Will COX-2 Be the Next Asbestos?
---
Big pharmaceutical company gets into big trouble and will almost certainly have to pay big money as a result.
Nothing...new...there.
But wait, there's more:
Now we're in serious "uh-oh" mode.
Of course, lawsuits would never be able to destroy the pharmaceutical industry the way they did the asbestos industry or the silicone breast implant business. If they couldn't destroy Big Tobacco, then they'll never destroy Big Pharma.
The quandary remains nonetheless: Only so much money will be made available (i.e., through class actions or master settlements with the government) to those who were injured by Vioxx and perhaps the other COX-2 inhibitors. How is that money to be distributed?
Already the airwaves are being flooded: "Did you or someone you know take Vioxx and later suffer a heart attack or stroke? You may be entitled to compensation. Call the Law Offices of Kip and Diamond..."
That's one way to go: The first plaintiffs to reach the courthouse win, and when the money's gone...well, it's gone -- too bad, so sad.
But is that fair?
It certainly wasn't fair to those injured by exposure to asbestos or who had silicone breast implants. Some have been compensated, some have not, some never will be. The money just ran out. The companies (e.g., Johns-Manville in asbestos, Dow Corning in silicone) were sued into oblivion.
If the same race to the courthouse occurs with COX-2, then the same inequities will occur regarding the distribution of compensation. Merck and Pfizer will never be sued into bankruptcy, but on the other hand they will also not be forced to pay limitless sums of money ad infinitum for two generations. There will be only so many dollars to distribute, and the dollars will likely not be enough to fully compensate everyone.
Does this sound familiar? Of course it does. It's the Tragedy of the Commons, just with a twist.
And how do we libertarians solve the Tragedy of the Commons? Well, we can't exactly "privatize" the "market" for Vioxx class actions. But we can acknowledge the externalities created when litigation claims exceed litigation resources.
A simple example: If my damages are $100 and your damages are $100 and the defendant only has $150 to pay, then should we allocate that $150 based on who gets to court first (getting the full $100 award) and who gets there second (getting only the remaining $50)? My claim generates negative externalities on you, and your claim generates negative externalities on me, just like our respective cows on the Commons.
Or do we first pause, catch our breath and ration the funds equitably (i.e., each plaintiff gets $150/$200, or 3/4 of their $100 claim, or $75)?
The problem is only compounded when you consider the fact that there will likely be a third plaintiff tomorrow who doesn't even know he's a future plaintiff today. Can it possibly be fair, even to a libertarian, to say to him, "Gee, you had your heart attack a month too late...no money for you!"? That's the true sorrow of the asbestos litigation -- countless people were exposed to asbestos and must now live with the risk of future illness, while the resources available to compensate them, should they actually become sick, slowly dwindle in the face of present litigation, whether valid or frivolous.
The COX-2 situation is truly unfortunate. We shouldn't exacerbate the situation by letting personal injury anarchy reign yet again in our courts and by allowing potential externalities become real externalities.
It's just not the libertarian thing to do.
SIDEBAR: Compare and contrast what a socialist would propose, namely nationalizing the problem outright and paying both parties their full $100 claims, with the extra $50 coming from innocent taxpayers, including the two plaintiffs themselves).
UPDATE: The news is worsening for Merck. The Wall Street Journal (subscription site) reports that both the SEC and the Justice Department are investigating the company over Vioxx. Meanwhile, PointofLaw has a collection of news reports and blogposts, including one estimating 50,000 potential Vioxx lawsuits totaling over $18 billion.
As I said above: personal injury anarchy.
Related Posts:
I Do Asbestos I Can
Will Cell Phones Be the Next Product Liability Disaster?
(Cross-linked at Outside the Beltway.)
Nothing...new...there.
But wait, there's more:
Pfizer Inc. said on Thursday its arthritis drug Celebrex was safe after a report in a Canadian newspaper linked it to 14 deaths. The National Post said the deaths were among 100 reports of adverse reactions to Celebrex filed with Health Canada over the past five years, including 19 cases of heart problems and five strokes.
...
