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Drugmaker product liability shields set for legal tests

Posted On: Sep. 14, 2008 12:00 AM CST

Complex legal issues will coalesce in the next several months to shape the future of product liability for makers of pharmaceutical drugs and medical devices.

Those issues include federal agency actions, past U.S. Supreme Court rulings and an upcoming case calling for constitutional interpretations as well as legislation in Congress.

At issue is whether manufacturers that market medical products with warning labels approved by the U.S. Food and Drug Administration are immune from state law product liability lawsuits that claim the companies failed to adequately warn consumers about products' potentially dangerous side effects.

Tens of thousands of plaintiffs currently are pressing product liability claims against medical product manufacturers, and that has scared insurers away from writing product liability coverage for the industry, according to the Washington-based Pharmaceutical Research & Manufacturers of America.

The FDA has sided firmly with manufacturers in recent years, stating in preambles to its regulations that the rules pre-empt, or bar, product liability claims against companies governed by the regulations (BI, June 30).

Most recently, the FDA late last month closed a public comment period on a proposed rule that would grant liability immunity to drugmakers that fail to warn that their products could have dangerous side effects on women who are pregnant or breast-feeding.

However, the FDA refused to comment on liability immunity for the manufacturers that it ordered on Sept. 4 to strengthen warning labels on drugs formulated to treat arthritis and Crohn's disease. While the labels already warned that patients could develop fungal infections, the warnings were not as prominent as the FDA now wants. The FDA said 45 of the 240 patients who used the drugs and developed fungal infections have died.

The Supreme Court has been more willing to shield medical device manufacturers than drugmakers, a legal dichotomy that attorneys say is rooted in the U.S. Constitution's Supremacy Clause. Under the clause, federal law and federal agency regulation supersede conflicting state law.

If a federal law or regulation expressly states it pre-empts state law, a court would have to determine only whether the federal law or regulation at issue in a case intended to pre-empt the state law that a defendant is challenging.

That concept came into play in February, when the high court ruled in Riegel vs. Medtronic Inc. that the Medical Device Amendments of 1976 to the federal Food, Drug, and Cosmetic Act expressly bar state court lawsuits against device manufacturers (see box).

Drugmakers, however, have no such expressly stated liability shield in the FDCA, attorneys note. Instead, drugmakers argue they are immune from liability under the legal concept that pre-emption of state-allowed claims against them is implied.

That argument would require a court in a product liability case to find that at least one of three scenarios exist: Congress left no room for state regulation on the issue, the pertinent state law in the case conflicts with federal law or enforcing the state law would frustrate federal objectives.

Without comment, the Supreme Court in March narrowly upheld an appeals court ruling that allowed a product liability case filed under a Michigan law to proceed, because the state law was not designed to police the FDA.

But the Supreme Court is scheduled to revisit the question in Wyeth vs. Levine in the court's upcoming term.

In that case, the Vermont Supreme Court upheld a nearly $6.8 million product liability claim against Wyeth because the company's FDA-approved warning label on anti-nausea drug Phenergan only cautioned physicians about, but did not disclaim, a quick-injection method. The plaintiff's artery was nicked during the injection, causing gangrene in an arm that eventually had to be amputated.

There is a stronger pre-emption argument in Wyeth than in the case the Supreme Court allowed to proceed earlier this year, said defense attorney James M. Beck of Dechert L.L.P. in Philadelphia. That's because in Wyeth, the FDA knew of the risk associated with a drug infusion method and addressed it, and the plaintiffs contend the infusion method should not have been allowed, he said.

But even if the Supreme Court rules in favor of drugmakers in Wyeth, consumers who have suffered debilitating side effects after taking medications would have other legal recourse, according to the attorneys and PhRMA. They just could not claim the manufacturers failed to adequately warn consumers, they said.

Plaintiffs attorneys argue that limiting consumers' ability to pursue state law failure-to-warn claims violates states' rights and would leave injured patients no practical legal recourse, wrecking a regulatory and liability system that has worked well in policing corporate conduct for decades.

"It was never the intention (of Congress) for the FDA to occupy the field of drug safety," said plaintiffs attorney Sol Weiss, a partner with Anapol Schwartz P.C. in Philadelphia. Unlike the National Highway Traffic Safety Administration, for example, the FDA does not design and conduct tests of the products it regulates, Mr. Weiss said.

Without the ability to argue that drugmakers failed to provide adequate product warnings, consumers would have to prove the drugs are defective, said Allison Zieve, an attorney with consumer advocacy group Public Citizen in Washington.

But all drugs are defective, essentially, because all cause some type of side effect, Ms. Zieve said. So consumers are looking for an adequate amount of accurate information in product warning labels to help them decide whether to use a drug, she said.

The Supreme Court's ultimate ruling in Wyeth, however, may not be the final word on drugmakers' liability.

Medical device manufacturers saw that shortly after their Supreme Court victory in Riegel.

Congress already is considering legislation, the Medical Device and Safety Act of 2008, that would guarantee patients the right to press state law product liability claims against medical device manufacturers.

Plaintiffs attorneys predicted the bill will not pass this year, because Republicans would not want to support a measure that President Bush likely would veto.

But the bill has bipartisan support and could be enacted during the next Congress, regardless who wins the presidential election, Mr. Weiss said. Barack Obama is a co-sponsor of the bill and John McCain has not expressed opposition to it, he said.

Ms. Zieve, however, said the bill's fate would be far more uncertain if Mr. McCain were elected.

Some legal experts predict that Congress would attempt to enact similar immunity limitations on drugmakers if the Supreme Court rules for manufacturers in Wyeth.

That's why even an unquestionable victory for drugmakers in Wyeth likely would not lead to a softer product liability insurance market in the short term, said Jim Walters, a Philadelphia-based managing director of the Aon Life Sciences Group at Aon Risk Services Inc.

Insurers, wanting to see how Congress will react, will "be reluctant to move quickly," Mr. Walters predicted.