Michigan law shielding drug makers draws scrutiny amid opioid crisis

Karen Bouffard | The Detroit News

A one-of-a-kind law is likely to prevent Michigan communities and the state from winning lawsuits to reclaim the millions of dollars they've spent fighting the opioid epidemic, legal experts say.

The 1995 Michigan Product Liability Act grants pharmaceutical companies nearly absolute immunity from lawsuits filed by consumers and has kept the state of Michigan from suing over dangerous or deadly drugs. Michigan Attorney General Bill Schuette was then a state senator who co-sponsored the bill, but now says he is open to reconsidering the law.

At least 50 Michigan communities — from Detroit, Saginaw and Lansing to Grand Traverse County and Escanaba — have filed lawsuits against opioid manufacturers, arguing in part that the companies aggressively promoted their products by falsely claiming the drugs aren't addictive.

Nationally, about 700 state and local governments have filed similar lawsuits, and the cases have been consolidated into multi-district litigation to expedite their consideration this fall by Judge Dan Aaron Polster in the U.S. District Court for the Northern District of Ohio in Cleveland.

Michigan's product liability law presents a hurdle for the Michigan lawsuits "both by virtue of the language in the statute and recent rulings of the Michigan appellate courts," said Wayne State University law professor Robert A. Ackerman.

"Even if you file in federal court, they have to look to the state law to determine the governing substantive law," Ackerman said. "Even in Cleveland, they're going to have to look to the Michigan law."

State Sen. Steve Bieda, D-Warren, has introduced legislation to repeal the law seven times over his nearly 14 years in the Legislature without success. Bieda said local governments have been contacting him, worried about how the act will block their lawsuits.

"If it was such a great idea, how come we’re not flush with a bunch of pharmaceutical type industries in the state?" he said. "And how come all the other states haven’t followed suit?"

The Michigan Chamber of Commerce, which backed the legislation, continues to support the law. The chamber argues that it "minimizes frivolous lawsuits, while still providing Michigan residents avenues to sue drug manufacturers."

The state law allows lawsuits to proceed if the federal Food and Drug Administration determines it was misled during the approval process for a drug, said Wendy Block, the chamber's vice president of business advocacy.

"In fact, the law states that Michigan residents may proceed with a lawsuit against a drug manufacturer if they first follow an administrative process that returns a finding by the FDA of wrongdoing by the drug manufacturer," Block said.

Navigating state obstacle

In 1995, the Michigan Legislature narrowly approved the legislation pushed by Republican then-Gov. John Engler, the Michigan Chamber and other business groups. The Michigan Product Liability Act bars lawsuits brought by the state and its residents for any drug that is approved for safety and efficacy by the FDA and labeled in compliance with FDA standards.

The law has proved to be an obstacle even for a Republican attorney general. In 2011, the Michigan Court of Appeals threw out a $20 million lawsuit filed against Merck by then-Attorney General Mike Cox over the arthritis pain medication Vioxx, which caused heart attacks and strokes.

The court ruled that the state couldn't sue because Michigan's law prohibits lawsuits for drugs approved by federal regulators. The Michigan Supreme Court agreed.

Robin Baumgartner of Mattawan near Kalamazoo, was devastated by a ruling that Michigan residents can't sue over Risperdal, made by Johnson & Johnson and its subsidiary Janssen Pharmaceuticals. Her son, Tyler Wagner, now 24, developed gynecomastia, or enlarged breasts, after taking the drug for nearly a decade to control aggressive behavior caused by developmental disabilities.

"His female hormones were crazy off the charts," Baumgartner said. "It ... has caused permanent damage to my son, physically, emotionally and psychologically. How do you put a price on that?"

The state appears to have had more success in getting cash payouts from drug makers under federal law. It has shared in settlements or verdicts from criminal and civil cases brought against pharmaceutical companies under federal laws such as the False Claims and Whistleblower Protection acts.

In the Risperdal case, Michigan received $43 million from a $1.2 billion settlement to resolve federal lawsuits. In addition, Janssen pleaded guilty in federal court to a criminal misdemeanor charge of misbranding Risperdal in violation of the Food, Drug and Cosmetic Act and agreed to pay another $400 million in criminal fines and forfeitures.

Michigan has shared in more than $100 million as a result of lawsuits against pharmaceutical companies, Schuette spokeswoman Andrea Bitely said. Much of the money involved settlements from multistate cases brought by the U.S. Department of Justice.

