Matt Holian Co-Chair, U.S. life sciences sector DLA Piper
Jessica Wilson Associate DLA Piper

Steps Every Small Biotech Company Should Consider

The top legal challenges facing the General Counsel of a small biotech company generally include protecting intellectual property rights, supporting strategic alliances, and securing venture capital—not defending against personal injury litigation. For a biotech company launching a new medication, the likelihood that the product will be associated with an unanticipated safety risk may seem low. Even if a potential safety risk emerged, a company may regard lawsuits as a distant possibility.

Historically, in the pharmaceutical context, personal injury lawsuits brought by plaintiffs’ lawyers arose when there was a very significant regulatory event, such as a voluntary withdrawal of a medication from the market or the addition of a boxed warning (the most serious warning available) on a medication’s label. Recently, however, plaintiffs’ lawyers have started to file more and more lawsuits on the basis of published studies alone, even before (or in the complete absence of) a significant regulatory event. They also have used the FDA’s adverse event reporting system to manufacture litigations by filing enough cases to get regulators’ attention. In other instances, plaintiffs’ lawyers have filed lawsuits involving other medications in a class, even if there is not a published study or regulatory event involving a specific medication in the class.

Because plaintiffs’ lawyers no longer wait for a significant regulatory event to start filing lawsuits, litigation often arises earlier in the lifecycle of a medication, sometimes even within a year or two of the product coming to market. Thus, while the likelihood of personal injury lawsuits for a new medication may appear low, unfortunately, they can arise sooner than expected. For this reason, it is never too early for a small biotech company to be thinking about litigation risk and some of the following steps to mitigate it.

1.Perform a Risk Assessment

A risk assessment is an effective, inexpensive way immediately before or after a medication’s approval to evaluate whether there are any potential safety issues that could be the subject of litigation because there is (or may be in the future) misalignment between the approved label and the available scientific evidence.

Typically, a risk assessment starts with a review of the label and other key regulatory, safety, and marketing documents. Depending on the findings, interviews with key employees responsible for the clinical development, regulatory approval, safety, or marketing of the medication may be helpful. The review and interviews should be performed by defense lawyers familiar with the methods that plaintiffs’ lawyers use to argue that a company knew or should have known that a medication causes a particular safety risk, particularly for relatively rare events that may not have been a focus of the medication’s development program.

Such methods, however unfair or scientifically questionable, may include combining biologically distinct adverse events, performing multiple statistical comparisons without appropriate adjustments, analogizing to the effects of other medications in a class, drawing unfounded conclusions from animal studies, comparing U.S. labels to foreign labels (despite regulatory standards that may differ significantly), or drawing conclusions solely on the basis of spontaneous post-marketing adverse event reports. Taking into account these potential vulnerabilities, a risk assessment may result in recommendations about potential label changes or other communications to address the particular safety risk, if needed.

Risk assessments also do not have to be limited to evaluating the risk of potential personal injury lawsuits. Especially if the company is aware of manufacturing, promotional, or other regulatory challenges prior to approval, a risk assessment can be a useful tool for identifying and mitigating the risk of potentially disruptive regulatory scrutiny.

2.Establish a Clear Medical Governance Process

Another step a small biotech company can take to mitigate litigation risk is to establish a clear medical governance process. Medical governance refers to the process a company has in place to determine if a potential safety risk impacts a medication’s benefit-risk profile. The goal of a medical governance process is to identify, evaluate, and escalate potential safety risks in a timely manner. For example, when a new study publication suggests that a medication may be associated with a particular adverse event, a company should have in place a clear process for analyzing the potential safety risk and communicating it both internally to senior leaders and externally to the medical community and public. Absent such a process, employees often are left to deal with new potential safety issues on an ad hoc basis without guidance regarding what information should be provided to whom and when.

A medical governance process should have multiple levels of support, oversight, and review of benefit-risk-related activities for a medication, which helps ensure that potential safety issues are escalated in a timely manner and to the appropriate people within the company. The process also should be cross-functional and multi-disciplinary, so that key members from clinical, safety, medical, and legal functions can contribute their respective expertise to evaluate the issue. A cross-functional and multi-disciplinary approach also ensures that information silos are not created within a certain department or functional area. Different companies have different views on whether or when marketing colleagues should be involved in the process. Regardless of the precise structure used, companies with a clear medical governance process are better able to identify and mitigate potential litigation risk.

3.Sensitize Employees to How Their Conduct May Be Viewed in Hindsight

When a new potential safety risk arises, employees may feel an immediate need to address the scientific evidence or theorize ways in which the company could investigate the potential risk further. For example, in response to new study publication demonstrating an increased risk of a particular adverse event, employees may suggest in e-mail or other documents that the company should conduct further studies or perform additional analyses that may not be feasible or, in fact, are not the best way to address the issue. Once these suggestions (however poorly thought out or preliminary) are documented in an e-mail, plaintiffs’ lawyers will use this evidence to suggest that not only was the company aware of the potential safety risk, but it conceived of ways to address it and then took no action to do so. In other words, the question becomes not what a company knew, but what it might have known if it had simply done more.

One way to mitigate this risk is to educate employees about how their conduct may be viewed in hindsight by plaintiffs’ lawyers. Experienced defense lawyers familiar with plaintiffs’ lawyers’ methods can provide advice to employees to sensitize them to these pitfalls and suggests ways in which they can reframe their critiques of the scientific evidence so as to limit the possible risk of litigation.

In conclusion, there are a number of steps that even a small biotech company can undertake to mitigate the risk of personal injury litigation. The first step is being aware of the risk and thoughtful about the ways to mitigate it. 

Matt Holian ([email protected]) is the co-chair of the U.S. life sciences sector at DLA Piper. Jessica Wilson ([email protected]) is an associate at DLA Piper. 


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