California dreamin'? Generic drug users can sue brand name drug manufacturers.

• Author: Martin, Anthony L., Jr.

DRUG MANUFACTURERS BEWARE! The rules governing the liability exposure of brand name drug manufacturers are changing, at least in California. Whether the rule announced in Conte v. Wyeth, Inc., (1) is an anomaly or will become the majority rule is a question which should be considered by all innovator drug companies, their law departments, and their outside counsel. Before Conte, the universal rule was that generic drug users could not sue brand name drug manufacturers. The California Court of Appeals adopted a contrary rule in Conte v. Wyeth, Inc. Thus far, no court outside California has adopted Conte, but it is far too early for innovator drug manufacturers to declare victory. California courts are innovative and influential. If brand name drug manufacturers want the Conte rule to be isolated to a few courtrooms in California, they need to take immediate steps to properly exert their considerable influence to achieve that goal.

Brand name or innovator drug manufacturers are just that. They have massive research and development departments to develop new drugs to help solve more and more medical problems. Once a new drug shows sufficient promise, these manufacturers undertake a time-consuming, challenging, and costly regulatory process. That process includes preparing and submitting for approval appropriate labeling package inserts and warnings. The brand name manufacturer also prepares its proposed monograph entry for use in the Physician's Desk Reference (PDR).

Manufacturers of generic drugs obtain approval for their products in a much more streamlined fashion. As a general rule, they copy verbatim the drug labeling information of the brand name drug. In practice, physicians become familiar with the brand name drug because it precedes any generic equivalent and because of the marketing efforts of the brand name manufacturer. Once a generic equivalent becomes available, it is often preferred by patients and health insurers because of the cost savings. Thus, it is frequently substituted by the pharmacist filling the prescription, if not prescribed by the physician directly. In fact, unless a physician affirmatively indicates that a prescription is to be dispensed as written, in most states a pharmacist may substitute the lower priced generic equivalent for the brand name drug actually prescribed. When it comes to lawsuits involving these generic products, plaintiffs often contend that brand name manufacturers can also be held liable under a theory of negligent misrepresentation because of insufficient warnings read by plaintiff's physician.

Since 1994, the majority rule has been that a brand name manufacturer does not owe a duty to users of the generic equivalent drug, noting that the injury alleged was caused by a different company's product. The leading case supporting the majority rule is Foster v. American Home Products Corporation. (2) Foster remained virtually unquestioned until 2008, when the California Court of Appeals decided Conte v. Wyeth. (3) The court in Conte held that the brand name manufacturer owes a duty of care to generic drug users whose doctors foreseeable relied on the brand name manufacturer's product information.

California has long been recognized as one of the nation's leaders when it comes to judicial and legal innovation. Crisco v. Security Insurance Company (4) and Greenberg v. Aetna Insurance Company (5) are preeminent cases regarding insurance bad faith. Similarly, Green man v. Yuba Power Products (6) is a renowned strict product liability case. The question now is whether Conte will become the leading case on brand name manufacturers' liability to users of generic drugs using a negligent misrepresentation theory, or whether it remains an isolated anomaly. Though Foster continues to be the prevailing rule, it should be remembered that most jurisdictions have not decided the issue. Conte has given hope to generic drug users and their attorneys that Conte will supplant Foster. Familiarizing oneself with the issues and arguments found in Conte and Foster is vitally important.

1. The Majority Rule: Foster v. American Home Products Corporation (7)

   1. Facts and Procedural History

      The defendant in Foster, American Home Products Corporation/Wyeth-Yarest ("Wyeth") was the brand name manufacturer of Phonogram. In 1988, infant twins Brandy and Bradley Foster had colic for which their doctor prescribed Phonogram. As permitted by statute, the pharmacy substituted a generic equivalent of Phonogram, called Promethazine Syrup Plain, manufactured by My-K Laboratories, Inc. The brand name and generic medications contained the same active ingredient. After the twins took the generic drug over several days, Brandy died.

      The Fosters filed suit against Wyeth (the brand name manufacturer) and the entity they incorrectly believed manufactured the generic drug. After substituting the correct generic manufacturer, the Fosters agreed to dismiss the generic manufacturer with prejudice, for reasons not stated in the record. (8) The Fosters alleged two counts of negligence against Wyeth, one in strict liability, and one for breach of warranty. In its initial motion for summary judgment, Wyeth argued that it could not be liable for Brandy's death because it did not manufacture the drug Brandy ingested. However, the U.S. District Court agreed with the Fosters that the negligence counts could be read to include a claim for negligent misrepresentation against Wyeth. Manufacturing the drug actually used was not an element of the negligent misrepresentation claim.

      Notably, the district court considered the negligent misrepresentation claim to be separate and distinct from the product liability claim. The district court granted summary judgment in favor of Wyeth on all claims except for negligent misrepresentation. The Fourth Circuit in Foster described the district court's reasoning as follows: if Wyeth "made a false representation concerning the safety of [its drug] for use in infants and [Brandy's doctor] relied on the representation in prescribing [the drug] for Brandy Foster, then Wyeth may be liable for any harm caused to Brandy as a result." (9)

      Wyeth thereafter filed its second motion for summary judgment, attacking the negligent misrepresentation claim. The second motion was granted after the prescribing doctor signed an affidavit stating that he had prescribed the brand name drug "based only on his own experience with the drug and did not rely on any representations made by Wyeth." (10) Both the Fosters and Wyeth appealed the ruling. Wyeth appealed the initial determination that Wyeth could be held liable on a negligent misrepresentation theory for injuries caused by another manufacturer's product.

      Essential to Plaintiffs' argument in Foster were the practices of the generic drug industry and the federal regulatory scheme governing the manufacture and sale of generic drugs. Generic drug manufacturers gain approval of their drugs by using an Abbreviated New Drug Application, which is a streamlined and less expensive procedure than what brand name manufacturers must complete. (11) Basically, a generic manufacturer seeks FDA approval by establishing that its drug is the bio-equivalent of the previously approved brand name drug, and it uses the same labeling as...