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PLAINTIFF STRATEGY MAY TRIM COSTS OF DIET DRUG SUITS

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The litigation strategy used by plaintiffs alleging injury from diet drugs recalled this month could lead to an earlier and less costly resolution of product liability suits filed in federal court, legal experts say.

Meanwhile, Wyeth-Ayerst Laboratories, manufacturer of one of the drugs, has appointed a Harvard cardiologist to chair an expert panel on issues related to the popular diet drugs. Dow Corning Corp. took a similar step in 1992 when it hired former U.S. attorney general Griffin Bell to review the development, production and marketing of silicone breast implants.

Wyeth-Ayerst, a division of Madison, N.J.-based American Home Products Corp., voluntarily removed Pondimin, or fenfluramine hydrochloride, and Redux, dexfenfluramine hydrochloride, from the market Sept. 15 after the U.S. Food & Drug Administration released new data showing that as many as 32% of 291 people tested after taking either of the drugs in combination with phentermine developed heart-valve abnormalities.

Those side affects were not found in either drug when the FDA approved them for use individually.

Studies released in July by the Mayo Clinic found that either of the drugs, when used in combination with phentermine, may cause serious heart damage. That combination of drugs was prescribed to 18 million Americans last year. The lawsuits allege that the company began marketing the diet-drug combination in the early 1990s "as being safe for human use" and having "fewer side affects and adverse reactions than other methods of weight loss." The combination was prescribed until the recall.

So far, class-action lawsuits seeking unspecified amounts for medical monitoring as well as general and punitive damages have been filed in federal courts in seven states: California, Illinois, Georgia, New York, Utah, Colorado and Ha-waii.

Rather than seeking class-action certification from federal courts in each of those jurisdictions, plaintiffs' lawyers last week jointly filed an application with the Judicial Panel on Multidistrict Litigation in Washington seeking to consolidate the lawsuits, being commonly called either Fen-Phen or Redux cases.

Many of the plaintiffs lawyers likely became familiar with the MDL procedure after having been exposed to it in both the silicone breast implant litigation against Dow Corning Corp. and in the Norplant contraceptive cases against Wyeth-Ayerst. Most of the plaintiffs lawyers in the Fen-Phen suits are also involved in one or both of these other mass-tort cases.

"MDL is a procedure the federal courts use to facilitate cases with the same issues," said Richard Hinds, defense partner with Clearly, Gottlieb, Steen & Hamilton in Washington.

Mr. Hinds is not involved in the Fen-Phen cases.

However, MDL "doesn't involve the trial of those cases. The cases are transferred to the MDL judge for discovery and resolution of common issues. Then they're sent back to the trial courts" for resolution of case-specific issues, Mr. Hinds explained.

But "the MDL judge has a lot of authority," and can steer the parties toward settlement, as was the case in the breast implant litigation, he said.

For example, U.S. District Judge Sam Pointer, who was appointed by the MDL panel to carry out the MDL procedures, successfully steered the parties toward settlement of the federal court cases against the Midland, Mich.-based implant maker.

While federal MDL certification wouldn't affect cases that might be brought in state courts for various reasons, most states have mechanisms in place similar to the federal process that could speed up resolution of state litigation as well, said Mr. Hinds.

State-run MDL procedures led to successful resolution of hundreds of California lawsuits with the dietary supplement L-tryptophan, he noted.

Mr. Hinds represented Japanese pharmaceutical maker Showa Denko K.K., the primary defendant in the L-tryptophan litigation.

The use of the MDL procedure also may be more advantageous since the recent U.S. Supreme Court ruling dismantling a class-action settlement in asbestos cases, Mr. Hinds pointed out (BI, June 30). "MDL is a procedure that's advantageous to both sides. In these kinds of cases, it's hard to obtain class-action certification," he said. And "defendants usually try to avoid class-actions."

The use of MDL will cut litigation costs for both the defendants and the plaintiffs, according to Kenneth B. Moll, a Chicago lawyer who is handling the case on behalf of some 200 plaintiffs there.

"The MDL was set up to consolidate civil cases with similar facts. Fen-Phen is a perfect example," he said, given that the known class of exposed individuals is easily identifiable through prescription records.

"In this situation, all the federal court cases can be transferred to one court, and a central document repository can be constructed to give all the attorneys in the case access to court papers," he said. "That helps cut litigation costs," Mr. Moll explained.

Indeed, Judge Pointer even set up a home page on the World Wide Web so that all plaintiffs, defendants and attorneys involved in the multidistrict breast implant litigation would have easy and inexpensive access to court documents via the Internet.

Neither Philadelphia-based Wyeth-Ayerst nor American Home Products would comment on the use of MDL or on any other issues relating to the diet drug litigation.

American Home Products estimated the one-time cost of the product recall will be between $200 million and $300 million, or 20 cents to 30 cents per share after tax. A company spokesman declined to say whether American Home or Wyeth-Ayerst had product recall coverage.

In announcing the product recall on Sept. 15, Wyeth-Ayerst said it was forming an expert panel of physicians and researchers to evaluate the data and recommend additional actions to address the situation. Dr. Arthur Weyman, professor of medicine and director of the cardiac ultrasound laboratory at the Harvard University Medical School, will chair the panel.

In June, American Home also hired a New York public relations firm, Robinson, Lerer & Montgomery, to do crisis public relations after reports alleging health risks appeared in medical journals, newspapers and on the Internet, a company spokesman confirmed. One of the public relations firm efforts has been to place full-page advertisements in major daily newspapers advising of the recall. The company also established a toll-free telephone number for users or physicians to obtain information on refunds, prescribing or to contact a medical affairs representative.

However, the spokesman would not say whether the move was part of an overall loss mitigation strategy.

The spokesman said the company is insured for the potential liability loss but declined to provide specifics of the coverage. American Home's risk manager referred all Business Insurance inquiries to its public relations department.

American Home acquired rights to sell the drugs in the United States from its maker, Interneuron Pharmaceuticals of Lexington, Mass. The drugs have been sold in Europe for nearly a decade by French drug maker Laboratoires Servier S.A. Servier pulled the drugs from pharmacies worldwide two weeks ago.