For your delectation and delight, desultory dicta on the law of delicts.

The Rhetoric and Challenge of Conflicts of Interest

July 30th, 2013

The Challenge

Critics and anti-industry zealots have argued that industry-sponsored science is vitiated by conflicts of interest.  The critics of industry research have supported their attack with studies that claim to show that industry studies disproportionately report outcomes favorable to their sponsors.

The potential conflicts posed by industry-sponsored research studies are fairly obvious.  Industries that make or sell products, raw materials, or chemicals have an interest in having toxicological and epidemiologic studies support claims of safety.  Research that suggests an industry’s product causes harm may hurt the industry’s financial interests directly by inhibiting sales, or indirectly by undermining the industry’s position in litigation, or by leading to greater regulatory scrutiny and control.  If the harm evidenced by the research is sufficiently severe, the research may lead to product recall or bans, again with serious economic consequences for the industry.  Evidence of harm may require heightened warnings or instructions, which may limit sales or encourage sales of competing, less hazardous products.

The Response.

The answer to the anti-industry challenge lies in a reality more complicated and nuanced that the simplistic views of the critics.  Industry often must conduct or sponsor research to live up to its common law or regulatory duties to test its products.  At other times, industry sponsors research in response to emerging scientific papers that claim that the industry product is harmful in ways not previously known.  While on occasion, industry might be accused of “manufacturing doubt[1],” there are scientists equally intent upon “manufacturing certainty,” whether from dodgy data or iffy inferences.

The motives and interests of scientists intent on manufacturing a faux certainty are harder to discern than the potential conflicts of industry and scientists who are funded by industry.  Many scientists purport to have only the lofty goals of science or the public interest at heart in pursuing their research, but a close look shows that there are several potential conflicts of interest prevalent in the research community, and that these interests help shape science into anti-industry positions.

1.  White Hat Bias

Over 20 years ago, a science journalist published an account of how dire predictions of asbestos deaths had not come to pass.  Tom Reynolds, “Asbestos-Linked Cancer Rates Up Less Than Predicted,” 84 J. Nat’l Cancer Instit. 560 (1992).  In trying to understand why the earlier predictions had been disconfirmed by later data, Reynolds quoted one scientist as saying that:

“the government’s exaggeration of the asbestos danger reflects a 1970s’ Zeitgeist that developed partly in response to revelations of industry misdeeds.  ‘It was sort of the “in” thing to exaggerate … [because] that would be good for the environmental movement’….  ‘At the time it looked like you were wearing a white hat if you made these wild estimates. But I wasn’t sure whoever did that was doing all that much good.”

Id. at 562.  Reynolds captured the essence of “white-hat” bias, a form of political correctness applied to issues that really depend upon scientific method and data for their resolution.

More recently, David Allison and Mark Cope, two public health researchers described[2] white-hat bias as a prevalent cognitive bias in how research is reported and interpreted.  They described white-hat bias as a “bias leading to the distortion of information in the service of what may be perceived to be righteous ends.” Perhaps the temptation to overstate the evidence against a toxic substance is unavoidable, but it diminishes the authority and credibility of regulators entrusted with promulgating and enforcing protective measures.  And error is still error, regardless of its origin.  Allison and Cope give examples of white-hat bias in how papers are cited, with “exonerative” studies cited less often than those than claim harmful outcomes.  And when positive papers were cited, they were often interpreted misleadingly to overstate the harms previously reported.

2. Other “Interested” Actors Who Sponsor and Conduct Scientific Research

The discussion and debate surrounding industry sponsorship of scientific research often ignores the activities of other, intensely interested sponsors and researchers.  Labor unions, for instance, have sponsored research on occupational hazards.  Evidence of harm often becomes potent ammunition in labor-management negotiations over work conditions and wages.  Environmental groups have sponsored studies with sympathetic researchers who are openly eager to embarrass industrial interests and support increasing regulatory restrictions or bans on chemicals or products.  Plaintiffs’ counsel may well be the largest rent-seeking group in the United States, and they have sponsored studies with the implicit or explicit goal of supporting their claims for compensation.  Disease support groups, often aligned with plaintiffs’ counsel, have sponsored research, to support their claims for compensation and fees, the more, the better.  Scientists and physicians who serve as expert witnesses for plaintiffs’ counsel have undertaken research to advance and support their testimonial enterprise in the litigation brought by the counsel who engaged them to testify.

3.  Regulatory Biases

Many scientists are funded by regulatory agencies intent upon showing harm from particularly exposures or industrial processes.  The agencies may be motivated by their desire to expand their regulatory control under their statutory mandate by having scientific evidence that fits their political and regulatory goals.  Some scientists may be politically aligned, or simply believe that the public interest requires the sought after enhanced regulation.

4.  Publication Bias

“Null” studies, studies that do not find a statistical significant increased risk of harm from exposure, do not sell.  More to the point, null studies do not routinely get published.  Spending substantial amounts of time on a study without obtaining an outcome that will make the study publishable is a sure-fire way to sideline one’s academic career.  Publications are the measurable units of success in academic circles.  Publications beget future grants and funding, which further enhance academic reputation and careers.

