Kiss the Rings!!!

This is a products liability blog, but as a proud graduate of the University of South Carolina (undergrad, grad school, and law school....yeah, I liked college), I have to take a moment to say...


CONGRATULATIONS TO THE UNIVERSITY OF SOUTH CAROLINA GAMECOCK BASEBALL TEAM ON REPEATING AS NCAA BASEBALL NATIONAL CHAMPIONS!

What a series.  South Carolina earned its first baseball national championship last year in the final game at legendary Rosenblatt Stadium (which I blogged about here) by defeating UCLA in the first two games of the final three-game series.

This was the first year in the magnificent $130 million TD Ameritrade Stadium, and our team again made history by (1) repeating as national champions, which I believe only six teams have been able to do (the last being Oregon State about four or five years ago), (2) having the longest College World Series winning streak (10 games), (3) having the longest tournament winning streak, at 16 games, and (4) being the first team to win in the new park.  We went 5-0 at the College World Series, defeating Texas A&M, Virginia (twice), and then defeating the Florida Gators in the first two games of a three game series, 2-1 and 5-3.

If you watched this year's team, and especially the games against Virginia and the first game against Florida, then you know that this team won through heart, grittiness, and stellar defense.  It wasn't a team of first round draft picks and "stars," but they had great team chemistry and never stopped believing they could win.  We overcame injuries to numerous players and just pieced together a line-up throughout the year to get it done.  The team's mantra became "Win Anyway" and "Battle."

I have never seen a team get out of so many bases loaded, one or two out "jams" as our team did in this tournament.  It was really fun to watch.

The headline, "Kiss the Rings," refers to a funny statement by our radio announcer earlier this year.  When we played Vanderbilt in a three game series, our starting ace Michael Roth faced off against Vandy's star, Sonny Gray.  The match-up became a game of "The Godfather" cliches..."Sonny" versus "Michael."  When we won the first game, our announcer said "Kiss the Ring!" (again... referring to The Godfather).  It became a fitting slogan for the team as we defended last year's championship and gutted out win after win to earn a second championship and second CWS ring.

Congratulations guys, you earned it!

DRI Fly-In Meeting and Planning for 2012 Products Liability Conference

On Wednesday, I attended a "Fly-In" meeting for DRI's Products Liability Committee steering committee.  The meeting was held in Chicago (which, like Columbia, was sweltering hot), and the purpose of the meeting was to basically plan for the 2012 Products Liability Conference, which will be held April 11-13, 2012 at the Venetian in Las Vegas. 

We had probably around 50 attendees at the Fly-In meeting, and we talked a great deal about the conference, possible themes, speakers, and other things.  Although it is still a good ways off, go ahead and mark your calendar for the 2012 conference, as it should be a good one.  Also, if anyone has a potential topic of interest, please comment.  We are still in the planning stages, but our deadline for a draft agenda is quickly approaching, so I need ideas quickly.

It has been a busy last couple of weeks, but I hope to get back to some substantive blogging next week, including an interesting case I want to brief and maybe some additional material on warranties.

Exclusive: Copy of Judge's "Penalty Order" in SC Risperdal Action

Well, maybe not "exclusive," but I did manage to obtain a copy of the Penalty Order in the South Carolina Attorney General's action against Johnson and Johnson and the award of $327 million in damages against the pharmaceutical company (which I have blogged about, including a post yesterday).  Since that post, I have obtained a copy of Judge Roger Couch's "Penalty Order" in which he sets damages and explains the rationale for them.  You can find a copy of the Penalty Order at this link. 

I have not had a chance to digest the Order yet, and I wanted to get it posted as I can tell from my site statistics that there is considerable interest about this case and the award of damages.  However, from my quick review, the high spots are as follows:

• The judge focuses on the "Credo of Johnson and Johnson" as published on its website and referred to in annual reports to tee up how he is approaching the case (p. 3).
• He recognizes the benefits of drug companies, medicine in general, and even Risperdal.  He also points out that they are a for-profit company...but he goes back to the Credo as the company's "first obligation" (pp. 3-4).
• He assesses the good/bad faith of the defendant and stresses that he is focused on what was known about the drug at the time statements were made (pp. 4-5).
• He reviews the labeling of the drug, what the company knew and when, and finds that the "Defendants exhibited a callous disregard to a patient's right to have all possible information available, and in the hands of their physician, before deciding to use or continue to use the drug" (p. 8). 
• He reviews the "Dear Doctor" letter from November of 2003 and describes it as an effort to "manipulate the message about Risperdal" (p. 9).  He also relies on some testimony from a Janssen executive about the "Dear Doctor" letter that is unfavorable (p. 10) and concludes that the actions of the company exhibited "extreme bad faith" (id.).
• He talks about "Injury to the Public" as a component of a South Carolina Unfair Trade Practices action, including reference to his charge on this component (pp. 10-12).  He notes that the jury found that the actions injured the public and were capable of repetition (p. 12).
• He assesses the "Desire to eliminate the benefits derived from a violation" and admits that this is "virtually impossible to accurately determine" (p. 13).  However, he points out the profit from the drug were "enormous," but also notes the releative small percentage of business conducted in South Carolina (id.).
• He assesses "The necessity of vindicating the authority of the agency involved" and notes that the South Carolina Attorney General is the one with the burden and duty to vindicate the public's interest in the case (pp. 13-14).
• He then goes into "The Defendant's ability to pay" at length (pp. 14-16), including the number of violations.  This includes a statement of Annual Sales of Risperdal worldwide (p. 15) and J&J's earnings.
• Finally, he assesses the number of times the label was published -- 509,499 sample boxes distributed -- and assesses $300 per violation, for a total of $152,849,700 (p.16-17).  He does similar analysis for the number of "Dear Doctor" letters mailed (7,184) and sales calles where the letter was published (36,372), for a total publication of 43,556, and assesses $4,000 per violation, for a total of $174,224,000 (id).
• Therefore, the total damages are $327,073,700 (p. 17).

An interesting order, and I welcome reader comments. 

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SC Judge Hands Down Damages Order in Johnson & Johnson Risperdal Case

 I have previously blogged (here and here) about South Carolina Attorney General Alan Wilson's lawsuit against Johnson & Johnson and the March 22, 2011 jury verdict against the pharmaceutical manufacturer.  A jury concluded that J&J violated South Carolina's consumer protection laws by sending South Carolina doctors a misleading letter about the safety and effectiveness of the anti-psychotic drug Risperdal.

Last Friday, Judge Roger Couch issued his order on damages in which he ordered J&J to pay $327 million.  An article about the decision can be found at this link, and it is cut and pasted below.  Thanks to bloomberg.com for the excellent coverage.

J&J Ordered to Pay $327 Million Over Deceptive-Marketing Claims

By Jef Feeley and Steven Church - Jun 4, 2011 12:01 AM ET

Johnson & Johnson's schizophrenia drug Risperdal. Photographer: JB Reed/Bloomberg News.

A Johnson & Johnson (JNJ) unit was ordered by a South Carolina judge to pay more than $327 million in penalties for deceptively marketing the antipsychotic drug Risperdal as safer and better than competing medicines.

J&J’s Ortho-McNeil-Janssen Pharmaceuticals unit repeatedly violated the state’s consumer-protection laws by sending a 2003 letter to doctors touting Risperdal as superior to rival drugs and including deceptive information in the product’s warning label, Judge Roger Couch in Spartanburg, South Carolina, concluded.

The drugmaker’s executives “allowed the profit-at-all- costs mentality to cloud” their judgment in connection with the drug’s marketing campaign and its labeling, Couch said in his 17-page ruling.

Janssen official said yesterday they’ll appeal Couch’s order and maintained the company fully disclosed Risperdal’s health risks and properly marketed the antipsychotic medicine.

“We don’t believe that the dissemination of an FDA- approved package insert constitutes a violation of the South Carolina Trade Practices Act,” Kara Russell, a spokeswoman for Janssen said in an e-mailed statement. “We do not believe the ruling can be upheld on appeal.”

South Carolina’s lawyers, who originally sued the J&J unit in 2007 for making misleading claims about Risperdal, sought billions of dollars in penalties over the targeted marketing and labeling material.

Sales Decline

Risperdal’s global sales peaked at $4.5 billion in 2007 and declined after the company lost patent protection. The drug generated $3.4 billion in sales in 2008, or 5.4 percent of New Brunswick, New Jersey-based J&J’s total revenue, according to company filings. Sales of the drug fell to $527 million last year, according to a January earnings report.

Risperdal Consta, the long-acting version of the antipsychotic drug, generated $1.5 billion in sales last year for J&J.

