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:

  1. "Fraud-on-the-FDA" - After Lofton, a showing that FDA found fraud will be required;
  2. "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;
  3. "Off-Label Promotion" - the product was used and the injury caused by an "unapproved use" "recommended, promoted, or advertised" by the defendant;
  4. "Off-Label Prescription" - the product was used and the injury caused by an "unapproved use" "prescribed" by the defendant; or
  5. "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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