Last weekend, we did a post on why preemption matters. The story has now evolved.
Judge Randy Wilson, in Harris County, Texas, is overseeing the Texas statewide coordinated Vioxx proceedings. Judge Wilson announced late last week (April 12, more or less) that he would be entering an order ruling in favor of Merck on a preemption-related issue. The Wall Street Journal was the first to report this news. The Journal had heard that Judge Wilson's decision would be based on preemption generally -- the notion that the FDA's approval of a drug's package insert bars private plaintiffs from later claiming that the FDA-approved warnings are inadequate under state law. (We'd previously collected cases on that point; here's a link to relevant precedents as of December 2006.) We thus posted last Saturday about "why preemption matters."
Later press coverage slightly changed the story. Judge Wilson would not in fact be issuing a ruling that analyzed preemption generally. He would instead be issuing a ruling analyzing whether Texas Civil Practice & Remedies Code section 82.007(b)(1) is preempted.
The suspense is over now. Judge Wilson has spoken, and the later reports were correct. The decision turns on preemption of a specific provision of a Texas statute. Here's a link to the decision that Judge Wilson handed down on Friday, April 20.
That prompts today's post, which is more refined than last week's: Why does the Texas Vioxx decision matter?
First, a disclaimer. Jim Beck and I do not normally identify the author of any particular post on this blog. We have the computer sign all posts "Beck/Herrmann," so no reader can spy the particular man behind the curtain. But this post is different. Beck's firm is helping to defend Merck in the Vioxx litigation, and he is therefore not participating in drafting this one post. This post is the work of Mark Herrmann only.
Why does the Texas Vioxx decision matter?
First, what does the decision hold? A Texas statute says that, if the warnings accompanying a "pharmaceutical product" were approved by the FDA, then "there is a rebuttable presumption that the" drug manufacturer is "not liable with respect to the allegations involving failure to provide adequate warnings." Tex. Civ. Prac. & Rem. Code Sec. 82.007. The package insert for Vioxx was, of course, approved by the FDA, so, under this law, Merck cannot be liable for any failure-to-warn claims -- which is the heart of the Vioxx litigation.
But the law goes on. A plaintiff can rebut the presumption of non-liability established by subsection (a) "by establishing that" the drug manufacturer "withheld from or misrepresented to the United State Food and Drug Administration required information that was material and relevant to the performance of the product and was causally related" to the plaintiff's injury. Tex. Civ. Prac. & Rem. Code Sec. 82.007(b)(1). To take advantage of this exception, the Vioxx plaintiffs pled (and every plaintiff in every Texas pharmaceutical product liability case will inevitably plead) that the defendant misled the FDA. If this "fraud-on-the-FDA" exception is viable, these allegations would let a jury decide, first, whether the drug company misled the FDA and then, if the company did, whether the drug's warnings were inadequate and the drug company should be liable to the plaintiff.
Not so fast. Six years ago, in a different context, the U.S. Supreme Court held that private plaintiffs cannot pursue claims of fraud on the FDA. In Buckman v. Plaintiffs' Legal Committee, 531 U.S. 341 (2001), plaintiffs pled that Buckman Company made fraudulent statements that caused the FDA to approve a medical device that then injured the plaintiffs. The Supreme Court held that the plaintiffs could not pursue these claims. It is the FDA's exclusive responsibility to "police fraud consistently with the Administration's judgment and objectives," and private plaintiffs should not be allowed to claim that the FDA had been defrauded in situations where the FDA itself does not believe that it has been defrauded. Private "fraud-on-the-FDA" claims are thus "preempted;" they are displaced by the federal regulatory scheme.
If straightforward "fraud-on-the-FDA" claims are preempted under Buckman, can Texas plaintiffs nonetheless argue that proof of fraud on the FDA eliminates the presumption under Texas state law that FDA-approved drug warnings are adequate? Judge Wilson says no. Buckman means that private plaintiffs are not allowed to pursue claims of fraud on the FDA either to support a claim directly or to overcome a presumption established by statute. "Given the extent of federal regulation, and the extent to which the FDA is empowered to investigate and regulate drug manufacturers who fail to provide required information, permitting a Texas jury or judge to make the same inquiry would impinge on a uniquely federal issue." Ledbetter v. Merck & Co., Inc., No. 2005-59499, slip op. at 9 (Harris County, Tex. Apr. 20, 2007).
Merck's warnings are therefore presumptively adequate under Texas law, and the plaintiff cannot overcome that presumption by proving fraud on the FDA. Because the plaintiff did not seek to overcome the presumption any other way, all of her failure to warn claims are dismissed.
Although Judge Wilson issued that decision in the case of Ruby Ledbetter, the same reasoning would apply to all of the other cases involving Texas law pending before Judge Wilson. The judge therefore certified his decision for an expedited ruling from the Texas appellate court, and all of the other Vioxx cases pending before Judge Wilson will be put on ice while the parties wait for the appellate court to rule.
Why does this decision matter to Merck?
First, there are a ton of cases pending against Merck in Texas. (The precise number is hard to determine. The Houston Chronicle reported that there are 888 cases pending before Judge Wilson. Merck's press release says that "more than 1300 cases were filed after the 2003 Texas law was enacted. In addition, there are approximately 2,000 cases pending in other jurisdictions that may be subject to this Texas law.") So, if Judge Wilson's decision is affirmed on appeal, we're talking about Merck winning, as a matter of law, a couple of thousand cases, give or take a thousand. That's not a bad day's work.
Moreover, Texas is not the only state that declares FDA-approved warnings to be adequate unless plaintiffs prove fraud on the FDA. In Michigan, FDA-approved drugs are "not defective or unreasonably dangerous" unless a statutory exception applies. Mich. Comp. Laws Sec. 600.2946(5). And one of the statutory exceptions says that the bar on liability "does not apply" if a drug manufacturer "[i]ntentionally withholds from or misrepresents to" the FDA "required" information about the drug. Id. at Sec. 600.2946(5)(a).
And, in Arizona, a law prohibits punitive damage claims against manufacturers of FDA-approved drugs. Ariz. Rev. Stat. Ann. Sec. 12-701(A)(1). But that protection does "not apply" if the plaintiff proves that the drug manufacturer withheld from the FDA "information known to be material and relevant to" the plaintiff's injury. Ariz. Rev. Stat. Ann. Sec. 12-701(B). Although a decision by a Texas state court about the Texas statute will not automatically bind judges in Michigan and Arizona, Judge Wilson's reasoning may nonetheless persuade judges in other states to reach the same result under other states' laws.
Why does the Texas Vioxx decision matter to drug manufacturers other than Merck? Because they get sued in Texas (and Michigan, and Arizona), too, and a precedent that eliminates failure-to-warn claims in those states helps everyone in the drug industry.
Emotions run high when people discuss both the preemption issue generally and the Texas preemption issue in particular. Lawyers for allegedly injured plaintiffs express outrage that their clients' claims have been eliminated "without even providing a day in court." But lawyers for industry say that it's nuts to have an expert federal agency -- the FDA -- carefully consider (and often dictate) the words to be included in a drug's labeling only later to permit juries, with no expertise and sitting in a courtroom with an injured plaintiff, to second-guess the FDA's decision. Those juries, trying to help one plaintiff, may inadvertently upset a regulatory scheme that is maximizing public health as a whole.
We defend drug companies for a living, so you know where our rooting interest lies -- and we think we're right. We'll surely watch with interest as this issue percolates through the courts.