Developing New Contraceptives Obstacles and Opportunities (1990) / Chapter Skim
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8 Products Liability and Contraceptive Development
8 Products Liability and Contraceptive Development
Pages 118-146
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From page 118... ...
This discussion is followed by a description of the trends in litigation involving contraceptives, a discussion of current products liability rules, and a summary of selected contraceptive cases. The chapter continues with a description of the products liability insurance environment and, finally, presents the committee's conclusions and recommendations.
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From page 119... ...
SOURCES OF DATA In an attempt to assess the magnitude and frequency of contraceptive products liability claims in the United States over the past two decades, the committee Recent legislation in New Jersey, Ohio, Oregon, and Texas allows a manufacturer of an FDAapproved product to assert an "FDA defense" in response to a claim for punitive damages~hat is, generally the manufacturer cannot be held liable for punitive damages if the product has been manufactured and labeled in accordance with FDA standards unless the manufacturer withheld from or misrepresented to the FDA material and relevant information.
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From page 120... ...
Robins Company were contacted regarding liability for the Dalkon Shield. Company annual reports and quarterly reports were also reviewed for information on liability claims and recent settlements for contraceptive products.
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From page 121... ...
Intrauterine Devices Figure 8.1 shows the number of products liability cases by year that were filed against manufacturers of IUDs and oral contraceptives and reported by the sources surveyed. Prior to 1970 there were no reported products liability cases involving manufacturers of IUDs.
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From page 122... ...
The litigation against manufacturers of oral contraceptives has persisted over the past 17 years. In sharp contrast to the situation with respect to II3Ds, however, oral contraceptives continue to be marketed by seven companies, although over the past two decades manufacturers have complied with an FDA request to remove some standard and high-dose oral contraceptive formulations from the market.
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From page 123... ...
To assist in understanding the impact of such litigation on contraceptive development, we provide a brief introduction to products liability law and substantive summaries of selected cases involving IUDs, oral contraceptives, and other contraceptives. PRODUCTS LIABILITY RULES The legal rules regarding products liability that have been applied to the manufacturers of contraceptives are the same ones applied to all other manufacturers, whether of lawnmowers, bicycles, or electric drills.
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From page 124... ...
Although recovery under a warranty theory against the manufacturer of a defective product in many states has been available in common law for roughly 100 years (Birnbaum, 1980) , recovery in most states today is governed by the relevant provisions of the Uniform Commercial Code, as adopted by each state.
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From page 125... ...
of Torts (American Law Institute and National Conference of Commissioners on Uniform State Laws, 1965~. Under a strict liability theory an injured user of a product may recover from the manufacturer without showing that the manufacturer was negligent (breached a duty of care)
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From page 126... ...
Frequently these cases show an alertness by plaintiffs' attorneys to locating and using new scientific studies that may not have achieved general scientific acceptability to contend for more extensive warnings. Cases involving IUDs, oral contraceptives, and other contraceptives are discussed separately, since each product's litigation has exhibited its own distinguishing characteristics.
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From page 127... ...
. ~ 1976, Congress enacted the Medical Device Amendments, which require premarketing approval for such devices as the Dalkon Shield (Pub.
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From page 128... ...
In September 1980, Robins issued a letter to physicians recommending removal of all Dalkon Shields that were still being worn. After paying $250 million to settle approximately 4,400 suits and after juries in 11 cases had awarded $24.8 million in punitive damages against it, Robins petitioned for protection from creditors under chapter 11 of the Bankruptcy Code on August 21, 1985 (Bureau of National Affairs, 1987~.
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From page 129... ...
Beyette v. Ortho Pharmaceutical Corp.
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From page 130... ...
) , an oral contraceptive case in which the court held that the trial court properly submitted the case to the jury on a design defect theory of strict liability, despite FDA approval of the drug.
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From page 131... ...
The court in Wisconsin reached the same result by a different route: a federal district court held that, under Wisconsin law, violation of a regulation designed to protect the class of persons of which the plaintiff is a member is negligence per se. The court then held that, since the FDA requires warnings to be furnished to the users of oral contraceptives in the form of package inserts (21 C.F.R.
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From page 132... ...
In 1970 and 1971, the manufacturer knew or should have known of the increased risks presented by oral contraceptives with higher estrogen levels and should have informed physicians of this higher risk (Brochu v. Ortho Pharmaceutical Corp., 642 F.2d 652 [1st Cir.
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From page 133... ...
