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U.S. court rejects J&J bankruptcy strategy for thousands of talc lawsuits

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Jan 30 (Reuters) – A U.S. appeals court on Monday shot down Johnson & Johnson’s (JNJ.N) attempt to offload tens of thousands of lawsuits over its talc products into bankruptcy court. The ruling marked the first major repudiation of an emerging legal strategy with the potential to upend U.S. corporate liability law.

J&J is among four major companies that have filed so-called Texas two-step bankruptcies to avoid potentially massive lawsuit exposure. The tactic involves creating a subsidiary to absorb the liabilities and to immediately file for Chapter 11.

The court ruled the healthcare conglomerate improperly placed its subsidiary into bankruptcy even though it faced no financial distress. J&J’s two-step sought to halt more than 38,000 lawsuits from plaintiffs alleging the company’s baby powder and other talc products caused cancer. The appeals court ruling revives those lawsuits.

Reuters last year detailed the secret planning of Texas two-steps by Johnson & Johnson and other major firms in a series of reports exploring corporate attempts to evade lawsuits through bankruptcies.

Monday’s decision by the U.S. 3rd Circuit Court of Appeals in Philadelphia dismissed the bankruptcy filed by the J&J subsidiary in 2021. Before the filing, J&J had faced costs of $3.5 billion in verdicts and settlements.

J&J shares closed down 3.7% – the biggest one-day percentage decline in two years. The company said in a statement that it would challenge the ruling and that its talc products are safe.

Plaintiffs attorneys and some legal experts have argued the two-step could set a dangerous precedent, providing a blueprint for any corporation to easily avoid undesirable litigation. The appeals court decision could force companies considering the strategy to more carefully consider its risks, two legal experts said.

“It is a push back on the notion that any company anywhere can use the same tactic to get rid of their mass tort liability,” said Lindsey Simon, a professor at University of Georgia School of Law.

Bankruptcy filings typically suspend litigation in trial courts, forcing plaintiffs into often time-consuming settlement negotiations while leaving them unable to pursue their cases in the courts where they originally sued.

The 3rd Circuit ruling does not directly impact three other Texas two-step bankruptcies, filed by subsidiaries of Koch Industries-owned Georgia Pacific, global construction giant Saint-Gobain(SGOB.PA), and Trane Technologies (2IS.F). Those cases fall under the jurisdiction of the 4th Circuit appeals court. 3M (MMM.N) attempted a similar maneuver, which is currently pending in the 7th Circuit.

Those companies did not comment on the 3rd Circuit ruling or did not immediately respond to inquiries. All have previously defended the bankruptcies as the best way to fairly compensate claimants. Plaintiffs’ attorneys have countered that the Texas two-step is an improper manipulation of the bankruptcy system. The strategy uses a Texas law to split an existing company in two, creating the new subsidiary meant to shoulder the lawsuits.

New Jersey-based Johnson & Johnson, valued at more than $400 billion, said its subsidiary’s bankruptcy was initiated in good faith. J&J initially pledged $2 billion to the subsidiary to resolve talc claims and entered into an agreement to fund an eventual settlement approved by a bankruptcy judge.

“Resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders,” J&J said.

A three-judge panel on the appeals court rejected J&J’s argument, finding the company’s subsidiary, LTL Management, was created solely to file for Chapter 11 protection but had no legitimate need for it. Only a debtor in financial distress can seek bankruptcy, the panel ruled. The judges pointed out that J&J assured that it would give LTL plenty of money to pay talc claimants.

“Good intentions – such as to protect the J&J brand or comprehensively resolve litigation – do not suffice alone,” the judges said in a 56-page opinion. “LTL, at the time of its filing, was highly solvent with access to cash to meet comfortably its liabilities.”

‘PROJECT PLATO’

The decision could force J&J to fight talc lawsuits for years in trial courts. The company has a mixed record fighting the suits so far. While the firm was hit with major judgments in some cases before filing bankruptcy, more than 1,500 talc lawsuits have been dismissed and the majority of cases that have gone to trial have resulted in verdicts favoring J&J, judgments for the company on appeal, or mistrials, according to its subsidiary’s court filings.

A December 2018 Reuters investigation revealed that J&J officials knew for decades about tests showing that the company’s talc sometimes contained traces of carcinogenic asbestos but kept that information from regulators and the public. J&J has said its talc does not contain asbestos and does not cause cancer.

Facing unrelenting litigation, J&J enlisted law firm Jones Day, which had helped other companies execute Texas two-step bankruptcies to address asbestos-related lawsuits.

J&J’s effort, as Reuters reported last year, was internally dubbed “Project Plato,” and employees working on it signed confidentiality agreements. A company lawyer warned them to tell no one, including their spouses, about the plan.

Jones Day did not immediately respond to a request for comment.

