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Introduction
Thank you for your kind introduction. I’m very pleased to have the opportunity to speak with you today. I’d like to begin by conveying the appreciation of the President and of Secretary Tommy Thompson, both of whom are deeply committed to improving our medical liability system.
This is a special time for our health care system, a critical time. On the one hand, we are on the cusp of some unprecedented breakthroughs in health care. I’m sure you are familiar with some of the recent breakthroughs in drugs and biologics, as well as innovative new combination products like drug-eluting stents. As a result of these changes and other improvements in our health care system – more specialized medicine, better decision support systems, and the like – millions of patients who come to their physicians with severe coronary artery disease can not only hope for a long and high-quality life – they should expect it. More targeted and less toxic medications for cancer are now allowing millions of patients to beat this disease, or at least hold it off, without all of the pain and suffering of traditional chemotherapy.
And the future might be even better. Today, public and private investment in biomedical research and development has grown to unprecedented levels. As NIH research has doubled in the last 5 years and private sector research has doubled within the last 10, we are starting to bring genomics, proteomics, and other new sciences into the development of better treatments for patients. New avenues of research hold the possibility of developing truly individualized, highly effective medicine.
These unprecedented medical achievements have been worth literally many billions of dollars in avoided medical costs, and are worth much more in better health. And the potential for even greater breakthroughs in the future has led many to call this the “biomedical century.” But with this progress have come concerns about rising medical spending and access to quality care.
More than ever before, rising costs threaten to price the benefits of modern technology out of the range of many of the patients who most need it. And there are other threats to access to high-quality care as well. There is no question in my mind that these pressures are going to increase, unless we all take steps together to improve our health care system. For the sake of the public health, we must find fundamentally better ways to achieve a health care system that addresses the growing problems of cost and access without sacrificing the great potential of medical care today and in the future.
I’ve been in Washington a few years now, and I remain an optimist that we are making real progress on these issues. Agreeing on how to solve these problems is not easy going, because health policy is contentious. Yet there are smart and dedicated people in and out of government who are trying harder than ever to solve these problems.
The President strongly believes that the role of government is to protect the freedom of all people to take effective steps to improve their own health. We must renew our commitment to this principle by protecting, not undermining, our market-based medical system. This system encourages health professionals to compete to do their utmost to help patients get the highest-quality, most innovative health care available. To help all Americans get the best care possible, our government and our legal system have critical supporting roles. We must help those with great needs and inadequate means, and we must create a healthy environment for medical care – one in which medical decisions can be made effectively, based on the best available scientific information, and one in which those who would take advantage of the sick and the vulnerable know that they will be held accountable for their improper actions.
The President’s framework for improving Medicare will allow beneficiaries to get access to modern integrated health insurance with drug coverage like that available to Federal employees and many millions of Americans under 65. The President’s ideas for refundable health insurance tax credits, so that people who get no help now can afford the health insurance they prefer, have already helped form the basis for legislation enacted last year to begin to reduce the number of uninsured.
Reforms to provide tax-free accounts for rising out-of-pocket medical costs have been implemented by the IRS to help people with insurance facing rising out-of-pocket costs. Reforms are being implemented to improve Medicaid and make it more efficient, by giving beneficiaries more control over how they get their care. These are all solid ideas for increasing value in our health care system. I am confident that if we keep working hard and working together, we can build on them with legislative action this year.
The President and Secretary Thompson have also called on Congress to act this year to reform the medical liability system. As you know better than I, in many states around the country, rapidly rising liability insurance premiums – if liability insurance is available at all – are threatening both the quality of care that patients receive today and opportunities to provide better, higher-value care in the future.
Our current medical liability system is threatening the public health. Consider what’s happening in Mississippi. Working with the President on this issue last year, I heard from people in many towns in the state who have lost access to needed medical care – especially in the Delta, where the economic conditions are such that they need help the most. Physicians who specialize in family medicine and obstetrics/gynecology in Indianola, and in other rural areas of the state, have stopped delivering babies and have even moved away because of skyrocketing insurance costs. Due to rising insurance costs, only one doctor with expertise in head trauma was available last July to cover all the hospitals in Gulfport, Mississippi. One patient reportedly may have suffered permanent brain damage as a result.
