ALEC-Inspired Bills Could Bar Defective Drug Lawsuits
Every year, thousands of Americans are sickened or killed by bad prescription drugs, but a battle is brewing in several states that could take away the ability of consumers to sue drug makers based on model bills by the controversial organization American Legislative Exchange Council (ALEC.)
In the case of some popular drugs like Vioxx or Phen-Fen, tens of thousands of consumers have sued en masse for bad side effects or risks that drug makers failed to warn about. Another recent example is Humira, a blockbuster drug for arthritis, that faces a slew of lawsuits over allegations it causes permanent nerve damage.
In many cases, safety concerns only surfaced after the drugs were approved by the Food and Drug Administration.
A bill that has been proposed in several states would make it harder for consumers to sue over unsafe drugs as long as the FDA approved the drug for market.
These measures are similar to a model bill called the Drug Liability Act, drafted by the American Legislative Exchange Council, that limits damages a patient can collect if injured by a drug’s side effects or other hazards. Some bills draw from another ALEC model bill called the Regulatory Compliance Congruity with Liability Act.
If enacted, many consumers in those states would not be able to sue if they get injured by a drug.
Drug manufacturers argue that litigation costs need to be kept down to allow for research on important cures, but lawyers who represent patients say laws protecting drug companies from lawsuits threaten consumer safety.
Michigan: Test Ground
Since Michigan passed its drug immunity law over 15 years ago, attorney Jason Thompson has been forced to turn away hundreds of consumers.
“I get calls every week from prospective clients injured by Vioxx, Zyprexa or other drugs. If they are Michigan residents, the first thing I have to say is ‘The doors to the courtroom are closed in Michigan. You cannot sue,’” he said.
The law in Michigan gives drug companies complete immunity from lawsuits as long as a drug was approved by the FDA.
The problem with that, says Thompson, is that the FDA only relies on information supplied by drug companies and does not have enough resources to watch over every drug.
Lots of drugs are approved by the FDA allowing millions of consumers take them, only to be pulled from the market after problems with safety, inadequate warnings or side effects are discovered to harm consumers, he said.
The immunity law was passed in 1995 with the support of then-governor John Engler, a member of ALEC since its formative years in the 1970s.
Interview with Amy Kjode Anderson
What does the civil justice task force do?
“The task force is comprised of state legislators, policy advisors and industry representatives. They all get together a couple times a year and talk through different issues. The civil justice task force has over 75 different model bills. Anyone who is a member of a task force can draft a model bill.”
How many members does ALEC and the civil justice task force have?
“ALEC has about 2,000 state legislators and about 300 private sector companies. The Civil Justice Task Force members varies. The legislators that sit total about 200 and the private sector members are about 30.”
Who are the current chairs of the Civil Justice Task Force?
“The current chair on the private side Victor Schwartz, who authored the torts casebook “Prosser, Wade and Schwartz on Torts” and is an attorney with Shook, Hardy & Bacon; the public chair is state senator in Ohio Bill Seitz, a practicing attorney.”
What is the process for turning the bills into model laws?
“Either side of aisle – either a state legislator or an industry representative – can bring an idea to the task force. They’ll bring it up and do at least one presentation. We may make calls and subcommittees and do research, then meet. There are three meetings per year and they are welcome to put forward language for a model bill after all the background studies. Then the task force discusses that langauge and can decide to vote on that bill, first by the legislators, then by the private industry members. Then it goes to the national board for a vote.”
What is your response to criticism that this is lobbying activity even though ALEC is registered as a tax-exmpt charity?
“ALEC is about educating state legislators on these issues. The idea is that legislators can’t be experts on every single issue, so organizations like us are there to provide education and bring in policy experts, particularly in the area of legal reform which can get very complex and particularly for legislators who are not attorneys. The number of attorneys elected to office has declined so there’s even more need for that sort of education.”
Are legislators paid or reimbursed for their travel expenses to ALEC conferences?
“How ALEC basically works is that legislators pay yearly dues and private sector members pay yearly dues. There are grants or donations from companies to pay for event sponsorship. That’s all up to the legislators.”
Are legislators reimbursed by ALEC’s corporate members for travel expenses that taxpayers in the legislator’s state paid for?
“ALEC doesn’t pay directly for legislators to attend the meetings. We have one meeting a year where a task force can get help for a portion of their travel. Then for the other two meetings each year, legislators are responsible for figuring out [how to pay for them]. They may use personal funds. They may have scholarship accounts that state chairs fundraise for. They raise funds in scholarship accounts so as many of their colleagues can attend. It doesn’t cover the full cost. They have to put some money out of pocket. State legislative chairs raise funds to cover the costs of traveling to ALEC meetings.”
Are the “scholarship accounts” funded by ALEC’s corporate members?
“Sure, yeah, ALEC members can give to those funds. It’s up to the state legislator who they fundraise from. Sometimes companies can contribute or a foundation can contribute. Sometimes state legislators give money so their colleagues can appreciate the great information at the meetings.”
What is your response to critics who say ALEC model bills are taking away rights of consumers?
