WASHINGTON - A U.S. Supreme Court decision this month affirming the right to sue in state court over complications from federally-approved medications could have far-reaching effects on Americans, a scholar says.

The high court's decision to reject an appeal by Wyeth Pharmaceuticals to reverse a $6.7 million state jury award could hamper new drug development and limit physicians' willingness to use certain drugs, wrote John Calfee, a resident scholar at the American Enterprise Institute.

"With so little apparent restraint on jury decisions about what manufacturers should have done, and with massive punitive damages to be gained from juries far more sympathetic to plaintiffs than to defendants, the scale and success of litigation are likely to mount," he wrote in a recent paper.

"Just as unexpected stock losses can trigger mass securities litigation, unfortunate effects from an otherwise useful or essential drug could launch numerous individual lawsuits asking for huge damages, followed by class action lawsuits with mammoth costs to all."

The Wyeth case was brought by a Vermont woman whose forearm was amputated because of a reaction to the company's injected anti-nausea drug Phenergan, which was approved by the U.S. Food and Drug Administration decades ago.

The plaintiff lost the arm to gangrene, which results if the drug comes in contact with arterial blood, so the medication is typically given by intramuscular injection or intravenously. Levine says those methods of administration are not safe under Vermont state law.

A state jury awarded Diana Levine more than $6 million because Wyeth failed to warn her adequately about the risks of the drug. Wyeth, however, argued her claims are preempted by the U.S. Food, Drug and Cosmetic Act.

Writing for the court's 6-3 majority, Associate Justice John Paul Stevens said the U.S. Food and Drug Administration's oversight of drug labeling doesn't prevent state-level actions against drug companies.

In his paper, Calfee said the case could lead to a flood of lawsuits filed in state court over FDA-approved drugs.

"Perhaps the scale of drug safety litigation in this new environment will be no greater than it was in the late 1980s and early 1990s, after a litigation crisis had caused Congress to remove childhood vaccines from the liability system altogether, and when juries seemed inclined not to burden ordinary drugs with extraordinary damages verdicts," he wrote.

Calfee -- author of Prices, Markets, and the Pharmaceutical Revolution -- said in the wake of the Wyeth decision, drug manufacturers will likely take extra care with their products.

"They are likely to pester the FDA with even more requests to augment safety warnings, reinforcing an existing tendency toward over-warning rather than under-warning," he said. "This is likely to discourage the use of valuable drugs."

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