Dechert Re:Torts - Key Developments in Product Liability and Mass Torts

Issue 6 - June 2023

Dechert Re:Torts is a monthly newsletter covering news and developments related to product liability and mass torts litigation.

In this issue:

States Intensify Efforts to Regulate PFAS
FDA Proposes New, Easy-to-Read Medication Guide
Montana TikTok Ban Sparks Litigation
FCA Scienter: A New Subjective Standard
ALI Delays Vote on No-Injury Medical Monitoring
Former FDA Officials Contend Fosamax Claims Are Not Preempted

Environmental Edit

States Intensify Efforts to Regulate PFAS

Over the last several months, the EPA has unveiled several measures to monitor and regulate per- and polyfluoroalkyl substances (“PFAS”). For example, in November of 2022, the EPA proposed to designate two PFAS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act, which (among other implications) would require reporting of certain PFAS releases. And in March, the EPA proposed a National Primary Drinking Water Regulation to establish legally enforceable levels, called Maximum Contaminant Levels (“MCLs”) for six PFAS in drinking water.

Over the same period, states have been actively working to implement new PFAS restrictions. In 2023 alone, states introduced 195 new bills attempting to regulate or restrict PFAS use. Many of these states are setting state-specific MCLs, some of which are stricter than limits promulgated by the EPA. Other states have enacted significant regulations with broad industry impacts. For example, the governor of Minnesota recently signed into law a comprehensive bill that not only calls for new water quality standards, but among other provisions, would require companies to report any products that contain “intentionally added” PFAS. That legislation also endeavors to phase out certain products containing PFAS from the market by 2025. Similarly, Maine has undertaken to phase out PFAS in consumer products altogether by 2030, except where the use is “unavoidable.” And Connecticut’s environmental protection agency now requires entities to disclose historical industrial activities that could have resulted in the presence of PFAS in the soil or in groundwater.

While many states are taking significant steps to transform the regulatory landscape of PFAS, some stakeholders have expressed concern about the extent of state regulation. The American Chemistry Council cautioned that extensive state regulation could create conflicting obligations—or even prevent—the production of important products such as medical devices. Recent state efforts to regulate PFAS serve as an important reminder to companies to remain informed of relevant developments at both the federal and state levels to ensure continued compliance.

Takeaway: As states continue their independent efforts to regulate PFAS, companies that use or have used PFAS in their operations should closely monitor emergent regulatory obligations to manage compliance risks and other potential consequences that proposed PFAS restrictions could have on their operations.

Learn more about PFAS development on Dechert’s PFAS website.

Regulatory Review

FDA Proposes New, Easy-to-Read Medication Guide

FDA recently issued a Proposed Rule (“Medication Guides: Patient Medication Information,” 88 FR 35694 (May 31, 2023)) that would require a new, easy-to-read medication guide for patients (Patient Medication Information, or “PMI”), and would broaden the current categories of prescription drugs that would require the new guides. The current comment period closes on November 27, 2023.

Through its Proposed Rule, FDA seeks to address several issues that have arisen under the current medication guide rules, including that they do “not consistently provide patients with clear, concise, accessible, and sufficiently useful written prescription drug product information delivered in a consistent and easily understood format to help patients use their products safely and effectively.” Medication Guides: Patient Medication Information, 88 Fed. Reg. 35694, 35698 (proposed June 5, 2023) (to be codified at 21 C.F.R. pts. 201, 208, 314, 606, 610). While the FDA previously limited the requirement for medication guides to specific prescription drug products that pose serious and significant safety concerns, the Proposed Rule would mandate that all licensed and registered prescription drug providers create and distribute PMI for all drug products that are “dispensed outside of an inpatient setting.” Id. at 35703–4.

Specific rules and regulations, ranging from formatting requirements to content and disclosure requirements, would apply to the PMI. For example, PMI would inform the reader/patient of the drug product’s name and purpose, important safety information, common side effects, and directions for use. It would be written at a sixth to eighth grade reading level, making the instructions and information readable for the average United States citizen. Id. at 35706. PMI would also contain a concise summary of the most important information about the drug product, its serious warnings, serious and common adverse effects, and basic instructions on how to use the product. The PMI would provide this information in objective, “non-promotional,” and “scientifically accurate” language. Id. at 35698, 35707. FDA explained that the Proposed Rule will help to ensure safer and more effective use of prescription medications. FDA predicts that PMI would decrease search costs for information and help patients make improved healthcare decisions.

Takeaway: The Proposed Rule is intended to allow patients greater participation in their own medical care and may have broader implications for litigants.

