Supreme Court Will Hear Preemption Case Today
6 CommentsBy Ed Silverman // February 25th, 2008 // 8:17 am
The pharmaceutical industry will be watching the Supreme Court today to see if drugmakers will be given similar protection from lawsuits recently handed to medical-device makers, the Associated Press reminds us.
The court ruled Wednesday in a case involving Medtronic that FDA regulation of advanced medical devices preempts lawsuits in state courts against manufacturers. But today’s case probably won’t provide as broad a shield against lawsuits as the Medtronic case, the AP notes, because it won’t apply to all pharmaceutical suits. Instead, it focuses on a specific issue: whether state courts can consider allegations that a drugmaker misled the FDA to win approval for its med.
The justices will hear oral arguments today in the dispute, which stems from lawsuits against Warner-Lambert over its Rezulin diabetes drug, which was yanked in 2000 after links to nearly 400 deaths and hundreds of cases of liver failure. Warner-Lambert, of course, is now owned by Pfizer.
A group of 27 Michigan plaintiffs, including relatives of six Rezulin patients who died from liver damage, sued the drugmaker in 2000 for negligence and defects in the design and manufacture of the drug. Michigan law, however, prohibits product-liability suits against meds approved by the FDA. But it allows the suits to proceed if plaintiffs can show that a drugmaker misrepresented or withheld info from the FDA that would have prevented the agency from approving the drug.
The plaintiffs, led by Kimberly Kent, charge that Warner-Lambert misled the FDA about the extent of liver damage among patients in its clinical trials. Kent’s relative died from liver damage. Lawyers for the drugmaker argue state courts shouldn’t decide such claims, because that would “intrude upon an exclusively federal domain” and “inevitably conflict with FDA’s authority” to police fraud against it, the AP writes.
Seven other states, including Texas and New Jersey, have similar laws that may be affected by the court’s ruling, the AP notes.
In court papers, the PhRMA trade group wrote that decisions about drug safety should be left to the FDA. Judges and juries are not “in a position to make complex scientific decisions with consequences that could have a significant effect on public health for millions of Americans.”
But the American Association for Justice, a group of trial lawyers, said in its filing that the FDA “is underfunded and overburdened” and noted its enforcement actions dropping by 66 percent between 2000 and 2005. As a result, product liability suits are necessary to help ensure that pharmaceuticals are safe and effective, the group argued.
Solicitor General Paul Clement, the Bush administration’s lawyer, sided with Warner-Lambert. The administration has supported federal preemption of state laws in several cases before the court this term. A decision is expected by July. The larger preemption involving drugmakers will be heard later this year in a case pitting Wyeth against a Vermont woman, who claims she lost an arm due to the drugmaker’s failure to properly warn consumers about the proper administration of an injectable medication. You can read about that here.
Justice in Michigan
As folks would expect, I know this one inside-out.
Ed’s post says it, but just to be clear: What is being preempted, if the Court votes that way (as they almost certainly will) is Michigan’s so-called “fraud exception.” The core of the issue goes back to a case called Buckmann in which it was held that only the FDA can find fraud against itself, not state courts. A number of states - like NJ - also allow courts to find fraud, as happened famously in one of the Vioxx decisions under Judge Higbee. Here, fraud finding is used as a grounds for punitive damages. A few other states also have such provisions.
Some of us have been arguing that Michigan’s fraud exception is meaningless in any case. There is not a single instance in the past twenty-five years that satisfies its conditions. That is because (a) felony fraud has to be proven and (b) the drug has to be withdrawn or “would have been withdrawn” as a result.
As has been discussed here, FDA essentially never goes ahead with full prosecution against companies for felony fraud. They settle before verdict, change label, send warning, etc. - none of which actions satisfy Michigan’s “fraud exception.” Additionally, there is no agency anywhere that can say what it “would have done” under X,Y,Z conditions. FDA itself emphasized this in its own brief in support of Warner-Lambert. They actually went further - arguing that the agency should not be perceived as a “gateway” for civil liability. Thus, even if fraud exception preempted, FDA would still argue that its own fraud findings (were they ever to occur) ought still not be used as the basis of civil action.
