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If FDA says a drug is safe, is a state court allowed to declare that it isn't? If FDA has approved a drug's labeling, can the states decide that more would have been better and that pharma companies, by not including information that goes beyond the FDA-approved label, can be held liable for failure-to-warn?
These are some of the issues that have been working their way through the courts in recent months. At stake, in the long run, is pharma's ability to rely on FDA rulings as a defense against liability suits. That larger issue is a year or more away from hitting the Supreme Court, but the Court took an important step forward in September, when it agreed to hear the case now known as Warner-Lambert v. Kent. The case, which involves a Michigan statute and the diabetes drug Rezulin (troglitazone), promises to provide early signals of the Court's thinking, as well as potentially changing the playing field for pharma. To find out more, we turned to Mark Herrmann, a partner in the Chicago office of law firm Jones Day.
What are the details of the Warner-Lambert case?
It's part of a multidistrict litigation where a collection of people have sued the same company. There is a Michigan law that governs at least the claims of Michigan residents. Part one of the Michigan law says essentially that drug companies are immune from liability for FDA-approved products. But part two says the plaintiffs are allowed to sue if they can show that the drug company defrauded FDA. The question in Warner-Lambert v. Kent is whether that exception can exist, or whether it is displaced by federal law so there is no exception. If there is no exception, then the Michigan law would just be: Plaintiffs can't sue the drug company, period.
What does fraud against FDA mean?
Well, there's a battle over that too. If you leave the meaning of fraud on FDA open, it becomes a loophole that trucks can drive through, because there is always some scrap of information that companies didn't send to FDA. If the plaintiffs can say that's fraud, then in essentially every case you have a claim of fraud on FDA.
Some say fraud on FDA should mean FDA itself discovered the fraud—perhaps even prosecuted the company for having defrauded. If that happened, then private plaintiffs can sue. Otherwise, the private plaintiffs haven't shown a fraud on FDA, so they shouldn't be allowed to sue.
Relatively few states have laws like Michigan's. What are the implications for the industry in this case?
Eight states have laws that you would say could make a big difference to pharma. Michigan's is the strongest because you simply cannot sue the drug company unless the drug company defrauded FDA. The next strongest statute that's still a huge help to the drug industry is the one in Texas that says you cannot sue a drug company for a failure-to-warn claim unless the company defrauded FDA. Then six other states have laws that say you cannot recover punitive damages from a drug company unless the drug company defrauded FDA; the six include New Jersey, where an awful lot of companies are headquartered. So the stakes are reasonably high—but not as high as they will be when the next case comes up.
What is that case and what are the high-stakes issues for pharma in that case?
People are watching a couple of cases. One is Colacicco v. Apotex, which is set for argument in the Third Circuit Court of Appeals on December 10. Another is the cert petition in Levine v. Wyeth. They want to see which will be first to grapple with the big, broad preemption issue that has the potential to give some real protection to drug companies.
As for the issues, the Supreme Court hasn't taken a case yet. But the general question will be whether FDA so heavily regulates the warning, manufacture, and design of drugs that private plaintiffs simply don't have the right to sue because it would be second-guessing decisions made by an expert federal agency—and whether it is wrong to let lay juries examining claims in the presence of an injured plaintiff second-guess decisions that were made by government experts.
FDA has stated that it believes that it preempts state laws and state precedent on issues like this. What's the legal standing for the claim of preemption?
Well, from the drug companies' perspective, it comes from the Constitution. The Supremacy Clause of the United States Constitution says, basically, that federal law is supreme, therefore, state law must give way to it.
Sounds like a pretty strong claim. Why is it under such siege at the moment?
In January 2006, FDA issued new labeling regulations and, as part of the preamble to those regulations, said some words that work in favor of industry in terms of preemption. And since those words have been written by FDA, preemption is getting raised in a whole lot more lawsuits, making that area of law very, very hectic. There are probably a dozen decisions pro and a dozen decisions con on preemption that have come down since FDA issued its so-called Preemption Preamble.
When the courts have found against FDA, what tend to be the grounds?
It hurts for me to say it, since I'm a defense lawyer, but some courts say that FDA's requirements are minimum requirements and that drug companies could do more. So if FDA says you have to give a warning about X, some judges have held that it would be possible to give a warning of X plus Y; therefore, state suits shouldn't be preempted, because what FDA says is just the minimum. In the Preemption Preamble, FDA says that what it is doing is setting both a minimum and a maximum and that there are dangers of overwarning. It gives some strength to the drug industry's argument that failure-to-warn claims, for example, ought to be preempted.
The Preemption Preamble obviously is not something that was passed by Congress. What kind of legal weight does it carry?
That, too, is being fought in the courts. Some are saying that the Preemption Preamble expresses the agency's view that its regulations are preemptive, which is sort of the strongest form of the industry's point of view. A less-strong version of the industry's point of view is that the Preemption Preamble simply makes clear that it interferes with what FDA is doing to have jury verdicts that impose different requirements on companies. So it is FDA speaking to a factual rather than a legal point. It's saying, It makes our job much harder if state juries interfere with what we're doing.
If preemption stands, what happens in a situation like Vioxx, where there are a lot of cases. Is Merck protected from lawsuits because the drug was approved?
Well, there are two different preemption issues. There is sort of the soft-form preemption that is up in Warner-Lambert v. Kent; and then there's strong-form preemption that is percolating through the courts. If the Supreme Court comes down on industry's side in Warner-Lambert v. Kent, then Merck would not be able to be sued in Michigan, Merck would not be able to be sued for failure-to-warn in Texas, and Merck would not be exposed to punitive damages in the six other states that have statutes that say you can't get punitive damages unless the company defrauded FDA. With the stronger form of preemption, it could be that either failure-to-warn claims are displaced or all claims are displaced; or, if the Supreme Court goes against industry, no claims are displaced. The stakes are high in Warner-Lambert, because the stakes get higher when the broader form of preemption—the Preemption Preamble sort of preemption—goes up to the Supreme Court.
So what's the big picture for pharma?
In the short-term, Warner-Lambert against Kent is a lock. It will tell you whether or not these statutes that protect companies—unless they defrauded FDA—work. And if the Supreme Court goes in favor of industry, then you get some protection in eight states. And then the 600-pound gorilla is the next preemption decision; one of the cases that have not yet been accepted by the Supreme Court.
It sounds like preemption might be better public policy than reevaluating drugs on the jury level, state by state, over and over.
Having an expert agency that is adequately funded, competent, and determining the best-possible warning label—and then leaving that warning label alone—makes a whole lot of sense. Having lay juries that are sitting in the presence of a person who's hurt saying, "Well, you could've warned a little more this way or a little more that way," is not going to get you scientifically neutral and independent decisions on what the warnings should be.
Industry Insider Mark Herrmann is a partner in the Chicago office of Jones Day and the author of several books, including the indispensable Curmudgeon's Guide to Practicing Law. In partnership with James M. Beck of Dechert LLP, he is proprietor of the widely read product-liability blog Drug and Device Law (druganddevicelaw.blogspot.com).