This article was originally published in FDA Flash!, The Official Blog of the American Intellectual Property Law Association (AIPLA) FDA Committee, on April 25, 2016.
Those teaching mathematics are familiar with the principle that students receive only partial credits for answers that do not show the steps. The process of getting to an answer is important because it allows the teacher to see that the student can replicate the results when faced with a similar problem. Therefore, no steps = no full credit.
Unfortunately, this seems to be the case with the courts’ holdings on off-label promotion and the First Amendment. Although a recent string of cases has held that off-label promotion does not constitute misbranding under FDCA if the speech is truthful and non-misleading, these cases do not provide guidance on who bears the burden of proving the false or misleading nature of the speech, and what the standard of proof should be. This is a key step because one does not reach the First Amendment question until the question on truthfulness is answered correctly. Without the courts showing us this first step (proof standard), companies cannot know whether their answer is correct (whether a particular off-label promotion is lawful).
In United States v. Vascular Solutions, Inc. et al., 5:14-CR-00926 (Feb. 25, 2016) (or “VSI”), however, the Court had an opportunity to set these standards. VSI would have been an ideal case to set these standards because the case had involved factual disputes about the truthfulness of the defendants’ speech. Unfortunately, the VSI Court avoided giving a direct answer, despite the defendants’ express request that the Court establish such a standard before the trial.
The case is important nonetheless for three reasons.
Because VSI was decided by a jury trial, a full reasoning showing the jury’s decision-making process is not available. However, the parties’ motions and the Court’s rulings on those provide some guidance on the above issues. Below, we provide a review of the VSI case and elaborate on the three points above.
VSI is a medical device company marketing medical devices used in vein ablation procedures. Vein ablation involves “burning” poorly performing veins with laser to re-route blood flow to healthier veins. VSI initially marketed its product, Vari-Lase, under a cleared premarket notification (or “510(k)”) with indications for ablation of superficial veins.
In 2006, one of VSI’s competitors obtained FDA clearance of a 510(k) for ablation of perforator veins – veins that are located further away from skin and closer to bones. VSI, however, could not market its device for perforator vein treatments because its premarket clearance did not include the additional indication.
In June 2007, VSI filed a premarket notification seeking to add an indication for perforator vein treatment to its existing clearance. 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 term “short vein” – an undefined term – was intended to include perforator veins. In October 2009, VSI told its board that it will 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.
On November 13, 2014, the government brought this case against VSI in the District Court for the Western District of Texas. The initial indictment included one count of conspiracy, four counts of adulteration, and four counts of misbranding charges against VSI and its CEO Howard Root. The government argued that the Short Kit was misbranded because it lacked marketing authorization, and the devices did not bear adequate directions for use.
On December 2, 2015, the government filed a Superseding Indictment, which did not include adulteration charges. On February 26, 2016, the jury acquitted VSI and Howard Root of all remaining charges (misbranding and conspiracy) brought by the government.
The parties’ briefs show stark differences on many issues, including on the availability of the First Amendment defense. These arguments are summarized below, along with the Court’s ruling.
Defendants first argued that the Court should apply heightened scrutiny to the case at hand because the government was applying content- and speech-based ban on speech used in off-label promotion. In the alternative, even if heightened scrutiny does not apply, defendants argued that the government’s prosecution still fails the Central Hudson test because it seeks to suppress speech through more extensive means than necessary.
Next, defendants attacked the government’s position that it can use speech as evidence of intent. According to the defendants, permitting this would allow FDA to evade the First Amendment and unlawfully burden the speech, even when the speech is protected under the First Amendment. Additionally, the motion argued the government should disclose the speech it intends to use at trial, and that the Court should examine them to determine their admissibility based on truthfulness. If the speech is truthful, it would not be presented to the jury.
Finally, the motion asked the Court to establish a standard for what constitutes false or misleading speech, and in particular, that the government should prove the speech was actually misleading, instead of only potentially misleading. In doing so, the defendants asked the Court to adopt the Lanham Act’s standard on truthfulness, which requires a plaintiff to prove a substantial subset of the intended audience was misled.
