Alison Frankel reports that:
... a divided three-judge panel of the 2nd Circuit vacated the conspiracy conviction of Alfred Caronia, a pharmaceutical sales representative who was involved in the off-label marketing of an FDA-approved narcolepsy drug called Xyrem. The Justice Department, which charged Caronia under the Federal Drug and Cosmetic Act, did not allege that he lied or misrepresented the truth when he told a physician about off-label (but related) uses for the drug, but merely that he conspired to introduce a misbranded pharmaceutical product into interstate commerce. Second Circuit Judges Denny Chin and Reena Raggi found that Caronia’s prosecution was a violation of his First Amendment right to free speech. And they went a step further: Citing the U.S. Supreme Court’s 2010 decision in Sorrell v. IMS Health, Chin and Raggi held that the FDCA cannot restrict off-label marketing, as long as it’s truthful. ...
... To be clear, the appellate decision does not (and cannot) impose First Amendment protection on misrepresentations by pharma companies. Fraud is fraud and can still be prosecuted.
I'm not a constitutional lawyer nor do I even play one on TV, but I can't help wondering if this commercial speech case has implications for the SEC's massive system of regulating corporate disclosures. Granted, the SEC clearly can prosecute fraud. But if the FDCA can't prohibit truthful marketing of drugs, how can the SEC regulate truthful efforts to sell securities or regulate the truthful solicitation of proxies?
If Citizens United and Sorrell portend greater judicial sensitivity for the free speech rights of corporations in both the political and commercial speech contexts, maybe it's time for someone to mount a serious challenge to the SEC disclosure system.