“Well, that’s a very general criticism. Generally I’ve supported the process of our bills and how they are vetted by legislators, policy experts, and yes we do have industry experts. We think it’s important to bring to the table those who have experience in areas looking at because it creates the best policy. The civil justice task force has 80 model bills. If a legislator wants to take one of those bills [back to his or her state], we certainly keep tabs on whether bills are introduced.”
According to ALEC’s model drug liability bill, which does not provide immunity but bans punitive damages against drug makers for FDA-approved drugs, the “lack of such limitations has severely harmed the public interest by creating disincentives for the research and development of new pharmaceutical products.”
Under Engler, Michigan became a test ground for laws restricting civil lawsuits, like limits on medical malpractice lawsuits and caps on damages, Thompson said.
“Engler was the king of tort reform and our state led the way across the country in getting bills passed one after the other, like a hot knife through butter,” said Thompson.
The drug immunity law shuts Michigan residents out of lawsuits that consumers in the rest of the country can bring. In some cases, Michigan residents can sue in federal court along with consumers from other jurisdictions in mass tort cases.
But sometimes drug companies file motions to get Michigan consumers dismissed from those claims under the immunity law; if they are not dismissed, when settlement time comes, Michigan consumers always “get a haircut” on the amount they receive in comparison to consumers in other states, Thompson said.
More States Debate Bills
In North Carolina, a bill scheduled to be introduced this month would impose a steeper burden on consumers to prove they were harmed or killed by a drug approved by the FDA. This will be the second attempt to pass the measure.
If passed, consumers like Scott Prewitt or Whitney Phipps could be barred from getting legal relief. Prewitt’s 15 year-old daughter, Brittany, died after being prescribed the contraceptive Yasmin for acne. Phipps‘ 64 year-old father died during surgery in 2006 after being given the clotting drug Trayslol; the drug was pulled from the market in 2008 amid allegations that its maker, Bayer, didn’t tell the FDA about the drug’s risks.
The North Carolina bill says that a drug approved by the FDA is presumed to be safe and the drug maker is not liable. The consumer can then rebut the presumption only if he or she shows “clear and convincing evidence” that the drug was unsafe or the seller failed to warn about its risks.
Kimberly Wilson, an attorney who represents consumers, said the bill will keep victims out of court because “clear and convincing” is the toughest burden of proof in a civil case.
“It would be very hard to sue. Essentially if passed it would deny access to the courtrooms,” she said.
She added that consumers would have a hard time finding a lawyer to take a case, especially in light of another rule in North Carolina that if a plaintiff is 1 percent at fault, even if the pharmaceutical company is 99 percent at fault, a consumer is totally barred from collecting damages.
“What lawyer is going to invest the money in these cases which are horribly expensive?” Wilson asked.
An exception in the bill allows a consumer to sue over an approved drug if the drug company committed fraud in dealing with the FDA.
But according to Wilson, “the FDA has never, ever issued an agency action finding fraud. Ever.”
Wilson, who testified before a state senate subcommittee, said that ALEC was behind the measure.
“We believe ALEC was directly involved and certainly supportive,” Wilson said.
ALEC-member PhRMA (Pharmaceutical Research and Manufacturers of America), a lobbying group for the pharmaceutical industry, supports the bill.
According to the Center for Media and Democracy, PhRMA is a “chairman” level member of ALEC at a rate of $50,000 per year, has two executives on ALEC’s Health Task Force, and a PhRMA executive was awarded ALEC’s “Private Sector Member of the Year Award” in 2011.
According to ALEC’s website a PhRMA representative sits on the Private Enterprise Board.
A 2010 tax filing by PhRMA shows a $356,075 contribution to the “ALEC Scholarship Fund” in Wisconsin. The fund reimburses state legislators who are members of ALEC for travel expenses to attend ALEC conferences where they vote on model bills (see sidebar.)
PhRMA senior vice president Matthew Bennett said in an emailed statement that “our involvement with ALEC concentrates on public health issues” that “directly relate to helping patients access the medicines and care they need and fostering medical innovation.”
Attorney Paul Schmidt testified on behalf of PhRMA at North Carolina hearings about the bill.
He told Lawyers.com the bill is not an immunity law and only gives companies who “play by the rules” a defense against lawsuits that do not have merit.
In Wisconsin, a copy-cat bill to the Michigan law would give drug and medical device makers complete immunity as long as the drug or device was FDA-approved.The measure was introduced by embattled governor Scott Walker, but died in committee and may be reintroduced next session. Wisconsin senator Rich Zipperer, the bill’s sponsor and an ALEC member, did not return a call seeking comment.
Despite support from ALEC members, these bills face opposition from state attorneys who say the bills will prevent states from suing drug companies to recover Medicaid payments spent on patients who took bad drugs.
In North Carolina, Edward Kirby of the state’s Medicaid Fraud Unit and Kevin Anderson of the Consumer Protection Division of the Attorney General’s Office warned the bill will jeopardize the state’s ability to sue drug companies that violate the law.
Lawyers who represent consumers say the bills are a lose-lose proposition.
“If a company realizes it is never going to be held liable, it no longer has the incentive to put out a safe drug,” said Bijan Esfandiari, a lawyer who has represented consumers in pharmaceutical lawsuits. “These bills are bad for everyone – bad for consumers, bad for taxpayers, bad for states. Everyone loses except for the wrongdoers.”