A Stitch in Haste

Sunday was not a good day for Merck, as it got a one-two punch from the New York Times and 60 Minutes, both of which smelled blood in the water and had major reports on the Vioxx recall, about which I have blogged previously.

No full-blown fisking here; I just want to focus on one dangerous meme in both reports:

NYT: "A heart attack in exchange for an ulcer is a poor treatment," said Dr. Ray, who is now consulting with lawyers suing Merck.

60M: "to have a medicine that's causing heart attacks and strokes is something that can't be tolerated," says [Dr. Eric] Topol.

Hogwash.

Of course, the sleight-of-hand behind these two quotes is the failure to put the risks from Vioxx (or any other pharmaceutical) into a probabilistic context.

We like to use the shorthand that a drug "causes" side effects. But in reality, the most that can typically be said is that a drug may increase the likelihood of a side effect. And the probabilities are often miniscule. If taking Vioxx increases your risk of suffering a heart attack from 1 in 10,000 to 3 in 10,000, then yes it "triples" the risk, but the risk remains extremely small.

So is the drug worth the risk or isn't it? The answer is, of course, "it depends."

Let's say you have a patient with severe rheumatoid arthritis who also has a history of serious gastro-intestinal illness but has no risk factors for heart attack or stroke. It would be totally inappropriate, both medically and legally, to say it is automatically and inarguably wrong to give that patient Vioxx.

I have blogged before about the law regarding defective drugs, but to review: A product is only "defective" for one of three reasons: defective manufacture (think "flu vaccine"), defective design or defective labeling (i.e., failure to warn).

In the case of pharmaceuticals, "defective design" has an extremely narrow meaning: "no reasonable health care professional would prescribe the drug for any class of patient under any circumstances."

Notice how the Vioxx opponents are trying to steer the debate in that direction by claiming that any increase in cardiovascular risk automatically makes a drug "unsafe" or "dangerous." That has never been the standard for product liability in pharmaceuticals, nor should it be.

Let me be excruciatingly clear on this: at first glance at least, it does look like Merck may be liable for Vioxx under the third prong of pharmaceutical liability (failure to warn / improper labeling). And perhaps liability will be found on other legal theories, especially fraud. But the plaintiff's bar must not be allowed to rewrite the law regarding defective design by parading a string of biased physicians who engage in hyperbole and histrionics by misstating the nature of pharmaceutical risk.

If Merck turns out to be liable under traditional legal theories, then yes, hang the company out to dry (I'm more concerned about hanging the plaintiffs out to dry -- see my previous post). But Vioxx's critics must be held to the same standard of intellectual honesty that they now claim Merck failed to maintain.

POST SCRIPT: Speaking of "blood in the water," check out this post from Overlawyered.com on the plaintiff bar's festive celebrations of, and preparations for, the pending Vioxx litigation.

UPDATE #1: The Wall Street Journal agrees with me...and welcome Point of Law Forum readers!

UPDATE #2: So do Reason Magazine and Jonathan Wilde of Catallarchy.

Related Posts:
COX-2: Other.Shoe.Dropping.
Will COX-2 Be the Next Asbestos?
I Do Asbestos I Can
Will Cell Phones Be the Next Product Liability Disaster?
Flu versus Bad Vaccine: Let the Public Decide

A four-year old boy died after riding an attraction at Disney's Epcot Center:

The $100 million ride, one of Disney World's most popular, was closed after the death but was reopened Tuesday after company engineers concluded that it was operating normally.
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During an eight-month period in 2003-04, six people over age 55 were taken to hospitals for treatment of chest pain and nausea after riding "Mission: Space," though none of them was found to have any serious problem.

Putting aside any demonstrable fault that may be discovered later (e.g., operator error, failure to warn), one wonders how long it will take before there are calls to shut down the ride permanently. The chant will likely go something like this: "A mere amusement ride is not worth one human life!"

But of course, both lawyers and economists know that we put dollar values on human life all the time -- in wrongful death actions, workers compensation claims and even divorce settlements. People might even be said to place dollar values on their own lives when they take out life insurance policies on themselves.