In responding to the defendants’ motion, the government directly attacked the underlying premise in the defendants’ argument that the prosecution was speech-based. The government emphasized that its indictment was constructed around the defendants’ conduct rather than speech, and that Caronia and Amarin were inapplicable for that reason. In addition, the government argued that the First Amendment jurisprudence permits evidentiary use of speech in inferring a defendant’s intent, and that it could use the speech as an overt act in a conspiracy case.
The government also argued that in any case, the defendants could not seek the First Amendment protection because the speech as alleged in the indictment were false and misleading. Among others, the government cited the defendants’ statements to doctors about the Short Kit’s clearance status, Medicare’s reimbursement for the Short Kit, and the clinical trial results as examples of false and misleading speech.
Lastly, if the Court considered the case to be criminalizing speech, the government suggested that the Court should instruct the jury that truthful off-label promotion is lawful, instead of making individual and burdensome determination on the truthfulness of each part of the contested speech.
In a relatively short memorandum (8 pages), the Court denied the defendants’ motion in limine and adopted much of the government’s position. First, the Court rejected the defendants’ First Amendment argument because the government stated it intends to prove the misbranding violation by only relying on conduct. Second, the Court affirmed the 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.”
The Court also declined to accept the defendants’ suggestion to import the Lanham Act’s “substantial subset” truthfulness standard into the case here. The Court explained that the Lanham Act’s standard on truthfulness is not applicable because the Lanham Act’s truthfulness standard is based on the Act’s express statutory language, and FDCA did not contain such a provision. The Court could see no justification for importing the Lanham Act’s requirement into FDCA.
Unfortunately, the Court did not offer an alternate standard the government could rely on to show the falsity or misleading nature of the speech. This may have been because the Court felt that providing a jury instruction (as it did) that truthful off-label promotion is not a crime is sufficient.
In its ruling against the defendants’ motion to dismiss, the Court distinguished Amarin from VSI, stating Amarin had involved truthful speech. FDA had lost in Amarin. But it was not all in vain because the Amarin Court had given the government some guidance for future cases. Specifically, the Court had stated, “Caronia leaves room for prosecuting off-label marketing as misbranding” when the defendants’ speech is false or misleading, or if the government’s prosecution is based on conduct instead of speech.
In VSI, the government faithfully followed this approach, and designed its case around those two points. First, the government emphasized the defendants’ conduct and did not argue that off-label promotion itself is unlawful. Throughout the case, it took painstaking care to characterize its argument as one based primarily on VSI’s conduct by repeatedly stating that “[t]he charges here punish conduct and not protected speech,” and that “[r]ather than promotional speech to doctors, the United States will rely on the following conduct to prove the intended use of the devices.”
Second, to the extent that the government relied on VSI’s speech, the government argued that the speech serves to provide overt acts in the conspiracy charge, and that in any case, that the defendants’ speech did not deserve the First Amendment protection because they were false and misleading. Indeed, the government’s motions in VSI seem to suggest that it wanted its case to almost exclusively be based on VSI’s conduct, possibly to avoid having to litigate the same issues litigated in Caronia and Amarin.
Ultimately, this strategy was successful. Despite the defendants’ best efforts, the First Amendment issues in Caronia and Amarin never dictated the flow of this case. The VSI Court rejected the defendants’ First Amendment argument twice – once because factual disputes on truthfulness existed and again later because the government’s case focused on criminal conduct rather than criminalizing speech. Although the jury ultimately acquitted the defendants, the government’s success in avoiding the First Amendment issues represented a meaningful win.
In addition, some of the government’s statements suggest that it may be accepting, albeit grudgingly, the holdings in Caronia and Amarin that truthful speech in off-label promotion cannot form the basis of a misbranding violation. The government conceded this in its briefs, stating in its response to motion to dismiss that the United States instructed the grand jury that “mere offlabel speech or promotion [i]s not a crime.”
Then, in its response to the defendants’ motion in limine based on the First Amendment, the government even took one step further and suggested that the court include the following jury instruction if in the court’s view, the government’s charges “treat speech itself as a crime.”
“If you find that VSI’s promotional speech to doctors was solely truthful and not misleading, then you must find the Defendants not guilty of the misbranding offenses.”
