Expanded Liability for Generic, Brand Manufacturers Ahead?

Consider the following scenario: A research-based pharma company—call it "X Pharma"—discovers and patents a compound that holds great promise as a treatment for a widespread, chronic condition. The compound makes it through clinical trials and the regulatory process, and becomes a commercial success.

John F. Brenner

The compound's success attracts the attention of generics manufacturers, which launch a successful Hatch-Waxman challenge to its patent. X Pharma stops active promotion of the compound, and effectively withdraws from the market.

Sales of the generic version of the compound are strong, but reports of a serious adverse effect begin to surface. Attorney advertising campaigns are launched and lawsuits are filed, claiming that the adverse effect should have been uncovered and disclosed years earlier. Like most pharmaceutical product liability cases, these turn on a "failure to warn" theory. According to plaintiffs, the compound's manufacturers—at this point all generics—should have modified their package inserts to reflect the risk.

In response, the generics manufacturers point to federal regulations that not only require them to use, verbatim, the labeling developed by X Pharma, but also prevent them from seeking or making a label change. The generics companies argue that they can't be held liable for any inadequacy in the labeling, since they don't control its content. Their hands are tied by FDA regulations.

Various courts accept this argument, and rule in favor of the generics companies. Undeterred, plaintiffs train their sights on X Pharma, arguing that even though it long ago abandoned the market (driven out by the successful Hatch-Waxman challenge), and even though none of their clients took an X Pharma product, that company controlled the labeling, and that company should be held liable for deficiencies in the labeling. Ultimately, courts accept this argument: X Pharma is liable to thousands of people who have never used its medicine.

An unfair result? Certainly. An implausible result? Maybe not. Depending on the outcome of a case before the US Supreme Court, and other cases making their way through state and lower federal courts, this scenario may well play out before the end of 2011.

The Case: Mensing v. Pliva

On March 30, the Supreme Court heard oral arguments in Mensing v. Pliva and a companion case. The cases—two in a growing inventory of thousands of cases pending around the country—involve Wyeth's Reglan (metoclopramide) and its generic counterparts, indicated for gastrointestinal disorders such as reflux. Extended use of metoclopramide has been associated with tardive dyskinesia (TD), a movement disorder. Reglan labeling has warned of the TD risk for some time, but in 2009 FDA added a boxed warning and risk evaluation and mitigation strategy (REMS). Plaintiffs claim that all labeling predating the boxed warning was inadequate.

In state and lower federal courts, the generics manufacturers argued that they were not free to modify the FDA-approved labeling for Reglan. FDA regulations require that the labeling for a generic must be the same as that of the brand-name drug. The generics companies also asserted that they were not permitted to request a label change by way of prior approval supplement, or to make labeling changes on their own pursuant to the "changes being effected (CBE)" regulation. Since federal law precluded the generics companies from changing the Reglan labeling, the claims against them should be preempted by operation of federal law.

Two federal appellate courts disagreed with the generics companies' position, and ruled that the generics companies could have requested a labeling change, or, at the very least, suggested to FDA that additional steps be taken to advise doctors of the TD risk.

At the request of the Supreme Court, the federal government participated in the appeal. The government noted that—contrary to the rulings of the appellate courts—the generics companies were not free to submit a prior approval supplement or make unilateral labeling changes under a CBE, but they were able to suggest to FDA that new safety information be communicated to physicians. While disagreeing with the reasoning of the Courts of Appeal, the government endorsed their results: Preemption should not apply, and the personal injury suits against the generics companies should move forward.

It is impossible to predict the outcome of Supreme Court cases on the basis of oral arguments. But the Court seemed divided, and the justices posed difficult questions to both sides and the government. Justices Kagan, Sotomayor, and Ginsburg seemed inclined to accept that the generics companies could have urged a labeling change in some informal manner not recognized by federal regulations (this became known as the "take steps" approach).

Chief Justice Roberts and Justices Scalia and Alito seemed skeptical of that approach. Apart from the fact that the "take steps" approach is not set forth in any regulation, Roberts and Scalia suggested that the government's approach meant that generics manufacturers could avoid liability simply by attaching a boilerplate letter suggesting a label change every time they submitted an adverse event report. Most observers expect a decision before the Court leaves for its summer recess.

Ramifications of the Decision

If the Supreme Court upholds the lower courts' decisions, generics manufacturers will face the same types of failure to warn claims that innovator companies have long confronted. If the Court holds these claims preempted by federal law, generics manufacturers will secure a safe harbor from the massive personal injury litigation that is now commonplace in the industry.

But a ruling in favor of generics manufacturers will also impact brand-name manufacturers, in an ominous way.

It seems logical that a patient injured by a generic drug would not have a claim against the brand-name manufacturer. For many years, most courts agreed with that common-sense approach. But in 2008, a California court came to the opposite conclusion. In Conte v. Wyeth, the plaintiff claimed she developed TD as a result of her use of a generic form of Reglan. She sued both the manufacturers of the generic metoclopramide she took, as well as Wyeth, even though she never took brand-name Reglan. The trial court dismissed the claims against Wyeth.

A California appellate court reversed the judgment in favor of Wyeth, holding: "The common law duty to use due care owed by a name-brand prescription drug manufacturer ... extends not only to consumers of its own product, but also to those whose doctors foreseeably rely on the name-brand manufacturers product information ... ." Because Ms. Conte's doctor testified that he had "probably" read the Reglan PDR entry, judgment in favor of Wyeth was deemed inappropriate.

The Conte case stood alone until last year, when a federal court in Vermont adopted its reasoning in another Reglan case. In Kellogg v. Wyeth (Vermont District Court, October 2010), the court held it reasonably foreseeable that a doctor will rely on information from the brand-name manufacturer, and that there was no reason to "limit Wyeth's duty of care to physicians by the pharmacist's choice of a generic."

Do Conte and Kellogg represent a shift in the law? It's too soon to tell. But if the Supreme Court sides with the generics manufacturers, plaintiffs' lawyers will use the California and Vermont decisions to pursue brand-name manufacturers. All of which underscores the continuing disconnect among Congress, the FDA, and the courts when it comes to prescription drug labeling. Congress says that uniformity in labeling is an important public health goal, and that it wants a strong FDA to regulate every aspect of prescription drug manufacturing, marketing, and the like. (And with the 2007 passage of FDAAA, it gave FDA additional authority to accomplish those goals.) Yet it steadfastly refuses to endorse the notion that FDA oversight should be exclusive, and that its regulations should preempt state law attacks on prescription drug labeling.

The Courts, for their part, refuse to acknowledge the expertise and primary role of FDA in overseeing prescription drug labeling, and cling to the notion that it is important to let lay jurors second guess—and override—FDA's labeling decisions.

And instead of advocating forcefully for its role as the agency best positioned to protect public health by creating and implementing a coherent, uniform, and exclusive system of prescription drug labeling, FDA has too frequently yielded to political pressure, with results like that seen in the government's position in Mensing: simultaneously arguing that the regulations prevented generic manufacturers from changing their labeling, but telling the Supreme Court that they should have "taken steps" to suggest label changes pursuant to some informal, unwritten procedure created by personal injury lawyers and judges.

Instead of certainty and clarity, the three branches of government have conspired to produce confusion and uncertainty when it comes to prescription drug labeling. Whatever the outcome in Mensing, this situation is not likely to change soon. Instead, someone—generics companies, brand-name manufacturers, or both—will face new liabilities.

John F. Brenner is partner in the Health Effects Litigation Practice Group of Pepper Hamilton. He can be reached at brennerj@pepperlaw.com