The pressure on researchers to find some untoward outcome from research on a potential toxic material or product is great.  As John Ioannides and others have shown, prevalent research methods encourage technique that will lead to some findings.  For instance, an epidemiologic cohort study will compare a group with and without exposure, but will look at multiple health outcomes.  Perhaps there was an a priori hunch that lung cancer rates would be increased among the exposed group, but the researchers also looked at a 100 other cancers, and perhaps another 100 other non-malignant diseases, in the study.  Chance alone would have led to several statistically significant findings of increased disease outcomes among the exposed group, and researchers can publish these findings that encourages readers to believe that they were the subject of the research all along.

Similarly, case-control studies can collect cases of a disease of interest and compare them with non-diseased controls in terms of dozens if not hundreds of prior exposures and life-style variables.  Again, the researchers can report the exposures and variables statistically significantly associated with the disease, and neglect to report all those not associated.[3]

5. Biased Studies with Biased Outcomes, Making Biased Claims

The critics of industry-sponsored studies have themselves conducted “studies of studies,” to assess whether sponsorship correlated with outcomes favorable to the sponsor.  These studies of studies claim to find that industry studies invariably or disproportionately favor their sponsors’ interests, but these studies of studies are themselves critically flawed by selection bias.[4]

To understand the selection bias involved, we need only pay attention to the conditions that lead industry to conduct the study.  In connection with potential toxicities of chemicals or products, industry  often is responding to an emerging scientific literature that claims the industrial materials cause harm.  If the studies that claim harm are clearly valid, there is likely to be no counter-study undertaken.  In this scenario, the anti-industry critics will find no industry study for inclusion in their analysis of whether industry studies are correlated with a favorable outcome.

Studies with doubtful data or overstretched conclusions are more likely to provoke an industrial concern into sponsoring research, and given the inciting condition, we should not be surprised that outcome is more favorable to industry than the previously published studies.    Studies ultimately favorable to the defense are thus counted in the “studies of studies,” but given the circumstances that led to the sponsorship, the imbalance in the results is exactly what we should expect to see. Of course, if the study somehow supports the prior findings, the critics of industry will claim that the industry-sponsored study is an “admission” of harm.  Inconclusive or exonerative studies will be dismissed by these critics as uninformative or vitiated by conflicts of interest.

There are many examples of how this selection bias plays out. In the early days of the silicone gel breast implant litigation, ostensibly neutral researchers published papers that claimed an association between silicone implants and scleroderma.  See Harry Spiera, “Scleroderma After Silicone Augmentation Mammoplasty,” 260 J. Am. Med. Ass’n 236 (1988).  These papers led to an FDA-imposed moratorium, which in turn instigated a litigation tsunami.  The then current and former manufacturers of silicone implants sponsored several epidemiologic studies.  Although the companies engaged reputable researchers from the leading medical research centers in the United States, public-interest advocates such as Sidney Wolfe decried the “biased” industry-financed research that came out.  Not surprisingly, the sponsored studies mostly exonerated any causal role of silicone in producing autoimmune diseases.

The biases of the physicians who supported the alleged causal association were much more difficult to ferret out.  Many of the physicians adopted pro-causation views to attract patients from the many support “victim” support groups, and many of the scientists who advocated pro-causation opinions sought to market test kits that would identify biomarkers of a unique silicone-induced disease.  The house of cards created by the support groups and plaintiffs’ counsel ultimately collapsed when court-appointed expert witnesses and the Institute of Medicine examined the evidence closely.  Today, the entire episode can be chalked up mostly to litigation fraud.  See Hon. Judge Jack B. Weinstein, “Preliminary Reflections on Administration of Complex Litigation.” Cardozo Law Review DeNovo 1, 14 (2009) (“[t]he breast implant litigation was largely based on a litigation fraud. …  Claims—supported by medical charlatans—that enormous damages to women’s systems resulted could not be supported.”).

Another example is provided by the welding fume litigation.  In 2001, Dr. Brad Racette published a case series that he erroneously called a case-control study, which purported to find an earlier age of onset for Parkinson’s disease among welders.  In 2005, working in cooperation with plaintiffs’ counsel, Racette transmuted litigation screenings into a cross-sectional study, which purported to find an increased prevalence ratio of “parkinsonism” among welders.  Both studies were seriously flawed, but the plaintiffs’ counsels’ use of Racette’s studies created an incentive for industry to sponsor several studies.  The plaintiffs’ counsel blasted the industry defendants for “manufacturing doubt,” but in fact, the industry-sponsored studies were valid scientific efforts, conducted by respected epidemiologists.  The industry sponsored studies were corroborated several times over by governmentally sponsored studies, conducted in the United States and abroad.  A meta-analysis published last year by well-regarded neuroepidemiologists ultimately vindicated the industry position, as well as the industry-sponsored studies.  See James Mortimer, Amy Borenstein, and Lorene Nelson, “Associations of welding and manganese exposure with Parkinson disease: Review and meta-analysis,” 79 Neurology 1174 (2012) (reporting a statistically significant decreased risk of Parkinson’s disease among welding tradesmen).

