Speaker 1: A coalition representing the biggest private equity and hedge funds
Speaker 1: is suing the Securities and Exchange Commission oversweeping new rules.
Speaker 1: The rules will require private funds to detail quarterly fees
Speaker 1: and expenses to investors and to perform annual audits. Firms
Speaker 1: also will be prohibited from allowing some favorite investors to
Speaker 1: cash out more easily than others, unless those deals are
Speaker 1: offered to all fund investors. The coalition is asking the
Speaker 1: Fifth Circuit Court of Appeals to vacate the rules, saying
Speaker 1: they're arbitrary and capricious and an abuse of discretion. Joining
Speaker 1: me is securities law expert Robert him a partner at
Speaker 1: Tartarkrinsky and Drogan. It's a six hundred and sixty page rule.
Speaker 1: Tell us what it provides.
Speaker 2: The new rules that the SEC adopted were designed to
Speaker 2: really fundamentally change the way that the private fund industry
Speaker 2: is regulated in the United States. In its adopting release,
Speaker 2: the SEC site they did three basic concerns that it
Speaker 2: was trying to address, one of which was lack of
Speaker 2: transparency in fees and charges that private funds charged to investors.
Speaker 2: Another is conflicts of interest that the SEC was concerned
Speaker 2: about between the advisory companies and the asset managers that
Speaker 2: manage these funds and the investors themselves. And the third
Speaker 2: was a lack of governance at the private fund So
Speaker 2: in the SEC's adopting release, which is over six hundred pages,
Speaker 2: they set out some very substantive and extensive new rules
Speaker 2: that were designed to address these perceived shortcomings and problems
Speaker 2: in the private fund market.
Speaker 1: Bob, So is it because the size of the private
Speaker 1: funds market has grown so much They now hold more
Speaker 1: assets than commercial banks, and it's grown. According to SEC data,
Speaker 1: gross assets under management grew one hundred and seventy one
Speaker 1: percent from twenty twelve to twenty twenty two.
Speaker 2: Yes, the rapid growth in the private funds market has
Speaker 2: been one of the facts that the SEC has cited
Speaker 2: for justification of its new rules. Right now, according to
Speaker 2: the SEC, there's over twenty six trillion dollars in assets
Speaker 2: under management in private funds, and the SEC used that
Speaker 2: as one of its basis for the concerns that it's
Speaker 2: expressed and the reason for these new extensive regulations.
Speaker 1: This was adopted in a three to two vote along
Speaker 1: party lines.
Speaker 2: Yes, it's right. These new rules are very controversial, both
Speaker 2: in the private fund industry as well as at the
Speaker 2: Commission itself. At the time when the rules were proposed
Speaker 2: and set for a vote at the Commission, it was
Speaker 2: passed on a three to two vote, with two commissioners
Speaker 2: dissenting and one of the commissioner's Commissioner Pierce, wrote a
Speaker 2: very singing descent from the rules, saying that they were
Speaker 2: ill conceived and that they were going to impose a
Speaker 2: lot of costly burdens on the industry, and also criticizing
Speaker 2: the majority of commissioners because in her view, the rules
Speaker 2: really were not justified. Commissioner Pierce also cited the statistic
Speaker 2: of over twenty six trillion in AUM in the industry
Speaker 2: and said that in fact, that shows that the market
Speaker 2: is very successful. The investors that invest in private funds
Speaker 2: are very sophisticated institutional investors. They're advised by the world's
Speaker 2: top law firms, and if there really was a problem
Speaker 2: in this market, it's really hard to explain why the
Speaker 2: private fund market would be growing so rapidly, and investors
Speaker 2: have been enjoying significant returns and profits on their investment,
Speaker 2: which these rules will cut into as a result of
Speaker 2: the high cost of implementation.
Speaker 1: These rules are watered down right from what the SEC
Speaker 1: originally wanted.
Speaker 2: Yes, in the proposing release that came out several months ago,
Speaker 2: the SEC had originally proposed even more stringent rules and
Speaker 2: stringent pro ambitions. And due to the backlash and the
Speaker 2: comments that were submitted by investors and industry participants, the
Speaker 2: SEC changed and when watered down some of these rules.