The Texas two-step has garnered criticism from Democratic lawmakers in Washington, and inspired proposed legislation that would severely restrict the practice.

Senator Sheldon Whitehouse, a Democrat from Rhode Island, cheered Monday’s appeals court decision. Whitehouse chaired the first congressional hearing scrutinizing two-step bankruptcies in February of last year.

“Bankruptcy is meant to give honest debtors in unfortunate circumstances a fresh start,” he said, not to allow “large, highly profitable corporations” to avoid accountability for wrongdoing with a legal “shell game.”

Reporting by Tom Hals in Wilmington, Delaware; Mike Spector in New York; and Dan Levine in San Francisco; additional reporting by Dietrich Knauth and Chuck Mikolajczak in New York; editing by Bill Berkrot and Brian Thevenot

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Tom Hals

Thomson Reuters

Award-winning reporter with more than two decades of experience in international news, focusing on high-stakes legal battles over everything from government policy to corporate dealmaking.

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Health

U.S. CDC still looking at potential stroke risk from Pfizer bivalent COVID shot

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Jan 26 (Reuters) – New data from one U.S. Centers for Disease Control and Prevention (CDC) database shows a possible stroke risk link for older adults who received an updated Pfizer (PFE.N)/BioNTech (22UAy.DE) COVID-19 booster shot, but the signal is weaker than what the agency had flagged earlier in January, health officials said on Thursday.

U.S. Food and Drug Administration officials said they had not detected a link between the shots and strokes in two other safety monitoring databases.

The new data was presented at a meeting of outside experts that advise the FDA on vaccine policy.

Earlier this month, U.S. health officials said they had detected the possible link to ischemic strokes in people over age 65 who received the newer booster shots in its Vaccine Safety Datalink (VSD) database. They said at the time it was very unlikely to represent a true clinical risk.

Dr. Nicola Klein of healthcare company Kaiser Permanente, which maintains VSD data for the CDC, said the rate of strokes observed in the database had slowed in recent weeks, but the signal was still statistically significant, meaning likely not by chance.

Most of the confirmed cases had also received a flu vaccine at the same time, which might be a factor, she said.

FDA scientist Richard Forshee said the agency plans to study whether there is any increased risk of stroke from receiving the two shots at the same time.

Both agencies still recommend older adults receive the booster shots, now tailored to target Omicron variants as well as the original coronavirus.

Dr. Walid Gellad, professor of medicine at University of Pittsburgh, said the issue required further investigation.

“Sometimes signals are not clear,” Gellad said in an email. “It makes sense to look into it more, and it doesn’t make sense to change practice given the known benefits (of getting the booster) in this age group.”

(This story has been corrected to fix the name to Nicola from Nicole in paragraph 5)

Reporting by Michael Erman; Editing by Bill Berkrot

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Eisai, Biogen receives U.S. FDA approval for Alzheimer’s drug, applies for full approval

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Jan 7 (Reuters) – The U.S. Food and Drug Administration on Friday approved the Alzheimer’s drug lecanemab developed by Eisai Co Ltd (4523.T) and Biogen Inc (BIIB.O) for patients in the earliest stages of the mind-wasting disease.

Eisai and Biogen said on Saturday the Japanese drugmaker had applied for full FDA approval of the drug.

The drug, to be sold under the brand Leqembi, belongs to a class of treatments that aims to slow the advance of the neurodegenerative disease by removing sticky clumps of the toxic protein beta amyloid from the brain.

Nearly all previous experimental drugs using the same approach had failed.

“Today’s news is incredibly important,” said Dr. Howard Fillit, chief science officer of the Alzheimer’s Drug Discovery Foundation. “Our years of research into what is arguably the most complex disease humans face is paying off and it gives us hope that we can make Alzheimer’s not just treatable, but preventable.”

Eisai said the drug would launch at an annual price of $26,500. Biogen shares, which had been halted, were up 3% at $279.40.

The Japanese company said it also plans to apply for marketing authorization for Leqembi in Japan and the European Union by the end of its business year on March 31.

Eisai estimated the number of U.S. patients eligible for the drug would reach around 100,000 within three years, increasing gradually from there over the medium to long term.

Dr. Erik Musiek, A Washington University neurologist at Barnes-Jewish Hospital, said he was “pleasantly surprised” by the drug’s price.

“Considering the marketplace and the fact that we have no other good disease-modifying treatments, I think it’s in the ballpark of what I would expect,” he said.

Initial patient access will be limited by a number of factors including reimbursement restrictions by Medicare, the U.S. government insurance program for Americans aged 65 and older who represent some 90% of individuals likely to be eligible for Leqembi.

“Without Centers for Medicare & Medicaid Services (CMS) and insurance coverage … access for those who could benefit from the newly-approved treatment will only be available to those who can pay out-of-pocket,” the Alzheimer’s Association said in a statement.

