Top Five Drug and Device Developments of 2018

The Food and Drug Administration’s
Proposed 510(k) Overhaul

This past year saw a dramatic increase in mainstream media focus on the medical device industry and the U.S. Food and Drug Administration (FDA). This was exemplified in the release of The Bleeding Edge Netflix documentary and the International Consortium of Investigative Journalists’ publication Medical Devices Harm Patients Worldwide as Governments Fail on Safety. Industry responded to the documentary in particular, decrying it as sensationalized fearmongering. AdvaMed, the industry’s lobbying group, stated:

[The] film does a disservice to the hundreds of millions of patients worldwide who have benefited from medical technology. The filmmakers could have crafted a thoughtful and balanced piece that explores the latest in medical innovation, including the risks and benefits of any medical technology and how to help patients make informed choices. Instead, they chose the easy route with an irresponsible film that might cause patients to forgo what could be life-saving procedures. Where are the voices of the millions of patients who can see, hear, walk and live normal, healthy everyday lives thanks to medical technology?

This sharpened media focus comes seven years after the Institute of Medicine criticized the 510(k) regulatory pathway, which “clears” certain devices if they are deemed to be substantially equivalent to a predicate device already on the market.

On November 26, the FDA announced a proposal to overhaul the 510(k) pathway. The FDA was quick to point out that the use of older predicates “doesn’t mean the products are unsafe.” Rather, the FDA reiterated that it “believe[s] firmly in the merits of the 510(k) process,” noting that the proposal is “aimed at continuing to ensure that new and existing devices meet our gold standard for safety and effectiveness.” With the overhaul, the FDA’s goal is to modernize the framework that has been in place for 42 years, with advances in technology creating devices that may not fit within the regulations first implemented in 1976.

The proposal engendered immediate reaction from commenters on all sides of the issue. There are questions aplenty about how the proposal will be implemented and what input the industry can suggest for the new framework.

Differing Results as to the Admissibility
of 510(k) Evidence

In the past few years, several courts have held that evidence of 510(k) clearance of devices was inadmissible at trial. The general rationale was that, unlike the more stringent premarket approval process, the 510(k) process is not relevant to a product’s “safety and effectiveness.” See, e.g., Huskey v. Ethicon, Inc., 848 F.3d 151 (4th Cir. 2017); Eghnayem v. Bos. Sci. Corp., 873 F.3d 1304 (11th Cir. 2017); In re C.R. Bard, Inc., MDL No. 2187, Pelvic Repair Sys. Prods. Liab. Litig., 810 F.3d 913 (4th Cir. 2016).

The District of Arizona broke from this recent history, concluding that 510(k) evidence was both relevant and highly probative. In re Bard IVC Filters Prods. Liab. Litig. (Sherr-Una Booker), 289 F. Supp. 3d 1045 (D. Ariz. 2018). The inferior vena cava filter at issue was cleared by the FDA through the 510(k) process. The plaintiff asserted design defect, failure-to-warn, and punitive damages claims under Georgia law. The court found the 510(k) evidence to be relevant for two reasons. First, whether a manufacturer acted reasonably affects Georgia’s risk-utility analysis for design defect claims. Bard’s compliance with federal regulations is one factor the jury might consider in its reasonableness assessment. Second, the court found that a jury could consider Bard’s compliance as a factor in assessing whether there was willful and wanton misconduct to justify punitive damages. According to the court, the exclusion of this evidence would only add to the jury’s confusion: “[I]f the evidence was half-baked, containing some references to the FDA but not explaining what role the FDA played with respect to the Bard filters, the jury would be left to speculate about the FDA’s involvement and conclusions.”

However, not all courts have shifted their view. For example, in Campbell v. Boston Scientific Corp., the Fourth Circuit reaffirmed its conclusion that 510(k) evidence is inadmissible to show that the product was safe, even where reasonableness of the manufacturer’s conduct is an issue. 882 F.3d 70 (4th Cir. 2018). Although Boston Scientific attempted to distinguish precedent by outlining how some products with 510(k) clearances are based on “a predicate device that was grandfathered in when the process was created” while others are based on “a predicate device that itself received a thorough safety evaluation,” the court was not persuaded, concluding the evidence would “invite a battle of the experts regarding the exact meaning of 510(k) approval.

A Few More States Take Positions on
Tort Remedies for Generic Consumers
Against Brand Manufacturers

We can now add Massachusetts to the short list of states (California and Vermont) that recognize the minority view that there are tort remedies available for generic consumers against brand manufacturers.

In Rafferty v. Merck & Co., 92 N.E.3d 1205 (Mass. 2018), the plaintiff was prescribed the drug finasteride to treat his benign prostatic hyperplasia in August 2010. However, the plaintiff only ever ingested the generic version of the drug, Proscar. Shortly after he started taking the drug, the plaintiff began to experience side effects, including erectile dysfunction and a decrease in libido. The product label for the generic drug, which was identical to Proscar’s label as required by federal law, did warn of these potential side effects but represented that they would dissipate after discontinued use. When the plaintiff reduced and eventually discontinued use of the drug, his side effects worsened. The plaintiff presented evidence that Merck knew of this possibility and even changed its label to reflect this in certain European countries as early as 2008. The Massachusetts Supreme Court distinguished between claims based on ordinary negligence and those that rise to the level of recklessness, holding that “a brand-name manufacturer that controls the contents of the label on a generic drug owes a duty to consumers of that generic drug not to act in reckless disregard of an unreasonable risk of death or grave bodily injury.” According to the court, “[t]his recklessness standard strikes the most appropriate balance between competing public policy interests, limiting liability for brand-name manufacturers while also providing remedies for the most serious injuries and deterring the most dangerous forms of conduct.”

