An Only Slightly-Tangental Topic -- FDA, and Drug Preemption

Although Schering is not a party, the Levine case will be argued tomorrow in the United States Supreme Court, and Ed Silverman has done a marvellous job of outlining the high stakes -- and human interests -- in play, here, tomorrow. Do go read all of his prior posts on it, as well. See those for all the background.

Make no mistake, though -- Schering-Plough would directly benefit -- and benefit, greatly -- from a ruling in favor of preemption in the Levine v. Wyeth case.

I've decided to reprint a portion of the dialogue, in the commentary, to Ed's latest -- and although all of it is quite excellent -- I have set forth, below, only the portions of the discussion in which I've participated. I was trying to make plain (to Nathan) that the pharmaceutical companies here seek (via preemeption) a truly monumental break with prior American common law, applicable to large multinational corporate businesses:

I had resolved to remain silent on these back and forths — but Nathan’s last misstatement cannot remain unchallenged.

[Nathan writes: ". . .It must be nice to be a doctor and be able to rely on liability insurance. There is no such thing in pharma. We pay the liability lawsuits out of our own pockets. . . ."]

While it is true that the applicable state law prevents plaintiffs from letting the jury know about the corporate defendants’ insurance policies (to prevent runaway verdicts) — it is simply not true that pharmaceutical companies do not carry products liability insurance.

The market is very narrow, and not particularly deep, and yes, riddled with re-insurers, excess coverage “carriers” and various other profiteers — and so, many corporations have chosen to create “captive” insurance companies — really a risk retention pool — funded by the companies themselves. A self-funded reserve for liability claims.

So, yes, Nathan, your dear pharmaceutical companies do have previously-reserved funds to tap — usually the vast majority of such payouts do not simply come out of “quarterly EPS” figures — this is just one of the natural “prices” of being granted monopoly power. Geez Nathan, try to sound at least plausible — in your goofy attacks, here. . . .

Yes — the coverage is expensive, and waning, but it does exist.

So, I’d encourage everyone to take whatever Nathan writes with a “truckload of salt” — from here on out.

He is a water-carrier. Plain and simple.

NB: It strikes me that Nathan’s first comment in the thread would be comical — if it were not so tragic — I guess he actually believes that nonsense, too. Sheesh.

Namaste, one and all.

~~~~~~~~~~~

Condor writes: “your dear pharma co.s do have already reserved funds to tap — usually the vast majority of such payouts DO NOT come out of “quarterly EPS” figures”

Absolutely correct. We don’t pull liability money out of our quarterly earnings. We stash it away every quarter into a “warchest” that is maintained to pay out on potential losses. In the case of Wyeth, that “warchest” was approximately $22 BILLION. None of that came from insurance — it came from our profits. Please correct me if I’m wrong. (Imagine having to pay for your civil liabilities out of your 401k rather than from your homeowners or umbrella policy!)

You also write: “Nathan’s FIRST comment in the thread would be comical — if it were not so tragic”

I assume you are talking about my placing more blame on the providor than on Wyeth. Do you place the blame for the Levine tragedy on Wyeth? If so, please explain why. It seems to me that 90% of the blame goes to the providor and maybe 10% to Wyeth. Yet the liability will come out the reverse (90% Wyeth, 10% providor) simply b/c Wyeth has deeper pockets.

~~~~~~~~~~~~

Nathan — I tried the longish format, but you side-stepped my central point. So, let me be more terse, this time around.

Where, exactly, do you suppose the funds for paying any third-party insurance premiums would come from?

Right — the same place as your litigation & claims reserves. So ours is a difference of degree — not kind. And a small one, at that. Not meaningful.

The central point you refuse to address is that there should be some additional responsibilty imposed — when our legal system grants your products vast monopoly power. It is then quite appropriate to transfer additional risk to your company, as that company receives the all the spoils of monopoly marketing muscle.

Please discuss.

~~~~~~~~~~~~~

Condor writes “The central point you refuse to address is that there SHOULD be some additional responsibilty imposed — when our legal system grants your products monopoly power.”

Our responsibility is to be honest and forthright with the FDA and the public. If we meet that criteria, there should be no liability. Tragic things happen in life and sometimes no one is to blame. Science is such that we can’t always afford or forsee the correct experiments and studies to perform. From what I can tell with both fen-phen and with the Levine case, Wyeth fulfiled its obligations to the public and the FDA. If you have evidence to say otherwise, please post. I’m waiting.

Condor, I’ll also remind you that it is the US patent office that gives us this limited monopoly power. (to ALL industries - not just ours) The USPTO imposes no special responsibility on the patent holder to be liabile in case of failure of the patented product. Maybe you believe it is somehow a moral responsibility. I, however, do not.

