No. 1 March 2009
In the Wake of Wyeth v. Levine:
Making the Case for FDA Preemption and Administrative Compensation
James R. Copland, Director, Center for Legal Policy, Manhattan
Institute for Policy Research
Paul Howard, Director, Center for Medical Progress, Manhattan
Institute for Policy Research
THIS | PRINTER
Fixing the FDA Preemption Mess Jim Copland and Paul Howard, Bloomberg Health Law, August 2009
In the Wake of Wyeth v. Levine: Making the Case for FDA Preemption an Administrative Compensation, Paul Howard and Jim Copland, BNA Product Safety and Liability Reporter, June 8, 2009
A Dose of Skepticism: The Supreme Court's ruling in Wyeth is likely to unleash conflicting standards and a flood of litigation, Jim Copland and Paul Howard, Los Angeles Daily Journal, 3-19-09 (This article also appeared in the San Francisco Daily Journal, 3-19-09)
Ruling Imperils Market for New Drugs, James Copland and Paul Howard, RealClearMarkets.com, 03-10-09 (This article originally appeared in the Washington Times, 3-9-09)
Click here to listen to a podcast of Manhattan Institute senior fellow Paul Howard reading this op-ed.
Jim Copland on WOR's "The Steve Malzberg Show", 3-10-09
Jim Copland on PJTV, 3-17-09
IN THE PRESS:
Levine Fallout Begins, American Lawyer, 3-10-09
Think tank proposes drug side effect compensation program, LegalNewsLine.com, 03-09-09
FROM THE WEB:
Reaction To Wyeth v. Levine, Drug and Device Law, 3-10-09
Manhattan Institute Scholars Propose New Compensation Program For Injured Drug Users, U.S. Food and Drug Administration News, 3-10-09
Manhattan Institute Scholars Propose New Compensation Program For Injured Drug Users, Medical News Today, 3-10-09
Wyeth Decision Seen as Victory for Consumers, Personal Injury and Social Security Disability Blog, 3-9-09
Regulation of Drug Development and Approval
the Risks and Benefits of New Drugs
of State Product-Liability Law
Normative Case for Preemption
Better Choice: Administrative Compensation
Pharmaceuticals are subject to what are, in effect, two
overlapping and often conflicting regimes for overseeing
drug safety: mandatory regulation by the U.S. Food and Drug
Administration and lawsuits seeking billions of dollars
in damages in the common-law state tort system. This dual
system is both irrational and destructive, particularly
insofar as it discourages innovation, raises drug prices,
and denies patients access to many medicines that are reasonably
safe and effective.
To put an end to this dual regulatory regime, we recommend
that Congress broadly preempt state tort lawsuits seeking
to hold drugs and medical devices responsible for claimants
illnesses and injuries. Malpractice actions in state courts
now available to plaintiffs would be unaffected by our proposal.
To deal with the consequences of serious and unforeseen
drug side effects, we instead urge Congress to create a
system modeled on the Vaccine Injury Compensation Program.
Congress created VICP in 1986 in response to a wave of junk
science litigation in the 1970s and 1980s that nearly
destroyed the vaccine industry. VICP, while not without
its own shortcomings, has since proven itself to be a scientifically
credible mechanism for offering timely and fair compensation
to the victims of rare vaccine side effects, while incurring
much lower transaction costs than the tort system.
Initially the program should be funded by taxes levied
on manufacturers on the basis of their market share. As
the relative safety of their respective products emerged,
manufacturers would be assessed taxes on the basis of their
share of payments to successful claimants, which would be
determined by the safety performance of the drugs they make.
Our argument rests on the conviction that the FDAs
regulatory regime, while imperfect in many respects, is
nonetheless better suited to weighing the benefits and risks
of new medicines than state courts, which may consider only
liability for harm to the particular plaintiffs before them.
Far from ignoring the potential hazards of drugs under review,
the FDA faces strong incentives to exercise excessive caution.
The result is a system that promotes voluminous warnings
on the labels of approved drugs and delays in approving
or denying outright reasonably safe and effective medical
State tort litigation only exacerbates the effects of the
FDAs biases and raises consumer prices. Moreover,
many lawsuits allege that a drug manufacturer should have
placed stronger warnings or even contraindications on a
label, ignoring the fact that the FDA had explicitly considered
the risk and then mitigated it by specifying the warning
language to appear on the product label.
Unfortunately, both the U.S. Supreme Court and Congress
have been moving in the wrong direction on the issue of
In its Wyeth v. Levine decision, handed down on
March 4, 2009, the Supreme Court allowed a state court
jury to substitute its judgment on a safety question for
the FDAs. The side effect produced by the drug in
question had been known to the FDA for almost thirty years,
and the manufacturer, in FDA-approved language, had clearly
disclosed the risk in six different locations on the label.
The actual cause of the plaintiffs tragic injury
was the treating physicians assistants obliviousness
to the labels plain warnings. In the aftermath of
Levine, we are likely to see conflicting jury verdicts
across the fifty states on the same issue or closely related
ones. The result will be, so to speak, a race to the bottom,
in which the most litigious jurisdictions will, in effect,
set drug-labeling requirements for the nation as a whole.
day after the Supreme Court ruled in Levine, U.S. Representatives
Frank Pallone (D-N.J.) and Henry Waxman (D-Calif.) introduced
a bill called the Medical Device Safety Act that is intended
to undo the Supreme Courts 2008 decision in Riegel
v. Medtronic, which found that the plain language
of the congressional act at issue was to preempt state
tort lawsuits for injuries attributed to certain classes
of medical devices.
We suggest that Congress should reject Pallone and Waxmans
bill and instead clear the way for a sane, single and science-based
system of safety review by broadly preempting state lawsuits
concerning FDA-approved drugs and medical devices. Doing
so would stop forum shopping and the filing of class actions
that lump claimants with minor or no injuries together with
a handful of legitimate claimants for the sole purpose of
inflating attorneys fees. A well-designed compensation
program along the lines we suggest would offer as a substitute
a mechanism for compensating the victims of unforeseen drug
injuries, and it would do so without the uncertainty and
expense of todays version of litigation. By limiting
compensation to unforeseen injuries, the program we propose
would also give companies a powerful incentive to rapidly
update drug labels with new safety information and to invest
further in both safety and effectiveness.
ABOUT THE AUTHOR
James R. Copland is the director of the Manhattan
Institutes Center for Legal Policy, which seeks to
communicate thoughtful ideas on civil justice reform to
real decision-makers. Mr. Copland also serves as managing
editor of the Institutes PointOfLaw.com, a web magazine
that brings together information and opinion on the U.S.
litigation system; and he is project manager of the Institutes
Trial Lawyers, Inc. series of publications, which challenges
the size, scope, and inner workings of Americas lawsuit
Mr. Copland has published opinion columns in national,
local, and online newspapers, including The Wall Street
Journal, The National Law Journal, Investors
Business Daily, and National Review Online. He
has testified before Congress and is a regular speaker and
Prior to joining the Manhattan Institute, Mr. Copland was
a management consultant with McKinsey and Company in New
York. He earlier served as a law clerk for the Honorable
Ralph K. Winter of the United States Court of Appeals for
the Second Circuit. He has been a director of two privately
held manufacturing companies since 1997.
Mr. Copland received J. D. and MBA degrees from Yale, where
he was an Olin Fellow in Law and Economics and an editor
of the Yale Journal on Regulation. He also has an M.Sc.
in the politics of the world economy from the London School
of Economics and a B.A. in economics with highest distinction
and highest honors from the University of North Carolina
at Chapel Hill, where he was a Morehead Scholar.
Paul Howard is a senior fellow and the director
of the Manhattan Institutes Center for Medical Progress.
He is the managing editor of MedicalProgressToday.com, a
web magazine devoted to chronicling how private-sector investment,
biomedical innovation, and market-friendly public policies
lead to improved health.
Mr. Howard has written on a wide variety of medical policy
issues, including medical malpractice, FDA reform, and Medicare.
He is often quoted on health-care issues and his columns
have appeared in newspapers across the country, including
the New York Post, Dallas Morning News, Investors
Business Daily and WashingtonPost.com. He is also a
member of the Manhattan Institutes Project FDA, a
committee of physician-scientists, economists, medical ethicists,
and policy experts. Its purpose is to show how 21st-century
technologies can help accelerate the drug-development and
drug-approval process while maintaining drug safety.
Mr. Howard first joined the Manhattan Institute, in 2000,
as the deputy director of the Center for Legal Policy. He
received a Ph.D. in political science from Fordham University
in 2003, and a bachelors degree from the College of
the Holy Cross in Worcester, Massachusetts.
The U.S. Food and Drug Administrations oversight
of prescription drugs, biologics, and medical devices has
for decades been considered the global gold standard,
with most developed nations adopting the FDAs template
when they oversee the development, testing, and marketing
of new medical products.
However, the agencys mandate of protecting
the public health by assuring the safety, efficacy, and
security of biomedical products
marketed for sale does not imply a guarantee of absolute
safety. No medical device or product that is designed to
alter the functioning of the human body is 100 percent safe
under all circumstances for all patients; indeed, every
medical product or procedurefrom aspirin to open-heart
surgerycarries with it the potential for severe and
even fatal complications. Society tolerates the relatively
rare risks of treatment only because of the greater and
more certain pain and suffering inflicted by untreated illnesses.
Two questions naturally arise from this reality:
To what degree should society screen potential medical products,
either to weed out those that are deemed unduly unsafe or
to uncover new information about risks? And to what degree,
if at all, should we compensate victims of adverse medical
Over the last fifty years, the United States has evolved
a highly complex and mandatory process for prescreening
the safety and efficacy of new drugs and devices, which
we discuss in detail in this paper. Many criticisms of this
process can be made, but one thing
that is apparent is that the FDA is typically much more
responsive to criticism that follows the discovery of previously
unknown risks from new medical products than it is to arguments
that too many medical innovations face delay or denial of
market entry because of the agencys overcautiousness.
The overcautiousness of the FDA, along with its effect
on medical innovation, is exacerbated by a compensation
mechanism for medical injuries lodged in the state-based
common-law tort system. Courts have come to rule not only
on issues of negligence but on complex issues of causation
and product labeling; as such, they constitute a second
system of drug regulation. The lawsuits that they hear not
only drive up the costs of products that in fact meet FDA
safety regulations; they also discourage innovation in areas
that are perceived to be litigation-prone.
