Trial Magazine

The California Supreme Court has agreed to review an immensely important issue: whether a brand-name drug company that knew or should have known that its drug was mislabeled can be held liable for injuries caused by a generic version of that drug.

The case, T.H. v. Novartis Pharmaceuticals Corp.,¹ filed on behalf of fraternal twins who were injured in utero by a generic version of the brand-name drug Brethine, could affect millions of people—both in terms of their ability to hold corporations accountable for their injuries and, more fundamentally, their ability to be adequately informed about prescription drugs’ dangers.

California is one of only a few jurisdictions² that allow lawsuits against brand-name drug manufacturers for injuries caused by generic drugs—a theory these companies refer to as “innovator liability.”³ In the 2008 case Conte v. Wyeth, a California appellate court applied common law principles of duty and foreseeability to conclude that a brand-name drugmaker could be held liable under a negligent misrepresentation theory for injuries caused by a generic version of its drug.⁴

The pharmaceutical industry and its proponents denounced the ruling as an irresponsible attack on brand-name drug companies, arguing that holding them liable for injuries caused by generic drugs would stifle innovation and raise drug prices.⁵ Others hailed Conte as a fair and reasonable application of long-standing California tort law principles that created incentives for brand-name manufacturers to monitor their products’ risks in the post-approval marketplace.⁶

The debate is about to come to a head again in California. The state’s high court denied review of Conte eight years ago but has granted review in T.H. v. Novartis. If the court reverses and disallows claims against brand-name manufacturers for generic drug injuries, it could result in many more people being harmed without the ability to hold the manufacturers accountable. It would eliminate a powerful incentive for -drugmakers to ensure their labels’ accuracy.

The stakes are high—more than 80 percent of the prescription drugs consumed in the United States are generics.⁷ And the FDA does not have the resources to ensure that the many hundreds of prescription drugs on the market bear accurate and up-to-date labels. So cases in which consumers are harmed by a generic drug make up the overwhelming majority of instances of people harmed by a mislabeled prescription drug.

The Fundamentals

Why should a brand-name manufacturer be held liable for injuries caused by a generic? Why not sue the generic manufacturer directly? Unfortunately, two unique features of FDA regulations governing prescription drugs explain why.

First, to market a drug as a generic equivalent of a brand-name drug, both drugs must be “bioequivalent”—meaning that they have essentially the same effect on a person taking them.⁸ Even though brand-name drug companies don’t make the generics, they are—except in the case of a manufacturing defect—essentially the same product.

Second, generic drugs must have the same label that’s been approved for the brand-name version.⁹ After the drug is on the market, brand-name manufacturers have the authority—indeed, the duty—to update their labels to add a warning of a serious risk or side effect that was not disclosed on the original label without the FDA’s express prior authorization.¹⁰

But generic drug manufacturers cannot add or strengthen their labels in any way without prior FDA approval, no matter how inadequate the warning may be.¹¹ Instead, they are subject to a “duty of sameness” that requires using the exact same label as the brand-name equivalent.

Because of this, the U.S. Supreme Court, in PLIVA, Inc. v. Mensing, held that federal law preempts state law failure-to-warn claims against generic drug manufacturers.¹² The Court ruled that because of the FDA’s regulations, it would be “impossible for the [generic] Manufacturers to comply with both their state-law duty to change the label and their federal-law duty to keep the label the same.”¹³

Under Mensing, consumers injured by inadequately labeled generic drugs have no recourse against the companies that made those drugs. Federal law tells us that inadequacies in generic drug labels are the fault of brand-name manufacturers because they are responsible for the inadequate labels on both products. So it is more than foreseeable to a brand-name manufacturer that patients could rely on its product information and be injured as a result—in fact, it is a virtual certainty.

