Update: Federal Liability Immunity Thankfully Conferred for Some Ebola Vaccines

670px-ebola_virus_virionPer Washington Legal Foundation’s suggestion earlier this fall, the Secretary of the Department of Health and Human Services (HHS) issued a formal declaration this week that those who manufacture, distribute, and administer certain yet-to-be-approved vaccines for the Ebola virus qualify for federal liability protection under the federal Public Readiness and Emergency Preparedness Act (PREP Act).

In our October 30 post, Ebola Vaccine and Treatment Makers Need Liability Protection, we discussed the PREP Act and explained why its protections would be an especially effective incentive for Ebola vaccine research and development. Under the law, those who have been allegedly injured by a vaccine can only sue in federal court if the FDA or the Justice Department investigates and finds willful misconduct by the drug manufacturer.  The act preempts all state laws that might limit distribution of the declared countermeasure, and it creates compensation funds for injured parties.

Secretary Burwell’s declaration applies to three specific countermeasures that are currently in development. The liability immunity protects manufacturers and distributors regardless of whether a covered vaccine is administered, and applies without geographic limitation. Liability protection related to the administration of a covered vaccine lasts until December 10, 2015, and the declaration extends that protection for manufacturers for an additional year “to allow for the manufacturer(s) to arrange for disposition of the Covered Countermeasure.”

Individuals who sustain a “covered serious physical injury as the direct result” of the use of a covered vaccine can seek compensation through a Countermeasures Injury Compensation Program. The burden of proof for such claims is significant:

The causal connection between the countermeasure and the serious physical injury must be supported by compelling, reliable, valid, medical and scientific evidence in order for the individual to be considered for compensation.

We applaud HHS for mitigating the manufacturers’ liability exposure and cutting avaricious plaintiffs’ lawyers out of the injury compensation process. Now if only similar measures can be adopted throughout our healthcare system, we might actually begin to bend the cost curve substantially.

Also published by Forbes.com at WLF’s contributor page

Why “King v. Burwell” Obamacare Case Is Not “NFIB v. Sebelius” Redux

supreme courtThe Supreme Court’s decision to hear King v. Burwell means that the Court, for the second time in three years, will be deciding an issue that will have a major impact on the Obama Administration’s ability to implement the Affordable Care Act. The ACA’s requirement that individuals purchase health insurance or else pay a penalty barely survived a constitutional challenge in June 2012 when the Court voted 5-4 in NFIB v. Sebelius to uphold the mandate as a proper exercise of Congress’s power under the Taxing Clause. The claim raised in King—that individuals who purchase insurance on the federal government’s healthcare exchange are not entitled to the tax subsidies available to those purchasing on state exchanges—would, if accepted by the Court, have an impact on the ACA every bit as great as a decision striking down the individual mandate. That fact has caused some commentators to draw spurious parallels between the two cases. Many Obamacare partisans who dismissed the NFIB constitutional challenge as a “shameful” and hypocritical “solicitation of right-wing judicial activism,” are making the same accusation against the King challenge.

The accusations were inaccurate in NFIB; they are hopelessly wrong when applied to King. Before such unfounded criticism of King takes hold, it is important to emphasize major distinctions between the two cases. The petitioners in NFIB were asking the Court to take a decisive step: to strike down legislation adopted by Congress and signed by the President. Those petitioners, in my opinion, raised highly plausible (and indeed, partially successful) arguments in support of their constitutional claims. However, a majority of the justices—mindful of separation-of-powers concerns that arise whenever they are asked to override the will of Congress and the President—followed the Court’s long-held preference that, in the words of Chief Justice Roberts, “every reasonable construction must be resorted to, in order to save a statute from unconstitutionality.” Continue reading

Nutrition Nannies Win Only 1 of 4 High-Profile Ballot Initiatives

election2014The 2014 election featured four high-profile attempts by the national food nanny movement to impose its agenda through municipal and state ballot initiatives. Voters in Oregon and Colorado rejected mandatory “genetically-modified organism” (GMO) food-labeling measures, while voters in two California cities split on sin taxes for “sugary” drinks.