Speaker 2: But the final rules were still you know, quite strong.
Speaker 2: And I think you know what's concerned Commissioner Pierce and
Speaker 2: others in the industry, is that really the argument here
Speaker 2: is that the SEC overstepped its statutory authority. You know,
Speaker 2: it's justification for adopting these new rules was based on
Speaker 2: a provision that's the general anti fraud provision in the
Speaker 2: Advisor's Act Statute, as well as a provision, a short
Speaker 2: provision in dot frank that was really geared towards the
Speaker 2: retail investors and regulating retail oriented investment funds. And the
Speaker 2: biggest complaint of the industry they've gone to court to
Speaker 2: challenge these rules is that the rules prohibit outright prohibit
Speaker 2: a lot of activities and contractual terms that are very commonplace.
Speaker 2: You know, an example of that is certain large investors
Speaker 2: get preferred information rights, they can negotiate certain provisions with
Speaker 2: advisors that would allow them to withdraw their funds in
Speaker 2: a shorter lock up period than other investors. And that's
Speaker 2: just a fundamental characteristic of the private funds market that
Speaker 2: you can have these customized terms. But the SEC said
Speaker 2: essentially that that can no longer happen. You can't have
Speaker 2: negotiated terms like that.
Speaker 1: Lead plaintiffs attorney Eugene Scalia wrote in the lawsuit quote,
Speaker 1: the rules exceed the Commission's statutory authority, were adopted without
Speaker 1: compliance with notice and comment requirements, and are otherwise arbitrary, capricious,
Speaker 1: and abusive discretion and contrary to law. You got everything
Speaker 1: in there. Did they not have notice and comment on these?
Speaker 2: Well, they actually did have notice in comment and it
Speaker 2: was quite quite a long and detailed notice in common procedure.
Speaker 2: What the industry is complaining about in that particular section
Speaker 2: is that the final rules that were adopted by the
Speaker 2: SEC are so different than what was originally proposed. Is that,
Speaker 2: in effect that the notice in common period was not sufficient,
Speaker 2: and they're arguing in the industry that once the Commission
Speaker 2: changed the rules to such a great extent they should
Speaker 2: have undergone another notice in common period so that the
Speaker 2: industry and others could comment on these new proposed rules
Speaker 2: and hopefully convince the SEC to roll them back even further.
Speaker 1: Drew Maloney, chief executive the American Investment Council, to all
Speaker 1: the Wall Street Journal that the rules will discourage competition,
Speaker 1: harm investors, reduce returns, stifle innovation, and impose costly burdens
Speaker 1: on funds of all sizes. Do you agree with any
Speaker 1: of that?
Speaker 2: Well, I do. I think that there's no question that
Speaker 2: the rules themselves are going to be quite costly. Even
Speaker 2: in the adopting release, it's acknowledged by the SEC that
Speaker 2: it's going to cost billions of dollars industry wide to
Speaker 2: comply with the rule. In the argument is that this
Speaker 2: really falls most heavily on the small advisors or new
Speaker 2: advisors that want to come into the space, and essentially
Speaker 2: the costs associated with compliance is going to be prohibitive.
Speaker 2: But I think, you know, one of the main points
Speaker 2: of the industry too, is that it really questions the
Speaker 2: role of the SEC in the sense that for years,
Speaker 2: the industry, which is made up of these institutional investors
Speaker 2: that are very sophisticated and private fund managers have been
Speaker 2: going along fine in terms of negotiating contract provisions that
Speaker 2: were customized to their own individual and situations that were
Speaker 2: structured in that in that way, and the SEC has
Speaker 2: now stepped into the picture and said, you know, no, no,
Speaker 2: you know, we know better as the SEC what contractual
Speaker 2: terms should be in place, and the contractual terms that
Speaker 2: you've been negotiating all along though, those are no longer
Speaker 2: going to be permitted because you know, we have decided
Speaker 2: to fundamentally change the way this market is regulated. And
Speaker 2: the industry is saying that the SEC has no statutory
Speaker 2: authority from Congress to step in and make that unilateral determination.
