What impact will health care reform have on vaccine and drug makers?

• Author: Dennis, Douglas R.
• Position: Health Care and the Law

MUCH has been written anticipating the various health care reform proposals propagated in Congress in the past two years. While the more far-reaching of these proposals have been pushed to a back burner, they are still very much in the public's mind and can be expected to return before the elections in 1996. Deciphering the proposals is an entirely different matter. Because of their enormous volume, these proposals cannot be swallowed whole; they must be broken into bite-sized pieces. This article examines one of those pieces--the potential impact on tort liability law for vaccine and drug injuries.

DRUG AND VACCINE PRODUCTS LIABILITY

1. Negligence and Warranty Claims

   Plaintiffs may assert claims in negligence against manufacturers, but those claims are much more difficult to prove than strict liability claims. In negligence claims, plaintiffs must prove that the manufacturer had a duty, breached that duty, the breach proximately caused harm, and harm resulted. In order to prove that a defendant owed a duty, the plaintiff must show that the risk of injury was foreseeable and unreasonable.(1) This burden is best accomplished by establishing a clearly feasible solution. Clearly feasible solutions in drug cases focus primarily on the labelling of drugs and the effectiveness of the directions and warnings, particularly with regard to gaining the attention of the intended audience and making such directions and warnings understood.(2)

   Plaintiffs also may have warranty claims against manufacturers, based on either expressed or implied warranties or both. Express warranties establish a promise to consumers that the product will perform in a certain manner, and often allow for replacement if the product does not do so. Courts invariably imply warranties of merchantability in which the mere sale of a product implies a promise that products will be fit for intended uses or will match "reasonable consumer expectations."(3) If a product does not perform up to this standard, the warranty is considered breached and the manufacturer can be held liable.

   The burden of proof is as difficult as in negligence cases, however, because the absence of an express warranty forces plaintiffs to try to prove the intended uses or at least the foreseeable uses intended by the manufacturer for the product, and that the product did not perform when used in that manner.

   These difficulties, as well as perverse results arising from privity of contract issues, led to the advent of strict liability.

2. Section 402A and Comment k

   Section 402A of the Restatement (Second) of Torts defines the special strict liability of a manufacturer or seller of a product that causes harm to a user or consumer. That famous section states:

   (1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if (a) the seller is engaged in the business of selling such a product, and (b) it is expected to and does reach the user or consumer without substantial change in the condition in which it was sold.

   (2) The rule stated in Subsection (1) applies although (a) the seller has exercised all possible care in the preparation and sale of his product, and (b) the user or consumer has not bought the product from or entered into any contractual relation with the seller.

   Comment g to Section 402A defines what condition is defective. The injured plaintiff bears the burden of proof that the product left the seller's hands in a condition not contemplated by the ultimate consumer, which imposes unreasonable danger on the consumer. This test of whether the product was defective is known as the "consumer contemplation test."

   Comment k to Section 402A limits the extent to which strict liability may be imposed on a manufacturer of prescription drugs that are "unavoidably unsafe." The comment states that unavoidably unsafe products with great utility, such as drugs which "cannot be legally sold except to physicians" or under prescription, or experimental drugs with no assurance of safety, may still be marketed because the potential benefit far outweighs the potential risk.

   The standard that applies to these drugs has been interpreted to be strict liability regarding the proper directions and warning given to consumers separately from the drug, as in Feldman v. Lederle Laboratories,(4) and negligence when regarding the warning and drug as one package, as in Brown v. Superior Court.(5)

   A drug is unavoidably unsafe when it cannot be made safe no matter how carefully it is manufactured.(6) A plaintiff must prove that the drug caused the harm and that the manufacturer breached the duty to warn of the possibilities that the harm could result. Therefore, when a prescription drug is properly manufactured, the only possible defect is an inadequate warning of the possible side effects that could cause harm to the ultimate consumer.

