Oral argument: February 25, 2008
Appealed from: U.S. Court of Appeals for the Second Circuit (Oct. 5, 2006)
PERSONAL INJURY, CONFLICT OF LAWS, PREEMPTION, PRESCRIPTION DRUGS, FDA APPROVAL, FRAUD-ON-THE-FDA
Under Michigan law, individuals may bring personal injury suits against manufacturers of FDA-approved prescription drugs only if the plaintiffs can show that FDA approval depended on fraudulent submission or withholding of information. 27 Michigan residents sued Warner-Lambert Co., claiming personal injury arising from using Rezulin, Warner-Lambert's FDA-approved drug for diabetes treatment. Warner-Lambert argues that Michigan law is preempted by federal law because permitting state courts to second-guess the FDA's product-approval and fraud-detection processes interferes with the agency's essential functions and promotes regulatory uncertainty. The Michigan plaintiffs respond that federal preemption does not apply to traditional state tort claims. The decision in this case will clarify the scope of FDA autonomy in policing the drug-approval process and plaintiffs' freedom to assert state tort claims in areas regulated by federal entities.
1. Whether, under the conflict preemption principles in Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341 (2001), 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.
1.� According to the conflict-of-laws standard established in Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341 (2001), does federal law preempt state law that requires a fact-finder to determine the validity of allegations of fraud-based federal agency product approval, if the agency has not detected fraud and state-court determination of the issue would thus intrude upon the agency's congressionally-mandated responsibilities?
2.� Under Buckman, is a Michigan provision permitting product liability suits against manufacturers of FDA-approved drugs only if the approval was premised on fraudulent dealings with the FDA preempted by federal law, in that it requires the state court to determine whether the fraud occurred and whether FDA approval depended upon such fraud?
In 1996, Warner-Lambert Co., a pharmaceutical manufacturer now owned by Pfizer Inc., sought federal Food and Drug Administration ("FDA") approval of Rezulin (troglitazone), a prescription drug intended to treat type 2 diabetes mellitus. Brief of Petitioners at 13-14. Despite recognizing risks of liver and cardiovascular problems associated with Rezulin, the FDA approved Rezulin in January 1997 for use in conjunction with insulin or other anti-diabetic drugs. Id. at 14. In August 1997, the FDA further approved stand-alone use. Id.
From 1997 to 1999, after receiving several reports indicating harmful liver-related problems in Rezulin users, Warner-Lambert agreed to several labeling changes. Brief of Petitioners at 14. In 1999, the FDA concluded that the benefits of Rezulin use without insulin no longer outweighed the risks. Id. In March 2000, Warner-Lambert terminated sales of Rezulin in the United States. Id.
Subsequent to Rezulin's withdrawal, 27 Michigan residents brought four independent product liability suits against Warner-Lambert, claiming damages under Michigan law for personal injury resulting from Rezulin use. See Brief of Petitioners at 12-13; Brief for Respondents at 8. The suits were later consolidated and transferred to a multidistrict litigation in the Southern District of New York. Brief for Respondents at 8.
At trial, Warner-Lambert argued that it possessed a complete defense against plaintiffs' claims based on Mich. Comp. Laws � 600.2946(5), which grants immunity from product liability for drug manufacturers whose drug and labeling were FDA-approved. See Mich. Comp. Laws � 600.2946(5); Brief of Petitioners at 11-12, 16. However, the plaintiffs claimed that this defense did not apply based on a narrow exception to the statute, which withdraws the defense if the defendant obtained FDA approval through fraudulently withholding or misrepresenting information. See Mich. Comp. Laws � 600.2946(5)(a); Brief of Petitioners at 16.
The district court dismissed the plaintiffs' complaints on the ground that the immunity exception is preempted by federal law under Buckman v. Plaintiffs' Legal Comm., 531 U.S. 341 (2001). See Brief for Respondents at 10. Buckman held that state "fraud-on-the-FDA" claims were preempted by federal law because they disturbed FDA attempts to balance several statutory objectives. Buckman, 531 U.S. at 348; Brief for Respondents at 13.On appeal, the Second Circuit vacated the district court's ruling, finding Buckman not controlling in the present case and the immunity exception not preempted. See id. at 11; Desiano v. Warner-Lambert & Co., 467 F.3d 85, 98 (2d Cir. 2006).
