Who should be liable when a patient is injured by a generic drug? That's an interesting question, since by law, a generic drug must be bioequivalent to and carry the identical labeling as the original brand name drug. So, if the injury arose from the drug's original design or labeling, how can you hold the generic manufacturer accountable?

[Last summer]About a year and a half ago, the U.S. Supreme Court held in a case called Pliva v. Mensing that negligent failure to warn tort actions against generic drug manufacturers were preempted by the Food, Drug and Cosmetic Act. Because generic manufacturers are obligated to use labeling identical to the FDA-approved labeling for the innovator, or branded, product, they can't be sued for failing to include warnings about certain risks if those warnings do not appear on the innovator's label.

It would seem to be common sense that you shouldn't be able to sue someone for not doing something they were legally forbidden from doing. But litigation-happy tort lawyers have been trying to find a way do it anyway. Even more troubling is the fact that four Justices of the Supreme Court seem to agree with that view. After all, their reasoning went, [Update: the generic manufacturers could have ask the FDA to initiate a labeling change in the expectation that FDA would pressure the innovator to agree to the change. "If the FDA agreed that a label change was required, it could have asked, and indeed pressured, the brand-name manufacturer to change its label." Justice Sotomayor's dissent, joined by three other Justices, argued the law should "require the Manufacturers to show that the FDA would not have approved a proposed label change."] [Update: An earlier decision from the U.S. Eighth Circuit Court of Appeals went so far as to argue that,] if the generics manufacturers don't want to be sued, they can just stop making generic drugs. In the view of those four dissenters [judges], if a patient is injured, then by golly there should always be somebody to sue. Well, based on the outcome of a handful of cases now making their way through the courts, it appears that there is -- at least in a handful of jurisdictions.

In a case called Conte v. Wyeth, a California Intermediate Appellate Court in San Francisco held that, since plaintiffs can't sue a generic manufacturer for negligent failure to warn, then they should be able to sue the innovator manufacturer who had some control over the contested labeling -- even if the patient didn't take the innovator's product, and even if the innovator is no longer manufacturing the off-patent drug and therefore no longer keeping its labeling up to date.

The California Supreme Court refused to review the case, which means it hasn't been implemented state-wide but is good law (that is, "good" in the sense of "valid," not "good" in the sense of "good") in the First Judicial District of California. [Update: There is apparently some dispute regarding the extent to which California trial courts are bound by California intermediate appellate court decisions. I'm no expert in California procedure, so I'll concede it's possible that not all courts in the First Judicial District would have to treat this decision as binding precedent.] Not long after Conte was decided, the U.S. District Court for the District of Vermont became the first federal court to agree with the Conte decision, in a case called Kellogg v. Wyeth. Following the rationale of Conte, the federal court held that it was "reasonably foreseeable" that physicians would continue relying on a brand manufacturer's approved labeling even after the innovator ceased making the drug. Thus, innovators have a duty of care to ensure up-to-date labeling for ... well, pretty much forever.

Unless this tort theory is struck down, and soon, it could very well metastasize throughout the country's state and federal courts, giving manufacturers and investors yet another reason to give up on innovation in the medical products space. Fortunately, both the U.S. District Court for the Middle District of Florida and the U.S. Sixth Circuit Court of Appeals have since rejected the Conte/Kellogg foreseeability theory, which presages an eventual Circuit Court split that would have to be resolved by the Supreme Court. And, at a more localized level, Jim Beck at the Drug and Device Law blog may have stumbled onto a way to rein in Conte based on an old California Supreme Court decision [from January 2011].

Yet, while it may indeed be possible to keep what Beck calls this "omniforeseeability" theory from spreading, these cases nevertheless raise a very important question: Who exactly should be responsible for ensuring that a drug's label is maintained in a post-patent, multiple-producer environment? In many cases, such as the one presented in Conte and Kellogg, the innovator manufacturer isn't producing the drug any longer. But none of the generic manufacturers has the legal power to change the label. That poses a real problem that merits a real solution. And its one of things that I'll be thinking through over the coming months and years.

