Posted On Thursday, December 6, 2012
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On November 29, 2012, the U.S. Court of Appeals for the Fourth Circuit affirmed the conviction of Roger L. Day, Jr., who was sentenced to 105 years imprisonment for a multi-million dollar scheme to defraud the U.S. Department of Defense. Following his jury trial in the Eastern District of Virginia, Day was convicted of orchestrating a scheme where he and co-conspirators created false companies to bid on parts-supply contracts for the Defense Logistics Agency, a subsidiary of DOD responsible for parts acquisition for the military. Under the guise of the false companies, Day and his co-conspirators would then use software designed by Day to allow bidding en masse on low-dollar value DLA parts contracts.
After being awarded the contracts, the conspirators shipped inexpensive and non-conforming parts to DLA with the expectation that the government could not inspect each and every part. Very often, DLA would not return non-conforming parts and would pay the full dollar value of the contract, although the company would be debarred from future DLA contracts. However, the conspirators would discard the debarred company and create another false company to replace it. The conspiracy spanned three years and involved 987 DLA contracts valued at $8.67 million.
On appeal, Day challenged his 105 year sentence which resulted from enhancements due to his attempt to bribe officials to escape from custody, a subsequent escape attempt, and an attempt to enlist Mexican cartel members to attack his prison van to permit him to escape. Day also challenged as unreasonable the trial court’s decision to impose a $3 million fine, over $6 million in restitution, and forfeiture award of over $2 million, plus, in gold and vehicles. The Fourth Circuit, however, found these arguments to be without merit and affirmed the judgment of the trial court. The complete decision in United States v. Day, No. 11-5218 (4th Cir. Nov. 29, 2012) can be found here.
Posted On Tuesday, December 4, 2012
Drug manufacturers may not be prosecuted for promoting off-label uses of their products, the U.S. Court of Appeals for the Second Circuit ruled Monday.
The court concluded that federal drug laws do not criminalize off-label promotion, so long as it is truthful and not misleading. To rule otherwise, the court wrote, “would raise First Amendment concerns” because off-label use of prescription drugs generally is not illegal.
The 2-to-1 decision in United States v. Caronia, No. 09-5006-cr, slip op. (2d Cir., December 3, 2012) has potentially wide-ranging ramifications for pharmaceutical regulation and free-speech law.
In Caronia, a pharmaceutical sales representative promoted to doctors off-label uses for Xyrem, a powerful central-nervous-system depressant with an active ingredient that is classified as a date-rape drug. The FDA had approved Xyrem for use by narcolepsy patients who suffer either from excessive daytime sleepiness or cataplexy, a condition involving sudden weakening or paralysis of muscles. But Caronia touted the drug’s benefits for treating other disorders, including insomnia, fibromyalgia and Parkinson’s disease. Based on this off-label promotion, Caronia was charged with and convicted of conspiring to introduce a misbranded drug into interstate commerce.
On appeal, Caronia argued that the conviction violated his First Amendment right to free speech. Avoiding the constitutional question, the Second Circuit instead ruled that the criminal ban on misbranding does not cover off-label promotion. But the court made clear that an interpretation of the law that allowed prosecution for off-label promotion would “run afoul of the First Amendment.”
“[P]rohibiting off-label promotion by a pharmaceutical manufacturer while simultaneously allowing off-label use ‘paternalistically’ interferes with the ability of physicians and patients to receive potentially relevant treatment information,” the court wrote.
Judge Debra Ann Livingston dissented, saying the majority’s opinion “calls into question the very foundations of our century-old system of drug regulation.”
A link to the full decision can be found here.
