How The Pharmaceutical Industry Is Coming Under Attack - Part II

Monday, January 1, 2007 - 01:00
Porzio, Bromberg & Newman, P.C.
Christopher P. DePhillips
Brian P. Sharkey

In last month's issue, the authors described the methamphetamine epidemic that is plaguing the U.S. and how the states and Congress have been responding to it. This article discusses how successful those responses have been, as well as pseudoephedrine-related lawsuits that are targeting the pharmaceutical industry.

How Effective Have The State Laws Been, And How Effective Will The Federal Law Be, In Combating The Methamphetamine Epidemic?

As noted previously, states that enacted restrictions on the sale of pseudo-ephedrine-containing products generally experienced a decline in the number of homemade "laboratories," and an attendant decline in the problems uniquely associated with those "laboratories." At the same time, however, the states generally did not experience reductions in the number of methamphetamine users. In that regard, the state laws cut down on the availability of locally-produced methamphetamine but did nothing to reduce or eliminate the demand for the drug, as users simply traveled to neighboring states to purchase methamphetamine products.

As a result of the reduced availability of locally-produced methamphetamine, addicts also turned to the Mexican-made methamphetamine. Law enforcement officials have acknowledged that there has been a large influx of methamphetamine from Mexican sources and that, as a result, the supply of methamphetamine in the U.S. remains basically the same as it was prior to the passage of the state laws. Although there are fewer reports of individuals suffering toxic chemical burns from "laboratory" explosions, drug treatment centers report that they are treating the same number, or more, of methamphetamine addicts. Similarly, child welfare officials report that there are fewer children being removed from homes because their parents are "cooking" methamphetamine, but there is an increasing number of removals based on parents' abuse of the drug.

Using Mexican-made methamphetamine instead of locally-produced methamphetamine leads to its own set of additional problems, as the Mexican-produced drug is far more pure, and, therefore, more addictive and harmful, than locally-made methamphetamine. Locally-made methamphetamine is typically 40% to 50% pure, whereas Mexican-made methamphetamine is over 90% pure. There has been an increase in methamphetamine-related fatalities, and in an article about the increase in overdoses in The Salt Lake Tribune , a spokesperson for the DEA suggested that the crackdown on local production, which has led to increased use of Mexican-made methamphetamine, could be a factor in contributing to the rise of overdoses. Addicts accustomed to the moderate purity level of locally-produced methamphetamine are at a greater risk of overdosing when they use the far purer imported version of the drug.

State and local officials have acknowledged that the state laws have done little to reduce the demand for the drug. States have already increased penalties and increased prison time without seeing a corresponding decline in demand.

The federal law passed by Congress is likely to encounter similar problems and successes, though the Act is far more expansive in its reach. First and foremost, the Act alleviates the problem of a patchwork system of state laws. By having federal requirements in place, it will be harder for methamphetamine "cooks" to obtain pseudoephedrine from a neighboring state, and, therefore, the Act should contribute to a further decline in locally produced methamphetamine and the number of local "laboratories." The Act also attempts to deal with the problem of foreign-produced methamphetamine by requiring new reporting and certification procedures for the largest exporting and importing countries of pseudoephedrine, ephedrine and phenylpropanolamine. In addition, the State Department is expected to work with Mexico on limiting its pseudoephedrine importation and controlling illegal methamphetamine production, and the Bush Administration is also investigating other avenues by which ephedrine and pseudoephedrine can be regulated and tracked on the international level. In that regard, administration officials are negotiating with China, Germany, India and the Czech Republic (the countries that manufacture pseudoephedrine and ephedrine) to limit their manufacture of those materials. Moreover, the Act allocates monies to state and local officials to offset the rising costs associated with the methamphetamine epidemic.

Senators Talent and Feinstein, the sponsors of the Act, concede that their legislation will not end the methamphetamine epidemic. Senator Talent has indicated that he ultimately expects fewer addicts because pseudoephedrine will not be as readily available to local producers, and a 70% to 90% decline in the number of "laboratories." At the same time, he has stated that he anticipates that more methamphetamine will be smuggled in from Mexico. Senator Talent has indicated that the Act was only the first step in battling the methamphetamine epidemic, and he and Senator Feinstein will urge the Bush Administration to push for greater cooperation among the U.S., Mexico and Canada "to stamp out methamphetamine production and abuse throughout North America."

Three Types Of Lawsuits Targeting The Pharmaceutical Industry

The pharmaceutical industry, having already seen the sale of its pseudo-ephedrine-containing products restricted by state legislatures and Congress, now finds itself targeted in a familiar arena: the courtroom. The industry is now facing three very different types of lawsuits.

In Oklahoma, a widow has filed a wrongful death action in state court against manufacturers and distributors of pseudoephedrine-containing products. That lawsuit, Green v. Pfizer, Inc. , Case No. CJ-05-115, stems from the murder of an Oklahoma patrol trooper by a metham- phetamine "cook" who was high on methamphetamine when he shot the trooper. The widow has sued three different types of defendants: (1) manufacturers, including generic manufacturers, of pseudoephedrine and ephedrine products (Pfizer, Inc.; Pfizer Consumer Healthcare; Leiner Health Products, Inc.; LNK International, Inc., and Perrigo Company); (2) distributors and sellers of those products (Chain Drug Marketing Association, Inc.; Wal-Mart Home Stores, Inc.; Walgreen Co.; Dollar General Corporation; Good Neighbor Pharmacy; R&S Drug Stores, Inc., and United Super Markets of Oklahoma, Inc.); and (3) the man who murdered her husband (Ray Malone, who was convicted of murder).

