The rise and fall of fen-phen – Part II

This is a continuation of my last post, The rise and fall of fen-phen – part I. I left off with describing how in 2003 and 2004 it appeared that the multibillion dollar Nationwide Settlement Agreement was on the verge of collapse.

The number of expected claims had been vastly underestimated—Wyeth estimated that less than ten thousand claims asserting Matrix injuries would be submitted to the Trust, but by 2004 the number of claims was more than 87,000. Additionally, because not everyone had wanted to take part in the Settlement, tens of thousands of cases were still in courts across the country.  And if Wyeth could not meet its financial obligations and filed for bankruptcy, no one would be paid—at least, not anytime soon.

The drug company found itself in the unenviable position of having promised a full year of free medical testing (echocardiograms) for everyone in America who had taken Pondimin or Redux. Remember, it was estimated that 6 million people had taken fen-phen.  And if the test revealed a compensable medical condition, those results could be used to file a claim with the Trust.  Nothing quite like this had ever happened before—certainly, not on this scale.

Wyeth soon realized the wide door that had been opened with this promise—and they started to drag their feet on the free tests and even accused many doctors, lawyers, and class members of submitting medical testing that was “unsupervised.”  Some people, including myself, believed that this was all in an attempt to limit the number of claims that would have to be paid.

The finger-pointing begins

There was a very real prospect in 2003 to 2004 that the Settlement Agreement would fail because the Trust might run out of money.  Everyone started pointing fingers.

The Trust launched an investigation into the integrity of the doctors who had signed the claim forms submitted to the Trust.  The Trust hired a team of experts, headed by Dr. Joseph Kisslo of Duke University, a former President of the American Society of Echocardiography, to examine 300 randomly selected claims.

Class Counsel followed suit, and hired Harry Rakowski—a preeminent cardiologist, who was also a former President of the American Society of Echocardiography—to examine a similar number of claims.

In a set of facts reminiscent of the Keystone Cops, the Trust’s special investigators concluded that claims submitted by Class Counsel, including one signed by Class Counsels’ own expert,  had been “significantly misrepresented” and the opinions expressed “were beyond the bounds of medical reason.”  In other words, Dr. Kisslo’s report concluded that the opinions of Class Counsels’ own expert were not only unreasonable, but the echocardiogram itself had been fraudulently manipulated.

To put this allegation in perspective, you need to know a little more about Class Counsels’ expert witness and his involvement in the Settlement Agreement. He was a key testifying witness in the court’s approval of the Settlement Agreement and was nominated and appointed by the court to serve on the Medical Review Coordinating Committee.

Dr. Kisslo’s report was largely discredited, eventually.  But his wide spread allegations of fraud and manipulation were enough to cause panic and concern among class members, attorneys, and doctors alike—especially after the Trust filed lawsuits against two doctors who submitted some claim forms.

And to top it all off, in the spring of 2004, a jury in Beaumont, Texas handed down an award of more than $1 billion to the family of a woman who died of primary pulmonary hypertension (PPH) four years after taking fen-phen. And less than a year later, a Pennsylvania jury awarded two women $100 million each for heart problems caused by fen-phen.

These were by far the largest individual verdicts ever in the fen-phen litigation, but they were an ominous sign that more verdicts like this were possible.

A Solution? The Seventh Amendment

In this environment the Seventh Amendment was born.  As its name suggests, it was the seventh major change or amendment to the Settlement Agreement. Under the Seventh Amendment, Wyeth agreed to contribute an additional $1.275 billion to the Settlement Fund, but in exchange class members had to make some concessions—less money and more filing restrictions.  Class members had to make a decision, stay in the original Settlement or become part of the Seventh Amendment.

But the Seventh Amendment would not apply to class members who chose to “opt out” of it and it would not apply to those who had chosen to file their cases in court.  And there were still more that fifty thousand cases pending in courts across the country.  Wyeth already had a taste of the enormous verdicts that juries were willing to hand down and was hoping to keep the Settlement Agreement alive with the addition of over $1 billion.  Otherwise, they ran the huge risk of having to potentially fight  hundreds of thousands of cases across the country.

Ultimately nearly 500,000 class members chose to take part in the Seventh Amendment.  And the Settlement Agreement survived.

Part III of the Rise and Fall of phen-fen will be posted on Monday (10/29).  We had to add part III—there was just too much to cover in this fifteen- year-old case. In my next post, I will discuss the changes that accompanied the approval of the Seventh Amendment and the current state of fen-phen litigation today.