September 21, 2007
Increased FDA Scrutiny of Legacy Drugs
Editorial in the Wall Street Journal -- The FDA vs. Small Pharma. Here's an excerpt:
Western Europeans began using quinine as a medicine in the 17th century. Then again, they didn't have to comply with the modern FDA.
In a little-noticed program announced last June, the Food and Drug Administration is cracking down on remedies like quinine. These belong to a class known colloquially as legacy drugs: That is, they are generally recognized as safe and effective, and have been prescribed by physicians for decades, in some cases before the modern FDA regime was created in 1962. But since they lack a formal FDA stamp of approval, they're being yanked from the market.
In a more rational political world, legacy drugs might be "grandfathered in," since the risks they pose are so few. The FDA, however, remains under intense scrutiny for handling of pharmaceutical safety in the aftermath of the Vioxx furor. So the agency is pulling out all the bureaucratic stops to mollify its Capitol Hill critics like Pete Stark and Chuck Grassley.
... [T]he FDA is requiring them to be put through the same regulatory wringer. Some must complete a New Drug Application, which requires clinical trials and can cost between $5 million and $10 million per legacy drug. The alternative, an Abbreviated New Drug Application, still costs over $1 million. That's a lot of money to reinvent the wheel.
The FDA Bill and Pharmaceutical Advertising
Article in the Wall Street Journal -- Media Industry Helped Drug Firms Fight Ad Restraints, by Anna Wilde Mathews and Stephanie Kang. Here's an excerpt:
When the Democratic-led Congress started debating a big Food and Drug Administration bill earlier this year, pharmaceutical companies worried that it would sharply restrict one of their most powerful sales-boosting tools -- drug ads.
But in the final bill, which passed the House overwhelmingly on Wednesday and the Senate last night, such marketing is largely spared. One major reason: the drug industry found powerful allies among media and advertising firms who were determined to protect one of their biggest and fastest-growing advertising categories.
The toughest drug-ad restriction in early drafts of the bill gave the FDA authority to block a drug company from advertising a medication that carried serious safety concerns. That was left on the cutting-room floor. The FDA will get new power to require drug companies to submit TV ads for review before they run, but it can only recommend changes, not require them. The bill lets the agency levy fines for false and misleading ads.
Congress Passes Bill Expanding FDA Powers
Article on cnn.com -- Drug safety bill heads to Bush's desk. Here's an excerpt:
The bill would give the FDA the power both to require drug companies to further study the safety of medicines if needed and to mandate new label warnings, when problems do appear. The FDA would be able to fine companies to ensure compliance with those two new authorities.
The legislation also would require companies to publicly release results of all clinical trials that show how well their drugs performed, although the level of disclosure remains to be determined.
The FDA also would gain the ability to fine drug companies for not completing follow-up studies on their drugs after they've won government approval. Those studies now often remain undone, often leaving important safety questions unanswered.
The legislation also would force the FDA to further step up its active surveillance for new safety issues with drugs. That system traditionally has been largely passive.
The manufacturers of certain new drugs would have to draft for each product a so-called "Risk Evaluation and Mitigation Strategy" that can include medication guides distributed with each prescription to ensure the medicine's safe use.
Melvyn Weiss Formally Indicted and Steven Schulman Agrees to Plead Guilty
Article on cnn.com -- Top class-action lawyer indicted. Here's an excerpt:
A federal grand jury in Los Angeles has indicted prominent class-action lawyer and Milberg Weiss co-founder Melvyn Weiss for conspiring to make illegal payments to plaintiffs in more than 250 lawsuits that generated $250 million in attorneys' fees for the firm, the government said Thursday.
Additionally, Steven Schulman, a former partner in the firm, has agreed to plead guilty to a racketeering charge and acknowledge that he and others, including Weiss, conspired to conceal the secret payments from judges presiding over suits filed by Milberg Weiss.
The racketeering conspiracy against Schulman carries a maximum sentence of 20 years in prison. A plea agreement released Thursday by federal prosecutors "contemplates" a sentence of 27 months to 33 months. Schulman had previously pleaded not guilty to the charges.
In a statement, Ben Brafman, Weiss' lawyer, said his client will fight the charges. "We are confident that when the evidence is carefully reviewed at a trial of these charges, Mr. Weiss will be fully exonerated," Brafman said.
