February 2, 2007
Texas Prempro Case Dismissed
A Texas judge has dismissed a hormone replacement therapy case on the verge of trial, based on FDA preemption, according to this Bloomberg article in today's Asbury Park Press -- Cancer Suit Against Wyeth Dismissed:
Madison-based Wyeth said a judge dismissed a lawsuit brought by a woman who claimed she developed breast cancer as a result of using the company's menopause drug Prempro.
Judge Caroline E. Baker of Houston said the woman couldn't accuse Wyeth of failing to warn about risks associated with Prempro because drug labels are regulated by the U.S. Food and Drug Administration, according to a Wyeth statement. Wyeth lawyers have said the company did what the FDA told them to do.
The trial was scheduled to begin on Monday, Feb. 5.
February 1, 2007
In a marked departure from its successful but expensive strategy of defending each case individually and vigorously at trial, Purdue Pharma last week settled over one thousand OxyContin lawsuits, according to articles in the Stamford Advocate and Staten Island Advance. The Jan. 27 article in the Stamford Advocate -- Purdue Settles 90% of Pending OxyContin Cases -- reports that the company decided it was able to settle on advantageous terms:
Stamford-based drugmaker Purdue Pharma said yesterday it has settled more than 1,000 lawsuits related to its controversial painkiller OxyContin.
Up to now, Purdue said it had resolved every suit claiming injury from OxyContin in its favor, either through dismissal or the plaintiff's withdrawal from the case. The company will not say if its settlement of approximately 90 percent of 1,374 outstanding cases in 10 jurisdictions around the country involved any payment to the plaintiffs.
"We have reached the point that it makes economic sense to resolve these cases under the terms we've been able to realize because of our past success in this litigation," Purdue spokesman Timothy Bannon said. ...
Many of the OxyContin suits had been brought by persons claiming to have become addicted to the drug or suffered an overdose, or from families of those who had died from an overdose. None of those claims had succeeded against Purdue, which held that people who illegally obtained or abused OxyContin were responsible for any injuries they suffered.
The Jan. 27 article in the Staten Island Advance (the litigation was of special interest to Staten Islanders because the New York state court cases were being handled by Judge Maltese on Staten Island) -- Oxycontin Maker Settles Suit for $75M -- cites unidentified "sources" for the $75 million settlement amount, and adds information about the number of claims involved:
Neither the plaintiffs' lawyers nor Purdue Pharma revealed settlement details, but sources put the total package at $75 million. ... The agreements affect all 1,117 actions brought here, including 924 plaintiffs who live outside New York, plus several hundred other lawsuits brought in various courts around the country. Prior to the agreement, there had been 1,374 active cases against Purdue Pharma, a company spokesman said.
Altria Ready to Consider Breaking Up Domestic and International Tobacco Holdings
Article in the Wall Street Journal -- Altria Ready to Consider Next Breakup: Tobacco, by Vanessa O'Connell:
Having set a March 30 date for the spinoff of its roughly 89% stake in Kraft Foods Inc., Altria Group Inc. is now expected to decide on the next phase of its restructuring: splitting its U.S. tobacco operations from its international business.
A board decision on the separation of the tobacco businesses is expected later this year, and in the eyes of many analysts, an official acknowledgment of the move by Altria could push Altria shares higher.
"There are clearly measures we can take going forward to enhance shareholder value," said Altria Chief Executive Louis Camilleri in an interview yesterday, noting a "conglomerate discount" has affected Altria shares.
Altria has been contemplating the two-stage breakup for several years. Separating the international and U.S. parts of Philip Morris makes sense because while both Philip Morris USA and Philip Morris International sell Marlboro cigarettes, they face differing regulatory landscapes and growth prospects.
January 31, 2007
FDA Changes In Response to IOM Report
Article in the Washington Post -- FDA Revamps Process for Safety of Drugs After Approval, by Shankar Vedantam:
The Food and Drug Administration said yesterday that it is making changes in the way it operates to prevent the kind of drug safety controversies that have dogged the agency in recent years.
Officials outlined plans to better monitor safety problems after drugs are approved and to make internal changes to increase the profile of agency scientists who raise red flags about drugs. The steps were announced in response to a report last year by the congressionally chartered Institute of Medicine (IOM) that called for an overhaul of the FDA's culture and structure following safety controversies over drugs such as the painkiller Vioxx.