Food Labeling. Exactly 2/3 of Colorado voters said “no” to the Colorado Right to Know Act. The vote on Oregon’s Measure 92 was considerably closer, with the “no’s” outnumbering the “yes’s” 50.7% to 49.3%. Each initiative trumpeted the superficial appeal of  consumers’ “right-to-know,” and both made the oft-repeated misleading or false claims in their legislative “findings” sections that GMOs in food are unregulated, unsafe, and unhealthy. Much like California’s unsuccessful Proposition 37 initiative, the Oregon and Colorado proposals were riddled with labeling exemptions, including food served at restaurants and alcoholic beverages. Oregon’s proposal would have also unleashed the plaintiffs’ bar on food processors through a “private attorney general” enforcement provision.

Thin Taxes? Two California municipalities, San Francisco and Berkeley, held votes on soda excise taxes. The Berkeley measure, which passed by a large margin, imposes a one-cent-per-fluid-ounce tax on all soda, energy drinks, coffee syrups, sweetened tea, and other packaged “sugary” drinks, while exempting milk and diet soda. The failed San Francisco initiative would have imposed a two-cent-per-fluid-ounce tax on sodas and other sugar-sweetened drinks, including some juices, coffees and flavored waters. It garnered 55% at the polls, but fell short of the 66% “yes” votes needed for measures whose revenues are aimed at a specific purpose. The initiative would have funded children’s nutrition and physical education programs. The revenues from Berkeley’s tax measure will go into the city’s general fund.

The Bigger Picture. Mandatory GMO-labeling proponents have now lost each of their four initiative campaigns. And they have failed in states where one might think voters would overwhelmingly support such progressive measures: California, Washington, Oregon, and Colorado. With 2015 being a slow year for elections, activists will likely turn their attention now to state legislatures. The negative opinions of hundreds of thousands of voters in the aforementioned states should speak volumes to politicians in other states about mandatory GMO labeling. In addition, as several WLF publications have explained (i.e. here and here)—and a suit against Vermont’s labeling mandate argues—such mandates infringe on federal authority to regulate food labels and tread on food producers’ constitutional rights. Policy makers should bear these points in mind, and keep a watchful eye on the legal challenge to Vermont’s law, when they are urged to embrace mandated labeling.

Nutrition nannies such as former New York City Mayor Michael Bloomberg have trumpeted the Berkeley vote as a watershed moment. Given the Berkeley electorate’s historical affinity for fringe movements and big government, the outcome is more likely an aberration than a harbinger. The result also should be considered counterproductive for the fight against obesity. It advances the entirely baseless notion that regressive taxes on soda and other disfavored beverages will benefit taxpayers’ health. Reliance on such taxes also detracts attention and energy from actual solutions to America’s expanding waistline. But considering the financial largesse of benefactors like Mr. Bloomberg and the zeal of his activist allies, the fight over manipulative sin taxes is likely to continue.

Also published by Forbes.com on WLF’s contributor page

Antitrust and Health Care: FTC’s Off-Again, On-Again Challenge to Georgia Hospital Merger

amurinoFeatured Expert Column – Antitrust/Federal Trade Commission

Andrea Agathoklis Murino, Wilson Sonsini Goodrich & Rosati

Consolidation in the health care industry, and the Federal Trade Commission’s (“FTC” or “Commission”) perspective on such activity, are being closely watched in antitrust law and policy circles. In April 2011, the FTC challenged the acquisition of Palmyra Park Hospital by Phoebe Putney Health System Inc. (“Phoebe”) in Albany, Georgia. The Commission argued that the combination would result in unduly high market shares (>85%) in the provision of acute care services in a six-county region and result in anticompetitive price increases. Shortly thereafter, the FTC sought and obtained a preliminary injunction (“PI”) from the United States District Court for the Middle District of Georgia halting the transaction pending trial. Typical enough. But here’s where our story starts to take some strange twists. What began that April in a federal district court is an adventure leading from the Supreme Court to local Georgia healthcare regulatory bodies…and possibly, back again. Here’s what happened.