Speaker 1: SEC chair Gary Gansler said he feels very confident in
Speaker 1: the agency's conclusion that it does have the power to
Speaker 1: implement the rules. What's your take on it. Does it
Speaker 1: have the power?
Speaker 2: I think that's going to be a tough argument for
Speaker 2: the SEC. The industry challenged the rules in the Fifth Circuit,
Speaker 2: which historically has been somewhat hostile to the SEC's expansive
Speaker 2: claims of regulatory authority. So the industry, you know, made
Speaker 2: a smart decision in terms of the forum that they've
Speaker 2: decided to challenge these rules, and in the adopting release,
Speaker 2: the SEC really just pointed to some very general provisions,
Speaker 2: you know, the anti fraud provision is one basis, and
Speaker 2: another provisions that related to requiring the SEC to provide
Speaker 2: enhanced rulemaking so that advisors would have to be clear
Speaker 2: about the terms and conditions of their relationship with investors,
Speaker 2: which was contained in the retail regulation section of DoD
Speaker 2: Frank And traditionally, federal courts in the last several years
Speaker 2: have been hostile not only to the SEC, but to
Speaker 2: other agencies who claim these broad ranging powers to regulate
Speaker 2: industries that in a lot of respects are hard hard
Speaker 2: to tie into the congressional grants of authority that have
Speaker 2: been made to the agencies.
Speaker 1: Coming up next, I'll continue this conversation with Robert him
Speaker 1: and we'll talk more about why this suit was filed
Speaker 1: at the Fifth Circuit. Lawsuits challenging the SEC rules are
Speaker 1: filed directly to appeals court, so they skipped the lower
Speaker 1: district court and they went to the Fifth Circuit, as
Speaker 1: you mentioned, which is the go to venue for conservatives
Speaker 1: and business groups challenging regulatory authority and ranging from the
Speaker 1: abortion pill, which is still in litigation the SEC's in
Speaker 1: house courts.
Speaker 2: Yes, that's correct. You know, the Fifth Circuit in particular
Speaker 2: has been very open to constitutional based arguments from business
Speaker 2: groups and private parties to really look at what agencies
Speaker 2: are doing to make sure that it's it's constrained within
Speaker 2: their statutory authority. And this is really a fundamental principle
Speaker 2: in the Constitution in terms of you know, in the
Speaker 2: democracy are elected representatives in Congress are supposed to make
Speaker 2: laws that people can vote on, and then there's a
Speaker 2: narrow delegation to agencies to implement those laws. But here,
Speaker 2: for example, with the SEC's regulation of the industry, and
Speaker 2: these new rules really didn't go through a democratic process.
Speaker 2: It was just something that the agency decided, you know,
Speaker 2: in their view, needed to be done and impose these rules.
Speaker 2: And then that's the argument from the industry. We're We're
Speaker 2: going to have to see if the judges in the
Speaker 2: Fifth Circuit accept that, and that's going to be their
Speaker 2: decision as to whether or not these SEC rules come
Speaker 2: within the statutory authority. And the Investment Advisors Act to
Speaker 2: allow the SEC to implement these sort of changes and rules.
Speaker 1: It's been sort of a regulatory blitz by SEC Chair
Speaker 1: Gary Gensler that we've talked about before. Is this just
Speaker 1: one step too far?
Speaker 2: Yeah, I think that that's part of the analysis. One
Speaker 2: of the concerns that Commissioner Peerce had that the industry
Speaker 2: has as well, is that when the SEC conducts its
Speaker 2: statutorily require cost benefit analysis of the new rules, they
Speaker 2: look at each rule one by one and they say,
Speaker 2: what's the cost and the benefits of this particular rule
Speaker 2: on the industry. But the point that the industry is
Speaker 2: making is that that's not always the best way to
Speaker 2: look at this, because the SEC has been engaged in
Speaker 2: a lot of new rule making. It seems like every
Speaker 2: week there's a new rule that comes out, and the
Speaker 2: industry is saying that it's not sufficient just to look
Speaker 2: one by one.
