Court Ruling Could Hamper Drug Innovation

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Court Ruling Could Hamper Drug Innovation
Linda A. Johnson, AP Business Writer

Drug Discovery & Development - March 04, 2009

(AP) - A US Supreme Court ruling that federal approval of a drug is no protection from lawsuits in state courts could make drugmakers more cautious about safety issues and may lead them to halt development of some medicines and even pull others off the market.

Drug industry analysts said the ruling, upholding a $6.7 million jury award against Wyeth, will make drugmakers scrutinize safety issues of all their experimental drugs in development, as well as existing products.

"They will weigh how prevalent the side effect is, how serious the side effect is, versus the number of people benefiting from the drug and the amount of money being made by the drug," said Erik Gordon, an analyst and professor at University of Michigan's Ross School of Business.

"This is like blood in the water for plaintiff lawyer sharks," and will encourage more lawsuits against the industry, Gordon added.

The case, involving a Vermont musician named Diana Levine who lost her arm after a botched injection of Wyeth's former anti-nausea medication Phenergan, was closely watched by drugmakers, which have been targeted by thousands of lawsuits over serious side effects.

Drugmakers and their trade group, backed by the Bush administration, had argued that product liability lawsuits in state courts are barred, or preempted, if the product and any warnings in the package insert have been approved by the Food and Drug Administration. In a 6-3 decision, the court rejected that claim.

Bert Rein, a Washington lawyer who represents Wyeth, told The Associated Press the company was disappointed by the verdict but will pay the jury award promptly. He said Wyeth believed that it could not change the warning in the package insert approved by the FDA, which disclosed the risk of gangrene if an injection of the drug accidentally hit an artery. Rein said the FDA-approved warning left it up to the doctor whether to give it to a patient that way or through a slow intravenous drip or shot in a muscle.

"The practical impact of this is going to be much greater caution" by doctors in deciding whether to use the most effective or least risky method of administering a drug, Rein said.

He said he doesn't expect more lawsuits against drugmakers but expects that they will carefully focus any use of the preemption defense on aspects of the Supreme Court ruling that concern how specifically the FDA reviewed warnings in a package insert and whether there was evidence the agency would have rejected proposed changes in existing labels.

Analyst Steve Brozak of WBB Securities said as a result of the ruling, drugmakers are "going to make a dollars-and-cents decision on what (research) programs will go ahead and what drugs will be pulled" from the market.

"They'll defend the blockbusters, but the smaller drugs with meaningful downside" will be sold to small companies, possibly overseas, or shelved quickly, Brozak said.

Brozak and Gordon, the Michigan professor, said the industry could see a slight reduction in innovation, or a shift to slight improvements in existing drugs rather than breakthroughs, to avoid excessive risk of lawsuits.

Rob Gordon, a plaintiff's lawyer involved in lawsuits over Vioxx and other medicines, said the key impact of the ruling is to preserve the right of "tens of thousands of people injured by products" to bring claims against their makers that would have been barred, had the court ruled differently.

"The FDA relies on the pharmaceutical industry for the safety data," he added. "All too often, we have seen (pharmaceutical) corporations hide unfavorable data from the FDA and mislead FDA officials."

Last year, the Supreme Court agreed with the pre-emption policy in a case involving medical devices. The Court ruled that a patient who was injured by a catheter from Medtronic could not sue the company under state laws, but that case turned on a provision of federal law prohibiting states from imposing their own requirements on the devices. There's no similar provision for drugs.

Since then thousands of lawsuits against Medtronic and other device makers have been dismissed by lower courts, citing the decision. However, Democratic lawmakers have stated their opposition to the ruling and plan to make a push to repeal it later this year.

Wyeth sold the rights to the intravenous version of Phenergan in 2004 to Baxter International Inc., according to Wyeth spokesman Doug Petkus. A syrup version of the drug was sold to another company in 2003, and tablet and suppository forms were both discontinued several years ago.

Date: March 4, 2009
Source: Associated Press