pharmaceuticals

An Explosion of Litigation

by Hans Bader on March 13, 2009 · 1 comment

in Bailout Watch, Economy, Employment, Healthcare, Labor, Legal, Politics as Usual, Precaution & Risk, Privacy, Regulation, Stimulus to Nowhere

Already burdened by $8 trillion in new federal spending commitments and the likelihood of higher taxes to pay for bailouts, pork, and welfare, the economy now faces an additional threat: an explosion of litigation.

Even liberal Washington Post columnist Michael Kinsley can’t stand the Supreme Court’s liberal 6-to-3 ruling in Wyeth v. Levine, which let a patient sue an innocent drug maker for an injury caused by a physician’s assistant who disregarded repeated warnings by the drug maker. (The ruling indirectly “will cost lives“). As Kinsley notes,

“Diana Levine, a professional guitarist, showed up at the hospital for the second time in one day complaining of . . . hours-long spasms of ‘retching’ and ‘vomiting.’ She was injected with an anti-nausea drug called Phenergan. The label on Phenergan says six times, in different ways, some of them in boldface capital letters, that if Phenergan gets into the arteries, the result can be disastrous. Nevertheless, a physician’s assistant used the wrong method of injection, and Levine’s arm turned gangrenous and ultimately had to be amputated.”

“The drug company Wyeth has sold Phenergan, with Food and Drug Administration approval, since 1955. The official question in Wyeth v. Levine, decided last week by the Supreme Court (the quotes above are from Justice Samuel Alito’s dissent), was whether that federal government approval “pre-empts” a Vermont jury ruling in favor of Levine. The court said no. A more interesting question is: How did we end up with such a crazy system for making important decisions? . . .”

“What happened to Diana Levine is a tragedy and a scandal. But what did Wyeth do wrong? Is there any way the company could have stayed out of trouble? It’s unlikely. Phenergan has been legal for half a century. (If you Google the word “Phenergan,” the results include pages containing an ad for Phenergan online.) So if you can’t get them for the product itself, you nail them for a “failure to warn.” The basic fiction at the heart of the whole system of regulation by lawsuits is that people read and act on warning labels. But the FDA approved Wyeth’s original warning label and every change since. “Not good enough,” said a Vermont jury, and, incredibly, a majority of the Supreme Court agreed.”

The arbitrary litigation fueled by this decision will cost lives over the long run by discouraging medical innovation, notes Gordon Crovitz in the Wall Street Journal. Jim Copland and Paul Howard call the counterproductive Wyeth decision “a ‘cure’ worse than gangrene.”

Ted Frank calls the Wyeth decision the most anti-business decision in more than 40 years. Yet, amazingly, the liberal New York Times, which wants even more lawsuits, accused the Supreme Court of “reflexive deference to corporations“!!!

Greg Conko observes that the jury’s decision was baseless and undermined the FDA’s labeling process. “The physician’s assistant injected Phenergan into Ms. Levine’s artery, in direct contravention of six label warnings against arterial injection. More or sterner warnings against arterial injection would not have prevented Ms. Levine’s injury.” “FDA made a regulatory decision that the benefits of IV injection outweighed the risks, and the agency permitted the product to be labeled accordingly. . . letting a Vermont jury penalize Wyeth for not ruling out IV injection on Phenergan’s label is tantamount to letting a group of laymen over-rule FDA’s expert opinion regarding safety.” Yale Law School’s Peter Schuck similarly criticizes the Supreme Court’s decision.

Don’t expect any help from Congress. Incredibly, it is moving to abolish what little limits there currently are on state court lawsuits that undermine federal drug-labeling requirements. The day after the Wyeth decision, trial lawyer allies like Rep. Henry Waxman (D-Cal.) proposed legislation to completely abolish any preemption of such lawsuits, even in the exceedingly narrow circumstances where the Supreme Court admits preemption is appropriate.

Drug and device lawyers explain the Wyeth decision as being partly the judiciary’s reaction to the 2008 election, when liberal politicians friendly to lawsuits, and hostile to (often mythical) “deregulation,” made big gains. As the humorist Finley Peter Dunne noted a century ago, the Supreme Court reads election returns.