This is a major shift from the government’s position in Caronia and Amarin, in which FDA had taken the position that pharmaceutical companies’ off-label promotion is unlawful. These statements seemingly lead one to conclude that FDA is adopting a new position. We should note, however, that the government qualified its concessions with a footnote, stating, “although the United States disagrees with these decisions in some aspects, the present prosecution fully complies with the holdings in those cases.” Unfortunately, the government did not clarify which “aspects” of Caronia and Amarin it agrees with, and which it disagrees with.
While it might be a bit premature to fully concede a sea change, the government’s approach in VSI indicates a possible shift in its enforcement strategy in off-label promotion cases. Moreover, it is even possible that the government could be accepting the holdings in Caronia and Amarin as settled law. Whether this indicates a true shift in FDA’s position, or whether FDA will continue to enforce its old position on off-label use despite the recent setbacks remains to be seen.
As briefly discussed, the VSI court did not make an express decision on which party has the burden of proving the false or misleading nature of a speech. However, the Court’s ruling on the defendants’ motion in limine suggests that the Court may consider FDA to bear the burden of proving the falsity or misleading nature of the speech at issue.
Before the jury trial began, the defendants asked the court to provide a standard delineating how the government should prove falsity. In particular, the defendants asked the Court to hold that “to prove that a communication was actually misleading, the government must prove that the communication misled a substantial subset of its intended audience.”
The Court declined this request, stating there was no justification to import the Lanham Act’s “substantial subset” standard into FDCA. In doing so, however, the Court never raised issue with the defendants’ contention that the government should have the burden of proof in such cases. The question about who has the burden of the proof is a question that must be determined before the question on what the standard of proof should be. If in the Court’s view the burden lay with the defendants, it easily could have denied the defendants’ motion on the ground that the government does not have the burden of proof. But the Court did not take that approach.
Moreover, it seems that the government also is not in disagreement with the defendants on who has the burden of proof. In its response, the government simply asserted that it should only be required to prove that speech is not solely truthful and misleading, rather than being required establish that the speech is wholly false. Again, the government never argued that the burden should rest with the defendants. That the government may consider itself as having the burden of proof is significant in that this may continue in future prosecutions as well.
VSI was certainly a disappointing loss for the government; it had designed its arguments around the holdings from Amarin, and the facts in VSI were favorable to the government. Despite this, the jury acquitted the defendants on all counts.
However, VSI should not be viewed as signaling the end of FDA’s prosecution in off-label promotion cases. First, VSI was decided by a jury trial; the government simply may have failed to convince the jury on the facts surrounding the conduct. It could also be that the jury believed the government was really criminalizing speech and not alleging VSI’s conduct was criminal. At any rate, the government’s enforcement strategy mostly remains intact even after VSI; most importantly, the VSI Court had agreed with the government that using speech as evidence or an overt act is not a violation of the First Amendment. We expect the government in future cases will exploit this holding and continue its enforcement efforts following its VSI prosecution strategy.
For that reason, pharmaceutical companies and medical device companies must continue to take extreme caution in engaging in off-label promotion. Companies should carefully review statements made to doctors during promotion, and must also carefully control even internal communications and conducts (e.g., clinical trials or manufacturing operations) as FDA may view them as evidence of violative conduct. Moreover, what constitutes “truthful and non-misleading” speech in off-label promotion still remains unclear. Until that is clarified, companies should aim to possess data that meets or exceeds the Amarin-level to support its speech before engaging in off-label promotion. Deviation from these practices could result in successful FDA enforcement actions, which no company would want to face regardless of outcomes in courts.
Perhaps most importantly, VSI demonstrates the need for FDA to clarify its position on whether it intends to adopt the holdings of Caronia and Amarin, and the standards it plans to use to determine speech’s truthfulness, or at least to clarify those “aspects” of these cases with which FDA agrees. While disagreements over what those standards are may continue, clarification would at least give the industry the option to comply, and allow issues that require the judiciary’s attention to be quickly identified and resolved. Without specific standards, the industry is substantially less able to comply because it is left to speculate. Leaving these uncertainties unaddressed would only lead to a waste of the agency’s and the industry’s resources in continued litigation.
 False or misleading speech does not receive constitutional protection under the First Amendment. See United States v. Caronia, 703 F.3d 149 (2d Cir. 2012).
