Wyeth v. Levine

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.

Wyeth v. Levine: Policy Arguments Regarding Preemption

by Bert Rein on February 13, 2009 · 9 comments

in Healthcare, Legal, Precaution & Risk, Regulation

The Wyeth v. Levine case presents a narrow set of facts in which the Food and Drug Administration had, for many years, known about the risks presented by intravenous push injection of Phenergan and worked with the manufacturer to carefully word the label description of this risk. There is no allegation of fraud in this case, nor has relevant information about this risk arisen since the label language was last amended. Nevertheless, disregarding the limiting facts in the Levine case, a flood of “friend of the Court” pleadings supporting Ms. Levine sought to broaden the preemption debate and persuade the Court of the critical need for additional tort-based supervision of the pharmaceutical industry. The FDA was portrayed as the vassal of the pharmaceutical industry, either unable or unwilling to protect the public against unsafe drugs. The industry was portrayed as a callous marketing machine committed to maximizing revenues – safety be-damned – and using promotion to skew medical decisions away from science-based, cost-effective medicine. Paying judgments was presented as a mere inconvenience given the enormous profit margins on pioneer branded drugs.

Ms. Levine’s supporters, who include the American Association for Justice (“AAJ”, formerly ATLA) are sophisticated enough to know that arguments relating to fact patterns not before the Supreme Court are unlikely, at best, to affect the Court’s judgment. Their briefs are more realistically targeted at a political audience which they wish to persuade to “right the wrong” should Wyeth prevail. Not surprisingly, AAJ has produced and is widely distributing a 22 minute video featuring Ms. Levine and promoting her cause. Thus, AAJ apparently believes that demonizing the pharmaceutical industry and denigrating the FDA is just one more means of obscuring the merits of federal preemption and positioning the issue as individual victim against industry Goliath – good versus evil.

On the actual policy merits, it is hard to conceive of any sound argument against the superiority of a uniform, scientifically based, expertly administered system for determining if and how prescription drugs should be approved for use, labeled and administered. Of course prescription drugs are powerful chemical and biological entities and their use will always entail a risk of injury. Some risks, as in the case of Phenergan, will be known, labeled and avoidable by proper medical procedures. Others, however, will be rare enough that only widespread use will suffice to detect and label them. In either case, given AAJ’s fundamental tenet that every injury warrants a legal proceeding and judicial remedy, injured patients like Ms. Levine will seek to have lay juries provide compensation by faulting the conduct of pharmaceutical companies. Sympathetic jurors, acting without scientific training, will set ex post facto standards of labeling conduct that override FDA’s determination that the drug allegedly causing injury was safe and effective for its labeled uses.

Absent preemption of these state-law conduct standards, pharmaceutical companies either will have to accommodate to jury determinations by restricting beneficial use of their products or face damages that have drained, and will continue to drain billions of dollars from the research-based industry, largely to the benefit of the pharmaceutical litigation industry. Moreover, practicing physicians will lack authoritative guidance for administering drug treatment and will be forced to consider whether they will be held accountable for failing to prevent injuries by considering any and all risks that might have been suggested in any publication an enterprising lawyer might later discover.

If faced with the question whether FDA experts or panels of lay people drawn randomly from the general population should make the hard call whether a drug’s effectiveness in treatment outweighs the risks it necessarily creates, few would opt for a lay decision. Yet a non-preemptive tort system makes exactly that choice and further distorts the decision process by focusing the inquiry on a single sympathetic drug-related injury and essentially ignoring the interests of all those who benefit from having the drug available.

AAJ and its allies no doubt hope to capitalize on the natural sympathy generated by innocent victims and the animosity whipped up by isolated instances of overzealous promotion or delayed recognition of emerging risk by pharmaceutical companies to overcome the sound policy support for uniform conduct standards enforced through federal preemption. Sadly, if they succeed in imposing dual level regulation by throwing brickbats at the pharmaceutical industry and the FDA, the harm to the public may spread even beyond a liability system run riot.

FDA professional staff, and FDA’s leadership are not insensitive to the criticisms levied at them in political debate and highlighted by jury verdicts proclaiming that drugs FDA has adjudged safe are, in fact, unreasonably unsafe. FDA’s likely reaction is to exercise greater caution in reviewing new drug applications, to demand more clinical testing in more sub-populations for longer periods before approval and to encourage defensive, use-restricting labeling and management systems. The inevitable consequence is to further limit the number of new drugs approved, to substantially increase the cost and risk of FDA’s new drug approval process and to deteriorate return on investment by deferring access to market.

The American pharmaceutical industry is one of the few successes left in an otherwise bleak industrial landscape. To survive, and hopefully thrive, American pharmaceutical manufactures need to have a regulatory apparatus reasonably tolerant of the risks arising from powerful new cures, the ability to disseminate meaningful information about new products, the pricing freedom to recoup the costs of research and development in a limited period of patent exclusivity and reliable upfront standards for the labeling and administration of their drugs. The looming fight over federal preemption will directly or indirectly affect each of these elements of pharmaceutical industry success. Indeed, winning the preemption battle may be essential to the survival of a privately financed, research-based, free enterprise pharmaceutical industry. Ironically, if the AAJ and its allies succeed in imposing dual regulation through attacking the industry on all fronts, they may wind up sorely missing their pharmaceutical industry whipping boy but they will not miss it nearly as much as the patient population of which we are all a part or the troubled American economy.

