United States: T.H. V. Novartis Pharmaceuticals Corp.

WHY IT MADE THE LIST

T.H. v. Novartis Pharmaceuticals Corp.1 represents a significant departure from established product liability and innovator liability law. The case tackles two high- stakes theories of liability for brand-name manufacturers of pharmaceutical products:

(1) whether they can be liable for injuries caused by a generic manufacturer's drug; and (2) whether that liability extends after the brand-name manufacturer transfers rights to the product and no longer makes or sells it. Nearly every court that has addressed these theories has rejected them. In T.H., the California Supreme Court charted a different course. It held that a brand-name manufacturer can be liable for failure to update a label even when the plaintiffs used a generic version of the product, years after the brand-name manufacturer last held rights to it.

The Facts

Plaintiffs, fraternal twins, sued Novartis in California state court for negligence and negligent misrepresentation for alleged failure to warn of the risks of Brethine (generic name terbutaline), an asthma medicine that works by relaxing smooth muscle tissue. Novartis initially owned the rights to market Brethine in its oral form. In December 2001, however, Novartis transferred the New Drug Application (NDA) for Brethine to NeoSan Pharmaceuticals Inc., a wholly owned subsidiary of AAIPharma. 2

Plaintiffs' mother, J.H., was hospitalized for premature labor in September 2007—nearly six years after Novartis divested Brethine—and was prescribed the generic version, terbutaline. 3 Terbutaline was not FDA-approved for such a use, and her prescription was thus off-label. 4

Plaintiffs alleged that the terbutaline passed to them in utero, causing them to suffer neurological damage, including autism. 5 They claimed that pre-2001 studies questioned the efficacy of terbutaline to prevent preterm labor and demonstrated the risks of the drug to fetal brain development. They further alleged that Novartis knew this information and updated the or should have known this information and updated the label warning accordingly. Instead, they contended, Novartis falsely represented that terbutaline was safe and effective for pregnant women.

Novartis moved to dismiss on two grounds: First, that it did not owe Plaintiffs a duty of care because it did not manufacture the generic terbutaline ingested by Plaintiffs' mother; and second, that it was not the NDA holder when Plaintiffs' mother took terbutaline and thus had no ability or legal duty to update the product labeling.

The Holding and Analysis

Question 1: Did Novartis owe a duty to the users of generic terbutaline?

The California Supreme Court started its analysis with what it perceived as the central issue: Does a brand-name drug manufacturer have a duty to warn to users of generic drugs manufactured and marketed by other companies? The answer from the court was a resounding "yes."

Before diving into the court's analysis, some background on applicable federal regulations is necessary. A brand-name manufacturer is responsible for drafting, updating, and maintaining the warnings in a prescription drug label. In most circumstances, it must obtain FDA approval before changing the product labeling. However, an exception allows a brand-name manufacturer to change a label—prior to FDA approval—to add or strengthen warning information under certain circumstances6 (i.e., a Changes Being Effected or CBE label change). A generic manufacturer, by contrast, must ensure only that its labeling is identical to that of the brand-name drug. 7 In PLIVA, Inc. v. Mensing, the U.S. Supreme Court ruled on this dichotomy between brand-name and generic manufacturers in a case brought against a generic. 8 Because generic manufacturers have a duty of "sameness" and cannot independently update product labeling, the Court held federal law preempts state tort claims based on generics' failure to warn.

In the wake of Mensing, plaintiffs' attorneys have brought cases against brand- name manufacturers for injuries allegedly caused by generic products. They argue that a brand-name manufacturer has a duty to warn users of both brand-name and generic products because it is reasonably foreseeable that the generic product labeling will be identical to that of the branded. Courts have almost universally rejected this argument, however, holding that only the seller or manufacturer of a product is liable for product liability claims. 9

The result, in theory, should be no different under California product liability law. 10 ut California courts have charted a different course. In Conte v. Wyeth, Inc.,11 widely accepted rule in pharmaceutical product liability cases. In Conte, the plaintiff alleged that she developed tardive dyskinesia after taking the generic version of Reglan and alleged negligent misrepresentation by the brand-name manufacturer.

The court found that negligent misrepresentation claims turn, not on whether the defendant manufactured the product, but on whether the harm is foreseeable. According to the court, it is "eminently foreseeable" that a physician might prescribe a generic product in reliance on the branded labeling. 12 While Conte has not gained traction elsewhere, it formed the basis of the California Supreme Court's reasoning in T.H.

As in Conte, the court in T.H. held that a brand-name manufacturer's duty and potential liability hinges on the foreseeability of harm. Because generic manufacturers are bound by the requirement of "sameness," a brand-name manufacturer exercises "complete control" over the product label. It "knows to a legal certainty [] that any deficiencies in the label for its drug will be perpetuated in the label for its generic bioequivalent." 13 Thus, it is foreseeable that a doctor may rely on branded product labeling even when prescribing a generic product, and a brand-name manufacturer accordingly owes a duty of care to users of both the branded and generic product.

Policy concerns drove much of the court's analysis. The brand-name manufacturer is the only one in a position to change the product labeling, yet, the court reasoned, a brand-name manufacturer's incentive to do so "declines once the patent expires and generic manufacturers enter the market." With liability for generic products at stake, a brand-name manufacture will continue to update labeling with risk information, thus safeguarding patients. 14 At the same time, the court rejected concerns that it was effectively making brand-name manufacturers insurers for the entire market. It deemed its holding to apply in only "narrow circumstance" because generics can still be liable for manufacturing defects, for failing to meet the "sameness" requirement, or for promoting off-label. 15

Footnotes

1 407 P.3d 18, S233898 (Cal. Dec. 22, 2017).

2 See id., slip op. at 9.

3 Id., slip op. at 9-10.

4 See id., slip op. at 7.

5 Id., slip op. at 10.

6 See 21 C.F.R. 314.70(c).

7 See 21 U.S.C. § 355(j)(v).

8 564 U.S. 604 (2011).

9 See, e.g., Strayhorn v. Wyeth Pharmaceuticals, Inc., 737 F.3d 378, 404-06 (6th Cir. 2013).

10 See O'Neil v. Crane Co., 53 Cal. 4th 335, 365-66 (2012) (manufacturer of valve cannot be liable for injuries caused by asbestos used to insulate valve because imposing liability on company for a product it did not manufacture or sell would "exceed the boundaries established over decades of product liability law").

11 168 Cal. App. 4th 89 (2008).

12 Id. at 105.

13 See T.H. v. Novartis, S233898 (Cal. Dec, 22, 2017), slip op. at 18.

14 See id., slip op. at 22.

15 Id., slip op. at 24.

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