Impact of global pharmaceutical regulations on U.S. products liability exposure.

• Author: Moore, Thomas M.

Harmonization of drug and medical device regulation among the major markets may be a long-range goal, but there are pitfalls

PRODUCTS developed and marketed in the United States, especially chemicals, drugs and medical devices, are subjected to rigorous scrutiny by a host of governmental agencies, including the Food and Drug Administration (FDA), the Consumer Product Safety Commission (CPSC), the Environmental Protection Agency (EPA) and others.

The domestic regulatory environment traditionally has placed product manufacturers in a Catch 22 situation. On the one hand, their failure to comply with governmental "safety regulations" may create a presumption of negligence or form the basis for an award of punitive damages in products liability lawsuits.(1) At the same time, a manufacturer's diligent compliance with those regulations will not shield them from liability because, almost without exception, the regulations are considered by courts to be "minimal" in nature.(2) As a consequence, courts and juries are allowed effectively to substitute their judgments for those of regulators as to what a "reasonable" manufacturer ought to have done in terms of product design, manufacture and labeling, even when a product has been produced in accordance with all applicable governmental requirements.

The increasing globalization of product development and marketing has added a new and potentially dangerous twist to the regulatory compliance "trap." Companies that manufacture and market products in many different countries must comply with an increasing morass of different, often disjointed, and sometimes inconsistent regulatory schemes. The result of regulatory compliance on a global scale is that many products are designed, manufactured, labeled and marketed differently from country to country. The lack of worldwide regulatory consistency, especially among agencies in the United States, the European Union and Japan, often makes it impossible for manufacturers of drugs and other products to implement globally acceptable product designs, manufacturing processes and labeling.

An unintended, but not unexpected, impact of these inconsistencies has been to increase the U.S. products liability exposure of companies that market products worldwide. The U.S. plaintiffs' bar has become increasingly sophisticated in using global regulatory inconsistencies to their clients' advantage in discovery and at trial.

Defense counsel, especially those representing pharmaceutical and medical device manufacturers, now are faced routinely with discovery requests designed to illicit documents and data relating to a manufacturer's dealings with foreign regulatory agencies. Plaintiffs' counsel regularly point to differences in product design and labeling occasioned by a manufacturer's compliance with foreign regulations as evidence of product "defectiveness" in similar or identical products marketed in the United States. Regulatory inquiries by foreign agencies concerning safety-related issues also may be proffered as evidence of liability or causation, even if a foreign regulatory agency's U.S. counterpart fails to find a basis for concern or determines that less drastic regulatory remedies are warranted--or instance, labeling changes rather than product withdrawal.

In some instances, product manufacturers create problems for themselves by taking inconsistent approaches to potential safety issues depending on the country and the regulatory agency with which they are dealing. This results in a product being withdrawn voluntarily from the market in one country but aggressively defended as "safe" in others. Product labeling also is often inconsistent from country to country.

The bottom line is that product manufacturers with multinational markets, and their counsel, can no longer ignore the impact of foreign regulatory environments on exposure to products liability litigation in the United States. Manufacturers must understand that compliance or non-compliance with regulations in any nation in which a product is marketed may have a profound impact on both discovery and verdict potential in products liability actions filed in the United States.

IMPACT OF GLOBAL REGULATIONS

1. Differences in Pharmaceutical and Medical Device Regulation in Major Global Markets

   1. United States

      The Federal Food, Drug and Cosmetic Act (FDCA) (21 U.S.C. [sections] 301 et seq.) is the primary governing statute for the sale and distribution of pharmaceuticals and medical devices in the United States. The act is enforced by the Food and Drug Administration (FDA). Generally, a drug cannot be distributed in the United States unless it is approved by the FDA pursuant to a new drug application (NDA), which is submitted to the FDA for review following years of carefully controlled studies and regulated clinical trials, performed under an approved investigational device exemption, known as an IDE. The FDA interprets the act as requiring at least two pivotal studies.(3)

      Once the NDA is received, the FDA reviews it and either requests supplemental information or approves the application.(4) Within 180 days after receiving it, the FDA must approve the application or notify the applicant of the fight to an approval hearing. In 1988, the average FDA review time for a new drug application was 31 months. Review of similar products in foreign jurisdictions took an average of 15 months.(5)

      Part of the NDA submission includes proposed labeling.(6) In order for an NDA to be approved, including the proposed labeling, the product must be shown by all methods reasonably applicable to be safe for the use of the conditions prescribed, recommended or suggested in the proposed labeling. The label also must provide adequate information for proper use of the drug, state any relevant hazards, contraindications, side effects and precautions of which a physician should be aware in order for the drug to be used safely.(7) Essential scientific information needed for the safe and effective use of the drug must be contained in a summary that is neither promotional nor false nor misleading.(8)

      Post-marketing surveillance also is required. Manufacturers must maintain records of clinical experience with the drug that would be relevant to determining whether the drug approval should be withdrawn, and they are required to submit a variety of types of adverse drug reports to the FDA.(9) In addition, domestic manufacturing facilities are subject to FDA inspection at least once every two years.(10)

   2. European Union

      Unlike the United States, the European Union has two drug approval systems in place.

      Under the decentralized approval system ("mutual recognition"), a company applies for drug...