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Why Medical Liability Reform Matters to Manufacturers

By | Briefly Legal, Health Care | 2 Comments

The House Judiciary Committee continues to work on H.R. 5, the medical liability reform package, today in an afternoon mark-up session. We wish them well on the effort. Liability reform will help control the rising costs of health care, and this specific piece of legislation — called the HEALTH Act — contains important protections for drugmakers and medical device manufacturers. The language reflects the understanding that drugs and devices are sold into interstate commerce, approved and regulated by the federal Food and Drug Administration, and once demonstrated as safe should not be subject to trial lawyers’ efforts to use state courts to play litigation lottery.

Section 7 of the legislation, Punitive Damages, sets guidelines on punitive damage awards in health care lawsuits, including limits so punitive damages awards do not exceed the greater of $250,000 or twice economic damages.

Manufacturers of drugs and medical devices are most interested in paragraph (c), “No Punitive Damages for Products That Comply With FDA Standards.


(A) No punitive damages may be awarded against the manufacturer or distributor of a medical product, or a supplier of any component or raw material of such medical product, based on a claim that such product caused the claimant’s harm where–

(i)(I) such medical product was subject to premarket approval, clearance, or licensure by the Food and Drug Administration with respect to the safety of the formulation or performance of the aspect of such medical product which caused the claimant’s harm or the adequacy of the packaging or labeling of such medical product; and

(II) such medical product was so approved, cleared, or licensed; or

(ii) such medical product is generally recognized among qualified experts as safe and effective pursuant to conditions established by the Food and Drug Administration and applicable Food and Drug Administration regulations, including without limitation those related to packaging and labeling, unless the Food and Drug Administration has determined that such medical product was not manufactured or distributed in substantial compliance with applicable Food and Drug Administration statutes and regulations.

Trial lawyers have long sought to bring suits against drug and device makers into state courts, seeking venues and judges that favor the plaintiffs and huge damage awards. In the 2008 decision in Riegel v. Medtronic, the U.S. Supreme Court limited such state suits against manufacturers of medical devices that had received pre-market approval from the FDA. The court ruled that Congress had specifically preempted the devices from state regulation under § 360k(a) of the Medical Device Amendments to the Food, Drug and Cosmetic Act.

This decision was critical in affirming the principle of federal preemption, which provides effective protections for public health and safety. Congress has determined that the FDA is the proper authority with the available resources to regulate drugs and devices in interstate commerce.  Lawsuits in state courts in effect create a 50-state system of regulation for these devices and drugs, full of inconsistencies, capricious enforcement and unjustified damage awards. (No wonder the American Association for Justice and other trial lawyer lobbyists sought to reverse the Riegel decision last Congress with the so-called Medical Device Safety Act. Thankfully, they failed.)

The language in H.R. 5, Section 7, paragraph(c) draws on that general principle of preemption for its “safe harbor” language. It holds that companies that manufacture drugs and devices recognized as safe by the FDA have by definition gone through the careful development, testing and approval — the due diligence — that demonstrate the companies did not behave in a way to justify punitive damages. The legislation provides a measure of protection for companies so they can manufacture effective drugs and devices. It’s exactly the kind of medical liability reform that will reduce costs while ensuring a dynamic market that innovates and creates live-saving products.

UPDATE (4:50 p.m.): The House Judiciary Committee just voted 16-20 to defeat an amendment offered by Reps. Mike Quigley (D-IL) and Sheila Jackson-Lee (D-TX) to strike  Section 7. Rep. Franks (R-AZ) successfully opposed against the amendment, making a similar case as argued above.

Attacking Preemption, the Opposite of Health Care Reform

By | Briefly Legal, Health Care | No Comments

A Forbes column by noted Chicago law professor Richard Epstein, writing about H.R. 1346 and S. 540, the Medical Device Safety Act, “A Sickly Medical Device Safety Act.” Epstein analyzes both Wyeth v. Levine and Riegel v. Medtronic as basically malpractice cases that were exploited and turned into cash-seeking legislation against the drug and medical device industries, respectively.