   Determining what constitutes an adequate warning is the crux of most drug products liability cases. A drug manufacturer's duty to warn depends on the causal connection between the drug and a harmful side effect. A manufacturer not only has an initial duty to warn, but also a duty to update the warning as new data are gathered regarding harmful side effects. A manufacturer is susceptible to claims when a warning becomes inadequate because the manufacturer fails to update the state-of-the-art information given to physicians and users of possible harmful side effects.

   The adequacy of a warning is best understood by applying the standard of Section 388 of the Restatement (Second) of Torts for "chattles known to be dangerous for intended use." In the case of drug manufacturers, a drug that is known to cause side effects is a chattel known to be dangerous for its intended use. If a manufacturer knows of possible side effects and believes that the consumer, and in the case of prescription drugs, the physician, might not be aware of these side effects, then the manufacturer has the duty to inform them of the risks involved in prescribing or taking the drug. The manufacturer can discharge its duty by stating in clear and simple terms the reasonably foreseeable risk inherent in the drug.

   Manufacturers are not required to give warnings that extend to all potential adverse effects of a drug that are inconsequential, infrequent or not specifically related to the drug.(7) When a drug is properly made, and accompanied by adequate warnings, it is protected by comment k, even though it is unsafe, because at that point, it is unavoidably unsafe. It should be noted that comment k does not prevent a claim in negligence against a manufacturer, it merely limits the application of Section 402A strict liability in this narrow exception of "unavoidably unsafe" drugs.

   Comment k does not apply when drug manufacturers fail to comply with Food and Drug Administration regulations. They must comply with FDA regulations to render the product properly made. While the FDA's standards are regarded as industry standards, they are not conclusive per se with regard to the adequacy of the testing. The standard that applies to manufacturers testing remains whether they "knew or should have known" about the risk of injury from a particular side effect.(8)

3. Leading Cases

   In Brown (cited at footnote 5), the Supreme Court of California ruled that comment k applies to all prescriptions, stating that a drug manufacturer would not be held to the strict liability standard because of the "public interest in the development, availability, and reasonable price of drugs." The comment k standard focuses not on the product, as in most 402A strict liability analysis, the court declared, but on the duty of the manufacturer to provide an adequate warning of inherent risks associated with the product.

   The plaintiff in Brown claimed that DES contained a design defect and that the manufacturer failed to warn adequately of the associated risks. The court concluded that the consumer expectations test was inappropriate to determine whether a design defect existed, because the consumers of prescription drugs are prescribing physicians, not plaintiffs. Riskbenefit analysis is more applicable, the court found, but it gave deference to the FDA in fulfilling the function of deciding whether the benefits of a drug outweighed the risks before allowing the drug on the market.

   The court stated there was a need to provide manufacturers with a uniform standard (negligence, under comment k) to evaluate the risks and benefits of providing drugs to consumers. In support of the public policy rationale for comment k, the majority cited numerous occasions when the threshold litigation costs caused drug manufacturers to withhold needed vaccines or to increase the price more than hundred-fold to cover the costs associated with litigation.

   However, in Feldman (cited at footnote 4), a 1984 New Jersey Supreme Court decision that preceded Brown, the defendant drug manufacturer basically argued the holding in Brown--that strict liability did not apply to prescription drugs--and lost. The court held that drug makers had a duty to warn of dangers they knew or should have known on the basis of reasonably available knowledge.

   In Feldman, the plaintiff's teeth were discolored by the drug Declomycin. Lederle Laboratories attempted to use a state-of-the art defense, claiming that tooth coloration was not a known side effect at the time the drug and its warning literature were disseminated. Failing in this defense, Lederle argued that comment k prevented strict liability for side effects of prescription drugs. The court noted, however, that comment k does not give carte blanche to drug makers; their products still must be "properly prepared, and accompanied by proper directions and warning." Finding that attributes that made this particular drug unsafe for this particular plaintiff...