The ranitidine case: a test for the new class action?

On September 20, 2019, the Italian Medicines Agency (AIFA) ordered the withdrawal of several batches of medicine containing Ranitidine, which is produced by the pharmaceutical laboratory SARACA LABORATORIES LTD in India. On September 13, the European Medicines Agency (EMA) had already requested that AIFA run some tests on medicines containing Ranitidine. As a result, the presence of a substance called N-nitrosodimethylamine (NDMA), which is potentially carcinogenic to human-beings, was discovered in some of the batches. Consequently, pursuant to EMA’s directives, AIFA ordered the withdrawal, and prohibited the use of, all medicines containing Ranitidine, until new tests were conducted. Ranitidine is a substance that is widely used and commercialized, even as a self-medication remedy. Its action inhibits heartburn and is a common treatment for ulcers.

It is no wonder, then, that the AIFA decision had significant media coverage and that the question of the potential growth in the number of legal actions that could follow, has already been raised. However, this will probably not occur.

Why AIFA took urgent measures

As was expressly stated by AIFA itself, both AIFA and EMA acted in compliance with the precautionary principle. The principle operates in administrative law (it is also a cornerstone of environmental law) and, applied to medicines, it aims to minimize risks against patient’s health by means of prevention.

The rationale behind such a cautious approach can be better appreciated in cases where this principle has not been observed. Not long ago, on September 23 this year, a major criminal trial started in France in connection with the Mediator scandal. Apart from criminal issues, it involves around 2,600 civil parties who brought their own civil actions against a French pharma firm and the French medicine safety agency (ANSM). The dispute arises from the commercialization of a medicine, the Mediator, that caused, according to the French Health Ministry, the death of around 500 people (although unofficial statistics estimate around 2,000 people died). In that case, the medicine was undisturbedly traded for decades, though its harmfulness was allegedly well known. Had the authorities followed the precautionary approach and immediately ordered the withdrawal of the medicine, these numbers would probably not be so overwhelming.

To return to the Ranitidine case, AIFA and EMA’s prompt intervention will most probably – and hopefully – prevent the onset of medical problems for Ranitidine’s consumers and, hence, in the absence of any actual damage, the case will not result in any court proceedings, or even a class action. Indeed, pursuant to the newly introduced Law no. 31/2019 (reforming Italian class action)^[1], damage must have occurred in order for a class action to be started.

The main features of the “new class action”

The goal of the new Law is indeed to increase the use of class actions by broadening the range of parties who are entitled to file them and by simplifying the process.

With reference to the first profile, the new Law provides that not only consumers, but even non-profit associations and organizations (registered on an ad hoc list) will have legal standing. In addition, class actions will be pursuable in all tort law liability scenarios and not – as was the case under the old rules – exclusively for specific cases of tort law liability.

As to the procedural aspects, it is indisputable that the success of the new Law will mainly depend on its ability to improve the length and the effectiveness of the procedure. To this end, the Law provides that class actions will only be presented before the specialized section for corporate matters, and the proceedings will be regulated as summary proceedings on the merits (since these are considered to be faster and more flexible than ordinary proceedings). However, the summary proceedings will still involve three steps: (i) the assessment of the admissibility of the class action (which will be deemed inadmissible if the claim is plainly groundless, the individual rights are not homogeneous, there is a conflict of interest, and the petitioner seems to be unable to adequately represent the individual homogeneous rights); (ii) the analysis of the merit; and (iii) the liquidation of damages.

Finally, adherents to the class action will also have the opportunity to opt-in to the proceedings after the final decision of the court that establishes the defendant’s liability. This is a significant change to the old rules, under which opting-in was possible until the issuance of the order admitting the action, but not at a later stage. This novelty – which is undoubtedly an incentive to join class actions – is a matter of concern for companies that are potential defendants in the proceedings, since the actual size of the class action and the impact of the relevant court’s decision on the company’s revenue cannot be quantified in advance.

The past and the future of class actions in the medical field in Italy

Under the previous regulation, Italian courts did not face many class actions. Among the few available precedents, however, one of the most famous concerns the medical field. The reference is to the Voden Medical Case: a ‘flu’-test had been advertised as being nearly faultless; once the consumers learnt its actual degree of accuracy was not as high as had been promised, they started a class action. Although the case resulted in one of those few in which a refund was actually ordered, only one consumer was awarded a mere €14,50 (i.e., the price of a sample of the test).

At present it is difficult to predict whether the statistics will change after Law no. 31/2019 comes into force in April 2020 (several doubts on the efficiency and convenience of its procedural innovations have already been raised). However, the pharmaceutical sector is certainly one of those which, in the near future, may be affected by the potential wider recourse to class actions that the recent reform aims to encourage.

In any event, due to AIFA and EMA’s farseeing course of action, it will not be the Ranitidine case that puts the new Law to the test.

[1] Law no. 31 of April 12, 2019 (“Provisions on class actions”) will come into force only from April 19, 2020. Until that date, Section 140 bis of the Consumer Code will continue to regulate the matter. In any case, pursuant to both provisions, damage must occur in order to start a class action.