Shielding Big Pharma
Stephen Pizzo was an investigative journalist for 25 years, whose articles have appeared in The New York Times, The Washington Post, The San Francisco Chronicle, Forbes and other publications. Pizzo also co-authored The New York Times best-seller, Inside Job: The Looting of America's Savings and Loans, which was nominated for a Pulitzer.
It's an image that haunts pharmaceutical CEOs’ private moments—Big Tobacco CEOs swearing to tell the truth on live television. And later, tobacco companies were ordered to pay billions of dollars in damages to their product's victims.
Pharmaceutical CEOs can't wipe those images away, because they know that they also knew. They too knowingly and purposely obfuscated, obscured, fudged the facts and, when push came to shove, lied about the known dangers of some of their most profitable products. Now they are terrified that their crimes of commission and omission could reap them the same whirlwind harvest of accountability.
That's really all you need to know to understand what George W. Bush’s FDA was up to last week. Ostensibly, last week's news conference was to unveil new rules—long demanded by consumer advocates and fiercely fought by drug companies—requiring clearer labeling of prescription drugs, particularly about possible harmful side effects.
Drug companies had successfully fought such a rule for more than two decades. They convinced the incoming Reagan administration to nix a similar Carter administration rule that was about to go into effect. Drug companies did not want to produce marketing materials that could scare off customers—so they didn't. When the University of Wisconsin conducted a study of industry-produced drug pamphlets, they concluded that the information contained in the pamphlets contained only half the story—the good half. Particularly lacking were clear, unambiguous warnings about any given drug's potential negative attributes.
The new rules announced by the FDA last week requiring clearer labeling and more detailed warnings represent a long overdue, pro-consumer change for the FDA—which causes one to wonder what's really up. Whenever the fiercely anti-regulation, pro-business Bush administration sides with consumer advocates, there must be more to the story. And there was.
Tacked onto that consumer-friendly drug labeling rule change was another rule change, one that couldn’t have been less consumer-friendly if it had been written by Big Pharma itself—which it likely was. It represents nothing less than a multibillion dollar gift to the pharmaceutical industry.
The second rule change announced that day would bar state courts from hearing individual or class-action liability suits against drug companies. The reasoning behind this change was that, because a federal agency—the FDA— approves drugs before they can be marketed to the public, only federal courts should hear cases where someone claims they were injured by those drugs. It's called “federal preemption,” and, if upheld, it will require anyone wanting to sue a drug do so in federal court.
Deputy FDA commissioner Scott Gottlieb explained the logic behind federal preemption.
We think that if your (drug) company complies with the FDA processes, if you bring forward the benefits and risks of your drug, and let your information be judged through a process with highly trained scientists, you should not be second-guessed by state courts that don't have the same scientific knowledge.
It may come as no surprise that not everyone agrees.
“This is a sneak attack on consumer rights,” responded Joan Claybrook, president of Public Citizen. “Bush is once again abusing his executive powers, this time in his attempt to protect the big pharmaceutical companies from the consequences of their actions. Thousands of people in this country have died or been seriously injured by drugs approved by the FDA, and this administration is saying it doesn’t think people should have any recourse.”
Third Time's The Charm
Republicans tried to pass legislation to shield Big Pharma from litigation. But with so much angst roiling voters over soaring drug costs, it proved too hot a potato. So the Bush administration turned to the courts, hoping they would rule in favor of federal preemption in drug liability cases. But those attempts failed as well.
With only three more years left in Bush's tenure, time was running out. That’s why anti-regulation Bush administration officials decided to go the regulatory route. By employing executive branch regulatory authority, the administration was able to spare Republicans in Congress from having to fight for such an explosive pro-industry measure during an election year while still rewarding Big Pharma for the generous support—roughly $84 million— for Republican candidates over the past decade. It was a win/win situation.
Too Close For Comfort
You could almost hear the sighs of relief from drug company executives last week when the FDA finally went public with its federal preemption rule. It came not a second too soon for them. Tweedledee-Big Pharma had just been rescued by its federal friends from the fate that befell Tweedledum-Big Tobacco.
The rule change is timely because law firms—some the same firms who took Big Tobacco to the cleaners a few years ago—now have Big Pharma firmly in the crosshairs. It would be so easy. All those law firms would have to do is white out the old defendants—from Brown and Williamson and Phillip Morris— and type the names of drug makers like Merck and Pfizer. After all, the causes of action were the same:
Both Big Tobacco and Big Pharma produce and sell products that often cause injury or death when used as directed.
Both industries knew that some of their most profitable products were injuring and killing people, and either hid such evidence, lied about it or both.
Both industries hired their own experts to produce often phony, always misleading non-peer-reviewed, “research” designed solely to cast doubt on any genuine research by outside experts that came to conclusions that could hurt sales.
Both industries attacked, slandered and punished those within or associated with their industries who broke the company stonewall by trying to sound a warning .
Finally, both industries enjoyed overly cozy relationships with government—relationships that enabled them to maximize profits for a long as possible, regardless of the harm such products were known to be causing. (In this regard, Big Pharma has gone even further, by compromising the FDA, the very federal regulatory agency that is supposed to protect consumers.)
The growing number of drug-liability lawsuits popping up in state courts had worried drug companies for years. State court juries are considered softies when it comes to these kind of David v. Goliath encounters. Liability laws are set by states and tend to favor consumers, which is why drug companies want such cases moved to federal courts. Some consumer advocates believe the ultimate goal of this FDA is to take that a step further, cutting off even federal court to injured plaintiffs, leaving just FDA as the final arbiter in such matters.
And state juries tend to sympathize with consumers over big corporations. The failure to get litigation protections for Big Pharma through Congress left them exposed to the same kind of financial trashing Big Tobacco suffered in state courts.