In pursuing its charge to safeguard the public health, the Food and Drug Administration ("FDA") subjects new prescription drugs to an extensive review process before deciding whether to approve them for U.S. marketing. See, e.g., 21 U.S.C. �� 355(a), 393(b)(1).� Michigan, along with several other states, defers to the FDA's regulatory expertise in the drug safety area by shielding drug manufacturers from product liability suits if the drug in question received FDA approval. See Mich. Comp. Laws � 600.2946(5); Brief of Product Liability Advisory Council as Amicus Curiae in Support of Petitioner ("PLAC Brief") at 4. However, Michigan withdraws this defense if the injured party demonstrates that the manufacturer obtained FDA approval by omitting or fraudulently misrepresenting information. See Mich. Comp. Laws � 600.2946(5)(a)("Michigan immunity exception"). In Buckman v. Plaintiffs' Legal Comm., 531 U.S. 341 (2001), the U.S. Supreme Court held that stand-alone state-law claims for fraud-on-the-FDA conflict with the FDA's authority to police such fraud. See 531 U.S. at 350. In determining whether the same federal preemption applies to the Michigan immunity exception, the Court will clarify the scope of the FDA's autonomy in policing its approval process but may obstruct private citizens' freedom to bring lawsuits relating to pharmaceutical development and other spheres of federal regulation.
Warner-Lambert asserts that the Supreme Court's decision in Buckman compels the conclusion that Michigan's fraud-based immunity exception is preempted by federal law. See Brief of Petitioners at 19-20.� According to Warner-Lambert, the exception requires that a judge or jury inquire into fraud upon the FDA, an exclusively federal matter under Buckman. See id. at 20.
The Michigan plaintiffs respond that the Court should apply a presumption against federal preemption because Michigan is exercising its historic police powers. Brief for Respondents at 13. The plaintiffs maintain that unlike the special fraud-on-the-FDA claim at issue in Buckman, the Michigan immunity exception concerns product liability, a traditional field of state-law tort litigation. See id. at 14-15.
If the Court decides in favor of Warner-Lambert, the FDA would preserve its sole authority to police the new-drug approval process. The FDA considers this statutory responsibility to be threatened by state-law product liability suits that permit safety and effectiveness determinations that conflict with its own prior findings. See Requirements on Content and Format of Labeling for Human Prescription Drug and Biological Products, 71 Fed. Reg. 3922, 3969 (Jan. 24, 2006). According to the Product Liability Advisory Council, states should not be able to circumvent the FDA's approval authority by enabling attacks on FDA determinations. See PLAC Brief at 21. The United States agrees that federal drug regulation may be threatened by entrusting juries to perceive fraud in a complex approval process. See Brief for the United States as Amicus Curiae Supporting Petitioners ("United States Brief") at 7.
By extension, a result in favor of the Michigan plaintiffs may hinder the FDA approval process. Tens of thousands of pending cases involve drug manufacturers' dealings with the FDA. See PLAC Brief at 4. The United States and pharmaceutical industry representatives argue that liability based on state-court findings of fraud would thus burden the FDA with a flood of additional information from manufacturers and discovery requests from consumer litigants. See Brief for the Pharmaceutical Research and Manufacturers of America as Amicus Curiae Supporting Petitioners ("PHRMA Brief") at 2; United States Brief at 7-8.� Exposure to state-law claims could also inject excessive uncertainty into the approval process.� See PHRMA Brief at 2.
If the Court holds in favor of the Michigan plaintiffs, the decision would advance traditional means of consumer protection through state tort claims.� According to the American Association for Justice, state tort actions provide an essential companion to FDA drug-safety regulation because the FDA is overburdened, lacks authority to require companies to maintain post-marketing safety records, and fails to adequately record reports of adverse reactions. Brief for the American Association for Justice as Amicus Curiae Supporting Respondents ("AAJ Brief") at 3. Because fraud claims are governed by state law, complete federal preemption of drug-safety claims might leave some victims of drug-approval fraud without any legal remedy. See Brief of the National Conference of State Legislatures, Council of State Governments, National Association of Counties, and International City/County Management Association as Amici Curiae Supporting Respondents at 4.
