Wednesday, January 21, 2009

OK, Students, Listen UP!

Preemption conundra......

For those of you able to get your head out of the peanut butter, below is a scenario that I will be using in my own class. I want to "beta test" (shouldn't it be "alpha test"?) it on y'all. It would actually be a great help to see what you do with it. And it may be kinda interesting to your nutty selves.


Company has created an enormously useful drug that is effective in treating colon and other GI cancers. At the same time, as part of the drug approval process, company has acknowledged deliberately covering up data it had about 40 deaths from acute liver failure that it believed to be attributable to the drug (such belief confirmed by internal documents). There is thus an admission of fraud in the NDA process.

Should preemption shield the company from lawsuits brought by the survivors of those who were killed by the drug?

Does the fact that the company’s drug saves so many lives make any difference regarding preemption in particular or a lawsuits more generally, in such a case?

If we knew that defending lawsuits, and potentially very large verdicts, could have a significant impact on this company’s ability to continue to develop its cancer drug ad others – even that the suits could put the company out of business – should that affect a judgment about shielding or not shielding? Can you viably make an argument for shielding a particular company because of what it contributes (despite fraud) but not others?

If we also knew that the odds of FDA/DOJ bringing criminal charges against the company over the withheld data was pretty much zero (because such FDA/DOJ action virtually never happens in these contexts), would that affect your view of whether the company should be shielded from lawsuits (civil rather than criminal liability) over this episode?

Assume this is one of those rare instances in which FDA/DOJ _do_ initiate criminal prosecution, and the company is convicted of felony fraud in the approval process. Would that affect your view of whether private lawsuits should or should not be able to proceed?


  1. p.s. Those who come up with the best answers, as judged by an independent (but secret) panel of experts, will be given a free subscription to PharmaLittle (wow!) and a Certificate of Genius appropriate for framing.

  2. Anyone up for a group project? I’ll start by outlining the case.

    Lawsuits against Company brought by the survivors of victims who died as a result of taking Drug are based on the following allegations: 1) Drug was defective because the company failed to produce a safer alternative drug formula, 2) the risks of using Drug outweighed the drug’s benefits to society, 3) Company failed to adequately warn consumers of the risks of Drug, 4) Company expressly warranted that Drug did not present a higher risk of death than was advertised, 5) Company tried to hide the risk of acute liver failure, and 6) Company conspired to deprive consumers of scientific data (conspiracy to defraud).

    I’ll be back after I read the Cipollone case.

  3. Justice, The heart of the matter for me is this -

    If the drugs we design require that we "sacrifice" ourselves or others because we are unable to understand the true affect on the greater population and if we also decide that there should be no avenue for restitution for such harm, then I say we have stepped over the line of decency.

    I will go to war for my friends and family and I will sacrifice myself for their freedom but I do not care to sacrifice myself so that the greater population can have a better pain killer.

    My government requests me to sacrifice. I have never been asked by the pharmaceutical companies to sacrifice my life or my well being for their product.

    For anyone to also ask me to forgo my right to even make an accusation against those that I have unknowingly granted the right to sell me a product that harms me - is unacceptable.

  4. Devil's AdvocateJanuary 21, 2009 at 7:47 PM

    Thanks, Jaynesday I appreciate what you're saying, but let me play the devil's advocate.

    In the case as outlined, you have not taken the drug. You are in the role of policy-maker. And keep in mind, we are not talking about a "better pain killer." We are talking about an effective treatment for colon and other GI cancers. Let's posit it being as close to a "miracle drug" as things ever actually get.

    So the claims to be balanced are: (a) those who are injured/killed by the drug, in significant part because of the company's fraud and (b) those whose lives would be saved by the drug which would not be saved (as the situation is framed) if the lawsuits are allowed to go forward.

    Are you really willing to say that your and others' right to "a day in court" trumps the right of that _larger_ number of your and other's right to a drug that would save or extend your and their lives were you and others were ready to give up right # 1? (Point is: at the outset, you do not know which group you would be in?)

    Again, there is a lot posited here that is obviously simplified relative to actuality. But I think that's how we sort out principles - when the "right answer" is less obvious (and self-satisfying) and the potential dilemma is easier to obscure.

    El Diablo

  5. Dear El Diablo et al,

    1.) No, the drug company should not be shielded, because then achieved FDA approval under false (fraudulent) practices.

