The federal right-to-try (“RTT”) adventure, which we chronicled here, and here, concluded not long ago with the final passage of S. 204, signed into law on May 30. The final bill is not materially different from the house draft we analyzed earlier. The final bill cleaned up some of the previous hastily-drafted language, such as tying the definition of “life threatening” to prior regulations dealing with that subject. The two provisions of most interest to us – concerning RTT adverse events and immunity from civil suits – had been pretty good before, and stayed that way. Reporting requirements became slightly less onerous. A “sense of the Senate” section at the end ensures no resurrection of the Abigail Alliance foolishness regarding a constitutional right to medications. So it’s done, but our basic skepticism remains unchanged – we don’t think that the entire exercise was worth the candle, given existing FDA compassionate use regulations, and we strongly doubt that many people, if anyone, will be helped. Right to try was a right-wing shiny object, a distraction from the serious problems stemming from our chaotic approach to health care.
According to something we read recently on the FDA Law Blog, a “New Vermont Law Seeks to Allow Wholesale Importation of Drugs from Canada.” We view that legislation similarly to RTT. Canadian drug importation is a left-wing shiny object, also distracting politicians from the country’s serious health care problems. Think about it. California alone has a greater population than Canada. Any large-scale importation of cheaper Canadian drugs to the United States would almost immediately cause shortages in Canada. Given the current tit for tat, we would expect Canada to react by slapping an export tariff on prescription drugs to force United States consumers to continue paying for the inefficiencies in our health care delivery system.
But putting stupid, unnecessary trade wars to one side, let’s focus on our sandbox – product liability. What would the product liability effects of the Vermont program, as created by the new legislation, be?
The legislation authorizes the state to design a program whereby, “a State agency that shall either become a licensed drug wholesaler or contract with a licensed drug wholesaler” in order to import prescription drugs from Canada to Vermont – all in supposed compliance with federal law. 18 Vt. S.A. §4651(a)(1). The arrangement is to “use Canadian prescription drug suppliers regulated under the laws of Canada.” Id. §4651(a)(2). While the imported Canadian drugs are supposed to meet FDA “safety, effectiveness, and other” standards, id. §4651(a)(3), there is no requirement that their Canadian labeling be altered. The Vermont state agency:
Shall . . . (1) become licensed as a wholesaler or enter into a contract with a Vermont-licensed wholesaler; (2) contract with one or more Vermont-licensed distributors; (3) contract with one or more licensed and regulated Canadian suppliers; [and] (4) engage with health insurance plans, employers, pharmacies, health care providers, and consumers. . . .
Id. §4655(1-4). Nowhere in the statute are the ultimate manufacturers of the Canadian drugs even mentioned. The statute does not envision any contact between the drug companies and the state importing agency. How does Vermont expect to handle drug recalls? Controlled substances?
The statute also raises interesting product liability questions. This being Vermont, the statute has no provisions creating any sort of immunity from suit. So it appears to us that, by inserting one of its agencies into the chain of drug distribution, Vermont has exposed itself to product liability suits should any of the drugs it sells cause injury. Equally important, the statutory scheme probably makes the state the prime target of any such litigation. In all likelihood, none of the drug manufacturers will be subject to personal jurisdiction in Vermont. They will not be selling any drugs in Vermont. They will have labeled their drugs in accordance with Canadian, not American, regulations. They will have no notice of their drugs being diverted from Canada to Vermont. In terms of Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), and Daimler AG v. Bauman, 571 U.S. 117 (2014), the drugs will enter Vermont solely by virtue of the conduct of unrelated third persons.
Just as we pointed out flaws with the immunity provisions of various versions of right-to-try statutes, the immunity issues here also implicate the viability of the Vermont program, albeit in a different fashion. With no statutory immunity, and no ability to obtain jurisdiction over drug manufacturers for the Canadian market, the statute paints a great, big target on the back of the state importing agency, as the deepest pocketed potential defendant available to all potential plaintiffs who might take the drugs thereby imported into the state. Sovereign immunity won’t help, since the Vermont scheme has the state engaging in commerce, not in any traditional governmental role.
Both sides of the political spectrum unfortunately share an affinity for largely meaningless, feel-good prescription drug-related schemes. Importing drugs from the Great White North, like the Vermont program envisions, would be rife with problems, including saddling states with product liability. Maybe that is inevitable where states seek to act as commercial entities.