A Commonsense Approach

Based on the above, there should be no problem stating a cause of action against a brand-name manufacturer for injuries caused by a generic equivalent. The Conte court certainly thought so. It rejected Wyeth’s argument that it was immune from suit because it did not directly manufacture the product that injured the plaintiff. While the Conte court agreed that a defendant generally cannot be held liable in a products liability case absent a showing that it made the offending product, the court held that this did not bar the suit because the plaintiff had alleged a negligent misrepresentation claim against the brand-name manufacturer, not a strict liability claim.¹⁴

Conte then addressed whether a brand-name drugmaker “owes a duty of care to patients who take a generic version of the drug pursuant to a prescription written in reliance on the name-brand maker’s information.”¹⁵ The court observed that because California pharmacists are authorized to fill prescriptions for brand-name drugs with their generic equivalents unless the prescribing doctor directs against the substitution—a feature of state law that is similar or identical to every other U.S. jurisdiction¹⁶—it was “highly likely” that the plaintiff’s brand-name prescription would be filled with a generic drug.¹⁷

It also is “eminently foreseeable” that a physician might prescribe a generic drug in reliance on the brand-name manufacturer’s representations about its own drug since they are biologically equivalent.¹⁸ The court concluded that the brand-name manufacturer could reasonably foresee that a patient taking the generic could injuriously rely on its product information.¹⁹

Where Other Jurisdictions Come Down

Despite Conte’s obvious good sense, most jurisdictions have refused to allow brand-name manufacturers to be sued for generic drug injuries. One camp consists of courts²⁰ that more or less have followed the Fourth Circuit’s decision in Foster v. American Home Products Corp.—involving a young child’s death from a generic form of Phenergan, a cough syrup—which was premised on the mistaken belief that “as an expert, a manufacturer of generic products is responsible for the accuracy of labels placed on its products.”²¹

As the Alabama Supreme Court recently observed, however, Foster is no longer persuasive authority in light of Mensing, which held that exclusive authority for generic drug labels lies with brand-name manufacturers.²²

A second camp consists of decisions issued in one of about 20 states with a version of the Model Product Liability Act,²³ which expressly defines any case involving a product-caused injury as a “products liability case,” regardless of the theory pleaded, and that expressly limits liability to manufacturers of the product at issue.²⁴ Obviously, these rulings have no bearing in states that have not adopted a version of the Model Product Liability Act.

And a third camp consists of courts that, unlike California, do not recognize a cause of action for negligent misrepresentation under §311 of The Restatement (Second) of Torts, which allows negligent misrepresentation claims based on foreseeability, without regard to privity.²⁵

But courts that understand the interplay of federal drug law and that have applied tort principles commensurate with California’s—including §311 of the restatement and the state’s emphasis on foreseeability in tort analysis generally—have reached the same conclusion as Conte.²⁶

Aside from the Alabama Supreme Court’s decision in Wyeth, Inc. v. Weeks²⁷—a decision that, despite its subsequent abrogation by statute, is worth a read—well-reasoned decisions that followed Conte include Dolin v. SmithKline Beecham Corp.²⁸ In Dolin, the widow of a man who committed suicide while taking generic Paxil, an antidepressant, sued GlaxoSmithKline (GSK), the brand-name manufacturer, based on evidence that it knew but failed to disclose that the drug’s active ingredient had a significant tendency to increase suicidal behavior.

In allowing negligence and negligent misrepresentation claims to proceed, the Dolin court emphasized that “it was entirely foreseeable” that GSK’s negligence regarding Paxil’s design and labeling “could result in injury to a consumer ingesting a subsequent generic version of the drug.”²⁹ The court also rejected the GSK’s argument that this was a products liability case.³⁰ Ultimately, a jury returned a $3 million verdict.

These decisions show that cases involving plaintiffs who are injured by mislabeled generic drugs will stand the best chance of success in jurisdictions that emphasize foreseeability, recognize negligent misrepresentation and apply it broadly to cases involving personal injury and regardless of whether there was a preexisting relationship between the plaintiff and defendant, and have not codified a version of the Model Product Liability Act.

The Next Frontier

All of this brings us to T.H. v. Novartis. As of this writing, no standing appellate court outside California has allowed consumers to sue brand-name manufacturers for injuries caused by the generic equivalent.³¹ Novartis is the brand-name drug company that wrote the label for Brethine, which the plaintiffs’ mother took to control preterm labor. Novartis knew that Brethine (and its generic equivalents) could cause fetal brain damage, but it didn’t disclose this on the drug’s label.

It sold the drug rights to another company, AAIPharma, which also failed to update the Brethine label, leaving the original Novartis label intact. A few years later, the plaintiffs’ mother’s doctor relied on the same dangerously inaccurate label, which said nothing about the risk to unborn children.