Officials said the steps will restore the trust and confidence of Congress and the public. They also pledged a renewed commitment to good science as the best way to counter critics who say the agency is too cozy with drug companies.
"We will fight back against those perceptions and that cynicism," said Steven Galson, head of the agency's Center for Drug Evaluation and Research, the division that evaluates new drugs and that has been at the center of the maelstrom.
A member of the Institute of Medicine panel said the FDA had taken steps in the right direction but had fallen short.
January 30, 2007
Schumer Embracing Tort Reform?
Editorial in the Wall Street Journal -- Schumer's Tort Epiphany:
Write about politics long enough and you come to think you've seen everything. But even we didn't expect to see a leading Senate Democrat declare that tort law abuse is making America less economically competitive. Has Chuck Schumer told his colleagues about his epiphany?
Mr. Schumer was knocked off his horse last week on the way to a press conference with Governor Eliot Spitzer and New York City Mayor Mike Bloomberg to discuss the ways that regulation is driving financial business from U.S. shores. Governor Spitzer's presence was so ironic that even he -- not famous for his self-deprecation -- had to joke about it. But the really big news is that Mr. Schumer endorsed a study declaring that tort reform is the single biggest key to retaining U.S. leadership in global finance.
As political conversions go, this is like Dick Cheney endorsing a stronger Congress. Mr. Schumer is chairman of the Democratic Senatorial Campaign Committee, which puts him at the center of fundraising for Democratic candidates. And trial lawyers have been a leading and deep-pocketed constituency for Democrats, donating millions of dollars in each election cycle. Over the last decade, more than 90% of trial lawyer donations have gone to Democrats. In return, the Democratic Senate caucus has been a bulwark against tort reform.
Judge Denies Prempro Punitive Damages
In the Prempro trial of Mary Daniel v. Wyeth, the jury yesterday rendered a verdict for the plaintiffs for $1.5 million in compensatory damages and finding a basis to move to a punitive damages phase, but today the judge ruled as a matter of law that the evidence was insufficient to hold Wyeth liable for punitive damages. In an interesting twist, however, the judge apparently has decided to allow the jury to hear the evidence on punitives and to render a verdict -- under seal -- in case her ruling is reversed on appeal. Here's an excerpt from the Reuters report by Jon Hurdle:
A judge on Tuesday agreed with Wyeth that there was insufficient evidence for a jury to find that the drugmaker acted recklessly in marketing its Prempro hormone replacement therapy, but allowed the punitive damage phase of the trial to proceed pending an appeal of the ruling.
However, Philadelphia Court of Common Pleas Judge Myrna Field ordered that any punitive damage award will not be made public unless an appeals court overturns her ruling.
A jury on Monday found that Wyeth failed to properly warn about the cancer risks associated with Prempro and that the drug was responsible for plaintiff Mary Daniel's breast cancer. It awarded Daniel and her husband some $1.5 million in compensatory damages.
The jury also found that Wyeth's conduct was malicious or showed reckless indifference, a finding that under Pennsylvania law would send the jury back to determine additional punitive damages to be paid by the Madison, New Jersey-based company.
While Field ruled in Wyeth's favor, effectively setting aside that part of the jury's verdict -- a ruling that would limit Wyeth's liability to the $1.5 million -- she agreed to allow punitive damages deliberations to proceed under seal after Daniel's attorneys said they would appeal the ruling.
The judge accepted arguments by lawyers for the plaintiff that a decision by an appeals court to overturn her ruling would necessitate a new trial, and that to keep costs down the jury should be allowed to come up with a punitive damages figure that would be kept under wraps, but could be used by the appeals court if necessary.
As a matter of judicial process, it's comparable to the granting of a renewed motion for judgment as a matter of law (JNOV) after denying the initial motion and allowing the jury to deliberate. The goal is to avoid the inefficiency of a retrial in the event of appellate reversal of the legal ruling. But Judge Field's action presents two twists on the usual situation. First, the judge announced her ruling to the lawyers before proceeding to the punitive damages phase. Even if a judge knows that she intends to grant JNOV, it must be rare for the judge to announce that intention before the jury deliberates, much less before the lawyers present the final round of evidence. Second, the judge apparently ordered that the final phase and the jury's verdict be conducted under seal. Ordinarily, the trial and verdict would be accessible to the public even if the judge chooses to grant JNOV.