Phoebe responded to the PI not by throwing itself into a trial on the merits, but rather by filing a motion to dismiss on the grounds that by virtue of the state action doctrine, Phoebe’s conduct was permissible. Generally, the state action doctrine provides that where (1) there is a clearly articulated state policy to displace competition and (2) there is active supervision by the state of the policy or activity, otherwise anticompetitive activity will be permitted. Here, Phoebe argued that because it was owned by the Hospital Authority of Albany-Dougherty County, and operated under Georgia’s Hospital Authorities Law, it was immune. Phoebe prevailed on its motion to dismiss in the district court and then again at the U.S. Court of Appeals for the Eleventh Circuit. Phoebe then completed its purchase of Palmyra, closing the transaction. Continue reading

Ebola Vaccine and Treatment Makers Need Liability Protection

670px-ebola_virus_virionU.S. politicians and regulators, many of whom ordinarily trend toward hyper-caution on new drug reviews and approvals, are rushing forward with policies aimed at speeding up development of Ebola vaccines and treatments. These measures include coordinated research among public health officials and drug makers, Food and Drug Administration (FDA) pledges of regulatory assistance, and congressional interest in legislation to qualify Ebola-targeted products for an FDA priority-review program. Such cooperation is encouraging, but government also needs to take action on another R&D disincentive which, if left unaddressed, could completely undermine current efforts on Ebola and frustrate future cooperative management of unforeseen pandemics. Ebola vaccine and treatment manufacturers need to have protection from tort liability exposure.

Any medical procedure, pharmaceutical product, or vaccine may have adverse health risks in some instances. Drug manufacturers must consider those risks when deciding whether to invest millions of dollars for product R&D, and the Food and Drug Administration (FDA) must weigh those risks against the benefits when approving a treatment. Such risks, along with the high regulatory barriers and low economic incentives attendant to investing in rare diseases, likely have been factors that explain the dearth of Ebola vaccines and treatments.

The United States government has the motivation and the means to minimize or eliminate such liability risks. Federal health agencies are already directly involved in vaccine development, and they will no doubt also be the major purchasers of the resulting drugs. Those federal entities could include a provision in the R&D agreements or purchasing contracts that would substitute the government as a defendant in any resulting lawsuits against private businesses, or indemnify companies from tort liability. The former option is certainly superior to indemnification, which could require the vaccine and treatment producers to litigate cases and then seek reimbursement for the losses or settlements. The companies would also have to negotiate with the government over whether the indemnification would cover litigation costs, such as attorneys’ fees.

The federal government indemnified manufacturers in contracts for a smallpox vaccine after the September 11, 2001 terrorist attacks. The companies argued that the proposed indemnification was insufficient, and in April 2003, Congress added expanded liability protections to the Homeland Security Act of 2002. For the one-year period of the national smallpox vaccination program (2003-2004), individuals allegedly harmed by a government-purchased smallpox vaccine could only sue the federal government under the Federal Tort Claims Act. Congress could consider the passage of a similar law for Ebola vaccines. Continue reading

White House Boosts Fictional “Food Addiction” Concept to School Kids

BSFriesAs we’ve discussed numerous times here, some nutrition nanny activists, regulators, and plaintiffs’ lawyers have embraced and promoted the concept that food can be “addictive.” The term grabs people’s attention, conjuring up disturbing mental images of helplessness and withdrawal. It’s no wonder, then, that the notion of “food addiction” is often invoked in the context of greater government regulation, taxes, and advertising restrictions designed to redirect our dietary choices.