In the pharmaceutical industry, publications will invariably show outcomes favorable to drug sponsors.  New drugs that fail to show efficacy in clinical trials will not likely be written about because the sponsor will not file an application for regulatory approval.  Writing up the clinical trials for publication typically is part of the process of seeking regulatory approval, and the publication effort is not undertaken unless there is a reasonable chance of approval.  Unremarkably, the published papers describing these clinical trials disproportionately show efficacy and manageable side effects.


6. Hypocrisy Over Conflicts of Interest

The persistence in ignoring non-financial conflict of interests is not innocent.  By elevating financial conflicts of interest, public advocates attempt to silence industry and discount industry-sponsored studies.  The single-minded focus on financial conflicts of interest misdirects attention away from the existence of other sorts of biases, and the distortions they create.[5]

Conflicts of interest have thus largely and incorrectly been reduced to financial conflicts.  For instance, in 2011, the National Institutes of Health (NIH) addressed only financial issues when it promulgated rules for managing conflicts of interest in the field of medical research.[6]  Several commentators advocated regulation of non-financial COI, but the agency refused to include such conflicts within its rules.[7] The Institute of Medicine (IOM), in a monograph on conflicts of interest in medicine, similarly gave almost exclusive priority to financial ties.[8]

The focus on economic conflicts of interest is dangerous because it instills complacency about non-financial interests, and provides a false sense of assurance that the most serious biases are disclosed or eliminated.  One need only consider the many examples of retractions, frauds, and ethical lapses in biomedical research to understand that non-financial interests, such as friendships and alliances, institutional hierarchies, intellectual biases and commitments, beneficence, “white-hat” advocacy, as well as the drive for professional achievement, recognition, and rewards, all have the potential to complicate, distort, and sometimes undermine scientific research in myriad ways. The failure to recognize and regulate non-economic conflicts and biases endangers the validity of science.  Not only are these non-financial threats ignored, but financial interests receive undue attention, resulting in the erosion of public trust in scientific research that is sound.


The Cure

1. Push Back Against the Rhetoric of Conflicts of Interest

Industry should not be cowed by the anti-industry attack on industry-sponsored studies.  Twenty years ago, one of the leading epidemiologists, Professor Kenneth Rothman, referred to the anti-industry bias as “new McCarthyism in science.[9]”  This intolerance toward corporate sponsorship has been going on for some time, fueled by one-sided accounts of industry-sponsored studies.  As noted by one of the leading 20th century epidemiologists, “an opinion should be evaluated on the basis of its contents, not on the interests or credentials of the individuals who hold it.[10]”  Courageously, some scientists have fought for science to be judged on its merits.[11]

Professor Stossel and others created an organization, ACRE – The Association of Clinical Researchers and Educators, to defend legitimate interactions between Physicians and Industry. ACRE has spoken out against the lopsided demonization of the pharmaceutical industry, and the lionizing of the industry’s critics.  A few years ago, a scientist working for the pharmaceutical industry, joined Professor Rothman, to cry out against the unfairness and partiality of journals’ conflict-of-interest rules and policies.[12]  Dr. Hirsch published a strongly worded commentary that journals’ concerns are often poorly disguised prejudices against industry.  Many of the journals in question rarely or never fuss over the obvious conflicts of interest created by the “profit motive” of researchers who want to climb the academic ladder, increase their salaries, enlarge their budgets, extend their influence, travel to organizational conferences, bolster their prestige, win more grants, enhance their reputations, or advance their political goals or ideologies.

The medical profession, the courts, and the public are seriously misled by the obsession with conflicts of interest, on either side.  The obsession allows a disclosed or undisclosed conflict of interest to substitute for the much harder work of considering the merits of a study.

[1] David Michaels, Doubt is Their Product (2008).

[2] Mark B. Cope and David B. Allison, “White hat bias: examples of its presence in obesity research and a call for renewed commitment to faithfulness in research reporting,” 34 Internat’l J. Obesity 84 (2010).

[3] The works of John Ioannides explore the problem of false discovery rate and publication practices that encourage error.  See N. S. Young, J. P. Ioannidis and O. Al-Ubaydli, 2008. Why current publication practices may distort science. PLoS Medicine5e20.

[4] Miquel Porta, Sander Greenland, and John M. Last, eds., A Dictionary of Epidemiology 225-26 (5th ed. 2008).

[5] Richard S. Saver, “Is It Really All About The Money? Reconsidering Non-Financial Interests In Medical Research,” 40 J. L. Med. & Ethics 467 (2012).

[6] Department of Health and Human Services, “Responsibility of Applicants for Promoting Objectivity in Research for Which Public Health Service Funding is Sought and Responsible Prospective Contractors,” 76 Fed. Reg. 53256 (Aug. 25, 2011).

[7] Id. at 53258.

[8] Institute of Medicine, Conflict of Interest in Medical Research, Education, and Practice (Washington, D.C.: The National Academies Press, 2009).