Even if we concede that scientific experts may reasonably
disagree with the FDAs regulatory decisions in individual
instances, state courts and juries are poorly positioned
to evaluate the aggregate effect of the FDAs
regulatory regime on consumer welfare. In the course of
litigation over FDA-approved medical devices and drugs,
courts and juries take cognizance of only a single injured
plaintiff and do not consider the competing risks and benefits
that the FDA, in however flawed or constrained a fashion,
must weigh for the total population of patients with
a given illnessor for society as a whole.
Lawsuits launched in state courts also drive manufacturers,
in hopes of deflecting lawsuits, to flood the agency with
label warnings that may discourage patients from using beneficial
medical products, and such lawsuits place additional political
pressure on FDA officers to relabel or even withdraw products
from the market on the basis of anecdotal evidence.
Making matters worse, much research suggests that compensating
patients for their medical injuries through the tort system
is extraordinarily expensive, time-consuming, and unpredictable.
Societys interest in promoting both medical innovation
and the safety of medical products is clearly not best served
by an ad hoc tort system that has a slim record of judiciously
weighing scientific evidence.
Such critiques might be made of other kinds of product-liability
lawsuits, but in this paper we limit our focus to FDA-regulated
drugs and medical devices, which
constitute a substantial fraction of mass-tort litigation
and affect the cost and delivery of health care, representing
some 16 percent of the economy.
For a small subsection of this marketvaccinesCongress
substantially replaced state tort lawsuits in 1986 with
a science-based administrative compensation system, the
Vaccine Injury Compensation Program. An administrative compensation
system based on this successful model and applied to all
drugs and medical devices would improve social welfare by
accomplishing four goals:
increased information on product safety through the routine
surveillance of adverse events possibly caused by new
greater innovation in product safety;
Offering compensation in a fair, timely, and transparent
manner for injuries resulting from serious, unforeseen
drug side effects; and
Protecting manufacturers from unscientific and potentially
This paper offers an overview of:
- The current FDA regulatory regime
FDAs balancing of the risks and benefits of new
normative case for preemption
vaccine example and our proposed administrative compensation
the last item, parties injured by drugs approved by the FDA
would be blocked from suing drug manufacturers in state court,
but they could still receive compensation for injuries so
caused, provided the risk of suffering those injuries was
not set out on an FDA-approved label accompanying the product.
Compensation would be adjudicated by a specially dedicated
administrative body operating independently of the FDAs
FDA Regulation of Drug Development and
The process of drug discovery and development is extraordinarily
complex, time-consuming, and expensiveoften involving
hundreds of millions of dollars and over a decade of development
time. The industry estimates that
only one out of every 10,000 compounds investigated for
medical use will eventually receive FDA approval.
The rest will be tested and discarded because of safety
or efficacy concerns.
Once a pharmaceutical or biotech company has identified
a compound likely to inhibit or modify a targeted disease
process, the drug will be subjected to substantial laboratory
and animal testingtypically over the course of several
yearsto ensure that the compound has an acceptable
safety profile and a significant impact on the intended
If the company is confident that the compound is a good
candidate for human testing, it will approach the FDA with
the results of its preclinical testing and request permission
to begin clinical trials by submitting an Investigational
New Drug (IND) application.
If the FDA approves the IND, clinical testing follows in
three generally sequential phases. In Phase I testing, the
drug candidate will be administered to (usually) healthy
volunteers for ADME-toxicity testing
to see how the body absorbs, metabolizes, and excretes the
compound and to note any side effects. Phase I testing is
also typically intended to establish safe dosing limits.
For Phase II testing, relatively small numbers of patients
(a few dozen) with the targeted disease will be given the
drug to establish baseline efficacy (or lack thereof) and
to add to the safety and dosing data already gathered.
If the two previous stages have been successful and do
not provide evidence of side effects that would outweigh
the potential benefits, companies will begin Phase III testing.
Depending on the drug or indication, a Phase III trial involves
assigning several hundred or thousand patients to a randomized
controlled trial (RCT) in which some will receive the drug
but others a placebo (sugar pill). In certain therapeutic
areas, such as oncology, where it would be unethical to
give a seriously ill person a substance known to be ineffective,
patients will be offered the standard of care. For instance,
in the testing of a new antibiotic for a severe bacteriological
infection, some patients will randomly receive the new drug
while others will receive an established treatment.
If the outcome of the Phase III trials is positive (that
is, the company can ascribe positive outcomes to the drug
and not to chance) at a statistical confidence level of
0.05 or less, the company will submit all its data on the
drug, including its composition, manufacturing processes,
and preclinical and clinical data, along with any reports
of adverse events and the drugs proposed labeling
indication, to the FDA in the form of a New Drug Application
(NDA). It is not unusual for an NDA to include several hundred
thousand pages of documentation.
Balancing the Risks and Benefits of
No drug, device, or medical procedure is without risk.
Indeed, any product that affects a patients physiology
is apt to have side effectssome serious, others less
sothat the clinician and the patient must weigh against
the risk of illness and death due to the underlying disease.
In his testimony before Congress, former FDA deputy commissioner
Scott Gottlieb, M.D., outlined the challenges that accompany
all drug treatment:
Every clinician who prescribes medicines has seen adverse
drug reactionsthe unintended and harmful effects
of drugs. Human biology, after all, is conservative, meaning
our bodies reuse a fairly small set of very similar molecular
processes to get all of their jobs done.
It follows that any drug that is active in blocking some
molecular process in order to have its desired effect
will also block the same molecular processes in other
parts of the body, parts that could lead to an unwanted
side effect. So there is no such thing as a completely
As a result, it has long been acknowledged that the FDA
will tolerate serious drug-related toxicities associated
with the treatment of serious and life-threatening ailments,
particularly when there are few effective therapies available
to patients, or when the drug under review represents a
significant therapeutic advance over existing treatments.
This is eminently rational: patients with serious illnesses
are apt to have a much higher tolerance for risk than patients
who suffer from more manageable or less life-threatening
Ideally, when a new drug or device is marketed, patients
and physicians would have the guidance of a label that outlines
all the individual risks and benefits of a medicine before
use. In reality, given the limits of existing science and
the enormous variation in human biology, no amount of premarket
testing can uncover all potential side effects that may
be associated with a new medicine. As noted previously,
during development, prospective compounds will be tested
on relatively small numbers of patients; if approved for
sale, they may be used in hundreds of thousands or millions
of patients. Additional premarket testing in larger clinical
trials might uncover a greater number of side effects but
would also delay patient access to valuable new therapies
and, by adding to drug-development costs, increase drug
prices or keep valuable drugs (for some indications) from
being brought to market, if the chances were better than
not that the added costs could not be recouped.
The FDAs effort to balance the conflicting values
of speed and safety is complicated by the high visibilityand
therefore the ensuing negative publicityof two types
of errors it may commit: Type I error, or approving
a drug as reasonably safe that later turns out to be unsafe
or ineffective; and Type II error, or withholding
from the public a drug that is reasonably safe and effective.
The Type I error, insofar as it results in widely publicized
deaths or serious injuries after a drug is approved for
sale, is of greater public concern and consequently has
the greater impact on agency oversight by Congress.
Exemplifying the Type I error is the history of thalidomide,
a sedative that was widely marketed in Europe and Japan
(but not the United States) to treat pregnancy-related nausea
(morning sickness) before it was discovered
that it caused severe birth defects. The thalidomide tragedy
led in 1962 to passage of the Kefauver Harris Amendment,
which created what became the FDAs current drug-approval
More recent examples of commercialized drugs being found
to have side effects, such as Vioxx or Fen-Phen, fit neatly
into a Type I narrative. Such Type I failures create the
impression that the FDA has failed in its primary public
obligation, which is to prevent unsafe drugs like thalidomide
from reaching the market, and have led to the perception
that there is a drug safety crisis, which has dominated
debate over industry and FDA regulation for the last several
years. According to this narrative, flaws in the FDAs
approval and post-approval monitoring of new medicines justify
a substantial role for private litigation in bringing adverse
events to light and deterring negligent industry behavior.
According to one often voiced critique:
There are often important gaps in the ascertainment
and reporting of adverse events associated with prescription
drugs, and the balance of information presented to physicians
about the risks and benefits of medications may understate
the former and inflate the latter
. In this environment,
litigation brought by government agencies and individual
patients can help uncover previously unavailable data on
adverse events, questionable practices by manufacturers,
and flaws in drug regulatory systems.
This argument is often repeated in the medical literature,
but such analyses typically focus on only one side of the
cost-benefit equationriskwhile failing to consider
information on benefits. Indeed,
since new indications cannot be added to drug labels without
new clinical trials, dissemination of new information on
benefits that may improve patient welfare lags behind less
than fully scrutinized bad news, which travels through the
media and dominates policy discussions. In addition, litigation
typically heightens awareness of the potential risks of
just one product, thus shifting market share to products
that may have their own unknown risks. In any case, litigation
does not collect post-market drug safety information systematically
enough to be useful to regulators.
Perhaps the best demonstration of a bias in the treatment
of risk/benefit information is the black box
warning that the FDA added to SSRI antidepressants in 2003,
after mixed data were gathered indicating that the drugs
might cause a short-term increase in suicidal behavior,
although reports submitted to the FDA on clinical trials
revealed no suicides. Under considerable pressure from plaintiffs
attorneys and consumer groups, the FDA implemented its new
label warning; predictably, the number of SSRI prescriptions
fell. Shortly thereafter, adolescent suicides increased,
following a decade-long decline, raising the question of
whether the FDAs label warning may have caused more
harm than good by scaring some physicians and families away
from drug treatment for depression.
There is also significant evidence, which we will discuss
shortly, that the trial bar distorts, manufactures, or otherwise
misrepresents evidence of drug injuries so as to increase
aggregate damage awards and legal fees, which go up along
In short, there is substantial evidence that the FDA faces
powerful incentives to commit Type II errorsfailing
to approve a drug that is, in fact, mostly safe and effective
and over-warning of the risks it might present.
There are a few well-known instances, however, when societal
pressures pushed the agency to address the problem of Type
II errors. The most notable was the protests by AIDS activists
during the late 1980s and early 1990s, when an AIDS diagnosis
was effectively a death sentence. AIDS advocates argued
that the FDAs lengthy and mandatory testing regime
doomed thousands of AIDS patients to certain death. Offering
them instead the possibility, however uncertain, of prolonging
life through accelerated access to experimental therapies
would have been preferable, these advocates argue.
Faced with the reality that AIDS patients were importing
unapproved drugs from Europe and Mexico or traveling to
foreign clinics to gain access to them, and under pressure
from economists and policymakers who noted that the FDA
was often excessively slow in weighing the evidence on many
new drugs that were already available in Europe,
the FDA dropped its insistence on a sequential testing process
and embraced a number of innovative programs, including
treatment IND and parallel track,
which allowed AIDS patients (and others) access to
promising experimental drugs early in the development process,
long before their safety and efficacy had been proved.