Workplace lawsuits also will rise. A costly comparable-worth bill backed by the Administration, the Paycheck Fairness Act, passed the House earlier this year on a largely party-line vote. And a law that largely eliminates the statute of limitations in pay-discrimination cases, the Lilly Ledbetter Fair Pay Act, was signed by Obama in January. Obama made false claims about the Supreme Court decision the Ledbetter law overturned (and the facts of that case), and broke campaign promises he made by signing it into law without the opportunity for public comment.

Obama also backs the so-called Civil Rights Restoration Act, which would radically rewrite federal discrimination law in several ways, such as scrapping limits on punitive damages (and allowing them in situations never before permitted by any federal court), and making schools liable for many more instances of “peer harassment” by students (increasing the pressure on colleges to adopt speech codes).

Other “radical employment law changes will create lots of work for attorneys,” according to the National Law Journal.

The economy-shrinking stimulus package Obama signed also contains multiple provisions creating new grounds for lawsuits. It contains increased damages and state attorney-general rights to sue under the burdensome and expensive HIPAA law, which contributed to the Virginia Tech shootings, has impeded public safety, and causes billions of dollars in losses due to pointless red tape. The stimulus package also contains vague and expansive whistleblower provisions allowing suits over actual or perceived wrongdoing.

The Administration also shows no interest in tempering the excesses of a law Obama supported, the Consumer Product Safety Improvements Act, which has shut down thrift stores and entire industries, and gives state attorney generals and their trial lawyer allies broad new powers to bring lawsuits over toys, clothes, and books, resulting in children’s books being thrown out and pulled from library shelves by the thousands.

Yes, “Botch” is the right word.

by Greg Conko on March 5, 2009 · 2 comments

in Healthcare, Legal, Personal Liberty, Precaution & Risk, Regulation

I certainly take Alex’s point that libertarians can disagree about the appropriateness of federal preemption of state tort law. Indeed, Justice Thomas’s concurring opinion lays out a strong textual case against implied preemption of state law in all cases. However, there are a few points I was not able to make in yesterday’s post that better elucidate why preemption is better policy given the narrow facts presented in Wyeth v. Levine. And, Justice Alito’s dissenting opinion — after pointing out a few misleading statements of fact in Justice Stevens’s majority opinion — shows why, if one accepts the current state of implied preemption caselaw, the Court’s majority decision is bad law.

Stevens’s majority opinion asserts that, regardless of FDA’s regulation, “the manufacturer bears responsibility for the content of its label at all times.” It further argues that, FDA can’t keep track of all safety issues that arise after a drug is approved, that the agency never specifically made a determination regarding the safety of IV-push administration, and that Wyeth could have changed its label without FDA’s pre-approval after receiving information regarding the risk of arterial injection of Phenergan.

However, as Justice Alito’s dissent makes clear, FDA repeatedly and intensively investigated this exact question after cases of severe tissue damage connected to the use of Phenergan began to emerge after the drug’s approval in 1955, and the agency approved several changes to the drug’s label that boosted the warnings accordingly. Indeed, Levine and her attorneys conceded that, in 1988, Wyeth proposed a label change that “if followed, would have prevented the inadvertent administration of Phenergan into an artery,” but the FDA rejected that language. Further, no new evidence of Phenergan’s risks has emerged in decades.

The Court majority nevertheless concluded that there was some other conceivable way for Wyeth to have ramped up its warning short of Levine’s preferred route of ruling out IV-push injection altogether, which the FDA rejected. Thus, FDA regulation is a “floor” below which state law cannot fall, but that the agency’s drug labeling regulation should not preempt state tort laws that require a more strict approach.

Unfortunately, that conflicts with reasonable and long-standing Court precedent regarding implied conflict pre-emption of state laws elucidated most recently in Geier v. American Honda. As Justice Alito’s dissent makes clear, “the ordinary principles of conflict pre-emption turn solely on whether a State has upset the regulatory balance struck by the federal agency.” That is exactly what has happened here.