Leqembi was approved under the FDA’s accelerated review process, an expedited pathway that speeds access to a drug based on its impact on underlying disease-related biomarkers believed to predict a clinical benefit.

“This treatment option is the latest therapy to target and affect the underlying disease process of Alzheimer’s instead of only treating the symptoms of the disease,” FDA neuroscience official Billy Dunn said in a statement.

CMS said on Friday that current coverage restrictions for drugs approved under the accelerated pathway could be reconsidered based on its ongoing review of available information.

If the drug receives traditional FDA approval, CMS said it would provide broader coverage. Eisai officials have said the company plans to submit data from a recent successful clinical trial in 1,800 patients as the basis for a full standard review of Leqembi.

The CMS decision was largely in response to a previous Alzheimer’s treatment from Eisai and Biogen. Aducanumab, sold under the brand name Aduhelm, won accelerated approval in 2021 with little evidence that the drug slowed cognitive decline and despite objections by the FDA’s outside experts.

Biogen initially priced Aduhelm at $56,000 per year before cutting the price in half. With limited acceptance and insurance coverage, sales were only $4.5 million in the first nine months of 2022.

Lecanemab is intended for patients with mild cognitive impairment or early Alzheimer’s dementia, a population that doctors believe represents a small segment of the estimated 6 million Americans currently living with the memory-robbing illness.

To receive the treatment, patients will need to undergo testing to show they have amyloid deposits in their brain – either through brain imaging or a spinal tap. They will also need to undergo periodic MRI scans to monitor for brain swelling, a potentially serious side effect associated with this type of drug.

The medicine’s label says doctors should exercise caution if lecanemab patients are given blood clot preventers. This could be a safety risk, according to an autopsy analysis published this week of a lecanemab patient who had a stroke and later died.

In the large trial of lecanemab, which is given by infusion, the drug slowed the rate of cognitive decline in patients with early Alzheimer’s by 27% compared to a placebo. Nearly 13% of patients treated with Leqembi in the trial had brain swelling.

Dr. Babak Tousi, a neuro-geriatrician at the Cleveland Clinic, said the approval will make a “big difference” in the field because it is based on biomarkers rather than just symptoms.

“It’s going to change how we make a diagnosis for Alzheimer’s disease, with more accuracy,” he said.

Tousi acknowledged that the benefit of the drug will likely be modest. “Still, it is a benefit that we were not able to achieve” before this approval.

Reporting by Deena Beasley in Los Angeles and Bhanvi Satija in Bengaluru, additional reporting Jaiveer Shekhawat; Editing by Bill Berkrot, David Gregorio and William Mallard

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Congressional report: U.S. FDA broke own protocols in approving Biogen Alzheimer’s drug

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WASHINGTON, Dec 29 (Reuters) – The U.S. Food and Drug Administration failed to adhere to its own guidance and internal practices during the approval process for Biogen’s (BIIB.O) Alzheimer’s drug Aduhelm, which was “rife with irregularities,” a congressional report showed on Thursday.

The FDA’s interactions with Biogen were “atypical” and did not follow the agency’s documentation protocol, according to a staff report on the findings of an 18-month investigation conducted by two House of Representatives committees into the drug’s regulatory review, approval, pricing, and marketing.

The FDA approved Aduhelm in June 2021 under an accelerated approval pathway over the objections of its panel of outside advisers, who did not believe data definitively proved the drug’s benefit to patients.

It was authorized based on evidence that it could reduce brain plaques, a likely contributor to Alzheimer’s, rather than proof that it slowed progression of the lethal mind-wasting disease.

The Medicare program restricted its coverage, which has led to severely limited use of the Biogen drug.

Biogen set an “unjustifiably high” price by initially setting Aduhelm’s price at $56,000 per year despite a lack of demonstrated clinical benefit in a broad patient population, the report said, adding that the company’s own internal projections showed it expected the drug to be a burden to Medicare and costly to patients.

“The findings in this report raise serious concerns about FDA’s lapses in protocol and Biogen’s disregard of efficacy and access in the approval process for Aduhelm,” the report, prepared by the staffs of the House Committee on Oversight and Reform and House Committee on Energy and Commerce, concluded.

The agency should ensure that all substantive interactions with drug sponsors are properly memorialized, establish a protocol for joint briefing documents with drug sponsors, and update its industry guidance on the developments and review of new Alzheimer’s Drugs, the report recommended.

Biogen and other drugmakers should communicate to the FDA any concerns over safety and efficacy to the FDA as well as take value and patient access into consideration when setting prices, the report said.

An FDA spokesperson said the FDA’s decision to approve Aduhelm was based on scientific evaluation of the data contained in the application.

He pointed to the FDA’s internal review finding its staff’s interactions with Biogen appropriate.

