Good News and Bad News: Legislative and Regulatory Changes

April 2005
Drug & Medical Device Newsletter, Spring 2005

Over the past six months, the pharmaceutical industry has faced some unprecedented challenges in both the regulatory and legislative sphere, making for some uncertainty as the industry looks to the future.  From the testimony of David Graham, a staff person with the FDA, regarding safety monitoring mechanisms to a new FDA focus on certain classes of drugs such as SSRIs used to treat depression and Cox-2 inhibitors used in the treatment of arthritis to political disputes over the importation of pharmaceutical products from Canada and other countries, the industry has been faced with the potential for a somewhat changed landscape in both the regulatory and legislative landscape.

In response to the regulatory issues that have been raised regarding the mechanism for monitoring drug safety, the FDA announced on February 15, 2005 that it would create a separate and independent board to advise the agency on post market drug complications and side effects and to make information about those complications and side effects available to the public.  The members of this board will be drawn from scientists throughout the federal government.  Dr. Lester M. Crawford, recently nominated by President Bush to become the permanent commissioner of the FDA, indicated that the hope was that this board would help the FDA become more transparent in making information available to the public about pharmaceutical products that are on the market.  Dr. Crawford said, “What the public, we think, is demanding is to know as soon as we know what’s going on.  And they’re fully prepared and adult enough to interpret whether or not this is a final decision.”

In addition to the creation of this board, the FDA has indicated its intention to begin making use of large databases it has available to it, like the Medicare database, to track and monitor side effects of drug products once they are on the market.  The agency, through Dr. Crawford, also recently stated that while it intends to aggressively pursue what it considers to be misleading direct to consumer pharmaceutical advertising, it has no intention of seeking a ban on direct to consumer advertising.

On the Congressional front, there was some good news for pharmaceutical companies and those who represent them in litigation.  After many years of being considered by the Congress, the Class Action Fairness Act was recently approved by the Congress and signed into law by President Bush.  The Act would place most large nationwide class actions in federal court (those with 100 or more plaintiffs and seeking damages of $5 million or more) and allow for a much easier threshold for removing such a case from state court to federal court (minimal diversity vs. complete diversity).  The Act also is designed to address coupon settlements in certain large class actions where the individual members of the class get a small rebate or coupon, while the attorneys representing the class reap millions of dollars.  This Act is the first of several tort reform proposals that are being supported by the Bush Administration and that may be taken up by the Congress this year.  (Tort reform efforts also continue on the state level, as you can read in the article in our newsletter on the recent adoption of tort reform legislation in Ohio.)

Thus, there is both good news and some uncertain news for the pharmaceutical industry as 2005 gets underway.  What is certain is that people will continue to look to the industry for new and innovative life saving drugs, but that the development of and regulatory approval process for those products may be somewhat more complicated.