FDA's new-found willingness to invoke the federal preemption doctrine in state tort suits may provide device firms with some solace in the absence of product liability reform legislation, but prospects remain unclear for non-original-PMA devices.

Last year, for the second time since Daniel Troy became FDA's chief counsel in 2001, the agency filed an amicus brief backing a device company defendant's assertion that premarket approval preempts state law product liability claims.

The case was Horn v. Thoratec. In FDA's 31-page brief - filed May 14, 2004 with the Court of Appeals for the Third Circuit - the agency acknowledges that its position departs from U.S. precedent.

For example, in Smith Industries v. Kernats, the government told the Supreme Court in 1997 the case did "not preempt a state tort law claim concerning an FDA-approved device," FDA recounts. The subsequent "change in views has not been taken lightly."

Troy Defends Proactive Preemption, Tags Masoudi

FDA's brief in Horn v. Thoratec aligns with the agency's stance in Murphree v. Pacesetter in December 2003. On behalf of FDA, the Department of Justice contested the Shelby County, Tenn. circuit court's decision to allow a jury to consider whether a device was approved via the "appropriate regulatory pathway."

That case hinged on whether PMA approval of St. Jude Medical unit Pacesetter's Tendril DX Model 1388T endocardial pacing lead covered the entire device or merely the steroid-eluting tip, as alleged by attorneys for plaintiff Gary Murphree.

Explaining FDA's intervention, Troy noted at the Food & Drug Law Institute's annual meeting that the court's initial decision marked a "frontal assault on our congressionally prescribed role" (¹ Also see "Medtronic Fraud Case Review Casts Doubt On FDA Tort Challenges – WLF" - Medtech Insight, 13 October, 2003., p. 8).

Troy now is with Sidley Austin Brown & Wood in Washington, D.C. On Nov. 24, he handed over his position as chief counsel to Gerald Masoudi.

Within the device legal community, little appears to be known about Masoudi - a former Kirkland & Ellis partner - including whether he will be as aggressive as his predecessor in defending FDA regulatory authority from state law product liability suits. Before his departure, Troy was faulted by Rep. Maurice Hinchey (D-N.Y.) and others for siding with industry in cases such as Horn v. Thoratec (² Also see "FDA Approps Amendment Targets Chief Counsel Troy" - Medtech Insight, 19 July, 2004., p. 4).

Is Government Standards Defense Weakened?

Further, the series of public relations setbacks FDA endured in the pharmaceutical arena in 2004 could deter the agency from taking so bold a stand on preemption.

Nonsteroidal anti-inflammatory drug (NSAID) scrutiny, suicide warnings for antidepressants and a flu vaccine shortage remain fresh in the public's mind. To state courts and jurors, those factors may cast doubt on the "government standards" defense in liability cases.

At the federal level, adverse publicity on the drug side likely will stall product liability legislation in the 109th Congress - even though President Bush has made medical malpractice and tort reform a domestic priority.

AdvaMed Exec VP-Strategic Planning & Implementation Blair Childs characterized the struggle to legislate the government standards defense as "a difficult argument to make [but] an argument we absolutely have to keep making."

Until provisions allowing FDA preemption of state product liability suits are enacted by Congress, device firms can take heart from Horn v. Thoratec.

"The reason that the case is something we're so happy about is that with participation of FDA and with the fact pattern being so classically within the framework of the statute, you really have a lot of clarity brought to the issue, with the decision of the Third Circuit to uphold preemption," Thoratec VP & General Counsel David Lehman said.

In that suit, the manufacturer's defense benefited from FDA's direct opinion. However, federal district courts in other device cases in 2004 also upheld the "preemptive scope" of the PMA process, according to Reed Smith Partner Michael Brown and Medtronic VP & Senior Counsel-Litigation David Martin.

Those cases include McMullen v. Medtronic, Moore v. Sulzer and Davenport v. Medtronic, the duo note in a paper presented to the American Conference Institute's Drug & Medical Device Litigation conference in New York in December. Moreover, in recent years the Third, Fifth, Sixth, Seventh and Eighth Circuit Courts of Appeals all have found in favor of preemption.

Other recent legal developments suggest that beyond arguing for federal preemption in product liability cases, manufacturers stand a good chance of curbing extensive discovery by plaintiffs into such a defense.

Brown and Martin cite Pakulak v. Sundareson. A July 14, 2004 order by the Wichita County, Texas district court denied continuance of a summary judgment hearing because plaintiffs sought "discovery on issues relating to federal preemption [and Tyco's] Ray TFC " spinal implant, already approved via PMA and PMA supplement.

