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Imported
prescription drugs would expose small businesses to
increased liability
by Karen Kerrigan
For Virginia Business
December 2003
It’s
hard to make it through a news cycle without hearing
about the need for lower priced prescription drugs.
Many point to “drug reimportation” as a cure
for high-priced drugs — allowing consumers to buy
prescription drugs from abroad at prices lower than
what’s available to citizens in the United States.
Who wouldn’t want that? Already, it’s estimated
that 1 to 2 million Americans buy drugs from Canada.
Before
leaving for its August recess, the U.S. House passed
reimportation legislation. Yet over the past two months,
this issue has been a controversial part of negotiations
to hammer out differences on Medicare bills between
the House and Senate. Now some governors and mayors
are getting into the act by pushing reimportation for
state drug programs in hopes of saving some money. The
U.S. Food & Drug Administration is firmly on record
opposing reimportation, declaring it cannot vouch for
the quality or safety of these drugs. But safety is
only one of the issues driving this debate. Small businesses
have another reason to be alarmed, and it centers on
the problem of liability.
Prominent
attorneys have raised serious concerns about businesses
— up and down the prescription drug manufacturing
and distribution chain — being open to attack from
opportunistic trial lawyers. These include businesses
that produce, prescribe, sell or administer imported
medications. With the very real prospect of some drugs
being tainted, counterfeit or substandard, reimportation
would expose small businesses to a rash of lawsuits
that could reach epidemic proportions. Do we really
want drug importing to become the next asbestos litigation
crisis or another Superfund? Indeed, thousands of small
businesses have been trapped in the costly liability
web of these two economically destructive legal quagmires.
According
to a July memo to U.S. House Speaker Denny Hastert from
Shook, Hardy & Bacon, liability expert Victor E.
Schwartz advised that if reimportation were to become
legal, and patients begin to suffer effects from unsafe
foreign-imported drugs these would be some of the consequences:
•
Pharmacists would be at risk of lawsuits. “[A]
pharmacist or pharmacy company would be subject to strict
liability if any product they sold had been altered
or modified, and that alteration or modification caused
an injury.”
•
Hospitals would likewise be in the crosshairs. “[H]ospitals
would be liable for their failure to exercise reasonable
care to detect drugs that were counterfeit, altered
or modified, and had entered the country under reimportation
due to the lifting of safety provisions under H.R. 2427”
(the bill the House has already passed).
•
Even doctors would be at risk. “If the physician
dispensed the drug and it was earmarked so the physician
should have noticed, it could result in a liability
claim. If the drug were altered or modified, the same
negligence standard would apply.” Schwartz goes
on to note that, “even a modest augmentation of
liability exposure for physicians in the current litigation
milieu would be both unfortunate and very unsound public
policy.”
Prescription
drug importing is truly a trial lawyer’s dream:
Small biotech firms and hospitals as well as their parent
companies would be on the legal hook for the quality
of the drugs they sell even though these medications
have passed through one or more foreign countries before
reaching a U.S. family’s household. While the trial
lawyers march to the bank, insurance rates will rise
and the real losers will be the pharmacies, clinics,
innovative firms and doctors in your own hometown.
Policy
makers must fully understand the legal exposure that
certain small businesses, and our economy, face if drug
reimportation moves forward. Small businesses and consumers
will be the ones paying the price if elected officials
do not heed the warning.
Karen
Kerrigan is founder and chairman of the Small Business
Survival Committee, a national, non-profit small business
advocacy organization with more than 70,000 members
nationwide. The group routinely monitors public policy
issues important to the business world, including health
care. It has 500 members in Virginia.
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