“It is the agency’s job to frequently interact with companies in order to ensure that we have adequate information to inform our regulatory decision-making. We will continue to do so, as it is in the best interest of patients,” he said, adding that the agency will continue to use the accelerated approval pathway whenever appropriate.

The FDA has already begun implementing some of the report’s recommendations, the spokesperson said.

“Biogen stands by the integrity of the actions we have taken,” the Cambridge, Mass.-based biotech company said in an emailed statement.

“As stated in the congressional report, an (FDA) review concluded that, ‘There is no evidence that these interactions with the sponsor in advance of filing were anything but appropriate in this situation,'” Biogen said.

Documents obtained by the committees show that FDA staff and Biogen held at least 115 meetings, calls, and email exchanges over a 12-month period starting July 2019.

The total number of meetings is unknown because the FDA failed to keep a clear record of informal meetings and interactions between its staff and Biogen representatives. The investigation identified an additional 66 calls and email exchanges that were not memorialized.

The FDA inappropriately collaborated with Biogen on a joint briefing document for the Peripheral and Central Nervous System (PCNS) Advisory Committee, the report said, with FDA and Biogen staff working closely for months ahead of the Nov. 6, 2020 meeting to prepare the document, which failed to adequately represent differing views within the agency.

“Using a joint briefing document afforded Biogen advance insight into FDA’s responses and direct guidance from the agency in drafting the company’s own sections. For example, in an exchange of the draft briefing document on October 9, 2020, FDA staff asked Biogen to move a paragraph drafted by the agency into Biogen’s section of the memorandum—a change reflected when the document was finalized,” the report made public to media organizations said.

When none of the advisory panel members voted to approve Aduhelm, the FDA pivoted to using its accelerated approval pathway – typically used for rare diseases or small patient populations that lack access to effective treatments – despite having considered the drug under the traditional approval pathway for nine months, the report said.

It did so on a substantially abbreviated timeline, approving it after three weeks of review, and for a broad label indication of “people with Alzheimer’s disease” that was unsupported by clinical data, the report said.

Internal documents obtained by the investigation showed that Biogen accepted the indication despite its own reservations over the lack of evidence Aduhelm could help patients at disease stages outside of its clinical trials.

Reporting by Ahmed Aboulenein; editing by Diane Craft

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Ahmed Aboulenein

Thomson Reuters

Washington-based correspondent covering U.S. healthcare and pharmaceutical policy with a focus on the Department of Health and Human Services and the agencies it oversees such as the Food and Drug Administration, previously based in Iraq and Egypt.

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Health

Measles now an imminent global threat due to pandemic, say WHO and CDC

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Nov 23 (Reuters) – There is now an imminent threat of measles spreading in various regions globally, as COVID-19 led to a steady decline in vaccination coverage and weakened surveillance of the disease, the World Health Organization (WHO) and the U.S. public health agency said on Wednesday.

Measles is one of the most contagious human viruses and is almost entirely preventable through vaccination. However, it requires 95% vaccine coverage to prevent outbreaks among populations.

A record high of nearly 40 million children missed a measles vaccine dose in 2021 due to hurdles created by the COVID pandemic, the WHO and the U.S. Centers for Disease Control and Prevention (CDC) said in a joint report.

While measles cases have not yet gone up dramatically compared to previous years, now is the time to act, the WHO’s measles lead, Patrick O’Connor, told Reuters.

“We are at a crossroads,” he said on Tuesday. “It is going to be a very challenging 12-24 months trying to mitigate this.”

A combination of factors like lingering social distancing measures and cyclical nature of measles may explain why there has not yet been an explosion of cases despite the widening immunity gaps, but that could change quickly, said O’Connor, pointing out the highly contagious nature of the disease.

The WHO has already seen an increase of large disruptive outbreaks since the start of 2022, rising from 19 to almost 30 by September, O’Connor said, adding that he was particularly worried about parts of sub-Saharan Africa.

Reporting by Raghav Mahobe in Bengaluru and Jennifer Rigby in London; Editing by Maju Samuel

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Health

Exclusive: Medical journals broaden inquiry into potential heart research misconduct

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WASHINGTON, Sept 13 (Reuters) – Three medical journals recently launched independent investigations of possible data manipulation in heart studies led by Temple University researchers, Reuters has learned, adding new scrutiny to a misconduct inquiry by the university and the U.S. government.

The Journal of Molecular and Cellular Cardiology and the Journal of Biological Chemistry are investigating five papers authored by Temple scientists, the journals told Reuters.

A third journal owned by the Journal of American College of Cardiology (JACC), last month retracted a paper by Temple researchers on its website after determining that there was evidence of data manipulation. The retracted paper had originally concluded that the widely-used blood thinner, Xarelto, could have a healing effect on hearts.

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“We are committed to preserving the integrity of the scholarly record,” Elsevier, which owns the Journal of Molecular and Cellular Cardiology and publishes the two other journals on behalf of medical societies, said in a statement to Reuters.