[9] Kenneth J. Rothman, “Conflict of interest: the new McCarthyism in science,” 269 J. Am. Med. Ass’n 2782 (1993).

[10] Brian MacMahon, “Epidemiology:  another perspective,” 37 Internat’l J. Epidem. 1192, 1192 (2008).

[11] See Thomas P. Stossel, “Has the hunt for conflicts of interest gone too far?” 336 Brit. Med. J. 476 (2008); Nature Publishing Group, “Nothing to see here: based on one company’s past poor publishing practices, a top-tier medical journal misguidedly stigmatizes any paper from industry,” 26 Nature Biotechnol. 476 (2008); Kenneth J. Rothman & S. Evans, “Extra scrutiny for industry funded trials: JAMA’s demand for an additional hurdle is unfair–and absurd, 331 Brit. Med. J. 1350 (2005), and 332 Brit. Med. J. 151 (2006) (erratum).

[12] Laurence J. Hirsch, “Conflicts of Interest, Authorship, and Disclosures in Industry-Related Scientific Publications: The Tort Bar and Editorial Oversight of Medical Journals,” 84 Mayo Clin. Proc. 811 (2009).

Securities Fraud vs Wire Fraud

July 29th, 2013

Pharmaceutical manufacturers are particularly vulnerable to securities fraud claims arising from the manufacturers’ pronouncements about safety or efficacy, the evidence for which is often statistical in nature.  Safety claims may involve complex data sets, both from observational studies and clinical trials.  Efficacy claims are typically based upon clinical trial data.

Publicly traded manufacturers may find themselves caught between competing securities regulations.  In evaluating safety or efficacy data, manufacturers will often consult with an outside science advisory board, or report to regulatory agencies.  Securities regulations specify that any disclosure of confidential inside information to an outsider triggers an obligation of prompt public disclosure of that information.[1]  Companies also routinely seek to keep investors informed of research and marketing developments.  Generally, manufacturers will make their public disclosures through widely circulated press releases.[2]  Not surprisingly, disgruntled investors may challenge the accuracy of the press releases, when the product or drug turns out to be less efficacious or more harmful than represented in the press release.  These challenges, brought under the securities laws, often are maintained in parallel to product liability actions, sometimes in the same multi-district litigation.

Securities laws require accurate disclosure of all material information.[3]  Rule 10b-5 of the Securities Exchange Commission (SEC) prohibits any person from making “any untrue statement of material fact” or from omitting “a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.”[4]

A prima facie case of securities fraud requires that plaintiff allege and establish, among other things, a material misrepresentation or omission.[5]  The obligations to speak and to speak accurately have opened manufacturers to second guessing in their analyses of safety and efficacy data.  In most securities fraud cases, courts have given manufacturers a wide berth by rejecting differences in opinions about the proper interpretation of studies as demonstrating fraud under the securities regulations.[6]  This latitude has been given both in judgment of what test procedures to use, as well as in how best to interpret data.[7]   In Padnes v. Scios Nova Inc., the manufacturer was testing a drug for treatment of acute kidney failure.  Scios Nova issued a press release after its phase II trial, to announce a statistically significant reduction in patients’ need for dialysis.  When the early phase III results failed to confirm this result, plaintiffs sued Scios Nova for not disclosing the lack of statistically significant outcomes on other measures of kidney function, as well as for its interpretation of dialysis results as statistically significant.[8]  The trial court dismissed the complaint.[9]

Several securities fraud cases have turned on investor dissatisfaction on how companies interpreted clinical trial subgroup data.  In Noble Asset Management v. Allos Therapeutics, Inc.,[10] the company issued a press release, noting no statistically significant increase overall in survival advantage from a drug for breast cancer, but also noting a statistically significant increased survival in a non-prespecified subgroup of patients with metastatic breast cancer.[11] The plaintiff investors claimed that the company should have disclosed that the FDA was unlikely to approve an indication based upon an ad hoc subgroup analysis, but the trial court rejected this claim because FDA policy on drug approvals is public and well known.[12] The plaintiffs also complained that the press release referred to statistically significant results from a Cox multiple regression analysis rather than the log-rank (non-parametric survival) analysis required by FDA. The trial court rejected this claim as well, opining that the analysis was not misleading when the company correctly reported the raw data and the results of the Cox multiple regression analysis.[13]

Two recent appellate decisions emphasize the courts’ unwillingness to scrutinize the contested statistical methodology that underlies plaintiffs’ claims of misrepresentation.  In In re Rigel Pharmaceuticals, Inc. Securities Litigation, the plaintiff investors were dissatisfied, not with reporting of subgroups, but rather with the failure of the company to report geographic subgroup results, as well as its use of allegedly improper statistical tests and its failure to account for multiple comparisons.[14]