The announcement of a $950 million settlement between Merck and the FDA for off-label promotion and false statements about risks for heart attacks and strokes should come as little surprise to anyone, particularly given the upcoming $3 billion dollar settlement by GlaxoSmithKline publicized in early November (and other recent large settlements). Unfortunately, drug companies do not seem too keen on avoiding behavior that results in massive financial penalties for illegal activities.

But wait! Aren't companies doing more and more to stay compliant these days? Haven't corporate integrity agreements included stricter and more detailed requirements? While Merck's settlement dates back to incidents occurring prior to the 2004 withdrawal of Vioxx from the market, the question still remains: Why then are these companies willing to risk massive fines for something that can be done as a normal part of business? My firm outlines specific guidance on this in our article "The Need for Compliance as Business Strategy."

Last week Merck & Co. agreed to pay $950 million to settle government allegations that it illegally promoted Vioxx (rofecoxib). Merck voluntarily removed Vioxx from the market in 2004, but it is still resolving legal claims.

Vioxx was approved in 1999 for the treatment of pain. In 2002, the FDA added a claim for rheumatoid arthritis (RA). However, the Justice Department claims that Merck promoted Vioxx for RA prior to 2002, which would mean Merck violated the FDA's off-label promotion rules.

Never mind that the FDA later agreed that Vioxx was safe and effective for RA and this assessment was based on a Phase III clinical trial of 1,100 RA patients. Is it any wonder that Vioxx was used off-label for RA when it had been approved for acute pain, osteoarthritis, dysmenorrhea, and migraine and was also shown to work in RA? This is a clear example of evidence-based medicine--there's no snake oil being sold here.

Let's examine a hypothetical snake oil situation and see just how unlikely it is. What if Merck had promoted Vioxx for something crazy, like breast cancer?

Step 1, Merck sales representatives call on oncologists and recommend that they try Vioxx for breast cancer patients. These physicians would say, "You're kidding, right? What data do you have? What's the mechanism of action? Is this a joke? What other doctors have used it that way and can I talk to them?" To this, the Merck sales reps would have no good response.

Step 2, an oncologist makes a huge mistake and prescribes Vioxx for breast cancer anyway.

Who needs a Super Committee? It seems the Food and Drug Administration has a plan to close the budget deficit all on it's own. Yesterday, the agency announced it had reached an agreement with Merck to pay $950 million in order to settle criminal and civil charges that the company illegally promoted Vioxx for off-label uses and for misrepresenting the drug's risks. That comes on the heels of a $3 billion settlement by GlaxoSmithKline earlier this month.

Now, with all due respect to the memory of Everett Dirksen, a billion here and a billion there isn't even real money in this day and age. But with Pfizer, Eli Lilly, AstraZeneca, GSK, and now Merck all having paid at least half a billion dollars in fines for off-label promotion in the past three years, it seems as though the FDA is on a one-agency revenue raising mission. And if that happens to also put a beat down on the pharmaceutical industry, I'm sure there are folks in the agency who feel that's all well and good too.

"Well, wait a second there!" you might be tempted to say. Doesn't the FDA have good reason to ban off-label promotion? After all, those ARE uses that the agency has never certified as safe and effective.

The problem is that FDA bans not just false or misleading claims about an off-label use's safety and efficacy. That is, it's not just preventing snake oil salesmen from peddling quick fixes that don't work. The agency bans all promotion of off-label uses, even if those uses have been proven to be safe and effective in clinical trials. Even if those uses are considered to be the standard of care for a given ailment. And even if a physician could be liable for malpractice for not administering a drug off-label.

