Health FDA Reform, Pharmaceuticals
March 3rd, 2009 4 Minute Read Report by Paul Howard, James R. Copland

In the Wake of Wyeth v. Levine: Making the Case for FDA Preemption and Administrative Compensation

Pharmaceuticals are subject to what are, in effect, two overlapping and often conflicting regimes for overseeing drug safety: mandatory regulation by the U.S. Food and Drug Administration and lawsuits seeking billions of dollars in damages in the common-law state tort system. This dual system is both irrational and destructive, particularly insofar as it discourages innovation, raises drug prices, and denies patients access to many medicines that are reasonably safe and effective.

To put an end to this dual regulatory regime, we recommend that Congress broadly preempt state tort lawsuits seeking to hold drugs and medical devices responsible for claimants’ illnesses and injuries. Malpractice actions in state courts now available to plaintiffs would be unaffected by our proposal.

To deal with the consequences of serious and unforeseen drug side effects, we instead urge Congress to create a system modeled on the Vaccine Injury Compensation Program. Congress created VICP in 1986 in response to a wave of “junk science” litigation in the 1970s and 1980s that nearly destroyed the vaccine industry. VICP, while not without its own shortcomings, has since proven itself to be a scientifically credible mechanism for offering timely and fair compensation to the victims of rare vaccine side effects, while incurring much lower transaction costs than the tort system.

Initially the program should be funded by taxes levied on manufacturers on the basis of their market share. As the relative safety of their respective products emerged, manufacturers would be assessed taxes on the basis of their share of payments to successful claimants, which would be determined by the safety performance of the drugs they make.

Our argument rests on the conviction that the FDA’s regulatory regime, while imperfect in many respects, is nonetheless better suited to weighing the benefits and risks of new medicines than state courts, which may consider only liability for harm to the particular plaintiffs before them. Far from ignoring the potential hazards of drugs under review, the FDA faces strong incentives to exercise excessive caution. The result is a system that promotes voluminous warnings on the labels of approved drugs and delays in approving or denying outright reasonably safe and effective medical innovations.

State tort litigation only exacerbates the effects of the FDA’s biases and raises consumer prices. Moreover, many lawsuits allege that a drug manufacturer should have placed stronger warnings or even contraindications on a label, ignoring the fact that the FDA had explicitly considered the risk and then mitigated it by specifying the warning language to appear on the product label.

Unfortunately, both the U.S. Supreme Court and Congress have been moving in the wrong direction on the issue of FDA preemption:

  • In its Wyeth v. Levine decision, handed down on March 4, 2009, the Supreme Court allowed a state court jury to substitute its judgment on a safety question for the FDA’s. The side effect produced by the drug in question had been known to the FDA for almost thirty years, and the manufacturer, in FDA-approved language, had clearly disclosed the risk in six different locations on the label. The actual cause of the plaintiff’s tragic injury was the treating physician’s assistant’s obliviousness to the label’s plain warnings. In the aftermath of Levine, we are likely to see conflicting jury verdicts across the fifty states on the same issue or closely related ones. The result will be, so to speak, a race to the bottom, in which the most litigious jurisdictions will, in effect, set drug-labeling requirements for the nation as a whole.
  • The day after the Supreme Court ruled in Levine, U.S. Representatives Frank Pallone (D-N.J.) and Henry Waxman (D-Calif.) introduced a bill called the Medical Device Safety Act that is intended to undo the Supreme Court’s 2008 decision in Riegel v. Medtronic, which found that the plain language of the congressional act at issue was to preempt state tort lawsuits for injuries attributed to certain classes of medical devices.

We suggest that Congress should reject Pallone and Waxman’s bill and instead clear the way for a sane, single and science-based system of safety review by broadly preempting state lawsuits concerning FDA-approved drugs and medical devices. Doing so would stop forum shopping and the filing of class actions that lump claimants with minor or no injuries together with a handful of legitimate claimants for the sole purpose of inflating attorneys’ fees. A well-designed compensation program along the lines we suggest would offer as a substitute a mechanism for compensating the victims of unforeseen drug injuries, and it would do so without the uncertainty and expense of today’s version of litigation. By limiting compensation to unforeseen injuries, the program we propose would also give companies a powerful incentive to rapidly update drug labels with new safety information and to invest further in both safety and effectiveness.



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