The state’s case centered on drug-safety claims that J&J and Janssen made in November 2003 correspondence to about 700,000 doctors across the U.S., including more than 7,000 in South Carolina.

The U.S. Food and Drug Administration responded with a warning letter saying J&J made false and misleading claims that minimized the potentially fatal risks of diabetes and overstated the drug’s superiority to competing products.

South Carolina’s lawyers argued during a two-week trial of the state’s suit that Risperdal’s safety label also downplayed diabetes and other health risks.

‘Clever Effort’

The faulty labels were included in as many as 722,000 Risperdal prescriptions written in South Carolina from 1994 to 2007, the state’s lawyers told Couch at an April hearing. The deceptive information also was presented in 183,144 sales calls on doctors by Janssen drug representatives, and 496,565 sample boxes distributed over that 13-year period, South Carolina’s lawyers argued.

In his ruling, Couch found the Risperdal letter to South Carolina doctors was a “clever effort” to “manipulate the message” about the drug.

He concluded penalties were warranted for 7,180 letters Janssen officials mailed to physicians in the state along with another 36,372 instances in which the drugmaker’s salespeople used the missive to market Risperdal in person, according to court records.

$4,000 per Violation

Couch awarded South Carolina a total of $174.2 million in penalties over the letter based on a rate of $4,000 per violation of the state’s consumer-protection laws, according to his ruling.

He also found 509,499 sample boxes of Risperdal distributed in the state contained labels with deceptive materials that warranted penalties. The judge awarded the state $152.8 million in penalties over the label at a rate of $300 per violation.

J&J’s lawyers claimed in court papers that the state engaged in “triple counting” by seeking to have prescriptions, marketing letters and sales calls on individual doctors included as violations.

Penalizing the drugmaker for multiple contacts with doctors who were allegedly “misled or deceived each time he or she had been exposed to” the targeted information would be unfair, Steven Pugh, one of the company’s attorneys, said in May 3 filing.

Hold Them Accountable

The award puts drugmakers on notice that if they “try to spin information or try to see what they can get away with,” state officials will hold them accountable, Donald Coggins, a Spartanburg-based lawyer who represented the state, said in an interview yesterday.

The case is the third of about 10 state lawsuits to be considered by jurors over J&J’s Risperdal marketing campaigns. In June, J&J won dismissal of Pennsylvania’s suit alleging the company hid the drug’s diabetes risk and tricked regulators into paying millions more than they should have for the medicine.

A Louisiana jury in October ordered the drugmaker to pay $257.7 million in damages to that state for making misleading claims about Risperdal’s safety. A judge later added $73 million in legal fees to the award.

A West Virginia judge in a 2009 non-jury trial awarded $3.95 million, finding the company misled doctors about the risks and benefits of Risperdal. The state dropped its Risperdal claim after J&J won an appeal, company officials said in February.

J&J fell 39 cents to $66.09 in New York Stock Exchange composite trading yesterday. J&J’s 4.95 percent bonds due in 2033 fell 1.36 percent to 102.3 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The case is State of South Carolina v. Janssen Pharmaceuticals, 2007-CP-42-1438, Circuit Court for Spartanburg County, South Carolina (Spartanburg).

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net; Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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SC House Agrees to Amended Tort Reform Bill

I received word yesterday that the house passed the amended tort reform bill by a vote of 99-16.  The State Newspaper has a short write-up about it here, and cut and pasted below.

House agrees to amended tort reform bill

GINA SMITH, gsmith@thestate.com

 

House members agreed to Senate amendments Thursday on a tort reform bill.

Under the measure, punitive awards would be limited to $500,000 or three times the actual damages, whichever is greater.

In the worst cases, punitive awards would be capped at the greater of $2 million or four times the actual damages, which includes things like lost wages and medical expenses. 

The House vote signals a victory for Gov. Nikki Haley who made tort reform one of her priorities this session.

Update on South Carolina Tort Reform, Punitive Damages Caps, Etc.

I have previously blogged about tort reform efforts in the South Carolina General Assembly this year.  (See prior posts here and here for context).  This issue has been consuming a great deal of my time in the last couple of months, and it seemed to be an appropriate time to provide an update.

