The International Who’s Who of Life Sciences Lawyers brings together three of the leading practitioners in the world to discuss key issues facing lawyers today.
Colin B Loveday
Who’s Who Legal: Are lawyers in this sector increasingly expected to have a high level of scientific knowledge and specialisation in the fields of pharmaceuticals, medical devices and biotechs? How important is experience for being a top lawyer in this area?
Colin B Loveday:There has always been an expectation that external lawyers who work for the pharma sector will have a level of specialised scientific knowledge and certainly the capacity to get on top of scientific issues promptly and efficiently. I do not believe that this is a new, or increasing, expectation in the Australian legal market.
As a result, it is necessary to have a team of lawyers who have a range of formal qualifications relevant to the pharmaceutical, medical device and biotech sectors and thus, familiar with the key scientific fields.
Equally, of increasing importance is practical industry experience (for example, through secondment arrangements), as it allows lawyers to better understand the business needs of industry participants and permit efficient provision of legal services.
Scott Maidment: Clients in this sector do not expect their defence counsel to be scientists or engineers. They do, however, expect their counsel to understand what the scientific evidence or the relevant technology will mean for the successful defence of the case, and for the development of an effective defence strategy. Take, for example, a “failure to warn” case where it is alleged that the manufacturer failed to warn of the risk of a condition found to be associated with the use of a particular drug. The client will not expect defence counsel to hold a PhD in epidemiology, but it will expect counsel to understand the typical weaknesses of epidemiological evidence in proving causation, and to be able to explore that area fruitfully. To be effective, one need not have all of the scientific answers, but one does need to know what scientific or technical questions must be asked. This comes only with experience, which teaches one the critical points of intersection between law and science in the defence of these cases.
Michael Brown: In the United States, there is a large amount of litigation involving pharmaceuticals, medical devices and biologics. There is no prerequisite for a background in science to be successful in litigating these cases because the companies’ in-house scientists and outside experts do a great job at educating the lawyers so that the case, including the science, can be presented simply and efficiently to a lay jury made up of individuals who are not scientists.
This field of law has become very specialised and experience litigating other pharmaceutical and medical device cases is critical to being a top lawyer in the field.
Who’s Who Legal: Several lawyers we spoke to mentioned an increase in both litigation and class actions, including some class actions against both brand and generic companies. Is this the case in your jurisdiction and what are the key reasons for this?
Colin B Loveday: This is certainly the case in Australia. However, the key drivers for this increase are a little harder to identify. There have been no material changes in legal standards, practice and procedure, although there is an increasing understanding of the low thresholds required to commence class actions in Australia. These low thresholds, which do not require proof of numerosity or a certification process, have driven much of the class action activity in Australia.
It is also true that the growth of the litigation funding industry in Australia has been important, although to date the focus of litigation funders has been primarily on financial, shareholder and post-GFC litigation.
Whilst copycat litigation (cases commenced in Australia that mirror international proceedings) is nothing new, it does appear that the lines of communication between the International and Australian Plaintiffs’ bar is becoming increasingly efficient. Ten years ago, there was usually a delay of one to two years before the commencement of such litigation. These days, it is not uncommon for litigation of this kind to be commenced in Australia at the same time and even sometimes before it is commenced overseas.
Scott Maidment: Class actions involving drugs and medical devices have been on the increase in Canada for several years now. Their popularity is driven in part by the success of plaintiffs in obtaining class certification in these cases. Unlike the situation in the United States, for example, class actions alleging personal injury are commonly certified in Canada. This area of litigation is likely to remain vibrant for the foreseeable future. We will see continued demand for new drugs and devices to treat an ageing population, and no new drug or medical device is risk-free. Some of those risks will inevitably materialise in circumstances where someone will argue there ought to have been better knowledge or better communication. We are also seeing a trend toward class actions against generic drug companies. Traditionally, generic companies were spared these claims because before their own entry into the market they had the benefit of the brand’s 20 years of real-world experience with the drug during the patent period. Now we are seeing what one might call “long-tail” failure to warn claims, alleging that some risks are only coming to light or being fully understood after the drug has been on the market for a long period.
Michael Brown: There has been an increase in litigation involving branded and generic drugs, specifically around the issue of whether the generic manufacturer can be held liable for not warning of specific risks as opposed to merely replicating the warnings that are on the branded manufacturer’s label. This has implicated issues of federal pre-emption as discussed in a United States Supreme Court case called Pliva v Mensing. The Supreme Court has just accepted another case (Bartlett v Mutual Pharmaceutical Co.) involving potential design liability for generic manufacturers
There also has been a move on the part of plaintiff’s lawyers to hold branded manufacturers liable even if the plaintiff took only a generic product and did not take the branded product. Many courts have rejected this theory of liability but courts in the states of California and Alabama have permitted this theory.
