Release Date: 4/26/2004
Case Turns On What Constitutes Adequate Warning
By Correy E. Stephenson
In the latest Rezulin case to reach trial, a New York jury awarded $2 million to a woman who suffered side effects from the diabetes drug, but had no evidence of permanent liver damage.
With approximately 8,700 Rezulin lawsuits filed in state and federal courts across the country, the April trial was closely watched for indications of whether the mass tort is likely to be successful.
Ironically, both sides claimed the Morgado verdict demonstrates the strength of their arguments and therefore bodes well for future cases.
Jay Mayesh, who heads the national defense team for Warner-Lambert, the company that manufactured Rezulin, said the only way for the jury to award damages was to reach an "inconsistent" verdict that may not hold up on appeal. It simply made no sense, he contended, for the jury to rule that the warning label was adequate and then hammer the company for $2 million in a failure-to-warn case.
"Think of [the Morgado verdict] as emblematic of one thing: no jury can reasonably find that there was a failure of adequate warning," said Mayesh. "The jury wanted desperately to reward someone who clearly was injured by Rezulin. But in the face of the warning, they had to come to the conclusion that the label was accurate."
Meanwhile, plaintiffs' attorney Troy Rafferty said the strength of his client's case against Warner-Lambert and its parent company, Pfizer Inc., was demonstrated by the $2 million verdict.
"The verdict has two important implications," said Rafferty, a mass tort specialist in Pensacola, Fla. "First, it came from a New York City jury in Pfizer's backyard. Second, to have another significant win two years after the first plaintiff's victory has a huge impact on where the litigation is going."
His position gained some more momentum on April 18 when the 2nd Circuit reinstated a class action suit filed by health insurers to recover the money they spent on Rezulin prescriptions (See below).
Rafferty believes the two recent developments could force Pfizer to seek a speedy resolution to the thousands of pending cases, most likely through a mass settlement.
Christopher A. Seeger of New York, who led the plaintiff's litigation team, agreed.
"If plaintiffs' lawyers continue to put up sizable verdicts, maybe Pfizer's shareholders will make the company come to the table and settle these cases for a lot less money than it takes to try them and lose."
Morgado is the seventh Rezulin case to reach a jury to date, with the previous six split down the middle between defense wins and plaintiff verdicts. The pace of trials was slowed somewhat with the establishment of a multi-district litigation (MDL) court in New York.
"The defense believes that the slower pace of the federal court works to their advantage," Seeger explained, and the process of transferring cases pushed back trial dates as well.
Are Labels Enough?
Concepcion Morgado began taking Rezulin in May 1998 and was admitted to the hospital in August 1998 with jaundice and severely elevated liver enzymes. Although she was hospitalized for 10 days and it took more than five months for her liver enzymes to return to a normal level, Morgado did not allege permanent damage to her liver.
Instead, Seeger presented only her clinical signs and symptoms to the jury.
As a result, the defense used a different strategy from previous cases. In the past, the company had argued that causation could not be pinned on Rezulin because the liver damage suffered by the plaintiffs could have been caused by the diabetes itself or other medicine they had taken to treat the disease.
But in the New York case, the company conceded the fact that Morgado's symptoms were caused by Rezulin. Instead, Mayesh argued the company shouldn't be held liable for the side effects experienced by the plaintiff outlined on its warning label.
"What the company wanted to do was try a case with an injury that fell within the four square corners of the warning label and beat us," said Seeger. "Since that didn't work, the verdict should send the company a message."
Morgado's attorneys acknowledged that the Rezulin label used words like 'death' and 'jaundice' but convinced the jury that without setting these terms in the proper context, the warning meant little.
"There's a big difference when you read a label and see a risk of 1 in 1,000 versus 1 in 1 million," Seeger said. "The word 'rare' was used several times, which did not disclose the real risk."
