The New Wave, and I don't mean music.

The NY Times online today, liberal leftist rag that it is, does occasionally toss out a great story and original reporting.

Today there is a must read article for attorneys, settlement professionals and insurance home office personnel, who should know that the same pharmaceutical industry that has made a fortune cranking out drug after drug for every ill, has of course had several major sellers that are cropping up with unintended side effects, many of which are crippling or fatal.

I won't pretend to have a clue about the science, or whether or not the claims of the trial bar of injury on these drugs is correct, but there is little doubt, as the article clearly shows, that there is about to be a wave of additional product liability mass tort claims across the industry involving some of the major selling drugs of these firms.  

The drugs which are now being investigated and will soon likely be litigated are Seroquel, the antipsychotic medication produced by AstraZeneca; Prempro, the hormone therapy for women from Wyeth; Fosamax, an osteoporosis medicine made by Merck; and Ortho-Evra, a hormone therapy for women from Wyeth. The Times reports that the drugs have combined sales of almost $7 billion annually and are used by billions of patients. The WSJ online in it's archives also has an excellent article on the Fosamax issue, which you will want to register and find if you are interested in that particular drug.

The article discusses the general phenomenon of pharmaceutical litigation, the strategic aspects of how the plaintiff's bar pursues cases, and the incredible costs of settlement as trial lawyers "stockpile" in the terms of the reporter, thousands of plaintiff cases at their firms to increase leverage during the settlement. They mention the Eli Lilly settlement for Zyprexa costing $700 million and how Wyeth has spent over $15 billion since 1998 to resolve lawsuits over it's fen-phen drug.

Interestingly, the NY Times also looks into the tie in between the eventual ending of lessening of asbestos litigation, and how it is driving many of the Asbesto's firms into the potentially lucrative area of pharmaceutical mass torts, and that their assets and tactics are reshaping that litigation. I personally think the fracture in the MDL for Vioxx, in which many of the asbestos attorney's basically broke off and went their own way, was the first such indication of how the cultural differences in how certain trial lawyers operate are going to radically reshape the mass tort litigation area.

As pointed out by Professor Benjamin Zipursky of Fordham Law School, these new cases aren't really class actions, and the recent federal reforms in class action have disrupted the old business model of bundling thousands of cases into a couple of courtrooms and hashing out a settlement. These are instead unique individual cases, tried individually, generally consolidated at big mass tort firms and therefore are going to be largely handled and negotiated on a firm by firm basis, as opposed to a committee or global settlement.

The premium, if this assumption is correct, is going to be on creating mechanism's by which firms can consolidate their unique cases, and either try them or settle them out, making claims resolution harder in some aspects, but easier then others. Either way it is a radical reshaping of the business model we are use to and settlement professionals are going to need to adapt to this reality over the next few years, or be left in the dust.  

Posted on April 22, 2006 .