Across the country, from Pennsylvania to Nevada, many hospitals and clinics have had to close emergency rooms and trauma centers and cancel other vital services like obstetrics. Doctors are moving to specialty areas with lower premiums, moving to states with more predictable legal systems, or retiring from active medical practice altogether. I’ve talked to some of the citizens affected by these crises in access to care. They are very worried, and understandably so.
The President has proposed some bold national medical liability reforms to deal with this crisis. And I’m pleased to see that others are now coming forward with their own proposals. In fact, one declared Presidential candidate who is a trial lawyer recently proposed his own kind of “liability reform.” As with all major health care issues, there are strong and well-financed interests on both sides of this one – so of course slogans and anecdotes and so-called “studies” bought and paid for by special interest groups abound. But one of the things that my work at FDA has made very clear to me is that, on virtually all of the critical public health issues we face, there is empirical evidence that we can use to help guide our thinking on difficult health policy issues.
First, there is direct, peer-reviewed, published evidence that the liability reforms supported by the President work. In states like California, almost three decades of experience show that they result in significantly lower growth in liability insurance premiums, and much greater stability in the availability of physician care. Moreover, there is peer-reviewed, published evidence that the cost savings to the health care system add up to many billions of dollars that could be used for other valuable health care purposes. This includes billions in liability insurance savings passed on as lower costs of care, and billions more in savings from avoiding so-called “defensive” medical practices that are intended to avoid lawsuits, not make patients healthier. And peer-reviewed, published studies also show that these reforms do not result in harm to patients – reasonable limits on the magnitude of lawsuits do not reduce the ability of the legal system to deter and redress poor medical care. Rather, these reforms add value to the health care system, by allowing us to get the same or better health care at a lower cost.
Second, the present crisis in many states is not the result of the so-called “insurance cycle” or reckless investments by insurance companies. I think it is true that we have been on an “up” part of the cycle. But that doesn’t explain premium increases of 100% or more in the last couple of years in some states that have not reformed their liability system, compared to much smaller increases in most of the states that have implemented significant reforms. The insurance cycle isn’t a phenomenon that occurs in some states but not others, like the current crisis in the liability system. And while insurance companies were not immune from the market downturns of the last few years, strict state regulations and reserve requirements already are in place to prevent “reckless” investment. So physician liability reform is a real opportunity to achieve a higher-value health care system, with greater access to modern medical treatment.
From the perspective of the FDA, I want to tell you about some related concerns also arising from fundamental problems in our current liability system. These concerns also involve the issue of whether patients can get timely access to high-quality medical treatment. Despite the rapid increases in biomedical research and development investments that I mentioned earlier, the approval of new drugs and biological treatments is now at the lowest level in more than a decade. Discovering innovative drugs remains a complex business, requiring many years of coordinated research across a broad and increasingly complex array of disciplines. At the same time, the process of bringing a truly new drug to the public is also getting steadily more expensive and now costs over $800 million, according to Tufts University study released three weeks ago.
While some may quarrel with this estimate, there is no debating the fact that developing new treatments has gotten much more expensive, more than double what it was just a decade ago. Nor has this process become any more certain. Despite all the excitement that has accompanied the research innovations of recent years, the fundamental fact is that new medicines are not reaching patients any faster today, and the “success rate” in the drug development pipeline remains very low.
I’m worried about the possibility that this trend may continue. It’s easy to see how this could happen: there aren’t many relatively easy receptor targets to exploit for creating new drugs; and developing genomics-based therapies remains very costly. It can take a decade or longer now for a new scientific concept to move from the laboratory to the patient who will benefit from it and the additional complexity of assessing genomic and other information could just add to that. I don’t think the future needs to be that way, or that it will be if we make the right decisions today. But the fact that the future of medical care is uncertain highlights the need to find ways to help make sure we realize the great promise of better medical technologies ahead.
So this is a critical time for health policy. Policymakers need to find ways to act together on creative but difficult health policy reforms, ones that make health care more affordable while still encouraging innovation. I can tell you that FDA is committed to doing all we can to reduce the cost and uncertainty of developing, producing, and using new medical technology. This doesn’t mean we’re going to relax our standards one bit for requiring that medicines demonstrate they are safe and effective to be approved, and to remain on the market. But FDA is working harder than ever to make sure that all of the steps we impose in the clinical development process and in our own review of applications make sense for protecting and promoting the public health.