The Ninth Circuit affirmed the dismissal of a complaint.  The appellate court held that allegations of “statistically false p-values” were not sufficient; plaintiffs must allege facts that explain why the difference between two statements “is not merely the difference between two permissible judgments, but rather the results of a falsehood.”[15] Alleging that a company should have used a different statistical method to analyze the data from its clinical trial is not sufficient to raise an issue of factual falsity under the securities fraud statute and regulations.[16]  The Court explained that the burden was on plaintiffs to plead and prove that the difference between two statistical statements “is not merely the difference between two permissible judgments, but rather the result of a falsehood.”[17] The Court characterized the plaintiffs’ allegations to be about judgments of which statistical tests or methods are appropriate, and not about false statements.  Furthermore, the Court emphasized that the company’s statistical method was called for in the trial protocol, and was selected before the data were unblinded and provided to the company.[18]

In Kleinman v. Elan Corporation[19], the Second Circuit affirmed the dismissal of a securities fraud class action against two pharmaceutical joint venturers, which issued a challenged press release on interim phase II clinical trial results for bapineuzumab, a drug for mild- to moderate-Alzheimer’s disease.  The press release at issue announced “top line” findings and promised a full review at an upcoming international conference.[20]  According to the release, the clinical trial data did not show a statistically significant benefit on the primary efficacy end point, but “[p]ost-hoc analyses did show statistically significant and clinically meaningful benefits in important subgroups.”[21]

The plaintiffs in Kleinman complained that the clinical trial had started with crucial imbalances between drug and placebo arms, thus indicating a failure in randomization, and that the positive results had come from impermissible post-hoc subgroup analyses.[22]  The appellate court appeared not to take the randomization issue seriously, and rejected the notion that statements can be false when they represent a defendant company’s reasonable interpretation of the data, even when the interpretation later turns out to be shown to be false[23]:

“At bottom, Kleinman simply has a problem with using post-hoc analyses as a methodology in pharmaceutical studies.  Kleinman cites commentators who liken post-hoc analyses to moving the goal posts or shooting an arrow into the wall and then drawing a target around it. Nonetheless, when it is clear that a post-hoc analysis is being used, it is understood that those results are less significant and should have less impact on investors.  Our job is not to evaluate the use of post-hoc analysis in the scientific community; the FDA has already done so.”

In United States v. Harkonen[24], the government turned the law of statistical analyses in securities fraud on its head, when it prosecuted a pharmaceutical company executive for his role in issuing a press release on clinical trial data. The jury acquitted Dr. Harkonen on a charge of misbranding[25], but convicted on a single count of wire fraud.[26] Dr. Harkonen’s crime?  Bad statistical practice.

The government conceded that the data represented in the press release were accurate, as were the calculated p-values.  The chargeable offense lay in Dr. Harkonen’s describing the clinical trial results as “demonstrating a survival benefit” of the biological product (interferon γ-1b) in a clinical trial subgroup of patients with mild- to moderate-idiopathic pulmonary fibrosis.  The p-value for the subgroup was 0.004, with an effect size of 70% reduction in mortality.  The subgroup, however, was not prespecified, and was not clearly labeled as a post-hoc analysis.  The trial had not achieved statistical significant on its primary end point.

In prosecuting Dr. Harkonen, the government offered no expert witness opinion.  Instead, it relied upon a member of the clinical trial’s data safety monitoring board, who advanced a strict, orthodox view that if the primary end point of a trial “failed,” then the data could not be relied upon to infer any meaningful causal connection within secondary end points, let alone non-prespecified end points.  The prespecified survival secondary end point showed a 40 percent reduction in mortality, p = 0.08 (which shrank to 0.055 on an intent-to-treat analysis). The press release also relied upon a previous small clinical trial that showed a benefit in survival at five years, with the therapy group at 77.8%, compared with 16.7% in the control groups, p = 0.009.

The trial court accepted the government’s claim that p-values less than 0.05 were something of “magic numbers,”[27] and rejected post-trial motions for accquittal. Dr. Harkonen’s use of “demonstrate” to describe a therapeutic benefit was, in the trial court’s view, fraudulent, because of the lack of “statistical significance” on the primary end point, and the multiple testing with respect to the secondary survival end point.  The Ninth Circuit affirmed the judgment of conviction in an unpublished per curiam opinion[28].

In contrast to the criminal wire fraud prosecution, the civil fraud actions against Dr. Harkonen and the company were dismissed.[29] The prosecution and the judgment in United States v. Harkonen is at odds with the latitude afforded companies in securities fraud cases.  Furthermore, the case cannot be fairly squared with the position that the government took as an amicus curiae in Matrixx Initiatives, Inc. v. Siracusano[30], where the Solicitor General’s office, along with counsel for the Food and Drug Division of the Department of Health & Human Services, in their zeal to assist plaintiffs on claims against an over-the-counter pharmaceutical manufacturer, disclaimed the necessity, or even the importance, of statistical significance[31]:

“[w]hile statistical significance provides some indication about the validity of a correlation between a product and a harm, a determination that certain data are not statistically significant … does not refute an inference of causation.”

Suddenly, when prosecuting an unpopular pharmaceutical company executive, the government’s flexibility evaporated. Government duplicity was a much greater problem than statistical multiplicity in Harkonen.[32]

[1] Security Exchange Comm’n Regulation FD, 17 C.F.R. § 243.100 (requiring prompt  public disclosure of any confidential, material inside information after disclosed to non-insiders).