There is no such thing as a perfectly safe drug, but on balance most drugs offer more benefit than harm. Congress established the FDA and enacted the Food, Drug and Cosmetics Act and subsequent amendments giving the agency statutory authority over questions of safety and efficacy because it believed that a federal expert body could most effectively balance the benefits and risks of new medicines. FDA made a decision that permitting IV-push injection provides greater benefits than could be achieved with the alternative of deep tissue injection, and that those benefits outweighed the risks. Permitting state tort law to over-ride that determination upsets the regulatory balance struck by FDA.

Thus, contrary to Alex’s suggestion, allowing Ms. Levine’s claim here would in effect act as a ban – not one that removes the drug from the market, but one that removes one “safe and effective” use of the drug from its label. And, while physicians may prescribe a drug for an “off-label” use, if a use is not identified on the label, the manufacturer can’t tell anyone about it. That restricts the ability of doctors to receive information about possible uses, and it means that some patients will not be able to benefit from some drugs.

Finally, it is relevant, as Alex notes, that the existence of FDA regulation as a legal floor means that the tort system acts as a check on FDA decision-making, but only in one direction: toward greater regulation. Alex is right. “This IS one of these questions about what to do in the real world, where first-best solutions just aren’t politically possible” (emphasis added). So, I think it’s reasonable for we libertarians to support the less bad position that, if our society is going to create a regulatory gatekeeper for drugs and empower it to make risk-benefit balancing decisions on our behalf, then we should not permit lay juries to ratchet up that regulation in circumstances in which all reasonably available information about risks and benefits is internalized into the system.

Supreme Court Botches Preemption Case

by Greg Conko on March 4, 2009 · 7 comments

in Healthcare, Legal, Regulation

The Supreme Court handed down its decision this morning in the Wyeth v. Levine federal preemption case, holding, by a 6-3 majority, that “Federal law does not pre-empt [plaintiff Diana] Levine’s claim that [the Wyeth drug] Phenergan’s label did not contain an adequate warning about the IV-push method of administration.” Justice Stevens wrote the majority opinion, joined by Justices Kennedy, Souter, Ginsburg, and Breyr, and with Justice Thomas concurring in the judgment. Justice Alito wrote a compelling dissenting opinion, joined by Chief Justice Roberts and Justice Scalia. Guest blogger Bert Rein and I separately commented on the case here, here, here, and here.

According to Justice Stevens’ majority opinion, “The history of the [Food Drug and Cosmetics Act] shows that Congress did not intend to pre-empt state-law failure-to-warn actions.” Fair enough, but this isn’t a typical failure-to-warn case. As Justice Alito’s dissent notes, Ms. Levine alleged not only that the warning on Phenergan’s label wasn’t strong enough, but that Phenergan was “not reasonably safe for intravenous administration,” and that Phenergan’s label should have indicated that the drug “should not be used intravenously.” But, that’s a question regarding FDA’s approval of the product for that use, not merely the sufficiency of the warning.

Consequently, the decision reaches to the very core of FDA’s statutory competence. FDA made a regulatory decision that the benefits of IV injection outweighed the risks, and the agency permitted the product to be labeled accordingly. Furthermore, there are no allegations that Wyeth hid any information about the risks of IV injection, nor that any new information regarding the risks of IV injection have arisen that would call that decision into question since FDA made it. So, letting a Vermont jury penalize Wyeth for not ruling out IV injection on Phenergan’s label is tantamount to letting a group of laymen over-rule FDA’s expert opinion regarding safety.

It would have been one thing if new evidence of risk had arisen since FDA approved the label, or if Wyeth were accused of hiding information from the FDA or mis-representing the data it did provide. In such a case, exposing a drug manufacturer to tort liability would not be over-riding FDA’s expert judgment. But that is decidedly not the case here. Indeed, the negligent act that actually caused Ms. Levine’s unfortunate injury was not an IV push injection into a vein, but the physician’s assistant’s botched administration. The physician’s assistant injected Phenergan into Ms. Levine’s artery, in direct contravention of six label warnings against arterial injection. More or sterner warnings against arterial injection would not have prevented Ms. Levine’s injury.