In a 1998 court case, the FDA argued in federal court that off-label promotion was inherently false or misleading because physicians would never be able to tell whether there was sufficient evidence supporting the safety and efficacy of a given drug use unless the agency approved that use. The judge laughed off the claim by writing that the "FDA exaggerates its overall place in the universe." After all, the court continued,

Both Paul Howard and Charles Hooper have commented recently on the $3 billion payment that Glaxo was forced to cough up to settle charges of off-label promotion. I'm not familiar with the specifics of the Glaxo case, but I thought I'd add my two cents on the constitutionality issue that Paul and Charles raise.

It is true there are good reasons to believe that FDA's prohibition on off-label promotion is unconstitutionally over-broad. The U.S. Seventh Circuit Court of Appeals suggested in one recent case that the off-label promotion ban was "unconstitutional in at least some applications." But unlike Prof. Ralph Hall, I'm not optimistic about the U.S. v. Caronia case now being decided by the Second Circuit.

For one thing, Caronia presents what we lawyers would call "bad facts." Drug sales rep Alfred Caronia was prosecuted for participating in a face-to-face sales meeting in which Caronia's colleague told a physician about various off-label uses, but did not supply any scientific research supporting the safety and efficacy of those uses. Although we First Amendment purists might argue that even this kind of speech ought to be permitted, it's not a stretch for federal courts to justify restrictions on that kind of off-label promotion given current commercial speech case law.

Federal judges are more willing to find First Amendment protection when the speech involves distribution of published research findings or discussions of on-going research at scientific conferences. But in the Caronia case, a federal trial court judge has already held that a ban on the kind of promotion at issue could be justified because "some control over the off-label promotion of manufacturers does appear essential to maintaining the integrity of the FDA's new drug approval process." So, it's entirely plausible that the Second Circuit could agree that the off-label promotion ban is "unconstitutional in at least some applications" but constitutional as applied to Alfred Caronia.

In addition, the Caronia case also presents a couple of purely procedural issues that might permit the Second Circuit to reverse Caronia's conviction without having to reach the merits of the constitutional question. As it turns out, the FDA has been fairly successful in avoiding unambiguous court decisions on the First Amendment question, as it did in an earlier case litigated by the Washington Legal Foundation.

In that case, the federal District Court for the District of Columbia held that the off-label promotion ban was unconstitutional as applied to the distribution of peer reviewed medical journal articles. But the FDA changed its interpretation of the statute when it appealed to the DC Circuit, as I discuss in this article, thereby mooting the constitutional question and rendering the district court's decision invalid.

Similarly, after the biotech company Allergan sued in October 2009 for a declaratory judgment that the FDA's off-label promotion ban was "unconstitutional and inconsistent with the Food, Drug and Cosmetics Act," the FDA initiated a criminal case against Allergan for illegal off-label promotion. When Allergan settled in September 2010, it was forced to drop the constitutional challenge as a condition of the settlement.

Last month, however, yet another drug firm, Par Pharmaceutical, filed an almost identical action seeking a declaratory judgment that certain forms of off-label promotion were indeed protected by the First Amendment. With some luck, that case will actually be fully litigated, and we'll finally get a clean decision on the constitutionality of FDA's off-label promotion ban.

You can read more about my own thoughts on the constitutionality question here.

You would think these ten simple words are clear enough: "Congress shall make no law...abridging the freedom of speech..." Apparently not. Congress did, of course, pass a law prohibiting pharmaceutical companies from promoting off-label uses for drugs and put the FDA in charge of that enforcement. Never mind that off-label prescribing is widespread, legal, and helps American patients. Never mind that Congress itself, Medicare, the Department of Veterans Affairs, the National Cancer Institute, and the National Institute of Health actively encourage off-label prescribing.

A drug's "label" is the drug's FDA-approved prescribing information--the package insert. Any approved use is considered on-label, while any use not listed on the insert is considered off-label, even though the off-label use may effectively treat a medical condition and reflect the best medical practices. Although the FDA tolerates off-label usage, it forbids companies from promoting such uses. Promotion is really just communication and communication is speech. So the FDA is in direct violation of the First Amendment. Something has to give.

