Issue Date: February 9, 2009
TRIAL LAWYERS and consumer advocates are asking President Barack Obama and the Democrat-led Congress to reverse Bush-era regulations that shield pharmaceutical manufacturers and other corporations from state liability lawsuits.
The groups say that in recent years, federal agencies—at the urging of industry—have been pushing courts to hold that federal regulation preempts state standards and lawsuits. But state law, they assert, is the only avenue for individuals to seek compensation for injuries caused by consumer products, including drugs and medical devices.
"It is unconscionable that our leaders would attempt to protect powerful corporations from liability at the expense of the safety of American consumers," says Nan Aaron, president of the Alliance for Justice, an association of advocacy groups.
Linda Lipsen, senior vice president for public affairs at the American Association of Justice (AAJ), the trial lawyers' lobby, says her group believes the Obama Administration will "reaffirm the importance of a civil justice system that complements strong regulations. The efforts to give negligent corporations complete immunity, escape accountability, and leave Americans without any recourse has gone too far and must be reversed," she declares.
The Washington, D.C.-based legal group says the Bush Administration adopted dozens of safety regulations that include language aimed at preempting product liability litigation in the state civil justice system. "This is the real Bush legacy," AAJ President Les Weisbrod says. "We have seen it in everything from medical device rules to railroad security to prescription drug labels."
When George W. Bush moved into the Texas governor's mansion in 1995, he acted quickly to curb what he called "frivolous and junk lawsuits." He pushed a series of bills through the Texas Legislature that narrowed the state's primary consumer protection law, made it more difficult for plaintiffs to win big punitive damage awards, and limited what deep-pocketed defendants had to pay in multiparty lawsuits.
During his 2000 presidential bid, Bush embraced tort reform as one of his campaign platform issues. But less than a year after Bush's election, the war on terror and then the war in Iraq put many domestic policy concerns on the back burner. The effort to overhaul the U.S. litigation system made little headway in Congress.
Four years ago, lawmakers approved legislation that redirects many class-action lawsuits from plaintiff-friendly state courts to the less sympathetic federal court system. But Senate Democrats blocked larger White House initiatives, such as efforts to rein in asbestos-related and medical malpractice lawsuits.
With much of its legal reform agenda stymied by Congress, the Bush Administration ultimately turned to the bureaucratic rule book to protect businesses that comply with federal rules from legal action in state courts. Virtually identical statements claiming that federal agency rules preempt state law began surfacing in executive branch regulations in 2005.
SINCE THEN, more than 50 rules have been issued with sweeping preemption language, including many from the federal agencies and departments responsible for food, drug, and transportation safety. "Un-elected federal regulators are now claiming that states can't protect their own citizens with stronger consumer protections," Weisbrod says.
Underlying this effort to curtail product liability litigation through regulatory changes is the concept of federal preemption. The section of Article VI of the U.S. Constitution commonly referred to as the "Supremacy Clause" states that the "Constitution and the laws of the United States ... shall be the supreme law of the land." This means that federal laws and regulations outweigh or preempt any conflicting state measures.
"In essence, it allows for businesses to operate under one set of rules—federal rules—instead of 51 sets of potentially conflicting rules," says Lisa A. Rickard, former vice president of federal and state government affairs for Dow Chemical and now president of the U.S. Chamber of Commerce's Institute for Legal Reform.
"Federal preemption limits plaintiffs' lawyers' ability to generate fees by bringing more state lawsuits," Rickard notes. "So, in order to further pad their pockets, they are working to convince Congress that eliminating the doctrine is in the consumer's best interest."
AAJ is urging Obama to take several steps to "restore the traditional balance between federal regulation and state-based consumer protections and ensure injured Americans have access to the courts when injured by negligence or misconduct," according to a summary of recommendations.
The group wants the new Administration to review and, if necessary, revise all pending and recently completed rules to ensure that they do not try to preempt state tort law. White House Chief of Staff Rahm Emanuel has already directed the executive branch not to finalize or implement any new regulation until it has been reviewed and approved by a department or agency head appointed by Obama.
One such rule is a measure issued last month by the Department of Transportation that requires railroad tank cars that carry the most dangerous toxic chemicals to comply with new safety design standards to guard against leaks in the event of an accident (C&EN, Jan. 19, page 8). According to AAJ, the regulation includes language that would bar most lawsuits by people injured in rail accidents that involve hazardous materials.
"With this final rule, the Bush Administration has tried to prohibit residents harmed like those in Minot from seeking justice for their injuries," Weisbrod says, referring to the 2002 anhydrous ammonia spill—the largest in U.S. history—near the small North Dakota town that killed one person and injured hundreds more.
AAJ also wants Obama to provide federal agencies and the courts with clear guidance about his Administration's preemption policies and to establish a White House office to oversee the preemption language that's included in all future federal regulations.
The lawyers' group's requests are simply designed to generate more tort cases, Rickard says. "America cannot sue its way out of this recession," she remarks. "Instead of coming up with proposals to benefit our economy, the trial lawyers' first proposal is a stimulus package for themselves—legislation and calls for executive action aimed at creating more litigation and more legal fees. Now is not the time to place a greater drag on the economy by expanding our nation's lawsuit system."
