Under Texas law, a products liability action involving a
"medicine" has a statutory rebuttable presumption that
the "health care provider, manufacturer, distributor, and
prescriber" are not liable if the warnings or information that
accompanied the product were approved by the Food and Drug
Administration (FDA). See Tex. Civ. Prac. & Rem. §
82.007(a)(1). The statute provides five grounds for rebutting this
presumption, including "Fraud-on-the-FDA" – the
defendant withheld from or misrepresented to the FDA (i)
"required information" that was (ii) material and
relevant to the performance of the product and (iii) causally
related to the claimant's injury. See Tex. Civ. Prac. &
Rem. § 82.007(b)(1).
On February 22, 2012, in Lofton v. McNeil, the Fifth Circuit
significantly limited plaintiffs' ability to use
Fraud-on-the-FDA to rebut the no liability presumption under Texas
law, finding the claims preempted under federal law.
In June 2000, Mr. Lofton died from Toxic Epidermal Necrolysis
("TEN"), allegedly resulting from ingesting ibuprofen.
Plaintiffs claimed the manufacturers failed to warn consumers about
the risk of severe autoimmune allergic reactions and asserted
common law negligence and strict products liability claims. The
manufacturers moved for summary judgment on all claims, asserting
that the failure to warn claims require proof of Fraud-on-the-FDA
and are preempted under Buckman Co. v. Plaintiffs' Legal Comm.,
531 U.S. 341, 121 S. Ct. 1012 (2001).
In Buckman, the Supreme Court rejected a private right to bring an
action sounding in Fraud-on-the-FDA because the state law claim
would "conflict with the FDA's responsibility to police
fraud consistently with the Administration's judgment and
objectives." 531 U.S. at 350. The Court stated "that the
federal statutory scheme amply empowers the FDA to punish and deter
fraud against the Administration." Id. at 348. Not only does
federal law provide administrative tools to punish and deter fraud,
but the agency's decision to employ those tools implicates its
discretion and special competence. Among the factors that make FDA
enforcement a somewhat delicate balance of statutory objectives are
the need for administrative efficiency and the possibility that
tort liability based on inadequate disclosures would create an
incentive to submit a deluge of information. Id. at 351. The Court
concluded that authorizing tort liability for failure to comply
with FDA disclosure requirements "would exert an extraneous
pull on the scheme established by Congress, and it is therefore
pre-empted by that scheme." Id. at 353.
The Lofton district court found that the § 82.007(a)(1)
presumption of no liability applied, because the manufacturer
complied with all FDA requirements governing the labels. Lofton v.
McNeil, 682 F. Supp. 2d 662 (N.D. Tex. 2010). The court considered
the plaintiffs' attempt to rebut that presumption based on
§ 82.007(b)(1) but entered summary judgment for the
manufacturers finding that a claim of Fraud-on-the-FDA is preempted
unless the claimant can demonstrate that the FDA itself found fraud
and further "extending the holding of Buckman to
fraud-on-the-FDA exceptions is warranted." See id. at
675.
The Fifth Circuit reviewed whether the district court correctly
found that federal law preempted § 82.007(b)(1) of the Texas
Civil Practice and Remedies Code. The Fifth Circuit considered
conflicting opinions interpreting Buckman in the Sixth Circuit
(finding preemption) and Second Circuit (not finding preemption)
involving virtually identical circumstances. The Sixth Circuit
found preemption "unless the FDA itself finds that fraud has
been committed during the approval process." Garcia v.
Wyeth-Ayerst Labs, 385 F.3d 961, 966 (6th Cir. 2004). The Sixth
Circuit did find that where the FDA itself finds fraud, the state
claim could proceed.
The Second Circuit disagreed, finding the traditional
"presumption against preemption" applied, finding it
embodies a state's regulation of health and safety where the
presumption "stands at its strongest." Desiano v.
Warner-Lambert & Co., 467 F.3d 85, 94 (2d Cir. 2006). The
Second Circuit did not view the statute as an attempt to police
fraud-on-the-FDA but instead as a prerequisite to allowing victims
to recover under existing state product liability laws. The
underlying claims were held to be traditional product liability
claims that didn't involve a "newly-concocted duty"
between the manufacturer and the federal agency. Id. at 94-95. The
Second Circuit further held the statute created an affirmative
defense available to drug manufacturers but did not render
fraud-on-the-FDA an "element" of the plaintiff's
claims, and that there was little likelihood of a conflict with
FDA's approval process that would inflict a deluge of
unnecessary information on the agency, as the Supreme Court feared
in Buckman.
The Fifth Circuit noted well-established Supreme Court precedent,
stating that a preemption inquiry "start[s] with the
assumption that the historic police powers of the States were not
to be superseded by the Federal Act unless that was the clear and
manifest purpose of Congress." Hillsborough Cnty., Fla. v.
Automated Med. Labs., Inc., 471 U.S. 707, 715, 105 S. Ct. 2371,
2376 (1985) (internal citations omitted). The court further noted
that the primacy of the state's police powers is not universal:
"the relationship between a federal agency and the entity it
regulates is inherently federal in character because the
relationship originates from, is governed by, and terminates
according to federal law." Buckman, 531 U.S. at 347, 121 S.
Ct. at 1017. Interestingly, Buckman squarely declined to apply a
presumption against preemption of a state law claim for
fraud-on-the-FDA, as the Court reasoned that federal law dictates
which information the manufacturer is obliged to disclose and
imposes penalties for omissions and misrepresentations. 531 U.S. at
347-48. As a result, disclosures to the FDA are "uniquely
federal" and thus beyond the states' traditional police
power, and state laws that depend on such disclosures are not
entitled to a presumption against preemption. Id.
The Fifth Circuit concluded that although the Supreme Court has
interpreted the Supremacy Clause to permit some parallel state law
tort suits, Lofton did not raise that issue. The Fifth Circuit was
further unpersuaded that § 82.007(b)(1) "is merely a
legislative means to produce some evidence" of fraud on the
FDA to counter the insulation from liability otherwise afforded by
§ 82.007(a)(1).
What remains of failure to warn claims regarding medicines in the
State of Texas?
The Plaintiffs argued for the first time on appeal that §
82.007(b)(1) is not severable from § 82.007(a) but the Fifth
Circuit refused to consider the issue holding that the court has a
"virtually universal practice of refusing to address matters
raised for the first time on appeal." Karl Rove & Co. v.
Thornburgh, 39 F.3d 1273, 1280 (5th Cir. 1994).
Under 82.007(b) there are five (5) grounds for rebutting the
presumption of no liability involving FDA approved products under
Texas law:
- "Fraud-on-the-FDA" - After Lofton, a showing that FDA found fraud will be required;
- "Sale after product recall" - the pharmaceutical product was sold or prescribed after an order of the FDA removing the product from the market or withdrawing its FDA approval of the product;
- "Off-Label Promotion" - the product was used and the injury caused by an "unapproved use" "recommended, promoted, or advertised" by the defendant;
- "Off-Label Prescription" - the product was used and the injury caused by an "unapproved use" "prescribed" by the defendant; or
- "Bribery" –the defendant bribed an official causing the FDA approved warnings or instructions to be inadequate.
While it is not clear which of these approaches, if any, will
next take center stage, what is clear is that federal courts in
Texas will be hard-pressed not to dismiss failure to warn claims
where Plaintiffs claim fraud on the FDA.
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