Teresa Mercadal December 18 2013 Court orders Grünenthal Pharma SA to pay damages to thalidomide victims Bird & Bird LLP | Healthcare & Life Sciences - Spain Teresa Mercadal Healthcare & Life Sciences BackgroundCausal connectionGrünenthal Pharma SA's responsiblity for thalidomide in SpainVictims entitled to be compensatedOn November 19 2013 the Madrid First Instance Court No 90 issued a judgment condemning Grünenthal Pharma SA, the Spanish subsidiary of German group Grünenthal, to pay damages to some of the Spanish alleged victims of thalidomide.Grünenthal Pharma SA is the successor of Medinsa, which marketed thalidomide in Spain. Thus, where this update refers to the selling of thalidomide in Spain by Grünenthal Pharma SA, it is referring to Medinsa.BackgroundThe judgment originated in a claim issued on February 17 2012 by the Association of Thalidomide Victims in Spain (AVITE). Laboratories Grünenthal started selling thalidomide in 1957 as a tranquiliser. The medicine could be used without a doctor's prescription and was also used by pregnant women to tackle pregnancy-related discomfort and nausea. Although the medicine was described as harmless, in 1959 it was discovered that many deformities and other health problems presented in newborns were due to the use of thalidomide by their mothers during a specific period of the pregnancy. Many of the affected persons died and others live or lived with difficulties.According to the judgment, it was proven that Grünenthal Pharma SA, after becoming aware of the side effects of thalidomide, decided not to inform Spanish doctors of the reason for the interruption of thalidomide sales and to provide only partial information to its external agents – even though the parent company expressly said to its subsidiaries that the external agents should have detailed information regarding the problem in order to answer questions from doctors accurately. The withdrawal of thalidomide in Spain was ordered after it had been withdrawn in other countries (eg, Germany.)A criminal procedure was initiated against Grünenthal in Germany, resulting in a judgment on December 18 1970.(1) Grünenthal was found not to be criminally liable, but had previously agreed to pay damages to the victims. In 1971 Grünenthal and the German government created the Contergan Foundation, and Grünenthal continues to pay pensions to victims through this foundation. A small number of Spanish victims are recipients of pensions from the foundation.In 2010 some of the Spanish victims received compensation, described as supportive assistance, from the Spanish government. This was regulated through Royal Decree 1006/2010.(2) The compensation depended on the degree of disability and was a one-off payment of between €30,000 and €100,000. To receive the compensation, the link between the disability and thalidomide had to be certified by the Instituto de Salud Carlos III.The Madrid court's judgment of November 19 2013 identified victims of thalidomide to which Grünenthal Pharma SA should pay damages as only the persons who had received compensation from the Spanish government under Royal Decree 1006/2010 and who do not received a pension from the Contergan Foundation. In particular, the judgment ordered Grünenthal Pharma SA to pay them compensation of €20,000 per degree of disability plus interest from the filing of the claim (incremented in two points from November 19 2013).This update examines the reasoning of the judgment.Causal connectionNo need for specific evidence due to notoriety and study of thalidomide effects during pregnancyAVITE filed no expert reports proving the link between its members' disabilities and thalidomide. However, the court considered that "[t]he notoriety of the fact and the thorough study that has been done on the phenomenon over the last 50 years exempt the plaintiff to prove the harmful effects of thalidomide and the harmful consequences of their intake by pregnant women".Mere compliance of administrative and labour rules does not negate liabilityFollowing the doctrine of the Supreme Court, the judgment noted that mere compliance with the relevant administrative and labour rules does not exempt the laboratories from civil responsibility with regard to the harm caused by the medicines that they offer.Today, strict pharmacovigilance rules are imposed on laboratories. The legislation was not so strict for laboratories 50 years ago but, as stated by the first-instance court, the laboratories were responsible for damage caused by their medicines, even though they had complied with administrative and labour legislation.The court highlighted that Grünenthal Pharma SA had filed no evidence to prove that the manufacturer had complied with scientific requirements and current knowledge.Value of Grünenthal's public assumption of responsibilityThe judgment considered that Grünenthal's public assumption of responsibility for the manufacture, distribution and consumption of thalidomide prevented Grünenthal Pharma SA from alleging that Grünenthal had a duty of diligence regarding the medicine.Grünenthal Pharma SA's responsiblity for thalidomide in SpainAVITE filed the claim against Grünenthal as a group. Grünenthal Pharma SA was the only company of the group which answered to the claim, and it answered only in its name. The judgment explained that there was no proof regarding either the judicial personality of the group or the identification of each company included on it. Therefore, Grünenthal Pharma SA was the only company considered to be a defendant in the judgment.Grünenthal Pharma SA argued that its predecessor, Medinsa, was only a retailer of thalidomide in Spain and was not the sole retailer of the medicine in Spain. The judgment held that it was proven that Medinsa was a subsidiary of Grünenthal in Spain, so it should assume responsibility to the customers of products that it commercialised in Spain. Furthermore, it was proven that Medinsa decided not to inform Spanish doctors of the reason for the interruption of thalidomide sales and to provide only partial information to its external agents. Moreover, the information leaflet expressly stated that the medicine was harmless, which led to customer expectations. In this regard, the judgment held that Medinsa, now Grünenthal Pharma SA, was responsible for the information that was provided to customers of the marketed product.Victims entitled to be compensatedThe judgment identified victims of thalidomide to which Grünenthal Pharma SA should pay damages as only those persons who had received compensation from the Spanish government under Royal Decree 1006/2010 and those who receive pensions from the Contergan Foundation. This implies that only a small number of people who do not already receive a pension from Grünenthal Pharma SA will benefit from compensation, according to the first-instance judgment. AVITE had claimed compensations for 186 persons.(3)The judgment criticised the fact that AVITE had filed no evidence regarding the persons who received government compensation, but decided to admit the filing of each administrative resolution granting their compensation at the time of the judgment's execution.AVITE also asked the court to order Grünenthal Pharma SA to compensate all of AVITE's associates recognised as victims of thalidomide through an administrative resolution or a judgment. The court considered that there was an error in AVITE's request regarding its associates who had not received compensation from the government. In particular, the judgment rejected the compensation regarding such people because AVITE had not individualised the damage that each person had suffered, and this was factually possible. The judgment referred to the lack of evidence filed by AVITE in this regard, such as a medical report or administrative rulings recognising the level of disability.The decision is not yet final, as the parties may appeal within 20 days of receiving notification of the judgment.For further information on this topic please contact Teresa Mercadal Menchaca at Bird & Bird by telephone (+34 91 790 6000), fax (+34 91 790 6011) or email ([email protected]). The Bird & Bird website can be accessed at www.twobirds.com.Endnotes(1) A Spanish translation is available at www.avite.org/archivos/sentencia_contergan.pdf.(2) See www.boe.es/diario_boe/txt.php?id=BOE-A-2010-12626.(3) "First sentence in Spain for thalidomide malformations", El Pais, November 20 2013.