Disney will find out about valuing human life soon enough when the parents of this child sue on whatever grounds they choose (and even if Disney isn't liable -- a quite tenable position -- they will almost certainly settle anyway). I actually want to address a different question:

Should the ride have been built in the first place?

Again, the chant will probably go, "A ride that is so risky that it might actually kill is too risky at the outset -- the cost is simply too great." But costs are only one side of the equation -- what about the benefits?

Opponents: "What benefits? It's just a stupid amusement park ride!"

Proponents: "Obviously there are benefits, or no one would ride it. There most be some utility being generated if people actually enjoy riding it."

Opponents: "How can you can compare a few minutes of mindless thrills to a human life?"

Proponents: "But it's not a few minutes -- it's a few minutes multiplied by the total number of rides taken. That could add up to hundreds of thousands, even millions of rides taken. That's quite a bit of utility. And yes, it might, all else equal, arguably exceed the value of one human life."

Opponents: "So we should just let kids die on rides?"

Proponents: "No, of course not. And again, if there was a clear fault on the part of Epcot, then Disney should pay damages to the family. But strictly as a matter of macroeconomics, it is inefficient and irrational to look only at risks -- even lethal risks -- and dismiss as 'irrelevant' or 'fleeting' the benefits provided by the product."

Opponents: "Heartless bastard."

Don't think it happens? Remember Slip 'N' Slides? Forced off the market (although they seem to be back with new safety features -- see also here). The New Jersey Supreme Court once essentially declared all above-ground pools to be unjustifiably unsafe in the wake of diving accidents (the rule was overturned by the state legislature). And don't get me started on pharmaceuticals.

Just because this is the kind of analysis no one wants to perform doesn't mean it isn't valid. One cannot disregard or trivialize the benefits to countless unharmed (and unnoticed) consumers and focus only on the aberrant costs to an unlucky handful.

That's the Politics, and the Economics, of the Warm Fuzzy Feeling, and it doesn't work.

I've developed a bit of a soft spot for the nutjobs over at GoldenPalace.com, not because of my interest in casino gambling (I don't gamble online), but because they won the rights to name the critter I would have named "Roark's Monkey" -- see this post and update.

The GoldenPalace.com people have developed quite a penchant for bizarre (and in my opinion foolish) advertising gimmicks. They bought the (partially eaten) "Madonna grilled cheese sandwich" and a car that once belonged to Pope Benedict XVI.

Well, here's their latest stunt:

For $10,000, Kari Smith has gone ahead and had her forehead tattooed with the Web address of a gambling site.

[Smith], 30, who sold her unusual advertising space on eBay, said the money will give her 11-year-old son a private education, which she believes he needs after falling behind in school.
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Smith's eBay auction attracted more than 27,000 hits and 1,000 watchers. Bidding reached $999.99 before Goldenpalace.com, an Internet gambling company in the Mohawk Territory of Kahnawake, Canada, met Smith's $10,000 asking price.

Kari Smith valued her son more than her forehead. Jean Valjean valued his family more than nineteen years of his freedom.

Talk about "Freakonomics."

Seriously though: economists, lawyers and philosophers often have to grapple with the difficult question of putting dollar values on things we like to think are "priceless," like health (e.g., bans on paid organ donation), dignity (think "Fear Factor"), our pets' lives (i.e., costly animal surgeries) or even human life itself -- see my previous post.

The great thing about capitalism and libertarianism is that they both recognize that, in the real world, we often do have to make those "callous" valuations and act accordingly. Libertarians and capitalists don't try to forcibly substitute our judgment for other peoples' or favor letting the government remove economics from the equation in the name of nebulous "higher values." We recognize that economics can't always be removed from the equation and that limiting choices, even in the name of patermalism, makes people worse off.

