Ruling may turn drugmakers skittish

TRENTON, N.J. | A Supreme Court ruling Wednesday that federal approval of a drug is no protection from lawsuits in state courts could make drugmakers more cautious about safety issues and may lead them to halt development of some medicines and even pull others off the market.

Drug industry analysts said the ruling, upholding a $6.7 million jury award against Wyeth, will make drugmakers scrutinize safety issues of all experimental drugs in development, as well as existing products.

“They will weigh how prevalent the side effect is, how serious the side effect is, versus the number of people benefiting from the drug and the amount of money being made by the drug,” said Erik Gordon, an analyst and professor at University of Michigan’s Ross School of Business.

“This is like blood in the water for plaintiff-lawyer sharks” and will encourage more lawsuits, he added.

The case, involving Vermont musician Diana Levine, who lost an arm after a botched injection of Wyeth’s former nausea medication Phenergan, was closely watched by drugmakers, which face thousands of lawsuits over serious side effects.

Drugmakers, backed by the Bush administration, had argued that product-liability lawsuits in state courts are barred, or pre-empted, if the Food and Drug Administration approved the product and any warnings in the package insert. In a 6-3 decision, the court rejected that claim.

Bert Rein, a Washington lawyer representing Wyeth, told the Associated Press that the company was disappointed by the verdict, but will pay the jury award promptly. He said Wyeth thought it could not change the FDA-approved warning in the package insert, which disclosed the risk of gangrene if a Phenergan injection accidentally hit an artery but left it up to the doctor whether to give it to a patient that way or through a slow intravenous drip or shot in a muscle.

“The practical impact of this is going to be much greater caution” by doctors in deciding whether to use the most effective or least risky method of administering a drug, Mr. Rein said.

He said he doesn’t expect more lawsuits against drugmakers but expects any future pre-emption defense will focus on narrow issues the ruling raised, such as whether there was evidence the FDA would have rejected proposed warning changes.

Analyst Steve Brozak of WBB Securities said that because of the ruling, drugmakers are “going to make a dollars-and-cents decision on what [research] programs will go ahead and what drugs will be pulled” from the market.

“They’ll defend the blockbusters, but the smaller drugs with meaningful downside” will be sold to small companies, possibly overseas, or shelved quickly, he said.

Mr. Brozak and Mr. Gordon said the industry could reduce innovation, or shift to slight improvements in existing drugs rather than breakthroughs, to avoid lawsuits.

Ken Johnson, senior vice president of the trade group Pharmaceutical Research and Manufacturers of America, said FDA experts “are in the best position to evaluate voluminous information” about a drug, but now health care providers and patients could “second-guess FDA-approved labeling.”

Investors seemed unfazed.

Wyeth shares rose 45 cents to $40.72 Wednesday.

Story Continues →