Less information is a good thing?

Late in March, a miracle occurred in Lansing. House Republicans and Democrats actually agreed on something, and it was an issue that had the potential to be one of those political wedge issues that pits corporate interests against the little guy.

For years, Democrats have fought to repeal a law that prohibits people from suing drug manufacturers if the drug was compliant with FDA standards.

But it has been met with strong Republican opposition by lawmakers who say that it would be harmful to business at a time when Michigan needs to send a business-friendly message to the corporate world.

It’s a fight that has gone nowhere, and the statute — section 2946 of the Revised Judicature Act, as amended by 1995 PA 249 — remains in place.

But that law bit the Republican Michigan Attorney General in the behind last October, when the Michigan Supreme Court opined in Attorney General State of Michigan, et al. v. Merck Sharp & Dohme Corp. that the AG cannot join a class action against the manufacturer of Vioxx.

When every other state in the country could join the suit, but Michigan could not recover the $20 million that Michigan paid for Vioxx prescriptions dispensed to Medicaid patients, it didn’t sit well with members of either party.

So state representatives Ellen Cogen Lipton, D-Huntington Woods, and Fred Durhal, D-Detroit, proposed an amendment to the House Appropriations Subcommittee on General Government. The amendment would require Michigan’s Attorney General to report the money lost by Michigan residents from not participating in the federal class action lawsuits brought by states against drug companies whose products were found to be harmful.

And it got bipartisan support.

Lipton said that she thinks Michigan is missing out on being able to recover millions of dollars every year, money that should be put back into Medicaid. And she said that if the state is going to continue to provide drug makers that level of immunity, lawmakers should at least have a full understanding of the consequences of the law.

“We might decide after we have the information that it’s not worth it to repeal that statute,” Lipton said. “But at least we’d be making an informed decision.”

The amendment must now be presented Wednesday to the House Appropriations Committee. And it might not survive, despite at least tentative interest on both sides of the aisle.

It’s possible that no other lawmaker than Sen. Roger Kahn, R-Saginaw Twp., has been a bigger proponent of immunity for drug makers. He consistently corrects anyone who calls it immunity by interjecting a quick “FDA defense.”

Kahn is a cardiologist who said he’s seen first-hand how beneficial new drugs have been in his patients’ lives. He wants Michigan to be a beacon to other states who want to pass immunity … err, FDA defense … laws.

And some have done just that. A handful of states have weaker versions of Michigan’s law. They either bar punitive damages in suits against manufacturers of drugs that are FDA-approved, or they have a rebuttable presumption that FDA warnings are adequate to protect consumers.

And even Kahn said in a phone interview this morning that he’d like to hear a full debate of Lipton and Durhal’s bill. It’s premature to say that he supports it, but he said, “I want to hear a debate and keep an open mind.”

By golly, there’s hope for us all.

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Drug-immunity law bans AG’s Vioxx-Medicaid suit, MSC rules

Merck Corp. took Vioxx, a pain-relief drug, off the market in 2004 (not soon enough, many lawsuits claimed) because the drug had the unintended side-effect of increasing the risk of heart attacks.

Under Michigan’s 1996 drug-manufacturer immunity law, MCL 600.2946(5), Michigan residents could not press Vioxx-related product-liability claims against Merck.

A divided Michigan Supreme Court has upheld a Court of Appeals decision, issued earlier this year, which held that the immunity law also barred the state attorney general’s 2008 suit against Merck under Michigan’s Medicaid False Claims Act for the $20 million the state paid for Vioxx prescriptions dispensed to Medicaid patients.

The attorney general alleged “that because Merck misrepresented the safety and efficacy of Vioxx in its marketing and because Michigan reimbursed providers who prescribed or dispensed Vioxx, Michigan would not have incurred such expenses but for Merck’s fraudulent activity.”

The COA majority in Attorney General State of Michigan, et al. v. Merck Sharp & Dohme Corp., characterized the attorney general’s suit as a product liability action and held that MCL 600.2946(5) barred the suit.

Over the weekend, Chief Justice Robert P. Young Jr., and Justices Stephen J. Markman, Mary Beth Kelly and Brian K. Zahra sided with the COA majority and denied the state’s application for leave to appeal.

Justices Michael F. Cavanagh and Diane M. Hathway would have granted leave. So would have Justice Marilyn Kelly, who said that the suit was a fraud claim, pure and simple, and had nothing to do with product liability:

MCL 600.2945(h) defines a “product liability action” as “an action based on a legal or equitable theory of liability brought for the death of a person or for injury to a person or damage to property caused by or resulting from the production of a product.”

