United States v. Facteau

89 F.4th 1

UNITED STATES of America, Appellee, v. William FACTEAU, Defendant, Appellant.

United States of America, Appellee, v. Patrick Fabian, Defendant, Appellant.

No. 21-1080

No. 21-1082

United States Court of Appeals, First Circuit

December 14, 2023

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Allison D. Burroughs, U.S. District Judge]

Reid H. Weingarten, with whom William Hassler, Shannen W. Coffin, Bruce C. Bishop, Steptoe & Johnson LLP, Michael Pineault, and Anderson & Krieger LLP were on brief, for appellant William Facteau.

Frank A. Libby, Jr., with whom Brian J. Sullivan, and Libby Hoopes Brooks, P.C. were on brief, for appellant Patrick Fabian.

Randall E. Kromm, Assistant United States Attorney, with whom Nathaniel R. Mendell, Acting United States Attorney, was on brief, for appellee.

Joel Kurtzberg, Adam S. Mintz, John S. MacGregor, Jason Rozbruch, Cahill Gordon & Reindel LLP, Cory L. Andrews, John M. Masslon II, and Washington Legal Foundation on brief for Washington Legal Foundation, amicus curiae.

Douglas Hallward-Driemeier, Kelli B. Combs, Joan McPhee, Ropes & Gray LLP, Paul E. Kalb, Coleen Klasmeier, Erika L. Maley, and Sidley Austin LLP on brief for Amgen Inc., Biosplice Therapeutics, Inc., Boehringer Ingelheim Pharmaceuticals, Inc., Bristol Myers Squibb Company, Eli Lilly and Company, GlaxoSmithKline LLC, Novartis Pharmaceuticals Corporations, and Pfizer Inc., amici curiae.

Jeffrey S. Bucholtz, Michael R. Pauzé, John C. Richter, Alexander Kazam, and King & Spalding LLP on brief for Howard Root, amicus curiae.

Jeffrey L. Handwerker, Elisabeth S. Theodore, Samuel F. Callahan, Arnold & Porter Kaye Scholer LLP, James C. Stansel, Melissa B. Kimmel, and Kelly Goldberg on brief for Pharmaceutical Research and Manufacturers of America, amicus curiae.

Jeffrey L. Handwerker, Elisabeth S. Theodore, Samuel F. Callahan, Arnold & Porter Kaye Scholer LLP, Daryl Joseffer, Andrew R. Varcoe, and U.S. Chamber Litigation Center on brief for Chamber of Commerce of the United States of America, amicus curiae.

Before Gelpí, Lipez, and Thompson, Circuit Judges.

LIPEZ, Circuit Judge.

After a thirty-day jury trial, appellants William Facteau and Patrick Fabian, former executives of the medical device manufacturer Acclarent, Inc., were found guilty of multiple misdemeanor violations of the Federal Food, Drug, and Cosmetic Act ("FDCA") for commercially distributing an adulterated and misbranded medical device. See 21 U.S.C. § 331(a). The charges related to a device developed and sold by Acclarent that the government alleged served an intended use different from the one for which it had been cleared by the U.S. Food and Drug Administration ("FDA").

On appeal, appellants assert that their prosecutions violated their First Amendment rights, relying on an emerging body of law protecting commercial speech that promotes off-label uses of medical products. Appellants also argue that their convictions violated due process under the Fifth Amendment. Fabian further contends that the jury was wrongly instructed about what evidence it could consider, that the evidence was insufficient to support his conviction, and that the $500,000 fine the court imposed on him is excessive under the Eighth Amendment.

We reject all of these claims and affirm.

I.

The FDCA strictly limits the ways in which manufacturers may market medical devices, including a prohibition on the distribution of "adulterated" or "misbranded" devices. A device is adulterated or misbranded if its "intended use" -- as determined objectively by the seller's statements and conduct -- differs from the use(s) for which the FDA has cleared it.

Facteau, former CEO of Acclarent, and Fabian, the company's former vice present of sales, played prominent roles in the marketing of a new device for the treatment of chronic sinusitis, the Relieva Stratus Microflow Spacer ("Stratus"). Acclarent obtained preliminary approval to market Stratus for use as a "spacer" that would dispense a saline solution to the ethmoid sinuses and maintain an opening created by sinus surgery. Facteau and Fabian were convicted of unlawfully marketing Stratus to dispense a steroid, an "off-label" (i.e. unapproved) use, and fined $1 million and $500,000, respectively.

