Every now and then, we think it’s a good idea to step back from the press of everyday events, current litigation, and where our next engagement is coming from and think a bit about the longer term. Today’s one of those days. Not too long ago we were asked privately to opine on what we thought might be happening in our drug and device sandbox over the next decade or so, and we provided our (probably half-baked) thoughts on that question. Today, we’ve decided to inflict our similar thoughts on our readers.
So here goes. We’re prognosticating on the future of five types of litigation: (1) generic drugs, (2) mass torts/class actions; (3) economic loss claims; (4) non-warning theories in prescription drug cases; and (5) PMA medical devices.
The biggest trend we see will be that generic drug litigation will become ever more important. If generic litigation doesn’t actually eclipse brand name drug litigation (maybe not, because most drug risks are discovered before patents expire), it will certainly come close. Generics already account for 60-70% of the total drug market, and with the number of patents to set expire in the next few years, that’s sure to rise. The recent certiorari grants in Mensing and Demahy, are the first generic product liability cases to reach the Supreme Court. Those cases can be viewed as a coming of age of sorts.
So what does that mean for litigation? In some ways plaintiffs will have a harder row to hoe on some issues that now only come up rarely. Take product identification – please. With a brand name drug, there’s rarely any question (outside of the odd counterfeit situation) about who made the product that the plaintiff took. With generics, that isn’t so. The same generic drug is often made by more than one manufacturer, and there’s also price-based pharmacy substitution to consider. Thus, product identification issues will raise their ugly heads with some frequency whenever a generic drug is fingered in a product liability suit. While we doubt we’ll ever see a repeat of the DES free-for-all, it is quite possible that some plaintiffs might try to resurrect some version of the largely discredited market share liability theory to address this problem.
The prevalence of generic drugs also explains why, from the beginning, we’ve seen the Conte issue (name brand liability for generics) as an incredibly big deal. With generics taking an ever bigger piece of the product liability pie, plaintiffs’ causation problems – whether product identification or warning causation (generics being older, generally more familiar drugs, prescribers are less likely to read the package insert: the fact pattern in Conte itself) lead them inexorably to want to join the original brand name. So far common-sense tort principles have generally prevailed, and in the overwhelming majority of cases (see our scorecard) only actual product manufacturers have been held potentially liable.
If brand name manufacturers were to lose control of the Conte issue, in the end nobody but plaintiffs’ lawyers would benefit. Unlike anybody suing over a branded drug, a generic case would have double the number of deep pockets to try picking. Given how often generic and brand name manufacturers sue each other already over IP-type issues, it doesn’t take a genius to see the potential for finger-pointing between defendants should both brand name and generic manufacturers remain in the same case. Finger-pointing = bad (for our side). Were the theory to gain a legal foothold, it is even foreseeable that third-party joinder could become the latest front in the incessant generic-brand name legal conflict.
An increase in product liability claims involving generic drugs also portends risks, and conversely opportunities, for the defense bar. Traditionally, most of the big defense firms (ours included) have represented brand name manufacturers because, frankly, that’s where most of the work was. With the constant litigation between generic and branded manufacturers, defending one group pretty much precludes – for conflict reasons – a firm from defending the other. There will be more defense work on the generic side, and the defense of those cases will become increasingly sophisticated. We see a growing market for top-of-the line legal representation on the generic side. Look for some new names to gain prominence.
We’re also wondering whether the era of pharmaceutical mega-mass torts may be coming to a close. Congress has provided the FDA with a bunch of new powers/requirements over post-approval matters, most notably FDAAA in 2007 and FDAMA in 1997. The FDA hasn’t been reticent about using those powers, either. We think that all of this legislative and regulatory activity has had concrete, real world results. That’s all for the good, but those results also influence the litigation environment.
There has been considerable tightening of FDA requirements concerning things like post-market reporting and supervision of manufacturing practices. We haven’t done any analysis, but it seems like there are now more FDA-mandated recalls and label changes than ever before. Through initiatives such as REMS we’ve also seen a move towards more robust models for evaluating adverse event reports. The FDA has also enforced greater publicity of the results of clinical trials. More trial results, and more negative results, are being posted on various Internet sites.
We think that the combined effect of all this activity is that problems with drugs, and particularly unforeseen adverse effects, are being discovered sooner – before they grow into huge problems. We also think that the regulatory back and forth has been accelerated. Sometimes this means that warnings are being changed on the basis of questionable information (SSRIs and suicide is one example), but we think it’s undeniable that warnings are also being changed more often.
So what do these regulatory developments have to do with mass torts?
We see more, but smaller, mass torts as a result. Everybody knows that recalls and label changes attract plaintiffs’ side solicitation. That’s what creates mass torts. Everything else being equal (which it never is), more recalls and label changes equals more mass torts. But since problems are being uncovered faster as a result of better regulation combined with better technology, not as many people are being hurt – both allegedly and actually – by any given problem.
Looking at the historical data on the MDL panel’s list of pending MDLs, only one (Yaz) of the last couple hundred MDLs that the panel has created has exceeds 1,000 total plaintiffs (including dismissed plaintiffs), and only two (Chantix being the other) have exceeded 500. That’s puny by historical MDL standards. But still, the total number of MDLs seems to be either steady or increasing.