In addition, Congress passed the Prescription Drug User
Fee Act (PDUFA) of 1992, which allowed the FDA to
levy user fees [on] firms filing a New Drug Application
or Biologic License Application, in exchange for guarantees
on review times. The legislation has been renewed
three times since then, in 1997, 2002, and 2007.
In return for being given user fees with which to hire
additional review staff, the FDA agreed to set a timetable
for the complete review of 90 percent of submitted
applications: ten months for a standard review; and six
months for a priority review, if the product under review,
in the FDAs judgment, offered a substantial improvement
over existing therapies or was a treatment for currently
unmet medical needs.
The implementation of the PDUFA regime also offered researchers
an opportunity to perform a controlled experiment to answer
the question of whether speeding up access to new medicines
offered a net benefit or, rather, posed harm to patientsa
key indicator of whether the FDA had been running an equal
risk of committing Type I and Type II errors.
Research shows that accelerated review of submitted NDAs
did not, in fact, harm patients. Researchers concluded that
by the most plausible measure, [PDUFA] did not, in
fact, have any effect on drug safety: neither the proportion
of drugs eventually withdrawn (23 percent), nor the
speed with which they were withdrawn, changed in any statistically
significant way since the laws passage.
In fact, researchers found that the drugs approved
and withdrawn since the law was enacted cost, at most, about
56,000 life-years in avoidable deaths. Conversely,
the calculation [of the benefits of added speed] implies
that the act added 180,000310,000 life-yearsfar
more than the 56,000 life-years lost if, in fact, [PDUFA]
was responsible for all of the mistakes of the drug review
Due to the complexity of human biology, no premarket screening
process can guarantee products to be without serious side
effects. Second, the available data suggest that, if anything,
the FDA is more prone to Type II errors than Type I errors.
When state courts are allowed to second-guess the label
warnings that the FDA requires for prescription drugs after
it has explicitly ruled on such matters, we can expect companies
to respond by reducing innovation, by raising prices, or
by flooding the agency with new warning labels and contraindications
in an attempt to forestall litigation, thus encouraging
the FDAs existing tendency toward excessive caution
in its regulation of pharmaceuticals.
Preemption of State Product-Liability
Under the Supremacy Clause of the U.S. Constitution, federal
law supersedes state law. A federal
statute can preempt corresponding state laws either expressly
or impliedly. However, in its landmark 1947 decision in
Rice v. Santa Fe Elevator Corp., the U.S. Supreme
Court articulated a presumption against preemption,
unless preemption was the clear and manifest purpose
Having just erected this apparent bulwark against preemption,
the Court then proceeded to articulate multiple rationales
for finding preemption of state law to be implied:
Such a purpose may be evidenced in several ways.
The scheme of federal regulation may be so pervasive as
to make reasonable the inference that Congress left no room
for the States to supplement it. Or the Act of Congress
may touch a field in which the federal interest is so dominant
that the federal system will be assumed to preclude enforcement
of state laws on the same subject. Likewise, the object
sought to be obtained by the federal law and the character
of obligations imposed by it may reveal the same purpose.
Or the state policy may produce a result inconsistent with
the objective of the federal statute.
The rationales spelled out in Rice are the basis of the
three categories of implied preemption recognized by courts
Conflict preemption, that is, cases in which there
exists a clear inconsistency between what the federal
government and the state government each allow or require;
Obstacle preemption, that is, cases in which the
imposition of the state liability will frustrate the ends
of the federal statute;and
Field preemption, that is, cases where the creation
of a pervasive system of Federal regulation makes it reasonable
to infer that Congress intended to disallow supplemental
State law measures or where Congress legislates in an
area where the Federal interest is so dominant that a
Federal system can be presumed to displace State laws
on the same subject.
Whereas scholars such as Richard Epstein have argued for
broad field preemption of state tort claims
for FDA-regulated products, the
general rule, until this decade, rejected even the narrower
claim that the FDAs extensive regulation of labeling
preempted, on conflict or obstacle
grounds, state tort failure to warn laws or
rulings. Over the last eight years,
however, the FDA began to contest this interpretation. Beginning
in 2000, it argued for both conflict and obstacle preemption
in court briefs. In 2006 the FDA
added the following language to its preamble: FDA
believes that under existing preemption principles, FDA
approval of labeling under the [FDCA] . . . preempts conflicting
or contrary State law.
In the past two years, the U.S. Supreme Court has considered
two major preemption cases involving drugs and medical devices.
In the first, 2008s Riegel v. Medtronic, the
Court considered the extent to which New York state common
law could support claims that a medical device was defectively
designed or that its label had failed to warn consumers,
when the product in question was a Class III
device that had gone through the FDAs full premarket
approval process. Riegel was an express preemption
case, because the Medical Devices Amendments to the FDCA,
adopted in 1976, say that states may not establish
or continue in effect
is different from, or in addition to, any requirement applicable
under [federal law] to the device.
Given such clear language, Riegel was by and large
an easy case, and the Court determined, in an 8-to-1 decision,
that the plaintiffs claims under state law of a design
defect and failure to warn were expressly preempted.
The Courts second major FDA-preemption case of the
past year, Wyeth v. Levine, was more difficult. Levine,
which the Court decided in March 2009, involved a drug rather
than a medical device, placing the case outside the express
preemption language of the Medical Devices Amendments. Because
no preemption language exists in the 1938 FDCA, the Court
had to determine whether the Vermont state common-law claims
in the case were impliedly preempted by the FDCAs
As in most such cases, the facts in Levine are tragic.
In 2000, Diana Levine, who played guitar professionally,
had to have her arm amputated below the elbow after developing
gangrene. The gangrene was caused when a physicians
assistant at a Vermont clinic inadvertently injected the
drug Phenergan (promethazine hydrochloride), made by Wyeth,
into an artery, rather than a vein, of Levines, using
the intravenous-push (IV-push) method in a second
attempt to relieve the patients nausea, a side effect
of her severe migraine headache.
In marketing Phenergan, which was initially approved by
the FDA in 1955, Wyeth warned of the risk of arterial exposure
to the drug. As early as 1973, the manufacturer submitted
a supplemental application to the FDA that warned of the
risks of inadvertent arterial injection via IV-push administration.
Subsequent Wyeth-initiated FDA reviews in 1979 and 1997
further strengthened Phenergan warnings and added more labeling
detail about how medical administrators could minimize the
risk of inadvertent arterial injection when performing an
IV-push application of the drug.
The label adopted for Phenergan following the FDAs
1997 review contained four prominent notices of the risk
of gangrene from arterial exposure, including:
Due to the close proximity of arteries and veins
in the areas most commonly used for intravenous injection,
extreme care should be exercised to avoid perivascular extravasation
or inadvertent intra-arterial injection. Reports compatible
with inadvertent intra-arterial injection of Phenergan Injection,
usually in conjunction with other drugs intended for intravenous
use, suggest that pain, severe chemical irritation, severe
spasm of distal vessels, and resultant gangrene requiring
amputation are likely under such circumstances.
In addition, in two places, the label contained the following
simple, bold, uppercase warning: INTRA-ARTERIAL INJECTION
[CAN] RESULT IN GANGRENE OF THE AFFECTED EXTREMITY.
Moreover, the label advised that deep intramuscular
injection (IM) rather than intravenous injection was
the generally preferred method of Phenergan administration.
For cases in which an intravenous injection was necessary,
the label stated that an intravenous drip (IV-drip) was
the preferred method of drug delivery: it is usually
preferable to inject [Phenergan] through the tubing of an
intravenous infusion set that is known to be functioning
satisfactorily. The label also contained clear advice
for minimizing risks associated with any intravenous administration:
When used intravenously, Phenergan Injection should
be given in a concentration no greater than 25 mg per mL
and at a rate not to exceed 25 mg per minute. And
the label advised, [i]n the event that a patient complains
of pain during intended intravenous injection of Phenergan
Injection, the injection should be stopped immediately to
provide for evaluation of possible arterial placement or
perivascular extravasation. (Notably, the physicians
assistant in Levine administered Phenergan as an
IV-push, rather than an IV-drip, at twice the maximum dosage
for intravenous injection specified on the label, and continued
doing so despite Levines complaints of severe pain.)
Notwithstanding Wyeths clear labeling of Phenergans
risks, and the treating physicians assistants
noncompliance with labeling specifications, the Supreme
Court sustained Levines multimillion-dollar jury award
against Wyeth. In rejecting Wyeths conflict-preemption
claim, the majority opinion, written by Justice Stevens,
relied on FDA regulations that permit companies [t]o
add or strengthen a contraindication, warning, precaution,
or adverse reaction or [t]o add or strengthen
an instruction about dosage and administration that is intended
to increase the safe use of the drug product.
The court acknowledged that the regulatory exception is
intended to apply only to newly discovered
risks from the use of [a] drug.
The court noted, however, that the exception is not
limited to new data, but also encompasses new analyses
of previously submitted data.
The majority opinion went on to argue, implausibly, that
Wyeth could have modified the label because it theoretically
could have analyzed the accumulating data,
although there was no evidence that the company had actually
done so. As Professor Epstein observed well before Stevens
rendered his opinion:
Levine presents a situation where the FDA
gave explicit approval to the exact treatment, notwithstanding
the precise side effect mentioned in the original warning.
What would count as new information to render that explicit
authorization obsolete? The mere occurrence of the identified
side effect cant do it because it was warned of in
advance. And in Levine the sketchy record reveals
no evidence collected after the drug hit the market indicating
a higher incidence of this failure (and perhaps others)
that might call for a reevaluation of the risk/reward ratio
for that procedure.
In short, Justice Stevenss opinion rejected Wyeths
claim of conflict preemption by embracing a fanciful hypothetical
in lieu of a considered analysis of the thirty-year evolution
of the contents of Phenergans actual label.
Justice Stevens majority opinion also rejected Wyeths
claim of obstacle preemption, largely on the basis of an
analysis of Congressional intent. In so doing, the Court
missed the obvious point that the Food, Drug, and Cosmetic
Act (FDCA), which was enacted in 1938, and its primary subsequent
amendments, adopted in 1962, predated the very expansion
of state product liability law that made Levines lawsuit
possible. It was not until 1963, in the landmark California
case Greenman v. Yuba Power Products, Inc.,
that Justice Traynors doctrine of strict product liability
became law; and not until 1965 that the Second Restatement
of Torts launched modern failure-to-warn lawsuits by opining
that in order to prevent the product from being unreasonably
dangerous, the seller may be required to give directions
What the dissenters in Levine correctly noted is
that the attorneys presenting Levines case before
the jury argued that the Phenergan label should not
have allowed IV push under any circumstancesa
direct challenge to the FDAs considered judgment that
IV-push administration of the drug could be warranted and
that the decision was best made by the treating physician.