The Court of Appeals majority held that plaintiffs’ allegations fall within this statutory definition because they assert legal and equitable theories of liability for damage to property resulting from the production of a product. Essentially, the court held that plaintiffs’ alleged financial damages in the form of payments to Medicare patients amount to “damage to property.”

This defies common sense and a rational understanding of the statutory phrase “damage to property.”

Kelly said the dissenting COA judge had it right:

As dissenting Court of Appeals Judge FITZGERALD noted, “[w]hen examined in the proper context of a product liability statute, it is clear that ‘damage to property’ means physical damage to property caused by a defective or unreasonably dangerous product.”

Think about this way, Kelly continued:

Product liability cases are generally brought by or on behalf of people who have suffered injury or damage to their physical property because of the use of a product.

Hence, if a customer buys a product and it burns down his or her house, that person may bring a product liability action. However, if that same customer buys a product, such as fireworks, with the expectation that it will blow up, and it does not work as promised, no product liability action lies.

The latter hypothetical situation is analogous to the instant case. Plaintiffs are attempting to recover money spent for a product that allegedly did not live up to defendant’s representations.

This case is not a product liability action because no physical injury is claimed.

COA bars state’s Vioxx-Medicaid suit against Merck

“The law of unintended consequences, often cited but rarely defined, is that actions of people — and especially of government — always have effects that are unanticipated or unintended. Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it.”
– Rob Norton, The Concise Encyclopedia of Economics

The state of Michigan got a taste of its own medicine yesterday when the Court of Appeals, in a 2-1 decision, booted the attorney general’s Medicaid False Claims Act suit against Merck, the manufacturer of the anti-inflammatory drug Vioxx.

Writing for the majority in Attorney General State of Michigan, et al. v. Merck Sharp & Dohme Corp., Judge Henry Saad applied Michigan’s drug immunity law to bar the state’s claim against Merck.

Michigan’s immunity statute is the only one of its kind in the United States and the claims made by the parties raise an issue of first impression under Michigan law.

We hold that where, as here, the drug in question was approved by the FDA [Food and Drug Administration], the state’s suit to recover Medicaid money premised on fraud by the drug company in its representations regarding the safety and efficacy of the drug is barred by MCL 600.2946(5), which exempts drug companies from product liability suits regarding FDA-approved drugs.

Saad, joined by Judge David H. Sawyer, ruled that:

[N]othing in the statute limits its application to claims brought by consumers and that the statute in no way precludes a claim pursued under the [Medicaid False Claims Act] or described as an action for unjust enrichment. Again, by its own terms, MCL 600.2946(5) applies to actions “based on a legal or equitable theory of liability,” which includes the claims at issue here.

If the plain language of the statute results in an outcome that the Legislature now deems improper, it is for the Legislature, not this Court, to narrow the application of the statute by amending or redrafting its terms.

In his dissent, Judge E. Thomas Fitzgerald argued that the state’s claim was not a product liability suit:

[P]laintiffs claim is a “product liability action” subject to the absolute defense of
MCL 600.2946(5) if (1) the action is based on a legal or equitable theory of liability, (2) the action is brought for the death of a person or for injury to a person or damage to property, and (3) that loss was caused by or resulted from the construction, design, formulation, development of standards, preparation, processing, assembly, inspection, testing, listing, certifying, warning, instructing, marketing, selling, advertising, packaging, or labeling of a product.

The point of contention is whether plaintiffs’ claim was “brought for the death of a person or for injury to a person or damage to property.” Here, plaintiff is seeking money damages “representing Medicaid overpayments wrongfully received by Defendant” as a result of defendant’s allegedly fraudulent conduct that occurred after the FDA’s approval of Vioxx.

To treat this case as a product liability action would require a finding that plaintiffs’ claim for money wrongfully paid was brought for damage to property. …

[T]he present case is not a product liability action, as defined in MCL 600.2945(h), because a suit brought for
the return of Medicaid overpayments is not “brought for … damage to property.”

Shoud Michigan repeal immunity law for drug industry?

“Recently we learned that the Department of Justice will fine Pfizer $2.3 billion in civil and criminal penalties for its illegal marketing of the drugs Bextra, Zyvox, Geodon and Lyrica. This is not only the largest penalty ever levied against a drug company. It is the largest penalty ever levied against any company in American history,” according to a guest columnist in The Detroit Free Press.

“Pfizer and its subsidiary entities — the former Upjohn and Pharmacia — not only promoted these drugs for uses that were not approved by the FDA. They also marketed the drugs for uses that were explicitly rejected by the FDA, primarily because of safety concerns. To the degree that patients were killed or injured as a result, Pfizer’s off-label marketing scheme amounts to negligent homicide.