Here's an excerpt from the related Wall Street Journal article, In Role Reversal, Melvyn Weiss is Indicted, by Nathan Koppel:
Mr. Weiss's share of firm profits during the years 1983 to 2005 was about $209.9 million, it says. The indictment also alleges Mr. Weiss profited greatly from the kickback scheme. The government alleges that Milberg Weiss earned more than $250 million in fees from cases involving kickbacks and that Mr. Weiss received more than about $41 million of those "tainted" fees.
Yesterday's indictment raises new allegations of kickbacks to certain "Florida plaintiffs" who served as name plaintiffs in 60 or more lawsuits for the firm. Prosecutors allege that around the early 1980s, David Bershad, a Milberg lawyer who has pleaded guilty in the case, told Mr. Weiss and another partner that paying a Florida plaintiff would violate laws prohibiting a lawyer from paying someone to induce the filing of a lawsuit. According to the indictment, Mr. Weiss and the other lawyer replied that because they would be paying in cash, there would be no paper trail and therefore there was little risk they would ever be caught.
Mr. Weiss "carried thousands of dollars in cash from New York to Florida" to compensate plaintiffs for taking the lead in class actions, the indictment alleges. Prosecutors allege Milberg paid kickbacks so it would have a ready stable of plaintiffs willing to file suits quickly, giving the firm an edge in the race to win the lucrative and powerful "lead counsel" status in class actions.
September 20, 2007
Milberg Weiss Statement on Melvyn Weiss Indictment
In the latest blow to Milberg Weiss, the once-powerful class action law firm now facing criminal charges for undisclosed payments the firm allegedly made to class representatives, an indictment against lead partner Mel Weiss is anticipated today. The firm released the following statement yesterday:
Milberg Weiss understands that a second superseding indictment will be
issued tomorrow that will include new charges against the Firm and also
Melvyn Weiss. Mr. Weiss has decided to discontinue his participation in
Firm management in order to focus on the defense of the charges against
him. The Firm's other partners, none of whom is alleged to have been
involved in any wrongdoing, will be responsible for its management and
litigation activities. Mr. Weiss will remain available to counsel clients
and Firm attorneys. The Firm remains proud of Mr. Weiss' and the Firm's
accomplishments over the years and will continue to fight for its clients
and class members and to produce the excellent results for which it is
known. We do not anticipate any interruption in our work and we look
forward to putting this difficult period behind us.
An article in today's Wall Street Journal -- Milberg's Weiss May Face Indictment in Kickback Case -- reports on the development, emphasizing the importance of Weiss as a target of the investigation:
Having secured a plea agreement this week with one of its biggest targets in the criminal prosecution of the Milberg Weiss law firm, the government is moving forward against another.
Melvyn Weiss, co-founder of the plaintiffs firm and a pioneer in the field of securities class-action cases, is expected to be indicted today in Los Angeles, according to people familiar with the situation. An indictment would come more than a year after Milberg and two then-name partners were charged with fraud for allegedly paying kickbacks to clients to induce them to serve as lead plaintiffs in lucrative securities class actions and shareholder suits. ...
It is expected that the indictment will charge Mr. Weiss with helping to steer secret payments to clients who served as lead plaintiffs in class actions; it will also raise a charge new to the case -- that Mr. Weiss allegedly obstructed justice by failing to turn over a document subpoenaed by prosecutors, according to people familiar with the case.
Although the firm is best known for its work in securities class actions, Milberg Weiss has represented plaintiffs in significant mass tort litigation in the past decade, including Rezulin, Zyprexa, Vioxx, fen-phen, and Exxon Valdez litigation.
September 18, 2007
Drug and Device Law has a post on two recent New York Times articles -- one on DaVita's involvement with Epogen and possible resulting litigation, and the other on interpretation of scientific studies.
Point of law's Walter Olson has a post on a $2.4 billion lead-paint abatement plan submitted by the state after defendants' were held liable in a nuisance trial.
Products Liability Prof Blog has a post regarding a Senate Judiciay Committee hearing on " “Regulatory Preemption: Are Federal Agencies Usurping Congressional and State Authority?”
Torts Prof Blog has a post linking The Examiner's multi-part series on class action abuse.