On September 26, the concept received its highest profile reference yet, from First Lady Michelle Obama, during an interview broadcast to millions of students on the in-school “Channel One News.” When asked about the criticism the federal government’s new school lunch rules have faced, the First Lady responded:

It’s natural. Change is hard. And the thing about highly processed, sugary, salty foods is that you get addicted to it. I don’t want to just settle because it’s hard. I don’t want to give up because it’s expensive. I don’t want that to be the excuse.

The interview appears to have been very carefully scripted, so her mention of “addiction” was hardly spontaneous or casual, nor was her referencing it in the context of “highly processed, sugary, salty foods.” Federal government regulation is taking direct aim at those demonized products and their ingredients.

For instance, the Department of Agriculture has proposed banning the sale of certain foods in public schools that don’t meet “Smart Snacks” guidelines, as well as banning advertising of those products in schools. Also, as part of its update of the Nutrition Facts label affixed to all packaged foods, the Food and Drug Administration (FDA) is proposing a new “added sugars” item. FDA is pursuing this mandate even though the agency acknowledges that no chemical difference exists between naturally occurring and added sugars in food. The “added sugars” mandate would also expose federal regulators to constitutional challenges under the First and Fourth Amendments, as leading food regulation attorneys Richard Frank and Bruce Silverglade argue in a September 26 WLF Legal Backgrounder.

The First Lady’s reference to “food addiction” was ill-advised, especially considering the age and maturity level of her captive audience on Channel One News. The concept of addiction has been significantly dumbed down and politicized over the past few decades to the point where it has almost lost any objective meaning. Reputable scientists have questioned not only the methodology behind “food addiction” studies, but also the researchers’ motivation.

The “Let’s Move” effort led by the First Lady advances the indisputably worthy goal of a healthier America, but that goal cannot be met by fomenting faulty food addiction concerns. Such a concept creates a serious moral hazard—people struggling to lose weight may throw up their hands because they believe addiction to (insert high-calorie product) has taken hold. Talk of addiction, and the choice-restrictive public policies it fuels, also diverts attention and resources from actual solutions to obesity in America.

Also published by Forbes.com at WLF’s contributor page

In FDA’s Revised Animal Food Safety Proposal, Common Sense Prevails on Brewers’ Spent Grains

spent brewing grains

spent brewing grains

This past spring, we highlighted a provision in the Food and Drug Administration’s (FDA) proposed implementation of the Food Safety and Modernization Act (FSMA) that would effectively stop brewers, distillers, and wine makers from sharing the byproducts of their production with farmers for use as animal feed.  Such a practice has deep roots in the crafting of alcoholic beverages and is substantially beneficial to all parties involved. As we wrote previously:

Farmers have been procuring and feeding their livestock spent brewing grains and grapes for centuries. These livestock happy hour arrangements advance environmental sustainability, engender bonds among local businesses, and financially benefit both parties. Farmers get low-cost whole grain feed packed with fiber, protein, and, of particular importance to livestock in arid climates, moisture. Alcohol makers save millions by not having to landfill the by-products.

The proposal inspired quite an uproar from alcoholic beverage producers of all sizes, from nanobreweries to large distillers, as well as Members of Congress. The reaction inspired second-thinking at FDA, and we were hopeful that the agency would eventually reverse course on this proposal that protected nobody from nothing.

On September 29, FDA will formally publish in the Federal Register and seek comment on revisions to its 2013 Food for Animals proposed rule.

On pages 43-50 in the pre-publication PDF, FDA acknowledged that any hazards that might potentially arise from the production of spent grains and grape pomace could be addressed through compliance with the separate human food rules being promulgated to implement the FSMA. FDA did feel compelled to note in the Animal Food proposal, however, that once the alcohol production byproducts were “separated from the human food,” the facilities “would need to ensure that the animal food is not treated like trash or garbage.”

We must give FDA two cheers for considering the overwhelming public opposition to the spent grain provisions in the 2013 proposal and embracing a common-sense approach. Had the agency acknowledged that its original proposal was directly at odds  with the explicit language of FSMA, we would have offered a third cheer.