Philadelphia-based Temple began its own inquiry in September 2020 at the request of the U.S. Office of Research Integrity (ORI), which oversees misconduct investigations into federally funded research, according to a lawsuit filed by one of the researchers.

The Temple investigation involves 15 papers published between 2008 and 2020 and supported by grants from the U.S. National Institutes of Health, according to the court records. Nine of the studies were supervised by Abdel Karim Sabri, a professor at Temple’s Cardiovascular Research Center.

His colleague Steven Houser, senior associate dean of research at Temple and former president of the American Heart Association, is listed as an author on five studies supervised by Sabri. Houser was also involved in four additional papers under scrutiny.

Houser sued in federal court last year to stop the university’s inquiry, saying Temple sought to discredit him and steal his discoveries.

Houser “has not engaged in scientific or other misconduct, has not falsified data, and has not participated in any bad acts with any other scientist or academic,” Houser’s lawyer, Christopher Ezold, said in a statement to Reuters. Houser helped review and edit the text portions of the Sabri-supervised studies and did not provide or analyze the data, Ezold said.

A Temple spokesperson said the university is “aware of the allegations and is reviewing them.” He would not comment further or discuss interactions with medical journals. ORI also declined comment. Sabri and Houser did not respond to questions.

Several research experts said that Houser, as one of multiple co-authors, cannot be assumed to be involved in potential misconduct. The ultimate responsibility for a study usually lies with the supervising scientist and any researcher who contributed the specific data under scrutiny.

EXPRESSION OF CONCERN

The probes highlight concerns over potential fabrication in medical research and the federal funds supporting it. A Reuters investigation published in June found that the NIH spent hundreds of millions of dollars on heart stem cell research despite fraud allegations against several leading scientists in the field.

The Temple inquiry also reveals a lack of consensus within the scientific community over how such concerns should be communicated, to prevent potentially bad science from informing future work and funding, according to half a dozen research experts interviewed by Reuters.

Temple did not notify the medical journals that it was conducting an inquiry at the request of the U.S. government agency, the journals told Reuters. They said that they began their inquiries independently.

Xarelto’s manufacturer, the Janssen Pharmaceuticals division of Johnson & Johnson (JNJ.N), also told Reuters the supervising researchers at Temple did not notify the company about the investigation or the retraction by the JACC journal, though two of its employees were listed as co-authors on the paper. Janssen said their contribution to the paper was not questioned in the retraction.

In some misconduct inquiries, universities have notified scientific journals that an investigation is underway. That has allowed journals to issue an “expression of concern” about specific studies, telling readers that there may be reason to question the results. If there is a finding of data manipulation, the journals would be expected to retract the paper.

None of the journals that published the papers under scrutiny by Temple have issued expressions of concern. They would not comment to Reuters as to why they decided not to.

“It’s murky because of a lack of resources for these investigations, there’s no standardization worldwide,” said Arthur Caplan, head of medical ethics at New York University’s Grossman School of Medicine.

Other journals are not scrutinizing the Temple researchers’ work. Five papers flagged by ORI were published in the AHA journals Circulation, Circulation: Heart Failure, and Circulation Research, where Houser is a senior advisory editor.

The AHA said it had not been notified by the U.S. agency or by Temple about their inquiry, and that it does not view itself as responsible for investigating further. The AHA said it had issued a correction of data on one paper at the authors’ request. The paper was the sole study under scrutiny that listed Houser as supervising researcher.

“The American Heart Association is not a regulatory body or agency,” the AHA said in a statement to Reuters.

FEDERAL FUNDING

Researchers and their institutions can be forced to return federal funding that supported work tainted by data manipulation.

Houser has received nearly $40 million in NIH funding and Sabri has received nearly $10 million since 2000, according to a Reuters analysis of NIH grants. Houser’s lawyer said that none of his NIH funding supported the papers supervised by Sabri.

The JACC journal said in its retraction of the Xarelto research that it launched its investigation after receiving a complaint from a reader. In response, the researchers issued a correction of some image data in the paper, which was supervised by Sabri and which listed Houser as an author.

However, the journal said that the correction raised further concerns, prompting it to hire an unidentified outside expert to review them.

According to the retraction notice, the expert evaluation found evidence of manipulation in seven images using a technique known as Western blot, which determines concentrations of a specific protein in cells or tissues under different experimental conditions. As a result, the journal said its ethics board voted to retract the paper.

NIH, ORI and Temple declined to comment on whether Temple would be required to return any federal funding of the work retracted by the JACC publication.

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Reporting by Marisa Taylor and Brad Heath; Editing by Michele Gershberg and Edward Tobin

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Brad Heath

Thomson Reuters

Washington-based reporter covering criminal justice, law and more and a graduate of Georgetown University Law Center and member of the Virginia bar.