A. Legal Framework Governing Medical Devices

The FDCA has prohibited the distribution of adulterated or misbranded medical devices since its original enactment in 1938. With the Medical Device Amendments of 1976 ("MDA"), Pub. L. No. 94-295, 90 Stat. 539, "[i]n response to the mounting consumer and regulatory concern" over the lack of premarket review of medical devices, Congress broadened the statute's coverage to regulate the introduction of new medical devices to the market as well. Medtronic, Inc. v. Lohr, 518 U.S. 470, 476, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996). This statutory scheme classifies "devices intended for human use" based on the level of risk to the public, with Class III devices presenting the most risk and correspondingly incurring the strictest regulation. 21 U.S.C. § 360c(a)(1)(C); see Lohr, 518 U.S. at 476-77, 116 S.Ct. 2240; Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341, 343-44, 121 S.Ct. 1012, 148 L.Ed.2d 854 (2001). Devices not on the market before 1976 -- and thus all new devices -- are initially placed by default in Class III. 21 U.S.C. § 360c(f)(1).

1. Premarket Approval and § 510(k) Clearance

Class III devices must receive "premarket approval" ("PMA") from the FDA before they can legally be marketed. See § 360e(a)(2). The PMA process is "time-consuming," Buckman, 531 U.S. at 348, 121 S.Ct. 1012, because it requires the device's manufacturer to demonstrate a "reasonable assurance" that the device is safe and effective, id. at 344, 121 S.Ct. 1012. See also Lohr, 518 U.S. at 477, 116 S.Ct. 2240.

A new device can avoid PMA review, however, if the FDA clears it through the "premarket notification" or "§ 510(k)" process,¹ which results in the device's reclassification from Class III to Class I or II. Lohr, 518 U.S. at 478-79, 116 S.Ct. 2240. A new device can obtain § 510(k) clearance if the FDA determines that it is "substantially equivalent" to a predicate device -- that is, a pre-1976 device or a post-1976 device that previously was moved from Class III to Class I or II. See § 360c(f)(1)(A)(ii); 21 C.F.R. § 807.92(a)(3); Buckman, 531 U.S. at 345, 121 S.Ct. 1012. A new device is "substantially equivalent" to a predicate device if it (1) has the "same intended use" and (2) either has the same technological characteristics or the same safety and effectiveness profile. 21 U.S.C. § 360c(i)(1)(A); 21 C.F.R. § 807.100(b).

At least ninety days before introducing a new device to the market, a manufacturer seeking § 510(k) clearance must submit a premarket notification to the FDA. 21 C.F.R. § 807.81(a). This premarket notification submission includes a "510(k) summary" identifying the predicate device and describing the device submitted for clearance, including its "intended use." 21 C.F.R. §§ 807.87(h), 807.92(a)(3)-(5).² The submission must also contain "[p]roposed labels, labeling, and advertisements sufficient to describe the [device submitted for clearance], its intended use, and the directions for its use." Id. § 807.87(e).

2. "Intended Use"

If the manufacturer of a device that is being marketed after receiving § 510(k) clearance makes a "major change or modification" in the device's intended use, the manufacturer must submit another premarket notification at least ninety days before marketing the device for the new use. 21 C.F.R. § 807.81(a)(3)(ii). This new notification must include supporting data showing that the manufacturer has considered the "consequences and effects the . . . new use might have on the safety and effectiveness of the device." Id. § 807.87(g).

Whereas the FDA determines the intended use of a new device based solely on the proposed labeling submitted with its premarket notification, see 21 U.S.C. § 360c(i)(1)(E)(i), it determines the intended use of a device already cleared for commercial distribution by reference to the "objective intent of the persons legally responsible for the labeling" of the device ("labelers"), 21 C.F.R. § 801.4 (2020).³ Labelers' "expressions" -- such as "labeling claims, advertising matter, or oral or written statements by [labelers] or their representatives" -- are one source of evidence for determining their "objective intent." Id. Labelers' "objective intent" may also be established by the "circumstances surrounding the distribution" of the device. Id.

3. Adulteration, Misbranding, and Off-label Use

The FDCA prohibits the "introduction or delivery for introduction into interstate commerce of any . . . device . . . that is adulterated or misbranded." 21 U.S.C. § 331(a). Violating this prohibition "with the intent to defraud or mislead" is a felony; a violation absent such intent is a misdemeanor. Id. §§ 333(a)(1)-(2). Misdemeanor offenses of commercially distributing adulterated or misbranded devices are strict-liability crimes. United States v. Dotterweich, 320 U.S. 277, 284, 64 S.Ct. 134, 88 L.Ed. 48 (1943).

A device is "adulterated" under § 351(f)(1)(B) if, as a Class III device, it is "required to have in effect an approved application for premarket approval" but moves in interstate commerce without the required PMA. See also United States v. Universal Mgmt. Servs., Inc. Corp., 191 F.3d 750, 754 (6th Cir. 1999). When a device that received an initial § 510(k) clearance is marketed for an intended use that represents a "major change or modification" from the cleared use without clearance for that change, the device is also considered "adulterated." 21 C.F.R. § 807.81(a)(3)(ii). As relevant here, a device is "misbranded" if the manufacturer fails to submit a "notice" to the FDA "as required by . . . section 360(k)." 21 U.S.C. § 352(o). The "notice" referenced by the statute is the new premarket notification required when a device that...