Four years later, federal court upholds convictions but harshly criticizes off-label prosecutions

On September 14, 2020, a federal judge in Boston became the most recent jurist to wade into the legal thicket of "off-label" promotion in United States v. Facteau, condemning the governing "statutory and regulatory scheme" and questioning whether Congress ever intended to criminalize off-label marketing in the first place.  Notwithstanding this sharp criticism, Judge Allison Burroughs denied a Rule 29 motion brought by two former Acclarent executives following their 2016 misdemeanor convictions for adulteration and misbranding of a medical device under the Food, Drug and Cosmetic Act (FDCA). The decision will likely draw attention both in the First Circuit and beyond.

FDCA and off-label promotion

The FDCA criminalizes adulteration or misbranding "of any food, drug, device, tobacco product, or cosmetic in interstate commerce," including the introduction or delivery of adulterated or misbranded products into interstate commerce.  21 U.S.C. § 331(a)-(b).  For many years the government has prosecuted individuals and companies under these provisions for promoting products for "unapproved" uses. The precise theory under which the federal government brings an off-label case case for adulteration or misbranding for medical devices depends on whether the medical device received formal pre-market approval or 510(k) clearance.  Pre-market approval is an intensive, time-consuming process during which a device manufacturer must demonstrate the safety and effectiveness of a medical device to the FDA.  See 21 C.F.R. 814.44.  Alternatively, 510(k) clearance is a shorter process through which a device manufacturer must demonstrate that the medical device at issue is substantially equivalent to an already approved device.  See 21 C.F.R. 807.92.

As a general matter, however, the federal government has relied on off-label promotion to prosecute claims under the theory that a medical device becomes adulterated or misbranded when it is promoted for a use other than that for which it was intended or approved.  Intent to defraud or mislead is required for felony adulteration and misbranding but is not required for a misdemeanor, which is a strict-liability crime.  See 21 U.S.C. § 333(a).

The legal waters become particularly murky when the promotion in question is truthful and not misleading.  In a seminal decision, the Second Circuit held in United States v. Caronia, 703 F.3d 149 (2d Cir. 2012) that truthful, non-misleading speech cannot sustain a criminal conviction, but such speech can constitute evidence of an intended use other than the one approved by the FDA. Thus, where questions of intended use, criminal intent, and truthful speech collide, courts (and juries) face difficult challenges when confronting criminal cases, especially those involving strict-liability (misdemeanor) charges.

Acclarent

Acclarent received 510(k) clearance from the FDA in 2006 for Stratus, a spacer device approved to deliver saline to the sinuses. The government alleged that the defendants engaged in both felony and misdemeanor misbranding and adulteration under the FDCA by marketing and promoting Stratus as a drug delivery device – an off-label use – instead of for delivering saline.

A jury cleared the defendants of the felony charges but convicted them of the misdemeanor charges, after which the defendants filed a Rule 29 motion for a judgment of acquittal or, in the alternative, a new trial.  The defendants raised several arguments in their motion, including that their convictions were based on truthful, non-misleading speech and therefore violated their First Amendment rights. They also argued that their due process rights were violated because they were held strictly liable as Acclarent officers for adulteration.

Ruling

Setting aside the court’s skepticism about the theories of prosecution, the defendants faced an uphill battle procedurally because Rule 29 requires the court to consider the evidence and jury verdict in the light most favorable to the government. Relying on Second Circuit precedent, the Court rejected the defendants’ argument that their convictions were impermissibly based on speech alone and instead found that the evidence supported their convictions for failure to submit premarket notification for a new intended use of Stratus. The court relied on the jury instructions, which warned that the defendants’ truthful, non-misleading speech could not be the sole basis for their conviction, as well as the government’s closing arguments, which focused on the absence of premarket notification.

The court also rejected the defendants’ due process argument against strict liability, noting that the Supreme Court approved of the imposition of strict liability on corporate officers for misdemeanor adulteration in United States v. Park. Although the evidence at trial demonstrated the defendants’ direct involvement in this case, the court acknowledged in a footnote that "there is something troubling about a criminal conviction based on strict liability in a situation where the accused may legitimately have had no idea who was going on far below him on the corporate ladder." 

Takeaways

The Facteau decision is significant for several reasons. First, the defendants are likely to appeal, which will give the First Circuit an opportunity to weigh in on the relationship between the First Amendment and off-label promotion.  As the court noted, "[t]he First Circuit has not yet considered the line between off-label promotion that is truthful and non-misleading and the FDA’s ability to regulate speech relative to off label promotion."

Second, the court considered the defendants’ motion for over four years, acknowledging in its decision that the issues were "challenging." As to the defendants’ First Amendment argument, the court highlighted that "[c]urrently 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." Id. The court’s language is likely to become significant in future challenges to adulteration and misbranding convictions, particularly within the First Circuit.

Third, this decision highlights the continued risk to corporate officers through Park liability for the off-label promotion activities of employees. Though rejecting the defendants’ due process argument, the court devoted an entire footnote to questioning the wisdom and fairness of Park liability, joining a chorus of attorneys and judges who question the continued use of the doctrine.

Learn more about the implications of this decision by contacting the authors or your DLA Piper relationship attorney.