Do Product Recalls Increase Mass Tort Exposure?
In a news account of yesterday's verdict for a plaintiff in the Prempro litigation, an analyst was quoted as saying that Wyeth's exposure is smaller than it would be if the FDA had recalled the product:
Linda Bannister, an analyst at Edward Jones, said Prempro is a minor cloud hanging over the company, with Wyeth's risk limited by the fact that the drug remained on sale. "It's not a situation like Vioxx or fen-phen," she said, referring to the 2004 withdrawal of Merck's arthritis drug Vioxx, and the 1997 recall of two Wyeth drugs used in the fen-phen diet cocktail. ... "If the U.S. Food and Drug Administration advises that a product be removed from the market, a company's (financial) risk is significant," Bannister said, because the product is deemed very defective or potentially harmful.
This raises the interesting question of the relationship between product recalls and liability. The comparison of Merck and Wyeth resonates on a day when Merck is reporting 4th quarter profits down 58% due in part to Vioxx litigation while Wyeth reports 4th quarter profits up 17% due in part to Prempro hormone replacement therapy (HRT) sales. Bannister's point is that if product recalls are triggered by strong scientific evidence of a link between the product and the alleged harm, then they can be expected to correlate with a greater likelihood of liability. Evidence of general causation, after all, bears on both the causation and liability elements of tort claims. She could have added (and perhaps she did; we have only the reporter's snippet of the quote) that a product recall itself is a triggering event for mass litigation, as a recall generates publicity that attracts the attention of lawyers and potential plaintiffs. Thus, it's fair to say that as a general matter, really massive liability tends to accompany products that have been removed from the market. Think asbestos, Dalkon Shield, and fen-phen.
But there's another side to recalls that cuts the other way. To whatever extent the product is causing harm or increasing risk, the longer the product stays on the market, the more potential liability it creates. When the product remains on the market, it's also harder for a defendant to anticipate the future stream of claims and to quantify the remaining risk. In this sense, Prempro resembles other litigation-generating products such as Zyprexa, Oxycontin and tobacco.
If a manufacturer knows that its product creates an unreasonable risk of harm, then most would agree that regardless of regulatory action, the company itself faces a moral, legal, and business imperative to remove the product from the market. But sometimes the evidence is debatable and the moral duty unclear, although the risk of litigation remains high. In those situations, the company faces the difficult decision of how to balance the upsides and downsides -- as to both business and litigation risks -- of keeping a product on the market.
Merck takes charges for Vioxx, Fosamax
Merck today reported a heavy decline in fourth quarter profits despite an increase in revenues, due in signficant part to litigation over its painkiller Vioxx and osteoporosis treatment Fosamax. Here's an excerpt from a report by Linda Johnson (AP) on BusinessWeek.com -- Merck 4Q Earnings Plummet 58 Percent:
Merck & Co. reported Tuesday that fourth-quarter profit plunged 58 percent despite higher revenues as the drugmaker took a slew of charges for restructuring costs, an acquisition and increased legal reserves, mainly for its withdrawn painkiller Vioxx.
On the litigation front, Merck reported that as of Dec. 31 it faced approximately 27,400 lawsuits, some involving multiple plaintiffs, alleging harm from Vioxx. The company pulled the one-time blockbuster arthritis pill from the market in September 2004 after research showed it increased risk of heart attacks and strokes.
Merck also said it faces about 265 potential Vioxx class-action lawsuits alleging personal injury or economic loss, and has entered about 14,180 agreements with other potential claimants suspending the time limit for them to sue.
The company said it added $75 million to its Vioxx legal defense fund in the quarter, after adding $598 million in the third quarter and $295 million in 2005.
It set aside another $48 million to start a legal defense reserve for lawsuits alleging that Fosamax destroys bone in the jaw; the company faces more than 100 such lawsuits.
