an abridgement of freedom of speech … to make a course of conduct illegal merely because the conduct was in part initiated, evidenced, or carried out by means of language, either spoken, written, or printed.'"[29] The Government states that "[j]ust as the Government may prohibit price-fixing conspiracies under the antitrust laws even when speech is instrumental to the conspiracy, so may the Government prohibit companies from knowingly causing the submission of false claims even when speech is the means by which they cause the false claims to be submitted."[30]

The Government also notes that Caronia "did not concern false or misleading off-label marketing" and stated that "'to warrant First Amendment protection, the speech in question must not be misleading and must concern lawful activity.'"[31] The Government argues that "[t]o the extent that the SAC alleges that Cephalon engaged in false and misleading promotion of the drugs, the Court should reject Cephalon's assertion that its alleged conduct is somehow protected by the First Amendment."[32]


The Government's Statement of Interest is consistent with the Government's previous articulations of its views on when and why claims for off-label use are false under the FCA. For example, in United States ex rel. Peter Prevost v. Pfizer, Inc., et al., No. 03-CV-11084-PBS (D. Mass.), the Government stated that a claim for an unapproved use of a drug is false under the FCA when it is not for a "medically-accepted indication." Nevertheless, the Statement of Interest is useful to the pharmaceutical and medical device industries as the first written expression of the Government's position on the applicability of Caronia to off-label FCA cases in the Second Circuit and as guidance for the Government's position in future cases.

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[1] See Statement of Interest of the United States of America ("Statement"). New York State also filed a statement of interest, in which it argued that the "United States' arguments in its Statement of Interest apply with equal force to defeat the contention that Caronia requires dismissal of the NYFCA claims based on a manufacturer's off-label marketing of a prescription drug that causes the submission of false claims to the Medicaid program." See Statement of Interest of Plaintiff the State of New York in Response to Defendant's Motion to Dismiss Relator's Second Amended Complaint.

[2] Statement at 1.

[3] 31 U.S.C.§§ 3729-3733.

[4] See Corrected Second Amended Complaint ("SAC") at ¶¶ 115-190, 291-329.

[5] See, e.g., id. at ¶¶ 3, 19, 68-71, 115-90, 291-329 at ¶¶ 68-69.

[6] Id. at ¶¶ 68-69; 115-190.

[7] Id. at ¶¶ 8-9, 70-71, 291-329.

[8] See, e.g., id. at ¶ 378-646.

[10] Id. at 14 (citing Caronia, 703 F. 3d at 162).

[11] Jones Day represented Washington Legal Foundation as Amicus Curiae before the Second Circuit in the Caronia matter.

[12] 703 F. 3d at 155-56.

[13] Id. at 156-57.

[14] Id. at 159.

[15] Id. at 169.

[16] Id.

[17] Id. at 162.

[18] Id.

[19] Statement at 2.

[20] Id.

[21] Id.

[22] Id. at 4.

[23] Id.

[24] Id. at 4.

[25] Id. at 5.

[26] Id.

[27] Id. at 6.

[28] Id.

[29] Id.

[30] Id.

[31] In its response to the Government's Statement of Interest, Cephalon argues that it is the off-label promotion that is alleged to be the violation. "Applying the FCA under such circumstances, therefore, in this context would amount to penalizing speech. This is precisely the type of content- and speaker-based restriction that requires heightened scrutiny under the First Amendment. Caronia, 703 F.3d at 164-65. 'Speech in aid of pharmaceutical 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)."

[32] Id. at 6-7.