wyeth

Did the Supreme Court “Botch” Wyeth v. Levine?

by Alex Harris on March 5, 2009 · 1 comment

in Healthcare, Legal, Precaution & Risk, Regulation

I was initially going to post this as a comment to Greg Conko’s recent post arguing against the Court’s recent decision in Wyeth v. Levine, but the comment system didn’t work correctly for me.

I appreciate the force of Greg’s argument (and I certainly agree that this particular case should have been decided much earlier on different grounds), but I think there is room for reasonable disagreement within the libertarian community about whether FDA preempting state tort law is good or bad. This is one of these questions about what to do in the real world, where first-best solutions just aren’t politically possible.

Most libertarians would likely agree that there should be only one system to deal with injuries caused by products, including drugs: the tort system. The tort system only operates once there has been an actual injury, not just some scared politician’s prediction of a harm. And it doesn’t ban anything; it just forces manufacturers to internalize the external costs of the injuries their products cause. If the benefits of the product outweigh the total (social) costs, the product will keep being made. This is the optimal outcome. And, further, the injured consumers will not simply be ignored; they get compensated for their harms, restored to a position as good as they’d be in had they not been harmed.

Unfortunately, however, we don’t just have the tort system. We also have the FDA and other prospective regulatory agencies that pass judgment on products before they hit the market, banning some and restricting how others can be marketed and sold. If the FDA isn’t going away, what should we do?

Greg’s answer is essentially the one I gave in the context of internet regulations: “multiple levels of regulation [are] always worse than… only one.” There is a difference between multiple levels of regulation and a tort system plus a regulatory system, though. If the FDA gets lots of stuff wrong, but the tort system functions ideally (a big, and admittedly untrue, assumption), then the FDA should not be able to preempt the tort system. If the FDA allows a drug that nonetheless causes injuries, the tort system has not failed or “overregulated” if it correctly assesses and assigns damages. It has internalized costs that would otherwise be external.

If the Court had found preemption, however, then there would be calls for the FDA to regulate even more heavily, banning every drug that might cause any problem. The tort system currently functions as a safety net. Remove it and politicans and voters will demand more stringent protection from the system left – the regulatory one.

However, finding no preemption emphasizes the point that the FDA is not infalible and that the tort system does a better job, at least sometimes. Unfortunately, it only does this in one direction, and does nothing to expose the much more common and deadly – but largely invisible – type I error. Still, I think though the tort system may get some stuff wrong and incorrectly over-compensate, this risk is more acceptable than the risk of further entrenched and onerous FDA regulation.

Supreme Court Considers Tort Preemption for Medicines

by Greg Conko on November 3, 2008

in Healthcare, Legal, Nanny State, Personal Liberty, Precaution & Risk

Diana Levine suffered from chronic migraine headaches for many years. So, in April 2000, when she went to a local clinic to get treatment, she knew what to expect. She’d received the same treatment several times before: an injection of Demerol for the pain, and an injection of an antihistamine called Phenergan to treat the nausea that accompanies both migraine headaches and Demerol itself. Everything was normal — except for how the drugs were actually administered. The physician’s assistant who gave her the drugs accidentally injected the Phenergan into an artery, instead of a vein, causing tissue death and gangrene. Ms. Levine, a professional musician, eventually had to have her arm amputated.

Levine naturally sued the physician’s assistant, the supervising physician, and the clinic for malpractice. After all, Phenergan’s FDA-approved label specifically warned against injection into an artery, precisely explaining the likely, tragic side-effects. But Levine also sued the pharmaceutical company that manufactures Phenergan, Wyeth, arguing that the warnings were not clear enough. Despite Wyeth’s defense that the drug had been on the market since 1955, FDA had known about the gangrene risk since 1967, and the agency had explicitly approved the warning that was included on the label, a Vermont jury awarded Levine $6.8 million dollars.

Wyeth appealed the jury verdict, arguing that, because it had complied with FDA regulations on both product safety and labeling, and because there was no new information about Phenergan’s risks that would supersede FDA’s judgment about the warning language, FDA regulation should preempt the state tort claim. And FDA agreed. Nevertheless, the Vermont Supreme Court affirmed the verdict, and Wyeth further appealed to the U.S. Supreme Court, which hears oral argument in the case today.
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