U.S. v. Facteau: District Court Finally Upholds Misdemeanor Convictions for Off-Label Promotion
LYNN C. TYLER*
After a three-year delay, last September the District Court in U.S. v. Facteau denied the defendants’ motion for acquittal or new trial, upholding misdemeanor convictions for distributing adulterated and misbranded medical devices based on off-label promotion. The court attributed the delay to the “challenging” issues presented, including the fact “there is no statute that specifically prohibits off-label marketing and yet the Government continues to prosecute the conduct by patching together the misbranding and adulteration regulations, thereby criminalizing conduct that it is not entirely clear Congress intended to criminalize.” In its order, the court rejected the defendants’ first amendment defense, which will be the focus of this article.
Why It Made the List
After a string of losses dating back over fifteen years, Facteau is the first time the government has overcome a First Amendment defense to score a (partial) victory in an off-label promotion case. Although the defendants were acquitted on related felony charges, they were sentenced to time served and to fines of $1,000,000 and $500,000, respectively, on the misdemeanor convictions. As of press time, both defendants have appealed, so the question is whether the government will be able to preserve its win.
William Facteau was the CEO, and Patrick Fabian was the VP of Sales, of a medical device company named Acclarent. In the order denying the motion for acquittal, the district court stated the evidence at trial supported the following facts. Beginning in or about 2005, Facteau, Fabian, and others at Acclarent caused Acclarent to develop and design a device known as the Stratus to release the steroid Kenalog-40 in the nasal passages over ten to fourteen days. The Stratus did not elute saline for any significant period of time.
Facteau, Fabian, and others understood that FDA would likely require significantly more testing and clinical data to permit the interstate distribution of the Stratus as a steroid delivery device than it would require for a device that did nothing more than maintain a space in the sinuses and release saline. Facteau, Fabian, and others therefore pursued a strategy to obtain marketing authorization more quickly by concealing from FDA that they intended the Stratus to be used as a steroid delivery device and by falsely claiming that the Stratus was a sinus spacer for use with saline that was substantially equivalent to an existing legally marketed spacer.
Six months after securing clearance for the Stratus as a sinus spacer, Acclarent requested additional clearance to market the Stratus for drug delivery. In May 2007, FDA denied Acclarent’s request to expand the Stratus’ indication to include drug delivery, finding that combining drug delivery with a device would make the Stratus a combination product and require a more extensive approval process. As late as 2010, FDA declined to approve a clinical study involving the use of the Stratus with Kenalog-40. Acclarent never obtained FDA approval of the Stratus as a drug delivery device.
Nonetheless, beginning in September 2008, Facteau, Fabian, and others marketed the Stratus almost exclusively as a steroid delivery device. Sales representatives were not trained about any benefits of using the Stratus solely as a spacer without saline or Kenalog-40. Instead, the sales representatives were told that the Stratus was designed for use with Kenalog-40. In several internal trainings, the Stratus was presented as a drug delivery device, not a saline device.
A “physician discussion guide” for the Stratus included a potential physician question and a recommended answer that “the only agent that works optimally with the current [Stratus] is [Kenalog-40].” There was testimony that no physicians used the Stratus to deliver saline and those who used it did so with Kenalog-40. Some physicians testified that they were never told to use the Stratus as a spacer or to deliver saline, and saw no benefit to those uses. Instead, they were told to use it to deliver Kenalog-40. At physician conferences, Acclarent demonstrated the use of the Stratus with Kenalog-40, not saline. A physician training video and a slide presentation showed how to use the Stratus with Kenalog-40.
Because Acclarent never received pre-market approval or clearance to market the Stratus as a steroid delivery device, the government alleged that it was adulterated and misbranded. The government’s theory was that a medical device is “misbranded” if a 510(k) notification had not been submitted to FDA at least ninety days before the device was introduced into interstate commerce or if it was intended for a new use for which a 510(k) notification was required but not filed with FDA.
Among several defenses, Facteau and Fabian argued that the promotion of the Stratus as a steroid delivery device was truthful and non-misleading, and therefore protected by the First Amendment.
The government’s case against Facteau and Fabian had to overcome the adverse results in several prior cases where FDA’s (or other) restrictions on promotion collided with the First Amendment. Some of the older cases on this issue include Washington Legal Foundation v. Henney, Thompson v. W. States Med.Ctr., and Sorrell v. IMS Health, Inc. More recently, in U.S. v. Caronia, the Second Circuit relied on the First Amendment to reverse a criminal conviction for the off-label promotion of a prescription drug. Following Sorrell, the court first held that FDA’s ban on off-label promotion is subject to heightened scrutiny: “The government’s construction of the FDCA’s misbranding provisions to prohibit and criminalize the promotion of off-label drug use by pharmaceutical manufacturers is content- and speaker-based, and, therefore, subject to heightened scrutiny.” The court then found that construing the FDCA’s misbranding provisions to preclude off-label promotion would violate the First Amendment. To avoid this constitutional difficulty, the court summarized its decision as follows:
We construe the misbranding provisions of the FDCA as not prohibiting and criminalizing the truthful off-label promotion of FDA approved prescription drugs . . . . We 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.
Accordingly, the court reversed Caronia’s conviction.