It is not hard to grasp how a lay jury, looking solely at
the facts of this case, could have reached such a conclusion:
Why, when the goal is merely to relieve migraine-induced
nausea, assume the risk of losing a limb? There clearly
are some situations, however, in which the FDAs decision
to permit such an application would make sense. Because
IV-push application of Phenergan injects the drug directly
into a patients bloodstream, it works more quickly
than oral, suppository, or intramuscular-push application:
three to five minutes for IV-push, versus twenty minutes
In an emergency-room situation in which doctors must perform
surgery quickly and a patients vomiting could severely
compromise their ability to do so, time is of the essence,
and the dramatically faster onset time of IV-push Phenergan
application and the difficulty in setting up a slower IV-drip
could spell the difference between life and death.
Owing in part to such considerations, the American College
of Emergency Physicians coauthored an amicus brief to the
Supreme Court for the defense in Levine arguing that appropriate
medical care is best determined by trained medical professionals.
That other physicians groups argued the contrary
position is perhaps unsurprising, in view of the fact that
liability not attached to manufacturers could fall upon
treating doctors and hospitals. In Riegel and Levine,
this point needs additional emphasis, for in both cases,
the injuries sustained could plausibly be attributed to
the error of the treating health-care worker. The balloon
catheter device in Riegel was used on a patient who
had a diffusely diseased and heavily calcified
right coronal arterya condition contraindicated on
the FDA labeling. Moreover, the
device was approved only for a rated burst pressure
of eight atmospheres. Despite this, the doctor inflated
the balloon to ten atmospheres, causing the balloon to burst.
Similarly in Levine, as noted previously, the treating
physicians assistant administered the Phenergan IV-push
at twice the dosage that the FDA-approved label stated should
be the maximum, and continued doing so after the patient
complained of pain, again ignoring contrary label language.
In other words, in both cases, the injuries may well not
have occurred had the FDAs actual label guidelines
been followed. If, as in these cases, they had not been,
a finding that claims against drug manufacturers are fully
preempted need not amount to a denial of all recourse under
state tort law for the injured claimants.
The Normative Case for Preemption
The Supreme Courts decision for the plaintiff in
Levine may not keep the new Congress from amending
the FDCA to preserve state common-law claims against drug
and medical-device manufacturers. In response to Riegel
v. Medtronic, last summer U.S. Representatives Frank
Pallone (D-N.J.) and Henry Waxman (D-Calif.) introduced
H.R. 6381, the so-called Medical Device Safety Act bill,
which proposed adding the following language to the FDCA:
Nothing in this section shall be construed to modify
or otherwise affect any action for damages or the liability
of any person under the law of any State.
Pallone and Waxman reintroduced the legislation in the new
Congress on the day after the Supreme Court decided Wyeth
v. Levine. For several reasons,
such a change would be unwise.
As previously discussed, the FDA is already more likely
to make Type II, rather than Type I, errors. The institutional
pressures it faces tend to encourage overregulation, even
though the evidence is strong that the number of lives saved
through expedited drug approval under PDUFA, since the programs
inception, has substantially exceeded the number of lives
lost as the result of Type I errors.
The evidence thus gives the lie to arguments that tort litigation
is a useful complement to FDA regulation, which should,
in the view of preemptions opponents, be merely a
floor above which states can impose additional
duties. Given that on balance the FDA is more prone to Type
II error, that tendency is only aggravated by the extra
layer of review that civil courts provide, so the tort system
generates a net social welfare loss.
In addition, in contrast to the FDA, which is charged with
making cost-benefit trade-offs, civil juries not only are
incapable of making them; they are actually forbidden to
do so. A civil jury is charged merely with looking at the
facts of the case before it, without considering the broader
societal repercussions. Moreover, while the FDA makes ex
ante decisions, juries ruling ex post are unavoidably
subject to hindsight bias, which makes them more likely
to assign liability than a neutral assessment of the facts
The civil jury system is also poorly equipped to rule on
complex scientific issues or to
weigh other kinds of trade-offs that the FDA must consider
in its regulation and monitoring of medical products. As
Philipson and Sun note:
Damages in such cases are typically awarded by
juries, who are not spending their own money. If juries
are likely to award inefficiently high damages, then pharmaceutical
firms will produce products that are inefficiently too safe,
or may exit the market entirely as has been observed in
the case of vaccine development
. In effect, product
liability acts as mandatory product insurance for consumers.
Even if most juries should reach a conclusion that comports
with sound science and economics, an outlier jury could
act otherwiseand impose a punitive damage awardthus
impelling companies to take greater precautions. This race-to-the-bottom
effect is exacerbated by the multistate, multijurisdictional
nature of the American judicial system, which permits the
phenomenon known as forum shopping. Plaintiffs
lawyers, who routinely receive contingency fees of 33 percent
or more, have an incentive to maximize
their recovery. Thus, attorneys will tend to move mass-tort
cases into states and jurisdictions that are most likely
to permit the consolidation of dubious claims with meritorious
ones, and then to assign liability and give high damage
Exemplifying this problem is the multibillion-dollar Fen-Phen
litigation, which The American Lawyer says will
long be remembered as a mass tort debacle. Although
the evidence is clear that Fen-Phen caused serious heart-valve
problems in a subset of users, after the drug was withdrawn
from the market plaintiffs attorneys launched cases
that lumped thousands of minor or dubious claims in with
a handful of severe injuries to inflate aggregate paymentsand
their fees. In 2004, cardiologists at Duke University reviewed
hundreds of echocardiogram records alleging injuries caused
by Fen-Phen; 70 percent, they concluded, should never have
been approved for payment by trusts set up to handle the
large number of claims. Even plaintiffs with records in
the undeserving category suffered needless worry and consternation;
in one case, a patient whose condition was overstated
for the sake of obtaining payment through the trust ended
up having unnecessary heart valve replacement surgery.
Furthermore, the laypeople who serve on juries, lacking
the technical expertise of FDA scientists, have shown themselves
susceptible to junk science and thus receptive to lawsuits
that have their own expensive and dangerous side effects.
For example, the morning-sickness drug Bendectin was used
by as many as 25 percent of all expectant mothers in 1980,
but by 1983, the manufacturer of Bendectin pulled the drug
in the face of $18 million in annual legal billsas
against only $20 million in total sales. Though Bendectin
is on the market around the world, it remains unavailable
to pregnant women in the United States, despite more than
thirty published studiesexamining more than 130,000
patientsthat have failed to find a link between the
drug and birth defects. Since Bendectin was pulled from
the market, the percentage of pregnant women hospitalized
each year for morning sickness has doubled, but the incidence
of birth defects has not declined.
In addition to removing valuable drugs like Bendectin from
the market and stifling research, the specter of drug litigation
can adversely affect public health by changing doctor and
patient behavior. In a 2003 Harris Interactive Poll, 43
percent of doctors said that they do not prescribe some
drugs that are under threat of litigation for fear that
they will be drawn into the suit, and 40 percent of pharmacists
reported that patients refused to take medicines that were
the subject of high-profile lawsuitssubjecting them
to potentially serious though treatable disease. Parents
are also refusing to have their children vaccinated in the
face of thousands of lawsuits alleging (without any scientific
evidence whatsoever) that vaccines cause autism. These children
will be exposed to dangerous, perhaps even fatal, childhood
Such strong doctor and patient reactions to litigation
highlight the risks of overwarning, one reason that
the FDA maintains tight control over drug labeling decisions.
Indeed, the brief in Levine authored by the Washington
Legal Foundation and the American College of Emergency Physicians
outlined specific cases in which overwarning led to inferior
health outcomes: for example, the institution of new SSRI
warnings was followed by a rise in teen suicides, and warnings
about vaccines led to a decline in vaccination rates and
then to an outbreak of measles.
Critics of FDA preemption are concerned that even limited
preemption would reduce the pressure on companies to produce
Tort law assists patients who have been harmed
by defective products, providing compensation
law deters industry negligence and deception and encourages
disclosure and innovation to improve product safety. Common
law failure-to-warn claims, for example, create incentives
for companies to revise their labels in light of risks that
were unknown at the time of approval or risks that are greater
than originally thought.
These critics, however, ignore the cost of Type II errors
and sidestep the tension that often exists between the incentives
generated by common-law litigation and the FDAs own
cost-benefit analysis. In many cases, as Tomas Philipson
explains, the FDAs decision is bindingthe company
lacks the discretion to modify a label or product design.
The result is a tort system that does little more than increase
company costs, which are then, of course, passed along to
consumers in the form of higher prices.
(In other cases, cost increases to drug manufacturers might
deter innovation by raising the break-even point for revenue
needed to support a product launch.)
Product liabilitys powerful price effect on medicines
that do make it to market has been demonstrated powerfully
by a pair of studies, authored by health economist Richard
Manning, which looked at the effects of product-liability
risk on the price of vaccines in the 1980s.
During that decade, some vaccines faced an onslaught of
litigation, which ultimately led Congress to create an administrative
compensation program that largely supplants the tort system
(see below). While all vaccines prices rose during
the decadedoubling, on averagethe two vaccines
most subject to litigation rose much more dramatically:
the price of the polio vaccine jumped sevenfold, while that
of the diphtheria-pertussis-tetanus (DPT) vaccine rose to
forty times its initial price.
A Better Choice: Administrative Compensation
Although we argue that state tort liability does not enhance
the safety of products already reviewed and approved by
the FDA, we readily admit that ensuring the safety of products
is not the sole normative function of the tort law, as we
noted in the introduction. At its base, tort law is about
compensating injured parties; and an aggressive preemption
of state tort-law claims should perhaps entail the establishment
of an alternative method for compensating those injured
by unforeseen drug side effects, the Type I errors that
are inevitable regardless of the quality of regulatory review.
Significantly, state tort law provides compensation to some
injured claimants but only through an adversarial process
that exacts extraordinarily high transaction costs.
Furthermore, while some claimants win jackpot
awards, others, equally deserving, go without compensation
As a better means of compensating injuries caused by unforeseen
drug side effects, we propose that Congress supplement broad
preemption with an administrative review process that more
quickly, fairly, and cheaply provides redress to injured
consumers. Such a process need not be created out of thin
air, for a long-standing and successful program already
exists for one class of pharmaceuticalsvaccines. It
was established by Congress in the mid-1980s and is called
the Vaccine Injury Compensation Program (VICP). A brief
history would be instructive.
