On September 20, 2023, the U.S. Court of Appeals for the Ninth Circuit held in United States v. Marschall, 2023 U.S. App. LEXIS 24886 (9th Cir. Sept. 20, 2023), that certain felony offenses for introducing misbranded drugs into commerce do not require proof of scienter. This is significant because companies and individuals engaged in marketing, shipping, or selling misbranded drugs could be charged with a felony despite the lack of criminal intent.

In Marschall, the defendant-appellant, a “naturopathic physician” who treated patients by using mainly natural means, was convicted in 2017 under 21 U.S.C. §§ 331 and 333(a) for selling misbranded drugs. Three years later, in 2020 and at the beginning of the COVID-19 pandemic, he was at it again. This time he published a series of posts on social media claiming that two products, which he advertised as the “Dynamic Duo,” could prevent and treat over a hundred viral, bacterial, fungal, and parasitic infections, including COVID-19. Neither of the two products contained in Dynamic Duo was listed in FDA’s Electronic Drug Registration and Listing System, and FDA had not reviewed the products’ safety and effectiveness.

These posts attracted FDA’s attention. An FDA special agent posing as an average consumer reached out to the appellant and recorded phone call conversations with him about Dynamic Duo. The agent placed an order and ran a chemical analysis of the substances received in the shipment, which revealed that Dynamic Duo contained unspecified sugar and garlic-related components, rather than any active pharmaceutical ingredients or controlled substances (which also likely would have been problematic given that FDA had not reviewed the drugs’ safety and effectiveness).

Given the appellant’s prior 2017 conviction, he was indicted under the recidivist prong of introducing misbranded drugs into interstate commerce. Following a jury trial, the appellant was found guilty because (1) the labeling of Dynamic Duo was false and misleading; and (2) Dynamic Duo was not included in any list of drugs manufactured, prepared, propagated, compounded, or processed in an FDA-registered establishment. He was sentenced to eight months’ imprisonment.

On appeal, the appellant contended that the indictment was defective because it failed to allege the requisite scienter, i.e., that he knew that the labeling of Dynamic Duo was false and misleading. The Ninth Circuit examined the statutory language of the Food, Drug, and Cosmetic Act (“FDCA”), including the misbranding provisions codified at 21 U.S.C. § 352, and concluded that none of the various provisions describing the underlying prohibition imposes a scienter requirement, and the court determined that it would not otherwise impose one. The Ninth Circuit observed that this was so not only for the recidivist provision of the statute under which the appellant was convicted, but also for the base offense criminalizing the same. Accordingly, the Ninth Circuit affirmed the felony conviction and held that the government is not required under the FDCA to prove that the defendant knew the drugs were misbranded, thereby imposing a strict liability regime.

This case offers three takeaways:

• The case reflects that FDA is taking a proactive approach to enforcement. FDA’s ongoing enforcement actions (including warning letters, inspections, and investigations) involving misbranded COVID-19 treatments can be expected to include monitoring and surveilling of online advertising, as well as other undercover activities. Companies should consider reviewing their online advertising in light of FDA policy and precedent.
  
  
• Companies and individuals, particularly in the Ninth Circuit, should be aware that the FDA may be emboldened by the Marschall decision, which allows the government to seek criminal penalties without showing scienter. This is significant in that it makes enforcement potentially quicker and easier for FDA.
  
  
• Companies and individuals engaged in the manufacturing, distribution, and marketing of prescription drugs should closely review their labeling and endeavor to ensure that it is above reproach.