Although scientists in the mid-1990s had documented concerns about Rezulin's potential to cause both liver and heart problems, the Food & Drug Administration agreed to a six-month "fast-track" review of the drug. On Jan. 29, 1997, the FDA approved Rezulin for the treatment of Type 2 diabetes, a disease affecting more than 15 million Americans.
But as evidence of potential side effects surfaced, the FDA put increasing pressure on the company to be more explicit in those warning labels.
Warner-Lambert announced the first change on Nov. 3, 1997. The change recommended that within the first one to two months of taking Rezulin, users should undergo liver enzyme testing, with continued testing every three months thereafter for the first year, and then periodically.
Over the next two years, the labels went through three more modifications, with each change recommending more frequent liver testing.
Finally, at the FDA's request, Warner-Lambert withdrew Rezulin from the market on March 21, 2000. The FDA also issued a press release stating that Rezulin was more toxic to the liver than two alternative drugs that provided the same benefits.
FDA research has since linked 63 deaths to the use of Rezulin.
Tracking Rezulin Litigation
Back in December 2001, the first Rezulin trial ended in a defense verdict delivered in Harris County, Texas. Defense attorneys immediately pointed to the case as representative of the causation problems awaiting other plaintiffs - that it was difficult to prove that Rezulin, rather than several other potential sources, caused the plaintiff's liver damage.
A few days later, however, a jury in Corpus Christi, Texas, awarded $43 million in compensatory damages to a woman who suffered severe liver damage. The case settled immediately after the verdict for an undisclosed amount.
Over the next two months, three more cases went to trial with mixed results - a $25 million verdict in Texas in January 2002, a defense win in Maryland in February 2002, and an $11.5 million verdict in Oklahoma in March 2002.
Since then, the landscape of Rezulin litigation has been dominated by settlements and defense verdicts.
Meanwhile, Warner-Lambert has emerged victorious in other cases, including personal injury and medical monitoring class actions suits that were dismissed in California, New York, and West Virginia.
J. Michael Papantonio, a mass torts specialist in Pensacola, Fla., believes that the plaintiff's strategy, although unchanged, has gained strength.
"The case we started with is the same case that is trying well today," he said. "Although some of the blank spots we had in Texas a couple years back are now being filled in as more information about the effects of the drug come to light over time."
Papantonio attributed early defense verdicts to weak cases, saying this is typical of mass tort litigation, where plaintiffs' attorneys, eager to achieve the first victory, run to court before a thorough evaluation of the merits.
Other attorneys believe the recent plaintiff victories may also be a result of a change in defense strategy.
"Initially the defense attitude was to evaluate the case, and if a plaintiff was injured they would talk," Seeger explained. "But that magnanimous behavior has changed and I've noticed a total reversal in their strategy."
After a spate of defense verdicts, Seeger believes that the defense stepped up its hardball tactics by showering plaintiffs with motions and closing lines of dialogue between the parties.
"Before, they actually reached out to plaintiffs in an attempt to resolve cases, which is certainly not happening now," he said.
Rafferty, whose firm acts as co-chair of the Discovery Committee of the MDL court, said more than nine-and-a-half million documents have been produced so far by the defense.
He also recognized a change of defense strategy.
"I think at first, they wanted to settle the stronger cases and try what they perceived to be weaker cases, to test the waters," he explained. "But with the success in New York, I don't know what direction they will be headed in now."
Mayesh maintains that his defense of Rezulin has not changed over time.
"The national strategy is that all drugs are balanced based on the benefits and the risks, and it's up to the FDA to strike that balance for pharmaceuticals in the United States," he said.
His contention is that it's up to the FDA to determine what constitutes an acceptable risk in a medication - and it's the company's responsibility to accurately convey that risk to the public. The fact that the New York jury concluded that the Rezulin warning label was adequate demonstrates that the manufacturer kept its end of the bargain, he said.
The approval of the second generation of diabetes drugs that looked safer led to Rezulin's removal, he added - Rezulin was retired when it was not the only drug in town.