Our tort system is having adverse effects on medical care, and it’s also impeding affordable and timely access to medical products. This is especially true in important areas like women’s’ health and pediatric care, especially care for young children – the same kind of crisis areas as in physician care. As the New York Times reported in a front-page story last weekend, health care experts believe that the unpredictable risk of extreme liability costs is affecting decisions about developing and marketing new treatments. These liability risks particularly affect areas like pregnancy care and vaccines, where we badly need innovation. Not only is the current liability system creating critical problems in access to physicians; it is increasingly threatening the development of badly-needed cures for physicians to use. The legal system is altering the practice of medicine, and the development of medicines themselves, in ways that harm patients.
Don’t get me wrong. I think that tort law and the lawyers who practice it can play a very important role in safeguarding the public health. They need to be there to help patients get redress for truly negligent care. The problem is that the current liability system doesn’t seem to help them do this. Getting back to the published evidence, comprehensive studies by the Harvard Malpractice Study and others have shown that only a small fraction of the cases that result in settlement payments or jury verdicts actually involve low-quality care by physicians. Rather, the hallmark of awards is bad outcomes – not bad care. And only a fraction of patients who are injured negligently get compensation, and when they do, a lot of the money goes to lawyers and the very high costs of administering this inefficient system.
We need to change the system so that it really will help deter bad care, not pile on when there are bad outcomes. In a report last year, echoed in a follow-up analysis this year, the Department of Health and Human Services suggested ways to do this – reasonable limitations on non-economic damages (with no limits on damages for economic losses, such as a mother’s ability to provide care at home for her children); so-called “early offer” programs to avoid the extremely high cost and many years of delay of compensating injured patients; and even the idea of science-based “health courts” to help assure that the latest scientific evidence forms the basis for decisions about negligent care.
Similarly, tort law can potentially be a very important force for improving the development and use of safe and effective medicines – one of our critical public health priorities at FDA. In cases when product manufacturers have a substantive adverse effect on the quality of health care, by providing fraudulent information to FDA, or deliberately withholding important information about safety problems associated with their products, they should be held accountable. The dedicated members of our legal profession have always provided, and continue to provide, vital protection against those who would prey on consumers or intentionally try to pass off harmful products. The threat of litigation can be an important disincentive to many predatory behaviors that could take advantage of vulnerable patients.
Recently, FDA published for the first time a list of all of the studies that were required when we approved new products. I am disappointed that many of these studies have been delayed, and remain incomplete – so that we aren’t getting all the information that we need on the safety and effectiveness of products that we approved on the condition of completing the studies. This is a real public health concern, and we are taking many steps to get the needed medical evidence. My hope is that, by publishing this list, we can encourage more accountability by product developers to fulfill study requirements. It’s possible that lawyers can potentially help in this area too.
But once again, the problem is that the current liability system doesn’t reward lawyers who focus their efforts on real public health threats that we are not already addressing. Instead, the most experienced and well-financed plaintiffs' law firms know that the biggest payouts can go to those who exploit the FDA’s decisions in support of our mission to promote the safe and effective use of medications. More and more often, these “mass tort” firms specialize in taking a new product warning or withdrawal decision, and using it to pile on the company.
As the New York Times described it, the lawyers are doing what we want patients and doctors to do: they’re reading the warnings that we put on products, and they’re taking action when we add a warning or withdraw a product from the market based on our analysis of new information. Using the information they get from us, they file a few suits with very sick plaintiffs in states and counties considered favorable to plaintiffs, while building big “inventories” of less seriously ill patients, or even people who have used the drug but are not sick. One woman, speaking to a reporter for the Jackson Clarion-Ledger, summed it up this way. When she read that the drug Propulsid might cause harm, she stopped taking it and signed up for a lawsuit. “Actually, I didn't get hurt by Propulsid,” she told the newspaper. But because she had taken the drug, she said she thought she could join a class-action lawsuit “and I might get a couple of thousand dollars.” Today, can we really afford an extra couple of thousand dollars every time a patient uses a drug, even if it doesn’t harm them?
Yet, a whole specialized industry has developed around this approach. On June 19 and 20, the trial lawyers group known as "Mass Torts Made Perfect" is hosting a meeting on “Securities, Drug, and Environmental Litigation. Their slogan is “The Knowledge to Conquer,” and I don’t think they are talking about conquering disease. You can still register at their web site: www.masstortsmadeperfect.com. Here is a sampling of some of the session titles: “Accutane: New Material-Systemic Injury”; and “PPA: 'Freight Train of Poison.'” And they have plenty of “good advice” too. Speaking at this group’s January 2003 meeting, one well-known plaintiff's attorney helpfully suggested that trial attorneys should reward the people who flush out the most clients by sending them steaks or turkeys at Christmas.