Judges constantly state that product liability law is supposed to make manufacturers bear the full costs of their product defects. But they have crafted bizarre, upside-down rules that make drug companies and device makers bear the full costs of the mistakes of downstream actors whose actions take place outside of their control. Fix state tort law, and you can forget about federal preemption. But with loopy tort law a fixture at the state level, Congress has to act. It should let the MDSA die. And it should restore parity by offering the same statutory protection to drug manufacturers that it now supplies to device manufacturers.

Elsewhere in the world of preemption, the Heritage Foundation has posted the video of its panel discussion last week, “Hurting or Helping Consumers? Destroying Federal Preemption One Industry at a Time.

A Reliable Regulatory Regime for Medical Devices: Saving Lives

By | Briefly Legal, Health Care | No Comments

The Senate HELP Committee yesterday held a committee hearing, “Protecting Patients from Defective Medical Devices,” with the central issue being federal preemption, that is, should FDA approval of medical devices preempt suits against those devices in state courts. In a 2007 decision in Riegel v. Medtronic, the U.S. Supreme Court ruled that Congress clearly intended such a consistent, federal regulatory regime. (Much more detail on the case at the ScotusWiki entry.)

Indeed, as the testimony of Peter Hutt of Covington & Burling, a former FDA chief counsel, explained yesterday, the specific and clear “Pre-Market Approval” (PMA) language was written into law in 1976.

The trial lawyer lobby has made elimination of preemption one of its top priorities. After defeat in Riegel v. Medtronic, they succeeded in the Supreme Court in the case of Wyeth v. Levine, dealing with prescription drugs.

For devices, Congress is now the focus. The goal is to replace the rigorous FDA approval process and recognized federal standards with the equivalent of a 50 state regulatory regimes, all determined by litigation and the courts. Once that happens, the trial lawyers will be able to identify particularly plaintiff-friendly and generous venues. There are bills to accomplish that goal now in the Senate and House, the Medical Device Safety Act (H.R. 1346 and S. 540).

Yesterday’s Senate hearing can be seen as part of that legislative push, but thankfully, testimony offered balance. One witness was Michael Roman, a race car driver from Missouri, who suffered debilitating chronic pain after his leg was amputated, pain only relieved after he started using a spinal cord stimulator manufactured by Boston Scientific, the Precision Plus ™ Spinal Cord Stimulator System, based on the same technology used in cochlear implants.

His testimony tells a wrenching story of what he suffered and what he regained thanks to the medical research that led to the device’s creation. The costs of increased litigation could have made it all impossible:

What if Congress had enacted the Medical Device Safety Act in 2001? For me, I’m sure it would have been game over.

It scares us to think I would lose the life I have today because a researcher decided to throw in the towel in 2002 – deciding that the status quo was good enough – and that the $60 million in development and testing costs of my device weren’t worth the risk of putting a cutting edge, FDA-approved product on the market, only to have that product’s value systematically reduced by lawsuits. There are millions of people out there who might one day benefit from the breakthrough therapies still in development. We need to think about those people when we think about the consequences of this bill.

Roman also issued a statement through the AdvaMed trade association, saying, “Decisions about the safety of medical devices should be left to the experts and scientists at the FDA who evaluate new products with the overall public good in mind. When juries are hearing about a patient who is harmed, it is easy to forget about the people like me who have had a great experience with a device.”

The question boils down to, which serves the public better — lawsuits or medical research?

Preemption and Medical Devices: Saving Lives

By | Briefly Legal, Health Care, Regulations | No Comments

One of the witnesses at the House Energy and Commerce subcommittee hearings on medical devices and federal preemption (see earliers posts) was a woman whose pacemaker had malfunctioned, causing her great distress, surgery and continued medical problems. In a similar fashion, Diana Levine became the public image of the preemption issue as it relates to labeling of medicines; a musician, she had lost her arm after an anti-nausea medication was improperly administered intraveneously.

The ones damaged have compelling stories, used by advocates (and trial lawyers) to promote a cause. We should certainly listen to them. But how about those saved? As the columnist Michael Kinsley noted in his testimony yesterday, “Lawsuits focus on the victim of some medical product. By their nature, they undervalue the benefit that same product has brought to other users, or even to the victim herself.”

