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OREGON PRODUCT LIABILITY REFORM ALLOWS GOVERNMENT STANDARDS DEFENSE UNLESS MANUFACTURER "KNOWINGLY" WITHHOLDS INFORMATION FROM FDA

Executive Summary

Oregon's proposed product liability legislation includes a government standards protection provision that eliminates punitive damages for products produced in compliance with FDA regulations unless the manufacturer "knowingly" withheld or misrepresented relevant information. The proposed legislation states that a manufacturer is liable for punitive damages only if "the defendent, either before or after making the drug available for public use, knowingly in violation of applicable federal FDA regulations withheld from or misrepresented to the agency or prescribing physician information known to be material and relevant to the harm which the plaintiff allegedly suffered." Under the Oregon legislation, which has passed both state houses but has not yet been signed by Governor Goldschmidt, punitive damages can also be awarded "where a manufacturer of a drug intentionally fails to conduct a recall required by a valid order of a federal or state agency authorized by statute to require such a recall." PMA views the proposed Oregon legislation as an acceptable approach to state product liability reform. In May, PMA President Mossinghoff cited a proposed version of legislation in Texas as a potential model for product liability reform ("The Pink Sheet" June 29, p. 7). However, the association feels that the enacted legislation, as amended, could be subject to misinterpretation. The Texas law states that the government standards protection will not apply if the manufacturer "knew or had access to information from which knowledge of the consequences could have been obtained at the time of distributing the drug that is alleged to have caused injury to the claimant that it posed a significant risk of serious harm or serious, adverse side effects to intended users and failed to report same in writing within as reasonable time to the FDA prior to the distribution of said drug." PMA expressed its reservations about the final language of the Texas bill in a June 12 letter to Governor Clements. The association pointed out that the government standards protection clause could be used too broadly if not interpreted in light of its legislative history. For example, PMA noted that "the legislative history makes clear that the plaintiff must prove that 'the drug manufacturer had actual knowledge or actual access of or possession of the information. . . ." The association added that "the legislative history underscores that point by stating that 'implied knowledge or constructive possession is neither contemplated nor sufficient' and states further that 'actual knowledge or actual possession does not include a book or scholarly paper or journal in a library somewhere.'" The association also cited the "reasonable time" reporting requirement as vague. "The legislative history makes clear that the 'reasonable time' requirement is conclusively determined to be the applicable reporting time limits and schedules required by FDA. We believe [this] section . . . must be read in the light of this legislative history for it to make any sense," PMA said. The proposed Oregon legislation also contains provisions for several liability only. In cases where a defendant is found to be less than 15% "at fault for the economic damages awarded the plaintiff's liability shall be several," the bill states. Liability for noneconomic damages is also several, under the legislation, "in any civil action arising out of bodily injury, death or property damage, including claims for emotional injury or distress, loss of care, comfort, companionship and society, and loss of consortium." The bill provides a cap of $500,000 for noneconomic damages.
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