Who’s Who Legal: Are the risks of product liability for biotech products any greater than for more conventional products? Are there any recent cases in your jurisdiction that you can use to illustrate your answer?
Colin B Loveday: Following amendments to the Therapeutic Goods Act 1989 (Cth) in 2011, Australia now has a separate regulatory framework for the regulation of biologicals. Transition arrangements of up to three years apply to allow all biologicals to meet the new arrangements.
Like any new regulatory system, it will take some time for the participants (and indeed the Australian regulator, the Therapeutic Goods Administration (TGA)) to test the metes and bounds of the new laws.
Scott Maidment: I do not believe the risks for biotech products are any greater than for conventional products under Canadian law. Having said that, a manufacturer of any product that is ingested, consumed or otherwise placed in the body has traditionally been subject to a high standard of care under the Canadian law of negligence. The Supreme Court of Canada restated this in the Hollis v Dow Corning breast implant case in 1995, and the advent of biotech products has not yet resulted in any novel principles that govern liability in connection with those products. On the contrary, the 2006 Hoffmann v Monsanto decision involving genetically modified crops suggests that traditional principles of tort law will continue to be applied in Canada to determine liability in the context of biotech products.
Michael Brown: The law concerning biotech products, including biologics, is less developed than for generic and branded pharmaceuticals. There has been a good amount of litigation over genetically modified crops such as corn, rice and other vegetables and we can expect that to increase and spread to other biotech products. In the consumer fraud area, we are seeing litigation over the use of the term “natural” for genetically modified products. Also, as the technology develops to the point where companies can manufacture genetically personalised drugs that treat people with unique genetic markers, we can expect an increase in failure to warn claims similar to what we see with more conventional products.
Who’s Who Legal: There have been several high-profile medical device cases recently, most notably that concerning the French breast implant company Poly Implant Prothèse, which has also resulted in criticism of regulators. What is or could be the impact of such cases on regulations in your jurisdiction?
Colin B Loveday: The impact of medical device cases has already been felt, with criticism levelled at both the TGA and the medical device industry sector. Interest in this area saw two recent Federal Senate inquiries into, firstly, the role of government and the TGA regarding medical devices, particularly Poly Implant Prothèse (PIP) breast implants (May 2012); and, secondly, the regulatory standards for the approval of medical devices in Australia (November 2011).
People complain about a perceived lack of regulatory control in the medical device sector. Usually, these complaints are in respect of complex medical devices where there is a poor understanding of the inevitable risks involved. Within the medical device field there are products ranging from the simple (such as a heat pack) to the complex (such as a device for the conduct of genetic testing). Given this broad range, it is difficult and it takes time to develop a system that can cover the field and accommodate increasing complexities.
Scott Maidment: Criticism of the regulator’s performance in the medical device area is not a recent phenomenon in Canada. The past two decades have seen a rapid growth in medical device technology and increasingly complex submissions. This taxed the regulators’ resources in many jurisdictions, Canada included. Since at least 2006, the Canadian regulator has been under pressure to improve its performance in the area of medical devices, and to improve its funding of medical device regulation. In June 2011, the Canadian Auditor General was critical of the regulator’s performance in both pre-market reviews and post-market surveillance. Among the criticisms levelled at the regulator was a failure to complete timely pre-market reviews in almost half of cases, thus delaying Canadians’ access to the health benefits of those devices. The regulator has been working to address the criticisms levelled against it, and we can expect to see continued reform in the area of medical devices in the short term.
Michael Brown: In the United States, we have seen an increase in criticism of regulators (the Food and Drugs Administration, FDA) over the level of human clinical testing that occurs on products before they are released to the market. In 2012, there was an increased focus on the many manufacturers of pelvic mesh used to treat pelvic organ prolapse and similar conditions. In the US, approximately 98 per cent of all medical devices that come on the market go through a regulatory process called the “510k equivalency” process where most often the products have not had human clinical trials but have been deemed “substantially equivalent” to a device that is already on the market in commercial use. This process has undergone additional scrutiny in the last few years and additional requirements for clinical testing either before or after the product has been on the market could lead to fewer products becoming commercially available.
Who’s Who Legal: Due to the global financial crisis and difficult economic environment there is pressure on clients regarding fees in many industries. Have you experienced this or are the stakes so high in this area that clients are more concerned about getting results than cost?
Colin B Loveday: Of course there is a pressure on professional fees; however, this pressure did not start with the GFC. In my view, it has been present for a long time.