We’ve also chronicled a secondary reason why mass torts “seem” smaller than they used to. That’s the size of the actions themselves. The number of successful class actions is now vanishingly small in prescription drug/medical device cases. One thing the defense bar has been spectacularly successful over the past 15 years or so in accomplishing is removal of the class action threat. Even economic loss and medical monitoring class actions don’t get certified very often anymore. And don’t get us started on punitive damages class actions. There haven’t been any of those lately that we’re aware of, and as we’ve discussed, Due Process probably precludes them altogether. The pending Dukes v. WalMart case in the Supreme Court may well make class certifications even harder. We think that’s much more likely than this court making them easier.
Have you looked at our lists of best and worst cases of the year lately? We hope you have, since we did the latest of those only a few weeks ago. So many of them – both lists – involve economic losses rather than personal injuries. Going forward, we see that trend continuing, even accelerating. A lot of these economic loss cases are brought by governmental bodies (both state and federal). Others are qui tams. There is also third-party payer litigation, although that has been less successful.
What’s going on here? The common thread is that governments (and their qui tam proxies) are trying to use litigation as a substitute for taxation. Well, the unwillingness of governments to raise taxes as rapidly as spending, or to cut spending as rapidly as revenue falls, shows no sign of abating. That means that the incentives for governments to pursue economic loss claims will continue, and thus so will the litigation. And so far, courts haven’t seemed inclined to limit governments from turning over their enforcement powers to politically-connected plaintiffs’ lawyers on contingent fee. Thus, we think economic loss claims will continue to be a growth area as the personal injury side of the practice plateaus or declines.
2011 could well be a watershed year, at least for third party payer litigation. We’ve chronicled the recent dismissals of quite a few of these claims. We have to think that at least some of those dismissals have been appealed and are pending. We suspect that this year should see a number of these appeals get decided – telling us all whether there’s any future in this specific sub-type of litigation.
Nobody needs us to tell them that, after Levine, preemption in the prescription drug area has not fared very well. Just look at our ten worst cases of 2010. Without preemption as a deterrent, we expect more plaintiffs to assert more theories that directly challenge FDA approvals. That’s already started, as the Wimbush (#1), Lance (#6), and Bartlett (#8) cases from 2010 demonstrate. We expect to be fighting more “design defect” claims that relitigate FDA risk/benefit determinations, and more failure-to-contraindicate/failure-to-recall claims that would have state-law juries rejecting FDA approvals of either drugs or particular uses of drugs.
Eventually, we figure, things will get bad enough and the Supreme Court will resurrect preemption, but until that happens, we expect there will be a dramatic increase in non-warning based theories of liability in the cases we litigate. We doubt, however, that public nuisance will be one of them. We expect that the global-warning public nuisance claims currently before the Supreme Court will be enough to turn the justices’ stomachs, and that they will put an end to such nonsense, at least under federal common law. But if we’re wrong, and the Court gives social activist public nuisance a green light – look out.
We don’t see much of a long-term future for product liability claims against manufacturers of PMA medical devices. Even if the extremely broad (and we think, extremely wrong) construction of the “parallel violation” exception to preemption asserted in the Bausch case were to prevail, that kind of claim is really difficult to prove. Bausch only held that such claims could be pleaded, and the litigation details are particularly devilish.
It’ll be almost impossible to prove an unpreempted violation without the benefit of FDA enforcement activity. Where the FDA hasn’t spoken, almost any theory the plaintiffs come up with won’t actually be the same as how the FDA interprets and enforces its own regulations – a preemption no-no.
Even with FDA enforcement action, however, the plaintiffs will have to find a causal link between the particular violation and the plaintiff’s injury. As we’ve seen already, a lot of violation claims are of the “wing and a prayer” variety, where the particular device that the plaintiff used wasn’t even subject to the FDA action. The easiest claims to allege – manufacturing defects – are also the hardest to prove, since a manufacturing defect, unlike a design or warning claim, is necessarily unique to each individual device.
There are also many legal problems with violation claims under state law. Some states simply don’t recognize violation-based claims such as negligence per se where the implicated statute – like the FDCA – forbids private enforcement. Other states only permit such claims against statutory, not regulatory, violations. More states require the violation to be of a specific standard capable of replacing the general “reasonable man” standard of the common law. There are enough legal defenses to negligence per se that at least one, and usually more, will be available in any state in the country.
Basically, assuming Riegel remains the law, we see the gradual demise of product liability claims against PMA devices. Violation claims – the only thing that might be left – are too hard to prove, require an inordinate amount of regulatory knowledge (both legal and expert), and in most cases will simply be too expensive and risky to litigate. As time goes on, more and more sensible plaintiff-side lawyers simply won’t take such cases. In ten years we think they will be consigned to the dustbin of history.
So there you have it. If we were stock analysts – which we’re not – we’d be bullish on futures for generics, economic loss, and weird pharma claims, and bearish on futures for mass torts and PMA medical devices.