The Rafferty decision is in stark contrast to decisions in two other jurisdictions that addressed the issue this year, one rejecting and the other declining to consider the theory of innovator liability. First, West Virginia considered but ultimately rejected the theory. McNair v. Johnson & Johnson, 818 S.E.2d 852 (W. Va. 2018). And then the Seventh Circuit, in Dolin v. GlaxoSmithKline LLC, 901 F.3d 803 (7th Cir. 2018), reversed a $3 million plaintiff verdict for the wrongful death of the plaintiff’s husband, who consumed a generic version of Paxil. The reversal was based exclusively on federal preemption, but the court noted: “The Illinois courts have not yet considered the new theory of [innovator] liability that plaintiff advances. Because the evidence of federal preemption is decisive, we do not offer for that question of duty a prediction of state law. . . .”

The Rafferty decision continues a slow press on brand manufacturers—which hold only 10 percent of the drug market in the United States—into essentially insuring the generic products comprising a large part of the rest of the market. It is hoped that the Illinois courts will answer the question the Dolin court left unanswered and put another tally in the majority for the innovator liability scorecard.

Third-Party Pressure on Plaintiffs to File
Lawsuits and Undergo Unnecessary Surgeries

Turning mass tort litigation into a lucrative vehicle for investment, third-party litigation financers have poured money into claims against drug and device manufacturers, training lawyers to litigate in the mass tort space and seeking potential plaintiffs.

This year, the New York Times reported on the growing phenomenon, examining “a network of doctors, lawyers, financiers and consultants lur[ing] women” into unnecessary surgeries in an effort to “improve their odds of winning large cash settlements in lawsuits against the manufacturers.” Matthew Goldstein & Jessica Silver-Greenberg, “Prosecutors Are Said to Issue Subpoenas over Pelvic-Mesh Surgery Financing,” N.Y. Times, Sept. 11, 2018; see also Matthew Goldstein & Jessica Silver-Greenberg, “How Profiteers Lure Women into Often-Unneeded Surgery,” N.Y. Times, Apr. 14, 2018.

Much about how this network operates remains a mystery. Especially concerning is how financers are identifying these women in the first instance and getting hold of their private medical histories. Several government investigations that are under way may soon uncover more about the network’s operation. And some device manufacturers involved in litigation have been assertive in pursuing discovery into how some plaintiffs were led to file lawsuits or inflate their damages claims with unnecessary surgeries. See, e.g., AMS’s Memorandum of Law in Opposition to Motion to Quash Subpoenas Issued by American Medical Systems, Inc. and for a Protective Order at 1, In re: Am. Med. Sys., Inc., Pelvic Repair Sys. Prods. Liab. Litig., No. 2:12-md-02325 (S.D. W.Va. May 12, 2016), ECF No. 2294. AMS summarized the issue as follows:

an illicit enterprise that targets and cold calls women who have received vaginal mesh implants, solicits those women (many of whom have limited education or health care options) to sue manufacturers regardless of whether the women have issues with their implants, pressures those women to obtain explant surgeries from out-of-state doctors at exorbitant prices regardless of medical necessity, creates high-interest loans secured by the women’s lawsuits to pay for the unnecessary procedures and associated expenses, and then waits for the cases to be settled to achieve a payoff.

Some courts have permitted discovery into the arrangements. For example, in the opioid MDL, the judge ordered disclosure to the court of “any agreement under which any person, other than an attorney permitted to charge a contingent fee representing a party, has a right to receive compensation that is contingent on and sourced from any proceeds of an MDL Case, by settlement, judgment, or otherwise.” In re Nat’l Prescription Opiate Litig., No. 1:17-md-02804-DAP (N.D. Ohio May 7, 2018), ECF No. 383, at 1 (order regarding third-party contingent litigation financing).

This phenomenon of financed lawsuits or surgeries has serious implications for device manufacturers, potentially swelling the number of lawsuits and the damages claimed. In fact, “surgical funding” (where the litigation funders actually “invest” in the plaintiffs’ operations) is so prevalent it has a term. Discovery of these unethical efforts may help demonstrate the bias of any explanter’s testimony who removed a device that did not need to be removed and may significantly drive down the “value” of plaintiffs’ claims. It may also stem the tide of such activity in the next mass tort. We have covered the topic more in depth previously and will be watching closely as it continues to unfold.

MDL Claim Separation Can Lead to
Case Fragmentation

The Judicial Panel on Multidistrict Litigation reminded us this year that while the panel’s main goal is to centralize, it can do so by separating claims that it deems do not belong in a multidistrict litigation (MDL). See In re Equifax Inc. Customer Data Sec. Breach Litig., MDL No. 2800 (J.P.M.L. Aug. 7, 2018). Fragmenting the cases may streamline the issues for MDL consideration—but also may force some parties to litigate their claims in more than one forum simultaneously.

The decision arose in the Equifax data breach litigation, in which a pro se plaintiff sought to vacate the panel’s order conditionally transferring only his gross negligence claim to the MDL in Georgia and remanding his other claims to the transferor court in Louisiana. The panel rejected the plaintiff’s argument that the transferor court had already denied the defendant’s request to sever that same claim, noting “[we] are not bound by the transferor court’s ruling . . . [and] must consider not just the parties to Iraheta, but the parties in more than 400 actions pending in MDL No. 2800.”

This fragmentation poses a burden on both plaintiffs and defendants, but it may help parties really tailor the claims they choose to plead and pursue. Because products liability cases account for just about one-third of all pending MDL proceedings, this non-drug and device decision has implications for those of us who are involved in that one-third.

Cheers to another year of interesting legal developments!
 

Christine Kain, Patrick Reilly, Isabelle Chammas, and Joe Price are with Faegre Baker Daniels LLP.

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