The Vioxx Nightmare
Then Vioxx happened. Big Pharma’s worst nightmare was realized. Merck's miracle painkiller had become a record-breaking cash cow for the company. The only trouble was, it was killing people in alarming numbers— upward of 55,000 Americans before it was finally pulled from the market. But this was known to both Merck and the FDA long before that—and both had ignored, denied and even suppressed evidence of this deadly side effect. )
But it's hard to just ignore that many dead customers, and it wasn't long before state court dockets were filling with class-action suits against Merck. Then Merck was slapped by a Texas jury with a quarter-billion-dollar judgment in one of the first Vioxx cases to go to trial.
But things got worse. Vioxx users—or their surviving heirs—began elbowing their way into state courts across America. As of Nov. 30, 2005, Merck admits to being served or being named as a defendant in no fewer than 9,200 lawsuits brought by 18,250 plaintiff groups, each alleging personal injuries from the use of Vioxx. While most of those cases are still in the courts or on appeal, stock analysts warn that if Merck keeps losing Vioxx-related suits, it could cost the company as much as $50 billion.
Tale Of Two Industries
Almost everywhere one looks, this tale of two industries intersect. It's like watching the remake of an old movie: the faces change but the characters are the same. It’s another reason Big Pharma needed this rule change, and needed it now.
Stop for a moment and try to imagine a state court jury of 12 ordinary Americans, hearing that testimony as the widow of a Vioxx victim softly sobs at the plaintiff table.
You can be quite sure lawyers for Merck have imagined it. And not just Merck. There isn't a major drug company that doesn't have a similar liability problem looming over one or more of its FDA-approved drug products.
That was the driving motivation for last week's FDA rule change, which claimed that only federal courts have jurisdiction to hear such cases—federal courts now populated more than ever before by conservative judges. Federal courts where, as in the case below, defendant drug companies can count on the support from a “friend of the court” with serious heft—the FDA.
Victor Motus killed himself with a shotgun six days after he began taking Zoloft, an anti-depressant he complained was making him "crazy." His widow sued Pfizer, the drug's manufacturer, charging that the company should have warned doctors that Zoloft could cause some people to have suicidal thoughts. But Flora Motus soon discovered the pharmaceutical giant wasn't her only adversary. The California woman was also fighting the U.S. government.
The FDA filed a legal brief on Pfizer's behalf in the fall of 2002, asserting that anti-depressants don't increase the risk of suicide. "Had Pfizer given a warning as to a causal relation between Zoloft and suicide, the FDA would have disapproved the warning," the agency argued.
That court ended up dismissing Motus' case against Pfizer.
So there you have it—the FDA's rule changes last week, decoded. Better labels on prescription drugs may or may not make consumers safer, but drug companies hope they will make them safer from lawsuits. Remember when Big Tobacco finally agreed to put warning labels on cigarette packages? They, too, had opposed clear warning labels for decades. But once the evidence of their product was killing millions of people every year became undeniable, they embraced the idea. It had become increasingly clear to Big Tobacco that the jig was up. Sooner or later, juries would hear all the ugly evidence. So when that time came, the tobacco company lawyers’ defense would be: “The government wanted us to put warning labels on our products. So we put warning labels on them. Customers smoked anyway. So how can you hold us liable? They were warned.”
But there was serious flaw in Big Tobacco's strategy: It had left home plate—state courts—unguarded. That lapse cost Big Tobacco dearly, and Big Pharma took note of that nearly fatal oversight. So last week, besides requiring clearer warning labels, the FDA also strung concertina wire around home plate for Big Pharma.
The Homeland Security Defense
The FDA's claim of federal preemption for drug liability cases will certainly be challenged in court by consumer advocates. If they are successful in overturning that rule, get ready for the administration's last gambit—declaring Big Pharma part of our homeland security/defense private sector infrastructure. That would put pharmaceutical companies into the same category as Northrup, Boeing, Halliburton and other large defense contractors that produce products vital to the national defense and therefore deserve special, protected relationship with the federal government.
The administration will argue that bioterrorists lurk, as do new, drug resistant nation-crippling pandemics like avian flu, and that only large drug companies can produce the new drugs and in large enough amounts needed to defeat these new threats. It will argue that, sure, a certain number of those vaccines and drugs will inevitably injure or kill a certain number of people. But we are at war, after all, and during war innocent people die. As sorry as we are to see such deaths occur, they will say, allowing “greedy lawyers” to bleed drug companies white in such cases would be like putting defense contractors out of business in the weeks following the Japanese attack on Pearl Harbor.
That will be the Bush administration’s argument, an argument that is already undergoing early market testing. In December, Republican leaders attached many controversial provisions to the Department of Defense appropriations conference report to include numerous extraneous items for special interests that could not pass the Senate and House on their own. One of them gave the drug industry “unprecedented immunity,” according to Democrats:
Republican leaders added provisions to the conference report after cutting a back-room deal in the middle of the night. The conference report grants sweeping immunity to drug companies for injuries caused by vaccines and drugs and for the administration of those vaccines and drugs, even if they are made with flagrant disregard for basic safety precautions. Moreover, the compensation program is a sham, leaving people who become injured from a drug or vaccine without recourse.”
There is one big difference between the Big Tobacco and Big Pharma stories, though. Big Tobacco faced a hostile FDA under Bill Clinton, while Big Pharma has a true friend in this FDA, and, for that matter, this White House. The same administration is now trying its damnedest to whittle those penalties against Big Tobacco down from $130 billion to $10 billion.
Who knows, the administration may just pull Big Tobacco’s chestnuts out of that fire. But Big Pharma figured a stitch in time—a federal preemption rule—was worth nine.