Learn about Dechert's Product Liability and Mass Torts services.

Hot Topics

Montana TikTok Ban Sparks Litigation

As we reported in last month’s issue of Re:Torts, states have begun enacting or considering laws restricting social media use, particularly by minors. Montana has taken a more stringent approach with respect to one social media platform: on May 17, 2023, the Governor of Montana signed Senate Bill 419 to make Montana the first state to ban TikTok.

Although S.B. 419 cites the protection of minors as one rationale for the TikTok ban, the primary impetus was to prevent the Chinese government from accessing users’ personal data. The action comes on the heels of Congressional hearings that raised similar concerns about TikTok’s privacy structures and alleged national security risks.

Set to take effect at the start of 2024, the legislation makes it illegal for individuals to access TikTok in Montana, illegal for mobile application stores to give Montana users the option to download TikTok, and illegal for the company to operate within the state. Each discrete violation—i.e., any time a user accesses TikTok or is offered the ability to access or download the platform—carries a fine of $10,000 and accrues against the mobile application store but not the individuals attempting to use TikTok. See S.B. 419. Unlike Montana’s broader approach, other states’ efforts focus on blocking access to TikTok specifically from state-issued devices but do not address private access or application platforms.

In response, TikTok sued Montana, challenging the ban on constitutional and preemption grounds and seeking declaratory and injunctive relief. Among other First Amendment violations, the complaint states that an outright prohibition of TikTok is unconstitutional in singling out one application, rather than social media companies in general. TikTok also highlights several measures the company has taken to protect users’ data and privacy, making a ban unnecessary. Indeed, TikTok recently took steps to initiate data privacy protections via a plan, known as Project Texas, where the United States government and third-party companies would have some degree of oversight of TikTok’s data practices.

Five TikTok users also sought injunctive and declaratory relief against Montana alleging the ban suppresses free speech and “exercises power over national security that Montana does not have.” The complaint’s First Amendment argument highlights TikTok’s role in public discourse and how “Montana can no more ban its residents from viewing or posting to TikTok than it could ban the Wall Street Journal because of who owns it or the ideas it publishes.”

Takeaway: Ongoing litigation will determine whether Montana’s TikTok ban can survive legal challenges. The outcome will serve as a litmus test for future action barring social media platforms.

Learn about Dechert's Product Liability and Mass Torts services.

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FCA Scienter: A New Subjective Standard

In the consolidated United States ex rel. Schutte v. Supervalu Inc. and United States ex rel. Proctor v. Safeway Inc. decision, the Supreme Court held that the scienter element of the False Claims Act (“FCA”), is a question of the defendant’s “knowledge and subjective beliefs” rather than its “objectively reasonable interpretations.” 143 S. Ct. 1391 (2023). The cases involved FCA claims by private parties against Supervalu and Safeway, alleging that two supermarket chains “knowingly” filed false reimbursement claims to Medicare and Medicaid, reporting prices higher than their usual and customary sale price. Id.

In the reimbursement claims each filed with Medicare and Medicaid, Supervalu and Safeway reported higher retail prices than those offered through their popular discount membership programs as their usual and customary prices for generic drugs. Plaintiffs alleged that the discount prices were in fact the usual and customary prices and that defendants had knowingly filed fraudulent claims reflecting higher prices. Id. The Seventh Circuit concluded that defendants’ belief that usual and customary referred to their discounted prices was irrelevant as a reasonable person could have interpreted usual and customary to mean the reported retail price. The Supreme Court rejected this approach as a claim would need to be “objectively unreasonable, as a legal matter, before a defendant could be held liable for knowingly submitting a false claim, no matter what the defendant thought.” Id. The Court concluded that a defendant’s subjective belief regarding the accuracy of their claim is central to FCA scienter inquiries, precluding defendants from raising post hoc reasonable interpretations when moving for dismissal. Id.

Under the Supreme Court’s recent decision, FCA cases require an inquiry into the specific knowledge of the defendant. The scienter requirement may be met by (1) “actual knowledge,” (2) “deliberate ignorance,” or (3) “recklessness.” Id. Going forward, dismissal of FCA claims at early stages may prove more difficult as defendants cannot rely on arguments of “objectively reasonable interpretations,” and instead may be more likely to face discovery into their specific knowledge and subjective beliefs. Id.

Takeaway: Following the Supreme Court’s adoption of a subjective scienter standard, FCA defendants may find motions to dismiss impeded by allegations regarding their specific knowledge and subjective beliefs.

Learn about Dechert's Product Liability and Mass Torts services.