    2.) No, the fact that the drug saves so many lives has no bearing. The case has to be looked at for the fraudulent aspect only.

    3.) Deciding how much money will be paid out because of the fraud is an interesting twist. Presumably this drug costs a small fortune. So, at sometime in the planning process someone in marketing said, hey whats the value you place on your life dear patient and what is a price that the market will bear? So, in some cruel way it becomes "payback time" the family of the deceased say "what is the value of your livelihood?" Well not really, and I would hope that given that the drug does help a significant amount of people that the outcome doesn't do too much damage. However there has to be some accountability her and some restitution.

    The heinous part about all of this is the fact that somewhere someone actually thought it was o.k. to conceal this information from cancer patients. "Well Barney, I say we hide that data and roll with it, heck, those cancer patients are going to die anyway..."

    The FDA DOJ should put this company on watch with their other submissions and I would hope that a complete review would be done with the entire team. Then of course comes the Black Box Warning, along with a corresponding dear doctor letter explaining what the situation was/is and the company should make sure their information addresses the situation.

    Just remember El Diablo, just because you are the smartest guy in the class doesn't preclude you from taking the final exam. No job is complete until the paperwork is done.

    By the way, I am not a lawyer, don't even play one on TV, but as for the payment of fines to the families one would have to look at such issues as type of cancer, quality of life before the treatment, expected overall progression free survival rates, ability to earn a livelihood, etc Which we do all the time in the business through our actuaries....

  6. Devil's AdvocateJanuary 21, 2009 at 8:32 PM

    Former Marketing,

    You write: "Just remember El Diablo, just because you are the smartest guy in the class doesn't preclude you from taking the final exam. No job is complete until the paperwork is done."

    I honestly don't follow. Can you explain?

  7. As a follow, the Bush FDA/DOJ, in Warner-Lambert v. Kent, explicitly argued (relevant to a point down the list) that an FDA/DOJ finding of fraud should _not_ open the door to civil liability. (This was arguing against a section of our Michigan preemption law which explictly does have a "fraud exception" in an otherwise full preemption shield).

    The "logic" was that only the FDA/DOJ can determine the "proper balance" of punishment that serves whatever criminal law purpose while still keeping the wider public health issues in mind. And that "over-punishing" - while it may serve strict retributive justice - may not be a good idea in the scheme of things.

    John Braithwaite argues a version of the same thing about corporate crime in general, and pharma crime in particular, even though he is anything but an apologist of "shill" for the industry. Quite the contrary.

  8. The company developed a medicine that significantly helped many cancer patients; however, the drug also caused liver failure in a small group of people. The company knowingly hid that fact, thereby committing fraud, and, therefore, should not be shielded. If they had told patients that there was a possibility of developing liver failure from the drug, then they would not be guilty of fraud. The fact that the drug saved many lives does not erase the crime of fraud. They broke the law.

    There isn’t an argument to defend fraud. What would the argument be? “Well, yes, as admitted, we did lie and hide evidence, but, look, it was only 40 people. Who cares about 40 people? We are a good, honorable company, working for humanity. Trust us. We need to be allowed to go forward with our work.”

    The company committed a crime. Yes, more people were helped than not, but all they had to do was be honest. It should have been up to the patient to decide if they wanted to risk liver failure. The company is not trustworthy. If they lied and hide evidence with one drug they will do so with others. The fact that they were dishonest was the risk they took, and if they are financially ruined, so be it. However, if that happened, I would hope that the medicine could be saved. Hopefully, another drug company would buy it. But, I’m getting off track.

    The fact that the FDA/DOJ rarely bring charges against a drug company would not change my opinion. I would also support civil trials.

  9. If doctors are not made aware of the consequences of what they prescribe so that they can guide their patients to an informed decision, it goes beyond what punative damages should be awarded to a situation of criminal assault and murder. It doesn't matter how many people the drug has helped.
    If the FDA has decided to approve drugs with any indication of fraud then they are accessories to murder. If you lie to a judge the whole your testamony loses credibility. So if FDA finds that dangers may not be fully disclosed- they have to assume that the documents that were presented to them are not completely credible and should withhold approval. Anything, if it is studied enough times, will come to acceptable numbers eventually.