Clarity Sought For PMA Supplements, IDEs

While the decision in Horn v. Thoratec guards the PMA approval process from plaintiffs' second-guessing, the lower courts appear less protective of other types of regulatory actions.

Hyman, Phelps & McNamara Partner Jeffrey Gibbs, a former associate chief counsel for enforcement at FDA, said that with the Horn case, "the weight of evidence, the preponderance of legal thinking is that PMAs are going to be preempted."

Nevertheless, "there may be issues about PMA supplements: [are they] entitled to the same deference, and how do IDEs fit into it?" he queried. "If someone got approval for a device and then modified labeling...would they still have a preemptive defense? Or would the plaintiff say, 'well, there's a much less thorough review for a supplement'?"

In January 2004, Minneapolis federal court determined that class actions related to St. Jude Medical's Silzone heart valve could proceed, ruling that the device's PMA supplemental approval did not constitute a "requirement" of federal law, and is not preemptive.

In September, an appellate court declined to review the decision. As of Oct. 22, St. Jude marked 19 individual Silzone cases pending in U.S. federal courts. Damages sought range from $9,500 to $120.5 mil. Another 22 state court suits seek damages ranging from $50,000 to $100,000. St. Jude's remaining product liability insurance coverage is approximately $155 mil., according to a Nov. 9 quarterly filing.

For Thoratec, it was the rigorous standard required exclusively of PMAs that allowed the defense to sway the Pennsylvania appellate court.

In the historic Medtronic v. Lohr case of 1996, the Supreme Court ruled that the express preemption clause within the Medical Device Amendments does not cover 510(k) products. The justices left open the possibility, however, that the provision - 21 USC Sec. 360k(a) - could apply to devices undergoing the more stringent PMA process.

Horn v. Thoratec settled the question. President & CEO Keith Grossman summarized the verdict: "If you're developing a classic PMA product that saves and/or supports life, and you're playing by the rules, and you run a good trial, and you've got good data and you demonstrate efficacy...which is the case described by a PMA...you ought to be protected from lawsuits."

In the case, plaintiff Barbara Horn sought damages related to the death of her husband, who died after implantation with Thoratec's HeartMate left-ventricular assist device as a bridge to transplant. Device failure was attributed to erosion of sutures holding a "screw ring" component (³ Also see "FDA’s Court Retort: Device PMA Approval Preempts State Common Law Claims" - Medtech Insight, 31 May, 2004., p. 5).

HeartMate originally was approved in 1998. Thoratec's destination-therapy indication for the device, granted in 2002, was supported by the 129-patient REMATCH trial, estimated to have cost $25 mil. The company is poised to begin a Phase II, pivotal trial of its rotary-flow HeartMate II .

Insurance Premiums Add To Small Company Burden

According to Grossman, even "spurious" liability claims can devastate "a small company trying to bring to market an active implantable device" for patients at end of life. In addition to crushing a firm's "innovative spirit," the "effect can be to drive a wedge between the industry and the clinic."

Grossman further observed that "premiums for good liability coverage can be quite burdensome, especially for companies even smaller than we are."

Chantilly, Va.-based MedMarc claims to be the largest U.S. insurer for medical product liability, based on the volume of insured revenue. The payor claims roughly 700 device firms as clients. Premiums are computed from the client's revenue, the types of product covered and "limits" on revenue the client wants insured.

Baker & Daniels Partner Tom Stayton, who heads the Indianapolis law firm's product liability team, noted that "a lot of companies...if they have product liability insurance at all, almost always have a very high deductible, or a self-insured retention."

Under that scenario, "the company has to pay the initial level of liability before the insurance will kick in. So many times insurance isn't a factor."

In his first health speech of 2005, President Bush told a Southern Illinois audience that "world-class medical technology is expensive.... I suspect that somebody whose life has been saved by the latest technology is going to say that cost increase is necessary."

The President contrasted that "worthwhile" expense with the toll of medical malpractice suits on the health system, singling out damage to neurosurgeons, ob/gyns and small businesses. On average, small firms pay $150,000 per year on litigation expenses, according to a White House fact sheet.

Federally, "medical liability problems and lawsuits and increasing premiums and the defensive practice of medicine" saps $28 bil. per year from Medicare, Medicaid and veterans benefits, Bush said Jan. 5.

Early Offers Accepted, Late Senate Debates Expected

At the New York litigation conference, HHS General Counsel Alex Azar spotlighted the department's "early offers" pilot program, unveiled in September.

