June 24th, 2011

Drug Companies Win Two Supreme Court Decisions

The New York Times

The Supreme Court on Thursday handed drug companies two significant victories, one limiting suits from people injured by generic drugs and the other striking down a law that banned some commercial uses of prescription data.

In the first case, Pliva v. Mensing, No. 09-993, the court split 5 to 4 along ideological lines in ruling that the makers of generic drugs — which account for 75 percent of prescriptions dispensed nationwide — may not be sued under state law for failing to warn customers about the risks associated with their products.

Two years ago, in Wyeth v. Levine, the court decided the same question in the context of brand-name drugs but came to the opposite conclusion. That decision was based in large part on the fact that such drug companies can sometimes change the labels on their products without permission from the Food and Drug Administration.

Justice Clarence Thomas, writing for the majority on Thursday, acknowledged that in the eyes of injured consumers, the new distinction between generic and brand-name drugs “makes little sense.” But he said it followed from the way the two kinds of companies are treated under federal law.

The manufacturers of generic drugs, he said, must use the same warning labels as the corresponding brand-name drugs, and they may not unilaterally alter those labels. That means, Justice Thomas wrote, that makers of generic drugs are caught in an impossible bind: they can comply with a state law requiring them to change their labels or the federal law prohibiting changes, but not both.

Given that impossibility, federal law pre-empts state law under the Constitution’s supremacy clause, he wrote.

In dissent, Justice Sonia Sotomayor said the majority opinion invented “new principles of pre-emption law out of the air” and will lead to “absurd consequences.”

“As the majority itself admits,” Justice Sotomayor wrote, “a drug consumer’s right to compensation for inadequate warnings now turns on the happenstance of whether her pharmacist filled her prescription with a brand-name drug or a generic.”

The decision considered three consolidated cases brought by women who took generic metoclopramide, which is sold under the brand name Reglan. They took the drug for stomach ailments and developed a serious neurological disorder. Appeals courts ruled against the drug makers, saying that the federal regulatory regime did not block claims under state law.

The Supreme Court reversed those decisions on Thursday, rejecting what Justice Thomas called the “fair argument,” that the defendants should have at least tried to persuade the federal drug agency to let them use a safer label.

But the process of asking the agency to change a label, he wrote, can be as complicated as a children’s board game.

“If they had done so,” Justice Thomas wrote of a possible request for a label change, “and if the F.D.A. decided there was sufficient supporting information, and if the F.D.A. undertook negotiations with the brand-name manufacturer, and if adequate label changes were decided on and implemented, then the manufacturers would have started a Mouse Trap game that eventually led to a better label on generic metoclopramide.”

Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Anthony M. Kennedy and Samuel A. Alito Jr. voted with the majority.

In her dissent, Justice Sotomayor wrote that she agreed that the makers of generic drugs could not unilaterally change their labels. But she said that did not allow them to remain idle after learning of safety issues.

“Had the manufacturers invoked the available mechanism for initiating label changes,” she wrote, “they may well have been able to change their labels in sufficient time to warn” the women injured by their drugs.

The majority opinion, Justice Sotomayor said, may reduce the demand for generic drugs and put doctors in an ethical bind.

Justice Ruth Bader Ginsburg, Stephen G. Breyer and Elena Kagan joined the dissent.

In a second decision on Thursday, Sorrell v. IMS Health, No. 10-779, a six-justice majority of the court struck down a Vermont law that banned some but not all uses of prescription information collected by pharmacies.

The law sought to restrict a form of marketing called “detailing,” in which representatives of drug companies pitch information about new drugs to doctors known to be prescribing certain kinds of medicine. The companies obtain prescription records to help them identify the most suitable doctors from data mining companies, which buy the records from pharmacies. The records are meant to be stripped of information that identifies individual patients.

The law banned the use of prescription data for detailing but allowed other uses of it, including by law enforcement, insurance companies and journalists. Drug companies remained free to market their drugs in a more indiscriminate fashion, without knowing the prescribing habits of individual doctors.

The law was challenged by data mining and drug companies, who argued that the law’s point seemed to be to protect doctors from hearing about more expensive drugs while the state pushed cheaper generic drugs. The state, as its lawyer Bridget C. Asay put it at the argument in April, said the law sought to address “an intrusive and invasive marketing practice.”

Justice Anthony M. Kennedy, writing for the majority, said the case presented fundamental First Amendment issues because it restricted the use of truthful information in private hands based on the identity of the speaker and the content of its speech. He supported his decision with citations to classic First Amendment decisions outside the realm of commercial speech, including ones on prior restrain and incitement.

“If pharmaceutical marketing affects treatment decisions,” he wrote, “it does so because doctors find it persuasive. Absent circumstances far from those presented here, the fear that speech might persuade provides no lawful basis for quieting it.”

Chief Justice Roberts and Justices Scalia, Thomas, Alito and Sotomayor joined the majority opinion.

Justice Breyer, joined by Justices Ginsburg and Kagan, dissented. Justice Breyer said the majority had looked at the case through the wrong First Amendment lens.

It is a mistake, he said, “to apply a strict First Amendment standard virtually as a matter of course when a court reviews ordinary economic regulatory programs.” Under ordinary standards applicable to commercial speech, Justice Breyer continued, the Vermont law should have been upheld.

“At best,” he wrote, “the court opens a Pandora’s box of First Amendment challenges to many ordinary regulatory practices that may only incidentally affect a commercial message.”

The majority opinion is an echo, he continued, of Lochner v. New York, a 1905 decision that struck down a New York work-hours law and has become shorthand for improper interference with matters properly left to legislatures.

“At worst,” Justice Breyer wrote of the majority opinion, “it reawakens Lochner’s pre-New Deal threat of substituting judicial for democratic decision-making where ordinary economic regulation is at issue.”

Read more: http://www.nytimes.com/2011/06/24/business/24bizcourt.html?_r=1&smid=tw-nytimeshealth&seid=auto

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