The Michigan communities hope to recover millions of dollars their local governments have spent coping with the opioid crisis, said Paul Novak, an attorney in the Detroit office of the national law firm Weitz & Luxenberg, P.C., which is handling the local cases. He didn't comment on how the state's product liability law might affect the Michigan cases.

“It seems like every day when you’re talking to a different municipality, you come across another category of expenses that they’ve confronted that’s increased as a result of the opioid epidemic," Novak said.

"We’ve had counties that had to redo their autopsy budget mid-budget-year because they didn’t anticipate the crazy number of autopsies.”

Attorneys for the Michigan communities could try to describe their claims as violations of federal laws to avoid Michigan's product liability law, Ackerman said. But it's uncertain whether the strategy would work.

"They can try to frame them in some different way, and say this is some kind of common law action for restitution. ... If I’m a Michigan plaintiff’s lawyer,I’ve got to get really creative," Ackerman said.

But the federal judge in Cleveland could still find the case involves product liability and Michigan's law applies, he said.

State opioid lawsuits

At least 22 states have sued drug manufacturers over the opioid epidemic. Bitely didn't say whether Michigan would join them, but noted Schuette is among a bipartisan coalition of 41 state attorneys general who are "actively investigating" the manufacture and marketing of prescription opioids.

"The attorneys general are looking at this the way that those in the past view the tobacco settlement — and Michigan families will benefit," Bitely said.

Michigan started receiving millions of dollars from tobacco companies in 2000 after a landmark national settlement over tobacco's dangers that will provide money to the state in perpetuity. This year Michigan received about $299 million in tobacco settlement cash, according to the state Treasury Department.

Schuette is willing to re-examine the 1995 law, Bitely said.

"The attorney general is open to a full review of any and all laws that will strengthen protections for Michigan consumers — including the 1995 Michigan Product Liability Act," she said.

Some attorneys question whether Michigan's law really allows any relief against drug makers that produce medications with disastrous or deadly side effects, even when the drug is used "off-label" for patients or conditions not approved by the FDA..

Pennsylvania attorney Stephen Sheller said he petitioned the FDA over the anti-psychotic medication Risperdal, and the administrative process outlined in the statute is effectively useless.

Risperdal was FDA-approved for use by adults. But it was aggressively marketed to treat children's behavior problems.

Hundreds of boys given the drug developed gynecomastia, or female-like breasts —some so disfiguring they required mastectomies. Hundreds of cases from across the country were consolidated in the Philadelphia court, where Judge Arnold New ruled Michigan residents could not sue.

"Unfortunately, at this juncture, no Michigan state court has encountered a claim that the MPLA (Michigan Product Liability Act) does not provide protection for drug manufacturers when the FDA approval they received is for a different population than those adversely affected by the drug," a Philadelphia appeals court wrote in upholding New's ruling.

A Philadelphia appeals court threw out more than a dozen cases Sheller filed on behalf of Michigan residents, he said, citing the Michigan law.

"I filed my own petition and the FDA refused to even schedule a hearing or even a meeting," Sheller said. "You can file a citizens petition, but they don't even hold hearings on them. At least they didn't in (the Risperdal) case."

The chamber's Block said she wasn't familiar enough with the case filings to provide an example of a lawsuit that proceeded after an FDA determination.

"I'd challenge those advocating for repeal whether they’ve tried to follow the process set forward in statute," Block added. "In the past the answer has been 'no but....'"

Detroit confident on suit

The city of Detroit is among the scores of Michigan cities that have sued over the opioid crisis. The city's attorneys argue Detroit will prevail in court regardless of the Michigan Product Liability Act.

Detroit's lawsuit targets not only drug makers, but wholesalers and large drug store chains that are accused of contributing to the opioid epidemic, said Eli Savit, an attorney in the office of Detroit Mayor Mike Duggan.

"We did our research before we filed the suit, and we’re confident that the conduct which we allege is not immunized by that law," Savit said. "The drug immunity law by its terms only (pertains to) state causes of action, and many of our causes of action, including a federal conspiracy claim, are federal.

"There was for a number of years a concerted effort by the manufacturers of opioids, by the wholesalers of opioids, and we allege by the retailers of opioids, to really push out misinformation to customers about just how addictive they were, and misinformation about the types of ailments that they could be used to treat."

But other local governments aren't as optimistic. They are interested in repealing the law because it stands between them and a successful lawsuit, Bieda said.

"It seems like something you would take a look at and say, '... Maybe we were wrong when we passed this thing in the '90s and it’s time to change it," he said.

kbouffard@detroitnews.com

Twitter: @kbouffardDN