Congress vs 'Defensive Medicine'

The Michigan Supreme Court recently upheld the constitutionality of this statute in Taylor v. Smithkline Beecham Corp., 658 N.W.2d 127 (Mich. 2003). The Taylor case worked its way up to the Michigan Supreme Court as a consolidated appeal of fen/phen cases originally filed separately by Tamara Taylor, Lee Anne Rintz, and Judith Robards. Tamara Taylor and Lee Anne Rintz each filed a products liability lawsuit in Wayne Circuit Court against manufacturers and distributors of diet drugs. The trial court denied defendants' motion for summary disposition on the basis that MCL 600.2946(5) was an unconstitutional delegation of legislative power. However, the Washentaw Circuit Court granted summary disposition to the defendants in the case of Judith and Kenneth Robards against the diet drug manufacturers and distributors. The Court of Appeals consolidated the two appeals and held that the statute was an unconstitutional delegation of legislative authority because it places the FDA in the position of final arbiter with respect to whether a particular drug may form the basis of a products liability action in Michigan.

The Michigan Supreme Court granted the defendants' leave to appeal and reversed the decision below. The court began its analysis by explaining that although the FDA makes an independent determination regarding a drug's safety and efficacy, it does not decide who may bring a product liability action in Michigan. Further, it is the legislature that has determined the legal consequences that follow the FDA's conclusions regarding safety and efficacy. Once the FDA has made its decision, it is the Michigan courts that must find as a matter of law that the manufacturer or seller acted with due care. The Michigan statute represents a legislative determination that a drug manufacturer and seller have acted responsibly by complying with FDA approval and standards. Ultimately, the Michigan Supreme Court determined that this statute was not an unconstitutional delegation of legislative power because the legislature did not delegate anything to the FDA. The FDA's determination is of independent significance and is simply a measuring device for the purpose of defining the limits of a cognizable product liability claim under Michigan law.

With respect to the proposed federal law (HEALTH), this legislation will be subject to extensive constitutional challenges on the ground that it 'federalizes' state tort law. The Supreme Court has found that state tort law may be impliedly pre-empted in certain cases. For example, in 2001 the U.S. Supreme Court ruled, in Buckman Company v. Plaintiff's Legal Committee, 531 U.S. 341; 121 S. Ct. 1012 (2001), that the Federal Food, Drug, and Cosmetic Act impliedly pre-empts certain state-law tort actions. In this case, the plaintiffs sued over injuries caused by their implanted orthopedic bone screws. Plaintiffs argued that Buckman Company, a consulting company that assisted Acromed in obtaining FDA approval for the device, made fraudulent representations to the FDA to obtain that approval. The plaintiffs tried to use the alleged fraudulent representations to satisfy the 'but for' test. The Supreme Court stated that because the policing of fraud against federal agencies is not a field that the states have traditionally occupied, there is no presumption against preemption of a state law cause of action. 'The relationship between a federal agency and the entity it regulates is inherently federal in character because the relationship originates from, is governed by, and terminates according to federal law,' the Supreme Court stated. The court held that the plaintiffs' state law fraud-on-the-FDA claims were impliedly pre-empted by federal law.

What Will the Outcome Be?

We can expect extensive debate about the issues underlying HEALTH and state and federal attempts to limit exposure. As for the federal statute, while the bill has passed the House, Senate passage is not guaranteed. The legislation has the potential to be filibustered due to an expected intense lobbying campaign by the American Trial Lawyers' Association that may offset any lobbying campaign by the American Medical Association and PHARMA.

If passed, we can expect close scrutiny by the bench and bar and anticipate litigation over the applicability and constitutionality of the 'FDA Defense.'

Rebecca M. Stadler is with Nixon Peabody LLP's Pharmaceutical and Medical Device team, based in Buffalo, NY, servicing clients on a national, regional and local level.

Due to the rising cost of 'defensive medicine,' the U.S. House of Representatives recently passed legislation to limit or ban punitive damages in product liability lawsuits over injuries allegedly caused by FDA-approved products. 2003 H.R. 5. The HEALTH 'Help Efficient, Accessible, Low-Cost Timely Healthcare' Act of 2003 was introduced in the House on February 5. This bill passed in the House on March 13 and is currently on the calendar of the Senate.