    It is hard to imagine that we have even come to discussing this. If I have cancer my doctor should say to me that there is treatment which may cause liver failure. Without the treatment I could die. Or we can try one of a couple other things that may be avilable.
    Then it is up to me. If I choose the treatment knowing the risk- my death due to liver failure is my responsibility. If I am not informed- my death is on the drug company.

    Do we want drug companies to have the power or the right to not inform prescribers? Would we rather sit passively while someone with a financial interest makes the decision for us? Is it okay to step on human or civil rights for a person's own good?
    It is my body, by GOD!
    Screw punitive damages, someone needs to share a cell with Bubba, as anyone else would share that cell if they murdered someone.

  10. Justice, I know its up stream a bit but in your example you stipulate that the drug is a wonder drug and saves lives. I am the policy maker who must make policy for all drugs, not just this one. If I make a preemption policy for this miracle drug that policy will also apply to pain killers and eye lash enhancers therefore I would not allow that policy.

    But even if we could make policy for drugs on an individual basis I would not exempt a maker from product liability because doing so would promote additional fraud by others to achieve the special exemption.

    Justice, it is a difficult question and I feel myself being tugged both ways as I try to answer it. In the end I would advocate for the person who unexpectedly is harmed or killed by the product of a maker that they placed their trust in to help them.

    If we can not then afford to sell some drugs because of the price of compassion (restitution) for those that are harmed we should increase the price of the drugs to cover the compassion.

    If the cost is too high and the company goes out of business I have to say too bad. If we don't force higher levels of safety on our makers we can expect ever lower levels of safety.

    If criminal prosecution were used instead of product liability I would approve preemption. As long as the consumer had some input into the process and as long as I saw that the drug supply was safer and there was less fraud. However this option would require a larger burden on insurance companies to care for the harm of the drug company.

  11. Justice, sorry it was a bit confusing I was writing late in the evening after a long day.

    But what I was trying to say is that even if you are a miracle drug (smartest student in the class) you still have to follow the rules (write the final exam - meet the required criteria on paper and do not commit any academic fraud)

    It doesn't matter if we are talking about cancer here, the disease the drug works for is irrelevant. If I have cancer and this drug is going to save my life, I want to be advised of the risk for cardiotoxicity for example, especially if I am taking this drug at home, and not under constant monitoring. I need this information so that I can be very careful to curtail my activities with regards to any food I eat or physical activity so that I will not provoke an incident. I will want to be assured that even though I accept the risk of taking the drug, that my doctor knows and my health care team knows so that we are all monitoring the situation carefully.

    Additionally, I cannot think of why a drug company wouldn't want to make a full disclosure on this. Take Vioxx for example. It is no known that the company knew the cardiotoxicity risk. Because they were not proactive, the drug is off the market and many people lost their lives. They completely ignored their responsibility to manage the risk. They deceived the doctors, patients and governments. This directly eroded the trust of consumers in general and it was a black mark against the entire pharmaceutical industry. Was it worth it the extra billion dollars in revenue's? No, because if they managed it right, the drug would still be on the market and would be a great money earner for them.

    Disturbingly, we do see traits of this kind of decision making continuing even after the Vioxx era, or maybe it is because we are still in the Vioxx era?

    It must not always be that the economic model wins. I firmly believe that if we look very closely at the disease, educate the patients, examine the risks, put the programs in place to manage those risks, then we will all win.

    Stimulating topic JIM, thanks for this!

  12. All interesting comments. It is, of course, our "natural instinct" to want to punish the company for fraud (and resultant deaths), and that is a good instinct. How could a company, or any individual, "get away with murder" - or certainly something beyond manslaughter - which would be the case here.

    If we're talking criminal liability, though, these kinds of balances are struck all the time. The good of retributive justice is balanced against the social cost of being too "draconian." Thus, people whose crimes are no less than others may get lighter sentences - probation or house arrest, for example - in order to be able to still do whatever "good thing" they contribute to society - while others would be put in the slammer for essentially the same crime. The punishment does _not_ always fit the crime, for a range of such reasons. And in the prosecution of corporate corruption, it is even less likely to.

    There is this irony as well: Even some who uphold preemption (like our Michigan law) speak of an exception if there is fraud in the approval or compliance process. So civil liability would not be shielded. If this were the case, however, that balancing mentioned above would not apply - a company could be both criminally punished (very large fine) as well as be overwhelmed with suits. The point of this case - "simplistic" as some of it is - is to push us to think through whether that always makes sense. The Bush FDA/DOJ argument in Kent would push us in the opposite direction - only the FDA/DOJ has the "expertise" to define the "optimum" amount of punishment to serve both immediate justice and the wider good. Sound familiar? It is preemption in the legal consequences department.