Instead of pursuing real wrongdoing, our legal system is piling on to our legitimate warnings about the risks of medical products. This is a problem, because all medical products carry risks as well as benefits. High quality medical care involves managing risks – including balancing the risks of treatments with the often more serious risks of illnesses. Medical care almost never involves eliminating risks.
The point of our warnings and the other science-based information on a medical product labeling is to provide doctors and patients with the up to date scientific information about risks and benefits, so that they can maximize benefits and minimize risks. And we can and should learn more about products on the market – even, as with hormone therapies, products that have been on the market for decades. This new information is critical, and we need to encourage all steps to generate and use it effectively. It may lead to new indications for use, new warnings, or, if the new information is unfavorable enough, even product withdrawals.
So when the FDA takes new action to add a black box warning or remove a drug from the market, that shouldn’t also be an automatic alert to the trial lawyers to pile on. We learn more all the time about drugs, and we want companies to help us in that effort, not to be afraid to work to develop better information on potential safety concerns for fear of triggering lawsuits.
Today, developers of new medical products increasingly need to set aside billions of dollars, or redirect their research activities from potentially valuable directions, in anticipation of the potentially unlimited risk of mass tort lawsuits. The growing practice of pulling together mass lawsuits based on FDA’s actions is altering the development of medical products in ways that reduce health care quality and access. We must work together to help solve some of these challenges.
I’m pleased that the medical community has long been concerned about this public health risk. I applaud the American Medical Association for their continued support for medical product liability reform as an important state and federal legislative reform objective. Many patient groups who come to see us because of concerns about the development or availability of needed treatments also worry that litigation has become an impediment to high-quality care.
These groups believe that companies should be held accountable, and that patients who are injured negligently should be compensated. But all worry that our current system is failing at these tasks. Especially at a time of rising health care costs – and of increasing cost and difficulty of developing new drugs, and declining productivity inside research labs -- we need a better system, one that encourages innovations in health care along with good behavior by product developers.
In addition to reducing access to medical care, the litigation system contributes to other, potentially even more pervasive barriers to high-quality care. For example, one proven approach to reducing errors and complications is patient safety and quality improvement programs implemented by doctors and health care organizations working together. By sharing information on quality problems and medical errors, health professionals can determine ways to avoid errors and complications in the first place. As the Institute of Medicine and many other nonpartisan expert organizations have pointed out, this kind of honest information-sharing within and among health care organizations is essential for implementing “quality systems” in health care – to generate substantial improvements in our health care system. But these efforts are blocked by fear of litigation. If health professionals write down information about errors and near-misses and how they can be avoided, these good-faith efforts to improve quality and safety become targets for lawsuits. This creates an environment in which “risk management” means avoiding lawsuit risk, by avoiding the honesty and candor that are vital to reducing patient risk. I think we need to create an environment in which everyone is rewarded for being concerned first and foremost about risk management for patients.
That’s why I’m very pleased that the House of Representatives, by a wide bipartisan margin, has passed legislation that will improve health care quality by providing appropriate confidentiality protections for patient safety activities. This will help health care organizations identify and act on ways to improve safety and quality; it will also help FDA get more and more timely information on important risks involving the products we regulate. It’s a big step forward in quality of care. And I hope the Senate will act soon.
Once again, at FDA, we see similar problems involving the medical products we regulate. We work diligently to keep product labels up to date and complete. Medical researchers and companies are important contributors to this effort, and so we need an environment in which all parties are encouraged to develop better safety information and to provide it to us as quickly as possible. How many of you doctors read the drug labels from the package inserts and the PDR? Come on… Well, we know this information is not presented in the most usable format, and that’s why we’re working right now on an improved product label. For example, many have suggested a summary section capturing key product information, including benefits and risks, with navigable links to more detailed information relevant to particular kinds of patients and circumstances.
The FDA has developed a proposed rule that would do just that. But regulations on labeling formats alone aren’t enough to make labels as useful as possible. What’s needed is a culture of patient safety – an environment of product development and use that focuses on reducing risks and improving benefits for patients. So long as the product developers we work with to develop the label are facing an environment in which any adverse outcome can result in major lawsuits, we may get labels written for lawyers, not doctors and patients.
