Tuesday, January 30, 2007

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.

HME

January 30, 2007 in FDA, Fen-Phen, Prempro, Vioxx | Permalink | Comments (0) | TrackBack (1)

Tuesday, December 5, 2006

Fen-Phen Lawsuits Claiming PPH

Article in Chicago Tribune -- Wyeth sued by former Fen-Phen users over lung disease, by Jef Feeley of Bloomberg News.  The article discusses new claims brought by plaintiffs counsel Alex MacDonald and Kenneth Rothweiler that Fen-Phen caused primary pulmonary hypertension.  Here's an excerpt:

Wyeth was sued by five women who claim the fen-phen diet combination caused them to develop an often-fatal lung disease at least eight years after they stopped taking the drugs.

Renee Tedesco of Paramus, New Jersey, says in one of the complaints filed today in state court in Philadelphia that she was diagnosed in April with primary pulmonary hypertension, 10 years after she began using fen-phen. Wyeth has set aside more than $21 billion to resolve litigation over the diet aids since pulling them off the market in 1997.

Wyeth officials engaged in a ``knowingly false campaign of misinformation and disinformation'' about whether the drugs Pondimin and Redux can cause the lung disease, known as PPH, years after a user stopped taking them, Tedesco's lawyers said in the complaint.

The lawsuits challenge Wyeth's assertion that health risks linked to fen-phen persist only a year after use ends. Wyeth, based in Madison, New Jersey, has said it resolved almost all of the 175,000 claims by former fen-phen users, most of them alleging the drugs caused heart problems, through a national settlement and deals with individuals.

The original $3.75 billion settlement program didn't cover PPH claims. The company last month told the U.S. Securities and Exchange Commission that it faced 95 PPH suits as of Oct. 15 and more might be filed.

BGS

December 5, 2006 in Fen-Phen | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 21, 2006

Alex MacDonald leaves Robinson & Cole

Boston mass tort plaintiffs' lawyer Alex MacDonald has left Robinson & Cole to join Rothweiler Eisenberg.  MacDonald's mass torts group at Robinson & Cole was a rare example of a significant mass tort plaintiffs' practice within a large corporate firm.  (Robins Kaplan in Minnesota is the other prominent example.)  Plaintiffs' practices in large defense-oriented firms have certain advantages -- resources, infrastructure, lawyers with varied experience -- but inevitably run into conflicts of interest and sometimes culture clashes as well.  The question is whether the benefits outweigh the costs.  Apparently, MacDonald found that the big-firm association no longer made sense for his practice. 

Here's a clip from a Connecticut Law Tribune article -- High-End Plaintiffs Cases an Uneasy Fit at Defense Firms:

In the end, multimillion-dollar contingency fee recoveries couldn't keep Hartford, Conn.-based Robinson & Cole and the chairman and founder of its nationally prominent mass tort group together under the same roof.

Like for other high-end plaintiff practices operating within large defense-oriented law firms, client conflicts eventually convinced Alex H. MacDonald that greener pastures lay elsewhere, he said.

Recently, he took the reputation he gained from brokering a record-breaking fen-phen settlement and joined forces with two high-profile Philadelphia trial lawyers to form MacDonald Rothweiler Eisenberg.

The message to other defense firms: Dabbling in plaintiffs work can be lucrative, but the more lucrative it gets, the more inevitable an eventual breakup becomes.

According to the article, Robinson & Cole's longstanding representation of Pfizer had precluded MacDonald's group from taking on Rezulin cases (because Pfizer was on the verge of acquiring Warner-Lambert) or Vioxx cases (because Pfizer produced similar drugs Celebrex and Bextra).

MacDonald made his name in the fen-phen litigation, in which he represented Mary Linnen and a host of other PPH claimants, and became a central figure on the plaintiffs' side.  He was profiled in Alicia Mundy's book, Dispensing with the Truth (St. Martin's Press 2001).

HME

November 21, 2006 in Fen-Phen, Rezulin, Vioxx | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 18, 2006

Kentucky Fen-Phen Lawyers Ordered to Turn Over $20 Million to Clients

Article in Monday's Lexington Herald-Leader -- Judge Orders Money in Fund from Fen-Phen Settlement Moved:

Nearly $20 million that had been placed in a controversial fund controlled by three Lexington lawyers should instead be held for 400 of the lawyers' former clients, a judge has ordered.

On Friday, Special Judge William Wehr ordered that money from the Kentucky Fund for Healthy Living, which was set up using money from a $200 million fen-phen lawsuit settlement in Boone Circuit Court, be placed in a trust for the lawsuit's plaintiffs, all of whom said they suffered medical problems because they took the diet drug.

Those plaintiffs are now suing their former attorneys: Lexington lawyers William Gallion, Melbourne Mills and Shirley Cunningham Jr. and Cincinnati lawyer Stanley Chesley. The 400 former clients say that their lawyers took more money from the settlement than what they agreed to give them in attorney fees.

According to the article, Wehr ruled earlier this year that Gallion, Mills and Cunningham violated their duty to their clients by taking more than their share of the settlement proceeds.  In August, the Kentucky Supreme Court temporarily suspended the attorneys pending a disciplinary investigation.

HME

October 18, 2006 in Ethics, Fen-Phen, Settlement | Permalink | Comments (0) | TrackBack (0)