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Court Says Yes to Stem Cell Funding, Boosts Free Speech

By Mari Serebrov
Washington Editor

An appeals court Friday upheld federal funding of human embryonic stem cell (hESC) research and, in a case involving cigarette labeling, gave a boost to corporate free speech rights that could encourage biopharma to challenge restrictions on off-label promotion.

While the three-judge panel from the U.S. Court of Appeals for the District of Columbia Circuit unanimously upheld the National Institutes of Health's (NIH) 2009 guidelines that permit funding of hESC research, at least one of the judges wasn't happy with it. Judge Karen LeCraft Henderson, who had dissented when a different panel lifted a preliminary injunction on the funding last year, said the court's hands were tied by that earlier decision.

In filing Sherley v. Sebelius, researchers James Sherley and Theresa Deisher, who worked with adult stem cells, claimed the NIH guidelines violated the Dickey-Wicker Amendment, which prohibits the use of federal funds for research in which human embryos are destroyed or discarded. (See BioWorld Today, July 7, 2009, and Aug. 25, 2010.)

When the D.C. Circuit considered the injunction last year, it gave deference to the NIH's interpretation of the amendment. That interpretation distinguished stem cell research from embryonic research by defining hESC research as a discrete project separate from the cells' derivation from an embryo. Henderson, the only judge to sit on both panels, accused the majority at that time of performing "linguistic jujitsu." (See BioWorld Today, May 2, 2011.)

In a concurring opinion to Friday's decision, Henderson expanded her argument against giving deference to the NIH when it isn't the only agency affected by Dickey-Wicker. But under the law-of-the-case doctrine, Henderson conceded that the second panel was bound by the deference shown by the earlier court.

Had the appellate court not deferred to the NIH interpretation the first time around, Henderson said she believed the second panel would have invalidated the agency's guidelines.

The appellate court's lifting of the injunction also tied the hands of the lower court, which grudgingly dismissed the case last year, leading to the appeal to the D.C. Circuit. (See BioWorld Today, July 28, 2011.)

Another issue raised in the appeal was whether an agency must respond to comments submitted during rulemaking. In this case, the NIH had determined that all comments advocating a ban on hESC research funding weren't relevant, so it didn't respond to them or consider them in finalizing the guidelines under the Administrative Procedures Act (APA).

In writing Friday's majority opinion, Chief Judge David Sentelle agreed with the NIH's decision, saying the agency had to implement a policy directive laid out in an executive order issued by President Barack Obama in 2009. The order made it clear that limitations on funding for hESC research were to be removed and NIH support for such research was to be expanded, Sentelle noted.

While Judge Janice Rogers Brown acknowledged that agencies shouldn't be expected to respond to every comment received, she questioned Sentelle's reasoning, which would permit an agency to ignore comments opposed to a president's policy goals. Such reasoning leads to "the distinct possibility that the executive power will expand at the expense of the APA's regulatory scheme and judicial review will be reduced to rubberstamping preordained results," she wrote in her concurring opinion.

Brown acknowledged serious concerns about the issues raised in Sherley. "There are aspects of this case that – NIH's insouciance notwithstanding – should trouble the heart," she said.

Noting that Congress has grappled with the ethical challenges rising from advances in biotechnology, Brown said, "Disagreement is inevitable when what lies at the core of the dispute is a profound question about the boundaries of science – one that is irreducibly controversial because the slippery slope is precipitous in both directions."

Whether this is the last word on Sherley remains to be seen. Sherley and Deisher could ask for the full court to hear the case or appeal to the Supreme Court. Absent a split in opinions among the various circuits, the likelihood that the Supreme Court would grant cert is small, said Cory Andrews, senior litigation counsel for the Washington Legal Foundation (WLF).

Victory for Commercial Free Speech

The D.C. Circuit split in the other decision handed down Friday, but the majority agreed with a lower court that the FDA's rule mandating specific graphic labeling on cigarette packages violates First Amendment free speech rights.

"The right to speak and the right to refrain from speaking are 'complementary components of the broader concept of individual freedom of mind' protected by the First Amendment," according to the majority opinion, which added that free speech applies to corporations as well as individuals.

While the court recognized that restrictions on commercial speech are subject to a less stringent review than those on individual speech, it questioned how much leeway the government should have "to compel a product's manufacturer to convey the state's subjective – and perhaps even ideological – view that consumers should reject the otherwise legal, but disfavored, product."

Since R.J. Reynolds Tobacco Co. v. FDA deals with compelled speech, the decision won't set any precedent on the legality of the FDA's ban on off-label drug promotion, which is a gag on free speech, Andrews told BioWorld Today. (Andrews was the counsel of record on the WLF's amicus brief filed in Reynolds.)

But the ruling "is a victory for the cause of commercial speech," he added. And it is part of a growing trend of court decisions protecting commercial speech. That trend, along with increased penalties for off-label promotion, could encourage drugmakers to challenge the FDA's off-label regulations, Andrews said. Corporate attorneys used to try to get plea deals to settle off-label charges. But now that company executives can be effectively banned from the industry for life as a result of such settlements, drugmakers "are becoming more willing to try to protect their rights," Andrews said. (See BioWorld Today, July 31, 2012.)

And with settlements topping $1 billion in some cases, he added that drugmakers may find it cheaper to fight off-label charges on free-speech grounds than it is to settle. (See BioWorld Insight, May 21, 2012.)