However, allowing state-court fraud-on-the-FDA determinations might in practice work against the interests of consumers.�� Such determinations inevitably require extensive FDA involvement and may distract the agency from its basic task of protecting public health.� United States Brief at 7-8.
The Pharmaceutical Research and Manufacturers of America cautions that more is at stake here than the Michigan immunity exception or even FDA regulation. See PHRMA Brief at 15. Some lower courts have extended the rationale for federal preemption in Buckman to a variety of other regulatory regimes and other jurisdictions have rejected federal preemption in such traditionally federal spheres as patent regulation. See id. at 17-20. Thus the Court's decision in this case will clarify the scope of Buckman and will guide lower courts concerning state tort claims that potentially conflict with federal regulatory authority. See id. Upholding the Second Circuit's "presumption against preemption" standard would potentially enable states to intrude upon federal regulation in other areas by following Michigan's approach of making fraud on a federal agency an exception to immunity, thus "provid[ing] a roadmap to evading Buckman." Id. at 20.
Under the Food, Drug, and Cosmetic Act ("FDCA"), before a manufacturer can release a new drug on the market, the manufacturer must file a New Drug Application ("NDA") with the Food and Drug Administration ("FDA"). Brief for Petitioner at 4. The NDA must furnish a full report providing the FDA with the information it needs to determine the drug's safety and effectiveness. Brief for Respondents at 3. The FDA will approve the NDA, unless it finds specific grounds for denying the application.� Id. at 3.� However, the U.S. Supreme Court has found that the FDA has discretion in enforcing the FDCA.� Brief for Petitionerat 9-10.�
In 1995, the State of Michigan enacted Mich. Comp. Law � 600.2946(5)� ("Michigan Statute"), which absolves drug manufacturers of tort liability if the FDA approved the drug and manufacturers complied with all of the terms of the approval. Brief for Respondents at 9.� However, the Michigan Statute withdraws this defense from the manufacturer if the plaintiff proves that (i) the manufacturer intentionally withheld or misrepresented information required under the FDCA and that (ii) the FDA would not have approved the drug application if the manufacturer had accurately submitted the omitted or misrepresented information. Brief for Petitioner at 12.
Applicability of Buckman Co. v. Plaintiffs' Legal Comm.
In Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341 (2001), the Supreme Court held that state-law claims based on fraudulent misrepresentations to the FDA ("fraud on the FDA claims") are preempted by federal law. 531 U.S. at 341.The Court held that there is no presumption against federal preemption, given the fundamental federal character of the relationship between the FDA and regulated companies. 531 U.S. at 347. Injecting state law would compromise this federal relationship, the Court reasoned, by disrupting the balance of statutory FDA objectives, burdening manufacturers with a patchwork of state tort regimes, and obstructing the FDA's review process through the resulting flood of information. 531 U.S. at 350-52.
In the present case, the courts below disagreed whether Buckman controlled.� The District Court for the Southern District of New York found that federal law preempted the Michigan Statute. Brief for Petitioner at 17. The District Court reasoned that although the Statute did not expressly create a state claim for fraud on the FDA, it implicitly achieved the same prohibited result by authorizing plaintiffs to plead and prove such fraud to a jury. Id. The Second Circuit Court of Appeals reversed, finding that the Michigan statutory exception was not preempted.� Id.� Unlike the statute in Buckman, the Second Circuit argued, the Michigan Statute did not create an independent state claim for fraud on the FDA. Id.; Brief for Respondents at 11. Rather, the Statute only placed a condition on plaintiffs' freedom to recover under traditional state tort law. Brief for Respondents at 11.
The parties also disagree over whether Buckman is controlling in this case. The Michigan plaintiffsclaim that unlike the Buckman statute, the Michigan Statute does not punish or deter fraud against the FDA. Brief for Respondents at 22. However, Warner-Lambert argues that this distinction is insignificant because both causes of action impermissibly permit state courts to infringe on the FDA's exclusive authority over federal disclosure requirements. Brief for Petitioner at 45-46.