As you may recall, there was an effort brewing to legislatively overturn Branham v. Ford Motor Co.  Some members of the Legislature viewed the case as judicial activism and a movement away from the comments to Restatement (Second) of Torts § 402A, which have been codified at S.C. Code § 15-73-30 as the legislative intent of South Carolina's Defective Products Act .  The first effort to overturn the case came in the form of a "renewal" of sorts of South Carolina's Defective Products Act.  Basically, the amendment to the tort reform bill was to strike the prior act (S.C. Code §§ 15-73-10, 20, and 30), and then renew it in identical form as S.C. Code §§ 15-73-11, 21, and 31.  The rationale behind this amendment was that by renewing the statute, the Legislature would re-affirm that South Carolina follows the Restatement (Second) of Torts, and not the Restatement (Third) (as suggested by the court in Branham).

After the initial amendment to renew the language of the Defective Products Act, the focus shifted.  Instead of renewing the language, the effort shifted toward a dialogue about adopting the Restatement (Third) of Torts as South Carolina's products liability law.  Therefore, over the last couple of weeks, I have spent a substantial amount of time drafting papers on what the court did in Branham, options for compromise, distinctions between the Restatement (Second) and Restatement (Third), and what other states have done with regard to adopting either of them. 

In short, my research revealed that although there are some worthwhile provisions of the Restatement (Third) of Torts, this is not something (in my opinion) that South Carolina should do "on the fly," by amendment, and toward the end of a legislative session.  If we are going to talk about substantial changes to the products liability law in South Carolina, this blogger's opinion is that it should take the form of a separate bill and should involve debate and input from members of the bar who practice in this area.  Adopting the Restatement (Third) would change South Carolina's products liability law overnight.  As a lifelong South Carolinian, I can say (with pride) that we do not do anything very quickly.  Adopting the Restatement (Third) should not be an exception based on the differences between it and current South Carolina law.  I welcome your comments on this issue.

After spending yesterday at the Legislature with my colleague Gray Culbreath, President of the South Carolina Defense Trial Attorneys' Association, we learned that the effort to overturn Branham no longer appears to be a focus of the tort reform bill.  Instead, the focus is on capping punitive damages, and there is no language to adopt the Restatement (Third) or to overturn Branham.  The most current form of the bill, as given second reading by the Senate yesterday evening, can be found at the following link:

http://www.scstatehouse.gov/sess119_2011-2012/prever/3375_20110531.htm

My understanding is that the provisions relating to the capping of punitive damages are based in large part on a Florida statute, with some variations.  Because I have been focused on the Branham issue, I have not fully analyzed the punitive damages provisions.  However, a quick review reveals that the bill provides for bifurcation of trials where punitive damages are at issue and a cap on punitive damages of the greater of three times the amount of compensatory damages or $500,000.  However, there are some exceptions in the bill that either increase this cap or remove it altogether, based on certain conduct.   

There is an article in The State today about the Senate's debate and the current status.  You can find it here, and cut and pasted below.

Senate caps lawsuit awards

By JOHN O’CONNOR -  joconnor@thestate.com

The South Carolina Senate agreed to limit lawsuit awards Tuesday, ending years of debate about whether to make the state legal system more business-friendly.

The bill would create a tiered system of damages based upon the degree of negligence or criminal behavior involved. Most lawsuits would cap punitive damages at $500,000, or three times actual costs, whichever is greater.

But that cap rises to $2 million, or four times actual damages, under several circumstances, including if an injury resulted because of an unreasonable profit-based decision or if the person or business that caused the injury was subject to a felony conviction.

The cap is lifted entirely if the person or business that caused the injury is convicted of a felony, intended to harm or was under the influence of drugs and alcohol.

The vote knocks out a key issue pushed by Senate Republican leadership, Gov. Nikki Haley and business interests in the session’s final week. The bill heads back to the House, which approved a $350,000 cap, or three times actual damages, with no exemptions earlier this year.

Business groups noted the caps are still among the highest in the Southeast, but they supported the compromise.

“It’s a decent day’s work,” said Rick Scott, president of the South Carolina Trucking Association. “This puts us close to being competitive; … it is a move forward.”

Attorneys said despite debating the need for years, the bill addressed a problem which did not exist.

“We still do not believe there is a need to put caps on punitive damages,” said Mark Joye with the South Carolina Association for Justice.

The bill has churned in the Senate for weeks as others issues, such as the budget, took precedence and those who opposed the caps sought to avoid a vote. But Haley and the state Republican Party dialed up the pressure Tuesday, with the governor insisting on the House version of the bill and telling lawmakers she would include their vote on her end-of-session report cards.