This is not some academic issue, as pharmaceutical companies have been pressed into paying almost $12 billion in fines over the last decade. In fact, just today GlaxoSmithKline announced that it settled its case for a whopping $3 billion.

In other news today, pharmaceutical companies are mounting a concerted legal effort to overthrow or weaken this and similar rules. Their case got a boost this summer when the U.S. Supreme Court cited the First Amendment in striking down a related Vermont law. In its decision, the court wrote that speech used in drug marketing is a form of expression protected by the Free Speech Clause of the First Amendment. It's good that someone is actually reading the Constitution.

A Federal Trade Commission report on so-called pay-to-delay drug patent settlements that was released this month has given new life to congressional efforts to ban the deals in which brand manufacturers pay potential generic competitors to drop patent challenges. A CBO analysis suggested that a ban could save federal health programs $2.68 billion over 10 years by getting cheaper generics to market sooner. And Democrats are pushing the deficit reduction super committee to include the ban in its proposals. In practice, though, a ban could actually delay the introduction of more generic drugs than it would accelerate, resulting in higher drug prices.

Current law provides incentives for generic producers to challenge potentially weak drug patents in court. But when faced with the uncertainty of patent litigation, brand manufacturers sometimes offer to settle the lawsuits by paying the challengers to drop the litigation. The patents remain in place that way. But as part of the settlements, the brand manufacturers usually agree to let the generics on the market a few years before the patents in question expire.

The FTC hates these deals and calls them anti-competitive because successful patent challenges would get generics to market sooner still. But that assumes that the majority of patent challenges would actually succeed, which isn't borne out by the data. Just over half of the drug patent cases that make it all the way to a court decision fail. And there is no evidence that settled cases would have been more likely to result in patent invalidation.

The FTC already has authority under existing antitrust laws to block patent settlements where evidence indicates consumers would be harmed by higher prices. But the agency loses many of those cases because the evidence isn't on their side. And, in the handful of cases where the FTC succeeded in blocking a settlement and forcing the litigation to go forward, courts more often upheld the patents than ruled them invalid.

As it turns out, settlements almost always result in a generic product reaching the market before the patent's expiration -- something a ban could not deliver. So, banning settlements altogether and forcing these cases into court would prolong the amount of time the typical brand drug enjoys a monopoly with no generic competition. That's why federal courts have so far refused the FTC's pleas to make these settlements per se illegal. In one decision, U.S. Seventh Circuit Judge Richard Posner wrote that "a ban on reverse-payment settlements would reduce the incentive to challenge patents by reducing the challenger's settlement options." He suggested that it was the proposed ban, not settlements, "that might well be thought anticompetitive."

Collusion between competing firms in any industry often raises red flags that suggest anticompetitive, anti-consumer behavior. But at least in these pay-to-delay cases, cooperation among brand and generic firms does seem to promote overall consumer welfare.

Thanks to Paul Howard for pointing me toward "The Long Term Bullish Case for Pharma," published back in August by biotech VC Bruce Booth.

Booth outlines three solid arguments for bullishness: First, it's a rich world--growing richer, at least in many countries--and rich people want more medicine; second, people are living longer, and the longer we live, the more we consume medicine; and third, drugs are a relative bargain--despite well-publicized episodes of pharmaceutical sticker shock, a pill is usually cheaper than a stay in the hospital.

Good reasons all, but we might immediately note: These three conditions have been in place in the recent past, and yet as we all know, the pipeline of new drugs and devices has been drying up over the last two decades. Indeed, Pharma companies are laying off, and spinning off, their researchers. So what evidence can we point to that tells us that the drying-up/downsizing trend will reverse itself any time soon? Or at all?

One answer, of course, is that things move in cycles. Another answer is that a bad trend can't go on forever, because if it's a bad trend, well, people will intervene to stop the downwardness, and even reverse it--that's another way of saying that things move in cycles.