14 September 11th Suits Settle
The New York Times (by Anemonia Hartocollis) reports today that 14 September 11th suits have settled. This leaves only 21 of the 96 lawsuits originally filed arising out of the tragedy. Judge Hellerstein had scheduled the first case of the bellwether trials on damages for next Monday. Now that these cases are settled, the next one is not scheduled to go to trial until November 5. You can access the orders on the SDNY website. The article provides some insight into the decision to sue, litigate and/or settle:
Settlement talks continue, and more settlements could result before the first trial ever takes place, Mr. Migliori said. But he said he expected that some families would refuse to settle and insist on a trial because they felt strongly that only a trial would bring the answers they wanted about how terrorists had bypassed security and managed to hijack four planes.
Although the court has barred parties to the settlements from talking about them or revealing how much money they received, Mr. Migliori said they felt vindicated by their decision to forgo the compensation fund.
“I think it’s fair to say that the folks that chose litigation knew they were going to get compensated whether they went into litigation or went into the fund,” he said. “But uniformly it was understood and appreciated that the fund was not going to provide the same level of compensation as litigation.”
According to the article, the settlements came in the wake of Judge Hellerstein's ruling that the cockpit recording from Flight 93 could be played to the jury. This must have raised the stakes for defendants enough that they decided to offer a settlement plaintiffs could agree to. In other words, Judge Hellerstein's tactics to encourage settlement by pushing cases to trial - even just a trial on damages - worked. The discussion on this blog about the motives of the plaintiffs - truth or compensation - is answered somewhat by this article. It would be interesting to do a mathematical analysis of the ultimate payout received by these plaintiffs to compare it to what they would have received from the fund. I wonder why the Judge ordered the amounts be kept confidential, and whether there is a time limit on that order. Perhaps its because the order gives the parties 30 days to reinstate the actions.
Former Milberg Weiss Partner William Lerach to Plead Guilty
Article in the Wall Street Journal -- Securities Lawyer Lerach Is Set to Plead Guilty, by Nathan Koppel. Here's an excerpt:
Noted securities lawyer William Lerach is set to plead guilty to one count of conspiracy in the criminal case involving his former law firm, now called Milberg Weiss LLP. A plea agreement calling for a one- to two-year prison term could be announced as soon as today, according to people familiar with the investigation.
The case, brought last year in federal court in Los Angeles, alleges Milberg Weiss paid $11.3 million in improper kickbacks to clients. Two now-former partners of the firm were indicted at the time. Mr. Lerach, as well as his former colleague Melvyn Weiss, have been under investigation but haven't been charged.
Mr. Lerach once led the field of securities class actions, in which investors who suffer losses typically claim executives misled them about a company's financial condition. The lawyer became a lightning rod for critics who claim plaintiffs securities lawyers flood a company with papers until it agrees to a settlement, regardless of the merits of the claim. Mr. Lerach, 61 years old, has defended the suits as a way to keep corporate America accountable.
New York State and New York City Seek Restitution from Merck for Vioxx Payments
Article in the Wall Street Journal -- New York Sues Merck Over Vioxx: State and City Bring Suit, Seek Restitution of Funds Spent Through Medicaid, by Heather Won Tesoriero. Here's an excerpt:
New York state and New York City have jointly sued Merck & Co. for allegedly concealing safety information about Vioxx, joining a half-dozen states that have sued the drug maker since it withdrew the painkiller three years ago amid concerns about dangerous side effects.
The complaint, brought by the offices of Attorney General Andrew Cuomo and Mayor Michael Bloomberg, seeks restitution for tens of millions of dollars allegedly spent on Vioxx through Medicaid and a prescription-drug assistance program for the elderly between 1999 and 2004. States develop lists of preferred drugs that they will pay for, and New York officials might have chosen cheaper alternatives to Vioxx had its risks been known earlier.
When asked about the timing of the suit, Jeffrey Lerner, director of communications for Mr. Cuomo, said, "One of the priorities for this AG, who has been in office only 10 months, is to focus on Medicaid fraud."
The complaint alleges that "Merck tried to distort each negative disclosure about Vioxx. Merck cherry-picked outcomes from its own research, omitting material information that would have communicated Vioxx's real cardiovascular dangers."