He also contended that Pfizer's position has strengthened over the last year, with its success transferring the majority of lawsuits filed in various state courts to the Multi-District Litigation Court in New York.
"The transfer of cases to the MDL court is beneficial because there are a number of state jurisdictions which are considered to be highly pro-plaintiff," he said. "In particular, certain jurisdictions in Texas and Mississippi are referred to as tort hell-holes. To the extent we can remove state court cases to the federal court and have them transferred to the MDL court, we generally end up with a court that is less plaintiff-friendly."
Just weeks after the $2 million New York verdict, Rezulin plaintiffs received another lift when the 2nd Circuit reinstated a class action filed by insurance companies against Warner-Lambert.
The insurers claim they were defrauded by Warner-Lambert because the company's misleading safety information convinced the insurers to approve prescriptions for Rezulin. The plaintiffs are seeking $1.4 billion in restitution.
The 2nd Circuit reversed a dismissal decision by the Judge Lewis J. Kaplan of the MDL Court in the Southern District of New York.
Richard W. Cohen of White Plains, N.Y., who represented the plaintiffs, described the reversal as "monumental."
"If the 2nd Circuit had gone the other way, it could have been the end of the story for health insurers," he said. "This decision will have a huge impact."
The 2nd Circuit's reversal is the first time a court has recognized any type of class action. But other novel attempts at recovery are underway as well.
Dr. Mark Dodson was one of the named defendants in the $43 million verdict in Texas a year ago. Although the judge delivered a directed verdict on Dodson's behalf, last summer Dodson sued Warner-Lambert himself, alleging that the company misrepresented the side effects of Rezulin. His suit claims emotional distress and a loss of business profits and marked the first suit against Rezulin's manufacturer for consequential damages.
Rafferty would like to see other doctors take legal action.
"It's great to see doctors fighting back when pharmaceutical companies often blame doctors as part of their defense strategy," he said.
Despite the continued attempts at class actions and Dr. Dodson's search for reimbursement, attorneys say the strongest will continue to be those filed against the manufacturer by Rezulin users for injuries caused by the diabetes drug.
"More and more lawyers are getting ready for trial and will push until the company litigates or settles," Rafferty stated. "Until there is a formal resolution, either by the company or by a jury on a case by case basis, somebody is going to have to give - and it's not going to be us."
Cohen predicts only that the future will bring a hard-fought battle. After his success in the 2nd Circuit, he provides a timely analogy for the future of Rezulin cases in the pipeline: "The war is underway, but we haven't reached Baghdad yet."
Plaintiff's Attorneys: Christopher A. Seeger, David R. Buchanan and Stuart P. Slotnick of Seeger Weiss LLP in New York, N,Y.; Troy A. Rafferty of Levin, Papantonio, Thomas, Mitchell, Escher & Proctor, P.A. in Pensacola, Fla.; Christopher V. Tisi of Ashcraft & Gerel LLP in Washington, D.C.
Defendant's Attorneys: Jay P. Mayesh and Lev L. Dassin of Kaye Scholer LLP in New York, N.Y.
The Case: Morgado v. Warner-Lambert; Supreme Court, New York County, New York; Judge Helen E. Freedman
Plaintiff's Attorney: Richard W. Cohen of Lowey Dannenberg Bemporad & Selinger, P.C. in White Plains, N.Y., argued before the court; Stephen Lowey and Peter D. St. Phillip, Jr. of Lowey Dannenberg Bemporad & Selinger, P.C. in White Plains, N.Y.; Mark D. Fischer, Mark M. Sandmann of Rawlings & Associates in Louisville, Ky., on the brief.
Defendant's Attorney: David Klingsberg of Kaye Scholer LLP in New York, N.Y., argued before the court; Maris Veidemanis and Robert Grass of Kaye Scholer LLP in New York, N.Y., on the brief.
The Case: Louisiana Health Service Indemnity Co. v. Warner-Lambert Co.; U.S. Court of Appeals, 2nd Circuit; Judge Guido Calabresi.