[Editor's Note: Bert Rein, a founding partner in the Washington, DC law firm Wiley-Rein and a long-time friend of CEI, represents Wyeth in this case. This post appears by invitation.]

Preemption in Wyeth v. Levine: Broader Implications

by Bert Rein on February 13, 2009 · 2 comments

in Healthcare, Legal, Precaution & Risk, Regulation

The Supreme Court’s pending, and perhaps imminent, decision on the preemptive effective of FDA drug labeling approvals in Wyeth v. Levine has stimulated a flood of legal and public policy debate on the roles that federal regulation and state-law based tort litigation should play in regulating pharmaceutical manufacturers. That debate, which is almost certain to continue in a legislative forum should Wyeth prevail before the Court, may determine the future of the now-lucrative litigation industry. More importantly, arguments made in the debate by those seeking to protect or expand litigation opportunities may exacerbate an onslaught of public policy initiatives that threaten the future viability of a private enterprise, research-based pharmaceutical industry.

The Wyeth v. Levine case itself presents a relatively narrow preemption issue. Ms. Levine lost her right forearm to gangrene when Wyeth’s drug Phenergan was improperly administered by intravenous push injection to deal with her severe migraine-related nausea. The drug entered an artery and caused gangrene. The administering clinic failed to observe a number of cautions prominently displayed on Phenergan’s label relating to the maximum total dosage, rate of administration, cessation of treatment on complaint of pain and extreme caution in avoiding exposure of Phenergan to arterial blood. Nevertheless, after settling her claim against the administering clinic, Ms. Levine successfully sued Wyeth under Vermont law for failing to totally foreclose push injection of Phenergan in its labeling and thus allegedly making the product unreasonably unsafe.

Wyeth’s constitutional preemption defense was two pronged. Wyeth first argued that, under federal law, it could not have complied with Vermont’s labeling standard. The FDA, in first approving Phenergan in 1955 and then repeatedly approving Wyeth’s evolving label, had determined that push injection – the fastest and most efficacious method of administration – was safe given the cautions included in the label. Wyeth’s post-approval experience had provided no additional information that would authorize a deviation from FDA’s position and any unauthorized deviation would put Wyeth in violation of federal law. Wyeth also argued that Congress had given FDA national authority to optimize prescription drug use by balancing benefit and risk and that state law – particularly case-by-case setting of labeling standards in jury trials – should not override FDA’s scientific risk assessments. Wyeth presented both arguments to the Supreme Court in seeking certiorari and in arguing the merits of its case.

Ms. Levine’s response to Wyeth was that FDA’s balancing determinations should be viewed as minimum standards subject to imposition of added safety requirements under state law. Congress had not included an express preemption clause in FDA’s prescription drug authority as it had, for example, in FDA’s medical device authority and thus a presumption against preemption should prevail. In any case, Ms. Levine argued, Vermont’s labeling standard only required Wyeth to compensate Ms. Levine and did not force Wyeth to change its federally-approved label.

The legal arguments of the parties, and the incremental approach typical of the Supreme Court, strongly suggest that the Court will issue a narrow legal ruling addressing FDA preemption only in the context of fully-informed FDA labeling decisions directly challenged in state tort actions. The Court is unlikely to rule on the consequences of allegedly fraudulent representations to the FDA or of pharmaceutical company failures to disclose or act upon new safety information available to the manufacturer after FDA approval. If other cases present those issues the Court will be able to deal with them on a full factual record.

Still, a number of organizations have filed amicus curiae (“friend of the Court”) briefs making “policy” rather than legal arguments regarding the importance of this case. Many, including the American Association for Justice (“AAJ”, formerly known as the Association of Trial Lawyers of America) have disregarded the narrow facts presented in Wyeth v. Levine to argue that preemption ought to be denied because of a need for additional tort-based supervision of the pharmaceutical industry. I will discuss the merits of these policy arguments in my next post.

[Editor's Note: Bert Rein, a founding partner in the Washington, DC law firm Wiley-Rein and a long-time friend of CEI, represents Wyeth in this case. This post appears by invitation.]

Uber-Attorney Bert Rein to Guest Blog on Federal Preemption Case

by Greg Conko on February 13, 2009 · 1 comment

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

Back in November, I wrote about the pending Supreme Court case Wyeth v. Levine, the decision in which will have a huge impact on the pharmaceutical industry and the law of federal preemption. The plaintiff in that case, Diana Levine, was injured when a physician’s assistant improperly injected a Wyeth-made drug into Levine’s artery despite a clear, FDA-approved label statement warning against possible risks from arterial injection.

Levine and her lawyers were nevertheless able to convince a Vermont jury that FDA’s approval of the label warning should not preclude her claim under Vermont tort law that Wyeth acted negligently. Wyeth, on the other hand, argued that the explicit FDA approval of the label statement should preempt Vermont law, since Congress delegated to FDA the authority to carefully examine the risks and benefits of medical drugs and determine whether they are, on balance, safe enough for doctors and their patients to use. In November, the United States Supreme Court heard oral argument on the preemption question, and a decision in the case is expected some time this spring.

One of Wyeth’s attorneys in the case is Bert Rein, éminence grise in the Washington legal scene and a founding partner of the highly regarded firm Wiley-Rein. Bert is a long-time friend of the Competitive Enterprise Institute, and he and other Wiley-Rein attorneys have done pro bono work for CEI in past years. So, I am happy to announce that Bert has agreed to contribute a few guest blog posts to Open Market discussing the importance of this case. His first post will appear later this morning.