Speaker 3: Really have to look at the.
Speaker 2: Whole basket of rules that the SEC is coming out
Speaker 2: with in lots of different areas, when you look at
Speaker 2: this sort of costs that are being imposed on the
Speaker 2: private sector and whether the rules are really going to
Speaker 2: provide the investor protection benefits that the SEC claims that
Speaker 2: they are working towards.
Speaker 1: Are these cases different in that this is a really
Speaker 1: wealthy and powerful industry that the SEC is going up against.
Speaker 2: Well, it does make a difference in a sense that
Speaker 2: the challenge to these rules is certainly a well funded effort.
Speaker 2: The lead lawyer Jean Scalia, who's the son of Justice Scalia,
Speaker 2: the lead Justice Scalia, is probably the top lawyer that
Speaker 2: the industry is used to challenge various regulations, not just
Speaker 2: at the SEC, but at the EPA as well on
Speaker 2: the argument that the rules exceed statutory grants of authority.
Speaker 2: But I think it's also a more fundamental point. The
Speaker 2: industry is arguing that Congress deliberately set up a two
Speaker 2: part regulatory system. One is mutual funds, which are regulated
Speaker 2: under the Investment Company Act, which has extensive disclosures and
Speaker 2: substantive rules that are appropriately in place to protect private
Speaker 2: retail investors. And Congress made a conscious decision to not
Speaker 2: impose that extensive regulatory regime on private funds which are
Speaker 2: opened only to a very high net worth investors and
Speaker 2: institutional investors. And Congress basically left it up to the
Speaker 2: parties in that scenario to negotiate contractual arrangements regarding fees
Speaker 2: regarding investment objectives and what duties the advisor owes and
Speaker 2: what the SEC has done with these rules is blur
Speaker 2: the distinction between those two regulatory regimes and is really
Speaker 2: importing these extensive regulations from the mutual fund space onto
Speaker 2: the private fund space. And a lot of respect, if there's.
Speaker 1: An adverse ruling to the SEC, does that have implications
Speaker 1: for other areas the SEC is regulating.
Speaker 2: It won't have a direct implication for other rules that
Speaker 2: the SEC is making, but in a certain sense, it
Speaker 2: really from a practical perspective, makes the agency sit up
Speaker 2: and take notice, to really understand that courts are going
Speaker 2: to be scrutinizing their claims of statutory authority and perhaps
Speaker 2: gives the SEC more reason to pause it's rulemaking and
Speaker 2: not be so aggressive in the future with regards to
Speaker 2: the type of rules and changes that it imposes on
Speaker 2: the industry.
Speaker 1: Bob was the SEC sort of prepared for this lawsuit?
Speaker 2: The SEC really understood that they were going to have
Speaker 2: a challenge of these rules in court, and the adopting
Speaker 2: release has quite an extensive discussion by the SEC as
Speaker 2: to what its claims of statutory authority are. In addition
Speaker 2: to going through the two satchatory provisions, and the adopting release,
Speaker 2: the SEC goes to great lengths to really try to
Speaker 2: explain that it's not really just institutional investors that are
Speaker 2: at stake here. The adopting release talks about that it's
Speaker 2: it's pension funds and endowments, and indirectly those pensions are
Speaker 2: made up of civil service workers, environment police officials, teachers,
Speaker 2: community activists, and the SEC goes through a whole description
Speaker 2: in their adopting release as to how these everyday types
Speaker 2: of people are impacted by the private fund industry and
Speaker 2: the types of rules and regulations that are imposed on it. So,
Speaker 2: you know, the SEC knew that this challenge was coming.
Speaker 2: They've done, you know, everything they can to prepare for it.
Speaker 2: So it's going to be a very interesting when the
Speaker 2: court addresses this. The parties have proposed a timeframe that
Speaker 2: would allow the Fifth Circuit to issue ruling by May
Speaker 2: twenty twenty four, which is several months before a lot
Speaker 2: of the final deadline for when these rules have to
Speaker 2: go in effect.
