JOLT Digest

Class action claim against Zicam manufacturer Matrixx reinstated by the Ninth Circuit

By Abby Lauer – Edited by Alissa Del Riego
Siracusano v. Matrixx Initiatives, Inc., No. 06-15677 (9th Cir. Oct. 28, 2009)
Opinion

The Ninth Circuit has unanimously reversed the U.S. District Court for the District of Arizona’s holding, which had dismissed a class action claim against Zicam manufacturer Matrixx for the complaint’s failure to adequately allege a violation of the Private Securities Litigation Reform Act of 1995 (“PSLRA”).

In an opinion written by Tashima, J., the Ninth Circuit held that the District Court improperly relied on a statistical significance standard to determine that the plaintiffs’ complaint did not allege “a material misrepresentation or omission of fact.” Siracusano v. Matrixx Initiative, Inc., No. 06-15677 at 18 (9th Cir. Oct. 28, 2009). Instead of determining materiality as a matter of law, the district court should have allowed the jury to conduct a “fact-specific inquiry.” Siracusano v. Matrixx Initiative, Inc., No. 06-15677 at 20 (9th Cir. Oct. 28, 2009). In addition, the Ninth Circuit held that the lower court erred in dismissing plaintiffs’ complaint for failure to allege scienter on the part of Matrixx executives. The court reasoned that the inference that Matrixx executives knew about the possible link between Zicam and anosmia (loss of smell) before issuing allegedly misleading statements is at least as likely as any plausible opposing inference.

Phoenix’s East Valley Tribune provides an overview of the case. For further discussion of the opinion and pleading standard precedents, see The D & O Diary. For more information about homeopathic remedies, including Zicam, see this recent Washington Post article. (more…)

By Sarah Sorscher*, JD/MPH Candidate, Harvard Law School &
Sara Crager, MD/PhD Candidate, Yale
Editorial Policy

Text of H.R. 1427
Summary

Last week, Rep. Henry Waxman and several other representatives unveiled the latest version of a bill designed to lower the price of drugs by encouraging generic competition in biological products (”biologics”). Biologics are products derived from living processes and used to prevent, treat, or cure human illness. Most drugs, in contrast, are synthesized using chemical reactions.  Biologics include products such as vaccines, blood-derived products, antibodies, and recombinant proteins (e.g. proteins that modulate the immune system, or proteins that induce the proliferation of red blood cells). Over the past 30 years, a revolution in recombinant DNA technology has propelled the sub-field of biologics from the periphery into prominence in the biopharmaceutical industry. Three of the top 10 best-selling drugs in the U.S. in 2007 were biologics (Enbrel, Aransep, and Epogen), and biological products now represent some of the most expensive drugs on the market; annual per-patient treatment costs for one expensive drug topped $300,000 last year.

The new bill, H.R. 1427, dubbed the “Promoting Innovation and Access to Life-Saving Medicines Act,” is intended to introduce price competition in biologics by granting the FDA clear authority to approve generic, or “follow-on” biologics, which are comparable in safety and efficacy to biologics already on the market. The new legislation is modeled on the Hatch-Waxman Act of 1984, which allowed generic manufacturers to gain market approval by showing that their products were interchangeable, or bio-equivalent, with previously approved products, without the need to preform additional clinical trials. Until now, the FDA has been reluctant to allow for this type of abbreviated approval for biologics, which have historically been regulated under a different legal regime from other drugs. Although, as described in this testimony by an FDA official, the story is more complicated. Some proteins that were initially purified from human and animal tissues, such as insulin and human growth hormone, were categorized as drugs when they first obtained FDA market approval. Today these substances remain regulated as drugs, even though they are now synthesized using recombinant DNA technology, like many biologics.
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Supreme Court Holds that FDA Regulation Does Not Preempt State Tort Claim
By Caitlyn Ross – Edited by Miriam Weiler

Wyeth v. Levine
Supreme Court of the United States, March 4, 2009, No. 06-1249
Slip Opinion

On March 4th, the Supreme Court of the United States affirmed the judgment of the Vermont Supreme Court, holding that federal drug labeling regulations do not preempt state failure-to-warn lawsuits.  The Supreme Court held that compliance with FDA labeling requirements did not preempt Levine’s failure-to-warn claim based on what she alleged was defective labeling of Wyeth’s anti-nausea drug Phenergan. In so holding, the Court concluded that Congress did not intend to preempt state-law failure-to-warn actions.  It also rejected Wyeth’s claim that the Court should defer to an FDA statement, made in the preamble to a 2006 regulation, that state tort suits threatened the FDA’s statutory mandate.

Briefs and relevant court documents are available here at the SCOTUS wiki.  The SCOTUS Blog provides an overview of the case. Drug and  Device Law Blog suggests that the decision does not eliminate preemption alcims, but does make them far more difficult to win.  The Wall Street Journal Law Blog features an analysis of the decision.  The Volokh Conspiracy notes a decrease in deference to agencies.

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