    Dianne writes: "The fact that they were dishonest was the risk they took, and if they are financially ruined, so be it. However, if that happened, I would hope that the medicine could be saved. Hopefully, another drug company would buy it. But, I’m getting off track."

    No, you are exactly _on_ track. Put yourself in the role of a patient who is using the drug effectively. And the company goes south and there is no certainty another company could or would buy it, at least not immediately. Are you really saying tough luck to those many pts who are relying on the drug? See ya later. It's more important that the company be made accountable for the fraud committed in the NDA process.

    In such a scenario, not only is the company punished, but so also are those perhaps thousands, or even more, patients who are entirely innocent. And so, in effect, the company's crime ends up potentially leading to the avoidable deaths of that many more people, "in the interest of justice."

    Is it?

  13. To Former Marketing's comment: "I cannot think of why a drug company wouldn't want to make a full disclosure on this." Indeed, and what you write next re: Vioxx and short-term thinking in general may be the answer.

    You and others may recall what a really good thread on Pharmalot in which a lot of industry folks discussed that kind of decision-making, driven by short-term, marketing goals - such that not only are certain pt. interests not factored in, neither are long-term interests of the company. In trying to avoid "killing the drug," the drug ends up dying.

  14. The purpose of product liability law is to protect consumers from “unreasonably dangerous” products. Indeed, product liability laws require strengthening in order to compensate for the current lack of oversight and regulation of corporations.

    Should preemption shield the company from lawsuits brought by the survivors of those who were killed by the drug? No. In Cipollone v. Liggett the U.S. Supreme Court ruled that the relevant federal regulations did not preempt the common law actions, with one exception. Federal law preempted claims that the company had failed to adequately warn consumers, because the company had complied with the federal regulations pertaining to warnings.

    In my view federal law should not preempt the survivors’ claims in Justice v. Drug Company in any state, because regulations relevant to the new drug application (NDA) were violated and the regulations provide no exceptions for bad science. According to 21CFR314.50, “The application is required to contain reports of all investigations of the drug product sponsored by the applicant, and all other information about the drug pertinent to an evaluation of the application that is received or otherwise obtained by the applicant from any source." The company knowingly omitted crucial safety information. The responsible parties should be held accountable.

    Assume this is one of those rare instances in which FDA/DOJ _do_ initiate criminal prosecution, and the company is convicted of felony fraud in the approval process. Would that affect your view of whether private lawsuits should or should not be able to proceed? A felony conviction would not change my view of whether or not civil lawsuits should be allowed to proceed, because criminal and civil lawsuits serve different purposes. Criminal convictions aim to punish offenders and possibly deter others from committing similar crimes; civil cases aim to provide fair and just compensation to victims and survivors.

  15. This is a great discussion, Justice. Thanks.

    In response to your comment, "in the interest of justice," in the real world, I don’t know how this would play out. What if there was a drug that cured cancer? Obviously, it would be a mistake to take away such a medicine. But it would also be a mistake to let a company that hid life threatening information from patients and doctors off with a warning and a fine. I know a man who misses his Vioxx. I’ve also met Dr. Cox.

    There should be financial consequences for the company, and those individuals responsible for hiding evidence should be held criminally accountable. To do less would only be sanctioning a license to kill. However, patients should not be denied their medicine. If the company went under, the government could step-in and re-assign the patent. I am sure there are many ethical and honest companies that would provide the drug.

  16. Here is another thing to think about. Let's keep with the idea about cancer patients. So pretty much all of us has the idea that when you hear the big "C" word, you are more or less doomed. With that idea in mind it is very easy for us to be led down the path of thinking "Any extra time we give them (this group of individuals, these people who are "other" than "we" the healthy ones)is a bonus for them. After all this is cancer, these are highly cytotoxic drugs, there are risks."

    So maybe in the case of the FDA there is a special unit led by biomedical ethicist, Scientists, Doctors, and why not even some key informed patients who help sort out acceptable risks. This panel must be provided access to ALL the raw data collected. There has to be an agreement, that cannot be bought (ahem), that does not cost the company more money, in order to adequately access the risk's for the patient group for which the drug is being targeted.