Additionally, the Michigan plaintiffs argue that, unlike the Buckman plaintiffs, they are asserting traditional common-law tort claims that pre-date and operate independently from the FDCA. Brief for Respondents at 22. Warner-Lambert responds that the Buckman prohibition controls regardless of whether this action rests theoretically upon a distinct state-law claim. Brief for Petitioner at 43. In practice, Warner-Lambert urges, claims under the Michigan Statute could not go forward without improperly proving fraud on the FDA. Id. at 43.
Presumption Against Preemption
If a field of law falls within traditional state police powers, courts will apply a presumption against preemption by federal law. See e.g., Buckman, 531 U.S. at 347. The Second Circuit found that the Michigan Statute falls within traditional state police powers and therefore applied this presumption. See Brief for Petitioner at 38. Warner-Lambert argues that this presumption should not apply. Id. at 40. According to Warner-Lambert, the Michigan Statute in practice requires courts to monitor fraud against federal agencies, which Buckman found does not fall within states' protected police powers. Id. at 39. The Michigan plaintiffs counter that the Michigan Statute is an entirely separate type of claim than a "fraud on the FDA" claim because the Statute has a different objective. Brief for Respondents at 18-19.� Rather than aiming to police manufacturers' disclosures to the FDA, the Michigan Statute is a defense to an action aimed at protecting consumer health and safety, a traditional object of state police authority. Id. at 18.�
Warner-Lambert further argues that the Second Circuit erred because an anti-preemption presumption cannot apply if state law impedes regulation under a comprehensive federal scheme. Brief for Petitioner at 40. Warner-Lambert points to prior decisions by the Court, finding that there is no presumption that a concurrent regulation is a valid exercise of police power when the subject of regulation has a history of federal control. Id.at 40-41. According to Warner-Lambert, the federal government has a long and significant history of regulating drugs in the United States. Id. at 40. The Michigan plaintiffs counter with the Court's history of applying presumptions against preemption for state statutes that impliedly conflict with federal regulation. Brief for Respondents at 19n.4. Because the Michigan Statute is similar to these "implied conflict cases," the Court should apply the anti-preemption presumption. Id. at 21.�
Finally, the parties disagree over whether federal law implicitly preempts the Michigan Statute. Federal law will implicitly preempt state law when the state law conflicts, frustrates the purpose of, or imposes upon the exclusive authority of a federal statute. Brief for Petitioner at 22. Warner-Lambert claims that the Michigan Statute trespasses on the FDA's exclusive enforcement power for federal disclosure requirements. Id. at 23-24. The Michigan plaintiffs respond that the Statute does not impinge on FDA authority because it does not seek to impose liability because of misrepresentations to the FDA. Brief for Respondents at 30. Rather than police for compliance with the FDA, the Michigan Statute provides tort liability immunity if the manufacturer has complied with the FDA, but will not extend this immunity if the process has been corrupted. Id. at 30-31.�
Warner-Lambert argues that if the Court fails to find implied federal preemption, state tort-law claims will interfere with the FDA's ability to enforce the FDCA. Brief for Petitioner at 29. State tort-law litigation will unfairly burden manufacturers, who will submit excessive paperwork to the FDA to avoid liability. Id. at 32. This outcome will obstruct FDA attempts to limit disclosure to information necessary to enforce the FDCA. Id. at 32. The Michigan plaintiffs claim that these fears are misplaced because the Michigan Statute only applies to non-disclosures of information already required by FDCA. Brief for Respondents at 38.
This case presents a classic problem of the rights of the few versus the needs of the many.�� If the Michigan plaintiffs prevail, the Court will vindicate the rights of individuals injured by prescription drugs, who must seek redress through state tort claims whenever FDA review fails.� If Warner-Lambert prevails, the Court will recognize that all Americans benefit from efficient FDA review.� An outcome in this case will clarify the proper balance between victims' interest in pursuing state-tort claims and the FDA's interest in controlling the drug review process. The Court's decision concerning the scope of federal preemption under Buckman will likely apply beyond product liability to all conflicting state and federal regulatory regimes.�
Edited by: Ferve Ozturk
- American Journal of Law and Medicine: Medical Devices: Food, Drug, and Cosmetic Act Preempts State Law Fraud Claims- Buckman Co. v. Plaintiff's Legal Comm.
- Reed Smith: Supreme Court's Two Fraud-On-The-FDA Cases Have Dramatically Different Reasoning
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