Speaker 1: So a long road ahead, Thanks so much, Bob. That's
Speaker 1: Robert him of Tartarkrinsky and Drogen. Coming up next on
Speaker 1: the Bloomberg law show class action lawsuits against pharmaceutical companies
Speaker 1: and retailers over ineffective decongestants. We're approaching cold and flu season,
Speaker 1: and the Food and Drug Administration has said the leading
Speaker 1: over the counter decongestion used by millions of Americans looking
Speaker 1: for relief from a stuffy nose is no more effective
Speaker 1: than a placebo. Advisors to the FDA voted unanimously last
Speaker 1: week against the effectiveness of the key drug found in
Speaker 1: popular versions of sudafed, day quill and other medications stocked
Speaker 1: on store shelves.
Speaker 4: This ingredient panel affron is in so many different cold medicines.
Speaker 4: That's why it is important to kind of educate yourself
Speaker 4: on what to look for and just avoid that ingredient.
Speaker 1: Doctor Purvy Perik, an allergist at NYU Langone Health, recommends
Speaker 1: reading the labels of these products and choosing something else instead.
Speaker 1: It didn't take long after the FDA's announcement for several
Speaker 1: class action lawsuits to be filed against pharmaceutical companies and retailers.
Speaker 1: My guest is healthcare attorney Harry Nelson of Nelson Hardiman
Speaker 1: Harry first tell us about this board of advisors and
Speaker 1: what they decided.
Speaker 3: Yeah, it was an FDA advisory panel that finally came
Speaker 3: out with a statement that people studying funnelf've been talking
Speaker 3: about for a while, which is that it is not
Speaker 3: better than placebo. That essentially it's ineffective when taken orally.
Speaker 3: It does not actually function as a decongestine, and little
Speaker 3: of the drug actually reaches the nose to be a decongestine.
Speaker 3: It's effective when it's used in a nasal pray directly
Speaker 3: to the nose. But the problem is that we sell
Speaker 3: billions of dollars of these different decongestin drugs where people
Speaker 3: take it orally and it has absolutely no effect, was
Speaker 3: completely broken down in the stomach.
Speaker 1: So you mentioned this, But there have been decades of
Speaker 1: studies and questions and documentation and clinical trial results. Why
Speaker 1: did it take so long for them to come to
Speaker 1: this conclusion.
Speaker 3: It's a good question. It's kind of an indictment, honestly,
Speaker 3: of the FDA's ability to do serious review. There were
Speaker 3: studies being put forward and petitions made to re examine it.
Speaker 3: But when you go back and look at what was happening,
Speaker 3: you know, for the last twenty plus years, it's been
Speaker 3: a process of rubber stamping and ignoring what's been said.
Speaker 3: It was a glacial pace, and it took an enormous
Speaker 3: amount of time for peer review studies to actually be
Speaker 3: given the attention they deserve. So it's kind of an
Speaker 3: indictment of the FDA process, you know that it took
Speaker 3: this long to see something that was quite obvious to
Speaker 3: people who were studying it.
Speaker 1: And the decision is confusing to consumers because shouldn't ineffective
Speaker 1: drugs be taken off the market and replaced? But here
Speaker 1: they're saying, no, you don't need to throw away these products.
Speaker 3: No one is saying these products are dangerous or the
Speaker 3: penalleffern causes harm. They're just saying it's ineffective. It's not
Speaker 3: better than placebo. So there's no danger associated with using
Speaker 3: these products. They're probably just not the best choices to use.
Speaker 3: You need an effective decongestion.
Speaker 1: This is just an advisory opinion. The FDA doesn't have
Speaker 1: to go along with it. And now what happens, They're
Speaker 1: going to allow the public to comment. What good does
Speaker 1: public comment do on an issue like this? I don't
Speaker 1: get that.
Speaker 3: Yeah. Also, it's a fair question. It's not at all
Speaker 3: clear what public comment is going to add to the
Speaker 3: conversation here. It just seems like they're still continuing to
Speaker 3: go slower than you would hope. Once we've kind of
Speaker 3: finally come to this public realization that there's a drug
Speaker 3: that's not working on the market and people are spending
Speaker 3: a lot of money on it, what does the.
