5 Things to Know About Innovator Liability

 
 

innovator liability

Innovator liability is a tort theory by which a brand-name drug manufacturer—the “innovator”—may be held liable for injuries allegedly caused by the use of a generic drug. While it has historically been largely unsuccessful as a plaintiff strategy, the highest courts in two states have recently breathed new life into the theory. Here are five key takeaways about the controversial theory:

1. Innovator liability is designed to circumvent federal preemption.

Under U.S. law, pharmaceutical manufacturers cannot market drugs in interstate commerce without the approval of the U.S. Food and Drug Administration (FDA). As part of the approval process, a brand-name manufacturer must establish that the proposed warning label for the new drug is accurate and adequate. By contrast, the FDA imposes only a duty of “sameness” on a generic manufacturer—that is to say, a manufacturer of a generic drug need merely establish that the proposed warning label for the generic drug is the same as the label approved for its brand-name equivalent. Generally, generic manufacturers are prohibited from making unilateral changes to their drug labels once approved by the FDA.

In light of a generic manufacturer’s inability to independently revise its warning label, the U.S. Supreme Court held in PLIVA, Inc. v. Mensing that state law “failure to warn” claims against generic manufacturers are preempted by FDA regulations. In Mensing, the plaintiffs alleged that they developed tardive dyskinesia (a neurological disorder characterized by involuntary, repetitive body movements) as a result of their ingestion of a generic digestive aid, metoclopramide. The plaintiffs’ claims that the generic manufacturers failed to warn of the risk of the disorder were preempted, however, because it would have been “impossible” for the generic manufacturers to simultaneously comply with state tort law—which required a revised warning label—and federal FDA labeling regulations—which prohibited any such revision absent action by the brand-name manufacturer.

In the wake of the Supreme Court’s 2011 decision in Mensing, the plaintiffs’ bar has championed the novel theory of innovator liability in an attempt to circumvent the practical consequence of the court’s holding that generic consumers have no remedy for failure to warn claims because of federal preemption. The significance of the imposition of such liability for brand-name manufacturers cannot be overstated. In 2016, 89% of all U.S. prescriptions were filled with generic drugs, according to the New York Times. Adoption of innovator liability would therefore subject brand-name manufacturers to liability nearly 10 times the size of their market share—potentially for years after loss of market share—effectively turning them into insurers of their market.

2. The vast majority of courts have rejected innovator liability.

The majority of state and federal courts that have considered innovator liability have thus far rejected it, as have all U.S. Circuit Courts of Appeal that have addressed the issue post-Mensing.

Only a small number of state courts have adopted innovator liability, including Alabama (subsequently abolished by statute), California and Massachusetts, as well as the federal district courts of Illinois and Vermont. Although still the minority position, the adoption of innovator liability by the high courts of California and Massachusetts has reinvigorated the theory. The common theme among these courts is a heightened emphasis on the element of foreseeability, typically at the expense of traditional products liability concepts.

3. Innovator liability requires an expansion (or outright disregard) of traditional products liability principles.

There are two fundamental tenants of products liability law: 1) a plaintiff must prove product identification, i.e., that the product at issue was manufactured, sold, or supplied by the defendant; and 2) a defendant cannot be held liable for failure to warn of risks created solely by the use or misuse of a product manufactured by an unrelated entity.

The rejection of innovator liability is based on the notion that a brand-name manufacturer should not be held liable for a generic product it did not manufacture, sell or supply.

In contrast, the handful of jurisdictions that have adopted innovator liability have had to expand traditional products liability concepts or disregard them altogether. In T.H. v. Novartis Pharma. Corp., the Supreme Court of California stretched the very definition of a “product,” holding that a drug’s warning label—not the generic drug that was ingested—constituted the “product” for purposes of imposing innovator liability. Further, in Rafferty v. Merck & Co., Inc., the Massachusetts Supreme Judicial Court skirted traditional products liability law altogether, finding that, “Rafferty did not bring a products liability claim…instead, he has brought a general negligence claim, relying on ‘a general principle of tort law’ that…every actor has a duty to exercise reasonable care to avoid physical harm to others.” Both of these courts remanded their case to the trial court for further proceedings.

4. It remains to be seen how plaintiffs may prove their innovator liability claims.

The recent decisions in California and Massachusetts should be monitored on remand as harbingers of how innovator liability claims may be developed during discovery.

In T.H., the Supreme Court of California affirmed the appellate court’s decision to allow the plaintiffs to amend their negligence and negligent misrepresentation claims to include innovator liability allegations. In March 2018, the plaintiffs filed their second amended complaint, which Novartis answered in April. The case will now move to discovery, where a battle is expected over the production of documents relating to the development, testing, and/or marketing of drugs that were never ingested by the plaintiffs.

In Rafferty, the Massachusetts Supreme Judicial Court rejected the plaintiff’s negligence claim, but held that a generic consumer “may bring a common-law recklessness claim against the brand-name manufacturer if it intentionally failed to update the label on its drug, knowing or having reason to know of an unreasonable risk of death or grave bodily injury associated with its use.” The court therefore remanded the case with leave for the plaintiff to amend the complaint to set forth allegations of innovator liability on recklessness grounds. As of the writing of this article, Rafferty has filed an amended complaint and it is not yet known whether Merck will challenge the new allegations at the pleading stage.

5. The decision in Mensing may provide guidance going forward.

Should the issue of innovator liability ultimately be appealed to the Supreme Court, the court’s opinion in Mensing may come into play. While the issue of innovator liability was not before the court, the holding in Mensing suggests that the court did not intend to impose liability on brand-name manufacturers. Instead, the majority lamented that its decision dealt an “unfortunate hand” to generic consumers by leaving them without remedy. Even the dissent was unified on this point—“the majority’s [decision] strips generic-drug consumers of compensation when they are injured by inadequate warnings,” it said. “If [a consumer] takes a generic drug, as occurs 75% of the time, she now has no right to sue.” Just two years earlier in Wyeth v. Levine, the court held that failure to warn claims against brand-name manufacturers were not preempted. Accordingly, if the court in Mensing intended to merely shift liability to brand-name manufacturers, it would have indicated that generic consumers still had a remedy for their injuries.

 
David L. Ferrera

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About the Author

David L. Ferrera is a partner in Nutter’s litigation department and chairs the firm’s product liability practice group.

Michael J. Leard

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About the Author

Michael J. Leard is an associate in Nutter’s litigation department.

 
 
 

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