The deeply-divided Supreme Court of California (“California Supreme Court”) held in its opinion filed on December 21, 2017 that “[b]ecause the same warning label must appear on the brand-name drug as well as its generic bioequivalent, a brand-name drug manufacturer owes a duty of reasonable care in ensuring that the label includes appropriate warnings, regardless of whether the end user has been dispensed the brand-name drug or its generic bioequivalent. If the person exposed to the generic drug can reasonably allege that the brand-name drug manufacturer’s failure to update its warning label foreseeably and proximately caused physical injury, then the brand-name manufacturer’s liability for its own negligence does not automatically terminate merely because the brand-name manufacturer transferred its rights in the brand-name drug to a successor manufacturer.”
In the case the California Supreme Court was deciding, the plaintiffs’ mother was prescribed terbutaline, a generic form of the brand-name drug Brethine, an asthma drug sometimes prescribed off label to stop or slow preterm labor, to suppress premature labor during her pregnancy. The plaintiffs were born full term, but were diagnosed with developmental delays at three years of age and autism by age five.
The plaintiffs’ father filed a lawsuit against the manufacturer of Brethine, alleging that those responsible for the terbutaline label knew or should have known, based on studies of the drug’s effects in rats and in humans, that the drug posed a serious risk to fetal brain development. The California lawsuit further alleged that the drug’s label unreasonably failed to include a warning about this risk.
Under California law, a brand-name drug manufacturer has a duty to warn of known or reasonably knowable adverse effects arising from an individual’s use of its drug. Federal law explicitly conveys to the brand-name manufacturer, and only that manufacturer, the responsibility to provide an adequate warning label for both generic terbutaline and its brand-name equivalent, Brethine. Only the brand-name drug manufacturer has unilateral authority to modify the drug’s label by adding to or strengthening a warning. Generic drug manufacturers are required to follow the brand-name manufacturer’s label to the letter. Accordingly, the manufacturer of Brethine controlled both the form and content of the terbutaline warning label.
The California defective labeling lawsuit was brought against Novartis Pharmaceuticals Corporation (“Novartis”), which manufactured Brethine until December 2001, and against aaiPharma Inc. (“aaiPharma”), which purchased the rights to and manufactured Brethine thereafter, using the same label Novartis had used, when the plaintiffs’ mother was prescribed the generic bioequivalent in 2007.
Plaintiffs alleged that Novartis knew or should have known that its warning label failed to alert pregnant women or their physicians to the risk Brethine posed to fetal brain development; that manufacturers of terbutaline were compelled by federal law to include Brethine’s deficient label on their own products; that it was foreseeable Novartis’s successor, aaiPharma, would not change or update Brethine’s deficient label; and, that in reliance on the deficient warning label, the plaintiffs’ mother was prescribed terbutaline, which adversely affected the plaintiffs’ developing brains in utero.
Novartis responded that its duty to provide a safe and adequate warning label for Brethine did not encompass those who were prescribed terbutaline in reliance on the Brethine label, and that any such duty should not extend to those who were exposed to terbutaline after Novartis ceased manufacturing Brethine and sold its rights in the drug to aaiPharma.
California Supreme Court Opinion
The California Supreme Court stated that during the period Novartis was the brand-name manufacturer, it had the legal duty to disclose Brethine’s known and reasonably knowable risks in the drug’s warning label. All generic manufacturers had a specific legal responsibility regarding the label: to ensure the terbutaline label was identical to the Brethine label. The California Supreme Court said that it is the brand-name manufacturer that bears responsibility for the accuracy and adequacy of its label as long as the drug is on the market; the generic manufacturer is responsible only for an ongoing federal duty of “sameness” (i.e., ensuring that its warning label is the same as the brand-name manufacturer’s). A brand-name drug manufacturer, unlike a generic manufacturer, may unilaterally update a label, without waiting for FDA pre-approval, to add or strengthen a contraindication, warning, precaution, or adverse reaction under the “changes being effected” regulation.
The California Supreme Court stated that because federal regulations preclude generic manufacturers from unilaterally altering the warning labels on their drugs, federal law preempts state tort claims against generic manufacturers for failure to provide adequate warnings. However, state tort claims against a brand-name manufacturer based on a failure to warn are not preempted.
The California Supreme Court held that a brand-name drug manufacturer has the duty under California law to warn of the risks about which it knew or reasonably should have known, regardless of whether the consumer is prescribed the brand-name drug or its generic “bioequivalent.”
The California Supreme Court stated that Novartis could reasonably have foreseen that deficiencies in its Brethine label could mislead physicians about the safety of terbutaline, Brethine’s generic bioequivalent, which was legally required to bear an identical label, and that a brand-name pharmaceutical manufacturer has a duty under federal law to draft, update, and maintain the warning label so that it provides adequate warning of the drug’s potentially dangerous effects.
Although the brand-name manufacturer generally must obtain FDA approval before making any change to the label, this category of manufacturers may use the “changes being effected” (CBE-0) regulation (21 C.F.R. § 314.70(c)(3)) to “add or strengthen a contraindication, warning, precaution, or adverse reaction” immediately upon filing a supplemental application, without waiting for FDA approval.
The duty for a manufacturer of generic drugs is to ensure that its warning label is identical to the label of the brand-name drug: generic manufacturers have an ongoing federal duty of “sameness.” (A generic manufacturer may use the CBE-0 regulation to change its label only to match a revised brand-name label or otherwise comply with FDA instructions.)
