Big Pharma and unfiltered speech: A dangerous prescription by Mina Kimes @FortuneMagazine January 2, 2013, 6:18 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons FORTUNE — One of the most powerful weapons in the Food and Drug Administration’s arsenal is its ability to censure companies that promote drugs for unapproved uses. Before a pharmaceutical company can market a product for a new purpose, it must first show the FDA that the new use is safe and effective, often by conducting clinical trials (doctors, meanwhile, are free to prescribe products however they see fit). Companies that flout this requirement are guilty of “off-label marketing”–promoting drugs for applications that haven’t passed regulatory muster. In recent years, the Department of Justice has brought off-label marketing cases against pharmaceutical giants like GlaxoSmithKline GSK , Johnson & Johnson JNJ , and Pfizer PFE . According to a recent report by the consumer advocacy group Public Citizen, the DoJ has netted more than $4 billion in settlements related to off-label marketing over the last two years. Those days may be coming to an end. On December 3rd, the Federal Appeals Court in New York overturned the conviction of a former drug sales representative, Alfred Caronia, for conspiring to promote the sale of a narcolepsy drug called Xyrem for off-label uses such as fibromyalgia and insomnia. Caronia, who worked for a small drug maker called Orphan Medical (now part of Jazz Pharmaceutical), was sentenced to a year of probation and 100 hours of community service. He appealed, arguing that he was being punished for exercising his right to engage in free speech. The appeals court agreed. In his majority opinion (for a 2-1 panel), Judge Denny Chin argued that, since doctors are allowed to prescribe unapproved drugs, the prohibition on letting drug companies promote those same unapproved drugs amounted to an unconstitutional restriction on speech. MORE: Big plans for 2013? Start the year with a ‘mental detox’ The ruling was a huge victory for Big Pharma, which has long coveted the right to promote drugs for off-label uses. In recent years, drug companies have framed this campaign in civil liberties terms, arguing that the FDA’s regulations obstruct their right to speak freely. The conservative writer David Frum applied the same reasoning in a column celebrating the decision. “Caronia’s words became a crime only because he happened to be an employee of the company that made Xyrem,” he wrote. “How, Caronia and his employer asked, can that be constitutional?” The Wall Street Journal opinion section concurred, noting, “The dirty not-so-little secret of health-care regulation is how frequently it infringes on civil liberties.” The op-ed continued: While the FDA tries to make “off-label” drug use seem sinister and criminal, it is often the state of the art in medicine…In talking off-label uses, sales reps like Mr. Caronia are often trying to share the results of government-funded studies. By the FDA’s logic, it should have stopped the promotion of aspirin to prevent stroke and heart attack as a crime. The decision guts the FDA’s rationale for off-label speech regulation and could be a landmark that liberates companies and doctors to spread news about medical innovation. Advocates for unfiltered commercial speech often point to innocuous examples of off-label marketing, such as the use of aspirin to prevent strokes, in an effort to make the FDA’s rules seem ridiculous and overly paternalistic. But the arguments posed by Frum and the WSJ contain notable omissions. They portray doctors as isolated and information-starved, desperate to hear more news about untested medical treatments. In fact, doctors who had questions about off-label uses of Xyrem could send them to the company in a legal manner. Orphan was perfectly entitled to share independent studies with physicians. MORE: 5 science breakthroughs in 2012 The columns also fail to mention Xyrem’s serious side effects, which include depression and vomiting. They don’t say that the drug’s active ingredient is gamma-hydroxybutryate, better known as the date rape drug GHB. Because the drug was high-risk, the FDA told Orphan to label it with a special black box warning stating that its safety and efficacy had not yet been established for patients under 16. Caronia was caught telling a doctor (who was wearing a wire) that patients as young as 14 were successfully using Xyrem. “It’s a very safe drug,” he said. Some off-label uses of drugs are safe. But not all. A few months ago, Fortune told the story of Synthes, a medical device maker that was charged with promoting a bone cement, called Norian, for off-label uses in the spine. In bypassing the FDA, Synthes effectively experimented on humans, five of whom died during spine surgery. (Read Bad to the bone: A medical horror story) It’s those outcomes that worry regulators like Robert Temple, the deputy director of clinical science at the FDA’s Center for Drug Evaluation and Research. “What is worth talking about is what the consequences would be if people could promote uses that they hadn’t established, hadn’t bothered to get through the system,” Temple said at a recent FDA summit. “I’m horrified by that.” Judge Debra Ann Livingston, who wrote the dissent in the Caronia appeal, raised the same warning: “The majority’s decision today extends heightened scrutiny further than the Supreme Court ever has, and calls into question a fundamental regime of federal regulation that has existed for more than a century.” Judge Chin wrote in his opinion that allowing drug makers to speak freely about their products would not hurt the FDA’s regulatory regime. In actuality, such a change would eviscerate it. How Commercial Speech Won Greater Protection In order to better understand why Chin’s opinion is a potential game-changer, one has to first look at his reasoning–namely, his holding that corporations engaging in truthful commercial speech (basically, speech predicated on the intent to make money) deserve greater protection under the First Amendment. This is a fairly novel idea. For most of U.S. history, the government had carte blanche powers to regulate marketing. Then, in 1976, the Supreme Court struck down a law that barred pharmacies from advertising drug prices, granting some protection to commercial speech (Virginia State Pharmacy Board v. Virginia Citizens Consumer Council). MORE: Is Obamacare killing medical device startups? In the ensuing years, the court came to give commercial speech an intermediate level of protection–not as much as political speech, but more than nothing.