Speaker 1: FDA have to do now in addition to you know,
Speaker 1: we mentioned the public comments, but what has to happen next.
Speaker 3: The next step is actually formal. This was just an
Speaker 3: advisory chanel, but the FDA has to formally review the
Speaker 3: status of the drug and presumably revoke its approoved status
Speaker 3: or narrow its approved status, because again, the drug is
Speaker 3: useful when applied directly, for example, like through a nasal spray,
Speaker 3: but at least orally to revoke the approval of the drugs.
Speaker 1: How unusual is it that class action lawsuits were filed
Speaker 1: within days of the FDA's announcement.
Speaker 3: So, I mean it's almost reflective, right, There are plaint
Speaker 3: of law firms around the countries that are basically built
Speaker 3: to take on harm related to different drugs, and so
Speaker 3: soon as the FDA said the drug was ineffective, it's
Speaker 3: not a surprise that we saw the first class action
Speaker 3: filed down in Florida. I'm sure we're going to see more.
Speaker 3: The real question is, other than the harm to people's
Speaker 3: wallets from spending one point seventy five billion on the drug,
Speaker 3: what actual harm? You know, whether there were any side
Speaker 3: effects that actually hurt anybody from Fenel effronts. There are
Speaker 3: a lot of reports of like minor problems like swelling
Speaker 3: or interration and itching, but I'm not aware of any
Speaker 3: severe harm, and it's not clear what kind of damages
Speaker 3: they are going to be beyond just the fact that
Speaker 3: these companies were selling an ineffector drug.
Speaker 1: Some of the complaints charged that the defendants violated consumer
Speaker 1: protection statutes and alleged a breach of implied warranty of
Speaker 1: merchant ability and they committed fraud, stating the defendants intentionally
Speaker 1: and knowingly falsely concealed, suppressed, and or admitted material facts,
Speaker 1: including us to the standard, quality or grade of the
Speaker 1: products they marketed and sold. But if the FDA approved this,
Speaker 1: what were the manufacturers supposed to do? Say no, the
Speaker 1: FDA is wrong.
Speaker 3: You know, there's been a lot of industry studies going on,
Speaker 3: so we know that, for example, competitors of some of
Speaker 3: the fenleft and products, like the folks that sharing plout
Speaker 3: who were making Clereson were doing a lot of research
Speaker 3: to show that and arguing that these drugs were ineffective.
Speaker 3: It's an interesting question whether internally whether the manu were
Speaker 3: doing their own research and had reason to know that
Speaker 3: these drugs were not effective, and whether they turned a
Speaker 3: blind eye to it. I think it's an interesting question,
Speaker 3: and hopefully we'll learn about some of the internal process
Speaker 3: within the pharmaceuticals and how much they were aware of
Speaker 3: this and taking it seriously and concerned about it. But
Speaker 3: you know, I think that still remains ahead of us.
Speaker 1: You know, you mentioned harm to consumers and that there's
Speaker 1: probably very little of that, so it would be limited
Speaker 1: to economic damages, right, I mean, how would they determine
Speaker 1: economic damages to consumers from this?
Speaker 3: I think what's likely to happen. I mean, I don't
Speaker 3: mean to sound cynical, but when this case gets prosecuted,
Speaker 3: what's likely to happen is that the lawyers who brought
Speaker 3: these cases will have a multimillion dollar pay day and
Speaker 3: attorneys fees, and they'll be coupons, you know, for people
Speaker 3: who can prove that they bought the drugs, but those
Speaker 3: coupons will be for insignificant amounts. The big winners in
Speaker 3: this class accent are likely to be the lawyers who
Speaker 3: get tens of millions of dollars for filing it.
Speaker 1: As an example, Johnson and Johnson's consumer unit settle claims
Speaker 1: alleging aerosol products contained benzene for one point seventy five
Speaker 1: million dollars plus two point five million in attorneys fees,
Speaker 1: So more an attorney's fees than in the settlement for consumers.
Speaker 4: Yeah.
