Supreme Court takes case with big stakes for Vioxx suits

September 27, 2007, 9:22 PM UTC

On Tuesday the U.S. Supreme Court quietly agreed to hear a case with tremendous potential consequences for Merck (MRK) in its pending Vioxx litigation, as well as for Big Pharma generally.

The case, now known as Warner-Lambert v. Kent (and known in the lower court as Desiano v. Warner-Lambert) specifically involves a federal preemption issue that was raised by a Michigan state law in a suit against the Pfizer (PFE) unit over the drug Rezulin. Very similar issues are raised, however, by state laws enacted by seven other states, including New Jersey, where more than half the 28,000 Vioxx personal injury suits have been filed, and Texas, where about 1,000 more are pending.

All of these state laws curb to varying degrees attempts to bring personal injury suits against drug companies relating to any drug that has been approved by the Food & Drug Administration unless the plaintiff can first establish that the manufacturer committed fraud on the FDA by, for instance, submitting false information or failing to submit relevant information during the drug approval process.

The issue that has arisen is how such statutes should be interpreted in light of a 2001 U.S. Supreme Court ruling called Buckman Co. v. Plaintiffs’ Legal Committee. In that case the Court ruled that any attempt by a state to allow a plaintiff to sue a drug company under a “fraud-on-the-FDA” theory was preempted by the federal statutory scheme that set up the FDA. In essence the Court said that the FDA and federal prosecutors were fully capable of punishing “fraud-on-the-FDA” if and when it occurred, and states had to butt out.

The question then became: How do you interpret a statute like Michigan’s, which bars bringing any action against a drug company over an FDA-approved drug unless there’s been fraud-on-the-FDA? Does the Buckman precedent mean (possibility number 1) that the exception is now preempted, but the remainder of the state law remains in effect. If so, the result is that all suits over FDA-approved drugs are now prohibited in Michigan — a pro-business result. Or does Buckman mean instead (possibility number 2) that the whole state law has to be struck down in its entirety (taking the bitter with the sweet). If so, the result is that no suits over FDA-approved drugs being barred anymore — a pro-plaintiff result. Or (possibility number 3), do you just continue to enforce the state statute as written, because it doesn’t really allow the plaintiff to sue on a fraud-on-the-FDA theory (which is what was forbidden in Buckman), but rather only allows the plaintiff to sue on more traditional theories, while conditioning that right upon the occurrence of a particular factual circumstance — which happens to be fraud-on-the-FDA? That’s another fairly pro-plaintiff result.

In 2004, in a case against Wyeth (WYE) over its Duract drug, the U.S. Court of Appeals for the Sixth Circuit, in Detroit, ruled that possibility number 1 was correct, and knocked out the exception while keeping the rest of the statute. (The pro-business result.) But in late 2006, the U.S. Court of Appeals for the Second Circuit, in New York, ruled that possibility number 3 was correct, and continued to give effect to the exception notwithstanding Buchman. (That’s a pro-plaintiff result.) Both cases involved interpretation of the exact same Michigan statute. It’s the latter case, then known as Desiano and now known as Kent, that the Supreme Court just decided to hear. (The Michigan case had been transferred to New York as a result of the multi-district litigation process.)

According to Mark Herrmann, a partner at Jones Day in Chicago who has written about these issues, of the eight laws that are implicated by the appeal, the Michigan law imposes the strongest curbs on suits over FDA-approved drugs, in that it purports to bar any such suit absent fraud-on-the-FDA. (Herrmann also co-writes the Drug and Device Law Blog, available here.)

The next strongest law, Herrmann says, is the Texas statute, which bars “failure to warn” claims absent fraud-on-the-FDA. Since “failure-to-warn” — an accusation that the drug label failed to warn doctors and patients about just how unsafe the drug really was — is by far the most common theory for bringing personal injury suits against drug companies, this law is also quite powerful. In April, in the Ledbetter case, the Texas state judge presiding over 1,000 Vioxx suits ruled that possibility number one was correct, following the Sixth Circuit, and granted partial summary judgment to Merck on the core theory of liability in all of those cases. All of those cases have been stayed pending appeal. (An article Herrmann wrote about that case on his blog at the time is available here.)

The six other states bar only the attempt to seek punitive damages in a case over an FDA-approved drug, absent fraud-on-the-FDA, according to Herrmann. These states are New Jersey, Arizona, North Dakota, Ohio, Oregon, and Utah, according to Herrmann. Judge Carol Higbee, who is presiding over many thousands of Vioxx cases in New Jersey, followed the Desiano reasoning (possibility three), and decided to let the plaintiffs seek to prove fraud-on-the-FDA and, therefore, seek punitive damages in those cases.

We’ll soon get clarity and uniformity. Some pro-business groups are already interpreting the Court’s decision to review the Desiano case as a good sign for their constituency. See, e.g., here.

The case will likely be heard early next year.