Vaccines are justly described as one of the greatest innovations
of modern medicine. Prior to their invention and widespread
use, human beings were largely defenseless against the ravages
of smallpox, polio, and influenza epidemics. Survival guaranteed
immunity to those lucky enough to weather the infection,
but subsequent generations would inevitably succumb to fresh
In the mid-1970s, a British research team claimed that
it had scientific evidence that the pertussis (whooping
cough) vaccine could cause permanent neurological damage
in children. The study, although later discredited, panicked
parents and sent immunization rates in England plummeting.
The U.S. media spread the claims, leading personal-injury
lawyers to launch a wave of lawsuits against vaccine manufacturers.
A series of high-value damage awards against manufacturers
of the diphtheria-pertussis-tetanus and polio vaccines led
many companies to decide that the costs of staying in the
market outweighed the benefits, and they exited the fieldcreating
persistent vaccine shortages.
Congress determined that since the societal benefits of
vaccination are considerableso considerable, in fact,
that states require children in school or day care to be
immunizedand the risks small, an administrative compensation
program should be created for the protection of the small
fraction of vaccine recipients harmed by vaccines. The program
was also designed to protect the vaccine industry from destructive
litigation and ensure a steady supply of new and innovative
vaccine products. In 1986, Congress passed the National
Childhood Vaccine Injury Act (NCVIA), which created the
The program is relatively simple. The VICP is jointly administered
by the Department of Health and Human Services and the Department
of Justice, with attorneys from the DOJ representing HHS
in proceedings before the court that hears vaccine claims,
the U.S. Court of Federal Claims.
The VICP is designed as a no-fault program that covers all
vaccines recommended by the Centers for Disease Control
for routine administration to children. The program maintains
a list of validated vaccine injuries on a Table
that is updated as new evidence emerges, as well as an expert-witness
program that provides the administrators with objective
If a covered vaccine is the alleged cause of the harm,
claimants must file a claim with the VICP. Judicial remedies
are available, but claimants must exhaust their administrative
remedies before pursuing them.
Provided that the claim is a reasonable one and brought
in good faith, the VICP will cover attorneys
fees and any other evidentiary costs incurred by claimants,
regardless of whether the claim is upheld.
Claimants can receive an award if they meet one of three
tests: if an injury that is listed on the Table as being
caused by vaccines occurred within an allotted time frame;
if the vaccination significantly aggravated an existing
condition; or if the claimant can prove that an injury (even
if not listed on the Table) was directly caused by the vaccine.
As noted previously, the VICP is a no-fault program, so
claimants need not show any fault or negligence on the part
of the manufacturer to recover. Moreover, for Table injuries,
even causation questions require only minimal proof: claimants
receive compensation automatically, as long as they can
demonstrate that they were, in fact, injured and that their
injury manifested itself in the listed time frame after
a vaccination. Funding for the program is provided by an
excise tax of 75 cents on every vaccine dose sold in the
The NCVIA also established the Vaccine Adverse Event Reporting
System (VAERS), created by the CDC and the FDA in 1990.
This is a passive reporting system that allows the FDA and
the CDC to monitor vaccines for possible new side effects,
identify patient risk factors for side effects, and assess
the safety of new vaccines down to the level of specific
vaccine lots. According to the CDC, more than 30,000 VAERS
reports are filed annually, with 1015 percent classified
The VAERS cannot, however, establish causation because
the information collected is relatively incomplete. As information
technology has improved, vaccine researchers have turned
to large linked databases (LLDB), often held
by insurers, to conduct tests of safety signals (indications
of possible adverse events) that passive reporting systems
like the VAERS have identified. Perhaps the leading vaccine
LLDB is the Vaccine Safety Datalink (VSD), a program operated
by the CDC and eight large managed-care organizations covering
more than 6 million lives. The
VSD allows researchers to test safety hypotheses that have
been generated elsewhere to determine whether the initial
reports are epidemiologically credible.
In one recent example, after the VAERS received several
reports of sudden deaths suggested to be linked to the cervical-cancer
vaccine Gardasil, the VSD examined the records of 190,000
women and girls who had received at least one dose of the
vaccine and found that there was in fact no association
between the vaccine and such serious medical events as seizures,
blood clots, and strokes.
The VICP, while not perfect, has sustained a reputation
for fair and timely compensation compared with that offered
by the tort system. The Health Resources and Services Administration
reports that from 1990 to 2009, the VICP spent over $913
million on 1,086 compensated claims, indicating large awards
for a relatively small number of children with serious injuries.
A 2005 federal government assessment of the program found
that the vast majority of VICP outlays went directly to
injured claimants; only 3 percent was spent on attorneys
fees and 11 percent on administrative costs. The assessment
estimated that transaction costs are reduced by as
much as 56 percent in comparison to the tort system.
While the VICP has played a substantial role in maintaining
the health of the vaccine industry and offering compensation
to injured claimants, it has also provided a test case for
critics claims that only the risk of exorbitant litigation
provides companies with incentives to develop safer products.
The record shows that the VICP has not in any way weakened
market-based incentives the industry already has to improve
safety further and otherwise innovate. Since the creation
of the VICP, companies have continued to invest in the development
of new and safer vaccine technologies such as subunit and
conjugate vaccines; improved and modernized their vaccine
manufacturing capacity; and brought valuable new vaccines
to market. For instance, a safer acellular pertussis vaccine
has replaced the whole-cell vaccine in the DTP formulation.
Rotateq, a new vaccine for rotavirus, was licensed for sale
after an earlier formulation was withdrawn out of safety
concerns. Gardasil, the first vaccine proved to prevent
cancer in humans, was licensed in 2006.
As long as vaccine manufacturers operate in a stable market
that rewards innovation without the threat of destructive
lawsuits based on flawed science and in a vaccine-reporting
environment that quickly updates physicians, patients, and
researchers on genuine adverse events, companies have powerful
incentives to invest in new vaccine technologies. Indeed,
companies can refer to the quality and safety of their products
in pressing their case for higher reimbursements from public
and private insurers.
Given the success of the VICP, the question naturally arises
whether the program could and should serve as a template
for administrative redress of injuries from all drugs and
medical devices. We believe that the logic supporting the
VICP can largely be extended to pharmaceuticals:
vaccines, drugs as a group have enormous public health
testing, development, and marketing of both drugs and
vaccines are extensively regulated by the FDA.
recognize that it is impossible to attain absolute safety
and that patients benefit from drug innovation and price
Given the parallels, as well as societys strong interest
in spurring pharmaceutical innovation, policymakers should
consider implementing an administrative compensation system
for pharmaceuticals similar to the VICP.
Attributing adverse events to drugs, however, poses unique
challenges. Since vaccines are given primarily to healthy
individuals, it is usually possible to link a severe side
effect to an administered vaccine and not an underlying
health condition. Drugs, particularly those used to control
chronic illnesses such as diabetes and heart disease, by
contrast, are taken by individuals whose health is already
substantially compromised, making it more difficult to say
definitively that the root cause of an adverse event was
drug treatment. Thus, policymakers would have to consider
carefully the classes of individuals and injuries to be
covered under any compensation program. If they did not,
the program would overcompensate some individuals and thus
discourage pharmaceutical companies from developing treatments
for certain diseases.
While we do not undertake to prescribe such a program in
detail here, we do think that an administrative compensation
should possess the following features:
Field Preemption of Pharmaceutical Claims
Though we believe that the Supreme Court has erroneously
limited conflict preemption in drug failure-to-warn cases
(see discussion of Wyeth v. Levine, above), an administrative
compensation program for pharmaceuticals would be problematicand
perhaps worse than the status quounless coupled with
field preemption for all drugs and devices. Were
a substantial administrative remedy designed to operate
alongside only narrow conflict or obstacle preemption rules,
each case would face a separate trial-court factual determination.
Some courts, of course, would find that state law had not
been preempted, which would render the new alternative program
merely an additional compensatory and regulatory scheme
and reinforce the existing tendency toward Type II errors.
Even if courts regularly found that tort claims were preempted,
the benefits of the administrative system would be substantially
compromised by the significant expenses of responding to
claims filed in court. (Tellingly,
the VICP itself has been subjected to end-run attacks by
the plaintiffs bar, particularly in the form of discredited
claims that thimerosal, which the lawyers argued falls outside
the VICP because it is a preservative rather than an actual
vaccine, is linked to autism.)
Limitation of Most Claims to Unforeseen Adverse Events
In some respects, vaccines are unlike other pharmaceuticals
or medical devices. While vaccines generate clear positive
externalities (i.e., unvaccinated individuals benefit from
the vaccines others take), they also are subject to a free
rider problem: the cost-free inclination of some individuals
to avoid vaccination because they can enjoy the same protection
as those who have been vaccinated, assuming almost everyone
has done so and the disease is dormant.
The VICP tries to induce participation by those who might
otherwise become free riders by promising to compensate
them when they succumb to the rare adverse event. Since
society as a whole benefits from the herd immunity
conferred by vaccines, it seems logical and fair to compensate
them even when their injures were foreseeable.
Many drugs, however, are designed to improve an individuals
health without offering the broad positive externalities
of vaccines. Thus, unless the medication in question was
deemed essential to stopping the spread of a dangerous,
communicable disease, the individuals taking it should not
be compensated by an administrative review process for the
side effects they suffered, assuming that the FDA knew of
them and that they were described on the label.
A well-designed system limiting compensation to claims
arising from injuries that were not anticipated by the FDA
would have the salutary effect of encouraging drug manufacturers
to disclose adverse events as they occurred during routine
use. Such incentives would be reinforced if the administrative
panel refused to compensate individuals harmed by side effects
that manufacturers had voluntarily disclosed in reasonably
clear language on drug labels before the FDA approved the
Clearly Defined Causation and Injury Requirements
The VICP has quite low administrative costs because the
inquiries it conducts need not consider questions of fault
or negligence and because questions of injury and causation
are relatively easy to resolve in the case of vaccines.
As previously discussed, even a no-fault system for compensating
individuals for the unforeseen side effects of pharmaceuticals
would probably be more difficult and expensive to administer.