This raises a small but intriguing possibility. Michigan’s fraud exception could be preempted. But the Court could also rule that the exception is so integral (not separable) from our Michigan law that, in effect, the law itself would be nullified by the Court’s decision.
Thus, there is the chance that (a) W-L wins _and_ (b) Michigan law is toast.
Slim, but real.
Justice in Michigan
Addendum - Would be interested to hear if folks here think fraud actually was committed in Rezulin case. Those who followed Willman’s reporting on it will know that court documents suggests a lot of hanky-panky in the reporting of ALF (acute liver failure). But the primary company person involved was never formerly charged, even though several of his colleagues raised questions about his “counting” at various points along the way, including pre-approval. He is now still developing drugs and practicing endocrinology just down the road from me.
Jack
PFIZER TO CUT WORKFORCE 120 PERCENT
NEW YORK, N.Y. (AP.com) - Pfizer will reduce its workforce by an unprecedented 120 percent by the end of 2008, believed to be the first time a major corporation has laid off more employees than it actually has. Pfizer stock soared more than 12 points on the news.
The reduction decision, announced Wednesday, came after a year-long internal review of cost-cutting procedures.The initial report concluded the company would save $1.2 billion by eliminating 20 percent of its 108,000 employees.
From there, said a spokesperson, “it didn’t take a genius to figure out that if we cut 40 percent of our workforce, we’d save $2.4 billion, and if we cut 100 percent of our workforce, we’d save $6 billion. But then we thought, why stop there? Let’s cut another 20 percent and save $7
billion.
“We believe in increasing shareholder value, and we believe that by decreasing expenditures, we enhance our competitive cost position and our bottom line,” he added.
Pfizer plans to achieve the 100 percent internal reduction through layoffs, attrition and early retirement packages. To achieve the 20 percent in external reductions, the company plans to involuntarily downsize 22,000 non-Pfizer employees who presently work for other companies.
“We pretty much picked them out of a hat,”.
Among firms Pfizer has picked as “External Reduction Targets,” or ERTs, are Quaker Oats, AMR Corporation, parent of American Airlines, Lockheed, Boeing, and Charles Schwab & Co. Pfizer’s plan presents a “win-win” for
the company and ERTs, said Chris, as any savings by ERTs would be passed on to Pfizer, while the ERTs themselves would benefit by the increase in stock price that usually accompanies personnel cutback announcements.
“We’re also hoping that since, over the years, we’ve been really helpfulto a lot of companies, they’ll do this for us kind of as a favor,”.
Legally, pink slips sent out by Pfizer would have no standing at ERTs unless those companies agreed. While executives at ERTs declined to comment, employees at those companies said they were not inclined to cooperate.
“This is ridiculous. I don’t work for Pfizer. They can’t fire me,” said Kaili Blackburn, a flight attendant with American Airlines.
Reactions like that, replied the Pfizer spokesperson “are not very sporting.”
Inspiration for Pfizer’s plan came from previous cutback initiatives, said company officials. In January of 1998, for instance, the company announced it would trim 18,000 jobs over two years. However, just a year later, Pfizer said it had already reached its quota. “We were quite
surprised at the number of employees willing to leave Pfizer in such a hurry, and we decided to build on that,”.
Analysts credited the short-term vision, noting that the announcement had the desired effect of immediately increasing Pfizer’s share value. However, the long-term ramifications could be detrimental, said Bear Stearns analyst Beldon McInty.
“It’s a little early to tell, but by eliminating all its employees, Pfizer may jeopardize its market position and could, at least theoretically, cease to exist,” said McInty.
The spokesperson, however, urged patience: “To my knowledge, this hasn’t been done before, so let’s just wait and see what happens.”
Justice in Michigan
Alternatively, Pfizer could be replaced by a generic.
A year ago, when Pfizer poofed out of Ann Arbor, the t-shirt, “Pfired” was all the rage.
Nathan
Jack,
That was great! I just forwarded that to half my department… Where did you find that?
Justice in Michigan
All for having fun, but I am still wondering whether people believe fraud was, indeed, committed in Rezulin reporting. I know there are former Warner-Lambert folks out there. And it was also clear that some questioned the ALF reporting at the time. As I’ve conveyed, these are the folks in industry who need to be supported when there actually is monkey business going on.