The U.S. Supreme Court ruling that drug manufacturers' federally approved labeling does not protect them from state lawsuits should not raise insurance rates for pharmaceutical companies, according to one brokerage expert.
James Walters, managing director of Aon's life science industry practice in Philadelphia, said the ruling should not impact rates because historically the sector has had no protection.
In the case that went before the Supreme Court, Wyeth pharmaceutical had argued that an implied protection existed for drug labeling approved by the Food and Drug Administration and this preempted state tort law permitting suits for failing to adequately warn consumers.
The high court decision kept in place a $6.7 million award against the drugmaker who was sued by Vermont musician Diana Levine, who lost her arm to gangrene after she was improperly injected with Wyeth's drug anti-nausea drug Phenergan.
Plaintiff Levine claimed the FDA approved label on the drug did not have a proper warning.
Mr. Walters said while there may be precedent-setting possibilities from the decision, Aon does not believe it will lead to an increase in rates because "federal preemption has not applied to pharmaceuticals" unlike medical devices which do have this protection, he explained
Pharmaceuticals, he said, "have never enjoyed that protection. They've been operating without a clear federal preemption forever." Rates might have improved, he noted, had Wyeth been successful.
On the flip side, he said, there has been talk that the decision will energize the plaintiff bar to file more suits against drug companies, but if, that does not happen "it should be business as usual."
He called the decision disappointing because there were six warnings on the drug's label "and they argued a seventh would have done the trick."
Mr. Walters said last year's Riegel v. Medtronic decision upholding labeling protections for device manufacturers also failed to impact rates because insurers in their underwriting had already been factoring in that protection.
Meanwhile the latest high court decision is likely to prompt legislative action. In its wake, Rep. Frank Pallone, D-NJ, chairman of the House Energy and Commerce Subcommittee on Health, announced he intended to reintroduce legislation in the near future that would overturn Riegel.
Energy and Commerce Committee Chairman Henry Waxman, D-Cal., will be a co-sponsor.
Giving the measure more impetus is the fact that President Obama said during his campaign that he supports legislation to overturn the Riegel decision and would sign it if elected.
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