Warner-Lambert v. Kent and Liabilty for Drugs

DECISION ON MARCH 3, 2008--THE LOWER COURT'S DECISION WAS AFFIRMED BY AN EQUALLY DIVIDED UNITED STATES SUPREME COURT (4-4), ROBERTS RECUSING HIMSELF.

This case demonstrates the growing power that pharmaceutical companies have in American life. At issue specifically is the ability of 27 Michigan residents who claim they were injured by ingesting Rezulin, a drug manufactured by W-L in the late 1990s before pulling it from the market in 2000, to sue W-L for tort damages. W-L says they can't do so because the law of MI only permits suit against them for allegedly harmful drugs if they either misled or withheld germane information from the Food and Drug Administration ("FDA") during the drug approval process. However, even in a case such as this, the MI plaintiffs would have no remedy because the proper body to sue the company, now folded into Pfizer, Inc., would be the FDA, as W-L argues. The District Court agreed with the company and dismissed the suit, but the Second Circuit panel reversed, claiming that cases interpreting MI law in the 6th Circuit (MI's location) didn't necessarily determine the 2nd Circuit's approach to the issue. Let's get some facts and law, and then "predict" what the Court might do.

The Facts of the Case and MI Law

Rezulin was approved by the FDA in 1997 and was indicated for the treatment of type 2 diabetes mellitus. Type 2 diabetes is a life-threatening disease that affects 18 million Americans, and is a leading cause of coronary heart disease, blindness, kidney failure and limb amputation. Between 1997 and 1999 reports of adverse liver-related effects in Rezulin patients were widespread. As a result, W-L agreed to a series of labeling changes between those years. W-L voluntarily removed Rezulin from the market in March 2000 after two new drugs for the treatment of type 2 diabetes were introduced. The FDA concluded that Rezulin no longer had a positive benefit to risk calculus in the face of newer drugs that appeared to have a better safety profile.

Well, some of those injured by ingesting Rezulin in this three year window sued W-L in state court, alleging a violation of MI law. Well, what is the MI law in view? Passed in 1995, the MI law was part of a "tort reform" package that in fact gave additional protections to the pharmaceutical industry. The relevant portion of the law provided:

"In a product liability action against a manufacturer or seller, a product that is a drug is not defective or unreasonably dangerous, and the manufacturer or seller is not liable, if the drug was approved for safety and efficacy by the United States food and drug administration, and the drug and its labeling were in compliance with the United States food and drug administration's approval at the time the drug left the control of the manufacturer or seller." M.C.L. § 2946(5).

The principal exception follows. Liability may attach to the manufacturer or seller if it:

"a) Intentionally withholds from or misrepresents to the United States food and drug administration information concerning the drug that is required to be submitted under the federal food, drug, and cosmetic act and the drug would not have been approved, or the United States food and drug administration would have withdrawn approval for the drug if the information were accurately submitted." M.C.L. § 2946(5)(a).

In the strength of these laws, plaintiffs alleged that W-L "knowingly concealed material facts about the safety and efficacy of Rezulin from the FDA, which would have prevented its approval and/or resulted in its earlier removal from the market."

What The Courts Did With the Claim

Because some of the litigants in the case alleged a CA connection, the case was not only removed from state to federal court, but the Judicial Panel on Multidistrict Litigation decided to transfer the cases to the US District Court for the Southern District of NY. While the case was being argued, the US Supreme Court handed down the Buckman decision (531 US 341 (2001)). In Buckman the Court held that state law fraud claims against medical equipment manufacturers were preempted by the federal Food Drug and Cosmetic Act, 21 USC sec 360e(b)(1)(A,B). That is, the Court concluded that for a state court to do an extensive investigation into the possible fraud perpetrated on a federal agency (the FDA) would not only lead to hopeless amounts of litigation but would take away or overshadow that same ability of the FDA to conduct its own investigation. Such an investigation of a federal agency, the Court held, was a federal responsibility.

In the wake of Buckman, the 6th Circuit (which includes MI) decided that the fraud provision of MI's statute, cited above, was unconstitutional. Therefore, according to the case (Garcia v. Wyeth-Ayerst Labs., 385 F3d 961 (6th Cir. 2004)), a case brought under the above-bolded MI law alleging fraud on the FDA could not go forward. The US District Court in NY agreed and dismissed the case of the many plaintiffs.

But the 2nd Circuit reversed (Desiano v. Warner-Lambert, 467 F3d 85 (2nd Cir. 2007)). The court concluded two things: (1) that since the issue was now in the 2nd Circuit, a 6th Circuit precedent didn't necessarily have conclusive authority, and, more important: (2) even if a claim for fraud was precluded, as it was by Buckman, the plaintiffs had brought claims for numerous other common law torts--such as negligent misrepresentation, breach of express and implied warranties, negligence, etc. that didn't seem to be affected by the MI statute. Thus, the 2nd Circuit decided the case could go forward.

What The Supreme Court is Likely to Do

I started this essay by saying that this case demonstrates the growing power of pharmaceutical companies in American life. Before MI passed its 1995 statute, which provided that as long as the drug company got FDA approval, and followed the FDA protocols, it was not liable for injuries resulting from the use of its products, there were other laws. Prior to 1995 the law was that compliance with FDA procedures could be adduced as evidence (but not conclusive evidence, as in 1995) of non-liability of the drug companies. Thus, the drug companies made a huge advance for their interests in MI and at least seven other states around 1995 (TX, AZ, UT, OR, NJ, ND, and OH passed similar statutes) by having FDA approval shield them from liability for drugs they manufactured, if they followed the FDA protocols.

The cases interpreting these laws since 1995 have even given the companies more protection, since now the exception clauses have been struck down. The 2nd Circuit's pro-plaintiff decision is understandable as a way to try to "redress" the "balance" that is now clearly working to the advantage of the drug companies in litigation such as this. But, in my judgment, the Supreme Court will probably reverse the 2nd Circuit and uphold the District Court's decision. They will reaffirm Buckman and hold that the FDA is the proper body to police alleged fraud or noncompliance by the drug companies. That sound you just heard was another door closing for private plaintiffs.

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