Novartis nonetheless is asking for total immunity for its negligent and possibly intentional failure to update its label, claiming that brand-name drug companies can’t be sued at all for injuries caused by generic versions of their drugs. And, even if they could, Novartis claims this lawsuit must fail because it had already sold its inadequately labeled drug to another company by the time the plaintiffs’ injuries occurred.

Our brief to the court argued that Novartis’s argument fails on both counts. First, we argued that the lower court’s ruling that brand-name companies can be held liable for negligently misrepresenting the dangers of generic drugs is fully consistent with one of the most basic principles of California tort law: Those who cause misinformation to be disseminated to the public are liable for the consequences of foreseeable reliance on that information.³²

Here, the foreseeable reliance is a function of the fact that federal law requires generic drug labels to be identical to the labels written for biologically equivalent brand-name drugs. As a result, when a consumer is injured by an inadequately labeled generic drug, the fault for the misrepresentation lies with the brand-name manufacturer, not the generic manufacturer.

Second, we argued that liability extends to “former” brand-name manufacturers when the divestiture of the drug to a successor company does not break the chain of causation between the original drug company and the injured party. It is well-established that “an originally negligent actor generally remains liable although a third person negligently fails to . . . prevent[ ] the harm if the third person’s conduct is reasonably foreseeable.”³³

Because Brethine’s market value depended on its continued sales to pregnant women, it was more than reasonably foreseeable to Novartis that AAIPharma also would violate its duty to update the drug’s label to warn of serious risks to the fetal brain. Thus, we argued Novartis should remain potentially liable for its misrepresentation even though it did not own the drug at the time the plaintiffs sustained their injuries.

Novartis has advocated for a bright-line rule of immunity for all former manufacturers of brand-name drugs. This would create a significant disincentive for brand-name manufacturers to update their labels when serious hazards emerge in the post approval marketplace. It directly undermines the most important public policy factor behind tort liability: the prevention of future harm.³⁴

Under Novartis’s approach, a brand-name company with a mislabeled drug could sell its drug to another company without first changing the label, leaving consumers entirely at the successor company’s mercy as to whether (and, if so, when) the label is ever updated.

The tort system provides a necessary deterrent to this type of life-threatening corporate misconduct, and it plays a vital role in encouraging manufacturers to keep their products safe and to warn of newly discovered risks. We’re keeping our fingers crossed on this one. We hope you do too.

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Leslie A. Brueckner is a senior attorney at Public Justice in Oakland, Calif. She can be reached at lbrueckner@publicjustice.net. Benjamin I. Siminou is an associate at Thorsnes Bartolotta McGuire in San Diego. He can be reached at siminou@tbmlawyers.com.