[2] Selective Disclosure and Insider Trading, Securities Act Release No. 7881, Fed. Sec. L. Rep. (CCH) ¶ 86,319 (Aug. 15, 2000) (“As a general matter, acceptable methods of public disclosure for purposes of Regulation FD will include press releases distributed through a widely circulated news or wire service . . . .”).

[3] Section 10(b) of the Exchange Act of 1934 prohibits any person “[t]o use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [Securities and Exchange Commission] may prescribe.”  15 U.S.C. § 78j(b).

[4] 17 C.F.R. § 240.10b-5.

[5] Stoneridge Inv. Partners LLC v. Scientific-Atlanta, 552 U.S. 148, 157 (2008) (“(1) a material misrepresentation or omission []; (2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation.”)

[6] In re Medimmune, Inc. Sec. Litig., 873 F.Supp. 953, 965 (D. Md. 1995).  The biological product at issue in this case was Respivir, a polyclonal antibody product, which “significantly” reduced frequency of hospitalization for respiratory syncytial virus (RSV).  Plaintiffs alleged “flaws” in study design, but the trial court appeared to interpret the statistical significance to mean that Respivir was “unquestionably efficacious.” Id. at 967.

[7] See, e.g., Padnes v. Scios Nova Inc., No. C 95-1693 MHP, 1996 WL 539711, at *5 (N.D. Cal. Sept. 18, 1996) (Patel, J.)[cited herein as Padnes].  See also DeMarco v. DePoTech Corp., 149 F.Supp. 2d 1212, 1225 (S.D. Cal. 2001)(“Although plaintiffs have established a legitimate difference in opinion as to the proper statistical analysis, they have hardly stated a securities fraud claim.”); n re Aldor Corp. Sec. Litig., 616 F.Supp. 2d 551, 568 n.15 (E.D. Pa. 2009) (allegations as to how data should have been analyzed do not support claims for false or misleading statements).

[8] Padnes at *2.

[9] Id. at *10.

[10] 2005 WL 4161977 (D. Colo. Oct. 20, 2005).

[11] Id. at *1.

[12] Id. at *6-7.

[13] Id. at *11.

[14] 2010 WL 8816155 (N.D. Cal. Aug. 24, 2010).

[15] 697 F.3d 869, 877 (9th Cir. 2012) (internal citations omitted), aff’g 2010 WL 8816155 (N.D. Cal. Aug. 24, 2010).

[16] Id. at 877-78.

[17] Id. at 878.

[18] Id. (“Because there are many ways to statistically analyze data, it is necessary to choose the statistical methodology before seeing the data that is collected during the trial; otherwise someone can manipulate the unblinded data to obtain a favorable result.”), citing and attempting to distinguish United States v. Harkonen, 2010 WL 2985257, at *4 (N.D. Cal. July 27, 2010).

[19] 706 F.3d 145 (2d Cir. 2013).

[20] Id. at 149.

[21] Id. at 149-50 (also noting that the press release provided a “preliminary analysis,” which might be less favorable upon further analysis).

[22] Id. at 150.

[23] Id. at 154-55 & 155n.11 (citing and quoting FDA Center for Drug Evaluation and Research:  E9 Statistical Principles for Clinical Trials, 63 Fed. Reg. 49583, 49595 (Sept. 16, 1998), that post-hoc analyses are exploratory and “unlikely” to be accepted as support of efficacy.)

[24] United States v. Harkonen, 2010 WL 2985257 (N.D. Calif. 2010) ((Patel, J.) (denying defendant’s post–trial motions to dismiss the indictment, for acquittal, or for a new trial).  Sometimes judges are looking for bright lines in the wrong places).

[25] 21 U.S.C. §§ 331(k), 333(a)(2), 352(a).

[26] 18 U.S.C. § 1343.

[27] United States v. Harkonen, 2010 WL 2985257, at *5 (N.D. Calif. 2010).

[28] United States v. Harkonen, 2013 WL 782354 (9th Cir. 2013).

[29] In re Actimmune Marketing Litig., 2010 WL 3463491 (N.D. Cal. Sept. 1, 2010), aff’d,  464 Fed.Appx. 651 (9th Cir. 2011).

[30] 131 S. Ct. 1309 (2011).

[31] Brief for the United States as Amicus Curiae Supporting Respondents, in Matrixx Initiatives, Inc. v. Siracusano, 2010 WL 4624148, at *14 (Nov. 12, 2010).

[32] Dr. Harkonen is expected to petition the Supreme Court for certiorari on statutory and constitutional grounds.  See Alex Kozinski & Stuart Banner, “Who’s Afraid of Commercial Speech?” 76 VA. L. REV. 627, 635 (1990) (“[T]here are many varieties of noncommercial speech that are just as objective as paradigmatic commercial speech and yet receive full first amendment protection. Scientific speech is the most obvious; much scientific expression can easily be labeled true or false, but we would be shocked at the suggestion that it is therefore entitled to a lesser degree of protection. If you want, you can proclaim that the sun revolves around the earth, that the earth is flat, that there is no such thing as nitrogen, that flounder smoke cigars, that you have fused atomic nuclei in your bathtub — you can spout any nonsense you want, and the government can’t stop you.”).