~~~~~~~~~~~

Nathan — your monopoly products possess one additional feature we haven’t yet addressed: they are opaque.

That is — we cannot know whether they work — thus, the FDA’s jurisdiction here. We have to trust your company — implicitly. Preemption won’t help us with that. We cannot live with a “caveat emptor” rule as to pharmaceuticals — nor should we — especially given your monopoly powers.

So, is it too much to expect additional warnings, and perhaps, more extensive training for nurses — funded by the pharmaceutical companies?

~~~~~~~~~~

Condor writes: “your monopoly products have one additional feature we haven’t addressed, yet: they are opaque. That is — we cannot know whether they work”

That used to be true. From our previous conversations on this site, it is my understanding that all clinical trial data (from the last few years, and going forward) is now posted online. This is no longer a valid argument.

Monopolies (patents) are granted in order to spur innovation. The monopoly is granted in exchange for publicizing information about the invention (in the form of a patent). In the case of drugs, I agree with you that this information should also include clinical trial data.

But that doesn’t change anything as far as liability goes. If a company is honest with the FDA and the public, there should be no liability for product failures and injuries. There’s an old saying “shit happens”. Sometimes no one is to blame for drug-injuries. Many people on this site (I’m not lumping you in there) do not seem grasp this point.

~~~~~~~~~~~~~

Nathan writes: “. . .If a company is honest with the FDA and the public, there should be no liability for product failures and injuries. . . .”

This would place pharmaceuticals alone, on the vast landscape of American commerce. It is unwarranted — and it makes no public policy sense.

Moreover, to suggest that one may “read the studies, online” does little to reduce the “opacity” of drug products — at least as to about 97 percent of the American consuming public. In order to understand these studies, one must be versed in the language, and nuances, of scientific discourse. And one must possess a very discerning, and scientifically-skeptical, point of view.

In addition, one must be able to sift through, and sort out the “noise”, the hyperbole — usually put out by the companies themselves (or doctors on “the pharma dole”), from what a given study actually finds — again, a tall task — even for most college-educated Americans.

We are watching — right now — the painful process of trying to get uniform, voluntary disclosures out of pharmaceutical companies — about which “thought-leaders” get paid for which “opinion pieces” published by each of these authors. And several, including Schering, have refused to do it voluntarily. So we will apparently end up needing more federal legislation — to “create the sunshine”, here.

That is what I mean by “product opacity”.

So, let us agree — your products are “opaque”. We Americans must rely on an “expert” — either the company, or our doctor, to figure out what is best for us. And, when things go wrong — after we’ve relied on these twin experts — both parties carry an affirmative burden to show they were free from negligence.

Having a “pure heart”, and an “empty head” has never been a good defense in American law — why should these multi-nationals be offered this break from at least 75 years of well-settled black-letter law?

You aren’t selling garden hoses, here — and you actually have two legislatively-created monopoly powers — FDA grants generally exclusive authorizations to sell new prescription medicines, right? So, along with this, and powered by the twin after-burners of patent-protection, the economic muscle of a novel, efficacious blockbuster drug is the envy of the capitalists’ world: a license to print money, and (usually) save lives, while doing so.

And so — it insults the intelligence of the readership, here assembeled, to use a reductio “shit happens” argument — to defend what would amount to placing drug companies — above all other forms of American commerce — granting them alone, immunity from the consequences of medical errors. Sorting out causation for, and damages from, such errors — should be left to the courts.

To state your premise in this more honest way — is to refute it. Please don’t tell me the pharmaceutical industry will “die” without it. That is also plainly rubbish.

[Finally, note here that I have assumed -- without adequate evidence -- that ALL trials and studies are actually reported to clinicaltrials.gov, and in a timely fashion.

But that, too, is a very-open open question, at the moment]. . . .

~~~~~~~~~~

Condor, I’ll have to post more later. I still disagree about the opaqueness issue. The public is not (and cannot expect to be) experts on ANY technical issue from the design of aircraft, automobiles, anticancer agents, or home heating systems. We rely on “expert opinion” all the time in every area of life — pharma is not unusual in this regard. . . .

~~~~~~~~~~~

Nathan writes: “The public is not (and cannot expect to be) experts on ANY technical issue from the design of aircraft, automobiles, anticancer agents, or home heating systems. We rely on “expert opinion” all the time in every area of life — pharma is not unusual in this regard. . . .”

Odd. I guess I’ve forgotten where the “preemption is the law of the land” 18 U.S.C. Sections and/or case-holdings are — for autos, for aircraft and home heating systems.

Oh. Right. Silly me.

THERE ARE NONE, Nathan.

Game. Set. Match.

Your own argument just proved far too much, just then.

If Wyeth has its way, pharmaceuticals will be unique in all of American commerce (save, of course, blood product providers -- and blood shield statute-beneficiaries).