Over the summer we posted on several preemption cases involving FDA-regulated products. In July, we reported that the Supreme Court agreed to hear Riegel v. Medtronic, Inc., which concerns whether the FDC Act preempts state tort claims regarding medical devices that entered the market pursuant to the Premarket Approval process, and that the Supreme Court was petitioned to hear Wyeth v. Levine, which concerns whether prescription drug labeling preempts state law product liability claims. (The Court still has not ruled on the petition.) In August, we reported that the Federal Circuit affirmed a lower court ruling that a District of Columbia law prohibiting sales activities that result in a patented prescription drug being sold in the District of Columbia for an “excessive price” is preempted by federal patent law. The list of preemption cases continues to grow.
In February 2005, the Pennsylvania Employees Benefit Trust Fund (“PEBTF”), which administers health care benefits to eligible Commonwealth of Pennsylvania employees, retirees, and their dependents, sued AstraZeneca alleging, among other things, that the company unlawfully advertised NEXIUM (esomeprazole magnesium) (i.e., the “Purple Pill”) in violation of the Delaware Consumer Fraud Act (“DCFA”). Specifically, PEBTF alleged that “the large-scale promotional campaign for Nexium, which included both physician-directed marketing and direct-to-consumer advertising, was misleading because it incorrectly represented that Nexium was superior to Prilosec,” and that AstraZeneca “initially sold NEXIUM at a price below Prilosec in order to establish brand loyalty, but then raised the price of Nexium while the price of Prilosec dropped.” (PRILOSEC [omeprazole] is an AstraZeneca drug that is similar to NEXIUM; both drugs are proton pump inhibitors.) In November 2005, the U.S. District Court for the District of Delaware ruled that NEXIUM advertisements that complied with the FDA-approved labeling were not actionable under the DCFA. PEBTF appealed the decision.
The U.S. Court of Appeals for the Third Circuit upheld the district court decision in its August 17, 2007 opinion. The appeal presented two principal questions: (1) whether the DCFA exemption for advertising regulated by the Federal Trade Commission applies to the facts of this case; and (2) whether federal law preempts the plaintiffs’ state consumer protection claims. With respect to the issue of preemption, the court ruled that:
allowing these claims to proceed would unnecessarily frustrate the FDCA’s purpose and FDA regulations, as the extent of agency involvement in regulating prescription drug advertising is extensive and specific. . . . An even stronger case for preemption occurs when FDA approved labeling is the basis for allegedly fraudulent representations made in prescription drug advertising. The essential affinity between advertising and labeling is clear in the composition of the FDCA and its associated regulations. . . . Although labeling is often directed at medical practitioners, the rules that govern labeling form the basis for the advertising regulations. . . . Accordingly, the purpose of protecting prescription drug users in the FDCA would be frustrated if states were allowed to interpose consumer fraud laws that permitted plaintiffs to question the veracity of statements approved by the FDA.
It is unclear whether PEBTF plans to appeal the decision. Meanwhile, another case involving preemption is awaiting the Supreme Court’s decision on whether to hear the case.
In 1995, Michigan enacted legislation immunizing pharmaceutical companies from products liability claims, provided FDA approved the drug product at issue. The law contains an exception, however, that preserves liability if the drug company withheld or misrepresented information that would have altered FDA’s decision to approve the drug product (i.e., “fraud-on-the-FDA”). Specifically, the Michigan law states, in relevant part:
In a product liability action against a manufacturer or seller, a product that is a drug is not defective or unreasonably dangerous, and the manufacturer or seller is not liable, if the drug was approved for safety and efficacy by the [FDA], and the drug and its labeling were in compliance with [FDA’s] approval at the time the drug left the control of the manufacturer or seller.
This subsection does not apply if the defendant at any time before the event that allegedly caused the injury does any of the following:
(a) Intentionally withholds from or misrepresents to the [FDA] information concerning the drug that is required to be submitted under the [FDC Act] and the drug would not have been approved, or the [FDA] would have withdrawn approval for the drug if the information were accurately submitted.
In 2001, the Supreme Court held in Buckman Co. v. Plaintiffs’ Legal Comm. that state “fraud-on-the-FDA” claims were impliedly preempted by federal law.