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ALI Delays Vote on No-Injury Medical Monitoring

On May 22, the ALI held its 100^th annual meeting, where members planned to debate adopting no-injury medical monitoring into the Restatement Third of Torts. If adopted, plaintiffs could seek compensation for the costs of ongoing medical surveillance and testing, even though the plaintiff has yet to sustain any physical injury or illness. Defense-minded members have argued that the ALI proposal does not reflect the state of the law, but rather advocates for what the law ought to be. The defense side of the debate has been hampered by limited attendance; 75 precent of attendees at the recent meeting were plaintiff-side attorneys and academics.

ALI Reporters, who are appointed legal scholars, are responsible for researching and presenting proposed modifications or additions to ALI publications. Based on limited case law research, reporters claimed that half of states support no-injury medical monitoring. However, based on an ALI member’s independent review, only 14 states support no-injury medical monitoring while 28 are opposed. And of the 14 states in favor, nearly all impose restrictions or otherwise limit the claims. For example, eight states limit claims to specific torts, such as negligence.

Further, reporters argued that the ALI should not consider federal cases applying state law except those that favored their position, such as Colorado and Ohio. Despite the existence of states that do not endorse no-injury medical monitoring, reporters still refused to consider anything short of a complete endorsement of no-injury medical monitoring. Reporters also argued that the ALI should not consider federal cases applying state law except those that favored their position, such as Colorado and Ohio. Despite the existence of states that do not endorse no-injury medical monitoring reporters still refused to consider anything short of a complete endorsement of no-injury medical monitoring.

The future of medical monitoring comes down to attendance and participation at the next annual ALI meeting in May 2024. It is imperative that ALI members attend, exercise their voting rights, and engage in a good faith debate to ultimately ensure that the Restatement represents an accurate portrayal of the law.

Takeaway: Adopting no-injury medical monitoring will change the longstanding tradition of requiring present injury to impose liability. Attendance by all ALI members is critical to ensure that the Restatement captures the full spectrum of ALI voices and the current state of the law on this significant issue.

Learn about Dechert's Product Liability and Mass Torts services.

Jurisdictional Jabber

Former FDA Officials Contend Fosamax Claims Are Not Preempted

In In re Fosamax (Alendronate Sodium) Products Liability Litigation, plaintiffs alleged that Merck failed to warn that Fosamax, an osteoporosis drug, can cause certain atypical femoral fractures (“AFFs”). The District of New Jersey previously dismissed plaintiffs’ claims on preemption grounds and granted summary judgment for Merck. See In re Fosamax (Alendronate Sodium) Prod. Liab. Litig., 593 F. Supp. 3d 96 (D.N.J. 2022). Plaintiffs’ appeal of that decision is now pending in the Third Circuit.

A key issue on appeal is whether there is “clear evidence that the FDA would not have approved” the AFF warning that plaintiffs contend should have been given. See Merck Sharp & Dohme Corp. v. Albrecht, 139 S. Ct. 1668, 1672 (2019). In May 2023, three former FDA officials and MedShadow Foundation (a not-for-profit organization with which they are affiliated) filed an amicus brief weighing in on that very issue. Br. 1. They contend that plaintiffs’ claims are not preempted because Merck never asked the FDA to allow a warning regarding AFFs specifically, and the FDA never barred the company from adding such a warning. Id. at 3. They also express concerns that “[a] finding of preemption in this case would encourage other drug companies to submit incomplete post marketing safety data and a faulty analysis to support a lesser warning in an effort to get FDA to reject such warning so that the company can use such rejection to defend against product liability claims.” Id. at 26.

The amicus brief is notable for several reasons. Although the FDA has sometimes weighed in on preemption, it is less common for former FDA officials to do so (see links below). Moreover, whereas the former FDA officials here advocate against preemption, FDA has often advocated in favor of it, albeit in other contexts. See, e.g., Wyeth v. Levine, 55 U.S. 555 (2009) (FDA contended that claims were preempted when the respondent challenged labeling FDA approved after being informed of relevant risk); In re Paxil Litig., 2002 WL 31375497 (C.D. Cal. Oct. 18, 2002) (FDA contended that injunctive relief against a manufacturer’s FDA-approved advertising directly contradicted FDA’s authority). Finally, the amici’s purported concerns about drug company conduct are unsupported.

Takeaway: The intervention by former FDA officials in this case is a notable departure from the approach that FDA itself has taken in amicus briefs regarding preemption in other litigations. It remains to be seen whether their views will have any impact on the Third Circuit’s preemption decision.

Bernhardt v. Liebman Statement of Interest

Colacicco v. Apotex Amicus Brief

Motus v. Pfizer Amicus Brief

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