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California Supreme Court Ruling on Generic Drug Extends Lifespan of Predecessor Brand-Name Manufacturer Liability

Feb 28, 2018 | Topic: Product Liability

Plaintiffs who were in utero when their mother was prescribed terbutaline, a generic version of an asthma drug that is used off-label to prevent premature labor, filed suit against the brand-name manufacturer of said drug, Brethine.  In T.H. v. Novartis Pharm. Corp. (2017) 4 Cal. 5th 145, the California Supreme Court recognized established law that Novartis had a duty to provide an adequate warning label on not only Brethine, but also generic bioequivalents, such as the Terbutaline.

The ruling expanded liability, however, by finding that Novartis’ duty on both form and content of the labeling extended to the warnings provided on the terbutaline prescribed to plaintiffs’ mother in 2007, years after Novartis sold the rights to manufacture Brethine.  Such a finding was not a forgone conclusion, though.  For the trial court below had sustained a demurrer without leave to amend on this point, finding that Novartis had no duty as a matter of law with respect to claims arising from terbutaline exposure in 2007.  However, the Court of Appeal then reversed, instead finding that plaintiffs could allege their causes of action to claim that Novartis could have warned about fetal risks prior to 2001, such that an adequate warning would have survived Novartis’ divestiture and thus remained as the standard for labeling.  

Thus, the only issue before the California Supreme Court was whether the demurrer should have been sustained with respect to the negligence and negligent misrepresentation claims on the ground that Novartis owed no duty of care to plaintiffs.  Several key factors animated the Court’s rationale: a brand-name drug manufacturer is in the best position to perfect its warning label (a least cost avoider), a factor which underlies the requirement under the FDA that a brand-name drug manufacturer has a continuing duty to update and maintain the warning label, even if the brand-name drug has been withdrawn from the market, until the FDA withdraws approval of the New Drug Application (NDA).  Furthermore, a brand-name manufacturer is already on the hook for any liability arising from a deficient warning label when it first brings a drug to market, so the Court was not convinced that such exposure would become “fatally uncertain” once generic manufacturers entered the market and the brand-manufacture lost its monopoly.  Therefore, at least for now, listed manufacturers who have stopped making or selling a particular drug can be held liable for inadequate labeling years after the fact; what remains to be seen, with time, is the chilling effect (if any) that this will have on the entities on the frontier of pharmaceutical industry.