Fallout from PLIVA v. Mensing

Posted on May 11, 2012 by Mike

Something I’ve been keeping an eye on is the effects of the SCOTUS ruling in PLIVA v. Mensing, limiting liability of generic drug makers for side effects of the drug that are not included on the warning label from the brand-name drugs.

A couple of links.

First:

In the wake of Mensing, state courts in Pennsylvania, California, and New Jersey have been considering what to do with thousands of suits by metoclopramide users who claim they weren’t warned about the long-term risks of developing a neurological disorder. (The cases were mostly filed in state courts after the Judicial Panel on Multidistrict Litigation denied a bid to consolidate the metoclopramide litigation at a federal level.) What’s notable is that judges in those states have taken markedly different approaches to their metoclopramide dockets: In Philadelphia and San Francisco, judges have allowed thousands of personal-injury suits against the generics to move forward despite Mensing. But on Friday Superior Court Judge Carol Higbee in Atlantic City, New Jersey, ruled that generics are largely off the hook in her court.

Alison Frankel at Thomson Reuters. In addition to the Higbee decision, there was another case in NJ (in re Fosamax)

A likely case for eventual SCOTUS review, to reconcile the decisions in PLIVA v. Mensing and Wyeth v. Levine, which provided for damages to plaintiffs who suffered side effects from brand-name drugs.

On Wednesday, the Court of Appeals for the First Circuit upheld a $21 million verdict awarded to a woman who suffered grievous injuries as a result of taking a generic pain medication prescribed by her doctor. In its appeal to the First Circuit, the generic drug manufacturer, Mutual Pharmaceutical Company, argued that the design defect claims were preempted by the Hatch-Waxman Amendments to the Federal, Drug, and Cosmestic Act (“FDCA”) under the Supreme Court’s 2011 decision PLIVA v. Mensing.

Bartlett v. Mutual

A NYT article about people suffering from side effects of the generics. Included in the article is a mention of a Public Citizen petition of the FDA to allow generics to use the Changes Being Effected process to change their warning labels. The FDA has apparently postponed their decision on this petition.

And Sen. Leahy has introduced a bill to address the PLIVA/Levine discrepancy. The bill is here with its House counterpart, introduced by Rep. Van Hollen here.

Filed under: regulations, Supreme Court | Tagged: , , | 25 Comments »

Friday Fodder…

Posted on May 11, 2012 by Dave!

I read the following story and I figured that it was a good way to cap off a week.  It’s one of those things that I find funny even though there are financial implications to it…  The title of it: 

This Is Not a Joke: Government Issues Study of a Study About Studies

The Pentagon was inundated with so many studies in 2010 that it commissioned a study to determined how much it cost to produce all those studies.

Now the Government’s Accounting Office has reviewed the Pentagon’s study and concluded in a report this week that it’s a flop.

The study of a study of studies began in 2010 when Defense Secretary Robert Gates complained that his department was “awash in taskings for reports and studies.” He wanted to know how much they cost.

Two years later, the Pentagon review is still continuing, which prompted Congress to ask the GAO to look over the Pentagon’s shoulder. What they found lacked military precision.

The GAO found only nine studies that had been scrutinized by the Pentagon review, but the military was unable to “readily retrieve documentation” for six of  the reports.

The Department of Defense’s “approach is not fully consistent with relevant cost estimating best practices and cost accounting standards,” the GAO concluded. In fact, they often did not include items like manpower, the report found.

The Pentagon “partially concurs” with the GAO’s report.

The cost of the study of the study of the studies was not immediately available from the GAO.

Filed under: dod, fun stuff | 10 Comments »

Morning Report 5.11.12

Posted on May 11, 2012 by Brent Nyitray

Vital Statistics:

 

  Last Change Percent
S&P Futures  1349.3 -8.3 -0.61%
Eurostoxx Index 2231.1 -16.3 -0.72%
Oil (WTI) 96.03 -1.0 -1.08%
LIBOR 0.467 0.000 0.00%
US Dollar Index (DXY) 80.19 0.078 0.10%
10 Year Govt Bond Yield 1.85% -0.02%  
RPX Composite Real Estate Index 175.3 -0.1  

Markets are lower this morning after J.P. Morgan announced a $2 billion trading loss in its Chief Investment Office unit. April PPI showed inflation is behaving at the wholesale level. Bonds and MBS are higher.

The JP Morgan story is interesting. The position was supposed to be a hedge the bank’s credit exposure. However, if you read the Blooomberg story, it suggests the bank had sold protection on the Markit Series 9 CDX North American investment grade index. Which means it wasn’t hedging anything at all – selling protection and extending credit (which is what the bank does) are similar risks. The story goes on to speculate that it may have been some sort of spread bet, where the bank was short long-dated protection and long short-dated protection. Regardless, this position in no way hedges the bank’s overall business, at least as far as I can tell. Good luck getting out, guys. J.P. Morgan is going to get their eyes ripped out on the exit.

This incident will not cause a systemic risk in any way – if anything it will simply give ammo to the proponents of the Volcker Rule. A $2 billion loss for a bank that made $19 billion the year before and has $176 billion in equity is not fatal in any way. It also shows (again) the fundamental weakness in Value at Risk (VaR), which basically tells you the best case scenario when the fit hits the shan. JP Morgan stock is down 9.2% this morning. 

The CFPB has proposed rules for mortgage origination costs, which bans origination charges that vary by the size of the loan. Rob Christman summed it up perfectly:  “I’m sure that consumer groups are happy about it – just wait until they can’t find anyone who’s going to do a $100,000 loan.” The CFPB has also re-affirmed the anti-steering rules by the Fed.

The Facebook IPO is supposedly garnering lukewarm interest, at least at the price being discussed. It must be bad – I heard Mark Zuckerberg was seen this morning in a suit and tie, eschewing his traditional hoodie. The underwriters still have time to whip up excitement for the deal which should list on May 17 under they symbol FB.

Filed under: Morning Report | 49 Comments »