 FDA had cleared VSI’s 510(k) for the main console as early as in 2003 (K033237), with additional clearances for accompanying accessories in the following years.
 Perforator vein treatment is riskier and more difficult than superficial vein treatment because of perforator veins’ location in deep vein systems.
 The parties had made almost identical arguments earlier in the trial on the defendants’ joint motion to dismiss based on the First Amendment. See Memorandum in Support of Howard Root’s Motion to Dismiss, United States v. Vascular Solutions, Inc. et al, No. 5:14-cr-00926 (S.D.Tex. Aug. 13, 2015), ECF No. 76; See Joint Memorandum, United States v. Vascular Solutions, Inc. et al, No. 5:14-cr-00926 (S.D.Tex. Aug. 13, 2015), ECF No. 80; See Order Denying Motion to Dismiss, United States v. Vascular Solutions, Inc. et al, No. 5:14-cr-00926 (S.D.Tex. Nov. 16, 2015), ECF No. 128. The Court denied the defendants’ motion to dismiss because the government argued, and the defendants did not concede that they engaged in false and misleading speech. Factual dispute regarding the truthfulness of the speech prevented the Court’s granting of the motion to dismiss.
Defendant Root had also submitted an additional, separate memorandum in support of the motion. See ECR No. 76. In that memorandum, Root made three main arguments: 1) FDA’s regulation regarding off-label promotion is unconstitutionally vague in violation of the Fifth Amendment, 2) the indictment violates the First Amendment, and 3) the government’s fraud charge fails because the indictment never alleges Root made any statements to FDA. Id. The Court rejected all of these arguments. See ECR No. 128.
 The government did not respond to the defendants’ argument regarding the proper scrutiny to be applied in this case. In its opposition to the previous motion to dismiss, the government had responded that determining the proper level of scrutiny was not required because this case revolved around conduct, instead of speech. Presumably, it was for the same reason that the government decided not to address this point here. See United States’ Response to Motion Dismiss at 32, United States v. Vascular Solutions, Inc. et al, No. 5:14-cr-00926 (S.D.Tex. Oct. 2, 2015), ECF No. 107.
 In ruling on the defendants’ motion in limine, the Court chose to not address the government’s argument that its conduct-based prosecution is not subject to Caronia and Amarin. Additionally, the Court’s ruling did not address the parties’ dispute on whether speech can serve as evidence of intent, or whether speech can be over acts in a conspiracy case. See ECR No. 128 at 5.
 See Memorandum and Order Denying Defendants’ Motion in Limine at 5, United States v. Vascular Solutions, Inc. et al, No. 5:14-cr-00926 (S.D.Tex. Jan. 27, 2016), ECF No. 213.
 Amarin Pharma, Inc. v. FDA, No. 15 Civ. 3588(PAE), 2015 WL 4720039, at *27 (S.D.N.Y. August 7, 2015).
 Among others, the government pointed to the following conduct:
ECF No. 178 at 8.
 See ECF No. 107 at 23 (“Similarly, the prosecution can (but does not need to) prove intended use exclusively through conduct that does not involve any protected speech to doctors”).
 See United States’ Response to Motion in Limine at 6, United States v. Vascular Solutions, Inc. et al, No. 5:14-cr-00926 (S.D.Tex. Jan. 12, 2016), ECF No. 178.
 See ECF No. 107.
 Id. at 28.
 ECF No. 178 at 2.
 Id. at 15 (emphasis added).
 See ECF No. 187 at 8 (“[T]he Court . . . should clarify how the government must prove that speech it wants to rely on was false or misleading and therefore unprotected and how the jury may so find”) (emphasis added); see also ECF No. 158 at 21 (“The crux of the disagreement here is thus about what counts as truthful speech and, more precisely, the circumstances under which a statement that is literally true can still be misleading and thus unprotected. To ensure that the trial proceeds according to clear rules and that the parties understand what the government needs to prove, the Court should set ground rules about what constitutes misleading speech”) (emphasis added).
 ECF No. 158 at 29.
 Some commentators argue that this burden should rest with pharmaceutical manufacturers. See Christopher Robertson, When Truth Cannot Be Presumed: The Regulation of Drug Promotion Under an Expanding First Amendment, 94 B.U. L. REV. 545 (2014).