Using the Rule 45 Subpoena to Obtain Research Data

July 24th, 2013

Back in June, Mr. William Ruskin posted a blog post, “When Should Data Underlying Scientific Studies Be Discoverable?” on his firm’s Toxic Tort Litigation Blog.  Earlier this week, the Defense Research Institute’s blog, dri-today republished the post, and I posted a response, “Research Data from Published Papers Generally Should Be Available,” on the DRI blog.

Mr. Ruskin’s blog post calls attention to the important problem of access to research data in litigation and other contexts.  The effort to obtain Dr. Racette’s underlying data is an interesting case study in these legal discovery battles.  Ruskin notes that there is the potential for “injustice” from such discovery, but he fails to acknowledge that the National Research Council has been urging scientists for decades to have a plan for data sharing as part of their protocol, and that the National Institutes of Health now requires such planning.  Some journals require a commitment to data sharing as a condition to publication.  The Annals of Internal Medicine, which is probably the most rigorously edited internal medicine journal, requires authors to state to what extent they will share data when their articles appear in print. Ultimately, litigants are entitled to “everyman’s” and “every woman’s” evidence, regardless whether they are scientists. If scientists complied with the best practices, guidances, and regulations on planning for data sharing, the receipt of a subpoena for underlying data would not be a particularly disruptive event in their laboratories.

In the case of Dr. Racette, it was clear that the time he needed to spend to respond to defense counsel’s subpoena was largely caused by his failure to comply with NIH guidelines on data sharing.  Racette was represented by university counsel, who refused to negotiate over the subpoena, and raised frivolous objections. Ultimately, the costs of production were visited upon the defendants who paid what seemed like rather exorbitant amounts for Racette and his colleagues to redact individual identifier information.  The MDL court suggested that Racette was operating independently of plaintiffs’ counsel, but the fact was that plaintiffs’ counsel recruited the study participants and brought them to the screenings, where Racette and colleagues videotaped them to make their assessments of Parkinsonism.  Much more could be said but for a protective order that was put in place by the MDL court.  What I can say is that after the defense obtained a good part of the underlying data, the Racette study was no longer actively used by plaintiffs’ counsel in the welding fume cases.

It is not only litigation that gives rise to needs for transparency and openness. Regulation and public policy disputes similarly create need for data access.  As Mr. Ruskin acknowledges, the case of Weitz & Luxenberg v. Georgia-Pacific LLC, 2013 WL 2435565, 2013 NY Slip Op 04127 (June 6, 2013), is very different, but at bottom is the same secrecy and false sense of entitlement to privilege underlying data. The Appellate Division’s invocation of the crime-fraud exception seems to be hyperbolic precisely because no attorney-client privilege attached in the first place. Basic tenets of openness and transparency in science should have guided the Appellate Division.

The Georgia-Pacific effort was misguided on many levels, but we should at least rejoice that science won, and that G-P will be required to share underlying data with plaintiffs’ counsel or whoever wants access. Without reviewing the underlying data and documents, it is hard to say what the studies were designed to do, but saying that they were designed “to cast doubt,” as Mr. Ruskin does, is uncharitable to G-P. After all, G-P may well have found itself responding in court to some rather dodgy data, and thought it could sponsor stronger studies that were likely to refute the published papers.  And the published papers may have been undertaken to “cast certainty,” or even a faux certainty, over issues that were not what they were portrayed to be in the papers.

Earlier this month, Judge Reggie Walton granted a motion to compel a litigant’s motion for underlying research in the denture cream litigation.  Plaintiffs’ counsel contracted with Dr. Salim Shah and his companies Sarfez Pharmaceuticals, Inc. and Sarfez USA, Inc. (“Sarfez”) to conduct human research in India, to support their claims that zinc in denture cream causes neurological damage.  In re Denture Cream Prods. Liab. Litig., Misc. Action 13-384 (RBW), 2013 U.S. Dist. LEXIS 93456, *2 (D.D.C. July 3, 2013).  When defense counsel learned of the Sarfez study, known as the Zinc/077/12 Study, and the plaintiffs’ counsel’s payments of over $300,000, to support the study, they sought discovery of raw data, study protocol, statistical analyses, and other materials from plaintiffs’ counsel.  Plaintiffs’ counsel protested that they did not have all the materials, and directed defense counsel to Sarfez.  Although other courts have made counsel produce similar materials from the scientist independent contractors they engaged, in this case, defense counsel followed the trail of documents to contractor, Sarfez.  Id. at *3-4.

After serving a Rule 45 subpoena on Sarfez, things got interesting.  Raising no objections, and asserting no privileges, Sarfez served about 1,500 pages of responsive documents.  Some of the documents were emails, but crucial attachments were missing, including protocols, analytical reports, and raw data.  Id. at *12-13.  When the defendant, Proctor & Gamble Company (P&G) pressed, Sarfez resisted further production.  P&G filed a motion to compel, and Sarfez objected on various  grounds, including lack of relevancy.