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Business

3M combat earplug lawsuits to proceed, judge rules, despite bankruptcy case

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The logo of Down Jones Industrial Average stock market index listed company 3M is shown in Irvine, California April 13, 2016. REUTERS/Mike Blake

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Aug 26 (Reuters) – 3M Co must face more than 230,000 lawsuits accusing it of selling defective earplugs to the U.S. military, after a U.S. judge on Friday ruled that the bankruptcy of a subsidiary did not stop lawsuits against the non-bankrupt parent company.

Companies that file for bankruptcy typically receive an immediate reprieve from lawsuits, and 3M subsidiary Aearo Technologies LLC argued that extending those protections to 3M would buy Aearo time to address its debts and restructuring goals.

Aearo and 3M had argued that bankruptcy offered a faster and fairer way to compensate veterans who say that earplugs made by Aearo caused hearing loss.

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But bankruptcy Judge Jeffrey J. Graham in Indianapolis said that Aearo’s bankruptcy restructuring could proceed in parallel with the lawsuits.

While the “sheer size” of the consolidated litigation may have spurred 3M and Aearo to seek “additional leverage” through the bankruptcy proceedings, that did not create a legal need to protect 3M, Graham ruled.

Attorneys representing the veterans with hearing loss said they looked forward to continuing their lawsuits against 3M in other courts.

“Judge Graham’s decision is a complete rejection of 3M’s attempt to evade accountability and hide in bankruptcy,” plaintiff attorneys Bryan Aylstock and Christopher Seeger said in a statement.

A spokesman for 3M said it intended to appeal.

“Continuing to litigate these cases one-by-one over the coming years will not provide certainty or fairness for any party,” 3M spokesman Sean Lynch said.

3M subsidiary Aearo Technologies LLC filed for bankruptcy protection in Indiana on July 26, seeking to resolve lawsuits alleging that 3M’s Combat Arms Earplugs Version 2 (CAEv2) caused hearing loss.

Aearo will continue in the chapter 11 proceedings and 3M will continue to defend its position in the litigation, the company said in a statement late on Friday.

“3M continues to expect to complete the pending separation of its food safety business on the targeted closing date of September 1,” 3M added.

The lawsuits have been consolidated in federal court in Florida and have grown into the largest mass tort litigation in U.S. history. Aearo placed $1 billion in a trust to settle them and agreed to indemnify 3M for all liability related to CAEv2.

3M has denied liability, saying its earplugs offered protection to soldiers while allowing them to hear on the battlefield.

The Florida judge overseeing the earplug lawsuits, U.S. District Judge M. Casey Rodgers, has admonished 3M for “naked duplicity” in attempting to dump its liabilities into a bankrupt subsidiary.

3M and Aearo have in turn criticized Rodgers for allowing the consolidated litigation to balloon, pointing out that earplug cases now account for a whopping 30% of all cases pending in U.S. federal courts.

3M has lost 10 of the 16 cases that have gone to trial so far, with about $265 million being awarded in total to 13 plaintiffs.

3M’s stock price was down 12% Friday to $129.

Companies have in recent years increasingly used bankruptcy proceedings to protect non-bankrupt owners and affiliates from litigation, with Johnson & Johnson’s effort to offload lawsuits alleging that its talc-based baby powder caused cancer a recent example.

J&J has denied liability and said its talc-based baby powder is safe. The J&J affiliate’s bankruptcy case is under review, after cancer victims appealed a court ruling that blocked their lawsuits against J&J.

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Reporting by Dietrich Knauth; Additional reporting by Ann Maria Shibu in Bengaluru; Editing by Josie Kao, Alexia Garamfalvi and Rosalba O’Brien

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U.S. judge blocks Idaho abortion ban in emergencies; Texas restrictions allowed

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FILE PHOTO – Abortion rights protesters participate in nationwide demonstrations following the leaked Supreme Court opinion suggesting the possibility of overturning the Roe v. Wade abortion rights decision, in Houston, Texas, U.S., May 14, 2022. REUTERS/Callaghan O’Hare

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Aug 24 (Reuters) – A federal judge on Wednesday blocked Idaho from enforcing a ban on abortions when pregnant women require emergency care, a day after a judge in Texas ruled against President Joe Biden’s administration on the same issue.

The conflicting rulings came in two of the first lawsuits over Biden’s attempts to keep abortion legal after the conservative majority U.S. Supreme Court in June overturned the 1973 Roe v. Wade decision that legalized the procedure nationwide.

Legal experts said the dueling rulings in Idaho and Texas could, if upheld on appeal, force the Supreme Court to wade back into the debate.

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About half of U.S. states have or are expected to seek to ban or curtail abortions following Roe’s reversal. Those states include Idaho and Texas, which like 11 others adopted “trigger” laws banning abortion upon such a decision.