Thus, the Supreme Court could have and should have held in Wyeth’s favor with a narrowly tailored opinion confined to the facts of this case. Doing so would not have insulated wrong-doers from punishment, but would have recognized that Congress gave FDA statutory authority over questions of safety and efficacy because it believed that only a federal expert body could effectively balance the benefits and risks of new medicines. So, not only is the majority’s decision bad policy, it’s also bad law.

Coming to a Pharmacy Near You: One Size Fits All

by Greg Conko on February 12, 2009

in Features, Healthcare, Personal Liberty, Politics as Usual, Regulation, Stimulus to Nowhere, Zeitgeist

You’ll never see Bill Gates using an iPhone or see General Motors CEO Richard Wagoner driving a Ford. So, naturally, when Novartis pharmaceuticals’ CEO Daniel Vasella revealed last year that he takes the Pfizer statin drug Lipitor to treat his high cholesterol instead of Novartis’s Lescol, it raised more than a few eyebrows.

It’s well known among doctors that people respond differently to different medications that treat the same condition. Vasella says he had some unpleasant side-effects when taking Lescol. And plenty of others have tried one or another statin without reaching their cholesterol reduction goals, only to find success with a different one.

Unfortunately, the pharmaceutical industry’s biggest critics just don’t get it. Marcia Angell, a former editor of the New England Journal of Medicine, argues that drug companies are little more than “marketing machines” that produce few innovations, just “me-too” drugs that are similar to but no better than others on the market to treat the same condition. Public Citizen’s Sidney Wolfe argues that “most new drugs [a]re ‘me-too’ or copycat drugs that have little or no therapeutic gain over existing drugs.”

Unfortunately, former Senator and erstwhile health czar Tom Daschle and many other congressional Democrats have been listening. Tucked away in the stimulus bill is a provision providing $1.1 billion to fund a new government agency called the Federal Coordinating Council for Comparative Clinical Effectiveness Research. It’s goal, as Daschle wrote in his 2008 book, Critical: What We Can Do About the Health Care Crisis, will be to evaluate medicines an decide which ones are effective enough for government health care plans like Medicare and Medicaid to purchase. So, if the Council decides Lipitor is the most effective colesterol drug, Medicare recipients who, like Daniel Vasella, see better results with a different statin are out of luck.

Fortunately, critics of the proposal, like Arizona Republican John Shadegg, have been quick to blow the whistle on this outrage. While supporters claim the program is merely intended to supply doctors with better information about the drugs they prescribe, Shadegg and others have pointed out that the Council is modeled after the UK’s National Institute for Health and Clinical Excellence (which goes by the ironic acronym NICE), which has repeatedly denied citizens of that country access to breakthrough drugs for life-threatening conditions like cancer and multiple sclerosis. Shadegg notes the case of UK resident George Robinson, who died of lung cancer after NICE deemed the drug Tarceva not cost-effective.

Think that can’t happen here? Think again, because it already has. Last year, the state-run Oregon Health Plan refused to pay for the exact same drug to treat 64-year-old Barbara Wagner. Adding insult to injury, the private firm administering Wagner’s health benefits on behalf of the state informed her that Oregon would pay for a cheaper option. The state health plan would be happy to pay for Wagner to take advantage of Oregon’s legal doctor-assisted suicide, if she wished to hasten her death.

Dr. Walter Shaffer, medical director of the state Division of Medical Assistance Programs, defended the policy, telling the Eugene, Oregon Register-Guard that “[w]e can’t cover everything for everyone. Taxpayer dollars are limited for publicly funded programs.” Indeed.

As libertarians, we normally applaud government employees for trying to cut costs. But, when our government tries to herd us all into the same one-size-fits-all health care plan, I believe we should demand a bit more choice. Or, at the very least, options that provide just a bit of basic human dignity.