So we note with appreciation this news release from AdvaMed, the Advanced Medical Technology Association, which organized remarks in Washington by a group of patients who had benefitted from medical devices. From “Patients Call for Continued FDA Preemption Authority“:

“Without my medical device, I would not be here today,” said Laura Doud of Arlington, Virginia, who received life-saving implantation of cardiac resynchronization therapy with defibrillation in 2004 after suffering almost fatal viral cardiomyopathy. “If the proposed legislation were passed, would the lawsuits facing inventors and manufacturers prevent devices like mine or future medical innovations from ever making it to patients like me?

And then there’s Olivia Vervaeke, a senior from Detroit, Michigan, graduating this week from the University of Notre Dame, born with a congenital heart defect that severely worsened in high school. Olivia required an implantable cardioverter defibrillator (ICD) in 2005.

“This device saved my life,” said Olivia Vervaeke, who is graduating from college on Sunday, May 17 but took a break from wrapping up her final days at Notre Dame to come to Washington to tell her story. “I can run five miles a day now; I could never do that before.”

The news release includes testimonials from other people helped by medical devices, and although they did not testify at the committee, their experiences need to be heard. Replacing a consistent, predictable and expert-based FDA regulatory system for medical devices with 50 different state systems determined by juries would discourage the innovation that helped save these people’s lives.

Michael Kinsley on Preemption, Medical Devices

By | Briefly Legal, Health Care | 2 Comments

From the hearing now under way, Energy and Commerce Subcommittee Hearing on H.R. 1346, the Medical Device Safety Act of 2009, the prepared testimony of liberal columnist Michael Kinsley, who notes the benefits he has received as a Parkinson’s sufferer from FDA-approved medicines and a medical device, an implant that provides Deep Brain Stimulation. As a journalist, Kinsley has also covered the impact of litigation on health care.

In his testimony, Kinsley remarks upon the dual approach toward drug and medical device regulation, one embodied by the FDA, the other by litigation.

The other system is tort law, administered by thousands of non-expert judges and jurors in 50 state courts. The same issue can and does get relitigated dozens of times. Differences in state law or just the randomness of juries produce dozens of different answers. Some plaintiffs hit the jackpot; most victims never even sue. The direct cost is horrendous: delivering a dollar to a victim costs far more than a dollar in expenses—mostly lawyers’ bills.

The indirect cost is immeasurable. Lawsuits focus on the victim of some medical product. By their nature, they undervalue the benefit that same product has brought to other users, or even to the victim herself.

Forced to choose between these two systems for making essentially the same decision, I believe that anyone sensible would choose the FDA. But in real life, the situation is even crazier: we have both systems simultaneously. And basically, whichever one draws a more restrictive line, wins. Add to this the fact that product manufacturers have no idea when or how the standard might change, and you have a perfect arrangement for discouraging drug and device manufacturers from developing new products, like the ones that allow people like me to go about our business, which is making trouble for people like you.

The Medical Device Litigation Act, a Hearing

By | Briefly Legal, Health Care, Regulations | One Comment

Balanced story in today’s Cleveland Plain Dealer on a House committee hearing scheduled this afternoon on H.R. 1346, the Medical Device Safety Act. This is the bill that would end what’s called “preemption,” the federal liability protection for FDA-approved medical devices, opening the gates wide for product liability suits in state courts.

The bill comes in response to the Supreme Court’s ruling in Riegel v. Medtronic, and has long been a priority of the trial lawyers at the American Association for Justice.

The Plain Dealer’s headline represents the pro-lawsuit arguments, “Patients injured by faulty medical devices want laws to hold manufacturers accountable,” and the story leads with the claims of the injured party. Still, the Plain Dealer provides space for manufacturers and others to comment on innovation-stifling effects of the legislation.

“This bill does not in any way improve patient safety,” said Steris spokesman Stephen Norton. “It will, however, restrict patient access to essential medical technologies, produce a chilling effect on medical innovation, create more lawsuits, and ultimately result in higher health-care costs for all Americans.”

And from Medtronic spokesman Rob Clark:

“When you regulate through litigation, which is the recipe the Medical Device Safety Act is aimed at, it places decisions in the hands of a 12-person jury that’s only looking at one particular patient, and one particular situation and not evaluating the safety and efficacy and risk benefit of that device for everyone,” Clark said.

Washington Post columnist Michael Kinsley, who is testifying at today’s House Energy and Commerce subcommittee hearing, made that important point last year when commenting on the high-profile preemption case, Wyeth v. Levine.