In the lawsuit, the plaintiff claims that the manufacturer and distributor defendants knew that their products were being used to make methamphetamine for over a decade but did nothing to stop it. In fact, the plaintiff alleges that the defendants knew that their increased sales of pseudoephedrine and ephedrine products were caused by methamphetamine production and that they "have been consciously reaping profits by serving as a 'corner store' supplier of raw product for the illegal production of Meth." Moreover, the plaintiff claims that the defendants knew about a safe and effective alternative ingredient for their medications to pseudoephedrine, which cannot be used to create methamphetamine, but chose not to use it. The plaintiff has asserted negligence and gross negligence claims against the defendants, and she is seeking punitive damages.

The second type of lawsuit is exemplified by a case that is pending in Alabama state court, The Town of Oakman v. Pfizer , CV05-178. The Town of Oakman is the sole plaintiff in that case, and Pfizer is the sole defendant. After outlining the problems and dangers associated with methamphetamine in its complaint, and Pfizer's involvement in the production of pseudoephedrine-containing products, the plaintiff claims that Pfizer's sale of those products "creates a continuing nuisance for the residents of Oakman, Walker County and the State of Alabama." The plaintiff further claims that absent court intervention, that nuisance will continue to endanger its residents. Alleging that its citizens will suffer irreparable injury and damage, the plaintiff requests injunctive relief, including that the court "restrain and enjoin the marketing and sale of these unreasonably dangerous products within Oakman, Walker County and the State of Alabama."

The third type of lawsuit has not yet been filed, but perhaps poses the greatest threat to the pharmaceutical industry. Mike Hatch, the Attorney General of the State of Minnesota, has announced that he is preparing a lawsuit against six large pharmaceutical companies to recover the government's costs associated with the methamphetamine epidemic. At a news conference in early 2006, Mr. Hatch, who is running for governor of Minnesota, stated that "[w]e're deluding ourselves that putting Sudafed behind the counter was the solution. It is an epidemic just like the avian flu, only it's here. It's real." In outlining his aggressive plan against the pharmaceutical industry, Mr. Hatch, who believes that Congress did not go far enough and has advocated that the sale of pseudoephedrine-containing products should be banned completely, said that the "industry essentially lied to the American public. They're clearly dumping [meth ingredients] in a way that allows creation of this illegal substance." Mr. Hatch plans to seek enabling legislation to aid him in his lawsuit, as he intends to ask the Minnesota legislature to extend drugmakers' liability six years into the past. Mr. Hatch has also asked the Minnesota legislature to enact a law that would hold pseudoephedrine product manufacturers liable for the damages caused by methamphetamine "laboratories." A spokeswoman for the Pharmaceutical Research and Manufacturers of America criticized Mr. Hatch's plans, as she stated that "[i]t seems that this solution seeks to punish people who make a legitimate and needed product because other people are misusing it. We are working with legislators and law enforcement in a number of states to develop processes to ensure that the products are safely delivered and appropriately used."

In a newspaper editorial, Mr. Hatch elaborated on why he believes that such a lawsuit against the pharmaceutical industry is necessary. First, Mr. Hatch described the methamphetamine problem in Minnesota and noted that, although the number of local "laboratories" had been reduced, overall methamphetamine use was up. Hatch then explained that he thought that a lawsuit seeking to hold pharmaceutical manufacturers liable for the state's costs was appropriate because "Minnesota, like all other states, imposes liability on manufacturers of unreasonably dangerous products regardless of whether the products are legal. If the design of a legal product is defective and thereby poses an unreasonable risk of harm to consumers or third parties affected by the product, the manufacturer is liable for the damages the product causes. In deciding whether a product is defective, courts look to factors such as the availability of safer alternative designs and the overall utility of the product in comparison to its risks. The manufacturers of pseudoephedrine/ephedrine products knew for years there was a safer design for their cold tablets made from phenylphrine. Unlike pseudoephedrine/ ephedrine, phenylephrine cannot be converted into meth. The manufacturers have been selling this alternative product in Europe for years. Pfizer finally just released such a safer product in the United States. Minnesota law clearly authorizes the state to sue these manufacturers for selling a defective product when they knew a safer design was available. During the time the meth epidemic was spreading, these manufacturers desperately fought efforts to regulate the sale of their products when they knew how their products were being used to make meth."

Mr. Hatch's theories and rationale are certainly disconcerting, to say the least, to pharmaceutical manufacturers. As described previously, a state's "costs" associated with methamphetamine abuse, with all of its negative societal consequences, can be extensive. If Mr. Hatch decides to file such a lawsuit and is successful, pharmaceutical manufacturers could face staggering liability. And if Minnesota's lawsuit is successful, that would certainly encourage other states to file their own lawsuits to recover their own costs, which could serve to multiply the industry's liability. States could come to view "pseudoephedrine litigation" as the new tobacco, and Mr. Hatch referred to that litigation as a model for his lawsuit. Having already been adversely impacted by laws passed by state legislatures and Congress, i.e., reduced sales and increased costs associated with the reformulation of its popular cold and allergy products, the pharmaceutical industry is now faced with potentially devastating liability from products liability, negligence and nuisance lawsuits filed by private citizens or governmental agencies.

Christopher P. DePhillips is a Principal of Porzio, Bromberg & Newman, P.C., in Morristown, New Jersey, New York, New York, and Brick Township, New Jersey. He is Co-Chair of the firm's Product Liability and Mass Tort Group and is a Member of the firm's Governmental Affairs Practice. Brian P. Sharkey is an Associate of the firm concentrating in products liability and mass torts.

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