The pilot allows HHS and patients treated by federally funded community health centers or the Indian Health Service to propose a settlement over injury claims within 90 days of notification of the program. Bids are confidentially taken and reviewed by a third party. Neither HHS nor claimant is aware of the other's action unless the bids match, or one exceeds the other.

Under the program, HHS must seek Justice Department approval before making bids over $200,000. After each case closes, HHS will study and publish the early-offers data as an example to state lawmakers.

Bush's proposed framework for medical malpractice legislation sets a $250,000 "hard cap" on non-economic damages. Former Rep. Jim Greenwood (R-Penn.) introduced the most recent iteration of the proposal (HR 4280), which passed the House in May.

The cap provision also passed the House through broader health liability legislation in 2003. Senate defeat of the measure is partly attributable to provisions outside the scope of medical malpractice - for example, product liability language that ultimately was stricken from the bill.

Sen. Lindsey Graham (R-S.C.) resisted that legislation, and is among a handful of Republicans who could block similar efforts in 2005. Sixty votes are needed to achieve cloture, halting further debate on the potential legislation. Sens. Richard Shelby (R-Ala.) and Mel Martinez (R-Fla.) also are viewed as likely dissenters.

The two other prongs of Bush's tort reform agenda - class action limits and asbestos claims management - should prove easier to pass than medical liability.

Regarding class actions from a device liability standpoint, B&D's Stayton observed that "one trend is the reluctance of courts to allow class actions."

"Courts are starting to decide that class actions are not an appropriate way to try to resolve these claims, when you're talking about claims involving alleged personal injury, because the claims are just too individualized to be able to handle on a class-action basis," Stayton said.

Separate lawsuits over pedicle screws, penile implants and heart valves in the 1990s are examples of "device cases where courts have denied certification of a class action," he noted.

Physician Liability Reforms Draw Industry Support

Though AdvaMed will continue to seek legislation on the government standards defense in 2005, the association also is "an active supporter of broad-based medical malpractice reform, and we will continue to be a voice in that discussion," Childs said.

As a member of the Health Coalition on Liability & Access and the American Tort Reform Association, which Childs ran in the late 1980s, AdvaMed is concerned with liability's impact on R&D, clinical trials and "the willingness of physicians to take risks."

In a 2003 survey, AdvaMed companies cited perceived threats over medical liability as a reason for not pursuing certain technologies, Childs noted. Implantable device firms, orthopedic surgeons and ob/gyns are particularly afraid of litigation, he said.

As it tackles liability this year, the association will work with new GOP leaders of key congressional committees. Rep. Joe Barton (Texas) now chairs the House Energy & Commerce Committee, instead of former Rep. Billy Tauzin (La.). Sen. Michael Enzi (Wyo.) heads HELP, with Sen. Judd Gregg (N.H.) assuming Budget leadership. AdvaMed also will work with House Judiciary Chair Jim Sensenbrenner (Mich.) and Senate Judiciary Chair Arlen Specter (Penn.), who replaced Orrin Hatch (Utah).

Although government standards defense legislation might be far off, Horn v. Thoratec reveals how companies can mobilize to direct legal opinion in a device-specific case, when preemption is at issue.

Thoratec emphasized that FDA did not technically "intervene" by filing the amicus brief, but that it responded to an invitation from the Third Circuit Court. "FDA had to make its own decision on whether or not and how to weigh in with their brief," CEO Grossman said.

Throughout that process, "we kept industry representatives of AdvaMed kind of abreast of what was going on, because they see things that are happening in other parts of the industry," he recalled.

Childs affirmed that "the judge asked for an amicus, and when he asked is when we sent a letter" to the U.S. Solicitor General "and informed all our companies. We sent them a copy of our letter [saying] that if they were so inclined, we would encourage them to do the same."

The case also reflects FDA's willingness to file amicus briefs more often and "at the lower-level courts as well," Washington Legal Foundation Chief Counsel Richard Samp said. "My impression was that they were in the past much more likely to do it only at the U.S. Supreme Court or at the federal appeals court level, but they have more recently been willing to do it at the district level and also at the state court."

Within months, WLF expects a decision from the Sixth Circuit Court on Gilligan v. Medtronic. WLF is trying to have the court dismiss plaintiff claims that Medtronic defrauded FDA with false data to get two pacemaker leads cleared. The group refers to the Supreme Court's Buckman decision of 2001, which held that FDA alone has authority to decide whether a premarket filing is fraudulent.

- Sunil Iyengar

Preemption Redemption: FDA Legal Briefs Stand In For Product Liability Law

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