The flaws of litigation as a method of making important government decisions are well rehearsed. It is ungodly expensive: The lawyers typically cost more than even the most worthy plaintiff ever gets. It is arbitrary: The same issues get litigated again and again, usually with a different result each time. Most people who suffer never sue and get nothing. While the FDA has scientists, the courts have jurors, for whom ignorance of the subject at hand is not merely the norm but a virtual requirement. And because trials occur only when a risk has gone wrong, they inevitably overemphasize the risk and undervalue the benefit.

The Subcommitte on Health holding the hearing is chaired by Rep. Frank Pallone (D-NJ), sponsor of the bill, so the agenda is clear enough. We trust that agenda allows space for the argument that undermining preemption will create a chaotic, expensive and capricious regulatory system ruled not by medical experts and the disinterested FDA but by juries in the 50 different states. And that’s a regulatory regime that does not serve the public.

For more on the hearing, see our post at Point of Law.com, “Medical Device Safety Act hearing, the PR angle.” It’s an interesting witness list.

Jackpot Justice, Undermining Good Health and Good Sense

By | Briefly Legal | No Comments

In today’s DC Examiner, Ted Frank of the American Enterprise Institute reports the story of a man who gambled, started taking a drug to control his Parkinson’s, continued gambling, stopped taking the drug, still gambled and eventually, four years on, gambled compulsively on the Internet and lost lots of money. He then sued the drug manufacturer.

A jury awarded Gary Charbonneau $204,000 to reimburse him for his gambling losses, $175,000 for “pain and suffering” and $7.8 million in punitive damages. The manufacturer had failed to provide enough warnings about side effects, or so they concluded.

All drugs from aspirin on up have side effects; doctors prescribe them because the benefits outweigh the costs. There can always be “more” warnings, and can always be accusations that the additional warnings weren’t sufficient.

After all, if the doctor knew the patient was going to have a side effect, she would not have prescribed the drug, so the warning must not have been good enough. The manufacturer can solve the problem only by taking every drug off the market, making everyone worse off.

Thus, the Food and Drug Administration says that courts should not permit such “failure-to-warn” lawsuits. Lawsuits can destroy the effectiveness of warning labels.

The trial bar wants to undermine the federal regime of drug regulation, preferring to sue in state courts where juries are more liable to make outrageous awards like those cashed in by Mr. Charbonneau. This “preemption issue” of federally regulated labeling was addressed by the U.S. Supreme Court in the Riegel v. Medtronic decision about medical devices, which limited tort claims in state courts when the manufacturer met federal labeling standards.  In the fall the court will consider Wyeth v. Levine, concerning the regulation of drugs (in this case, an anti-nausea drug treatment). In the meantime, preemption is coming under attack in Congress. (For example, this medical device legislation, H.R.6381.)

As Frank concludes: “As even Clinton appointee Justice Stephen Breyer pointed out in a February 8-1 Supreme Court decision about medical devices, if we are to have meaningful safety regulation, those standards should be determined by federal regulators, not by untrained juries who hear only the sad stories of side effects in hindsight without considering the larger policy issues. ”


The Supreme Court, Too Cold, Too Hot or Just Right?

By | Briefly Legal | No Comments

All in the tongue of the beslurper…

Anyway, last week ended with the usual wrap-up stories about the just-completed term for the U.S. Supreme Court. Dow Jones especially had a good review: “Supreme Court Term Is Mixed For Business, But Wins Were Big“: “The U.S. Supreme Court handed the business sector a mix of wins and losses in the 2007-2008 term ending Friday, but when business did win, it won big.” The opinions Dow-Jones highlights are Stoneridge, Riegel v. Medtronic and the Exxon Valdez case. More…

Meanwhile, Akin Gump Strauss Hauer & Feld LLP and SCOTUSblog.com issued their annual end-of-term statistical summary of the U.S. Supreme Court’s decisions. A few highlights:

  • The Justices issued 67 merits opinions after argument this term, the lowest number since the 1953-54 Term
  • The Justices decided 71 cases in total this term, the lowest number of decisions in recent memory.
  • Five-to-four rulings represented 17 percent of the term’s opinions; last year’s percentage was 33 percent.

 Crossposted from Point of Law.com.