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Notes

1. H. (T.) v. Novartis Pharm. Corp., 371 P.3d 241 (Cal. 2016). The case is commonly referred to as T.H. v Novartis.
2. See, e.g., Dolin v. SmithKline Beecham Corp., 62 F. Supp. 3d 705, 713 (N.D. Ill. 2014); Chatman v. Pfizer, Inc., 960 F. Supp. 2d 641, 645 (S.D. Miss. 2013); Kellogg v. Wyeth, Inc., 762 F. Supp. 2d 694, 704 (D. Vt. 2010); Wyeth, Inc. v. Weeks, 159 So. 3d 649, 677 (Ala. 2014), subsequently abrogated by Ala. Code §6-5-530.
3. “Innovator liability” plays into the defense’s misleading arguments. These claims do not depend on brand-name manufacturers’ status as the “innovator” of the drug, but rather are premised on sincere allegations that they knew or should have known that the mislabeled drug posed serious health risks to the public.
4. See Conte v. Wyeth, Inc., 85 Cal. Rptr. 3d 299 (Cal. Dist. Ct. App. 2008).
5. See, e.g., Victor E. Schwartz et al., Warning: Shifting Liability to Manufacturers of Brand-Name Medicines When the Harm Was Allegedly Caused by Generic Drugs Has Severe Side Effects, 81 Fordham L. Rev. 1835, 1870–71 (2013).
6. Martin A. Ramey, Conte v. Wyeth: Caveat Innovator and the Case for Perpetual Liability in Drug Labeling, 4 Pitt. J. Envtl. & Pub. Health L. 73, 109–13 (2010).
7. Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products, 78 Fed. Reg. 67,985, 67,988 (proposed Nov. 13, 2013).
8. 21 C.F.R. §314.3(b) (2017).
9. 21 U.S.C. §355(j)(2)(A) (2012).
10. 21 C.F.R. §314.70(c).
11. See Abbreviated New Drug Application Regulations, 57 Fed. Reg. 17,950, 17,961 (Apr. 28, 1992); PLIVA, Inc. v. Mensing, 564 U.S. 604, 613 (2011).
12. Mensing, 564 U.S. at 624.
13. Id. at 618.
14. Conte, 85 Cal. Rptr. 3d at 309–10.
15. Id. at 311–13.
16. Id. at 313; see Mensing, 564 U.S. at 628–29 (Sotomayor, J., dissenting).
17. Conte, 85 Cal. Rptr. 3d at 313.
18. Id.
19. Id.
20. See, e.g., Fisher v. Pelstring, 2010 WL 2998474, at *6 (D.S.C. July 28, 2010); Meade v. Parsley, 2009 WL 3806716, at *3 (S.D. W. Va. Nov. 13, 2009); Gross v. Pfizer, Inc., 2010 WL 4485774, at *2–3 (D. Md. Nov. 9, 2010); see also Guarino v. Wyeth, LLC, 719 F.3d 1245, 1251 (11th Cir. 2013).
21. 29 F.3d 165, 170 (4th Cir. 1994); see, e.g., Schrock v. Wyeth, Inc., 727 F.3d 1273, 1284–85 (10th Cir. 2013); Guarino, 719 F.3d at 1252.
22. Mensing, 564 U.S. at 613; see Weeks, 159 So. 3d at 669–70.
23. Am. Legislative Exchange Council, Product Liability Act, www.alec.org/model-policy/product-liability-act/.
24. See, e.g., Anselmo v. Sanofi–Aventis Inc. USA, 2014 WL 8849464, at *1–2 (Kan. Dist. Ct. Oct. 13, 2014); Franzman v. Wyeth, Inc., 451 S.W.3d 676, 689–90 (Mo. Ct. App. 2014); Gardley-Starks v. Pfizer, Inc., 917 F. Supp. 2d 597, 602–04 (N.D. Miss. 2013); Phelps v. Wyeth, Inc., 857 F. Supp. 2d 1114, 1121 (D. Or. 2012); Finnicum v. Wyeth, Inc., 708 F. Supp. 2d 616, 619–22 (E.D. Tex. 2010).
25. See, e.g., Huck v. Wyeth, Inc., 850 N.W.2d 353, 371–72 (Iowa 2014); Moretti v. Wyeth, Inc., 579 F. App’x 563, 564–65 (9th Cir. 2014); Mensing v. Wyeth, Inc., 588 F.3d 603, 613–14 (8th Cir. 2009), vacated in part on other grounds, 658 F.3d 867 (8th Cir. 2011).
26. See  Weeks, 159 So. 3d at 677; Dolin, 62 F. Supp. 3d at 713; Chatman, 960 F. Supp. 2d at 654; Kellogg, 762 F. Supp. 2d at 704; Clark v. Pfizer, Inc., 2008 WL 7668730, at *13–14 (Pa. Ct. Com. Pl. 2008).
27. Weeks, 159 So. 3d 649.
28. 62 F. Supp. 3d 705.
29. Id. at 714.
30. Id. at 716–17.
31. The Alabama Supreme Court decision adopting Conte was abrogated by statute. See Ala. Code §6-5-530.
32. See, e.g., Randi W. v. Muroc Joint Unified Sch. Dist., 929 P.2d 582, 593–94 (Cal. 1997).
33. See, e.g., Cline v. Watkins, 135 Cal. Rptr. 838, 841 (Cal. Ct. App. 1977) (emphasis added).
34. See Rowland v. Christian, 443 P.2d 561, 564 (Cal. 1968), superseded by statute as stated in Calvillo-Silva v. Home Grocery, 968 P.2d 65 (Cal. 1998).