Several cases have absolved manufacturers of liability on this ground.7 Other Contraceptives Only three products liability actions have been reported involving manufacturers of contraceptives other than oral contraceptives or IUDs. The central issue in two cases concerned whether the injury was caused by the product.
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From page 134... ...
122, 428 A.2d 515 [19811) , a husband and wife brought a products liability action against a condom manufacturer on the theories of strict liability, negligence, and warranty.
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From page 135... ...
That period saw some contraceptive manufacturers' liability insurance Mtes more than triple; for certain contraceptive products, liability insurance was totally unavailable; courts approved multimillion dollar awards against a manufacturer of a spermicide and against manufacturers of oral contraceptives and IUDs; at least two pharmaceutical companies withdrew FDAapproved contraceptives from the market; and at least one large pharmaceutical company, which had traditionally been involved in contraceptive development, discontinued research and development of new methods. Causes of the Insurance Crisis The reasons for the recent problems of increasing price and lack of availability of comprehensive general liability insuranc~which covers products and a range of other liabilities of corporations, municipalities, and nonprofit organizations are multiple and complex (the reader is referred to the glossary for explanations of some of the technical terms in this section)
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From page 136... ...
The cyclical patterns in insurance markets in the early 1980s have been more extreme than in previous cycles, particularly the swing to a hard market for commercial general liability insurance in 1984-1985. A major distinguishing feature during this period has been increased uncertainty in predicting future liability costs.
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From page 137... ...
Contraceptive liability tends to be a high-risk category because contraceptives are used by so many women over long periods of time, can create risks that may be latent for years after the product has been discontinued, and can cause severe injuries-birth defects and loss of fertility that tend to result in very large awards. Cost and Availability of Liability Insurance for Contraceptives Contraceptive developers and manufacturers found it difficult to obtain liability insurance coverage during the mid-1980s.
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From page 138... ...
They do nothing to alleviate the underlying problem of high and unpredictable liability exposure. However, greater risk retention and use of self-insurance may be a preferred second-best solution for some policy holders, given the costs of liability insurance in the face of the unpredictability of future liability costs.
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From page 139... ...
Other responses by the insurance companies have been to increase the deductible, increase the premiums, or no longer offer liability coverage for what they consider risky products. Responses by Policy Holders The simplest response to high price or lack of availability of liability insuranceshort of ceasing to manufacture the product is self-insurance.
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From page 140... ...
The group may provide product liability and other types of liability insurance. The 1986 amendments extended the scope of the act to cover all commercial liability risks except worker's compensation, and it eased the regulatory requirements on such groups.
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From page 141... ...
The first is the unpredictable nature of litigation, which results in part from the absence of stable and uniform national products liability rules and in part from the often erratic character of the litigation system. The second is that, although manufacturers may introduce evidence of compliance with FDA regulations in a contraceptive products liability lawsuit, this evidence is given no special status in most states, such as entitling the manufacturer to a presumption that it acted with due care.
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From page 142... ...
by the FDA. The first part of this recommendation is straightforward: the enactment of a federal products liability statute is intended to deal with the unpredictability and uncertainty caused by requiring manufacturers of nationally marketed contraceptive products to face the possibility of 50 different state liability rules.
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From page 143... ...
First, if it is established that the injury-causing aspect was in compliance with all applicable requirements of the FDA at the time the contraceptive drug or device was made or sold, then a manufacturer or seller of a contraceptive drug or device would not be liable under any of the relevant legal theories (misrepresentation, negligence, warranty, or strict liability) for any injury related to design; nor would it be liable for a failure to provide an adequate warning or instruction regarding any danger associated with its use; nor would it be liable if the FDA had not asserted that the contraceptive drug or device was not in compliance.
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From page 144... ...
That is, if a contraceptive manufacturer or seller complies with the FDA directions on the basis of information developed after initial FDA review and approval, then the contraceptive drug or device could not be found defective with respect to any aspects in compliance with the FDA. Fifth, the defense would not be available if a claimant establishes that the FDA was not informed of dangers regarding the contraceptive drug or device that were known to the manufacturer or seller but not to the FDA and that the claimant's injury is attributable to such dangers.
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From page 145... ...
) , the court held that the warning regarding possible adverse effects of oral contraceptives must be given to the user and that the adequacy of the warning was a question for the jury, even though it was in compliance with FDA regulations.
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From page 146... ...
The committee believes that the proposed statute constitutes a modest reform and is by no means a radical proposal. It is our belief that a change in the products liability law would change the climate of disincentives for the development of contraceptive products, without compromising the safety of contraceptive use.
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