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Washington Examiner


Supreme Court Drug Decisions Are Blows For Common Sense

June 30, 2011

By James R. Copland

In two different cases decided last week, Sorrell v. IMS and Pliva v. Mensing, a divided Supreme Court issued rulings that govern the regulation of pharmaceuticals in general and the manufacturing of generic drugs in particular.

In Sorrell, the court determined that Vermont violated the First Amendment when it passed a law that prohibited pharmaceutical companies from using doctors’ prescription records to inform their marketing of drugs to physicians.

Vermont’s legislators apparently hoped to lower health-care costs by preventing drug makers from finely tuning their sales pitch to doctors, whom the companies’ representatives regularly visit to offer product “details.”

Since new drugs are more expensive than older, off-patent drugs and brand-name drugs more expensive than generic substitutes, Vermont lawmakers felt that by limiting companies’ ability to make an effective sales pitch, they would indirectly induce doctors to prescribe cheaper medications.

Vermont’s rationale seems dubious, however. Prescription drug spending only accounts for 10-12 percent of total U.S. health-care costs, and generics make up nearly three- quarters of all U.S. prescriptions, largely because so many branded drugs have lost patent protection in recent years, opening the market to cheap copycats.

Insurers � through drug co-pays � can also encourage patients to utilize cheaper, but still effective options, where appropriate. But blocking the sharing of accurate information (vetted by the FDA) about new drugs that could help improve patient treatment could actually increase health-care costs by leaving doctors ignorant of more effective options.

Still, the six-member majority in Sorrell emphasized that Vermont could well have prohibited the disclosure of all physician prescription data but chose not to. Instead, the state allowed this data to be used broadly, restricting its use only for certain speakers (pharmaceutical companies) and certain content (pharmaceutical marketing).

Speech that discriminates on the basis of content or viewpoint typically is subjected to heightened First Amendment scrutiny, whether or not the speaker is a corporation (all nine justices agree that free-speech protections extend to corporations).

But in his dissent, Justice Stephen Breyer argued that such speech limitations deserve special deference when part of a regulatory scheme. He worried that businesses would now use the First Amendment as a cudgel to attack hosts of government regulations.

They may, but it’s likely that they’ll be largely unsuccessful, since most government regulatory schemes are less ham-handed than Vermont’s. It goes without saying that Vermont could have used other approaches to promote cost-conscious drug prescriptions�either directly, by pushing generic prescriptions through formulary coverage decisions, or indirectly (and preferably in our view), by increasing patients’ drug-purchase deductibles to make them more cost-\sensitive.

Justice Breyer is clearly right about one thing, though: government regulation of companies’ speech is ubiquitous, as evidenced by the issue in the Court’s second pharmaceutical case decided last week, Pliva v. Mensing.

Pliva involved how pharmaceutical companies label their products�an area tightly regulated by the federal Food and Drug Administration (FDA).

Indeed, generic drug manufacturers cannot modify a drug label without the FDA’s prior approval, which is why the Court in Pliva ruled that the manufacturers of generics cannot be sued in state courts under the charge that a label warning was defective.

The majority’s holding in Pliva leads to a contradiction in federal law, since manufacturers of generic drugs are now immune from state-law failure-to-warn labeling suits�but manufacturers of non-generic versions of the same biochemical compound enjoy no such protection. The Pliva dissenters, led by Justice Sonia Sotomayor,called this result “absurd.”

Justice Sotomayor is right that it’s unlikely that Congress, in establishing its regulatory regime for generic drugs in 1984, intended to shield generic drug makers from lawsuits otherwise available against the manufacturers of non-generics.

But to the extent that Pliva’s result is absurd, it traces, in our view, to the Supreme Court’s own wrongheaded Wyeth v. Levine decision, issued in 2009, before Justice Sotomayor joined the Court.

Levine held that the FDA’s exhaustive labeling regulation doesn’t generally preempt related state tort claims�a decision that itself leads to absurdity, as it places companies’ labeling decisions under not only the federal regulator but also 50 different, often competing, state-law regimes.

Still, at least generic drug makers have some protection against failure-to-warn suits. This protection is helpful since, with narrower profit margins, a single large jury verdict could lead producers to desert the market entirely, threatening patients’ access to critical medicines.

In fact, the U.S. is currently suffering from a shortage of many generic drugs, and expanding product liability for companies in this environment would further weaken an already fragile market.

At the end of the day, public health isn’t served by limiting drug manufacturers’ ability to convey truthful information to doctors, or by effectively taxing pharmaceuticals by quibbling over product-warning labels already heavily regulated by the FDA.

So piercing through the legalese, the Supreme Court’s decisions last week strike a blow for common sense.

Original Source:



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