Lawmakers huddled all day, but it took a late afternoon five-minute recess that stretched more than three hours for the two sides to finally parse the bill’s language. Business lobbyists huddled near the House chamber poring over the latest revision, while lobbyists for trial lawyers did the same thing across the lobby.

Senators shuttled back and forth between the two groups with the others’ thoughts.

The bill now heads back for the House to agree or disagree with the Senate version. In a letter to Senators Tuesday, Haley said she supports the House version of the bill. If the House insists on its version, House and Senate lawmakers will have to work out a compromise.

“We got as good a bill as we can under the circumstances,” said Sen. Gerald Malloy, D-Darlington and an opponent of the caps. “We need to lean on the Senate to try to maintain the Senate position.

Reach O’Connor at (803) 771-8358

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SC Attorney General Action Against GlaxoSmithKline

South Carolina Attorney General Alan Wilson has brought another lawsuit against a pharmaceutical manufacturer.  On May 17, the Office of the Attorney General filed a lawsuit against GlaxoSmithKline in which he alleges that the pharmaceutical manufacturer improperly marketed the diabetes drug Avandia.  I have not seen a copy of the complaint, but an article here at wcnc.com (and cut and pasted below) seems to suggest that this is another off-label promotion lawsuit, similar to past lawsuits brought by South Carolina against pharmaceutical companies.  (See blog posts about prior off-label promotion lawsuits here).  There are also some inadequate warning allegations according to the article. 

SC prosecutor suing GlaxoSmithKline over Avandia

Credit: FILE PHOTO

by MEG KINNARD / Associated Press

COLUMBIA, S.C. (AP) -- British drug maker GlaxoSmithKline PLC improperly marketed the diabetes drug Avandia to South Carolina consumers, hiding the medication's harmful side effects, according to a lawsuit filed by the state's top prosecutor.

Posted on June 1, 2011 at 8:56 AM

A spokeswoman for the company, however, said GlaxoSmithKline supports both its drug and the ways in which it was marketed.

In a lawsuit filed May 17 in Spartanburg County, Attorney General Alan Wilson argued that the drug maker acted negligently when it claimed that Avandia did not put patients' hearts at risks and could actually reduce the potential for heart problems.

"GSK did not just fail to disclose the potential cardiovascular risks Avandia posed, which include heart attacks and sudden cardiac death, it affirmatively represented that Avandia could reduce diabetics' cardiovascular risks," Wilson wrote. "GSK knew or should have known that these representations were not true and likely to deceive."

First approved by the Food and Drug Administration in 1999, Avandia quickly became the top-selling diabetes pill in the world. The drug works by increasing the body's sensitivity to insulin, a key protein needed for digestion that diabetics don't adequately produce.

But Avandia's popularity has diminished since 2007 when its heart risks were first publicized. That year, the New England Journal of Medicine printed an article that evaluated dozens of studies on Avandia, concluding that the drug increases the risk of heart attack and death.

In July 2007, the FDA ruled that Avandia could remain on the market, but sales had already taken a hit. At a safety panel meeting that month, FDA scientists said that Avandia had caused approximately 83,000 heart attacks since coming on the market, according to Wilson's lawsuit.

GlaxoSmithKline rolled out new labels in February to indicate that Avandia is intended only for patients who cannot control their blood sugar with any other diabetes medication on the market. Regulators in Europe have pulled the drug off the market altogether, and other authorities including Louisiana's attorney general are investigating the drug.

The exact amount South Carolina was seeking was not clear. Wilson is seeking a civil penalty of up to $5,000 for each action in violation of the state's unfair trade practices act, as well as unspecified punitive damages and $2,000 for each false claim or overstatement made to the state in connection with prescriptions for its Medicaid recipients.

"GlaxoSmithKline stands behind the safety and efficacy of Avandia when used appropriately and according to its label," said Bernadette King, a spokeswoman for the company. "GSK acted properly and responsibly in conducting its clinical trial program for Avandia, in marketing the medicine, in monitoring its safety once it was approved for use and in updating information in the medicine's labeling as new information became available."

The lawsuit, which says millions of dollars in state funding was spent on prescriptions for Medicaid patients and state employees, also cites several warnings from the FDA for "false and deceptive advertising" that Wilson says attempted to minimize the required warnings.

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