Hunton Employment & Labor Perspectives

The Second Circuit this week overturned the conviction of a pharmaceutical sales representative for conspiracy to engage in “off-label” marketing in violation of the Food, Drug & Cosmetic Act (the “Act”) in a decision that has implications for “whistleblower” cases brought against pharmaceutical employers by their employees.  In United States v. Caronia, No. 09-5006-cr, 2012 WL 5992141 (2d Cir. Dec. 2, 2012), a divided panel held that the Act could not be interpreted to criminalize truthful “off-label” marketing because such a reading would render the Act an unconstitutional violation of the drug manufacturer’s First Amendment rights.  “Off-label” marketing occurs when a drug or device is approved for one purpose but is marketed for other, non-approved purposes.

In recent years, manufacturers of medical and pharmaceutical products have increasingly had to defend against wrongful discharge claims and “whistleblower” suits by employee sales representatives who opposed or refused to engage in the illegal off-label marketing of drugs or devices.  In Caronia, however, the Second Circuit eliminated the underlying basis of those suits by decriminalizing the conduct that the employee might have opposed as unlawful.  As a result, pharmaceutical employers now have the defense that their conduct was constitutionally protected speech. 

It is widely expected that the government will ask the Second Circuit to reconsider its decision in Caronia en banc.  Should the Second Circuit decline, the government will have no choice but to seek review from a Supreme Court that has shown itself to espouse a broadly pro-speech, anti-regulation First Amendment philosophy such that the Caronia decision is likely to stand.

For more information on the decision, please see our Client Alert.