The objections did not go very far.  Plaintiffs’ counsel, who probably should have been tasked with producing the subpoenaed materials in the first instance, had already declared their intent to rely upon the study that they contracted for with Sarfez.  Id. at *9. Judge Walton noted that relevancy did not require that the subpoenaed materials be admissible at trial, but only that they may be relevant to the claim or defense of a party.  Id. at *6.  Judge Walton also upheld the subpoena, which sought underlying data and non-privileged correspondence, to be within the scope of Rules 26(b) and 45, and not unduly burdensome. Id. at *9-10, *20.

Sarfez attempted to suggest that the email attachments might not exist, but Judge Walton branded the suggestion “disingenuous.”  Attachments to emails should be produced along with the emails.  Id. at *12 (citing and collecting cases). Although Judge Walton did not grant a request for forensic recovery of hard-drive data or for sanctions, His Honor warned Sarfez that it might be required to bear the cost of forensic data recovery if it did not comply the district court’s order.  Id. at *15, *22.

The Denture Cream case is a helpful reminder that not only industrial defendants sponsor scientific studies in litigation contexts.  Plaintiffs’ counsel, and sometimes their interest proxies — labor unions, support groups, advocacy groups, zealous scientists, and regulatory agencies — sponsor and conduct studies as well.  Proctor & Gamble should not have been put to the expense and trouble of a Rule 45 subpoena, but it is encouraging to see that Judge Walton cut through the evasions and disingenuous claims, and enforced the research subpoena in this case.



July 9th, 2013

When the Milward case hit the U.S. Court of Appeals for the First Circuit, it attracted the attentions of an amicus, the Council for Education and Research on Toxics (CERT).  I had never heard of CERT before, and the amicus brief filed by CERT was rather sketchy on the nature of the organization.

A bit of research on CERT revealed the following.  It is a non-profit California corporation, EIN: 42-1571530, founded in 2003.  CERT has a business address at:

401 E Ocean Blvd., Ste. 800, Long Beach, California 90802-4967

And a telephone number:  1-877-TOX-TORT

CERT’s mission statement? Furthering scientific understanding of toxins.

Plaintiffs’ lawyer Ralph Metzger is noted as the contact person for CERT.

Given its phone number and its contact person, one might think that its mission statement was “furthering legal positions on toxins.”

But wait; it gets better.  Ralphael Metzger, at the same Long Beach, California, address is the attorney for CERT on its amicus brief in Milward!

The potential conflicts grow deeper and wider.  Metzger has represented CERT, which shares at least his offices, if not his alter ego, in lawsuits including CERT v. Brad Berry Co., Ltd., No. BC461182 (Cal. Super. Ct., Los Angeles County, Cent. Dist., filed May 9, 2011), and CERT v. Starbucks Corp., BC435759 (L.A. Super. Ct., filed April 13, 2010).

CERT has sued McDonald’s and Burger King over its claim that their french fries contained high levels of acrylamide, a chemical “known” to the State of California to cause cancer. CERT has sued Chemtura on claims that the company’s chemical fire-preventive products, known as PBDEs, cause injuries to wildlife and humans.

Although not definitive, it seems that CERT’s mission is not exactly scientific, and the description of its interests in its Milward brief just a tad misleading.

In addition to the CERT, the other amici joining the brief include:

Nicholas A. Ashford,
Nachman Brautbar,
David C. Christiani,
Richard W. Clapp,
James Dahlgren,
Devra Lee Davis,
Malin Roy Dollinger,
Brian G. Durie,
David A. Eastmond,
Arthur L. Frank,
Frank H. Gardner,
Peter L. Greenberg,
Robert J. Harrison,
Peter F. Infante,
Philip J. Landrigan,
Barry S. Levy,
Melissa A. McDiarmid,
Myron Mehlman,
Ronald L. Melnick,
Mark Nicas,
David Ozonoff,
Stephen M. Rappaport,
David Rosner,
Allan H. Smith,
Daniel Thau Teitelbaum,
Janet Weiss, and
Luoping Zhang

An interesting bunch; eh?  Page two of the amicus brief tells us that:

“None of the amici has any financial or other similar interest in the outcome of this lawsuit. Amici appear on their own behalf to inform this Court of the substantial medical knowledge and understanding of leukemia arising from exposure to benzene.”

That’s probably true for the Milward case itself, but more interesting for what the disclosure does not say.  Many of the amici have testified frequently in toxic tort cases, and several have been excluded by the straightforward application of Rule 702 or its state counterparts.  Some have lost income as a result of judicial gatekeeping, and most have seen their advocacy science curtailed by such gatekeeping.

Appendix I to the brief provides further information on the amici, but there is no mention of their testimonial adventures, their financial stake in expert witnessing, or their political or positional commitments.

I suppose from CERT you get CERT-i-tude, a certain kind of attitude.