Sec. 7(c)(1)(A) of the bill addresses punitive damages for FDA-approved products (drug, device, or biological product intended for humans). 'Punitive damages may not be awarded against the manufacturer or distributor of a medical product ' on the basis that the harm to the claimant was caused by the lack of safety or effectiveness of the particular medical product involved, unless the claimant demonstrates by clear and convincing evidence that: 1) the manufacturer or distributor ' failed to comply with a specific requirement of the Federal Food, Drug, and Cosmetic Act or regulations promulgated thereunder; and 2) the harm attributed to the particular medical product resulted from such failure to comply with such specific statutory requirement or regulation.

Some state legislatures have already enacted legislation that in effect provides an 'FDA Defense' to the manufacturer and seller. In Michigan, MCL 600.2946(5) limits the liability of a drug manufacturer or seller in a product liability case if the drug had been approved for safety and efficacy by the FDA and labeled in compliance with FDA standards at the time the drug left the manufacturer or seller's control. This law makes exceptions in the event that fraud or bribery on the part of the manufacturer was involved.

The Michigan Supreme Court recently upheld the constitutionality of this statute in Taylor v. Smithkline Beecham Corp. , 658 N.W.2d 127 (Mich. 2003). The Taylor case worked its way up to the Michigan Supreme Court as a consolidated appeal of fen/phen cases originally filed separately by Tamara Taylor, Lee Anne Rintz, and Judith Robards. Tamara Taylor and Lee Anne Rintz each filed a products liability lawsuit in Wayne Circuit Court against manufacturers and distributors of diet drugs. The trial court denied defendants' motion for summary disposition on the basis that MCL 600.2946(5) was an unconstitutional delegation of legislative power. However, the Washentaw Circuit Court granted summary disposition to the defendants in the case of Judith and Kenneth Robards against the diet drug manufacturers and distributors. The Court of Appeals consolidated the two appeals and held that the statute was an unconstitutional delegation of legislative authority because it places the FDA in the position of final arbiter with respect to whether a particular drug may form the basis of a products liability action in Michigan.

The Michigan Supreme Court granted the defendants' leave to appeal and reversed the decision below. The court began its analysis by explaining that although the FDA makes an independent determination regarding a drug's safety and efficacy, it does not decide who may bring a product liability action in Michigan. Further, it is the legislature that has determined the legal consequences that follow the FDA's conclusions regarding safety and efficacy. Once the FDA has made its decision, it is the Michigan courts that must find as a matter of law that the manufacturer or seller acted with due care. The Michigan statute represents a legislative determination that a drug manufacturer and seller have acted responsibly by complying with FDA approval and standards. Ultimately, the Michigan Supreme Court determined that this statute was not an unconstitutional delegation of legislative power because the legislature did not delegate anything to the FDA. The FDA's determination is of independent significance and is simply a measuring device for the purpose of defining the limits of a cognizable product liability claim under Michigan law.

With respect to the proposed federal law (HEALTH), this legislation will be subject to extensive constitutional challenges on the ground that it 'federalizes' state tort law. The Supreme Court has found that state tort law may be impliedly pre-empted in certain cases. For example, in 2001 the U.S. Supreme Court ruled, in Buckman Company v. Plaintiff's Legal Committee , 531 U.S. 341; 121 S. Ct. 1012 (2001), that the Federal Food, Drug, and Cosmetic Act impliedly pre-empts certain state-law tort actions. In this case, the plaintiffs sued over injuries caused by their implanted orthopedic bone screws. Plaintiffs argued that Buckman Company, a consulting company that assisted Acromed in obtaining FDA approval for the device, made fraudulent representations to the FDA to obtain that approval. The plaintiffs tried to use the alleged fraudulent representations to satisfy the 'but for' test. The Supreme Court stated that because the policing of fraud against federal agencies is not a field that the states have traditionally occupied, there is no presumption against preemption of a state law cause of action. 'The relationship between a federal agency and the entity it regulates is inherently federal in character because the relationship originates from, is governed by, and terminates according to federal law,' the Supreme Court stated. The court held that the plaintiffs' state law fraud-on-the-FDA claims were impliedly pre-empted by federal law.

What Will the Outcome Be?

We can expect extensive debate about the issues underlying HEALTH and state and federal attempts to limit exposure. As for the federal statute, while the bill has passed the House, Senate passage is not guaranteed. The legislation has the potential to be filibustered due to an expected intense lobbying campaign by the American Trial Lawyers' Association that may offset any lobbying campaign by the American Medical Association and PHARMA.

If passed, we can expect close scrutiny by the bench and bar and anticipate litigation over the applicability and constitutionality of the 'FDA Defense.'

Rebecca M. Stadler is with Nixon Peabody LLP's Pharmaceutical and Medical Device team, based in Buffalo, NY, servicing clients on a national, regional and local level.