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Accutane: A Case Study in Avoidance as a Risk Management Tool
July 2009 Risk Management Tip of the Month
By By Kevin Quinley CPCU, ARM AIC, AIM, ARe © 2009

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Stung by too many product liability lawsuits, drug giant Roche has decided to pull its teen acne drug Accutane off the U.S. market (see news story here).

Roche faces 5,000 product liability claims from plaintiffs who allege injuries from the drug. Recently, it has been hit with over $30 million in jury awards.

Risk management students or anyone studying the Insurance Institute’s ARM program know that avoidance is a draconian but legit corporate risk management tool. It means forgoing an activity due to the potential for loss. If I opt not to drive because I’ve had one too many glasses of red wine at a restaurant, that is avoidance.

In a commercial and corporate context, avoidance is a company deciding not to enter a line of business, an activity or to forgo a product due to the risk of loss. In some cases, companies practice avoidance before engaging in an activity. Some firms have considered entering the contraceptive market, but have been deterred by memories of Dalkon Shield and Copper-7 IUD litigation. Who can blame them?

Other firms, like Roche, may “get religion” as to avoidance in a more circuitous path, after learning the hard way about the costs and liabilities attached to certain activities or products.

I understand Roche’s decision, but must confess some mixed feelings from a personal standpoint. Years ago, one of my kids had a challenging case of adolescent acne. For him, Accutane was a godsend in keeping his complexion clear. That may sound like a small thing, but for a 16-year old adolescent, being pock-marked with acne is a HUGE deal. Still, I marveled at the controls that went along with my son taking Accutane – thorough warnings, parental informed consent signatures, literature and monthly blood tests at the doctor’s office. I understood why all this was being done but was relieved that my son had no apparent ill effects from the drug – only positives in keeping his skin clear.

Still, as the car TV ads say, “Your mileage may vary.” Not all patients sidestepped ill effects. Apparently some suffered inflammatory bowel disease, depression and some have alleged later birth defects. A kid in Tampa flew a private plane into a building, was killed and his family later blamed Accutane. Before girls get the drugs, they must take a pregnancy test. Roche warns of at least some of these potential perils in its product literature.

Roche’s withdrawal of Accutane from the market may not fully stanch the (financial) bleeding. Those 5000 suits will not disappear just because Roche takes Accutane off the market. They will go forward. In fact, personal injury lawyers may pursue them (and new) cases, reinvigorated and viewing Roche’s withdrawal as a concession of the drug’s alleged defect.

Like sharks, other plaintiff attorneys may smell blood in the water and pile on. “Hey, maybe we should start suing the generic makers of Accutane-like drugs too!” ATLA – um, excuse me, AAJ – to the CHARGE!

So in one sense, Roche is in a “damned if I do – damned if I don’t” predicament. If it keeps Accutane on the market, it invites moiré suits and financial hemorrhage. If it removes it from the market, it bolsters the perception that Accutane is dangerous and may thereby invite future litigation. What to do?

Perhaps in risk management as in life, no good deed goes unpunished.

Kevin Quinley CPCU, ARM is a risk management author, trainer and speaker who lives in the Washington D.C. area. You can reach him at kquinley@cox.net or at his website, KevinQuinley.com

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