“That is probably why Pfizer was compelled to plead guilty to felony charges, which is also unprecedented in such contexts. In most instances, companies plea-bargain to misdemeanor admissions, fines are levied, and that is the end of it.”

Michigan drug immunity law: Court access blocked, promised economic benefits not realized, says new report

Michigan’s drug immunity law received some national attention today in a report released by the Center for Justice & Democracy in New York.

The report’s key assertions: the law keeps residents harmed by dangerous drugs out of the courtroom and has not delivered any the economic benefits promised by the law’s backers.

The heavily footnoted report, “A Tragic Blunder: Michigan’s Drug Industry Immunity Law”, concludes the law should be repealed:

“In 1995, under the leadership of then Governor John Engler, the Michigan legislature passed an unprecedented law that prevents its residents from gaining access to the civil justice system if they were harmed by dangerous drugs approved by the Food and Drug Administration (FDA), with the limited exception that the drugmaker did not withhold information from the FDA. Michigan is the only state in the nation that has a drug industry immunity law which allows drug companies to escape accountability in this manner.

“Over the last 15 years or more, as drug companies have had an increasing amount of influence over FDA decision-making and policy, the FDA has fallen down on its job of protecting the public. The result has been perilous for all Americans, with the news now replete with reports of drug industry marketing unsafe drugs to the public with the FDA’s knowledge – Rezulin, Vioxx, and Trasylol, recently featured on 60 Minutes, to name just a few. Yet unlike the residents of any other state, Michiganders have no legal recourse should they be hurt by these or other dangerous drugs that the FDA failed to keep off the market.

“What Michigan lawmakers accomplished with this law is exactly what the pharmaceutical industry has been trying to accomplish unsuccessfully for the last three decades in Congress and state legislatures around the country – eliminating their liability for marketing unsafe drugs, and shielding them from responsibility when their harmful products hurt or kill.

“With the problematic nature of the FDA, it is clear that Michigan needs the protection of its civil justice system. This law undermines public safety, is devastating to many people in Michigan and needs to be repealed.”

The report also discusses the promised economic benefits that were touted by the law’s supporters:

“The Michigan Manufacturers Association, a strong pro-business lobbying group, has stated that it supported the drug immunity law in order to ‘encourage companies – including pharmaceutical companies – to stay in Michigan.’ The high-paying pharmaceutical jobs, however, began trickling out of Michigan even as Governor Engler was signing the bill into law.

“In 1995, the Kalamazoo-based pharmaceutical company Upjohn Co., the company the immunity law was meant to protect, merged with the Swedish company Pharmeacia Corp. After the merger, the new company moved its headquarters and cut hundreds of jobs in Michigan. In 2003, Pharmeacia & Upjohn merged with Pfizer and cut over a thousand additional jobs in Western Michigan.

“In December 2006, responding to an effort to repeal the drug company immunity law, the Detroit News ran an editorial praising Pfizer for providing so many good jobs in the state. Less than a month later, Pfizer announced it was closing the Kalamazoo and Ann Arbor research and development facilities – a move that affected thousands of jobs in Michigan. A year later, the Ann Arbor site was nearly abandoned and hundreds of Pfizer employees and their families had moved out of the state.”

In an editorial last Sunday, the Detroit News again took to the stump to support the drug immunity law:

“State lawmakers should abandon efforts to repeal the Michigan law, which protects drug companies that comply with standards set by the U.S. Food and Drug Administration (FDA) and whose products were tested and approved by the agency. …

“The whole idea of the FDA is to set and enforce national standards, including rules for drugs and medical devices. As a result, U.S. health care is one of the most advanced systems in the world. New and exotic procedures and drugs save lives even though most all carry some risk.

“To the extent there’s a problem with FDA procedures, it belongs to Congress and the agency itself. If stricter or looser rules are needed for a product line, both federal lawmakers and FDA officials can make that happen.”

But according to the center’s report, the Michigan Senate, which has resisted repeal efforts, has tacitly admitted the FDA’s oversight leaves something to be desired.

“[I]n late January 2008, just hours before Governor Jennifer Granholm’s State of the State address in which she expressed support for repeal, the Senate passed a non-binding resolution calling on the FDA to ‘establish stricter standards for the drug approval process.’ This was an obvious concession that the FDA was failing in its job, yet the Senate continued to support immunity for those harmed by the FDA’s failures.”

The repeal legislation is still awaiting a hearing in the Senate. See this post: The Michigan Lawyer: Drug immunity law: politicos jockey for position