Under the Federal Food Drug and Cosmetics Act (FDCA), drugs sold in the United States require an FDA-approved label—the elaborate, incomprehensible (to laymen) sheets you find inside every package. Every sentence is dictated by FDA requirements, down to the font and letter size. Violations of these requirements, and the sale of drugs without the label or a different label, are subject to very severe penalties. The statutory scheme operates to the explicit exclusion of any state regulatory (administrative) scheme. What Wyeth asks us to believe is that state juries may nonetheless hold drug manufacturers liable, for accidents caused by use in direct contravention of the federal label, on the grounds that the federally required label was inadequate. Meticulous compliance with federal requirements doesn’t preempt “failure to warn” liability under state common law.

What Wyeth v. Levine did is a post from Overlawyered - Chronicling the high cost of our legal system

P.S. But preemption does not carry the day in an automotive case, Williamson v. Mazda.

SCOTUS, 6-2: vaccine suits preempted is a post from Overlawyered - Chronicling the high cost of our legal system

P.S. More: Throckmorton’s Other Signs. And, from before the decision, from Yale-affiliated neurologist Peter McAllister in the Providence Journal.

Pre-emption: don’t be sick is a post from Overlawyered - Chronicling the high cost of our legal system

We can put the nail in the coffin in the idea that this is a pro-business Supreme Court: the 6-3 Wyeth v. Levine decision is the worst anti-business decision since United States v. Von’s Grocery, 384 U.S. 270 (1966). Justice Thomas’s confused concurring opinion is especially disappointing, as it declares an abdication of the Supreme Court’s appropriate structural role to prevent individual states from expropriating the gains from interstate commerce.

Sell your pharmaceutical stocks now, because the Supreme Court just declared it open season on productive business. One should now fear the coming decision in the as-yet-to-be-briefed Clearinghouse v. Cuomo, and the effect that is going to have on an already battered banking economy, as well.

Beck and Herrmann have first thoughts, but are likely to be relatively quiet thereafter.

Update, as Walter points out in the comments, see also Andrew Grossman’s post at Point of Law, and the earlier coverage at that site by numerous authors, dating back to when the case first began making headlines.

Contrary to the suggestion of Justice Thomas, Dan Fisher, this is not a “victory for federalism” by any stretch of the imagination: federalism is a two-way street, and permitting states to impair interstate commerce through a litigation tax upsets the federalist structure of the Constitution. See, e.g., Epstein and Greve.

Wyeth v. Levine is a post from Overlawyered - Chronicling the high cost of our legal system

The 5th U.S. Circuit Court of Appeals on Monday upheld the conviction of Vicksburg lawyer Robert Arledge, convicted of bilking the drug company Wyeth of more than $6.7 million over the diet drug Fen-Phen….

U.S. District Judge David Bramlette sentenced Arledge to six years in prison for knowingly allowing clients to make claims of about $250,000 each for health complications although they had no legitimate reason.

Seems it was a clergy scandal as well as a lawyer scandal:

Regina Reed Green of Fayette, who pleaded guilty to tax evasion involving false Fen-Phen claims, testified Arledge knew about the scheme to defraud the drug company. She said he told her every resident of 9,740-population Jefferson County would get $1 million.

“The evidence showed that when Green became concerned that she might be caught fabricating the prescriptions and expressed a desire to stop her illegal activity, she contacted (the Rev. Gregory) Warren,” the appeals court wrote. “Warren tried to convince Green to continue fabricating the prescriptions, but Green was not assuaged.”

Green testified Arledge persuaded her to continue: “And he said … I wasn’t going to get in any trouble because like (Warren) said, they were going to box all those files up, put them away, and never be seen again.”

Earlier coverage here, here, and here (via).

“Lawyer’s Conviction Affirmed for Fen-Phen Settlement Fraud” is a post from Overlawyered - Chronicling the high cost of our legal system

…it is folly to act as if the private lawsuits attacking FDA warnings just backstop a porous and lax FDA. Often those lawsuits add an unwanted deterrent against the sale of desperately needed drugs. That risk is multiplied by hyperventilated state tort law that, in many instances, is lopsidedly pro-plaintiff.