Because “risk management” often means reducing liability risk not reducing patient risks, there is pressure to make labels read like liability avoidance tools rather than efficient documents for conveying risk and helping doctors to help patients. To protect and improve the health of the public, product labels must be written with a patient in mind, not a jury. By getting better information to patients and doctors, it’s possible to achieve systematic improvements in medical outcomes.
At FDA, we have taken a number of steps to bring more clarity to the risk information appearing in approved labels. Our regulations increasingly make clear that contraindications and warnings should be used only when they are scientifically appropriate. We have also issued guidance making clear that similar judiciousness should guide decisions with respect to the inclusion of adverse event information in labeling. As I’ve said, the objective of these efforts is to make the package insert more useful to doctors and patients by reducing the amount of unnecessary, unsubstantiated, out-of-date, or otherwise misleading information about the risk of a drug. But the fact that we have to devote additional efforts to this problem is an indication that there are growing obstacles to science-based, effective labeling.
Here again, creative legal thinking has become an impediment to sound medical judgment. Sometimes a plaintiff will file a product liability lawsuit that complains that the FDA made a mistake in judging when particular risk information should be added to labeling.
We try hard to make sure that any and all appropriate information makes it on the product label. That’s our mission, and that’s why we have developed a comprehensive scientific review process and ongoing evaluation process to fulfill it effectively. But the legal environment in which we operate makes that increasingly challenging. When the FDA considers and rejects some labeling language regarding the risk of a particular adverse event, we base our decisions on a rigorous, science-based system that carefully evaluates the evidence and the proposed warning. Yet state courts sometimes allow lawsuits against manufacturers who, at FDA’s instruction, didn’t add certain warning language to a product’s labeling.
In fact, we have participated in some product liability lawsuits in which plaintiffs asked courts to find that a product developer’s statements were inadequate, even though they met the comprehensive and exacting standards of FDA’s science-based system of drug regulation. We’ve done this before, but have had to intervene more often in recent years. In one recent case, the plaintiff sought to require a suicide warning in the labeling of an antidepressant that FDA had specifically considered and rejected three times, because it was scientifically unsupportable and (by drawing unwarranted attention to an unproven risk) could lead to under-treatment of depression. I intend to continue to make sure that we use all available evidence to guide our decisions on product labels, and we are doing more than ever to improve that information. But I worry about the impact on the consistency and scientific accuracy of our labels in the face of increasing involvement of different juries in different states.
When the liability system threatened the development of lifesaving medical products in the past, we found creative solutions. One clear example is the response to the crisis involving childhood vaccines in the 1980s. Under the weight of very costly litigation involving rare but serious adverse events, prices for vaccines had increased 10-fold, and the number of manufacturers dropped from about 20 to only 4 – and only 2 in the US. So Congress took most child vaccine litigation out of the tort system, and the Vaccine Compensation Fund has worked very well for a while. Today, it’s widely understood that vaccines are safer than ever despite these fundamental liability reforms – or perhaps, because of them. But gaps in this program are now leading to new litigation that again threatens the stability of the vaccine market.
The stakes for resolving these challenges couldn’t be higher. We are right at the point where the new technology that has been developed over the last two decades, from genomics, and proteomics, to antibody-based drugs, and others, is yielding some breakthrough treatments. In recent weeks, we’ve approved novel drug treatments for cancer. These breakthroughs in cancer may be the leading edge of what the new technology can make possible for many human diseases. It’s an indication that these new technologies can work, and we need to make sure that we have a health care system that encourages such medical progress.
Patients deserve access to high-quality health care without avoidable medical errors and complications, and there are many steps that we can and must take to achieve this goal. Our liability system for both physicians and medical products can be a positive force to help us meet these critical public health challenges. But today, our liability system is threatening high-quality care. In order to continue to improve the public health through affordable access to health professionals, and through the development of better clinical practices and better medical technology, we need to have a tort system that is reasonable and modern and as up-to-date as our technology.
I want to thank you all again for all your efforts, and all your efforts still ahead, to achieve this system of high-quality health care. Your efforts are in the best interest of the public health, and you are helping FDA fulfill its mission of protecting and promoting the public health. We’re in the right place at the right time to make real differences in the health of Americans.