Light Cigarette Suit Not Preempted by Federal Law
BNA Law Week reports that the 1st Circuit held that the Federal Cigarette Labeling and Advertising Act does not preempt smokers' state law claims under the Maine Unfair Trade Practices Act alleging unfair and deceptive practices by Philip Morris. See Good v. Altria Group Inc., No. 06-1965 (1st Cir. Aug. 31, 2007). The preemption clause at issue states that "No requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provisions of this chapter." 15 U.S.C. § 1334(b). The provisions referred to are the Surgeon General's Warning. The 1st Circuit distinguished between plaintiffs' various claims, holding that those claims based on a state law that are "broader in scope" are not preempted. Accordingly, the court struck down plaintiff's theory that defendant's advertising neutralized the Federal warning on preemption grounds, but upheld the misrepresentation and concealment claims. This represents a split with the 5th Circuit, which recently held that fraud claims based on advertising of "light" and "lower tar" cigarettes are preempted because they effectively operate as Federal warning neutralization claims. See Brown v. Broawn & Williamson Tobacco Corp., 479 F.3d 383 (5th Cir. 2007). The opinion in Good v. Altria is available on the 1st Circuit website.
Because the 1st Circuit relied on a plurality opinion in the Supreme Court, Cipollone v. Liggett Group Inc., 505 U.S. 504 (1992), it seems likely that this case will be headed that way. The case raises an interesting theoretical issue about pragmatism in statutory interpretation (in addition to the federalism issues of course). Justice Stevens laid out the battle lines in a footnote:
Both Justice BLACKMUN and Justice SCALIA challenge the level of generality employed in our analysis. Justice BLACKMUN contends that, as a matter of consistency, we should construe failure-to-warn claims not as based on smoking and health, but rather as based on the broader duty “to inform consumers of known risks.” Post, at 2631. Justice SCALIA contends that, again as a matter of consistency, we should construe fraudulent-misrepresentation claims not as based on a general duty not to deceive but rather as “based on smoking and health.” Admittedly, each of these positions has some conceptual attraction. However, our ambition here is not theoretical elegance, but rather a fair understanding of congressional purpose. To analyze failure-to-warn claims at the highest level of generality (as Justice BLACKMUN would have us do) would render the 1969 amendments almost meaningless and would pay too little respect to Congress' substantial reworking of the Act. On the other hand, to analyze fraud claims at the lowest level of generality (as Justice SCALIA would have us do) would conflict both with the background presumption against pre-emption and with legislative history that plainly expresses an intent to preserve the “police regulations” of the States.
If this gets to the Supreme Court, I predict that Justice Scalia will have the opportunity to overrule Cipollone.
September 17, 2007
Louis Robles Trial to Begin
Jury selection is set to begin tomorrow in the criminal trial of Miami asbestos lawyer Louis Robles, according to an article by Julie Kay on law.com, Nationally Known Mass Torts Lawyer Headed for the Trial Nobody Wants:
Jury selection is scheduled to begin Tuesday in the long-awaited federal trial of former superstar Miami attorney Louis Robles, who was charged with mail fraud in the alleged theft of $13.5 million in clients' settlement money. The trial is expected to last four weeks before U.S. District Judge Alan Gold.
Robles was disbarred in 2003 and later indicted on federal charges. In April, Robles agreed to plead guilty and receive a ten-year prison term, but Judge Gold rejected the deal:
Neither prosecutors nor defense attorneys wanted a trial. But Gold rejected a plea deal that called for Robles to serve 10 years in prison and recently rejected a request from Assistant Federal Public Defender Hector Flores for a 60-day continuance.
The article notes that the defense has proposed voir dire questions to identify juror with a negative image of personal injury lawyers.
Nagareda on Mass Torts in a World of Settlement
Richard Nagareda's book Mass Torts in a World of Settlement was just published by University of Chicago Press. It's worth reading. I had the pleasure of reading an earlier draft, and now that I've gotten my hands on the finished product, I can't wait to read the final version. Nagareda, whose expertise in administrative law gives him a distinct perspective on mass tort problems, views mass torts largely as a problem of governance. If the endgame of most mass torts is a private compensation regime designed by lawyers, he argues, then mass tort litigation functions as a legal reform mechanism that replaces one set of rights with another. In the course of making this argument, he weaves together an impressive range of legal issues and mass tort stories. Vanderbilt Law School is hosting a panel discussion on the book this Friday, Sept. 21, featuring tort experts Tony Sebok of Cardozo and Cathy Sharkey of NYU.