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Trial Lawyers, Inc.: The Move To Reverse Michigan's Model Reforms

report

Trial Lawyers, Inc.: The Move To Reverse Michigan's Model Reforms

June 1, 2006
Legal ReformOther

Why Wolverine Staters Should Just Say No to the Trial Bar's War on Drugs

In state after state, Trial Lawyers, Inc.'s high-octane governmentrelations machine keeps businesses and consumers on the run. The latest race is on in Michigan, where the litigation industry is seeking to reverse part of a highly successful tort-reform package enacted by the legislature a decade ago.

The lawyers' legislative assault could not come at a worse time for the Wolverine State. Michigan has lost nearly one-third of its manufacturing jobs—its employment mainstay—since 1999, and has hemorrhaged 20,000 jobs since March of last year alone.[1] Anticipating just such an employment exodus from the besieged automobile sector, Michigan's legislators in 1996 passed an "FDA defense" law that has allowed another sector of Michigan's economy—medical research and development—to thrive. Should the plaintiffs' bar succeed in repealing this rule, Michigan's 12,000 pharmaceutical-industry jobs—with a direct and indirect economic impact of over $4 billion—would be in jeopardy. Many manufacturers in other sectors, as well, would certainly view the legislature's retreat as an ominous portent for the state's litigation climate. Repeal would, for example, forestall any hoped-for growth in Michigan biotech that industry leaders have projected.

Michigan's Principled, Pragmatic Stand

In 1996, the Michigan legislature passed its historic "FDA defense" law, under which a drug's approval by the Food and Drug Administration (FDA) automatically sets limits on the suits that can be filed against its maker. Because Vioxx was approved by the FDA, for example, plaintiffs' ability to recover for alleged Vioxx-related injuries in Michigan courts is sharply curtailed.

Does the ten-year-old Michigan reform make sense? We think so. As we noted in our Trial Lawyers, Inc.: Health Care report:

Trial Lawyers, Inc.'s assault on the drug industry has undermined the democratic authority of Congress itself, which vests the Food and Drug Administration with responsibility for pharmaceutical regulation. . . . Though the FDA is far from perfect and needs reform, its onerous approval processes are specifically designed to test drugs’ safety and efficacy with an eye toward the big picture: they determine whether the costs of allowing a drug into the marketplace are higher or lower than the benefits that the drug is expected to bring. In contrast, juries that decide lawsuits over drug side effects can consider only the case at hand, not the broader cost/benefit analysis.[2]

Common sense—and a commitment to democratic and federalist principles—dictates that local juries should not be able to trump the considered decisions of a federal regulatory agency. Runaway juries discourage vital innovation and harm the public health.

Given Michigan's current economic woes, though, it's important to realize that Michigan's lawmakers in 1996 weren't merely interested in federalist principles or the state of overall drug innovation in the United States. The FDA preemption law was specifically intended to give Michigan a comparative advantage over other states and attract high-technology pharmaceutical jobs. Notes Dick Posthumus, who as Senate majority leader led the 1996 reform efforts in the legislature:

One of the things we foresaw at the time was the need to diversify Michigan's economy. We saw coming what eventually happened, that is the globalization of the auto industry, which meant Michigan wouldn’t be as dominant and we would have to provide jobs in other industries. One of the industries we looked at as a state back then, and I think rightly so, was the life sciences industry. We had Pfizer in Ann Arbor and Upjohn in Kalamazoo. We had Dow in Midland and the University Research Center in Ann Arbor. . . . We had all of these pieces, so one of the things we wanted to do was encourage the expansion of the life sciences industry. There were a whole lot of pieces to that, but one of the pieces was to ensure that a pharmaceutical company working on a life-saving drug wouldn’t have to worry about frivolous lawsuits.[3]

Just how well has the state legislature's plan worked? Life-sciences companies have invested $355 million on research and development in Michigan since the preemption law's passage in 1996, and the pharmaceutical industry's 12,000 jobs in the state have a healthy average yearly wage of over $60,000.[4] And this in a state with a 6.6 percent unemployment rate, at a time when unemployment hovers under 5 percent nationally.

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