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Pharmaceutical companies and their sales staff can’t be prosecuted for promoting drugs for “lawful,” unapproved uses, a federal appeals court said, reversing a conviction of a salesman.

Alfred Caronia, a sales representative for Orphan Medical Inc., was convicted in 2008 of conspiracy to introduce a misbranded drug into commerce by promoting the narcolepsy medication Xyrem for unapproved uses. Under the U.S. Food, Drug and Cosmetic Act, or FDCA, doctors are allowed to prescribe drugs for unapproved uses while drugmakers and their sales representatives are barred from promoting such prescriptions.

Caronia appealed, contending that the conviction violated his First Amendment right of freedom of speech. The U.S. Court of Appeals in New York yesterday found that the government “clearly prosecuted Caronia for his words” and reversed the conviction.

“The government cannot prosecute pharmaceutical manufacturers and their representatives under the FDCA for speech promoting the lawful, off-label use of an FDA-approved drug,” U.S. Circuit Judge Denny Chin said in a 2-1 decision. “The proscribed conduct for which Caronia was prosecuted was precisely his speech in aid of pharmaceutical marketing.”

Dean Boyd, a Justice Department spokesman, declined to immediately comment.

‘Repeatedly Prosecuted’

The U.S. has “repeatedly prosecuted” drug companies and sales representatives for off-label promotion, the appellate court said, citing multiple cases including one that resulted in a $3 billion settlement by GlaxoSmithKline Plc earlier this year.

The 2-1 decision by the appeals court may restrict such prosecutions in the future, U.S. Circuit Judge Debra Ann Livingston said in her dissent. “The majority calls into question the very foundations of our century-old system of drug regulation,” she wrote.

That system “developed to protect consumers from misleading and unsubstantiated claims about drugs’ safety and efficacy, and the prohibition on off-label promotion by drug manufacturers is essential to maintaining the effectiveness of that system,” Livingston said.

The U.S. claimed that Caronia engaged in improper promotion of Xyrem in 2005 while working for Orphan Medical. Orphan Medical was acquired that year by Dublin-based Jazz Pharmaceuticals Plc, according to the appeals court.

The case is U.S. v. Caronia, 09-5006-cr, U.S. Court of Appeals for the Second Circuit (New York).