(“Wyeth v. Levine Could Endanger Your Health”, Forbes, Nov. 11). Much more on the debate at Point of Law here, here, here, etc.

Richard Epstein on Wyeth v. Levine is a post from Overlawyered - Chronicling the high cost of our legal system

February 23 roundup is a post from Overlawyered - Chronicling the high cost of our legal system

• Judge Fallon denied the motion of Florida plaintiffs to expedite a hearing on their inclusion into a settlement when they did not even bring suit (Jan. 30). Merck and the PSC are required to respond Feb. 15, and the hearing will be Feb. 21, where one can expect the motion to be denied.
• At Point of Law, I comment on the recent grand jury investigation into Merck marketing of Vioxx.

Update, Feb. 8: separately, Merck yesterday settles for $650 million different Medicaid fraud allegations over the marketing of Vioxx and other drugs. The qui tam relator will get a jackpot award of $68 million. [WaPo; DOJ; Merck] The pricing theories at the center of these lawsuits—which hold Merck liable for purportedly charging too little—definitely deserve longer discussion another time.

• The Manhattan Institute’s Marie Gryphon has a well-written and interesting piece in City Journal on the Vioxx settlement. (Unnecessary disclosure: I am friends with Ms. Gryphon, and critiqued an early draft of her article. Also, she didn’t show up for my Super Bowl party, despite a positive response to the Evite.) Ms. Gryphon’s argument suffers, however, from a major error in the premise: she values the fourteen tried cases at $7 million each. This is a gross overestimate. First, the correct denominator is not fourteen cases, because many more cases than fourteen were scheduled for trial. Plaintiffs dismissed another fourteen cases that were scheduled rather than try them; the fourteen cases that reached verdict (of which Merck won ten) include the stronger cases plaintiffs brought (though they also include some weak cases that Merck nominated for scheduling first). So cut the $7 million figure in half. Second, Gryphon’s figures assume that all cases will be affirmed on appeal. That’s not so. The two Texas verdicts and the New Jersey punitive damages verdict in McDarby all contradict the Supreme Court’s decision in Buckman v. Plaintiffs’ Legal Committee and, unless there is a severe surprise in the Warner-Lambert v. Kent argument later this month (for which, see Beck/Herrmann), those cases will be reversed as a matter of law. (Merck has other excellent arguments for reversal that should knock out the Humeston verdict entirely and could well knock out all or most of the McDarby verdict.) Plus there is some chance that the Wyeth v. Levine appeal to be heard in the Supreme Court early next term would preempt all failure-to-warn litigation nationwide. So the $3.5 million/case figure needs to be discounted still further, perhaps as much as 95-99%. Add in present-value calculations, and the Vioxx settlement actually provides more for plaintiffs than they could expect to obtain in trial. (Notwithstanding the availability of judicial hellholes through forum shopping, plaintiffs have yet to win a case in Madison County, and such cases would still be subject to review in the Illinois Supreme Court down the road.) Gryphon’s argument that the attorneys are selling out their clients depends on the premise that the Plaintiffs’ Steering Committee actually believes their cases are worth millions each, yet is agreeing to settle for nuisance value rather than hold out for more money by continuing to litigate to put more pressure on Merck. What is the PSC’s economic incentive to leave billions of dollars on the table? It is not risk aversion: the PSC has a diversified inventory of cases and plenty of financing available to it, and the PSC as a group should be considerably more risk-neutral than their individual clients. It is no longer the case, if it ever was, that a mass-tort defendant can hope to win a litigation through attrition: lengthy litigation hurts a defendant’s access to capital markets far more than the organized mass-tort trial bar’s access to capital. If trial lawyers end up deciding to agree to settle their cases for nuisance value, it is because they recognize that the settlement fairly values the cases at nuisance value. One can certainly argue that the plaintiffs’ attorneys are acting unethically, but the ethical problem comes from the original decision to bring thousands of meritless cases in the first place. (That said, I certainly agree with Gryphon that a loser-pays rule would better structure incentives. In that alternative universe, however, there would not have been 60,000 cases brought, and Merck could have plausibly chosen to defend itself rather than settle.)

Previous update: Jan. 17.