But of course, things don't always move in cycles--sometimes they "move," if that's the right word, in troughs. That is, there's little or no upward movement at all. In economic terms, we can recognize troughs in the form of "liquidity traps," as seen in the US in the 30s, or in Japan over the last two decades--and maybe in the US, now, too.

In scientific terms, we can think of "punctuated equilibrium," as another kind of trough. Punctuated equilibrium, of course, holds that progress--in the scientific and technological realm as well as in nature--is not a steady upward curve, but rather, a step-like progression, if we're lucky. As an example of punctuated technological equilibrium, we can note, for example, that commercial aviation has shown little increase in jet speed in five decades; indeed, if one factors in the now defunct-Concorde, jetliners move slower today than they did 35 years ago. So we can never know for sure when we are on the horizontal part of the step, or how long we will be stuck on the flatline.

And in historical terms, we can think of the Dark Ages in Europe; more recently, other civilizations have faced similar long troughs of stagnation and even decline, e.g. China, India, and the Arab world. One needn't be Spengler to realize that civilizational advancement is not a given.

Today, it certainly would appear that the domestic forces that have conspired against medical progress in recent decades--including, but no limited to, the usual suspects, namely, trial lawyers and regulators--have their foot firmly on the neck of medical progress and have no intention of letting go. And with apologies to Newton, we can say that a foot at rest tends to remain at rest.

Moreover, mindful of the historical truism that all great historical events have multiple causes, we should also say that other forces stand in sturdy opposition to Pharma bullishness. One such is the static-analysis fiscalist mindset that dominates Washington, which holds that money saved on "healthcare" in the short run is all that matters, ignoring the larger costs of such "savings" to society as a whole. And another negative force is the strange but enduring alliance between libertarians and greens that leaves our politics with a sense of fatalism, even nihilism, about even the idea of advancement stemming from public-private enterprises. NASA has been one victim of this libertarian-green alliance; the medical industrial complex has been another. Until someone figures out how to obviate even the most streamlined FDA, as well as widespread clinical trials and legal liability, medicine will always be a res publica--a public thing. So the libertarian dream of totally privatized medicine is just that--a dream. And in that case, it will be necessary to focus on reinventing the public-sector role in medicine.

In the meantime, in the real world, when will this wide-array phalanx of opposition to medical progress disappear in the US? Good question. Whoever can answer that question will, indeed, also have the answer to the question of when the Pharma bull market starts.

Of course, we should note that while these doleful conditions apply to the US, and also to Europe, there's no law that says that the rest of the world must be so shortsighted. Indeed, the ROW--most obviously, the rising countries of Asia--might well conclude that the self-strangulation of the Pharma sector is one more bad idea not to import from the West.

So the Pharma bulls could be running soon, somewhere.

Alex Tabarrok's vision of a "Consumer Reports" FDA depends on the widespread use of biomarkers and diagnostics - not just in the labs of pharmaceutical and biotech companies, but in your doctor's office or local pharmacy. Widespread consumer access to those tests - and confidence on what the tests are telling us - is still several years away.

What's slowing the field down?

On the industry side companies are investing heavily in using biomarkers to help guide new drug development, and are clearly shifting to an R&D strategy built around personalized medicines, but so far (outside of cancer treatments) those investments haven't found their way into many drug labels or companion diagnostics.

A 2010 report from the Tufts Center for the Study of Drug Discovery noted that while many companies are submitting data for the FDA's program for Voluntary Exploratory/Genomic Data Submissions, they also said that "they cannot use pharmacogenomic data in an approval package due to a variety of regulatory concerns."

The Medical Progress Today blog provides a forum for economists, scientists, and policy experts to explore the scientific, regulatory, and market frameworks that will best support 21st century medical innovation.  We will focus especially on the U.S. Food and Drug Administration, the agency responsible for overseeing the nearly half-trillion dollar drug and medical device markets in the United States.

The blog will range widely in terms of topics and POV.  But, at its heart, MPT is about harnassing the power of science, market incentives, and (prudent) regulation to create the kind of health care system that we all want - more effective, efficient, and affordable.