In March 2000, the sponsor of REZULIN (troglitazone), Warner-Lambert (a wholly-owned subsidiary of Pfizer), voluntarily withdrew the drug product from the market amid certain safety concerns. Several Michigan consumers alleging injuries caused by REZULIN subsequently sued Warner-Lambert in state court alleging breach of implied and express warranties, negligence, negligent misrepresentation, negligence per se, fraud, defective design, defective manufacturing, and loss of consortium –specifically that Warner-Lambert “knowingly concealed material facts about the safety and efficacy of Rezulin from the FDA, which would have prevented its approval and/or resulted in its earlier removal from the market.” The case was removed to federal district court, where the court granted Warner-Lambert’s motion for judgment on the pleadings on the grounds that Plaintiff’s could not establish under Michigan law that REZULIN was “defective,” and that that the immunity exception in Michigan law should be severed because it was preempted by the FDC Act and the Medical Devices Act under the reasoning of Buckman. The district court reasoned that:
[i]f plaintiffs covered by the Michigan statute were able to litigate claims of fraud on the FDA in individual personal injury suits, whether in state courts or in federal courts, the potential would exist for the FDA’s personnel to be drawn into those controversies on a case-by-case basis over and over again, [thereby resulting in] enormous . . . interference with the proper discharge of the mission that Congress created the FDA to perform.
The case was appealed to the U.S. Court of Appeals for the Second Circuit to determine whether, under the rationale of Buckman, federal law also preempts traditional common law claims that survive a state’s legislative narrowing of common law liability through a fraud exception to that statutory limitation. In vacating the district court’s ruling, the Second Circuit ruled in an opinion entered earlier this year that:
because Michigan law does not in fact implicate the concerns that animated the Supreme Court’s decision in Buckman, and because Appellants’ lawsuits depend primarily on traditional and preexisting tort sources, not at all on a “fraud-on-the-FDA” cause of action created by state law, and only incidentally on evidence of such fraud, we conclude that the Michigan immunity exception is not prohibited through preemption. It follows that common law liability is not foreclosed by federal law, and Appellants’ claims should not have been dismissed.
Warner-Lambert and Pfizer recently appealed the Second Circuit’s decision to the Supreme Court. Warner-Lambert’s Cert. Petition presents two issues for the Court’s review:
1. Whether, under the conflict preemption principles in [Buckman], federal law preempts state law to the extent that it requires the fact-finder to determine whether the defendant committed fraud on a federal agency that impacted the agency’s product approval, where the agency—which is authorized by Congress to investigate and determine fraud—has not found any such fraud, and thus—as in Buckman—the state requirement would interfere with the agency’s critical functions.
2. Whether, under the conflict preemption principles in Buckman, federal law preempts the provision in a Michigan statute that allows a product liability claim to be maintained against a manufacturer of an FDA-approved drug where, without an FDA finding of fraud on that agency, the fact-finder is required to make a finding under state law as to whether the manufacturer committed fraud-on-the-FDA and whether, in the absence of that fraud, the FDA would not have approved the drug.
Warner-Lambert argues, among other things, that:
the Second Circuit’s holding will interfere with the FDA’s ability to perform its critical functions, which is precisely what this Court sought to avoid in Buckman. Findings of fraud-on-the-FDA would inevitably disrupt the regulatory process by encouraging manufacturers to supply unnecessary information to the FDA for fear that the failure to do so will lead to state-law liability; by discouraging manufacturers from seeking approval for beneficial drugs that are not risk-free; by distorting the FDA’s decision-making process to anticipate potential state-law review of that process; and by burdening FDA personnel who are ordered to testify as witnesses in state-law products liability cases concerning the FDA’s decision-making process.
The Respondents’ brief opposing Cert. argues (not surprisingly) that:
The Second circuit properly distinguished Buckman on the grounds that the present case involves (i) state regulation of tort law affecting health and safety, as to which the presumption against preemption applies (rather than an attempted use of state law to police fraud on the FDA); (ii) alleged violation of state common law duties, rather than solely the federal duty of candor to the FDA; and (iii) invocation of fraud on the FDA to rebut an affirmative defense, rather than as an element of a claim.
The Washington Legal Foundation, the Pharmaceutical Research and Manufacturers of America, and the Product Liability Advisory Council have submitted amicus briefs. The Supreme Court is scheduled to consider whether or not to grant Cert. during a September 24, 2007 conference.