Zyprexa Documents: Judge Invites NYT Reporter to Appear
The fallout from the disclosure of Zyprexa documents continues and just gets more interesting. Torts Prof has the story of Judge Jack Weinstein's "invitation" yesterday to New York Times reporter Alex Berenson, asking him to voluntarily appear on February 7 to explain how he obtained the sealed documents. According to Judge Weinstein's order, a copy of which may be found on Torts Prof, "This invitation is intended to permit Alex Berenson to confront testimony received at a hearing in this court on January 16-17, 2007 implicating him in a conspiracy to obtain and publish confidential documents sealed by this court." The order includes relevant excerpts from the hearing transcript referencing Alex Berenson, James Gottstein, and David Egilman, and instructs Lilly to "serve a copy of this invitation" on Berenson.
January 29, 2007
Wyeth Loses Prempro Trial
Today, a jury found Wyeth liable to plaintiff Mary Daniel and her husband in a Prempro trial in Pennsylvania state court. Here's an excerpt from the Reuters report:
A state jury in Philadelphia on Monday found Wyeth's hormone replacement therapy (HRT) Prempro was responsible for an Arkansas woman's breast cancer and ordered the U.S. drugmaker to pay $1.5 million in compensatory damages, a court official said.
The jury found that Wyeth was negligent in failing to provide adequate warnings about the breast cancer risk associated with Prempro.
The jury is expected to return, possibly as soon as Tuesday, to decide punitive damages after also finding that Wyeth's conduct was "malicious, wanton, willful or oppressive or showed reckless indifference to the interest of others" in its failure to provide proper warnings about its HRT drugs, taken by millions of women to treat symptoms of menopause.
Birnbaum, Scruggs, and the Katrina Settlement
An article by Anita Lee in yesterday's Sun Herald (Mississippi) -- Insurance Showdown: Here's the Inside Story of How Legal Titans Reached Settlement -- sheds light on the process by which settlement class actions are negotiated. In litigation over Hurricane Katrina insurance coverage, Sheila Birnbaum (who heads the Complex Mass Tort and Insurance Group at Skadden Arps) represents State Farm, and Richard Scruggs (Mississippi mass tort plaintiffs' lawyer who played a central role in the tobacco state attorney general settlement) represents numerous Gulf Coast policyholders. The reporter describes a phone call from Birnbaum to Scruggs in September 2006:
In a telephone interview, Birnbaum said she called Scruggs because he had put out feelers, passed on by local attorneys, that he wanted to talk.
Scruggs recalled in an interview last week: "She said, 'We need to talk. I'm representing State Farm. We'll meet you any time, anywhere and see if we can't find common ground.' That's the way things usually unfold like this on a large scale."
Eventually, they negotiated a settlement on a class action basis, in coordination with a deal between Attorney General Jim Hood and State Farm that ended the state's criminal investigation. They presented it to the federal court last Tuesday:
State Farm and the Scruggs team reached an accord for Scruggs' clients and crafted a class-action settlement for policyholders who have not hired a lawyer - about 8,000 by Hood's estimate. Those who choose to opt out of the settlement could do so.
Hood's negotiations with State Farm were aimed at keeping the company's questionable claims practices out of negotiations with policyholders who take part in the class-action settlement. He said he also pushed to get them the best deal possible, while State Farm pushed back.
Finally, they inked a deal. Hood ended his criminal investigation, but plans to forward evidence to Congress. He also dismissed a civil lawsuit against State Farm in Hinds County Chancery Court that sought full coverage for policyholders. He'll continue to press that suit against other major insurers.
Once Hood and State Farm reached an accord, that airplane finally took off for the Coast, where the proposed settlement between State Farm and the Scruggs group was delivered to the federal courthouse in Gulfport on Jan. 23.
On Friday, Judge L.T. Senter, Jr. rejected the proposed settlement without prejudice. The parties hope to revise the deal to address the court's concerns.
January 28, 2007
Bill to Require Sick 9/11 Workers Honored in Ground Zero Museum
Article in the Washington Post -- Bill Would Honor Sick Sept. 11 Workers, by the Associated Press:
The museum planned for ground zero should include a memorial to workers who died after becoming ill during recovery and cleanup of World Trade Center debris, two state lawmakers said Sunday.
The Bush administration, along with state and local governments, have been criticized for being slow to acknowledge that many people developed debilitating illnesses from exposure to toxic materials at ground zero.
The event came a day after the funeral of police officer Cesar Borja, 58, who died of lung disease believed to have resulted from ground zero recovery activity.