The California Supreme Court stated that what a brand-name manufacturer thus knows to a legal certainty is that any deficiencies in the label for its drug will be perpetuated in the label for its generic bioequivalent, and that although the warnings communicated in its drug label are designed for physicians — and are intended to influence a physician’s decision whether to prescribe the drug — it is often the pharmacist who actually decides whether the patient receives the brand-name drug or its generic bioequivalent. Furthermore, many insurance companies require the substitution of a generic drug for the brand-name drug as a matter of course, unless the physician justifies use of the branded drug. Therefore, it is entirely foreseeable that the warnings included (or not included) on the brand-name drug label would influence the dispensing of the generic drug, either because the generic is substituted by the pharmacist or the insurance company after the physician has prescribed the brand-name drug, or because the warning label on the generic drug is legally required to be identical to the label on the brand-name drug.
Furthermore, the possibility that any consumer injured by a deficient drug label, including those who were dispensed the generic bioequivalent drug, could assert a claim of warning label liability restores the brand-name manufacturer’s incentive to update the warning label with the latest safety information, even as the brand-name drug’s market share declines. The California Supreme Court stated that because the brand-name drug manufacturer is the only entity with the unilateral ability to strengthen the warning label, a duty of care on behalf of all those who consume the brand-name drug or its bioequivalent ensures that the brandname manufacturer has sufficient incentive to prevent a known or reasonably knowable harm.
The California Supreme Court held that because the brand-name drug manufacturer exercised complete control over the contents of the generic drug label at the time of its alleged negligence, and the generic drug was legally required to be the brand-name drug’s bioequivalent, warning label liability is likely to be effective in reducing the risk of harm to those who are prescribed (or are exposed to) the brand-name drug or its generic bioequivalent. The California Supreme Court stated that the burden on brand-name drug manufacturers of satisfying a common law duty of care to those who are prescribed the generic version of the drug is zero becasue brand-name manufacturers already have a continuing duty to warn of potential risks “as soon as there is reasonable evidence of an association of a serious hazard with a drug; a causal relationship need not have.” (21 C.F.R. § 201.80(e))
The California Supreme Court held that under warning label liability, the brand-name drug manufacturer is liable only in a narrow circumstance — when deficiencies in its own label foreseeably and proximately caused injury. A brand-name drug manufacturer is in the best position to discover and cure deficiencies in its warning label, to bear the cost of injury resulting from its failure to update and maintain the warning label, to insure against the risk of liability, and to spread any increased cost widely among the public; the balance of preventing harm and avoiding an undue burden on drug manufacturers and the public generally thus tips in favor of warning label liability.
In addressing the issue, “Is a brandname drug manufacturer’s duty to warn extinguished simply because the deficiency in the label caused the injured plaintiff to be exposed to the drug after the manufacturer had transferred the NDA to a successor?”, the California Supreme Court stated that foreseeablity of harm is the touchstone of its duty analysis: “We agree that Novartis’s failure to update the warning label could foreseeably cause harm to plaintiffs. Under the circumstances arising from the federal regulatory regime for prescription drugs, a successor manufacturer’s negligent failure to update the warning label is foreseeable. According to federal regulatory rules, a successor brand-name drug manufacturer has no choice but to use the former manufacturer’s warning label — or a warning label at least as strong as the one used by the previous brand-name manufacturer — unless directed otherwise by the FDA.”
The California Supreme Court stated that because nearly half of all terbutaline prescriptions at the time of sale were written to prevent premature labor, it was also reasonably foreseeable that aaiPharma would be reluctant to add warnings about the risks to fetal brain development. “In sum, a successor drug manufacturer’s negligent conduct can be “‘derivative of [the brand-name drug manufacturer’s] allegedly negligent conduct'” and thus foreseeable.” “[T]he relevant inquiry is whether a successor drug manufacturer is sufficiently likely to continue using the warning label it inherited from the prior brand-name manufacturer, even when that label was deficient at the time the NDA was transferred.”
The California Supreme Court further stated that “It is true enough that a successor drug manufacturer has an obligation, under state as well as federal law, to ensure adequacy of the warning label. But the scenario at issue here implicates whether a successor drug manufacturer is sufficiently likely –– as a matter of law –– to modify the warning label when the brand-name manufacturer, which labored under an identical obligation, negligently failed to do so. In such circumstances, it is at least plausible that a successor manufacturer may choose to undertake only a cursory investigation of the medical literature, on the assumption that the prior manufacturer must have done a more thorough inquiry during the period that it was responsible for maintaining the warning label. This option will seem especially attractive when the prior manufacturer has greater resources or expertise than its successor.”
The California Supreme Court held: “It’s that when a brand-name drug manufacturer has ignored its own duty, there is a risk that the successor manufacturer will adopt the same strategy. Under these circumstances, categorically justifying a manufacturer’s neglect of that risk requires heroic, and ultimately unreasonable, assumptions distinguishing an original brand-name manufacturer’s behavior from that of its successors. For these reasons, we find it reasonably foreseeable that a successor drug manufacturer could continue to use the same label it inherited, even when the label was deficient.”
Source T.H., a minor v. Novartis Pharmaceuticals Corporation, S233898.
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