Speaker 3: So a lot of people, and including me, think it
Speaker 3: is a defect in our class action systems that, you know,
Speaker 3: the plane of class action lawyers are motivated to bring
Speaker 3: cases that really don't do much to advance the public interest,
Speaker 3: but to produce profitable work for them. Kind of a
Speaker 3: sort of bug in our class action system that anytime
Speaker 3: there's a drug, even if the harm to the public
Speaker 3: is really miniscule, the plane of class action lawyers have
Speaker 3: a big opportunity.
Speaker 1: Are those kinds of suits mostly settled? Do any of
Speaker 1: them ever go to trial?
Speaker 3: This is certainly not a case that's going to trial.
Speaker 3: This is clearly you know, if there were big damages
Speaker 3: and significant amounts that would be at risk, Like if
Speaker 3: the harm caused by a final effort was so significant,
Speaker 3: then there would be something to fight over and a
Speaker 3: lot at stakes. But you know, the money that the
Speaker 3: drug companies are likely to pay for this is going
Speaker 3: to be something like a rounding error for them. This
Speaker 3: is not going to be one of those multi billion
Speaker 3: dollar settlements. You know, it's likely that the plans class
Speaker 3: ection layers will kind of have a get in quick,
Speaker 3: you know, reach the settlements, and the drug companies will
Speaker 3: be offered numbers that will motivate them to do so.
Speaker 3: I think it's a pretty safe bet that we're never
Speaker 3: going to see a trial on the marketing of fenel efern.
Speaker 3: Does the FDA.
Speaker 1: Give the drug manufacturers time to put new products on
Speaker 1: the shelves or don't they take that into consideration.
Speaker 3: The first decision is whether to actually revoke the marketing
Speaker 3: approval for it. But if the FDA imposes a recall,
Speaker 3: the recall is focused on exclusively on the public health
Speaker 3: issues and not on whether these drug companies have time
Speaker 3: to find alternatives. That's really the drug companies problems. I'm
Speaker 3: sure that the folks at all the companies that we're
Speaker 3: selling sele An Efferns are you know, already working hard
Speaker 3: on that. But the really interesting question here is whether
Speaker 3: the fact that the drug is ineffective, though not seemingly dangerous,
Speaker 3: is going to provoke an actual recall or alternatively, whether
Speaker 3: presumably its sales will decline. The drug companies will obviously
Speaker 3: stop marketing it because you know, now that the FDA
Speaker 3: has come out with this, it's a much higher risk
Speaker 3: for them to engage in any marketing suggesting that it
Speaker 3: has positive benefit, and whether we'll just fade away from
Speaker 3: the shelves of our drug stores sort of more naturally.
Speaker 1: I sort of assume that the FGA, in light of this,
Speaker 1: would take these off the shelves at some point, since
Speaker 1: the best you can say is they're ineffective.
Speaker 3: Honestly, I think the reason that tenneleffernd became popular in
Speaker 3: the first place was because of problems associated with a
Speaker 3: different decontestant that is effective, which is a related drug
Speaker 3: category called pseudofhedriant. You know, more than fifteen years ago
Speaker 3: we started seeing that metam fetamine dealers or manufacturers were
Speaker 3: using due to Fedrian to make illegal drugs and so
Speaker 3: so that led to the popularity of penalleffern as an alternative.
Speaker 3: So I think now it's kind of back to the
Speaker 3: drawing board of actually figuring out what are going to
Speaker 3: be you know, effective decongestion, And it's going to be
Speaker 3: interesting to see what the impact on pseudofedrian access is,
Speaker 3: given that it is a ineffective the congestion, but also
Speaker 3: a drug that is at risk of a view. That's
Speaker 3: a part of the story that we haven't really been
Speaker 3: talking about yet. But I think it is clear that
Speaker 3: part of the rise of seneffrine was about the problems
Speaker 3: associated with pseudophedrin. So it's going to be interesting to
Speaker 3: see what medications are the winners after senal eleftferm phades
Speaker 3: from the market.
Speaker 1: Thanks so much, Harry. That's healthcare attorney Harry Nelson of
Speaker 1: Nelson Hardiman