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Executive Summary

The pharmaceutical industry's efforts to obtain legislative reform of product liability law should be carried on at the state as well as the federal level, D.C. lawyer John McLaughlin (Royer Shacknai & Mehle) maintained at a Sept. 16 seminar sponsored by the Food and Drug Law Institute. "A short list of critical provisions must be supported at both the state and federal level," McLaughlin asserted. The provisions should include FDA approval as a defense against punitive damages, elimination of joint and several liability, a cap on noneconomic damages, a clearer and more restrictive legal standard for awarding punitive damages, inadmissibility of subsequent remedial measures as evidence of fault, and elimination of the collateral source rule (under which payments from insurance, government benefits, and workers compensation may not be factored into assessments of damages). Both federal and state approaches to such tort reforms must be under-taken because certain provisions "are more likely to be passed at the federal level, and others are more likely to be passed by the states," he said. "For example, FDA approval as a defense against punitive damages is more likely to be passed at the federal level. State legislatures are simply not as knowledgeable about, and therefore as comfortable with, federal regulatory agencies like the FDA as are congressmen and senators," said McLaughlin, a former counsel to Rep. Waxman (D-Calif.). On the other hand, "caps on noneconomic damages are more likely to be passed at the state level," he continued. Limits on awards for pain and suffering "have been strenuously opposed by congressional supporters of product liability legislation -- including Republican Sens. Stevens (Alaska) and Gorton (Washington) -- even after prodding by the Administration," McLaughlin noted. The pharmaceutical industry should therefore embark upon "vigorous pursuit of this provision at the state level of build on previous successes." Elimination or modification of the doctrine of joint and several liability is "a provision which should be pursued at both levels simultaneously," McLaughlin said. "It probably cannot be passed for all damages at the federal level, [where] the best that can be expected is elimination of joint liability for noneconomic damages. Elimination of joint liability for all damages probably can be passed in many states and probably even a few but not all of the key ones," he maintained. Consequently, "it is important to eliminate joint liability for all damages in as many states as possible and to rely on the federal statute to eliminate it for noneconomic damages in the remaining states," he asserted. A federal product liability bill is currently pending in the Senate, where debate on the legislation began on Sept. 17. The measure (S 2760) is expected to be filibustered and then withdrawn from consideration. Even if the Senate were to pass the bill, little hope remains this year in the House, which has not begun legislative action. "Considerably more legislative progress" has occurred at the state level, McLaughlin pointed out; however, the problem "persists because too few key states" have passed tort reform measures. Furthermore, "those states which have passed bills have not addressed the problem in a comprehensive fashion," he said. "A sweeping rewrite" of tort law cannot be passed at the state level because "there is simply no interest," nor at the federal level because is interest but not enough support." Center for Public Resources (CPR) founder James Henry urged that pharmaceutical manufacturers be sure that outside counsel has expertise in alternative dispute resolution, which he defines as "a range of practices aimed at preventing, managing, and resolving disputes cost effectively." Alternative dispute resolution is a voluntary, confidential, and nonbinding procedure. It commonly involves choosing a mediator, submitting written arguments, a single public (joint) session for each party to summarizing its best case, individual meetings between the mediator and each party, the mediator's written recommendation of settlement terms for each party (which is confidential and includes assessments of the strengths and weaknesses of the party's arguments), and final negotiations. Confidentiality is crucial to the process because neither party wants to tip his hand to the other in the event that the case is brought to trial. Corporate members of the Center of Public Resources include representatives of Abbott, Bristol-Myers, Lilly, McKesson, Merck, Monsanto, and Pfizer.

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