In today's New York Times, Bob Herbert again trumpets the ATLA line by claiming that President Bush's proposal to prohibit punitive damage against drug companies who had complied with FDA regulations is "both unwarranted and dangerous." (For our previous refutations of Herbert's pro-trial-lawyer claims, see June 22, June 22, June 23, June 28, June 29.) Herbert goes so far as to assert:
[T]he [Bush] administration is like an ardent lover in its zeal to shower the rich and powerful with every imaginable benefit. So tucked like a gleaming diamond in proposed legislation to curb malpractice lawsuits is a provision that would give an unconscionable degree of protection to firms responsible for drugs or medical devices that turn out to be harmful.
Herbert points to Vioxx and Celebrex, and Prozac -- you know, the claim that it increases the likelihood of suicide in teens -- to point to bogeymen that punitive damages would supposedly do a good job of punishing or deterring. He claims, relying on his favorite "consumer" advocate Joanne Doroshow, head of the trial-lawyer-front-group "Center for Justice and Democracy" (check out their site -- the center exists only to support pro-trial-lawyer positions; its backers include Ralph Nader and board members Erin Brockovich and Michael Moore; see Ted's post here on their most recent report): "The whole idea behind punitive damages is to severely punish the most egregious offenders. Huge punitive damage awards are supposed to serve as a deterrent to extremely bad behavior."
But do punitive damages really do that?
Not according to research by Harvard professor Kip Viscusi. As I note in my new paper, "Tragic Solutions: The 9/11 Victim Compensation Fund, Historical Antecedents, and Lessons for Tort Reform" (CLP Working Paper, released yesterday at our 9/11 Victims Compensation Fund conference in Washington, D.C.):
[E]xtensive cross-sectional studies of punitive damages for a variety of risk measures (including "toxic chemical accidents, toxic chemical accidents causing injury or death, toxic chemical discharges, surface water discharges, total toxic releases, medical misadventure mortality rates, total accidental mortality rates, and a variety of liability insurance premium measures") have found that "[s]tates with punitive damages exhibit no safer risk performance than states without punitive damages," so that "there is no deterrence benefit that justifies the chaos and economic disruption inflicted by punitive damages."
See W. Kip Viscusi, The Social Costs of Punitive Damages Against Corporations, 87 Geo. L.J. 285, 297-98 (1998); W. Kip Viscusi, Why There Is No Defense of Punitive Damages, 87 Geo. L.J. 381 (1998).
If punitive damages do not deter risk but rather serve merely as a tax on innovation itself, as Viscusi's research would suggest, then it's hard to argue that Bush's idea would reduce health outcomes. On the contrary, eliminating punitives when a drugmaker has complied with the FDA would lower costs on innovation, thus spurring drug development and/or lowering costs.
Indeed, our friend Richard Epstein, one of the nation's foremost tort scholars, has advocated complete immunity for drugmakers who complied with the FDA (see our editor's link here). By comparison, a prohibition on punitive awards is a much smaller step.
Key to this discussion is the near-certainty that juries' awards of punitive damages will interfere with the FDA's congressional mandate. Dan Troy, the immediate past chief counsel of the FDA, made just this argument at yesterday's conference; Troy made big news in his tenure by "intervening in court actions to explain how judicial review of FDA-approved labeling undermines FDA oversight of drugs and patient health." See, e.g., Amicus Brief, Motus v. Pfizer, Inc., Nos. 2-55372, 02-55498 (9th Cir. Sept. 3, 2002).
It's important to recognize that all drugs have side effects. The question is whether the harms to some patients are outweighed by the benefits to others. The FDA has top scientists making these determinations.
As Troy pointed out yesterday, the only way the FDA can come close to ensuring "perfect safety" is to have extremely long trial periods. The problem with such an approach is that of "Type II" error -- i.e., by significantly delaying the introduction of drugs that improve and save lives, many people are hurt.
I'm not arguing that the FDA shouldn't be reformed (though we shouldn't be hasty, and we shouldn't jump to quickie fixes based on the Vioxx scare, as my Manhattan Institute colleagues Bob Goldberg and Paul Howard explain in this column). But the sensible path toward reform absolutely, positively shouldn't be having random juries overriding the FDA's carefully considered regulatory decisions.