The current economic environment has meant that clients have become more demanding in terms of fee certainty, visibility and the timing and cost of each step in a particular matter. This can be a particularly challenging exercise in class action litigation.
Scott Maidment: In the class actions area in which I practise, the stakes are certainly high, and this means that the defence will involve a substantial financial investment by the company. No business can succeed without obtaining good value for money, however, and in a difficult economy the focus on value is generally intensified. That is to be expected. One advantage of practising in this field, however, is that companies in this industry understand the value of effective legal counsel. This tends to create a healthy competitive environment for the top lawyers in this field.
Michael Brown: There are a lot of factors that affect this issue. In today’s world, despite the high stakes of the litigation, managing and minimising costs is a priority for most companies. That does not mean that they will not vigorously defend the products at issue but will want to do it efficiently, similar to how other parts of the business are run. Depending on how important the product is to the business may also affect the level of resources the company spends on the litigation.
Who’s Who Legal: What trends do you foresee for the year ahead? Can we expect any significant developments in this sector or in the legal marketplace in your jurisdiction?
Colin B Loveday: One of the important developments for Australian pharmaceutical companies in 2013 is the introduction of Edition 17 of the Medicines Australia Code of Conduct (the Code). On 20 December 2012, the Australian Competition and Consumer Commission (ACCC) granted authorisation for the Code for a two-year period.
The new edition of the Code, taking effect from 11 January 2013, brings in reporting requirements to further increase transparency of relationships between pharmaceutical companies and health-care professionals (HCPs). It also completely bans the use of brand reminders and the provision of gifts or prizes to HCPs. The ACCC has indicated it expects Medicines Australia to give further consideration to the transparency of HCP relationships for the next edition of the Code.
As with any new piece of legislation or guideline, it is inevitable that there will be some uncertainty associated with the interpretation of the provisions and implementation of the new requirements.
Another development in Australia is the return of the “on again, off again” proposed joint regulation of therapeutic goods in Australia and New Zealand. On 8 January 2013, the TGA and the New Zealand regulator, Medsafe, released a discussion paper calling for comments on a proposed framework for an Australia New Zealand Therapeutic Products Agency (ANZTPA). The consultation is open until 21 February 2013.
Discussion about ANZTPA is not new. Since it has been actively discussed for some years, it is difficult to tell whether this most recent consultation paper is indicative of a real advance or merely a symptom of the difficulty in attempting to harmonise a cross-border regulatory regime.
Attitudes towards a joint regulatory scheme have been broadly positive. However, perhaps unsurprisingly, the form of this regime has been the point of much discussion and there is a degree of hesitancy in some sectors about the introduction of a regime which could involve the adoption of one national regime over the other, a hybrid of the two regimes, or an entirely new regime. This necessarily creates uncertainty for industry and their ability to rely on a familiar regulatory regime in planning the future conduct of their business.
Scott Maidment: In Canada, we will continue to see a lot of activity in class actions, though the focus of this activity is now shifting from certification to trial. The past decade has not been an encouraging one for class action defendants in Canada. In most cases the principal strategic focus for defendants has been to defeat the plaintiff’s motion for certification by arguing that the complex individual issues in the case made the claims unsuitable for class treatment. This strategy generally failed, as courts showed a ready willingness to certify drug and medical device cases despite complex individual issues like causation, in part by relying on novel theories of class recovery like “waiver of tort”. As certification has proven to be a poor battleground for defendants, there is necessarily a trend toward an increased focus on the merits trial, with certification increasingly viewed as an important element of an effective trial strategy. We expect to see this trend continue, and to see an increasing number of these cases proceed to a trial on the merits in Canada. This will place an even higher premium on selecting experienced and effective defence counsel.
Michael Brown: I expect to see a continuation of plaintiff’s lawyers aggregating claims and cases in an effort to develop a “mass tort” which presents the manufacturer with a difficult choice over whether to expend significant resources defending the cases or resolving them or both. It has become relatively easy for lawyers to sign up clients after a barrage of television advertising, much of which is often misleading. As long as this practice remains economically viable and courts permit it, this trend will likely continue.
I also expect to see further legal developments on the issue of federal pre-emption for both generic pharmaceuticals and medical devices approved through the FDA’s pre-market approval (PMA) process. Currently the law is not uniform and there are cases in both areas working their way to the US Supreme Court.
Finally, I expect there to be continued overlap among government investigations conducted by the Department of Justice and State Attorney’s General and even committees of the United States Congress, regulatory enforcement by the FDA and efforts by the plaintiffs’ bar to aggregate clients. We have seen that if there is a government investigation or regulatory enforcement action taken, civil product liability suits are sure to follow.