Not that I think the people behind GoldenPalace.com are particularly good entrepreneurs. As I blogged back when they bought the naming rights to Roark's Monkey:

I would hazard a guess that if GoldenPalace.com keeps shelling out insane amounts of money for advertising stunts like these, then yes, they can expect Roark's Monkey the GoldenPalace.com Monkey to be around long after GoldenPalace.com has itself become extinct.

But as for Ms. Smith, I say more power to her.

Yesterday I blogged about the woman who "sold her forehead" by agreeing to have it tattoed with an online casino's web address. In that post I pointed out how tempting it can be to remove some decisions, in the name of paternalism, from the realm of "mere" economics and explained why such paternalism is flawed.

As a follow-up, here are some other recent stories about trying to put monetary value on things we often think cannot, or should not, be reduced to dollar amounts.

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ITEM: Point of Law Forum has two posts about subjective versus objective damages in the context of the following hypothetical:

Suppose a teenager attempts suicide by overdosing on 300 aspirins. Suppose further the physicians treating the teenager actually make a medical mistake which results in the death of the teenager. What should the damages be? From an economic perspective, the teenager essentially thought his future was worthless.

The author suggests that non-pecuniary damages (pain & suffering, punitive damages) may be "over-awarded" since people don't take out "pain and suffering insurance" but only "medical insurance."

MY TAKE: I'm unpersuaded. The point of tort law is to make people whole, not to reward or penalize plaintiffs for "guessing right or wrong" about how they value non-pecuniary aspects of their lives that may be impeded in accidents that they had no reason to foresee in the first place. I see no reason to expect people to pre-insure against every imaginable contingency in life — if we did, then there would be no need for tort law in the first place.

A co-blogger then responds and suggests that personal responsibility, if not personal expectations, should play a greater role in computing damages. He also reviews the difficulty in adopting a subjective or "sentimental value" approach to damages. Both posts are worth reading.

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ITEM: It's becoming increasingly common, when an imprisoned convict has his conviction overturned, to be compensated for his undeserved confinement. But should compensation go to every overturned conviction or only those who clearly were innocent?

John Stoll walked out of prison last year a free man at 62 after 20 years behind bars. His 1985 conviction on 17 child molestation counts was thrown out by a judge who said investigators coerced the witnesses.

Now Stoll wants some payback, under a state law that allows for vindicated prisoners to collect $100 for every day spent in prison. But first, he must prove to a state board he did not commit the crimes and did not contribute to his arrest.
...
Prosecutors still believe Stoll is guilty, but decided not to retry him, saying they no longer had enough evidence. "The judge didn't make a finding of factual innocence," prosecutor Lisa Green said.

MY TAKE: I might actually take it a step further and require not only error but also actual misconduct by police or prosecutors. And such abuses are already covered by 42 USC 1983 ("violation of civil rights") anyway. If the criminal justice system mistakenly but reasonably finds an innocent person to be guilty, then I'm not sure why it should then compensate the accused after the fact. There should be some requirement of either gross error or willful misconduct.

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ITEM: In the wake of the rise of Indian gaming, it seems like new tribes are springing up all the time, even in the Twenty-First Century (see also the Native Hawaiian government proposal). Now, however, a federal appeals court has said enough is enough:

A $248 million award to the Cayuga Indian Nation of New York for land dispossession more than 200 years ago has been reversed by the 2nd U.S. Circuit Court of Appeals.

Citing a U.S. Supreme Court ruling released earlier this year, a divided circuit panel found that New York state must prevail because of the long delay by the Cayuga Nation in pursuing its claim for ejectment of the defendant land owners and immediate repossession of its land.

MY TAKE: Entirely proper. As terrible as our nation's history is regarding the slaughter of American Indian, after over two hundred years it is time to stop this nonsense. Trying to put a monetary value on 200 years of lost rental income is simply not possible, and of course neither is ejectment — soon someone will claim to be a Lenape Indian and demand the entire island of Manhattan back. The United States, and individual states, have been apologizing, with land and cash, for long enough. Every legal claim, even those arising from our greatest national sins, must eventually end. (Hat tip to Overlawyered.)