December 5, 2012

Mutual's Generic Design Preemption Case To Be Heard by Supreme Court

supremecourt.pngLast Friday, the Supreme Court decided to consider the question presented by generic drug manufacturer Mutual Pharmaceutical Co. ("Mutual") whether federal law "preempt[s] state law design-defect claims targeting generic pharmaceutical products because the conceded conflict between such claims and the federal law governing generic pharmaceutical design allegedly can be avoided if the makers of generic pharmaceuticals simply stop making their products." This issue emerges from the First Circuit's affirmation of a $21 million verdict against Mutual in a state law products liability action.

This case originated in the District of New Hampshire, where Karen Bartlett filed suit against Mutual alleging that its anti-inflammatory drug sulindac (reference listed drug: Clinoril®) is "unreasonably dangerous" under New Hampshire products liability law. Bartlett had a severe allergic reaction to the product resulting in the loss of more than 60% of her outer skin layer. The New Hampshire Supreme Court has adopted § 402A of the Restatement (Second) of Torts ("RS (2nd) § 402A"), which imposes strict liability for selling "any product in a defective condition unreasonably dangerous to the user or consumer." Under New Hampshire law, this requires a showing that "the magnitude of the danger outweighs the utility of the product," regardless of whether there is a safer alternative design. Vautour v. Body Masters Sports Indus., Inc., 784 A.2d 1178, 1182-83 (N.H. 2001).

At issue is whether the Drug Price Competition and Patent Term Restoration Act of 1984 ("Hatch-Waxman Amendments") and corresponding FDA regulations preempt design defect claims that are based in state tort law directed towards generic pharmaceutical products, such as Bartlett's New Hampshire claim. The relevant sections of the Hatch-Waxman Amendments require a generic drug manufacturer to show that its product (1) has the same "route of administration," "dosage form," and "strength" as, and (2) is "bioequivalent" to, the brand name drug that its application references, in order to gain FDA approval. See 21 U.S.C. § 355(j)(2)(A). Mutual argues that these "sameness" requirements preclude generic manufacturers from materially altering the design of their products, and that a generic's ability to comply with both federal and state law by withdrawing its product from the market ("the stop selling theory") is not a valid rationale for finding non-preemption.

Mutual argues that the First Circuit's decision runs directly afoul to the Supreme Court's June 2011 ruling, in PLIVA, Inc. v. Mensing, that generic drug manufacturers cannot be sued for failing to warn patients of adverse side effects of their products when the warning was not present in the referenced brand name product's labeling. In that case, the Court found preemption because generic manufacturers could not comply with Louisiana and Minnesota laws requiring them to update product labels with newly discovered risks of harm because the Hatch-Waxman Amendments require generic drugs to have the same safety and efficacy labeling as their brand name counterparts. See 21 U.S.C. § 355(j)(2)(A).

In this case, the First Circuit acknowledged the PLIVA decision, but limited it to failure-to-warn claims. The court also, however, deliberately solicited the Supreme Court's opinion: "[I]t is up to the Supreme Court to decide whether PLIVA's exception is to be enlarged to include design defect claims. Given the widespread use of generic drugs and the developing split in the lower courts ... this issue needs a decisive answer from the only court that can supply it."

In its petition for certiorari, Mutual argues that PLIVA requires preemption of Bartlett's claim because federal law is the same for labeling and design requirements. In opposition, Bartlett maintains that the state law claim is not preempted because New Hampshire law does not require a generic to take any action that federal law prohibits. In the words of the First Circuit, while "the generic maker has no choice as to label--the decision to make the drug and market it in New Hampshire is wholly its own." Bartlett argues that PLIVA is distinguishable because failure-to-warn claims are based on a duty to change a product label, which the Hatch Waxman Amendments prohibit, while design defect claims are based on a duty to stop selling, which is in not prohibited. Mutual counters that failing to change a label is no different than selling a product with a defective warning, which is no different than selling a product with a defective design.

The Supreme Court is expected to hear arguments in March of next year. Mutual certainly has a strong argument give the recent precedent and common statutory basis for preemption. On the other hand, the Court may find merit in Bartlett's argument that the stop selling theory applies differently when a state law claim is based on the actual drug (i.e., its design) than when it is based on its accompanying label. Also of possible influence is Bartlett's contention, citing Wyeth v. Levine, 555 U.S. 555 (2009), that "'Congress did not intend [FDA] oversight to be the exclusive means of ensuring drug safety and effectiveness' and that state law serves as a 'complementary form of drug regulation.'" Lastly, PLIVA was a 5-4 decision in which the dissent adamantly disapproved of hinging a consumer's relief on "the happenstance of whether her pharmacist filled her prescription with a brand-name or generic drug," and even the majority admitted that this discrepancy "makes little sense." (The First Circuit similarly commented in this case that Bartlett "lost her [original] warning claim by the mere chance of her drug store's selection of a generic.")

A decision in favor of Mutual would further limit consumers' ability to bring products-liability lawsuits. Many state courts, however, already refuse to recognize "abnormally dangerous" strict liability claims for prescription drugs based on RS (2nd) § 402A, comment k, which provides an exception for "unavoidably unsafe products . . . accompanied by adequate warnings." See Restatement (Third) of Torts: Products Liability § 6, comment f (Courts "traditionally have refused to review the reasonableness of the designs of prescription drugs."). Nevertheless, the Supreme Court's decision will dictate whether generic and brand name consumers are provided the same opportunities for relief in those that do, including New Hampshire.