Pfizer argues that Celebrex does not have the same safety problems as Merck & Co. Inc.'s Vioxx, which was pulled from the market after a study showed the drug increased the risk of heart attack and stroke. Celebrex, which had sales in 2003 of $1.9 billion, is in the same class of drugs as Vioxx. Both are known as COX-2 inhibitors. The withdrawal of Vioxx has cast a cloud of suspicion over all members of the class, including Celebrex and another Pfizer drug, Bextra.
...
[Health Canada] said it had determined that no regulatory intervention was required at the moment but it was monitoring the situation and it was premature to say what action it might need to take in the future.
Now we're in serious "uh-oh" mode.
Of course, lawsuits would never be able to destroy the pharmaceutical industry the way they did the asbestos industry or the silicone breast implant business. If they couldn't destroy Big Tobacco, then they'll never destroy Big Pharma.
The quandary remains nonetheless: Only so much money will be made available (i.e., through class actions or master settlements with the government) to those who were injured by Vioxx and perhaps the other COX-2 inhibitors. How is that money to be distributed?
Already the airwaves are being flooded: "Did you or someone you know take Vioxx and later suffer a heart attack or stroke? You may be entitled to compensation. Call the Law Offices of Kip and Diamond..."
That's one way to go: The first plaintiffs to reach the courthouse win, and when the money's gone...well, it's gone -- too bad, so sad.
But is that fair?
It certainly wasn't fair to those injured by exposure to asbestos or who had silicone breast implants. Some have been compensated, some have not, some never will be. The money just ran out. The companies (e.g., Johns-Manville in asbestos, Dow Corning in silicone) were sued into oblivion.
If the same race to the courthouse occurs with COX-2, then the same inequities will occur regarding the distribution of compensation. Merck and Pfizer will never be sued into bankruptcy, but on the other hand they will also not be forced to pay limitless sums of money ad infinitum for two generations. There will be only so many dollars to distribute, and the dollars will likely not be enough to fully compensate everyone.
Does this sound familiar? Of course it does. It's the Tragedy of the Commons, just with a twist.
And how do we libertarians solve the Tragedy of the Commons? Well, we can't exactly "privatize" the "market" for Vioxx class actions. But we can acknowledge the externalities created when litigation claims exceed litigation resources.
A simple example: If my damages are $100 and your damages are $100 and the defendant only has $150 to pay, then should we allocate that $150 based on who gets to court first (getting the full $100 award) and who gets there second (getting only the remaining $50)? My claim generates negative externalities on you, and your claim generates negative externalities on me, just like our respective cows on the Commons.
Or do we first pause, catch our breath and ration the funds equitably (i.e., each plaintiff gets $150/$200, or 3/4 of their $100 claim, or $75)?
The problem is only compounded when you consider the fact that there will likely be a third plaintiff tomorrow who doesn't even know he's a future plaintiff today. Can it possibly be fair, even to a libertarian, to say to him, "Gee, you had your heart attack a month too late...no money for you!"? That's the true sorrow of the asbestos litigation -- countless people were exposed to asbestos and must now live with the risk of future illness, while the resources available to compensate them, should they actually become sick, slowly dwindle in the face of present litigation, whether valid or frivolous.
The COX-2 situation is truly unfortunate. We shouldn't exacerbate the situation by letting personal injury anarchy reign yet again in our courts and by allowing potential externalities become real externalities.
It's just not the libertarian thing to do.
SIDEBAR: Compare and contrast what a socialist would propose, namely nationalizing the problem outright and paying both parties their full $100 claims, with the extra $50 coming from innocent taxpayers, including the two plaintiffs themselves).
UPDATE: The news is worsening for Merck. The Wall Street Journal (subscription site) reports that both the SEC and the Justice Department are investigating the company over Vioxx. Meanwhile, PointofLaw has a collection of news reports and blogposts, including one estimating 50,000 potential Vioxx lawsuits totaling over $18 billion.
As I said above: personal injury anarchy.
Related Posts:
I Do Asbestos I Can
Will Cell Phones Be the Next Product Liability Disaster?
(Cross-linked at Outside the Beltway.)
Posted by KipEsquire on
5 November 2004
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