(False and misleading commercial speech could be banned outright.) That’s basically where things stood for more than three decades. Then, in 2011, another groundbreaking Supreme Court case–Sorrell v. IMS Health–cleared the way for even greater protection of commercial speech. In Sorrell, the Court ruled that the state of Vermont could not stop pharmacies from selling data about doctors’ prescribing habits to drug marketers, arguing that such a ban inhibited the companies’ ability to engage in truthful speech. In his opinion for the 6-3 majority, Justice Anthony Kennedy ruled that, because the state’s law discriminated on the basis of speaker and content, it deserved even greater scrutiny than the guidelines established in recent decades. The Sorrell opinion was cryptic, spurring lawyers to wonder how broadly it should be read. Did it elevate commercial speech to an even higher level of protection–approaching the level accorded to political speech? When the ruling came down, many in the healthcare industry anticipated–correctly–that drug companies would soon use Kennedy’s rationale to attack the FDA’s ban on off-label marketing. Enter Caronia. Writing for the majority, Judge Chin picks up where Kennedy left off, stating at the outset that the regulation of off-label marketing discriminates on the basis of speaker and content. Chin’s point–that the ban requires greater scrutiny because it targets certain speakers and specific content–stunned some First Amendment experts. Commercial speech regulation almost always takes those factors into account. “You’re saying this deserves heightened scrutiny because it regulates based on the content and identity of the speaker, but that’s what commercial regulation does,” explains David Gans, director of human rights at the left-leaning Constitutional Accountability Center. “If that’s what it takes to justify close review, were going to have substantial changes in the legal regime.” MORE: Technology will replace 80% of what doctors do Justice Stephen Breyer made the same argument in his dissent over Sorrell, writing that “regulatory programs necessarily draw distinctions on the basis of content.” For example, he said, the Federal Reserve Board regulates loan proposals and interest rate disclosures. Energy regulators order certain appliance makers to make certain disclosures. Such rules are inherently biased. “At best,” wrote Breyer, “the Court opens a Pandora’s Box of First Amendment challenges to many ordinary regulatory practices that may only incidentally affect a commercial message.” Why the FDA Needs to Regulate Off-Label Marketing Chin writes in his opinion that the ban on off-label marketing fails to satisfy even an intermediate level of scrutiny because it does not directly advance the government’s interests. “As off-label drug use itself is not prohibited,” he writes, “it does not follow that prohibiting the truthful promotion of off-label drug usage by a particular class of speakers would directly further the government’s goals of preserving the efficacy and integrity of the FDA’s drug approval process and reducing patient exposure to unsafe and ineffective drugs.” This point fails on two fronts. First, Chin states that the rule is not necessary to preserve the FDA’s drug approval process. In fact, the rule is crucial to the process. If companies did not have to conduct clinical trials in order to procure the right to market products for new uses, why would they run trials at all? Convincing patients to undergo experimental treatment is time-consuming and expensive. There’s no reason to believe that businesses would conduct meaningful trials in the absence of any incentive, a fact underscored by Judge Livingston in her dissent: “Drug manufacturers form the entirety of those speakers that could possibly undermine the new drug approval process by not participating in it.” Chin also maintains that the ban doesn’t reduce patient exposure to unsafe and ineffective drugs. He writes that the regulatory regime hampers the ability of physicians–“sophisticated and experienced customers”–to procure information about products. This, too, fails to apprehend the realities of the industry. While doctors are certainly better-informed than most, they are hardly capable of evaluating all of the claims made by sales representatives. In the case of Synthes, for example, several surgeons told Fortune that they simply didn’t have time to scour the literature that came with devices; they trusted sales representatives to give them factual information. A 2006 study in the Archives of Internal Medicine found that 73% of off-label uses lacked scientific support. MORE: Biogen’s Paul Clancy: The other side of being a CFO The judge does leave room in his ruling for one form of regulation: the FDA can bar “false and misleading” speech. Off-label marketing proponents have latched on to this caveat, arguing that it would deter companies from making dangerous claims. But “false and misleading” is hardly a clear guideline, especially in an industry where companies have been known to lie through omission, delaying and doctoring the results of clinical trials. The ban on off-label marketing makes it easier for regulators to police drug makers’ claims, since it forces companies to confine their marketing messages to the language on their products’ labels. Lifting the ban would greatly increase the FDA’s burden; regulators would have to scan a much wider berth of communications for demonstrably false and misleading claims. Kate Greenwood, a research fellow at Seton Hall’s Center for Health and Pharmaceutical Law & Policy, is dubious that such an approach would work. “It’s very difficult to police prescription drug promotion for false and misleading claims–companies have trouble policing their own sales representatives,” she says. In a recent paper, Greenwood wrote that the Federal Food, Drug & Cosmetic Act was amended in 1962 to prohibit off-label marketing because “post-market enforcement actions against misleading claims were almost always futile.” They often took months or even years to implement. The FDA’s Office of Prescription Drug Promotion staffs about 70 officials who are currently charged with reviewing more than 80,000 marketing items a year. It would be impossible for the FDA to monitor the majority of statements made by sales representatives. Many of those messages are conveyed behind closed doors, in conversations with doctors. The Caronia decision isn’t final. The government might petition for a rehearing by the Second Circuit Court. It could also ask the Supreme Court to take up the case. Given the Court’s recent history of granting broader First Amendment rights to corporations, such a move could be risky for regulators–unless the justices take a pragmatic view. In theory, truthful speech ought to be free. In practice, some words are more potent than others. Drug makers’ marketing practices have the power to put the public in danger, which is why they merit strong regulation.