Seriously ill or injured individuals will often develop
additional ailments or injuries, with or without medical
treatment. A drugs mere association with an adverse
eventas, say, Vioxx usage is associated with heart
problemsdoes not imply that it was the cause. Isolating
a drugs impact from other confounding factors is difficult:
Did Vioxx cause the heart attack, or was it chiefly or exclusively
attributable to an individuals age, obesity, or lifetime
Despite these difficulties, there is little reason to think
that an administrative compensation system would be less
adept at handling these questions than a lay jury, which
in essence must weigh the same factors. Compared with the
tort system, a good administrative system has the advantage
of statistical precision and predictability. As with the
VICP, various adverse outcomes, once established with statistical
confidence as having been drug-induced, would be added to
a table of recoverable injuries. Individuals who took the
drug before the adverse event or contraindication was listed
on the label could make a claim for compensation. Those
individuals would then have the burden of proving that the
drug caused their injury, and the agency could consider
the relative risk factors of the drug as well as various
confounding factors in those individuals medical history,
such as age, weight, smoking, or preexisting conditions.
Once a determination of injury was made, the agency would
determine economic damages and the monetary value of noneconomic
injury, with various injuries receiving fixed payouts according
to schedules, as in workers compensation systems.
As with the VICP, administrative compensation decision makers
should not be the same people as the FDA decision makers
responsible for original drug approval and labeling, so
as to avoid even the appearance of a conflict of interest.
Although the VICP is funded by a simple tax on all vaccines,
it might not be appropriate to extend such a funding mechanism
to all drugs and devices, given their widely varying costs
and benefits. Because an administrative compensation system
beyond vaccines would apply to unforeseen, rather than known,
side effects, system costs would most appropriately fall
upon those manufacturers making the riskiest products. Such
determinations would be difficult to make ex ante,
almost by definition. Thus, drug and device taxes to fund
the system should initially be allocated on the basis of
market share. However, historical controls and improved
data mining should eventually enable the program to risk
adjust manufacturers tax burdens on the basis
of the size of the payouts to the users of their respective
products, thereby encouraging manufacturers to pursue innovations
in product design and delivery.
Independent Post-Market Drug Monitoring
Expansion of the FDAs ability to monitor drugs in
a post-market environmentand more rapidly learn of
unknown side effects or expand label indications on the
basis of emerging benefit informationis a laudable
goal in itself. As already outlined, the tort bar lacks
the expertise, incentives, and infrastructure to explore
the risks and benefits of new drugs in a credible way, and
tort lawsuits tend on balance to compromise rather than
complement the FDAs post-market surveillance.
The FDA Amendments Act of 2007 has already substantially
strengthened the FDAs ability to identify and address
safety-related issues in the post-market environment.
New agency powers include the ability to require manufacturers
to make labeling changes and to require that companies implement
additional controls or conduct studies of newly launched
drugs through the use of a set of tools collectively known
as Risk Evaluation and Management Strategy.
A program like the VICP, by keeping extensive records of
adverse drug events, would meaningfully supplement the FDAs
new powers. The growing prevalence of information technology
and sophisticated data-mining programs would enable regulators
to quickly identify underlying trends that could then be
subjected to further analysis and testing. As with the administrative
compensation system, the post-market review process should
be separate from the FDA decision makers responsible for
original drug approval and labeling. Were the ex post
reviewers the same individuals as the ex ante regulators,
inevitably there would be individual and institutional incentives
to ignore past mistakes. In addition, the post-market review
process should be funded by a source other than the excise
revenues that support the administrative compensation process,
both to avoid the appearance of a conflict of interest and
to ensure that the highest-quality science is used to study
potential drug side effects and identify compensable individuals.
Remaining Tort-Law Remedies
Even though a well-constructed administrative compensation
scheme would not offer a remedy to individuals affected
by known side effects, they would retain the right to sue
health-care providers for malpractice in the prescription
of a contraindicated drug, or for the improper administration
of a drug or device. (As discussed, such remedies were available
in both Riegel and Levine). These legal options
are important forms of protection for unsophisticated consumers,
who must rely on learned intermediaries.
A remaining question is what remedy might be available
to individuals harmed by a drug or device as the result
of a manufacturers fraud on the FDA. Under the U.S.
Supreme Courts Buckman decision,
fraud-on-the-FDA cases, being deemed to conflict
with the FDAs rulemaking process, are preempted. In
our view, Buckmans holding is crucial to protecting
the FDAs independence. Even if the FDA itself has
determined that an applicant committed fraud, permitting
fraud-on-the-FDA lawsuits as an exception to the broad field
preemption that we are proposing would open the agency repeatedly
to political pressure. To open the door to possible litigation,
trial lawyers and their allies in Congress would inevitably
press the agency to declare that a manufacturer had hoodwinked
the agency. Preferably, the FDA would police fraud through
normal channels, civil and criminal. Anyone injured in cases
in which the FDA identified fraud should have recourse to
the administrative compensation program. (In the event Congress
decides to permit state-law tort cases to proceed in instances
of fraud on the agency, it should do so only upon a formal
FDA declaration. Otherwise, the exception would swallow
the rule by allowing even the feeblest suit to proceed,
so long as it merely alleged that the agency had been defrauded.)
The FDA is far from perfect at protecting the public health.
While the agency necessarily fails to identify some harmful
side effects that have serious and often deadly consequences,
it also creates serious and deadly social harms in rejecting,
delaying, and overwarning about the drugs and devices that
it considers for approval. There is both a theoretical and
an empirical basis for believing that the agency has greater
incentives to err on the side of caution, thus generating
the latter, Type II errors and exacting a social cost that
well exceeds that of previously undiscovered side effectsa
calculus belied by the much more intense publicity and scrutiny
that Type I mistakes often receive.
The imposition of state tort liability on top of the FDA
regulatory process increases the perverse social effects
of agencys Type II bias. Moreover, in many instances,
state tort law directly contradicts the FDAs considered
decisions. Product-liability directives can vary from state
to stateindeed, from courtroom to courtroomand
jurors decisions are impaired by a lack of expertise,
hindsight bias, and rules that prohibit the very kind of
social cost-benefit analysis that the FDA is obliged to
employ. Rather than serving as a useful adjunct or complement
to the FDA, state tort law in this field tends merely to
retard innovation and raise consumer prices.
The FDAs overarching regulatory scheme argues for
greater preemption of state common-law actions that conflict
with FDA decisions than courts have yet recognized. Unfortunately,
legislative forces are moving in precisely the opposite
direction. Congress is considering legislation that would
eliminate essentially all preemption of state tort actions
concerning FDA-regulated drugs and devices, notwithstanding
the U.S. Supreme Courts decision in Wyeth v. Levine
limiting the scope of FDA preemption.
Preempting state tort claims does not preclude compensating
individuals genuinely injured by unforeseen side effects.
The successful Vaccine Injury Compensation Program offers
a template from which Congress could construct a compensation
program that offers a rapid and reliable remedy for adverse
events inevitably caused by some pharmaceuticals. Even though
inquiries into causation would be more complicated under
an administrative program that included all pharmaceuticals,
a workable system could be developed that would compensate
drug injuries more quickly and fairly than the tort system.
And, of equal importance, industry would retain powerful
incentives to produce medical innovations of ever greater
- This is not to say that many agency proceduresfrom
placebo-controlled trials in developing countries to terminal
cancer patients access to experimental drugs in
the United Statesare not subject to frequent criticism.
For example, see Jonathan Kimmelman, Charles Weijer, and
Eric M. Meslin, Helsinki Discords: FDA, Ethics,
and International Drug Trials, The Lancet
373, no. 9657 (January 3, 2009): 1314; and Ronald
L. Trowbridge and Steven Walker, The FDAs
Deadly Track Record, Wall Street Journal,
August 14, 2007.
- See the FDAs Mission Statement at http://www.fda.gov/opacom/morechoices/mission.html.
- The ancient Greeks recognized the dilemma facing physicians:
they used the same word for medicine and poison, pharmakon.
- See Tomas J. Philipson and Eric Sun, Is the Food
and Drug Administration Safe and Effective?,
Journal of Economic Perspectives 22, no. 1 (Winter
2008): 85: Compared to many other regulatory agencies,
relatively little research has been done by economists
on the efficiency trade-offs involved with the FDA.
If a product application was supplied to the FDA with
the scant amount of analysis that currently exists on
the efficiency or performance of the policies of the agency
itself, such an application would clearly be rejected
on the basis of insufficient evidence.
- Silicone breast implants were blamed for connective-tissue
disease by trial lawyers and ultimately removed from the
market, notwithstanding scientific evidence that showed
no association between implants and the connective
tissue diseases and other disorders that were studied.
Sherine E. Gabriel et al., Risk of Connective-Tissue
Diseases and Other Disorders after Breast Implantation,
New England Journal of Medicine 330 (June 16, 1994):
1697-1702. SSRIs antidepressants received a severe black
box label after high-profile lawsuits alleged that
the drugs caused adolescents to commit suicide.
- See, e.g., Troyen, A. Brennan, et al., Incidence
of Adverse Events and Negligence in Hospitalized Patients:
Results of the Harvard Medical Practice Study I &
II, New England Journal of Medicine 324 (1991):
370-84; Tillinghast-TowersPerrin, U.S. Tort Costs:
2003 Update, Trends and Findings on the Cost of the U.S.
Tort System (2003): 17; Joseph N. Gitlin, et al.,
Comparison of B Readers Interpretations
of Chest Radiographs for Asbestos Related Changes,
Academic Radiology 11(2004): 243; Alison Frankel,
The Fen-Phen Follies, The American Lawyer,
March 1, 2005, available at http://www.law.com/jsp/article.jsp?id=1109597691121.
- We do believe that serious critiques of state tort
law can be made across the field of product liability
(cf. the Federal Product Liability Fairness Act of 1998),
but the statutory scheme of federal regulation varies
widely across different economic sectors, thus affecting
the case for preemption. Few economic activities are as
heavily regulated by the federal government as are drugs
and medical devices; and our view is that in light of
the extensive regulation in this area, state common law
should be broadly preempted by the Food, Drug, and Cosmetic
Act, as are labor-management relations by the Labor Management
Relations Act and employee pensions by the Employee Retirement
Income Security Act.
- Based on 2006 data from the Centers for Medicare &
Medicaid Services (2008), available at
http://www.cms.hhs.gov/ResearchGenInfo/, at Table
- Joseph A. DiMasi, Ronald W. Hansen, and Henry G. Grabowski
(The Price of Innovation: New Estimates of Drug
Development Costs, Journal of Health Economics
22 : 15185) estimate a total pre-approval
cost of over $800 million. Two of the same authors later
estimated the total development cost of a biotechnology
product at $1.2 billion. See Joseph A. DiMasi, Henry G.
