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Feb. 29 — In a blow to the federal government, a Texas federal jury found device maker Vascular Solutions Inc. (VSI) and its chief executive officer not guilty in a criminal case that accused them of illegally promoting a device used for treating varicose veins.
The government’s indictment alleged that VSI and CEO Howard Root conspired to violate the Federal Food, Drug, and Cosmetic Act and sold misbranded medical devices. However, a unanimous jury in the U.S. District Court for the Western District of Texas found them not guilty on each of the counts.
Senior U.S. District Judge Royce Lamberth, who sat by designation in the case, has entered an order dismissing the case, and the Department of Justice can't appeal it, VSI said in a Feb. 26 press release announcing the end of the case.
The unanimous not guilty verdicts don't bode well for future prosecutions of companies for promoting off-label or unapproved uses of their medical products, attorneys told Bloomberg BNA Feb. 29.
“The government held this case out as being an important one from an FDA enforcement perspective and hand-picked it to send a message to industry, so it is should be viewed as a substantial loss,” John Richter and Michael Pauze of King & Spalding's Washington office said Feb. 29. Richter and Pauze were lead counsel for VSI in the case.
“The jury’s verdict demonstrates that, if the First Amendment is to be taken seriously, prosecuting off label promotions will become more difficult,” Cory Andrews, senior litigation counsel at the Washington Legal Foundation, told Bloomberg BNA in a Feb. 29 e-mail. WLF is a Washington-based public interest group with a free-market/free-enterprise orientation. WLF has been the named plaintiff in several cases challenging government policy on off-label promotion.
“Off-label promotion concerns alone with no or insufficient evidence of false or misleading information are going to be a tough sell to judges and juries,” Katie McDermott, an attorney with Morgan, Lewis & Bockius LLP in Washington, told Bloomberg BNA Feb. 29. It's a “sobering loss” for the government, she added.
“When you get these cases before a jury, they tend to think, ‘What's wrong with what these people did?' ” attorney Bert W. Rein, of Wiley Rein LLP, told Bloomberg BNA Feb. 29.
“This is a tough road because the government's position is highly technical and that's hard for people to grasp,” Rein said in a phone call.
Under long-standing policy at the Food and Drug Administration, companies can be subject to criminal prosecution and civil liability if they promote their products for uses for which the agency hasn’t specifically approved them. Manufacturers argue that the FDA's restrictions on promotions violate their free speech rights under the First Amendment.
“This is another nail in the coffin for the FDA's off-label promotional policies,” John Kamp, consulting counsel to Wiley Rein LLP in Washington and executive director of the Coalition for Healthcare Communication, told Bloomberg BNA in a Feb. 29 telephone interview. The Coalition for Healthcare Communication is an industry group that promotes the free exchange of scientific and medical information.
“I think the off-label promotional policies are going to be revised and I hope fairly soon,” Kamp said.
“[T]his jury’s rejection of DOJ’s off-label criminal theory represents a stunning blow to the government’s off-label enforcement program,” Richter and Pauze said in an e-mail.
In the meantime, the agency has recently suffered multiple setbacks to its off-label promotion policy in 2015, most recently in cases involving the drug companies Amarin Pharma Inc. and Pacira Pharmaceuticals Inc. .
“There have been a number of cases, of which this is only the latest, that the government has lost in this area,” Alan R. Bennett, senior counsel at Ropes & Gray LLP in Washington, told Bloomberg BNA in a Feb. 29 e-mail.
“While many cases involving manufacturer speech are settled, those that do go to trial often do not turn out well for the government; I’d guess juries are particularly reluctant to convict for alleged speech violations where there is an individual defendant and no allegation of patient harm,” he said.
“These cases put considerably more pressure on FDA to relax its decades-old stance on off-label promotion, and to issue a policy that is consistent with the Constitution. The touchstone now is becoming whether marketing is truthful, not whether it is ‘on-label,' ” Richter and Pauze said.
Meanwhile, industry is still waiting for the FDA to revise its guidance in this area.
Although Janet Woodcock, director of the agency's Center for Drug Evaluation and Research (CDER) has promised new off-label guidance in the wake of recent jurisprudence around the First Amendment, the agency hasn't released any yet.
“Almost two years ago, the FDA announced it was re-thinking its off-label policy and promised to issue new draft guidance by the end of 2014,” Richter and Pauze said. “It’s been well publicized that a lack of consensus among senior leadership at FDA and HHS has created administrative gridlock on this issue.”
“I think the agency is going through something akin to the various stages of grief … denial, anger, bargaining, depression, and finally acceptance,” Bennett said. “Sometime in the foreseeable future, the FDA will simply have to come to terms with court decisions ... that find its traditional methods of regulation inconsistent with the First Amendment.”
The case against VSI and Root dates to 2014, when the government alleged that they marketed devices from VSI's Vari-Lase line of products designed to treat varicose veins by burning or ablating them with lasers to seal off veins deep in the leg, even though the products were cleared by the FDA solely for the treatment of superficial veins. The government also alleged that they engaged in a criminal conspiracy to defraud the federal government by concealing those illegal sales.
In a Feb. 26 company statement, Root assailed the government's “abusive and dishonest conduct” in its pursuit of the case, calling out several attorneys by name.
“We are appalled by the malicious behavior and lack of substantive oversight of the government officials who pursued this matter,” he said.
Root also asked the government to issue a corrective press release to retract “multiple false and misleading public allegations made by the Department of Justice” regarding the matter.
“We respectfully disagree with Mr. Root’s comments about the trial team,” a Justice Department spokesperson told Bloomberg BNA in a Feb. 29 e-mail. “We respect the jury’s decision and have no further comment.”
The law firm of King & Spalding LLP in Washington was lead counsel for VSI. Local counsel for VSI was Johnny K. Sutton of Ashcroft Sutton & Reyes in Austin, Texas.
The law firm of Fredikson & Byron PA in Minneapolis was lead counsel for Root. Local counsel for Root was John E. Murphy, of San Antonio, Texas.
Bud Paulissen and Christina Laura Playton, assistant U.S. attorneys with the U.S. Attorney's office in San Antonio, Texas, and Charles John Biro and Timothy T. Finley of the Department of Justice's Consumer Protection Branch in Washington, represented the government.
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A copy of the jury verdict is at http://src.bna.com/cWD
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