We live in a time of breathtaking advances in the capacity to treat--and cure--illness. The translation of the human genome and an explosion of information from new sciences like metabolomics and proteomics have given researchers powerful new tools for understanding, treating and (eventually) curing deadly diseases like cancer and Alzheimer's. The old medical paradigm treated illnesses symptomatically with one-size-fits all medicines; the new paradigm will analyze disease at its molecular roots and to develop personalized therapies that match a patient's own unique biochemistry.

The question is not whether personalized medicine will become a reality, but when. Innovation is currently struggling in the face of regulatory, reimbursement, and insurance frameworks built around public health assumptions that fit the middle of the last century, rather than the first decades of the 21st century.

Turning personalized medicine from an aspiration into a reality will require regulators, companies, and researchers to breakdown binary regulatory frameworks; develop collaborative approaches to rapidly validate new technological standards; and embrace clinical tools that allow patients and physicians to become full partners in the innovation process.

Through both this blog site and the original essays it will commission, MPT will provide a forum to explore the most current ideas--and emerging challenges--in the field of personalized medicine.

We hope that you will find MPT a vital and provocative resource for building a health care system ready to embrace the full potential of personalized medicine and sustain U.S. leadership in biomedical innovation.

The U.S. government is stepping up its use of the so-called "responsible corporate officer doctrine" to hold pharmaceutical company executives personally and criminally responsible for violations of FDA laws. (Here is one example.) This enforcement approach doesn't require the executives to be personally responsible for an offense or even to be aware that an offense was committed. As we know, all Americans are supposed to be innocent until proven guilty, which requires prosecutors to prove criminal intent and criminal behavior. With the responsible corporate officer doctrine, prosecutors simply need to prove that a law was broken somewhere in the company and it follows that the executive(s) at the top of the organization are guilty.

One conviction is worse than merely a fine and jail time; it can mean the end of that executive's career because the government is also trying to ban convicted individuals from doing business with Medicaid and Medicare. No drug company can afford to forego those segments of its business and therefore no drug company would ever hire such an employee. Welcome to "one strike and you are out."

Sometimes the violation might be due to bad luck if, for instance, a raw ingredient is later found to be tainted. Perhaps most amazing, however, is that some of the FDA's rules--violations of which can end an executive's career--actually harm patients. These supposed "crimes" actually have clear beneficiaries.

Consider off-label prescribing. Off-label prescribing is a legal and common way for physicians to provide the best medicines for their patients. When a new medicine is approved by the FDA, it is approved for a particular disease or diseases. Usage for these disease(s) is called on-label prescribing. If the disease isn't listed on the product's package insert, that prescribing is called off-label.

Off-label prescribing is legal, widely practiced, and is actively encouraged by Congress, the National Institute for Health, Medicare, the Veterans Administration, and the National Cancer Institute. However, the company that markets that medicine can't encourage off-label prescribing in any manner whatsoever because the FDA considers such promotion illegal. The prescribing itself is legal; it is the communication that is illegal. This prohibition on communication for legitimate medical conditions does real harm to real people, to say nothing of the harm to our First Amendment rights.

Consider the following case. A pharmaceutical sales representative reads a peer-reviewed science journal article that recommends an off-label use of the company's product. This enterprising sales rep then gives a reprint of that article to an interested doctor and that doctor prescribes the drug for that condition. The cost of the drug is reimbursed by insurance companies and Medicare. Patients get better. The doctor receives kudos. The federal government then sues the drug company and the top executives, forcing them to pay fines and serve prison time. When they are later released, they are unable to find any employment in the pharmaceutical industry. Why? Because one of their employees was trying to help patients and physicians.

Pharmaceutical companies are energetically trying to find better ways to help patients and physicians--that's their whole business model. Treating company executives as criminals with a "one strike and you are out" doctrine won't help a single patient fight breast cancer or Parkinson's disease.