Grabowski The Cost of Biopharmaceutical R&D:
Is Biotech Different?, Managerial and Decision
Economics 2007; 28 (4-5): 469-479. See also Benjamin
Zycher, Joseph A. DiMasi, and Christopher-Paul Milne,
The Truth About Drug Innovation: Thirty-Five Summary
Case Histories on Private Sector Contributions to Pharmaceutical
Science, Manhattan Institute, Medical Progress Report
no. 6 (June 2008), available at http://www.manhattan-institute.org/html/mpr_06.htm.
- See http://www.phrma.org/innovation.
- In pharmacology, ADME is an acronym for absorption,
distribution, metabolism, and excretion.
- Testimony before the U.S. Senate Committee on Health,
Education, Labor, and Pensions, March 1, 2005. Available
- See John E. Calfee et al., Supreme Court Amicus
Brief Regarding Wyeth v. Levine (June 3,
2008): Because the harmful side-effects of the drug
may be highly visible, a Type I error can and often does
lead to impassioned criticism of the agency. On the other
hand, a Type II errorthe failure to permit marketing
of a drug that would in fact provide benefits in excess
of harmsis typically known only to the relatively
few persons who are intimately involved in developing
the drug and are largely hidden from patients and the
larger medical community. Available at www.aei.org/publication28133.
- Aaron S. Kesselheim and Jerry Avorn, The Role
of Litigation in Defining Drug Risks, JAMA
297, no. 3 (January 17, 2007): 30811, at 308.
- See also Catherine D. DeAngelis and Phil B. Fontanarosa,
Prescription Drugs, Products Liability, and Preemption
of Tort Litigation, JAMA 300, no. 16 (2008):
193941; and Lawrence O. Gostin, The Deregulatory
Effects of Preempting Tort Litigation: FDA Regulation
of Medical Devices, JAMA 299, no. 19 (2008):
231316; Gregory D. Curfman, Stephen Morrissey, and
Jeffrey M. Drazen, Why Doctors Should Worry about
Preemption, New England Journal of Medicine
358, no. 1 (July 3, 2008): 13. None of these authors
provides any systematic or objective evidence that any
aspect of the FDAs existing regulatory authoritiy
has a net negative impact on patient health, or that litigation
addresses the alleged deficiencies of the existing post-market
drug-safety reporting system. Instead, they focus on specific
instances of FDA approval or slow withdrawal of unsafe
- Daniel J. DeNoon, Did FDA Teen Suicide Warning
Backfire? WebMD Health News, September 13, 2007.
Available at http://www.medicinenet.com/script/main/art.asp?articlekey=83878.
See also Jens Ludwig, Dave E. Marcotte, and Karen Norberg,
who analyzed data from twenty-six countries on the effects
of SSRI sales on suicide mortality rates and conclude
that an increase in SSRI sales of one pill per capita
(about a 12 percent increase over 2000 sales levels) is
associated with a decline in suicide mortality of around
5 percent (Anti-Depressants and Suicide,
NBER Working Paper 12906, February 2007, available at
- Alternatively, even when a serious side effect is discovered
in the post-market environment, it is not necessarily
the case that the agency has committed a Type I error.
Take the case of Vioxx: for many patients with severe
rheumatologic illness, Vioxx was a treatment that substantially
increased quality of life. Vioxxs withdrawal in
the face of litigation threats left these patients without
a good alternative, or at least the choice to use the
drug once they had given their informed consent. In many
cases, better informationnot market withdrawalis
in the best interest of patients. For some sense of the
trade-offs facing patients and physicians, see Benjamin
Brewer, Doctor Struggles to Help Vioxx-Deprived
Patients, Wall Street Journal, November 23,
2004. Available at http://www.collegejournal.com/article/SB110113543945680878.html.
- See Sam Peltzman, Regulation of Pharmaceutical Innovation:
The 1962 Amendments (American Enterprise Institute,
1974); William M. Wardell and Louis Lasagna, Regulation
and Drug Development (American Enterprise Institute,
1975); and K. I. Kaitin and Jeffrey Brown, A Drug
Lag Update, Drug Information Journal 29 (1995):
- Fran Hawthorne, Inside the FDA: The Business and
Politics Behind the Drugs We Take and the Food We Eat
(Hoboken, N.J.: Wiley, 2005), p. 54.
- Philipson and Sun, Is the Food and Drug Administration
Safe and Effective?.
- T. Philipson, E. Berndt, A. Gottschalk, and M. Strobeck,
How Safe Is Too Safe?, The Milken Review 2
(2006): 3846, at 44.
- Ibid, p. 45.
- Federal law is supreme, assuming that it is enacted
pursuant to a constitutional grant of authority. See U.S.
Const. art. VI, cl. 2 ([T]he Laws of the United
States [are] the supreme Law of the Land).
- Rice v. Santa Fe Elevator Corp., 331 U.S. 218,
- Ibid. (citations omitted).
- Richard A. Epstein, The Case for Field Preemption
of State Laws in Drug Cases, Northwestern University
Law Review Colloquy 54 (2008): 55.
- Testimony of Randolph D. Moss, July 14, 1999, U.S.
Senate Committee on Government Affairs.
- See Richard A. Epstein, Why the FDA Must Preempt
Tort Litigation: A Critique of Chevron Deference and a
Response to Richard Nagareda, Journal of Tort
Law 1 (2006): 5.
- See Katherine M. Glaser, A Step Toward Preemption:
The Effect of the FDAs 2006 Preamble, Temple
Law Review 80 (2008): 877 & n. 62 (collecting
- See ibid. at 88285 (citing Mark C. Levy and Gregory
J. Wartman, Amicus Curiae Efforts to Reform
Product Liability at the Food and Drug Administration:
FDAs Influence on Federal Preemption of Class III
Medical Devices and Pharmaceuticals, Food and
Drug Law Journal 60, no. 4 : 495); see, e.g.,
Amicus Brief for the United States in Support of the Defendant-Appellee
and Cross-Appellant, and in Favor of Reversal of the District
Courts Order Denying Partial Summary Judgment to
Defendant-Appellee and Cross-Appellant, Motus v. Pfizer,
Inc., 358 F.3d 659 (9th Cir. 2002) (Nos. 02-55372, 02-55498),
2002 WL 32303084, at *17.
- Requirements on Content and Format of Labeling for
Human Prescription Drug and Biological Products, 71 Fed.
Reg. 3922, 3934 (January 24, 2006) (codified at 21 C.F.R.
pts. 201, 314, 601).
- 21 U.S.C. §360k(a).
- See Riegel v. Medtronic, Inc., 128 S. Ct. 999
- See Wyeths petitioners brief (2008), at
- 21 C.F.R. § 314.70(c)(6)(iii)(A), (C). Some academic
commentators have seized upon the codification of such
language in the Food and Drug Administration Amendments
Act of 2007 to argue against preemption of state-law claims.
See, e.g., David A. Kessler & David C. Vladeck, A
Critical Examination of the FDAs Efforts to Preempt
Failure-to-Warn Claims, Georgetown Law Journal
96 (2008): 461 (cited in Wyeth v. Levine, No.
06-1249, slip op. at 23 n. 12 (U.S. March 4, 2009)).
- 47 Fed. Reg. 46,623.
- See Levine, slip op. at 12 (citing 47 Fed. Reg.
- Ibid., at 13.
- See Epstein, supra n. 26, at 59.
- The majority opinion also relied on Congresss
1976 preemption language in the Medical Devices Amendments,
21 U. S. C. § 360k(a), as a rationale for its determination
that Congress did not intend that the FDCA preempt state
tort claims in cases like Levines: Its silence
on the issue, coupled with its certain awareness of the
prevalence of state tort litigation, is powerful evidence
that Congress did not intend FDA oversight to be the exclusive
means of ensuring drug safety and effectiveness.
Levine, slip op. at 18. While the 1976 Medical
Devices Amendments did post-date the expansion of state
product liability, including failure-to-warn suits, there
was nothing the court cited in its opinion to suggest
that Congress considered any amendments to the broader
FDCA apart from the special regulations it was enacting
particularly for medical devices. Assuming that Congress
deliberately failed to enact a broader substantive statutory
revision in the course of enacting a more specific subordinate
statute displays an extreme naïveté about
the log-rolling processes involved in legislative action.
See generally James M. Buchanan & Gordon Tullock,
The Calculus of Consent: Logical Foundations of Constitutional
Democracy 132-46 (Ann Arbor, Mich.: University of
Michigan Press, 1962) (discussing majority voting and
log-rolling). Cf. Antonin Scalia, A Matter of Interpretation:
Federal Courts and the Law 32 (Princeton, N.J.: Princeton
University Press, 1997) (It is much more likely
to produce a false or contrived legislative intent than
a genuine one. The first and most obvious reason for this
is that, with respect to 99.99 percent of the issues of
construction reaching the courts, there is no legislative
intent . . . .).
- 377 P.2d 897 (Cal. 1963).
- Restatement (Second) of Torts § 402A, comment
j (1965). Comment j of the Restatements went on to state:
[W]here warning is given, the seller may reasonably
assume that it will be read and heeded; and a product
bearing such a warning, which is safe for use if it is
followed, is not in defective condition, nor is it unreasonably
- Levine v. Wyeth, 944 A.2d 179, 182 (2006), affd,
No. 06-1249 (March 4, 2009).
- See http://www.adaweb.net/Portals/0/Paramedics/documents/promethazine.pdf.
- We do not mean to suggest that IV-push application
of Phenergan should be limited to emergency-room situations.
In fact, nurses and other medical professionals regularly
administer the drug through IV-push, according to label
specifications, without error. Whether the decision to
administer Phenergan in Levines case was medically
warranted is beyond the scope of this paper.
We also emphasize that even if the FDA erred in permitting
the IV-push method of administering Phenerganor
not limiting its use more explicitlythe case for
preemption here is strong, as long as on balance the FDA
gets it right more often than not and shows a bias in
favor of Type II errors, as the evidence suggests. That
is, even if some juries correctly second-guess the FDA
in some cases, the systemic bias created by an additional
layer of review will favor Type II error and lower social
- See Washington Legal Foundation and American College
of Emergency Physicians (2008), amicus curiae supporting
petitioner in Wyeth v. Levine, at 2.
- See Riegel, 128 S. Ct. at 1005.
- See Wyeths petitioners brief (2008), at
20. Levine did sue her physicians assistant, her
doctor, and the clinic for malpractice, prior to suing
Wyeth. After that suit settled, the physicians assistant
wrote Levine a letter admitting responsibility
for the tragedy.
