Could the problem with Federalism be the States? As Milton Friedman observed, “The problem with capitalism is capitalists. The problem with socialism is socialism.” The problem with Federalism cannot be Federalism because the benefits of a federally structured government are easy to see; citizens can choose between high-tax, high-service, nanny States like Maryland, and low-tax, lower service options. One recent example of citizens’ ability to choose is Rush Limbaugh’s response to New York’s proposed increase in the taxation of high incomes, which was to think about moving out of New York.
So, the problem must be the States. For all of their ability to operate as laboratories of democracy, they are frequently prone to disappoint. One recent example of that disposition is their reluctance to limit their protection of local interests even where such limitation might serve the larger common good. That reluctance was expressed in a friend-of-the-court brief that 47 States joined in Wyeth v. Levine arguing that their juries, not the Food and Drug Administration, should be the final judges of the adequacy of a drug manufacturer’s warning of the potential dangers of its product.
Levine’s forearm was amputated after a physician’s assistant injected her with Phenergan, an effective anti-nausea drug. Levine received the injection after she returned to the hospital for the second time in a day complaining of a severe migraine headache. Unfortunately, as the result of the injection, the drug entered an artery, and gangrene resulted. Wyeth warned against the danger of gangrene if Phenergan were injected into or made its way into an artery, but did not specifically say that the drug should not be injected. Levine settled with the doctor and physician’s assistant, then sued Wyeth, and a Vermont jury awarded damages of $7.4 million, which were reduced to reflect the amount of the settlement.
In March 2009, the Supreme Court rejected Wyeth’s contention that federal law barred Levine’s claim. The FDA had approved Wyeth’s warning, but the Court said that the FDA’s action was not the final word. Federal law could have, but does not, expressly preempt state court lawsuits. The Court rejected the argument that it was impossible for Wyeth to comply with both federal and state law, noting that federal regulations permit Wyeth to “add or strengthen” its warning without getting prior FDA approval. The Court also gave short shrift to the preamble of a 2006 FDA regulation governing the content and format of prescription drug labels. In that preamble, the FDA declared that its action established “both a ‘floor’ and a ‘ceiling'” and operated to preempt certain state-law claims, like Levine’s failure-to-warn claim. The Court concluded that, for several reasons, that preamble was entitled to no weight.
In a concurring opinion, Justice Thomas objected to the whole idea of implied preemption, suggesting that, if Congress wants to preempt State lawsuits, it should say so expressly. That notion sounds appealing. But, as Michael Greve points out, the States have an incentive to circumvent Federal law, and there is no way that Congress can foresee the “myriad ways” in which they can do so. For example, in another case from last term, Altria Group v. Good, the Court said that, while state law claims “based on smoking and health . . . with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity” with federal law and regulations are preempted, claims based on more general state law duties, like a duty not to deceive the buyers of products, are not. The result is to turn the lawyers loose to argue that the labeling of “light” and “low tar” cigarettes is deceptive to state court juries.
Wyethinvolves a warning, and warnings are generally easier to modify than products. Even so, if, as the Vermont Supreme Court put it, “federal labeling requirements create a floor, not a ceiling, for state regulation,” how does Wyeth know where the ceiling is? In his dissent, Justice Alito notes that, in the trial, Levine’s attorney told the jury that Wyeth’s warning should have said, “Do not use this drug intravenously,” and her expert witness said, “I think the drug should be labeled, ‘Not for IV use.”” Whatever ceiling Vermont established can be trumped by a jury in another State which concludes that an even more specific warning is needed. Thus, Wyeth’s warning and the use of Phenergan are at the mercy of juries and courts in the 50 States.
The effect will be to discourage the use of Phenergan, an effective anti-nausea drug, even though, when properly injected, Phenergan gets to work faster than it does when given in other ways. Remember that Levine needed relief quickly More generally, allowing state tort laws to second-guess FDA actions can discourage investment in the development of new drugs and, by forcing the removal of existing drugs from the market or some uses, make drugs less available. Those drugs that are available will be more expensive. Finally, drug warnings will become so detailed and lengthy that they warn of everything and nothing, discouraging some proper uses.
Instead of simply turning the issue over to juries, the States should consider a legislative solution. Michigan did precisely that in 1996 when it enacted an FDA Shield Law which provides that, with certain exceptions, drugs approved by the FDA that are approved by and in compliance with FDA requirements cannot be found to be “defective or unreasonably dangerous” in a state-law tort action. The Michigan law bars recovery of both compensatory and punitive damages. Other States have enacted other laws that limit liability for punitive damages for FDA-approved drugs, create a rebuttable presumption that an FDA-approved drug warning is adequate, or expressly call for the FDA approval to be considered in determining whether a manufacturer has acted reasonably. Significantly, the protection that these laws provide is conditioned on the manufacturer’s good faith.
If the States want to insist on an end to implied preemption, they should limit the effects of their tort systems. Rather than being part of the problem, they should be part of the solution.