Vioxx settlement: February 8 update is a post from Overlawyered - Chronicling the high cost of our legal system

The AEI Legal Center for the Public Interest and the Federalist Society present:

The Vioxx Settlement

Monday, January 7, 2008, 12:00 p.m.–2:00 p.m.
Wohlstetter Conference Center, Twelfth Floor, AEI
1150 Seventeenth Street, N.W., Washington, D.C. 20036

In 2004, Merck withdrew its pain reliever Vioxx from the market because of new studies showing increased cardiovascular risk. Merck announced that it would not settle any of the tens of thousands of Vioxx lawsuits filed, and set aside over a billion dollars to litigate cases without reserving a penny for damages. After a $254 million verdict in the first Vioxx trial in 2005, some observers predicted over $25 billion in liability for the company. Fifteen trials later, Merck and the plaintiffs’ attorneys announced a settlement of the outstanding personal injury litigation—for under $5 billion. Merck stock rose after the announcement, and is now higher than before it withdrew Vioxx from the market. But some law professors are arguing that a new and unusual provision in the settlement raises ethical concerns.

Why did Merck settle? And why was the settlement for so much less than originally anticipated? Is the Merck settlement different from the Wyeth fen-phen settlement, which was originally announced as a $3.75 billion settlement, but has so far cost more than $20 billion? Will the settlement stand up under legal challenge, and what will remain of the Vioxx litigation if it does?

At this event cosponsored by AEI and the Federalist Society, a panel of experts will explore these and other questions. Speakers include Vanderbilt law professor Richard Nagareda, author of Mass Torts in a World of Settlement; Virginia legal ethics professor George Cohen; author and leading pharmaceutical mass torts defense attorney Mark Herrmann; Andy Birchfield, a member of the Vioxx Plaintiffs’ Steering Committee; and Ted Frank, director of the AEI Legal Center for the Public Interest. AEI resident scholar John E. Calfee will moderate.

11:45 a.m.
Registration and Lunch

12:00 p.m.
Panelists:
Andy Birchfield, Beasley Allen
George Cohen, University of Virginia School of Law
Ted Frank, AEI
Mark Herrmann, Jones Day
Richard Nagareda, Vanderbilt University Law School

Moderator:
John E. Calfee, AEI

2:00 p.m.
Adjournment

January 7: Vioxx Settlement panel at AEI is a post from Overlawyered - Chronicling the high cost of our legal system

• In Scotland, car repair shop faces music royalty suit because its employees listen to radios on the job [BBC]
• Pediatricians grill kids about their parents’ drinking, gun ownership and antisocial habits — what, weren’t the hairdressers reporting back enough dirt for the authorities to work with? [Malkin, Szwarc]
• Watch out for the new ADA Restoration Act of 2007, which would reverse several Supreme Court precedents with the aim of making it easier to file and win suits [Bader]
• Don’t confuse Hollywood’s idea of lawyering, as in Clooney’s “Michael Clayton”, with the real kind [Lundegaard, MSNBC]
• “It costs millions of dollars in litigation fees to show that a patent should not have been granted, and most big corporations have learned that the hard way.” [Chachkes @ CNet]
• Banning all uses of lead from metal assemblies can result in “tin whiskers” leading to catastrophic failures in electronic devices — lucky those aren’t dangerous or anything [AP]
• Armenian-American writer Garin Hovannisian isn’t an admirer of the Congressional genocide resolution [Boaz @ Cato-at-Liberty; see also Jul. 27]
• Lynchburg, Va. woman: hey, I invented those pre-moistened cleaning wipes [News Advance via VLW]
• Don’t listen to trolls like this Olson fellow [Mark Thoma comments]
• Another round of coverage on libel tourism, SLAPPs and terror-support research [Broyde & Lipstadt @ NYT; Miller @ City Journal, Levitt @ The New Republic]
• New at Point of Law: Ted on yet another iPhone suit, this time demanding a billion plus; further coverage of the Hofstra/Lynne Stewart affair; after many failures, lawyers score a $143 million verdict against Wyeth over hormone replacement drug Prempro/Premarin; more on the U.S. Navy, WWII and asbestos disease; new Irvine law school’s in the money; and much more.

October 12 roundup is a post from Overlawyered - Chronicling the high cost of our legal system