- Even if no compensation were warranted, it is our position
that the regulatory and compensatory questions should
be addressed separately. State courts and juries have
a natural interest in assuring that patients injured by
pharmaceuticals or medical procedures have some compensation
for serious injuriesand companies (deep pockets)
may appear to a jury to be the only source of ready compensation
available, even when there is no negligence or malpractice
- H.R. 6381 § 2(a) (2008).
- See Press Release, Health Leaders Introduce Legislation
Reversing Supreme Courts Medical Device Decision,
March 5, 2009.
- For simplicitys sake, in this paper, we adopt
a straightforward utilitarian calculus, under which the
substantially higher cost of Type II errors caused by
FDA regulation easily outweighs the cost of Type I errors
permitted by the FDA. Some might instead prefer making
a philosophical distinction between sins of commission
and those of omission. Such niceties are not easily applied
to this case, since a Type I or Type II error may be caused
by either action or omission, depending on the identity
of the referent actor: for a Type I error, the manufacturer
acts but the FDA fails to act; for a Type II error, the
FDA acts and prevents the manufacturer from acting.
- Juries weakness at handling scientific evidence
exists in many product-liability cases, not merely those
involving the FDA. Improving the use of scientific evidence
in the courts has been the subject of multiple books;
see, e.g., Peter W. Huber and Kenneth R. Foster, Judging
Science: Scientific Knowledge and the Federal Courts
(Cambridge, Mass.: MIT Press, 1997); Peter W. Huber, Galileos
Revenge: Junk Science in the Courtroom (Basic Books,
1991), and courts have labored to improve the evidence
presented to juries; see, e.g., Daubert v. Merrell
Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).
- Philipson and Sun, Is the Food and Drug Administration
Safe and Effective?, p. 99. The logic here is that
consumers as a result pay higher prices for pharmaceutical
products and bear the costs of forgone innovation.
- See Lester Brickman, Effective Hourly Rates of
Contingency Fee Lawyers: Competing Data and Non-Competitive
Fees, Washington University Law Quarterly,
81 (2003): 653.
- See John H. Beisner & Jessica Davidson Miller,
Theyre Making a Federal Case Out of It . .
. In State Court, Manhattan Institute Civil Justice
Report No. 3 (2001).
- See Frankel, supra n. 5.
- There is currently no drug in the United States that
is labeled specifically for treating pregnant women who
have nausea. A variety of drugs are used off-label, and
companies have no incentive to perform clinical studies
on such uses or develop new drugs for this indication
because of litigation risks.
- In 2008, after vaccination rates declined, the U.S.
experienced the largest measles outbreak since 1996. See
CDCs MMWR report for August 22, 2008. Out of the
135 documented sufferers, 112 were unvaccinated or had
unknown vaccination status, with over 66 percent of these
unvaccinated on account of religious or philosophical
exemptions. In Great Britain, vaccination rates plummeted
after The Lancet published a study in 1998long since
discredited (see John Harlow, MMR Row Doctor Andrew
Wakefield Spreads Fear to US, Sunday Times,
September 28, 2008)linking the MMR vaccine to autism.
On April 3, 2006, the London Times reported:
Immunisation rates [in Britain], eight years after the
first scare over the combined measles, mumps and rubella
(MMR) vaccine, are among the lowest in Western Europe.
Fears that the triple jab could lead to autism caused
take-up to fall from over 90 per cent in 1998 to less
than 80 per cent two years ago. Currently, 81 per cent
of children have the combined vaccine before they are
two; many European countries achieve the 95 per cent coverage
recommended by the World Health Organisation to prevent
Available at http://www.timesonline.co.uk/tol/news/uk/health/article701459.ece.
- See Washington Legal Foundation and American College
of Emergency Physicians (2008), amicus curiae supporting
petitioner in Wyeth v. Levine.
Gostin, The Deregulatory Effects of Preempting
Tort Litigation, p. 2315. See also Kessler &
Vladeck, A Critical Examination of the FDAs
Efforts to Preempt Failure-to-Warn Claims (2008).
- As we noted earlier, the FDA has strong incentives
toward making Type II errors, and its regulation is likely
to be overly burdensome as a result.
- See Philipson and Sun, Is the Food and Drug Administration
Safe and Effective?, at 93 (Given that the
FDAs mandated level of [product safety] investment
is binding, product liability in this case does not have
additional deterrence effect beyond the FDAs regulations.
However, product liability raises firms costs and
therefore product prices, since it requires firms to pay
damages to consumers, and this increase in price for no
corresponding gain in product safety reduces social welfare.).
- See Richard L. Manning, Changing Rules in Tort
Law and the Market for Childhood Vaccines, Journal
of Law and Economics 37 (1994): 273; idem, Products
Liability and Prescription Drug Prices in Canada and the
United States, Journal of Law and Economics
40 (1997): 234.
- See idem, Changing Rules in Tort Law and the
Market for Childhood Vaccines.
- See, e.g., Tillinghast Towers Perrin, supra n. 5, at
- The historian Roy Porter describes this as the era
The immediate invasion of a town by smallpox or another
infection was a fulminating epidemic and subsequent decimation.
Population recovery would then get under way, only for
survivors heirs to be blitzed by the same or a different
pestilence, and yet another, in tide upon tide
With almost everybody slain or immune, the pestilence
moving on to storm other virgin
populations, like raiders seeking fresh spoils.
(The Greatest Benefit to Mankind: A Medical History of
Humanity [New York: W. W. Norton, 1997], p. 23)
- Paul A. Offit, The Cutter Incident: How Americas
First Polio Vaccine Led to the Growing Vaccine Crisis
(New Haven, Conn.: Yale University Press, 2005).
- Idem, Why Are Pharmaceutical Companies Gradually
Abandoning Vaccines? Health Affairs 24, no. 3 (2005):
- National Childhood Vaccine Injury Act of 1986, 42 U.S.C.
No vaccine manufacturer shall be liable in a civil action
for damages arising from a vaccine-related injury or death
associated with the administration of a vaccine after
October 1, 1988, if the injury or death resulted from
side effects that were unavoidable even though the vaccine
was properly prepared and was accompanied by proper directions
- The Court of Federal Claims hears cases where citizens
sue the federal government for monetary redress; the NCVIA
gave the court jurisdiction over claims related to vaccine
injuries. Placing the administrative compensation program
under the Court of Federal Claims is significant because
unlike general Article III courts, the Article I Court
of Claims is not bound by Seventh Amendment jury trial
- VICP claims are tried before special masters who exclusively
adjudicate vaccine injuries. Rulings can be appealed to
the Court of Federal Claims, and to the United States
Court of Appeals for the Federal Circuit. Once remedies
have been exhausted, VICP claimants can opt out of the
program and initiate a traditional tort lawsuit by filing
a motion rejecting the judgment. Perhaps because VICP
processing is expeditious and claimants in the system
need not show fraud or negligence, such motions are uncommon:
in the eight years following passage of the NCVIA, only
seventy claimants out of 3,142 adjudicated in the system
opted out. See Thomas F. Burke, Lawyers, Lawsuits,
and Legal Rights: The Battle Over Litigation in American
Society (Berkeley, Cal.: University of California
Press, 2002), at 163.
We note that an effective administrative compensation
system for all drugs and medical devices could not have
the liberal opt-out rules of the VICP because the inquiries
will have to examine more complicated questions of causation,
as we discuss below in more detail. Because Congress has
the power to preempt tort litigation in this area in its
entirety, it also can make our proposed administrative
compensation system an exclusive remedy, subject to caveats
that we discuss below.
- See http://www.cdc.gov/vaccinesafety/vaers.
- See http://www.cdc.gov/vaccinesafety/vsd.
- R. T. Chen et al., The Vaccine Safety Datalink:
Immunization Research in Health Maintenance Organizations
in the USA, Bulletin of the World Health Organization
78, no. 2 (2000): 18694.
- Aliza Marcus, Mercks Gardasil Isnt
Linked to Risks in U.S. Study, Bloomberg News, October
22, 2008. Available at http://www.bloomberg.com/apps/news?pid=20601124&refer=home&sid=aiu3HUxq2GEo.
The FDA also reports:
Concerns have been raised about reports of deaths occurring
in individuals after receiving Gardasil. As of June 30,
2008, 20 deaths had been reported to VAERS. There was
not a common pattern to the deaths that would suggest
they were caused by the vaccine. In cases where autopsy,
death certificate and medical records were available,
the cause of death was explained by factors other than
- Source: http://www.hrsa.gov/vaccinecompensation/statistics_report.htm.
- See the detailed assessment of the program at
- See James R. Copland, Tragic Solutions: The 9/11
Victim Compensation Fund, Historical Antecedents, and
Lessons for Tort Reform, January 13, 2005, available
(As the experience with no-fault auto insurance
makes clear, add-on programs of this type
tend to perform woefully by allowing potential claimants
to opt for the highest-returning option between two parallel
- In the American legal system, plaintiffs lawyers
have an incentive to file low-probability claims, and
defendants have an incentive to settle them. See Marie
Gryphon, Greater Justice, Lower Cost: How a Loser
Pays Rule Would Improve the American Legal System,
Manhattan Institute Civil Justice Report No. 11
(2008): 4-7 (discussing viability of nuisance suits
under an American Rule system).
- On February 12, 2009, the Special Master at the U.S.
Court of Federal Claims overseeing omnibus claims alleging
that thimerosal or the MMR vaccine caused autism ruled
in several test cases that the evidence against such claims
was overwhelming. See Cedillo v. Secretary
of Health and Human Services Case No. 98-916V (ftp://autism.uscfc.uscourts.gov/autism/vaccine/Hastings-Cedillo.pdf).
- See Jim Copland, Liable to Infection Flu Vaccine
in Short Supply Partly Because of Trial Lawyers and Tort
Tax, Dallas Morning News, December 14, 2003.
- Drug manufacturers are allowed to modify drug labels
in the light of new or emerging safety information, pending
final FDA approval.
- The act can be read in its entirety online at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_public_laws&docid=f:publ085.110.
- For a critical appraisal of the FDA Amendments Act,
and whether it continues the overemphasis on Type II errors,
see John E. Calfee, Reform without Reason: Whats
Wrong with the FDA Amendments Act of 2007, September
26, 2007. Available at http://www.aei.org/publications/filter.all,pubID.26859/pub_detail.asp.
- Buckman Co. v. Plaintiffs Legal Committee,
531 U.S. 341 (2001).
- See ibid. at 35455 (Stevens, J., concurring)
(arguing for permitting fraud-on-the-FDA suits [i]f
the FDA determines both that fraud has occurred and that
such fraud requires the removal of a product from the