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Rein in the Monster
John Calfee, New York Sun, 4-12-06

Calfee offers a powerful analysis of the central flaw afflicting pharmaceutical litigation in U.S. Courts. He argues, in short, that medical issues in these cases are often so complex that juries just end up guessing—or voting based mainly on emotional considerations.

Yesterday, a New Jersey jury added $9 million in punitive damages to $4.5 million in compensation it had awarded to John McDarby, a 77-year–old man who had sued the drug manufacturer Merck after suffering a heart attack while taking the pain reliever Vioxx. That verdict did not tell us much about Vioxx, Merck, and even the Food and Drug Administration, but it certainly provided a lot of unpleasant news about the tort system...

Now, if we ask a jury to do the impossible, we're asking for trouble. And if we ask it to do the impossible with tens of billions of dollars in the balance, we're asking for big trouble. Yet that's what we did last week in that New Jersey courtroom. Does this mean we should junk the liability system, at least for pharmaceuticals? Not at all. The system works reasonably well for outlier situations such as intentionally hiding essential information from the FDA and others, or marketing drugs that clearly fail a cost-benefit test while withholding exactly the information that would have disclosed that fact. But today's system cannot work well for close calls, at least not when the stakes are in the billions or tens or hundreds of billions of dollars. Analysts expect tens of thousands of cases roughly similar to Mr. McDarby's. Juries will continue to guess at the central issues, getting it wrong as often as right but charging Merck $10 million or $20 million or $40 million every time they're wrong. A thousand mistakes is $10 billion to $40 billion. And a lot of states make it easier than New Jersey does to award punitive damages.

Nor is Vioxx the only drug where this perverse logic could play out. The liability plaintiff bar is honing the same methods for other drugs where similar imponderables can generate $10 million guesses.

What to do? There is a simple way to keep these questions out of the reach of juries. The states can do what the FDA has already suggested they do: Stop letting plaintiff lawyers seek huge awards for behavior that actually complies with the FDA's regulations and findings of fact. With lawyers bringing thousands of cases before juries that read about the evils of the drug companies every day and then have to decide the central issues through guesswork, we are now creating a monster. It is time to rein that monster in.

Project FDA.
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