BOTH THE trial bar and business groups are closely watching a potential landmark case pending before the U.S. Supreme Court that will be a major test of federal preemption authority. Last term, the justices affirmed a lower court ruling in Riegel v. Medtronic, finding that the preemption clause of a 1976 federal law bars product-liability lawsuits challenging the safety of a Food & Drug Administration-approved medical device. In the highest profile business case on the docket this year, the pharmaceutical industry hopes to score a similar victory in Wyeth v. Levine, in which the justices are examining whether drugmakers are liable for harm from medicines that carry warning labels approved by FDA. A decision is expected in the first half of this year.
In April 2000, Vermont musician Diana Levine went to her local health clinic seeking relief from a severe migraine headache and nausea. As part of her treatment, a physician's assistant injected Levine with Wyeth's antinausea drug Phenergan by an intravenous method known as "IV push." However, the drug was improperly administered, and some of it entered an artery in Levine's right arm. Within weeks, gangrene set in and the arm eventually had to be amputated below the elbow.
After suing the health center and staff members for malpractice and settling the case for $700,000, Levine filed suit in Vermont state court against Wyeth, the New Jersey-based pharmaceutical company that is being acquired by Pfizer (C&EN, Feb. 2, page 7). She claimed that the label on Phenergan did not adequately warn of the catastrophic risks of administering the drug by IV push and that Wyeth should have advised doctors to avoid that method of delivery altogether. A jury found in favor of Levine and awarded her $7.4 million in damages; a judge subsequently reduced the amount to $6.7 million.
By a vote of 4-1, the Vermont Supreme Court upheld the jury's decision, ruling that federal law provides a floor, not a ceiling, thus leaving states free to enforce stricter standards. "FDA and the state share the purpose of encouraging pharmaceutical companies to alter their drug labels when they are inadequate to protect consumers," Associate Justice Denise R. Johnson wrote in the court's majority opinion.
Wyeth appealed to the U.S. Supreme Court, asserting that FDA's approval of the drug and the prescribing instructions on its label shields the company from civil liability claims under state laws. The label warns that "inadvertent intra-arterial injection" can result in "gangrene requiring amputation." But it does not specifically rule out the fast-acting form of injection used on Levine.
"FDA concluded that Phenergan was safe and effective for use under the conditions described in the approved labeling," Washington attorney Seth P. Waxman wrote in Wyeth's brief to the court. "The labeling plainly comprehended and warned about the specific risks for IV administration."
However, David C. Frederick, Levine's attorney, argues that FDA never fully weighed the comparative risks and benefits of administering Phenergan by IV push over other methods before approving the label. He also contends in his brief that Wyeth knew or should have known since at least the 1970s that injecting the drug by IV push is inherently dangerous and puts patients at high risk of injury.
Drug companies, Frederick argues, have a duty to update their product labels to ensure they reflect all known dangers. "Had Wyeth been a reasonably prudent manufacturer over the years, it would have known that the risks of IV push so far outweigh any negligible benefits, that it would have offered a stronger instruction," he writes.
At issue in the case is language in a labeling rule FDA most recently revised in 2006 that effectively limits when people can sue in state court over injury claims involving prescription drugs. In the introductory statement, or "preamble," to the rule, FDA argues that without preemption, juries of randomly selected laypersons could overrule the judgment of the agency's highly trained scientists who carefully weigh the risks and benefits of medicines.
State law actions "threaten FDA's statutorily prescribed role as the expert federal agency responsible for evaluating and regulating drugs," the agency writes. "FDA approval of labeling under the [1938 Federal Food, Drug & Cosmetic] Act ... preempts conflicting or contrary state law." The agency also cautioned that the threat of state suits could lead drug companies to propose unnecessary labeling that might result in scientifically unsubstantiated warnings and discourage the use of beneficial treatments.
"Patients are best protected by a single strong uniform regulatory authority that is the sole arbiter of the benefits and risks of medicines," says Ken Johnson, senior vice president of the Pharmaceutical Research & Manufacturers of America (PhRMA), the brand-name drug industry's trade association. "That is why Congress empowered FDA to approve how that information is conveyed on the medicine's label."
FEDERAL PREEMPTION is not about providing blanket immunity for drug companies, Johnson says. "Upholding federal preemption will not deny patients their day in court. State judges and juries may still levy damages against manufacturers that fail to comply with FDA standards. But those state judges and juries should not be permitted to interfere with an important public health goal: uniform science-based risk communication," he says.
The high court's ruling will have an impact on future lawsuits against drug companies and could affect many other businesses as well. "The U.S. Supreme Court's decision will have enormous ramifications far beyond Diana Levine," AAJ's Weisbrod says. "We trust the Supreme Court will uphold the right of Americans to hold negligent companies and manufacturers accountable."
Supporters of the preemption doctrine worry that if the judgment against Wyeth is allowed to stand, it will open the floodgates for lawsuits challenging the authority of FDA to evaluate drugs and their labels. "The impact will be devastating," says Lawrence J. McQuillan, director of business and economic studies at the Pacific Research Institute, a San Francisco think tank that advocates free-market policies.
"If FDA is found not to have the last word in drug approval, we will see a chaotic patchwork of state- and jury-written warning labels," McQuillan says. "Imagine the confusion if the same drug bore vastly different warning labels from state to state."
Pharmaceutical companies, he predicts, "will simply stay away from developing new life-saving drugs because they deem them too costly and risky to pursue. Or they might pull existing drugs off the market." Vaccine manufacturers have already done so, McQuillan notes, because of the fear of excessive liability exposure."
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