Abortion is already illegal in Texas under a separate, nearly century-old abortion ban that took effect after the U.S. Supreme Court’s decision. Idaho’s trigger ban takes effect on Thursday, the same day as in Texas and Tennessee.

In Idaho, U.S. District Judge B. Lynn Winmill agreed with the U.S. Department of Justice that the abortion ban taking effect Thursday conflicts with a federal law that ensures patients can receive emergency “stabilizing care.”

Winmill, who was appointed to the court by former Democratic President Bill Clinton, issued a preliminary injunction blocking Idaho from enforcing its ban to the extent it conflicts with federal law, citing the threat to patients.

“One cannot imagine the anxiety and fear (a pregnant woman) will experience if her doctors feel hobbled by an Idaho law that does not allow them to provide the medical care necessary to preserve her health and life,” Winmill wrote.

The Justice Department has said the federal Emergency Medical Treatment and Labor Act requires abortion care in emergency situations.

“Today’s decision by the District Court for the District of Idaho ensures that women in the State of Idaho can obtain the emergency medical treatment to which they are entitled under federal law,” U.S. Attorney General Merrick Garland said in a written statement.

“The Department of Justice will continue to use every tool at its disposal to defend the reproductive rights protected by federal law,” Garland said. The DOJ has said that it disagrees with the Texas ruling and is considering next legal steps.

U.S. District Judge James Wesley Hendrix ruled in the Texas case that the U.S. Department of Health and Human Services went too far by issuing guidance that the same federal law guaranteed abortion care.

Hendrix agreed with Texas Attorney General Ken Paxton, a Republican, that the guidance issued in July “discards the requirement to consider the welfare of unborn children when determining how to stabilize a pregnant woman.”

Hendrix, an appointee of former President Donald Trump, said the federal statute was silent as to what a doctor should do when there is a conflict between the health of the mother and the unborn child and that the Texas law “fills that void.”

Hendrix issued an injunction barring enforcement of the HHS guidance in Texas and against two groups of anti-abortion doctors who also challenged it, saying the Idaho case showed a risk the Biden administration might try to enforce it.

Hendrix declined to issue a nationwide injunction as Paxton wanted.

Appeals are expected in both cases and would be heard by separate appeals courts, one based in San Francisco with a reputation for leaning liberal and another in New Orleans known for conservative rulings.

Greer Donley, an assistant professor at the University of Pittsburgh Law School and expert on abortion law, said that if the conflicting rulings were upheld the U.S. Supreme Court may feel pressured to intervene.

“Without a federal right abortion, this is the type of legal chaos that most people were predicting would be happening,” she said.

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Reporting by Nate Raymond in Boston; Additional reporting by Dan Whitcomb in Los Angeles; Editing by Grant McCool and Christopher Cushing

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Nate Raymond

Thomson Reuters

Nate Raymond reports on the federal judiciary and litigation. He can be reached at nate.raymond@thomsonreuters.com.

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US

Fauci, face of U.S. COVID response, to step down from government posts

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  • Immunologist served as adviser to seven presidents
  • Fauci was vilified by Trump and Republican lawmakers
  • He faced death threats over pandemic policies

Aug 22 (Reuters) – Dr. Anthony Fauci, the top U.S. infectious disease official who became the face of America’s COVID-19 pandemic response under Presidents Donald Trump and Joe Biden, announced on Monday he is stepping down in December after 54 years of public service.

Fauci, whose efforts to fight the pandemic were applauded by many public health experts even as he was vilified by Trump and many Republicans, will leave his posts as chief medical adviser to Biden and director of the U.S. National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH). Fauci, 81, has headed NIAID since 1984.

The veteran immunologist has served as an adviser to seven U.S. presidents beginning with Republican Ronald Reagan, focusing on newly emerging and re-emerging infectious disease dangers including HIV/AIDS, Ebola, Zika, monkeypox and COVID-19.

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Fauci endured criticism from Trump and various conservatives and even death threats against him and his family from people who objected to safeguards such as vaccination, social distancing and masking that he advocated to try to limit the lethality of the COVID-19 pandemic. After defeating Trump in the 2020 election, Biden made Fauci his chief medical adviser.

“I definitely feel it was worth staying as long as I have. It is unfortunate, but it is a fact of life that we are living in a very, very divisive society right now,” Fauci told Reuters on Monday.

Fauci said he never considered resigning due to the threats against him.

“I don’t like the idea that I have to have armed federal agents with me. That’s not a happy feeling. It’s reality. And you’ve got to deal with reality,” Fauci said.

Republican lawmakers including fierce critic Rand Paul, with whom Fauci tangled during Senate hearings, vowed on Monday to investigate him if they gain control of either the House of Representatives or Senate in November’s congressional elections.

“As he leaves his position in the U.S. Government, I know the American people and the entire world will continue to benefit from Dr. Fauci’s expertise in whatever he does next,” Biden said in a statement. “The United States of America is stronger, more resilient and healthier because of him.”

