This is going to be very closely watched. For those unaware, preemption gives companies some immunity against product liability claims, because the FDA has already deemed a product to be safe. As a result, drugmakers say state judges and juries don’t have the right to supercede a federal regulatory authority. And so the Supreme Court will be deciding whether to place limits on product-liability lawsuits.

In the case to be reviewed by the Supremes, Pfizer is seeking to overturn a lower court ruling that a group of Michigan residents could proceed with lawsuits claiming they were harmed by Rezulin, a diabetes drug that was linked to liver damage and, subsequently, withdrawn. The med was sold by Warner-Lambert, which Pfizer later acquired. (Here’s the amicus brief filed by the Product Liability Advisory Council in support of Pfizer).*

The dispute gives drug and device makers a chance to extend a victory they won in 2001, when the Supreme Court said patients can’t sue companies for defrauding the FDA during the approval process, Bloomberg News notes. As an example, a ruling favoring industry would help Merck, which is fighting more than 27,000 Vioxx lawsuits. In fact, a federal judge denied such a Merck bid recently.

In its appeal, Pfizer contends the 2nd U.S. Circuit Court of Appeals in New York created a loophole that would let patients in some states press the types of suits barred by the high court in 2001. Pfizer said the lower court “adopted an unduly narrow reading” of the 2001 decision, Bloomberg reports. The 2nd Circuit said the Michigan lawsuits could go forward because they focus primarily on traditional product-liability allegations, claiming Rezulin was defectively designed and manufactured. The suits depend “only incidentally on such fraud” against the FDA, the 2nd Circuit ruled.

Michigan law generally shields drugmakers from product-liability suits over approved products, making an exception for companies that withhold information or deceive the FDA. Texas has a similar law, and six other states have what’s known as a “fraud on the FDA” exception to their ban on punitive damages for approved drugs, Bloomberg reminds us.

Pfizer’s Supreme Court appeal seeks to block suits by 29 people, most of whom took Rezulin and some representing family members who did. Those people urged the Supreme Court not to hear the case, saying it is unlikely to have broad implications. “The issue will likely be limited to groups of cases where widespread problems lead to withdrawal from the market of a popular drug such as Rezulin or Vioxx,” the patients argued.

At the time of the Rezulin withdrawal in 2000, the FDA said newer diabetes drugs were safer. Rezulin, which helped regulate insulin, had been linked to at least 63 deaths from liver failure. The justices will hear arguments and rule by July.

For a handy primer on preemption, take a peek at this morning’s post on Drug & Device Law, a blog written by two attorneys whose firms often rep drug and device makers.

* Hat tip to Torts Prof for the brief