U.S. Supreme Court Considers Whether “Fraud-on-the-FDA” Exception to Legislative Immunity for FDA-Approved Drug is Pre-empted Under Buckman

February 26, 2008

On February 25, 2008, the U.S. Supreme Court heard argument in the second of three FDA pre-emption cases considered by the Court this term. The issue presented in Warner-Lambert Co. LLC, et al. v. Kent, et al. (formerly Desiano), U.S. Supreme Court No. 06-1498, is whether implied pre-emption of state-law fraud-on-the-FDA claims articulated in Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341 (2001) (“Buckman”) is limited to express claims of fraud-on-the-FDA or whether Buckman extends to traditional tort causes of action that require the fact-finder to determine whether the manufacturer withheld material information from or misled the FDA.

In Kent, plaintiff asserted common-law failure to warn and design defect claims under Michigan law concerning Rezulin, a prescription drug indicated for treatment of type 2 diabetes mellitus. Desiano v. Warner-Lambert & Co., 467 F.3d 85 (2d Cir. 2006) (as amended Jan. 18, 2007), cert granted, 75 U.S.L.W. 3623 (U.S. Sept. 25, 2007) (No. 06-1498). Rezulin was cleared onto the market in 1997 via FDA’s review and approval of a New Drug Application (“NDA”). In 2000, Warner-Lambert voluntarily withdrew Rezulin from the U.S. market. Plaintiff alleged 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.” There was no allegation that FDA itself ever determined that Warner-Lambert improperly withheld information from FDA or that any purportedly withheld information affected FDA decisions about whether Rezulin could be marketed.

Under a Michigan statute, FDA approval provides an absolute defense with one important exception — if the manufacturer or seller intentionally withholds from or misrepresents to the FDA information that is required to be submitted under the FDCA and the drug would not have been approved or the FDA would have withdrawn approval if the information were accurately submitted, plaintiff may recover under common law. M.C.L. § 600. 2946(5)(a). The District Court found that the fraud-on-the-FDA exception to immunity for FDA-approved drugs was pre-empted under Buckman. The Second Circuit reversed, limiting implied pre-emption under Buckman to express “fraud-on-the-FDA” theories of liability. See Desiano, 467 F.3d at 98. Applying a presumption against pre-emption, the Second Circuit held that, absent a clear statement from Congress, the common law claims preserved by the immunity exception are not pre-empted.

During yesterday’s oral argument before the U.S. Supreme Court, several Justices questioned the rationale for Buckman as applied to the unique Michigan statute. Justice Souter questioned the Assistant Solicitor General arguing on behalf of the United States as Amicus Curiae about whether there is pre-emption under Buckman “when regulatory compliance is raised as a defense [absent the statute], or regulatory violation is raised as a ground for liability?” The government position is that pre-emption does not apply if the jury is merely considering admissible evidence of compliance rather than being instructed to make findings about fraud-on-the-FDA and FDA’s speculated response to withheld or misleading information.

Justice Ginsburg described the Michigan statute as creating an “invigorated regulatory compliance defense” that was inextricably linked to the fraud-on-the-FDA exception. If the exception was pre-empted and the pre-empted exception was severed (leaving the regulatory compliance immunity intact), “it really would be a case of letting one side keep the sweet and get rid of the bitter,” according to Justice Ginsburg. If the Court finds pre-emption, it would likely remand for further consideration the severance issue, including whether the Second Circuit is bound to follow the Sixth Circuit in Garcia v. Wyeth-Ayerst Labs., 385 F.3d 961 (6th Cir. 2004) (finding severance under Michigan law) or whether the Second Circuit could certify this issue of Michigan law to the Supreme Court of Michigan. See Desiano, 467 F.3d at 92 n.4.

Justice Breyer possibly forecasted his view on the broader issue to be decided next term in Wyeth v. Levine, U.S. Supreme Court No. 2004-384. Addressing the issue of whether a jury should be able to decide whether an FDA-approved drug is defective, Justice Breyer identified a fundamental problem underlying Buckman:

[Side effects that hurt people are inherent] risk[s] when you have a drug, and it is a terrible thing if the drug hurts people.

There’s a risk on the other side. There are people who are dying or seriously sick, and if you don’t get the drug to them they die. So there’s a problem. You’ve got to get drugs to people and at the same time the drug can’t hurt them.

Now, who would you rather have make the decision as to whether this drug is, on balance, going to save people or, on balance, going to hurt people? An expert agency, on the one hand, or 12 people pulled randomly for a jury role who see before them only the people whom the drug hurt and don’t see those who need the drug to cure them?

Now, that it seems to me is Congress’s fundamental choice, and Congress has opted for the agency. . . . [I]t seems to me, reading Buckman, that Buckman says the agency should do it.

It is likely that the ruling in Kent will be narrow — whether a state can condition legislative immunity (or a presumption of no defect) on determinations by a fact-finder of “fraud-on-the-FDA.” The drug manufacturer may win this battle and eventually lose the war if, on remand, the regulatory compliance immunity cannot be severed and therefore is also subject to pre-emption. Furthermore, the underlying policy considerations of who (the FDA or juries) should decide whether a drug with side effects should be marketed foreshadow the broader pre-emption issues presented in Wyeth v. Levine, which the Court will decide next term.