Taking advantage of Caronia, Amarin Pharmaceuticals filed a declaratory judgment action and sought a preliminary injunction against FDA to preclude any enforcement action arising out of proposed truthful and non-misleading, but off-label, promotion of a drug, Vascepa®. Citing Amarin’s First Amendment rights, the court issued a preliminary injunction authorizing Amarin to make several specific statements or disclosures to doctors and to disseminate thirteen scientific publications concerning Vascepa®. FDA did not dispute the truth of the statements and/or they were supported by clinical trials FDA had approved. In ruling for Amarin, the court relied heavily on Caronia. FDA argued for a narrow interpretation of Caronia, limited to its facts, but the court rejected its arguments and concluded “[w]here the speech at issue consists of truthful and non-misleading speech promoting the off-label use of an FDA-approved drug, such speech, under Caronia, cannot be the act upon which an action for misbranding is based.”
The final case before Facteau involving these issues was U.S. v. Vascular Solutions, Inc. (VSI). VSI initially marketed its product, a laser used in vein ablation procedures, under a 510(k) clearance with an intended use for the treatment of varicose veins near the surface of the leg. In June 2007, VSI filed a premarket notification seeking to add an indication for perforator vein treatment to its existing clearance. Perforator veins are closer to bones. In response, FDA requested data showing Vari-Lase’s safety and efficacy in perforator vein procedures. VSI conducted a clinical trial in late 2007 but did not submit the trial data. In March 2008, FDA informed VSI that the agency considered the application to be withdrawn.
By October 2007, however, VSI had already launched the “Short Kit,” which was intended for “short vein” treatments. The government alleged that the undefined term “short vein” was intended to include perforator veins. In October 2009, VSI told its board that it would not submit a 510(k) due to the lack of clinical data supporting its perforator vein use. Nevertheless, VSI’s marketing of the Short Kit continued until 2014.
The government pursued charges against VSI for misbranding based on off-label promotion. In a motion in limine, VSI argued that the court should apply heightened scrutiny because the government was applying a content- and speech-based ban on speech. The district court denied VSI’s motion in limine, rejecting VSI’s First Amendment argument because the government stated it intended to prove the misbranding violation by relying only on conduct. The court also followed prior case law that speech may serve as an overt act in a conspiracy case, stating that “[t]he Court . . . sees no First Amendment threat from this proposed use of speech.” Despite these legal wins for the government, it lost the case when the jury acquitted VSI and its CEO of all charges.
In light of this background, we return to the Facteau case. The following excerpt from the Facteau court’s jury instructions reflect that it followed Caronia by ruling that the FDCA does not make off-label promotion a crime, but also followed VSI and other cases by ruling that the defendants’ speech could be used as evidence of a crime:
The indictment in this case does not charge any defendant with the crime of promoting a device off-label, because that is not itself a crime. Rather, the FDCA crimes charged are conspiring to introduce, and causing the introduction of, devices into interstate commerce that were adulterated or misbranded. Although you may not convict a Defendant of a crime based solely on truthful, non-misleading statements regarding off-label use, even truthful statements about an off-label use can be considered as evidence. To put it another way, to convict, there must be a criminal act. Truthful, non-misleading speech cannot be a criminal act in and of itself, but it can be evidence and therefore used by you to determine whether the government has proved each element of each offense beyond a reasonable doubt, including the element of intent.
The jury found the defendants guilty of causing the introduction of an adulterated device into interstate commerce and causing the introduction of a misbranded device into interstate commerce. The jury also found the defendants lacked the intent to defraud or mislead, so the convictions were misdemeanors, not felonies. Further, the convictions were based on the lack of a required pre-market notification for the Stratus’s intended use, and not on false or misleading labeling or lack of adequate instructions for use.
The defendants filed a motion for acquittal or new trial on multiple grounds, including the First Amendment. The gist of the First Amendment argument was that the jury rejected the government’s claim that the defendants had engaged in false or misleading speech and thus the First Amendment precluded any conviction. As noted above, however, the district court rejected this argument. Quoting Wisconsin v. Mitchell, 508 U.S. 476, 489 (1993), the district court stated “[t]he First Amendment . . . does not prohibit the evidentiary use of speech to establish the elements of a crime or to prove motive or intent.” The court concluded: “Here, the use of speech to actively market and promote the device for off-label use, as Defendants did, was evidence of their intent that the device be used for a purpose that the FDA had not approved and was not itself the crime. The Court therefore finds that Defendants’ First Amendment rights were not violated by the conviction.” The defendants have appealed. Thus, it remains to be seen whether FDA will retain its partial victory.
For now at least, despite the acquittals on the felony charges, Facteau represents a significant victory for the government. As in VSI, it is another vindication of the government’s theory that it can use speech as evidence of criminal conduct. At a minimum, the defendants have likely spent millions in legal fees and have been convicted and sentenced to pay substantial fines, in addition to the time served in prison. These results should have a deterrent effect on others employed in FDA-regulated industries. On the whole then, the First Amendment still appears to be better deployed as a shield after a company’s employee(s) have gone astray (despite thorough training), rather than as a sword with which to slash a trail of off-label promotion.
* Partner, Barnes & Thornburg LLP.
 Case No. 1:15-cr-10076-ADB (D. Mass.).
 Dkt. No. 436 at 27 (emphasis added). See also id. at 26 (“It is not illegal in and of itself for a device manufacturer to provide truthful, not misleading information about an off-label use. The FDCA does not prohibit or criminalize truthful, not misleading off-label promotion.”).
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