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Executive Summary

SENATE PRODUCT LIABILITY MARKUP BY COMMERCE COMMITTEE is expected before the end of May, Senate Commerce/Consumer Subcommittee Chairman Bryan (D-Nev.) said at a May 10 hearing on S 1400, Sen. Kasten's (R-Wis.) product liability bill. Bryan said in an opening statement that there would be no further hearings and the legislation would go straight to markup by the full committee. Bryan added that the markup is expected to be scheduled before Memorial Day. The hearing was the subcommittee's third on the bill. The subcommittee heard testimony from the Pharmaceutical Manufacturers Association and consumer organizations on a bill provision for defense against punitive damages for products approved by FDA. Testifying on behalf of PMA, D.C. attorney Richard Kingham (Covington & Burling) endorsed the government standards provision. Kingham maintained that "the imposition of excessive, standardless punitive damage judgments...are a significant obstacle to continued pharmaceutical research and development." At the same time, "this limited defense would not prevent full compensation from being awarded to injured persons in any case, or punitive damages from being imposed in a case where the defendant has violated its obligations under federal law governing the marketing of drugs." He noted that liability concerns have restricted R&D of vaccines and contraceptives, among other products. While PMA supports the "principle" of the provision, Kingham said the association would recommend some "minor modifications" to its wording. The first recommendation, based on recent discoveries of illegal gratuities paid by generic drug companies to FDA reviewers, is that "where a manufacturer has made illegal payments to government officials or engaged in similar illegal conduct for the purpose of securing approval of a drug, it should not be entitled in product liability actions to a defense based on FDA approval of that drug." In addition, he said, the provision's exception to the government standards defense in some cases should "be clarified to ensure that it applies only to withholding of information required to be submitted under federal law." Third, "the provision should not deprive pharmaceutical manufacturers of a defense on the grounds that the manufacturer failed to provide information to any federal agency other than FDA." Finally, Kingham urged, "the manufacturer should not be deprived of the government standards unless the information withheld relates to the plaintiff's harm." The government standards defense is contained in section 303(c) of the bill. Public Citizen Health Research Group Director Sidney Wolfe, MD, and Consumers Union Legislative Counsel Linda Lispen argued that the government standards defense would allow manufacturers of pharmaceuticals, medical devices other consumer products to shield themselves even in cases of negligence. Public Citizen and CU, in conjunction with the U.S. Public Interest Research Group and the Consumer Federation of American, issued a report at the hearing entitled "The FDA Excuse," which criticized the government standards provision. "Government regulation is no substitute for corporate responsibility," the report asserts. "The 'FDA Excuse' in S 1400 would remove a critical incentive for corporations to ensure the safety of their products when the regulatory system fails." The report outlines a series of "case studies" that the organizations maintain are instances where "pharmaceutical companies have obtained FDA approval for unsafe drugs and medical devices and have continued to market those products even after learning of the products' hazards." The cases involve the Bjork-Shiley heart valve and the drugs Versed, Zomax, Accutane, aspirin (and Reye's Syndrome), Suprol, Merital and high-estrogen contraceptives. The report also outlines "failures" of the FDA pre-market approval process and problems in postmarket surveillance, as well as listing "interference in FDA decisionmaking" from the Office of Management and Budget and "inadequate enforcement authority" as contributing to the cases of patient injury. For example, the report points out, in the course of the generic drug scandal, FDA did not have the independent authority to require Pharmaceutical Basics, Inc. to recall its generic epilepsy drug after reports of seizures in patients taking the drug. According to the report, the government standards defense "would prevent injured consumers from suing PBI for punitive damages when the company did not remove its drug from the market, even though PBI knew its product did not adequately prevent seizures." Much of the hearing was taken up by at times acrimonious exchanges between panel members and representatives of the consumer organizations. The exchange began when Consumers Union's Lipsen began her testimony by presenting data suggesting that an asbestos-substitute being developed by Monsanto may be carcinogenic in rats. Sen. Danforth (D-Mo.) strenuously objected to Lipsen presenting the data without adequate prior notice to the subcommittee. The Monsanto product has been cited by proponents of the legislation as a notable example of a beneficial product for which development has been stymied by liability concerns.

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