FDA’s Next Gift to the Litigation Industry: A Veritable Ban on Partially Hydrogenated Oils?

sharkIn a recent post, we lampooned the “high trans fat intake consumer” the Food and Drug Administration (FDA) invented to advance its de facto ban of partially hydrogenated oils (PHOs) as being a cross between Augustus Gloop and Homer Simpson. The ramifications of such a PHO ban for many processed food makers and their customers, however, are no laughing matter. Among other things, FDA’s final determination could expose the food industry to an avalanche of lawsuits and potentially billions of dollars in liability costs.

The Current Litigation Environment. Plaintiffs’ lawyers have been working feverishly for the past decade to turn lawsuits against “Big Food” into the next big payday. As chronicled on this blog since its inception in 2011, a small but persistent segment of the Litigation Industry has filed hundreds of class-action lawsuits alleging that everything from a perceived excess of empty space in a bag of chips to the printing of “evaporated cane juice” on a label violates state consumer protection laws.

By Litigation Industry standards, this lawsuit product line has not yet met profit expectations. But the lawsuits have successfully established, especially in California, that private litigants can enforce federal food laws and regulations. Continue reading

Federal Regulators’ Disregard for Sound Science Displayed in Four Agencies’ Actions

4th CircuitHow federal regulators use—and abuse—science in the regulatory process has a profound impact on regulated businesses and consumers who purchase their products and services.  In addition to the financial impact, every time that an agency forces science and the scientific process to serve its ideological or political agendas, rather than be guided by the neutral data, the public becomes less trusting of government pronouncements based on science. Below are some troubling recent examples of regulatory junk science. The first example demonstrates that protections against junk science do exist in the courtroom. The subsequent three examples reflect the lack of similar protections in the rulemaking and adjudication contexts.

Fourth and Sixth Circuits Slap-down EEOC. For the second time in less than a year, a federal appellate court has rebuked the Equal Employment Opportunity Commission (EEOC) for its use of junk science in accusing an employer of discrimination for conducting criminal background checks in its hiring process. EEOC’s litigation crusade against criminal background checks has faltered since its outset, with federal district court judges in Ohio and Maryland separately dismissing Title VII claims in 2013. Last April, just 20 days after hearing oral argument, the U.S. Court of Appeals for the Sixth Circuit affirmed the Ohio trial judge’s decision in EEOC v. Kaplan. The court found the EEOC’s statistical proof of disparate impact—compiled and presented by expert witness Kevin Murphy, an industrial psychologist—unreliable and “based on a homemade methodology” not generally accepted in the scientific community. A WLF Legal Opinion Letter and a WLF Legal Pulse post, both published last spring, offer more detail on the ruling. Continue reading

The “21st Century Cures Act” Draft Legislation Includes Welcome Support for First Amendment Rights

FDAThe House Energy and Commerce Committee released a 400-page “discussion draft” of its proposed “21st Century Cures Act” late last month. The bill includes a broad range of reforms governing the regulation of drugs and medical devices, most of which have been warmly received by broad segments of those industries. The bill is particularly welcome to supporters of commercial speech rights; it includes several provisions designed to ensure that government regulators do not prevent manufacturers from speaking truthfully about their medical products.

Social Media

One particular area of concern has been Food and Drug Administration (FDA) restrictions on manufacturer use of social media. Subtitle I of Title I of the bill would overturn those restrictions. One characteristic of social media is that it places a premium on brevity. For example, Twitter limits messages to 140 characters or less. In a Draft Guidance issued on June 18, 2014, FDA concluded that drug/device manufacturers should rarely, if ever, attempt to use social media platforms with character space limitations because those limitations deprives manufacturers of sufficient space to include all the risk and benefit information that the agency asserts is a necessary part of any such communications. It is not sufficient, FDA concluded, for a Twitter message to include the name of the drug and its intended uses, and then provide a hyperlink where detailed risk and benefit information is available. But as Washington Legal Foundation (WLF) pointed out in comments urging withdrawal of the Draft Guidance, a de facto prohibition on use of social media platforms raises serious First Amendment concerns. The First Amendment does not allow the government to prohibit an entire method of communication simply because other methods of communications are available to the speaker, at least not where the government’s goals can be achieved through more narrowly tailored means. Continue reading

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

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

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

Eleventh Circuit Ruling a Welcome Judicial Pushback against Criminal Enforcement of Regulations

strickly skillz

On a balmy late August day in Orlando, Florida, nearly a dozen Orange County police officers, some dressed in ballistic vests and masked helmets, swept into Strictly Skillz barbershop with their guns drawn. As their colleagues blocked off the parking lot entrances and exits, the officers declared that the shop was closed and ordered its patrons to leave, depriving the shop of business and perhaps deterring future patrons. Two barbers and the owner were handcuffed. A plain-clothed member of the raiding party demanded to see the barbershop’s business license.

Yes, you read that correctly. On August 21, 2010, a veritable SWAT team of heavily armed police conducted a warrantless inspection to check for barbers’ licensing violations. The Florida Department of Business and Professional Regulation (DBPR) inspector soon determined that Strictly Skillz barbers were properly licensed (which, as you’ll learn below, they already knew), so the police uncuffed the detained barbers and owner and left the shop.

The owner and three barbers sued a number of the officers involved for violating their Fourth Amendment rights against unreasonable search and seizure, and a federal district court denied the defendants’ motion for summary judgment on qualified immunity grounds. On September 16, the U.S. Court of Appeals for the Eleventh Circuit issued a strongly worded opinion affirming the lower court (Berry v. Leslie). The ruling provides a forceful reminder that the Fourth Amendment protects businesses (and their employees) from overzealous regulatory inspections. Continue reading