Fauci signaled his impending departure last month, telling Reuters he would retire by the end of Biden’s first term, which runs to January 2025, and possibly earlier. read more

Top U.S. infectious disease official Dr. Anthony Fauci and U.S. President Joe Biden deliver an update on the Omicron variant at the White House in Washington, U.S., November 29, 2021. REUTERS/Kevin Lamarque/File Photo

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The United States leads the world in recorded COVID-19 deaths with more than one million. In the first months of the pandemic in 2020, Fauci helped lead scientific efforts to develop and test COVID-19 vaccines in record time and took part in regular televised White House briefings alongside Trump.

Fauci became a popular and trusted figure among many Americans as the United States faced lockdowns and rising numbers of COVID-19 deaths, even inspiring the sale of cookies and bobblehead dolls featuring his likeness.

However, Fauci drew the ire of Trump and many Republicans for cautioning against reopening the U.S. economy too quickly and risking increased infections and for opposing the use of unproven treatments such as the malaria drug hydroxychloroquine.

‘A DISASTER’

Democrats accused Trump of presiding over a disjointed response to the pandemic and of disregarding advice from public health experts including Fauci. Trump in October 2020, weeks before his re-election loss, called Fauci “a disaster” and complained that Americans were tired of hearing about the pandemic. Trump even made fun of Fauci’s off-target ceremonial first pitch at a Washington Nationals baseball game.

Fauci sometimes publicly contradicted Trump’s statements about the pandemic. Fauci said on Monday that while he respects the office of the presidency, he felt he had to speak out “when things were said that were outright untrue and quite misleading.”

“I didn’t take any great pleasure in that,” Fauci said.

Paul frequently attacked Fauci during Senate hearings on the pandemic. read more

Fauci has accused Paul of spreading misinformation. Paul on his website has accused Fauci of “lying about everything from masks to the contagiousness of the virus.” Fauci during one hearing noted that Paul placed fundraising appeals on his website next to a call to have him fired.

Fauci said staying on until December allows for a search for a new director of NIAID, an institute with an annual budget exceeding $6 billion, and the appointment of an acting chief. Fauci also said he wanted to remain to help address an expected autumn upswing in COVID-19 infections.

Fauci made clear that while he will be leaving government service, he will not be retiring. He said in the future he hopes to use his expertise to help inspire a new generation of doctors to pursue careers in public health, medicine and science.

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Reporting by Leroy Leo in Bengaluru and Julie Steenhuysen in Chicago; Additional reporting by Kanishka Singh in Washington; Editing by Will Dunham and Sriraj Kalluvila

Our Standards: The Thomson Reuters Trust Principles.

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Business

Bluebird’s $2.8 million gene therapy becomes most expensive drug after U.S. approval

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Signage is seen outside of the Food and Drug Administration (FDA) headquarters in White Oak, Maryland, U.S., August 29, 2020. REUTERS/Andrew Kelly/File Photo

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Aug 17 (Reuters) – The U.S. Food and Drug Administration on Wednesday approved bluebird bio’s (BLUE.O) gene therapy for patients with a rare disorder requiring regular blood transfusions, and the drugmaker priced it at a record $2.8 million.

The approval sent the company’s shares 8% higher and is for the treatment of beta-thalassemia, which causes an oxygen shortage in the body and often leads to liver and heart issues.

The sickest patients, estimated to be up to 1,500 in the United States, need blood transfusions every two to five weeks.

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The therapy, to be branded as Zynteglo, is expected to face some resistance from insurers due to its steep price, analysts say.

Gene therapies usually come with a high price tag as they are often curative and have faced hurdles in securing insurance coverage.

For instance, Novartis (NOVN.S) was in 2019 forced to offer discounts and work out “outcome-based” installments payments for its $2.1 million therapy Zolgensma after insurers balked at the drug’s price.

Bluebird has pitched Zynteglo as a potential one-time treatment that could do away with the need for transfusions, resulting in savings for patients over the long term.

The average cost of transfusions over the lifetime can be $6.4 million, Chief Operating Officer Tom Klima told Reuters before the approval. “We feel the prices we are considering still bring a significant value to patients.”

Bluebird has been in talks with insurers about a one-time payment option.

“Potentially, up to 80% of that payment will be reimbursed if a patient does not achieve transfusion independence, they (insurers) are very excited about that,” Klima said.

The FDA warned of a potential risk of blood cancer with the treatment but noted studies had no such cases.

Bluebird expects to start the treatment process for patients in the fourth quarter. No revenue is, however, expected from the therapy in 2022 as the treatment cycle would take an average of 70 to 90 days from initial cell collection to final transfusion.

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Reporting by Mrinalika Roy in Bengaluru; Editing by Aditya Soni

Our Standards: The Thomson Reuters Trust Principles.

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