    I obviously feel that if a company has committed fraud, they should be fined and the fine could be tempered with the number of people it is actually saving. However, the fine scheme also has to include severe punishments for the individual humans who were involved in the decision making with in the organization. Let's remember, corporations have a legal status, but they are not human, they do not think for themselves. They are like computers, they do what we humans tell them to do.

  17. All these are great comments.

    The last few focus on criminal sanctions, which are relatively easy to "titrate" - up to the DOJ to decide what the fine should be, who goes to jail, etc..

    But civil liability remains far less predictable. While most very large punitive damages verdicts are paired down, and class actions need to be certified, the argument for preemption (even in a case of fraud like this) is exactly that defense costs might injure a company to a degree that it impacts on the good things it was also doing and providing - and thus, indirectly, injure innocent patients who rely on those good things.

    Whether there are examples in the "real world" of that ever happening is another question that goes back to the "help me" thread - whether we have any genuine evidence about the impact of litigation costs on new drug devel, availability, etc. As you all know, we hear that claimed all the time.

    Let me tweak the scenario for your consideration. Let's say no fraud or other negligence was known to have been committed by the company. For reasons they could not have foreseen, and did not cover up or disguise, some number of pts die as a result of taking the drug.

    In a "strict liability" situation, the company could still be liable and still be sued (although they could use all the above as a defense). Preemption would take this a step further. It would _assume_, if company is in FDA compliance and there is no evidence of fraud or negligence that FDA has reported or pursued, that no "failure to warn" claims are justifed.

    You all know the counter-argument re: FDA's limits, role of discovery, etc..

    What I'm wondering is this: When a judge decides whether or not to certify a class action, and a jury to assign punitive damages of whatever amount, do _they_, in fact, take into consideration the potential impact on the company and other patients (besides those injured), it serves?

    If you listen to preemptors, the assumption is virtually always that juries, at least, only see the plaintiff. They are not capable of taking the bigger picture into consideration (only the FDA in its wisdom is). There is, I think, more good data on whether this is or is not true.

  18. Justice

    Interesting exercise and I will get back with an opinion on some of the questions you posed.

    However you posed the following question:

    "Does the fact that the company’s drug saves so many lives make any difference regarding preemption in particular or a lawsuits more generally, in such a case?"

    In a perfect world if the company is forthright about disclosing ALL of the known risks, and the patient is fully aware of all the risks associated with the drug then I think preemption should apply.

    For anyone interested I have attached the oral arguments for Warner-Lambert v Kent.


  19. Hot off the press: FDA on GAO "High Risk" list. Read the report, here (starts on page 15):

  20. Thanks Nancy, The report has been posted.

  21. Justice said:

    "Let's say no fraud or other negligence was known to have been committed by the company. For reasons they could not have foreseen, and did not cover up or disguise, some number of pts die as a result of taking the drug."

    I have been covering the pharmaceutical industry steady since mid-2004 and the scenario you mention would be highly unlikely in the real world.

    However, if this did occur, it follows that few people would likely be injured and it should be left up to the legal system to allocate blame.

    We have three branches of government for good reason and the actions of the out-going administration should serve to highlight that fact.

    When is the last time a drug company went under due to litigation? Did any of them learn anything from the Vioxx debacle? No!

    The corrupt pharmaceutical industry will not knock it off until a few of the top CEO's start marching off to prison. The argument that drug companies are corporations not people does not wash.

    Those at the top make big bucks and they are responsible for overseeing all employees. If the top dogs can't point the finger at which employees are responsible then they should be charged with the crimes.

    As for the original quiz, lets not forget that the cancer drug will most likely be promoted for off-label use for who knows what so it won't only be cancer patients at risk.

    Evelyn Pringle

  22. Evie - First of all, good to see you here!

    The only drug I know of that "went under" because of litigation - and probably should not have = was Benedectin. That's why it is mentioned in every pro-preemption brief. At the time it was withdrawn, both of its active ingredients were available OTC.

    Anyway, I hope you've checked to "help me, smart people" thread too, which raises related issues about arguments re: the presumptive consequeces of litigation, whether they are real, and - most important - how to find out one way or other. A drug going off the market is, admittedly, an extreme case relative to what may be more subtle impacts on new drug development, drug cost, etc..


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